First-Year Surprise Billing Statistics Reveal High Claims Volume, Backlogs, and Eligibility Questions | Practical Law

First-Year Surprise Billing Statistics Reveal High Claims Volume, Backlogs, and Eligibility Questions | Practical Law

On April 15, 2022, a federal portal was launched for parties to submit payment dispute claims involving the No Surprises Act's (NSA's) surprise medical billing rules. On April 27, 2023, the Departments of Labor (DOL), Health and Human Services (HHS), and Treasury issued usage statistics reflecting nearly a full year of operations of the federal portal. The Departments also issued a Q4 2022 report addressing surprise billing utilization statistics.

First-Year Surprise Billing Statistics Reveal High Claims Volume, Backlogs, and Eligibility Questions

by Practical Law Employee Benefits & Executive Compensation
Published on 02 May 2023 • USA (National/Federal)
On April 15, 2022, a federal portal was launched for parties to submit payment dispute claims involving the No Surprises Act's (NSA's) surprise medical billing rules. On April 27, 2023, the Departments of Labor (DOL), Health and Human Services (HHS), and Treasury issued usage statistics reflecting nearly a full year of operations of the federal portal. The Departments also issued a Q4 2022 report addressing surprise billing utilization statistics.
The Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (collectively, Departments) have issued a report of usage statistics reflecting nearly a full year of operations of the federal portal for initiating surprise medical billing claims under the No Surprises Act (NSA) (HHS Status Update (Apr. 27, 2023)). The federal portal was launched just over a year ago (on April 15, 2022) for use by group health plans, health insurers, and health providers in submitting payment dispute claims involving the surprise billing rules. The report concludes that the first year of portal operations was characterized by:
  • A higher-than-expected volume of disputes.
  • An ongoing backlog of claims.
  • Confusion over whether disputes were eligible for the federal independent dispute resolution (IDR) process under the NSA.
In addition, the Departments issued a partial report for the fourth quarter of 2022 (Q4 IDR Report (Apr. 27, 2023)).
For more information on the NSA and federal IDR process, see:

Federal IDR Process for Payment Disputes

As background, the NSA's federal IDR process is for use by group health plans, insurers, and providers in determining out-of-network (OON) rates for:
  • Emergency services.
  • Non-emergency items and services delivered by OON providers at in-network facilities.
  • Air ambulance services furnished by OON providers of air ambulance services.
The federal IDR process can be invoked by a party after:
  • A provider receives an initial payment (or notice of payment denial) from a plan or insurer regarding an NSA-covered item or service.
  • The parties do not agree on a payment amount using an open negotiation process.
In October 2021, the Departments issued interim final regulations (IFRs) addressing the NSA's IDR process and related issues (see Legal Update, Departments' IFRs Address Independent Dispute Resolution (IDR) Procedures and Surprise Medical Billing). In August 2022, the Departments issued final regulations and guidance addressing, among other topics, payment determinations under the federal IDR process (see Legal Update, Surprise Medical Billing Guidance Includes Final Regulations, FAQ Guidance, and More).

Publication of Information Relating to IDR Process

For each quarter in 2022 and later years, the Departments must disclose on a public website:
  • The number of initiation notices submitted by parties during a quarter to request the IDR process.
  • The size of the provider practices and facilities that submitted notices to access the IDR process during the quarter.
  • The number of notices for which a determination was made.
  • Specified information for each notice for which a determination was made.
  • How many times the payment amount determined (or agreed to) was more than the QPA amount for a particular item or service (see Practice Note, Surprise Medical Billing for Group Health Plans: Qualifying Payment Amounts (QPAs)).
  • How much it costs the Departments per quarter to carry out the IDR process.
  • The total amount of fees during the quarter.
  • The total amount of compensation paid to IDR arbitrators during the quarter.
(See Q4 2022 Report on IDR Process.)

Status Update on First Year of IDR Process

HHS's status update report covers the period beginning April 15, 2022 (the date the online federal IDR portal was launched) and ending March 31, 2023. During this time, the federal portal received more than 334,800 disputes—a caseload that is nearly 14 times more than the Departments expected for this period. According to the report:
  • Non-initiating parties raised an eligibility challenge in over 122,700 disputes (almost 40,000 of which were determined to be ineligible for the IDR process).
  • Over 106,500 disputes were closed (more than four times the number expected). Of these disputes, IDR arbitrators made payment determinations in more than 42,000 disputes.
Setting aside disputes that resulted in payment determinations, some of the remaining disputes were closed because the parties withdrew from the process, reached a settlement, or failed to pay fees involving the IDR process.
In addition, the Departments noted that IDR arbitrators sometimes struggled to determine whether disputes were eligible for the IDR process, which resulted in a backlog of payment determinations. Eligibility for the federal IDR process may depend on factors such as:
It may be more difficult for an IDR arbitrator to make its eligibility review if the parties have not provided all the information required to properly initiate the IDR process. In response to eligibility-related delays, the Departments:
  • Updated the dispute initiation form to request enough information to identify items or services at issue (for example, claims numbers and plan types) and the parties to the dispute.
  • Instructed parties to attach documents demonstrating eligibility for the IDR process at the outset.
  • Hired a contractor and government staff to perform pre-eligibility reviews.
  • Provided outreach and additional technical assistance regarding eligibility determinations by IDR arbitrators.
The Departments are also considering additional rulemaking to improve the eligibility determination process so that IDR arbitrators can make payment determinations more quickly.

Advantage to Initiating Parties

Of the more than 42,000 disputes for which payment determinations were made as of March 31, 2023:
  • Initiating parties prevailed in roughly 71% of the disputes.
  • Non-initiating parties prevailed in the remaining 29% of disputes.

Q4 2022 Report on IDR Process

The Departments also issued a report addressing IDR process information from October 1 to December 31, 2022. The Departments published a partial report (covering Q4 2022), rather than a full-year report, to reduce the administrative burden on IDR arbitrators and the Departments of manually collecting and processing data from the federal portal. The Departments plan to issue a full report once the portal's reporting functionality becomes more automated.
The Departments' 2022 Q4 report includes:
  • The overall number of payment determinations and dispute closures, which was higher than in prior quarters.
  • An explanation of the difficulties IDR arbitrators faced when trying to assess eligibility for the federal IDR process, including determining whether a disputed item or service was subject to the IDR process or a state All-Payer Model Agreement.
  • Breakdowns of disputes by state and the types of items or services in dispute.
During Q4 2022, for example, disputing parties initiated more than 110,000 disputes, which was:
  • Significantly more than the Departments initially expected for an entire year.
  • A 53% increase in dispute volume compared to Q3 2022 (roughly 72,000 disputes).
Most disputes were submitted by OON health providers and facilities.
During Q4 2022, IDR arbitrators reached payment determinations in more than 12,500 disputes (that is, 40% of closed disputes). IDR arbitrators also found more than 9,500 disputes (30% of closed disputes) to be ineligible for the IDR process. As reflected in HHS's status update report, many of the claims that remained unresolved were due to disagreements over whether a given dispute was eligible for the federal IDR process. During Q4 2022, non-initiating parties challenged the eligibility of approximately 40% of initiated disputes (that is, 42,500 disputes).
As another complicating factor, many payments disputes were submitted with missing or incorrect contact information for the non-initiating party, missing QPAs, or missing proof of open negotiations.