While the No Surprises Act is helping Americans avoid surprise bills, it is fundamentally flawed and driving costs
Since the No Surprises Act (NSA) was passed in late 2020 and went into effect beginning January 1, 2022, I have argued that the baseball-style arbitration process in the law is heavily stacked against health plans and favors providers. While the bill certainly stops Americans from receiving surprise bills, there is little question to me that the bill itself has and will continue to increase costs in the healthcare marketplace.
A few new studies show the pros and cons of the bipartisan legislation. Let’s take a look at them.
The pros
As I note, the NSA has saved so many from exorbitant out-of-network (OON) bills. That is a good thing. While not every surprise bill has been stopped (e.g., ground ambulances), OON abusive billing for all emergency care and most surgery or procedures at an in-network facility have been banned. And a new study seems to confirm the value to American consumers. It shows that surprise bills have fallen under the act based on data from states that had some protections before the national law took effect and those that did not.
Researchers at Harvard University and Mass General Brigham looked at 17,351 privately insured adults. About half were in states that gained protections against surprise billing and the remainder were in states with existing state surprise billing protections. The researchers found that there was a $567 decrease in out-of-pocket (OOP) spending related to surprise billing for people living in states that did not have protections before the national law.
As important, the study finds that the NSA appears to be generating more savings to Americans than other coverage measures or cost reductions and protections. For example, expanded Medicaid was tied to a $152 decrease in annual OOP, while the Medicare drug price negotiations are estimated to drive $400 in savings annually per enrollee.
An earlier survey from the Blue Cross Blue Shield Association released in early 2024 projected that the NSA averted 10 million surprise bills in the first nine months of 2023 alone.
The cons
But the world is not all that rosy regarding the NSA. There is growing evidence that the act itself is driving costs up. How so? While consumers are protected from these bills (they can pay no more than in-network cost-sharing for the OON services), health plans and providers now have to fight over what is paid in these situations. And providers are using the law, which is clearly slanted toward them, to drive higher and higher awards and prices in the market. What’s more, a small subset of providers backed by private equity firms are using the law as a gravy train to drive investment value.
At the time of the bill’s passage, the Congressional Budget Office (CBO) estimated that premiums would drop between 0.5% to 1% because of the law and the independent dispute procedure set up. It also said federal deficits would drop from 2021 to 2030 by $17 billion. The CBO foolishly assumed that most awards would be near the so-called qualifying payment amount (QPA) that would be used in the arbitration process. The QPA is pegged at the median in-network rate. But as I noted at the time, baseball-style arbitration in other state surprise billing laws favored providers, with both a much greater percentage of wins and extremely high awards. In baseball-style arbitration, an arbiter decides between one or the other last best offers from the sides and cannot craft a middle ground.
There was nothing in the law that pointed to an award at or near the QPA. Indeed, language seemed to point to the fact that the QPA could not be favored over other data points by arbitrators. When laying out the actual regulation of the law, the Biden administration sought to direct arbitrators to give greater weight to the QPA. A court struck the provision as outside of the administration’s authority and not consistent with intent. The Biden administration was forced to adopt guidance with little direction to the arbitrator.
Since the arbitration process went in, statistics show that providers win the vast majority of cases and receive exceedingly high awards. Arbitrators are siding with the so-called “beneficent” providers over “greedy” health plans without regard to the economic impact to the healthcare system. Of course, providers and private equity lobbied hard for an unlevel playing field in the act. Provider lobbies have cultivated a cast of fawning lawmakers on each side of the aisle and congresspeople were more than happy to oblige. Providers convinced lawmakers the law was somehow neutral despite the clear evidence to the contrary from states with similar processes and approaches.
The latest data, from a new study by Georgetown University researchers and published in Health Affairs, show that providers have won 85% of disputes since the fourth quarter of 2023. This has risen from just below 75% earlier. In these cases, the median payments were three to four times higher than the established QPA – well above the previous status quo for payments in the system. We know that provider billed charges are not based on any real economics but are used as leverage to get as high a contracted payment as possible. These billed charges are being used by providers to drive payments up in the arbitration process. Where a plan won the 15% of cases, the mandated payment tends to be at or just above the QPA. But in Q4 2024, for line-items where the provider prevailed, the median payment determination was 459% of the QPA. The median payment amount has increased over time. The 2023 and 2024 median amounts were 327% and 445% of the QPA, respectively.
Providers have brought far more disputes than anticipated and the resolution timeframe is three times longer than the statutory deadline. From mid-2022 to May 2025, more than 3.3 million disputes were filed. Original estimates suggested the process would handle about 17,000 disputes annually and most of these would be resolved by plans and providers through a mandatory 30-day negotiation period. Did lawmakers, policymakers, and regulators responsible for the estimates ever study plan-provider relationships?
The high volume of disputes is generating significant admin costs as well as the higher payments. Together, these amount to over $5 billion in total costs through the end of 2024. Additional payments were about $2.24 billion, with additional administrative costs and fees totaling $2.78 billion. Annually, this totals $2 to $2.5 billion a year in increased costs. The researchers say there is little doubt this will be recognized in overall healthcare costs and premiums. The new law encourages some doctors to stay out of network as they will obtain higher reimbursement through the NSA. The huge arbitration caseloads are proof of this. This could then force health plans to pay in-network doctors more to meet various network adequacy requirements.
Further, the study finds that the majority of the disputes are filed by a small number of providers that are backed by private equity firms. In 2023 and 2024, 43% of resolved line-item claims were filed by two private equity-backed provider organizations: Radiology Partners and affiliates and Team Health. The top five provider organizations were responsible for 59% of line-item claims.
So, not only did the CBO’s ridiculous estimate of savings not materialize, but there is growing evidence that the national law is ending up much like those of earlier state laws with baseball-style arbitration. As the study authors note: “Additional regulations are needed to prevent the shifting of this profiteering business model from patients to the broader insurance pool.”
Insurers fight back
At least three major insurers have now sued various providers over their abuse of the dispute resolution process.
CVS Health’s Aetna filed a lawsuit against Radiology Partners and its private equity backers. Aetna says Radiology Partners, an imaging group, is engaging in and sought to conceal a nationwide healthcare fraud scheme and conspiracy by manipulating the NSA and the arbitration process. Aetna says the group has defrauded it of tens of millions of dollars. The provider stands accused by Aetna of inflating its billed charges and then submitting thousands of NSA disputes when the claims were actually subject to in-network rates of contracted entities. Then, the group used the ultimate wins in arbitration to attempt to gain much higher in-network rates. I have read the claim in full and Aetna seems to be on to something here. The depth of the alleged fraud and conspiracy seems compelling.
UnitedHealthcare also is suing Radiology Partners and its Arizona-based affiliate, Sonoran Radiology, alleging the companies have been abusing the NSA dispute resolution process as well. Like Aetna, it argues the radiology provider behemoth routed tens of thousands of in-network claims through Sonoran to make them appear to be out-of-network. United says this amounted to “funneling millions into the pockets of its private-equity owners.”
Elevance Health also sued two Georgia providers and their billing company HaloMD for thousands of ineligible disputes in an effort to receive inflated reimbursement payments. Elevance says about 70% of the cases were ineligible.
While I have not read the United and Elevance suits, the claims match what Aetna is saying about the providers.
Changes needed
While Americans are being sheltered from surprise bills, the arbitration process is a mess and it is heavily slanted to providers. This is driving up overall costs throughout the healthcare system, but especially in the commercial world as the NSA applies here. In essence, the costs of balance or surprise billing have been transferred from consumers to employers. The problem is the costs of these surprise bills are going up under the dispute process. Employers are already battered by surging utilization and prices. They are moving more and more costs to employees. So, employees actually are paying anyway for surprise billing through higher premiums, deductibles, cost-sharing, and fewer benefits.
Further, the process is being abused by a small sunset of greedy private equity-backed provider organizations. This amounts to a curious arbitrage scheme that is sucking money out of healthcare and lining investor pockets to no benefit at all to the system.
Lawmakers were spineless in kowtowing to providers when the bill passed, but they need to get a backbone now. A few pointed reforms are needed:
- Open an investigation of what the NSA has and has not accomplished. Scrutinize the role of private equity in the process.
- Apply the NSA to ground ambulances, which continue to have abusive contracting processes and excessive charges.
- Reform the arbitration process and require that the QPA be given great weight in the process. This would encourage more negotiations with plans. This is key to limiting costs throughout the healthcare system.
- Further, stop the abuse by private equity firms by limiting the number of cases providers abusing the system can bring and ensure appropriate billing.
Deeper dive articles (some may require a subscription):
https://www.healthcaredive.com/news/no-surprises-dispute-resolution-driving-health-costs/758713
https://www.beckerspayer.com/legal/unitedhealthcare-sues-radiology-partners-over-no-surprises-claims
#nsa #nosurprisesact #transparency #providers #healthplans #surprisebilling #privateequityform #healthinsurance #coverage #uninsured #underinsured
— Marc S. Ryan
