WashingtonOut-of-network providers are winning $34,000 for a spine surgery that pays $1,400 in-network.
The No Surprises Act arbitration has no cap on awards; providers win over 80% of disputes, and private-equity staffing firms file the bulk of claims.
Award costs flow to insurer premiums; Congress has not moved to cap arbitration outcomes.
Sources: STAT
THE ORIGINAL PROBLEM
Before 2022, patients who went to in-network hospitals could still get billed thousands by out-of-network anesthesiologists, radiologists, or ER doctors they never chose. These 'surprise bills' bankrupted families even with good insurance.
THE FIX
The No Surprises Act took effect January 2022. Patients pay only their in-network cost-sharing. The provider and insurer then fight over the actual price through an Independent Dispute Resolution process — baseball-style arbitration where each side submits an offer and the arbiter picks one.
WHY BASEBALL ARBITRATION
In final-offer arbitration, the arbiter cannot split the difference — they must pick one number. The theory is that this forces both sides toward reasonable offers, since extreme bids lose. The mechanism was pioneered in Major League Baseball salary disputes in 1974.
WHY IT BROKE
The arbiter is supposed to anchor on the Qualifying Payment Amount — the median in-network rate. But court rulings in 2023 (TMA v. HHS) weakened that anchor, letting arbiters weigh provider 'training, experience, and complexity' instead. The median became one factor among many, not the benchmark.
WHO FILES
Private-equity-backed staffing firms — Envision, TeamHealth, Radiology Partners — file the overwhelming majority of arbitration claims. These firms acquired physician practices in the 2010s on a thesis that out-of-network billing leverage was a durable revenue source. The NSA was designed to kill that thesis; arbitration handed it back.
WHO PAYS
Arbitration awards do not come from patients directly — but insurers fold the cost into next year's premiums. A RAND analysis estimates the inflated awards add billions annually to commercial premiums, a hidden tax on everyone with employer-sponsored coverage to fund the spread between $1,400 and $34,000.