THE MYTH FACT SHEET ON
Independent Dispute Resolution
Independent dispute resolution (“IDR”) is a proven, effective and fair solution that protects patients from surprise medical bills while reducing costs and instances of out-of-network billing. New York State adopted an IDR system to address surprise medical bills in 2015, and government data and independent analysis both confirm the effectiveness of this policy solution.
Some lawmakers have advanced the concept of ‘rate setting’ to address surprise medical bills, an approach that has been in place in California since 2017. California’s law, which has been endorsed by large insurers, illustrates the unintended consequences associated with giving insurers the incentives and the unilateral ability to set their own rates by eliminating providers’ ability to negotiate for fair and reasonable reimbursement.
These facts will clarify that IDR is the best solution to stopping surprise medical bills and protecting patients’ access to care.
IDR would lead to higher premiums
IDR leads to lower premium growth where implemented
IDR has not caused higher premium growth. New York administrators have reported no inflationary effect on premiums since adopting IDR. Premiums in New York have grown in line with the rest of the country, and states that did not implement IDR had higher premium growth than New York. (Sources: Georgetown University Case Study, Kaiser Family Foundation Premium Data)
The New York out-of-network law has increased healthcare costs for New Yorkers
The New York out-of-network law saved consumers $400 million
The New York Department of Financial Services, which oversees the state’s IDR process, reports that the law saved consumers $400 million from 2015-2018, reduced out-of-network billing by 34 percent, and lowered in-network physician payments by nine percent. (Source: New York Department of Financial Services Report)
IDR is only supported by physicians
Patients and the New York Health Plan Association support IDR
The New York Health Plan Association, an organization that represents 29 insurance companies, released a letter in support of an independent dispute resolution process, calling it a fair and reasonable solution that protects patients. Aetna, Empire BlueCross BlueShield, and UnitedHealthcare are all members of the New York Health Plan Association. According to polling, an overwhelming majority of Americans (69 percent) prefer independent third-party resolution over government rate setting, while 81 percent of Americans believe that insurers bear the responsibility for a majority of costs associated with surprise medical billing. (Sources: New York Health Plan Association Press Release; Morning Consult Poll)
The “median in-network” rate is a market-based solution
The government fundamentally undermines the market by allowing insurers to unilaterally set reimbursement rates.
The median in-network rate disrupts the market dynamic by giving insurance companies the ability and the incentive to unilaterally set the median in-network rate in a given geographic area. When out-of-network rates are benchmarked to the median in-network rate, insurers can drive the median in-network rate down significantly by cancelling contracts and renegotiating at unfair, unreasonable, and unsustainable rates for providers — if they choose to renegotiate at all. Providers have no leverage in these negotiations and can merely elect to be underpaid in-network or out-of-network. California uses this approach, and physicians have reported narrowing insurance networks, cancellation of long-standing contracts, and loss of patient access to critical medical care. (Source: California Medical Association Survey)
Insurers claim that IDR will burden patients, raise premiums, and drive up the cost of care.
IDR is a patient-centered solution that ends surprise medical bills, saves money for patients and consumers, and does not drive up insurance premiums.
Independent dispute resolution allows hospitals and physicians to continue serving their communities by ensuring they receive fair, reasonable, market-based reimbursement for treating patients. IDR removes patients from billing disputes by directing providers and insurers to an arbitration process which allows independent billing experts to determine a fair rate. In New York, IDR has saved consumers over $400 million dollars and state officials report no inflationary effects on annual premiums. It has also encouraged in-network contracting, with out-of-network billing down 34 percent. (Sources: New York Department of Financial Services Report; Georgetown University Case Study)
Rate setting will not impact patients’ access to care.
Rate setting harms patients by failing to protect them from the causes of surprise medical bills and threatens patient access to care.
California’s rate setting law, which has been endorsed by insurance companies as a model for federal legislation, has led to narrower insurance networks and decreased patient access to in-network physicians. It has also shrunk physician resources and the ability to respond to medical emergencies. Almost two-thirds of California physicians reported that patients have experienced challenges with timely access to care under the new law. More than 75% of physicians agree that a federal law modeled after California will disproportionately hurt rural areas, which would be threatened with doctor shortages and hospital closures if insurers are allowed to unilaterally determine their own rates. (Source: California Medical Association Survey)
HOW YOU CAN GET INVOLVED:
Tell Congress to stand up to the insurance industry and demand they pay their fair share. Insurers, doctors, and hospitals all have a shared responsibility to provide high-quality care to patients across the country. It is time we fix the broken healthcare system and stop surprise medical billing.