The Impact of New York's Surprise Billing Law on Payment Rates to Emergency Physicians

Abstract

In 2015, New York implemented one of the first state laws regulating surprise out-of-network billing. The law used a binding arbitration process to settle payment disputes between insurers and out-of-network emergency physicians and directed arbitrators to base their decisions in part on the 80 th percentile of billed charges for the relevant service, an amount that far exceeded typical out-of-network payments prior to the law. We use a triple-difference research design that compares trends inside and outside of New York for fully-insured plans (which were subject to New York's law) and self-insured plans (which were not). We estimate that the law increased average allowed amounts paid by affected plans by 14% by 2017 but had little effect on physician charges. This estimated increase in allowed amounts may be a lower bound on the actual effect, as we present some evidence of "spillover" effects on self-insured plans. Our results differ from prior research that found that New York's efforts to address surprise billing reduced physician payments, likely primarily because our approach isolates the effect of New York's law from other policy and non-policy changes that occurred during this period.

Keywords: surprise billing, provider prices, health insurance JEL CLASSIFICATION: H75, I11, I13, I18