No Surprises Act reducing out-of-pocket costs for patients, study finds

The No Surprises Act appears to be reducing out-of-pocket costs for consumers, with a new study from Harvard University and Mass General Brigham showing significant decreases in out-of-pocket spending for adults living in states that enacted new protections as part of the legislation.

Spending decreased less for those living in states that already had consumer protections in place regarding surprise bills.

The NSA prevented more than 10,000 surprise bills during the first nine months of 2023, and consumer complaints to state and federal regulators declined considerably after the law's implementation, researchers found. 

In all, the NSA resulted in an estimated $567 reduction in annual out-of-pocket spending. That’s a greater reduction than was achieved through other efforts to curb costs, such as the expansion of Medicaid, which was linked to a $152 reduction in annual out-of-pocket costs, and drug-related provisions under the Inflation Reduction Act, linked to about $400 in annual savings.

Notably, premium spending remained unchanged after the NSA. The Congressional Budget Office had initially projected the NSA would reduce premiums by 0.5% to 1%, the idea being that the independent dispute resolution process could reduce excessive charges and overall healthcare costs if negotiations between providers and insurers were primarily based on the median in-network rate – the so-called qualifying payment amount. Reducing out-of-network reimbursement rates to qualifying payment amount levels was projected to lower in-network payments to providers by weakening their negotiating leverage with insurers.

But the initial data released by federal agencies showed providers won 85% of resolved independent dispute resolution cases in the last quarter of 2023. Cases won by providers resulted in median payments that were more than three times higher than the qualifying payment amount, whereas cases won by insurers adhered closely to the qualifying payment amount. 

More than two-thirds of independent dispute resolution cases were filed by providers backed by four private equity firms, who have higher case win rates and tend to extract larger monetary awards, researchers found.

The NSA may have also indirectly increased utilization or inflated prices, meaning healthcare costs may have remained stagnant after its passage. Perceived or real reductions in surprise billing have likely ameliorated financial concerns among patients and encouraged more healthcare utilization, with some evidence showing state-level bans on surprise billing were linked to statistically significant increases in emergency department visits.

And although the NSA successfully lowered out-of-pocket spending, the lack of reductions in high burden medical spending suggests that the law has not substantially alleviated the financial strain associated with these costs at the population level. In 2020, nearly 18% of Americans had medical debt based on consumer credit reports, with the mean amount of debt estimated at $429.

Addressing gaps in the design and implementation of the NSA may help reduce the “financial toxicity” associated with medical bills, the study concluded. For example, the law could be extended to cover ground ambulance transports – of which about 71% resulted in a potential surprise bill between 2013 and 2017. Evidence is also emerging that many socially disadvantaged patients are still unaware of the protections available to them under the NSA and may still be receiving unexpected surprise bills.

Efforts are required to increase public awareness of NSA related protections, assist patients with surprise billing complaints, and enforce penalties against providers who violate the law, authors said.