Feds Oust Medical Billing Arbitrators From Program Beset By Soaring Costs, One-Sided Decisions

The Trump administration has fired two private arbitrators from a federal program tasked with settling billing disputes between doctors and insurers, after finding both companies overwhelmingly sided with health care providers. The Centers for Medicare and Medicaid Services disclosed on Nov. 4 that the Island Peer Review Organization, known as IPRO, and Network Medical Review Company can no longer take new cases as federal arbitrators under the No Surprises Act’s independent dispute resolution process. The Centers said both companies failed to meet performance standards and cited “independence and impartiality.” IPRO’s provider win rate for doctors stands near 97 percent, according to the data firm Turquoise Health, and its revenue nearly tripled while it handled disputes. In response, IPRO said its rulings were fair and impartial, and Network Medical Review plans to appeal. Neither would explain why it was cut, and eight other arbitrators are waiting to learn whether they will be recertified.The firings came weeks after an investigation exposed just how lucrative refereeing these fights has become. A spine surgery that runs about $1,400 in network now fetches a median of $34,000 when doctors take the bill to federal arbitration, and the firms deciding those fights are cashing in, too.Three years ago, iMPROve Health was in trouble. The Michigan-based nonprofit lost more than $2 million in 2022, over a third of its revenue, and held talks about selling the business.Today it runs at a profit margin of about 70 percent, close to that of chipmaker Nvidia, and its revenue has grown 13-fold, according to a Stat News investigation that drew on more than 100 pages of financial records. iMPROve Health was not among the firms cut loose last week.The windfall comes from a role Congress created to settle payment fights under the No Surprises Act, the 2020 law that shields patients from shocking out-of-network bills. iMPROve Health is one of three nonprofits among the 17 firms certified before last week, and research has flagged all three as among the likeliest to rule for medical providers.Across the system, arbitrators side with providers in more than 80 percent of cases, and several judges have ruled that courts cannot second-guess their decisions.Margins like that invite hard questions about who is watching the referees.“The reported 70 percent margin raises questions about federally approved fees and oversight, and whether the arbitrator selection could be structured to incorporate more competition over the fees charged,” a fellow and associate director at the Brookings Institution’s Center on Health Policy, Loren Adler, tells The New York Sun. “Nonprofit status doesn’t eliminate financial incentives.”Until last week, the answer was hardly anyone, according to a market-oriented health policy analyst.“There has been remarkably little oversight of arbitration firms. We are aware of only one audit since the No Surprises Act took effect,” a senior policy analyst at the Paragon Health Institute, Jackson Hammond, tells the Sun. “These extraordinary profit margins reflect dispute volumes far beyond what policymakers anticipated and are another data point for how the system is not operating as Congress intended.”$1,400 Surgery Becomes a $34,000 PaydaySince taking effect on Jan. 1, 2022, the law has blocked roughly 50 million surprise bills, according to one estimate. The arbitration costs still fall on someone. Insurers and employers cover the awards and fees up front, and workers end up paying through steeper premiums and thinner raises.Patients owe only in-network cost sharing. If 30 days of talks between provider and insurer fail, either side can file for arbitration, and a certified firm picks one of the two final offers.Federal officials projected about 17,000 disputes a year. Nearly 7.8 million have been filed since April 2022, including 390,602 in September alone. Doctors have been awarded $61,000 for breast reduction surgery, a procedure with an in-network rate of $1,420.“Providers choose which cases to bring, so there’s no reason to expect a 50–50 split. The stronger evidence of a problem is payments far above negotiated prices,” Mr. Adler explains.Employers footing the bills say the check sizes trouble them as much as the win rate.“In addition to how often providers win these disputes, we’re also concerned that the amounts awarded are often many times what the same care costs in-network,” the interim president and CEO of the National Alliance of Healthcare Purchaser Coalitions, Jenny Goins, tells the Sun.The 15 arbitration firms that handled disputes collected roughly $1.3 billion in fees in 2025 alone, according to House Energy and Commerce Committee Democrats, while providers were awarded nearly $15 billion. One analysis by Georgetown University researchers put the total cost of the process at $22.4 billion over four years.Sympathy may also tip the scales toward doctors.“Hospitals and physicians are much more sympathetic than large insurers,” a professor of health policy and management at Johns Hopkins University, Gerard Anderson, tells the Sun.How the firms, known as independent dispute resolution or IDR entities, get paid may matter, too, according to a Georgetown University health insurance researcher.“Since arbitrators are paid per dispute, and providers primarily file disputes, arbitrators ruling in favor of providers may incentivize providers to submit more disputes, thus increasing IDR entities’ volume and associated profit,” a research fellow at the Center on Health Insurance Reforms at Georgetown University’s McCourt School of Public Policy, Kennah Watts, tells the Sun.“There are also some indications that some IDR entities share common ownership or financial backing with certain provider groups, which may be another perverse incentive to rule in favor of providers.”Providers start more than 99 percent of disputes, Mr. Hammond points out, and the side that files gets first pick of which firm hears the case.“Provider groups are effectively the repeat customers of arbitration firms, and firms with higher provider win rates are likely more attractive to providers selecting an arbitrator,” he says.Physician groups blame insurers for lowballing initial payments, and the Texas Medical Association points to an Aug. 11 ruling in which the full Fifth Circuit Court of Appeals found the government’s benchmark-rate formula unlawfully pushed that figure down.The arbitrators reject the idea that the system is broken. A study commissioned by their trade group, the Coalition for Independent Dispute Resolution Entities, argues the process is working as Congress designed and that early federal estimates of 17,000 to 22,000 disputes a year were simply wrong. It also notes that in about a quarter of disputes only one side participated, and plans lost 90 percent of those.Washington Moves to Rein In the RefereesThe New York State employee health plan has identified arbitration awards as the primary driver of a 10 percent premium increase this year, according to Rep. Frank Pallone Jr., the New Jersey Democrat who helped write the No Surprises Act.Nationally, workers with employer coverage now pay an average of $7,471 a year toward family premiums, up nine percent from 2025, according to an annual survey released Oct. 22. That far outpaces 3.7 percent wage growth.“Anecdotal information suggests arbitration is already adding hundreds of dollars to family premiums, and the costs are growing,” Mr. Hammond says.“Arbitration awards are the most significant cost driver of the IDR process. In 2025 alone, more than $16 billion was awarded to providers above median in-network rates,” Ms. Watts says.“The IDR process was supposed to be a last resort. Instead, it has become a business model for a handful of private equity-backed groups and billing firms,” Ms. Goins says.The administration has been turning up the heat for weeks. On Oct. 1, the Centers for Medicare and Medicaid Services administrator, Dr. Mehmet Oz, and an assistant secretary of labor, Daniel Aronowitz, summoned leaders of every certified arbitration firm to a meeting that a government readout said addressed increasingly high costs. A month later, two of those firms were out.Insurers and big employers had urged a pause on recertifying any firm until the system is overhauled. Their lobbying group, the Coalition Against Surprise Medical Billing, cheered the firings, saying arbitrators had let providers turn the process into a “gold rush.”Mr. Pallone followed up on Oct. 8 with a bill to scrap arbitration altogether for care delivered from Jan. 1, 2028. Out-of-network providers would instead get a recalculated median of what insurers pay doctors in their networks, adjusted each year for inflation. Doctors’ groups have lined up against it.With Democrats taking the House in January, Mr. Pallone is in line to chair the Energy and Commerce Committee, which oversees the law.A rival bipartisan measure from Rep. Greg Murphy, a North Carolina Republican and urologist, would keep arbitration and penalize insurers that fail to pay awards within 30 days.Regulators are tinkering, too. A rule finalized in May cut the federal administrative fee from $115 to $15 per party and, as of Nov. 1, lets providers bundle up to 50 line items into a single dispute.Some would scrap arbitration altogether.“Replacing arbitration with a benchmark, as Pallone proposes, would reduce administrative waste and excessive payments while preserving patient protections,” Mr. Adler says.Ms. Goins’s coalition also backs a benchmark like the one in Mr. Pallone’s bill.Others would split the difference. Mr. Hammond would keep arbitration for emergency care yet cap awards at a high percentile of the insurer’s in-network rates for the same service in the same area.“For elective procedures, patients should receive prices in advance, eliminating the need for arbitration,” he says.Mr. Anderson would rather tie payments to a percentage of the in-network rate.“Guidelines are clearly needed,” he observes.Government funding also expires Dec. 11. Until lawmakers act, the dispute machine keeps grinding out more than 12,000 new cases a day.For some, the trouble traces back to how the law was written.“Congress made a big mistake in offering an arbitration option for providers not satisfied with the Qualifying Payment Rate without at the same time providing strong guidance to arbitrators,” a professor of the practice of health policy at the University of Southern California’s Price School of Public Policy, Paul Ginsburg, tells the Sun.“This has been an example of opening what may have been thought to be a small loophole that became greatly enlarged by the incentives of arbitrators to expand numbers of cases for which arbitration applied and to approve excessive rates,” he adds.

Feds Oust Medical Billing Arbitrators From Program Beset By Soaring Costs, One-Sided Decisions

Feds Oust Medical Billing Arbitrators From Program Beset By Soaring Costs, One-Sided Decisions

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