No surprises, the settlement of disputes create billions of dollars in additional costs, could increase the premiums: analysis

Diving brief:

• The process implemented by the surprises law to settle disputes between service providers and insurers on off -network complaints generates billions of additional costs for the health system – costs that may take place in the form of higher consumption premiums, according to a new analysis.
• The independent settlement of disputes, or IDR, created total costs of $ 5 billion between its creation in 2022 and the end of last year, according to the report published in Health Affairs on Monday. The high amount of complaints, the significant participation of service providers and the high amounts of offers are expenses, according to researchers.
• Analysis raises questions to decision -makers concerned about reducing health care costs. In particular, Washington should consider tackling the high volume of ineligible disputes obstructing the process – and examine the role of investment capital, since suppliers supported by companies are responsible for a disproportionate part of disputes, researchers said.

Diving insight:

The surprise law was adopted in 2020 to hold consumers without blame for unstoppated and inevitable off -network invoices. The law has largely succeeded in a patient’s point of view, eliminating a wide strip of balance invoices and reduction of cost sharing payments.

But no surprise has also proven an important headache for insurers, service providers and regulators due to the dispute settlement process intended to help insurers and suppliers arrive at equitable payment for non -network complaints.

If the parties cannot reach an agreement during an informal negotiation period, the two parties deposit what they believe that a fair price would be for this medical service and a third party arbiter certified by government choices between the two offers.

The United States is now in the fourth year of this configuration. Patients can be protected from unexpected bills, but this also results in significant costs – approximately 2 billion to 2.5 billion dollars each year in additional administrative expenses, higher costs and payments beyond network rates, according to the new analysis of federal data on IDR litigation.

Snowball expenses are motivated by a few trends. Providers and insurers do not resolve the payment negotiations themselves and submit a significantly higher level of complaint in the IDR than the regulators initially planned.

In the rules establishing the IDR, federal agencies estimated that the process would resolve some 17,300 disputes per year. But during the nine months after the start of the IDR in 2022, around 190,000 disputes were deposited – more than ten times the number of regulators expected during a full year.

This rhythm has not abandoned since, leaving the regulators with a backlog of nearly 500,000 disputes in May, according to the analysis.

The providers lay the vast majority of IDR disputes. And these declarants are dominated by some organizations supported by investment capital, which should make warning bells, researchers said. The team’s radiology and health partners represented 43% of all complaints resolved in 2023 and 2024. Overall, the five main supplier organizations were responsible for almost 60% of complaints, according to the analysis.

The high volume of providers’ complaints, associated with the fact that providers earn the vast majority of disputes and tend to receive substantial supply amounts, creates a significant source of higher IDR costs, the researchers said.

In the fourth quarter of 2024, in the disputes where the supplier won, the allocation of median payment was more than four times the eligible payment amount, a metric representing what a plan would pay in a network for a service in a given geographical area, according to the analysis.

Providers say that this asymmetrical assessment shows that the Plan Offer, which is generally closely to the eligible payment amount, is unjustly low. However, insurers compress that some bad players take advantage of the IDR process to inflate their reimbursement and take advantage of staying out of network.

All in all, the Congressional Budget Office originally assumed that IDR rewards would be modest and that the process would contribute to a drop in premiums by creating downward pressure on negotiations between insurers and providers.

But “the results of the IDR to date can reverse this expectation,” Jack Hoadley and Kennah Watts, researchers from the Center on Georgetown health insurance reforms and the reports of the report, wrote.

Hoadley and Watts suggested that the situation could worsen without action to brake the IDR, which could actually end up increasing the premiums.

“As the volume of disputes increases, the costs too,” they wrote. “Over time, future negotiations for network contracts could reflect the higher amounts awarded by IDR.”

However, legislators and regulators have a number of political levers to which they can turn to prevent this result, according to Hoadley and Watts. This includes reducing the submission of ineligible disputes, such as modifying the IDR portal to help filter these cases.

The decision -makers could also follow the open negotiations more closely between payers and providers before entering IDR to try to understand why cases are not resolved in informal discussions. They could also prioritize the creation of more transparency and consistency among IDR entities to try to limit high -level payments to suppliers – and examine why such a large volume of disputes comes from groups of suppliers supported by investment capital companies, said Hoadley and Watts.

This last concern is already a source of proceedings against insurers. This spring, Elevance continued two Georgia providers and their Halomd billing company for having allegedly flooded the arbitration process with thousands of ineligible disputes in order to take advantage.

It is a series of legal proceedings in recent years, no surprises – many providers’ associations trying to influence the factors that arbitrators are authorized to take into account to decide on an equitable payment amount.

The proceedings have generally succeeded in the service providers, reorganizing the dispute settlement process and contributing to the current backwards in disputes because the HHS had to take a break and restart the IDR several times to comply with judicial decisions.