A New York Times article dated April 22, 2026, authored by Sarah Kliff and Margot Sanger-Katz, includes the heading: “A $440,000 Breast Reduction: How Doctors Cashed In on a Consumer Protection Law.” The law is the so-called “No Surprises Act,” legislation that introduced baseball-style arbitration to disputes between insurers and out-of-network physicians. 

The law was intended to take patients who had no choice but to go to an out-of-network physician out of the payment loop. If there was a disagreement as to the insurer’s amount of compensation to the physician, the provider could arbitrate in a framework of baseball arbitration, where the provider and the insurer each proposed the amount of an award to the arbitrator, and the arbitrator picked the most reasonable number, guided by a variety of factors, including the Qualified Payment Amount (QPA), the median contracted rate an insurer paid for a specific service, in a specific geographic area, as of January 31, 2019, adjusted annually for inflation.

Apparently the No Surprises Act has gone sideways, resulting in runaway costs. Because disputes between providers and insurance companies get resolved through baseball-style arbitration, the arbitrator is constrained to choose the most reasonable proposed award from the number proposed by the provider or the insurer. As the case law has evolved, however, arbitrators have not been constrained by the Qualified Payment Amount, and have often chosen the amount proposed by the provider, which may be much higher than the QPA. As a result, a mechanism that was supposed to be quick, efficient, and result in the most reasonable award has resulted in spiraling costs for the health care system. And presumably, as awards rise, so will the Qualified Payment Amount, which, however, currently serves as only one among other factors that the arbitrator can take into consideration. Because there is no provision for attorneys fees in the legislation, private equity has stepped in to provide litigation financing for the out-of-network providers.

Is there a solution?

One approach would be to simply do away with arbitration altogether, and impose fixed payment benchmarks adjusted for inflation.

Another approach would be to do away with baseball arbitration, allowing arbitrators to fashion awards that were not at extremes proposed by providers and insurance companies.

Another approach would be to make the Qualified Payment Amount the primary, if not determinative factor, for the arbitrator to consider what is reasonable.

Another approach would prohibit arbitrators from using past out-of-network rates, which, if inflated, can be used by providers to justify ever higher awards.

Another approach would be to weed out cases that are not appropriate for handling within the system of baseball-type arbitration — treatment cases that should have gone to in-network providers, or been handled by Medicare and Medicaid for the patients. Critics complain that many cases going to arbitration are actually ineligible and abusive claims, and there is a lack of oversight.

The No Surprises Act created a mechanism that was intended to take into account the interests of providers and insurers. No good deed goes unpunished. Any fix of the system will require congressional legislation. Any proposed change will trigger vigorous lobbying. Do not expect a fix anytime soon.

What do you think?