For many Americans, a trip to the emergency room once carried a hidden financial risk. Even with valid insurance and by choosing an in-network hospital, patients routinely received unexpected bills weeks later from medical professionals they never selected. These surprise charges, often totaling thousands of dollars, were a common source of medical debt and financial hardship, forcing families to weigh health care costs against basic necessities.
Before federal action, surprise billing was widespread. Nearly 20 percent of emergency department visits and the majority of air ambulance transports resulted in out-of-network charges. Patients had no practical ability to avoid these costs. Care was often delivered in urgent situations, providers were assigned without patient input, and billing information arrived long after treatment. Insured individuals who followed every rule of the health care system were still financially exposed.
The No Surprises Act dramatically reduced these harms, but it did not eliminate them entirely. Key design flaws, particularly in how payment disputes are resolved, have allowed certain providers to shift costs back into the system. This has contributed to higher insurance premiums and left some types of emergency care unprotected. This report examines why those weaknesses matter and outlines how Congress can strengthen the law to better protect consumers.
This analysis is part of the Fixing America’s Broken Hospitals initiative, which evaluates systemic problems across the hospital sector. Long-standing issues such as weak competition, misaligned payment incentives, and outdated safety-net structures have fueled excessive pricing, aggressive billing practices, misuse of public funds, and insufficient community investment. Addressing surprise billing is one necessary step toward building a health care system that is financially sustainable and centered on patients.
What the No Surprises Act Changed
Passed in 2020, the No Surprises Act aimed to end the practice of billing patients for out-of-network care they could not reasonably avoid. Prior to the law, it was common for patients to receive large bills after hospital stays because certain clinicians, such as anesthesiologists or radiologists, were not part of the hospital’s insurance network even though the hospital itself was.
At the time, approximately one in five hospital admissions included at least one surprise bill, sometimes reaching six-figure amounts. High-profile cases, including a Texas teacher billed more than $100,000 after emergency cardiac care, highlighted how routine these situations had become.
To address this problem, the law prohibited surprise billing in three situations:
- Emergency medical treatment
- Certain nonemergency services delivered by out-of-network providers at in-network facilities
- Air ambulance transportation
Insurers are required to cover emergency services at in-network rates without requiring prior approval. For scheduled care, providers may no longer charge patients more than the applicable in-network cost-sharing amount when patients receive care at in-network facilities without knowingly choosing an out-of-network provider.
These provisions shifted financial responsibility away from patients and significantly reduced the likelihood of catastrophic medical bills.
The Role and Failure of Arbitration
Instead of setting a clear payment standard for out-of-network services, Congress created an Independent Dispute Resolution process to resolve payment disagreements between insurers and providers. The expectation was that most disputes would settle quickly through negotiation, with arbitration used sparingly.
That assumption proved incorrect.
Arbitration filings rapidly exceeded projections. In 2023 alone, more than 650,000 disputes were submitted, with hundreds of thousands more filed in early 2024. A disproportionate share of these filings came from a small group of large provider organizations, many backed by private equity. Some companies increased their arbitration volume severalfold in just a few years.
By submitting disputes at scale, some providers have strained the system and pressured insurers to agree to higher payments to avoid administrative costs and delays. The issue is compounded by the fact that many disputes are ineligible under the law, yet continue to clog the process. As arbitration becomes more complex and resource-intensive, many practices turn to specialized support services such as No Surprise Bill for expert guidance on how payor tactics affect Independent Dispute Resolution cases, helping providers navigate the process more effectively, reduce arbitration-related fees, and improve the likelihood of timely and favorable reimbursement outcomes.
Arbitrators are also permitted to consider inflated historical charges when determining payment amounts. As a result, awards frequently exceed typical in-network rates. In 2024, provider-favored arbitration outcomes resulted in payments more than four times higher than median in-network rates.
These elevated payments do not disappear. They are incorporated into premium calculations for employers and individuals, increasing health care costs across the system.
Legal Challenges and Provider Influence
Some provider groups have also attempted to reshape the law through litigation. Organizations such as the Texas Medical Association have brought multiple lawsuits challenging federal implementation of the arbitration process. Several district court rulings weakened consumer protections by giving greater weight to provider payment demands.
National trade groups representing hospitals and physicians have pursued similar legal strategies, further shifting the balance away from patients and toward high-cost providers.
Where Patients Remain Unprotected
Despite its successes, the No Surprises Act left two major cost drivers unaddressed.
Excessive Out-of-Network Pricing
The arbitration framework allows providers to secure payments well above market norms. This effectively rewards those who remain outside insurance networks and undermines the purpose of the law by raising overall health care spending and insurance premiums.
Ground Ambulance Billing
The law also excluded ground ambulance services, which account for nearly all emergency medical transportation. A large majority of ground ambulance claims remain out-of-network, leaving patients vulnerable to surprise bills in emergency situations.
A federally created advisory committee studied the issue and recommended:
- Classifying ground ambulance services as essential health benefits
- Limiting patient cost-sharing
- Capping reimbursement based on Medicare when no contract rate exists
While some states have enacted protections, particularly by tying rates to Medicare, most patients remain unprotected at the federal level.
How Congress Can Fix the Law
To fully deliver on the promise of the No Surprises Act, Congress should take additional steps.
Extend protections to ground ambulances by capping patient costs and reimbursement rates for emergency ground ambulance services.
Reform or replace arbitration by prioritizing median in-network rates and Medicare benchmarks, excluding inflated historical charges, and enforcing accountability standards.
Adopt a benchmark payment standard to reduce administrative costs, prevent strategic gaming, and discourage excessive pricing.
Cap out-of-network payments by tying maximum reimbursement to a percentage of Medicare to discourage providers from remaining out-of-network as a profit strategy.
Congress should also reject legislative proposals that weaken patient protections by increasing penalties on insurers without addressing provider behavior.
Final Takeaway
The No Surprises Act significantly improved consumer protections, but unfinished elements of the law are now driving higher costs through loopholes and misuse. Without corrective action, these weaknesses will continue to raise premiums and expose patients to financial risk. Strengthening the law is essential to ensuring that surprise medical bills remain a thing of the past and that health care costs are kept under control.