The dispute resolution process established by the No Surprises Act has resulted in billions of dollars in spending on administrative costs and payments for services, according to a new study.
The No Surprises Act, legislation that seeks to protect patients from surprise medical billing, was signed into law as part of the 2021 Consolidated Appropriations Act. While the law has achieved some success in protecting patients from surprise bills, it has also resulted in aggressive litigation and costly disputes. A study published by Health Affairs found that the independent dispute resolution (IDR) system created by the law — the process to be followed when payers and providers cannot agree on a payment rate for an out-of-network service — resulted in at least $5 billion in spending on administrative costs and payments for services between 2022 and 2024.
The federal IDR process does not apply in cases where a state law provides a method for determining the total amount payable for an out-of-network service. In states where there is no such law, such as Arkansas, the federal IDR process is triggered when payers and providers cannot agree on a payment rate after a 30-day “open negotiation” period. Either party in a dispute may initiate the resolution process. Between April 2022 and May 2025, a total of 3,324,051 disputes were initiated, more than two-thirds of them initiated by private equity-backed groups on behalf of healthcare providers.
The $5 billion in spending that resulted from the IDR process between 2022 and 2024 includes administrative fees, fees paid to independent organizations that arbitrated disputes, internal costs, and payments for services. Of that $5 billion, $2.24 billion went to healthcare providers, who won 82% of cases, usually for a much higher amount than the qualifying payment amount — i.e., the median in-network rate for the same service.
Increased costs for the healthcare system could lead to increased costs for consumers in the form of higher health insurance premiums and medical bills. Greater scrutiny by federal and state agencies of the role played by third-party entities such as private equity groups in the dispute resolution process could help to control costs associated with the process while maintaining consumer protections.
