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Moody's: 'No Surprises Act' Will Negatively Affect Physician Staffing Companies, Air Ambulance Operators

Analysis  |  By Melanie Blackman  
   January 28, 2021

The "No Surprises Act," which will take effect January 1, 2022, will ban surprise medical bills and eliminate out-of-network balance billing.

The recently passed "No Surprises Act" will "constrain cash flow at physician staffing companies and reduce negotiating clout for air ambulance operators," according to two reports released by Moody's Investors Service Thursday afternoon.

The "No Surprises Act," which will take effect January 1, 2022, will ban surprise medical bills and eliminate of out-of-network balance billing. The act passed as a part of the $900 billion coronavirus relief omnibus package in December.

According to the Moody's analysis, companies that directly bill patients for healthcare services will have “some level of exposure” to the “No Surprises Act."

Physician staffing firms and air ambulance operators are among the affected companies that are likely be negatively affected by the new legislation.

Physician staffing companies will see a dip in cash flow, Moody’s stated, especially those that staff operating rooms, provide anesthesiology and radiology services, and hospitals that rely on the outsourcing capabilities of staffing firms.

"Many rated staffing companies carry leverage, cash flow and liquidity metrics that place them well into speculative-grade territory," Jonathan Kanarek, a Moody’s vice president-senior credit officer, said in a press release. "As such, even a modest reduction in collections could negatively impact cash flow and liquidity, placing further pressures on their credit profiles."

According to the ratings agency, air ambulance operators that "rely on their ability to directly bill patients" for remaining funds due after commercial insurers pay will also see a negative effect as well.

"The ability to directly balance bill patients has been particularly important for air ambulance companies, which often provide services on an out-of-network basis,” Kailash Chhaya, a vice president-senior analyst for Moody's, said in the press release.

“Healthcare providers generally favor the arbitration approach which preserves some of their negotiating leverage,” Chhaya added in the press release. “This is especially true for air ambulance operators because determining a benchmark in-network reimbursement rate on which to base out-of-network transports is challenging.”

According to Moody's, over the next year, air ambulance providers will pursue in-network contracts with insurers to further reduce “their exposure to uncertainty created by out-of-network claims."

Related: What Rev Cycles Need to Know About the No Surprises Act

Related: Healthcare Orgs Respond to $900B COVID Stimulus Package, Surprise Billing Legislation

Related: Moody's: For-Profit Hospital Outlook Now Stable for 2021

Related: Moody's For-Profit Hospital Forecast Holds Negative into 2021

Melanie Blackman is the strategy editor at HealthLeaders, an HCPro brand.

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