Aetna suit against private-equity radiologists tests No Surprises Act

Aetna has fired the health insurance industry's first salvo against private equity-backed providers it alleges manipulate the No Surprises Act to inflate reimbursements by staying out of health plan networks.

Congress and President Donald Trump enacted the No Surprises Act in 2020 to shield patients from certain unexpected out-of-network charges. Supporters also anticipated the policy would reduce costs and eliminate financial incentives for providers to avoid contracting with insurers. But according to Aetna, Radiology Partners has found a new strategy: remaining outside its network and leveraging the law’s independent dispute resolution, or IDR, to generate bigger payments.

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“Insurers are keeping an eye on this type of activity. The case could shape how the IDR process works going forward,” said Matthew Fiedler, a senior fellow at the Brookings Institution Center on Health Policy.

CVS Health subsidiary Aetna's allegations suggest the No Surprises Act in fact encourages providers to sell themselves to private equity groups, which have demonstrated success at winning higher payments from independent arbitrators, and not participate in insurance networks, Fiedler said.

The case submitted to the U.S. District Court for the Middle District of Florida on Dec. 23 is the first instance of a health insurance company claiming a provider unlawfully manipulated the No Surprises Act's independent dispute resolution to improperly boost payments, Fiedler said.

“The precedent that gets set here is going to inform how people weigh the risk of when you actually go to court over an IDR decision,” Fiedler said.

The No Surprises Act protects patients against unexpected out-of-network medical bills from hospital emergency departments and air ambulances and for non-emergency care received at in-network hospitals and ambulatory surgical centers. Mediators oversee an independent dispute resolution process to settle claims when insurers and out-of-network providers fail to reach agreement on reimbursement.

Neither health insurance companies nor providers are satisfied with how the independent dispute resolution process has worked so far.

Providers have initiated a slew of legal challenges alleging insurers simply won't hand over the money arbitrators say they owe. Insurers believe far too many out-of-network bills wind up going through independent dispute resolution.

Until now, insurers had been less likely to seek relief from the courts. In part, that's because they usually manage to avoid mediation, said Jack Hoadley, research professor emeritus at the Georgetown University McCourt School of Public Policy.

Providers accepted insurers' offers without engaging in independent dispute resolution 73% of the time during the first three quarters of 2023, the health insurance trade groups AHIP and the Blue Cross Blue Shield Association reported last January.

“Most of insurers' payment offers get accepted by the providers, so maybe they don't feel they need to make as big a deal about this,’” Hoadley said. “But, at some point, maybe their patience wears out on a particular provider organization. That may be why you saw this lawsuit.”

The insurance industry has observed that providers owned by private equity firms, such as El Segundo, California-based Radiology Partners, initiate more cases, win more often and receive higher payments than other providers. Those reimbursements can substantially exceed in-network rates and the baseline Qualifying Payment Amounts defined under the No Surprises Act.

Providers with private-equity investors won 90% of billing disputes in 2023, compared with 39% for providers with different ownership structures, researchers from the University of Southern California, the University of Missouri, Lafayette College and the Brookings Institution reported in the journal Health Affairs in October.

The payments mediators granted to providers with private equity investors were 63% higher than what other providers received in 2023, the researchers determined using Centers for Medicare and Medicaid Services data.

Private equity-backed Radiology Partners, TeamHealth, SCP Health and Envision Healthcare collectively accounted for about 70% of No Surprises Act disputes in 2023, according to an analysis of CMS data Hoadley and his Georgetown colleagues published in Health Affairs in August. Arbitrators sided against insurers 85% of the time in 2023, they found.

That year, Radiology Partners won reimbursements as much as eight times higher than the Qualifying Payment Amount, the Georgetown researchers reported.

If Aetna prevails over Radiology Partners, it could also pave the way for more insurers looking to fight arbitration decisions in court. It could also compel other insurers to scrutinize the bills they receive from Radiology Partners.

According to Aetna, Radiology Partners fraudulently submitted in-network claims through an out-of-network provider in hopes mediators would order payments above the insurer's contracted rates.

Aetna alleges Radiology Partners sought reimbursement for Mori, Bean and Brooks, an affiliated out-of-network imaging practice in Jacksonville, Florida, rather than for the in-network providers that performed the services. Aetna says that resulted in "tens of millions" of dollars in improper payments.

The insurer, which declined to comment, seeks repayment and an injunction forbidding Radiology Partners from submitting additional claims for arbitration.

Radiology Partners rejects these accusations and has sought CMS sanctions against Aetna for not handing over the ordered payments, a spokesperson wrote in an email.

“Aetna does not want to negotiate [and] does not want to pay when it loses disputes in the [No Surprises Act] arbitration process. It does, however, want a judge to say it does not have to pay its bills from already-decided disputes,” the Radiology Partners spokesperson wrote.