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For years, health insurers have argued that the arbitration system through which they dispute bills must be broken because providers win so often — which obliges insurance companies to pay medical expenses they sought to avoid. Physicians, hospitals and air ambulances prevail in more than 80% of disputes under the No Surprises Act, which took effect in 2022, and arbitrators select payments above the insurer-calculated benchmark in about 85% of cases.
The U.S. Court of Appeals for the 5th Circuit has been looking at those numbers, and on Aug. 11, the judges drew the opposite conclusion. In Texas Medical Assn. vs. HHS, the court held that Biden administration rules had allowed insurers to build the law’s benchmark using rates that were never meaningfully negotiated. The resulting benchmarks, the court found, were artificially low, which would favor insurers seeking to minimize their spending.
It turns out the referee was not biased. The scoreboard was.
I spent years as chief enforcement counsel at the California Department of Managed Health Care, which regulates most health plans in the nation’s largest insurance market. My job was to hold plans to their obligations. I am not reflexively hostile to insurers, and I have seen providers behave badly and try to take advantage of insurers. But the mechanism the court described should trouble everyone.
Here is how it worked. Insurers often give physician practices broad, boilerplate contracts with fee schedules covering services the practice may never perform. Providers negotiate the rates for services they actually perform, leaving the rest unnegotiated.
Those untouched prices are “ghost rates.” Some were set at $0 or $1. No one meaningfully negotiated them. Yet federal rules allowed ghost rates to be folded into the median used to calculate the qualifying payment amount, the benchmark that anchors payment disputes.
The insurers supplied the contracts, calculated the median and then pointed to the resulting figure as evidence of the “market” rate. They were, in effect, grading their own exam.
The 5th Circuit rejected that system. A price no one negotiated is not a market rate. The court pointed to the arbitration results themselves — which overwhelmingly favored providers and indicated that the benchmarks were unrealistically tilted in insurers’ favor.
The ruling should direct Washington’s attention toward a second problem: Winning an arbitration does little good if the award is not paid.
Under the No Surprises Act, an arbitrator’s decision is final and binding, and payment is due within 30 days. Yet the American Medical Assn. and more than 100 medical organizations warned federal officials this spring that insurers have delayed or refused payments, improperly increased patient cost-sharing and reopened resolved cases. A 2024 survey of emergency medicine practices found that 24% of awards were unpaid or paid incorrectly.
Providers have limited recourse. The 5th Circuit previously held that the law does not give providers a private right to sue in federal court to enforce unpaid awards, and the Supreme Court declined to review that ruling this year. Other courts have disagreed, leaving a law with few answers.
Congress already has a bipartisan bill, the No Surprises Act Enforcement Act, that would impose federal penalties for missing statutory payment deadlines. In July, an insurer-backed coalition launched a million-dollar campaign opposing it.
That is worth noticing. For years, insurers have argued that the problem is providers collecting money they are not owed. Now their coalition is spending heavily to oppose enforcement of amounts neutral arbitrators have awarded.
Congress should go one step further and make binding awards enforceable in federal court. No new agency. No new appropriations. Just the ordinary rule that when a neutral entity resolves a dispute, the losing party pays.
Somewhere underneath all of this is a patient. She did not choose the emergency physician who stabilized her or the aircraft that carried her to a trauma center. She paid premiums for coverage. An arbitrator has already decided what her insurer owes.
Congress now has to decide whether “binding” actually means something.
M. Dylan McClelland is a former chief enforcement counsel of the California Department of Managed Health Care. He advises the Emergency Air Rescue Alliance, an advocacy organization for emergency air medical providers.
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Ideas expressed in the piece
The article argues that insurers’ long‑standing complaints about the No Surprises Act arbitration system overlook the real problem: benchmarks for payment disputes were engineered to be artificially low, making provider “win” rates a symptom of tilted rules rather than biased arbitrators.
Building on recent court decisions, the piece contends that federal regulations allowed insurers to construct the qualifying payment amount by including “ghost rates” in broad boilerplate contracts—prices for services that were never meaningfully negotiated and in some cases set at nominal amounts—so the supposed market median reflected insurer‑created numbers rather than real market rates.[7][9][12]
The article highlights that courts have increasingly agreed with providers that earlier rules gave improper weight to insurer‑calculated benchmarks, noting that a Texas district court and the 5th Circuit found that directing arbitrators to prioritize the qualifying payment amount conflicted with the statute and skewed the dispute process in favor of commercial insurers.[9][12]
Furthermore, the piece suggests that high provider success rates in arbitration and awards above insurer benchmarks are evidence that those benchmarks were unrealistically low, reinforcing the view that insurers were “grading their own exam” rather than reflecting genuine negotiated prices.[9][12]
The article stresses that even when providers prevail in arbitration, many health plans still delay, underpay or refuse to pay awards, citing surveys and complaints from physician organizations that a substantial share of decisions are not honored correctly and that plans sometimes increase patient cost‑sharing or reopen resolved cases.[3][4][5]
In describing the enforcement gap, the piece notes that providers face limited recourse when awards go unpaid, pointing to prior rulings that the No Surprises Act does not clearly grant a private right of action in federal court to compel payment, leaving a patchwork of conflicting decisions and few practical tools for enforcing “binding” determinations.[8][10]
The article portrays the bipartisan No Surprises Act Enforcement Act as a necessary step to restore balance, emphasizing that the bill would authorize penalties against parties that fail to comply with statutory payment deadlines and explicitly empower federal regulators to enforce final arbitration decisions.[3][5]
The piece underscores what it sees as a revealing contradiction: insurers and their allies have backed a significant advertising campaign against the Enforcement Act even as they argue publicly that providers are collecting money they are not owed, suggesting that opposition to penalties on late payments undermines claims that the main problem is overpayment to providers.[1][2][6]
Finally, the article urges Congress to go beyond administrative penalties by making arbitration awards enforceable in federal court, arguing that no new agency or funding is required—only the standard expectation that when a neutral decision‑maker resolves a dispute, the losing party must pay—so that patients who paid premiums and had no control over emergency providers are not left exposed when insurers resist paying adjudicated bills.
Different views on the topic
In contrast, insurer and employer coalitions argue that the independent dispute resolution system under the No Surprises Act is being exploited by certain provider groups and “middlemen,” including private‑equity‑backed entities, which use arbitration aggressively to secure high out‑of‑network payments and drive up overall healthcare spending and premiums.[1][2][11]
These groups contend that high provider win rates do not prove that benchmarks were unfairly low, but instead reflect misaligned arbitrator incentives and structural flaws in the IDR process—such as backlogs and financial incentives for IDR entities to process more disputes—that, in their view, tilt outcomes toward larger awards.[1][2][6]
Insurer‑backed organizations point to internal analyses suggesting that a large share of disputes involve claims they consider ineligible for arbitration, arguing that the current system allows “bad‑faith batching” and other tactics that magnify costs and reward the most aggressive users of IDR rather than those with legitimate payment disagreements.[1][2]
From this perspective, the No Surprises Act Enforcement Act is criticized for “doubling down” on what these coalitions regard as a flawed system, because it would impose additional costs and interest on employers and health plans for any delay in final payments without first tightening eligibility rules or addressing alleged abuses of the arbitration process.[1][2][6]
Employer groups warn that imposing stronger penalties and federal enforcement authority for late payments, while leaving existing IDR incentives intact, will exacerbate what they describe as a growing affordability crisis, making healthcare costs “spiral even higher” for working families and consumers.[1][2]
These critics advocate alternative reforms, calling for clearer guardrails on arbitration awards, automatic screening of disputes for eligibility, penalties for bad‑faith initiation of IDR, and more robust oversight of IDR entities, arguing that such measures would better protect patients and payers from inflated out‑of‑network charges than expanding enforcement of current awards.[2][11]
More broadly, some litigation and policy analyses aligned with payer interests maintain that if federal regulators cannot set reasonable guidelines around the qualifying payment amount and arbitration factors, certain providers will continue to leverage the process for higher payments, which they argue risks inflationary effects on healthcare costs and insurance premiums.[7][11]
In this view, making arbitration awards enforceable in federal court, on top of new penalties for payment delays, is seen as likely to further empower providers and their representatives to pursue more disputes and larger awards, adding administrative burdens and undermining the stability of negotiated networks that insurers say are essential to controlling costs.[1][2][11]
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