The city of San Antonio is $40 million over its employee healthcare budget this year following costly misuse and abuse of the independent dispute resolution (IDR) process by a handful of out-of-network providers. New reporting from the San Antonio Express-News details how more than 28,000 city workers and their families were hit with cost increases as a result of out-of-network freestanding emergency rooms misusing the No Surprises Act’s arbitration process.
San Antonio joins a growing list of public sector employers absorbing excessive arbitration costs. Nationally, arbitration payouts reached nearly $15 billion in 2025, up from $4.08 billion the year before, according to new data from researchers at Georgetown University. This translates directly into higher costs and premiums for employers and employees.
For example, New York’s Empire Plan has taken on more than $200 million in added claim payments tied to IDR abuse, which in turn fuels premium increases for employees. In Idaho, one health plan has said arbitration payouts to Post Falls ER & Hospital, a freestanding facility owned by Nutex Health, run four to five times what it typically pays other providers for the same services, with those costs expected to reach patients through higher premiums, according to the Idaho Capital Sun.
Highlights from the San Antonio Express-News are included below. To read the full story, click here.
IDR abuse and increased costs from out-of-network providers are compromising public sector employees’ benefits and budgets.
- “The city of San Antonio is $40 million over its employee healthcare budget this year, in part because city workers have been going to costly, out-of-network emergency rooms, according to officials. City Manager Erik Walsh said his staff saw that healthcare costs started ballooning in late 2025, and they investigated. They found that one of the main culprits was freestanding ERs.”
- “‘We have seen an extreme cost increase from Freestanding Emergency Room visits that are out of network facilities,’ Walsh said in a May 20 memo to city employees… Walsh’s memo — which he wrote when the city was just $20 million over budget — said one local company, Prestige Emergency Room, dealt the biggest blow to city government’s $250 million healthcare fund.”
- “Though the number of employee visits to freestanding ERs is about the same this year as it was at this point in 2025, the city’s costs have skyrocketed recently because of claims filed through a six-year-old federal law, the No Surprises Act.”
- “Walsh told employees in May that [Prestige] more than doubled what it charged the city per visit over the last year, from $886 to $1,846.”
One freestanding ER captured more than half the city’s ER claims, and extreme arbitration awards have pushed the city’s costs higher.
- “Of the 50 freestanding and hospital-based ERs in San Antonio, Walsh said Prestige’s four locations made up 53% of emergency claims for city employees and their dependents in 2025.”
- “Federal arbitrators have sided with Prestige in 99.6% of the cases the company submitted for city workers, Wright said.”
- “He said the company’s billing rates are average for Bexar County, and that the city is paying more now because arbitrators have been siding with Prestige, forcing the city to pay more than it had in the past.”
Urgent reforms to IDR are needed to protect city employees who are absorbing higher premiums and facing reduced benefits.
- “The city will chip away at the $40 million cost overrun in the next three to five years through higher insurance premiums, Villagómez said. Civilian employees with families on the least expensive plan will see an increase of $6 per month.”
- “Villagómez said the city is looking into ways to change the No Surprises Act.”
Even Prestige Emergency Room’s co-owner admits the system needs to be reformed. Dr. Edward Wright told the Express-News the current system “allows providers to snag far more money on a claim through arbitration than what they’d originally billed for.” As he put it: “It’s just not good for the system. It’s not good for patients. It’s not good for anybody.”
For more on how IDR abuse is driving up healthcare costs, click here.
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