The No Surprises Act behavioral health impact is creating unexpected hurdles for providers. Designed to protect patients from unfair medical billing practices, the law, passed as part of the Consolidated Appropriations Act of 2021, aims to increase transparency in healthcare billing. However, as the behavioral health industry faces limited resources, rising demand, and complex care dynamics, the law’s administrative demands are proving challenging to manage.
While the law was written with good intentions, its broad scope and lack of tailored provisions for mental health services have sparked concern throughout the sector. In fact, the No Surprises Act behavioral health implications may be more disruptive than beneficial — not because providers oppose transparency, but because the act doesn’t account for the realities of behavioral health care delivery.
What the No Surprises Act Requires
The No Surprises Act was primarily designed to shield patients from unexpected medical bills, particularly from out-of-network providers. It prevents surprise bills in emergency situations and mandates that patients who seek care outside their insurance network are given Good Faith Estimates (GFEs) before treatment. Additionally, it allows patients to dispute charges that significantly exceed those estimates.
These regulations apply to all healthcare providers — including those in behavioral health. And while general hospitals and large health systems may have billing departments equipped to absorb the new responsibilities, smaller practices and specialized behavioral health clinics often don’t.
Behavioral Health and the Administrative Burden
The No Surprises Act behavioral health impact is disproportionately heavy for providers already stretched thin. Mental health clinicians and small group practices must now provide written estimates of costs for cash-pay, uninsured, or out-of-network patients — even when treatment plans are fluid and diagnoses evolve over time.
As Maureen Maguire of the American Psychiatric Association explains, “Psychiatric reimbursement has been low for many years, and administrative burdens have been rising, rising, rising… Of course, it has the impact of contributing to burnout.” Requiring providers to constantly revise and update GFEs as treatment progresses adds yet another layer of bureaucracy — and pulls time away from patient care.
Emergencies, Telehealth, and Complex Cases
The No Surprises Act behavioral health requirements also complicate situations that are inherently difficult to forecast, such as mental health emergencies. Since the COVID-19 pandemic, emergency rooms have increasingly been the first point of contact for behavioral health crises — particularly among children. In these moments, transparency is not the issue; access and continuity of care are.
Many behavioral health providers also rely on telehealth partnerships to meet demand, especially in rural areas. These services often cross state lines and involve out-of-network clinicians, further muddying the waters around insurance participation and patient billing. Yet the law demands clarity where clarity doesn’t always exist.
Predicting the course of behavioral health treatment is often impossible at intake, especially for patients with serious mental illness (SMI) and co-occurring physical conditions. As Maguire notes, “When somebody comes in and you don’t know what the diagnosis is, it’s going to be hard to really estimate exactly what treatment looks like.” But under the law, clinicians are expected to try — and to be held accountable if their estimates prove wrong.
Industry Pushback and the Call for Exemptions
Mental health advocacy organizations, including the American Psychiatric Association and the National Association for Behavioral Healthcare, have urged the federal government to exempt behavioral health providers from the full scope of the law.
These organizations argue that mental health professionals already adhere to strong ethical standards around fee transparency. They warn that forcing clinicians to constantly issue and revise GFEs — even when the patient’s care plan shifts slightly — only consumes precious time and resources.
In a joint letter to the Biden administration, they stated: “Requiring clinicians to fill out the [good faith estimate] form and update it every time there is a minor change in the treatment plan… takes away from valuable treatment time – which is in extremely high demand as more and more people are struggling with the mental health impact of the COVID pandemic.”
Nevertheless, the final rule did not grant this exemption — and the full force of the No Surprises Act behavioral health enforcement continues to loom large.
Independent Dispute Resolution: A Power Shift to Payers?
Another major concern is the law’s Independent Dispute Resolution (IDR) process, which allows providers and insurers to resolve payment disagreements through arbitration. Behavioral health leaders worry that this process unfairly favors insurers, making it even harder for providers to receive adequate reimbursement — especially when network participation and payment rates have already been declining.
For providers who operate out of network, the IDR system and billing restrictions are particularly punishing. Some organizations historically opted out of insurance networks to maintain autonomy and secure better rates. But with insurers pushing back and the No Surprises Act behavioral health rules firmly in place, this model is becoming unsustainable.
As Rebecca Springer, healthcare analyst at PitchBook, put it: “Those businesses were already struggling before No Surprises took effect because the payers had been pushing back on the out-of-network rates. I think the vast majority of private equity sponsors will not touch an out-of-network-heavy addiction treatment business at this point.”
The Ripple Effects on Staffing and Access
The No Surprises Act behavioral health compliance process doesn’t just create billing headaches — it can also impact staffing and access to care. Behavioral health organizations already face months-long credentialing delays when trying to get clinicians in-network with insurers. Under the new law, the stakes for ensuring that a provider’s network status matches patient expectations are even higher.
If a patient mistakenly believes their provider is in-network, the organization could face not only reputational damage but also financial penalties. This places enormous pressure on hiring practices, provider directories, and intake workflows — many of which were never designed for this level of legal scrutiny.
Moving Forward: Balancing Transparency with Practicality
The goals of the No Surprises Act behavioral health provisions — cost transparency and patient protection — are undoubtedly important. But implementing those goals in a way that works for behavioral health providers remains a challenge.
As demand for mental health services continues to rise, especially in the wake of the pandemic, the risk is that well-intentioned policy could inadvertently limit access to care. Transparency should not come at the cost of capacity. To truly protect patients, lawmakers must recognize the unique nature of behavioral health and craft policies that support — rather than hinder — those on the frontlines.
Final Thoughts
The No Surprises Act behavioral health debate highlights a larger issue in U.S. healthcare: one-size-fits-all policies rarely work across a system as diverse as ours. Behavioral health professionals want to be transparent and ethical in their billing. But they also need the flexibility to provide care without being buried in red tape.
As implementation of the act continues and legal challenges unfold, behavioral health providers, patients, and policymakers alike must keep pushing for common-sense reforms. Only then can we find the balance between transparency and practicality — and ensure that mental health care remains accessible, sustainable, and centered on healing.
