The No Surprises Act's dispute resolution process costs the healthcare system $5 billion in three years while PE-backed provider groups game the system to extract 3-4x in-network rates

The No Surprises Act (2022) was designed to protect patients from surprise medical bills from out-of-network providers. However, the independent dispute resolution (IDR) process has been captured by a small number of private equity-backed provider groups and middlemen who file disputes in bulk. Three entities alone (HaloMD, TeamHealth, and SCP Health) accounted for 44% of all disputes initiated in the first half of 2024. Providers win 88% of disputes and are awarded 3 to 4 times comparable in-network rates, creating a perverse incentive to remain out-of-network. Why it matters: PE-backed provider groups earn more by staying out-of-network and filing IDR disputes than by negotiating in-network contracts, so they have no incentive to join insurance networks, so the supply of in-network emergency physicians, anesthesiologists, and radiologists shrinks, so insurers raise premiums to cover the inflated IDR payouts, so an estimated $5 billion in additional costs over three years is passed to employers and employees through higher premiums, undermining the very consumer protection the law was designed to provide. The structural root cause is that the IDR arbitration framework was designed to resolve individual billing disputes, but bulk filing by sophisticated corporate entities has turned it into a revenue extraction mechanism. The arbitration process lacks the cost controls of network contracting, and the 88% provider win rate signals that arbitrators are anchoring to billed charges rather than in-network benchmarks, creating a systematic bias toward higher payments.