The Impact of the No Surprises Act on Physician-Insurer Negotiations

Abstract

The No Surprises Act (NSA) banned surprise out-of-network (OON) medical bills and established an arbitration process to determine OON reimbursement. We develop a bargaining model and characterize the equilibrium before and after the NSA. Using multiple data sources, we estimate model parameters and predict the net effect of the NSA on prices. We find substantial pre-NSA geographic variation in the expected return from surprise billing and an inelastic response of surprise billing collection to charges. Overall, we predict the NSA is likely to result in payments close to the benchmark Qualifying Payment Amount, resulting in savings for patients and insurers.

Keywords: surprise out-of-network billing, balance billing

JEL Classification: I11, I18, L14