A Law That Stopped Surprise Bills Now Fuels 2 Million Disputes a Year

The No Surprises Act has blocked roughly 50 million surprise medical bills since 2022 — but arbitration under the law has exploded past 2 million disputes a year, more than 100 times the 17,000 the federal government expected, and providers are winning about 85% of them.

That's the core tension Lindsey Murtagh, Distinguished Senior Fellow in Health Law at Brown University and a former federal employee who helped draft the law's implementing rules, lays out in a new analysis. The law protects patients from balance billing. A small number of out-of-network providers, she writes, are simultaneously using its arbitration mechanism "to extract enormous payments from health plans" — and that behavior is starting to push coverage costs up for employers and individuals alike.

What did the law actually fix?

Before 2022, out-of-network care could generate a second, often huge bill on top of your copay, coinsurance or deductible. Roughly 20% of inpatient emergency department visits produced a surprise bill from an out-of-network provider, according to Health Affairs research. About 40% of air ambulance rides did the same — at an average cost of nearly $20,000 per bill.

The financial threat was pervasive. A 2020 KFF poll found roughly two-thirds of Americans were very or somewhat worried about unexpected medical bills.

The No Surprises Act, which took effect in 2022, targets a practice called balance billing: an out-of-network hospital or doctor billing you the gap between their charge and what your insurer paid. The law bans it in three situations where patients have little or no control over network status:

• Out-of-network emergency care at a hospital or independent freestanding emergency facility.
• Treatment by an out-of-network provider — say, an anesthesiologist — during a visit to an in-network hospital or ambulatory surgical center.
• Out-of-network air ambulance services.

Cost sharing in those cases is capped at approximately in-network levels. The law has gaps: ground ambulance rides and out-of-network office visits outside hospitals can still trigger balance bills.

Why is arbitration running amok?

The law doesn't set out-of-network payment rates. Instead, dissatisfied providers can take disputes to arbitration, where each side submits an offer and the arbitrator must pick one. The arbitrator is required to weigh the median in-network rate for the same service — the benchmark experts expected would anchor outcomes near in-network pricing.

That's not what happened. Murtagh worked on rules that would have forced arbitrators to treat the median amount as a strong benchmark, expecting savings in line with Congressional Budget Office projections — a 1% reduction in consumer premiums and $17 billion off federal deficits. Provider lawsuits blocked those rules.

Without them, arbitrators are selecting offers far above in-network rates, and winning offers are much larger than what Medicare would pay for the same service, according to Brookings Institution data. Providers prevail in roughly 85% of disputes. Last year's volume exceeded 2 million cases against a federal estimate of 17,000 annually, with many disputes brought by providers backed by private equity. Volume has grown every year.

What does this change for consumers?

Here's the practical question: if a provider wins big at arbitration, does the patient pay more? No. Individual cost sharing stays capped at the in-network amount. But consumers as a group foot the bill.

Researchers estimate the arbitration process alone cost health plans $22.4 billion in the law's first four years — more than $5 billion a year — and that figure excludes the in-network rate increases likely if current trends continue. Insurers, Murtagh predicts, will raise rates; employers will budget more for coverage or shift costs to employees through higher contributions.

Some of that is already visible. The New York state employee plan cited the No Surprises Act as a key driver of its 10% rate hike for 2027. A Texas city reported the law pushed its employee plan $40 million over its 2026 budget. Employers' groups like ERIC and unions including the AFL-CIO are both raising alarms that the law is raising the cost of providing insurance.

Is Congress about to step in?

With healthcare costs a top voter concern heading into the 2026 midterms, the law is under real scrutiny. In September 2026, the Senate Health, Education, Labor and Pensions Committee held a roundtable on fixes. In October, Rep. Frank Pallone, a New Jersey Democrat, introduced legislation to scrap the arbitration system entirely.

For now, only a small share of providers use arbitration. But if volume keeps climbing and providers keep winning big, arbitration costs will grow — and so will the tab for everyone buying coverage. Absent congressional action, Murtagh warns, the law's protections "will come at a cost that ultimately limits consumers' access to health insurance."

By Nathan Brooks