Escalating Arbitration Awards Drive Up Commercial Medical Costs
Arbitration awards under the No Surprises Act are reaching nearly 6% of total commercial medical spend in select regions, according to statements made by UnitedHealthcare CEO Tim Noel during an October earnings call.
UnitedHealthcare Exceeds Initial 11% Cost Projections
UnitedHealthcare reported that its commercial medical cost trend is exceeding an initial expectation of 11%. During the earnings call, Mr. Noel pointed to clinician cost intensity and expensive specialty drugs as contributing factors, alongside an acceleration of costs tied directly to the No Surprises Act. He attributed these cost pressures to ongoing abuse driven by a relatively small number of clinician groups and third-party organizations.
The financial impact of these disputes adds billions of dollars in additional costs that ultimately affect consumers and employers. Dan Kueter, who serves as UnitedHealth Group’s chief commercial officer, noted during a July earnings call that excessive use of the independent dispute resolution process added about 50 basis points of incremental cost trend in 2026, accounting for at least 100 basis points of the total commercial cost.
Massive Payout Disparities and High Ineligibility Rates
Data from UnitedHealth Group indicates that upwards of 40% of claims entering the independent dispute resolution process are ineligible. Furthermore, about 60% of arbitration cases are brought forward by just five entities.
When arbiters align with out-of-network providers, the average payout reaches 11 times what Medicare would pay. In certain determinations, payouts have climbed as high as 30 times standard Medicare rates. Payer executives plan to address these escalating cost management challenges and regulatory shifts at the upcoming Becker’s 5th Annual Fall Payer Issues Roundtable in Chicago, scheduled for November 2–3.
Regulatory Intent Versus Payer Pressures and Market Shifts
The law was intended to protect patients from unexpected bills, and we strongly support that objective.
Mr. Noel said during the earnings call, emphasizing that the organization will continue working with policymakers and regulators to ensure the legislation functions as intended.
