"The No Surprises Act, intended to shield patients from unexpected medical costs, is now facing a significant legislative challenge. A new House bill proposes replacing the current arbitration system with a fixed payment rate, aiming to curb escalating healthcare expenses and potentially lower insurance premiums."
The landscape of healthcare billing in the United States is undergoing a critical re-evaluation as a new piece of legislation emerges from the House of Representatives, aiming to fundamentally alter the dispute resolution process established by the No Surprises Act. Introduced by Rep. Frank Pallone Jr. of New Jersey, the proposed "Lower Premiums, Faster Payments Act" seeks to dismantle the existing arbitration system that adjudicates payment disagreements between health insurance companies and out-of-network medical providers. Instead, the bill champions a radical shift towards a predetermined payment structure, mandating insurers to pay a set amount pegged to their median in-network rate, with a strict 30-day payment window. While currently lacking a bill number, named cosponsors, or a Congressional Budget Office cost estimate, and with its passage this year appearing unlikely, the implications of this proposed legislation are far-reaching, touching the financial well-being of virtually every individual who pays for health insurance.
The core of the debate revolves around the operational effectiveness and financial consequences of the No Surprises Act’s Independent Dispute Resolution (IDR) process, commonly referred to as arbitration. Since its implementation in January 2022, the Act has provided a crucial safeguard for patients, shielding them from the brunt of surprise medical bills. This protection extends to most emergency care, certain services rendered by out-of-network providers at in-network facilities, and air ambulance transportation. Under these provisions, patients are typically only responsible for their standard in-network cost-sharing amounts. However, when insurers and providers cannot agree on the remaining balance for these services, the IDR process becomes the venue for resolution.
What was envisioned as a mechanism for resolving a manageable number of disputes has, in practice, become a colossal undertaking, far exceeding initial projections. According to data released by the Centers for Medicare & Medicaid Services (CMS), the number of initiated disputes has surged dramatically. Between April 2022 and July 2026, over 7 million disputes were initiated, with July alone accounting for a staggering 394,140 cases. This volume has raised significant concerns about the efficiency and fairness of the arbitration system.
Further analysis of CMS arbitration outcomes provides a stark picture of the current landscape. In the latter half of 2025, providers emerged victorious in approximately 85% of payment decisions. Crucially, the winning offer in about 87% of these cases exceeded the insurer’s benchmark rate, suggesting a potential imbalance in favor of providers. The dominance of a few large provider groups is also evident, with HaloMD, TeamHealth, and SCP Health collectively initiating around 38% of all disputes. This concentration of activity raises questions about the systemic dynamics at play within the IDR process.
The discrepancy between projected and actual dispute volumes is significant. When the No Surprises Act was being debated, the Congressional Budget Office (CBO) had anticipated an annual dispute rate of roughly 22,000 cases and had projected that the law would lead to a modest 1% reduction in commercial insurance premiums. However, a more recent assessment by the CBO in June indicated that the actual arbitration outcomes could, in fact, contribute to an increase in prices and premiums over time. This unforeseen consequence undermines one of the law’s intended benefits and fuels the argument for reform.
Rep. Pallone’s office has highlighted the substantial financial implications of the current system. They estimate that providers were awarded nearly $15 billion in 2025, with arbitration firms themselves collecting an additional $1.3 billion in fees. Pallone has publicly acknowledged the success of the Act in protecting patients from surprise bills but has unequivocally stated that "the arbitration process is clearly not working." The financial burden is not confined to direct arbitration costs; a Health Affairs analysis cited by Pallone’s office estimates that arbitration has added a staggering $22.4 billion in costs over a four-year period. This ripple effect is evident in real-world premium increases, with New York’s state employee health plan reportedly citing arbitration awards as the primary driver behind a 10% premium hike this year. In response to these concerns, Pallone has previously sent letters to six arbitration firms, questioning the integrity and intended functioning of the process.
The "Lower Premiums, Faster Payments Act" aims to address these issues by fundamentally altering the payment dispute resolution mechanism. According to an announcement from the committee Democrats, the bill proposes to replace the arbitration process with a payment system anchored to the median in-network rate. This rate would be determined by the "qualifying payment amount" (QPA), a benchmark derived from an insurer’s median contracted rate for a specific service as of 2019, with subsequent adjustments for inflation. The proposed shift would take effect for services rendered on or after January 1, 2028, meaning the current arbitration system would remain operational through 2027, even if the bill were to become law.
Beyond establishing a new payment standard, the bill also mandates a 30-day payment window for insurers after a provider submits a bill. Furthermore, it requires federal agencies to update the methodologies for calculating the payment amount and mandates public disclosure of audit results related to insurers’ calculations, thereby increasing transparency and accountability.
The proposed legislation has garnered support from consumer advocacy groups. Families USA, a prominent organization dedicated to healthcare access and affordability, has endorsed the measure. Its executive director, Anthony Wright, stated that the bill would ensure providers "receive fair but not inflationary payments that raise costs for everyone." This sentiment underscores the belief that the current arbitration system is contributing to an unsustainable rise in healthcare costs that ultimately impacts consumers.
However, the proposed shift away from arbitration is met with strong opposition from physician groups, who argue that the premise of the bill is flawed and that insurers are actively undermining the No Surprises Act. These groups contend that the current arbitration system, despite its volume, is essential for ensuring fair reimbursement for out-of-network services. They point to CMS data from 2025, which reportedly shows instances where insurers offered as little as $1 for disputed line items or made offers at or below the benchmark rate. Dr. L. Anthony Cirillo, president of the American College of Emergency Physicians, has asserted, "The No Surprises Act must be enforced, not undermined," suggesting that the focus should be on ensuring compliance with the existing law rather than overhauling its dispute resolution mechanisms. Christopher Sheeron, president of the provider group Action for Health, has echoed this sentiment, telling The New York Times that "the only gaming of the system is being done by insurers."
The historical context of the No Surprises Act’s development reveals that provider groups had indeed voiced concerns about a median-rate approach during the legislative drafting process in 2020. Their primary apprehension was that such a system would grant insurers excessive leverage in payment negotiations. Ultimately, Congress opted for the arbitration model as a compromise.
The legislative path for the "Lower Premiums, Faster Payments Act" appears challenging in the immediate future. According to reports, with only a few legislative weeks remaining in the current session, significant action on the bill is unlikely before the end of the year. Its prospects may become clearer next year, particularly depending on the outcome of upcoming elections and the subsequent composition of the House.
For patients, the immediate impact of this proposed legislation is minimal. The protections afforded by the No Surprises Act remain in place. Individuals receiving bills for emergency care or for services from an out-of-network provider at an in-network hospital should generally only be responsible for their in-network cost-sharing. The CMS No Surprises Help Desk, available seven days a week at 1-800-985-3059, serves as a resource for reporting complaints and seeking assistance. Patients are advised to compare any unexpected bill with their insurer’s explanation of benefits before making payment. Those most likely to encounter surprise bills include individuals treated in emergency rooms, patients undergoing surgery at in-network hospitals where ancillary providers like anesthesiologists or radiologists are out-of-network, and individuals requiring air ambulance transport. Maintaining detailed records of bills, insurance statements, and correspondence can significantly aid in the resolution of any billing disputes.
The broader question of healthcare costs remains paramount. While supporters of the proposed bill argue that it will alleviate the financial burden of arbitration awards and fees that are ultimately passed on to consumers through premiums, a definitive estimate of the potential savings remains unavailable. The Congressional Budget Office’s scoring of the bill, along with the identification of additional cosponsors and any committee actions taken next year, will be crucial in understanding its fiscal impact.
Key Questions Answered:
What would Pallone’s bill change?
The bill proposes to end the No Surprises Act arbitration process for services beginning January 1, 2028. It would mandate insurers to pay out-of-network claims at a rate based on the median in-network rate within 30 days.
Does this affect what patients pay for surprise bills?
No, this bill does not alter what patients pay out-of-pocket. Patients are already protected by the No Surprises Act, which limits their financial responsibility to in-network cost-sharing for most emergency and certain out-of-network care. The legislation focuses on the payment disputes between insurers and providers.
Why do supporters want to replace arbitration?
Supporters argue that the current arbitration system is overwhelmed with an excessive volume of disputes, often favors providers, and contributes to rising healthcare costs that are passed on to consumers through increased insurance premiums.
Why do doctors oppose a median-rate standard?
Provider groups express concern that insurer-proposed benchmarks are frequently too low and that a fixed median-rate standard would grant insurers too much power and leverage in payment negotiations, potentially leading to underpayment for services.
Is the bill likely to pass this year?
Reports indicate that legislative action on this bill is unlikely before the end of the current year, given the limited number of remaining legislative sessions.
How often do providers win arbitration now?
According to CMS data from the second half of 2025, providers were successful in approximately 85% of payment decisions within the arbitration process.
What should I do if I get a surprise medical bill?
If you receive a surprise medical bill, you should compare it with your insurer’s explanation of benefits. You can also contact the No Surprises Help Desk at 1-800-985-3059 for assistance and to report any issues.
Published by Medicaldaily.com
