How state surprise billing protections increased ED visits, 2007-2018: potential implications for the No Surprises...

The No Surprises Act took effect in 2022 and prevents patients from receiving unexpected emergency department (ED) out-of-network physician bills from in-network hospitals and restricts out-of-network co-payments to in-network co-payment levels. By studying similar state bans, we examine whether the large reduction in out-of-pocket payments under bans will have an unintended consequence of an increase in ED visits and spending.

We examine 16 million nonelderly, fully funded, privately insured health maintenance organization (HMO) enrollees between 2007 and 2018 from 15 states with balance billing bans for HMO ED visits and 16 states without bans as the control group.

Using MarketScan data, we conduct an event study analysis and a difference-in-difference analysis of the impact of state balance billing bans on the probability of an ED visit. We use a 2-part expenditure model to estimate the impact on spending.

By analyzing 15 state-level bans, we find that the bans reduced spending per visit by 14% but spurred a demand response, an increase of 3 percentage points in ED visits, which wiped away the cost savings. Based on an ED severity index, these extra ED visits were 9% less urgent than prior to the bans.

We predict that the federal ban will result in $5.1 billion in savings but 3.5 million more ED visits at $4.2 billion in extra spending per year, largely negating expected savings. Health plans must be prepared to manage this spike in ED visits as the No Surprises Act takes effect.