Surprise! Congress Screwed Up Healthcare Again

And private equity is making it even worse

A few years ago, Congress tried to address America’s healthcare crisis by passing the No Surprises Act. This was well-intended legislation designed to end the scourge of “surprise” medical billing. Prior to this law, patients who unknowingly received care from an out-of-network physician would often be stuck with crippling bills through no fault of their own. The No Surprises Act solved that problem, but unfortunately, as government intervention often does, it created a brand new one in the process that further exacerbated healthcare costs.

Instead of sending surprise bills to families, insurers and out-of-network providers now resolve disagreements through the Independent Dispute Resolution (IDR) process, in which a third-party arbitrator chooses one side’s proposed payment. This was supposed to be a rarely used resolution enforcement mechanism, but it is now being exploited by sophisticated financial actors as part of a lucrative business model. Rather than serving as an occasional referee between insurers and providers, the IDR system has now exploded into a multibillion-dollar industry that rewards volume, encourages gaming, and ultimately leaves employers and families (not to mention taxpayers) paying the bill.

New reporting from the Wall Street Journal found that nearly $15 billion was paid out through the IDR system in 2025. The New York Times found that providers filed 1.2 million arbitration cases in just the first half of 2025, even though regulators originally projected roughly 17,000 disputes annually. Providers prevailed in roughly 88% of cases, with arbitrators collecting nearly $885 million in fees between 2022 and 2024 alone. In 2025, these arbitrators raked in a whopping $1.3 billion in fees. 

Even more troubling are the individual examples. The Times documented a plastic surgeon who advertised breast reductions costing between $15,000 and $25,000 but successfully obtained arbitration awards reaching $440,000 for a single procedure. According to the investigation, the physician filed more than 6,000 arbitration claims and won more than 85 percent of them. A different investigation found that surgical assistants were exploiting the law to outearn surgeons, sometimes earning up to 25 times what a doctor makes. In 2025, providers were paid more than six times than they would have made from typical in-network payment rates. 

Obviously, this is not what Congress intended, and it’s not what Americans deserve.

The IDR system has become another example of regulatory capture, where those with the best lawyers, consultants, and financial backing benefit while ordinary Americans pay higher premiums. Over my career, I have personally seen how sophisticated financial actors exploit complex systems to extract maximum profit while providing little to no societal value. In this instance, the private equity industry deserves particular scrutiny.

Research has shown how private equity-backed physician staffing firms helped fuel the original surprise billing problem, then successfully lobbied for the arbitration framework that ultimately became part of the No Surprises Act. Today, many of those same firms dominate arbitration filings, while private equity investors also have interests in companies that administer portions of the arbitration process itself. Normal folks might call that a “conflict of interest.” Or, corruption. Or, fraud. But it’s all legal. 

The business model has become increasingly sophisticated. Rather than simply treating patients, an entire ecosystem of middlemen has emerged to maximize arbitration revenue.