A growing number of surprise billing disputes are being submitted for arbitration despite not qualifying for the federal process, according to a new survey from AHIP and the Blue Cross Blue Shield Association (BCBSA). The findings point to systemic inefficiencies within the Independent Dispute Resolution (IDR) system established under the No Surprises Act (NSA), which was designed to protect patients from unexpected out-of-network medical bills.
Health plans reported that 39% of all disputes filed in 2024 were ineligible for arbitration, including 45% of non-emergency disputes. In contrast, independent dispute resolution entities (IDREs) deemed only 17% of claims ineligible. This means many improper cases still resulted in binding payment determinations.
Where the process breaks down: The disconnect between what health plans identify as ineligible and what arbiters reject highlights a serious oversight issue. Common reasons for ineligibility included:
- Disputes filed after the allowed timeframe
- Missing required information
- Services already governed by state surprise billing laws
- Disputes involving in-network providers or government-covered patients
Under current rules, only arbiters determine eligibility, and because their administrative fees are refunded when a case is dismissed, they have a financial incentive to allow questionable disputes to proceed. This structure has led to what AHIP and BCBSA describe as “arbitration abuse,” with some providers flooding the system to secure higher payments.
Impact on collections: In 2024 alone, nearly 1.23 million disputes were submitted to IDR, a total that far exceeded federal projections. Georgetown University’s Center on Health Insurance Reforms estimates that arbitration inefficiencies now drive between $2 billion and $2.5 billion in wasteful spending annually. For hospital revenue cycle teams and their collection partners, that inefficiency matters: providers typically win most disputes and are awarded payments roughly four times higher than standard in-network rates.
AHIP President and CEO Mike Tuffin said, “The same private equity-backed outfits that created the surprise billing business model have turned to arbitration abuse as their new strategy to gouge consumers and employers.”
Both AHIP and BCBSA are calling for tighter eligibility screening, stronger oversight of arbiters, and reforms to eliminate incentives that encourage unnecessary disputes. Without changes, the report warns, the growing flood of ineligible claims threatens to increase premiums, strain provider relationships, and drive up administrative costs throughout the healthcare system
