No Surprises Act Backfires: Who Pays the Price for Arbitrage? -By Fransiscus Nanga Roka

But a lot of insures are claimings those policies remain high after the passbook of the U.S. NSA, signed into law in late 2020 and which took full effect last January, was designed to prevent so called “balance billing” huge out of network bills for emergency services even if patients were admitted to in-network hospitals. Behind the curtain of protecting consumers, however, has been unveiled a multi-billion dollar bureaucratic shadowland of IDR that instead catalyzed premium increases with so-called consumer protections now raising horrible questions about who exactly pays for this mess in our fractured healthcare system.

Out Of Network Emergency Care: NSA bars medical providers from billing patients directly more than out-of-network usual and customary cost-sharing for emergency services. Intended to protect patients from being caught in the crossfire of payment disputes, it shifted the fight over payments into negotiations between insurers and providers. The contentious baseball-style arbitration system IDR acts as a mediator when they are in disagreement over reimbursement.

Insurer and provider each submit final offers, in sealed envelopes, to an arbitrator empaneled by the government, who must select one or the other without modification. The loser pays arbitration expenses, increasing the stakes in strategic bidding. The process is intended to be quick and equitable, but it has come down to a zero sum game disproportionately in favor of providers.

Information from the Centers for Medicare & Medicaid Services indicates a shocking 1.5 million arbitration cases, 70 times what the government initially estimated with providers winning 80-85% of disputes. Arbitrators routinely select payment demands that run well above the market average, which is leading to an arbitrarily inflated cost base for emergency care.

These arbitrations are typically dominated by private equity-backed medical groups. Using IDR as a profit engine, these investor-backed entities who own multiple anesthesiology, radiology and urgent care clinics intentionally stay out-of-network. The imposition of an out-of-network designation pays 2.7 to more than 4-yer norm rates exposing a windfall mercenary arbitrage that is directly in conflict with the NSA intent to stem surging unreported costs.

The QPA the median in network contracted rate based on the data is an anchor price that the NSA requires to be used by arbitrators. Insurers maintain that as a rule: QPA must be the baseline for fair reimbursement. But this metric was subsequently challenged in court by large physician associations, which accused regulators of rounding up “ghost rates.” In a decision in August 2026, the U.S. 5th Circuit Court upheld the prices agreed to under the QPA calculation method, referencing this as a key pricing guardrail and publishing their ruling which overturned it. Providers gained traction in continued claims for exorbitant arbitration awards and, in turn, increased runaway cost inflation due to this legal victory.

The blowback lands squarely on consumers: Insurers required to pay mega arbitrage awards and absorb soaring administrative IDR costs (up from $50 per case to $350) must recoup their losses by raising health insurance premiums. The key to understanding surprise bills is in the math : billions of inflated claims plus $2–2.5 billion wasted every year by arbitration overheads means that our collective cost burden doesn’t just shift away from surprise bills, but squarely into every policyholder’s pocket.

And high arbitration payouts create economic incentives for providers to drop from networks and seek out-of-network status, further undermining the leverage of insurers. At least tractable network discounting leads companies to pay higher premiums for in-network treatment or lose access entirely again, sparking further upward pressure on premia.

Uncle Sam’s noble attempt to provide a patient protection system also created an opening for stealthy provider groups used by private equity vultures to chronicle-of-ownership fair and round reimbursement into a collective-market arms race driving soaring healthcare costs. Instead of bending the healthcare cost curve as intended, the law makes insurance premiums inflating upward at an accelerating pace and worsening the affordability crisis for millions of Americans.

A much-needed and immediate reform of the No Surprises Act’s flawed arbitration process is vital to roll back its unintended price-raising effect. Above all things, Congress needs to reset arbitration pricing by restoring an open and research based floor in the form of the QPA. It would need a return to lost methods and more capable oversight bodies, with punitive powers of enforcement over strange pricing calls. Absent such a hard and data-based pricing anchor, arbitration itself is just open season for providers to gouge exorbitant takeouts that decimate whole blocks of the health insurance ecosystem.

Just as important is to rein in how private equity strategically takes advantage of the arbitration system. Regulators need to establish strict rules to prevent investor-backed provider groups from using out-of-network status for their own profit-maximizing gambit. This includes a stronger requirement for full financial disclosure — looking at ownership structures, and the implementation of strong anti-fraud measures. It is necessary to close these arbitrage loopholes in order to realign incentives around actual patient care, and not opportunism or rent seeking.

At the same time, the excessive administration in arbitration fees demands urgent attention. In fact, procedural overheads rising from little more than fees of pennies to hundreds of dollars per case are perpetuating inefficiency and cost inflation that consumers ultimately pay for with higher premiums. There is a need for legislators and regulators to take action to cap these fees, abolish fee traps, and simplify dispute resolution processes. Alternatives to adversarial proceedings, such as mediation or court-facilitated settlements with governments, should be explored when there is a reasonably fair way of getting an adequate outcome without hoodwinking the courts into spending huge amounts of bureaucratic energy on unproven yet contentious theories.

Additionally, network adequacy standards must be reinforced. After that, we recommend that policymakers incentivize providers to keep in network contracts for example by implementing penalties or other regulatory disincentives against out of network declarations when not warranted. This would strengthen insurers negotiating leverage, help stabilize provider reimbursement, and slow the gradual narrowing of networksa , principal contributor to growing premiums and diminished access.

Last, annual reporting on arbitration decisions, cost trends and provider behavior should be mandated to enhance public transparency and accountability. That kind of reporting can expose hostile situations, give consumers and policymakers useful data to make changes, and create disincentives for gaming the system. Transparency is the linchpin of fair reform in a sector translated with power and information asymmetries.

Absent a multi-pronged, strategic reimagination involving many of these proposals, the No Surprises Act is on a fast track to becoming an expensive shell game shielding patients in principle but creating more burdensome costs in reality. Lawmakers must act swiftly to re-calibrate the architecture of this law before its hidden costs swamp consumers and fracture Americans’ access to affordable health care.

Ironically, the patients NSA was meant to preserve now pay this hidden cost: monthly increasing insurance premiums that diminish both access and affordability. The unintended effects act as a warning against policy design defects which work to the advantage of private interest groups at public expense. Absent rapid and widespread reform effort, the hope of “No Surprises” could become an empty victory eclipsed by the rising healthcare cost crisis.

Fransiscus Nanga Roka

Faculty of Law University 17 August 1945 Surabaya and Managing Partner Law Firm Victorious Indonesia