No Surprises Act sparks millions of disputed claims, health insurers say

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The federal No Surprises Act (NSA) has generated millions of claims, but is working to protect consumers from unexpected, out-of-pocket costs for health care, according to a new survey.

AHIP, a trade group for America’s health insurance plans, and the Blue Cross Blue Shield Association (BCBSA) published a report estimating NSA is preventing more than 1 million surprise bills a month. The findings come from a survey of 21 health insurance providers representing 139 million commercial enrollees.

The health insurance plans reported enrollments and claims incurred and paid from January to September 2023, with data about claims eligible for NSA and those submitted to the independent dispute resolution (IDR) process.

The result: an estimate of more than 10.15 million claims eligible for NSA. Most of those – more than 8.02 million – were settled when physicians and other health care providers accepted initial payments from insurers.

There were an estimated 2.46 million NSA-eligible claims that entered open negotiation, and 668,326 submitted to independent dispute resolution (IDR), according to AHIP and BCBSA.

“But data indicates that despite a high volume of claims being submitted to independent dispute resolution (IDR), the law’s components appear to be working to protect consumers and resolve payments,” the report said.

How it works

When patients with private health insurance are treated for emergency services or at in-network facilities by out-of-network health care providers, the providers or facilities may not bill patients above in-network cost-sharing amounts, according to AHIP and BCBSA. Previously, the out-of-network providers could “balance bill” patients, or charge them the difference between what the provider billed and the amount paid by the patient’s health insurance, according to the U.S. Centers for Medicare & Medicaid Services. NSA was meant to protect patients from those surprise bills.

The IDR process resolves disagreements about what health insurers will pay out-of-network physicians, hospitals, or other providers or facilities, according to AHIP and BCBSA.

Volumes of claims

The U.S. Centers for Medicare & Medicaid Services (CMS) allows batches of many claims or a group of several claims for a single visit. The certified IDR entities must review each one, “meaning the volume of claims is even higher than the number of individual disputes, increasing the burden on IDR entities and driving health care costs higher through associated fees,” the report said.

The large number of disputes indicates many health care providers that previously balance-billed patients now may be using IDR, “presumably in hope of collecting above-market reimbursement amounts,” the report said.

“Should this trend continue, health care costs are likely to unnecessarily increase,” the report said.

Increasing network sizes

Lawmakers intended NSA to give incentives to physicians and other health care providers to join insurance networks to limit patients’ exposure to out-of-network costs, thus protecting them from unexpected bills, the report said. It appears that also is working, because no responding health insurers reported decreases in network size; all reported maintaining or increasing the provider volume in their networks.

Physicians and hospitals respond

The Texas Medical Association (TMA) has been one of the most vocal critics of elements of NSA. The association claimed legal victories in four separate lawsuits against HHS, Labor and Treasury because their implementation “conflicts with congressional intent and skews the IDR process in payers’ favor.”

The American Hospital Association also has opposed some elements of NSA and noted the federal regulators right now are in an open public comment period for a proposed rule to improve the IDR process.

Effects of the law

When the law took effect in 2022, federal analysts in the U.S. Departments of Health and Human Services, Labor and Treasury estimated about 17,000 claims a year would go through IDR. In June 2022, AHIP and BCBSA made headlines in the world of health care when they surveyed and estimated more than 2 million surprise medical bills for the first two months of 2022.