A recent study published in Health Affairs compared policies in New York, where out-of-network bills have increased by 24% because existing state law allows the arbitration process to rely on billed charges (billing charges increased from assistant surgeons and surgical assistants, in particular). That’s compared with California, where a payment standard is used in arbitration, and out-of-network bills decreased by 25% as a result.

The No Surprises Act yields to state laws, which means that, in certain states like New York, arbitrators can consider billed charges as part of the arbitration process over disputed out-of-network bills. Unfortunately, certain providers may be taking advantage of this process by increasing the charges they bill in order to receive greater pay-outs for out-of-network bills or to raise the arbitration benchmark value. These are exactly the kinds of harmful billing practices the No Surprises Act sought to end.

Read a brief overview below and the full study here from Health Affairs.

Provider Charges and State Surprise Billing Laws: Evidence From New York And California
By Aliza S. Gordon, Ying Liu, Benjamin L. Chartock, and Winnie C. Chi

Surprise billing laws that allow dispute arbitration relying on provider charges may incentivize out-of-network providers to increase their charges to increase upcoming or future out-of-network payments. Although the federal No Surprises Act forbids arbitrators from considering charges during payment disputes over surprise bills covered by the act, states with existing laws can continue to use the specified state laws, which may allow the consideration of charges. This analysis examined provider charges in two such states, using claims data to compare trends in billed charges for out-of-network care during surprise bill scenarios involving nonemergency inpatient hospitalizations. The analysis considered New York, where state law uses arbitration tied to charges; California, where state law uses a payment standard rather than charges; and a comparison group of states without a law regarding surprise billing. We estimated that provider out-of-network charges for the nonemergency out-of-network bills we studied increased by $1,157 (24 percent) in New York after the passage of New York’s surprise billing law and decreased by $752 (25 percent) in California compared to states without surprise billing laws. Assistant surgeons and surgical assistants had a large increase in charges in New York from before to after the law’s passage, which may have driven the overall increase in charges.