The Impact of Balance Billing Laws on Network Provider Participation: Evidence from Three State Laws

Surprise balance billing laws have been passed to protect policyholders from being balance billed for surprise out-of-network services. However, little is known about the impacts of surprise balance billing laws without specific payment standards or guidance on providers’ network participation. Existing research only suggests that balance billing laws with specific payment standards can impact provider’s network participation. I conduct three empirical studies of the surprise balance billing laws in Illinois, Florida and Arizona, none of which has specific payment standards or guidance for surprise out-of-network services. In the analysis of the 2011 Illinois balance billing law and the 2016 Florida balance billing law, I use MarketScan data and examine the laws’ impacts on surprise balance billing prevalence in in-network emergent and non-emergent admissions for Anesthesiology, Pathology, Radiology and Emergence Medicine. For the 2017 Arizona balance billing law, I use the combined Vericred provider and network data and Centers for Medicare and Medicaid Services data to assess its impacts on providers’ network participation rate. I find the 2011 Illinois balance billing law, which does not have payment standards and guidance, does not impact the prevalence of surprise out-of-network services except for Radiology services among emergent admissions. Similarly, the 2017 Arizona balance billing law, which also does not have payment standards and guidance, has no impact on the providers’ network participation rate except for Emergent Medicine providers. On the other hand, the 2016 Florida balance billing law, which has payment standards in a range, does significantly impact the prevalence of surprise out-of-network services although the impacts are heterogeneous across different medical fields with a higher prevalence of surprise out-of-network services in Anesthesiology and a lower prevalence in Pathology and Radiology. These results suggest that not only specific payment standards for surprise out-of-network services but also payment standards in a range can prompt providers to change their network participation decisions. On the other hand, when balance billing laws do not have payment standards or guidance, it may be difficult for providers to evaluate the payment rates for surprise out-of-network services. Therefore, providers tend to keep their current network participation decision.