No Surprises Act: Evaluating Its Impact and Challenges

In the complex landscape of U.S. healthcare, protecting patients from unexpected costs is a significant concern. The implementation of the “No Surprises” Act aimed to address one of the most distressing issues: the financial distress caused by unexpected out-of-network billing. However, while the law has achieved some success, new challenges have emerged that could undermine its benefits.

Understanding the Objective of the Act

The “No Surprises” Act took effect in 2022, designed to shield patients with private health insurance from receiving exorbitant bills when using out-of-network services. Before the law, if someone needed emergency care and was taken to an out-of-network hospital, they often faced substantial bills in addition to their copay, coinsurance, or deductible. The Act limits what individuals must pay to an amount equivalent to what they would owe had they received care from an in-network provider.

As a health policy researcher familiar with the drafting of the regulations, I commend the Act for effectively reducing surprise medical bills in most cases. Still, a concerning pattern has emerged: some out-of-network providers are exploiting this legislation to demand excessively high payments from health plans, which could drive up overall healthcare costs.

Medical Bill Concerns

The unpredictability of healthcare costs is a well-known issue in the U.S. system, especially in emergencies when patients are often unable to choose in-network providers. Prior to the No Surprises Act, nearly 20% of emergency department visits led to unexpected bills from out-of-network providers. Similarly, around 40% of air ambulance rides resulted in surprise bills averaging nearly $20,000. The emotional and financial burden these bills cause is significant, with nearly two-thirds of Americans expressing worries about unexpected healthcare expenses in a 2020 KFF poll.

Safeguards Against Surprise Bills

The “No Surprises” Act aims to protect consumers from balance billing, a practice where out-of-network providers bill patients for the difference between what their insurance covers and the service cost. Providers must adhere to agreements when they join a network, accepting predetermined fees for their services, thus prohibiting balance billing.

Nonetheless, out-of-network providers can still balance bill patients and often impose higher cost-sharing rates compared to in-network services, making out-of-network care significantly pricier. The Act protects patients from unexpected costs in specific scenarios:

• Emergency care at out-of-network hospitals or independent facilities.
• Out-of-network services during an in-network hospital visit.
• Out-of-network air ambulance services.

However, balance billing remains possible for ground ambulance services and out-of-network care in non-hospital settings.

The Mixed Success of the Act

While the No Surprises Act has successfully prevented around 50 million surprise medical bills as of September 2026, it has inadvertently raised concerns among employers and unions regarding rising health insurance costs. The root of this increase lies in the arbitration process established by the Act. Instead of setting a fixed payment rate for out-of-network providers, the law allows these providers to initiate arbitration if they disagree with a plan’s payment. This process has led to outcomes that often favor providers, with them winning about 85% of arbitration disputes.

This prevailing trend is troubling, as it contradicts expectations that arbitration would lower overall healthcare costs. The arbitration process has cost health plans an estimated $22.4 billion in the initial four years of the law, not accounting for potential increases in in-network rates if these trends continue.

Consumer Impact and Future Considerations

While individual patients’ cost-sharing remains capped at the in-network rates, the overall burden falls on consumers as health plans adjust premiums to accommodate rising arbitration costs. Some plans have already reported significant increases attributed to the No Surprises Act, raising concern about the affordability of health insurance for employers and their employees.

The ongoing scrutiny of the No Surprises Act is timely, especially as healthcare costs remain a pressing issue nationally, likely influencing the landscape of upcoming elections. Congress is under pressure to reconsider the arbitration process, with proposals already introduced to modify or eliminate it altogether. Without decisive action, the protections afforded by the No Surprises Act could inadvertently lead to reduced access to health insurance for many Americans.

Conclusion

While the No Surprises Act marks a positive step towards protecting patients from unexpected healthcare costs, its unforeseen consequences reveal challenges that must be addressed to ensure that its benefits do not come at an excessive price. The ongoing dialogue around this legislation is crucial as we strive for a more equitable healthcare system.