Capitol Insights Newsletter

Authors: Luke Schwartz, Matt Reiter, and Caroline Oliver

What happened in Congress this week?

Given Monday’s holiday and both chambers of Congress being on recess this week, it was another quiet week in health policy. Most of Congress’s attention is on the looming Continuing Resolutions (CRs) expiring March 1st and March 8th, respectively. Unless Congress can pass the necessary appropriations bills, the government will partially shut down on March 1st and fully on March 8th, when funding for most government agencies will expire.

House appropriators are expected to release a funding deal on Sunday that, if passed, would avert the March 1st partial shutdown. The biggest health policy issue CAI is watching in any proposed funding deal is the inclusion of a fix to the Conversion Factor. If advanced by lawmakers, we expect it to be included in the March 1st package.

However, given the very tight timeline, passing yet another CR to temporarily avert a shutdown (potentially delaying passing a full funding bill until the end of March) is quietly being discussed by lawmakers.

Breaking Down the New 2023 IDR Data

On February 15th, the Centers for Medicare and Medicaid Services (CMS) published data about the No Surprises Act (NSA) Independent Dispute Resolution (IDR) Process for the first half of 2023. The IDR Process is an arbitration process used to settle out-of-network (OON) billing disputes between providers and health plans in scenarios that are protected under the NSA.

The NSA requires CMS to publish information on the IDR process on a quarterly basis. This data, among other things, includes the total number of disputes initiated, the size and types of organizations that were a party to a dispute, and details of each payment determination, including a description of the items or services disputed, identities of the disputing parties, the offers submitted by each party, and the final payment determination.

Many news articles about the data have emphasized two key points from the data for the first half of 2023:

  • The total number of initiated disputes far exceeded CMS’ estimates.
  • Providers are winning 77% of initiated disputes.

Emphasizing these points paints an incomplete picture of the IDR environment.

First, CMS says that the 288,810 disputes initiated in the first half of 2023 were 13 times higher than it expected. However, CMS’ estimates are fundamentally flawed. Texas implemented a similar arbitration process for surprise situations in its state before the NSA was passed. According to data from Texas on its process, it received over 50,000 arbitration requests in 2021 and over 70,000 arbitration requests in 2022. This data is just one state and was available to CMS when it made its utilization estimates. Even though Texas is the largest state, this data shows that CMS should have had a more realistic estimate for a national version of this arbitration process.

The second point of emphasis ties into the first. Providers won 77% of initiated disputes against health plans. In most cases, health plans submitted the QPA, defined as the median in-network rate, as their offer. The data shows that IDR entities (arbiters) do not believe the QPA is the correct amount in over three quarters of cases. The purpose of publishing this information is to establish a precedent that will reduce the need for IDR disputes. A precedent is clearly being set. Health plans could offer higher rates than the QPA to try to avoid the need for IDR, which would reduce the volume of disputes. 

Health plans could also avoid the need for IDR by engaging in the 30-day open negotiation process which precedes the IDR process. Anecdotally, health plans are not engaging in this process whatsoever. 

Additionally, CMS says that while health plans typically submitted the QPA, providers often submitted a rate that was based on a past contracted rate with the health plan or a different health plan. Past contracted history is one of the factors the NSA statute explicitly allows IDR entities to consider. According to the CMS data, past contracted history appears to be a winning strategy for providers engaging in IDR disputes. 

Many health plans are challenging if disputes are eligible for the IDR process which can cause further delays. However, the NSA statute makes health plans responsible for communicating to a provider if the NSA protections apply to a claim. This is not happening as Congress intended. In October, CMS published a proposed rule that, if finalized, would strengthen how health plans are required to communicate this information to providers.

CMS says a small number of parties initiated most of the disputes with the top ten initiating parties representing approximately 78% of all disputes initiated in the first six months of 2023. Initiating IDR disputes is administratively burdensome and time-consuming. Many providers choose not to initiate disputes due to the complexity of the process. Additionally, CMS has attempted to set a non-refundable administrative fee at an amount that exceeds the amount being challenged in many of the disputes.

Lastly, some articles analyzing the data suggest the NSA is failing because the high win rate for providers is leading to higher costs than the Congressional Budget Office (CBO) predicted for the NSA. However, it is important to note that the NSA was primarily intended to protect patients from surprise medical bills – which it does very well – by limiting patient out-of-pocket costs to their health plan’s in-network cost-sharing benefit. Solving reimbursement disputes is a necessary part of this policy as there is no contractual relationship between the patient’s health plan and the OON provider. Resultant savings are certainly welcome but are not the main purpose. Therefore, it is not fair to criticize the IDR process based on cost.

Top Stories in Healthcare Policy

At the beginning of 2024, the common asthma inhaler Flovent was discontinued by manufacturer GlaxoSmithKline (GSK). Although GSK now offers an “authorized generic” of the inhaler, pharmacy benefit managers have chosen not to cover the generic, complicating care for patients.

On Friday, February 16th, the FDA approved Xolair to treat food allergies. Patients taking Xolair demonstrated higher tolerances to allergens in a study funded by the National Institutes of Health (NIH).  

Lawmakers in Alabama, Georgia, and Mississippi are weighing Medicaid expansion as public support to do so increases. Expansions in these states could grant coverage to over 600,000 uninsured people.

On Tuesday, February 20th, the Center for Medicare & Medicaid Services published a final rule that will cut Medicaid disproportionate share hospital (DSH) payments by $8 billion. The final rule adjusts the methodology to calculate Medicaid shortfall, aiming to address overpayments.

On Wednesday, February 21st, the University of Alabama at Birmingham paused in vitro fertilization (IVF) procedures following the Alabama Supreme Court’s ruling that a frozen embryo is considered a child. 

A survey of physicians by Athenahealth found that 83% of doctors believe that artificial intelligence could aid in addressing provider burnout. Incorporating AI to reduce clerical work would require careful implementation to ensure that it does not increase administrative burden for physicians or negatively impact quality of patient care.

A poll conducted by KFF this week identified that healthcare costs and medical bills are top concerns for voters in this year’s presidential election. Eight in ten voters noted high importance for candidates to address the affordability of healthcare with inflation.

CMS released the second part of draft guidance this week for the Medicare Prescription Payment Plan (formerly known as out-of-pocket smoothing), which will go into effect in 2025. The payment plan will allow enrollees to spread out payments for prescription drugs over the course of the year.

A bipartisan coalition of state attorney generals sent a letter to Congress on Tuesday, February 20th urging them to hold pharmacy benefit managers accountable. The letter expresses support for legislation that would restrict PBM practices and increase healthcare price transparency.