HHS Issues First Annual Report to Congress on Impact of No Surprises Act

Recently, HHS issued the first in a series of five annual reports to Congress on the impact of the No Surprises Act (NSA). The NSA was enacted in 2020 to address certain instances of surprise billing, where individuals receive unexpectedly high medical bills after receiving treatment, either unknowingly or unavoidably, by an out-of-network (OON) provider, facility, or provider of air ambulance services subject to NSA requirements.

This first report establishes a framework for evaluating the NSA’s impact on surprise billing, healthcare costs, and consolidation that will be used in future reports. It focuses on key trends such as the impact of state surprise billing laws already in effect, trends in market consolidation and concentration related to prices, quality, and spending, and overall OON billing trends.

The report notes that the law went into effect on January 1, 2022, and it may take time to see the full impact. Existing healthcare trends such as demographic changes, economic conditions, technology changes that affect healthcare delivery, and healthcare policies that alter financial incentives may impact the NSA trends being studied, and additionally, distinguishing between these factors is challenging. Future reports will identify the most promising study designs and methods to capture the NSA impact on key outcomes such as price, spending, quality, and access to healthcare.

The first key factor discussed is the effect of state surprise billing laws. Prior to the NSA, 33 states had surprise billing protections, but those laws generally only applied to insured plans written in that state. The NSA covers both self-insured plans, which may not have been subject to individual state laws, and fully insured plans. Additionally, the NSA fills the gap where federal law prohibits states from regulating the prices of air ambulance services. State methods for addressing surprise bills can vary markedly either by the approach used or the terms of the benchmark rates being used. The report includes examples of differences across states. Studies show that the impact of surprise billing laws is greatly influenced by the approach taken by the respective state. Therefore, while evaluating existing state data is important, the NSA will need to be cautious in making comparisons, especially since the NSA was written to defer to existing state laws in some situations.

The second key factor discussed is market consolidation and concentration. NSA protections may have a downstream effect on other areas of healthcare markets, such as a change in network structures or provider bargaining power due to lower OON prices, which they refer to as market power. The report focuses on two aspects of market power — consolidation and concentration. Consolidation of market power are things like mergers and acquisitions, which modify markets and increase market power, or arrangements such as affiliations between organizations that allow joint negotiations. Consolidation can lead to weakened competition, resulting in less competitive prices and quality, or it may lead to increased efficiencies and patient outcomes. Concentration of market power looks at the size and number of competitors in a market, which may feel an impact from a consolidation of market power. Health insurance, hospital, and physician organization markets have become increasingly concentrated over recent years, but reports are thus far mixed as to the impact of concentration on pricing and patient care.

The final key factor discussed is the overall trend in OON billing to help determine items and services most likely to be affected. Providers, items, and services most closely associated with OON billing prior to the enactment of the NSA will likely feel the impact of the NSA the most. Therefore, it is important to examine historical data as part of the overall analysis. The report looked at Health Care Cost Institute (HCCI) data from 2012–2022, comprising claims and enrollment data for 55 million commercially insured individuals from four insurers (Aetna, Blue Health Intelligence, Humana, and Kaiser). The data shows an overall decrease in OON claims during this timeframe, although a substantial variation in OON claims by state, age, and gender exists. Insurance plan type also made a difference, with point of service (POS) carrying the highest share and preferred provider organizations (PPO) with the lowest share.

Estimating the true impact of the NSA will take time as analysis and methodologies evolve. This first annual report is an important reminder of the importance of the NSA and its potential impact on patients and the healthcare market as a whole.

HHS NSA First Annual Report »