Q4 2021: No Surprises Act leaves payers happy, but a bitter taste for providers

The aim of the NSA is to protect individuals from being billed at exorbitant out-of-network rates by medical providers that are not part of their plan. For example, even if a hospital is in-network, some providers, such as anesthesiologists, are not. When the patient is unaware they are receiving out-of-network care, they fall prey to unexpected costs. 

But as of January 2022, health insurance companies are by law obliged to cover most out-of-network bills, with consumers to be charged no higher than the median cost for the same service provided by an in-network participant. While the experts we’ve spoken to agree with the premise of the NSA, the waters are murky and there appear to be some unintended consequences. 

One of the main takeaways from a recent Forum Interview was that the NSA greatly benefits insurance companies while being hugely detrimental to providers, as it effectively gives insurers the power to set reimbursement rates. Specialists noted that although a dispute resolution process is available, the starting point for negotiations is median in-network payer rates, which, as it stands, can be manipulated to minimise reimbursement. Other tactics that can be used by payers, to bring costs down, include forfeiting contracts with higher-paying providers.

“There’s way too much wiggle room for them [insurers] to pretty much design a way to pay as little as they can,” a former manager at UnitedHealth Group told us. The specialist does not expect many arbitration claims to be filed unless high sums are involved. “That’s another way that the insurer is going to come out on top here, because it’s not worth it for the provider to go to bat over smaller claims.”

We also heard that some out-of-network ER doctors were billing patients up to five times the Medicare fee schedule. “They are going to feel the burn with the legislation… because it’s definitely going to take them down to a more reasonable rate,” the former UnitedHealth manager added, suggesting reimbursement is “probably going to be more in the 130% [of the Medicare fee schedule] realm when the payers get done with it”. Out-of-network providers are therefore increasingly migrating in-network, where they can see that their revenue, while significantly lower, will be more predictable and stable. Insurers are likely to see a reduction to their top line as well. “I think that it could even affect commercial premiums going down for members at probably at least 1% or 2% after about a year of the programme being in place,” one expert said. “There’s going to be a lot of money moving around.” 

The NSA is a big challenge for the air ambulance industry in particular. As we heard, the average charge to patients is USD 16,000-17,000, with USD 6,000 at the low end and USD 25,000 at the high end. “I think that we’ve got to be very cognisant of the air ambulance in this,” the former UnitedHealth manager said. Indeed, the NSA could lead to as much as a 28% reduction in commercial payer reimbursement, according to a former VP at Air Methods. It’s expected that the industry will have to find ways to offset lower revenue, such as through M&A, rationalisation of capacity and the rationalisation of base locations.

The NSA will almost certainly stir the competitive landscape. As the law does not apply to ground ambulance services, a former VP from another division at Air Methods we spoke to believes Global Medical Response is best positioned to weather the storm thanks to its wider array of services. They also pointed out that its membership programme means it makes money even without emergency flights taking place. However, we also heard that Air Methods was taking action to better manage its spend, move in-network and bolster its patient advocacy even before the NSA was passed. Meanwhile, Netherlands-based Falck was flagged to us as an emerging player to watch. Falck entered the fray through 911 contracts on the ground several years ago and recently made another splash after winning more contracts in San Diego. “The next five years in EMS should be very interesting with these three players, at the very least.”

We also heard about a new type of business seeking to capitalise on the administrative commands of the legislation. After spending years amassing data, companies like Zelis, MultiPlan and Optum have been springing up to calculate and defend payer rates and are well positioned in the new environment. Smaller insurers are likely to be the first to embrace their offerings, but experts anticipate larger players will soon be on board. “Optum probably has the best data warehouse to come up with the best rates. I would say MultiPlan is probably second, and Zelis is probably third,” the former UnitedHealth Group manager said. 

Experts we’ve spoken to support the intentions of the NSA, but also believe more support is needed to ensure fair pricing by the Centers for Medicare & Medicaid Services and private medical insurers. While the consensus is that the legislation was passed in good faith, the fear is that health providers are going to suffer the most in the long term while insurers continue to see their profits soar. Specialists expect changes to the NSA over time but the migration of out-of-network providers into larger groups or managed service organisations looks set to continue. “We just hope that the insurers will be fair in the negotiations and that the providers will be reasonable as well,” the former UnitedHealth manager said. “That’s when everybody wins.”