You Can’t Blame a Payer for Trying

I have spent 20 years working in out-of-network healthcare reimbursement. After reading the New York Times article “A $440,000 Breast Reduction? How Doctors Cash In on a Health Care Law,” I felt the payer’s use of the independent dispute resolution (IDR) process was not sufficiently scrutinized.

The article details how the No Surprises Act (NSA) helped shield patients from surprise bills by barring out-of-network clinicians from billing patients directly. Instead, these doctors can now bring their case to a federally vetted arbitrator, and if they win, the patient’s insurer must pay the doctor’s proposed amount. And the doctors have been winning: the arbitrators have ruled in favor of the doctors approximately 88% of the time, leading some to collect fees up to hundreds of times higher than what they could previously negotiate with insurers or what they could have gotten from patients.

This left me wondering if these admittedly high IDR provider awards were really a pain point for an insurance industry that routinely reports billions in profits.

Examining the Insurer-as-Victim Narrative

First, I agree that $440,000 for a breast reduction is unreasonable, and yes, there are many bad actors in the space. But the NSA was developed to protect patients, not to reduce the out-of-network payment precedent set by payers over the last two decades. Within the context of the reported $447.6 billion in revenue and $12.1 billion in net earnings for United Healthcare in 2025, $274.9 billion in revenue and $6 billion in shareholder net income for Cigna, and $197.6 billion in operating revenue and a returned $4.1 billion to shareholders for Elevance, the payer-as-victim narrative falls flat.

The article suggests that the inflated IDR payments led some insurers to have to increase their premiums, but this fails to account for the many factors driving up the cost of care: rising prescription drugs costs, Medicare Advantage costs, utilization rates, pharmacy benefit managers (PBM pricing), administrative costs, reserves, shareholder returns, and corporate margin targets. Meanwhile, the O’Neill Institute at Georgetown Law reported in mid-April that providers have filed hundreds of lawsuits seeking payment of unpaid IDR awards, sometimes involving millions of dollars, while courts have recognized only narrow paths for enforcement.

None of these points prove that the large provider IDR awards are fair, but they make the payers’ claim about what’s driving the rising cost of healthcare seem selective.

Is $440,000 the Norm?

It’s also worth looking at the broader context of IDR payments: are most providers raking in tens of thousands of dollars more than they were before the NSA passed? Or are these cases outliers?

The qualifying payment amount (QPA) used to price surprise billing claims is the plan’s median contracted rate for a service in a market. It determines patient cost-sharing and a benchmark for payer offers, but it may be far below historical out-of-network reimbursement. There is no concrete data to measure the number of claims processed at the QPA rate versus how many of them go through the arbitration process, but we can measure.

According to payer-industry extrapolation from “more than 10 million” in the first 9 months, there were about 13.5 million claims in 2023 that met the surprise bill criteria, but only 657,040 IDR disputes were filed.

According to a survey from AHIP and the Blue Cross Blue Shield Association, there were an estimated 19.7 million qualified IDR/NSA-eligible claims in 2024. The survey reported that providers accepted the initial payment in 76% of those claims, 18% resolved in open negotiation, and approximately 6% entered IDR arbitration, with an estimated 1.2 million disputes submitted.

If many of the 94% of NSA-eligible claims that do not reach IDR are paid at or near the QPA, regulators should ask whether payer savings on those claims offset, or even exceed, the high awards paid on the much smaller subset of claims that reach arbitration. The public data currently does not allow that question to be answered.

The Industry Line

Despite billion dollar insurance industry profit reports and data suggesting only a small percentage of claims eligible for the QPA may go through the IDR process, major insurance industry players call out the process as “rigged,” “gaming,” or “abuse,” and point to “inflated awards.” Some payers have gone further, filing lawsuits that aim to disqualify IDR awards.

The result is a troubling pattern: when providers win, the award is often treated not as the outcome of a binding federal process, but as evidence that the process itself must be illegitimate.

There is another reason this rhetoric matters. Many plans subject to the NSA are self-funded employer plans. In those arrangements, the employer — not the insurer — ultimately bears the claims cost, while the payer is paid to manage the plan, process claims, and contain spending. KFF reported that 67% of covered workers were enrolled in self-funded plans in 2025, including 80% of workers at larger firms. If a payer cannot persuade an employer that it is controlling out-of-network costs, that employer may look for another payer, network, repricing vendor, or cost-containment partner. That gives payers and their affiliates a business reason to frame provider-favorable IDR awards not merely as disputed payments, but as evidence that the arbitration process itself is broken.

The most seemingly exorbitant provider payouts deserve scrutiny, but they should not be viewed as representative of the entire out-of-network physician community. Some non-participating providers are highly specialized physicians performing complex or life-saving procedures. A fair account of the IDR system should distinguish between potentially abusive outliers and legitimate providers seeking reasonable payment for necessary care. Regulators should require public reporting of how many NSA-eligible claims are paid initially, at what percentage of QPA, how many enter IDR, how many awards are unpaid after 30 days, and how many notice-and-consent waivers are accepted or rejected. This will make for a fairer system for all stakeholders.

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