No Surprises Act Arbitration System Raises Medical Costs for Patients
Arbitration under No Surprises Act boosts medical costs, shifting burden to employers and patients. New data reveals rising disputes.
POLICY WIRE — New York, United States — A law aimed at shielding patients from unexpected medical bills has led to an unexpected consequence: a booming arbitration industry that is driving up healthcare costs for consumers.
The No Surprises Act was designed to prevent surprise billing by setting clear guidelines for resolving disputes between insurers and out-of-network providers. However, the system it created allows doctors and dispute resolution specialists to secure payments far above standard rates for medical services, with much of the cost ultimately falling on workers through higher premiums or reduced benefits.
Dr. Rowe, a representative of the health policy group, highlighted the use of FairHealth benchmarks, which are widely accepted as reliable market data used in state regulations and statutes. These benchmarks, however, are not always the deciding factor in arbitration cases, where providers often receive significantly higher payments than the typical rate. Insurers have been forced to pay these inflated amounts under the law’s “baseball-style” arbitration process, where an arbitrator must choose between the two parties’ proposed rates without negotiation.
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According to Leland Robbins of Turquoise Health, providers win over 85% of arbitration cases, with some entities favoring them even more frequently. This trend has raised concerns that the financial burden is shifting to employer-sponsored plans, potentially leading to higher premiums for employees. Last year alone, 15 certified arbitrators handled cases, with 17 now designated to manage disputes. The volume of cases has far exceeded initial expectations, with 1.2 million disputes submitted in the first half of 2025, according to research from Georgetown University.
New Jersey Rep. Frank Pallone, the lead sponsor of the No Surprises Act, has criticized private equity firms for exploiting the system by acquiring medical practices and influencing arbitration outcomes. He argues that the law’s current structure benefits outside investors rather than patients or healthcare providers. Meanwhile, companies like HaloMD, which specializes in arbitration cases, have made over $1 billion for clients, often securing payouts nine times the benchmark rates for services.
A federal court recently ruled that the benchmark rate used in arbitration is artificially low due to insurers offering minimal reimbursements. Pallone now calls for reforms to address the issues he believes are undermining the original intent of the No Surprises Act, arguing that the system should protect patients rather than allow third-party profiteers to benefit from their insurance premiums.
Reporting by Policy-Wire (PW)
