When Congress passed the No Surprises Act in 2020, lawmakers envisioned a simple solution to protect patients from costly, unexpected out-of-network medical bills. Beginning in 2022, patients would be shielded from surprise billing, while payment disputes would be settled between health plans and providers through a neutral process called independent dispute resolution (IDR).
The IDR process was expected to be a narrow backstop that kept negotiations both fair and infrequent.
Four years in, that process looks very different. Some providers have turned what was meant as a limited safety valve into a high-stake business strategy—one that’s driving up costs and undermining the Act’s original intent.
The No Surprises Act set out to solve a straightforward problem: patients who unknowingly received out-of-network care were often hit with sky-high bills they couldn’t contest. The law requires health plans to pay these providers a qualifying payment amount (QPA)—typically the plan’s median in-network rate—so patients are protected from balance billing.
If the health plan and provider still can’t agree on the final payment, they turn to the IDR process. In this approach, both sides submit their best offer and a neutral arbitrator makes the final decision.
Congress expected IDR to be a rare, last-resort step. In fact, the federal government estimated a mere 17,300 claims would be submitted as part of the IDR process each year. It also anticipated a quick 30-day deadline for IDR decisions, with fees that would cover the cost of the program without driving up premiums.
In practice, IDR is turning out to be far different than intended. Providers are using it more than expected—and they’re winning.
Since the law went into effect, IDR has been used significantly more often than anticipated. Roughly 190,000 disputes were filed in the first nine months of 2022 alone, and more than 3.3 million disputes were filed by May 2025.
The process heavily favors providers. According to an analysis from Health Affairs, the vast majority of disputes—about 85%—have been decided in favor of care providers.
The rewards are eye-catching. When providers win, their payments average three to four times that of typical in-network rates. That was a staggering 459% of the QPA in the fourth quarter of 2024. By contrast, when health plans prevail, the median determination is just 110% of QPA.
These conditions have produced an environment that not only fails to discourage unnecessary arbitration, but actually creates a financial incentive for some providers to bypass normal contracting entirely. It’s no wonder that cases are now taking three times longer to resolve than the envisioned 30-day statutory deadline due to the enormous backlog.
Federal IDR was supposed to be budget-neutral. Instead, it’s rapidly becoming a new cost center for commercial health plans. The reason? High payments and case backlogs.
Each dispute carries two separate federal fees:
Those are just the official charges. The Health Affairs analysis estimates that plans also incur about $857 in internal staff time and resources per dispute, even before factoring in the higher payments when providers win.
Multiplied across millions of cases, these expenses threaten to ripple through the entire employer-sponsored insurance market.
The delays in case decisions also hurt. Health plans face months of uncertainty around budgeting and claims management. Employers struggle to predict year-end costs. And regulators are left trying to scale an arbitration system that simply wasn’t designed for this kind of volume.
The surge in IDR disputes is not spread evenly across the provider landscape. A small number of private-equity-backed provider organizations dominate IDR filings:
Geographically, more than 60% of all decided line-item claims come from just four states: Arizona, Florida, Texas, and Tennessee. Texas alone represents more than one-third of the total, and half of Texas disputes are tied to Radiology Partners.
This concentration highlights the fact that the IDR process is being used not just as an occasional safeguard, but as a deliberate revenue strategy for a small group of providers.
For employers and health plans, the lesson is clear: federal IDR has shifted bargaining power and added avoidable costs. Until federal regulators revisit the fee structure and enforcement mechanisms, plans must account for arbitration as a significant, recurring expense.
Healthgram continues to help clients manage these pressures with:
Contact Healthgram to learn how our data-driven strategies can help you minimize the impact of IDR disputes.
