Reports Show Network Participation Increased With Surprise Billing Ban

A vocal contingent of providers has argued that the No Surprises Act (NSA), the 2020 law that banned surprise medical billing in most cases, has limited their ability to get fair in-network rates from insurers, disincentivizing network participation. However, experts say that this complaint misses the point of the reform — and recent data indicate that the opposite of what providers argue may be true.

The NSA stipulates that when a patient is being treated by an out-of-network provider without having agreed to it first — which often happens in emergency rooms — the provider can only charge the patient their maximum in-network cost sharing amount. If there is an outstanding balance after the patient is billed that amount, the provider has two options for payment: The provider can either accept the median in-network rate for the care in question, or submit the disputed bill to a binding arbitration process called Independent Dispute Resolution (IDR).

Some providers have argued that this framework gives insurers too much power by undermining the providers’ power in network negotiations. Congressional testimony by Jim Budzinski, chief financial officer of Wellstar Health System of Georgia, is exemplary of this view.

“The Act has unintentionally encouraged bad payer behavior. Now, without consequence, payers are able to sell health insurance in counties in which they have no in-network hospital emergency departments. The Act and its administrative process have allowed those insurers to receive in-network level discounts from hospitals without the need for good faith negotiations, and some take discounts below even in-network rates,” Budzinski told the House Ways and Means Committee in September 2023.

Is Provider Dissention ‘Red Herring’?

But experts on the NSA say that this line of argument misses several points — namely, that the goal of the NSA was to ban surprise billing, which appears to have succeeded.

“I think this whole debate in the surprise billing space is a bit of a red herring,” Loren Adler, associate director of the USC Schaeffer Initiative for Health Policy. “It’s not really the relevant thing that we should care about from the overall good, social planner side of things, given that there effectively is a contract for [out-of-network reimbursement] regardless of whether they have a contract or not.”

The NSA’s reimbursement regime means that for most care, in effect, “it’s in-network for the patient,” Adler says, “and the payment is whatever gets worked out on the back end through arbitration. For all intents and purposes, it’s sort of a default contract.”

Adler’s “point is a good one — from a consumer perspective, it doesn’t really matter,” says Jack Hoadley, Ph.D., research professor emeritus at Georgetown University’s Center on Health Insurance Reforms and a former Medicare Payment Advisory Commission member. “Particularly when you’re dealing with ER docs, you’re dealing with anesthesia, you’re dealing with radiology — those are probably the big three specialties that are affected by this law.”

“You’re going to have the same out-of-pocket costs regardless, and so you don’t really care whether they’re officially in the network or officially out of the network, they’re treated as if they are in the network for the purposes of your cost,” Hoadley adds.

That said, “at some point, it’s going to have an effect…from a systemic perspective. We want to see robust networks for plans,” Hoadley says. If “shrinking networks were to occur, what effect will that have on the prices paid, which will eventually affect premiums?”

Adler says there is a simple reason why providers have raised the network agreement issue.

“I could see reasons why you just don’t bother with it,” Adler says of providers entering network agreements. “Although there may always be some advantages to having a contract — maybe it makes payment more seamless, things like that. But most of the arguments from providers, I think, are more about, ‘We’re not getting paid as much as we want to,’ rather than whether there’s a contract or not.”

In any case, the network effects of the surprise billing ban are hard to quantify at present, Hoadley says, although he adds that “there are some researchers who seem to be trying to start working on that.”

“What we really need is some good neutral source of data. And that’s not easy to do. There’s no magic place where I can go and look up what network sizes are,” Hoadley says. “There will probably soon be some analysis for at least the first year of the No Surprises Act, for the 2022 year.”

In the meantime, “what we’ve got is claim and counterclaim,” Hoadley says, and anecdotal examples of strongarm negotiations.

Reports Show More In-Network Care

As far as quantitative evidence is concerned, two reports have come out in recent weeks, although they carry caveats. One should be taken with a very large grain of salt, as it was funded by insurer groups — AHIP and the Blue Cross and Blue Shield Association (BCBSA) — which have an obvious stake in proving one side of the argument.

Regardless, the AHIP-BCBSA report, which surveyed commercial insurers nationally, found that 67% of insurers “indicated that their overall provider networks (the number of participating health care providers) have increased since 2021, following the enactment of the NSA.” The remaining 33% “indicated that their provider networks remained unchanged.” No surveyed plan’s networks decreased in size.

The other, released by FAIR Health, is a significant step in the direction of the kind of large-scale, third-party research that Hoadley hopes for. FAIR Health is an independent group with perhaps the most substantive claims database of any health care research organization.

However, the FAIR Health white paper does not specifically answer the question of whether more providers were more likely to join or leave insurance networks after the NSA passed. Instead, it tracks changes in in- and out-of-network claim volumes before and after the law came into effect. It also was not peer reviewed, and FAIR Health considers the “findings…starting points for further research on in-network and out-of-network utilization and pricing against the backdrop of federal and state surprise billing laws.”

That said, the FAIR Health white paper — which studied claims made from the first quarter of 2019 to the third quarter of 2023 — does have notable findings on utilization and surprise billing, including that:

• On average, allowed amounts as a percentage of billed amounts for both in- and out-of-network services decreased during the study period. (Allowed amounts are defined as “the total fee negotiated between an insurance plan and a provider for an in-network service, including both the portion to be paid by the plan member and the portion to be paid by the plan.”)
• A large majority of professional services in facility settings were rendered in network both before and after the NSA went into effect in all specialties, nationally and regionally.
• In-network percentages of total utilization increased across all specialties in the studied period. During that period, in-network care as a percentage of all claim lines increased 7.0% nationally, from 84.1% of claim lines in the first quarter of 2019 to 90.0% in the third quarter of 2023.
• There was a relatively sharp increase in in-network percentages nationally (2.3%) and in all regions that occurred across all specialties at the time when the NSA went into effect (the white paper defines this as the fourth quarter of 2021 to the first quarter of 2022).
• Over the entire studied period, radiology had the highest in-network percentage (ranging from 89.3% to 92.0% over the course of the period) compared to the other specialties of interest. Emergency medicine had the lowest in-network percentage (ranging from 71.6% to 83.1%).
• Emergency medicine had the highest increase of in-network care (13.2%) of studied specialties.

In any case, Adler reiterates that the NSA is a notable success in its most important goal.

“The reason we care about network adequacy, from the consumer perspective, is because it means having more access to physicians or hospitals or medical care,” Adler says. “But in this case, whether 90% or 95% of emergency docs are in network now doesn’t have any relation to how much access the patients have.”

And, as far as pricing dynamics are concerned, Adler says, “the whole point of [network] contract negotiations is to figure out the price for the service…we knew the No Surprises Act was going to change the negotiations. I don’t think we’ve reached equilibrium by any stretch here. Certainly [the law] changed the dynamics of negotiations. I think that’s [the cause of] the yelling here.”

Contact Adler at ladler@brookings.edu and Hoadley at jfh7@georgetown.edu.

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