Insurers point to provider misuse of surprise billing arbitration

Providers submitting ineligible claims

Under the NSA, out-of-network providers and payers can submit surprise billing disputes to the federal IDR process if the items or services on the claim are out-of-network emergency services, out-of-network non-emergency services provided at an in-network facility or out-of-network air ambulance services.

Additionally, surprise billing disputes for qualified items and services must follow procedural requirements, the report pointed out. Those include timing requirements, rules for batching or bundling multiple claims, parties participating in an open negotiation period and determinations under applicable state laws.

However, the data from AHIP and BCBSA found that, of the 1.23 million surprise billing disputes submitted through the federal IDR process in 2024, approximately 39% were ineligible based on the requirements stated above, including 45% of non-emergency service disputes.

The report stated that there "is a stark divide" between disputes considered ineligible by payers and those by IDR entities, which operate the process and make payment determinations. Payers identified and challenged almost 40% of disputes as ineligible, largely based on missed timing requirements or lack of required information.

Meanwhile, IDR entities deemed just 17% of disputes as ineligible, including about 15% of emergency, 19% of non-emergency and 10% of air ambulance service disputes.

Common reasons payers identified claims as ineligible included:

• Claims included services payable under Medicare or Medicaid;
• Disputes were already resolved through IDR and resubmitted;
• Disputes involved in-network providers; and
• Claims were already subject to a state surprise billing law.

Consequences of a broken system

The current federal IDR process is broken, according to the report. AHIP and BCBSA researchers found that payers are making timely payments to out-of-network providers despite a high volume of ineligible claims. In 2024, health plans paid about three out of four claims within 30 days, the report found.

Researchers said that payments for ineligible services are adding to premiums and wasteful healthcare spending. Inefficiencies identified in the report are also "straining the system, and some provider groups see an opportunity to extract higher payments."

The findings call for reform to the federal IDR process, they added, including clearer eligibility standards, enhanced oversight and accountability by regulators, realigned incentives through required fees, better screening of disputes at the front end and improved IDR operations.

However, providers have called out the burdens payers have put on the federal IDR process. Industry stakeholders have argued that payers have systematically made low payment offers, triggering greater use of the arbitration process to resolve claim disputes.

Providers have also complained of missed or delayed payments following an IDR entity's final payment determination. Nearly half of claims were paid late, according to survey results from the Americans for Fair Health Care, which polled more than 48,000 physicians.

Private equity's role in IDR problems

The report points fingers at out-of-network providers for submitting large volumes of ineligible claims and gaming the system for higher payments for disputed services. However, these providers tend to be backed by private equity firms, research shows.

Industry stakeholders have alleged that private equity-backed providers have more aggressively pursued the federal IDR process. In fact, an analysis out of Georgetown University last month found 43% of resolved line-item claims in 2023 and 2024 were filed by two private equity-backed provider organizations: Radiology Partners and affiliates (28%) and Team Health (15%). The analysis also identified a higher volume of filings through middleman organizations, like HaloMD.

Some payers have gone after private equity-backed organizations, suing them over their alleged misuse of the federal IDR process.

"On average, the IDR process resulted in payments 400% above and as high as 10 thousand percent above contracted rates -- with many instances far exceeding that amount," said BCBSA President and CEO Kim Keck. "Unchecked, these wasteful practices drive up everyone's premiums. It's time to restore balance and transparency to this process, and The Blues stand ready to work with policymakers on commonsense reforms."

Meanwhile, two air ambulance providers asked the U.S. Supreme Court earlier this month to enforce payment determinations made via the federal IDR process following ignored, delayed and incorrect payments made by payers.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.