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A coalition of more than 60 employer groups, insurers, patient advocacy organizations and labor groups is urging the federal government to crack down on what they say is widespread abuse of the arbitration process created under the No Surprises Act.
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.
