Arbitration under No Surprises Act inflates provider payments, pushing up consumer health costs

An investigation found that while the No Surprises Act succeeded in removing unexpected medical bills, its mandated arbitration has created a lucrative market where doctors and specialist firms secure payments far exceeding standard benchmark rates. Examples include plastic surgeon Dr. Norman Rowe receiving awards about 170 times the benchmark and spine surgeon Dr. Vadim Lerman averaging 280 times the benchmark. Arbitrators choose between the insurer's and provider's offers, favoring providers in more than 85% of disputes, and the process has produced over $2 billion in arbitrator fees.

Companies such as HaloMD and other private-equity-linked firms handle the majority of cases, taking undisclosed cuts of the inflated payouts. Because most of these costs are billed to employer-sponsored plans, employees may see higher premiums at open enrollment. Lawmaker Rep. Frank Pallone, who helped craft the act, now seeks legislation to eliminate arbitration and require out-of-network providers to be paid in-network rates.