When Congress passed the No Surprises Act, the federal agencies estimated the independent dispute resolution process would handle about 17,000 cases a year. A modest backstop for the occasional billing disagreement. Four years later, the actual number is 7,048,593 disputes initiated — and counting. In July 2026 alone, 394,140 disputes were filed, a 24% increase from June.
The law worked. And then it worked too well, in a direction nobody planned.
Start with the victory, because it is real and it matters. Before January 1, 2022, patients hit with out-of-network bills at in-network facilities had little recourse — the anesthesiologist you never chose could bill you $8,000 above what insurance paid, and the debt was yours. The No Surprises Act ended that. Patients are held harmless; the provider and the insurer fight over the payment.
By that measure — the law’s actual purpose — it succeeded. CMS states plainly: “The No Surprises Act has succeeded in its primary objective: protecting American consumers from surprise medical bills.” Nearly 15,000 consumer complaints have been processed, the large majority against providers still testing the boundaries. The patient protection works.
The dispute resolution mechanism, however, became something its designers never imagined. Providers filed more than 2.5 million IDR disputes in 2025 — nearly 150 times the original estimate. By May 2026, cumulative filings exceeded 6.3 million. Disputes grow by several hundred thousand per month.
A Georgetown University analysis put the total cost at $22.4 billion through the end of 2025: $15.6 billion in payments to providers above in-network rates, $4.2 billion in administrative costs, and $2.7 billion in fees to the arbitration entities themselves. A Wall Street Journal analysis of federal data found arbitration awarded about $14.85 billion to providers in 2025, up from $4.08 billion in 2024. Arbitration firms collected roughly $1.3 billion in fees.
The incentives explain the volume. Arbitrators are paid per dispute — $425 to $800 for single determinations, $625 to $1,150 for batched cases. More disputes mean more revenue for the entities deciding them. A January 2024 Brookings analysis noted the structural problem: arbitrators seeking to process cases economically while remaining acceptable to the parties selecting them have “no reason to expect these incentives to lead arbitrators to make the ’right’ decisions.” Specialized companies now identify eligible claims, assemble submissions, and file disputes by the thousands. A small group of provider organizations generates a disproportionate share of cases. What was designed as a backstop became an industrialized revenue strategy.
The payment outcomes favor providers overwhelmingly. Providers prevailed in about 85% of second-half 2025 determinations, per CMS data, and the winning offer exceeded the qualifying payment amount in about 87% of cases. When arbitrators side with out-of-network providers, the average payout runs 11 times Medicare rates, with some reaching 30 times, according to UnitedHealthcare. The mechanism meant to approximate in-network pricing routinely produces anything but.
The provider argument is straightforward and has data behind it. Insurers defaulted on 24.5% of IDR line items decided in 2025 — submitting no offer at all on over 1.1 million line items, per an analysis of CMS data by the American Society of Anesthesiologists, the American College of Emergency Physicians, and the American College of Radiology. Another 8.2% drew offers of $1 or less. In total, 63.1% of line items never received a plan offer above the qualifying payment amount. Arbitrators must pick the more reasonable of two offers; a no-show or a $1 bid hands the provider the win by default. As the physician groups put it, these numbers — not provider gaming — explain the high win rates.
A federal judge seemed to agree. In July 2026, U.S. District Judge Thomas Thrash Jr. wrote it was “highly plausible” that a plaintiff insurer engaged in “a consistent practice of submitting lowball offers to out-of-network providers in an effort to maximize its profits.” And the Fifth Circuit ruled in August 2026 that the regulation producing the qualifying payment amount was arbitrary and capricious.
The payer argument is equally pointed. Cigna CEO Brian Evanko told investors the company sees “clear abuses” of the IDR process, citing “unsustainable volume levels, much of which is concentrated amongst a small number of providers.” Elevance Health reported a 40% increase in case volume in 2025. UnitedHealthcare, seeing roughly 100,000 disputes a month, says the process “is not working” and needs reform. Fifty-eight employers wrote Congress calling for fixing “the broken IDR system” rather than expanding penalties.
Both sides are describing the same elephant. Providers use the IDR process aggressively because insurers lowball. Insurers lowball because the process rewards it until a provider files. The system has settled into an equilibrium where dispute volume is the business model — for providers filing, for arbitration firms deciding, and for the consultants on both sides.
“The enormous IDR cost inevitably will add to the insurance premiums paid by consumers,” said Jack Hoadley, the Georgetown researcher behind the $22.4 billion analysis. “We’ve already seen some employers and insurers attributing a portion of their premium increases to IDR costs.”
That is the deepest irony of the No Surprises Act at four. A law designed to protect consumers from unexpected costs is now, through its dispute mechanism, adding to the expected costs — premiums — that every consumer pays. The HFMA’s verdict was blunter: “Surprise-billing arbitration has become the economic equivalent of digging holes and filling them back up with rocks.”
Congress is circling. The No Surprises Act Enforcement Act, with 36 bipartisan cosponsors, would raise penalties for missing payment deadlines after IDR determinations. Fifty-eight employer groups oppose it, wanting IDR reform instead. The Coalition Against Surprise Medical Billing launched a six-figure ad campaign against the bill. Nobody defends the status quo; nobody agrees on the fix.
Three reforms would address the core dysfunction without touching patient protections. First, fix the incentives: pay arbitrators a flat rate decoupled from volume, or fund the system publicly, removing the revenue motive from dispute growth. Second, enforce genuine negotiation: penalize $1 offers and no-shows symmetrically with frivolous filings, so both sides come to the table seriously. Third, publish everything — offer distributions, win rates by entity, payment timelines — because the current opacity protects every bad actor in the system.
The patient protection is non-negotiable and it works. But a backstop designed for 17,000 cases a year cannot sustainably process 7 million. The No Surprises Act solved the problem it was written to solve. It is now time to solve the problem it created.
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