Blog | Health Plan Payment and Reimbursement

Texas-based study raises questions about impact of using additional criteria in No Surprises Act arbitration cases

Blog | Health Plan Payment and Reimbursement

Texas-based study raises questions about impact of using additional criteria in No Surprises Act arbitration cases

Arbiters in Texas have tended to issue judgments that mirror the median in-network rate even with guidance instructing them to consider other factors, researchers reported.

Results of a new study indicate that ongoing litigation over the independent dispute resolution (IDR) process established by the No Surprises Act may not have a major impact on IDR outcomes.

The study of IDR outcomes in Texas, which in 2020 implemented a law prohibiting surprise billing, suggests “arbiters may anchor to a median in-network price benchmark," researchers reported in JAMA.

Initially, the U.S. Department of Health and Human Services issued regulations requiring arbiters to primarily consider the median in-network payment amount for a given service in a given market (i.e., the qualifying payment amount) when settling disputes between providers and health plans over out-of-network payments under the No Surprises Act.

Provider representatives have filed at least six different lawsuits challenging those regulations, saying Congress intended for arbiters to consider additional criteria. In the lone case to be decided thus far, a judge said the regulations deviated from legislative intent and IDR arbiters should assess other criteria as well.

HHS has been working on new regulations that purportedly will incorporate those criteria. A key finding of the new study calls into question whether such changes will have a substantial effect on outcomes.

Specifically, in Texas’s IDR process, final allowed amounts closely tracked the median in-network benchmark, with a median ratio of 1.06 between the two metrics. In comparison, the ratio of final allowed amounts to the 80th-percentile-of-charges benchmark was 0.37.

Median in-network prices and 80th percentile of charges both are among the criteria required to be used in Texas IDR cases. The two benchmarks are provided by the independent nonprofit FAIR Health.

The 80th percentile of charges is not among the statutory criteria in the federal IDR process, and the absence of that metric might be a drag on final judgments relative to those seen in Texas and even more so in other states that have arbitration mechanisms.

“Final allowed amounts resulting from IDR in Texas were lower than in New York and New Jersey, where arbiters are not shown median in-network prices, and previous research found that mean awards reflected the 80th percentile of charges benchmark,” the researchers noted.

Study methodology and data

As reported in the study, researchers with the University of Southern California and the University of Pennsylvania examined Texas IDR cases spanning a 15-month period starting in January 2020.

Among more than 32,000 unique IDR cases involving clinicians, 80% of services fell under the category of emergency medicine and 12% were for anesthesia.

In the sample of disputed services, mean charges were $2,306 and mean initial allowed amounts were $192. The mean judgment was $635 — virtually identical to the average FAIR Health median allowed amount benchmark of $634.

Unlike the federal IDR system, Texas includes the option for disputes to be settled by teleconference before proceeding to arbitration. In the study sample, 74% of cases were settled via teleconference.

But that preliminary step may not make a huge difference in the arbitration outcomes. The researchers reported that the median ratio of final allowed amounts to FAIR Health median in-network allowed amounts was 1.12 for arbitrations compared with 1.03 for settlements.

About the Author

Nick Hut

is a senior editor with HFMA, Westchester, Ill. (

Sign up for a free guest account and get access to five free articles every month.


Related Articles | Health Plan Payment and Reimbursement

News | Medicare Payment and Reimbursement

Providers lose pair of Supreme Court decisions, including a case about disproportionate share hospital payments

In separate cases, the Supreme Court said HHS’s formula for determining DSH payments is statutorily correct and that health plans can limit outpatient dialysis coverage.

News | Labor Cost Management

News Briefs: Hospital labor costs rose by almost 40% between 2019 and early 2022

As published in hfm magazine, a monthly roundup of top news for healthcare finance professionals.

Blog | Billing and Collections

Insurer groups issue report showing the No Surprises Act’s early impact on patient billing

More than 2 million potential surprise medical bills were prevented during the first two months of the No Surprises Act, according to the health insurance lobby.

News | Pricing

Hospital prices increasingly are coming under a microscope

Newly issued reports and policy recommendations are examining hospital prices in the context of high healthcare costs.