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Provider Charges and State Surprise Billing Laws: Evidence from New York and California
Surprise billing laws that allow dispute arbitration to use provider charges to determine out-of-network (OON) payments to providers may incentivize OON providers to increase their charges. This study published in Health Affairs examined changes in OON charges after enactment of surprise billing laws in New York and California.
OON provider charges increased in New York, where arbitration is tied to charges, whereas charges decreased in California where the law determines OON payments based on an algorithm tied to in-network rates.
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 those laws, which may allow the consideration of charges. This study demonstrates that surprise billing laws that allow for charges to be considered by arbitrators (such as New York) are associated with increases in OON provider charges, which may ultimately lead to higher costs for OON care.
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