The Hidden Cost Of The No Surprises Act Is Building Future Premium Pressure

Patient protection and plan economics are pulling in different directions under the No Surprises Act, with the legislation succeeding at one of those goals while raising the cost of the other. The arbitration process designed to settle out-of-network disputes is delivering awards at scale and at sizes the system was never built to handle, with the financial consequences landing well outside the patient experience. Benefits leaders looking for ways to bend the healthcare cost curve are finding the dispute-resolution mechanism is realigning incentives in favor of providers. The resulting pain points for self-funded plans are turning into deferred expenses that show up later in premium renewals and stop-loss pricing.

Brian Cotter, Founder and CEO of Bright Spot Insights, sees the data anomaly clearly and has the receipts to prove it. After 25 years in claims analytics, he left a vice president role at CVS Health to gain more flexibility following his wife's Stage IV cancer diagnosis, and now focuses his work on optimizing employer health benefits for self-funded plan sponsors. His analysis was featured in a December 2025 Bloomberg Big Take investigation, a series that became a 2026 Pulitzer Prize finalist in Explanatory Reporting, where he identified cases of self-funded plans being charged tens of thousands of dollars for cancer treatments that Medicare would normally cover for around $30.

"The No Surprises Act was put in place to avoid surprise bills for patients. I think that part of it is likely working, because patients are being subjected to copays only at the market rate. The unfortunate thing is all of these costs are going to end up raising premiums in following years," says Cotter. The structural problem starts with the reality of how care is actually delivered, where out-of-network providers routinely operate inside in-network facilities and patients have no way to control who staffs an emergency room or reads an MRI. The No Surprises Act protects patients from being penalized for those clinical realities, with regulators building the IDR process as the safety net designed to settle the payment disputes that follow. The unintended consequence is that many physician groups and revenue-cycle vendors have learned how to navigate the arbitration rules in ways that maximize their payouts.

The lag between award and impact

Cotter points to a breast-reduction case where practices are generating massive revenue through arbitration as a concrete example of the dynamic. "The physician submitted a dispute for $200,000, and then an assistant surgeon from their practice submitted a dispute on that same case for $200,000. They both won their disputes on that single procedure, getting $400,000 for something that Medicare would have paid somewhere around $1,200," he says. The arithmetic of the case is the story of the IDR process in miniature, with a single procedure producing a payout vastly higher than what the same work would have generated through traditional Medicare reimbursement.

The scale at which those anomalies are now compounding turns the conversation from outlier to system. Regulators originally projected the IDR process to handle roughly 17,000 disputes per year, with the actual volume reaching 1.2 million disputes in the first half of 2025 alone, including a single radiology practice that submitted 230,000 claims in six months. The odds inside that volume run heavily in the providers' favor. "When there's a dispute, the plan submits their offer, the provider submits their offer, and 88% of the time it's being decided in favor of the provider. Those are pretty good odds," Cotter notes, adding that winning providers secure payouts averaging four times the median in-network market rate.

For many self-funded employers, the bigger structural problem is the lag between when those awards are issued and when the financial impact lands. Benefits teams focused on scrutinizing immediate expenses like pharmacy data reporting and compliance can miss the arbitration awards compounding in the background, particularly as employers explore alternative plan designs like ICHRA to stabilize volatile 5 to 12% year-over-year renewals. Cotter frames the delay through a familiar reference. "I'll gladly take a hamburger today and pay you tomorrow. This is trying to solve the issue of patients getting hit with high costs now, but it's then pushing substantially more costs into the system that members and patients are going to have to pay through premiums going forward," he explains. The aggregate cost trajectory makes the warning concrete, with total IDR awards rising from $58 million in Q1 2023 to $4.6 billion by Q2 2025 and recent regulations streamlining the dispute process in ways likely to accelerate provider submissions further.

Closing the visibility gap

The disparity in win rates traces back to a resource gap, with providers often submitting highly prepared justifications for their offers while plan administrators are still catching up to the documentation standard those submissions have established. Cotter notes that it's difficult to know whether plans are offering too little money or failing to provide enough supporting evidence. In some cases, plans skip the response entirely. "How often is the plan not even responding to a dispute?" he asks. "If you have cases where there's a dispute and the plan doesn't even submit an offer, then obviously the provider is going to win automatically by default if they've submitted an offer."

Cotter advises plan sponsors to start with better data hygiene and stronger contract language. The work involves pushing administrators for specific reporting and defense documentation to verify compliance and negotiating clearer accountability into vendor agreements around visibility and dispute handling. The reporting layer is where the conversation begins, with the specific metrics worth surfacing being plan-versus-provider win rates, average award amounts, offer-versus-award differences, and default-loss data showing where plans never responded at all. "If they don't have the data themselves, they should be asking their plans," Cotter concludes. "They should ask for a report that shows claims that have gone through the No Surprises Act. You want to ask the plan what is the percentage of the time that the plan versus the provider is winning."