The Congressional Budget Office (CBO) is urging further research into the effectiveness of no-surprise laws. These laws are intended to shield consumers from unexpected out-of-network medical expenses, yet there’s growing concern that they might be increasing overall health care costs instead.
Back in 2021, the CBO projected that these laws would lower insurers’ reimbursements to health care providers, which would ideally lead to reduced monthly premiums and lower national health spending.
Since then, while the law has effectively reduced surprise medical bills and some studies hint that it may have lowered prices for certain services, new evidence is causing skepticism. A researcher recently pointed out that, perhaps surprisingly, the law may not be as effective as the CBO initially believed.
Recent studies indicate potential issues, revealing that hospitals and health care providers are winning more than 80% of out-of-network billing disputes, often resulting in payments significantly higher than standard in-network rates.
Due to these findings, the CBO has called for updated research to better understand how no-surprise laws affect health care prices, participation in provider networks, the decision-making processes of arbitrators, and the overall market dynamics.
Insurer groups have jumped at the opportunity to advocate for reform, asserting that the no-surprise setup for resolving out-of-network disputes is flawed. An AHIP spokesperson stated that these issues have led to billions in unnecessary spending, which ultimately raises health care costs for everyone. They argue that policy changes are essential, highlighting how independent dispute resolution (IDR) should focus on protecting consumers from unreasonable price practices by some providers.
Concerns About IDR
The conflict between medical providers and insurance companies regarding surprise charges isn’t a new phenomenon. However, the introduction of the No Surprises Act in 2020 and the subsequent launch of IDR in 2022 have intensified the situation, especially as data has emerged illustrating the law’s disproportionate benefits to medical providers.
The No Surprises Act aimed to limit out-of-network claims tracking and reduce insurers’ leverage in demanding higher rates from providers. The intention was to encourage physicians to join insurer networks by curbing excessive reimbursements outside those networks.
Nevertheless, if a provider remains out of network, the No Surprises Act established an IDR process to decide the appropriate reimbursement amount for services rendered. In this process, both parties submit their proposed fair prices, and an independent arbitrator, certified by the government, chooses one.
However, this system has raised concerns. Critics argue that providers are reaping unexpected benefits from it. Government statistics reveal that doctors and health organizations are profiting from IDRs, which leads to a cascade of disputes, unusual outcomes, and substantial payouts for providers.
Initially, it was anticipated that about 17,000 cases would be arbitrated annually. Yet, providers initiated approximately 1.2 million disputes just in the first half of 2025, many stemming from a few private equity-backed firms.
According to federal data, providers have won 88% of surprise billing disputes. When they do win, their payouts often range from three to four times higher than what in-network providers receive.
Providers maintain that this data does not reflect malicious intent but rather how little they are compensated by insurers within their networks. Still, researchers highlight that the implications for overall health care costs are troubling, as this could drive up expenses in the long run. The CBO is taking this warning into account.
If providers consistently secure higher payments through the IDR process, they may be tempted to remain out of network or demand elevated rates when in-network. The CBO pointed out that although only a tiny fraction of claims go to arbitration, those cases could significantly influence negotiations and ultimately drive prices higher.
These price increases would, in turn, inflate commercial health insurance premiums, exacerbating the federal deficit, according to the CBO.
Despite a widespread focus on enhancing health care access and affordability across parties, Congress seems largely unmotivated to address surprise billing further. However, the CBO’s renewed eagerness to guide lawmakers on this policy indicates that the issue remains unresolved.
This development is notably welcomed by insurance companies, who have struggled to mitigate fraud in IDRs thus far. The Alliance Against Medical Billing, an advocacy group backed by insurers and employers, remarked that legislation aimed at reducing the deficit has been counterproductive, expressing a need for practical guardrails to safeguard consumers and diminish health care costs.
Recently, health authorities introduced new regulations intended to enhance IDR, such as barring ineligible disputes from entering the system. Yet, insurers argue that these rules do not adequately tackle the gaming strategies employed by providers.
