By Sabrina Corlette, Jack Hoadley, Maanasa Kona, and Madeline O’Brien

Under the “No Surprises Act of 2020,” patients are no longer held financially responsible for surprise medical bills, which typically occur when a health care provider who is not in a patient’s insurance network bills for services at a higher rate than an in-network provider. Congress has charged the U.S. Departments of Health & Human Services, Labor, and Treasury with creating a national independent dispute resolution (IDR) system to resolve disagreements over payment between health care providers and insurers before the law takes effect in January 2022.

Eighteen states have enacted comprehensive protections against surprise balance billing. Fourteen of these use an IDR process to resolve provider-payer disputes. As federal regulators establish the criteria and processes for a national IDR system, they can learn from the experiences of these states. Researchers from Georgetown University’s Center on Health Insurance Reforms (CHIR), with support from the Robert Wood Johnson Foundation, carefully examined the IDR systems and reported outcomes in four states—Colorado, Washington, Texas and New Jersey—and highlight key differences.

• In Colorado and Washington, where providers sparingly resort to arbitration, physicians report that the risks of the arbitration process outweigh the benefits. Physicians in Colorado risk paying arbitration costs in full if they lose the dispute.
• In Texas and New Jersey, states that see an exceptionally high rate of disputes, the arbitration process more often tilts in favor of providers. One factor could be that arbitrators in both states consider the provider’s full billed charge, which is not competitively determined.

Federal regulators must consider a range of IDR approaches and outcomes, as well as various market and competitive forces at play in states across the U.S., to build a fair and effective federal IDR structure.

Read the full brief here.