More Than One-Fifth Of Insurers Failed To Pay No Surprises Awards Last Year, Provider Lobby Says

A provider lobby is catalogueing the ways insurers are allegedly taking advantage of federal legislation preventing surprise bills in the latest industry salvo over the implementation of the No Surprises Act.

Americans for Fair Health Care, an advocacy group for providers around surprise billing issues, published a report surveying more than 30,000 physicians about their experiences dealing with insurers last year.

AFHC found a number of concerning statistics, including insurers failing to honor payment determinations or delaying reimbursement and stretching out the negotiation process, essentially requiring providers to float them revenue in the meantime.

Insurers are also continuing to cancel contracts with providers, forcing them out of network, according to the survey. As a result, many providers have to rely on the framework for billing negotiations set up by No Surprises, called independent dispute resolution or IDR, for reimbursement, AFHC said.

“Insurers’ persistent contract terminations, payment cuts and delays, patient burdens, and compliance failures are forcing physicians to seek fair treatment through the IDR process,” said Eric Berger, AFHC executive director, in a statement.

No Surprises, which went into effect in early 2022, protects consumers from unexpected medical bills after receiving out-of-network care at an in-network facility or other surprise situations. It does so by holding them blameless for any charges, and requiring insurers and providers to decide how much the provider should be reimbursed for a member’s care.

If they can’t do so themselves, the dispute comes before a third-party arbiter, who reviews a payment offer submitted by each side before picking one of the two amounts.

In the first half of 2023, providers won more than three-fourths of payment determinations.

Yet the AFHC survey found that many insurers are still failing to pay IDR awards altogether, though the rate has lessened somewhat from last year’s survey.

In 2022, providers reported that insurers failed to pay 52% of determinations. That fell to 22% last year, though the finding is still illustrative of continued abuse, the AFHC spokesperson said.

Powerful insurance lobby AHIP implied the AFHC’s results could be skewed due to the group’s backing. AFHC is comprised of physician practices such as Envision Healthcare and TeamHealth that have been accused of remaining out of network with insurers as a business strategy.

“Americans for Fair Health Care is run by the private equity-backed provider groups that are directly benefiting from arbitration,” an AHIP spokesperson said over email.

For their part, insurers have accused providers of sending large numbers of claims through IDR to try and garner higher reimbursement than the fair market value of their services.

AFHC’s survey also found that 94% of insurers were submitting qualifying payment amounts — an important metric that helps determine how much providers eventually get paid —  at or below Medicare rates.

Providers have argued IDR’s reliance on QPAs, which represent the median in-network charge for a service in a specific geographic area, skews the process toward insurers, since insurers are the ones setting the rates.

How heavily the QPA factors into the dispute resolution process has been at the center of multiple suits against the government.

As a result of the lawsuits, regulators have had to pause and restart the dispute resolution process multiple times over the last two years. That’s contributed to a backlog in claims, putting more stress on the IDR system. Regulators say they’re facing a growing mountain of disputes, after receiving more requests for arbitration than anticipated.

Insurers’ actions are forcing providers into IDR, according to AFHC. However, the group’s second annual analysis of No Surprises also found some insurer actions were abating compared to 2022, especially around the threat of termination.

In 2022, 100% of providers said insurers threatened to end their contract. That fell to 53% last year, AFHC found.

The group attributed the decline to fewer contracts benefiting providers surviving 2022’s cull. Contract negotiations are traditionally hammered out behind closed doors, but more disputes between payers and providers have been bubbling into the public sphere, a trend providers chalk up to increasingly contentious debates over fair rates.

“Insurers did so much damage to in-network contracts and reimbursement in 2022 that there simply weren’t as many relationships and rates they could disrupt in 2023,” a spokesperson for the group said. “Contract terminations are just one part of the story.”