By Jack Hoadley and Kennah Watts
Passage of the No Surprises Act (NSA) in 2020 reflected a consensus among stakeholders that consumers should be protected from certain surprise medical bills. The law targeted scenarios where consumers received emergency services in an in-network or out-of-network (OON) facility, and some services, such as radiology or anesthesiology, from OON providers at in-network facilities. In these scenarios, the NSA prohibits providers balance billing patients for amounts exceeding what the patient’s insurer paid, and limits consumers’ costs to in-network amounts, even from OON providers. Research shows that the NSA eliminated most balance bills and brought down consumers’ cost-sharing payments.
Because the NSA required providers in these scenarios to accept the payer’s fee as payment in full, it was also necessary to ensure the payment was appropriate. However, there was no consensus on determining how much the OON provider should be paid in the event of a disagreement between payer and provider. Some state laws and early committee versions of the federal law used a payment formula, often based on the insurer’s usual in-network rate. Facing provider opposition, some states turned to an independent dispute resolution (IDR) approach (New York was one of the first in 2014). Key features included baseball-style arbitration––where the arbiter selects either the provider’s or the insurer’s amount with no other option––and a “loser pays” approach for IDR fees. The federal NSA ultimately took this approach.
We are now in the fourth year of federal IDR operations. Public use files (PUFs) with complete data on IDR outcomes, along with supplemental tables, have been released for 2023 and 2024. Limited data were also released for 2022. To date, providers have brought far more disputes into IDR than anticipated and have won the vast majority. When providers win, they typically receive fees that are three to four times the typical in-network rate, as reflected by the qualifying payment amount (QPA). We have previously highlighted trends for 2023 and the first half of 2024. In addition to trend updates, this article estimates total costs incurred by the IDR system since its initiation, and explains how IDR trends––high volume, high provider participation, and high offer amounts––have led to billions in costs.
The IDR Process Has Incurred $5 Billion In Total Costs
The high volume of IDR disputes is generating significant spending from administrative costs and higher payments for services. This higher spending will likely be reflected in higher overall health costs and consumer premiums in the future. By estimating administrative and payment costs, and we find the IDR process has generated at least $5 billion in total costs through the end of 2024 (Exhibit 1).
Exhibit 1. Total Estimated Costs* of the IDR System, 2022 to 2024
Source: Authors’ analysis of Federal IDR Supplemental Tables and Public Use Files (2023-2024)
* Includes costs of air ambulance disputes.
Administrative Costs
IDR administrative costs include two fees to the parties for each dispute: an administrative fee and an IDR entity fee. The administrative fee, initially set by CMS guidance at $50, was raised in 2024 to $115. Supplemental table data reveal that since the start of the IDR process, the system has collected $218 million in administrative fees (plus $10 million for air ambulance disputes) (Exhibit 1). These fees go to the federal agencies to support system administration.
IDR entities – independent organizations that arbitrate disputes – set fees within CMS’s predetermined upper and lower payment range: $200 to $840 for single disputes and $268 to $1,173 for batched disputes. In 2023 and 2024, the parties paid $636 million in IDR entity fees (plus $20 million for air ambulance disputes) (Exhibit 1). The losing party pays the IDR entity, and the fee covers the entity’s costs. Combined, a total of $885 million (including air ambulance disputes) in fees has been collected to finance the system (Exhibit 1).
Beyond fees, plans and providers incur costs to manage IDR disputes. In the impact analysis in the original IDR interim final rule, the federal agencies estimated plans’ and providers’ internal costs to submit various IDR materials would be $857 per dispute. Multiplying that by the total disputes over 2 years yields $1.9 billion in internal administrative costs. Combined with the required fees, this yields a total of $2.8 billion. This sum does not fully account for administrative costs that stakeholders incur for managing their IDR participation, nor costs incurred by or paid to third-party middlemen organizations that assist in filing or responding to disputes.
Costs From Payment Determinations
In addition to administrative costs, IDR often results in payment determinations that exceed the original payments to providers. Stakeholders may disagree on whether higher payments are fair, but these amounts reflect payments beyond those incurred if in-network rates were sustained.
Payment-related costs may not be entirely attributable to the IDR process, as some portion of these costs existed prior to the NSA, but were paid by consumers. However, given that balance billing protections are in place, these IDR-specific payment awards and added costs might not be incurred with different IDR rules, outcomes, or means to determine appropriate payment.
To estimate total additional payments, we compared the QPA (a proxy for the initial plan payment and in-network rates) with the prevailing offer (the payment determination by the IDR entity). Because of missing data in the PUFs, we estimated the additional payment amount by assuming that the average amount for cases with missing or suppressed data (about one-fifth of all cases) is the same as cases with complete data.
For 2023 and 2024, we estimated additional payments of $2.24 billion (Exhibit 1). In nearly all cases, this represents additional payments made by plans to providers. We assumed that currently unpaid resolved cases will be paid.
Combining required fee payments, administrative costs, and additional payments for services, the IDR process has generated at least $5 billion—about $2 to $2.5 billion annually—in total costs through the end of 2024 (Exhibit 1). Over the last two years, these costs have been driven by a high volume of disputes and high provider use of IDR––primarily by private equity backed groups––which we expand on below.
The Volume Of IDR Disputes Continues To Surpass Agency Estimates
In the regulations establishing the IDR system, the federal agencies estimated that the IDR process would annually resolve 17,333 disputes, with an additional 4,899 disputes from air ambulance providers. This estimate reflected expectations that most disputes would be resolved amicably through a mandatory 30-day negotiation period before IDR.
The reality is far different: From mid-2022 to May 2025, 3,324,051 disputes were filed (including air ambulance disputes) (Exhibit 2). In the nine months after the system opened in 2022, about 190,000 disputes were filed—more than ten times the number expected for the first full year alone. Air ambulance companies filed about 10,000 disputes in this period—double the original estimate. (While the agencies have not released 2025 PUFs, CMS released bi-monthly reports on dispute volume. We include these data in Exhibit 2.)
Exhibit 2. Total Number* of IDR Disputes (by millions), April 2022 to May 2025
Source: Author’s analysis of Federal IDR Supplemental Files (2022-2024) and Bi-Monthly Report (2025)
* Includes air ambulance disputes
Over that same period, 2,831,804 disputes were closed—including those deemed ineligible and those closed for other reasons (e.g., withdrawn, settled by the parties, data entry errors) (includes air ambulance) (Exhibit 2). As of May 2025, 85 percent of all disputes filed to date had been closed. The closure rate has increased rapidly from 29 percent at the end of 2022 and 41 percent at the end of 2023. But as of May 2025, a backlog of nearly 500,000 disputes remained.
Of the closed disputes, 2,152,045 payment determinations were issued by IDR entities (includes air ambulance) (Exhibit 2). This count underestimates the total number of line-item claims that have received an IDR decision because many claims were filed in batch. In Q4 2024, 30 percent of emergency and non-emergency disputes were filed as batched cases. From 2023-2024, the average batched dispute included five similar line-item claims (median of three). But some batched disputes are much larger; the largest dispute included 453 individual line-item claims. In total, 2,505,764 separate line-item claims had payment determinations in 2023-2024.
Determinations Take Three Times Longer Than The Statutory Deadline
The volume of IDR disputes has made it nearly impossible for IDR entities to meet the 30-day statutory deadline for payment determinations. In the last quarter of 2024, the median days to determination for line-item claims was 81 days, down from a previous peak of 96 days. In Q4 2024, about 34 percent of single disputes and 22 percent of batched disputes had a payment determination within the required 30 days. Average days to determination also vary significantly among IDR entities. Although volume is likely the main reason for delays, delays were exacerbated by pauses when adverse court decisions forced the agencies to review procedures.
Disputes Remain Dominated By A Few Provider Organizations
Our analysis of the PUFs––data files released by the federal agencies that include information on resolved IDR disputes–– reveals that in 2023 and 2024, 43 percent of resolved line-item claims were filed by two private equity-backed provider organizations: Radiology Partners and affiliates (28 percent) and Team Health (15 percent). The top five provider organizations were responsible for 59 percent of line-item claims. Alongside the continued dominance of these provider groups, middlemen organizations have grown in importance. In 2023, HaloMD accounted for 1 percent of line-item claims, and by the end of 2024, HaloMD was the fourth most active participant, with 6 percent of line-item claims.
Providers Continue To Prevail With Growing Offer Amounts
Providers have won the vast majority of disputes. In 2024, providers won 85 percent of the line-item claims decided that year, up from 81 percent in 2023 (Exhibit 3).
Exhibit 3. Share of IDR Disputes Won by Providers by Quarter, 2023 to 2024
Source: Authors’ analysis of Federal IDR Public Use Files (2023-2024)
Furthermore, providers have won substantial offer amounts. In Q4 2024, for line-items where the provider prevailed, the median payment determination was 459 percent of QPA. That means the provider requested, and won, a payment that was over four times the in-network amount.
The median payment determination amount has increased over time. The median amounts in 2023 and 2024, for line-item disputes won by providers, were 327 percent and 445 percent of the QPA, respectively (Exhibit 4). Often, the winning amounts are even higher. For example, in disputes filed by HaloMD, the median amount was 934 percent of the QPA.
Exhibit 4. IDR Process Median Prevailing Offer Amount as Percent of QPA, 2023 to 2024
Source: Authors’ analysis of Federal IDR Public Use Files (2023-2024)
Prevailing amounts are significantly lower when the IDR entity selects the plan’s offer. When plans win, the median prevailing offer was 110 percent of the QPA in 2024, up from 100% of the QPA in 2023 (Exhibit 4). Plans have increased their offers modestly in the disputes they win, but they continue to request payments close to in-network rates.
Geographic Distribution Is Skewed By Dominant Provider Organizations
From 2023-2024, 63 percent of all the decided line-item claims came from just four states: Arizona, Florida, Tennessee, and Texas. Over one-third of all claims (37 percent) came from Texas alone. These four states represent just 17 percent of the U.S. population. By contrast, large population states—California, Illinois, and Pennsylvania—each represented just 1 percent of all line-items.
This geographic skew appears driven by volume from the top provider organizations. From Q1 2023 to Q2 2024, roughly half of line-items in Texas and Arizona came from Radiology Partners providers. Similarly, Team Health accounted for more than a third of Florida’s total line-item claims.
High Costs Raise Policy Challenges And Questions
The IDR system has added at least $5 billion to overall health system costs since its inception––approximately $2 to $2.5 billion per year. If additional stakeholder administrative costs could be measured and included, costs are likely much more. And as dispute volume grows, so will costs. Currently, cost growth affects IDR-specific claims, but over time, future network contract negotiations could reflect the higher amounts awarded through IDR. The original cost projections by the Congressional Budget Office assumed that awards would be more modest and create downward pressure on negotiations. IDR outcomes to date may be reversing that expectation. Still, the future depends on whether high awarded fees are sufficiently widespread to influence negotiations.
These trends prompt the question of whether steps should be taken to reduce IDR use and the size of the awards and what policy levers are available.
One component of the high dispute volume is the prevalence of ineligible disputes, constituting about 20 percent of all closed disputes. Because IDR entities receive no fee for disputes deemed ineligible, some external means of assessing eligibility may be needed. The federal agencies have suggested some changes through a pending proposed rule. Changes to the IDR portal could help screen out ineligible cases, but the federal agencies may need a separate process to manage eligibility.
As noted, Congress anticipated that a more significant volume of cases would be settled outside the IDR process through informal negotiations. While the rate of such settlements cannot be measured under the current system, the proposed rule could allow closer tracking of open negotiations.
For cases that receive a payment determination from IDR entities, the high provider win rate and the magnitude of the prevailing rates continue to defy expectations. More transparency and consistency among IDR entities might help observers better understand the results. Furthermore, the federal agencies could provide neutral data on payment amounts to the IDR entities to offer a means of anchoring payment determinations to market data.
The role of private equity in the process deserves greater scrutiny. As noted above, many disputes are initiated by provider organizations and middleman organizations with private-equity backing. Their aggressive tactics have been challenged in recent court cases by insurers. Plans may also need to offer stronger responses to provider-initiated disputes.
The NSA successfully protects consumers from higher out-of-pocket costs associated with surprise bills and OON cost sharing. But without action to rethink the IDR process, the high costs will add to overall health system costs and will ultimately by paid by consumers.
Jack Hoadley and Kennah Watts “The Substantial Costs Of The No Surprises Act Arbitration Process” August 25, 2025, https://www.healthaffairs.org/content/forefront/substantial-costs-no-surprises-act-arbitration-process. Copyright © 2025 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.
