The No Surprises Act changed your adequacy obligation.

The No Surprises Act (NSA), which took effect January 1, 2022, was primarily discussed as a consumer protection law — a way to prevent patients from receiving unexpected bills from out-of-network providers at in-network facilities. That is an accurate description of what it does. What received less attention is the way the NSA changed the calculus for health plan network adequacy, provider contracting leverage, and the financial exposure for plans with inadequate networks.

The adequacy connection

Under the No Surprises Act, when a member cannot access an in-network provider within the plan's time-distance standards, the plan must authorize care from an out-of-network provider and cover it at in-network cost-sharing rates. This is the continuity of care and network adequacy provision — and it is not a theoretical requirement.

What this means practically: a plan with an inadequate emergency medicine network, for example, cannot balance-bill members when they go to an out-of-network ED. The plan has to pay the out-of-network provider at rates that are now subject to the NSA arbitration process — which, in practice, has produced rates significantly higher than what the plan would have paid an in-network provider.

Adequacy gaps are no longer just a compliance problem. They are a financial exposure. The counties and specialties where you are short on in-network coverage are the counties and specialties where your claims cost is highest, because out-of-network utilization in those areas is now effectively mandatory and subject to the arbitration rate process.

The arbitration dynamic

The NSA established an Independent Dispute Resolution (IDR) process for out-of-network payment disputes between plans and providers. Under IDR, a certified arbitration entity makes a payment determination based on the Qualifying Payment Amount (QPA) — which is essentially the plan's median in-network rate for the service — along with other factors the arbitrator can consider.

Early experience with the IDR process showed that arbitrators were frequently awarding above the QPA, citing “other factors” including the complexity of the service, the provider's training and experience, and the geographic market. For emergency medicine and anesthesiology in particular — specialties with historically high out-of-network utilization — IDR awards have added meaningful cost compared to what plans expected when the QPA was established as the anchor.

Plans with the weakest adequacy in these specialties have the most exposure. Plans that had pre-NSA strategies of maintaining thin networks and relying on balance billing deterrence to limit out-of-network utilization discovered that the NSA closed that path entirely.

The good faith estimate requirement

The NSA also requires plans and providers to furnish Good Faith Estimates (GFEs) to uninsured or self-pay patients before scheduled services. For insured patients, the GFE requirement applies to the Advanced Explanation of Benefits (AEOB) — a prospective cost estimate the plan must provide when a provider submits a scheduled services notification.

The AEOB requirement has operational implications for network management: it requires your systems to be able to identify, for any given service and provider, whether the provider is in-network, what the applicable in-network rate is, and what the member's cost-sharing obligation will be. Provider data quality issues — wrong taxonomy codes, stale directory information, credentialing status errors — translate directly into AEOB accuracy problems.

An adequacy gap used to be a compliance problem you managed at the annual review. Under the No Surprises Act, it shows up on your claims expense every week.

Contracting leverage implications

The NSA changed the contracting leverage dynamic for providers in specialties with historically high out-of-network rates. Before the NSA, a specialty that could generate significant out-of-network revenue (emergency medicine, anesthesiology, radiology) had limited incentive to contract with plans at low rates — out-of-network balance billing was the alternative. After the NSA, that alternative is largely gone for most plan types.

This theoretically should have reduced specialty contracting costs. In practice, the same specialties are still negotiating aggressively — now using the IDR process as a lever rather than balance billing. Plans that have not updated their contracting strategy for the post-NSA environment may be paying more than necessary in certain specialties, or may be in more IDR disputes than they anticipated.

The appropriate response is to model your out-of-network exposure by specialty and geography, understand where IDR disputes are occurring and at what rates, and prioritize contracting in the specialties and geographies where your NSA exposure is highest. That is where the build or rebuild investment has the clearest financial justification.