Amid a flurry of partisan roadblocks rolling out across Capitol Hill, representatives on both sides of the aisle came together Tuesday to critique federal agencies’ rollout of the No Surprises Act and throw their support behind court-ordered rewrites of independent dispute resolution (IDR) regulations.
During a hearing exploring the “flawed implementation” of the law intended to protect patients from surprise out-of-network healthcare bills, House Ways and Means Committee members probed provider and payer representatives on the pain points affecting their businesses and patients.
Though the law appears to have been largely successful in heading off most of the unexpected bills sent to patients, legislators opened the session by highlighting litigation, narrowing coverage networks and little action toward implementing the “advanced explanation of benefits” reform included in the legislation.
“Agency rulemaking has unfortunately ignored congressional intent,” Ways and Means Chairman Jason Smith, R-Missouri, said during the hearing. “It has created a tilted dispute resolution process that has left medical providers paying more to participate in a process that often forces them to accept artificially low payments with no enforcement guarantee. It has also led to legal challenges that have resulted in significant backlogs and left the process clouded in uncertainty.”
Rep. Richard Neal, D-Massachusetts, the committee’s ranking member, was similarly adamant that federal agencies had undermined “one of the greatest consumer protection reforms in our country’s history.”
Much of the “disappointment” has come from how the agencies had chosen to hinge the IDR process on the qualifying payment amount (QPA)—a focal point in industry debate that the courts agreed tilted in the favor of payers—rather than following the path laid out in the bill, he said.
“When drafting the law, we worked to ensure fairness involved in the payment disputes and we carefully specified factors that should be considered during the independent dispute resolution process,” he said. “As written, this law carefully avoids any one single factor unduly influencing the dispute resolution process. Despite this consideration, the Final Rule for the No Surprises Act strays from the law as written in favor of an alternate approach that overwhelmingly favors one factor instead of the more balanced consideration this committee and Congress fully intended.”
Lawsuits brought by the Texas Medical Association have repeatedly led to court decisions ordering the Department of Health and Human Services to suspend the IDR process until the regulations can be rewritten in light of Congress’ intent. The latest two such decisions have left the IDR process suspended since Aug. 3.
Providers allege narrowed networks, delayed reimbursement
Testimonies given to the committee by industry stakeholders spanned well beyond federal agencies’ stuttering implementation.
Seth Bleier, M.D., vice president of finance for Wake Emergency Physicians, PA, told the representatives that his emergency medicine practice had long been in-network with all of the region’s major insurance companies.
In November 2021, it and other nearby physician groups received letters from one of the major insurers that it would terminate their contracts without “significant cuts” to rates.
“Thankfully this did not come to pass, but we have since had two other payers unilaterally terminate a long-standing contract,” he said. “These insurers are now paying at rates that are up to 70% less than our previous contracts for what are now out-of-network services. These actions have pushed about 9% to 10% of our total patients out of network.”
The now-out-of-network patients represent a third of the practice’s total commercial population “and is a significant reduction in our practice’s reimbursements,” Bleier said. Additionally, the administrative fees and burdens necessary for IDR challenges are “virtually inaccessible” for smaller practices once they are out of network, he said.
“Many smaller practices have been advised by their billing contractors to avoid going through IDR altogether as the costs outweigh the benefits,” he said.
Jim Budzinski, chief financial officer of Wellstar Health System, outlined similar frustrations across his 11-hospital system.
The “problematic” original and rewritten IDR rules outline a process that is tilted in insurers’ favor, is inefficient and gives both sides little insight into why a particular side’s payment offer prevailed, he said.
Centers for Medicare & Medicaid Services (CMS) data suggest that payment determinations were reached in just 15% of submitted cases—Wellstar alone has 8,000 outstanding claims and only a 7% rate of claims that were heard and closed. The system estimates it’s due more than $40 million from payers and has only received reimbursements from payers “on a timely basis” for one of three closed cases.
“At this rate, it will take 20 years to resolve our pending claims,” Budzinski said, while highlighting “batching” and “bundling” rules that add to the volume of claims.
Budzinski went on to argue that the No Surprises Act has “unintentionally encouraged bad payer behavior” by allowing insurers to receive in-network level discounts from providers “without the need for good faith negotiations, and some take discounts below even in-network rates.” This, along with the preferential focus on QPAs and the delayed or dropped IDR petitions, all disincentivize payers from maintaining wide coverage networks, he and other testifying providers told lawmakers.
Wellstar has seen firsthand the actions of large health insurers that refuse to negotiate with the health system, "insist on going out of network and rely on the independent dispute resolution process,” Budzinski said. “We see this as a prime example of how flawed the No Surprises Act implementation has been.”
Payers defend QPA, highlight 'small subset of providers' abusing disputes
Jeanette Thornton, executive vice president of policy and strategy at America’s Health Insurance Plans, and the hearing’s lone payer representative, broadly pushed back on the allegations of empowered insurance companies.
She said that the “lower and more predictable” costs patients are seeing are a direct result of the QPA “that Congress wrote into law as a centerpiece of the No Surprises Act, including as the basis for determining cost-sharing.” She also drew fire from federal agencies’ reliance on the QPA by citing CMS data indicating that the initiating party won their IDR dispute in 71% of cases that reached a final determination.
“At present, CMS estimates the IDR process overwhelmingly favors healthcare providers and air ambulance suppliers,” she said while advocating for a “more balanced” process.
Thornton went on to tell Congress that payers “really strive” to adhere to the law’s requirement that insurers reimburse providers the arbitrated amount within 30 days of a decision. Technical issues involving the federal IDR portal and a general steep learning curve—not any kind of ulterior negotiation motives—are responsible for any delays in payments, she testified.
“The idea that health insurance providers are intentionally withholding required payments to healthcare providers defies our fundamental business model,” she said. “While we advocate for a regulatory structure that incentivizes network participation over IDR, when a provider is owed additional amounts after IDR, because we aim to bring more providers in-network, we have every incentive to view that provider as a potential partner and make timely payments," she said.
Payers, meanwhile, have faced their own administrative burdens from “a small subset of providers” that take advantage of the IDR process by initiating a deluge of disputes, she said. A single company is responsible for almost a third of non-air ambulance disputes, she said, and over half of all emergency or nonemergency services disputes come from just three companies.
“Just as some provider staffing firms disproportionately relied on surprise billing as a business strategy, there is a small, but active number of physician groups disproportionately using—and misusing—the IDR process,” Thornton said. “… It’s not the small mom-and-pop providers that are taking advantage of this. This is large, very well-established, private equity-backed firms.”
Congress and the industry’s goal, she said, should be “discouraging commonplace use of IDR” through stronger agency policymaking that encourages broader health plan network participation, finally implements the “gamechanger” advanced explanation of benefits and, again, balances IDR outcomes to land closer to 50-50.
Thornton’s comments on the IDR program’s misuse appeared to land among lawmakers, like Rep. Lloyd Doggett, D-Texas, who largely came to the sessions with provider and patient concerns front of mind.
“I am concerned about the testimony of all our witnesses—particularly some of the comments [Wellstar’s] Mr. Budzinski made about the cost this has,” Doggett said after asking Thornton to elaborate on the private-equity-backed provider firms. “But it has to be a balance. … I think we can make some improvements, but the focus has to be on the consumer first and foremost.”