The No Surprises Act changed what a network gap costs.

The No Surprises Act (NSA), which took effect January 1, 2022, was primarily discussed as a consumer protection law — a way to prevent patients from receiving unexpected bills from out-of-network providers at in-network facilities. That is an accurate description of what it does. What received less attention is how the NSA changed provider contracting leverage and the financial exposure for plans with thin networks in the services it covers.

One point of scope first. The NSA's billing protections apply to commercial group and individual coverage, including Marketplace plans. They do not apply to Medicare Advantage or Medicaid. Everything below is about your commercial and Marketplace business.

The network connection

The No Surprises Act does not set time-and-distance standards. It caps member cost-sharing at in-network levels for emergency care, for out-of-network providers at in-network facilities, and for air ambulance, and it bars those providers from balance billing. The plan then pays an out-of-network rate settled by negotiation or federal IDR. Its continuity-of-care provision is separate: when a provider leaves the network, patients in active treatment keep in-network cost-sharing for up to 90 days.

What this means in practice: if your emergency medicine network is thin, out-of-network emergency providers cannot balance-bill your members when they go to an out-of-network ED. The plan pays those providers a rate settled by negotiation or the NSA arbitration process, which in practice has often come out well above what the plan would have paid an in-network provider.

Network gaps in these services are no longer just a compliance problem. They are a financial exposure. Where you are short on contracted emergency physicians, anesthesiologists, radiologists and other hospital-based specialists, your members still get in-network cost-sharing, and you pay whatever negotiation or arbitration produces.

The arbitration dynamic

The NSA established an Independent Dispute Resolution (IDR) process for out-of-network payment disputes between plans and providers. Under IDR, a certified arbitration entity makes a payment determination based on the Qualifying Payment Amount (QPA) — which is essentially the plan's median in-network rate for the service — along with other factors the arbitrator can consider.

Early experience with the IDR process showed that arbitrators were frequently awarding above the QPA, citing “other factors” including the complexity of the service, the provider's training and experience, and the geographic market. For emergency medicine and anesthesiology in particular — specialties with historically high out-of-network utilization — IDR awards have added meaningful cost compared to what plans expected when the QPA was established as the anchor.

Plans with the thinnest contracted coverage in these specialties have the most exposure. Plans that had pre-NSA strategies of maintaining thin networks and relying on balance billing deterrence to limit out-of-network utilization discovered that the NSA closed that path entirely.

The good faith estimate requirement

The NSA requires providers and facilities to give uninsured and self-pay patients Good Faith Estimates (GFEs) before scheduled services. The Advanced Explanation of Benefits (AEOB) for insured patients is in the statute, but CMS has deferred enforcement until it finishes rulemaking.

When the AEOB does take effect, it will have operational implications for network management: your systems will need to identify, for any given service and provider, whether the provider is in-network, what the applicable in-network rate is, and what the member's cost-sharing obligation will be. Provider data quality issues (wrong taxonomy codes, stale directory information, credentialing status errors) will translate directly into AEOB accuracy problems. Cleaning that data up now is cheaper than doing it under a deadline.

A gap in hospital-based specialties used to be a compliance problem you managed at the annual review. Under the No Surprises Act, it shows up in your claims expense every week.

Contracting leverage implications

The NSA changed the contracting leverage dynamic for providers in specialties with historically high out-of-network rates. Before the NSA, a specialty that could generate significant out-of-network revenue (emergency medicine, anesthesiology, radiology) had limited incentive to contract with plans at low rates — out-of-network balance billing was the alternative. After the NSA, that alternative is largely gone for the services and plan types the law covers.

This theoretically should have reduced specialty contracting costs. In practice, the same specialties are still negotiating aggressively — now using the IDR process as a lever rather than balance billing. Plans that have not updated their contracting strategy for the post-NSA environment may be paying more than necessary in certain specialties, or may be in more IDR disputes than they anticipated.

The appropriate response is to model your out-of-network exposure by specialty and geography, understand where IDR disputes are occurring and at what rates, and prioritize contracting in the specialties and geographies where your NSA exposure is highest. That is where the build or rebuild investment has the clearest financial justification.

Sources: CMS, No Surprises Act overview; CMS, progress on AEOB rulemaking (December 2024).