The No Surprises Act is succeeding in protecting patients from unexpected medical bills, but insurers and provider groups remain divided on what is driving rising costs tied to the Independent Dispute Resolution process and how regulators should respond.
Since the arbitration system launched in 2022, providers have won the vast majority of disputes. In 2024, they prevailed in about 85% of cases, with median payment determinations reaching 459% of the qualifying payment amount in the fourth quarter. The process has also generated at least $5 billion in costs, much of it from administrative fees and higher payments.
As those costs have climbed, payers have said that the system is inflating prices across the healthcare system, while providers say it is correcting years of underpayment.
“The concern now is that the law hasn’t met its second objective, to contain costs,” Jennifer Jones, senior director of legislative and regulatory policy at the Blue Cross Blue Shield Association, told Becker’s. “That’s primarily because of the challenges we’re seeing with the independent dispute resolution process.”
In 2023 and 2024, IDR awards required insurers to pay providers $2.24 billion above the in-network rates reflected by the qualifying payment amounts. In many cases, awards were three to four times the QPA.
Federal regulators originally projected that about 17,000 disputes would take place annually. Instead, from mid-2022 to May 2025, more than 3.3 million disputes were filed, including air ambulance cases. As of May 2025, 85% have been closed, but nearly 500,000 disputes remain pending.
Ms. Jones said the association representing more than 30 independent BCBS companies sees three main problems: high dispute volumes, inconsistent decision quality, and a lack of transparency.
Four to five large, often private equity-backed provider groups account for roughly 40-60% of all IDR cases, she said, effectively flooding the system. She also raised concerns that the federal-certified arbiters, known as IDR entities, are issuing awards that lack expertise in billing practices and reimbursement dynamics.
“The win rate that we’re seeing does not suggest a fair or predictable process,” she said.
Insurers and providers also cannot view each other’s submissions, and the rationales explaining how IDR entities reached their decisions are often missing, Ms. Jones said.
“That makes it pretty challenging to counter misinformation or any sort of information that could cloud the IDR entity from making a fair decision,” she noted.
Ms. Jones outlined three policy priorities for BCBS: screening out ineligible cases, strengthening accountability and transparency for IDR entities, and increasing oversight of provider behavior, particularly among high-volume filers. A final federal rule aimed at improving IDR operations is expected to be published in November, though Ms. Jones said it likely will not address every issue.
On the other side of the equation, provider groups say insurers are relying on a flawed baseline when they claim arbitration awards are inflated.
“The QPA was designed to reflect the median in-network rate,” Patrick Velliky, chief external affairs officer at HaloMD, told Becker’s. “Unfortunately, many have taken that figure as accurate despite plenty of evidence to the contrary. We’re confident that QPAs have been significantly manipulated in many instances.”
He cited so-called “ghost rates,” or unused billing codes embedded in contracts that can distort median payment calculations, and said his company has seen initial payments “well below the Medicare rate” for the same services in the same geography.
“Payers process roughly 1.4 billion claims each year, so the idea that they’re overwhelmed by NSA disputes is laughable,” Mr. Velliky said. “If they’re concerned about the volume of disputes going to arbitration, they should offer fair and reasonable rates up front.”
He said the No Surprises Act was designed to be burdensome on purpose to push both sides toward contracting rather than endless arbitration.
“It is a matter of incentives. If you can fix the incentives and make it so that payers actually have a reason to contract, then this process will work the rest of the way. [The NSA] has protected patients, thank goodness. But payers are doing everything they can to not stick the landing on the contracting side,” he added.
Mr. Velliky said insurers have avoided that outcome because many IDR costs are borne by employer clients in self-funded plans.
A BMJ analysis published in August found the NSA is tied to an 18% decline in out-of-pocket spending among adults with direct-purchase private insurance, an average savings of $567 per family. But researchers and payers warn the rising administrative and arbitration costs could eventually appear in premiums.
Large insurers including UnitedHealthcare, Elevance Health and Aetna have all filed lawsuits against provider groups alleging misuse of the IDR process. In May, Elevance’s Blue Cross Blue Shield of Georgia sued HaloMD and two other physician groups, claiming they submitted thousands of ineligible disputes to secure inflated payments. HaloMD denies the allegations.
Lawmakers have also been urging regulators to act. In September, a letter from Republican lawmakers called on HHS, and the Labor and Treasury departments, to finalize clear QPA calculation methodology, accelerate enforcement of updated calculations, and release statutorily required audits of the process.
