Pallone Bill Would End Surprise Billing Arbitration in 2028 and Set Out-of-Network Pay at Insurers’ Median Rates

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Rep. Frank Pallone Jr. of New Jersey, the top Democrat on the House Energy and Commerce Committee, introduced the Lower Premiums, Faster Payments Act on Thursday. The bill has no number, named cosponsors or Congressional Budget Office cost estimate yet, and it is unlikely to move this year.

The debate matters to anyone who pays health insurance premiums. Patients are already protected from most surprise bills, but supporters of the bill argue that the cost of arbitration awards flows back into premiums that families and employers pay.

The No Surprises Act, in effect since January 2022, bans surprise bills for most emergency care, for certain care from out-of-network providers at in-network facilities and for air ambulance services. Patients pay only their normal in-network cost-sharing. When insurers and providers disagree over the remaining payment, either side can take the dispute to an independent arbitrator through what is called the independent dispute resolution process.

That process has grown far beyond expectations. According to CMS reports, more than 7 million disputes were started from April 2022 through July 2026, including 394,140 in July alone.

CMS data on arbitration outcomes show that in the second half of 2025, providers won about 85% of payment decisions. The winning offer was above the insurer’s benchmark rate in about 87% of decisions. The top three filers, HaloMD, TeamHealth and SCP Health, started about 38% of disputes.

The volume dwarfs early projections. When the law passed, the Congressional Budget Office expected roughly 22,000 disputes a year and projected that the law would lower commercial premiums by about 1%. In a June blog post, the budget office said arbitration outcomes could instead lead to higher prices and premiums over time.

Pallone’s office said providers were awarded nearly $15 billion in 2025, while arbitration firms collected $1.3 billion in fees. Pallone called the law a success at protecting patients from surprise bills but said: “the arbitration process is clearly not working.”

His office also pointed to a Health Affairs analysis estimating that arbitration has added $22.4 billion in costs over four years, and said New York’s state employee health plan cited arbitration awards as the main reason for a 10% premium increase this year. In September, Pallone sent letters to six arbitration firms questioning whether the process was working as Congress intended.

According to the committee Democrats’ announcement, the bill would replace arbitration with a payment system based on the median in-network rate.

The bill text ties that payment to the qualifying payment amount, a benchmark based on an insurer’s median contracted rate for a service as of 2019, adjusted for inflation. Arbitration would end for services provided on or after January 1, 2028, so the current process would continue through 2027 even if the bill became law.

Insurers would have to pay within 30 days after a provider sends the bill. The bill would also require federal agencies to update the rules for calculating the payment amount and make audits of insurers’ calculations mandatory, with results made public.

Families USA, a consumer advocacy group, backs the measure. Its executive director, Anthony Wright, said the bill would ensure providers “receive fair but not inflationary payments that raise costs for everyone.”

Physician groups strongly disagree with the premise. Before the bill was introduced, emergency physicians, radiologists and anesthesiologists sent Congress an analysis arguing that insurers are undermining the law. “The No Surprises Act must be enforced, not undermined,” said Dr. L. Anthony Cirillo, president of the American College of Emergency Physicians.

Those groups cite 2025 CMS data showing insurer offers of $1 or less in 8.2% of disputed line items and many offers at or below the benchmark rate. In July, Christopher Sheeron, president of the provider group Action for Health, told The New York Times that “the only gaming of the system is being done by insurers.”

Roll Call reported that when the law was being written in 2020, providers pushed back hard on a median-rate approach, arguing it would give insurers too much leverage. Congress ultimately chose arbitration.

Roll Call reported that action is unlikely before the year ends, with only a few legislative weeks left. The bill could gain more attention next year depending on which party controls the House.

For patients, nothing changes now. If you receive an unexpected bill for emergency care or for an out-of-network doctor at an in-network hospital, you generally should owe only your in-network cost-sharing. The CMS No Surprises Help Desk at 1-800-985-3059 takes complaints seven days a week.

Patients can compare any bill with their insurer’s explanation of benefits before paying. Those most likely to see a surprise bill include people treated in emergency rooms, patients having surgery at an in-network hospital where an anesthesiologist or radiologist is out of network, and anyone transported by air ambulance. Keeping copies of bills, insurance statements, and call notes makes a complaint easier to resolve.

The larger question is cost. Employers and families pay for arbitration awards and fees through premiums, but no official estimate yet shows how much this bill would save. MedicalDaily will watch for a CBO score, cosponsors and any committee action next year.

It would end No Surprises Act arbitration for services starting January 1, 2028, and require insurers to pay out-of-network claims at a median in-network-based rate within 30 days.

Does this affect what patients pay for surprise bills?

No. Patients are already limited to in-network cost-sharing for most emergency and certain out-of-network care. The bill targets payments between insurers and providers.

Why do supporters want to replace arbitration?

They say the process is flooded with disputes, favors providers in most cases, and adds costs that raise premiums.

Why do doctors oppose a median-rate standard?

Provider groups argue insurer benchmarks are often too low and that a fixed standard would give insurers too much leverage.

Roll Call reported that action is unlikely this year, with few legislative weeks remaining.

How often do providers win arbitration now?

CMS data show providers won about 85% of payment decisions in the second half of 2025.

What should I do if I get a surprise medical bill?

Compare it with your insurer’s explanation of benefits and call the No Surprises Help Desk at 1-800-985-3059.