By Jack Hoadley and Kennah Watts
Passage of the No Surprises Act (NSA) in 2020 mirrored a consensus amongst stakeholders that customers needs to be shielded from sure shock medical payments. The regulation focused eventualities the place customers obtained emergency companies in an in-network or out-of-network (OON) facility, and a few companies, equivalent to radiology or anesthesiology, from OON suppliers at in-network services. In these eventualities, the NSA prohibits suppliers stability billing sufferers for quantities exceeding what the affected person’s insurer paid, and limits customers’ prices to in-network quantities, even from OON suppliers. Analysis reveals that the NSA eradicated most stability payments and introduced down customers’ cost-sharing funds.
As a result of the NSA required suppliers in these eventualities to simply accept the payer’s payment as cost in full, it was additionally vital to make sure the cost was acceptable. Nonetheless, there was no consensus on figuring out how a lot the OON supplier ought to be paid within the occasion of a disagreement between payer and supplier. Some state legal guidelines and early committee variations of the federal regulation used a cost method, usually primarily based on the insurer’s common in-network charge. Dealing with supplier opposition, some states turned to an unbiased dispute decision (IDR) method (New York was one of many first in 2014). Key options included baseball-style arbitration––the place the arbiter selects both the supplier’s or the insurer’s quantity with no different choice––and a “loser pays” method for IDR charges. The federal NSA in the end took this method.
We are actually within the fourth yr of federal IDR operations. Public use information (PUFs) with full knowledge on IDR outcomes, together with supplemental tables, have been launched for 2023 and 2024. Restricted knowledge had been additionally launched for 2022. So far, suppliers have introduced way more disputes into IDR than anticipated and have received the overwhelming majority. When suppliers win, they sometimes obtain charges which are three to 4 instances the standard in-network charge, as mirrored by the qualifying cost quantity (QPA). We have now beforehand highlighted developments for 2023 and the first half of 2024. Along with development updates, this text estimates complete prices incurred by the IDR system since its initiation, and explains how IDR developments––excessive quantity, excessive supplier participation, and excessive provide quantities––have led to billions in prices.
The IDR Course of Has Incurred $5 Billion In Complete Prices
The excessive quantity of IDR disputes is producing vital spending from administrative prices and better funds for companies. This increased spending will seemingly be mirrored in increased total well being prices and shopper premiums sooner or later. By estimating administrative and cost prices, and we discover the IDR course of has generated at the least $5 billion in complete prices by the tip of 2024 (Exhibit 1).
Exhibit 1. Complete Estimated Prices* of the IDR System, 2022 to 2024
Supply: Authors’ evaluation of Federal IDR Supplemental Tables and Public Use Information (2023-2024)
* Contains prices of air ambulance disputes.
Administrative Prices
IDR administrative prices embrace two charges to the events for every dispute: an administrative payment and an IDR entity payment. The executive payment, initially set by CMS steerage at $50, was raised in 2024 to $115. Supplemental desk knowledge reveal that for the reason that begin of the IDR course of, the system has collected $218 million in administrative charges (plus $10 million for air ambulance disputes) (Exhibit 1). These charges go to the federal businesses to assist system administration.
IDR entities – unbiased organizations that arbitrate disputes – set charges inside CMS’s predetermined higher and decrease cost vary: $200 to $840 for single disputes and $268 to $1,173 for batched disputes. In 2023 and 2024, the events paid $636 million in IDR entity charges (plus $20 million for air ambulance disputes) (Exhibit 1). The dropping occasion pays the IDR entity, and the payment covers the entity’s prices. Mixed, a complete of $885 million (together with air ambulance disputes) in charges has been collected to finance the system (Exhibit 1).
Past charges, plans and suppliers incur prices to handle IDR disputes. Within the impression evaluation within the unique IDR interim closing rule, the federal businesses estimated plans’ and suppliers’ inner prices to submit numerous IDR supplies could be $857 per dispute. Multiplying that by the overall disputes over 2 years yields $1.9 billion in inner administrative prices. Mixed with the required charges, this yields a complete of $2.8 billion. This sum doesn’t absolutely account for administrative prices that stakeholders incur for managing their IDR participation, nor prices incurred by or paid to third-party middlemen organizations that help in submitting or responding to disputes.
Prices From Fee Determinations
Along with administrative prices, IDR usually ends in cost determinations that exceed the unique funds to suppliers. Stakeholders could disagree on whether or not increased funds are honest, however these quantities replicate funds past these incurred if in-network charges had been sustained.
Fee-related prices will not be fully attributable to the IDR course of, as some portion of those prices existed previous to the NSA, however had been paid by customers. Nonetheless, on condition that stability billing protections are in place, these IDR-specific cost awards and added prices won’t be incurred with completely different IDR guidelines, outcomes, or means to find out acceptable cost.
To estimate complete extra funds, we in contrast the QPA (a proxy for the preliminary plan cost and in-network charges) with the prevailing provide (the cost dedication by the IDR entity). Due to lacking knowledge within the PUFs, we estimated the extra cost quantity by assuming that the common quantity for circumstances with lacking or suppressed knowledge (about one-fifth of all circumstances) is similar as circumstances with full knowledge.
For 2023 and 2024, we estimated extra funds of $2.24 billion (Exhibit 1). In practically all circumstances, this represents extra funds made by plans to suppliers. We assumed that at present unpaid resolved circumstances can be paid.
Combining required payment funds, administrative prices, and extra funds for companies, the IDR course of has generated at the least $5 billion—about $2 to $2.5 billion yearly—in complete prices by the tip of 2024 (Exhibit 1). Over the past two years, these prices have been pushed by a excessive quantity of disputes and excessive supplier use of IDR––primarily by non-public fairness backed teams––which we increase on beneath.
The Quantity Of IDR Disputes Continues To Surpass Company Estimates
Within the rules establishing the IDR system, the federal businesses estimated that the IDR course of would yearly resolve 17,333 disputes, with a further 4,899 disputes from air ambulance suppliers. This estimate mirrored expectations that almost all disputes could be resolved amicably by a compulsory 30-day negotiation interval earlier than IDR.
The truth is way completely different: From mid-2022 to Might 2025, 3,324,051 disputes had been filed (together with air ambulance disputes) (Exhibit 2). Within the 9 months after the system opened in 2022, about 190,000 disputes had been filed—greater than ten instances the quantity anticipated for the primary full yr alone. Air ambulance firms filed about 10,000 disputes on this interval—double the unique estimate. (Whereas the businesses haven’t launched 2025 PUFs, CMS launched bi-monthly stories on dispute quantity. We embrace these knowledge in Exhibit 2.)
Exhibit 2. Complete Quantity* of IDR Disputes (by tens of millions), April 2022 to Might 2025
Supply: Writer’s evaluation of Federal IDR Supplemental Information (2022-2024) and Bi-Month-to-month Report (2025)
* Contains air ambulance disputes
Over that very same interval, 2,831,804 disputes had been closed—together with these deemed ineligible and people closed for different causes (e.g., withdrawn, settled by the events, knowledge entry errors) (consists of air ambulance) (Exhibit 2). As of Might 2025, 85 p.c of all disputes filed so far had been closed. The closure charge has elevated quickly from 29 p.c on the finish of 2022 and 41 p.c on the finish of 2023. However as of Might 2025, a backlog of practically 500,000 disputes remained.
Of the closed disputes, 2,152,045 cost determinations had been issued by IDR entities (consists of air ambulance) (Exhibit 2). This rely underestimates the overall variety of line-item claims which have obtained an IDR choice as a result of many claims had been filed in batch. In This autumn 2024, 30 p.c of emergency and non-emergency disputes had been filed as batched circumstances. From 2023-2024, the common batched dispute included 5 comparable line-item claims (median of three). However some batched disputes are a lot bigger; the biggest dispute included 453 particular person line-item claims. In complete, 2,505,764 separate line-item claims had cost determinations in 2023-2024.
Determinations Take Three Instances Longer Than The Statutory Deadline
The amount of IDR disputes has made it practically unattainable for IDR entities to satisfy the 30-day statutory deadline for cost determinations. Within the final quarter of 2024, the median days to dedication for line-item claims was 81 days, down from a earlier peak of 96 days. In This autumn 2024, about 34 p.c of single disputes and 22 p.c of batched disputes had a cost dedication throughout the required 30 days. Common days to dedication additionally fluctuate considerably amongst IDR entities. Though quantity is probably going the primary motive for delays, delays had been exacerbated by pauses when hostile courtroom selections compelled the businesses to evaluate procedures.
Disputes Stay Dominated By A Few Supplier Organizations
Our evaluation of the PUFs––knowledge information launched by the federal businesses that embrace info on resolved IDR disputes–– reveals that in 2023 and 2024, 43 p.c of resolved line-item claims had been filed by two non-public equity-backed supplier organizations: Radiology Companions and associates (28 p.c) and Crew Well being (15 p.c). The highest 5 supplier organizations had been chargeable for 59 p.c of line-item claims. Alongside the continued dominance of those supplier teams, middlemen organizations have grown in significance. In 2023, HaloMD accounted for 1 p.c of line-item claims, and by the tip of 2024, HaloMD was the fourth most energetic participant, with 6 p.c of line-item claims.
Suppliers Proceed To Prevail With Rising Provide Quantities
Suppliers have received the overwhelming majority of disputes. In 2024, suppliers received 85 p.c of the line-item claims determined that yr, up from 81 p.c in 2023 (Exhibit 3).
Exhibit 3. Share of IDR Disputes Gained by Suppliers by Quarter, 2023 to 2024
Supply: Authors’ evaluation of Federal IDR Public Use Information (2023-2024)
Moreover, suppliers have received substantial provide quantities. In This autumn 2024, for line-items the place the supplier prevailed, the median cost dedication was 459 p.c of QPA. Meaning the supplier requested, and received, a cost that was over 4 instances the in-network quantity.
The median cost dedication quantity has elevated over time. The median quantities in 2023 and 2024, for line-item disputes received by suppliers, had been 327 p.c and 445 p.c of the QPA, respectively (Exhibit 4). Typically, the profitable quantities are even increased. For instance, in disputes filed by HaloMD, the median quantity was 934 p.c of the QPA.
Exhibit 4. IDR Course of Median Prevailing Provide Quantity as % of QPA, 2023 to 2024
Supply: Authors’ evaluation of Federal IDR Public Use Information (2023-2024)
Prevailing quantities are considerably decrease when the IDR entity selects the plan’s provide. When plans win, the median prevailing provide was 110 p.c of the QPA in 2024, up from 100% of the QPA in 2023 (Exhibit 4). Plans have elevated their presents modestly within the disputes they win, however they proceed to request funds near in-network charges.
Geographic Distribution Is Skewed By Dominant Supplier Organizations
From 2023-2024, 63 p.c of all of the determined line-item claims got here from simply 4 states: Arizona, Florida, Tennessee, and Texas. Over one-third of all claims (37 p.c) got here from Texas alone. These 4 states signify simply 17 p.c of the U.S. inhabitants. In contrast, giant inhabitants states—California, Illinois, and Pennsylvania—every represented simply 1 p.c of all line-items.
This geographic skew seems pushed by quantity from the highest supplier organizations. From Q1 2023 to Q2 2024, roughly half of line-items in Texas and Arizona got here from Radiology Companions suppliers. Equally, Crew Well being accounted for greater than a 3rd of Florida’s complete line-item claims.
Excessive Prices Elevate Coverage Challenges And Questions
The IDR system has added at the least $5 billion to total well being system prices since its inception––roughly $2 to $2.5 billion per yr. If extra stakeholder administrative prices may very well be measured and included, prices are seemingly far more. And as dispute quantity grows, so will prices. At the moment, value progress impacts IDR-specific claims, however over time, future community contract negotiations might replicate the upper quantities awarded by IDR. The unique value projections by the Congressional Finances Workplace assumed that awards could be extra modest and create downward stress on negotiations. IDR outcomes so far could also be reversing that expectation. Nonetheless, the longer term is dependent upon whether or not excessive awarded charges are sufficiently widespread to affect negotiations.
These developments immediate the query of whether or not steps needs to be taken to cut back IDR use and the scale of the awards and what coverage levers can be found.
One element of the excessive dispute quantity is the prevalence of ineligible disputes, constituting about 20 p.c of all closed disputes. As a result of IDR entities obtain no payment for disputes deemed ineligible, some exterior technique of assessing eligibility could also be wanted. The federal businesses have advised some adjustments by a pending proposed rule. Adjustments to the IDR portal might assist display out ineligible circumstances, however the federal businesses may have a separate course of to handle eligibility.
As famous, Congress anticipated {that a} extra vital quantity of circumstances could be settled outdoors the IDR course of by casual negotiations. Whereas the speed of such settlements can’t be measured underneath the present system, the proposed rule might enable nearer monitoring of open negotiations.
For circumstances that obtain a cost dedication from IDR entities, the excessive supplier win charge and the magnitude of the prevailing charges proceed to defy expectations. Extra transparency and consistency amongst IDR entities may assist observers higher perceive the outcomes. Moreover, the federal businesses might present impartial knowledge on cost quantities to the IDR entities to supply a method of anchoring cost determinations to market knowledge.
The function of personal fairness within the course of deserves higher scrutiny. As famous above, many disputes are initiated by supplier organizations and intermediary organizations with private-equity backing. Their aggressive ways have been challenged in current courtroom circumstances by insurers. Plans might also want to supply stronger responses to provider-initiated disputes.
The NSA efficiently protects customers from increased out-of-pocket prices related to shock payments and OON value sharing. However with out motion to rethink the IDR course of, the excessive prices will add to total well being system prices and can in the end by paid by customers.
Jack Hoadley and Kennah Watts “The Substantial Prices Of The No Surprises Act Arbitration Course of” August 25, 2025, https://www.healthaffairs.org/content material/forefront/substantial-costs-no-surprises-act-arbitration-process. Copyright © 2025 Well being Affairs by Mission HOPE – The Folks-to-Folks Well being Basis, Inc.
