Measuring the effectiveness of the No Surprises Act

The No Surprises Act (NSA), implemented to combat surprise medical billing and enhance transparency in healthcare costs, has been in effect since January 1, 2022. Since its inception, the NSA has been touted as the solution to surprise medical billing and a huge win for patients. While the NSA’s purpose of preventing surprise medical billing is fundamentally good, its implementation—and more importantly, its effectiveness—reveals a more complex reality. As with any new program designed to protect patients from financial ruin when accessing care, it is important to ask whether the program is achieving its intended purpose, or whether the benefits have been accumulated by another party along the way.

The No Surprises Act benefits patients and insurers

The NSA has made significant strides in protecting patients from surprise medical bills, with estimates suggesting it has blocked nine million surprise bills since its enactment. By establishing cost-sharing limitations, providers are now prohibited from billing exorbitant charges for out-of-network care received during emergencies at in-network facilities. To the vast majority of Americans, this is common sense and prevents physicians and physician management organizations from charging 2-3 times the in-network rate for services provided by out-of-network providers at in-network facilities.

While the claims data suggests the NSA has been effective in preventing surprise bills from reaching patients, it has very likely helped insurance companies save money as well. Currently, when out-of-network providers submit a bill for a service, they can only bill the patient the in-network rate. If they wish to collect an additional fee for out-of-network services, it is then up to the provider and the payer to negotiate what that fee will be. This negotiation is now arbitrated by the Independent Dispute Resolution (IDR) process, which is designed to be an independent third party designed to facilitate these negotiations. Currently, the disputed reimbursement rates are tied to the median contract value of the service in 2019 with adjustment for inflation.

This means that insurers are also saving money, on average. Decreasing reimbursement rates for out-of-network providers incentivizes them [antecedent?] to join payers’ networks, which results in lower costs of care and savings for the patient and payor. Because the IDR process is tied to 2019 rates plus inflation, this also means the average payout for out-of-network services will be much lower post-implementation of the NSA than it would have been in 2019 or before. What is unclear, however, is whether these savings are being passed on to consumers. Existing data suggests it is not, as average premiums for family and single plans are essentially equivalent from 2021–2022.

Challenges and room for improvement

The NSA has blocked many surprise billing attempts, but it is likely not blocking them all. At least one in five patients continues to encounter unexpected bills due to various factors, including inaccurate network directories, disputes over reimbursement rates, and the emergence of new billing practices designed to circumvent the act’s protections. While the hundreds of thousands of arbitration claims filed with the IDR have led some to believe that millions of surprise bills have been blocked, it has led others to wonder if providers are engaging with the IDR process more than they should to receive higher than in-network reimbursement rates.

The NSA is not effectively reaching its intended audience. Even after its implementation, one in four individuals still reports skipping care due to fear of receiving a surprise medical bill. Although the NSA received nearly ten times more surprise billing claims than they expected, this likely represents a fraction of the individuals receiving surprise out-of-network bills. For example, as recently as 2019, payers denied approximately 17 percent of all in-network claims, and less than one percent of these denied claims were appealed. Even worse, six in ten of these appeals were denied after the review process was completed. In effect, this suggests that consumers are highly unlikely to turn to appeals processes when they receive surprise medical bills.

Due to the sheer size of the U.S. healthcare system, monitoring compliance with the NSA presents ongoing challenges. In large part, compliance will depend on claims made by patients. For patients to file a claim, they must first know that surprise billing for emergencies or out-of-network non-emergencies is illegal. They must also understand and have the resources to file the claim themselves. Whether this will pose a challenge to compliance with the NSA remains unclear.

While the No Surprises Act has shown positive developments in protecting patients from surprise medical bills and promoting transparency, its full effects are mired by complexities surrounding implementation, network adequacy, and compliance monitoring, all of which underscore the need for ongoing evaluation, refinement, and collaboration among all stakeholders. By learning from the early experiences and feedback, policymakers, healthcare providers, insurers, and regulators can work together to optimize the act’s impact, providing patients with greater protection against surprise medical bills and fostering a more transparent and consumer-centric healthcare system.