The No Surprises Act was designed to protect patients from unexpected medical bills. On that front, it’s working. But behind the scenes, a different financial story is unfolding, and one that’s shifting the burden to employers in ways many still don’t fully see.
“The patient protection part of the law is largely working,” says Jude Odu, Founder of Health Cost IQ and author of Model Optimal Care. “The financial burden did not disappear, though. It shifted from the patient’s pocket to the employer’s health plan.”
At the center of that shift is the law’s Independent Dispute Resolution (IDR) process. When insurers and providers disagree on payment for out-of-network services, disputes go to arbitration. What was intended as a neutral mechanism is now driving a new layer of cost.
“Providers win roughly 80 percent of these cases, with median awards at about 3.7 times the Qualifying Payment Amount,” Odu explains. “The arbitration process has become a tool for extracting higher payments from employer health plans rather than a fair adjudication mechanism.”
For self-insured employers, that difference is not theoretical. It’s absorbed directly into their health plans.“When a self-insured plan offers the QPA and the provider wins arbitration at 3.7 times that amount, the difference is absorbed by the plan,” he says.
The result is a cost dynamic that operates largely out of sight. Most employers don’t see arbitration outcomes broken out in their reporting. Instead, they’re presented with a single number at renewal.
“Most employers see a single number at renewal… That story is partially true. It is also dangerously incomplete,” Odu says.
Without visibility into how much of that increase is driven by arbitration versus utilization or pharmacy trends, employers are left managing costs without understanding their true source.
That lack of insight feeds into a broader issue across the healthcare system.
“Up to 50 cents of every dollar paid in claims can be classified as wasteful or inefficient,” Odu notes. “Administrative complexity and pricing failure together account for more than half of the total.”
The arbitration process is just one piece of that larger puzzle, but an increasingly influential one. It is also beginning to reshape provider behavior in ways that could further inflate costs.
“When providers consistently win multiples of the QPA, network participation becomes less attractive,” Odu says.
In other words, staying out of network, and relying on arbitration, can become more profitable than agreeing to negotiated rates. That dynamic introduces a new layer of strategic pricing pressure across the system.
For employers, the challenge is not just cost control. It’s cost visibility.
“When employers evaluate rising costs through a vendor-supplied summary, they are only reading the summary that the vendor wants them to read,” Odu says.
The path forward requires a more active approach. That starts with access to data. “Your data is your single best tool for detecting hidden taxes, fees, waste, and fraud,” he explains. From there, employers can begin to isolate arbitration-related costs, audit network adequacy, and identify pricing inconsistencies across providers. Technology is also playing a growing role.
“A machine learning system can review 100 percent of claims… On a $50 million plan… that is roughly $7 million a year,” Odu says, pointing to the scale of recoverable inefficiencies.
At the same time, newly available price transparency data is opening additional opportunities to guide employee decision-making. “An echocardiogram that costs $350 at one facility and $2,700 at another… is a steerage opportunity, not an unavoidable cost,” he adds.
Ultimately, the No Surprises Act highlights a broader truth about healthcare reform: solving one problem does not eliminate cost, it redistributes it.
“The patient sees temporary relief,” Odu says. “But then the plan sponsor sees a higher bill at renewal… creating a vicious cost cycle.” For employers, the next phase is not just reacting to rising costs, but understanding, and actively managing, the mechanisms driving them.
