Rep. Pallone Presses Arbitration Firms Over Rising No Surprises Act Dispute Costs

When Congress passed the No Surprises Act, the goal was simple: get patients out of the crossfire when their doctor and their insurer can't agree on a bill. That system relies on a process called independent dispute resolution, or IDR, where neutral arbiters step in to settle payment disagreements so families don't end up footing the difference. Now a top lawmaker wants to know if that safety valve is working the way it was designed to.

Rep. Frank Pallone, D-New Jersey and ranking member of the House Energy and Commerce Committee, sent letters this week to six certified IDR entities: C2C Innovative Solutions, Commence, Dane Street, EdiPhy Advisors, National Medical Reviews, and ProPeer Resources. He's asking each one to explain how it handles arbitration and whether its practices comply with the law, as the costs tied to this system keep climbing.

The numbers behind his concern are stark. A Georgetown University Center on Health Insurance Reforms study released in August found that IDR-related costs hit $22.4 billion by the end of 2025. That same study counted 2.6 million disputes initiated that year, a 77% jump from 2024. For a mechanism that was supposed to be a last resort, arbitration has become anything but rare.

Think of the No Surprises Act's structure like a two-step process. First, providers and insurers are supposed to negotiate a fair payment directly. Only when that fails does a case move to IDR, where a third-party arbiter picks a final number. The system assumes most disagreements get resolved before reaching that second step. What Pallone's letters suggest is that the first step is increasingly being skipped, and the second step is absorbing far more volume, and far more money, than lawmakers anticipated.

Who's Driving the Surge

Pallone isn't just worried about the volume of disputes. He's asking pointed questions about who is filing them and how those cases get decided.

His letters flag reports that a meaningful share of claims reaching IDR may not even be eligible for arbitration in the first place. That distinction matters because eligibility rules exist to keep the process focused on genuine payment disputes, not routine billing disagreements that should be resolved elsewhere. If ineligible claims are slipping through, it suggests either a breakdown in screening or a strategic push by filers to use IDR as a first option rather than a backstop.

He's also zeroing in on who benefits from that dynamic. Research, including the Georgetown study, points to a small number of organizations initiating a disproportionate share of disputes, many backed by private equity. Pallone's letters specifically request the names of the 10 organizations generating the most disputes at each IDR entity. That's a meaningful ask. If a handful of well-funded, repeat filers are driving the bulk of the 2.6 million disputes counted last year, that changes how policymakers should think about reform. This wouldn't be a story about isolated billing disagreements. It would be a story about a business strategy built around arbitration itself.

Then there's the question of who, or what, is actually making these decisions. Pallone wants details on the compensation, training, and credentials of the staff members determining eligibility and payment amounts. He's also asking whether artificial intelligence is playing any role in those determinations.

That last question deserves attention on its own. Arbitration decisions carry real financial weight for patients, providers, and insurers alike, and each case is supposed to involve a human judgment about fairness given the specifics of a claim. If AI tools are helping triage cases, flag eligibility, or even influence payment recommendations, the public deserves to understand how those systems work, what data trains them, and whether they introduce bias or inconsistency into a process that's meant to be neutral. Automation can bring speed and consistency to a system straining under 2.6 million disputes a year. It can also entrench errors at scale if the underlying logic is flawed and nobody is checking the work.

Pallone has given the six entities until Sept. 24 to respond with hard data covering dispute volume, eligibility determinations, and default judgments over the past several years. He's framed this as protecting the law's original intent.

"For too long, patients were caught in the middle of billing disputes between providers and health plans," Pallone wrote in the letters. "While the law has protected millions of families from surprise medical bills, I am concerned that the independent dispute resolution process is not functioning as Congress intended and is resulting in increased out-of-pocket costs and higher premiums for consumers."

Why It Matters

It's tempting to see this as an inside-baseball dispute among insurers, providers, and arbitration firms. It isn't. Every dollar added to the $22.4 billion IDR price tag has to come from somewhere, and history suggests that somewhere is often premiums.

When arbitration costs rise, insurers typically pass those costs on to policyholders through higher monthly premiums or increased cost-sharing. Patients who never saw a surprise bill, who were fully protected by the law working as intended, can still end up paying more for coverage because the system meant to shield them has grown expensive to operate. That's the quiet irony at the center of Pallone's inquiry: a law built to protect patients from cost shocks may be generating cost pressures of its own, just further upstream.

There's also a broader accountability question. The No Surprises Act was a rare example of bipartisan consensus on healthcare costs, passed with the explicit promise that patients would be protected without inflating the system elsewhere. If a small set of private equity-backed filers and opaque decision-making processes, human or automated, are quietly reshaping how that promise gets fulfilled, oversight isn't optional. It's the only way to know whether the law is still doing what Congress designed it to do, or whether it needs fixing before the costs climb even higher.