On Thursday, the Trump administration finalized a widely supported rule addressing shortcomings in the system through which providers and payers settle disputes over surprise medical bills.
But insurers think regulators should have done a lot more.
Payers are saying the Trump administration missed the mark by not cracking down on alleged provider abuse of the dispute resolution process set up by the No Surprises Act, a watershed consumer protection law passed in 2020 to shield consumers from surprise medical bills.
No Surprises has largely been successful in that goal, preventing millions of Americans from being hit with unexpected out-of-network charges. But the law came with an unintended consequence, creating a multi-billion dollar industry enabling doctors to get paid significantly more than they normally would for providing care.
“This rule is a missed opportunity to restore the balance that Congress intended — a balance that has been badly warped by activist courts and predatory provider interests,” James Gelfand, the CEO of the ERISA Industry Committee, which lobbies on benefits issues for large employers, said in a statement.
Payers and providers have been at odds over independent dispute resolution, or IDR. Each side has long complained that the process unfairly benefits the other.
But over the past few years, data has emerged suggesting that doctors and medical groups are raking in the dough from IDR — filing snowballing disputes, winning an exceptional share of awards and garnering massive payouts.
When No Surprises passed, the government expected about 17,000 cases would enter arbitration each year. But providers brought 1.2 million disputes in the first half of 2025 alone, many originating with a small group of private equity-backed companies.
Meanwhile, providers consistently triumph over insurers, winning 88% of surprise billing disputes, according to the most recent federal data. And doctors are often awarded three or four times above comparable in-network rates when they win. In one instance, a plastic surgeon was paid $440,000 for a breast reduction that normally costs around $20,000.
“Without stronger guardrails and more meaningful reforms, the gaming by providers of a flawed arbitration process will continue as evidenced by the unfair and unrealistically inflated provider charges employers are seeing come through the current IDR process at a break-neck speed, and without any opportunity to appeal,” ERISA Industry Committee’s Gelfand argued.
‘A meaningful step in the right direction’
The situation has spiraled into a big concern for health insurance carriers and the employers and unions picking up the tab for their members’ coverage.
Payers are being forced to absorb the inflated payouts sent to providers, threatening their margins. And many of those costs are ultimately sent to consumers and employers through higher premiums for health insurance, research suggests.
Providers have strongly refuted allegations of profiteering, and argue that their high win rate and payment amounts illustrate how little they’re normally reimbursed.
But critics point to key flaws in the process that they say allow bad actors to run wild in IDR.
In arbitration, providers and insurers both propose what they believe is a fair payment rate for an out-of-network service. An arbiter then picks one of the two numbers, and their decision is final without an opportunity to appeal.
Arbiters, which are certified by the government, are meant to be wholly impartial. But insurers say that’s not always the case.
Arbiters allow many claims that shouldn’t be eligible, such as for patients covered by government insurance programs, to enter IDR anyway, critics say. According to insurance groups, nearly 40% of disputes submitted in 2024 should not have gone through the process.
But arbiters are accepting the cases since they don’t get paid otherwise, payers argue. And since providers initiate virtually all IDR disputes, arbiters may be incentivized to reward providers to keep cases flowing, resulting in the skewed win rate.
Many of the changes in the final rule have broad support, including cutting down on ineligible disputes, standardizing communication between payers and providers and improving the federal IDR portal.
But payers were hoping that the rule would create more oversight around arbitration.
That could include auditing arbiters to ensure neutrality and decertifying arbiters with conflicts of interest. It could also include requiring arbiters to publicly disclose their ownership structures and compensation arrangements, and punishing entities that consistently pay out awards significantly over in-network rates.
“While the focus on addressing flawed incentives in the IDR process is a significant first step, more action is needed to protect Americans from unconscionable price gouging by some PE-backed providers and IDR middlemen,” Chris Bond, a spokesperson for influential payer lobby AHIP, said.
The rule isn’t a sea change for how IDR functions. But it’s still a meaningful improvement on the status quo, according to Carol Skenes, the chief of staff at price transparency platform Turquoise Health.
Efforts to standardize how payers and providers communicate will prevent more disputes from entering IDR in the first place, which should curb spending and address some of payers’ concerns, she said.
Moreover, standardization will create more clarity that could help regulators identify and potentially crack down on any actors taking advantage of the system — though, it’s just as likely that ineligible disputes are trickling into IDR due to genuine confusion over whether or not they qualify, according to Skenes.
“There’s still room for improvement,” she said. “But this is still a meaningful step in the right direction.”
Meanwhile, provider groups have applauded the rule, with for-profit hospital association the Federation of American Hospitals saying it takes “important steps” to strengthen No Surprises and will “ensure the system works more fairly and efficiently.”
The Medical Group Management Association, which represents medical practices, especially cheered cuts to filing fees, saying that will make it easier for smaller practices to enter IDR.
