State systems that are friendlier to providers have inflationary potential by driving up awards and health costs.
Most states are partnering with the federal government to enforce protections under the No Surprises Act, but some state systems for resolving the independent dispute resolution (IDR) process are more favorable to providers, according to a report by the Commonwealth Fund.
The research finds nine states—Alaska, Connecticut, Florida, Illinois, Missouri, New Jersey, New York, Ohio, and Texas—are friendlier to providers than insurers compared to the federal system and could lead to higher payments for providers.
The No Surprise Act features an IDR process to determine out-of-network payment amounts between providers and health plans. When providers reject insurers' initial payment or denial, the law calls for the parties to negotiate. If the two sides can't reach an agreement, they can trigger the arbitration process and have an independent entity determine the rate, which places an emphasis on the qualifying payment amount, or the median in-network rate.
The federal law takes precedence except for in states that have their own systems of determining payments to out-of-network providers in place of the federal IDR system, the report states.
Analysis of state and federal regulations, supplemented with interviews with insurance regulators in 12 states, finds variation in how states enforce the protections under No Surprises Act.
Five states (Idaho, Iowa, Maryland, Pennsylvania, and West Virginia) have full state enforcement, while seven states (Alabama, Hawaii, Indiana, Louisiana, Missouri, Oklahoma, and Wyoming) are fully federally enforced. Three-fourth of states have chosen to share enforcement.
The report finds that twenty-two states use existing state processes to determine payments, with some state laws having a narrower scope than the No Surprises Act. Additionally, state payment determination processes usually do not apply to air ambulance payment disputes.
Overall, 25 states intend to enforce all payment determinations for providers and insurers, whether they use the federal IDR process or their state system. Around half of those states will do this with a collaborative enforcement agreement, which allows the federal government to enforce the outcomes of state process, the report mentions.
While the No Surprises Act is essential for protecting patients, it has placed responsibility on the federal government to get enforcement right. The authors of the report believe enforcement processes will evolve over time and that state policymakers will consider changes to their existing surprising billing laws.
"The long-term success of the law also will rely on oversight from state and federal agencies, both to monitor the law's efficient operation and to identify any adverse consequences," the authors conclude. "The No Surprises Act calls for various studies of its impact on provider networks, health costs, provider concentration, and the role of private equity. Some states already report on the impact of their state laws on both costs and the prevalence of out-of-network claims.
"A focus on these issues by government agencies and researchers will be critical to identifying adverse effects and opportunities for adjustments."
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
Analysis by the Commonwealth Fund finds variation in how states enforce the protections under No Surprises Act.
Nine states are friendlier to providers than insurers compared to the federal system and could lead to higher payments for providers.
Twenty-two states use existing state processes to determine payments, with some state laws having a narrower scope than the No Surprises Act