Healthcare providers and insurers in Florida will use the state's own dispute resolution process for out-of-network bills instead of the controversial methodology in the federal No Surprises Act.
About 30 states, including Florida, already had their own laws governing balance billing when the new federal balance billing ban was passed. The Centers for Medicare & Medicaid Services is now determining whether those state laws can supersede the No Surprises Act when it comes to issues like payment dispute resolution.
This week, the agency disclosed its finding that Florida's methodology will determine payment resolution in most situations. That's on top of about a dozen other states found to have so-called "specified state laws," meaning their own laws will supersede at least some aspects of the federal balance billing law.
It's good news for Florida healthcare providers, because the state's dispute resolution process is much friendlier to them than the federal one, which defers to health plans' median in-network rates for services if providers and insurers can't reach agreement. Hospital and physician lobbying groups are suing to block that part of the law, which they say unfairly favors insurers.
In Florida, insurers must reimburse out-of-network emergency providers the lesser of the provider's charges, the usual and customary charge for a similar service in that region or a mutually agreed upon charge. That's typically going to result in higher reimbursement than under the federal rules, said Jack Hoadley, research professor emeritus with Georgetown University's Center on Health Insurance Reforms.
"Usual and customary is still based on the provider's charges," he said. "It's not based on the insurer's paid amount, and that's why this is likely to be more favorable to providers than if they operated under the federal system."
What's truly "usual and customary" often gets decided by a judge or jury when the disputes land in court, said Becky Greenfield, a partner with the Florida law firm Wolfe Pincavage. She said she thinks that's preferable to the federal dispute resolution process, which relies on arbitrators and doesn't allow their decisions to be reviewed by courts.
"It may take a little longer, but we believe it's the fairest way to get to the right answer, and for fair reimbursement to providers," Greenfield said.
Florida offers a voluntary arbitration program for providers and insurers, but it appears to be rarely used. It assessed 68 claim disputes in 2020. The claim amounts in question ranged from $1,256 to $669,019.
Florida providers and payers will use the federal dispute resolution process when it comes to services provided to members of health maintenance organizations for claims that are below certain thresholds, such as $10,000 for hospital inpatient claims with non-contracted providers. All states, including Florida, will use the federal process for air ambulance services, which states cannot regulate.
Not all "specified state laws" work out in providers' favor. In California and Maryland, out-of-network payments are based on a percentage of Medicare, which is often lower than the usual and customary rate, Hoadley said. In Texas, the methodology is similar to Florida's in that dispute resolution relies on billed charges and usual and customary rates.
"What we're finding in Texas has been that the decisions are coming well above network rates," Hoadley said. "It's a different mechanism from Florida but it has a similar end result."
By Hoadley's reading, another seven states have laws that potentially constitute "specified state laws," although the CMS has not issued findings yet. Those states are Colorado, Illinois, New Jersey, New York, Nevada, Ohio and Arizona.
It's important to remember that regardless of whether dispute resolution follows state or federal laws, patients will get the same protection from the No Surprises Act, Hoadley said.
"Consumers will pay in-network cost sharing regardless," he said, "but from the perspective of providers and payers, it does matter."