As part of the Consolidated Appropriations Act of 2021, the No Surprises Act (NSA) was rolled out on January 1, 2022, to safeguard patients against unanticipated, staggering medical bills. In outlawing surprise billing for emergency services, non-emergency care from out-of-network providers at in-network facilities, and air ambulance services from out-of-network providers, the NSA established an Independent Dispute Resolution (IDR) process to determine out-of-network payment amounts between providers (including those for air ambulance services) or facilities and health plans.
In theory, this is supposed to be an equitable system whereby providers — who are charged with certifying the eligibility of claims submitted for IDR — and payers come to the negotiating table to resolve payment amount disputes with the latter group presenting a qualifying payment amount, or QPA, that's grounded primarily in the median in-network payment rate. In reality, while innumerable patients have reaped tremendous financial rewards from the NSA, the corresponding IDR process, one that has been inundated with an unexpectedly soaring volume of submissions, has undeniably been tilted heavily towards providers. According to a 2025 study conducted by researchers at Harvard University and Mass General Brigham, providers have won approximately 85% of IDR decisions since the third quarter of 2023. Furthermore, it's not just that providers are winning a disproportionate amount of the time, but also that their gains are disproportionately higher than payers': per the aforementioned study, when payers prevail in IDR, payouts are generally aligned more closely to that established QPA, whereas when providers win, the median payout was on average three times higher than the QPA.
The data from studies provides some insight into the tension that is rising between insurers, health plans, and providers related to NSA claims and the IDR process. The perception of the success of the NSA and IDR dispute process changes depending on which role one holds. Even before the NSA, providers have alleged that insurance companies and plans are underpaying, while insurance companies and health plans allege that providers are overcharging. It's not a surprise that this long-standing narrative is viewed as a battle that eventually results in litigation.
Anthem Blue Cross' lawsuit
Recently, a glaring problem in the IDR process has been the alleged practice of certain providers exploiting IDR confusion for their own financial gain. Specifically, Anthem Blue Cross sued 11 Prime Healthcare facilities (hereinafter referred to as "Prime") in California on allegations they committed fraud by "knowingly flooding" the No Surprises Act's dispute resolution process to inflate out-of-network payments. The official complaint, filed this past January in a California federal court, alleged that starting in January 2024 the hospitals submitted over 6,000 spurious claims involving exaggerated or made-up charges to arbitration for emergency services. Anthem claimed that the "wrongfully obtained awards" equated to Prime receiving $15 million more than the insurer would have paid originally. Also, per the filing, the typical award was more than six times what a contracted provider would receive from Anthem for the same service and over 75% of disputes submitted by Prime were ineligible for the IDR process.
"IDR opened a lucrative revenue stream for defendants, which were all out-of-network with Anthem for at least some period since the NSA was enacted, and the upside of abusing the process was too profitable for them to ignore," Anthem wrote in the complaint. "These misrepresentations force payers like Anthem into costly dispute resolution proceedings in cases that the system was designed to weed out."
Furthermore, Anthem, which says it has paid more than $2 million in IDR-related fees stemming from the alleged scheme, has also accused Prime of purposefully submitting fraudulent attestations claiming eligibility for disputes involving services covered by California's Knox-Keene Act (which preempts the federal IDR process), services not covered by patients' health plans, disputes where the hospitals failed to start required open negotiations, and services provided while hospitals were in-network with Anthem. The lawsuit also has targeted the hospitals' communication practices, arguing they route all IDR-related notices through a restrictive online portal that only permits one Anthem employee to access it at a time. Messages automatically delete after 30 days, which, according to Anthem, makes it "all but impossible" to effectively respond to the high volume of disputes.
Anthem is not only pursuing monetary damages but also a cancellation of the IDR awards to Prime and an injunction to inhibit the hospitals from continuing to submit what it believes to be are fraudulent claims. (Meanwhile, Elevance Health, parent company of Anthem, sued three Georgia provider groups last May, alleging they submitted thousands of ineligible disputes.)
Prime's response
Through a spokesperson's statement to Fierce Healthcare, Prime went on record as saying the lawsuit is "meritless."
"The No Surprises Act was created to protect patients from balance billing and to ensure providers delivering necessary care are treated fairly," the spokesperson went on to say. "Prime Healthcare does not balance bill any patients and acted in compliance with the Act and its independent dispute resolution process, which Congress established to promote equity and transparency.
"Anthem's lawsuit ignores the reality that certain large health plans, including Anthem, amass record profits by underpaying providers, delaying or denying care, and burdening patients with administrative barriers, practices that have eroded the public trust."
Additionally, it should be noted that in fairness to Prime, even though the NSA has been around for over four years now, the IDR system remains a highly complicated one that lacks standardization. Thus, it's possible that some providers — perhaps even ones associated with Prime — are making good-faith innocent mistakes in their offers.
Implications for the self-funded industry
Though it remains to be seen how the courts will rule in this case — and there is certainly no telling how long it will take to reach a settlement or a conclusion to the lawsuit — it is apparent that there is significant tension in the NSA landscape as insurers such as Anthem Blue Cross are starting to stand up to the alleged systemic abuses of the NSA system. Should the courts rule in favor of Anthem, providers may be liable for bad-faith operations in arbitration, which could subsequently prevent aggressive actions in billing disputes. A legal precedent for this situation could prompt regulatory clarifications or require the creation of anti-fraud measures associated with the federal IDR program.
In addition to monitoring the development of this case, it would be prudent for TPAs to closely examine patterns in claims and IDR filings and note any abnormally high-volume arbitration by particular providers/facilities. TPAs may also with to educate their self-funded plan clients on the NSA and best practice for NSA disputes to ensure alignment on payments that could help avoid IDR. If Anthem does indeed prevail, it may require TPAs to ensure their internal processes are equipped to identify and counter potential fraudulent IDR activity.
With this litigation in its infancy, predicting the outcome is challenging, but this case could contribute to the ever-shifting landscape the health plan industry has been faced with over the last 15 years.
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