Exploring the Provider Side of the No Surprises Act | FTI (2024)

Two years after its implementation, providers are still struggling with the rollout of the No Surprises Act (“NSA”), a complex law that is adversely affecting providers who specialize in emergent care services.¹ Hospital and physician group operators may not be fully aware of all its requirements, which could lead to rapidly declining revenue and unintentional violations of the law and/or best practices. In this article, we’ll dive into the background of the NSA, its benefits for consumers, the ongoing trouble it is giving providers, and high-level ways to mitigate its impact moving forward.

What is the No Surprises Act?

Effective January 1, 2022, the No Surprises Act established federal protections against balanced billing, more commonly known as “surprise billing,” for commercially insured patients who received emergency care or were treated by an out-of-network provider at an in-network hospital or ambulatory surgical center.²

The law protects patients from most surprise bills across three primary areas:

• The NSA protects most emergency services, including services received in hospital emergency departments, freestanding emergency departments and urgent care clinics that are licensed to provide emergency services.³ In addition, the law applies to air ambulance transport but not ground ambulance services.⁴
• The NSA covers emergency services provided by a hospital following an emergency visit. This protection covers emergency care received until a physician determines that the patient can safely travel to another in-network facility using non-medical transport without causing unreasonable burdens for the patient.⁵
• The NSA applies to non-emergency services provided by out-of-network providers at in-network hospitals and facilities who bill independently for their services.⁶

In addition to these select prohibitions, the NSA also created a process for determining the payment amount for a surprise, out-of-network medical bill, and an independent dispute resolution process for payment disputes significantly greater than the good-faith estimate provided.⁷

States have the primary role in enforcing NSA rules against health providers, with the federal government providing supplemental support as necessary.⁸ Even in states where consumers are covered by a federally regulated health plan, states remain the primary enforcer.⁹ Most states are familiar with NSA obligations, as 33 states independently implemented their own balanced-billing laws prior to NSA.¹⁰

To support providers and health care facilities with the implementation, several resources were created by governmental and professional organizations, one of which is the American Medical Association toolkit. The toolkit identified three challenges:

• Non-emergency services at in-network facilities.
• Emergency services and post-stabilization care at hospitals or freestanding emergency departments.
• Good-faith estimates (GFEs) for self-pay and uninsured patients.¹¹

Healthcare Consumers Get a Win, but at What Cost?

At its passage, the NSA law was heralded as a win for healthcare consumers. The days of patients receiving unexpected and potentially devastating medical bills, often due to unforeseen emergencies, would be over. Nearly two years later, this promise has largely been realized. However, few outside of the industry predicted the amount of financial hardship the law would have on providers, particularly companies providing emergency services, such as physicians groups and air medical transportation companies. Healthcare bankruptcies increased by 84 percent from 2021 to 2022, with multiple health care organizations citing the new law along with higher costs of debt and unfavorable payer contracts as contributing factors in their bankruptcy filings.¹² As of November 2023, about 30 public companies named the NSA law as a potential risk to their financial performance.¹³

One of the unforeseen consequences of NSA is the excruciatingly slow process of disputing payments and reaching settlements. While the law was being developed, policymakers realized that requirements would be needed to facilitate negotiations and settlements between providers and payers that are not under any existing contractual requirements. This brought a new process called “open negotiation” that allows providers and payers to negotiate rates in the event a patient receives care from an out-of-network provider. If an agreement is not reached within 30 business days of the initiation of open negotiation, the case can be submitted for arbitration to an independent third party, initiating a process called Independent Dispute Resolution (IDR). Depending on the insurance plan type, the case may follow federal rules and be facilitated through the federal portal, or it may be required to follow a different process defined by the state in which the health services were rendered. This adds another layer of complexity contributing to payment delays and negatively impacting cash flows of providers. According to a report by the U.S. Government Accountability Office (GAO-24-106335), federal departments anticipated about 22,000 disputes would enter the IDR process in 2022. However, over 490,000 disputes were submitted between April 2022 and June 2023, with 61% of the disputes still unresolved as of June 2023.¹⁴

No Surprises Act Disputed Claims Backlog

Source: “No Surprises Act Consequential for Some U.S. Healthcare Providers”, Fitch Ratings, Department of Health & Human Services, Department of Labor and Department of the Treasury (30, Oct 2023),

Claims disputed through the NSA’s process almost immediately built up a backlog, and they continue to outpace those resolved.¹⁵

To prepare for the new requirements, many providers are creating strategies and processes within their revenue cycle management to identify, track and dispute low payments from non-contracted payers. However, because of the additional requirements and processes the law has put in place, lower reimbursem*nt rates and delays in cash receipts seem inevitable.

To Weather the NSA Storm, Providers Need To Build an NSA Capability

To help weather the ongoing storm triggered by this new law, organizations need to stand up an NSA capability with built-in flexibility that allows them to nimbly change approaches in response to ever-changing rules and regulations, payer behaviors and contract status. An effective NSA strategy can protect net revenue and create leverage for providers at the negotiating table. Insurance companies have little incentive to contract with complacent out-of-network providers. As a result, providers with an enterprising approach stand a greater chance of protecting their patient service revenue.

However, providers face many challenges related to processing out-of-network claims, including staffing a team with the appropriate contract management and revenue cycle skills and building a sustainable technology solution that scales the NSA process. NSA IDR volumes have risen to a level exceeding 500% of CMS expectations, so managing administrative and technology costs remains a challenge for providers.

Implementing an NSA Strategy at a Large, Nationwide Provider

A large, nationwide provider retained FTI Consulting in March 2023 to aid in developing and executing an NSA strategy. FTI Consulting’s expertise enabled the client to:

• Identify high-priority payers and markets to target NSA efforts.
• Implement a technology platform to manage the overall NSA process across markets and states.
• Acquire expertly trained revenue cycle associates to work and track out-of-network claims through the open negotiation and IDR processes.
• Realize winning settlements from large out-of-network payers that can be used as leverage in future negotiations.

With extensive experience developing and executing strategies, our experts helped our client successfully navigate through the financial challenges faced by No Surprise Act laws at the state and federal levels.

Bottom Line

Although no “one size fits all” approach exists, organizations must make difficult decisions on how to develop a streamlined workflow to handle claim volumes, source the claim processing work, align their revenue cycle and managed care processes, understand NSA rules and regulations across state and federal processes, and accurately track and trend program costs and results. Even with an effective and efficient follow-up process, providers must hold payers accountable to making timely payments.

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