Congress tried to stop surprise medical bills. It created another problem.

A law meant to shield patients from surprise medical bills inadvertently fostered a burgeoning arbitration industry, according to a CBS News investigation. The legislation, enacted in 2022, was intended to prevent unexpected charges, yet it has instead created lucrative opportunities for providers and specialized middlemen who extract payments significantly higher than standard billing rates.

This arbitration system allows doctors and resolution specialists to secure payments many times greater than typical rates for medical services. Under this system, insurers often pay healthcare providers hundreds of dollars for routine lab tests that typically cost between $10 and $30. One plastic surgeon, Dr. Norman Rowe, was awarded more than $400,000 for a breast reduction procedure, far exceeding the typical reimbursement of $6,000 to $30,000.

Other doctors, like Long Island spine surgeon Vadim Lerman, have had their services awarded at an average of 280 times the benchmark rates. The arbitration process, which Congress established to resolve disputes between insurers and out-of-network providers, allows arbitrators to award rates without negotiation, with providers winning more than 85% of cases.

Critics argue that private equity firms are exacerbating the issue by buying up practices and driving arbitration cases, leading to settlements that are up to 1,000% above benchmark rates. This has resulted in significant costs for employers and consumers, with 1.2 million new disputes submitted to the arbitration portal in the first six months of 2025, far exceeding initial expectations.