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Rep. Pallone bill would replace surprise billing arbitration with median in-network rate
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Rep. Frank Pallone Jr., ranking member of the House Energy and Commerce Committee, introduced a bill on October 8, 2026, to overhaul the 2020 No Surprises Act. The bill would replace the law's arbitration process for out-of-network payment disputes with a fee calculated based on the median rate insurers pay for in-network services. Pallone stated that while patients no longer receive surprise bills, the arbitration process is 'clearly not working,' citing gaming by bad actors backed by private equity, backlogs, delayed payments, and rising premiums. Health policy analysts have found that arbitration payouts, which averaged over six times local in-network rates and totaled an additional $15 billion in 2025 alone, are contributing to higher premiums. The bill would also require payments within 30 days of claim filing. Action is unlikely in the current lame-duck session, but if Democrats win control of the House, Pallone could set the legislative agenda for the Energy and Commerce Committee in the next Congress.
Source report
By: Jessie Hellmann Posted: October 8, 2026 at 12:06 PM ET
Rep. Frank Pallone, D-N.J., looks to replace an arbitration process with a fee calculated on a median rate insurers pay for in-network services. (Tom Williams/CQ Roll Call file photo)
A 2020 law designed to protect patients from "surprise" medical bills would undergo a major overhaul under legislation introduced Thursday by Rep. Frank Pallone Jr., ranking member of the House Energy and Commerce Committee.
The New Jersey Democrat's bill would eliminate the law's arbitration process, which insurers and providers currently use to settle payment disputes for certain out-of-network services, such as emergency department visits. Instead, fees would be calculated based on the median rate insurers pay for in-network services.
"Today, I'm pleased to say patients no longer receive these outrageous bills, but unfortunately the arbitration process is clearly not working," Pallone said in a statement Thursday. "A few bad actors — largely backed by private equity — are gaming the system, creating backlogs, delaying payments, and driving up premiums."
Background on the No Surprises Act
The No Surprises Act was enacted to shield patients from unexpectedly large bills when they receive care from out-of-network providers at emergency rooms, in-network hospitals, or other medical facilities. The law established a "baseball-style" arbitration process that providers and health plans could use to agree on payment when no pre-negotiated contract exists between the parties.
Issues with the Current System
While arbitration was intended to be a rare occurrence, it has become the default in many cases. Key problems include:
- Providers generally win arbitration cases, receiving payouts averaging more than six times local in-network rates.
- $15 billion in additional arbitration payments were secured by providers in 2025 alone.
- Health policy analysts have found that these arbitration payouts are contributing to higher premiums for both employers and employees.
Pallone's Proposed Changes
Pallone's bill would:
- Replace the arbitration process with a payment system based on the median in-network rate.
- Require payments to be issued within 30 days of the claim being filed.
This approach mirrors the system that insurers and some members of Congress — including Pallone — originally advocated for when drafting the 2020 law. However, providers strongly opposed using median in-network rates to determine payments, arguing it would give insurers too much leverage.
The Ways and Means Committee, then led by Rep. Richard E. Neal, D-Mass., favored the arbitration process. Neal has since criticized how the arbitration process has been implemented.
Outlook
Action on the bill is unlikely this year, with only a few legislative weeks remaining in the upcoming lame-duck session. However, if Democrats win control of the House, Pallone could set the legislative agenda for the Energy and Commerce Committee in the next Congress.
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Source
Policy – Roll CallWestern