No Surprises? Surprise Billing and Independent Dispute Resolution

Surprise medical bills are making headlines again. On February 25, 2025, President Trump issued an executive order aimed at increasing healthcare price transparency and compliance, signaling a renewed focus of federal enforcement efforts. Meanwhile, recent federal government spending cuts affecting the Center for Consumer Information and Insurance Oversight (CCIIO)—an agency of the Centers for Medicare & Medicaid Services that is tasked with implementing the related federal No Surprises Act (NSA)—spotlight a lingering frustration shared by patients, providers, and insurers alike.

The NSA, amending Title XXVII of the Public Health Service Act, was adopted as part of the Consolidated Appropriations Act, 2021, and became effective January 1, 2022. Three years later, it is helpful to review the changes this law has brought to the health insurance arena—with special focus on its built-in dispute resolution mechanism—and also preview developments to come.

The NSA and Surprise Medical Bill Disputes

The NSA arose to address increasingly common disputes involving “surprise” medical bills. These result when patients receive certain out-of-network medical services (e.g., emergency or other care delivered by providers not in the applicable health plan network), and then the non-network providers seek reimbursement outside of the contractual network arrangement. This frequently occurs through an approach called “balance billing.”

Balance billing is the practice of out-of-network healthcare providers billing patients for the difference between (1) the provider’s billed charges and (2) the amount collected from the plan or insurer, plus the amount collected from the patient in the form of cost-sharing (such as a copayment, coinsurance, or amounts paid toward a deductible).

Imagine a situation in which a patient cannot control the choice of a care provider. For example, in an emergency, a patient could visit an in-network facility and wind up being treated by an out-of-network doctor. In that case, if the non-network provider charged $30,000 and the patient’s health insurer covered just $10,000, the insurer could bill the patient to collect the $20,000 difference.

Now, under the NSA, health insurance companies, healthcare plans, and providers resolve these billing discrepancies through a statutorily mandated independent dispute resolution (IDR) arbitration process.

NSA Arbitration: Where Are We Now?

The NSA protects patients from unanticipated, and potentially significant, financial liabilities that could result from so-called surprise medical bills. The law limits out-of-network cost-sharing and prohibits balance billing in many of the circumstances in which surprise bills arise most frequently.

Of particular interest to litigators and alternative dispute resolution professionals, the NSA also establishes a dispute resolution system to determine out-of-network payment amounts between providers or facilities and health plans. This system, known as the IDR process, allows medical providers and insurance payers to resolve payment disputes through arbitration.

Suppose a provider or facility receives a payment denial notice or an initial payment from a health plan for certain out-of-network services with which it disagrees. In that case, the health plan, provider, or facility must start an open negotiation period that lasts 30 business days. At the end of the negotiation period, if the relevant entities have not agreed on a payment amount, within 4 business days any of them can begin the federal IDR process. 

Upon engaging the IDR process, the parties have the option to choose a certified, third-party IDR entity (IDRE) from among a list of approved organizations. The disputing parties must submit payment offers and supporting information to the IDRE. The IDRE determines whether the parties’ dispute is eligible for IDR and then decides the amount owed to the provider by the insurer.

Notably, the NSA provides for a “baseball-style” arbitration format. For disputants under the NSA, each party is to submit one proposed payment amount to the IDRE arbitrator, and the arbitrator must choose one of the two amounts in making a decision. In this blind-bid process, arbitrators are prohibited from considering the provider’s billed charge in determining which offer to award as the applicable out-of-network rate.

The NSA provides that the IDRE’s decision is binding and that payment must be made not later than 30 days after the date of determination. The NSA specifies that judicial review is allowed only under section 10(a) of the Federal Arbitration Act (FAA), which permits a party to seek to vacate an arbitration award under limited circumstances. Furthermore, the NSA does not expressly provide a mechanism for prevailing parties to enforce IDRE awards.

Issues on the Horizon

In the few years since its enactment, the NSA has resulted in a significant number of complaints and monetary awards. In turn, we can also observe an uptick in litigation between medical providers and health insurers.

Along these lines, an interesting question to watch is whether the NSA confers a private cause of action to enforce an IDR award and convert it to a final judgment. Several months ago, a Texas district court held that the NSA does not confer such a cause of action, express or implied, rejecting air ambulance providers’ post-IDR efforts to bring claims against a health insurer. In this case, the Guardian Flight, LLC v. Aetna Health Inc. et al. court noted, unlike the FAA, the NSA does not contain a provision enabling the confirmation or enforcement of arbitration awards and, further, the NSA does not contain language establishing that Congress intended to create a remedy for out-of-network providers.

Interestingly, in reaching its decision in Guardian Flight, the court observed that the NSA permits courts to vacate IDR decisions only on the same limited grounds on which a court can vacate an arbitration award under the FAA. However, at the same time, the court also noted that the NSA’s omission of the FAA’s procedural mechanism to vacate, modify, and confirm arbitration awards in a federal court reflects the absence of congressional intent to create a remedy under the NSA.

As of this writing, Guardian Flight is on appeal to the Fifth Circuit Court of Appeals, with oral argument having taken place on February 24, 2025. It remains to be seen how efforts to enforce NSA arbitration awards will proceed and how the role of courts might evolve in these disputes.

The new administration’s expressed emphasis on healthcare pricing transparency might very well lead to efforts to enhance enforcement of the NSA. Congress could choose to step in and amend the NSA, as well, to address enforcement of IDR arbitration awards. Toward the end of 2024, Representatives Greg Murphy (R-NC), Raul Ruiz (D-CA), John Joyce (R-PA), Kim Schrier (D-WA), Ami Bera (D-CA), and Jimmy Panetta (D-CA) and Delegate Eleanor Norton (D-DC) introduced H.R. 9572, the Enhanced Enforcement of Health Coverage Act. This bill, which was referred to the Subcommittee on Health on December 17, 2024, would have increased penalties for group health plans and health insurance issuers for practices that violate balance-billing requirements, including penalties for late payment or nonpayment following IDR arbitration determinations.

Because of the high volume of disputes that the IDR process has generated and lingering uncertainty as to how its arbitration awards are to be enforced, payers and providers—as well as arbitrators and counsel involved in balance-billing disputes, of course—will continue to watch these and related issues closely.