The federal government's arbitration program for surprise medical bills is now costing nearly $3 billion a year while arbitrators award providers payments that have climbed to four times the benchmarks Congress set, according to new data released by the Centers for Medicare and Medicaid Services and analyzed by the Niskanen Center. The report, published this week, warns that the No Surprises Act's dispute resolution system is "being gamed" by providers who file disputes in record numbers and consistently win inflated awards, pushing costs onto patients through higher insurance premiums.
The volume of billing disputes between doctors and insurers jumped nearly 75 percent in 2025 compared to the prior year, with more than 2.5 million disputes filed and nearly 2.2 million payment decisions made. That's a stark difference from the federal government's original projection of roughly 17,000 cases annually. Providers won the vast majority of these disputes throughout 2025, though their success rate dipped slightly in the final two quarters. The median winning provider offer reached four times the qualifying payment amount — the median in-network rate insurers pay for a service — by year's end, while insurer offers stayed at that benchmark. In the fourth quarter of 2025, the median provider offer spiked even higher, to five times the benchmark. Neurology and surgery showed the most dramatic escalation: neurology awards hit nearly 30 times the benchmark in the second quarter of 2025, while surgery awards ended the year at roughly 15 times the benchmark. Although emergency department services accounted for more than half the dispute volume among the top five specialties, followed by radiology at 19.6 percent, anesthesia at 9.6 percent, surgery at 9.3 percent, and neurology at 7.6 percent, the outsized awards in surgery and neurology translate even modest case volumes into an outsize share of total award dollars.
The report finds that arbitrators consistently favor providers because they're benchmarking their decisions to past out-of-network payments and old in-network contracts rather than the qualifying payment amount Congress built into the law. CMS discovered that providers "often benchmarked their offers to past [out-of-network] payment amounts" and previous in-network rates, essentially ignoring the statutory benchmark. Four companies alone — HaloMD, Team Health, SCP Health, and Radiology Partners — accounted for nearly half of all disputes filed in 2025, with HaloMD securing median awards of 920 percent and 835 percent of the benchmark in the first two quarters. The administrative burden has ballooned as well: by the end of 2025, total program costs exceeded $2.8 billion, with arbitrators receiving over $1.2 billion in compensation and companies like HaloMD bringing in over $1 billion annually to manage disputes on behalf of providers.
According to the Niskanen Center analysis, the inflated awards are already affecting state budgets and insurance markets, with New York estimating the program's abuses have cost the state over $200 million, which officials cited as a "primary contributor" to premium increases. The report explains that providers may now find staying out of network too profitable to abandon, shrinking patients' access to affordable care while insurers pass higher costs to customers through elevated premiums and slower wage growth. Recent reforms from both Congress and the Trump administration haven't addressed the core issue of oversized awards: a May 28 final rule from CMS focused on reducing ineligible disputes and lowering administrative fees but didn't tackle payment amounts, while the only congressional bill would fine insurers for late payments without curbing arbitrator decisions.
The report recommends that Congress replace the arbitration system entirely with rate benchmarking, requiring insurers to pay out-of-network providers the median in-network rate and eliminating the bureaucracy and legal costs that come with dispute resolution. Short of that, lawmakers could prohibit arbitrators from considering any previous payment rates or make the benchmark the primary factor in decisions through statutory changes that close legal vulnerabilities. CMS, meanwhile, should expand automatic eligibility screening before disputes reach arbitrators, who have a financial incentive to process as many cases as possible. Without intervention from Congress or the administration, the report warns, the No Surprises Act will continue to function as a "price-inflation machine," driving up costs in the short run and pushing commercial sector prices higher over the long term while patients bear the burden through premiums and lost wages.