State health care dispute rules could become too provider-friendly

"Instead of reining in bad actors or addressing spiraling costs, emerging state proposals all too often loosen arbitration standards for providers or restrict private sector efforts to curb unnecessary arbitration and irresponsible billing practices," Dillon Clair, director of state advocacy at ERIC, wrote in a letter to the National Council of Insurance Legislators.

Members of NCOIL have been looking into reports that the No Surprises Act IDR system side with providers more than 80% of the time. Providers are typically awarded pay rates that are far higher than what Medicare or commercial plans pay.

ERIC and other health claim dispute experts have told NCOIL members that the federal claim fight system is also far more likely to side with the providers than state-level health claim review systems.

State-level efforts to make the state review systems friendlier to providers "will continue to create a patchwork of conflicting and unworkable requirements," Clair wrote.

What it means: ERIC worries that the light at the end of the No Surprises Act IDR system problems tunnel could be a train that might get bigger, heavier and faster.

Many states have their own versions of the No Surprises Act that may apply to different types of disputes and involve different, state-level equivalents of the federal independent dispute resolution entities.

A team of researchers affiliated with Georgetown University reported in a commentary published in Health Affairs that Virginia, for example, has a state-level claim dispute resolution system that accepted just 252 disputes for review from May 2024 through May 2025 and sided with the providers just 45% of the time.

Over roughly the same period, the No Surprises Act IDR system took in about 34,000 cases and sided with the providers in those disputes 85% of the time, the researchers reported.

Kennah Watts, a member of the team that wrote the Health Affairs commentary, told NCOIL members at an in-person session in April that the percent of state-system claim disputes resolved in favor of the providers was 67% in California, 61% in Washington state and just 51% in Colorado, according to a written version of her presentation posted on the NCOIL site.

Watts noted that New York state and Texas have claim review systems that are similar to the federal system. "Texas and New York see very high volumes of disputes, very high provider win rates and very high award amounts," Watts said, according to the draft minutes of a meeting of NCOIL's Joint State-Federal Relations & International Insurance Issues Committee.

One step policymakers should take is to look at the state review programs and understand whether the programs are pushing up reimbursement rates in their jurisdictions, Watts said.

Related: Will high No Surprises Act arbitration awards pump up the federal budget deficit?

Texas state Rep. Tom Oliverson, a Republican and a medical doctor, noted that providers see things differently and question, for example, whether the payers are offering adequate payment rates or describing the care provided accurately.

"The fact that providers are winning more frequently than plans tells me that the rate that's being offered in-network is inadequate," Oliverson said. "The hope was that over time, these providers and these plans would recognize that there's a happy medium there, and they would agree that this is what the fair market value is, hence this is what the in-network rate has been. But that hasn't happened."

Watts said there are signs that plan network participation rates are increasing, and that one problem is lack of independent, objective data on the No Surprises Act claim disputes and the IDR process.

Credit: Diego M. Radzinschi/Touchpoint Markets