The top Democrat on the powerful House Energy and Commerce Committee introduced a bill Thursday to reform a costlier-than-expected part of the law protecting patients from surprise medical bills.
The new legislation from Rep. Frank Pallone of New Jersey aims to overhaul the arbitration process established by the No Surprises Act for resolving disputes between medical providers and insurers.
“The No Surprises Act has been an overwhelming success when it comes to protecting patients from surprise medical bills,” Ranking Member Pallone said in a statement. “Today, I’m pleased to say patients no longer receive these outrageous bills, but unfortunately the arbitration process is clearly not working. A few bad actors—largely backed by private equity—are gaming the system, creating backlogs, delaying payments, and driving up premiums.”
Pallone’s bill, the “Lower Premiums, Faster Payments Act,” would replace the current system with a “benchmarking” approach that bases payments on the median in-network rate for a service. The bill would also require that payments be issued within 30 days of a claim being filed.
How we got here: The bipartisan No Surprises Act, which passed in late 2020 and took effect in 2022, established an arbitration system to determine how much providers should be compensated for out of network care. Insurers and providers each submit a proposed rate for a given service, and the arbitrator must choose one of the two numbers, with no middle ground.
Numerous reports — see here, here or here — have detailed how the system has been flooded with filings by a subset of providers and their billing middlemen with claims that resulted in payments far above standard rates. Critics charge that process is leading to higher healthcare costs for employers and consumers. Like Pallone, the Trump administration earlier this year said the arbitration system is being “gamed” and needs to be cleaned up.
Of the 2.5 million disputes submitted last year, about two-thirds came from 10 provider groups, according to a Pallone press release. And arbitrators last year sided with providers in about 85% of cases, according to an August report published in Health Affairs by Georgetown University researchers. They found that the dispute resolution process set up by the No Surprises Act has resulted in $22.4 billion in total costs from 2022 through 2025, including $15.6 billion in awarded payments that exceed in-network rates.
“These escalating costs are driven by the sheer volume of disputes (which rose by 77 percent from 2024 to 2025) and higher payment amounts (which rose by 264 percent from 2024 to 2025),” the report said, adding that the dispute resolution process “is dominated by a handful of provider organizations, many of which are backed by private equity or have other conflicted profit interests.”
For their part, doctors and billing companies argue that insurers have repeatedly sought to underpay providers, in some cases offering no response or absurd payments as low as $1, leading arbitrators to rule against them as part of a scheme meant to ultimately have the law changed.
“The only gaming of the system is being done by insurers,” Christopher Sheeron, president of Action for Health, a group that represents medical providers, told The New York Times earlier this year. “They are losing in federal arbitration on purpose in an effort to overhaul the law in their favor.”
What’s next: Pallone is poised to become chair of the Energy and Commerce Committee next year if Democrats win control of the House in November’s elections. In that role, he could push his bill — though the House Ways and Means Committee reportedly prefers a different approach to overhauling the No Surprises Act, which could complicate any reform push. But the higher-than-expected costs of the arbitration process are garnering plenty of attention, adding to the likelihood that lawmakers will act.