Is the No Surprises Act working? Government watchdog is uncertain

How effective has the No Surprises Act been in reducing patient sticker shock? The Congressional Budget Office (CBO) says more research is needed to make a determination—but preliminary data indicate it may not be having the positive impact proponents hoped for.

The nonpartisan government analyst firm wrote in a recent report that emerging evidence “suggests that the law might not have the effects that CBO anticipated,” those being a reduction of in and out-of-network costs that insurers pay to providers, especially at facilities with a high rate of surprise billing.

The CBO added that it also expected that those lower prices would, in turn, “reduce the premiums that insurers charge for commercial plans by roughly 1%, thus decreasing federal deficits by $17 billion from 2021 to 2030.”

But, the firm said its current estimates show that prediction may be way off, as the dispute resolution process put in place to determine when illegal surprise billing is being conducted has, so far, heavily favored providers.

The CBO said that, out of 10 cases submitted for independent dispute resolution, eight result in a victory for providers, meaning it is determined that their billing rate was legitimate.

These formal disputes are triggered when out-of-network billing submitted to a payer would result in an unexpected balance owed for a patient. The dispute process is outlined as part of the No Surprises Act itself, signed into law at the end of 2020 by President Donald Trump.

It officially went into effect on Jan. 1, 2022, with the anticipation that a price reduction for services would follow as hospitals, health systems and provider groups moved toward transparent pricing.

However, the CBO said it has not observed much of a change in price negotiations between providers and payers, who typically have 30 days to hammer out a fair reimbursement price for out-of-network and unexpected patient care.

If the parties cannot agree on the amount, that’s when either side can trigger the IDR process.

“CBO estimated that the No Surprises Act would reduce federal deficits by decreasing payments to providers for services for which surprise bills were common and, in turn, reduce premiums for commercial health insurance,” its report reads. “Lower premiums would decrease federal subsidies for health insurance by shifting a portion of some employees' compensation from tax-favored health insurance to taxable wages and by decreasing subsidies for insurance purchased through the marketplaces established under the Affordable Care Act.”

“Even though the law targets out-of-network care, about 80 percent of its projected savings stemmed from lower in-network prices, relative to prior law,” the CBO added, noting that only works if the negotiating leverage providers used to have prior to the law being signed was mitigated by the IDR process—but that 80% success rate providers indicates their negotiating leverage remains.