Surprise-Billing Legislation: Early Analysis of Impact on Physician Payments
In December 2020, the US Congress passed the No Surprises Act to protect patients from surprise medical bills. These bills typically arose when an individual unknowingly receives care from an out-of-network practitioner at an in-network health care facility. The law also established 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. Before the No Surprises Act, 18 states had enacted their own surprise billing legislation. The federal law defers to the state’s law.
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.
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