No Surprises Act leads to $15B in payouts

In December 2020, Congress passed the No Surprises Act to mitigate patients' exposure to surprise medical bills and require insurers and providers to resolve payment disputes for out-of-network care independently or use a new arbitration process. At the time, the Congressional Budget Office (CBO) projected the law would reduce private health plan premiums by an average of 0.5%-1% and reduce the federal deficit by $17 billion over 10 years.

In 2021, CMS released an interim final rule that established a process to settle disputes between out-of-network providers or facilities and health plans over these surprise bills. In 2022, HHS, the Labor Department, and the Treasury Department finalized this independent dispute resolution (IDR) process.

However, arbiters have usually settled on a payment greater than an insurer's median in-network rate for a service, which has led insurers to pay more for an out-of-network provider than an in-network one. In a 2024 report, CMS found that arbiters settled on a higher payment amount in over 80% of disputes over surprise bills.

Since the IDR process was implemented, total payouts for surprise billing disputes have increased significantly. In 2025, total payouts were $14.9 billion, up from $4.1 billion in 2024 and $393 billion in 2023.

"It's shocking that it's rising so fast," said Jack Hoadley, a research professor emeritus at Georgetown University's Center on Health Insurance Reforms.

At the same time, CMS and its contractors have not been able to keep up with the staggering number of surprise billing dispute cases. Initially, federal officials estimated that there would only be around 22,000 claims a year. Instead, there have been 6.3 million cases filed since 2022, including 1.4 million filed in the first five months of 2026 alone.

"There's no real end in sight," said Lawson Mansell, a senior health policy analyst at the Niskanen Center. Since 2022, there has been only one 15-month period where the number of new claims has not been greater than resolutions. 

Conflict over the surprise billing disputes continues to grow

So far, CMS has had to pause the IDR process at least twice after courts ruled that mediators had to change how cases were decided. Insurers and physician groups have also repeatedly filed lawsuits against each other over the IDR process, with insurers arguing that high payouts have increased spending and premiums and physicians arguing that insurers are underpaying them.

Recently, CBO called for more research into the impact of the No Surprises Act, with budget researchers writing that "emerging evidence suggests that the law might not have the effects that CBO anticipated."

"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 wrote, noting that while fewer than 0.05% of claims go to arbitration, they could have an outsized effect on bargaining and increase negotiated prices over time. 

"While the general consensus is that the No Surprises Act has effectively done its job in protecting patients from surprise bills, the IDR process is now viewed as a key input in rising healthcare costs for employers," Landis said. 

Landis also noted that employer health advocacy groups have called out a small number of private-equity-backed provider groups as being problematic actors "manipulating" the IDR process for financial gain, which has in turn contributed to "increased employer costs by changing plan-provider contract negotiations and in-/out-of-network dynamics."

Provider groups have pushed back against the claim that they're driving up costs.

"The only gaming of the system is being done by insurers," said Christopher Sheeron, president of Action for Health. "They are losing in federal arbitration on purpose in an effort to overhaul the law in their favor."

Meanwhile, HaloMD, a medical billing company that files arbitration claims for doctors, acknowledged that "a handful of organizations" may be taking advantage of the No Surprises Act.

"We support CMS' desire to weed out bad actors" so that the arbitration process "can remain available to the vast majority who are using it as intended to secure fair and sustainable reimbursement," said Patrick Velliky, a spokesperson for HaloMD.