Unveiling Unexpected Twists in the No Surprises Act

In 2020, Congress passed the No Surprises Act to protect patients from exorbitant medical bills that burdened Americans with substantial debt. This law targets reducing charges for patients treated by out-of-network doctors during emergencies, addressing ER visits that often resulted in so-called surprise bills where insurers would only pay a fraction of the treatment costs.

The No Surprises Act has, in one significant aspect, achieved its goal. Reports indicate that patients are receiving fewer crippling bills. Though concrete data is limited, an insurance industry survey suggests consumers avoided around 10 million surprise bills in the first nine months of 2023. Additionally, a think tank report indicates lower costs for care in emergency situations, including air ambulance trips, as covered by the law.

However, a cumbersome government system for resolving payment disputes between doctors and insurers now jeopardizes the law’s effectiveness, according to various industry players, recent data analyses, and government documents.

Potential consequences include higher insurance premiums and fewer physicians available in rural areas. Doctors claim insurance companies manipulate the system to lower payments, stiff medical practices, and remove physicians from networks.

“The experience has been chaotic and inefficient,” said Dr. Andrea Brault, head of the Emergency Department Practice Management Association. “It’s a costly, lengthy process.”

On the other hand, insurers argue that some physician groups, particularly those owned by private equity investors, exploit the process for higher payments. “A small but significant number of bad actors” have overwhelmed the system to maximize revenue, said Kelly Parsons of the Blue Cross Blue Shield Association, warning that continued trends could unnecessarily raise healthcare costs.

Jeff Wu, deputy director of policy at CMS’ Center for Consumer Information and Insurance Oversight, defended the law. “The No Surprises Act protects millions from surprise medical bills. The large volume of disputes since its implementation shows the law’s necessity,” Wu stated.

Historically, private insurance customers faced giant bills from out-of-network doctors during emergency room visits, with limited choice over the care they received. The No Surprises Act aimed to equalize billing for ER patients, so they incur costs similar to in-network care.

The law has notably altered billing dispute dynamics. According to Zack Cooper, a Yale public health and economics professor whose research influenced the law, conflict now primarily lies between doctors and insurers rather than involving patients. The out-of-network doctors or hospitals bill insurers, which counter with their own offer. While 80% of claims resolve this way, unresolved cases move to a government system where an independent arbiter decides the final payment amount.

Data released in June 2023 revealed that the government significantly underestimated the annual dispute filings, projecting 17,000 cases versus the actual 680,000. This discrepancy resulted in a backlog, delaying payments to medical providers, with some cases extending beyond nine months. Wu mentioned that arbitrators are “scaling up operations” to address these delays.

The law has faced multiple legal challenges, with healthcare provider associations and air ambulance groups filing nearly 20 lawsuits. Two cases have already overturned initial CMS arbitration guidelines, necessitating numerous adjustments and contributing to the delays.

The most intense debate centers on the payment and enforcement of arbitration decisions. Initially, officials believed the law would reduce medical care costs. Contrary to these expectations, arbiters have often awarded higher payments to doctors, potentially increasing insurance premiums.

Loren Adler, a researcher at the Center on Health Policy at Brookings, attributes this to arbiters awarding higher amounts than anticipated. However, doctors argue insurers propose artificially low payments, evidenced by arbiters favoring doctors in most cases. Surveys by emergency physicians’ trade groups show overall a 40% decrease in provider reimbursements since 2022. Envision Healthcare, for instance, cited the law among its bankruptcy reasons.

Should revenue decreases persist, rural hospitals with tight profit margins might reduce services, further impacting areas struggling to attract ER doctors. “This threatens the sustainability of many practices,” said Randy Pilgrim, enterprise chief medical officer for SCP Health. “Practices across over 30 states have been affected.”

Doctors also complain about late or incomplete payments post-arbitration decisions, with CMS complaints reportedly ignored. Wu affirmed that the agency investigates complaints within its jurisdiction. Yet, uncertainties remain about enforcing insurance company payments, a point underlined by Pilgrim, whose company sent 75,000 letters pleading for reimbursements after arbitration victories.

“The process has very little enforcement teeth,” Pilgrim expressed. “You just continue to plead your case and hope for progress.”