No Surprises Act arbitration costs reach $22.4 billion as disputes surge

A payment dispute system created under the No Surprises Act has generated an estimated $22.4 billion in costs since 2022, according to a new Georgetown University study.

The study focuses on the law's independent dispute resolution, or IDR, process, which was created to settle payment disputes between health insurers and out-of-network providers while protecting patients from surprise medical bills.

Researchers said the law has largely succeeded in protecting consumers from surprise bills, but the arbitration system has grown far beyond what policymakers originally expected.

The $22.4 billion estimate includes payment awards, administrative costs and fees tied to the IDR process. Researchers said dispute volumes have far exceeded early federal projections, with millions of cases moving through the arbitration system each year.

Premium concerns emerge

The researchers said rising IDR costs could affect employers, health plans and consumers if those expenses continue to grow.

The study cited New York's state employee health plan, which reported more than $200 million in additional claim payments tied to IDR decisions and said those costs were a major contributor to a nearly 10% premium increase in 2025.

An AHIP spokesperson who declined to be identified said much of the spending identified in the study ultimately falls on employer-sponsored health plans.

"Those are funds that don't come out of insurance company coffers. That's money that comes from employers," the spokesperson said.

The spokesperson said employers are increasingly being forced to weigh difficult decisions as health care costs rise.

"Do we cut back on benefits? Do we increase premiums? Do we further increase deductibles?" the spokesperson said. "They're having to make those decisions."

Several employers and insurers have also reported financial effects tied to the arbitration process.

UnitedHealthcare has said it is processing about 100,000 IDR disputes each month and that the IDR process is contributing a 2% to 6% increase in premium expenses within its exchange business.

The United Service Workers Health Plan, which covers about 20,000 workers in the New York area, reported increasing premiums by an additional 1.75 percentage points to offset arbitration awards and fees.

Centene reported that its commercial health benefits ratio was 100 basis points higher than expected during the fourth quarter of 2025. The AHIP spokesperson cited the increase as an example of growing cost pressure facing health plans.

A recent Mercer survey found health benefit costs are expected to rise 8.2% in 2027, the largest increase since 2003. Mercer identified several contributors to rising costs, including GLP-1 drugs, AI-assisted claims software and the growing volume of disputes moving through the No Surprises Act IDR process.

Costs continue to climb

According to the study, dispute volume rose 77% from 2024 to 2025, while total award amounts increased 264% during the same period. Researchers estimated that IDR-related costs reached $16.6 billion in 2025 alone.

The report also found that providers initiated about 1.75 million disputes during the first six months of 2026, up 50% from the same period a year earlier. Providers prevailed in about 85% of disputes in 2025, according to the study.

Federal officials originally estimated the arbitration system would handle roughly 22,000 disputes annually. Researchers found providers initiated about 2.6 million disputes in 2025 alone.

The spokesperson said the process was originally intended to be used only in limited situations.

"It was not going to be a major revenue stream, let alone an entire business model for many providers and an entire business model for these IDR middlemen," the spokesperson said.

The spokesperson said the growth of companies that specialize in filing and managing IDR claims has contributed to rising dispute volumes.

Industry debate continues

The study's findings have drawn criticism from several physician groups.

In a joint statement, the American Society of Anesthesiologists, American College of Emergency Physicians and American College of Radiology challenged the study's methodology.

The groups said the report relies too heavily on the qualifying payment amount, or QPA, which they argue does not accurately reflect market rates and is often calculated too low by insurers.

AHIP disputed that criticism, saying the QPA remains an important benchmark because it reflects negotiated in-network payment rates.

"The QPA is based on the median of in-network rates for that same service in the same geographic area," the spokesperson said.

The study also found that a small number of organizations account for a large share of arbitration activity.

According to the researchers, more than three-fourths of resolved dispute lines in 2025 came from Radiology Partners, HaloMD and TeamHealth.

Researchers said the No Surprises Act has largely succeeded in protecting patients from surprise medical bills. They also found the arbitration system created by the law now handles millions of disputes each year, far exceeding the roughly 22,000 annual cases federal officials originally projected when the process was established.

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Noah Lopez is editorial assistant for InsuranceNewsNet. Contact him at [email protected].