The No Surprises Act (NSA) is the latest chapter in the ongoing struggle between insurance payers and physicians. But today’s challenges result from the compounding laws and regulations that have emboldened payers and steadily shifted the balance of power.

Out-of-Network Balance Billing Practices Positioned Patients at the Center of a Payment Dispute Between Payers and Physicians

Historically, physicians have been able to negotiate in-network contracts with insurance companies to ensure fewer denials, lower patient cost-share, and prompt payments. However, emergency medicine (EM) contracts are unique from those of other medical specialties in that there is no control over patient volume or payer mix, and there is no ability to change staffing hours or services to offset any decreases in payer reimbursement.

These dynamics change the calculus for in-network EM contracts, and in recent years, it has become common for EM physicians to remain out-of-network (OON) when reasonable terms can’t be reached.

The common practice in this OON scenario was for the insurance companies to pay the allowed amount, and the guarantor (generally the patient) would owe the remaining amount—a practice known as balance billing.

But, over time, insurance companies started shifting more of the cost onto the cost-sharing amount owed by the patient. The theory was that if patients were aware of the “cost,” they would be more thoughtful in seeking care. However, this increase in cost-sharing led to public frustration over the dollar amount of these balance bills.

The Affordable Care Act (ACA) went into effect on January 1, 2014, and attempted to address the frustration of high cost-sharing using the greatest-of-three (GOT) payment standard. The expectation was that the GOT standard would ensure that payers couldn’t pay an unreasonably low amount for OON care, and patients would be protected from unreasonably high cost-sharing bills. However, the ACA did not include an outright ban on Balance Billing.

Narrow Networks Help “Reduce” Health Care Costs

The ACA helped accelerate the shift to narrow networks as a way to reduce health care costs. However, the unintended consequence of these narrow networks was that more patients were surprised to learn they were OON when seeking unplanned care. And this unexpected lack of coverage eventually led to a rise in surprise billing, i.e., when a patient seeks care at an in-network facility and is seen by an OON physician.

This phenomenon led several states to enact bans on surprise billing. However, this patchwork approach by individual states only had a limited effect because most Americans are covered under employer-sponsored health plans—many of which are governed by the federal ERISA statute applicable to self-funded insurance plans.