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84% Increase of Healthcare Bankruptcies Due to No Surprises Act 

08 Oct, 2023 F.J. Thomas

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Sarasota, FL (WorkersCompensation.com) – Experts have been sounding the alarm on healthcare, between provider shortages, increasing costs, and layoffs. While practices have been working to come back from the financial pressures and lost revenue during the pandemic, they are additionally challenged with increases in staffing and supply costs.  

To add to the complexity, the No Surprises Act has added yet another layer to the financial issues that providers are facing. The No Surprises Act essentially prohibits providers from billing patients for balances that are the result of care being provided by an out of network provider without their prior knowledge. Before the legislation came into effect, providers were allowed to balance bill a patient for services that were provided out of network. 

While the No Surprises Act has allowed providers to pursue payers for what they feel is a correct payment through arbitration via a federal IDR portal, the amount of disputes filed have been overwhelming to the point the program has had several deferments and adjustments, delaying provider reimbursement as a result.

Between the loss of revenue from out of network balances, as well as the increased cost of being compliant to the new regulations, the results are pushing some organizations out of business. Organizations that treat emergency and trauma patients for their initial care and even follow up have been the hardest hit.

Just last month, American Physician Partners (APP), a private equity emergency medical staffing company, announced they had filed Chapter 11 bankruptcy in the transition of their clinical services. 

Earlier this year, another staffing company, Envision Healthcare Corp, announced their filing of Chapter 11 bankruptcy. According to a report from HealthcareDive, several factors aside from declining revenue and pandemic financial pressures contributed to the Envision bankruptcy. In addition to ongoing legal battles with a commercial insurer, the No Surprises Act allegedly caused the group to lose hundreds of millions of dollars in reduced or delayed payments. 

According to a September report presented to the House Committee on Ways and Means, the number of healthcare bankruptcies has increased by 84 percent from 2021 to 2022. Although the testimony cited rising costs, workforce shortages, and high interest rates as a direct cause to the increase, the No Surprises Act was listed as a likely contributor due to the payer landscape of unclear and narrow networks, terminations of contracts, and the refusals to negotiate. 

While the No Surprises Act focues is on commercial payers, the potential dwindling access to care will ultimately effect more than just commercial payers as organizations continue to struggle.


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    About The Author

    • F.J. Thomas

      F.J. Thomas has worked in healthcare business for more than fifteen years in Tennessee. Her experience as a contract appeals analyst has given her an intimate grasp of the inner workings of both the provider and insurance world. Knowing first hand that the industry is constantly changing, she strives to find resources and information you can use.

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