UnitedHealthcare’s frustration with the No Surprises Act’s arbitration system became explicit on the insurer’s second-quarter earnings call, but it is only the most recent escalation in a fight that has stalled in Congress, lost repeatedly in federal court and is now spilling into the contracts insurers write with ASCs and physician groups.
“The IDR process is not working, certainly not as Congress intended it, and it needs to be reformed,” Dan Kueter, CEO of UnitedHealthcare’s employer and individual business, said on UnitedHealth Group’s second-quarter earnings call July 16. Mr. Kueter said the independent dispute resolution process is “being exploited by select providers and select geographies,” adding about 50 basis points of incremental cost trend in 2026 and now accounting for at least 100 basis points of the insurer’s total commercial cost.
UnitedHealthcare CEO Tim Noel said commercial costs are “stubbornly high, rising above expectations, which we believe is consistent with what is being experienced across the sector,” with medical cost trends running modestly above the 11% level the insurer previously reported. He said commercial margin recovery “will remain a focus area longer than originally anticipated,” extending past 2027.
Mr. Kueter’s complaint reflects an industry-wide position that has, so far, gone nowhere in Washington. The No Surprises Act Enforcement Act — introduced in the House in July 2025 by Rep. Gregory Murphy, MD, R-N.C., and now carrying 36 bipartisan cosponsors — would raise penalties, including $10,000 per violation, on plans, providers or facilities that miss payment deadlines following an arbitration determination. On July 13, the Coalition Against Surprise Medical Billing, whose members include AHIP, launched a six-figure ad campaign opposing the bill. Three days earlier, 58 employer groups sent a letter to the House Ways and Means Committee urging lawmakers to reject it.
“The profit-driven use of the IDR process by certain provider groups and middlemen is causing healthcare costs to spiral even higher, and employers, working families, patients and consumers are paying the price,” the employer groups wrote. “Congress should be focused on advancing policies that improve healthcare affordability by fixing the broken IDR system rather than misguided legislation like the No Surprises Act Enforcement Act, which will only exacerbate the affordability crisis.”
Insurers have fared no better in court than in Congress. On July 10, a federal judge dismissed with prejudice a lawsuit from Elevance Health’s Blue Cross Blue Shield of Georgia that accused billing company HaloMD and two physician groups of defrauding the insurer through the IDR process.
Judge Thomas Thrash Jr. wrote that it was “highly plausible to infer that the Plaintiff engages in a consistent practice of submitting lowball offers to out-of-network providers in an effort to maximize its profits.” Elevance said it plans to appeal. Judges in California and Texas dismissed similar insurer lawsuits against HaloMD in April and May, ruling that judicial review of arbitration determinations is narrowly constrained. A separate rule proposed by HHS in November 2023 to overhaul IDR operations more broadly has been tied up for more than two years by litigation from the Texas Medical Association and remains under review at the Office of Management and Budget.
The scale of the numbers helps explain why insurers are pressing the issue on every available front at once. According to UnitedHealthcare, upwards of 40% of claims that enter the IDR process are ineligible, and roughly 60% of arbitration cases are brought by just five entities — a concentration Mr. Kueter said marks a shift from prior years. When arbiters side with out-of-network providers, the average payout is now 11 times what Medicare would pay, with some determinations reaching 30 times Medicare rates, he said. Separately, a recent Health Affairs study found providers won 85% of disputes in 2024 at median payment determinations of 459% of the qualifying payment amount, up from 327% the year before. More than 5 million disputes have been filed since the IDR process launched in 2022, against the roughly 17,000 annual filings regulators originally projected.
With legislative and legal remedies stalled, some insurers have started addressing the imbalance directly in their contracts. Elevance Health finalized a policy, effective Jan. 1, under which facilities can face an administrative penalty equal to 10% of the allowed amount for any claim involving a nonparticipating provider not in-network with Anthem Blue Cross Blue Shield commercial plans in 11 states.
“This policy is deeply flawed and operationally unworkable,” the American Society of Anesthesiologists, the American College of Emergency Physicians and the American College of Radiology said in a joint statement asking Anthem to withdraw it. “It effectively shifts Anthem’s network adequacy obligations onto facilities, holding them financially liable for the contracting status of independent physician groups — an area over which they have no control or infrastructure to manage.” In December, 14 House lawmakers called for a federal investigation into the policy, arguing it is anti-competitive and undermines the No Surprises Act by pressuring facilities to coerce independent physician groups into accepting Anthem’s rates rather than pursuing arbitration.
Providers are making their own calculated contract-level moves. Anthony Maioriello, MD, founder of Comprehensive Level One Staffing in Dallas, also runs Level One Revenue Recovery, which helps physicians and facilities arbitrate underpaid out-of-network claims. Speaking at the Becker’s Spine, Orthopedic and Pain Management-Driven ASC + The Future of Spine Conference in Chicago June 11, he laid out a selective strategy: stay in network with a dominant payer, go out of network with those that consistently underpay, and rely on arbitration to recover on the emergency and call cases covered by the law’s inadvertent-provider designation.
“What is your motivation to sign a contract that gives you Medicare, or in Dallas, less than Medicare?” Dr. Maioriello said. “Why would you do that?”
Dr. Maioriello said arbitration awards he now sees typically run eight to 12 times the original insurer payment — a gap he attributes to how low initial insurer offers are, not to providers gaming the process. He also argues the calculus around network participation often ignores the administrative cost of chasing volume.
“Is it better to do 40 cases a month and make X or 10 cases a month and make X?” he said. “It’s better to do 10 cases a month and make X because you don’t have to have as much staff, you don’t have to have as big of a machine to keep that funnel coming in.”
That logic is precisely what worries health plan executives most. Thomas Nyhan, executive director of TeamCare, a health plan covering about half a million union workers, said his plan has spent $19 million on arbitration cases since 2022. Mr. Nyhan warned that as out-of-network arbitration becomes more lucrative, providers may have less incentive to join insurance networks at all — a dynamic that compounds the roughly $5 billion in cumulative IDR-related costs insurers and employers say the process has generated since 2022.
Four channels — regulation, legislation, litigation and now direct contract terms — are all being tested at once, and none has produced a resolution. With dispute volume still running far past what regulators projected when the law took effect, neither payers nor providers appear ready to step back before one of those channels gives way.
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