May 13, 2026

Summary

The No Surprises Act (NSA) was enacted to protect patients from unexpected out-of-network (OON) medical “surprise bills” while encouraging in-network participation and reducing overall costs. However, the independent dispute resolution (IDR) process created by the NSA has rapidly become a faulty, high-volume mechanism with warped economic incentives that drive excessive costs and lead to inflationary payment outcomes far above typical market rates – the opposite of what Congress intended when they passed surprise billing protections for patients. These increased administrative and claims costs are ultimately borne by employer plan sponsors and their employees in the form of increased premiums.

The Business Group urges Congress to consider strong action to salvage the aims of the NSA.

We believe the appropriate course correction would be to amend the NSA statute to discontinue IDR as the final step and replace the IDR provision with a geographic commercial benchmark final payment rate primarily derived from blending the in-network rates reported by each plan for the Transparency in Coverage (TiC) files that have become available since the NSA enactment.

Using the TiC files would beneficially and efficiently promote TiC file utility and concentrate investment and improvements to these files, which will have broader benefit beyond the NSA. More pressingly, we believe this change is necessary and appropriate to stop the inflationary, wasteful and conflicted IDR process from ultimately raising costs on employers and employees and their families, and to return incentives to encouraging in-network participation.

About Business Group on Health

Business Group on Health is the leading non-profit organization representing employers’ perspectives on optimizing workforce strategy through innovative health, benefits and well-being solutions and on health policy issues. Our membership includes the majority of Fortune 100 companies as well as large public-sector employers, who collectively provide health and well-being programs for more than 60 million individuals in 200 countries. For more information, visit www.businessgrouphealth.org.

Background

The No Surprises Act (NSA) was enacted to protect patients from unexpected out-of-network (OON) medical “surprise bills” while encouraging in-network participation and reducing overall costs. When receiving NSA eligible items and/or services from an OON provider, the individual’s health plan calculates their cost-sharing at the in-network rate and that is the only amount for which such individual will be responsible. Any payment amount sought by the provider beyond the calculated cost-sharing amount is sent to the health plan to pay or resolve with the provider through the steps outlined in the NSA.

In the years since 2022, when cost-sharing provisions for patients were effective, the NSA has been widely regarded as successful at protecting patients from millions of surprise bills – a truly remarkable improvement for patients.

When a provider seeks additional payment beyond the cost-sharing from the health plan, there are specific steps and timelines applicable to each party to pursue resolution through the NSA’s independent dispute resolution. The IDR framework was intended to serve as a limited backstop following a required open negotiation period, resolving occasional disputes and reinforcing incentives for providers and plans to reach market-based agreements without defaulting to arbitration. Under the statutory and regulatory framework, an arbitrator at an approved “IDR entity” (IDRE) selects between the final offers submitted by the plan and the provider after considering specified factors.

The Problem Illustrated by the Costs and the Data

Four years into implementation, it is increasingly clear that the IDR process is not functioning as Congress intended. Rather than acting as a narrow fallback, IDR has become a business strategy for certain provider organizations, generating excessive volume, distorting outcomes in response to conflicted incentives and escalating costs that directly and negatively affect employer-sponsored health plans and the millions of lives they cover.

Additionally, employer plan sponsors bear even more administrative expenses for their insurer and/or administrative service only/third party administrator (collectively “ASO/TPA”) to process NSA claims and handle NSA responses and the IDR administrative elements. These plan-based administrative expenses are above and beyond (and not reflected in) the data provided below. For employer plan sponsors, the overall administrative expense increase between IDR and ASO/TPA further encumbers health plan affordability for costs not associated with the provision of care.

Publicly available data from CMS demonstrates that all of the presumptions about the impacts of IDR on the market participants were incorrect and have failed – the scale, structure and nature of IDR activity do not meet original expectations and are being exploited:

• Over 3.4 million disputes were filed from mid-2022 through the first two quarters of 2025, a massive departure from regulators’ original estimate of approximately 17,000 disputes annually.¹ This includes 1.2 million initiated between January and June 2025 alone, a 39% increase from the previous six-month period.²
• Continuing prior year trends, for the first six months of 2025, providers prevailed in more than 88% of decided disputes, and predominantly secured payment determinations far above typical in-network rates.³
• Again, continuing similar prior year trends, for the first six months of 2025, 56% of all disputes were filed by just four provider groups.⁴
• In aggregate, administrative fees, internal compliance costs and inflated arbitration awards have generated at least $5 billion in total costs since the system’s inception.⁵
• Ineligible claims (i.e., in-network services, Medicare/Medicaid claims, etc.) constitute nearly one-fifth of all closed disputes.⁶
• In just the first six months of 2025, disputing parties paid IDR entities a total of $844 million. This number is particularly staggering given that these fees totaled $636 million between 2023 and 2024.⁷

Taken together, the unprecedented volume of disputes, the concentration of filings among a small number of provider organizations, consistently inflated payment determinations, mounting administrative costs for IDR and ASO/TPA services and the misaligned economic incentives embedded in the IDR compensation structure make it clear that the current IDR system is failing at a fundamental level.

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¹ Hoadley, Watts, et al. “The No Surprises Act IDR Process: An Early Look At 2025 Data.” Georgetown University Center on Health Insurance Reforms. 30 March 2026.
² Centers for Medicaid & Medicare Services. Federal Independent Dispute Resolution Supplemental Tables. Updated 21 January 2026.
³ CMS, id
⁴ CMS, id
⁵ Hoadley, supra fn 1
⁶ Hoadley. id
⁶ Hoadley. id

The Insoluble Path We Are On

Since enactment of the NSA, Business Group on Health has consistently supported targeted regulatory and administrative reforms aimed at improving IDR operations. While such improvements remain necessary, experience to date demonstrates that operational adjustments alone cannot correct the structural incentives embedded in the current IDR model. We appreciate and support the ongoing and anticipated efforts by regulators to update operations rules and improve oversight, but we believe these will not be enough to overcome the flaws in the IDR model.

Conflicted Independent Dispute Resolution Entity (IDRE) compensation. IDREs only get paid when they process and make awards on disputes. Because IDREs can only effectively maintain and grow their revenue as companies if they get more disputes submitted, and essentially all disputes are initiated by OON providers, there is an inherent incentive for IDREs to decide in favor of providers in order to incentivize new dispute filings. This is why, even if the administrative process is improved to reduce or eliminate ineligible claims from IDR, the number of eligible claims will continue to grow and the incentive for providers to avoid in-network participation will strengthen. This is potentially exacerbated by misplaced ASO/TPA incentives as well, discussed below.

The federal analysis of the NSA expected that once IDR decisions were predictable and not overly beneficial to one side, the parties would be incentivized to avoid IDR, utilizing it as a last resort, and instead resolve disputes in open negotiation or develop new in-network arrangements. Because IDREs can only sustain and grow as companies if more disputes are filed and taken to IDR, their decision-making incentives will always skew in favor of the nearly exclusive initiators – the OON providers. While it is hypothetically possible to mitigate this problematic incentive with agency directives and oversight, we believe it can never be eliminated in the current structure and the funding, resources and monitoring/process required for such governance would be overly burdensome and lagging in effectiveness.

For providers, the emerging certainty of winning in IDR will be an undeniable factor and rational incentive pushing against in-network participation – in contravention of the NSA’s stated objectives and the overarching desires of employer health plan sponsors. We unfortunately expect more providers to look at using IDR as their preferred payment method – necessitating that they continue or become out-of-network. We note that we have heard and do believe there are some OON providers who are utilizing IDR, even in fairly large volume, that are doing so as a last resort when they would prefer to be in-network but have had challenges with ASO/TPAs or for other reasons. In an environment where the data supports IDR incentivizing OON provider use, it can be challenging to distinguish such stakeholders which is another reason to move away from IDR and realign incentives.

Regarding ASO/TPA vendors. Employer health plan sponsors are also highly concerned that the networks and services generally available to them from their ASO/TPA service providers will be distorted and made more expensive by continuing with IDR and entrenching business interests of those stakeholders. Because employer health plans generally utilize provider networks and claims processing built by ASO/TPA vendors, and the same ASO/TPA vendors are providing IDR support services for plans, the ASO/TPA’s interest in increasing in-network participation and reducing IDR claims may ultimately deviate from the employer health plan’s. While employer health plans typically need to partner and have working relationships with these vendors, they are not naive to potential and rational maneuvers by the vendors to optimize their own financials. Although ERISA vendor transparency requirements will help employer plan oversight and we believe we are in the early stages of those potential risks, we can foresee both additional direct IDR administrative fee and other costs increasing, along with undesirable and hard-to-unpack changes to the network composition in order to drive IDR-based revenue.

The Solution

We acknowledge that there does need to be a structured resolution for disputes between OON providers and health plans for claims under the NSA. To meet the in-network participation and cost-reduction objectives of the NSA, this final step of the dispute resolution must be a lackluster and relatively undesirable outcome for all market stakeholders – OON providers, ASO/TPAs, and employer health plans.

(Note that the NSA provisions protecting patients must be preserved and are not at issue here.)

Given these realities, Business Group on Health proposes amending the No Surprises Act to:

• 1 | eliminate the federal IDR process as the final step in resolving surprise billing payment disputes, and
• 2 | enact as a replacement that – when open negotiation does not resolve a dispute, payment should default to a predictable, commercial benchmark derived from the in-network rates for the item or service in the applicable geographic area, as calculated by CMS using aggregated, transparent commercial data reported in the Transparency in Coverage machine-readable files.

This means that TiC files would be provided to CMS, and resources would be redirected to support CMS’s calculation of a blended and transparent final payment commercial benchmark rate to finally resolve the dispute.

This approach leverages the TiC files, which were not available when the NSA was enacted. We believe it would eliminate inflationary and inconsistent arbitration awards and significantly reduce administrative costs while preserving a market-based standard grounded in actual commercial pricing. It would also directly align NSA payment resolution with broader ongoing federal efforts to improve the accuracy, completeness, and usability of TiC data, reinforcing incentives to strengthen that infrastructure.

Importantly, anchoring final payment to in-network rates would restore incentives for providers and ASO/TPAs to establish in-network arrangements, rather than rewarding out-of-network strategies and repeated arbitration. It would also substantially reduce administrative burden and waste for employer plan sponsors, while maintaining the strong patient protections that remain the central success of the NSA.

A Call for Partnership on the Solution

Business Group on Health is interested in a broad discussion on this proposed TiC file-based solution to the intractable problems with IDR. We acknowledge that a TiC file-derived final payment amount alone may need certain safeguards to ensure that no provider, ASO/TPA, or other stakeholder can exploit a new structure – but rather that it serves as a backstop to what should be a diminishing number of OON NSA-eligible claims and disputes.

While the federal agencies and the industry have invested in IDR, we should all recognize that what has emerged with IDR is not a long-term solution to OON payment resolution. The employer plan sponsor community would strongly prefer to invest in implementing a fair, balanced and sustainable resolution structure that drives to in-network participation and cost reduction (while continuing to protect patients) without having to indefinitely attempt to counteract new intermediary profit-driven incentives of the IDREs while bearing the burden of administrative and exorbitant claims costs arising from continuing with IDR.

More Topics

Resource Compliance Surprise Billing