New Yorkers Can Use Arbitration to Dispute Medical Bills, But Cost Savings is Questionable

Since Mar. 31, 2015, New York residents have had an arbitration process to help them dispute medical bills, but new research indicates the plan may driving up the costs of health care.

According to the New York State Department of Financial Services website, patients who have a fully funded New York Health plan are protected from surprise medical bills. They are only responsible for the in-network copayment, coinsurance or deductible if they sign an Assignment of Benefits form that permits the provider to seek payment for the invoice from their health plan and send the form to their health plan and provider, including a copy of the bill or bills they don’t believe they should have to pay.

The New York Independent Dispute Resolution Entity (IDRE) plays the arbitrator, reviews the disputed bill, and makes a determination of the applicable fee within 30 days.

Consumers Kept from Middle of Process to Dispute Medical Bills

According to Vox.com, Sen. Maggie Hassan (D-NH) has introduced a bill to take New York’s arbitration process nationally. She told Vox in an interview that the financial issue is between a provider and the health plan and that the consumer shouldn’t be in the middle of the conversation.

It was also noted by ABC News that a loophole in the Affordable Care Act (ACA) may allow for some of these surprise medical bills, and that reform is needed. New York’s arbitration process attempts to help consumers with these bills as well.

New York’s medical arbitration law is based upon Major League Baseball’s arbitration process that is used to settle team salary disputes. In that realm, the baseball player and the team receive one opportunity to suggest a salary amount. An arbiter decides the final figure, choosing between the two.

Jeffrey Gold, a senior vice president with the New York Hospital Association, provided input in writing the bill.

In an interview with Vox, Gold said, “In baseball arbitration, whoever is closer to reality wins. I felt that was very quick and easy and would very quickly set a market rate for what was an acceptable behavior.”

The IDRE addressed 1,014 billing disputes in 2018, compared with only 396 in 2016. The New York Department of Financial Services said that New Yorkers saved about $400 million over the course of the IDRE’s first three years, but researchers from the USC-Brookings Shaeffer Initiative for Health Policy question the financial perks of the IDRE’s services.

According to Advisory.com, researchers from USC-Brookings conducted an analysis that revealed no evidence that the arbitration saved consumers millions of dollars and “the actual data released in the report strongly suggests the opposite is true.”

Balance billing laws could possibly help consumers, but congress is facing opposition.

Researchers pointed to the fact that the state tells arbiters to consider the 80^th percentile of provider charges as they calculate final payment figures. The researchers faulted this as any way consumers can save money because “Providers’ billed charges, or list prices, are unilaterally set, largely unmoored from market forces, and generally many times higher than in-network negotiated rates or Medicare rates.”

Researchers went on to say that when arbiters must focus on the 80^th percentile of charges, the overall standard is set higher, and premiums will likely increase as a result. Plus, doctors might choose to leave insurance networks in order to receive a higher payment in the end.

The USC-Brookings Shaeffer Initiative for Health Policy also determined that IDRE arbiters decided on a payment that was on average about eight percent higher than the 80^thpercentile of charges, which translates to arbitration costing New Yorkers more money to dispute medical bills, not less.

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This article is not legal advice. It is presented 
for informational purposes only.