The No Surprises Act appears to have actually reduced the number of surprise medical bills received by patients, according to people familiar with the topic.
There was a “huge falloff” over the past year in appeals for billing help from people looking for help in resolving big medical bills, Susan Null, from one billing advocate, Systemedic, said in a telephone interview. “We attribute it to the surprise medical bill law. It can’t be that all of a sudden no one is getting medical bills.”
The No Surprises Act was signed into law on December 27, 2020. It specifically was written to protect patients from going to an in-network hospital or doctor and getting an out-of-network bill for a related service, like an emergency room doctor or an out-of-network anesthesiologist or cardiologist. Bills for air ambulances — which are often exorbitant — were also affected, but not ground ambulances. Most of its provisions took effect at the beginning of 2022, but it has taken a bit for the consequences to be clear, and some were skeptical that the law would work well and that the industry would give up the money easily.
“During the first nine months of 2023, more than 10 million unique claims from health care facilities, providers, and air ambulance providers were subject to the protections of the federal law, which limits out-of-pocket costs for consumers,” according to a Jan. 26 report from AHIP, the insurance company trade group, and the Blue Cross Blue Shield Association. The report said that appeals are being submitted under the law for independent dispute resolution, but “the law’s components appear to be working to protect consumers and resolve payments.”
In related developments, while hospitals and insurers are still arguing over who will actually pay the surprise bills, the end to such easy money has affected other parts of the industry, bring a wave of financial crises to companies that depended on the money.
Of course there are many other kinds of surprise bills — for example, if you have a high deductible and have a surprisingly large bill because of that. Or a flawed bill not accounting for your insurance, or a service that is not covered for some reason — many of these bills also surprise patients, but they are not governed by the No Surprises Act.
‘Like night and day’
I told Null I had been somewhat surprised that the N.S.A. had had such an effect, considering the wide range of types of surprise bills that people encountered. She said she was surprised too. “It was a seismic effect,” she said. “It’s like night and day.”
Null said it’s not just her practice — she was at a meeting a few weeks ago of a group of advocacy professionals, where this was a topic of conversation. “People were saying, ‘I’m thinking about getting a job someplace else, because there’s just not enough coming in,'” she said.
The timing tracks with the fullblown implementation of No Surprises, she said. While the law went into effect in early 2022, it was not fully clear how it would affect people immediately. Understanding the reasons, and separating out the effects of the pandemic, has taken some time.
What they are seeing is smaller billing appeals, she said — bills of around or under $1,000, for example, or billing questions that are caused by deductibles or co-insurance charges that people have questions about, but that are legitimately due under the conditions of their insurance policies. Also, Null said, they are seeing bills from people with chronic health needs or ill children, who are “overwhelmed by the volume of the paper for all the care they receive.” But it’s nothing like the multi-thousand-dollar bills from an out-of-network E.R. doctor or air ambulance that used to be so common.
She also said it’s her impression that the change in laws about what kind of debt can go on your credit report has had an effect on people — perhaps they are less concerned that an unpaid bill will ding their credit. (Details here and here and here.) But most of the effect, she thinks, is from the No Surprises Act.
What should someone do if they get what they think is a surprise bill?
First, Null said, look at the bill to make sure it’s technically O.K. — the proper procedure and place of service. Then they should go to the insurance company and say, “I believe this is a surprise bill.” The insurance company will then let them know what forms to fill out and what else to do — and all along the way, it pays to take copious notes about what they are told and what to do about it, she said. And then they should follow up — don’t just put it into the hands of the insurer, doctor or hospital and assume that it’s been solved.
Hospitals and insurers still arguing
While it seems that — at least for now — patients are off the hook, what has not been resolved, experts say, is the final disposition of these disputed bills. Doctors and hospitals are targeting insurers for not making payments under the No Surprises Act. Insurers are dragging their feet on paying.
In the pre-No Surprises era, when doctors didn’t get paid, they went after patients. But the No Surprises Act forbids that, instead sending a billing dispute between a doctor and an insurer into an arbitration process. The process has been slow and cumbersome, and subject to a series of court cases and procedural disputes. But now some of the court cases have been decided — and doctors and hospitals say insurers are refusing to pay.
“The rollout has been challenging,” a GAO report in late 2023 said. “As of June 2023, over 490,000 disputes have been submitted, a much larger number than anticipated by the agencies. And 61% of the disputes are unresolved as of June 2023.”
Jack Hoadley, research professor emeritus at the McCourt School of Public Policy, Georgetown University, said that one problem was that there were more cases going into the arbitration process than had originally been expected.
How it works: The insurance company gets an out-of-network bill, and then they have a certain amount of time to send a payment back. Hoadley said the insurers have told researchers at Georgetown’s Center for Health Insurance Research that they are paying something that looks like their network rate, maybe some percentage of Medicare.
If the hospital or doctor doesn’t like the amount offered, they have the right to go to the Independent Dispute Resolution process, he said, usually first in a negotiation and then moving on to arbitration. The assumption was that this would be relatively rare when the law was written, he said. The actual numbers have turned out to be higher.
Bloomberg reported: “Health-care providers are increasingly taking insurers to court to claim they are not making timely arbitration award payments under the No Surprises Act, adding a new obstacle to the already bumpy rollout of the billing dispute resolution system. Those lawsuits are likely to only grow in popularity as more claims move through the system, and more are potentially batched together, according to attorneys and advocates who work with both providers and insurers.”
The assumption was that a number called the Qualified Payment Amount (Q.P.A.), defined as the median in-network contracted rate for the same or similar service by the same or similar provider in the same or similar geographic area would be a basis for negotiations. But it has not been that smooth, he said: The law calls for the Q.P.A. to be one of the key factors, which would theoretically bring down outliers, but the process has not been smooth.
“A lot more cases are going to” independent dispute resolution, he said, and the upshot for doctors and hospitals is not yet clear — do they make enough money to make the challenge under the I.D.R. process worthwhile, or will it not be worth it?
The AHIP report said: “Prior to the law taking effect, the federal agencies responsible for implementation estimated about 17,000 claims would go through the Federal I.D.R. process annually. In reality, between April 15, 2022, and March 31, 2023, disputing parties initiated 334,828 disputes through the Federal I.D.R. portal, nearly fourteen times greater than the initial estimate. By October 2023, when proposing new Federal I.D.R. operations regulations, the government predicted approximately 420,000 initiated disputes for the following year. AHIP and BCBSA estimate there were almost 670,000 claims submitted to IDR between January 1st and September 30, 2023 alone, with no indication of having peaked.”
In November, the Centers for Medicare and Medicaid services reported receiving 7,888 complaints of violations of No Surprises Act compliance. These would be cases that did not achieve resolution through the regular process and were brought to C.M.S. as violations. The others are still in process.
The process has been complicated by court cases challenging the I.D.R. process, Hoadley said, especially a series of four lawsuits from the Texas Medical Association. Two of them have been appealed, he said, and so the I.D.R. process is probably to a certain degree hung up and waiting for decisions. The lawsuits turn on things like defining the Q.P.A., which is obviously central to resolution of these cases, he added.
But every time a court case is filed, the process can be suspended, he said, and so “it could yet take many months before that litigation is resolved.” The current appeals could go all the way to the Supreme Court, he said.
Testing the system
Meanwhile, separate from these court cases, some I.D.R. challenges are working their way through the system, and the resolution of those cases may have some effect on how insurers, doctors and hospitals choose to use the system. There are clearly some where the legal “fee is larger than you can win,” he said. “They are trying to test the system. But you can only lose money on testing the system for so long.”
To get even more arcane, he said, the different I.D.R. entities differ somewhat, so people in the system are analyzing the outcomes of these cases to see where to make the most money.
Throughout 2024, he said, as the court cases are resolved and more data becomes available on the output of the resolution system, it should become clear how many cases will be appealed routinely and how many can be solved relatively quickly to the — at least grudging — satisfaction of both parties. And, most important, how much it will cost and who will pay what to whom.
At that point, he said, it may become clear if one of the ultimate goals of the No Surprises Act will be attained: Reducing the cost of care. With those large out-of-network bills removed from the system, the framers of the law hoped, the nation’s healthcare bill would be reduced, and perhaps insurance premiums would drop. That remains to be seen.
Staffing firm woes
Among the most visible consequences of the No Surprises Act have been a wave of bankruptcy filings and other disasters for the companies generally known as “physician staffing firms.” These companies, many of them built by or financed by private equity, serve hospitals by supplying emergency room doctors and other stopgap staffing solutions, so the hospitals don’t have to hire full-time staff.
The business model for many years went like this: Patient visits in-network emergency room and sees doctor who is not a hospital employee. Patient gets two bills: A hospital bill, paid for by insurance, and an out-of-network doctor bill, which then may get paid or may go to collections. The payment feeds the bottom line of the staffing firm.
The No Surprises Act was designed to eliminate these surprises. It also sent these out-of-network bills into the arbitration process, instead of reaping instant money.
Hoadley said that the business model of the staffing firms had been to create leverage with payers or create income from patients by billing the patients. “A lot of these plans were paying the full rate,” he said, though some were negotiating. “I think we knew that was going to take the business strategy away,” he said. While some staffing firm Chapter 11 bankruptcy filings have ensued, not all the consequences have probably been seen yet, he said. It is also likely that some hospitals were making separate payments to supplement insurance payments and keep the emergency rooms staffed, he said.
“We don’t know how much of that has taken place,” he said. “We don’t know what is going on under the surface. What we can see is that they are not using leverage against the patient.”
One E.R. practice, he said, “turned off the switch that sent the bill to the patient,” meaning that they might negotiate with the insurer, but that the patient is not at risk.
But the staffing firms learned pretty quickly that the out-of-network bills would not get paid, resulting in financial havoc. And with the arbitration process dragging on, several were tipped into bankruptcy — to the glee of those who had either received an out-of-network bill, or who had worked with the staffing firms.
American Physician Partners (APP) filed for bankruptcy in September, about four months after physician staffing firm Envision Healthcare filed for bankruptcy in May.
“The legislation has dented the earnings or cash flows of others such as medical imaging practice Radiology Partners, backed by New Enterprise Associates, Whistler Capital Partners and Future Fund; ambulance provider Global Medical Response, a KKR portfolio company; physician-staffing firm TeamHealth, a Blackstone holding; and listed neuromonitoring provider Assure Holdings, according to ratings firm reports, people familiar with the matter and public securities filings,” The Wall Street Journal reported in late 2023, adding that about 30 public companies had named the No Surprises Act as a risk to their business.
