New paper in @Health_Affairs looking at arbitration over surprise bills in NJ, w/ @BenChartock, Bich Ly, @ErinLDuffy1, & Erin Trish.
It's not good.
Arbitration awards appear to be based on charges, averaging *5.7 times* prevailing in-network prices.
healthaffairs.org/doi/full/10.13…
It's not good.
Arbitration awards appear to be based on charges, averaging *5.7 times* prevailing in-network prices.
healthaffairs.org/doi/full/10.13…
Moreover, arbitration awards >25x median in-network prices were not uncommon.
New Jersey, similar to New York, illustrates the danger of basing an arbitration system on unilaterally-set provider charges.
Such an approach is destined to unnecessarily increase health costs.
New Jersey, similar to New York, illustrates the danger of basing an arbitration system on unilaterally-set provider charges.
Such an approach is destined to unnecessarily increase health costs.
However, it's important to disentangle the benchmark from the mechanism. Arbitration in it of itself is not necessarily the problem in New Jersey (or NY). The problem is basing decisions on the 80th %-tile of provider charges, an extremely high amount untethered by mrkt forces.
The new federal law also utilizes arbitration, but takes heed of the lessons from NJ & NY, and generally follows the better approach we outline in the paper by prohibiting consideration of charges & limiting arbitration to infrequent or unusual services.
In light of this analysis (& others), states such as NJ & NY should strongly consider adopting the more consumer-friendly version of arbitration established in the federal law for their entire state.
healthaffairs.org/doi/full/10.13…
brookings.edu/blog/usc-brook…
healthaffairs.org/doi/full/10.13…
brookings.edu/blog/usc-brook…
Such a decision should result in substantial savings for state residents and avoid the bureaucratic nightmare of two parallel arbitration systems running in a state.
/FIN
/FIN
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