Federal data analyzed by colohealthplans.org reveals that medical billing arbitration payouts reached nearly $15 billion in 2025, more than tripling the previous year’s total under a law originally designed to shield patients from unexpected healthcare charges.
How Arbitration Drove Payouts to $15 Billion in 2025
A controversial process for resolving medical payment disputes awarded $14.85 billion in payouts to healthcare providers last year. The figure represents a sharp escalation from 2024, when total awards stood at $4.08 billion according to an analysis of previously unreleased data from the Centers for Medicare and Medicaid Services.
It’s shocking that it’s rising so fast,
said Jack Hoadley, a research professor emeritus at Georgetown University’s Center on Health Insurance Reforms, in findings colohealthplans.org.
The Origins of the No Surprises Act
Congress passed the No Surprises Act in 2020 with a dual mandate: shield patients from unexpected medical bills and lower exorbitant prices charged by some doctors. Before the legislation took effect, patients frequently faced crushing financial demands after inadvertently receiving care from physicians outside their insurance networks, particularly during emergency room visits.
While the law successfully insulated patients from unexpected charges, the mechanism established to determine provider compensation has generated severe friction between insurers and medical practices.
Arbitration Mechanics and Provider Success Rates
To settle price disagreements without involving patients, lawmakers established an independent dispute resolution process modeled after Major League Baseball salary negotiations. In this setup, insurers and physicians each propose an amount to arbitrators.
Data shows that doctor groups representing radiologists, anesthesiologists, and emergency-room physicians have emerged as the primary beneficiaries. Insurers have consistently landed on the losing end of the independent dispute resolution process, with arbitrators accepting insurer-proposed payment amounts roughly 20 percent of the time or less.
Extreme Billing Multiples and Unintended Consequences
Reporting from Tradeoffs highlights specific instances where out-of-network providers secured awards that vastly exceed median in-network rates. In gynecological care, some practitioners received payments 600 times the average price for placing intrauterine devices, including one instance where a doctor collected $330,000 for a procedure typically averaging around $2,000.
It is like this cautionary tale,
Margot Sanger-Katz told Tradeoffs regarding the policy outcome. Even if you do this stuff in the right way, public policy is really hard and you can end up with unintended consequences.
Insurer Pressures and the Broader Bargaining Landscape
Insurance companies are legally required to make the awarded payouts, driving up costs that ultimately feed into higher health insurance premiums for consumers. Because large companies representing doctors frequently win awards that exceed standard in-network rates, the financial stakes continue to climb.
As arbitration awards continue to swell, the mechanism designed to keep provider rates reasonable has instead provided a lucrative alternative revenue stream for select medical specialties.
