The No Surprises Act: what employers may not see

You’re probably familiar with the No Surprises Act—the federal law that took effect in 2022 to shield patients from unexpected out-of-network medical bills. The kind that arrive after an emergency visit, or when an out-of-network provider was involved in an otherwise in-network procedure. Under the law, patients generally can’t be billed more than their in-network cost-sharing amount in those situations, and when providers and insurers can’t agree on payment, they’re required to resolve it themselves.

The No Surprises Act was designed to solve a clear problem: protect patients from unexpected medical bills. And in many ways, it has. But for employers, the story doesn’t end there.

The assumption

When federal protections are in place, it’s reasonable to assume that financial risk is being reduced—that costs are becoming more predictable and unexpected exposure is being managed.

But in practice, the dynamics are more complex.

What’s actually happening

At the center of the No Surprises Act is the independent dispute resolution (IDR) process, a mechanism used to determine payment amounts for out-of-network care. When a provider and an insurer can’t agree on what an out-of-network service should cost, both sides submit their proposed payment amounts to a neutral third-party arbitrator, who selects one. The patient is held harmless throughout; it’s entirely a dispute between the provider and the plan.

The scale and outcomes of that process tell a different story. In 2025, more than 2.6 million IDR disputes were filed—far exceeding initial projections. Arbitrated payments often end up being three to four times higher than the median in-network rates. It’s estimated that the IDR process has added more than five million dollars in costs to the healthcare system since its launch, with costs ultimately flowing back to self-funded employers who pay their employees’ claims directly.

Rather than declining over time, the volume of arbitration disputes continues to grow well beyond original expectations, and many cases still take longer than intended to resolve. The result is a system where financial outcomes remain dependent on retrospective processes that employers cannot fully predict or control.

Bottom line: even in a regulated environment, pricing is not always set up front. It’s often determined after care occurs, through arbitration and negotiation.

What the data doesn’t show

When pricing isn’t defined upfront, financial outcomes can’t be determined until after the fact, and they remain subject to external processes and variable benchmarks. Some key questions become difficult to answer:

• What will this actually cost?
• How much exposure do we have?
• Can we confidently stand behind these decisions?

That’s not a hypothetical problem. In one documented case, a large self-funded employer incurred approximately $6.6 million* in unexpected exposure, despite the protections of the No Surprises Act. That exposure came from a combination of arbitration outcomes, network gaps, and out-of-network provider involvement—all scenarios permitted within the current system.

Beyond the financial impact, the employer was required to actively manage arbitration outcomes, cost recovery efforts, and prolonged negotiations. Even with protections in place, the burden of managing financial uncertainty remained.

What this means for employers

The No Surprises Act reinforces an important reality: regulation can limit certain outcomes, but it cannot replace defined pricing. And for employers, this isn’t just a compliance question. It’s a question of whether they have any meaningful control over what care ultimately costs.

Financial certainty doesn’t come from regulation alone. It comes from how care is purchased in the first place.

Pricing uncertainty in a regulated environment doesn’t disappear—it just shifts. The No Surprises Act was an important step forward, but it also makes one thing clear: as long as pricing is determined after care occurs, financial results remain difficult to predict, validate, and control.

Models built on upfront, transparent pricing take a fundamentally different approach, defining the full cost of care before a decision is made, rather than relying on processes that determine it afterward. So what does it look like to eliminate that uncertainty altogether?

We’ve outlined the full framework—including the financial, governance, and fiduciary implications—in our executive brief.

For employers who feel stuck navigating a system that wasn’tdesigned with their interests in mind, there is a different way to approach it. That means no arbitration, no retroactive negotiations, and no surprises.

Download the Responsible Purchasing Executive Brief HERE.

*Data provided by a de-identified Fortune 500 client.