No Surprises Act: Exploring the Impact on Employees, Employers and Costs

By Nadia Stovicek

On March 7, CHIR hosted the second event in a series of policy briefings on the future of employer-sponsored health insurance, sponsored by Arnold Ventures. The event, featuring remarks from Congressman “Bobby” Scott and a panel discussion moderated by Julie Appleby of KFF Health News, focused on the No Surprises Act’s (NSA) impact on consumers and implementation challenges associated with the independent dispute resolution (IDR) process. A recording of the event can be found here.

Opening Remarks Underscore the Promise and Ongoing Challenges of the NSA 

Congressman Scott, one of the key members behind the bipartisan NSA’s passage in 2020, set the tone for the discussion. He emphasized his frustration that, prior to the NSA, patients would agree to pay a certain amount for an item or service related to their health and then later discover that they owed more on top of that. Under the NSA, Congressman Scott noted, workers and their families are now shielded from most surprise bills. But challenges remain; the congressman cited legal challenges to the NSA that have complicated its implementation as well as the lack of protections for out-of-network ground ambulance services.

Next up was Daria Pelech, a principal analyst at the Congressional Budget Office (CBO) who was involved in predicting how much the NSA would cost or save the federal government via about 150 different “scores.” She explained how CBO thought about protecting patients from surprise billing and how payers would reimburse providers and the associated impact on the federal budget through the tax subsidy for employer coverage. Pelech described how, for the NSA’s IDR process, CBO considered the role assigned to the market-based median in-network rate, known as the qualifying payment amount (QPA), as a benchmark that arbitrators would consider in resolving payment conflicts. Without a benchmark, she noted, the IDR process was more likely to inflate prices for care, a cost ultimately borne by consumers, employers and the federal government. Because CBO assumed that the QPA would be a primary factor considered by the IDR entity, the agency predicted that the NSA would ultimately drive down premiums and the federal deficit by about $17 billion over a ten-year period. While the actual implementation of the NSA’s IDR process has been mired in legal challenges, it was useful for advocates, researchers and policymakers to gain an understanding of CBO’s original analysis to inform current and future NSA implementation.

Jack Hoadley, Research Professor Emeritus at CHIR, continued table-setting by reviewing  recently published CMS data showing that providers are using the IDR process much more frequently than originally expected, and providers are winning these arbitration cases 77 percent of the time. Notably, four private equity-backed organizations are responsible for filing two-thirds of these cases. Professor Hoadley further explained that when plans win, they are paying the QPA—their usual in-network amount—whereas when providers win, they are awarded more than triple the QPA amount. This dynamic, Professor Hoadley explained, incentivizes providers to enter into arbitration. Professor Hoadley has done a detailed analysis of the data and its impact on the NSA’s cost-containment goals for the Commonwealth Fund, and future publications should provide additional insights.

Panelists Provide an Array of Perspectives on NSA Implementation

Three panelists, moderated by Julie Appleby, discussed their perspectives on the NSA, including its successes, ongoing challenges, and the implementation process:

• Katie Berge, Director of Federal Affairs at The Leukemia & Lymphoma Society, highlighted the patient experience after the passage of the NSA and how it has affected consumers accessing health care.
• Matthew Fielder, Senior Fellow at the Brookings Institution, continued the conversation that Professor Hoadley started about IDR data and delved into the IDR process itself.
• Shawn Gremminger, President and CEO of the National Alliance of Healthcare Purchaser Coalitions, emphasized the employer perspective on how to frame the successes and challenges of the NSA.

The NSA is working to protect consumers from surprise bills, but challenges remain with the IDR process. While patients do not have to directly engage with the IDR’s arbitration process, they will eventually feel the impact of providers winning disputes at a significantly higher amount than anticipated in the form higher premiums and increased cost sharing. Additionally, current trends in the IDR process may affect employers’ bottom lines. Employers could be expected to pay more for workers’ health benefits if providers continue to win arbitration awards that significantly exceed both payers’ asking price and the QPA standard. The trend of private equity-backed firms winning a majority of IDR cases and making a large profit on submitting a claim raises major concerns for both consumers and employers—PE-backed firms have been associated with worse patient health outcomes and higher costs.

When asked how to tackle these issues with the IDR process, Gremminger discussed how few options remain to reform the NSA absent congressional action. Fielder agreed, but went on to suggest that Congress set a different benchmark for payments, potentially tied to Medicare rates.

Finally, Berge spoke about the NSA’s ground ambulance coverage exclusion, and efforts by a federal advisory committee to recommend to Congress ways to protect consumers from surprise ground ambulance bills. (For more information, see this Robert Wood Johnson Foundation issue brief highlighting the ground ambulance gap).

This event explored the origins of the NSA, the impact on the consumer, and the challenges post-implementation. The variety of perspectives helped shed light on potential paths forward to build on the success of the NSA and strengthen it.

The next event in the series will be held on May 21, 2024. You can sign up for our mailing list to receive more information here.