Although most observers agree that the No Surprises Act did fix one problem — nixing unexpected bills for out-of-network care — lawmakers are still trying to fix other problems caused by the law.
The act, passed at the end of 2020, was designed to protect patients who received bills for out-of-network care — often emergency care — even though the care was delivered at an in-network facility. This can happen, for example, if the in-network hospital contracts with out-of-network providers for emergency or specialty care. The insurer must then negotiate with the out-of-network provider to agree on a pay rate for them. If the two parties cannot agree, the matter then goes to arbitration.
That arbitration process, known as independent dispute resolution (IDR), is where problems have arisen, Jack Hoadley, PhD, professor emeritus at the Center on Health Insurance Reforms at Georgetown University in Washington, told MedPage Today.
“Congress came up with an IDR approach, which it seemed at that time would work well,” Hoadley said. “Most people did expect arbitration to be used modestly in a relatively low number of cases — that the offers would be there and negotiation could work in many cases — and only if negotiation failed we could go to arbitration. And the arbitration would be set up with a reasonable set of guardrails, a set of factors that could be looked at … and it could be used more in a spirit of compromise.”
As part of the law, Congress implemented a “qualifying payment amount” (QPA), designed to approximate the median rate paid for in-network care. “They were not trying to invent a new way to determine how much people get paid; instead, it was the pay comparable to what people would pay if they were in-network,” Hoadley said.
“The [implementing] agency suggested in the initial rule [for the No Surprises Act] that the QPA should be the default presumption, so arbitrators would be instructed to use the QPA unless there was a compelling reason to go higher or lower,” he continued.
However, the rule ended up in federal court, where judges ruled that the QPA presumption was not allowed and that the arbitrators had to consider other factors as well when setting the payment amount, he explained.
In addition, arbitrators started siding with the providers much of the time — in about 85% of cases, Hoadley explained.
“That has created an incentive to ask for more and more [money],” he said. “Even when plans offer more, they don’t seem to win any more often.”
That has led to a pattern of very high awards — and to a huge increase in the amount of arbitration cases. The government estimated that 22,000 disputes per year would enter into the arbitration process; in 2025 there were over 4 million disputes, he noted.
This has led to another issue with the law: insurers have stopped paying the awards, said Josh Hill, JD, a partner at the Pietragallo Gordon Alfano Bosick & Raspanti law firm in Philadelphia.
“The language of the statute is clear that these awards shall be paid within 30 days, and it had to have been error on Congress’s part not to include what happens if they fail to pay in 30 days,” Hill told MedPage Today. “They can impose fines but they can’t enforce the arbitration award.”
Overall, the IDR system “is currently broken,” Hill added.
That issue, too, has ended up in federal appeals court, with two courts saying that providers have no right to sue to collect their awards and a third lower court ruling the opposite, Hill said. There are a number of cases on the issue currently pending in Maryland and Virginia which might make their way to yet another appeals court — which could leave the providers with a split circuit depending on how that court rules.
If that happens, “the Supreme Court could step in and say, ‘We need to figure this out,'” Hill said.
Congress is considering several bills to address the law’s problems. The newest one, introduced on Oct. 8 by Rep. Frank Pallone (D-N.J.), ranking member of the House Energy and Commerce Committee, would get rid of the arbitration system entirely and just use the QPA.
Unsurprisingly, physician groups have panned the proposal.
“Giving health insurance companies even greater control over physician payments is not the solution to concerns about the IDR process — particularly when health insurers’ own practices are contributing to the problems Congress should be addressing,” Patrick Giam, MD, president of the American Society of Anesthesiologists (ASA), said in a joint statement with the American College of Radiology (ACR) and the American College of Emergency Physicians (ACEP).
“ASA, ACEP, and ACR urge Congress to reject proposals to eliminate independent dispute resolution, implement existing regulatory and court-directed reforms, and continue bipartisan efforts to improve the law,” the groups said.
The consumer group Families USA disagreed. “We are thrilled Rep. Pallone is proposing this common-sense solution to end the industry abuse of arbitration by replacing it with a market-based benchmark,” the organization said in a statement. “This bill would take away the incentive for corporate middlemen to flood the system with disputes and win inflated payouts.”
Families USA was referring to the fact that many out-of-network physician groups are now owned by private equity firms.
Another bill, first introduced in September 2024 by Rep. Greg Murphy, MD, (R-N.C.), would require insurers that don’t pay arbitration awards within 30 days to pay steep penalties. It also would require more reporting on which insurers are and are not paying.
Whatever the solution, it’s unlikely to be an administrative one, Hoadley said.
“It probably does come down to Congress,” though it’s “not obvious what the answer for Congress is,” he said.
Members “could go in and say we really did mean QPA [and would like that to be used],” he said, or they could tell arbitrators “to look at all the factors but take the QPA the most seriously.”
