The No Surprises Act (NSA) addresses a serious problem. Before the law, about one in five people who went to in-plan hospital emergency departments received a surprise bill from an out-of-network physician. However, the law’s arbitration process, used when providers dispute plan payments has led to high administrative costs and excessive prices. Here’s what you need to know about the controversy around the NSA, and actions your clients can take.
What is the No Surprises Act?
The No Surprises Act (NSA), passed in 2020 and effective in 2022, protects insured patients who receive emergency care or care at in-network hospitals from providers who are out-of-network. It also limits charges for air ambulance services. The NSA requires the plans to pay these out-of-network providers a qualified payment amount (QPA), which they calculate based on in-network rates. If the provider thinks the payment is too low, they can start an independent dispute resolution process (IDR). That’s where an arbitrator chooses either the plan or the provider proposed payment.
How do IDRs work?
When a provider believes the QPA is too low, they file a dispute and pay an administrative fee and are assigned to an arbitrator. The health plan must also pay an administrative fee and respond quickly to the provider’s complaint. Patients and employer plan sponsors aren't involved in the IDR process. The process uses “baseball style” arbitration, meaning the arbitrator must choose either the provider or the health plan’s price. Initial regulations directed arbitrators to rely heavily on the QPA, but court rulings now require them to consider multiple factors, with the QPA as just one input.
What’s happening with IDR requests?
Federal officials expected 17,000 IDR disputes a year, but preliminary data from 2025 show 2.6 million IDR disputes. More than half of these disputes were initiated by three provider groups and a claim aggregator. Providers are winning in 88% of arbitrations and often receive payments three to four times the QPA.
Why does this matter?
The high number of IDR requests has caused administrative costs to quickly increase. The high fees given to providers increase total medical spending and encourage more IDR claims. Health plans have charged employer-sponsored health plans extra fees to deal with the IDRs. In some cases, they are charging “shared savings” based on the difference between billed charges and the QPA.
While the NSA has protected patients from surprise bills, the rapid growth of IDR disputes and fees is increasing cost pressure on employer-sponsored plans. As these expenses are passed through to plans, sponsors and fiduciaries should evaluate the long term financial impact, vendor fee structures and potential litigation exposure. Proactive oversight of NSA related costs is now an essential part of health plan governance.
What plan sponsors should do now
The federal government will likely issue new rules that may address some of the loopholes that have led to high plan costs from these arbitrations. Review your carrier contracts to understand all IDR-related costs, and audit “shared savings” arrangements to ensure they reflect final arbitration outcomes.
