Listen to this articleA law passed by Congress to protect patients from massive, surprise medical bills is now putting growing financial pressure on small healthcare practices and, according to legal and medical experts, could lead to higher overall market costs.
With forecasts for higher healthcare-related expenses in New York in the coming year, the effects of the federal “No Surprises Act” are getting urgent, renewed scrutiny.
Intended to protect patients and streamline payments, the act has left small healthcare providers saying that, two years later, they are struggling with delayed or reduced payments and no effective way to challenge insurers and arbitrators in a “take-it-or-leave-it” reimbursement system.
Disputes between providers and insurers are now winding their way through federal courts—on a course that could eventually land the matter before the U.S. Supreme Court.
At issue is a part of the No Surprises Act that calls for an Independent Dispute Resolution system with third-party arbitrators when out-of-network providers and insurers can’t agree on compensation amounts.
“At the end of the day, there’s a lot of out-of-network providers waiting a very long time to get reimbursed, and they’re owed millions of dollars,” said Roy Breitenbach, healthcare industry team leader for law firm Harris Beach, which has offices in Uniondale.
Experts say larger commercial health organizations benefit from greater leverage in negotiations and arbitration awards, while smaller providers lose out. And when a healthcare provider is at the losing end of an arbitration award, there is no current avenue for appeal.
Breitenbach and others say they are stuck with lower reimbursements, and getting paid takes longer than many can afford.
Elizabeth Stachtiaris is a Long Island-based physician who is also an attorney, a law professor, and a member of the Hofstra Legal Medical Partnership, said the larger institutions are advantaged in the process.
“The big (providers) are just much more successful at negotiating than smaller ones,” she said. “More powerful institutions can enter the dispute resolution process, even though it’s supposed to be quick but is often backlogged. They go into it with a lot of negotiating power, which they already had because of their existing relationships with insurance companies.”
So while saving patients from medical billing sticker shock: “Are the smaller institutions getting disadvantaged?
“They can’t really compete anymore. So the big practices are buying out the smaller ones,” Stachtiaris said; the No Surprises Act, with lengthier wait times for payment and smaller reimbursement amounts, just adds to the pressure independent providers have.
“What’s the future of medicine? Is this act indirectly going to harm smaller practices?” Stachtiaris asked.
And patients who were supposed to be protected from the federal act may still wind up impacted.
“Rather than fully protecting commercial insurance enrollees from balance billing, the No Surprises Act mostly just takes them out of the fight between providers and insurers in regard to setting out-of-network rates,” said Mark Ustin leader of Farrell Fritz’s Healthcare Practice and head of the firm’s Albany office.
“But patients are still not entirely shielded from disputes between providers and insurers, as they are still responsible for any applicable cost-sharing like copayments or deductibles–so what they pay may still change based on what providers and insurers ultimately agree upon.”
Disputes are growing in numbers.
A December 2023 Government Accountability Office (GAO) report revealed that the IDR system is overwhelmed. Nearly 490,000 disputes were submitted between April 2022 and June 2023, way more than initially thought.
“The federal system…has been a disaster,” Breitenbach said.
Adding to the woes of small providers, many are not being paid even when they win in arbitration. Insurers are required to pay within 30 days of a decision but often fail to do so. “There’s a lot of out-of-network providers waiting a very long time to get reimbursed,” Breitenbach said. Without penalties for late payments, insurers can delay with little consequence.
Breitenbach said he has filed some litigation on behalf of health providers down this road.
“What we’re arguing is that when the plans don’t pay within the required 30 days, they’re basically stealing the provider’s money,” Breitenbach said.
But if a provider loses in arbitration through the IDR process, their only recourse is federal court – a costly and slow option.
“The appeals process is murky…courts have been all over the place about whether they have jurisdiction,” Breitenbach said. This leaves small providers with no meaningful way to challenge unfavorable decisions.
At least one case—involving an emergency medevac company in a dispute over its own reimbursement—has sued, pointing out flaws in the IDR process. The plaintiff—Guardian Flight LLC—filed its appeal last week before the Fifth Circuit Court of Appeals against Health Care Service Organization.
The plaintiffs argue that when negotiations between a provider and an insurer fail, and an IDR reaches a decision on how much is to be paid, there should be an avenue of appeal. If the case winds up before the Supreme Court, it will at the very least bring heightened scrutiny.
Ustin acknowledges that while some providers win in arbitration, the volume of disputes and delays create serious financial strain. “It is difficult to determine what the actual financial impact of the federal No Surprises Act on providers has been,” he said.
For many, the cost of waiting for payments is unsustainable.