The No Surprises Act: A Panacea for Surprise Billing or a Mirage of Transparency?

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By Pragat Patel

Pragat Patel is a sophomore at the College of Arts and Sciences studying neuroscience and philosophy.

For the past 50 years, patients have faced unwieldy wording in medical billing that limits their ability to effectively grasp the extent of the financing. Insurance companies and healthcare companies in general introduced new charges and never gave a comprehensive outlook on what the patient should anticipate. The No Surprises Act, effective from January 1, 2022, is a law enacted with the aim of easing this burden and protecting patients from unexpected bills and changes—aptly referred to as “surprise billing” [1]. These bills typically arrived when patients received care from out-of-network providers, who did not have a direct seamless financing process with the companies involved [2]. While the new legislation is a significant step towards greater transparency in healthcare billing, its effectiveness remains a subject of debate.

Despite its intended impact on the medical industry, the No Surprises Act has been criticized for the overwhelming ambiguity in its provisions. For instance, the act prohibits balance billing for out-of-network emergency care and certain non-emergency care provided even in-network [1].  While these interpretations have been reached by acceptance by the greater public, the language used in defining them is not explicit, leading to confusion among providers and insurance firms. 

As surprise billing generally focuses on emergency care, it is expected that the bill would comprehensively outline what constitutes a surprise bill. However, the act does not clearly define what constitutes an emergency service. This lapse in clarity contributes to many differing interpretations among providers, which results in inconsistent implementation nationwide. Similarly, the act fails to specify which non-emergency services at in-network facilities are covered and leaves it up to the discretion of the facilities [1]. The inherent ambiguity perpetuated by this law overturns the purpose of the act, which is to provide transparency and aid  patient understanding to help settle disputes. Instead, more disputes are happening and it is hard to grasp what is correct and what is not. 

Moreover, the law does not provide clear guidelines on how to determine the “usual, customary, and reasonable” rate for out-of-network services [1]. While the No Surprises Act represents a significant step towards addressing the issue of surprise medical billing, the ambiguity in its provisions could potentially limit its effectiveness. Further clarification and guidance from regulatory authorities may be necessary to ensure consistent and effective implementation of the act.

Despite being intended to safeguard patients, the No Surprises Act significantly burdens healthcare providers. In a controversial move, the act changes the responsible party for negotiating payments. When a patient receives care from an out-of-network provider, the act requires the payer and the provider to submit files about payment, including costs, cuts, and any discounts. Conflicts that cannot be resolved amicably are referred to an independent dispute resolution (IDR) procedure [3].

Smaller providers may find this transition especially difficult since they lack the means of personnel to engage in productive negotiations with bigger insurance firms. It can take a long time and be difficult to negotiate; it requires a thorough understanding of reimbursement rates and billing codes. Furthermore, because these smaller providers could have to take less money from insurers, the act would result in a drop in their income. The act not only costs providers money, but it also puts administrative strain on them. They must provide patients an estimate of the cost of care in good faith, but because medical billing is so complicated, this can be challenging to do [4]. Also, providers must responsibly navigate the time-consuming and expensive IDR procedure. The No Surprises Act significantly burdens healthcare providers, even if its goal is to shield patients from unexpected medical expenditures. This would effect on healthcare organizations' capacity to maintain their financial stability, as well as how they provide treatment.

The enforcement mechanisms of the legislation add more debate to the controversy. The act does not clearly define how the independent dispute resolution entity, as aforementioned, will be selected or how it will make decisions [5]. The IDR process itself could be expensive and time consuming, adding more complexity and undermining the purpose of the bill. States have three options for protections enforcement [5]: 

1. Direct state enforcement
2. Direct federal enforcement 
3. Collaborative enforcement 

These disparate options have led to a varied landscape of enforcement nationwide, and it contributes to more inconsistency and ambiguity in the act’s usage. Further clarification is necessary for effective implementation of the act.
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While the act has the potential to bring about much-needed transparency in healthcare billing, it is clear that further work is needed to ensure its success. This includes providing clearer guidelines for consumers, addressing the burdens on healthcare providers, and ensuring an effective enforcement mechanism.

While the No Surprises Act may not be the panacea for surprise billing that many had hoped for, it is not merely a mirage of transparency. It is a significant step forward, with room for improvement and expansion. As with any major legislation, its true impact will only become clear with time. With critical examination and revision, there’s hope that this critical examination of the Act will contribute to the ongoing discourse on this important issue.

Sources:
[1] “Detailed Summary of No Surprises Act Advisory 1-14-21.” American Hospital Association. Accessed December 15, 2023. https://www.aha.org/system/files/media/file/2021/01/detailed-summary-of-no-surprises-act-advisory-1-14-21.pdf.
[2] “The No Surprises Act: A Bipartisan Achievement to Protect Consumers from Unexpected Medical Bills.” Journal of Health Politics, Policy and Law. Duke University Press. Accessed December 15, 2023. https://read.dukeupress.edu/jhppl/article/47/1/93/174073/The-No-Surprises-Act-A-Bipartisan-Achievement-to.
[3] “Understanding the No Surprises Act.” Brookings. Accessed December 15, 2023. https://www.brookings.edu/articles/understanding-the-no-surprises-act/.
[4] “AMA High-Level Summary of the No Surprises Act.” American Medical Association. Accessed December 15, 2023. https://www.ama-assn.org/system/files/2020-12/no-surprises-act-summary.pdf.
[5] “No Surprises Act: Federal–State Partnership to Protect Consumers.” Commonwealth Fund. Accessed December 15, 2023. https://www.commonwealthfund.org/publications/fund-reports/2022/oct/no-surprises-act-federal-state-partnership-protect-consumers.

The opinions and views expressed in this publication are the opinions of the designated authors and do not reflect the opinions or views of the Penn Undergraduate Law Journal, our staff, or our clients.