The Brookings Institution recently published a study on the outcomes under the No Surprises Act arbitration process, finding that the process has tended to result in payouts larger than what Medicare and in-network private insurers would pay providers. Under the No Surprises Act, the amount a patient owes for out-of-network emergency services and non-emergency services delivered at in-network facilities cannot exceed the cost-sharing that the patient would owe for similar in-network services. The law also created an independent dispute resolution (IDR) process to resolve disputes between insurers and providers over payment for impacted out-of-network services.
To conduct the study, Brookings reviewed data on arbitration decisions during the first half of 2023 from the Centers for Medicare and Medicaid Services (CMS). In conducting the review, Brookings analyzed the IDR process to see how much providers and insurers are offering in IDR and what amounts the IDR entities ultimately decide upon.
Brookings reported median figures rather than means because the data include some “extreme outlier decision amounts” that are suspected to be data errors. With a focus on emergency care, imaging, and neonatal/pediatric critical care, median payouts were at least 3.7 times what Medicare would pay.
For emergency care and imaging – categories in which there are estimates of historical mean in-network commercial prices – the median payout was at least 50% higher than the historic most generous payments average for in-network care through commercial plans. For emergency care estimates, they ranged from 2.5 to 2.6 times Medicare’s price while imaging estimates ranged from 1.8 to 2/4 times Medicare’s price.
Brookings also noted that “typical IDR decisions appear more similar to the allowed amounts that insurers historically set for the minority of services delivered out-of-network,” with estimates ranging from 3.9 to 4.7 times Medicare’s prices for emergency care and 2.9 to 3.3 times Medicare’s prices for imaging services. The insurer’s allowed amount does not necessarily reflect the amount the provider collected for the services and neither the allowed amount nor the IDR decision may reflect non-pecuniary costs that providers or insurers may incur with respect to out-of-network care.
This means – in a surprising turn of events and the opposite of what the Congressional Budget Office predicted – the law very well may result in raised in-network prices and insurance premiums. CBO expected IDR decisions would fall close to the qualifying payment amount since it is one of the key factors considered by IDR entities in making decisions. In the disputes analyzed by Brookings, the qualifying payment amount has been lower than the mean in-network rates (absent the law) but as noted above, actual decisions in the dispute resolution process have tended to far exceed the qualifying payment amounts.
Of course, it is not possible to predict whether future rulings will follow the same pattern, so the long-term effect on negotiations between insurers and providers is hard to predict.