No Surprises Act Explained: What Physicians Need to Know

Imagine paying $20 a month for Netflix, then getting a separate $100 bill because a movie came from outside the service’s network. Surprise! This is no different than choosing an in-network surgeon, then learn later that the anesthesiologist involved in your care was out of network.

The No Surprises Act was enacted on December 27, 2020, and its main protections took effect January 1, 2022. When the law applies, it generally limits patients’ cost sharing to in-network amounts and leaves the payment dispute to the health plan and provider.

Early evidence suggests that out-of-pocket spending fell for some privately insured patients after the law took effect. At the same time, the federal arbitration process for provider-plan disputes has seen high and rising volume and costs. Those findings raise questions, but they do not establish the Act’s overall effect on healthcare spending.

In this Healthcare Trends article, I’ll explain what the Act covers, how the payment process works, and what the latest evidence means for clinicians and patients.

Before the No Surprises Act took effect, patients could receive an unexpected bill after getting care from an out-of-network clinician—even when they had little choice over who treated them. This could happen during an emergency department visit or a planned surgery at an in-network hospital, where the anesthesiologist might not be in the same insurance network.

Depending on their coverage and applicable state protections, patients could face two types of costs:

A Peterson-KFF analysis shows how often patients were at risk. Among people with large-employer coverage in 2017, 18% of emergency visits had at least one out-of-network charge. The rate varied considerably by state. An out-of-network charge did not necessarily mean a patient received a balance bill, but the claims data identified potential exposure, not every bill sent to a patient.

The same issue could arise during an inpatient stay at an in-network hospital. A clinician might work in the hospital but belong to a separate group that did not participate in the patient’s insurance network.

In the same analysis, 16% of in-network inpatient stays among people with large-employer coverage had at least one out-of-network professional charge in 2017.

Before the federal law, some states had enacted protections. Comprehensive state laws generally required insurers to apply in-network cost sharing and prohibited providers from balance billing in covered situations. But protections varied, and state insurance laws generally did not apply to self-insured employer plans.

The possibility of an unexpected bill weighed on patients. In a 2018 KFF poll, about two-thirds of Americans said they were very or somewhat worried about being able to afford unexpected medical bills.

Some clinician groups also had financial incentives to remain out of network: without a negotiated contract, they could seek higher payments and, where permitted, bill patients for the remaining balance. That incentive did not mean every out-of-network clinician deliberately pursued a surprise-billing strategy.

The No Surprises Act established federal protections against surprise medical bills. Enacted in December 2020, its main protections generally took effect for plan years beginning on or after January 1, 2022. They apply to most private health plans, including self-insured employer plans that state laws generally couldn’t regulate.

When the law applies, patients are generally responsible only for their in-network cost sharing, such as a copay, deductible, or coinsurance. The out-of-network clinician or facility generally cannot balance bill them for the rest. The patient may still owe money for care, but the health plan and provider must work out the remaining payment between themselves.

The protections apply in three main situations:

There are limits, though. For example, the law doesn’t protect against every out-of-network bill or make a service covered if the health plan otherwise excludes it. Ground ambulance services also aren’t covered by these federal surprise-billing protections. Medicare and Medicaid have separate protections.

In some non-emergency situations, a clinician can ask a patient to waive these protections through a notice-and-consent process. That exception isn’t available for many services patients typically can’t choose, including anesthesia, radiology, and other ancillary services.

The Act also addresses problems beyond surprise bills. For example, it includes requirements for insurer provider directories, which I discussed in Ghost Networks in Health Insurance.

For covered surprise bills, the patient is generally out of the middle. But the health plan and clinician still need to agree on a payment, which is where the dispute-resolution process comes in.

When an out-of-network clinician treats a patient under the No Surprises Act there’s no contracted rate between the clinician and the health plan. The plan makes an initial payment or issues a denial, but the two sides may disagree about what the service is worth.

For eligible claims, the clinician or plan can start a 30-business-day negotiation period. If they can’t agree, either side can generally initiate the federal independent dispute resolution (IDR) process within four business days after the negotiation period ends. Some disputes follow a state payment process instead of federal IDR.

In federal IDR, both sides submit a payment offer and supporting information to a certified independent organization. The organization reviews the offers and selects one of them—it doesn’t split the difference. The decision is binding, and the required payment is generally due within 30 calendar days.

So, imagine this:

One benchmark in the process is the qualifying payment amount (QPA). Generally, it’s based on the health plan’s median contracted rate for the same or a similar service, provided by a clinician in the same or a similar specialty in the relevant geographic area, adjusted for inflation. The IDR entity considers the QPA alongside other permitted information. It doesn’t simply have to choose the offer closest to it. CMS notes that parts of the rules for calculating the QPA have been challenged in court, while the federal IDR process remains operational.

Throughout this process, the patient generally remains responsible only for the applicable in-network cost sharing. The dispute is over what the plan and provider settle on for the service—not whether the patient owes the difference.

The early evidence suggests that the law has helped protect some patients financially. At the same time, the arbitration process has grown far larger than federal officials initially expected. Whoopsie.

A 2025 study in The BMJ compared adults who purchased their own private insurance in states that gained surprise-billing protections with adults in states that already had protections. After the Act took effect, the researchers estimated that annual family out-of-pocket spending fell by $567 more, on average, in the states that gained protections. They did not find a significant difference in premium spending between the groups.

While this is encouraging, the study looked at adults with direct-purchase insurance, not employer-sponsored coverage. It also measured self-reported family healthcare spending overall, not just surprise bills, so it doesn’t tell us exactly how much each patient saved because of the law.

According to a Health Affairs analysis of federal data, about 1.2 million disputes were submitted in the first half of 2025—more than twice the number in the same period in 2024 (that’s wild!). Nearly 1.4 million more were submitted in the second half of 2025. Federal officials had initially estimated about 17,000 disputes per year.

Providers prevailed in about 85% of payment determinations in the second half of 2025. That describes the disputes that received a payment decision (it doesn’t mean providers won 85% of all out-of-network claims or that the decisions were necessarily biased.)

The cases aren’t spread evenly across the healthcare system. In the first half of 2025, four provider groups and representatives accounted for more than half of disputes filed (HaloMD, Team Health, Radiology Partners, SCP Health).

A 2026 Health Affairs analysis estimated $22.4 billion in costs associated with IDR from 2022 through 2025. The estimate includes fees, modeled administrative expenses, and payments above the qualifying payment amount.

Much of that $22.4 billion represents payments to providers above a benchmark, while administrative expenses and fees are costs of running and participating in the process.

Broader market effects remain uncertain. A 2026 GAO report found that payment trends for selected services largely continued patterns that began before the Act. Meanwhile, an NBER working paper found lower network participation in more affected specialties and states, with suggestive evidence of higher premiums among more exposed insurers. The paper has not been peer-reviewed, and neither analysis settles every question about the law’s wider effects.

The data give us a reason to look closely at the arbitration system: disputes have grown, providers frequently prevail, and the process carries administrative costs. How much those outcomes affect premiums, network access, and overall spending is still being studied.

Physicians, insurers, and employers agree that patients shouldn’t be stuck with surprise bills. But they have different views on whether the payment dispute process is working as intended.

On the physician side, the American College of Emergency Physicians, American College of Radiology, and American Society of Anesthesiologists have called for a more transparent and accessible IDR process. They’ve also raised concerns about insurers delaying or withholding payments after a physician wins a dispute. The groups welcomed a 2026 federal rule, but said stronger enforcement is still needed.

Insurers and employers see a different problem. AHIP, a health insurance trade group, said the rule was a first step, but argued that more action was needed to address incentives in IDR. A group of employers and employer organizations has also raised concerns that the process could increase healthcare costs.

Federal agencies have begun changing how IDR operates:

The payment benchmark is still being contested in court, too. In August 2026, the Fifth Circuit upheld parts of a lower-court decision striking certain rules and guidance for calculating the qualifying payment amount. CMS said the agencies were reviewing the decision and that federal IDR remained operational.

These changes aim to make the process easier to use and administer. Whether they also address concerns about payment levels, administrative burden, and healthcare costs remains to be seen.

Protecting patients from surprise bills is, of course, the right move. Healthcare costs are on everyone’s minds (among the top issues on voters’ minds in this past election, it landed at number 2!). Patients shouldn’t have to worry about an anesthesiologist’s network status while they’re under the knife, or an emergency physician’s while they’re in the ED.

Physicians also deserve fair, timely payment for the care they provide. If an insurer’s initial payment is too low, clinicians need a practical way to challenge it. That’s especially important for specialties where patients often can’t choose who treats them.

At the same time, millions of disputes and substantial administrative costs suggest the arbitration process deserves another review. A high provider win rate alone doesn’t tell us whether payments are fair, whether insurers’ initial offers were reasonable, or what the law is doing to overall healthcare spending.

The new rules may help make the process more accessible and efficient, but there are trade-offs. Lower fees can make it easier for clinicians to pursue a dispute (less friction), while the new batching limit could mean more work for practices handling many claims (more friction). I’ll be watching whether these changes actually reduce delays and administrative burden (stay tuned for my Inefficiency Insights).

My hope is that policymakers keep patients out of the middle while making the payment process more transparent and holding both insurers and providers accountable. The measures of success should include patient protection, timely and fair payment, access to care, and the law’s impact on premiums and overall spending.