Frustration in Surprise Billing Cases Ups Pressure for Overhaul

At least two lawsuits alleging doctors are abusing arbitration for surprise medical bills are headed to the appeals circuit, escalating yet another issue under the No Surprises Act and creating more pressure on Congress and the Trump administration to revisit the system.

The law prohibited doctors from balance-billing patients in most cases of unexpected out-of-network care, and established an “independent dispute resolution” process to settle bills with insurers instead. But both providers and insurers have been accusing the other of violating the law, and courts so far have taken a narrow view of when either party can sue.

Insurers are urging courts to nullify arbitration awards they say providers obtained in fraudulent ways, including by submitting ineligible Medicare and Medicaid claims and funneling out-of-network claims through in-network practices.

Insurance lobbying group AHIP said in a recent amicus brief that some providers have “adopted IDR exploitation as a business strategy.”

Doctors and insurers are struggling with the law’s implementation. Data show doctors are winning 88% of cases, fueled by a handful of billing vendors and private-equity backed practices. Awards can reach as high as 17 times insurers’ median in-network rate, and the number of disputes providers are filing is increasing.

But providers accuse insurers of not paying when they lose, and judges are siding with insurers in determining the law doesn’t give courts jurisdiction to make insurers pay.

Last month, Anthem Blue Cross Life and Health Insurance Co. appealed a US District Court’s ruling in California that rejected its ability to sue billing vendor HaloMD and doctor group Sound Physicians over ineligible claims, even though Anthem alerted the arbitrator to the issue. A federal court in Florida in April also ruled against Aetna because it didn’t alert the arbitrator that claims submitted by Radiology Partners were ineligible.

The cases are now at the US Court of Appeals for the Ninth and Eleventh circuits, respectively.

A federal court in Pennsylvania likewise ruled against UnitedHealthcare of Pennsylvania Inc. in a case involving a Medicaid patient, even though NorthStar Anesthesia of Pennsylvania LLC admitted it opened arbitration for the claim in error.

Insurers are testing the same legal limits courts rejected when providers brought fraud allegations against them. The Fifth and Eleventh circuits previously ruled against providers in those cases, which alleged insurers misrepresented payment metrics.

“To the extent that both sides—the providers and the insurers—cannot find the recourse that they are looking for from the courts, it’s only going to increase the pressure on the Trump administration or Congress to do something,” said Katie Keith, founding director of the Center for Health Policy and the Law at Georgetown University’s O’Neill Institute.

Insurers should instead be attacking the constitutionality of the law itself, said Bill Brewer, founding partner at Brewer, Attorneys & Counselors, who specializes in complex commercial litigation. The “fundamental flaw” of the NSA is that it forces arbitration onto both parties, he argued, when it’s typically reserved for parties that voluntarily waive their First Amendment right to sue.

“Insurers have got to go back and replot their assault on this,” he said, “and stop appealing after they lost.”

Incentives

Insurers argue the law’s payment structure encourages arbitrators to ignore ineligible claims. Arbitrators are only paid if they reach a decision in a case—not if it’s deemed ineligible beforehand.

“Whether this expressly affects behavior or not, there is a financial incentive for IDR entities to proceed to a payment determination because that’s how they get compensated,” said Jason Mayer, who represents Anthem, now known as Elevance Health, as a partner at Crowell and Moring LLP.

Critics point to private equity investments in the arbitration companies as evidence of their profit motives. But advocates dismiss those concerns, noting that ineligibility rates continue to fall. Ineligible cases made up 17% of disputes in the first half of 2025.

Insurers are also still excluding “remark codes” on bills that help identify the patient’s plan, said Patrick Velliky, chief external affairs officer for surprise billing vendor HaloMD.

The latest data files also show that insurers are defaulting in 22% of cases, while offering less than $1 in another 9%, he said.

“I don’t know how you can credibly or in good faith make an argument that you should be winning more frequently in IDR when you don’t even show up meaningfully in over a third of the disputes you engage in,” Velliky said.

Insurers say their processes are improving, but argue the caseload is overwhelming and contains significant variations depending on the arbitrator.

Solutions

The Centers for Medicare & Medicaid Services receives $230 in administrative fees for each of the more than 2 million cases per year. That money could be invested in the arbitration portal to help block ineligible claims from getting through, said Elevance’s Vice President of Health Economics Ariel Bayewitz.

Better oversight of whether providers are giving patients authorization forms for planned out-of-network procedures would also help, he said.

“There are many small businesses where one of these awards would bankrupt them,” he said.

CMS is expected to release a final rule improving arbitration—including by requiring remark codes—but it was proposed in 2023 and won’t address many industry frustrations, said Lindsey Murtagh, senior fellow at Brown University and a former CMS official who helped develop NSA regulations.

“The impact of litigation is hard to overstate, because the departments are likely to feel that they’re under a microscope,” she said.

CMS could create a formal appeals process and implement additional safeguards, Murtagh added. But reining in escalating award amounts could require Congress to cap their dollar value or tie rates to in-network benchmarks—a fight that previously divided lawmakers.

“As long as we see these really high awards and huge win rates for providers, there’s going to be a significant incentive, a business incentive for providers to continue to bring these types of disputes,” Murtagh said, “and right now there’s not really a check on that at all.”