No Surprises Act is Flawed, Bogged Down and Being Abused

 by Devon Herrick

The No Surprises Act (NSA) is a 2020 law banning the use of balance billing when a patient is treated by an out-of-network physician. Balance billing was a practice whereby physicians forgo network affiliation to bill amounts far higher than what health plans pay in-network providers. The balance above what health plans typically paid was billed to patients directly. The NSA banned the practice of balance billing patients. Instead, if health plan and provider cannot agree on fees, either party can request an independent dispute resolution process. The arbitrator is not necessarily free to set fees. Rules were created by Congress, with a form of baseball arbitration. The arbitrator must accept an offer from one party or another.

The dispute resolution process has not worked well. The IDR was supposed to be an inexpensive mechanism for resolving fee disputes, but critics claim the process has become bogged down with far more disputes than anticipated. Insurers estimate 40% of disputes filed are ineligible for IDR. One result is a costly system for taxpayers. The following is from Health Affairs:

The high volume of IDR disputes is generating significant spending from administrative costs and higher payments for services. This higher spending will likely be reflected in higher overall health costs and consumer premiums in the future. By estimating administrative and payment costs, and we find the IDR process has generated at least $5 billion in total costs through the end of 2024.

Critics also charge that the process is being unfairly gamed by third parties to generate fees far higher than in-network fees. It is not one provider saying, “my payment was unfair.” Rather, it is an organized process where provider groups are disputing nearly all cases, believing they can systematically boost fees. Not only does this raise costs, but it also erodes networks as physicians see their colleagues getting richer by avoiding networks, further increasing dispute resolution costs. Implausibly, providers are winning the vast majority of cases against insurers. In the first six months of 2025, according to Health Affairs: 

Providers also won 88 percent of disputes—the highest provider win rate to date—as compared to 85 percent in 2024 and 81 percent in 2023. Radiology Partners prevailed most often, winning favorable IDR awards in 92 percent and 95 percent of its cases in the first two quarters of 2025, respectively. Team Health saw similar win rates of 94 percent across both quarters. HaloMD won slightly less often but still prevailed in 87 percent and 82 percent of its disputes in the first two quarters of 2025, respectively.

The fees being awarded are far above median in-network rates:

For the first two quarters of 2025, Radiology Partners secured median awards of 582 percent and 594 percent of QPA, respectively. SCP Health won median awards of approximately 370 percent of QPA in both quarters, and Team Health won award amounts at a median of 277 percent of QPA. Of the top four initiating parties, HaloMD’s award amount far outpaced the others, with median payments of 920 percent and 835 percent of QPA in the first two quarters of 2025, respectively. To the extent that the QPA accurately represents median in-network rates, these results indicate that certain provider groups are receiving three to nine times in-network rates. 

The NSA was fundamentally flawed from the beginning. Only a small subset of physicians were prone to surprise bill patients. They were the ones who worked inside facilities where patients have no choice but to accept their care regardless of network affiliation. Patients cannot choose their emergency room physicians, their anesthesiologist, nor their radiologist or pathologist. They cannot choose their assistant surgeon if one is present for their surgery. These were the medical specialists most likely to generate surprise medical bills precisely because they could not be rejected by patients based on their out-of-network status. Eschewing network affiliation to (surprise) balance bill patients became a business model for some private equity owned physician group practices.

It is not clear how third parties are able win awards three to nine times in-network rates. It is also difficult to fathom that in-network rates are below the (unknown) market clearing price by up to a factor of nearly 10, otherwise no providers would agree to be in-network. There appears to be an anti-insurer bias on the part of the independent dispute resolution arbitrators. 

What is the market price for anesthesiology, radiology, pathology, and emergency medical services? That is impossible to know with any certainty. Market prices would vary by state, region, city and probably by hospital. However, there is a way to discover fair market prices. That is by negotiating fees between health plans and providers as a necessary precondition to treating health plan enrollees. An alternative would to require hospitals to establish reimbursement rate or pay in-house providers directly and build the cost of services into hospital prices. The key is mutually agreed upon prices in advance, which is the norm in virtually every other market. In no market should vendors be allowed to provide services against the will of their customers, with fees determined by third parties uninvolved in the transactions.

Read more at STAT+: How Scott and Alla LaRoque got rich from disputed medical bills (gated)
Health Affairs: The No Surprises Act IDR Process: An Early Look At 2025 Data
Health Affairs: The Substantial Costs Of The No Surprises Act Arbitration Process

https://www.goodmanhealthblog.org/no-surprises-act-is-flawed-bogged-down-and-being-abused/