Premera Blue Cross is suing a weight loss clinic, its physician-owner and its revenue cycle management firm, alleging repeated abuse of the No Surprises Act’s independent dispute resolution process to extract inflated payments from the insurer.
The lawsuit, filed April 6 in federal court in Seattle, alleges that Transform Weight Loss, an out-of-network provider operating ambulatory surgery centers in Washington, began filing IDR proceedings with CMS around 2024 for weight loss and related services provided to Premera members at its facilities.
Despite that, Premera alleges that Transform and its RCM firm repeatedly filed false attestations to CMS certifying that the services qualified for IDR. Once inside the process, Transform allegedly submitted payment offers that exceeded in-network rates by more than 1,000%. Because the NSA does not allow insurers to opt out of IDR proceedings without risking a default award, Premera says it was forced to participate, pay a non-refundable $115 administrative fee per dispute, and devote staff resources to responding, all while knowing it did not owe the amounts being sought.
Premera also alleges that IDR entities, who are only compensated when they issue a final award, have a financial incentive to overlook eligibility objections and proceed to payment determinations anyway. The insurer said it raised objections at each stage of the process and that the defendants were notified their conduct was improper and told to stop, to which they allegedly responded by saying they would continue filing IDR disputes.
Premera is asking the court to declare any IDR determinations obtained by Transform as invalid, ban the defendants from filing future IDR proceedings for services provided at out-of-network facilities, and bar them from trying to enforce existing IDR awards. The insurer is also seeking treble damages under Washington state consumer protection law.
In the complaint, Premera warned that if left unchecked, the defendants’ conduct will “deplete funds set aside for covering healthcare for citizens of Washington, incentivize copy-cat behavior by other out-of-network providers, and make it more difficult for insurers to build networks with providers.”
The lawsuit arrives as the IDR process remains a source of ongoing controversy and litigation nationally more than three years after taking effect. Providers have been winning roughly 80% of NSA arbitration cases, with median payments reaching 3.72 times the qualifying payment amount, 2.04 times actual median local in-network rates, and 4.5 times Medicare rates. Insurers have also grown increasingly vocal and enacted reimbursement policies in response to what they describe as a broken arbitration system that drives up costs.
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