INVESTIGATION | November 11, 2026 | By Lotta Goddess
Imagine a law that stops an unexpected medical bill from reaching your mailbox—then helps a much larger bill travel through the insurance system instead.
That is the uncomfortable question at the center of the next health-insurance price shock. The federal No Surprises Act has protected patients from certain out-of-network charges since January 2022. But its mechanism for settling fights between insurers and medical providers has become a rapidly expanding arbitration business. An analysis of federal records by Georgetown University researchers estimates that this process generated $16.6 billion in payments above a benchmark rate and administrative costs in 2025 alone.
That number is an estimate, not a government accounting of the law’s net cost. It also does not mean that patients should lose their protections. The central question is whether the system can keep patients out of billing disputes without giving powerful intermediaries new ways to raise the price of care.
2027 premiums: the increase is real, but there is no single number
On November 11, The Atlantic reported that employers face another unusually steep rise in health-plan costs next year, highlighting the arbitration system as a potentially overlooked contributor. Its cited forecasts extend as high as roughly 11%. Other major forecasts point in the same direction but differ on scale: Aon projects a 9.5% employer health-care cost increase for 2027 before mitigation, while Business Group on Health surveyed employers anticipating a median 9.2% rise before plan changes.
These are forecast health-plan cost trends, not a guarantee that each worker’s payroll premium will jump by that percentage. Employers may absorb some increases, shift costs through deductibles and contributions, narrow benefits or change plans. The distribution is a business decision layered over medical spending.
The starting point is already expensive. KFF’s 2026 employer benefits survey found an average annual premium of $28,303 for employer-sponsored family coverage, including an average $7,471 paid by workers. The average family premium rose 5% from 2025; it has risen 55% since 2016. The rest of the premium is generally financed by employers, but it is still part of the cost of employing someone.
People shopping through Affordable Care Act Marketplaces face a related but distinct problem. KFF reports that the average finalized benchmark silver premium for 2027 is rising 13%, against a backdrop of medical inflation and the expiration of enhanced premium tax credits after 2025. Those Marketplace figures should not be merged with employer-plan forecasts.
How a patient-protection law created a second financial contest
Before the No Surprises Act, someone could enter an in-network hospital and later discover that an emergency physician, radiologist or other clinician was outside the insurance network. The patient might then receive an additional bill for the difference. The law generally blocks that practice for protected emergency care, certain out-of-network services at in-network facilities and air ambulances, limiting the patient’s cost-sharing.
It also shifted the payment fight to the parties behind the scenes. Under the federal independent dispute resolution process, insurers and providers first try to negotiate. If that fails, each side proposes a payment and a certified arbitrator selects one of the two offers. This final-offer model was meant to encourage settlement instead of endless litigation. For covered patients, that means a dispute should not become an extra balance bill.
The model had an assumption buried inside it: relatively few claims would reach arbitration.
The filing numbers have overwhelmed the original design
In the Georgetown analysis, researchers Jack Hoadley and Kennah Watts calculated that providers initiated about 2.6 million disputes during 2025, far beyond the approximately 22,000 annual disputes federal agencies had projected in the original estimate cited by the researchers, including air ambulances.
Newer CMS operational data show the growth did not stop: 2,895,872 disputes were initiated from January through September 2026. In August and September alone, 750,022 were initiated. The government also reports that certified arbitrators closed 784,352 disputes over those two months, reducing the backlog. The system is processing more claims, but it is also receiving them at extraordinary volume.
And the dispute pipeline is not evenly distributed among American physicians. Georgetown’s review of 2025 resolved dispute lines attributes roughly 30% to Radiology Partners, 27% to HaloMD and 20% to TeamHealth. Radiology Partners and TeamHealth have private-equity backing; HaloMD files disputes on behalf of medical providers. This concentration does not make an individual claim improper, but it shows that large organizations and specialized filing operations can shape the system’s economics.
Where the $16.6 billion estimate comes from
The researchers did not simply add up every arbitration award and call it waste. They estimated the amounts paid above the qualifying payment amount—generally based on the median contracted in-network rate—then added estimated internal processing costs and arbitration fees. Their analysis puts the accumulated cost of the IDR process at approximately $22.4 billion from 2022 through 2025, with $16.6 billion attributed to 2025.
In 2025, providers prevailed in approximately 85% of decided disputes, and the median winning award exceeded four times the qualifying payment amount, the Georgetown researchers report. Such a large gap raises questions about whether the arbitration mechanism is anchoring payments anywhere near existing negotiated prices.
But several limitations matter. The $16.6 billion estimate includes modeled administrative costs, not only observed checks. The researchers acknowledge that the in-network benchmark is contested, that their calculation excludes some negotiations and that it does not measure the No Surprises Act’s overall net effect after accounting for the surprise bills patients no longer pay and broader market changes. It is evidence of an expensive process, not proof that repealing the law would save $16.6 billion.
Providers have a counterargument—and insurers are not neutral observers
The dispute has two well-funded sides. Provider groups argue that insurers sometimes make unrealistically low initial payments, resist fair reimbursement or fail to participate effectively in arbitration. In its Atlantic responses, TeamHealth defended arbitration as necessary to challenge insurer underpayment, while HaloMD disputed the insurance industry’s explanation for rising medical costs. Radiology Partners likewise argued that the law’s payment protections need to remain viable for clinicians. These are the organizations’ positions, not independently established explanations for every claim.
Insurers have incentives, too. The qualifying payment amount can itself be disputed as an imperfect reflection of market rates, and the system is not a neutral experiment in which everyone begins with identical bargaining power. An insurer’s low offer does not automatically prove bad faith; a high provider award does not automatically prove that a service was overpaid. The most useful test is to examine the claims, fees, arbitration decisions and actual negotiated rates—not simply select one industry’s press release.
Researchers have raised another concern: arbitrators are paid to handle disputes, and large repeat filers may have influence over the volume directed to different certified entities. A Health Affairs analysis found substantial variation in how different arbitrators ruled. That pattern merits scrutiny but does not, by itself, establish corruption or prove a specific decision was bought.
It is not just arbitration: expensive drugs and AI billing are part of the story
The health-cost squeeze has more than one driver. Prescription drugs, including widely used GLP-1 treatments, increase spending for plans that cover them, although their longer-term effects on illness and utilization complicate simplistic cost accounting. Hospital prices and consolidation, workforce pressures, greater use of services, and expensive specialty care also matter. Aon’s forecasts emphasize utilization and the mix of care, not only unit prices.
Meanwhile, AI-assisted documentation and coding tools may enable clinicians to capture more billable complexity in medical encounters. Vendors often market improved reimbursement as a feature. That is not proof that all AI-assisted coding is inflated or fraudulent: better documentation can also capture legitimate care that previously went unrecorded. What remains uncertain is how much these technologies will add to national claims spending in 2027. A forecast attributed to a consulting firm should not be confused with a completed audit.
The arbitration process is unusual because it is one part of medical inflation that Congress and federal regulators specifically designed. It is therefore also a place where policy changes can directly address incentives.
Can Washington change the rules without sacrificing the patient?
Regulators have already made changes. A May 2026 federal final rule sought to improve communication, transparency and administrative efficiency in the IDR process. Under CMS’s fee notice, the federal administrative fee for new disputes fell from $115 to $15 per party in June 2026. But cutting filing fees alone does not resolve the more consequential question of how awards are determined.
Reform choices include tighter eligibility screening, clearer explanations of arbitrators’ decisions, greater visibility into relationships between filers and arbitrators, and payment standards more closely connected to documented market rates. Each has tradeoffs. Fixing an award system that favors repeat large-scale participants should not mean giving insurers unchecked authority to dictate compensation for legitimate emergency care.
Readers also have a practical stake right now. The CMS medical-bill rights page describes which surprise bills are generally prohibited and how to complain. Those protections remain in force. For employer coverage, compare total expected costs—not just payroll premiums—including the deductible, out-of-pocket maximum, network, prescription coverage and any announced 2027 benefit changes.
For related Apep Bar reporting, see America’s Vanishing Hospitals: Corporate Profits, ER Gridlock and the Longer Drive to Care, which examines another side of the fight over who finances access to medicine.
The unanswered question: Can a system that successfully stopped surprise bills to patients be rebuilt to stop surprise costs from accumulating elsewhere—or have its most sophisticated users already learned to make the loophole the business model?
Sources and further reading
- CMS: Federal independent dispute resolution public data and 2026 operational reports
- Jack Hoadley and Kennah Watts, Georgetown Center on Health Insurance Reforms: arbitration cost estimate and methods (August 28, 2026)
- KFF: 2026 Employer Health Benefits Survey
- Aon: 2027 employer cost outlook
- CMS: May 2026 IDR operations final rule
- Rogé Karma, The Atlantic: The Perverse Reason Health-Care Costs Are About to Surge (November 11, 2026)
Featured-image credit: Contextual documentary photograph of Saratoga Hospital emergency entrance, Saratoga Springs, New York, by P_R_F, CC BY 2.0. The photographed hospital is not implicated in any of the arbitration concerns discussed in this article.
