From the article: [...] [...] [...] [...] [...] [...] [...]
From the article:
Dr. Rowe has taken full advantage of a new arbitration system, part of a major consumer protection law Congress passed in 2020 with bipartisan majorities. The No Surprises Act was designed to eliminate surprise medical bills, for patients who showed up in the emergency room and were treated by a doctor who didn’t take their insurance.
It bars those out-of-network doctors from billing patients directly. Instead, they can plead their case to a government-approved arbitrator. If they win, the patient’s insurer has to pay their desired amount.
By all accounts, the law is successfully protecting patients against bills from doctors they never chose. But it has also generated an expensive unanticipated consequence: Doctors have flooded the arbitration system with millions of claims. Most are winning, often collecting fees hundreds of times higher than what they could negotiate with insurers directly or what they could have earned from patients before the law passed.
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Some health plans said they have increased premiums this year to cover the extra costs. The United Service Workers health plan, which covers 20,000 trades workers in the New York area, said it boosted premiums by an extra 1.75 percentage points to offset arbitration awards and fees. The system has also enriched a new class of specialized businesses, which assist doctors in navigating the bureaucratic process.
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When the law passed, government officials estimated that about 17,000 cases would go to arbitration a year. Instead, doctors brought 1.2 million such cases in the first half of last year, and won around 88 percent of them.
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The arbitrators are doing well too. The fees they earn for deciding cases, which range from $425 to $1,150 per case, have added up. They earned $885 million from 2022 to 2024.
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In arbitration, doctors and insurers each propose a price for the care, along with arguments for why it is appropriate. An arbitrator must pick one of the two numbers, and there is no opportunity to appeal the decision.
Arbitrators have repeatedly approved doctors’ submissions of extremely high prices for common medical procedures, according to court filings and a New York Times analysis of a large public data set with basic information on each dispute.
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Many claims that shouldn’t be eligible for arbitration, such as those for patients covered through the government programs Medicare and Medicaid, move through the system anyway. The claim from the New Jersey anesthesiologist involved a patient on a UnitedHealthcare Medicare Advantage plan, according to a lawsuit that UnitedHealth has filed protesting the arbitration decision.
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Medical specialties like spinal and plastic surgery, for which surprise bills were rare before the law, now frequently have cases in arbitration, according to the public data. Some practices are using the law to obtain high payments for routine medical care, including gynecologists who have won fees 600 times higher than usual rates for placing intrauterine contraceptive devices, or I.U.D.s.
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Health policy experts have been surprised to see such lopsided results that favor doctors. Some argue that because the arbitrators are paid per case, they may have an incentive to render decisions that keep doctors coming back.
Arbitrators may also, like the broader public, prefer doctors to insurers, said Matthew Fiedler, a senior fellow at the Brookings Institution who has studied the law. “Arbitrators are people, and the typical person likes physicians.”
The government being implicit in arbitration schemes is, in my view, the single most corrupt thing it has ever done. Arbitration is a waiver of your civil rights. You are put into a situation...
The government being implicit in arbitration schemes is, in my view, the single most corrupt thing it has ever done. Arbitration is a waiver of your civil rights. You are put into a situation where you get into a mocking simulacra of a court situation where your chances of winning are actually lower but the penalties are real and damaging and thanks to the morons in charge they are legally binding. Instead of making laws legitimizing the practice they should be outlawing it and spending money giving the courts the resources they need to actually do the things they are built for.
This feels like a situation where arbitration is a good thing. For one, this would be kinda absurd to go to court. No amount of judges is going to make it so that “I prescribed the patient extra...
This feels like a situation where arbitration is a good thing. For one, this would be kinda absurd to go to court.
No amount of judges is going to make it so that “I prescribed the patient extra strength Tylenol and I think should be able to charge $100 for it” isn’t going to clog up the courts to a ridiculous extent. It’s low stakes and should be moved to something lower tiered than the full on legal system.
Second, the two parties in the arbitration are: a hospital system, and an insurance company. There’s no little guy’s here. Both parties can absolutely afford to make proper legal arguments.
For the patients, this is a pure cost savings. Either the doctor wins, and your insurance pays for more things, or your insurance company wins, and the doctor goes empty handed.
Sure, but they (like everyone else) get their money from the little guy. Every party directly involved may be swimming in money, but they won't get poor from robbing each other. They will just...
Both parties can absolutely afford to make proper legal arguments.
Sure, but they (like everyone else) get their money from the little guy. Every party directly involved may be swimming in money, but they won't get poor from robbing each other. They will just increase their income and maybe become even richer because they have an excuse. I'll be surprised if big oil isn't making billions in additional profits because of the ongoing crisis.
Societies will always find ways to make the little guy pay.
Under ACA regulations insurers are not allowed to increase premiums because of medical expenses. It’s not like car insurance. This is a pretty clear example of a successful consumer protection...
Under ACA regulations insurers are not allowed to increase premiums because of medical expenses. It’s not like car insurance.
Societies will always find ways to make the little guy pay.
This is a pretty clear example of a successful consumer protection law. I wouldn’t cite it as an example of the latter.
They can’t increase premiums so they gotta cut costs somewhere else. You’ll end up seeing it in bigger deductibles, lower payouts, higher copays, etc. That’s just how it works. Health insurance is...
They can’t increase premiums so they gotta cut costs somewhere else. You’ll end up seeing it in bigger deductibles, lower payouts, higher copays, etc. That’s just how it works. Health insurance is actually a very low-margin business. They get rich off the volume, but there isn’t like a pile of money lying around that they can give up and remain in business.
In net, it will average out the scenarios. Patients who never go to out-of-network medical care will see their premiums increase as the entire pool's costs go up. However, people who do end up...
In net, it will average out the scenarios. Patients who never go to out-of-network medical care will see their premiums increase as the entire pool's costs go up. However, people who do end up having out-of-network medical care will see their personal +- go way down.
And in the end, that's a good thing. Averaging out costs is the point of insurance, after all. It'll also encourage insurers to broaden the networks - after all, if they have to pay for out of network costs anyway, why not just make sure everyone is under a negotiated contract to begin with?
This entire line of logic relies on trust on both the arbitration process and the arbitation providers to the same or better standard as we do government, which is a huge leap.
This entire line of logic relies on trust on both the arbitration process and the arbitation providers to the same or better standard as we do government, which is a huge leap.
I don’t they need to be at the exact same standard as the government - it can be worse, that’s OK, the stakes are not as high. In this case, both parties have massive resources at their back -...
I don’t they need to be at the exact same standard as the government - it can be worse, that’s OK, the stakes are not as high.
In this case, both parties have massive resources at their back - both the hospitals and insurance companies can afford to maximize their arguments. It’s not like a consumer vs a company. That will balance itself out.
Furthermore, it really incentivizes both parties to eliminate the need to ever get into arbitration: simply cease with the in-network/out of network dichotomy. If insurance companies and clinics know that the only result of not having a contract with each other is a tedious and expensive arbitration process, it will lead to the natural avoidance of the latter with the former.
So let me get this straight: arbitration is good because it is not as long and expensive as a court battle, but at the same time it’s expensive enough to kill the concept of in- and out-network...
So let me get this straight: arbitration is good because it is not as long and expensive as a court battle, but at the same time it’s expensive enough to kill the concept of in- and out-network expenses? How does that work?
Because it’s a lot more expensive than what happens right now: the insurance company tells the insurer to deal with it, not in network and not my problem, and the clinic bills the individual the...
Because it’s a lot more expensive than what happens right now: the insurance company tells the insurer to deal with it, not in network and not my problem, and the clinic bills the individual the money. This has zero cost to the insurance company. They wash their hands of the problem and make the individual insurer the one with the problem who has to negotiate with the hospital.
It’s less expensive and time consuming than a court case, yes. These two things are true at their same time. It’s like how the number 2 is greater than 0 but less than 5.
Moreover, when the court system is backed up, it actually just ceases to function. It just reverts to the status quo. The insurer never gets “punished” by having to pay for medical costs out of network because that case never goes anywhere.
As we can see here, it’s quite easy for the arbitration agent to tell the insurer to stfu and pay and that be the end of it.
It bars those out-of-network doctors from billing patients directly. Instead, they can plead their case to a government-approved arbitrator. If they win, the patient’s insurer has to pay their desired amount.
Some health plans said they have increased premiums this year to cover the extra costs. The United Service Workers health plan, which covers 20,000 trades workers in the New York area, said it boosted premiums by an extra 1.75 percentage points to offset arbitration awards and fees.
Of course that's what the insurance company would say, they hate this law. But in the end, that's the point of insurance - it's to average out costs. That's doing its job. The people who never go...
Of course that's what the insurance company would say, they hate this law.
But in the end, that's the point of insurance - it's to average out costs. That's doing its job. The people who never go to out of network will see their costs increase slightly, but the people who would have ended up at out-of-network care see their costs dramatically go down.
I think the peace of mind of never having to worry about whether or not the ER you went to is in network or not is well worth 1.75%.
It also has the benefit of incentivizing insurers away from the in/out of network model. The point of that was to reduce costs for the insurer - they negotiate contracts with some clinics and not others because they deem the others to either not be necessary or be too expensive. But if because of this law, they end up paying for it anyway, there's not much point.
It seems like it would incentivize insurers to move away from the in/out of network model, while also incentivizing providers to be out of network. If you’ve got overhead costs for processing in...
It seems like it would incentivize insurers to move away from the in/out of network model, while also incentivizing providers to be out of network.
If you’ve got overhead costs for processing in network claims or overhead costs for arbitration, but the expected value for arbitration is as much (0.88 * 600%, assuming “600 times” doesn’t actually mean 600 times…that would be wild) 528% of in network claim value…why not?
Because it's not guaranteed. It's why almost all lawsuits end up settled, and not actually given a judgement by a judge. It's nonetheless better for healthcare providers to get money on a timely...
Because it's not guaranteed. It's why almost all lawsuits end up settled, and not actually given a judgement by a judge. It's nonetheless better for healthcare providers to get money on a timely and reliable basis than have to fight your way to money in an arbitration where you ultimately don't know how the agent will rule.
But this is a relatively streamlined arbitration process, one in which the providers have an 88% success rate, not a lawsuit? There are no billable hours being burned on motions practice,...
But this is a relatively streamlined arbitration process, one in which the providers have an 88% success rate, not a lawsuit?
There are no billable hours being burned on motions practice, discovery, doc review, etc. for months (years). There’s no 12(b)(6) to survive, there’s no Motion for Summary Judgment to survive, there’s no discovery disputes, no scheduling conferences, etc.
And the success rate is 88%. That is almost 9 out of every 10 times.
So, on the provider side, there might not actually be good incentives to not use the arbitration process because the likelihood of winning multiplied by the oversized damages make it a good deal financially.
And if there aren't fees to pass on, they'll invent a reason to raise prices anyways. Never forget that the definition of "success" for virtually all for-profit companies is that they have...
And if there aren't fees to pass on, they'll invent a reason to raise prices anyways.
Never forget that the definition of "success" for virtually all for-profit companies is that they have ever-increasing growth for the rest of time. Costs or no costs, they'll screw you eventually, and insurance companies have long since already started.
Some health plans said they have increased premiums this year to cover the extra costs. The United Service Workers health plan, which covers 20,000 trades workers in the New York area, said it boosted premiums by an extra 1.75 percentage points to offset arbitration awards and fees.
This is fascinating, and really goes to show how complex systems produce unexpected results. I haven't really been able to decide whether this result is good or bad - both, probably - but it's...
This is fascinating, and really goes to show how complex systems produce unexpected results. I haven't really been able to decide whether this result is good or bad - both, probably - but it's certainly unexpected.
There ought to be better procedures for more quickly adjusting new laws after they see how people game them. Maybe this tactic should have been anticipated, but not every new tactic will be.
There ought to be better procedures for more quickly adjusting new laws after they see how people game them. Maybe this tactic should have been anticipated, but not every new tactic will be.
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The government being implicit in arbitration schemes is, in my view, the single most corrupt thing it has ever done. Arbitration is a waiver of your civil rights. You are put into a situation where you get into a mocking simulacra of a court situation where your chances of winning are actually lower but the penalties are real and damaging and thanks to the morons in charge they are legally binding. Instead of making laws legitimizing the practice they should be outlawing it and spending money giving the courts the resources they need to actually do the things they are built for.
This feels like a situation where arbitration is a good thing. For one, this would be kinda absurd to go to court.
No amount of judges is going to make it so that “I prescribed the patient extra strength Tylenol and I think should be able to charge $100 for it” isn’t going to clog up the courts to a ridiculous extent. It’s low stakes and should be moved to something lower tiered than the full on legal system.
Second, the two parties in the arbitration are: a hospital system, and an insurance company. There’s no little guy’s here. Both parties can absolutely afford to make proper legal arguments.
For the patients, this is a pure cost savings. Either the doctor wins, and your insurance pays for more things, or your insurance company wins, and the doctor goes empty handed.
Sure, but they (like everyone else) get their money from the little guy. Every party directly involved may be swimming in money, but they won't get poor from robbing each other. They will just increase their income and maybe become even richer because they have an excuse. I'll be surprised if big oil isn't making billions in additional profits because of the ongoing crisis.
Societies will always find ways to make the little guy pay.
Under ACA regulations insurers are not allowed to increase premiums because of medical expenses. It’s not like car insurance.
This is a pretty clear example of a successful consumer protection law. I wouldn’t cite it as an example of the latter.
They can’t increase premiums so they gotta cut costs somewhere else. You’ll end up seeing it in bigger deductibles, lower payouts, higher copays, etc. That’s just how it works. Health insurance is actually a very low-margin business. They get rich off the volume, but there isn’t like a pile of money lying around that they can give up and remain in business.
In net, it will average out the scenarios. Patients who never go to out-of-network medical care will see their premiums increase as the entire pool's costs go up. However, people who do end up having out-of-network medical care will see their personal +- go way down.
And in the end, that's a good thing. Averaging out costs is the point of insurance, after all. It'll also encourage insurers to broaden the networks - after all, if they have to pay for out of network costs anyway, why not just make sure everyone is under a negotiated contract to begin with?
Win-win.
This entire line of logic relies on trust on both the arbitration process and the arbitation providers to the same or better standard as we do government, which is a huge leap.
I don’t they need to be at the exact same standard as the government - it can be worse, that’s OK, the stakes are not as high.
In this case, both parties have massive resources at their back - both the hospitals and insurance companies can afford to maximize their arguments. It’s not like a consumer vs a company. That will balance itself out.
Furthermore, it really incentivizes both parties to eliminate the need to ever get into arbitration: simply cease with the in-network/out of network dichotomy. If insurance companies and clinics know that the only result of not having a contract with each other is a tedious and expensive arbitration process, it will lead to the natural avoidance of the latter with the former.
So let me get this straight: arbitration is good because it is not as long and expensive as a court battle, but at the same time it’s expensive enough to kill the concept of in- and out-network expenses? How does that work?
Because it’s a lot more expensive than what happens right now: the insurance company tells the insurer to deal with it, not in network and not my problem, and the clinic bills the individual the money. This has zero cost to the insurance company. They wash their hands of the problem and make the individual insurer the one with the problem who has to negotiate with the hospital.
It’s less expensive and time consuming than a court case, yes. These two things are true at their same time. It’s like how the number 2 is greater than 0 but less than 5.
Moreover, when the court system is backed up, it actually just ceases to function. It just reverts to the status quo. The insurer never gets “punished” by having to pay for medical costs out of network because that case never goes anywhere.
As we can see here, it’s quite easy for the arbitration agent to tell the insurer to stfu and pay and that be the end of it.
the system is so violently against the little guy. how much longer is it sustainable?
The little guy is... the insurance companies?
No, they pass their fees onto the little guy.
Of course that's what the insurance company would say, they hate this law.
But in the end, that's the point of insurance - it's to average out costs. That's doing its job. The people who never go to out of network will see their costs increase slightly, but the people who would have ended up at out-of-network care see their costs dramatically go down.
I think the peace of mind of never having to worry about whether or not the ER you went to is in network or not is well worth 1.75%.
It also has the benefit of incentivizing insurers away from the in/out of network model. The point of that was to reduce costs for the insurer - they negotiate contracts with some clinics and not others because they deem the others to either not be necessary or be too expensive. But if because of this law, they end up paying for it anyway, there's not much point.
It seems like it would incentivize insurers to move away from the in/out of network model, while also incentivizing providers to be out of network.
If you’ve got overhead costs for processing in network claims or overhead costs for arbitration, but the expected value for arbitration is as much (0.88 * 600%, assuming “600 times” doesn’t actually mean 600 times…that would be wild) 528% of in network claim value…why not?
Because it's not guaranteed. It's why almost all lawsuits end up settled, and not actually given a judgement by a judge. It's nonetheless better for healthcare providers to get money on a timely and reliable basis than have to fight your way to money in an arbitration where you ultimately don't know how the agent will rule.
But this is a relatively streamlined arbitration process, one in which the providers have an 88% success rate, not a lawsuit?
There are no billable hours being burned on motions practice, discovery, doc review, etc. for months (years). There’s no 12(b)(6) to survive, there’s no Motion for Summary Judgment to survive, there’s no discovery disputes, no scheduling conferences, etc.
And the success rate is 88%. That is almost 9 out of every 10 times.
So, on the provider side, there might not actually be good incentives to not use the arbitration process because the likelihood of winning multiplied by the oversized damages make it a good deal financially.
And if there aren't fees to pass on, they'll invent a reason to raise prices anyways.
Never forget that the definition of "success" for virtually all for-profit companies is that they have ever-increasing growth for the rest of time. Costs or no costs, they'll screw you eventually, and insurance companies have long since already started.
Not sure what you mean. Are these doctors who take advantage of the system the "little guy?"
From your top comment.
I consider that to be doctors taking money from the "little guy" and the system not being sufficiently well-designed to prevent them from doing it.
This is fascinating, and really goes to show how complex systems produce unexpected results. I haven't really been able to decide whether this result is good or bad - both, probably - but it's certainly unexpected.
There ought to be better procedures for more quickly adjusting new laws after they see how people game them. Maybe this tactic should have been anticipated, but not every new tactic will be.