The No Surprises Act was signed into law on December 27, 2020, to protect patients from surprise billing—unexpected charges from doctors, hospitals, or other health care providers who are not part of a patient's health plan's network. The law limits the amount that patients are required to pay in those situations and creates an independent dispute resolution (IDR) process for resolving disputes between commercial insurers and health care providers about payments for such out-of-network care.
In January 2021, the Congressional Budget Office estimated that the law would reduce the in- and out-of-network prices that insurers pay to providers who had high rates of surprise billing before the law was enacted. CBO expected that those lower prices would, in turn, reduce the premiums that insurers charge for commercial plans by roughly 1 percent, thus decreasing federal deficits by $17 billion from 2021 to 2030 (CBO 2021). Contemporaneous analyses supported those projections, although experts noted at the time that outcomes would vary depending on how the law was implemented (Duffy et al. 2020; Adler et al. 2021; Chhabra, Brown, and Ryan 2021; Fiedler, Adler, and Ippolito 2021).
Emerging evidence suggests that the law might not have the effects that CBO anticipated. Although prices for some services that had high rates of surprise billing before the law's enactment have declined (after adjusting them for inflation), several published reports indicate that providers are winning more than 8 in 10 IDR cases and are being awarded payments that are much higher than expected, particularly in certain geographic areas. CBO is therefore seeking research that evaluates the law's effects on health care prices and network participation.
What Is the No Surprises Act?
Surprise bills, as defined in the law, are those that arise when patients with commercial health insurance receive care from out-of-network facilities or medical professionals during emergencies or from out-of-network medical professionals at in-network facilities. As of January 1, 2022, patients' cost sharing (the amount they pay in copayments, coinsurance, or deductibles) for emergency services, air ambulance services, and certain ancillary services such as radiology or anesthesiology is capped at in-network amounts. The law also prohibits providers from collecting additional payments directly from patients, a practice known as balance billing.
Generally, the No Surprises Act applies to federally regulated health plans and to plans in states that do not have a method for determining out-of-network payments under a state-level surprise billing law. In states that have such a method, fully insured plans (in which employers or individuals pay premiums to an insurer to assume the financial risk of covering the cost of enrollees' care) are governed by state laws instead of federal laws.
When federal law applies, insurers and out-of-network providers have 30 days after care has been rendered to negotiate a payment amount. If the parties cannot agree on the amount, either of them can initiate the IDR process, which is financed through fees assessed to the disputing parties. Each party offers an amount as final payment, and an arbitrator selects one of the offers on the basis of statutory factors. Those factors include the qualifying payment amount, or QPA, which is the insurer's median in-network rate for similar services in the same geographic area in 2019, indexed to inflation. Also, the law prohibits the arbitrator from considering certain other factors, such as providers' billed charges or Medicare's or Medicaid's payment rates.
What Were CBO's Estimates of the Budgetary Effects of the No Surprises Act?
CBO estimated that the No Surprises Act would reduce federal deficits by decreasing payments to providers for services for which surprise bills were common and, in turn, reduce premiums for commercial health insurance. Lower premiums would decrease federal subsidies for health insurance by shifting a portion of some employees' compensation from tax-favored health insurance to taxable wages and by decreasing subsidies for insurance purchased through the marketplaces established under the Affordable Care Act.
Even though the law targets out-of-network care, about 80 percent of its projected savings stemmed from lower in-network prices, relative to prior law. That percentage reflects the comparatively small share of spending that is out of network and the influence of out-of-network prices on in-network prices. A provider that can credibly threaten to remain out of network when negotiating in-network payment rates can demand higher rates. Before the No Surprises Act became law, providers had greater leverage because they could credibly threaten to stay out of network and then balance bill patients if the insurer refused to pay higher rates. A law that bans balance billing and limits out-of-network payments would thus weaken that leverage and put downward pressure on in- and out-of-network prices.
CBO first modeled a simplified scenario in which out-of-network prices were capped at the level of the median in-network price, or QPA. The agency projected that in that scenario, average in- and out-of-network prices would decrease by changing the amount that a provider could expect to receive if they remained out of network (CBO 2019). Lower-paid providers might successfully negotiate higher prices by threatening to remain out of network, but higher-paid providers would lose leverage; as a result, median prices would stay about the same even though the spread of prices would decrease. Because median in-network prices were estimated to be 15 to 20 percent below average in-network prices, the estimated effects on average in-network prices were substantial. Additionally, because the QPA was set at 2019 levels and indexed to inflation (which has historically been lower than growth in prices for medical care), the downward pressure on prices would increase over time.
CBO then considered a scenario in which the QPA served as the basis of the arbitration process instead of serving as a strict cap. When the QPA was listed as the main consideration for arbitrators (among other factors, including the severity of a patient's condition and providers' experience), CBO expected an effect that was similar to but smaller than the effect in the scenario in which the QPA served as a cap. The IDR process introduces uncertainty and allows some providers—particularly those offering specialized services—to obtain higher payments. Accordingly, CBO estimated that if the QPA was used as the basis of arbitration, savings would be about 25 percent less than if it was used as a fixed benchmark. In that case, prices for in-network care would still be expected to converge toward the QPA (CBO 2019). This scenario closely reflects the law as enacted in 2020 (CBO 2021).
In CBO's projections, the estimated savings were partially offset by several factors, including the following:
- Increased spending by insurers on newly covered out-of-network care;
- Greater use of health care services because of lower cost-sharing amounts for patients; and
- Administrative costs associated with arbitration and calculating the QPA.
The costs associated with those offsetting factors were greatly outweighed by the savings from lower prices.
What Evidence Has Emerged Since the Law Was Implemented?
So far, evidence suggests that the No Surprises Act is protecting patients from surprise bills. The percentage of out-of-network claims (GAO 2026, HHS 2026) and the amount of cost sharing for patients (Liu 2025) have declined since the law was enacted.
The evidence about factors that affect premiums is more mixed. Studies suggest that for some services affected by the law, inflation-adjusted prices for in- and out-of-network care have decreased in recent years. However, those studies rely on just a few years' worth of data since the law was enacted, and isolating the law's effects from previous trends is difficult.
By contrast, evidence based on outcomes from arbitration suggests that the law could cause premiums to increase if outcomes from arbitration enhance providers' ability to secure higher prices by credibly threatening to stay out of network. The number of IDR cases has far exceeded projections, and awarded payments are often much higher than anticipated. Amounts from arbitration settlements may be much larger than the typical prices for health care services in part because of the number of lawsuits challenging the law—at least 50 cases as of 2026 (O'Neill Institute 2026). Health care providers have largely prevailed in those lawsuits, and federal agencies have been directed to rewrite rules for arbitration so that additional considerations listed in the law—including providers' experience, the severity of a patient's condition, and good faith efforts to join networks—are considered on an equal basis with the QPA (Keith 2025). Those changes and the uncertainty they bring may be contributing to higher arbitration awards, raising the prospect that, over time, the law could increase health care prices and premiums (Baron 2023).
In-Network Prices and Network Participation
Available evidence suggests that provider participation in networks has increased and that inflation-adjusted prices for affected services have generally declined in relation to other services (GAO 2026, HHS 2026). One study found that through 2022, the percentage of out-of-network claims decreased for emergency services, air ambulance services, and certain ancillary services that had high rates of out-of-network billing before the No Surprises Act became law (HHS 2026). Those findings are corroborated by reports from stakeholder surveys (AHIP 2024, Hoadley et al. 2023).
Findings about average in- and out-of-network payments are mixed but mostly conclude that those payments declined after the law was enacted (GAO 2026, HHS 2026). One study noted that the sharpest declines occurred in 2022 amidst general increases in health care prices (HHS 2026).
However, evidence about changes to in- and out-of-network payments remains limited. Claims data—the most reliable data about prices and the amount of care delivered out of network—generally lag several years behind the delivery of care. Therefore, current findings only extend through 2022 or 2023. Moreover, price declines among affected specialties might be continuations of trends that began before the No Surprises Act became law (GAO 2026). Because contracts between insurers and providers are renegotiated only periodically (Dorn 2024), effects on prices may continue to evolve.
Outcomes of Arbitration
By contrast, research on arbitration suggests that negotiated prices might increase over time. From 2022 to mid-2025, 3.4 million disputes were filed, far exceeding the roughly 22,000 disputes per year initially projected by the Centers for Medicare & Medicaid Services, or CMS (Hoadley et al. 2026, Federal Register 2021). Nearly all disputes are being submitted by providers, and they are prevailing more than 80 percent of the time (Hoadley and Watts 2025). Awarded amounts are generally far greater than the QPA, in-network average payments, or other common benchmarks, such as multiples of Medicare's payment amounts (Hoadley et al. 2026; Adler, Fiedler, and Agarwal 2026; Fiedler and Adler 2024). According to various studies, awards often exceed 400 or 500 percent of Medicare's prices (Adler, Fiedler, and Agarwal 2026; Fiedler and Adler 2024; Ukert and Gordon 2025). Using estimates from claims data, another study found that awards often exceed 172 to 349 percent of out-of-network payments (HHS 2026).
Reports also suggest that IDR claims are disproportionately concentrated in certain segments of the health care system. In 2023 and 2024, the five organizations with the most claims accounted for nearly 60 percent of all filings (Hoadley and Watts 2025). Many cases came from large groups backed by private equity and other investors or revenue-cycle management firms (Hoadley et al. 2026, Fiedler and Adler 2024). Claims are also concentrated in certain states; through 2024, nearly two-thirds of them were filed in four states—Arizona, Florida, Tennessee, and Texas—that collectively represent less than 20 percent of the U.S. population (Hoadley and Watts 2025). Although heavy use of the IDR system is currently concentrated among specific firms and localities, the financial gains for those firms may incentivize broader use of the system over time.
The administrative costs associated with the IDR system have also exceeded CBO's projections. Recent estimates suggest that insurers and providers spent nearly $900 million in fees associated with the arbitration process through 2024 (Hoadley and Watts 2025). Those fees are greater than anticipated because the volume of IDR cases exceeded CBO's projections and because the fees were increased by CMS during that period to cover the unexpected volume. (The administrative fees assessed for each party submitting a claim were reduced in a recently published rule; see CMS 2026.) Insurers' and providers' administrative costs may also be greater than expected because of the costs of submitting information to the IDR system, although the magnitude of such costs is more uncertain. Significant increases in insurers' administrative costs can increase premiums for commercial health insurance and, in turn, federal subsidies for health insurance.
Implications for the Federal Budget
Although evidence suggests that prices for services affected by the No Surprises Act may have initially decreased, arbitration outcomes could lead to higher prices over time. If providers can systematically secure large payments through the IDR process, they have an incentive to remain out of network or demand higher in-network rates. Although surveys of insurers suggest that less than 0.05 percent of all claims go to arbitration (AHIP 2024), those claims could have an outsized effect on bargaining and, over time, cause negotiated prices to increase. An increase in prices would increase premiums for commercial health insurance and, in turn, lead to larger federal deficits.
What Research Would Be Especially Useful to CBO?
CBO will continue to monitor evidence about outcomes of the No Surprises Act as it prepares cost estimates and projections for Congress. The agency could benefit from additional research that relies on more-recent data to understand trends related to network participation, prices, and ownership structure. The claims data used in existing studies end in 2023, when patterns from arbitration were only beginning to develop.
Additionally, determining whether trends in prices are causally related to the No Surprises Act is difficult because prices for some specialties affected by the law may have been trending downward before it was enacted and because the rollout of the law coincided with a period of historic inflation. Quasi-experimental evidence could isolate the effects of the law from other trends in prices. Evidence that helps determine whether changes in prices or network participation vary with the degree to which the IDR system is used in a particular market might also help identify changes attributable to the law instead of other factors.
CBO would welcome additional quantitative or qualitative research on the arbitrators' decision-making process and any incentives they face. Because of the lawsuits challenging the use of the QPA as a guideline, the alternative benchmarks that are being used to determine outcomes from arbitration are unclear.
And finally, CBO would welcome research about how health care markets continue to evolve in the wake of the law. Early evidence suggests that large organizations dominate arbitration activity, potentially disadvantaging smaller providers and encouraging consolidation (Adler, Fiedler, and Agarwal 2026; Hoadley and Watts 2025). Continued analysis of market structure and competition will be critical for understanding the law's long-term effects.
Tamara Hayford is the Deputy Director of Health Analysis at CBO. Daria Pelech is an analyst in the Health Analysis Division. And Jessica Hale is an analyst in the Low-Income Health Programs and Prescription Drugs Cost Estimates Unit of the Budget Analysis Division. This blog post includes contributions from Berna Demiralp, Sarah Masi, and Chapin White.
As part of the legislative process, CBO supplies Congress with cost estimates for legislation, economic and budget projections, and other economic assessments. Information from the research community is an important element of the agency's analyses. This is the 14th in a series of blog posts discussing research that would enhance the quality of the information that CBO uses in its work. (Earlier posts in the series discussed the need for new research in the areas of energy and the environment, finance, health, hepatitis C, labor, macroeconomics, national security, new drug development, nutritional standards in the Supplemental Nutrition Assistance Program, obesity, permitting requirements for investments in physical infrastructure, spending on Medicare Part D, and taxes and transfers.) Please send any comments to communications@cbo.gov.