Surprise billing: The hidden cost of consumer protection

A law aimed at curtailing surprise medical billing has been surprisingly lucrative for doctors, said Anna Wilde Mathews and Tom McGinty in The Wall Street Journal. Health-care providers were awarded nearly $15 billion last year from arbitrators called in to settle medical billing disputes, more than triple the amount in 2024. It’s an unintended result of the No Surprises Act, passed by Congress in 2020 in response to a surge of complaints from patients about “huge, unexpected bills from doctors who weren’t in their insurers’ networks.” Patients are no longer responsible for those bills, but their insurers now battle doctors in arbitration hearings “over how much they will pay.” Doctors are winning around 80% of the cases. Some insurance groups allege that the system is getting “gamed,” said Sarah Kliff in The New York Times. Seeing the favorable results, “a growing number of medical providers and billing firms have begun using it to obtain higher payments for scheduled procedures”—and then winning payments “that are 10 or hundreds of times as high as what insurance typically pays.”

The No Surprises Act has spared millions of Americans from unexpected medical costs, said Lisa Jarvis in Bloomberg. It “addressed a real problem many Americans regularly experienced.” Unfortunately, that great bipartisan achievement is getting abused, which means patients will start “paying the bill in other ways.” Several insurers, like UnitedHealthcare of New York, have already said that “costs associated with the dispute process accounted for a portion of its premium hike for next year,” which could be as high as 9%. “What began as an exercise in consumer protection” is instead becoming “another force pushing health care out of Americans’ reach.”

It’s a perfect example of a policy with consequences “nearly the opposite of what was intended,” said The Wall Street Journal in an editorial. The Biden administration estimated there would be 17,000 disputes every year; last year, there were 2.6 million. Part of the problem is that “arbitrators don’t often throw out ineligible claims.” The government should audit and discredit the obvious money grabs. However, the Trump administration “finalized a Biden-proposed rule aimed at making arbitration more efficient and less expensive.” This will only “encourage more claims.”

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Early drafts of the No Surprises Act foresaw this very issue, said the Washington Examiner. Those drafts required “insurers to pay out-of-network providers a clear, market-based benchmark rate,” which was usually tied to the median in-network price for the same service in the same area. “This was the simplest and fairest solution.” But hospitals and medical groups argued this would be too favorable for insurers. And so instead the arbitration process has become “a racket.” Congress must fix its mistake.