Providers, insurers battle over out-of-network reimbursement
By Alex Kacik and Nona Tepper / February 23, 2026
Providers and health insurance companies are accusing each other of gaming the No Surprises Act of 2020, sometimes pulling patients back into the middle of billing disputes the law was meant to prevent.
Physician groups, hospitals and air ambulance companies have flooded third-party mediators with millions of claims seeking higher reimbursement from insurers for out-of-network care. Providers argue insurers’ flawed reimbursement methodology is decreasingpayment and forcing them to seek arbitration, while insurers contend providers are committing fraud by submitting ineligible claims.
What Congress intended to be a patient protection law has become an increasingly contentious battleground over healthcare costs, driving up spending and bogging down the system. In some cases, patients are bearing the brunt of those additional costs, contradicting the intent of the law.
Attempts to rein in arbitration through legislation and regulation have stalled. But providers and insurers are hopeful policymakers will rework the dispute resolution process to fulfill the No Surprises Act’s aim of reducing healthcare costs and facilitating more in-network agreements between insurers and providers.
“The Independent Dispute Resolution process, which was intended as a payment backstop, is not working. It’s broken,” said Jennifer Jones, executive director of legislative and regulatory policy at the Blue Cross Blue Shield Association.
Arbitration surge raises stakes
Congress passed the No Surprises Act to protect patients from being billed unexpectedly for out-of-network care when they do not have a choice over their provider, like in hospital emergency departments. Under a process dubbed Independent Dispute Resolution, the federal government hires mediators to settle claims when insurers and out-of-network providers fail to reach agreement on how much they will be paid for providing that care.
There were nearly 1.2 million disputes filed in the first half of 2025, up 39% from the last six months of 2024, according to Centers for Medicare and Medicaid Services data. Providers successfully challenged the qualifying payment amount, which is the median in-network rate insurers pay for care in a given market, and secured higher pay in 88% of those cases, CMS data shows.
Patients caught in the middle
Providers have responded to insurers’ allegations of fraud by claiming insurers are systematically underpaying and delaying reimbursement.
They say insurers are trying to undercut the process, in some cases adjusting patient cost-sharing amounts. The law says patient cost-sharing amounts cannot change regardless of the outcome of the arbitration process.
In one explanation of benefits provided to Modern Healthcare by a physician group, an insurer — after it lost a dispute — increased a patient’s cost-sharing amount to $1,755.54 for high-acuity care provided by an out-of-network emergency physician at an emergency department. The patient’s portion of the bill before arbitration had been $335.98.
In another bill for a similar level of care, patient cost-sharing rose to $310.65 from $27.65. The patient information, physician group and insurance company were redacted from the benefits notices.
Physician groups that frequently work out-of-network said there are hundreds of examples where insurers adjusted patient cost-sharing amounts after the dispute process. In many cases, the providers said they absorb the costs. In other instances, patients have to foot the bill.
“Insurers are issuing a revised bill and patient cost-sharing amount after IDR determinations, putting patients right back in the middle. That’s exactly what was never supposed to happen,” said Dr. Anthony Cirillo, director of government affairs of US Acute Care Solutions, an emergency medicine physician group. “That is a violation of the law.”
A CMS spokesperson said in a statement patient cost-sharing should not increase because of the arbitration process. If needed, federal agencies and state regulators will take appropriate enforcement action to protect consumers, the spokesperson said.
After reviewing the explanation of benefits notices, a spokesperson for AHIP said the redacted documents were not clear enough to determine what actually transpired. In addition, the spokesperson for the health insurance trade group said certain out-of-network providers have gamed the process to increase costs for consumers, employers and employees.
Policymakers consider fixes
Blurred lines between state and federal laws, along with ongoing litigation regarding the arbitration process, often muddle enforcement efforts.
Providers said the No Surprises Act Enforcement Act, if passed, would force insurers to stop adjusting patient bills and require them to pay providers in a timely manner after a mediator settles a dispute. The bill, which would allow CMS to penalize insurers up to $10,000 if they violate the law, stalled in committee. Providers are hopeful Congress will revisit the issue.
Insurers are advocating for broader change, including limiting providers’ use of the arbitration process and shedding light on how arbiters come to payment decisions.
In the meantime, some companies like Elevance Health are using AI to flag ineligible claims for arbiters and defend its proposed reimbursement rate, said DR. Catherine Gaffigan, president of health solutions. At the start of the year, of the year, the insurer enacted a controversial new policy to deduct 10% of pay from hospitals every time an out-of-network doctor treats one of their policyholders.
“Clearly, providers have decided that this is an opportunity. They’re just testing the waters,” Gaffigan said.
During Congressional hearings last month, executives from UnitedHealth Group, Cigna, Aetna and others pointed to providers’ alleged abuse of the independent dispute resolution process for driving up premiums.
A week after the hearings, CMS moved a proposed rule governing how the process functions to the last step before finalization. The proposed regulation, which would adjust administrative fees per arbitration claim, expand the types of services and codes that can be bundled together in one case and limit batched complaints to 25 items, has been pending for more than two years.
Finalizing the regulation would streamline the technicalities of arbitration, Blue Cross Blue Shield Association’s Jones said. But ultimately it would serve as a superficial solution to a systemic problem, she said.