Flawed Rules in No Surprises Act Hurt Doctors and Patients, Experts Say

The No Surprises Act has led to unintended consequences for physician practices that could ultimately hurt patients, said physicians and patient advocates during a hearing of the House Committee on Ways & Means this week.

What was meant to be a major win for patients and providers has instead led to some practices fighting to keep afloat — and patients losing access to care, said Committee Chair Rep. Jason Smith (R-Mo.)

Under the law, patients who receive surprise medical bills are only required to pay what they would have for an in-network copay or deductible. If there’s a dispute between the health plan and the provider over payment, it is settled through arbitration, for a fee of $350.

Smith and other committee members argued that the Centers for Medicare and Medicaid Services (CMS) bungled enactment of the law by ignoring “congressional intent” in its rulemaking.

“It has created a tilted dispute resolution process that has left medical providers paying more to participate in a process that often forces them to accept artificially low payments with no enforcement guarantee,” he said.

As a result of flawed regulation, emergency department wait times have doubled since 2020 and implementation of the rules has “inflamed an existing staff shortage,” leaving some hospitals under threat of closure, with 600 rural hospitals currently at risk of shutting down, he noted. “Left unchanged, these federal rules will continue to lead to less access to quality care.”

When the No Surprises Act first passed, Seth Bleier, MD, of the Wake Emergency Physicians Professional Association (WEPPA), a physician-owned practice in Raleigh, North Carolina, did not expect the bill to impact his practice. At the time, WEPPA was in-network with all of the major insurers in the area.

But soon after the act became law, his practice and others in the area received a letter from one insurer demanding significant cuts to contracted rates, Bleier said. If they refused, the insurer threatened to force the practices out of network.

While WEPPA ultimately kept that contract, two other payers terminated contracts with his practice. The problem, Bleier said, is that the core mechanism for resolving payment issues between practices and insurers — the independent dispute resolution (IDR) process — is “virtually inaccessible” for a small practice.

“We cannot afford to challenge every underpayment when the non-refundable portion of the arbitration fee is $50 — much less $350,” he said. In addition, lack of enforcement means an adjudicated decision in favor of the provider is no guarantee of payment from the insurer.

“So even when we win an IDR case, we effectively lose due to the fees associated with it, and then we do not get paid afterwards,” he added.

Bleier argued that if conditions persist, WEPPA “may be forced to substantially reduce staffing hours, cut positions, or potentially even withdraw contracts at certain hospitals.”

Another witness, Jim Budzinski, MBA, executive vice president and chief financial officer for WellStar Health System in Marietta, Georgia, said the “broken” dispute resolution process is the biggest challenge that his health system is facing from the law.

Like Smith, Budzinski said a national insurer threatened to end a 20-plus-year contract if WellStar did not agree to a 20% reduction in payment — equal to a $4 billion loss over a decade. Ultimately, the health system resolved the matter, but in the compromise, Budzinski estimated that they will lose $1 billion over the next 10 years.

Currently, IDR entities have issued determinations for only 7% of WellStar’s 8,000 requests; however, the estimated total reimbursement for all the requests amounts to more than $40 million, Budzinski said. “At this rate, it will take over 20 years to resolve all of our outstanding requests.”

Can the Arbitration Process Be Fixed?

Rep. David Kustoff (R-Tenn.) asked Bleier how he would ideally like to see these payment issues addressed.

Bleier said that enforcement of the qualifying payment amount (QPA) — usually the median contracted rate for the same or a similar service in a certain geographic region — is needed for payments to be calculated correctly and for the arbiter’s ruling to ensure that payments are made to providers and hospitals appropriately.

The law needs “some teeth,” he said. While he could not name a “price point,” he noted that “it would need to be significant, I would imagine.”

He added that a $350 non-refundable arbitration fee is a lot for a small practice, but would mean little to a large insurer.

Rep. Greg Murphy, MD, (R-N.C.) named examples of physicians whose payments were delayed by 8 or 9 months and were bullied out of plans’ networks, only to be allowed back in if they agreed to substantially lower rates.

“Are you just waiting for the practices to go bankrupt? Because that’s what’s happened,” he said.

Concerns about the IDR process also surfaced during the hearing.

In August, CMS paused the IDR process after a Texas judge ruled that certain elements of the regulation were unlawful. In 2021, the Texas Medical Association sued HHS, saying the agency’s arbitration rules unfairly advantage insurers.

Asked what will happen when the portal for disputes reopens, James Bobeck, president of the Federal Hearings and Appeals Services, said company staff is “standing ready” for an expected “tsunami” of cases, and that the group has invested in its case management systems to help streamline processes.

Should Ground Ambulances Be Exempt?

Lawmakers also clashed over whether ground ambulances should be included in the legislation.

Rep. Carol Miller (R-W.Va.) argued that ground ambulances in her state are often operated by small companies that have few resources and struggle to keep their doors open. Some insurance plans are currently attempting to force these companies into the “expensive and time-consuming” IDR process, even though they are exempt from the law, she said.

“I am dismayed that CMS hasn’t issued the written clarification that would solve this confusion,” she added.

Rep. Suzan DelBene (D-Wash.) countered that the exclusion of ground ambulances from the law represents a “critical gap in our consumer protection framework.” In Washington, the “vast majority” of surprise bills are tied to ground ambulances, she said, citing Washington State’s Office of the Insurance Commissioner.

An individual with private insurance can be charged copays and cost-sharing of $500 on average, and closer to $1,000 if the service is deemed a non-emergency, she noted.

DelBene asked Diane Spicer, JD, a supervising attorney for the Community Health Advocates of the Community Service Society of New York, for her take on the issue.

While New York’s own state law includes patient protections relating to surprise billing from ground ambulances, her organization still receives “a number of calls” from federally insured patients for out-of-network bills, Spicer said.

“It’s hard for them to understand why their plan isn’t paying and it deters them from going to the emergency room and getting care when they need to,” she noted.

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