Loyal readers may recall my previous posts on the subject of how health care providers in the U.S. are able to bill 10-15X the fair price to patients, accept the fair price from insurers, and chase after the uninsured for the absurd price. The latest: $1559 of lab work for $103. See also Recent health care scams.
The New York Times took a rare break from its “Bad Things about Donald Trump” coverage to write about some doctors who manage to collect at absurd multiples of the fair price, but from the insurance companies. “A $440,000 Breast Reduction: How Doctors Cashed In on a Consumer Protection Law” (NYT, April 22, 2026):
Dr. Norman Rowe, a plastic surgeon with offices in New York and Florida, advertises on his website that breast reduction surgery usually costs between $15,000 and $25,000.
But these days, his practice sometimes earns $440,000 for the procedure.
Dr. Rowe has taken full advantage of a new arbitration system, part of a major consumer protection law Congress passed in 2020 with bipartisan majorities. The No Surprises Act was designed to eliminate surprise medical bills, for patients who showed up in the emergency room and were treated by a doctor who didn’t take their insurance.
It bars those out-of-network doctors from billing patients directly. Instead, they can plead their case to a government-approved arbitrator. If they win, the patient’s insurer has to pay their desired amount.
By all accounts, the law is successfully protecting patients against bills from doctors they never chose. But it has also generated an expensive unanticipated consequence: Doctors have flooded the arbitration system with millions of claims. Most are winning, often collecting fees hundreds of times higher than what they could negotiate with insurers directly or what they could have earned from patients before the law passed.
When the law passed, government officials estimated that about 17,000 cases would go to arbitration a year. Instead, doctors brought 1.2 million such cases in the first half of last year, and won around 88 percent of them.
The arbitrators are doing well too. The fees they earn for deciding cases, which range from $425 to $1,150 per case, have added up. They earned $885 million from 2022 to 2024.
The chart shows that doctors get smarter every year:
How does it function in practice?
In arbitration, doctors and insurers each propose a price for the care, along with arguments for why it is appropriate. An arbitrator must pick one of the two numbers, and there is no opportunity to appeal the decision.
A neurosurgery practice outside of Philadelphia went to arbitration after the health plan Highmark offered its standard payment of $2,660 for a diagnostic procedure to measure blood flow to the brain. An arbitrator awarded it $333,000 instead.
(Let’s say that the “diagnostic procedure” is done with an MRI machine, which I think is the most expensive machine used in medicine. So the single procedure, which takes less than one hour, paid 100% of the cost of a refurbished machine or about one third of the cost of a new machine.)
Some practices are using the law to obtain high payments for routine medical care, including gynecologists who have won fees 600 times higher than usual rates for placing intrauterine contraceptive devices, or I.U.D.s.
Health policy experts have been surprised to see such lopsided results that favor doctors. Some argue that because the arbitrators are paid per case, they may have an incentive to render decisions that keep doctors coming back.
Just like Family Court! Divorce litigation that keeps everyone busy and highly paid is rare in jurisdictions where divorce litigation isn’t lucrative.
The first doctor profiled seems to have a lot of fun:
Dr. Rowe has practiced for decades on New York City’s Park Avenue and in New Jersey. Last winter, he opened an office in Palm Beach, a few miles from President Trump’s Mar-a-Lago resort. Just before the inauguration, he told The New York Post the office had been overrun with clients who wanted to look good when they “have face time with the leader of the free world.”
Dr. Rowe did not respond to multiple requests for comment from The Times.
On social media, he flaunts a lavish lifestyle. An Instagram post in February detailing his 60th birthday party featured a performance from the rapper 50 Cent and a custom-cake recreation of his 1950s vintage Porsche.
Sometimes the best paperwork is no paperwork:
Before the No Surprises Act, Dr. Rowe’s practice was out of network with EmblemHealth, but he accepted fees $30,000 or lower for hundreds of breast reduction surgeries, the lawsuit claims.
In 2024, the lawsuit says, he started routinely performing surgeries on EmblemHealth patients in hospitals that accepted the insurer’s in-network payments, though he still did not.
Under the No Surprises Act, doctors in such situations can provide patients with a waiver that warns of additional costs. If patients sign that form, the doctor has permission to bill them directly.
Dr. Rowe does not hand out that waiver. That allows him to take his payment disputes to arbitration.
He and his practice have filed more than 6,000 arbitration claims, according to an analysis of public filings from the Georgetown University Center on Health Insurance Reforms. He has won more than 85 percent of his cases.
What do our esteemed politicians have to say about this massive siphoning of GDP?
“My focus is on ensuring everyone can get the care they need without worrying about the cost,” said Patty Murray, Democrat of Washington, who helped craft the bill.
What’s incredible to me is that the U.S. economy survives our health care system!
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