In a Feb. 24, 2026 letter to the U.S. Departments of Treasury, Labor and Health and Human Services (HHS), the organizations asked the Trump administration to tighten oversight of the law’s independent dispute resolution system. The groups argue that the process, which was designed to settle payment disputes between insurers and out-of-network medical providers, is being manipulated in ways that increase health care costs.

A study cited in the letter found that the IDR process generated at least $5 billion in wasteful spending between 2022 and 2024, including administrative fees and arbitration awards that far exceed typical market rates.

How the No Surprises Act works

The No Surprises Act took effect in 2022 and was designed to protect patients from unexpected medical bills. Before the law, patients could receive large bills if they unknowingly received care from out-of-network providers (for example, an out-of-network anesthesiologist at an in-network hospital).

The law prohibits providers from billing patients for these unexpected charges. Instead, insurers and providers must negotiate payment for the service. If they cannot reach an agreement within 30 days, either side can initiate the IDR arbitration process.

Congress intended the process to serve as a limited backstop for resolving occasional disputes, but it has evolved into something far larger.

Federal regulators originally estimated that about 17,000 disputes would enter arbitration each year. Instead, more than 3.3 million disputes were filed between mid-2022 and May 2025, according to a study published in Health Affairs.

Act is a new cost driver

The Office of the Assistant Secretary for Planning and Evaluation, a division of HHS, issued a report in 2026 that found the act is driving up costs for health plans, payers and patients. It found that:

• About 85% of the disputes that flowed through the system in 2023 involved participants in health plans sponsored by private employers.
• IDR reviewers took an average of 91 days to handle disputes, and some took more than 300 days to close some disputes.
• The reviews cost an average of $445 each.
• The reviewers sided with providers in hospital care cases 80% of the time.
• When reviewers sided with the providers, they awarded significantly higher payment rates. For example: For colonoscopy anesthesia, health insurers paid providers an average of $300 in 2023. When an IDR reviewer handled a dispute involving the procedure, it awarded an average payment of $1,252.

What the coalition wants

Industry analysts say the growing use of arbitration is already creating new affordability pressures for employer health plans and their employees through higher premiums, deductibles and cost-sharing.

In their letter, the groups urged federal regulators to take several steps to restore the arbitration system to its intended purpose.

They recommended that the agencies:

• Strengthen enforcement to ensure only eligible claims enter the IDR process.
• Require arbitrators to explain decisions that deviate significantly from benchmark payment levels.
• Increase transparency around arbitration outcomes.
• Penalize providers that repeatedly submit ineligible claims.

The coalition argues that stronger oversight is necessary to ensure the No Surprises Act continues protecting patients without unintentionally driving up health care costs for employers and their workers.

According to the findings, nearly 40% of disputes filed through the system in 2024 (the year the law took effect) were ineligible, yet many still advanced through arbitration, forcing employers and health plans to pay unnecessary or inflated claims. Many of these claims are driven by private equity-backed health care providers and not individual health plan enrollees, according to the survey.

According to Kim Keck, president and CEO of BCBSA, the volume of dispute resolution cases has exceeded expectations and is clogging up the system. Many decisions are made despite evidence that the claim is ineligible for compensation.

What the survey found

The survey, which polled health plans covering 154 million Americans, found that:

• 40% of all disputes were identified by insurers as ineligible, including 45% of nonemergency service disputes.
• Only 17% were ultimately deemed ineligible by the federal arbitration entities, meaning more than half of improper cases still resulted in binding payment determinations. This suggests that the referees in the IDR system are failing to identify a large volume of ineligible disputes submitted by providers.
• 20 million claims were filed in 2024, with emergency services making up about 61% of the total.
• Air ambulance claims, though fewer than 1% of submissions, were the most likely to reach arbitration and involved high-dollar payouts.

Bright spots

While the survey identified potential abuse in the system, it also found evidence that it works in legitimate cases:

• In 2024, nearly 20 million health care claims met the criteria for federal surprise billing protections, meaning nearly 20 million surprise bills were prevented in 2024.
• Three out of four claims were paid without further dispute when providers accepted the plan’s initial payment.
• Once arbitration decisions are issued, plans pay nearly three-quarters of arbitration awards within 30 days; 41% were paid in just 15 days.
• When delays occurred for qualified IDR items or services, they were most often due to provider submission errors (e.g., wrong contact info, missing details) or processing challenges stemming from the very high volume of IDR cases.

The crux

While the No Surprises Act has successfully shielded employees from unexpected medical bills, the volume of ineligible disputes now clogging the system is driving claims costs.

Arbitrators often side with providers, leading to payments that far exceed in-network rates. As those costs cascade through plan spending, premiums and overall claim costs rise, affecting employer budgets and employee contributions alike.

AHIP and BCBSA said the current system lacks a workable appeal process, leaving plans no avenue to challenge decisions even when the underlying dispute should never have qualified.

The two groups are urging federal regulators to tighten oversight, clarify eligibility rules and impose stronger screening to prevent improper cases from moving forward.

They also called for “realigned incentives” so that independent dispute resolution entities are not rewarded for pushing unnecessary claims through arbitration.

Takeaway

For employers, the survey highlights how a well-intentioned law meant to protect patients has, in practice, created a potentially costly loophole.

Until regulators reform the system, arbitration under the No Surprises Act may continue to inflate claims costs and premiums, even for cases that never should have been disputed.