In 2020, Congress passed the No Surprises Act to protect patients from exorbitant medical bills that had burdened Americans with tens of thousands of dollars in debt. The law was designed to decrease the charges for patients treated by an out-of-network doctor during medical emergencies. Such ER visits often left people vulnerable to so-called surprise bills, in which their insurer would only pay a portion of the expensive treatment.

One of the biggest health care reforms since Obamacare, the No Surprises Act appears to have worked in one important sense. Patients have reported fewer crippling bills. Although little hard data exists, an insurance industry survey found that consumers avoided some 10 million surprise bills in the first nine months of 2023. A think tank report also suggests that people are paying less for the care they receive in the ER and other medical situations covered by the law, such as air ambulance trips.

But a cumbersome government system to resolve payment disputes between doctors and insurers now threatens to undermine the law’s promise, according to interviews with industry players, recent data analyses and government documents.

One potential outcome: higher insurance premiums for everyone.

Another: fewer physicians available to treat rural populations.

Doctors said that insurance companies have been abusing the system to lower payments, stiff medical practices and kick physicians out of their networks.

“I’m trying to think of a polite word to describe the experience, but it has been just chaotic and inefficient,” said Dr. Andrea Brault, the head of the Emergency Department Practice Management Association, a physicians’ trade group. “It’s a costly, lengthy process.”

Insurers, however, charged that big physician groups — some of them owned by private equity investors — are trying to manipulate the process to squeeze out higher payments. “A small but significant number of bad actors” have flooded the system with cases “as a way to maximize revenue,” said Kelly Parsons, a spokesperson for the Blue Cross Blue Shield Association. “Should this trend continue, health care costs are likely to rise unnecessarily.”

An official at the Centers for Medicare & Medicaid Services said the rising number of disputes was a byproduct of the law’s success.

“The No Surprises Act is protecting millions of patients from surprise medical bills when they experience an emergency or get care from an out-of-network provider at an in-network facility,” said Jeff Wu, the deputy director of policy of CMS’ Center for Consumer Information and Insurance Oversight. “The incredibly large volume of disputes submitted since the law’s surprise billing protections became effective demonstrates the need for this law.”

For decades, private insurance customers had to worry about receiving giant bills from using out-of-network doctors, who typically charge more for services. This was especially true when they had to go to an emergency room, where people have little ability to choose which doctor or hospital to treat them. The No Surprises Act aimed to fix the problem by protecting ER patients so that they would get billed essentially the same as if they received care from in-network physicians and hospitals.

The law radically changed the dynamics of billing disputes. “Before the No Surprises Act, you had doctors and physicians fighting, with patients stuck in the middle. Now you just have doctors and insurers fighting,” said Zack Cooper, a professor of public health and economics at Yale whose research helped shape the law.

Under the law, out-of-network doctors or hospitals invoice insurers, which counter with their own offer. Some 80% of claims are resolved this way, according to the survey conducted by the insurance trade groups.

But when the two sides can’t agree, they go to battle in a system created by the CMS and other government agencies. There, an independent arbiter weighs various factors and determines the final payment amount. This arbitration is at the heart of many of the law’s unintended consequences.

Originally, the government estimated there would be about 17,000 cases a year. But in 2023, almost 680,000 were filed, according to data released in June. The result is an enormous backlog that has slowed payments to doctors, hospitals and medical groups. Decisions are supposed to take 30 days. Since 2022, however, more than half of the cases remain unresolved. Some have lasted more than nine months. Wu said that arbiters have “scaled up their operations” to reduce the delays.

In addition, the law has been challenged repeatedly in court — health care provider associations and air ambulance groups have filed nearly 20 lawsuits involving the No Surprises Act, according to legal experts at the O’Neill Institute for National and Global Health Law. Two cases have overturned the initial CMS guidelines governing the arbitration. The agency has been forced to make numerous adjustments to the process that have contributed to the long delays.

The most heated debate over the dispute system surrounds the payment and enforcement of arbiters’ decisions.

Federal health officials at first thought that the law would help lower the cost of medical care. Instead, arbiters have awarded higher amounts to doctors and other providers than expected — potentially driving up insurance premiums.

“The most likely outcome is that this law doesn’t save consumers on net and potentially pushes in the opposite direction,” said Loren Adler, a researcher at the Center on Health Policy at Brookings, which issued a recent study on the possibility.

While the amounts are higher than expected, they remain lower than what doctors’ groups have billed. Doctors charge that insurance companies are submitting artificially low payment amounts. As proof, they point to data from June that shows arbiters rule in favor of doctors the vast majority of the time.

Still, overall, providers have seen nearly a 40% decrease in reimbursements since the law took effect in 2022, according to a recent survey by the emergency physicians trade group. At least one doctors’ group, Envision Healthcare, mentioned the No Surprises Act as one of the reasons it filed for bankruptcy. (The company has since emerged from court oversight.)

If revenue decreases continue, some doctors’ groups may have to cut back on services. This would most likely be felt in rural hospitals, which often operate with thin profit margins and already have difficulty recruiting ER doctors. “This is threatening to the sustainability of many, many practices,” said Randy Pilgrim, the enterprise chief medical officer for SCP Health, which provides doctors to emergency rooms across the country. “There have been few practices in the over 30 states where we operate that haven’t been affected by this.”

Doctors have also said that insurance companies are making late or incomplete payments after decisions by the arbiter. Complaints to CMS have been ignored, doctors said. Wu, the CMS official, said the agency actively investigates complaints under its jurisdiction.

It is also not clear whether courts can force an insurance company to pay. Pilgrim said his company had submitted almost 75,000 letters to insurance companies pleading for reimbursements after winning an arbitration decision.

“There’s very little teeth” in the process, he said. “You just continue to plead your case and hope you get somewhere.”

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