How the No Surprises Act Could Improve Our Understanding of US Health Care Markets

Focus Area:
Sustainable Health Care Costs
Health Care Consolidation

You can’t improve what you can’t measure. This truism is not unique to health care, but it is a source of both urgency and frustration for policymakers trying to understand the enormously complex and opaque $3.8 trillion dollar health care industry. Despite near universal agreement that more transparency is needed, many regulatory, operational, and technical roadblocks remain to accessing actionable information about how our health care system is performing and who is bearing its ever-growing costs.

Nevertheless, with the passage of the No Surprises Act in December 2020, Congress took several steps to protect those most acutely impacted by our system’s lack of transparency and to invest in state data capacity to better understand local health care markets. Implementing the new federal surprise billing protections is an important priority that will provide immediate and important benefits to the public. However, the provisions supporting new and enhanced all-payer claims databases (APCD) — which collect data from public and private health plans to support market transparency efforts and research — and more accurate information about provider networks could be important “sleeper” components, with significant potential to increase market transparency in our country.

Strengthening surprise billing provisions. The new provisions establish a minimum set of “surprise billing” protections for consumers, protecting against out-of-network charges for emergency services —  including air ambulances — and non-emergency services when provided at an in-network facility. Protections extend to ERISA health plans (self-insured plans administered and funded by employers or their associations), which are generally exempt from state regulation. Health plans are also required to maintain up-to-date provider network rosters.

Implementing these provisions will require close coordination between federal and state stakeholders. While the surprise billing provisions create a national baseline of protections for people enrolled in health insurance plans (both self- and fully funded), it notably defers to state regulations around fully insured reimbursement for out-of-network services. Given that at least 33 states have regulations governing surprise billing, it will be important for states to reconcile their protections with the new federal provisions to ensure regulatory alignment for administration and compliance.

Improving APCDs. The law also institutionalizes, as a matter of national policy, the use of public and private claims databases to enhance consumer protection and market transparency. It also empowers a state-based model for claims data collection and use. The law provides up to $125 million in funding for states over three years ($2.5 million per state) to establish or enhance APCDs, while incentivizing the harmonization of data access requirements. The provisions promote self-funded plan participation in state APCDs by advancing a standard format for data collection and reporting.

Presently, 21 states currently have or are actively implementing APCDs. APCDs have the potential to inform policies and programs by translating raw administrative data into actionable market information. APCD agencies, however, have long been stymied by limited resources to invest in data curation and analysis; a lack of standardization for data collection and use; and the withdrawal of self-insured data, which comprises approximately 60% of employer-sponsored insurance membership. The new federal law has the potential to mitigate some of these state APCD challenges should states respond to the opportunity in a coordinated and collaborative manner — and use its resources to address long-standing regulatory and technical barriers to data use.

Updating provider directories. The law requires plans to maintain up-to-date health provider directories, a long-standing operational and technical challenge but one that is essential to the law’s implementation and consumer protections. Plans often struggle to translate the myriad changes in provider affiliations, ownership, and contracting across their broad networks into consumer-facing, product-specific information in a timely manner. New requirements could incent plans, states, and providers to explore new methods to collect and curate provider data (individually or collaboratively). APCD agencies may choose to leverage new federal funding to advance centralized provider directories, which could be used to alleviate some of these industry issues, while enhancing state capacity to monitor provider consolidation, helping to keep health care affordable for purchasers and families.

In California, for example, the state, plans, and providers worked together to create a centralized platform for managing provider information to help overcome some of these long-standing obstacles. Massachusetts, meanwhile, has worked with providers to establish a separate provider organization registration process, which captures detailed provider information to support broader statewide analyses of health care cost trends and alternative payment model adoption. RAND has described several priorities for improving provider information detail to support market regulatory and transparency interests.

Building Capacity to Answer the Right Questions

As the U.S. Departments of Health and Human Services and Labor advance these provisions, they should consider how state capacity may be sustainably built (and the best data collection and distribution model to do so) as it issues new regulation or guidance. New capacity in the form of more robust APCDs and provider directories should help us answer fundamental questions like:

  • How much are we spending on health care costs annually, and for what services?
  • What is driving cost growth, and who is bearing those cost increases?
  • How are changes in health system organization and ownership affecting cost?
  • Is the adoption of alternative payment models successfully redistributing spending to critical preventive care services like primary care and behavioral health?

Building sustainable state data capacity to help answer these questions will be of paramount importance as we work together to develop a more transparent, effective, and equitable health care system.