In the healthcare industry, payment and other contractual disputes are common and can significantly impact claims processing. Disputes can arise between a healthcare provider and the party responsible for payment, such as an insurance company, often over an alleged overpayment or underpayment for care the provider has already provided. In addition to these typical business conflicts, disputes may arise from corporate transactions such as mergers, between healthcare organizations and their employees, or over healthcare tech and licensing arrangements. In this article, we’ll explore the main types of healthcare disputes and common methods for resolving them.
Common Types of B2B Healthcare Disputes
Payor-Provider Disputes
In the healthcare industry, providers (such as doctors or hospitals) are often involved in disputes with payors (such as insurance companies or government programs). Payors and providers enter contractual relationships with the expectation that disputes may arise during their normal business interactions. For this reason, their contracts typically include terms that explain how future disputes will be resolved, often specifying alternative dispute resolution (ADR) methods such as negotiation, mediation, and arbitration. Payor-provider and reimbursement disputes represent the majority of healthcare business-to-business (B2B) cases filed with ADR providers such as the American Arbitration Association® (AAA®).
The main types of payor-provider disputes include:
Managed Care Contract Disputes
A managed care contract is an agreement between a managed care organization (MCO), such as an insurance company, and a healthcare provider. This contract establishes the terms under which the provider will treat patients enrolled in the MCO’s plan. Disagreements can arise between these two parties over contract interpretation, termination, payment terms, network participation requirements, unmet obligations, or prompt pay statutes/guidelines.
Reimbursement and Underpayment Disputes
Reimbursement and underpayment disputes arise when a payor doesn’t pay the full amount a provider believes it is owed for a medical service. This type of dispute typically involves conducting a billing audit to identify missing revenue and comparing payments against the applicable contract, fee schedule, or reimbursement rules.
Claim Denials, Authorization, and Medical Necessity Disputes
When medical insurance or other health plans reject a claim, deny authorization, or deny coverage for a procedure based on medical necessity, the provider may dispute the denial. The payor and provider may disagree over how policy decisions are made or hold differing medical interpretations. These types of disputes have increased in recent years, as a large volume of claims may be flagged or denied through automated systems or algorithms.
Billing, Coding, and Claims Submission Disputes
Disputes may arise from coding or medical billing errors that lead to unintended claim denials or unexpected bills. The codes used in medical billing may be outdated or inaccurate, modifiers may be missing, documentation may not support the billed code, or patient information may be incorrect. These disputes can also involve third-party vendors who handle billing or coding services for a payor or provider.
Post-Payment Audits and Overpayment Demands
An insurance company or government program may conduct an audit of medical records to determine accuracy or verify medical necessity. If the audit suggests overpayment, they may demand a refund from the provider. Auditors may review a sample of claims rather than every claim and then extrapolate an error rate statistically from a large volume of claims.
Out-of-Network and Non-Participating Provider Disputes
Payment disagreements may arise if an insurance company or government agency pays a lower amount than the provider bills due to the absence of a network participation agreement. These disputes may occur during emergency situations or when a patient receives care at an in-network location, such as a hospital, but with an out-of-network physician. They may also involve disputes over state surprise billing laws or federal No Surprises Act requirements.
Pharmacy and 340B-Related Payment Disputes
Disagreements may arise between payors and providers over reimbursement for prescription drugs, including drugs purchased through discount programs. The federal 340B Drug Pricing Program allows eligible healthcare providers to buy outpatient drugs at discounted prices. Disputes may arise when payors reduce reimbursement for 340B drugs or when providers believe payors are not paying the proper amount.
Healthcare Corporate Transaction Disputes
Corporate transaction disputes can arise from mergers, acquisitions, and joint ventures within the healthcare industry. These disputes often involve post-closing obligations, valuation issues, inaccurate financial or operational information, or promises made during the deal that one side says were not kept. They may also arise when regulatory or operational risks are discovered after the deal closes.
Healthcare Employment, Workplace, and Partnership Disputes
Within healthcare organizations, employment disputes may involve hiring, termination, employment terms, or working conditions. Disputes may also arise between business partners in the healthcare industry or between shareholders of an organization and leadership. In physician practices or healthcare groups, these conflicts may involve ownership rights, buyouts, profit distributions, or departure from the practice.
Credentialing, Peer Review, and Medical Staff Disputes
Credentialing and peer review disputes often involve questions about a provider’s qualifications, conduct, or clinical performance. They may also involve quality-assurance concerns, disciplinary actions, or decisions about clinical privileges. These disputes typically arise when a hospital board or committee restricts or revokes a physician’s privileges. In many cases, the dispute centers on whether the hospital, board, or committee complied with its bylaws, peer review procedures, and fair hearing requirements.
Healthcare Technology, Licensing, Outsourcing, and Asset Disputes
Healthcare technology disputes can involve software used in clinical, billing, administrative, or patient-facing settings. They may also involve technology licensing arrangements, equipment sales or leases, and third-party service contracts. For disputes involving outsourced services, disagreements often involve payment terms, the handling of patient information or other data, compliance obligations, or termination rights.
Healthcare Dispute Resolution
The most appropriate method to resolve a healthcare dispute may depend on the type of conflict, relevant industry rules and regulations, the jurisdiction governing the dispute, and any applicable dispute resolution provision in the parties’ contract. Because the healthcare industry is highly regulated and complex, and legal requirements can vary by jurisdiction, the dispute resolution method may depend on the specific circumstances involved in the dispute. In some cases, a dispute may require government intervention, federal litigation, or other specialized procedures.
Certain healthcare disputes may be resolved through ADR methods, such as arbitration or mediation. Mediation is a voluntary, collaborative process in which the parties to a dispute attempt to resolve the conflict, with a neutral third party (the mediator) guiding the discussion but not imposing a binding decision on the parties. Arbitration is a more formal process in which a neutral decision-maker — the arbitrator — reviews evidence, testimony, and arguments and issues a final, binding decision to resolve the conflict. ADR providers, such as the AAA, offer access to qualified arbitrators and mediators who have expertise in resolving conflicts in the healthcare industry.
In many healthcare disputes, the parties often attempt informal negotiation or use an internal resolution process for disputes within an organization. If this fails to resolve the dispute, parties may escalate to mediation when appropriate or required by their contract. In certain cases, arbitration, litigation, or other specialized procedures may be the preferred or necessary path to conflict resolution.
Which Healthcare Dispute Types are Typically Handled with Arbitration or Mediation?
In the healthcare industry, arbitration provisions are frequently included in payor-provider agreements, such as contracts between insurance companies and hospitals. Arbitration can provide a more efficient path to resolving disputes in an industry where contractual disagreements are common. The AAA has arbitration rules specific to healthcare payor-provider conflicts. Parties can agree to use these rules to resolve disputes by including them in their contract’s arbitration provision, or they can agree after the dispute arises to arbitration under these rules.
While healthcare organizations commonly use ADR for conflict resolution, disputes between patients and their provider or insurance company are typically resolved through other means. Some patient-provider disputes, including certain malpractice claims, may proceed through ADR if the parties have an enforceable agreement or if applicable law provides for ADR, but requirements and enforceability vary by jurisdiction.
Employment and workplace disputes in healthcare organizations are typically handled through ADR methods when the parties’ employment contract specifies those processes. At the AAA, these arbitration or mediation cases are governed by rules and fee schedules specific to employment and workplace disputes. Corporate transactions in the healthcare field, such as mergers and acquisitions, joint ventures, and shareholder disputes, are also commonly resolved through ADR when the parties’ agreement calls for it. At the AAA, these disputes typically fall under the Commercial Arbitration Rules and Mediation Procedures and the applicable fee schedules. Whether credentialing and medical staff disputes are resolved through ADR or another process depends on the specific issues, contracts, and laws involved.
Which Healthcare Dispute Types are Typically Handled in Court?
While ADR is common in many healthcare business disputes, some matters are more likely to proceed through court or a formal agency process. Consumer collection, nursing home negligence, and medical malpractice disputes are typically handled through litigation if there is no enforceable ADR agreement or state law requires a court process.
Other healthcare disputes follow a more formal procedural path, often involving administrative appeals or government enforcement processes. Disputes involving pharmaceutical drug patents, certain drug pricing claims, and misappropriation of medical data or other proprietary information are typically litigated in court if there is no ADR provision in the applicable contract.
Other disputes that are typically litigated or handled through administrative or enforcement channels include disputes involving government payors — such as Medicaid/Medicare reimbursements — as well as issues involving healthcare fraud, antitrust enforcement, HIPAA compliance, and any issues requiring injunctions or court-supervised remedies. However, even certain disputes that are normally litigated, such as an antitrust case or class action lawsuits, may still involve mediation as a step in the process and may settle through it.
Why Healthcare Organizations Choose Arbitration and Mediation to Resolve Disputes
When appropriate under the governing law and jurisdiction, or when included in a contract or agreement, ADR methods such as arbitration and mediation can be useful for resolving disputes. In payor-provider matters, the parties involved typically include an ADR clause in their contracts to provide for a more efficient and cost-effective way to resolve disputes through a private process.
For AAA healthcare cases closed as awarded in 2025 with claims greater than $1 million, the median time to award was approximately 20 months. In contrast, the median time to trial in the U.S. District Court was more than a year longer at 34.1 months. Arbitration and mediation can help resolve disputes more efficiently in an industry where conflicts are frequent and organizations often need to get past their disputes to maintain working relationships.
At the AAA, our qualified neutrals understand the unique challenges of the healthcare field. The AAA Healthcare Panel comprises experienced professionals, including healthcare attorneys, physicians, executives, and former judges, who are adept at resolving complex payor-provider and other healthcare industry disputes. Our dedicated case management team, expert neutrals, and specialized procedures can help address conflict resolution needs at your healthcare organization.