Why Costs Keep Rising

David 0:00

If the No Surprises Act was designed to protect patients from surprise medical bills, why are many employer health plans still quietly paying more than ever? We'll find out on this episode of Shift Shapers.

Announcer 0:15

Change either energizes or paralyzes. The choice is yours. This is the Shift Shapers Podcast, bringing the employee benefits industry interviews with individuals and companies who are shaping the industry shifts. And now, here's your host, David Saltzman.

What IDR And QPA Mean

David 0:35

And to help us unpack that question is Scott Bennett. Scott is Chief Provider Relations Officer at the FIA Group, a national leader in healthcare cost containment and planned fiduciary strategy. Now, Scott and his team recently released a national NSA report analyzing more than 1.25 million federal arbitration disputes, and it gives us one of the most comprehensive looks yet at how the No Surprises Act is actually functioning in the real world. Welcome, Scott. Thanks for being here. Yeah, thanks for having me. So let's start with the big picture. Your report analyzes over 1.25 million federal IDR disputes involving more than 23,000 providers. So two questions. One, what's an IDR? And second of all, at a high level, what story does that data tell you about how the No Surprises Act is working today?

SPEAKER_03 1:30

So the the first thing, what's an IDR? Uh the the No Surprises Act was intended to prevent balance billing in certain situations for patients. And it's accomplished that goal. Inside of the No Surprises Act is the regulation that says you you first, if there's an emergency out of network claim, then the patient can't be balance billed. Patient just pays their co-paid deductable. And then what is to be paid is what's called the QPA or the median contracted rate. So the payer is supposed to pay that. If the payer pays that, I'll get to what IDR is, I promise. If the payer pays that and then the provider does not agree, then they can initiate open negotiation to try and negotiate. And then lastly, if open negotiation fails, then they go to a form of arbitration that's called IDR or independent dispute resolution. And that's the dispute that we did an analysis on, because there is a federal report that produces all the information, at least some of the information on the disputes. So what what did this report tell us, or why did we, why did we do this report? And really the reason we did the report was to look at whether or not there were any starting patterns. And we looked at first, it shows what the offers were in the disputes. And IDR is a basebile baseball style arbitration. Two offers, the IDR indeed picks one. And so we were looking at where the offer sat. Is there aggression in offers? Are the offers really high that are going in? Um, how far apart are they? That sort of thing. And then we also overlaid that with other transparency data sets of billing practices of providers in geographic areas. So what we're able to do is identify these categories of providers andor disputes where there was a lot of aggression. These are high-billing providers that are making very high offers. So they're really kind of pushing the envelope. And then lower billing providers that are still making really high offers. So that gave us an idea of where there's a place where this dispute resolution process has become strategic. And then there are providers that are lower billing providers that are making lower offers right around where the other offers are. So in doing that, we're able to kind of build a heat map of where there is a lot of aggression and strategy in IDR that results in for self-funded employers much higher payments on those kinds of claims.

David 3:57

So you just alluded to this, but one of the most striking conclusions in the report is that, as you say, arbitration may be shifting from a dispute resolution tool to a payment maximization strategy. What patterns did you see in the data that led you to that conclusion?

SPEAKER_03 4:14

Yeah, and and it it's the start of a it's the start of an indication. So I don't want to make the conclusion that that there's somebody gaming the system or anything like that, although you can draw some strong inferences from the data, which shows number one, that there are very high offers being made. So I mentioned the QPA or the median contracted rate as the payment. So payers are supposed to figure out what that median contracted rate is and pay it. That would be the starting point. And then we're seeing offers in the data that are five and six times higher than that amount, and then they're winning. So five and six times what the median contracted rate is is a very strong incentive to continue to use that process and see that process as a next step rather than a last resort. So that's that's why you're seeing that shift from what would be a dispute resolution process when there's an outlier and you feel like, oh, I don't think I got paid properly. I've got some reasons or some arguments for it. So I might initiate a dispute. What we're seeing is that's moving to, with some providers, a situation where there's initiation on almost every dispute. And it's because it's become part of their process, part of their revenue process, and they're initiating because the incentives right now, uh, and and there's data showing that there are a significant number of wins. Um, the the IDR, the IDR wins for initiating parties, which are largely providers, is in the 80%. And so if you're winning on 80% of them and offers are um up to five times as much, then it's it's created this incentive for um for initiating. And then the last the last thing I would add is there are some um specific collection entities who have really taken hold of this, and they account for a large percentage of the disputes being filed on behalf of a number of um providers. And so for them, it is a process. It is something that is strategic and it is working for providers to do it. So it's gotten away from this way that these parties might resolve a dispute over payment to revenue maximization and um improvement in revenue, which you you can't fault anyone for, but unfortunately that's what the process has created.

The Budget Hit To Employers

David 6:32

So it's like when they asked Willie Sutton, the famous Boston bank robber, why you rob banks, and he said that's where the money is. These folks have figured that out too. So your your analysis shows, as you've alluded to again, a pattern of higher provider bills, higher arbitration offers, and ultimately higher employer payouts, kind of the cost ripple effect. How does that dynamically actually play out for employer-sponsored health plans?

SPEAKER_03 6:57

Well, for employer-sponsored health plans, it is a variable that contributes to increased premiums and increased cost for the patients themselves. So unfortunately, the No Surprises Act was meant to protect patients and members, and it did. It got rid of that immediate harm of a balance bill for an individual, but it put it behind the scenes into this arbitration process where there are all of these additional high payments. And on some of these, David, it could be on a, for instance, like a neuromonitoring case where someone does neuromonitoring at a network, they initiate um IDR and they put in an offer, why not, at$50,000 when it's typically paid at$2,000 or$3,000 in the market and they win. They get that amount of money. Now, if you're a school district, a self-funded school district, that's almost one FTE that's come out of your budget. And these self-funded plans, as you know, that that money is their money. It's not carrier money. This isn't an issue where a health carrier who's collecting premiums is having to spend more out of their premiums. These are self-funded plans, a lot of them, school districts, police departments. So the real effect is um increases in renewals. Now it's a factor. There's a lot of reasons there are increases in renewals, but it's a factor for increases in renewals and spreading it across. And unfortunately, it, and this is why we made the report, it's this noise that's a little behind the scenes, and it needs to be sort of reviewed and identified to handle with the same level of strategy that the providers clearly are handling them.

David 8:27

So going a little bit out of the study for a moment, there's more and more scrutiny, as you guys know because it's what the Fiat group deals in. There's more and more scrutiny on making sure that plan sponsors are clear in carrying out their fiduciary duties and their fiduciary responsibilities. And we all know what all that stuff is, but is this going to be something that employers have to think about? And is there a counter? Is there a way for them to get around this as a plan sponsor?

Repeat Filers And Provider Clusters

SPEAKER_03 8:57

Yes. First of all, it it's it's definitely got to become more than um an ancillary fallback that occurs occasionally. It's it's the noise is louder and louder because there are these losses where there is a huge additional payments down the road for these employers. So they have to pay attention to it. And in doing so, they need to look at data, number one, make sure that they understand, just like we've started to do, understand where the pockets and clusters are of really aggressive use of this IDR process. And they need to develop really solid strategies to respond so they're not on their heels. Because if you can see in the data that there are sophisticated entities that have created an entire organized strategy for this. And then on the other side, someone's just getting this dispute, trying to figure out the timelines and sort of responding to it, that that's not going to be in a good enough place, like you said, as a fiduciary, to really make sure that these IDR disputes come out the way that they're supposed to, and with a reasonable payment from the plan stallers.

David 10:03

One of the findings in the study was that there's a relatively small cluster of providers who drive a disproportionate number of disputes. Why does that happen? And what does it tell us about provider strategy under NSA?

SPEAKER_03 10:18

It it provides some indications, but it would require a deeper look. So I'm not going to make the conclusion that this is because there are providers that are, that are, that are abusing the system of ready. It could have to do with the kinds of providers. So there might be a certain provider that is an emergency-only provider or anesthesiologist. So it could have to do with the services they provide just happen to fall under the NSA all the time. It could also have to do with the market power of that provider in the area. If they're the only game in town and they've chosen to be out of network and out of network activity is just part of their, it's part of their strategy, that could have been in place long before the NSA. But also, David, it could be because they've realized that the NSA is one place that you can increase your revenue. So looking at all those factors and doing an analysis of these providers, who they are, what service mixes they provide, whether you've got a group of providers in a geographic area where some of the providers who provide the exact same services are in network or are doing what you would normally do in the revenue cycle process versus providers who have who have become strategic or who have hired somebody on their behalf to become strategic. So I think that's that's what that's what we're really asking this report to be is the starting point of it's it's a good idea to look more specifically. And there is in the federal data, it's granular enough that you can look at a geographic area, you can look at specific providers and how many providers have filed, and you might be able to identify repeat filers and then say, why is there a repeat filer? And then in your own data for a third-party administrator, look at that and say, what can we do strategically? Whether it's bringing that provider and network, if that's even possible, or um, you know, changing that situation so we don't keep getting hit and get these determinations at amounts that are five times what we paid.

David 12:10

One of the interesting things that I found is that the report shows that states like Nevada, Arkansas, Louisiana, South Carolina, and Colorado have the highest share of high-risk providers. What makes some markets more prone to this aggressive arbitration behavior than others?

SPEAKER_03 12:26

And that is in those states, we also we noticed in that that there were, there were clusters. There were small numbers of providers that were initiating um significant amounts. And also the general certain states have processes where um part of the billing is divided. Bill, the the providers will bill very high and payments will be very low. For example, you you mentioned um Louisiana. And for a very long time, Louisiana had uh an ambiguous workers' compensation fee schedule. And in that, it looked like it almost was a percent of billed. And it it there was some, you know, there's a lot of litigation and conflict on that. So you have some areas where the market itself dictates a higher conflict approach to reimbursement. And so that's why some of those states sort of shine. And then also there are larger populations of out of network providers in in certain areas. And so that could be another factor that lends to it. And then lastly, there are places where um there are organized, uh, very sophisticated entities that are offering a way to increase revenue. And they're there, and I think there are even a couple of TikTok ads that I've seen that say, hey, you could collect a lot more in IDR if you really push the envelope. And and therefore that's another reason. And I think there's a letter that's been sent just recently by the industry stakeholders identifying some of those major entities. Uh Halo MD is one of them. Um, there's a couple others they identify too, who who have made this into a cottage industry. And so that's another place where you might see these concentrations.

David 14:06

I'm currently living in Tennessee. What happened in Tennessee? You guys found more than 36,000 disputes involving just 147 providers.

SPEAKER_03 14:16

Yeah, and and what what that means is it's a lower number of providers and a lot of disputes that were initiated. Now, this sample is based on the provider billing aggression as well. And these are this is this is based on us being able to match that provider and look at its billing in addition. So it may be a slightly number of provide different number of providers with the because of the um the matching the providers themselves. But in the data, what that shows you is you have a lower number of providers initiating a significantly high number of disputes. So we've identified that as a high risk area. So there's a risk that there's significant aggression and strategy in the IDR disputes there, and it should, it should require a little bit of a deeper dive. Now, I I wouldn't go so far right now as to name specific providers or provider systems, but that would be the next step. Is there a hospital system? Is there a a provider, a professional group? Is there a neuromonitoring group that's really sort of taken to using the NSA in this way? And and how can we make sure that that we respond to that as an employer in that area? So that's that's what the high disputes low providers sort of says.

David 15:22

Is that is part of the factor the paucity of networks or robust networks in a particular geographic area?

SPEAKER_03 15:29

Yes. I I I think I think it can be that you've got in some areas, you've got what what you'd call network penetration that is all the way through, and and most providers have selected to be in network. And then in some geographic areas, that's not the strategy. The strategy is narrow networks. And that ties into billing strategy. So some providers bill very high as an anchor point. It's it's not, and and because sometimes they capture that revenue and then they they plan to negotiate down very, very low. And if they see an opportunity to go out of network, especially with a carrier that they think is not um really making a fair deal, then they end up in this dispute process instead of in network. So it can definitely have a lot to do with uh market power on either side. So in some geographic areas where carriers have significant market power, a lot of people are going to be in network. A lot of providers are gonna be in network, you're not gonna see as much. Um, in areas where uh providers have significant market power and can't go out of network because they don't have anywhere else to go if they go there, then you'll see this data show uh more dispute and and conflict in that area.

Why Patients Do Not See It

David 16:34

Do you think there hasn't been more of a hue and cry about all of this because patients don't really see the impact?

SPEAKER_03 16:40

That's that's I think the the impact is for them is is behind the scenes. It's it's a softer impact because it may be an increase in premiums. It may be significant issues for the employer's overall budget. And it it may be um something that hits, you know, for instance, their their stop loss premium, then you know, their premium outside of that. So they don't they don't see it as much. And before this, Kaiser Health News had these bills of the month where Kaiser Health would say, look at this balance bill, look at how terrible it is, and look at what the this the school teacher, what's happening to the school teacher who had a heart attack. You know, there was that the the caliber bill. It was really important. And you you don't have patients submitting bills anymore. You what you'd really need, and this is my call to action, is employers are going to need to submit bills to those same with the permission of their members and patients, you know, of course, so that they can show what I would call a surprise bill for an employer. So the No Surprises Act, no surprises for patients, it accomplished its goal. No surprises for employers, that's that's where we need reform. And so that you're exactly what you said gets to the point of it is to make this more transparent, employers and brokers are going to need to make sure to identify those atrocious IDR results on specific bills so we can have those anecdotes and stories again. And I think that'll start to move the needle a little bit.

David 18:04

Well, it's kind of like what Uwe Reinhardt talked about it when he was at Princeton about this medical hydraulic economics and where the cost goes down on one side of a tube, but it goes up a proportionate amount on the other tube. So the money is still there. The extra cost is already there. It's just a question of where it's being pushed and who's bearing that cost, right?

SPEAKER_03 18:22

Yes, it is. And and unfortunately, I think, and I haven't, we haven't analyzed this. This is just a a theory or prediction. I think it may be a higher cost for self-funded employers that are not quite as um robust and sophisticated in how they handle their disputes. And so they're, they're bearing a higher cost now. In the same way that patients with balance bills, an individual patient would bear an incredibly bankrupting cost. Now you've got these employers getting hit with these bills that are self-funded and it's wiping out parts of their budget. And so that's that's that's the that's the problem, is there there is there's there's more to be done here. I mean, I'm not saying that it's it's not a good step in in a good direction, but um these disputes, the data around these disputes, the aggression, and then the results are pointing to patterns that there is additional analysis that needs to be done.

David 19:17

So brokers are the front line of all of this stuff. I call them advisors or brokers, whichever you prefer. And the report shows several questions that brokers and advisors should be asking their vendor about IDR strategy and monitor. So what are the two or three most important questions advisors should start asking right now?

SPEAKER_03 19:34

I think the the the first one to ask really is what is what is the process for these? Well, the first one is get the data. Get the data on your disputes. I mean, it's it's it's a it's kind of deep in the process. As as you understand, having been in a TPA, there's there's a lot of things that happen to a claim as it goes through from coverage to eligibility to um payments to appeals to disputes. That needs to be pinpointed and the data needs to be reviewed as its own specific kind of claim. So look at the NSA claims that you've got, look at the determinations, and figure out whether or not you've got a problem. Because in some geographic areas, as we've identified, there's not a lot of disputes. There's not a huge problem. Once you identify there's a problem, then the questions you want to ask really the main the main focus area would be the NSA and IDR strategy. So are you operating under best practices for this strategy? Are you um identifying disputes as soon as they come in? Or do you have a vendor that's doing it? Are you monitoring the timelines? Are you looking at um whether or not you can negotiate? Because in some of these instances, the negotiation period of 30 days, that's a very short time to be responsive for some administration and plans. So what kind of negotiation is happening? Is it a good faith negotiation? And does it give you good evidence in IDR to say one, no good faith negotiation? We should probably stick with what was paid because there was no attempt. This is just pretext to get into IDR. Or also, what's the evidence? What benchmarks and evidence can you use? So that that would be the the questions I would say to focus on is the ones that say is, you know, who's handling it? Um, are you monitoring the trends? Um, is provider level being tracked? And how are these how are these things being reviewed? So I think that's that's that's probably the most important one.

David 21:26

So traditional network discounts alone are not really enough anymore to to address arbitration-driven payment escalation.

SPEAKER_03 21:35

They are the um if if you and we uh we are seeing that the, you know, if it's in network, it doesn't, it doesn't fall under the No Surprises Act. But providers, uh many providers as a strategy have have have gone out of network and are out of network, and there's there's not a there's not a good way to bring them into network. That that, of course, is one of the factors in IDR is whether or not there were any negotiations for that provider to go in network. Makes sense when you're talking about carriers. It doesn't make sense when you're talking about the police department or the school district. They're not really reaching out and saying, um, will you be a part of our network? So there's some parts of the regulations that really need to look more at self-funded employers, perhaps as a separate class of or group, and then identify a more updated process that accounts for that. Because you're right, just getting networks isn't something that works for this.

David 22:30

Advisors who understand, maybe after this podcast, a little bit more about arbitration dynamics can really differentiate themselves and strengthen their value for their clients. What does that look like at a ground level if you're an agent talking to a client? What's that conversation like?

Where To Get The Report

SPEAKER_03 22:45

I guess the conversation is to identify one that there is an issue, and it's a problem that they may not know about, but they definitely need to solve. You know, like mold in a house. You have to say, look, there's this issue, and it and it's systemic and it could it could really grow and cause problems for your bottom line. So if I can be a better fiduciary and I can really help you um contain costs and improve your overall um outcomes financially by monitoring this, by adopting best practices, and by bringing in a good strategy that prevents this from happening. So it's it's an ability to say that I understand, you know, as a as a broker or consultant, that I understand um that this is an issue. It's in the news, it's being talked about a lot. Um, and uh I've got a way to deal with these harms. I've got I've got uh a good handle on it and you're protected.

David 23:39

If listeners want to get hold of a copy of the study, how can they do that?

SPEAKER_03 23:44

It's on VIA's website. So they can go to FIA's website and it's it's on there. And and also if if you just were to look for it, you'd be able to find it as well.

David 23:51

And that's for because we're not broadcasting video, that's PHIA for folks who are not familiar with the firm. So if you go looking for it, it's it's PHIA. Anyway, Scott, thank you very much for a fascinating discussion. Scott Bennett, Chief Provider Relations Officer at the FIA Group. Thank you. Thanks for having me, Dean.

Announcer 24:13

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