Nutex Health's Arbitration Strategy: A Win for Providers and Patients

Nutex Health Inc. (NASDAQ: NUTX), a physician-led, integrated healthcare delivery system, has provided an update on its strategic participation in the Independent Dispute Resolution (IDR) process under the No Surprises Act (NSA). The company, which operates 24 state-of-the-art micro-hospitals in 11 states and primary care-centric, risk-bearing physician networks, has achieved significant success with its arbitration strategy, submitting 60-70% of billable visits to arbitration each month and maintaining an 80% success rate in Q4 2024.



The company's proactive approach to arbitration under the No Surprises Act has yielded positive results, reinforcing its commitment to fair reimbursement. By effectively leveraging its industry-leading expertise and knowledge, Nutex Health has been able to secure rightful payments for its facilities and providers while continuing to deliver high-quality, accessible care to its communities.

Nutex Health's arbitration success aligns with its broader strategic initiatives, which include optimizing hospital operations, expanding physician networks, and driving efficiencies across its integrated healthcare delivery model. The company cannot predict whether arbitration successes and claim recovery will continue at current levels, as any significant revisions to the federal arbitration process may result in a substantial decrease in claim amounts recovered in the future. Additionally, Nutex Health is unable to predict future regulatory changes, evolving arbitration practices, and payer responses to ongoing enforcement of the NSA, all of which may have an adverse impact on the company's ability to recover on its claims.

In March 2023, the Centers for Medicare & Medicaid Services (CMS) issued new guidance applicable to the IDR process in the NSA, effective for payment determinations made on or after February 6, 2023. The revisions were put in place to help balance the arbitration process by including the recent Texas Medical Association Court Order and removing "double counting" provisions. From now on, independent arbiters must consider all evidence given to them by the disputing parties, and not just the Qualified Payment Amount (QPA). This news comes as a major win for Nutex Health and other providers' quest to make the arbitration process more equitable and straightforward.

After being suspended for services rendered after October 25, 2022, IDR entities have been instructed to resume payments. Now that the IDR process is reopened for all claims, arbiters can start making headway on the backlog. Nutex Health has always advocated for a fair payment system to providers so that it can continue to deliver high-quality, efficient care to its patients. Having the insurers take into account all other factors, and not just the QPA, for provider payments is a major step forward, and better aligns with the original intent of the NSA.

In conclusion, Nutex Health's arbitration strategy under the No Surprises Act has proven successful, with an 80%+ success rate in Q4 2024. The company's proactive approach, industry-leading expertise, and effective use of resources have contributed to its high success rate. While regulatory changes, payer responses, and evolving arbitration practices pose risks to the long-term sustainability of Nutex Health's current success rates, the company is well-positioned to mitigate these risks by closely monitoring regulatory developments, adapting its arbitration strategy, and diversifying its revenue streams. As Nutex Health continues to optimize its hospital operations and expand its physician networks, its arbitration strategy will remain a critical component of its integrated healthcare delivery model, ensuring fair reimbursement for providers and high-quality care for patients.