Imagine recently having a medical procedure and you’re on the road to recovery. You’re beginning to feel well, planning to go back to work, and out of the blue, receive a medical bill that you weren’t expecting, sending you into emotional and financial distress. You went to a facility that was in your health plan’s network. The doctor that treated you was in your network. But were they? Unfortunately, this scenario and surprise medical bills plays out all too often; patients who “did the right thing” inadvertently received care (and bills) from physicians and providers outside of their health insurance network. Shockingly, studies indicate that this situation occurs approximately in 1 in 5 emergency room visits and between 9% and 16% of in-network (INN) hospitalizations for non-emergency care, leaving patients burdened with unexpected bills from out-of-network (OON) providers they didn’t have a choice in selecting. Recognizing the unfairness of this issue, Congress passed the No Surprises Act (NSA) in 2020 and estimated that the law would protect patients from approximately 10 million OON medical bills annually. Now, approximately 18 months after the law’s enactment, it is crucial to assess its impact and shed light on the challenges it faces in achieving and maintaining its objectives.
The NSA was signed into law as part of the Consolidated Appropriations Act (CAA) of 2021 and went into effect on January 1, 2022. The NSA applies to any of the following three situations: 1) a patient receives emergency care at an OON facility or from an OON provider; 2) a patient requires emergency air-ambulance transportation (excluding ground-ambulance services); 3) a patient receives non-emergency care at an INN facility but is involuntarily treated by an OON provider.
In these circumstances, the NSA limits a patient’s financial exposure to INN cost sharing, and providers are prohibited from sending balance bills for any amount above the patient’s cost sharing amount. The federal law applies to fully insured plans (e.g., employer-based and individual), and builds on state laws enacted in 33 states by expanding protections to patients covered by self-funded plans.
The NSA tackles the issue of surprise medical bills but who pays the bill when a provider is not contracted with a health plan? And how much does the health plan or patient actually have to pay? The NSA takes the patient out of the middle and requires the provider and health plan to settle the bill. In order to do this, the law established a comprehensive payment determination process. While federal law typically defers to state surprise billing policies since they are more comprehensive, the NSA pre-empts any gaps in state law.
When it comes to payment for OON services, the law outlines three potential steps. First, the health plan pays the OON provider an amount it deems appropriate, and the provider can accept this as payment in full. If the provider does not accept the payment in full from the health plan, they can enter into standard negotiating procedures and reach a mutually agreed-upon amount. If these first two attempts are unsuccessful, the parties can enter into an independent dispute resolution (IDR) process. This process requires a neutral third party to examine the case, review payment offers from each disputing party, and determine the payment amount based on the qualifying payment amount (QPA) or the median in-network rate. Factors such as geography, patient acuity, market share of both entities, and clinician characteristics (e.g., tenure) factor into determining the value of the disputed item or service.
In the first year and a half, the NSA has yielded promising early results, demonstrating a significant impact benefiting many patients. In 2022, AHIP and the Blue Cross Blue Shield Association (BCBSA) conducted a comprehensive survey to gauge the reach of NSA-eligible claims among their commercial health plan members, encompassing both employer-sponsored insurance and the individual market. The survey findings illuminate the scope of the NSA’s impact, as 2 million commercial claims were identified as NSA-eligible between January and February 2022 alone. This figure underscores the extent to which patients have been shielded from the burdensome weight of surprise medical bills.
A noteworthy report released by the Centers for Medicare and Medicaid Services (CMS) in December 2022 provided crucial insights into the arbitration process. During the period between April and September 2022, a total of 86,807 disputes were filed through the IDR process. Of those, 75% of all disputes that were initiated were filed by ten parties. Interestingly, the report revealed that four private-equity-owned healthcare companies initiated 41% of the disputes.
More recently, CMS released a more comprehensive report on disputes initiated by providers, facilities, providers of air ambulance services, and health plans between April 2022 and March 2023. The volume of cases increased to a level nearly 14 times higher than initially estimated for the full calendar year, reaching a staggering 334,828 disputes. Within this time frame, non-initiating parties challenged 122,781 disputes, ultimately rendering 39,890 disputes ineligible. As of March 2023, payment decisions were made for 42,158 disputes. Initiating parties were successful in approximately 71% of the disputes, and non-initiating parties were successful in approximately 29% of the disputes. These findings not only shed light on the complexities and dynamics within the IDR process but also accentuate how the initiating party is more likely to be favored during the arbitration process.
While the NSA has shown promise in its initial stages, it has encountered its fair share of legal battles. To date, nearly 20 lawsuits have been filed by providers, raising concerns about various statutory provisions, agency regulations, guidance, and payment decisions made during the IDR process. At the heart of these legal disputes lies the contentious role of the QPA, which providers argue heavily favors insurers and could potentially drive providers out of the workforce. On the other side, insurers maintain that the NSA process is upholding its payment guidelines and is a necessary safeguard for protecting patients from shockingly high and unanticipated medical bills.
So far, these legal battles have culminated in a federal judge in Texas ruling in favor of the providers twice, resulting in the Department of Health and Human Services (HHS) revising its guidance on the IDR process and temporarily halting the process at one point in time. Patients may feel secure for now, but as the IDR continues to evolve and if the decisions in the process result in higher payments to providers someone will have to absorb those payments. For now, health plans will incur the cost of higher payments to providers, but they may eventually pass on these higher payments to employers and patients. A process that once safeguarded patients from expensive medical bills may eventually impact them in the form of higher out-of-pocket health care costs and premiums.
The NSA has emerged as a powerful mechanism that mitigates surprise billing by completely removing the patient from the middle. Early results have demonstrated its significant impact, with many patients being shielded from unexpected financial burdens. However, the road to this early success has not been easy. The IDR process will need to continue to be monitored closely to ensure its adverse or unintended consequences for employers and patients is limited.
CPR’s Project and Research Manager, Dayne Slay wrote this blog post.