Doctors, Employers Wary as Medical Billing Arbitration Halted

Shutting down the federal arbitration process for disputes over out-of-network medical bills will delay payments to health-care providers and back up an already-clogged system, doctors said of the HHS action.

The department’s Centers for Medicare & Medicaid Services announced Aug. 4 that the independent dispute resolution process will be suspended until additional instructions can be provided. It made the call in the wake of a ruling from a federal court in Texas.

The court’s decision does little to alleviate a backlog of arbitration disputes. It also grinds to a halt a system that was aimed at preventing patients from paying surprise medical bills when they receive care from out-of-network providers such as emergency physicians and anesthesiologists at facilities that are in their insurance networks.

“There have been a lot of delays already in reaching decisions” in the independent dispute resolution process under the No Surprises Act, Laura Wooster, senior vice president for advocacy and practice affairs at the American College of Emergency Physicians, said in an interview. “We hope that the shutdown is as brief as possible.” The organization filed an amicus brief supporting the plaintiffs in the case.

More than 330,000 payment disputes over out-of-network health-care claims were initiated in the first year of the process—nearly 14 times what the administration had estimated, the CMS reported. The Aug. 4 shutdown is the second time the arbitration process has been put on hold.

Judge Jeremy D. Kernodle of the US District Court for the Eastern District of Texas ruled Aug. 3 against the administration’s actions that sharply raised fees for filing dispute resolution cases and restricted providers’ ability to “batch” similar cases together.

The case is among a handful filed by the Texas Medical Association and other providers that challenge how the No Surprises Act is being implemented by the Department of Health and Human Services and other federal agencies. Providers have been at odds with the agencies—and with insurers and employers—over how the arbitration process should work.

Providers so far have been winning the battle. An earlier ruling, also by Kernodle, overturned the government’s original regulation requiring arbitrators to use the qualifying payment amount based on median in-network rates as the primary basis for settling disputes. Insurers and employers fear that may lead to higher payments to out-of-network providers, which in turn would raise costs for health plans.

‘Batching’ Cases

Ronald Harter, an anesthesiology professor at The Ohio State University and president-elect of the American Society of Anesthesiologists, said in an interview that the $350 fee for filing arbitration cases, up from $50, has been “a significant issue,” especially for smaller and medium-sized anesthesiology practices, and it is linked to “the inability to really batch cases effectively.” The American Society of Anesthesiologists filed an amicus brief with ACEP supporting the plaintiffs in the case.

Out-of-network providers that have many claims with insurers have to make large payments to file if they can’t group similar claims together, Harter said.

In some cases “the difference between what the insurer is offering and what the provider is asking would be less than the amount of the fee,” without the ability to group the claims as a batch, he said. “That really makes it a losing proposition when you have to factor in that $350 fee.”

Pausing the arbitration process could be a problem if “patients are inappropriately charged higher than they should be,” Melissa Bartlett, senior vice president for health policy with the ERISA Industry Committee, said in an interview.

“I do worry that suspending these processes will just inadvertently benefit provider practices” owned by private equity groups, such as anesthesiologists, emergency physicians, and radiologists, she said. “That’s kind of how we got here in the first place,” she said.

Surprise billing has been linked to private equity ownership of groups that provide those services to hospitals.

“Some provider groups continue to flood the system with excessive numbers of disputes while also repeatedly filing lawsuits intended to hinder and slow down the process,” the Coalition Against Surprise Medical Billing said in a statement. The group represents health insurers and employer groups, among others.

“We continue to work to improve arbitration and believe the No Surprises Act should have clear, stable rules of the road that discourage over utilization of arbitration while aiming to lower health care costs. These ongoing lawsuits are trying to do just the opposite.”