Recent developments have raised grave questions about the effects of the No Surprises Act on the healthcare system. While the legislation seems to have protected many patients from “gotcha” bills for out-of-network treatment, the effects have not all been positive.
The number of claims has risen sharply, and the total cost to the healthcare system of appealed claims has brought a flurry of criticism and calls for change.
Under the No Surprises Act procedure for resolving an out-of-network healthcare bill, either a provider or a payer must submit a complaint about a given disputed out-of-network case to what is supposed to be an independent arbitrator under what the legislation calls the Independent Dispute Resolution (I.D.R.) process. Then the two parties will have an opportunity to submit what they think is a fair price, and the I.D.R. agency, one of several approved agencies nationwide, must pick one or the other. So far, it seems that some providers are submitting a lot of claims with extremely high potential payment numbers and winning them, which has caused headlines in news coverage.
The act went into effect Jan. 1, 2022, after legislators devised it as a solution to the problem in which patients would go to an in-network hospital and be treated by an out-of-network radiologist, for example, and then get an out-of-network bill.
Those bills did not just go away; it turns out they wound up sloshing around other places in the health care system. The dispute awards, in a number of well-publicized cases, far exceed what would be paid for an in-network procedure.
$210,000 for a surgical assistant
New York Times reporters recently dug into some data and found that surgical assistants were winning huge amounts of money: “$50,000 for a prostate surgery, $100,000 for a breast reconstruction (just right breast, not left) and $210,000 for a facial feminization procedure,” Sarah Kliff, one of the reporters, wrote on Twitter. Other large awards were also reported.
A recent study by Georgetown University researchers found that three companies—Halo MD, Team Health, and Radiology Partners — were behind three-quarters of the No Surprises Act cases. In aggregate, they won 90% of their cases, the study found. Halo MD Is not itself a provider, but rather an agency that files these I.D.R. disputes on behalf of others.
“Over the first four years (2022 to 2025), total costs attributable to the I.D.R. system totaled $22.4 billion (including air ambulance disputes),” the researchers wrote. “This estimate dramatically exceeds our previous estimate of $5 billion for 2022 through 2024. In 2025 (the most recent data available), tota I.D.R. costs were $16.6 billion, an amount nearly 3.5 times higher than 2024 alone.”
Not only did the sheer number of disputes exceed the expectations, then, but the settled disputes can result in stratospheric liabilities for the insurers.
“The evidence presented here suggests that providers have a clear incentive to keep filing disputes and to ask for higher and higher amounts,” the researchers wrote. “To date, there is no evidence that there is any ceiling on the amount requested by providers that are deemed by I.D.R. entities to be the superior offer.”
Not paying, not showing up
There are also an increasing number of reports that the insurance companies, while they may be on the losing end, have just simply not paid up. And in a number of cases insurers simply didn’t show up.
In an earlier report, the Georgetown researchers wrote: “Beyond ineligible disputes, 22 percent of I.D.R. determinations in the first six months of 2025 resulted from default decisions (i.e., where only one party submitted their offer and paid their fees). This is similar to the rate in earlier quarters. But it is concerning that more than one-fifth of determinations continue to be decided by default even after several years of I.D.R. operations.” Insurers respond that they do not come to court with an offer if they consider the case ineligible.
Some insurers are also making a counteroffer for $0. The American Council of Emergency Physicians, in a letter to the Centers for Medicare and Medicaid Services, documented a number of these cases. If the I.D.R. arbitrator must pick a number, of course, it is unlikely to pick $0.
Insurers are also citing No Surprises costs as an underlying factor for premium increases “A.C.A. insurers are pitching a median rate increase of 15% for 2027, the second year in a row of double-digit premium hikes, according to a July 8 Peterson-KFF Health System Tracker analysis that was updated Aug. 3,” Becker’s Payer Issues trade publication reported.
“Insurers cited steeper healthcare costs as informing rates. Looking at a subset of insurers, the median medical trend was 10% for 2027. Insurers mentioned inflation, labor supply issues, claims severity, GLP-1s, provider consolidation and No Surprises Act disputes as drivers.”
The Georgetown researchers wrote: “While there is little comprehensive evidence on how the I.D.R. process is affecting plan premiums, employers and insurers have begun raising this concern in advocacy materials, amicus briefs, and earnings calls. For instance, the New York Department of Civil Service reported that it has incurred more than $200 million in additional claim payments from I.D.R. for the state employee health plan, which the agency described as ‘a primary contributor to the nearly 10 percent increase in premium rates [in 2025].’ The United Service Workers union plan reported that it raised premiums by an additional 1.75 percentage points to offset I.D.R. awards and fees. And a United Healthcare official noted that ‘the I.D.R. process is driving a 2 to 6 percent incremental increase in total premium expenses’ for their commercial business.”
Ballooning costs
In the middle of September, a coalition of 67 healthcare industry and advocacy groups urged Congress to revisit the No Surprises Act because of the ballooning costs of settlement. The industry group sent a letter to Congress pressing for changes in the No Surprises Act, citing as one of the main problems the law’s “baseball-style” arbitration. In this kind of decision-making, the two parties — the provider and the insurer — can both submit a price in a dispute, and the arbitrator has to choose one, with no opportunity for a middle ground.
In another move, in early September, “Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ) today sent oversight letters to six companies certified as independent dispute resolution entities (I.D.R.E.’s) under the No Surprises Act, requesting detailed information on how each company is conducting arbitration and complying with the law amid reports of skyrocketing awards and rising consumer costs,” according to a press release from the committee.
“Pallone was a key leader in the effort to pass the No Surprises Act to shield patients from surprise medical bills and lower health care costs for American families… Pallone cited a dramatic escalation in I.D.R. case volume, from an initial estimate of 17,000 disputes annually to 2.5 million disputes filed in 2025 and 1.4 million in just the first five months of 2026. Troublingly, most cases appear to have been initiated by a small number of private equity-backed provider organizations, with just 10 initiating parties accounting for approximately 67 percent of cases.
“The Ranking Member also raised concerns that a significant share of disputes submitted to I.D.R.E.’s do not appear to meet the law’s eligibility requirements, and that arbitrators are awarding payment determinations that are resulting in increased costs for consumers.”
Effects on premiums
The Libertarian Cato Institute published a paper stating that the No Surprises Act was driving up premiums. But a number of industry figures have pushed back on this, noting that sometimes the insurance companies don’t actually respond to a No Surprises Act dispute resolution request with a real counter-number, or even any number at all.
Ed Gaines III, a healthcare attorney, posted on Twitter: “So, the #NoSurprisesAct I.D.R. payments represent less than 1% of the health plans’ costs, yet the NSA is to blame in part for a median premium increase (per the Kaiser/Peterson analysis this week) in ACA plans of +15% for ‘27? That math does not math.”
The advocacy group Action For Health posted a piece criticizing The Wall Street Journal For accepting the insurance companies’ explanation that the No Surprises Act caused them to raise their premiums. “The real racket? That’s health insurance companies’ anticompetitive and egregious behavior in the No Surprises Act’s Independent Dispute Resolution (I.D.R.) process. Yet, the Journal’s editorial board argues that the “No Surprises Act of 2020…has had consequences nearly the opposite of what was intended,” Action For Health wrote.
Cato added: “Even in the bizarro world of health care finance, the I.D.R. system stands out as a case study of good intentions resulting in bad consequences for everyone but those who are financially benefiting (i.e., the doctors, group practices, and private equity firms that receive elevated payments from the I.D.R. system, as well as the arbitrators who are paid a fee for each case they decide, typically around $600).”
What can be done?
The Georgetown researchers wrote: “Policymakers could, for instance, replace I.D.R. with a payment standard to regulate what plans must pay out-of-network providers in N.S.A.-eligible disputes. A payment standard was considered, although ultimately not adopted, in the debate leading up to the N.S.A.; this approach scored greater savings and premium reductions from C.B.O..”
They also suggested: “Congress could also make operational changes to the I.D.R. process to try to mitigate the concerns raised above. For instance, Congress could impose penalties on stakeholders that file a large number of ineligible disputes or that fail to pay I.D.R. awards in a timely manner.”
The Cato Institute and others have suggested that the arbitration process be changed and made more of a contract-based approach. Failing that, and retaining arbitration, it said, “the easiest solution is to eliminate outlier payments by introducing an upper limit on I.D.R. payments … based on a multiple of Medicare rates… or existing commercial rates. Cato also noted that a number of ineligible and unbundled claims have been sent into the system; they recommended. that “Congress should introduce a sliding fee schedule for using arbitration that increases substantially with an entity’s volume of claims … paired with efforts to ensure prompt payments by insurers after decisions, thereby combating a source of considerable frustration for providers.”
Another trade group, the Paragon Health Institute, issued a paper with this heading: “No Surprises Act — A Government-Created Incentive for Providers to Avoid Networks.” It recommended removing “elective services from federal arbitration.”
“For emergency services, a different approach is needed, and Congress has two reasonable options. It could eliminate federal I.D.R. entirely while maintaining the prohibition on balance billing, leaving insurers and providers to settle payment disputes through private arbitration, litigation, or state law,” the paper said
“Alternatively, Congress could retain I.D.R. solely for emergency services but impose meaningful guardrails. Awards should have a reasonable upper limit so arbitration does not continue producing payments wildly disconnected from market prices. Congress should also reform how arbitrators are paid, and if an upper limit is implemented, insurers should face penalties when they fail to pay awards on time.”
