Out-of-network providers’ abuse and misuse of arbitration have become a $22 billion affordability crisis, according to recent government data analyzed by Georgetown researchers. Excessive independent dispute resolution (IDR) costs have translated directly into premium increases, with several recent reports citing IDR as one of the main contributors to historic cost increases for employers and consumers.
Persistent and excessive provider payouts under IDR have prompted the Congressional Budget Office to warn about the broader impact on healthcare access and affordability. “Although evidence suggests that prices for services affected by the No Surprises Act may have initially decreased, arbitration outcomes could lead to higher prices over time. If providers can systematically secure large payments through the IDR process, they have an incentive to remain out of network or demand higher in-network rates.”
CBO’s red flag on the No Surprises Act (NSA) is not an isolated one. Patient and consumer groups, unions, employers, and leading policy experts have all called on Congress and the Trump administration to overhaul IDR, given the rampant abuse and misuse of the process.
“In protecting millions of consumers each year from devastating surprise medical bills, the No Surprises Act is one of the most significant bipartisan consumer protection reforms in recent memory. But its central promise of protecting patients while lowering costs has been broken. Abuse of the arbitration process is raising costs – by over $16 billion in 2025 alone, which is showing up as higher premiums for consumers and workers. We call on Congress to stand up to corporate provider groups and IDR middlemen who are abusing IDR to profit at consumers’ expense. Congress must act to rein in this corporate abuse and restore the law’s full promise.”
Cato Institute: “A New ‘Fresh Hell’ for Surprise Medical Bills”:
“It isn’t surprising that this strategy has become a viable business model for the same providers and specialties that were sending surprise bills prior to the passage of the NSA, plus multiple new entrants. Indeed, many of the disputes that have entered the IDR system involve elements of scheduled procedures, which were responsible for a tiny share of the surprise bills that pre-dated the NSA…Congress’s fix for the ‘hell’ of surprise medical bills gave us the ‘fresh hell’ of the IDR system. The longer Congress waits to fix the new problem it created, the more entrenched and expensive this fresh hell will become.”
Paragon Health Institute: “Fixing the No Surprises Act’s Broken Arbitration System”:
“The largest economic effect of the NSA likely occurs outside of the arbitration process itself. Providers can remain out of network and pursue IDR awards or use the prospect of those awards to demand higher rates during contract negotiations. Either response puts upward pressure on health care prices. This mechanism is particularly important because CBO’s original estimate of savings from the NSA depended on precisely the opposite occurring.”
“The NSA protects patients from surprise bills, and that outcome is worth preserving. The arbitration process attached to it is another matter… Costs absorbed through IDR awards eventually reach workers through higher contributions, higher cost sharing, or narrower networks, which makes this a coverage affordability problem rather than a provider-payer dispute. The remedy does not require reopening the patient protections. It requires making the process sustainable for the employers who pay for coverage, so the law can continue to deliver on its core affordability promise for patients.”
Benefits Pro: “No Surprises Act dispute system cuts provider network participation by 20%”:
“A team of university economists says the No Surprises Act independent dispute resolution system really is driving up employers’ health plan costs. Panle Jia Barwick and three colleagues have concluded in a new working paper that the IDR system is increasing insurers’ and health plans’ spending on the eligible claims, increasing coverage premiums and giving the health care providers who can use the IDR system an incentive to leave health plan provider networks. Access to the IDR system reduces the odds that an emergency room doctor, a radiologist or an anesthesiologist will be in a plan’s network by about 20%, the researchers estimated.”
“[T]he profit-driven use of the IDR process by certain provider groups and middlemen is causing health care costs to spiral even higher, and employers, working families, patients and consumers are paying the price. Congress should be focused on advancing policies that improve health care affordability by fixing the broken IDR system rather than misguided legislation like the No Surprises Act Enforcement Act, which will only exacerbate the affordability crisis. Employers believe that providers should be paid fairly and in a timely manner for eligible claims, yet employers oppose the No Surprises Act Enforcement Act because imposing new penalties for late payments on top of a fundamentally flawed IDR process, that incentivizes submission of ineligible claims, will result in more abuse of an increasingly broken system.”
“[The No Surprises Act Enforcement Act] will accelerate the alarming costs generated by a broken provider payment process enacted as part of the No Surprises Act (NSA) in 2020. These new costs are already being passed to workers in the form of higher premiums for health coverage…Data provided by health plans with union-negotiated benefits show an alarming trend in excessive provider charges and spiraling costs resulting from the broken process.”
Wall Street Journal editorial board: “The ‘Surprise Billing’ Racket”:
“Providers are winning huge payouts for ineligible claims, which encourages them to file more claims seeking bigger payments. The riches that can be made have discouraged providers from joining insurer networks, which ironically was one of the surprise billing law’s goals.”
“Instead of patients receiving unexpected bills in the mail, Americans are now paying for a massive arbitration system that has become a gold rush for a handful of providers, private equity-backed physician groups, lawyers, and arbitrators…Every inflated arbitration award eventually shows up in higher insurance premiums, higher deductibles, and higher costs for employers providing coverage. The surprise bill was spread across millions of working families who have no idea they’re paying it…Republicans should make fixing this costly farce a priority.”
Bloomberg’s Lisa Jarvis: “The No Surprises Act Could Be a Shock to the Healthcare System”:
“[C]onsumers might eventually discover that they’re paying the bill in other ways. The process for settling disputes between insurers and providers has tilted heavily toward providers, leading to unusually high prices for care that could drive up costs throughout the healthcare system. Unless policymakers correct that imbalance, an otherwise good law could end up raising costs for everyone.”
The bottom line: The evidence is clear on the urgent need for broad IDR reforms. Congress must close the IDR loopholes and address the extreme awards that are driving up costs for millions of Americans.
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