The Impact of the No Surprise Billing Act on Anesthesia Providers: A Quick Update

While there has been some concern about a loss of revenue due to the implementation of the No Surprises Act and its corresponding regulations, our own review indicates that, in most cases, there has been no negative financial impact on anesthesia groups.

Although the No Surprise Billing Act was intended to protect patients from excessive surprise medical bills, it has had some unintended and ironic implications for anesthesia providers. As is so often the case with new regulations developed in Washington, the specific details of the proposed change tend to be rather intimidating. Many practice managers were concerned that the bill would represent another attempt to chip away at practice revenue. The point is that many of the details of this act simply don't really impact hospital-based anesthesia practices that participate with most insurance plans. It should also be noted that, as the Medicare and Medicaid populations continue to grow, the impact of their discounted rates tends to drive down the average overall yield per billed unit. In other words, the downward pressure on payments has little to do with the new law and everything to do with fundamental demographic trends related to an aging American population. 

It is always important to put things in context. As the chart below clearly demonstrates, the categories of claims that fall under this act do not represent a significant portion of the average practice. As always, we would note that the specific impact of this act on any practice will be determined by the population served. Although some practice will have higher percentages, as we will demonstrate below, the financial impact, i.e., changes from 2021 to 2022 will not be significant.

What the act has done is focus our attention on an aspect of the payer mix that most of us had not spent much time thinking about: patients with no insurance and those who are covered by out-of-network insurance plans. Conventional wisdom holds that this is not a significant portion of the patient population. It turns out this is part of the surprise. A review of data for a nationwide sample of clients reveals that total revenue from this category of the population averages about five percent of total practice revenue. While the impact of Medicare and Medicaid plans has resulted in an average yield per unit billed of about $40 (based on 15-minute time units), the average net yield per unit for non-contracted plans and self-pay patients is closer to $65 (based on 15-minute time units). Obviously, these rates will vary significantly from practice to practice based on payer mix. The point is they are not declining. A review of paid claims for 2021 and year-to-date 2022 data indicates that, if anything, there may be a slight increase. In other words, the act has not had any material impact on actual collections.

When the act was first announced, there was some concern about how market rates would be set for out-of-network patients. There were many questions about how to calculate good faith estimates. We have provided guidance to many of our clients, but the number of requests thus far has been insignificant. We have yet to see any independent dispute resolution (IDRs) reviews for anesthesia claims. This could potentially become somewhat more of an issue for chronic pain claims rates. Technically, the act can have the effect of leveling the playing field for contract rates. There has been considerable concern that insurance plans will use the law to not renew contracts if they believe the rates are above market. This appears not to have happened in most locations, but there have been some notable exceptions. Practices should be especially wary of rates that even they recognize as exceptional. The fact is that if a contract must be renegotiated, the norm will be set by average rates in the area.

The preliminary review of the act should be considered neutral. There should not be any noticeable financial impact on most practices. If you would like more information regarding this, please contact your account executive or email us at info@anesthesiallc.com.