Introduction
The No Surprises Act’s Independent Dispute Resolution (IDR) system was designed as a patient protection mechanism, shielding consumers from unexpected out-of-network medical charges. However, recent analysis reveals that this well-intentioned healthcare reform is generating substantial costs of its own, raising critical questions about the system’s long-term sustainability and effectiveness.
Implemented as a federal mandate, the IDR process utilizes baseball-style arbitration to resolve payment disputes between healthcare providers and insurance plans. While several states had previously adopted similar mechanisms, the federal rollout has encountered unprecedented challenges that extend far beyond initial projections.
The Financial Impact of IDR
Cost Breakdown Analysis
Georgetown University researchers have conducted a comprehensive analysis revealing that the IDR system cost approximately $5 billion to manage between 2022 and 2024. This staggering figure encompasses multiple cost categories that demonstrate the system’s extensive financial footprint across the healthcare ecosystem.
The largest expense component consists of additional payments from insurance plans to healthcare providers, totaling $2.24 billion. This represents money that insurers must pay above their initial payment offers, ultimately contributing to higher healthcare costs that may be passed on to consumers through increased premiums.
Internal operational costs for both payers and providers account for $1.9 billion of the total expense. These costs include administrative overhead, legal fees, case preparation, and staff time dedicated to managing disputes through the arbitration process.
IDR entity fees represent $656 million in payments to independent arbitration organizations responsible for conducting dispute resolution. These specialized entities serve as neutral third parties in the baseball-style arbitration process, where each side submits a payment proposal and the arbitrator selects one.
Administrative fees paid to federal agencies supporting the IDR infrastructure total $228 million. These funds support government oversight, system maintenance, and regulatory compliance activities necessary for the program’s operation.
Volume Exceeds All Expectations
The IDR system has experienced a dramatic surge in dispute volume that has overwhelmed initial federal projections. Government agencies originally estimated that approximately 17,333 disputes would require resolution annually, with an additional 4,899 disputes related specifically to air ambulance services.
Reality has proven vastly different. Between mid-2022 and May 2025, the system processed 3,324,051 filed disputes, including air ambulance cases. The first nine months alone generated 190,000 disputes—more than ten times the annual federal estimate.
Processing Delays and Challenges
This unprecedented volume has created significant operational challenges. The legislation mandates a 30-day deadline for payment determinations, but the sheer number of cases has made meeting this timeline “nearly impossible” for arbitration entities.
By the end of 2024, the median processing time for line-item claims had reached 81 days—nearly triple the intended timeframe. At its peak, processing times extended to 96 days, creating cash flow challenges for providers and administrative burdens for all stakeholders.
Resolution rates have gradually improved over time, increasing from 29% at the end of 2022 to 41% one year later. As of May 2025, approximately 85% of disputes had been resolved, though the backlog continues to present challenges.
Processing delays have been exacerbated by legal challenges and court decisions that forced agencies to pause operations and review procedures, further contributing to system inefficiencies.
Provider Concentration Issues
Top Dispute Filers
Analysis reveals that IDR disputes are heavily concentrated among a small number of healthcare providers. Radiology Partners and its affiliated organizations account for 28% of all disputes in 2023 and 2024, while TeamHealth represents 15% of cases.
The top five provider organizations collectively generate 59% of all line-item claims, indicating that a relatively small number of entities are driving the majority of system usage and associated costs.
This concentration raises questions about whether certain providers are using the IDR system strategically to maximize reimbursements, rather than as an occasional dispute resolution mechanism.
Growing Payment Awards
The median payment awards through IDR arbitration have grown substantially since the system’s inception. In the fourth quarter of 2024, the median payment determination reached 459% above the qualifying payment amount—the initial payment offer from insurance plans.
This dramatic increase in award amounts suggests that either initial insurance payment offers are consistently low, or that the arbitration process tends to favor provider arguments for higher reimbursement rates.
Future Implications
The Georgetown University researchers emphasize that these escalating costs will likely manifest in higher overall healthcare expenses and increased consumer premiums. The substantial financial burden of the IDR system may ultimately undermine its primary goal of protecting patients from surprise medical bills.
The analysis raises important policy questions about potential reforms to reduce IDR usage and limit award amounts. Policymakers must consider what regulatory levers are available to improve system efficiency while maintaining patient protections.
Conclusion
While the No Surprises Act’s IDR system successfully protects patients from unexpected medical bills, its implementation has generated significant unintended consequences. The $5 billion management cost, processing delays, and concentrated usage patterns suggest that substantial reforms may be necessary to ensure the system’s long-term viability and cost-effectiveness.
Healthcare stakeholders, policymakers, and consumer advocates must collaborate to address these challenges while preserving the essential patient protections that the legislation was designed to provide.
