Independent Dispute Resolution (IDR) Process Growing Pains Feature Prominently in GAO Report 

In December 2023, the U.S. Government Accountability Office (GAO) issued a report to Congress, aptly named "Private Health Insurance – Roll Out of Independent Dispute Resolution Process for Out-of-Network Claims Has Been Challenging," to satisfy part of its review and reporting obligations under the No Surprises Act (NSA) provisions of the Consolidated Appropriations Act, 2021 (CAA). Here are some takeaways from the report.

The Numbers

Nearly 490,000 disputes were initiated from the opening of the IDR portal in April 2022 through June 2023. Ninety-five percent involved out-of-network emergency items and services or non-emergency items and services provided at an in-network facility, leaving only a small minority focused on out-of-network air ambulance claims. This volume far exceeds the federal government's estimate of 22,000 disputes for 2022 contained in the October 2021 interim final rules implementing the NSA. 

Sixty-one percent of the open disputes were unresolved as of June 2023. Of the disputes closed, approximately 53 percent resulted in payment determinations and 30 percent were determined ineligible for the IDR process. Parties initiating IDR prevailed in 77 precent of the disputes ending in a payment determination.

Medical practices and medical management companies initiated 84 percent of IDR disputes involving out-of-network emergency items and services or non-emergency items and services provided at an in-network facility. The balance of the disputes came from health care provider facilities such as ambulatory surgery centers and in-patient hospitals and group health plans and health insurance issuers, among others.

There were more than 500 unique initiating parties for disputes involving out-of-network emergency and non-emergency services or items. The top 10 parties initiated over 70 percent of these disputes as of December 2022 and include large practice management companies and medical practices representing hundreds of individual practices, providers, or facilities. During this period, the top non-initiating party was involved in about one quarter of the disputes.

Process Issues

Disputes initiated with missing or incorrect information and documentation hampered eligibility determinations and created delays in dispute processing. Pending federal rulemaking is designed to address some these information and documentation deficiencies. 

Applicable state surprise billing laws and All Payer Model Agreements in 21 states also complicated and delayed eligibility determinations, as IDR entities had to determine whether disputes were subject to state laws and procedures or the federal IDR process. Two-thirds of the disputes submitted to the federal IDR portal in 2022 involved items or services rendered in these states.

Difficulty understanding and applying IDR batching rules also contributed to dispute processing delays. These rules have been the subject of repeated changes in agency guidance and technical assistance and successful legal challenges in court.

Few disputes are resolved during the open negotiation period. Non-initiating parties voiced concern about the burden of sorting through the high volume of claims submitted during open negotiation given the large percentage of them that are ultimately found ineligible for the federal IDR process. Both initiating and non-initiating parties cited the lack of responsiveness and engagement of the other side as a reason open negotiation is "not meaningful."

Some providers are questioning the "lack of transparency" of qualifying payment amount (QPA) calculations, claiming QPAs are not being adjusted for inflation and "seemed artificially low." The report notes government officials have not released any reports relating to their audits of issuers' QPA calculations.

Everyone seems to agree the IDR portal is not user-friendly, or effective as it could be, and that there is a lack of uniformity in IDR decision-making.

Payors described payment determinations being made by default because the provider entered incorrect contact information or failed to include a claim number in the IDR portal. In such cases, payors don't know about the dispute or determination until they are contacted for payment.

The IDR process has not fostered an increase in in-network contracting.

Oversight

The Centers for Medicare and Medicaid Services (CMS) and U.S. Department of Labor (DOL) oversee the IDR process through complaint reviews and market conduct exams. Complaints are received through a help desk and routed to the appropriate overseeing agency. CMS oversight focuses on certified IDR entities, non-federal government plans, and issuers and providers in states where CMS has enforcement authority with respect to the IDR provisions. DOL oversees employer-sponsored group health plans. 

Most complaints against issuers and plans relate to late payments and most complaints against IDR entities relate to eligibility determinations, payment determinations and non-compliance with deadlines. As of May 2023, CMS received 281 complaints against IDR entities and 115 complaints against issuers or providers under CMS jurisdiction. Approximately 40 percent of those complaints remain under investigation. 

CMS is conducting QPA audits as part of the agency's market conduct audits, which may be based on complaints. CMS has initiated 23 QPA audits as of July 2023 and plans to release an audit report in the future. DOL directs complaints relating to employer-sponsored group health plans to a DOL benefit advisor, whose aim it to achieve voluntary compliance. DOL is not separately tracking the number of complaints it received related to the IDR process and the GAO report provided no information regarding DOL enforcement audits in this area. 

Private Equity

GAO states in Appendix I of the report that six of the top 10 initiating parties submitting emergency and non-emergency disputes were owned, at least in part, by private equity firms, accounting for 46 percent of the disputes submitted in 2022. Five of the top 10 parties initiating air ambulance disputes were owed, at least in part, by private equity firms, accounting for 66 percent of air ambulance disputes submitted in 2022.

New State Laws Impacting Health Plans 

We expect to see state legislatures continue to enact laws that impact health plans in a variety of ways in the new year. Below are a handful of notable statutes that recently went into effect.

Connecticut

Section 340B of the federal Public Health Service Act (PHSA) requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to health care organizations that care for many uninsured and low-income patients. Pursuant to Connecticut HB 6669 (2023), as of January 1, 2024, agreements between pharmacy benefit managers (PBMs) and 340B-protected organizations can no longer contain: a reimbursement rate for a prescription drug that is less than the rate paid to non-340B pharmacies; a fee or adjustment not required for non-340B providers or pharmacies; a fee or adjustment that "exceeds the fee or adjustment amount" enforced for non-340B providers or pharmacies; "any provision that prevents or interferes with a patient's choice to receive a drug from a 340B-covered entity"; or any provision that excludes a 340B-covered organization from the PBM's network based on participation in the 340B program. 

Florida

SB 1550 (2023) provides that, as of January 1, 2024, a PBM operating in Florida must hold a state-issued "certificate of authority" to act as an "administrator" or risk facing hefty fines under a comprehensive law seeking to improve accountability among the entities that manage prescription drug benefits. A PBM is defined as "a person or an entity doing business in [Florida] which contracts to administer prescription drug benefits on behalf of a pharmacy benefits plan."

Maine

LD 935 (2023) provides that private health plans cannot impose any deductible, copayment, coinsurance, or other cost-sharing requirement for the costs of abortion services. These requirements "apply to all policies, contracts and certificates executed, delivered, issued for delivery, continued or renewed in [Maine] on or after January 1, 2024."

New Mexico

Pursuant to HB 53 (2023), group health plans issued on or after January 1, 2024, must cap out-of-pocket costs for insulin at $25 for a 30-day supply. The law also requires that plans provide access to certain "equipment, supplies and appliances to treat diabetes," such as blood glucose monitors, injection aids, and "medically necessary podiatric appliances." 

Pennsylvania

As of mid-2024, section 2153 of Act 146 (2022) requires insurers in Pennsylvania to have in place an electronic communications network that allows prior authorization requests to be submitted and returned electronically. Through an insurer's "provider portal," a provider must also be able to access the insurer's applicable medical policies and obtain information about requesting a peer-to-peer review.

Virginia

And under Virginia HB 2354 (2023), any carrier that offers provider panels (i.e., providers with which a carrier contracts to provide health care services to the carrier's enrollees under the carrier's health benefit plan) must, as of January 1, 2024, implement procedures for notifying enrollees when a provider is no longer part of the carrier's panel, among other required notifications.

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