In December 2020, the US Congress passed the ‘No Surprises Act’, which is in effect as of January 2022. The purpose of this legislation is to protect patients from surprise medical bills that may occur when an individual unknowingly receives care from an out-of-network practitioner at an in-network health care facility. The law also establishes a method of determining payments made by a patient’s insurer to the out-of-network practitioner. Insurers and practitioners must first negotiate out-of-network rates. If negotiations fail, they may proceed to a federal independent dispute resolution (IDR) process in which each party submits a price, and an arbitrator decides using the insurer’s median in-network rate as a benchmark.

Legislative Goals

• Restrict excessive out-of-pocket costs
• Emergency services must continue to be covered
  • Without prior authorization requirement
  • Regardless of whether or not a provider or facility is in-network

What is a ‘Suprise’ Bill

• Typically, health plans do not cover the entire out-of-network cost
• This could leave a patient with higher costs than if they’d been seen by an in-network provider
  • Often occurs in an emergency situation where a patient lacks the ability to choose the provider
• If out-of-network provider bills the patient for the difference between the charges the provider bills and the amount paid by the consumer’s health plan (known as balance billing) an unexpected balance bill will be generated
• The unexpected balance bill is also known as a surprise bill

Key Elements of the Act

• Establishing an independent dispute resolution process to determine out-of-network payment amounts between providers (including air ambulance providers) or facilities and health plans
• Requiring good-faith estimates of medical items or services for uninsured (or self-paying) individuals
• Establishing a patient-provider dispute resolution process for uninsured (or self-paying) individuals to determine payment amounts due to a provider or facility under certain circumstances
• Providing a way to appeal certain health plan decisions

Early Evidence Regarding Impact on Physician Payments

Before the No Surprises Act, 18 states had enacted their own surprise billing legislation.

Using anesthesia services, researchers (JAMA Internal Medicine) conducted a retrospective economic analysis of data from 2014 to 2017 from three states, California, Florida, and New York, comparing price changes before and after with 45 states that had not passed such ‘surprise bill’ legislation. Anesthesiology is one of the specialties with a great potential for surprise bills because patients typically do not choose an anesthesiologist for service.

Each of the three study states used a different payment standard or independent dispute resolution to determine the out-of-network rate paid to practitioners. The data set to examine the effect of the law had short before and after periods. Finally, not all commercial claims were examined, only claims from three of the largest US insurers.

The researchers learned that compared to prices in the control state, prices paid to in-network and out-of-network anesthesiologists in hospital outpatient departments and ambulatory surgery centers declined after surprise-billing legislation was enacted in the study states. California practitioners have argued that out-of-network prices were too low compared to in-network prices. Florida saw the largest out-of-network decline but that may have occurred because those prices were already substantially higher than those of in-network prices.

In summary, state surprise-billing legislation directly lowered anesthesia out-of-network prices and indirectly lowered in-network prices in outpatient departments and ambulatory surgery centers. These findings, however, cannot necessarily be extrapolated to other specialties. Data collection will need to continue to have more comprehensive information over a longer period of time.

Learn More – Primary Sources

No Surprises Act | CMS

Association of Surprise-Billing Legislation with Prices Paid to In-Network and Out-of-Network Anesthesiologists in California, Florida, and New York: An Economic Analysis (JAMA Internal Medicine)

Surprise Billing in Surgical Care Episodes – Overview, Ethical Concerns, and Policy Solutions in Light of COVID-19 (Annals of Surgery)

Related ObG Topics: