The federal government originally expected the No Surprises Act’s independent dispute resolution (IDR) process to handle about 22,000 payment disputes in its first year, a laughably low prediction.
In 2024 alone, providers and payors initiated more than 1.46 million. And as of May 2026, the number of disputes entering the process since launch reached more than 5 million. Evidently, out-of-network payment disputes involved more than just air ambulances. Who’d have thought?
Once again, the government clearly misunderstood the environment it was trying to regulate…. maybe because it was a sound bite and not intended to fix the problem.
No Surprises Act payment disputes were never an edge case
The original vision for IDR appears to have been something closer to the occasional emergency air ambulance dispute, hence the direct reference to “out-of-network air ambulance services” in federal guidance. The No Surprises Act was meant to keep the patient out of the argument that followed.
- Was the air ambulance medically necessary?
- What was a reasonable payment for the service?
- Could the payor apply an allowed amount far below the provider’s charge and leave the patient responsible for the difference?
None of these questions should be settled via the patient’s bank account. The federal IDR process gave the provider and payor somewhere else to have that fight.
As the volume of disputes attest, the bullet just above air ambulances in federal guidance, “nonemergency services furnished by out-of-network providers at certain in-network facilities,” opened a rather large door. In the ordinary course of care, patients can receive care from an in-network hospital and still get an unexpected bill from an out-of-network clinician they never chose.
That’s because some of the clinicians involved in a hospital encounter are effectively invisible to patients. Pathologists, emergency physicians, anesthesiologists, radiologists, and laboratories — sometimes grouped under the acronym PEARL — may become part of a patient’s care without the patient choosing them individually. Some work for independent physician groups rather than the hospital itself, and some choose not to participate in particular insurance networks.
A patient scheduling surgery may choose the hospital and surgeon but not assisting surgeon, surgical assistant group, or hospitalists much less the other aforementioned specialists.
This happens every day all across the country. The original estimate of 22,000 disputes a year looks less like a conservative estimate for a narrow set of services and more like nobody did the math.
Payors are losing No Surprises Act IDR disputes — a lot
If legislators vastly underestimated the number of cases that would reach IDR, it’s worth asking whether anyone anticipated how often the decisions would go against payors.
Payors, who are used to being Goliath in the fight over rates, suddenly find themselves losing — repeatedly. Providers and facilities prevailed in approximately 85% of IDR payment determinations in 2024. Remove cases decided because one party defaulted and the provider win rate remains about 85%. Federal data also show that winning provider offers can be substantially higher than the qualifying payment amount (QPA), the insurer-calculated benchmark based generally on median contracted rates.
The dollars are adding up. The Congressional Research Service reported hundreds of millions of dollars in IDR administrative fees in 2024 alone. More recent analysis of CMS data estimates that payments to providers through arbitration reached nearly $15 billion in 2025, up dramatically from the year before.
The results threaten the economics of insurance networks. An independent provider can remain out of network, use IDR for eligible claims, and potentially receive considerably more than the payor allowed rate. That gives providers less reason to sign contracts at inadequate rates – maybe that’s why they ran into the arms of hospitals to begin with?
There’s a communications problem here, too. Payors have spent years characterizing provider demands for higher reimbursement as another example of hospitals and physicians driving up healthcare costs. That argument gets harder to make when an independent arbitrator looks at the payor’s offer, looks at the provider’s offer, and sides with the provider roughly 5 times out of 6.
Providers claiming they aren’t being paid enough suddenly don’t look quite so unreasonable.
And they have plenty of other evidence to support the argument. The American Hospital Association has repeatedly documented payment shortfalls relative to the cost of providing care. Medicare and Medicaid underpayments totaled approximately $130 billion in 2023, and more recent AHA research shows hospitals absorbing substantial costs associated with insurer denials, delays, and other administrative requirements. Meanwhile, insurance companies continue to have record profits.
An IDR decision does not establish whether a particular insurer’s network rate covers the cost of care. But telling providers to accept lower reimbursement because that’s the price of network participation becomes a harder sell when an independent process repeatedly determines that higher payments are appropriate.
Elevance tried another way to protect its network
That helps explain the extraordinary step Elevance Health, the parent company of Anthem, took this year.
Elevance announced a policy reducing hospital reimbursement by 10% when an out-of-network physician participates in certain nonemergency care and Elevance determines a reasonable in-network alternative was available. The company says the policy is intended to discourage inappropriate use of the federal IDR process, control healthcare costs, and preserve incentives for network participation.
The patient retains the protections of the No Surprises Act. The out-of-network provider retains access to IDR. So… the hospital loses 10%?
There is an obvious problem with that solution. A hospital doesn’t control the physician group’s contracting decisions or have the ability to compel an independent practice to sign a contract with Elevance. x
More troubling is the leverage Elevance tried to create. If independent physicians won’t join its network on the terms Elevance is offering, penalize a separate entity that does contract with Elevance and give the hospital a financial reason to pressure them into doing so.
That’s a pretty ugly way to solve a network adequacy problem, and the backlash was fast and loud. The American College of Emergency Physicians, American College of Radiology and American Society of Anesthesiologists called on Elevance to withdraw the policy. The American Hospital Association separately urged Elevance to rescind it, arguing that hospitals cannot force independent physicians into health plan networks.
Elevance did not simply walk away. In California, the company subsequently issued a version of the policy effective June 1, 2026, applying the 10% reduction to hospital claims associated with self-funded employer plans, subject to specified exceptions. The limitation to self-funded business is notable, particularly in a state with extensive regulation of fully insured plans.
No Surprises Act administrative burden became payment infrastructure
The sheer volume of IDR cases tells us something else. Independent dispute resolution has become part of the healthcare payment infrastructure, complete with all the associated costs.
Providers need staff, technology, data, outside vendors, and legal expertise to determine which claims qualify, initiate disputes, submit offers, track deadlines, respond to challenges, and eventually collect successful awards.
The Centers for Medicare & Medicaid Services (CMS) now says the process itself needs reform to reduce bureaucracy and administrative costs. Its May 2026 final rule attempts to screen out ineligible disputes earlier, improve transparency, and streamline portions of IDR.
However, we should be careful about treating administrative efficiency as the underlying problem. The process did not reach 5 million disputes because providers suddenly developed an inexplicable passion for federal arbitration. They’re using it because they disagree with what insurers are paying them, and they keep winning.
The qualifying payment amount deserves scrutiny too
The QPA sits near the center of the fight.
Insurers calculate the QPA, generally using their median contracted rate for a service in a geographic area. The figure influences patient cost sharing and provides important context during IDR. Thus, the integrity and transparency of the calculation matters.
Providers have spent years challenging QPA methodology in court, including whether insurers can include so-called “ghost rates” — contracted rates for services a provider may not actually perform — when calculating the median.
The insurance industry appears to have developed a peculiar fixation with the paranormal. The No Surprises Act requires accurate provider directories, yet “ghost providers” who aren’t actually available to patients continue to haunt them. Now we have ghost rates haunting the QPA.
If inappropriate or artificially low rates enter the calculation, they can lower the benchmark against which an out-of-network payment is evaluated. And the provider does not have access to the insurer’s entire book of contracts to independently recreate the math.
So one party calculates an important benchmark, controls most of the information behind the benchmark, makes the initial payment, and then complains when the other party challenges the payment.
Nothing says “transparent payment methodology” quite like years of litigation over how the number was calculated.
Another administrative fix will not resolve the underlying problem
There are legitimate problems with the No Surprises Act IDR process. Five million disputes are too many. Ineligible cases should not clog arbitration. Providers should not manipulate the process to manufacture excessive payments. Insurers and employers have legitimate reasons to care about what IDR ultimately costs.
But providers should not have to build an increasingly sophisticated administrative operation simply to challenge payments that independent arbitrators repeatedly find inadequate.
That is the larger problem we have been watching since the No Surprises Act took effect. The law protected patients from being the financial pressure point in certain out-of-network disputes. But the financial pressure is now present in the cost of arbitration, hospital reimbursement policies, litigation over the QPA, new vendors, new administrative processes, and new costs required to manage all of it.
Now CMS is trying to make that machinery work more efficiently. Efficiency would certainly help. But after more than 5 million disputes, perhaps we should spend at least as much time asking why the machinery needs to be this large in the first place.
