Federal No Surprises Act: Key Points

Growing public dissatisfaction over high medical bills has put pressure on U.S. politicians to enact legislation to protect consumers. The main cause for these surprise bills are out-of-network costs. Due to physician shortages and a more widely insured population following the passage of the Affordable Care Act (ACA), it has become common practice for hospitals to contract third-party physician-staffing companies rather than directly employing everyone who practices in their facilities [2]. Many of these companies are owned by private equity firms that profit from keeping their staffing companies out of insurance networks, which in turn allows them to bill patients for out-of-network costs [2]. While federal legislation has been under consideration for more than a year, lobbying efforts have impeded its passage [1]. However, the federal No Surprises Act was recently passed, paving the way for nationwide protections.

Because federal legislation has been delayed, many states have stepped in to offer relief. More than half have enacted laws designed to protect consumers from surprise billing practices, but the comprehensiveness of these protections varies [3]. States such as New York have legislated that disputes over unresolved charges be arbitrated, a method preferred by providers [3]. Other states have enacted laws which set rates through “benchmarking,” which sets clear limits on out-of-network costs; this is the system preferred by insurers and consumers [3]. However, there are federal limitations to what can be covered. The 1974 Employee Retirement Income Security Act prevents states from regulating health plans that are offered by employers and funded by the individual [3]. Additionally, states are unable to offer protections against emergency air transit costs, a major source of surprise billing [3].   

At the end of 2020, Congress passed the No Surprises Act as part of the omnibus spending bill that then President Donald Trump signed into law on December 27. The law goes into effect on January 1, 2022 [4]. The Act protects consumers from surprise bills they might incur either from emergency services from out-of-network providers (including air transport) or nonemergency services provided by out-of-network providers within in-network facilities [4]. Aside from protecting patients from incurring large bills for emergency or ancillary services, the law also aims to increase transparency for consumers. One example of this is the provision in the Advanced Explanation of Benefits, which details potential out-of-pocket costs [4]. Patients may exclude themselves from the Act’s protections if they knowingly select an out-of-network provider when other options are available, or if they sign a consent waiver, although waivers can only be issued in exceptional circumstances [4]. When it comes to payment disputes, the legislation establishes that insurers and providers have a limited time frame to engage in private negotiations, after which any disputes must be settled by arbitration [4]. Furthermore, the Act puts provisions in place to prevent the arbitration system from being abused [4].  

In situations where state laws offer more protection than the new act, it is the state law which takes precedence, so long as it does not prevent the federal law from being applied [5]. States will be responsible for enforcing provisions of the Act, but federal enforcement will intervene if the states fail [5]. The COVID-19 pandemic has brought economic and medical uncertainty to many families. The No Surprises Act seeks to ease the stress of navigating an increasingly complex health industry, and to help providers, insurers, and patients find favorable and affordable resolutions.             


[1] Jack Hoadley, Kevin Lucia, & Beth Fuchs | Research Professors, Principal at B&J Health Policy, LLC | Dec 17, 2020. “Surprise Billing Protections: Help Finally Arrives for Millions of Americans.” The Commonwealth Fund Blog, 17 Dec. 2020, https://www.commonwealthfund.org /blog/2020/surprise-billing-protections-cusp-becoming-law 

[2] Rachel Bluth & Emmarie Huetteman | Kaiser Health News | Sept 11, 2019. “Investors’ Deep-Pocket Push To Defend Surprise Medical Bills.” KHN, 11 Sept. 2019, https://khn.org /news/investors-deep-pocket-push-to-defend-surprise-medical-bills/ 

[3] Molyneux, J. “Surprise Medical Bills: Are We Any Nearer to a Federal Fix?” American Journal of Nursing, vol. 120, no. 8, 2020, pp. 17–19. doi:10.1097/01.naj.0000694532.10549.f4 

[4] Hoadley, J., et al. “Unpacking the No Surprises Act: An Opportunity to Protect Millions.” Health Affairs Blog, 2020, doi: 10.1377/hblog20201217.247010.  

[5] The No Surprises Act: Implications for States, State Health and Value Strategies, 12 Jan. 2021, www.shvs.org/the-no-surprises-act-implications-for-states/.

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