What Is No Surprises Act?
The No Surprises Act (NSA) is a comprehensive federal law designed to protect individuals from unexpected medical bills, primarily those arising from receiving emergency care or non-emergency services from out-of-network providers at in-network facilities. Falling under the broader category of consumer protection in healthcare finance, the No Surprises Act aims to shield patients from charges they cannot reasonably avoid or foresee, ensuring they are only responsible for their standard cost-sharing amounts, such as copayment, coinsurance, and deductible. The No Surprises Act addresses situations where patients might receive care from a provider or facility that is not part of their health insurance plan's network, often without their prior knowledge or consent70, 71.
History and Origin
Surprise medical billing became a significant concern in the United States, with studies indicating that a substantial percentage of emergency department visits and non-emergency hospitalizations involved out-of-network bills, even when the facility itself was in-network68, 69. These unexpected bills often burdened patients with exorbitant healthcare costs that their insurance did not fully cover, leading to financial distress.
In response to widespread bipartisan support for addressing this issue, the No Surprises Act was enacted on December 27, 2020, as part of the Consolidated Appropriations Act of 202166, 67. The legislation came into effect on January 1, 2022, introducing new federal protections intended to take patients out of the middle of billing disputes between providers and insurers63, 64, 65. Prior to the NSA, many states had their own laws, but federal legislation was necessary to cover patients with employer-sponsored health plans and air ambulance services, which state laws often could not address61, 62.
Key Takeaways
- The No Surprises Act protects patients from unexpected medical bills for most emergency services and non-emergency services provided by out-of-network clinicians at in-network facilities59, 60.
- Patients are generally only responsible for their in-network cost-sharing amounts for services covered by the NSA57, 58.
- The law establishes an Independent Dispute Resolution (IDR) process for providers and insurers to resolve payment disputes, keeping the patient out of the negotiation55, 56.
- Uninsured or self-pay patients have a right to receive a good faith estimate of expected charges before receiving non-emergency care53, 54.
- The No Surprises Act also applies to air ambulance services, preventing surprise bills from out-of-network air ambulance providers51, 52.
Formula and Calculation
The No Surprises Act does not provide a single overarching formula for the act itself. Instead, it establishes methodologies for determining the amount patients owe for services covered by the Act and the amount providers can seek from insurers. A key concept introduced is the Qualifying Payment Amount (QPA).
For services covered by the No Surprises Act where balance billing is prohibited, a patient's cost-sharing is based on a "recognized amount"49, 50. This recognized amount is generally the lesser of the billed charge or the QPA48. The QPA is defined as the median of the contracted rates that a health plan pays to providers in the same geographic region for the same or similar service46, 47.
When calculating the QPA, health plans generally use:
The QPA serves as a benchmark for patient cost-sharing and as a reference point in the Independent Dispute Resolution (IDR) process between providers and insurers44, 45. The methodology for calculating the QPA involves considering underlying fee schedule rates or derived amounts for services43.
Interpreting the No Surprises Act
The No Surprises Act fundamentally alters how unexpected medical bills are handled, shifting the financial burden away from patients in many situations. For insured individuals, it means that if they receive emergency services or non-emergency care from an out-of-network provider at an in-network facility, they generally cannot be billed for the difference between the out-of-network charge and what their insurer pays41, 42. Their financial responsibility is capped at the amount they would typically pay for in-network care, including their deductible and coinsurance40.
For healthcare providers and facilities, interpreting the No Surprises Act means understanding their obligations to disclose patient protections, provide good faith estimates to uninsured patients, and engage in the Independent Dispute Resolution process with insurers if a payment agreement cannot be reached38, 39. The law aims to prevent situations where patients are caught in the middle of billing disputes37.
Hypothetical Example
Consider Sarah, who experiences sudden chest pain and is rushed to the nearest hospital emergency room. Unbeknownst to her, while the hospital itself is in her health insurance plan's network, the emergency room physician who treats her is an out-of-network provider. Before the No Surprises Act, Sarah might have received a separate, substantial bill from the out-of-network physician for the difference between the physician's charge and what her insurance paid, a practice known as balance billing.
Under the No Surprises Act, Sarah is protected from this surprise bill. She would only be responsible for the cost-sharing amount she would have paid if the emergency physician had been in-network. Her insurer would then work directly with the out-of-network physician to determine the final payment, possibly through the Independent Dispute Resolution process, without Sarah being financially liable for the remaining balance.
Practical Applications
The No Surprises Act has significant practical applications across the healthcare and insurance sectors, fundamentally reshaping aspects of healthcare finance and patient billing.
- For Patients: The primary application is the elimination of unexpected bills for specific services. Patients receiving emergency care, or non-emergency care from out-of-network providers at in-network hospitals, are largely shielded from additional charges beyond their standard in-network cost-sharing36. This provides greater financial predictability and patient protection.
- For Providers: Healthcare providers, including hospitals, physicians, and air ambulance services, must adhere to new billing regulations. They are generally prohibited from balance billing patients for services covered by the Act34, 35. This requires adjustments to billing practices and potentially more direct engagement with insurers for payment disputes via the Independent Dispute Resolution process33. They also must provide a good faith estimate of costs to uninsured patients32.
- For Insurers: Health plans are now required to cover emergency services by out-of-network providers at no more than the in-network cost-sharing rate and must directly pay the out-of-network provider31. Insurers must also participate in the IDR process to resolve payment discrepancies with providers. Further details on the implementation of these regulations can be found from resources like the Kaiser Family Foundation (KFF). No Surprises Act Implementation: What to Expect in 202230.
Limitations and Criticisms
While the No Surprises Act offers significant patient protection, its implementation has faced several limitations and criticisms, primarily concerning the Independent Dispute Resolution (IDR) process and its impact on provider reimbursement.
A major point of contention has been the methodology for determining the Qualifying Payment Amount (QPA), which serves as a key benchmark in the IDR process28, 29. Provider groups have argued that initial regulations unduly favored insurers by giving excessive weight to the QPA, potentially leading to lower reimbursement rates for out-of-network services26, 27. This has resulted in multiple lawsuits filed by provider organizations, leading to vacating of certain rules and causing delays and backlogs in the IDR process24, 25. For example, the Texas Medical Association (TMA) has been particularly active in legal challenges, alleging that the rules skewed the arbitration process against physicians23.
Another limitation is that the No Surprises Act does not cover all unexpected medical bills. For instance, it generally does not apply to ground ambulance services or when a patient knowingly chooses an out-of-network provider for non-emergency services where protections can be waived with proper notice and consent20, 21, 22. The complexity of the rules and the ongoing litigation have also created uncertainty for both providers and patients in some situations18, 19. Insights into these challenges can be found in publications like The Guardian's coverage on the clash between doctors and insurers over the law. Doctors and insurers clash over US law that protects against surprise billing17.
No Surprises Act vs. Balance Billing
The No Surprises Act directly addresses and largely prohibits the practice of balance billing in specific healthcare scenarios. Balance billing occurs when a healthcare provider bills a patient for the difference between the provider's charge and the amount their insurer pays, especially if the provider is out-of-network and has no contractual agreement with the insurer to accept the plan's allowed amount as full payment15, 16. Patients often received these surprise bills when they had little or no control over choosing an out-of-network provider, such as during an emergency or when an out-of-network specialist (e.g., an anesthesiologist) was involved in an in-network hospital procedure13, 14.
The No Surprises Act's core purpose is to end this practice for emergency services and certain non-emergency services where patients cannot reasonably avoid an out-of-network provider, for example, when treated by an out-of-network provider at an in-network facility11, 12. Under the NSA, patients are protected from being balance billed in these situations and are only liable for their standard in-network cost-sharing amounts. The financial responsibility for the remaining balance shifts from the patient to a negotiation between the provider and the insurer through the Independent Dispute Resolution process10.
FAQs
Q: What types of services are covered by the No Surprises Act?
A: The No Surprises Act primarily protects consumers from unexpected bills for most emergency services, non-emergency services provided by out-of-network providers at in-network facilities (like hospitals or ambulatory surgical centers), and air ambulance services8, 9.
Q: Does the No Surprises Act apply if I don't have health insurance?
A: Yes, if you are uninsured or choose to self-pay for your care, the No Surprises Act gives you the right to receive a good faith estimate of the total expected cost of any non-emergency healthcare items or services before they are provided6, 7. If your final bill is at least $400 more than the estimate, you may be able to dispute the charges5.
Q: What should I do if I receive a surprise medical bill that I believe violates the No Surprises Act?
A: If you receive a bill you believe is a surprise bill covered by the No Surprises Act, you should contact your health insurance plan or the Centers for Medicare & Medicaid Services (CMS) No Surprises Help Desk for assistance4. Healthcare providers are also required to provide a notice explaining patient protections and who to contact if they think the protections have been violated2, 3. For a comprehensive overview of your rights, official government resources like CMS's consumer guide are helpful. No Surprises: Understand your rights against surprise medical bills1.