Insurer survey finds surprise billing law shielded 9M claims so far as arbitration popular among providers

New data from the insurance industry estimate more than 9 million healthcare claims were subject to surprise billing protections, as a legal battle over how to implement such protections continues. 

Insurer industry groups AHIP and the Blue Cross Blue Shield Association (BCBSA) released a survey Thursday detailing the impact of the No Surprises Act (PDF)—which banned surprise medical bills—since January 2022. The survey showed that providers are using arbitration to settle payment disputes more than originally expected.

BCBSA, which represents 34 Blues plans, called the law a “huge win for patients” based on the new survey data. 

“However, the tens of thousands of arbitration claims filed by providers clearly demonstrate that more needs to be done to ensure that they don’t abuse the system for their financial gain,” said David Merritt, the association’s senior vice president of policy and advocacy, in a statement.

The No Surprises Act took effect Jan. 1, 2022, and effectively banned surprise medical bills. The insurer groups conducted a nationwide survey of plans in the commercial insurance market, including both individual and employer-sponsored plans. 

Overall, 33 insurers were surveyed representing 122 million enrollees. 

The survey showed that 5.3 million claims were eligible for protection under federal law. The groups estimated there were 9 million claims nationwide since January. To arrive at the nationwide estimate, the analysis relied on numbers from the 2021 census on the total number of commercial enrollees.

Of the 5.3 million claims from the survey, 157,889 were submitted for arbitration. 

“The large number of disputes initiated, including thousands of batched claims and many found to be ineligible, indicates many health care providers who were previously able to balance bill patients may now be utilizing the Federal IDR Process to collect above-market reimbursement amounts,” the groups’ analysis argues. “Should this trend continue, health care costs could unnecessarily increase.”

The American Hospital Association told Fierce Healthcare that batching of claims can help improve efficiency of the process and pushed back on the assertion that insurers are largely paying market rates.

The Texas Medical Association said the federal government has acknowledged that the claims submitted for arbitration was far higher than the anticipated, but charged that insurers were the culprit.

"If insurance companies simply made fair opening offers or engaged in good faith negotiations during the open negotiation period, physicians would receive payment faster without incurring any administrative fees relating to the [independent dispute resolution]," said Gary Floyd, president of the Texas Medical Association, in a statement to Fierce Healthcare. 

While the law bans any surprise out-of-network bills, a provider and payer can enter a third-party arbitration process to handle any disputes over such charges. Each party submits its preferred amount, and the arbiter picks one.

How to exactly create this process, though, has caused major disputes between providers and payers. The Biden administration released an interim final rule last year that called for the arbiter to pick the number closest to the qualifying payment amount, which is the geographic average for the service. 

Providers objected that the interim rule flatly contradicted Congress’ intent, wherein lawmakers shied away from relying on a benchmark average rate to handle out-of-network disputes. A federal judge sided with the Texas Medical Association and struck down the interim final rule

The Biden administration put out a retooled final rule back in August that calls on arbiters to put an emphasis on factors beyond just the qualifying payment amount. However, the Texas Medical Association issued a new lawsuit back in September arguing that the final rule still skews too heavily in insurers’ favor. The fate of that federal lawsuit has yet to be decided.