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Without question, the new federal law banning surprise billing is achieving its goal of protecting patients from enormous medical bills. But in doing so, the measure, which was initially projected to lower federal spending, appears to be raising costs elsewhere.

The Biden administration’s new progress report on the process for arbitrating disagreements between insurance companies and providers, which covers the first six months of 2023, shows that in over 80% of payment disputes, the arbiter settled on an amount that was more than the median in-network rate for that service. In other words, insurers were ordered to pay more to an out-of-network provider than they’d pay to a contracted one. Not only that, the sheer volume of disputes means the three federal agencies that run the program are devoting much more time to it than expected.

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“It raises concerns for folks that envisioned the arbitration process as helping to moderate costs rather than be a tool these companies can leverage to obtain even higher payments,” said Zachary Baron, the director of Georgetown University’s Health Policy and Law Initiative.

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