
SUMMARY: The federal No Surprises Act was passed in 2020 and set up an arbitration process where insurance companies and providers would negotiate the payment for out-of-network charges so patients didn’t get huge surprise bills. What happened is a classic example of how for-profit corporate capitalism creates huge costs and waste in our health care system. Ultimately, patients are paying for all of this through increased premiums, while the cost of our health care system spirals upward with no improvements in quality or outcomes.
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You probably remember the surprise health care billing problem that made headlines in 2019 and 2020 where patients were getting huge bills for “out-of-network” medical services over which they had no control, such as in the emergency room or for anesthesia or radiology. As a remedy, the federal No Surprises Act was passed in 2020 and set up an arbitration process where insurance companies and providers would negotiate the payment for out-of-network charges, so patients didn’t get huge surprise bills.
Although the Act did succeed in keeping patients from getting surprise bills, what happened is a classic example of 1) how for-profit corporate capitalism dominates and has corrupted our health care system, and 2) how the lack of a single payer system wastes time and money. With a single payer system, the surprise billing problem would never have happened in the first place because there would be no such thing as “out-of-network.”
The arbitration system created to “solve” the surprise bill problem has become another layer of bureaucratic waste. It has created two new sets of middlemen, arbitrators and consultants, who manipulate the system to maximize their own profits on the backs of our already expensive health care system. [1]
The arbitration system primarily has huge insurance companies on one side who want to pay less for medical services. On the other side, in many cases, are private equity-owned medical staffing companies trying to maximize billings and profits. The No Surprises Act instituted an arbitration system using an independent dispute resolution process (IDR).
The in-network rate for medical services is supposed to be used as a guideline for determining payments, but it is not a mandated standard. Policy makers estimated there would be 20,000 arbitration cases a year nationally, based on experience with a similar system that mandated in-network rates as the standard.
However, in 2025 there were 2.2 million arbitration cases and payments were triple those of the previous year. Providers won roughly 85% of the cases and some outrageous payments were made. For example, there were 25 payments for over $10 million each for procedures that had an in-network cost of $100 to $2,000.
One of the new middlemen, the arbitrators get a flat fee per case and took in $1.3 billion. Given their flat rate, they have a perverse incentive to want to stimulate more cases as the only way to increase their revenue. The way to incentivize more cases is to make high payment awards that create an incentive for providers to file more cases. These high payments establish precedents that are cited in subsequent cases, so the payment awards just spiral upward. By the way, five of the certified arbitrators have private equity backers.
The other new middlemen are consultants to providers and their private equity owners. One of these consultant companies, HaloMD, filed 20% of all the arbitration cases and earned over $1 billion in fees in 2025. These consultants, of course, have an incentive to maximize the payment awards and they brag about getting eight to thirteen times the typical in-network payment rate for their clients.
The insurers are fighting back in unusual ways. Across the 2.2 million cases in 2025, in roughly one million cases they simply gave up and defaulted to the providers’ requests. In another 380,000 cases, they offered to pay $1 or less. Clearly, they are not participating in the arbitration system in good faith. It appears their strategy is to fight in court to get cases thrown out en masse rather than having to fight case by case – although the No Surprises Act bans judicial review of individual billing disputes. Or their strategy may be to have the arbitration system spiral so far out of control that the insurers can argue in court that the whole system should be thrown out. A piece of the court-based strategy may be to delay payments. In some cases, providers are reporting that insurers are simply refusing to pay. A trade association for emergency medical services providers has reported that about 60% of awards were not paid within the 30-day period mandated by the No Surprises Act.
Ultimately, patients are paying for all of this – the outrageous payments for the services and the billions of dollars of administrative overhead costs. Individual patients aren’t getting huge surprise bills, rather we are all paying through increased premiums for our health insurance. And the cost of our health care system spirals upward with no improvements in quality or outcomes – just more capitalists making more money. (See this previous post for a more general overview of how capitalism has corrupted our health care system. See this previous post for how a universal, single-payer health care system would save lots of money and lives.)
For lots of good news see Jess Craven’s Chop Wood Carry Water blog’s most recent good news Sunday post here.
[1] Dayen, D., 8/13/26, “Congress face-plants on surprise health care bills,” The American Prospect (https://prospect.org/2026/08/13/congress-trump-no-surprises-act-health-care-bills-insurance/)




































































