The No Surprises Act was created to protect patients from unexpected medical bills. A sensible idea. You choose an in-network hospital, an in-network surgeon, and then discover that the anesthesiologist, whom you did not choose, …
The No-Surprises Act’s Biggest Surprise: You May Not Need To Pay – Yet.
The No Surprises Act was created to protect patients from unexpected medical bills. A sensible idea. You choose an in-network hospital, an in-network surgeon, and then discover that the anesthesiologist, whom you did not choose, was out of network. The law took the patient out of that argument.
It did not, however, take the bill out of the healthcare system.
Instead, the argument moved behind the curtain, into a dispute-resolution process between providers and health plans. What was expected to produce approximately 16,000 disputes has produced millions. According to the figures discussed in this episode, the result has been an estimated $22 billion in additional costs. The patient may no longer receive the surprise bill in the mail, but employees still meet it later – in their contributions, deductibles, benefits, and paychecks.
I invited attorneys Christine Cooper and Jack Towarnicky to the J.P. Farley Show because they understand two sides of this problem. Christine works directly with No Surprises Act disputes and balance-billing matters. Jack brings the ERISA and fiduciary perspective. Together, they raised a question that every self-funded employer should hear before authorizing another payment.
“Yes, the statute requires payment within 30 calendar days, but there’s no enforcement.”
Christine Cooper
On this episode of the J.P. Farley Show, I spoke with two attorneys who work directly with these issues: Christine Cooper, whose work includes patient advocacy, reference-based pricing, balance billing, and No Surprises Act disputes, and Jack Towarnicky, an ERISA attorney with extensive experience advising plan sponsors.
How Patient Protection Became a Cost Problem
The No Surprises Act applies to a relatively specific category of medical claims. It generally covers out-of-network emergency services, services from certain out-of-network providers working at in-network facilities, and air ambulance services. The familiar example is the patient who schedules surgery at an in-network hospital with an in-network surgeon but later discovers that the anesthesiologist was outside the network.
Before the law, that provider could send the patient a balance bill for the portion the health plan did not pay. The patient became trapped between the provider and the plan, often without having made any meaningful choice about who delivered the service. The No Surprises Act largely removed the patient from that dispute and established a process through which the provider and payer would determine what the plan should pay.
That objective was reasonable. The trouble arose in the machinery designed to accomplish it. Instead of eliminating the disputed amount, the law transferred the dispute into a complicated negotiation and arbitration system known as the independent dispute resolution, or IDR, process. The patient may no longer see the original balance bill, but the employer’s health plan still pays the resulting costs. Those costs eventually return to employees through higher contributions, larger deductibles, greater coinsurance, reduced benefits, or wages the employer can no longer afford to pay.
As Jack explained, employer contributions do not make healthcare costs disappear either. Even when the company formally pays a larger share of the premium, the economic burden ultimately reaches employees because every additional dollar committed to healthcare is a dollar that cannot be used for wages or other benefits. The No Surprises Act therefore did not necessarily remove the surprise. In many cases, it hid the surprise inside the future cost of coverage.
A Process Built for Thousands Received Millions
The No Surprises Act applies to a relatively specific category of medical claims. It generally covers out-of-network emergency services, services from certain out-of-network providers working at in-network facilities, and air ambulance services. The familiar example is the patient who schedules surgery at an in-network hospital with an in-network surgeon but later discovers that the anesthesiologist was outside the network.
Before the law, that provider could send the patient a balance bill for the portion the health plan did not pay. The patient became trapped between the provider and the plan, often without having made any meaningful choice about who delivered the service. The No Surprises Act largely removed the patient from that dispute and established a process through which the provider and payer would determine what the plan should pay.
That objective was reasonable. The trouble arose in the machinery designed to accomplish it. Instead of eliminating the disputed amount, the law transferred the dispute into a complicated negotiation and arbitration system known as the independent dispute resolution, or IDR, process. The patient may no longer see the original balance bill, but the employer’s health plan still pays the resulting costs. Those costs eventually return to employees through higher contributions, larger deductibles, greater coinsurance, reduced benefits, or wages the employer can no longer afford to pay.
As Jack explained, employer contributions do not make healthcare costs disappear either. Even when the company formally pays a larger share of the premium, the economic burden ultimately reaches employees because every additional dollar committed to healthcare is a dollar that cannot be used for wages or other benefits. The No Surprises Act therefore did not necessarily remove the surprise. In many cases, it hid the surprise inside the future cost of coverage.
A Process Built for Thousands Received Millions
Jack brought the fiduciary issue into focus. A plan fiduciary must administer legitimate benefits according to the plan, but also has a duty to protect plan assets from erroneous payments. If an award involves an ineligible claim, a defective process, or an amount that requires further examination, paying it without asking questions may not be the conservative decision it appears to be.
“Plan sponsors are not potted plants.”
Jack Towarnicky
Jack brought the fiduciary issue into focus. A plan fiduciary must administer legitimate benefits according to the plan, but also has a duty to protect plan assets from erroneous payments. If an award involves an ineligible claim, a defective process, or an amount that requires further examination, paying it without asking questions may not be the conservative decision it appears to be.
That may be my favorite fiduciary explanation yet.
Employers are allowed to think. They are allowed to challenge claims that do not belong in the process. They are allowed to ask who is being paid, why the award was issued, and whether the organizations participating in the system have incentives that deserve greater scrutiny. They are also allowed to hire experts capable of defending the plan, particularly when providers have already hired specialists who know exactly how to use the IDR process.
Jack compared the system to the computer in WarGames, which eventually studies every possible outcome and reaches a memorable conclusion:
“What a strange game. The only way to win is not to play.”
A self-funded plan cannot simply refuse to participate in the No Surprises Act. It can, however, refuse to participate blindly. It can challenge eligibility early, monitor deadlines, examine provider behavior, coordinate with experienced counsel, and stop treating every award as an invoice that belongs in the next payment run.
The No Surprises Act was sold as patient protection. It may have protected patients from seeing certain bills directly, but those bills did not vanish. They entered a system that was expected to process thousands of disputes and is now processing millions. Billions of dollars followed, along with administrative complexity, private litigation, fiduciary questions, and a payment obligation that the law may not currently provide a practical way to enforce.
So, what should an employer do when the award arrives?
Do not ignore it. Do not spend the money. Do not make the decision casually.
But perhaps do not rush to write the check either.
Watch the episode before your plan pays its next No Surprises Act award. You may discover that the most surprising part of the law is not the bill – it is what happens when you decide not to pay it immediately.
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This article and episode are provided for general informational purposes and do not constitute legal, financial, or fiduciary advice. Plan sponsors should consult qualified counsel and their stop-loss carrier before deciding whether to challenge, reserve, delay, or pay an IDR award.
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