In 2020, the No Surprises Act (NSA) was passed to protect commercially insured patients from receiving unexpected bills when insurers are out-of-network with physicians. Before NSA, out-of-network bills occurred when physician groups and insurers couldn't agree on fair in-network rates. When a physician cared for a patient not covered by an in-network contract and the insurer paid less than the physician considered fair, the physician could bill the patient for the difference between the paid and fair amount. Insurers branded this "surprise medical billing." Physicians called this a "surprise coverage gap."
Before the NSA, these situations occurred in about one in 20 patient visits to emergency departments (EDs). In NSA's creation, both providers and payers wanted to protect patients but diverged on how. Providers worried NSA would allow payers to set rates. Payers wanted the law to give them control. Congressional leaders attempted to craft legislation to balance these interests. The final compromise bill created an arbitration process for when providers and insurers can't agree on fair payment within a defined period where open negotiations between the two parties are allowed.
This new process for out-of-network bills allows three potential options for physicians. First, they can accept the out-of-network payment decided by the insurer. If they decline, the physician and plan are allowed 30 days to negotiate. If they are unable to agree, both the physician and plan submit a final offer to the independent dispute resolution (IDR) process, where an independent arbiter selects one of the two options within 30 days. This incentivizes both parties to give their best offer. Any unreasonable offer could lead to a worse outcome for that party.
The Impact of the NSA on ED Physicians, Payers, and Patients
The NSA thankfully protects patients as intended. Yet, it insidiously erodes physician payments. This erosion is magnified for ED physicians, who rely heavily on commercial insurance to subsidize dramatically lower payments from other payers. Emergency physicians are federally required to care for the uninsured and underinsured, regardless of whether they can pay through the Emergency Medical Treatment & Labor Act (EMTALA) of 1986. Emergency physicians are paid very little for uninsured care. Low-paying Medicaid patients are seen in increasing numbers. Medicare pays slightly better, but payments are declining and have significantly lagged inflation over the last 20 years.
The central issue in NSA is what constitutes reasonable payment when physicians and payers are out-of-network. Several NSA factors determine fair payment: 1) provider training and experience, 2) market share of the parties, 3) previous contracting, 4) service complexity, 5) teaching status and case-mix, and 6) the qualifying payment amount (QPA). The QPA is set by the insurer based on the median contracted in-network rate for similar services.
In rulemaking, clarifications were made about how an arbiter should weigh these factors. Early rules directed that the QPA be used as the presumptive payment. Physician groups objected that this unfairly advantaged payers who can determine their own QPA through a non-transparent process. To no surprise, many payers have "calculated" as low a QPA as possible. This is accomplished by gerrymandering the regional median rate because the geographical region used to calculate the QPA is not defined by NSA. Say five regional physician groups have median rates of $100, $115, $230, $270, and $285. By adding just two more groups with rates of $120 and $135 by broadening the region, the QPA changes from $230 to $135 in the payers' favor. Overweighting QPA in arbitration allows insurers to set their own rates. This was not the intention of the law.
The intention of NSA is for physician groups and payers to operate under in-network contracts. However, if the QPA is lower than an existing contracted in-network rate, insurers have a perverse incentive to cancel contracts. This forces physicians out-of-network, increasing arbitration. If insurers win arbitrations, this may iteratively lower the QPA over time, resulting in a death spiral in emergency physician payments. Insurers are already using this strategy. In 2021, Blue Cross Blue Shield of North Carolina proposed in-network contract termination for physician groups unless they agreed to 15% payment reductions or offered a comparable counter proposal, citing NSA as the reason. Similarly, United Healthcare proposed the termination of physician contracts unless they accepted a 40% pay cut.
There have been multiple lawsuits. In two closed cases, judges invalidated using QPA as the only standard for healthcare providers and for air ambulances. Subsequently, CMS directed arbiters to consider more than the QPA, retaining the intended process of fair arbitration. The final rule was released on August 19, 2022, with mixed results for physicians. It stated the QPA is credible and must be considered. Yet, it also stated that it will often, if not always, be the correct out-of-network rate because it incorporates essential factors to determine reasonable payment. If concerns arise on how the QPA was determined, the burden is on providers and facilities to submit complaints, which would be investigated by regulators. But until that point, QPA is presumed correct.
The final rule also officially defined the practice of down-coding, where plans reduce the level of service codes so they can pay less. Previously, insurers were not required to disclose whether their calculated QPA was based upon down-coded claims, which is another way to artificially decrease the QPA. Additionally, plans have to explain why claims are down-coded, describe which service codes were altered, and critically, what the QPA would have been if down-coding had not occurred.
Thus far, federal arbitration is being used heavily. According to a government report on the federal IDR process (April 15 to Sept. 30, 2022), 90,078 disputes were initiated. This is many more disputes in 5.5 months than were anticipated over the entire year. As of September 30, 2022, only one in four cases were resolved. However, this number is misleading. Final payment determinations have been made in just 4% of disputes, with 18% found to be ineligible for federal IDR. Additionally, 84% of disputes for emergency and non-emergency services were submitted by physicians, and 15% by healthcare facilities with 81% of disputes involving ED-related fees. This is noteworthy considering that the fee to open a dispute increased from $50 to $350 as of January 1 of this year. These fees will be on physicians and facilities.
Ultimately, the results of NSA and its IDR are substantial payment delays to ED physicians, often for months, as payers tie up bills in administrative gridlock. This makes NSA a clear boon to payers while disadvantaging ED physicians.
Toward a Fairer Implementation of the NSA
Patients or policymakers may shrug their shoulders when hearing about how physicians may be getting paid less. Yet, the NSA lowering physician salaries may cause even more highly trained, skilled, and certified ED physicians to leave clinical practice. Many hospitals today already face ED physician shortages. Like nurses, ED physicians are not easily replaced. Reduced ED physician staffing will undoubtedly worsen emergency care, increasing waits and ED crowding. This will make patient care less safe and accessible.
Although further legislative action on NSA is unlikely, there is still room to improve it through ongoing FAQs and sub-regulatory guidance. The NSA protects patients while remaining fair to a complex business arrangement between physicians, hospitals, and payers. Yet, some for-profit insurance companies appear to be using NSA in ways that are inconsistent with its original intent due to lack of enforcement. Policymakers need to understand the potential impact of these policies and act to protect our vital safety net by auditing the QPA and ensuring the arbitration process is fair. In January 2023, a letter outlining details on specific solutions was sent to HHS Secretary Xavier Becerra, Secretary of Labor Martin Walsh, and Secretary of the Treasury Janet Yellen by the American College of Emergency Physicians and the Emergency Department Practice Management Association about how to level the playing field between ED physicians and payers. It is incumbent upon policymakers to lead the charge and act to ensure patients remain protected and the nation's emergency care system remains robust and viable.
Nishad Rahman, MD, is a clinical innovation fellow at US Acute Care Solutions and a practicing emergency physician at Sinai Hospital – LifeBridge Health in Baltimore. Jonathan J. Oskvarek, MD, MBA, is research director and clinical instructor in emergency medicine and a practicing emergency physician at Summa Health in Cleveland, Ohio. Jesse M. Pines, MD, MBA, MSCE, is national director of Clinical Innovation at US Acute Care Solutions and a professor of emergency medicine at Drexel University. He works as an emergency physician at Allegheny General Hospital in Pittsburgh and at George Washington University Hospital in Washington, D.C.