How the new surprise billing law is working so far

Insurers say the No Surprises Act has kept 9 million surprise bills from reaching patients.

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Myles Ma, CPFCMyles Ma, CPFCSenior ReporterMyles Ma, CPFC, is a senior reporter and certified personal finance counselor at Policygenius, where he covers insurance and personal finance. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

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The No Surprises Act, which granted consumers new protections against surprise bills from out-of-network health care providers, has been in effect for almost a year. How’s it working out so far? It depends who you ask. Insurance companies say it’s a “huge win for patients.” Health care providers are more wary, and the Texas Medical Association has gone as far as to challenge the law in court. Where does that leave patients?

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The effects of the No Surprises Act

Here’s the situation the No Surprises Act was designed to address. Let’s say you have health insurance and you break your leg. You go to an in-network hospital. You should be covered from most costs, right? Well, it turns out you got treatment from an out-of-network anaesthesiologist while you were still reeling from the pain of your broken leg. Your insurance doesn’t cover the full cost of the anaesthesiologist’s services, so she sends you a bill for the remainder, a practice known as balance billing.

Under the No Surprises Act, this type of “surprise bill” is banned. Now, there’s a process for the anaesthesiologist to haggle over her payment with the insurance company, and you, the patient, should be left out of it. Through the first three quarters of 2022, the law has kept 9 million surprise bills from reaching patients, according to estimates from a joint analysis by AHIP, a trade association representing health insurance companies, and the Blue Cross Blue Shield Association. [1] This estimate represents the number of insurance claims health insurance companies paid that are covered by the No Surprises Act.

AHIP and BCBSA also estimated that nearly 300,000 claims were submitted to independent dispute resolution, an arbitration process for when health care providers and insurance companies can’t agree on a payment amount. Neither side is happy with this process. 

“The tens of thousands of arbitration claims filed by providers clearly demonstrate that more needs to be done to ensure that they don’t abuse the system for their financial gain,” says David Merritt, senior vice president of policy and advocacy for BCBSA.

Meanwhile, the doctors say the rules of the arbitration process favor insurance companies because they ask arbitrators to use the Qualifying Payment Amount — a median rate paid to in-networth health care providers — as a benchmark for resolving the disputes. 

Using a median rate as a benchmark should, in theory, make half of the doctors happy (because they charge less than the median and are given more), and the other half unhappy (because they charge more than the median and have to accept less). In practice, says Christopher Garmon, assistant professor of health administration at the University of Missouri-Kansas City’s Bloch School of Management, research shows the providers who charge more than the median are way higher than the providers who charge less than the median are below it.

“The physicians above are going to lose more than the physicians below will gain,” Garmon says. 

In addition, in some areas, out-of-network prices are a whole lot higher than in-network prices, so providers in those areas will lose out as well. Garmon noted that these comparisons are based on the Qualifying Payment Amount — so far there’s no data on how much providers are actually getting paid in the arbitration process, but given the litigation, it’s clear some aren’t happy with the results.

How the No Surprises Act impacts patients

The biggest impact of the Act is that insurance providers and doctors are arguing with each other (and the government), not patients. 

“I like that it takes patients out of the middle,” Garmon says. “That’s the most important thing.”

You now have legal protections against balance billing, and a website and phone number to complain if you still get a surprise bill. Whether these protections are saving people money is still unclear, Garmon says. It will likely be years before researchers have the data to make a call.

And the law still has a huge hole: It doesn’t cover bills from ground ambulances. About 3 million privately insured patients use emergency ground transportation each year, and half receive a balanced bill, since many ambulance services are deemed out of network. [2] While the No Surprises Act doesn’t cover ground ambulances, the law does create a committee to study billing for ambulance services, and it’s scheduled to meet in January. [3] Until then, ambulances could remain one reason why even many people with health insurance avoid medical care.

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