The No Surprises Act has prevented about 50 million surprise medical bills since taking effect in 2022, but the law's arbitration process for resolving payment disputes between providers and health plans has grown far beyond expectations, generating over 2 million disputes last year compared with an initial government estimate of 17,000. Murtagh says arbitration is adding to insurance costs and could lead to higher premiums for consumers.
The law, which prohibits balance billing for out-of-network emergency care and services at in-network facilities, was designed to protect patients from the financial shock of unexpected medical charges. Health policy researcher and former federal employee Lindsey Murtagh, who helped draft the implementing rules, said the law has largely succeeded for patients. However, a small number of out-of-network providers are exploiting the arbitration mechanism, winning about 85 percent of disputes at amounts well above what insurers would pay in-network.
The federal government estimated there would be 17,000 disputes annually, but last year saw more than 2 million, many brought by providers with private equity backing. The process has cost health plans an estimated $22.4 billion over the law's first four years, not including potential increases to in-network rates, Murtaugh said.
Murtagh noted that the Congressional Budget Office had predicted lower payments would reduce premiums by 1 percent and federal deficits by $17 billion. She said she expected rules requiring arbitrators to treat the median in-network payment as a strong benchmark to achieve savings like those predicted by the CBO. Those rules were blocked by provider lawsuits.
The costs are already showing up in health insurance rates. The New York state employee plan reported the law was a key driver of its 10 percent premium increase for 2027, and a Texas city said the law caused its employee plan to exceed its 2026 budget by $40 million, according to Murtaugh.
Congress is beginning to respond. In September 2026, the Senate Health, Education, Labor and Pensions Committee held a roundtable on options to fix the law. In October, Representative Frank Pallone, a New Jersey Democrat, introduced legislation to scrap the arbitration system entirely.
Murtaugh said that without congressional action, the protection the No Surprises Act offers Americans may come at a cost that ultimately limits access to health insurance.
Analysis
Why This Matters
- The No Surprises Act's arbitration process is driving up health insurance costs, which may be passed on to consumers through higher premiums.
- The unintended consequences highlight the difficulty of designing healthcare policy that balances consumer protection with cost control.
- Congress is now considering changes, including eliminating arbitration entirely, which could reshape how out-of-network disputes are resolved.
Background
The No Surprises Act, effective 2022, aimed to protect privately insured patients from surprise out-of-network bills for emergency care and certain other situations. It addressed a common problem: roughly 20% of inpatient emergency visits and 40% of air ambulance rides resulted in such bills. The law prohibits balance billing and caps patient cost-sharing at in-network levels. The Congressional Budget Office predicted the law would reduce premiums by 1% and federal deficits by $17 billion. However, the law also set up an arbitration process for providers to challenge health plan payments.
Key Perspectives
Health policy researchers (Lindsey Murtaugh): The arbitration process is being exploited by a small number of out-of-network providers, who win about 85% of disputes, driving up costs for health plans and ultimately consumers. The volume of disputes far exceeds expectations and is growing.
Employers and unions: They report that the No Surprises Act is increasing the cost of providing health insurance. The New York state employee plan cited it as a key driver of a 10% rate hike; a Texas city said it caused its plan to exceed its budget by $40 million.
Congressional lawmakers: Both the Senate HELP Committee and Rep. Frank Pallone have taken steps to address the issue, with Pallone introducing legislation to scrap the arbitration system.
What to Watch
- Lawmakers' progress on legislation to reform or eliminate arbitration, which could significantly alter the law's operation.
- The volume of arbitration disputes, which is growing year over year and may continue to increase if left unchecked.
- Potential premium increases in employer and individual health plans as insurers adjust to the costs of arbitration awards.
Checked
12 claims in this story checked against 1 source: 10 supported.
Show each claim
- SupportedThe No Surprises Act has prevented about 50 million surprise medical bills since taking effect in 2022.Fortune | FORTUNE: “The No Surprises Act is working as promised for patients – as of September 2026, it has prevented approximately 50 million surprise medical bills.”
- SupportedThe arbitration process cost health plans an estimated $22.4 billion over the law’s first four years.Fortune | FORTUNE: “Researchers estimate the arbitration process alone cost health plans $22.4 billion in the law’s first four years.”
- SupportedLast year there were more than 2 million disputes, compared with a government estimate of 17,000 annually.Fortune | FORTUNE: “The federal government estimated there would be 17,000 disputes annually. Last year, there were more than 2 million disputes, many brought by providers with private equity investment.”
- SupportedMurtagh warns that arbitration could raise insurance costs and premiums for consumers.Fortune | FORTUNE: “I’m concerned that to pay for this, insurance companies will increase rates. Employers will need to budget more to pay for health insurance or increase the amount their employees pay.”
- Partly supportedThe law prohibits balance billing for out-of-network emergency care and services at in-network facilities.Fortune | FORTUNE: “The law prohibits balance billing and requires cost sharing to be at approximately in-network levels in three cases where surprise medical bills were common: If you receive out-of-network emergency care at a hospital or independent freestanding emergency facility. In a medical emergency, you’re not”
- SupportedA small number of out-of-network providers win about 85 percent of disputes, at amounts well above what plans would pay in-network.Fortune | FORTUNE: “Without those rules, arbitrators are selecting offers that are far above what plans would pay in-network. The winning offers are also much larger than what Medicare would pay for the same service. Providers are winning the vast majority – roughly 85% – of these disputes.”
- Partly supportedMurtagh said the $22.4 billion estimate excludes potential increases to in-network rates.Fortune | FORTUNE: “Researchers estimate the arbitration process alone cost health plans $22.4 billion in the law’s first four years. This doesn’t include the increases in in-network rates that are likely to occur if arbitration trends continue on pace.”
- SupportedThe Congressional Budget Office predicted lower payments would reduce premiums by 1 percent and federal deficits by $17 billion.Fortune | FORTUNE: “The Congressional Budget Office predicted these lower payments would reduce premiums for consumers by 1% and reduce federal deficits by $17 billion.”
- SupportedThe New York state employee plan reported the law was a key driver of its 10 percent premium increase for 2027.Fortune | FORTUNE: “The New York state employee plan reported that the No Surprises Act was a key driver behind the plan’s 10% rate hike for 2027.”
- SupportedA Texas city reported the law caused its employee plan to exceed its 2026 budget by $40 million.Fortune | FORTUNE: “A Texas city reported the No Surprises Act caused its employee plan to exceed its 2026 budget by $40 million.”
- SupportedThe Senate Health, Education, Labor and Pensions Committee held a roundtable on options to fix the law in September 2026.Fortune | FORTUNE: “In September 2026, the Senate Health, Education, Labor and Pensions Committee hosted a roundtable to discuss options to fix the law.”
- SupportedIn October, Representative Frank Pallone introduced legislation to scrap the arbitration system entirely.Fortune | FORTUNE: “In October, U.S. Rep. Frank Pallone, a New Jersey Democrat, introduced legislation to scuttle the arbitration system entirely.”