Health-care providers are increasingly taking insurers to court to claim they are not making timely arbitration award payments under the No Surprises Act, adding a new obstacle to the already bumpy rollout of the billing dispute resolution system.
Those lawsuits are likely to only grow in popularity as more claims move through the system, and more are potentially batched together, according to attorneys and advocates who work with both providers and insurers.
“I think you’re going to see more and more lawsuits kind of pursuing relief from these physicians,” Kelly Kenney, CEO of the Physicians Advocacy Institute said. Many are waiting until they have hundreds of thousands of dollars in unpaid claims to make it financially worthwhile to file legal cases, she said.
The implementation of the No Surprises Act’s federal online independent dispute resolution portal has been far from smooth, creating large case backlogs. Numerous shut-downs of the system that handles billing disputes between providers and insurers followed decisions from a federal district court in Texas overturning the government’s arbitration regulations.
As of June 2023, more than 490,000 disputes over out-of-network claims were submitted since the IDR process was established in April 2022, a much larger number than anticipated by the agencies, according to a recent Government Accountability Office report. It added that 61% of the disputes remain unresolved.
The No Surprises Act prevents providers from billing patients more than out-of-network rates in emergencies and for out-of-network services at facilities that are in their health plan networks. Untimely payments to providers was cited as a cause of provider complaints in the GAO report.
The law requires health insurers to make payments within 30 days of a final determination by the IDR entity.
On Dec. 15, 2023, the departments reopened the federal IDR process for all dispute types after months of closures, including batched filings and single disputes.
Big Insurers in Crosshairs
In a consolidated lawsuit believed to be the largest of its kind, Guardian Flight LLC v. Aetna Life Insurance Co.., four air ambulance companies are suing
Aetna and Cigna collectively have failed to pay more than $3 million in IDR awards, and plaintiffs have “no reason to believe” the insurers’ “violations of federal law will cease,” according to a court filing in the case.
The insurers have paid some of the original claims, but the air ambulance companies are seeking interest, fees, and penalties for the late payments, according to Adam Schramek, a partner with Norton Rose Fulbright US LLP, who represents the plaintiffs.
“It is a systemic problem of payers not timely paying these awards,” Schramek said.
“From the time a provider performs the emergency services until the time they receive an IDR award, it’s already several months down the road,” he said. “You have to wait several months to get your award, so the insurer is sitting on that money for months earning interest on it.”
“The problem we face is that the insurance companies think that they can pay the award at any time they want, many months after it was due, and that they don’t owe any additional money,” he added.
Aetna declined to comment on the litigation and Cigna didn’t respond to a request for comment.
In Aetna’s May 2023 motion to dismiss the case, the insurer said it has “worked diligently to resolve this matter,” but some of the IDR awards identified by the plaintiffs “did not appear to involve Defendants (i.e. Aetna), while Defendants lacked sufficient information to verify the status of other IDR awards.”
A survey published in 2023 by Americans for Fair Healthcare of 48,000 physicians across the US found that 52% of payments determined by the IDR system were not being remitted by payers at all.
Recourse for Complaints
Insurers are taking the position that providers can’t file court cases to enforce IDR awards and that the only recourse is to file a complaint with the Centers for Medicare & Medicaid Services, according to Schramek.
CMS takes the issue of late payments after the 30-day deadline “very seriously,” but can’t know about individual cases of late payment unless a complaint is submitted by the parties, according to a statement from a department spokesperson.
CMS “is actively investigating and addressing complaints under its jurisdiction, and if a violation is found, CMS will not hesitate to use its authority to impose civil monetary penalties to enforce the requirement for payment and to ensure that future payments are made within the federal-required time frame,” the statement said.
In another air ambulance case against Aetna seeking to overturn a No Surprises Act arbitration decision in Guardian Flight, LLC v. Aetna Health Inc. et al, the Southern District of Texas said that IDR entities can face lawsuits. That runs contrary to a previous ruling in a federal case filed against
“The providers have signaled they will appeal that decision to the 11th Circuit,” Zachary Baron, director of the health policy and the law initiative at Georgetown Law’s O’Neill Institute, said in an email.
In addition to the federal government, some states that operate dispute resolution processes for billing claims are also permitted to process No Surprises Act complaints.
HHS defers to the state process, according to the CMS. Some health-care providers, however, have found it difficult to know which system they should use, Schramek said.
Christine Cooper, CEO of aequum, which works with health plans on the IDR process, said in some cases providers filing suits are trying to vacate awards handed down by arbitrators, rather than procure payment.
“It’s going to be a high hurdle to overcome to either vacate or to defend against [award] confirmation,” she said.
There are very narrow grounds for challenging arbitration awards: if the award is the result of corruption or fraud, evident partiality or misconduct by the arbitrator, or the arbitrators exceeded their powers.
Another factor that may dissuade health providers from suing to procure payment from insurers is the sheer price tag of litigation.
“There’s a big cost to filing these cases, which is why you’re seeing them go against Aetna and Cigna, where you may have $1 million worth of claims that may have been unpaid,” Cooper said.