The No Surprises Act represented a landmark achievement—one designed to protect patients from unexpected medical bills. But while the law’s intent was clear, its implementation—particularly the arbitration process, also known as the independent dispute resolution (IDR) process—has created unintended consequences. As a recent article in the Regulatory Review notes, “some scholars warn that the burden of arbitration may ultimately increase health care costs for patients. Insurers may raise premiums to offset arbitration losses, while hospitals and physician groups appear to be increasing sticker prices as leverage in future disputes.”
Originally envisioned as a tool of last-resort, the arbitration process has instead become a mechanism for certain private equity-backed providers to extract maximum profits, leading to a financial drain for patients and employers.
Since the law took effect in 2022, more than 3.3 million disputes have been initiated, far surpassing projections from the Department of Health and Human Services. Additionally, a recent analysis found that the IDR process is driving $5 billion in wasteful health care spending that ultimately hits employers and consumers.
So, what’s going wrong?
Private equity (PE)-backed providers are gaming the system.
- In the first half of 2024, 47 percent of all cases originated from just four PE-backed organizations: Team Health, SCP Health, Radiology Partners and Envision. According to researchers from the Brookings Institution, these providers submit rates averaging 3.7 times Medicare payments.
- In addition to a high volume of cases, these top provider organizations won the vast majority of their disputes, with offer amounts at least two times greater than the qualifying payment amount (QPA), according to an analysis from Georgetown’s Center on Health Insurance Reforms. Radiology Partners significantly outmatched other provider groups, with a median prevailing offer at 631% of QPA and 610% of QPA in the first half of 2024.
- As noted in a Stanford Law Review study from 2024, researchers warn that PE in health care prioritizes profits over patient care and target specialties where they can aggressively use the law’s arbitration process to push for higher payments and preserve their profits. This aggressive, profit-driven use of the arbitration process not only inflates costs, but it also undermines the intended goals of the No Surprises Act: to make care more affordable and predictable for patients.
Ineligible claims are clogging the system, leading to widespread inefficiencies.
- The arbitration process was designed for legitimate, last-resort disputes, not to be a routine business model. Yet, providers are increasingly flooding the system with claims, including a substantial number that do not qualify for arbitration.
- Centers for Medicare & Medicaid Services (CMS) 2024 data show that nearly 20% of the 450,000 disputes were ruled ineligible. The flood of ineligible or incorrect claims, combined with high volumes, makes it difficult for federal agencies and IDR entities (IDREs) to assess eligibility efficiently—slowing resolutions and complicating matters for health plans and employers.
- Yet both health plans and providers must still pay a non-refundable $115 fee per claim, regardless of outcome. Since IDREs are only paid for accepted cases, they face incentives to classify borderline claims as eligible, adding delays, inefficiencies and costs.
- As caseloads continue to mount, the structure of the system itself compounds the problem, creating costly bottlenecks for health plans, employers and the federal government.
Lack of transparency and accountability in the arbitration process creates opportunities for misuse and abuse.
- Transparency remains a major weakness in the arbitration process, which is increasingly marked by inconsistent decisions, limited transparency and growing opportunity for manipulative behavior.
- Arbitrators vary widely in how they rule, often offering minimal rationale, while high-volume, provider-aligned entities dominate the process. While IDREs must report basic information about determinations to CMS, they are not required to explain the reasoning behind their decisions.
- A Mitchell Hamline Law Review study from 2023 also highlights a critical gap: the absence of a clear appeals process. Without a mechanism for oversight or challenge, questionable rulings often go untested.
- Together, these gaps in transparency and accountability undermine the integrity of the system and drive-up costs—pressures that inevitably flow back to patients in the form of higher premiums.
Manipulation of the arbitration process is already driving more than $5 billion in excessive costs and waste in the health care system, costs that ultimately fall on patients, employers and taxpayers. Without greater transparency, stronger guardrails and real accountability, the very law designed to shield families from surprise bills risks being repurposed into a tool for profiteering, eroding affordability and trust in the system.
The Path Forward
The Coalition Against Surprise Medical Billing urges the Trump administration and Congress to implement common-sense reforms to address current flaws with the process, including:
- Addressing persistent claim eligibility issues that lead to wasteful, exorbitant costs on ineligible claims by affirming claim eligibility for IDR and discouraging initiating ineligible disputes;
- Improving system transparency and oversight with enhanced information sharing and performance monitoring by:
- Enhancing access within the IDR portal and requiring transparent information sharing and rationales;
- Establishing IDRE performance metrics and audits tied to corrective action;
- Monitoring and correcting longstanding provider misuse of the arbitration process that drives up employer and employee costs by developing a series of metrics to monitor problematic provider behaviors.
Read the full article from The Regulatory Review online here.
To learn more, visit https://stopsurprisebillingnow.com/.
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