Lisa Jarvis: The No Surprises Act needs a dose of sunlight

The Trump administration recently said it wants to “clean up” the No Surprises Act, the law that ended surprise billing for medical emergencies but opened up the healthcare system to exploitation. Now, a law that does a lot of good for individual patients could wind up raising costs for everyone.

To understand what went so wrong, policymakers need a better grip on the players and processes that have caused a well-intended law to go so far off course. As is so often the case, sunlight could be the best disinfectant.

To be clear, the principle behind the No Surprises Act is a good one. People experiencing health emergencies shouldn’t be stuck with surprise bills because someone on their care team isn’t covered by their insurance. And that used to be common: Before the law, about one in five Americans who had visited an emergency room later received an unexpected bill from an out-of-network provider. Those bills could leave even well-insured patients with thousands of dollars in out-of-pocket costs.

Patients no longer are on the hook for such bills, which is a win. But the law, which directs providers and insurers to settle payment disputes between themselves, has created a new problem. When an out-of-network provider and an insurer can’t agree on a payment, the law calls for an arbitrator to be brought in to settle the matter. And as I recently explained, the system seems ripe for exploitation.

First, the system has been overwhelmed with disputes — millions more than government officials had anticipated. And the vast majority of disputes are being won by providers, who are getting payouts that can far exceed the industry standard. In 2025, they received six times the rate insurers pay for in-network services on average, according to a Wall Street Journal analysis.

A spokesman for the Centers for Medicare and Medicaid Services recently told the New York Times that the law “is being gamed to get higher prices, and CMS is actively working to clean it up.”

Federal officials have yet to outline what that would entail. But there are a few obvious places to start.

Their first stop should be the arbitration firms that decide whether a doctor’s or insurer’s proposed payment is fair. Nobody can explain why physicians are overwhelmingly winning these disputes — especially when they are asking for payments that are so far outside the norm.

The law had laid out guidelines for arbitration firms, which must be certified by the government. It originally called for these independent judges to benchmark payments against the rate insurers typically paid for similar services in an area. But provider groups challenged that practice in court — and won.

That’s left arbitrators using a process that’s frustratingly opaque to outsiders. “A better sense of what happens under the hood, and how they’re reaching their judgment” would help everyone understand where things are going wrong, says Zach Cooper, a health economist at Yale University.

More transparency around the ownership structures of the arbitrators is also needed. Although firms aren’t supposed to be connected to an insurer or provider, those relationships can be murky. The Private Equity Stakeholder Project found that at least five of the 16 arbitration firms accredited by the Centers for Medicare and Medicaid Services are backed by private equity — some by more than one investment firm. The PESP also found at least one instance of a private equity firm owning both an arbitrator and a provider group that initiated disputes under the law. Identifying these potential conflicts of interest is paramount.

And scrutiny shouldn’t stop with the arbitrators. Of the millions of claims being filed, the majority are being brought by a small number of physician groups, many of which are owned by private equity firms. It’s not surprising that private equity might take advantage of this system — after all, private equity-backed physician staffing firms previously profited from charging consumers for emergency services not covered by their insurance.

Those firms have the financial wherewithal to navigate the dispute system, says Kennah Watts, a research fellow at Georgetown University’s Center on Health Insurance Reforms. Smaller, independent physician groups might not be able to afford to sit on a bill for months while the arbitration process unfolds, let alone be on the hook for the arbitration firm’s fees if they lose, she explains.

Now, though, billing firms are popping up to draw more providers into these payment disputes. Where health economists see a policy gone far awry, these middlemen see, as one put it in a recent webinar to potential clients, “a big, underutilized opportunity” for doctors. They offer to streamline the process of filing claims, tout their success at securing higher payouts for providers, and typically only take a cut if they win a dispute.

The proliferation of these businesses should shock no one, Cooper says. After all, before the No Surprises Act, consultants had emerged to help out-of-network physicians recover payments from patients. “If there are profits to be had, it’s going to create incentives for malign actors to take advantage of the law,” he says. “This is why it’s so critically important to get a better sense of what the arbitrators are doing, how they’re thinking about the rulings, and what outcomes they get.”

Identifying and closing loopholes in the law wouldn’t just be good for patients and the healthcare system — ideally, it would prevent vulnerabilities from being carried into future laws. The No Surprises Act doesn’t cover every aspect of emergency care, and emergency care isn’t the only situation where patients are sidelined by unexpected bills. As lawmakers try to bring more transparency into the healthcare system, they should learn from this experience.

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This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Lisa Jarvis is a Bloomberg Opinion columnist covering biotech, health care and the pharmaceutical industry. Previously, she was executive editor of Chemical & Engineering News.