When we visit a doctor or hospital, we look to see whether they’re “in-network” or “out-of-network.” Why? We do it because we know we will probably pay more if we choose to receive out-of-network care.
In-network providers have contracts with health plans and have agreed to set rates — amounts typically set between what Medicare pays for a service and what’s considered reasonable and competitive for the local market. Patients know what to expect when they see the bill: a copay, a deductible and an amount that won’t bankrupt them.
Out-of-network providers haven’t signed those contracts and may expect to be paid their billed charges. Patients pay more out-of-pocket when they choose to see one.
The key word here is “choose.”
What happens when a patient doesn’t choose to see an out-of-network doc?
Prior to 2022, in an emergency or when a patient thought they were receiving routine care at an in-network hospital, and in-network rules applied, they sometimes got hit with massive surprise bills — on occasion, for tens of thousands of dollars. A patient might choose an in-network facility for a surgery, only to discover the anesthesiologist was out-of-network. The bill would land in their lap.
Congress tried to fix this. The No Surprises Act, implemented in 2022, protects patients with private health insurance from these types of unexpected financial blows, and as a physician, I support it.
Under this law, out-of-network providers can no longer balance-bill the patient in emergencies and other situations, like interpreting an x-ray or giving anesthesia at an in-network hospital.
Under the law, the provider must bill the health plan and if they don’t agree with the payment, they have 30 days to try to negotiate with the plan for more money. If they reach no agreement, the federal government has created the Independent Dispute Resolution process, where an independent third-party arbitrator becomes involved and decides in favor of either the amount requested by the doctor or the amount offered by the plan.
This is where things appear to have gone wrong.
There is no further negotiation.
There is no compromise.
The arbitrator doesn’t tell the doctor they’ve requested too much or the plan that they are offering too little. There are no outer bounds. The arbitrator chooses either the higher or lower amount.
Researchers have reported significant cost variability and a lack of transparency in third-party arbitrator decisions.
Most decisions are for the higher amount requested by the physician. Insurers have been vocal about arbitration entities awarding excessive payments for many claims that shouldn’t even be eligible for payment under the system because they don’t qualify for consideration.
The volume of IDR cases in 2025 was already 40% above 2024. Since providers win more than 85% of the time, often receiving awards three and four times higher than in-network rates, it’s no wonder that certain groups are flooding those arbitration entities that have frequently ruled in their favor with all their out-of-network claims.
This is driving even more awards, and now these additional costs have begun to impact employer-funded health plans, meaning that American workers and families will foot the bill through higher premiums and reduced benefits.
Most physicians don’t participate in this behavior. In fact, most doctors accept in-network contracts, charge reasonable rates and treat patients, not the system.
A small minority of providers, though — most backed by private equity and sophisticated billing operations — are exploiting the IDR process created by the law, driving massive costs into American health care.
Critics argue that insurers underpay out-of-network doctors. The math doesn’t support this. One study found the median price of surgeries jumped from $1,232 for in-network to an average settlement of $14,220. Similarly, imaging procedures jumped from a $608 in-network price to $3,337 in arbitration.
These outlier bills don’t hurt insurance companies. They hurt real people.
Reforming the IDR doesn’t mean shortchanging honest doctors. It means closing a loophole that a few bad actors are exploiting.
The law was designed to settle certain out-of-network billing disputes — not to serve as a high-priced auction for routine procedures.
It’s always easy to blame it on the insurer, but when a surgery price jumps 10 times, repeatedly, not because of medical necessity, but because of billing strategy — something has gone very wrong.
We need policy adjustments to the IDR process that maintain all the patient protections of the No Surprises Act and create fairer and more predictable payment benchmarks for all parties involved.
Andrea Gelzer, MD, is CEO of Qual-IT Strategies and a physician-executive with deep payer industry expertise, board leadership experience, and recognized thought leadership in health information technology, value-based care, and health care innovation. She can be found on LinkedIn.