The 2020 No Surprises Act, designed to protect patients from unexpected medical bills, has resulted in a volume of arbitration claims far exceeding initial government projections. Lawmakers from both parties now report that the dispute resolution system is experiencing significant backlogs and unintended financial outcomes. While the law has successfully shielded patients from out-of-network charges, the administrative process used to settle disagreements between doctors and insurance companies has become a point of legislative friction.
The No Surprises Act established an arbitration system where out-of-network providers and insurers must negotiate payments for emergency care. If they fail to reach an agreement within 30 days, an independent arbitrator selects one of two final payment offers provided by the parties. This "baseball-style" arbitration was intended to encourage reasonable offers, but federal data indicates that the system is being utilized at a much higher rate than the 17,000 annual claims originally anticipated by Congress.
In 2025, the system received 2.5 million claims, up from 1.5 million the previous year. According to an analysis by the Wall Street Journal, arbitration judgments tripled last year to reach $15 billion. Reports have highlighted instances where arbitrators awarded payments significantly higher than standard market rates, such as $440,000 for a procedure typically costing between $15,000 and $25,000. Insurers, who lose approximately 90% of arbitration cases, have been accused by physician groups of "slow-walking" or refusing to pay these judgments.
For medical providers and healthcare facilities, the backlog means billions of dollars in revenue are tied up in legal disputes. Small medical practices and emergency room groups report that delayed payments impact their ability to maintain staffing levels and operations. Specifically, the Emergency Department Practice Management Association reported a 39% reduction in out-of-network reimbursements, which they attribute to insurer non-payment. Conversely, the insurance industry warns that if the "gold rush" of high arbitration awards continues, the overall cost of the U.S. healthcare system will rise, potentially leading to reduced benefits for policyholders.
The conflict has created a stalemate in Congress between members who want to penalize insurers and those who want to limit provider claims. Rep. Greg Murphy (R-NC) and Rep. Raul Ruiz (D-CA) have introduced the No Surprises Act Enforcement Act to increase penalties on insurers who fail to pay arbitration awards. Meanwhile, Sen. Bill Cassidy (R-LA) is developing a proposal to filter out ineligible claims and ensure timely payments. A new regulation from the Centers for Medicare and Medicaid Services (CMS) took effect in May to streamline the process, but lawmakers state that further statutory changes are necessary to address the $15 billion backlog. No dates have been set for floor votes on the proposed corrective legislation.