How the No Surprises Act’s nonprofit arbitrators are operating like ‘mini gods’ and getting rich doing it

STAT News – Monday, October 19, 2026
By Tara Bannow

Before it won a lucrative government contract, iMPROve Health’s very future was in question.

The Michigan-based nonprofit lost over $2 million in 2022 alone — over a third of its revenue — on top of losses in previous years. There were budget cuts; it ditched the office, went remote, and even discussed selling the company.

“We had conversations about, ‘Should we merge and be an organization that someone acquires?’ We had those conversations,” said Richard Murdock, a former iMPROve board member.

Three years later, iMPROve boasts a 70% profit margin, almost as high as that of tech giant Nvidia. Its revenue has grown 13-fold. The turnaround is thanks to the company’s new government-backed role: picking winners in high-stakes payment disputes between health care providers and health insurers.

It’s not the only nonprofit making massive sums by acting as an arbitrator in the program, created under a 2020 law to protect patients from unexpected out-of-network bills. Two others, C2C Innovative Solutions and IPRO, are raking in cash as well. For every dollar the three nonprofits made last year, about half was pure profit.

Even as that law, called the No Surprises Act, has largely succeeded in protecting patients from massive bills from out-of-network providers, its process for determining how much those providers should get paid has gone off the rails. The arbitration system’s $22 billion tab has far exceeded anyone’s expectations and sparked countless legal battles.

Still, iMPROve and its fellow arbitration firms — there are 17 in total, most of them for-profit — perform their work largely in secret, with little accountability or oversight. And their decisions are effectively set in stone, after multiple judges ruled that courts can’t overturn them.

“The [arbitrators] are essentially operating as mini gods, above the law, so to speak, from regulators and the courts,” said Melissa Bartlett, senior vice president of health policy at The ERISA Industry Committee, an advocacy group for large employers, which contends the law is raising the cost of health care and must be reined in.

They’re not the only companies finding new ways to enrich themselves from the patient-protection law. The arbitration system has also given rise to a cottage industry of middlemen that take providers through the process in exchange for a cut of the winnings. STAT profiled one such company, HaloMD, which formed in 2022 and has since become a top filer of disputes. One of its clients, the hospital chain Nutex Health, more than tripled its revenue less than a year after signing on.

The arbitrators’ shocking financial results add to the reasons to question their work. They’re siding with providers in over 80% of cases, which may be in part to drum up more business, since providers file the majority of disputes. Research has highlighted the three nonprofit arbitrators as having some of the highest provider win rates.

IPRO had the highest of any in the final quarter of 2025, deciding 99% in favor of providers. Arbitration firms make at least $425 for each dispute they rule on.

And they’re awarding clinicians massive sums of money — multiple times what they made before the law took effect in 2022. A common spine surgery that typically costs $1,400 in network now fetches $34,000 in arbitration at the median, with some providers getting over $100,000. Doctors are making $61,000 for breast reduction surgery via arbitration, a procedure whose in-network rate is $1,420.

“Looking at the decisions, it is very hard to understand how they are being made,” said Loren Adler, a health economist with the Brookings Institution.

Not only that, it’s impossible to identify the individuals making these highly consequential calls. Unlike in the legal system, where judges’ names and titles are public, that’s never revealed in No Surprises Act arbitration. Current and former employees of iMPROve and C2C said the former relies on contracted judges and attorneys to make decisions, the latter on doctors and nurses. It’s unclear which approach is more common, but the disparity highlights the lack of standardization and direction from the federal agencies overseeing the arbitration system, known as independent dispute resolution.

The lopsided outcomes and immense, ever-growing costs are putting pressure on Congress to rein in the arbitrators, and at least one federal legislative proposal seeks to do away with them entirely. Academics, employer groups, and researchers warn that, eventually, everyone who buys health insurance will feel the effects in the form of higher premiums and out-of-pocket costs.

A transformed arbitration process

In their efforts to protect patients against surprise bills, neither regulators nor lawmakers envisioned a system that would so heavily favor out-of-network providers. It’s turned out this way largely because of a single judge in Texas whose rulings have reshaped the No Surprises Act.

The law prohibits out-of-network providers from billing privately insured patients for the difference between what the clinician charged and what health insurance paid. The question then became determining how much those providers would get paid.

Not everyone agrees arbitration was the right choice.

“I think we’ve learned it’s hard to make arbitration work in any sort of efficient manner,” Adler said. “And they are all facing somewhat perverse incentives.”

When regulators wrote the initial rules for the arbitration process, they told arbitrators to heavily rely on a measure of insurers’ in-network rates for the disputed service, known as the qualifying payment amount. But two decisions by Judge Jeremy Kernodle, who has consistently sided with providers, transformed that system, effectively removing the in-network rate as an anchor for mediation. Both of those decisions were reinforced by a federal appeals court.

Now, the rules direct arbitrators to weigh a variety of factors, including the qualifying payment amount, on equal footing. The other factors include the severity of the patient’s condition and the provider’s expertise, among others.

The arbitration is done baseball style, meaning arbitrators must choose either the provider’s offer or the insurer’s offer; they can’t pick a number in the middle.

Lindsey Murtagh, who helped write No Surprises Act rules while at the Centers for Medicare and Medicaid Services, said Kernodle’s rulings have made the arbitration process extremely friendly to providers. That’s because with no anchor number to use as a starting point, arbitrators can’t recognize outrageous offers as such. That’s opened the floodgates for providers to demand sky-high payments, and still win.

“That may be contributing to [arbitrators] sort of guessing at the number in a way that doesn’t reflect the actual paid amount or negotiated contract agreements,” said Murtagh, currently a distinguished senior fellow at Brown University’s School of Public Health.

Providers notched yet another legal win in August, when a federal appeals court agreed with the Texas Medical Association that the government had erred in its instructions to health insurers for calculating the qualifying payment amount.

In particular, the judges said the qualifying payment amount should not include “ghost rates,” placeholder rates that providers don’t actually negotiate and that can be as low as $1. These are often rates for services that clinicians don’t actually perform, such as a dermatologist’s charge for a colonoscopy. The judges also said the qualifying payment amounts should include bonus and incentive payments. Regulators now have to issue new instructions; it’s unclear when that will happen.

Bartlett, of The ERISA Industry Committee, agrees that dropping the qualifying payment amount as the benchmark rate opened the floodgates for profiteering. Now, she said Congress should pick a new measure that arbitrators are directed to award closest to.

“There needs to be some guiding benchmark for these folks to be held accountable,” she said. “Right now, that’s not there.”

States with their own arbitration systems have not seen the same lopsided outcomes as the federal system. Anthony Wright, executive director of the consumer advocacy group Families USA, said that’s because states give arbitrators clear benchmarks to guide their decisions. California, for example, uses 125% of Medicare’s rates or the average contracted rate for that region, whichever is greater.

“It’s not a surprise that the federal arbitration process has gone askew if we didn’t give the arbitrators the guidelines by which they were to rule,” Wright said on a recent call with reporters. “When we give judges the power to judge, they have precedent, they have case law. If you don’t give them that guidance, then other factors will lead them, including some of the clear conflicts of interest that are embedded in the process.”

To become certified as arbitrators, companies must prove that they have substantial health care knowledge, including in making payment determinations, claims administration, billing and coding, and legal matters. Arbitrators must also be certified by nationally recognized accrediting organizations as having completed training in conducting payment determinations and arbitration.

That language is vague and lacks specific standards, but rather than tighten it up, the federal agencies overseeing arbitration have been pressured to certify more arbitrators to get through the high volume of cases, Murtagh said.

“Adding training standards could help to make sure it’s not just the [arbitrators] saying they have the training, but their people are getting the required training,” she said.

From losing money to 70% margins

When the No Surprises Act’s arbitration system opened for business in 2022, iMPROve was perfectly positioned to join in, and reverse its financial fortunes.

iMPROve, formerly Michigan Peer Review Organization, has spent most of its 40-plus years in operation doing the uncontroversial work of educating health care providers on quality and safety and performing reviews after medical claims are denied. It’s an unsung charge that’s important, but not terribly lucrative. Before becoming an arbitrator, its revenue came from a hodgepodge of contracts with Medicare, state and local governments, and private companies, and it didn’t always cover expenses.

By the end of fiscal 2025, iMPROve’s finances were unrecognizable from when it first became an arbitrator in fiscal 2022. In 2025, it generated $78 million in revenue — 13 times higher than three years earlier. About $55 million was profit, yielding an unheard of 70% margin.

Leland Babitch, iMPROve’s CEO, wrote in an email that iMPROve’s profit stays with the organization to support its mission. He also said most of iMPROve’s revenue now comes from No Surprises Act arbitration.

At least some of the money is going toward higher salaries. Babitch’s $736,000 in total compensation last year was up 27% from 2024. iMPROve’s five highest-paid employees, Babitch included, made $2.3 million in 2025, up 43% from the prior year. Babitch wrote in an email that the changes reflect modest increases in base pay, and that substantial portions of executives’ pay is based on meeting incentive metrics.

Today, some of the clinicians who previously performed iMPROve’s quality and safety reviews have been shuffled to No Surprises Act arbitration, where they check disputes’ eligibility and review submitted documents before they go to the final decision-makers.

A person who used to work for iMPROve on a contract basis said she was asked to review the dispute documents submitted by health insurers and providers in 2023. She checked for spelling and grammatical errors, as well as mistakes like duplicate cases. At the time, she said iMPROve was struggling to get through a backlog of cases. She worked up to 15 hours per week — only at night because she had a day job — but could have worked as many hours as she wanted.

“I felt like iMPROve was overwhelmed,” said the reviewer, who requested anonymity to protect her current role in health care. “They could barely keep up.”

Babitch said his organization has scaled to meet the demand, which far outpaced CMS’ predictions.

“We responded by investing in staffing, technology, training, and workflow infrastructure to keep pace with case growth, while maintaining timely, compliant administration,” he said.

The former iMPROve worker said she became disturbed by how similar the documentation from providers was. She said the whole thing “felt kind of dirty” because filings from different providers matched word for word, seemingly written by lawyers and middlemen rather than doctors.

“It almost felt scammy that these companies would be clearly hiring high-pressure lawyers who know what to say,” she said. “And it’s not like there was a doctor deciding this was a reasonable price. It was just lawyers talking to lawyers.”

Rather than relying on its in-house experts to make award decisions, iMPROve contracts with attorneys, some of whom don’t specialize in health care, to make those crucial calls. The law allows this, so long as those contractors have the same expertise as the arbitration firm itself. iMPROve said its arbitrators are trained in Medicare regulations and guidance and bring expertise in arbitration and health care claims administration.

Four of iMPROve’s five highest-paid contractors were arbitrators who made a combined $3 million in the year ended Sept. 30, 2025, according to its tax form. The top-paid contractor that year was RediMinds, a Michigan-based technology company that iMPROve paid almost $960,000 for “AI enablement for [independent dispute resolution] services.”

Madhu Reddiboina, the CEO of RediMinds, told STAT that his company uses artificial intelligence to synthesize the arguments from providers and health insurers. Each dispute can involve hundreds of pages of documentation, and with thousands of disputes coming in per day, the arbitrators can’t possibly hire enough people to read it all, he said.

Babitch said iMPROve ended its work with RediMinds because it did not produce satisfactory results. He said AI can only manage about 20% of iMPROve’s eligibility checks; the rest require people. The actual arbitration decisions are always handled by contracted attorneys.

The tax form only requires companies to identify their five highest-paid contractors. iMPROve wrote that it has a total of 14 contractors who each made over $100,000 in fiscal 2025.

Arbitration firms don’t identify the people who make their award decisions, but STAT learned some of their names from iMPROve’s tax forms.

Among them: Matthew Reue, a retired judge in Texas who now runs an arbitration business. IMPROve paid Reue almost $865,000 in fiscal 2025 to serve as an arbitrator, making him the organization’s second highest-paid contractor. Reue declined to comment.

IMPROve paid retired Texas judge Terry Flenniken almost $800,000 in 2025 to serve as an arbitrator. Flenniken, who also declined to comment, oversaw breach of contract, oil and gas, divorce, and medical malpractice cases while serving as a judge.

Other arbitrators listed on the tax form are Robert K. West Jr. of Troy, Mich., who made about $850,000; and Walker Legal and Business Consulting in Tupelo, Miss., which made about $484,000.

IMPROve’s contract arbitrators get paid a fixed rate per dispute, and their high pay is because of the high volume of cases they complete, Babitch said. He said they receive training in CMS regulations and guidance and bring expertise in arbitration, claims administration, and regulatory compliance. They must also show that they’ve received training through organizations like the American Health Law Association or the American Arbitration Association.

Babitch said becoming an arbitrator fit with iMPROve’s mission and felt like a “natural extension” of its work.

A high-pressure job

Unlike iMPROve, C2C wasn’t in dire financial straits before becoming an arbitrator, pulling in a modest but reliable annual profit.

Things started to change in 2023, when revenue spiked 35% in one year to $91 million and profit to $15 million at C2C’s parent company, a 16% margin. In 2024, the profit margin grew to 43%.

By the end of 2025, revenue at the parent company surpassed $281 million, $160 million of which was profit, a 57% margin.

IPRO has been on a similar trajectory. Like C2C, it was stable before becoming an arbitrator. In fiscal 2024, its profit margin was 10%, but that spiked to 44% in fiscal 2025, when the company generated $75 million in profit on $171 million in revenue.

Nonprofits typically spend such surpluses on expanded programming or new technology. It’s unclear how TMF Health Quality Institute, C2C’s parent company, and IRPO are directing their windfalls. A spokesperson for TMF did not respond to requests for comment, and a spokesperson for IRPO declined to comment.

At C2C, reviewing No Surprises Act disputes comes with specific production quotas; missing them can land your job on the chopping block.

“A lot of people don’t make it because it’s just not an easy job,” said a woman who works at C2C as a dispute resolution reviewer. She asked to remain anonymous to protect her job.

The current C2C employee said she reviews the documents in a dispute file and makes sure everything is correct before it’s sent to the nurse or doctor who issues a final decision. She said she’s expected to complete three disputes per hour, which works out to 24 disputes per day and 120 per week. Falling short of the quota or making mistakes could land her on probation.

It’s busy, fast-paced work, but the employee said she enjoys it and she’s gotten good at it. It’s her first time working in health care. When she started at C2C in 2023, she had to take a five-week training before she handled any cases.

“It was very thorough,” she said of the training. “They don’t just throw you out to the wolves.”

And while her experience has been that there are always “tons of disputes” to work on, a lull in 2025 resulted in some employees being laid off.

One of them was Rebecca Collimore. She got a job reviewing disputes for C2C but only worked there for four months before getting laid off in August 2025. “It was kind of a shock,” she said.

All eyes on Congress

Groups from opposite ends of the political spectrum are now urging Congress to step in. Both the left-leaning Families USA and the conservative Paragon Institute have worked to highlight the arbitration process’s soaring costs.

So far, the fixes proposed in Congress take dramatically different approaches.

Rep. Frank Pallone (N.J.), a powerful Democratic lawmaker, wants to scrap the arbitration process altogether, instead paying out-of-network providers median in-network rates for services. A number of stakeholders have come out in support of Pallone’s bill, including consumer advocates, employer groups, health insurers, and academics. Provider groups oppose it.

Rep. Greg Murphy (R-N.C.), a doctor, introduced a measure that would increase fines on health insurers that don’t pay up after arbitrators rule against them. Murphy’s bill is supported by other physicians in Congress, as well as the American Medical Association, a physician lobbying group.

Large employers like Microsoft, Halliburton, Quest Diagnostics, and DICK’S Sporting Goods are urging members of Congress to reject Murphy’s bill, arguing it will worsen the affordability crisis. They wrote in a July letter that arbitrators are issuing excessive, unreasonable payment awards that are ultimately borne by employers and employees.

“Employers should be able to challenge something they think is absurd,” Bartlett, of The ERISA Industry Committee, said. “They have no recourse.”

Sen. Bill Cassidy (R-La.), an author of the No Surprises Act, is convening meetings with providers, insurers, employers, patient groups, and arbitrators to inform legislation aimed at fixing problems with the law, which he views as a legacy item, according to Politico.

While a congressional fix would have the most impact, the agencies that oversee arbitration can make improvements on their own, starting with simply demanding more transparency into the “black box” of the arbitration process, Brown University’s Murtagh said.

To that end, Pallone recently sent letters to six of the arbitrators, including C2C, asking for information on things like how they train their staff, their dispute volume, financial relationships, and use of artificial intelligence.

No one knows with certainty why arbitrators have sided with providers in over 80% of disputes, but there are theories.

One is simply that providers, not health insurers, file the vast majority of disputes. And since ruling in disputes is how arbitrators make money, some researchers believe arbitrators side with providers to keep the business flowing.

Providers and insurers can choose which arbitrators handle their disputes, so long as both parties agree on one. One study found that arbitrators that favor providers in over 90% of disputes tend to have the highest case loads, suggesting that the parties pick them based on their previous experience.

Philip Valtadoros, a doctoral candidate at the University of Texas who has researched the No Surprises Act arbitrators, said in most cases, it’s likely the providers who choose the arbitrators because they’re more engaged in the process. Their picks are selected when the insurers don’t protest.

Another potential factor is that providers file more paperwork to support their payment offers, whereas health insurers are more likely to dismiss the process or, in some cases, submit protest offers of as little as a penny. Collimore said that in the disputes she reviewed at C2C, providers submitted more notes and proof that they performed certain services, whereas health plans didn’t produce as much evidence.

Adler, of the Brookings Institution, also suspects implicit bias favoring doctors and disliking health insurers plays a role in providers’ high win rates. “Especially if you got your life saved, everyone will be like, ‘Of course they should get paid whatever they want. They just saved someone,’” he said.

The current C2C employee said she doesn’t think bias plays a role. She said C2C’s doctors and nurses decide cases based on what’s written in the law.

But that doesn’t change her personal perspective. “In my opinion, it comes down to: Insurance is a scam,” she said.

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