No Surprises Act Independent Dispute Resolution Drives Up Healthcare Costs in America

This video provides an in-depth exploration of the unintended consequences of the No Surprises Act (NSA) Independent Dispute Resolution (IDR) process on employer-sponsored health insurance and overall healthcare costs in America. Dr. Eric Bricker begins by reviewing the original intent of the NSA, which was enacted approximately four to five years ago to protect patients from receiving unexpected "out-of-network" bills when they sought care at "in-network" facilities. This typically occurred with ancillary services like radiology, emergency room physicians, anesthesiologists, pathologists, and surgical assistants who might be out-of-network even if the hospital itself was in-network. The NSA mandated that instead of billing the patient, the insurance carrier and the physician group must resolve payment disputes directly.

The core issue arises when the insurer and provider cannot agree on a payment amount, leading them to the federal government's IDR process, which functions as a "baseball-style" arbitration. In this system, both parties submit their "best offer," and the arbitrator must choose one offer in its entirety, rather than splitting the difference. The video highlights a significant volume of these disputes, with approximately 300,000 cases per quarter, a number that has been steadily increasing. Alarmingly, providers (physician groups) win 80-85% of these cases. The financial impact is substantial: providers are winning amounts that average 4.5 times the Qualified Payment Amount (QPA), which is typically the median in-network reimbursement rate. Specific examples cited include radiologists winning 6 times the QPA and neurosurgeons winning 11 times the QPA, translating to significantly higher multiples of Medicare rates. One extreme case mentioned was a surgical assistant receiving a $200,000 payment for a single operation through the IDR process, directly contributing to an employer's budget overrun.

Dr. Bricker further explains that a relatively small number of physician groups, predominantly those owned by private equity firms (such as Radiology Partners, TeamHealth, and SCP), are driving the majority of these IDR cases. He asserts that these private equity-owned entities are solely focused on maximizing profits and have no interest in lowering healthcare costs, effectively exploiting the IDR process to increase reimbursements. The video also scrutinizes the arbitrators themselves, who are outsourced contractors to the federal government. There are about 15 such contractors, and their provider win rates vary dramatically, from as high as 90% to as low as 33%, with the majority leaning towards higher provider favoritism. This variability suggests that parties strategically select arbitrators known to be favorable to their side. The speaker concludes by offering actionable advice for self-funded employers to mitigate these rising costs, emphasizing their fiduciary responsibility to plan members.

Key Takeaways:

• No Surprises Act's Unintended Consequences: While designed to protect patients from surprise out-of-network bills, the NSA's Independent Dispute Resolution (IDR) process has inadvertently led to a significant increase in healthcare costs for employer-sponsored insurance due to inflated provider reimbursements.
• IDR Process Mechanics: The IDR process is a "baseball-style" arbitration where an independent arbitrator chooses one of two offers (from the insurer or the provider) without compromise, leading to binary, often high-value, outcomes.
• High Provider Win Rates and Inflated Payments: Providers win 80-85% of IDR cases, securing payments that average 4.5 times the Qualified Payment Amount (QPA), which is the median in-network rate. This significantly exceeds standard in-network rates.
• Exorbitant Reimbursement Examples: Specific instances include radiologists winning 6 times the QPA, neurosurgeons winning 11 times the QPA, and a surgical assistant receiving $200,000 for a single operation through IDR, directly impacting employer budgets.
• Private Equity's Role in Cost Escalation: A small number of private equity-owned physician groups (e.g., Radiology Partners, TeamHealth, SCP) are aggressively utilizing the IDR process, driven by a profit motive that actively contributes to rising healthcare costs.
• Geographic Concentration of IDR Activity: The majority of IDR cases and associated high costs are concentrated in specific states, identified as hotspots for provider fraud: Texas, Florida, New Jersey, New York, Arizona, Tennessee, and Georgia.
• Arbitrator Transparency and Bias Concerns: There are approximately 15 federal contractors acting as arbitrators, with highly variable provider win rates (some as high as 90%). This lack of transparency and potential for bias warrants investigation, as parties may strategically select arbitrators.
• Employer Fiduciary Responsibility: Self-funded employers have a fiduciary responsibility to their plan members to be good stewards of their health plans, which includes actively monitoring and addressing the financial impact of the IDR process.
• Actionable Advice: Demand Claims Data: Employers should demand that their insurance carriers identify claims that have gone through the IDR process to quantify costs and pinpoint "offending" provider groups and associated hospitals. Carriers may initially resist providing this data.
• Actionable Advice: Steer Employees Away: Employers can implement plan designs, direct primary care referrals, and direct contracting strategies to steer plan members away from hospitals and facilities that employ out-of-network provider groups known for high IDR wins.
• Actionable Advice: Lobby for Congressional Oversight: Employers should contact their congressional representatives to advocate for public hearings and investigations by the Department of Justice and CMS into the arbitrators and the IDR process, questioning the appropriateness of the lopsided judgments.
• Disparity in Provider Financial Health: The video highlights that while some rural hospitals may be struggling, certain provider groups, particularly in specific states, are "raking it in" through these processes, indicating a significant financial disparity within the provider landscape.
• Systemic Exploitation: The speaker emphasizes that the current IDR system is being exploited by certain entities, and without proactive measures from self-funded employers and government oversight, this exploitation and the resulting increase in healthcare costs will continue.

Key Concepts:

• No Surprises Act (NSA): Federal legislation designed to protect patients from unexpected medical bills from out-of-network providers at in-network facilities.
• Independent Dispute Resolution (IDR): The arbitration process established by the NSA for resolving payment disputes between insurance carriers and out-of-network providers when they cannot agree on a payment amount.
• Qualified Payment Amount (QPA): The median in-network rate for a service, often used as a benchmark in payment negotiations and IDR cases.
• Self-funded Employer: An employer that directly assumes the financial risk for providing healthcare benefits to its employees, rather than purchasing health insurance from a third-party carrier.

Examples/Case Studies:

• Specific Reimbursement Multiples: Radiologists receiving 6 times the QPA; neurosurgeons receiving 11 times the QPA.
• High-Cost Surgical Assistant Claim: A single surgical assistant's bill for one operation resulted in a $200,000 payment through the IDR process for a self-funded employer.
• Private Equity Firms: Radiology Partners, TeamHealth, and SCP are named as examples of private equity-owned physician groups heavily utilizing the IDR process.
• Geographic Hotspots: Texas, Florida, New Jersey, New York, Arizona, Tennessee, and Georgia are identified as states with high concentrations of IDR cases and provider fraud.