By Jack Hoadley, Nadia Stovicek, and Kevin Lucia

The No Surprises Act (NSA) provides comprehensive protections from many of the most prevalent forms of surprise medical billing, and a new process for determining out-of-network provider reimbursement aims to control health care costs by limiting insurer payments for surprise bills. It remains to be seen if the new federal law—implemented only last year—will achieve these goals.

Two recently released reports provide some of the first indicators of the law’s impact. In November, the Centers for Medicare & Medicaid Services (CMS) published a report including a high-level summary of NSA-related complaints from consumers, providers, payors, and others. A new Government Accountability Office (GAO) study also provides information about both complaints and independent dispute resolution (IDR), the NSA’s binding arbitration process to settle disagreements over payment amounts between insurers and providers. Taken together, these reports suggest the NSA is protecting consumers and other stakeholders, but more data are needed to determine whether the payment dispute process is working to contain costs.

Background on the NSA

Before passage of the NSA, surprise medical billing was most common when consumers could not reasonably choose who provided care, such as for emergency services or ancillary services (like anesthesia) during an in-network hospital stay. In these circumstances, providers would typically bill payors a much higher charge than their in-network rates; if the payor refused to pay the charge in full, providers billed consumers large dollar amounts as “balance bills.”

The NSA protects consumers from balance billing by out-of-network providers and facilities in emergency, air ambulance, and in-network hospital settings, and establishes a process to resolve payment disputes. When providers challenge payors’ initial payments as insufficient, the NSA requires open negotiations between the parties. If negotiations fail, the law allows binding arbitration, where an IDR entity selects between the payment amounts offered by each party. As part of IDR, Congress assigned a key role to a market-driven rate—the qualifying payment amount (QPA), defined as the median in-network rate—rather than a government rate, such as a multiple of a Medicare rate. This process is meant to contain spending and, ultimately, premiums—the Congressional Budget Office projected the law will lower insurance premiums by 0.5–1.0 percent below trends in most years and reduce the federal deficit by $17 billion over 10 years. Moreover, individuals who would have been hit by surprise bills benefit from significantly lower out-of-pocket costs.

While consumers are already seeing savings, process and legal challenges have hampered smooth implementation of the IDR procedures, stalling the law’s objective of protecting consumers in a way that contains costs.

Release of complaint data offers promising but limited insights on NSA Implementation

Compared to the rate of care utilization, relatively few complaints have been filed: in the first 22 months since implementation, CMS reported only 7,888 complaints that deal specifically with NSA compliance. For comparison, two trade groups representing insurers estimate that one million claims are submitted each month for care protected by the NSA. The low complaint volume could be a sign that the NSA is preventing the vast majority of balance bills.

Most complaints concern provider behavior. According to the CMS data, 86 percent of NSA compliance complaints were filed against providers, facilities, and air ambulance entities. About two-thirds of these provider-based complaints arise from surprise billing for a non-emergency out-of-network service at an in-network facility, which we interpret to mean allegations that providers are sending balance bills prohibited by the NSA. The rest are split between balance billing for emergency services and failures to provide good-faith estimates of a patient’s out-of-pocket costs, as required by the NSA. Notably, out of the resolved complaints (including both those against providers and those against plans), fewer than 8 percent resulted in a CMS determination that an actual violation took place. However, the report notes that these violations led to about $3 million in “monetary relief.”

Far fewer complaints were filed against non-federal governmental plans, such as state or local employee health plans, and insurers. The most common complaints against payors—likely from providers—allege non-compliance with QPA requirements. About a quarter of the complaints directed at plans were about a late payment after an IDR determination, a major source of frustration among providers.

Although the low number of cases and violations is a promising finding, it would be useful to have a more detailed breakdown to see which types of complaints were most likely to involve underlying violations and other patterns of noncompliance. The CMS report also lacks information on the source, timing, and resolution of NSA complaints, as well as information about grievances referred to other agencies, such as states, the Office of Personnel Management or the Department of Labor (DOL). The new GAO report indicates that DOL received 12,585 NSA-related complaints during a similar timeframe, but it is unclear if these numbers are directly comparable.

Complaint data support prior research suggesting the NSA is protecting consumers from surprise medical bills

The latest data from CMS bolster findings from a Georgetown and Urban Institute report examining the effectiveness of federal protections against balance billing. The report, based on 30 interviews with federal and state regulators and a broad spectrum of stakeholders, concluded the NSA has generally been successful in protecting consumers from balance billing and taking consumers “out of the middle” of payment disputes between providers and insurers. Consistent with CMS’s complaint data, the insurance regulators interviewed reported relatively few complaints rising to the level of an NSA violation. Of the few that did, insurance regulators found most providers and payors would, when requested, adjust patients’ bills to comply with the law.

That said, stakeholders generally cautioned against declaring complete victory over surprise balance bills simply because of a low number of complaints. Given how few consumers ever complain about billing issues, one state regulator pointed out that the fact they are still receiving NSA-related consumer complaints suggests that the law is “not completely protecting consumers.” In addition, some stakeholders suggested the low volume of consumer complaints may partially reflect (1) a lack of public awareness about the NSA, and (2) consumers’ lack of health coverage literacy, particularly regarding cost-sharing obligations. Stakeholders also described a lag between when a service is rendered and when the patient receives the bill, meaning balance billing cases will not show up immediately in complaint systems. These findings complicate reading low complaint volume as a marker of NSA success.

Questions remain regarding the NSA’s cost containment impact

While CMS reports low numbers of complaints and few violations of the balance billing ban, it is not clear if the NSA is also working to contain costs as intended. Most experts recognize that it is simply too early to understand the full impact of the NSA on provider prices and provider networks, overall health costs, and premiums. Ongoing provider-driven litigation over the IDR process and the calculation of the QPA has led to several pauses by the federal agencies in accepting new IDR cases and adjudicating cases already in the pipeline as well as change in the rules under which IDR operates. As a result, we have an incomplete picture of IDR decision-making. The federal government has faced significant challenges in responding to the numerous legal actions, and court decisions have required significant technical changes to the underlying IDR processes. A recent proposed rule lays out various improvements, but these will not be implemented until late in 2024.

Initial data show that the IDR process has received a much higher than expected number of claims. In the first year of NSA implementation, IDR submissions were 14 times higher than initial estimates. Notably, the new GAO report states that six of the top ten disputes were initiated by private equity-backed provider groups. The GAO report also indicates that disputes have increased every quarter since April 2022, and as of June, about 61 percent of the 490,000 disputes submitted between April 2022–June 2023 remained unresolved. Furthermore, GAO cites CMS data showing that the initiating party (typically the provider) prevailed in 77 percent of the resolved cases for the first six months of 2023. But information remains unavailable on key details, such as the dollar amounts of these resolutions. Until more information is available, it is difficult to assess the NSA’s impact on containing costs.

Looking forward

The NSA is a landmark law that holds substantial promise for driving down costs and protecting consumers. While the CMS report on complaint data supports the general notion that the NSA is preventing unfair balance billing, the significant amount of IDR activity and the ongoing litigation leave us uncertain about whether the law is achieving its cost containment goals. The release of more data, including ongoing complaint data and more granular data related to IDR outcomes, would help policymakers assess the impact of the NSA and whether further action to protect consumers and reduce system costs will be needed.