When President Trump signed the No Surprises Act into law in 2020, the straightforward premise was that patients should not be blindsided by massive emergency care bills from out-of-network physicians they never chose. On that front, the law has largely worked.
But the system Congress built to resolve payment disputes between insurers and providers has become something of an increasingly bitter standoff that may be raising premiums and leaving physicians without pay. And employers, particularly the self-funded plans that cover the majority of commercially insured workers, say they’re the ones now stuck with a big chunk of the bill. In recent months, the courts, Congress and federal regulators have all been moving in different directions on exactly what to do about it.
Under the No Surprises Act, when a patient receives out-of-network emergency care or is treated by an out-of-network provider at an in-network facility, their insurer pays an initial amount and the patient owes only their in-network cost-sharing. If the provider thinks the payment is too low, the two sides have 30 days to negotiate. If they cannot agree, either party can take the dispute to a federally certified independent arbitrator through what is known as the independent dispute resolution process. That arbitrator reviews both sides’ offers and picks one, and there is no splitting the difference.
Federal agencies originally projected the IDR system would handle about 22,000 disputes a year, but more than 6 million have been filed since the portal opened in 2022 – and the pace continues to accelerate. Providers have initiated nearly all of the disputes and won about 85% of the cases that have been decided, with awards frequently going far above the qualifying payment amount, or the in-network benchmark used in the process.
In July, a Wall Street Journal analysis of the latest CMS data put total arbitration awards at nearly $15 billion in 2025 alone, up from $4 billion the year prior. The Congressional Budget Office, which originally projected the system would reduce premiums by roughly 1%, said in June that “emerging evidence suggests that the law might not have the effects that CBO anticipated” and called for research into how the law, including IDR outcomes, is affecting healthcare prices and network participation.
A cottage industry of billing intermediaries has also sprung up around the process, with firms filing disputes on behalf of provider groups at massive scale. The three most active filers – HaloMD, TeamHealth and SCP Health – accounted for about 38% of all disputes initiated in the second half of last year.
Insurers have been upping the rhetoric
The nation’s largest health insurers have largely been speaking about the IDR process as a united front, with leadership at UnitedHealthcare, Cigna, Elevance Health and Aetna all recently framing the system as being exploited by a concentrated group of providers and billing companies at the expense of employers and their workers.
UnitedHealthcare commercial CEO Dan Kueter was perhaps the most direct in second quarter earnings calls, saying July 16 that the IDR process is “not working, certainly not as Congress intended it,” and calling for its reform. He said the system is adding about 50 basis points of incremental cost trend in 2026 and now accounts for at least 100 basis points of total commercial cost at UnitedHealthcare. A spokesperson for the insurer told Becker’s it is now involved in roughly 100,000 IDR disputes a month.
Overall however, Cigna Group President and CEO Brian Evanko said July 30 that while the company is seeing “clear abuses of the IDR vehicle in practice,” the financial impact on his company’s insurance business “has been manageable.” And Oscar CEO Mark Bertolini said Aug. 6 that “IDR is part of the business” and “is not a trend driver.”
The Coalition Against Surprise Medical Billing, a cohort of insurer and employer groups that include AHIP and the BCBS Association, launched a seven-figure ad campaign in May targeting what it called misaligned arbiter incentives. In July, the group launched a six-figure campaign opposing the bipartisan No Surprises Act Enforcement Act, which would impose stronger penalties on insurers or providers that fail to make payments required after an IDR determination.
Elevance Health has taken a more operational approach, citing IDR “abuse” directly. The company began penalizing in-network hospitals 10% of the allowed claim amount when out-of-network providers are involved in care for its commercial members, rolling the policy out across more than a dozen states this year. The move has drawn a lawsuit from the California Hospital Association, along with enacted or proposed legislation in several statehouses blocking the practice.
“If we pay every out-of-network provider seven times what their network peers are getting paid, imagine what that would do to overall healthcare costs,” Ariel Bayewitz, vice president of health economics at Elevance, told Becker’s. “That’s not sustainable, and it incentivizes basically everyone moving out of network, which also is not sustainable.”
Providers push back on two fronts
Physician groups and their trade associations have been telling a different story, arguing that the high provider arbitration win rate is not evidence of system abuse, but of systematic insurer underpayments from the beginning.
This past spring, the AMA and 111 specialty societies and state medical associations sent a letter to federal regulators saying that insurers are delaying payments beyond the required 30-day window, refusing to pay altogether, improperly increasing patient cost-sharing after losing arbitration decisions, and exploiting a technical loophole to reopen closed cases. A couple weeks later, the AMA sent a separate letter to congressional leaders backing the No Surprises Act Enforcement Act.
“Physician practices are forced to absorb unpaid costs, finance delays, and shoulder uncertainty while insurers retain funds they are legally obligated to pay,” the groups wrote April 28.
A 2024 survey by the Emergency Department Practice Management Association, whose members account for roughly 60% of annual emergency department visits nationally, found that 24% of disputes were unpaid or paid incorrectly within 30 days of the IDR determination. Respondents also reported a 39% reduction in out-of-network emergency physician reimbursement per visit in 2023 compared with 2021.
The dispute over how the QPA itself is calculated took a major turn Aug. 11, when the Fifth Circuit sided with the Texas Medical Association in ruling that the government’s methodology for including so-called ghost rates in QPA calculations is partly unlawful. Ghost rates are non-negotiated placeholder rates in insurer-provider contracts for services a provider typically does not perform, and can be as low as $1. Provider groups had long argued that including them artificially drags down the benchmark that underpins the entire dispute process. The majority of the Fifth Circuit’s 17 active judges agreed, writing that the government’s rules had “upended” the system. The decision could require higher QPAs once federal agencies revise their methodology.
The decision is the latest in a series of legal challenges TMA has been waging against the NSA’s implementation since 2021. Across four separate lawsuits, the association has successfully argued at the district and appellate court level that federal agencies repeatedly wrote rules that tilted the arbitration process in favor of insurers, including by giving outsized weight to the QPA and allowing calculation methods that suppressed the benchmark.
Self-funded employers say they’re footing the bill
“There’s this narrative out there that this is about health plans versus providers. It is not,” Mr. Bayewitz at Elevance said. “When you see an award for a half a million dollar plastic surgery case, it’s an employer paying for that.”
According to Elevance, 90% of IDR award dollars flowing through its plans are hitting self-funded employer clients, where the employer bears the claim cost directly and the insurer acts as a third-party administrator of benefits. Aetna President Steve Nelson said Aug. 5 that self-funded employers are “frustrated” with the IDR process, and UnitedHealthcare said self-insured school districts, local governments and unions have been especially impacted by the issue.
Mr. Bayewitz said that when a self-funded plan loses an IDR determination, the employer sees a claims adjustment right away. He said every type of employer has been affected, including those with restricted EPO plans that carry no out-of-network benefits, and noted that the company is seeing heavy concentrations of spine and plastic surgery disputes among its self-funded clients in California and New York.
Employer groups have responded in kind, with the ERISA Industry Committee, the Business Group on Health and dozens of other organizations lobbying Congress and federal regulators for IDR reform.
How Washington is responding
In July, a CMS spokesperson told the Journal that “while patients are now protected from surprise bills, the system is being gamed to get higher prices, and CMS is actively working to clean it up.”
The Trump administration finalized an overhaul of IDR operations in May, cutting per-dispute fees from $115 to $15, expanding batching rules, adding standardized billing codes and requiring providers to attest that disputed services do not qualify for the notice-and-consent exception before entering arbitration. A centralized IDR portal is also expected to begin replacing the current system later this year.
In Congress, the legislative proposal with the most momentum is the No Surprises Act Enforcement Act, which has gained backing from major physician groups.
Senate HELP Committee Chairman Bill Cassidy, R-La., who co-authored the original No Surprises law, told Politico in July that both sides share blame and that he is working on his own plan to address “ineligible claims while ensuring timely payment.”
Politico also reported that some lawmakers are exploring scrapping the arbitration process entirely in favor of a benchmark rate, though no bill has been introduced.
Federal courts side against insurers
Federal courts have recently rejected several insurers’ attempts to use fraud and racketeering claims to challenge unfavorable IDR outcomes, with four lawsuits brought by Elevance Health affiliates and Aetna dismissed this year. In several, judges wrote that insurers were attempting to bypass the NSA’s narrow limits on judicial review of IDR decisions.
In one of the Elevance cases brought against billing company HaloMD and two physician groups, Judge Thomas Thrash Jr. in the Northern District of Georgia wrote that it was “highly plausible to infer that the Plaintiff engages in a consistent practice of submitting lowball offers to out-of-network providers in an effort to maximize its profits.” The case was dismissed with prejudice, and Elevance said it will appeal.
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