No surprise act could lead to higher insurance premiums, fewer doctors – ProPublica

In 2020, Congress passed the No Surprises Act to protect patients from exorbitant medical bills that have saddled Americans with tens of thousands of dollars in debt. The law was designed to lower fees for patients treated by an out-of-network doctor during medical emergencies. Such ER visits often left people vulnerable to so-called windfall bills, in which their insurer would pay only a portion of the expensive treatment.

One of the biggest health care reforms since Obamacare, the No Surprises Act appears to have worked in an important sense. Patients reported fewer crippling bills. Although little hard data exists, an insurance industry survey found that consumers avoided about 10 million unexpected bills in the first nine months of 2023. A think tank report also suggests that people are paying less for the care they receive in ER and other medical situations covered by law, such as air ambulance travel.

But a cumbersome government system to resolve payment disputes between doctors and insurers now threatens to undermine the law’s promise, according to interviews with industry players, recent data analysis and government documents.

One possible result: higher insurance premiums for everyone.

Another: fewer doctors available to treat the rural population.

Doctors said insurance companies have abused the system to lower payments, tighten medical practices and drive doctors out of their networks.

“I’m trying to think of a kind word to describe the experience, but it’s just been chaotic and inefficient,” said Dr. Andrea Brault, head of the Emergency Department Practice Management Association, a physician trade group. “It’s an expensive and lengthy process.”

However, insurers charged that large physician groups — some of them owned by private equity investors — are trying to rig the process to squeeze higher payments. “A small but significant number of bad actors” have flooded the system on occasion “as a way to maximize revenue,” said Kelly Parsons, a spokeswoman for the Blue Cross Blue Shield Association. “If this trend continues, health care costs are likely to rise unnecessarily.”

An official at the Centers for Medicare & Medicaid Services said the growing number of disputes was a byproduct of the law’s success.

“The No Surprises Act is protecting millions of patients from unexpected medical bills when they experience an emergency or receive care from an out-of-network provider at an in-network facility,” said Jeff Wu, CMS deputy director of policy. Center for Consumer Information and Insurance Supervision. “The overwhelming volume of disputes filed since the law’s surprise billing protection became effective demonstrates the need for this law.”

For decades, private insurance customers had to worry about racking up huge bills from using out-of-network doctors, who typically charge more for services. This was especially true when they had to go to an emergency room, where people have little ability to choose which doctor or hospital to treat them. The No Surprises Act was intended to fix the problem by protecting ER patients so they would be billed essentially the same as if they were receiving care from in-network doctors and hospitals.

The law fundamentally changed the dynamics of billing disputes. “Before the No Surprises law, you had doctors and doctors fighting, with patients stuck in the middle. Now you just have doctors and insurers fighting,” said Zack Cooper, a Yale professor of public health and economics whose research helped shape the law.

By law, out-of-network doctors or hospitals bill insurers, who counter with their offer. About 80% of claims are settled this way, according to a survey conducted by insurance trade groups.

But when the two sides can’t agree, they go to battle in a system created by CMS and other government agencies. There, an independent arbitrator weighs various factors and determines the final payment amount. This arbitrage is at the heart of many of the law’s unintended consequences.

Initially, the government estimated there would be around 17,000 cases a year. But in 2023, almost 680,000 were filed, according to data released in June. The result is a huge backlog that has slowed payments to doctors, hospitals and medical groups. Decisions are supposed to take 30 days. However, as of 2022, more than half of the cases remain unsolved. Some have lasted more than nine months. Wu said arbitrators have “increased their operations” to reduce delays.

In addition, the law has been repeatedly challenged in court — health care provider associations and air ambulance groups have filed about 20 lawsuits involving the No Surprises Act, according to legal experts at the O’Neill Institute for National and Global Health Law . Two cases have overturned the original CMS guidelines governing arbitration. The agency has been forced to make numerous adjustments to the process that have contributed to the long delays.

The most heated debate over the dispute system concerns the payment and enforcement of arbitrators’ awards.

Federal health officials initially thought the law would help lower the cost of medical care. Instead, arbitrators have awarded higher amounts to doctors and other providers than expected — potentially driving up insurance premiums.

“The most likely result is that this law does not save consumers in the network and potentially pushes them in the opposite direction,” said Loren Adler, a researcher at the Brookings Center for Health Policy, who published a recent study on the possibility.

While the amounts are higher than expected, they remain lower than what physician groups have billed. Doctors charge that insurance companies are presenting artificially low payment amounts. As evidence, they point to data from June showing that arbitrators rule in favor of doctors the vast majority of the time.

Overall, however, providers have seen a nearly 40% drop in reimbursements since the law takes effect in 2022, according to a recent study by the emergency physician trade group. At least one physician group, Envision Healthcare, cited the No Surprises Act as one of the reasons it filed for bankruptcy. (The company has since come out of court supervision.)

If revenues continue to decline, some physician groups may have to cut services. This is most likely to be felt in rural hospitals, which often operate on thin profit margins and already have difficulty recruiting ER physicians. “This is threatening the viability of many, many practices,” said Randy Pilgrim, chief medical officer for SCP Health, which provides emergency room physicians across the country. “There have been few practices in the 30-plus states where we operate that have not been affected by this.”

Doctors have also said insurance companies are making late or incomplete payments following arbitrator rulings. Complaints to CMS have been ignored, the doctors said. Wu, the CMS official, said the agency actively investigates complaints under its jurisdiction.

It is also not clear whether courts can force an insurance company to pay. Pilgrim said his company had submitted almost 75,000 letters to insurance companies begging for reimbursements after winning an arbitration award.

“There are very few teeth” in the process, he said. “You just keep pleading your case and hope you get somewhere.”