The No Surprises Act, which went into effect in 2022, was designed to protect patients against surprise bills when they receive care from an out-of-network provider. Data suggest it has also had the unintended effect of raising medical costs.

The legislation ensures that consumers are well-protected from high charges for emergency care and out-of-network services that previously left them with unexpected medical bills, according to the Robert Wood Johnson Foundation, a health research and philanthropy organization.

The problem lies with the law’s independent arbitration system, which was intended to be a seldom-used last resort for resolving disputes between providers and payers.

An explosion of arbitration cases, with outcomes mostly favoring the higher-than-average fees charged by out-of-network providers, has tripled or quadrupled the prices paid by insurance companies for some services.

Here’s how the system works and why it is increasing medical costs.

Millions of Disputes, Providers Win

The act prevents hospitals from “balance billing” charges provided by out-of-network providers delivered at in-network hospitals.

For example, when a patient receives treatment at a hospital included in their insurance network, part of the treatment may be given by an independent provider who is not part of the network.

That could be for imaging, lab work, an emergency room physician’s services, or even a surgeon’s fee.

In those cases, the hospital can’t bill the patient for the amount not covered by the patient’s insurer. It’s up to the provider or hospital and the insurance company to work out an agreement.

When the provider and payer can’t agree, the law allows for an independent dispute resolution process.

When the law was created, Congress expected about 17,000 dispute cases each year. The actual number has been more than 8,000 percent higher.

From April 2022 through March 2026, the system received more than 5.7 million disputes—nearly 1.4 million per year on average.

In the first six months of 2025, providers and facilities prevailed against the insurers and other payers 88 percent of the time.

By 2024, default judgments in favor of providers and facilities had begun to increase because many insurers did not submit an offer, which involves a fee payment.

Providers’ Higher Fees Mostly Upheld

Independent arbitrators, spread among 15 private companies, settle billing disputes by choosing between two possible payment amounts.

The first is the insurer’s bid, which is usually the median in-network price, the middle price providers have agreed to accept in that area. The other is the amount billed by the out-of-network provider.

The arbitrators must choose one of those prices. No compromise amount is permitted.

In the vast majority of cases, arbitrators choose the out-of-network provider’s fee, which is generally much higher than the insurer’s allowed amount.

In fact, the out-of-network fee was triple the payer’s median in-network payment amount in about 87 percent of the cases decided in the first half of 2025.

In 2024, providers of imaging services who filed arbitration claims were reimbursed at rates 5.2 times what insurers usually paid, and 2.4 times what they routinely billed before the No Surprises Act was enacted.

Imaging providers won their arbitration cases 91 percent of the time, according to an April report from the Brookings Center.

Arbitration Drives Cost

Parties in arbitration claims paid $718 million in fees in 2024 alone.

The 15 arbitration companies retained $559 million of that amount, and $159 million went to the Department of Health and Human Services, Labor, and the Treasury for administrative oversight, according to a 2025 congressional report.

Arbitrators collected more than over $1.1 billion in fees from 2023 through the end of 2024, according to a January working paper from Brown University. 

“It is within reason to suspect that arbitrators are inducing more cases by ruling generously for providers,” the researchers concluded.

Three-quarters of these disputes in the first half of 2025 were filed by four organizations: HaloMD (27 percent), Team Health (19 percent), SCP Health (15 percent), and Radiology Partners (13 percent).

HaloMD is a middleman organization that specializes in arbitration. The organization filed just 2 percent of claims in 2023 but became the most active participant by the first half of 2025.

About two-thirds of all disputes were filed against three large insurers: UnitedHealthcare (33 percent), Blue Cross Blue Shield of Texas—a subsidiary of the Health Care Service Corporation (18 percent), and Aetna (14 percent).

Researchers also said the arbitration system could have the downstream effect of raising prices across the board.

The high payment awards could increase providers’ bargaining power with insurers, the team concluded. That could increase the amount paid for a single emergency procedure by $2.7 billion, according to the Brown University working paper.

Tracking the Increase

The No Surprises Act is protecting patients, but not containing health care costs, said Lawson Mansell, a Health Policy Analyst at the Niskanen Center, in a March article.

Between 2022 and 2024, the arbitration system has added at least $5 billion to health system costs, according to Health Affairs’ 2025 estimate. That will likely reflect in higher consumer premiums in the future, the authors concluded.

A group of more than 60 employer groups, insurers, and patient advocacy organizations has criticized the arbitration process.

“The [independent dispute resolution] process must serve as a backstop—not a pricing mechanism or profit-seeking tool,” the coalition said in a February letter to the federal government.

The letter further said that what it labeled a misuse of the system would undermine the affordability and stability of employer-sponsored coverage.

The group urged the government to revise the system.

Before the No Surprises Act was passed, some patients believed it would not affect insurance premiums.

“Insurance companies are not going to lose money—they’re going to get their money somehow,” one patient said in a 2024 report to Congress.

Despite fears that high arbitration payouts could discourage providers from joining insurance networks, a February report from the U.S. Government Accountability Office suggested that provider participation actually increased after the No Surprises Act took effect.

In-network claims for emergency medicine physicians rebounded since the act took effect in 2022 after declining from 2019 to 2021.

The federal watchdog also dismissed concerns that the arbitration system would inflate in-network prices.

Instead, the agency noted that payment shifts—such as rising hospital fees and falling doctor payouts in emergency medicine—simply mirrored trends that began before the No Surprises Act.

Lawrence Wilson contributed to this report.