Hospitals win +75% of the time. The median settlement is 370% of Medicare.
A first look at outcomes under the No Surprises Act arbitration process…
Matthew Fiedler and Loren Adler
March 27, 2024
The No Surprises Act (NSA) was enacted in 2022 to protect patients from “surprise” bills for out-of-network care. Under the law, the amount a patient owes for out-of-network emergency care and non-emergency services delivered at in-network facilities cannot exceed the cost-sharing the patient would owe for similar in-network care. The law also created an independent dispute resolution (IDR) process to adjudicate disputes between insurers and providers over payment for affected out-of-network services. IDR is a binding final-offer arbitration process in which each party makes an offer and an arbitrator, called an “IDR entity,” chooses one of those offers to be the final payment amount.
On February 15, the Centers for Medicare and Medicaid Services (CMS) released detailed data on IDR disputes decided during the first half of 2023, the first such data release. We use these data to analyze several aspects of how the IDR process is operating so far, including how much providers and insurers are offering in IDR and what amounts IDR entities are ultimately deciding upon.
Looking across three categories of services, we find that the median IDR decision is at least 3.7 times what Medicare would pay. For the two categories of services where we have estimates of historical mean in-network commercial prices relative to Medicare, the median decision is at least 50% higher than these past prices. Decisions appear closer to the amounts insurers historically paid for out-of-network care. These outcomes reflect the fact that providers are submitting relatively high offers and that IDR entities are selecting the provider’s offer more than three-quarters of the time. And they contrast with Congressional Budget Office (CBO) projections that outcomes would hew close to prior in-network rates.
We also discuss what this experience portends for the overall prices of these services and, in turn, for insurance premiums. This is uncertain because it is unclear whether the outcomes seen so far are representative of what typical providers could obtain in IDR, how disputing parties’ and IDR entities’ behavior may change in the future, and what these outcomes imply for negotiations over in-network prices (and prices for out-of-network services that never reach IDR). Nevertheless, we conclude that there is a realistic possibility that the NSA will raise in-network prices and premiums, the opposite of what CBO predicted at enactment and something that the lawmakers who crafted the law said they wished to avoid.
Continue reading here: A first look at outcomes under the No Surprises Act arbitration process | Brookings
