Implications of No Surprises Act for Payers & Providers

Arbitration outlook for No Surprises Act

Although thanks to the NSA surprise medical bills are – by and large – stopping, what remains to be seen is what the NSA means for reimbursement rates and arbitration outcomes. As our specialist noted, it will take time for early cases to funnel through, making it difficult to know how rulings are going to play out. 

The controversy, the Resident Scholar at The American Enterprise Institute for Public Policy Research explained, arises over how arbiters make decisions about payment rates, as it is not clear how they will weigh up and assess the many factors under consideration. Awards will differ by specialty because many of the factors, notably the in-network median, will also differ by specialty.

“Some specialities are going to have relatively high or relatively low payments today relative to the Medicare reimbursement rate, and that’s going to be clearly reflected in the in-network median that existed prior to the No Surprises Act going into effect,” the expert said. Another source of heterogeneity, we heard, is high vs low-price providers, while the interaction with various state laws could also be important moving forward.

The NSA stipulates that in an out-of-network case, an insurer must offer an amount – but it does not state how much. “Conceptually, they could offer something extremely generous or  extremely stingy, something realistic or something completely unrealistic,” our specialist said. However, they expect that initial offers are likely to be “in the ballpark” of the expected arbitration outcome. “The reason I say that is because going to arbitration is not free for either party.” According to the Interview, a single arbitration will cost the losing party USD 200-500 in administrative fees – but a bigger cost to both sides is the time involved.  

Meanwhile, we heard that private equity in healthcare is “getting a lot of attention on the Hill”, with the specialist highlighting some potential sources of political risk as it relates to the NSA.

Overall, the specialist does not expect the NSA to have a significant impact on premiums, noting that it would be difficult to disentangle its impact from other larger sources of cost pressures, such as inflation and COVID-19.