Abuse of the No Surprises Act’s independent dispute resolution (IDR) process by certain private equity-backed providers and IDR firms continues to drive up premium costs for employers, unions, and workers.
POLITICO recently reported that one national health insurer is processing 100,000 IDR disputes a month, which is driving up premium costs by 2 to 6 percentage points. New York state budget documents show that its Empire Plan is absorbing more than $200 million in added claim payments tied to IDR abuse, a primary driver of this year’s roughly 10% premium increase for state employees. And the New York Times recently highlighted that the United Service Workers Health Plan, which covers 20,000 New York-area trades workers, raised premiums an extra 1.75 percentage points to offset arbitration costs.
Now, Mercer’s latest blog captures just how much pain employers are feeling. Tracy Watts, Mercer’s senior partner and national leader for U.S. healthcare policy, lays out the numbers.
IDR payouts to out-of-network providers and IDR firms are exploding, and employers are footing the bill.
- “During our meetings with lawmakers and staffers, employers shared how IDR is adding an additional 2% to their total medical spend on top of the highest medical trend we have seen in the last 15 years.”
- “A recent WSJ article reported that ‘for 2025, total payouts under the arbitration process reached $14.85 billion, according to a Journal analysis of new, previously unreleased data from the Centers for Medicare and Medicaid Services. The figure for 2024 was $4.08 billion, according to the analysis.’”
- “That’s a 264% increase in one year, and employers are sounding the alarm about how much worse it has been in 2026.”
Lawsuits from the Texas Medical Association have undermined any real payment guardrails within IDR.
- “The crux of why costs are rising so fast at such excessive amounts can be traced to a legal decision in a Texas case that struck down a helpful part of the implementing regulations.”
- “The case, which was won by the Texas Medical Association, has had the effect of untethering IDR entity payment determinations from in-network payment amounts.”
More than a third of the claims that reach arbitration never belonged there.
- “The AHIP/BCBSA report found that 39% of claims submitted to IDR were ineligible under the terms of the law, but only 17% were dismissed as ineligible, with more than half of the ineligible cases resulting in binding payment determinations.”
- “All told, this discrepancy resulted in payors being required to make payments on 184,000 ineligible claims.”
Recently, 58 leading employers and employer organizations sent a letter to Ways and Means Chairman Jason Smith and Ranking Member Richard Neal outlining the impact of IDR abuse and misuse on rising healthcare costs and employees’ benefits. The groups note that “these costs, which provide no additional value for employees or their families, will only multiply over time if the misaligned incentives and lack of guardrails further undermine the health care networks upon which employees rely for affordable, high-quality care.”
Read the full piece from Mercer here. For more on how IDR abuse is driving up healthcare costs, visit stopsurprisebillingnow.com.
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