Health Affairs Article IDR ‘Cost’ Claim Inflated Due to Reliance on Flawed QPA Benchmark

The American College of Emergency Physicians (ACEP), the American College of Radiology^® (ACR^®) and the American Society of Anesthesiologists (ASA) today challenge a Health Affairs Forefront report claiming that the No Surprises Act’s (NSA) Independent Dispute Resolution (IDR) process has generated $22.4 billion in costs. The national medical associations point out that the report’s cost claim is built on a deeply flawed premise: that the insurer-calculated Qualifying Payment Amount (QPA) is accurate and represents an appropriate in-network payment rate. The evidence is overwhelmingly clear that QPAs are often inaccurate and unreasonably low. QPA calculations are opaque and independently unverifiable by physicians.

The paper counts $15.6 billion in IDR awards above the QPA as a cost attributable to the IDR, nearly 70% of the authors’ total estimate. Errors in the Public Use Files (PUF) files have been publicly acknowledged but are not fully reflected in the Health Affairs analysis. It is estimated that at least $6 billion in the PUF may be either clerical errors or already accounted for before the IDR process.

“The paper posits that appropriate payments to front-line physicians for patient care translate into higher premiums. This framing overlooks the reality of big insurance: many of the nation’s largest commercial health insurers and their parent companies report annual profits in the billions of dollars,” said ASA President Patrick Giam, M.D., FASA. “If insurers choose to pass the cost of reasonable physician payments on to consumers rather than absorb those costs within their substantial revenue and profits, that is an unfortunate, profit-driven, business decision, not an inevitable consequence of the IDR process.”

“The data continue to show that the IDR process is being used because insurers increasingly refuse to negotiate fair rates, offer inadequate reimbursement, and narrow physician networks,” said ACR CEO Dana H. Smetherman, M.D., MPH, MBA, FACR. “When arbitrators consistently reject insurer payment offers and courts find flaws in how QPAs are calculated, policymakers should ask whether the median in-network rate calculations themselves are distorted; a fair and effective IDR process depends on accurate payment data, transparency, and accountability from all stakeholders.”

A recent federal court decision offers further proof that QPAs can be distorted by unreasonable, artificially low rates. On August 11, the U.S. Court of Appeals for the Fifth Circuit ruled that federal QPA regulations improperly permitted insurers to include non-negotiated “ghost rates” and exclude certain bonus or incentive payments from QPA calculations. The court concluded that these practices resulted in artificially low QPAs.

The same ruling pointed to physicians’ high IDR win rates and the frequency with which arbitrators selected payments above the QPA as evidence of artificially low QPAs, not proof that physicians were gaming the system.

ACEP, ACR and ASA agree policymakers should examine unusually large IDR awards and ensure the process operates efficiently. But policymakers should also examine inaccurate QPAs, inadequate initial payments, extremely low insurer offers, insurer defaults, and failures to pay IDR awards in a timely manner.

“The NSA and the IDR process must ensure that physicians who provide care to patients can receive fair and reasonable in-network payments after that care has been delivered,” said ACEP President L. Anthony Cirillo, M.D., FACEP. “Congress and the Administration should ensure QPAs are accurate, require insurers to participate in the IDR process and negotiate with physicians in good faith. It is essential to preserve a fair IDR process that holds both insurers and physicians accountable.”