The No Surprises Act: How Federal Law Protects Against Unexpected Medical Bills

A $108,951 Surprise: The Problem That Drove Federal Action

Before January 2022, an American could choose an in-network hospital for a planned surgery, do everything right, and still receive a bill for tens of thousands of dollars from an out-of-network anesthesiologist, assistant surgeon, or radiologist who worked at that facility. Analyses by KFF found that patients received surprise out-of-network bills in roughly 18% of emergency room visits and 16% of in-network hospital stays. The median surprise bill in one large study was $622, but amounts exceeding $10,000 were not uncommon, and some cases involved bills over $100,000. The legislative solution—years in the making as Congress debated physician and insurer lobbying on opposite sides—was the No Surprises Act, enacted as part of the Consolidated Appropriations Act of 2021 and effective January 1, 2022.

The law works. But its limits matter.

What the No Surprises Act Covers

The NSA prohibits balance billing—charging patients more than their in-network cost-sharing amount—in three primary situations:

• Emergency services: Any emergency service at any facility, regardless of whether the provider or facility is in-network, must be billed at in-network cost-sharing rates. A patient taken by ambulance to an out-of-network emergency room cannot be billed beyond what their plan would charge for an in-network ER visit.
• Non-emergency services at in-network facilities by out-of-network providers: When a patient receives scheduled care at an in-network facility but is treated by an out-of-network provider—such as a radiologist, anesthesiologist, or hospitalist—without the patient's advance notice and consent, balance billing is prohibited.
• Air ambulance services: Out-of-network air ambulance services are covered under the NSA's balance billing protections (though ground ambulance services are explicitly excluded).

The Qualifying Payment Amount

When the NSA applies, insurers and out-of-network providers must negotiate payment based on the Qualifying Payment Amount (QPA)—generally the insurer's median in-network contracted rate for the service in the geographic area. The patient's cost-sharing is calculated based on the QPA rather than the provider's billed charges, dramatically reducing out-of-pocket exposure. The provider and insurer then negotiate, or dispute, the actual reimbursement amount between themselves—the patient is not involved in that dispute and is not liable for the difference.

Good Faith Estimates: The New Requirement for Uninsured and Self-Pay Patients

The NSA also requires healthcare providers and facilities to provide a Good Faith Estimate (GFE) of expected costs to uninsured and self-pay patients before scheduled services. The GFE must be provided within specific timeframes based on how far in advance the service is scheduled:

If the final bill exceeds the GFE by more than $400, the patient has the right to dispute the bill through the Patient-Provider Dispute Resolution process established by the law.

Independent Dispute Resolution: The IDR Process

When an insurer and an out-of-network provider cannot agree on payment, either party may initiate federal Independent Dispute Resolution. The IDR process involves a neutral third-party arbiter who selects between the insurer's offer and the provider's offer—a "baseball arbitration" structure designed to incentivize reasonable offers from both sides. The arbiter must consider the QPA and several other factors, including the complexity of the service and provider training and experience.

The IDR process has been the subject of intense legal and regulatory dispute. The physician community challenged initial regulations that the CMS issued requiring arbiters to give heavy presumptive weight to the QPA, arguing this effectively set a price ceiling favoring insurers. Courts in both Texas and the D.C. Circuit ruled against various aspects of those initial regulations, and the administration issued revised rules in 2023. The disputes reflect the hundreds of millions of dollars at stake in the arbitration system's outcome.

Balance Billing Prohibition in Practice

When the NSA applies, providers are prohibited from:

• Billing patients more than their in-network cost-sharing amount (deductible, copay, coinsurance)
• Sending patients to collections for amounts above in-network cost-sharing
• Requiring patients to waive their NSA rights as a condition of receiving care

Violations can result in civil monetary penalties of up to $10,000 per violation. Patients who receive bills they believe violate the NSA can file complaints with the federal Centers for Medicare & Medicaid Services or, for state-regulated plans, with their state insurance commissioner.

What the No Surprises Act Does NOT Cover

The law's exclusions are significant and have drawn criticism from patient advocates. The most important gaps:

• Ground ambulance services: Explicitly excluded from the NSA's balance billing prohibitions. Ground ambulance surprise billing remains a major unresolved problem; Congress established an advisory committee to study the issue but had not enacted a legislative fix as of mid-2024.
• Out-of-network non-emergency care the patient knowingly chose: If a patient is given proper notice (Advanced Explanation of Benefits) and consents in writing to receive out-of-network care and associated potential costs, the provider may balance bill. Consent must meet specific federal criteria to be valid.
• Grandfathered plans: Plans grandfathered under the ACA are not subject to the NSA's requirements.
• Short-term health plans: These plans are not subject to ACA insurance market requirements and are generally not covered by the NSA.

State Law Interaction

Many states enacted surprise billing protections before the federal law took effect. States that have their own surprise billing laws may maintain those laws as long as they apply to state-regulated (fully insured) plans. For self-insured employer plans governed by ERISA, the federal NSA applies exclusively—states cannot regulate those plans. The interaction between state and federal protections is plan-type specific, and patients covered by employer self-insured plans (which cover roughly 65% of covered workers) rely entirely on federal protections.