Medical billing arbitration firms are facing scrutiny after data show physicians are winning disputes at high rates and receiving awards dozens of times higher than the standard amount. Now, the federal government is starting to take action.
The 2020 No Surprises Act protects patients from surprise bills when they see a physician outside their health plan. The law requires healthcare providers and insurers to settle on a price, and when they cannot, each side submits a proposed price, and a federally contracted arbitration firm picks whichever offer it judges as more reasonable. When it went into effect in 2022, the law’s authors expected the system to be rarely used, but physicians have been flooding it with millions of cases and win more than 85% of them on average, The New York Times reported.
A Georgetown University study found the IDR system — where No Surprise Act disputes are processed — cost $22.4 billion from 2022 through 2025.
The arbitration incentive for physicians
Many of the dispute awards are dozens of times higher than usual insurer rates. In the fourth quarter of 2025, one arbitration firm gave a median award of 601% of the qualified payment amount to winning physicians, while a second gave 159% of the qualified amount.
One physician earned $440,000 for a routine breast reduction, the Times found. In March, a Dallas surgical assistant earned $50,456 through arbitration for a prostate removal operation — meanwhile the surgeon on the case earned $1,843.
Typically, surgical assistants are paid a standard fee of 16% of the surgeon’s earnings. However, some are opting to file separately from physicians for arbitration and win far greater awards than what an in-network assistant would normally receive, in some cases more than the surgeon they assisted. These surgical assistants are sometimes physicians, but more often they are nurses or physician assistants.
A boom for arbitration firms
Seventeen arbitration firms have contracted with the federal government to handle millions of cases flowing through the IDR system. Arbitrators set their own fees, charging between $425 to $800 for each dispute they settle, the Times reported. Between 2022 and 2025, they collectively earned $742 million.
While arbitrators are supposed to follow the same rules, federal data shows outcomes vary drastically, with the number of physicians winning cases ranging from 62% to 97% depending on the firm. Physicians seem to win their cases at similar rates regardless of if they request modest or huge payments.
Experts told the Times that arbitrators have an incentive to side with physicians to keep them coming back to the system since they are paid per case.
Payers, employers raise alarms
The Coalition Against Surprise Medical Billing and the ERISA Industry Committee sent letters to federal officials in late October, calling for more rigorous scrutiny of independent dispute resolution arbitrators under the No Surprises Act.
The letters responded to five IDR entities submitting recertification applications. Arbitrators’ contracts last five years and the government is now reviewing those awarded in 2022, the Times reported. Three additional entities have entered the petition period since the letter.
CASMB requested the federal government pause IDR entity recertification until higher standards are established and request a 30-day public comment period before any recertification decision is finalized.
Melissa Bartlett, senior vice president of health policy at ERIC, which represents large employers, said that outcomes suggest some IDR entities consistently favor high-volume initiating parties. A handful of provider groups and intermediaries are responsible for initiating many disputes. She said CMS should consider these patterns when weighing recertification.
She also requested CMS factor in how often entities take cases that involve ineligible disputes — something that insurers argue happens frequently. ERIC encouraged CMS to deny or revoke certification for entities that could not show compliance with the No Surprises Act.
The federal government takes action
On Nov. 4, HHS and the Labor and Treasury departments denied recertification for two independent dispute entities — Island Peer Review Organization, known as IPRO, and Network Medical Review Co.
“The departments determined that these entities did not substantially comply with the standards governing their performance during their current certification terms,” Christopher Krepich, a spokesman for CMS, told the Times.
IPRO and Network Medical Review Co. cannot accept new disputes under the federal IDR process. Health plans and providers in an open dispute with one of the entities should expect guidance on next steps. The entities can appeal within 30 business days of the departments’ written denial notice.
The problem for patients
Patients are often unaware if their case was taken to arbitration, and pay what they normally would for an in-network provider. But the extra cost is passed onto patients as higher premiums. TeamCare, a health plan that covers half a million union workers, has spent $19 million on arbitration cases since 2022.
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