The arbitration system implemented by New Jersey in 2018 to resolve surprise billing disputes between insurers and out-of-network providers is advantageous to hospitals and other providers, according to a study published Jan. 5 in Health Affairs.
For the study, researchers analyzed 1,695 surprise billing arbitration cases that were filed and completed in New Jersey in 2019 to better understand how payment decisions compare with other possible alternative payments outside of arbitration.
Specifically, the authors compared arbitration decisions with the prices Medicare pays locally for the same services, the median in-network prices based on commercial insurance claims from the Health Care Cost Institute and the 80th percentile of provider chargemaster prices in New Jersey.
The research provides a case study, as Congress just passed a measure banning surprise billing in the U.S. The measure promotes an arbitration system to resolve disputes between insurers and providers.
Here are seven key findings from the Health Affairs study:
1. The authors found that providers won 59 percent of arbitration decisions, and health plans won in 41 percent of decisions in the study period.
2. The average arbitration awards were considerably higher than typical in-network payment amounts. The average award was $7,222. This payment award is nine times higher than the median in-network price for the rendered service.
3. For just Medicare plans, the average arbitration award was 12.8 times higher than Medicare prices for the service. It is higher because commercial plans typically pay more than Medicare.
4. On average the arbitration dispute included about 2 procedure codes and 30 percent of decisions revolved around a single procedure code.
5. Study authors also said their research shows that the 80th percentile of provider billed charges may serve as a "strong guidepost for arbitration decisions."
6. The four most common specialties that participated in arbitration in New Jersey were orthopedics, general surgery, plastic surgery, and trauma and emergency medicine.
7. "This article brings transparency to New Jersey’s arbitration system for surprise medical bills, showing that the process has proved to be generous for providers," the study authors concluded.