OPINION: YOUR PRESCRIPTIONS ARE ABOUT TO GET MORE EXPENSIVE — THANKS TO A RULE NOBODY ASKED FOR

Surprise billing was never the result of patients making faulty choices. Patients did everything right. They paid their premiums and sought care at in-network hospitals, only to be treated by out-of-network specialists they neither chose nor, in many cases, even met. Later, they were blindsided by bills for thousands or even tens of thousands of dollars — followed by waves of collection notices.

These bills were generated by a subset of providers, many backed by private equity firms, that turned surprise medical billing into a lucrative business model built on preying on patients and exploiting gaps in the system.

The bipartisan No Surprises Act largely ended that deceptive practice. Today, patients are generally protected from unexpected bills for emergency care and for most scheduled care they receive at in-network hospitals when an out-of-network provider is involved. Instead of facing unlimited out-of-network charges in unexpected medical situations, patients typically pay the same cost-sharing they would owe to an in-network provider.

So, what went wrong?

The law also created an arbitration process — known as independent dispute resolution — to allow health plans and out-of-network providers to resolve payment disputes without involving patients. Congress intended IDR to serve as a targeted backstop for exceptional cases. Federal officials estimated IDR would handle roughly 17,000 disputes annually. Through the first half of 2026, the system is seeing more than 17,000 disputes every two days.

Certain providers are flooding the system with claims that are plainly ineligible under the law, including claims involving Medicare and Medicaid patients. Arbitrators are compensated for every payment determination they issue, creating incentives for a lax approach to eligibility and ruling in favor of providers. Providers now prevail in nearly 90% of disputes.

The result is an IDR system that rewards volume, tolerates abuse, and drives healthcare costs ever higher.

Recent analyses illustrate just how distorted the system has become. Out-of-network providers — and the private equity firms that back them — have used arbitration to secure shocking awards, including six-figure payments for individual procedures. One plan recently reported median IDR awards of more than 50 times the median in-network rate for the same service in the same market. These are unjustified, unsustainable prices that no commercial insurer or public program would ever willingly pay, and that the country simply cannot afford. 

Arbitration was never intended to result in payments wholly disconnected from market realities. Yet, for some private equity-backed physician staffing firms and revenue-cycle companies, arbitration has become arbitrage. American clinicians are already the best compensated in the world, and every dollar from inflated arbitration awards is ultimately passed on to consumers and employers through higher insurance premiums.

The Congressional Budget Office originally projected that the No Surprises Act would modestly reduce commercial health insurance premiums. It now warns that arbitration outcomes “could lead to higher prices over time,” resulting in higher premiums for consumers. CBO has also found that arbitration activity is increasingly dominated by large organizations, putting independent physician practices at a competitive disadvantage and accelerating consolidation in the healthcare system.

A bipartisan law enacted to protect Americans from surprise medical bills should not be a driver of higher healthcare costs.

Common-sense reforms are needed to make the law work as originally intended. Out-of-network providers should be fairly compensated for the care they deliver. A reasonable place to start would be with the rates negotiated by comparable in-network providers in the same market. 

IDR disputes should also be automatically screened for eligibility before they are assigned to arbitrators, preventing ineligible claims from entering the system. Clear guardrails should ensure that IDR awards reflect the actual market value of care rather than wildly inflated charges. The law should also prevent providers from funneling scheduled, non-emergency care into a process that was created to protect patients from truly unexpected medical bills. 

Finally, arbitrators must be held accountable through transparent reporting of their decisions, rigorous performance and recertification standards, and meaningful penalties for repeated bad-faith filings.

OPINION: SOCIALISTS ARE SELLING YOU ‘MEDICARE FOR ALL.’ IT’S JUST MEDICAID WITH BETTER PR

Congress promised Americans protection from surprise medical bills and lower healthcare costs. Keeping that promise now requires confronting the abuse of the arbitration system by interests that have replaced one surprise billing scheme with another. 

Patients may no longer receive the surprise bill in the mail. They are simply paying for it through higher premiums.

Mike Tuffin is CEO and president of AHIP.