For years, health insurers have argued that the arbitration system through which they dispute bills must be broken because providers win so often — which obliges insurance companies to pay medical expenses they sought to avoid. Physicians, hospitals and air ambulances prevail in more than 80% of disputes under the No Surprises Act, which took effect in 2022, and arbitrators select payments above the insurer-calculated benchmark in about 85% of cases.

The U.S. Court of Appeals for the 5th Circuit has been looking at those numbers, and on Aug. 11, the judges drew the opposite conclusion. In Texas Medical Association vs. HHS, the court held that Biden administration rules had allowed insurers to build the law’s benchmark using rates that were never meaningfully negotiated. The resulting benchmarks, the court found, were artificially low, which would favor insurers seeking to minimize their spending.

It turns out the referee was not biased. The scoreboard was.

I spent years as chief enforcement counsel at the California Department of Managed Health Care, which regulates most health plans in the nation’s largest insurance market. My job was to hold plans to their obligations. I am not reflexively hostile to insurers, and I have seen providers behave badly and try to take advantage of insurers. But the mechanism the court described should trouble everyone.

Here is how it worked. Insurers often give physician practices broad, boilerplate contracts with fee schedules covering services the practice may never perform. Providers negotiate the rates for services they actually perform, leaving the rest unnegotiated.

Those untouched prices are “ghost rates.” Some were set at $0 or $1. No one meaningfully negotiated them. Yet federal rules allowed ghost rates to be folded into the median used to calculate the qualifying payment amount, the benchmark that anchors payment disputes.

The insurers supplied the contracts, calculated the median and then pointed to the resulting figure as evidence of the “market” rate. They were, in effect, grading their own exam.

The 5th Circuit rejected that system. A price no one negotiated is not a market rate. The court pointed to the arbitration results themselves — which overwhelmingly favored providers and indicated that the benchmarks were unrealistically tilted in insurers’ favor.

The ruling should direct Washington’s attention toward a second problem: Winning an arbitration does little good if the award is not paid.

Under the No Surprises Act, an arbitrator’s decision is final and binding, and payment is due within 30 days. Yet the American Medical Association and more than 100 medical organizations warned federal officials this spring that insurers have delayed or refused payments, improperly increased patient cost-sharing and reopened resolved cases. A 2024 survey of emergency medicine practices found that 24% of awards were unpaid or paid incorrectly.

Providers have limited recourse. The 5th Circuit previously held that the law does not give providers a private right to sue in federal court to enforce unpaid awards, and the Supreme Court declined to review that ruling this year. Other courts have disagreed, leaving a law with few answers.

Congress already has a bipartisan bill, the No Surprises Act Enforcement Act, that would impose federal penalties for missing statutory payment deadlines. In July, an insurer-backed coalition launched a million-dollar campaign opposing it.

That is worth noticing. For years, insurers have argued that the problem is providers collecting money they are not owed. Now their coalition is spending heavily to oppose enforcement of amounts neutral arbitrators have awarded.

Congress should go one step further and make binding awards enforceable in federal court. No new agency. No new appropriations. Just the ordinary rule that when a neutral entity resolves a dispute, the losing party pays.

Somewhere underneath all of this is a patient. She did not choose the emergency physician who stabilized her or the aircraft that carried her to a trauma center. She paid premiums for coverage. An arbitrator has already decided what her insurer owes.

Congress now has to decide whether “binding” actually means something.

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M. Dylan McClelland is a former chief enforcement counsel of the California Department of Managed Health Care. He advises the Emergency Air Rescue Alliance, an advocacy organization for emergency air medical providers.

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