The No Surprises Act’s arbitration process is once again embroiled in controversy as physician groups speak out on what they say are inflated IDR costs being reported out through recent research.
A report published in Health Affairs Forefront on Aug. 26 by researchers at the Center on Health Insurance Reforms at Georgetown University in Washington, D.C., put a $22.4 billion price tag on the law’s IDR process. Of that total, which includes costs calculated since 2022, the researchers attributed $15.6 billion to arbitration awards that came in above insurers’ qualifying payment amount, or QPA — the benchmark rate insurers use to set in-network reimbursement — with the remaining $6.9 billion split between internal administrative costs for health plans and providers and fees paid to IDR entities and the federal government.
The American College of Emergency Physicians, the American College of Radiology and the American Society of Anesthesiologists say that framing gets the story backward. In a joint statement shared with Becker’s, ACEP, ACR and ASA argued the entire estimate rests on treating the QPA as an accurate, appropriate in-network payment rate, an assumption they say the evidence does not support.
“The data continue to show that the IDR process is being used because insurers increasingly refuse to negotiate fair rates, offer inadequate reimbursement, and narrow physician networks,” said Dana Smetherman, MD, CEO of ACR. “When arbitrators consistently reject insurer payment offers and courts find flaws in how QPAs are calculated, policymakers should ask whether the median in-network rate calculations themselves are distorted; a fair and effective IDR process depends on accurate payment data, transparency, and accountability from all stakeholders.”
The $15.6 billion in above-QPA awards accounts for nearly 70% of the report’s total estimate, according to the associations, which pointed to acknowledged errors in the federal data used to calculate it. The groups estimate at least $6 billion of that figure may reflect clerical errors or costs already accounted for elsewhere in the dispute process, errors they say the Health Affairs analysis does not fully reflect. QPA calculations themselves, the associations added, are opaque and cannot be independently verified by physicians.
That skepticism got legal backing on Aug. 11, when the U.S. Court of Appeals for the Fifth Circuit ruled that federal regulations improperly let insurers pad QPA calculations with so-called “ghost rates” — placeholder figures for services rarely or never actually provided — while excluding bonus and incentive payments from the calculation. The court found those practices artificially depressed the very benchmark the Health Affairs report treats as accurate, and pointed to physicians’ high win rates in arbitration as evidence QPAs are set too low, not proof that physicians are gaming the system.
“The No Surprises Act and the IDR process must ensure that physicians who provide care to patients can receive fair and reasonable in-network payments after that care has been delivered,” said L. Anthony Cirillo, MD, president of ACEP. “Congress and the Administration should ensure QPAs are accurate, require insurers to participate in the IDR process and negotiate with physicians in good faith. It is essential to preserve a fair IDR process that holds both insurers and physicians accountable.”
The associations also pushed back on the report’s suggestion that fair physician payments are driving up premiums. Patrick Giam, MD, president of ASA, said that framing ignores how profitable the insurance industry remains.
“The paper posits that appropriate payments to front-line physicians for patient care translate into higher premiums. This framing overlooks the reality of big insurance: many of the nation’s largest commercial health insurers and their parent companies report annual profits in the billions of dollars,” Dr. Giam said. “If insurers choose to pass the cost of reasonable physician payments on to consumers rather than absorb those costs within their substantial revenue and profits, that is an unfortunate, profit-driven, business decision, not an inevitable consequence of the IDR process.”
The associations said they aren’t opposed to scrutiny of the IDR process altogether. They agree policymakers should examine unusually large arbitration awards and look for ways to make the system run more efficiently. But they argue that scrutiny needs to cut both ways, toward inaccurate QPAs, inadequate initial payments, lowball insurer offers, insurer defaults and delayed payment of arbitration awards, not just toward the amounts physicians ultimately win.
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