No Surprises Act Arbitration Bill: Pallone Moves to End IDR After 2.5 Million Disputes

The No Surprises Act arbitration bill introduced on October 8, 2026 by Rep. Frank Pallone Jr. (D-N.J.) would abolish the federal independent dispute resolution (IDR) process for out-of-network care furnished on or after January 1, 2028, and replace it with a fixed payment pegged to the median in-network rate, due within 30 days. Branded the Lower Premiums, Faster Payments Act, it is the most direct legislative attack yet on a system that took in 2.5 million disputes in 2025, roughly 150 times the annual volume regulators first projected, and it would make the country's biggest arbitration program disappear by statute rather than by reform.

Pallone is not a peripheral voice. As the top Democrat on the House Energy and Commerce Committee, he was one of the principal authors of the No Surprises Act in 2020, and he would chair the committee if Democrats take the House in November. His bill arrives after a month of oversight letters to arbitration firms, a summer of fee cuts and procedural changes at the Centers for Medicare & Medicaid Services, and a run of federal court decisions that have made IDR awards almost impossible for either side to challenge. For anyone who works on Mass Arbitration in the consumer or employment space, the debate is also a live case study in what happens when an arbitration system's economics reward volume.

What the No Surprises Act arbitration bill does

The No Surprises Act, in force since January 2022, bars most surprise balance bills to patients and sends payment disputes between out-of-network providers and health plans to "baseball-style" arbitration. After a 30-day open negotiation period, either side may initiate IDR. A certified IDR entity then picks one of the two final offers, with the qualifying payment amount (QPA), roughly a plan's 2019 median contracted rate indexed for inflation, as one of the factors it must weigh. The losing party pays the IDR entity's fee.

The Pallone bill keeps the patient protections and removes the arbitration. According to Holland & Knight's summary of the text, it would "effectively end" IDR for items and services furnished on or after January 1, 2028, and make a recalculated QPA the out-of-network payment rate. Plans and issuers would have to pay that amount within 30 days after the provider or facility submits the bill. The departments of Health and Human Services, Labor and the Treasury would have to rewrite the QPA calculation rules, insurers' calculations would be subject to mandatory audits with public results, and the bill would bar judicial review of the payment methodology.

What is the Lower Premiums, Faster Payments Act?

The Lower Premiums, Faster Payments Act is a House bill that would replace No Surprises Act arbitration with a benchmark payment standard for out-of-network emergency care, ancillary services at in-network facilities, and air ambulance services covered by the law. Medical Daily reported that at introduction the bill had no assigned number, no named cosponsors and no Congressional Budget Office cost estimate. The table sets the proposal against current law.

Feature	Current No Surprises Act	Lower Premiums, Faster Payments Act
How out-of-network rate is set	Open negotiation, then final-offer IDR arbitration	Recalculated QPA based on median in-network rate, geographically adjusted
Who decides	Certified IDR entity picks one party's offer	Statutory formula; no arbitrator
When the change applies	IDR available since 2022	Items and services furnished on or after January 1, 2028
Payment deadline	30 days after an IDR determination	30 days after the provider submits the bill
Oversight of QPA math	Audits of a sample of plans	Mandatory audits of insurers' calculations, results made public
Court challenges	Narrow review of IDR awards; rule challenges in court	Judicial review of the QPA methodology barred
Patient balance-billing ban	Yes	Unchanged

Why does Pallone say the IDR process is not working?

Pallone says the IDR process is "clearly not working" because a handful of high-volume filers, "largely backed by private equity," are "gaming the system, creating backlogs, delaying payments and driving up premiums." His office's figures, released with the bill, are the core of the case.

Measure	Figure	Source
Disputes filed in 2025	2.5 million	Committee Democrats
Share of 2025 disputes from 10 provider groups	About 67%	Committee Democrats
Awards to providers in 2025	Nearly $15 billion	Committee Democrats, via Becker's
Arbitration fees in 2025	$1.3 billion	Committee Democrats, via Becker's
Annual disputes regulators first expected	About 17,000	Healthcare Dive
Disputes initiated in 2025	2.6 million, up 77%	Georgetown CHIR
IDR-related costs, 2025	$16.6 billion	Georgetown CHIR
IDR-related costs, 2022 to 2025	$22.4 billion	Georgetown CHIR
Provider win rate, 2025 payment determinations	About 85%	CMS data, via HFMA and Medical Daily

Georgetown's Center on Health Insurance Reforms found that three organizations, Radiology Partners (30%), HaloMD (27%) and TeamHealth (20%), accounted for more than three-quarters of resolved dispute lines in 2025. Radiology Partners and TeamHealth are private equity-backed physician groups. HaloMD is an intermediary that files disputes on providers' behalf. Roll Call reported that winning providers have been receiving payouts averaging more than six times the local in-network rate, and CMS has said the federal portal has received and closed more than 7 million disputes since April 2022.

On September 3, 2026, Pallone sent oversight letters to six of the 17 certified IDR entities: C2C Innovative Solutions, Commence, Dane Street, EdiPhy Advisors, National Medical Reviews and ProPeer Resources. The letters asked about dispute volumes, eligibility determinations, arbitrator training, use of artificial intelligence and automation, the top filers and their success rates, ownership structures, and any financial relationships with the parties. The bill is, in effect, the remedy that follows that inquiry.

How would out-of-network payments be set without arbitration?

Without arbitration, out-of-network payments would be set by formula: plans would pay a recalculated qualifying payment amount equal to the median in-network rate for the service, adjusted for geography, within 30 days of receiving the bill. There would be no final-offer contest and no arbitrator weighing the QPA against other factors such as provider training, market share or case acuity.

That is a return to the benchmark approach Pallone favored during the 2019 and 2020 surprise billing negotiations, before providers persuaded Congress to add arbitration as a backstop. The Competitive Enterprise Institute argues the formula would compound an existing distortion, because the QPA starts from 2019 in-network rates carried forward by general inflation, and medical costs can rise faster than general prices. The bill answers part of that criticism by ordering a recalculation of the QPA and by requiring audits, but the text summarized so far does not specify a new base year.

The ban on judicial review of the methodology is the provision most likely to draw litigation risk analysis. Provider groups led by the Texas Medical Association have won repeated challenges to the QPA rules, most recently on August 11, 2026, when the en banc Fifth Circuit vacated the provisions allowing "ghost rates" and excluding incentive-based payments from the calculation. A statutory bar on review of the new methodology would close that route for future challenges, subject to any constitutional objections.

The 2026 backdrop: fee cuts, batching and the courts

Pallone's bill lands in the middle of a year of attempted repairs. The federal IDR Operations final rule, published in the Federal Register on June 4, 2026, cut the non-refundable administrative fee from $115 to $15 per party per dispute for disputes initiated from June 11, 2026, and raised the Batching cap from 25 to 50 items or services per dispute. Georgetown researchers report that 2026 IDR entity fees range from $425 to $800 for a single dispute and up to $1,125 for a batched dispute. Further changes to open negotiation, eligibility review and entity selection phase in only after CMS announces supporting portal functionality.

The courts have narrowed the exits. The Fifth Circuit held in 2025 that the No Surprises Act gives providers no private right of action to enforce IDR awards, and the Supreme Court declined review on January 12, 2026. Insurers have fared no better trying to unwind awards. Anthem's suit against HaloMD in California was dismissed in April 2026, with the judge holding that the statute's limits on judicial review preclude second-guessing eligibility and award determinations; Blue Cross and Blue Shield of Texas lost a similar case in late May; and Judge Thomas Thrash Jr. dismissed a Georgia suit by an Elevance affiliate. Highmark Health filed a fourth suit on June 1, 2026 in the Western District of Pennsylvania, alleging that HaloMD and a neuromonitoring client submitted more than 450 ineligible disputes and won more than $3.9 million. None of those courts has found that the disputes were in fact ineligible; the dismissals rest on the review bar.

Date	Development
January 1, 2022	No Surprises Act protections and IDR take effect; portal opens April 2022
January 12, 2026	Supreme Court denies review of Fifth Circuit no-private-right-of-action ruling
April to May 2026	Insurer suits against HaloMD dismissed in California and Texas
June 4, 2026	IDR Operations final rule published; $15 fee applies from June 11
August 11, 2026	En banc Fifth Circuit (TMA III) vacates two QPA rule provisions
August 26, 2026	Georgetown CHIR puts four-year IDR costs at $22.4 billion
September 3, 2026	Pallone letters to six certified IDR entities
October 8, 2026	Lower Premiums, Faster Payments Act introduced
January 1, 2028	Proposed end of IDR for newly furnished items and services

Who opposes the Pallone No Surprises Act bill?

The American Society of Anesthesiologists, the American College of Emergency Physicians and the American College of Radiology came out against the bill on the day it was introduced. They said it would remove "a critical independent safeguard" against unreasonably low insurer payments and hand insurers effective control over out-of-network rates. ASA President Patrick Giam argued that giving insurers more power over physician pay would not fix problems that, in the groups' view, insurers helped create. The groups also called the bill premature because the IDR Operations rule and court-ordered QPA changes are not yet fully in place, and they cited CMS data showing insurer offers of $1 or less in 8.2% of disputed line items.

Support has come from consumer advocates, employer and payer-aligned groups, and cost-focused policy organizations. Families USA described a median-rate benchmark as a market-based fix for arbitration abuse, and U.S. PIRG backed eliminating what it called costly arbitration. Holland & Knight expects "strong opposition" to the bill as written. Roll Call reported in September that a coalition of 67 health care industry and advocacy groups had already urged Congress to revisit the law and benchmark disputed payments to Medicare or median in-network rates, and that House Ways and Means Republicans were examining arbitration costs.

Can the No Surprises Act arbitration bill pass?

The No Surprises Act arbitration bill is unlikely to move in the current Congress, which has weeks left and a Republican majority in the House. Its significance is as a marker: if Democrats win the House on November 3, Pallone would be in line to chair Energy and Commerce, and coverage of the bill has flagged it as a possible early priority. Even short of passage, the bill frames the 2027 debate. Republicans on Ways and Means are studying arbitration costs, insurers and employers want a benchmark, and physician specialties that rely heavily on IDR will fight any proposal that removes an independent decision maker.

Lessons from the largest arbitration program in the US

Viewed from the mass arbitration bar, IDR is a natural experiment in what aggregated, fee-driven arbitration does at scale. Three dynamics will be familiar.

First, repeat filers dominate. Three organizations account for more than 75% of resolved dispute lines, and an intermediary, HaloMD, files more than a quarter of them. That mirrors the concentration of consumer mass arbitration in a small number of claimant firms practicing Claim Aggregation, and the same policy argument follows: concentration is described as abuse by respondents and as efficient enforcement by claimants.

Second, fees shape behavior. When the losing party pays the arbitrator and the expected award greatly exceeds the fee, filing is rational even for marginal claims. The June rule cut administrative fees by about 87%, which lowers the cost of filing as much as it lowers the cost of defending. Consumer arbitration providers learned the same lesson and, in 2024, moved to tiered and batch-based Filing Fee schedules, as covered in our analysis of fee economics before and after 2024.

Third, limited review entrenches outcomes. The No Surprises Act, like the Federal Arbitration Act (FAA), gives courts little room to revisit awards, and insurers' attempts at Vacatur-style relief have failed on that ground. Pallone's answer is not better review but abolition, coupled with a review bar of its own on the replacement formula. For drafters and providers watching from the consumer side, the takeaway is that legislators frustrated with an arbitration system's volume may skip reform and remove the forum altogether.

What it means for providers, plans and arbitration practitioners

• Out-of-network physician groups and hospitals: Nothing changes for disputes now in the pipeline or for care furnished before 2028. The commercial risk is a future rate set at the median in-network level, which would cut the leverage that high win rates in IDR currently provide.
• Health plans and self-funded employers: The bill offers cost predictability and a 30-day payment clock, but it also imposes mandatory public audits of QPA calculations. Plans whose QPA math has been challenged would face a new transparency regime.
• Dispute intermediaries and revenue-cycle vendors: Businesses built on IDR filing volume face the most direct exposure, because the bill removes the forum rather than adjusting its fees.
• Certified IDR entities and arbitration practitioners: The 17 certified entities would lose a program that generated about $1.3 billion in fees in 2025, according to committee Democrats. For the wider ADR market, the episode shows that high-volume programs invite congressional scrutiny of arbitrator incentives, AI use and ownership ties.
• Mass arbitration counsel on both sides: Respondents will cite IDR as evidence that aggregated arbitration inflates costs; claimants' counsel will point to the 8.2% of line items with $1 offers as evidence that low-ball conduct drives volume. Both arguments are now part of the federal record.

FAQ

Would the Pallone bill end No Surprises Act arbitration?

Yes. As introduced, the bill would end IDR arbitration for items and services furnished on or after January 1, 2028, and replace it with a payment set at a recalculated median in-network rate.

When would the No Surprises Act IDR process end under the bill?

The IDR process would stop applying to care furnished on or after January 1, 2028. Disputes over earlier care would remain subject to the existing IDR rules.

How many No Surprises Act arbitration disputes were filed in 2025?

House Energy and Commerce Democrats say 2.5 million disputes were filed in 2025, with about 67% coming from 10 provider groups; Georgetown researchers count 2.6 million disputes initiated, up 77% from 2024.

Does the bill affect patients' surprise billing protections?

No. The bill changes how insurers and out-of-network providers settle payment between themselves; the No Surprises Act's ban on most surprise balance bills to patients would stay in place.

Who opposes the Lower Premiums, Faster Payments Act?

The American Society of Anesthesiologists, the American College of Emergency Physicians and the American College of Radiology oppose it, arguing it removes an independent check on insurer payments. Consumer advocates, employer groups and insurer-aligned organizations have largely welcomed it.

Is the bill likely to become law?

Not in the current Congress. Its prospects depend on the November 2026 midterms, since Pallone would be in line to chair the Energy and Commerce Committee if Democrats win the House.