Analysis: New York's surprise-billing solution is causing healthcare costs to climb

A New York state law and its arbitration process to resolve surprise out-of-network medical bills is increasing healthcare costs for New Yorkers, according to an analysis released Oct. 24 by the USC-Brookings Schaeffer Initiative for Health Policy.

In 2015, New York implemented a law aimed at protecting patients from surprise medical bills, which occur when a patient unintentionally receives out-of-network care in emergency situations or at in-network hospitals. Under the law, patients are not charged more than the amount they would owe to in-network providers. Then providers and insurers have the option of using a binding arbitration process to settle price disputes, if the parties can't agree on an out-of-network payment amount.

The law's arbitration process includes state guidance that arbiters should consider the 80th percentile of bill charges as calculated by Fair Health, an independent claims database, when determining the most reasonable price, according to the analysis.

The analysis cited a New York Department of Financial Services report released in September, which found that arbitration decisions have averaged 8 percent higher than the 80th percentile of charges. The state report also found 2,595 arbitration decisions were rendered between 2015 and 2018, and estimated New York's law has saved consumers more than $400 million from the law's implementation in March 2015 through the end of 2018. 

But researchers from the USC-Brookings Schaeffer Initiative for Health Policy argue after examining the issue and the New York Department of Financial Services report, "there is no supporting evidence provided and the actual data released in the report strongly suggests that the opposite is true."

According to the researchers, consumers and taxpayers appear to be "losing" whether the insurer or provider "won" in arbitration.

"That is, even arbitration decisions in favor of the health plan have averaged only 11 percent below the 80th percentile of charges, still far above in-network rates or typical out-of-network payments — implying that health plans only 'win' in arbitration when they offer to pay extremely high rates, which is then paid for through higher premiums," the researchers wrote.

Read the full analysis here.

 

More articles on healthcare finance: 

Missouri hospital's finances dragged by unpaid patient debt
More than 1,500 hospitals to see increased payments under Value-based Purchasing Program
University of Virginia Health creates billing and collections advisory council

 

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Featured Whitepapers

Featured Webinars