January 17, 2024
Clinicians Lose more than they Can Expect to Gain when Challenging Insurer Payments Under the No Surprises Act
Reston, VA – A new Harvey L. Neiman Health Policy Institute study found that clinicians who dispute insurer payments under the No Surprises Act (NSA) will typically pay fees in excess of recovered payments. Across affected medical specialties, only one-half to two-thirds of out of network (OON) claims would result in any net return if submitted through the NSA’s Independent Dispute Resolution Process (IDR) process, demonstrating this is not a financially viable option to resolve payment disputes. This American Journal of Roentgenology study was based on 1.5 million commercial OON claims (2017-2021) for individuals covered by a large commercial payer and focused on specialties most affected by the NSA: anesthesiology, emergency medicine, hospitalist, intensivist, laboratory, neonatology, pathology, and radiology.
The federal NSA was enacted to protect patients from surprise medical bills when circumstances were beyond patients’ control. The NSA was widely hailed as an important financial protection for patients in these instances. Before the NSA, many states had implemented laws to protect patients from surprise medical bills, but the NSA established a national minimum standard.
The NSA legislation only dictates patient responsibility for payment, not the insurers’ responsibility for the balance payment for OON provider charges. The IDR process was established to resolve payment disputes between insurers and providers. Specifically, a clinician or practice may submit a claim or group of similar claims to IDR if they believe they were paid below market rates, but there are costs of going through this process.
“Since the NSA became effective in 2022, IDR costs have been fluid. These costs include an administrative fee paid by all parties. This fee was $50 in 2022 and increased to $350 in 2023 before a court ruling reset the fee to $50. Since the government set this fee at $115 for 2024”, said Eric Christensen, PhD, Research Director at the Neiman Health Policy Institute. “In addition, the losing party must pay a fee to the entity that adjudicates the claim and makes a payment determination. These entity fees have increased from $200-700 in 2022 to $200-938 in 2023 to $200-1,173 in 2024. Given the 2024 IDR cost structure, clinicians would need to expect payment recovery of at least $173 to $455 to at least break even from the IDR process.”
The most clinicians could recover is the difference between their charge amount and the Qualified Payment Amount. If they were to recover this full amount, they would break even or recover a portion of the disputed amount for 57% to 74% of claims. Because recovering the full amount charged may be unrealistic, the research team also tested a more modest recovery of one-quarter of this amount. Even in this more realistic scenario, clinicians would break even or better for only one-third to one-half of claims.
“This breakeven range differed by specialty given the differences in the nature and volume of OON claims across specialties,” said Ali S. Raja, MD, the Deputy Chair of the Department of Emergency Medicine at Massachusetts General Hospital and a Professor of Emergency Medicine and Radiology at Harvard Medical School. “For radiologists, we estimate they would at least breakeven for only 11% to 27% of claims. Across the eight specialties examined in the study, laboratory had the lowest breakeven range (8-21%) and neonatology the highest (69-89%).”
“With the IDR process not being a financially viable mechanism to resolve payment disputes in most instances, the IDR rulemaking has favored insurers, as the insurer-determined payment stands absent successful negotiation or an IDR ruling,” said Dr. Raja. “Broadly, clinicians are disadvantaged in network-rate negotiations with payers if they have no reasonable avenue to set their own rates; they lose all bargaining power when negotiating in-network rates with insurers, who are no longer at risk for higher OON rates.”
The researchers used the 2023 IDR claims batching rules to model how many claims could feasibly be submitted together in a single IDR submission. The batching rules dictate the types of claims eligible to be submitted together, in which case the same fee would cover more than one claim; an August 2023 court ruling vacated these rules. The government has proposed new batching rules, which need to be finalized. The study found that by maximizing the number of claims in any batched submission, each batch included only three claims, on average. “The average batch size for 2023 rules provides a useful reference point for the financial viability of future batching rules for IDR submission.”
“Proposed 2024 batching rules allow for broader grouping of claims compared to the 2023 rules, which only allowed batching of claims with the same billing code and modifiers”, said Elizabeth Rula, Executive Director of the Neiman Institute. “The proposed rule for radiology, for example, would allow batching claims in 27 groups. While this would certainly increase the opportunity to batch claims, this increased batching opportunity would be tempered by another proposed rule limiting batches to 25 claims. The government also noted that batching more dissimilar claims would be more complex and time-consuming to adjudicate and likely lead to increased IDR entity fees.”
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About the Harvey L. Neiman Health Policy Institute
The Harvey L. Neiman Health Policy Institute is one of the nation’s leading medical imaging socioeconomic research organizations. The Neiman Institute studies the role and value of radiology and radiologists in evolving health care delivery and payment systems and the impact of medical imaging on the cost, quality, safety and efficiency of health care. Visit us at www.neimanhpi.org and follow us on Twitter, LinkedIn and Facebook.