The No Surprises Act (NSA) took effect January 1, 2022, and was designed to protect patients from surprise medical bills, particularly in emergency and out-of-network (OON) situations. While successful in curbing balance billing for consumers, the implementation of the law has led to significant unintended consequences for employer-sponsored health plans, particularly those that are self-funded. The Independent Dispute Resolution (IDR) process, a core element of the NSA, has been marked by high volume, provider-favorable outcomes, and substantial administrative burdens. This summary outlines the law’s mechanics, its financial and operational impact on employers, and the urgent need for reform.
Under the NSA, when a patient receives OON emergency care or services from ancillary providers at in-network facilities, the provider and health plan must negotiate reimbursement without billing the patient beyond in-network cost sharing. If no agreement is reached, either party may initiate the IDR process, wherein a certified arbitrator selects one party’s proposed payment. Initially, the “Qualified Payment Amount” (QPA) was intended to serve as the primary benchmark in IDR cases. The QPA represents the median in-network rate for a service in a geographic area. However, legal challenges and court rulings have allowed arbitrators to weigh other factors more heavily, such as provider experience and case complexity. Right or wrong, this has diluted the intended cost-containment role of the QPA.
Employers and Plan Sponsors, and particularly those with self-funded plans, are bearing the brunt of NSA-related cost increases. The financial impact arises from both the direct cost of arbitration awards and the indirect administrative expenses tied to compliance and dispute resolution. Here are some data points that put the added costs into perspective:
There is growing recognition of the strain the NSA has placed on employers and plan sponsors. Legislative and regulatory proposals are emerging from Congress and the administration. H.R. 9572 in the U.S. House offers a series of fixes intended to rein in payments that are far in excess of the QPA which lead to increased financial exposure to self-funded plans. Below is a summary of some of the proposals in play:
| Category | Congress (e.g., H.R. 9572) | Administration (Regulatory & Budget Proposals) |
|---|---|---|
| Goal | Strengthen enforcement, limit abusive IDR use | Streamline IDR, reduce fees, expand protections |
| QPA Role | Codify QPA as central benchmark | Maintain QPA, allow flexibility post-litigation |
| Transparency | Biannual audit and IDR reporting | CMS releases quarterly data |
| IDR Reform | Curb excessive provider use, expedite rulings | Narrow eligibility, standardize fees |
| Ambulance Inclusion | Not addressed | 2025 budget proposed adding ground ambulances |
| Funding | No new funds | $500 million proposed for NSA administration |
Employers and plan sponsors need to act and advocate for meaningful reform to the NSA. Left as is, the law may actually drive up providers leaving networks and increasing the probability of higher out-of-network usage overall. Conner Strong & Buckelew will be advocating for fixes to the law that does not undermine its intent but does fix the enormous new costs the law has shifted to employers and plan sponsors. Some immediate steps group health plans should consider include:
The NSA has succeeded in reducing patient exposure to surprise medical bills, but at a substantial and rising cost to employer-sponsored health plans. The current IDR system disproportionately favors providers and leads to awards significantly above market benchmarks. Combined with administrative burdens and legal uncertainty, the system places employers at risk of financial strain and compliance errors. Employers and plan sponsors should actively advocate for reforms that restore the QPA as the primary benchmark, streamline the IDR process, and reduce fee exposure.
Joe DiBella
Executive Partner, National Employee Benefits Practice Leader
