$15.6B provider payouts fuel surge in No Surprises Act costs

More IDR disputes lead to extreme costs

They attributed exorbitant costs to the sheer volume of disputes entering the process and the high cost of the IDR awards themselves.

Researchers pointed to 2.6 million new disputes initiated in 2025, up 77% from 2024. This volume pales in comparison to the federal government's estimate of about 22,000 disputes a year.

These disputes yielded a hefty price tag -- $15.6 billion in payments owed to providers from 2023 to 2025. Meanwhile, the researchers observed $4.2 billion in internal fees and $1.9 billion in IDR entity fees.

Arbitrators awarded 264% more payment determinations between 2024 and 2025, but the amounts were far more than the equivalent in-network rates, researchers indicated.

In the last two quarters of 2025, they found that the median initial payment amounts were in the 90th percentile of disputes. More disputes were "unusually high-dollar awards," researchers explained, filed largely by surgeons, assistant surgeons and neurologists.

The IDR process initially required arbitrators to heavily consider a qualifying payment amount for awards. This QPA is the median in-network contracted rate for a specific service in a region, adjusted for inflation.

The QPA, however, has been central to IDR-related controversies, leading to a reduction in its weight in payment awards. Just recently, an appeals court also overturned the methodology payers use to calculate the QPA, citing inappropriate use of ghost rates.

Providers celebrated the ruling, as they have criticized the QPA for underestimating the actual in-network rate or the market price of out-of-network services. Still, researchers asserted that the amounts awarded above the QPA drove the use of the IDR, incentivizing providers, including those not specifically targeted by lawmakers when designing the No Surprises Act, to file disputes.

The analysis showed that the estimate of total IDR costs attributable to payment amounts would be lower by $1.1 billion to $2.3 billion if payment determinations were set at 150% or 200% of the QPA, respectively. Winning providers -- which made up the majority of closed disputes -- got a median award of 445% of the QPA.

The total awards alone, without subtracting QPA, totaled $19.3 billion in 2025, they reported.

Rethinking the IDR process

These runaway costs, as researchers put it, are jeopardizing key goals of the No Surprises Act, including reducing consumer premiums. Instead, the IDR process will likely lead to higher consumer costs.

"In the short term, higher plan spending on IDR may lead plans to offset spending with higher premiums," the analysis stated. "In the longer term, if providers continue to obtain high IDR awards, employers and plans may take other steps to try to reduce health care costs, including further raising premiums, increasing patient cost sharing, narrowing provider networks, and restricting wage increases."

The findings also support concerns that providers could stay out of network to leverage the IDR process for higher payments or threaten to leave the network, according to the analysis.

Researchers concluded that lawmakers may want to revisit the No Surprises Act, including replacing the IDR with a payment standard or once again altering how arbitrators consider various factors to determine a payment amount.

IDR reform is coming down the pipeline, though, under a rule finalized by the Centers for Medicare and Medicaid Services in May. The rule seeks to alleviate major issues with the process, including high administrative fees, a backlog of ineligible claims and communication breakdowns between payers and providers during open negotiations.

Many of the rule's changes have now taken effect, although the IDR portal's functionality for specific update features like new batching rules will be rolled out later. Providers have generally applauded the updates but remain cautious about stricter eligibility scrutiny and timeline pressures.

Jacqueline LaPointe is an Executive Editor at Xtelligent Healthcare Media, covering revenue cycle management, healthcare payers, health policy and health IT since 2016.