Opinion | The No Surprises Act: Debunking the Myths

In the 2023 State of the Union address, President Biden highlighted the country’s success in reducing surprise medical bills: “…stopping 1 million surprise bills a month.” This accomplishment, years in the making, was met with applause from both sides of the aisle. The No Surprises Act, legislation protecting patients from surprise medical billing, was passed in 2020 following Congressional consideration of several proposals with differing approaches. The complexity of the issue not only made passing legislation challenging but also gave rise to numerous myths. A concern is that these myths could influence implementation of the law.

Surprise medical billing occurs when a patient with commercial health insurance receives care that is unexpectedly out of their health plan’s network. Since insurers often cover only a fraction of the bill, patients may find themselves liable for the rest, which can be substantial.

The issue of surprise medical bill legislation is deceptively complex. For example, one myth is that its only impact is reducing unexpected bills. However, laws addressing surprise medical billing can be crafted to have a secondary effect: the disruption of good faith network contracting negotiations between insurance companies and providers, like medical practices or hospitals. While addressing surprise medical billing was widely supported, Congress had to decide if the law should favor one side in contract negotiations or be balanced. In the end, Congress designed a law aimed at stopping surprise medical billing while favoring neither insurers nor providers. Below is a selection of other myths.

Myth: The law intended the “qualifying payment amount” (QPA) to be the primary factor arbiters would use in their decision-making process in reimbursement disputes between insurance companies and medical providers.

The No Surprises Act is a bipartisan effort to protect patients without favoring insurance companies or medical providers. As evidence of this approach, the law includes a detailed list of factors to be considered in arbitration between insurance companies and providers. One of those criteria is the QPA — an insurance company’s median contracted rate for a specific item or service. Was this insurer-calculated value meant to be the primary factor in arbitration? The leaders of the House Ways and Means Committee were clear that no factor was meant to be most important. In a bipartisan letter, they wrote, “…the legislation [from our committee], which was adopted in the No Surprises Act…directs the arbiter to consider all of the factors without giving preference or priority to any one factor…” In rulemaking, the Departments of HHS, Labor, and Treasury have twice tried to make the QPA the primary factor in arbitration, but each time their rule has been struck down by a federal court. In the first federal lawsuit about QPA primacy brought by the Texas Medical Association, the judge wrote, “nothing in the Act…instructs arbitrators to weigh any one factor or circumstance more heavily than the others.” After a revised rule again placed the QPA above the other criteria, the Texas Medical Association filed a second lawsuit. The judge again ruled with the medical association.

Myth: The No Surprises Act was passed to reduce reimbursement to physicians and hospitals to lower healthcare spending.

The No Surprises Act was passed for a single reason: protect patients from receiving surprise medical bills. It was crafted to achieve this in a manner that would protect good faith contract negotiations. An announcement of the bipartisan, bicameral deal includes no mention of using the bill as a lever to reduce provider reimbursement. There isn’t even a mandate to lower premiums, just not increase them (though the Congressional Budget Office predicted the law would have a modest premium lowering effect).

Myth: “Only certain specialties and investor-backed physician-staffing firms that rely on out-of-network billing as a revenue strategy would see their profits fall.”

This statement from the New England Journal of Medicine referenced an earlier Congressional proposal on surprise billing. Still, the narrative persists that surprise medical billing legislation only targets medical practices that send surprise bills or are associated with private equity. Proof that this myth is untrue: an insurance company sent letters to in-network practices, independent of their private equity affiliation or history of surprise billing, stating that the No Surprises Act empowered insurers to extract rate reductions with threat of removal from the network if they do not accept. Since they were in-network, these practices could not surprise bill the insurance company’s patients. Also, since insurers were threatening contract terminations, the law was paradoxically being used to potentially increase the volume of out-of-network care.

Myth: The large number of arbitration requests reflect medical practices flooding the system in an attempt to “spam” the process.

This myth is demonstrably false. The process of arbitration submission is expensive and burdensome, requiring substantial resources. The non-refundable administrative fee is currently $350 and total fees could top $1,500. The arbiter’s fee is returned to the party who prevails; however, the time value of this money is lost. Since the process can take over half a year and groups may be submitting many disputes, the value of capital tied up in arbitration and lost interest is not insignificant. More importantly, the notion that medical practices would want to slow down the system is counterintuitive. Medical practices benefit from an efficient, timely reimbursement process. Since insurance companies have the capital invested earning interest, delays benefit the insurers, not the physicians. The longer the delay, the more interest insurers collect on the amount they underpay providers. If the provider group does not request arbitration or not within the strict time limits, the insurer benefits by saving the underpayment plus interest. It takes chutzpah for insurers to underpay doctors, forcing them to request arbitration, then complain about all the arbitration cases.

While surprise medical billing is a deceptively complex issue, there is consensus that patients should be protected. The No Surprises Act does this while balancing the concerns of insurers and physicians. The administration should implement the law as written, without being swayed by the many myths.

Richard Heller, MD, MBA, is associate chief medical officer for Health Policy & Communications at Radiology Partners.