Rep. Pallone Presses No Surprises Act Arbiters on Rising Costs and AI's Role in Billing Disputes

When Congress passed the No Surprises Act, the goal was simple: get patients out of the crossfire when insurers and providers can't agree on a bill. Nobody should face a five-figure invoice because an out-of-network anesthesiologist happened to be in the room during an emergency surgery. That was the promise, anyway. Now, one of the law's original architects is asking whether the system built to keep that promise has started working against the people it was meant to protect.

Rep. Frank Pallone, D-New Jersey, the ranking Democrat on the House Energy and Commerce Committee, sent letters last week to six certified independent dispute resolution entities: C2C Innovative Solutions, Commence, Dane Street, EdiPhy Advisors, National Medical Reviews, and ProPeer Resources. These are the firms that act as referees when a health plan and a provider can't settle a payment dispute on their own, a process known as IDR. Pallone wants to know how they're making decisions, who's making them, and whether the process is still doing what lawmakers intended.

Think of IDR as a kind of binding arbitration for medical bills. When negotiations fail, either side can kick the dispute to one of these certified entities, which reviews the claim and picks a payment amount. It was supposed to be a narrow backstop, used only when good-faith talks broke down. Instead, it's become the default path for a rapidly growing share of disputes, and that shift is costing real money.

A study released in August by researchers at the Georgetown University Center on Health Insurance Reforms put a number on that growth. IDR-related costs hit an estimated $22.4 billion by the end of 2025. The same study found that 2.6 million disputes were initiated that year, a 77% jump over 2024. That's not a modest uptick. That's a system straining under a volume nobody quite planned for.

Pallone's letters, sent Thursday and detailed in an announcement from his office, zero in on a specific worry: that a meaningful chunk of the claims flooding into IDR shouldn't even be there. If claims that don't qualify for arbitration are getting through anyway, and if that volume keeps climbing, the costs of running the process itself start to ripple outward, showing up eventually in the premiums ordinary people pay.

"For too long, patients were caught in the middle of billing disputes between providers and health plans," Pallone wrote. "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."

What the Letters Are Asking For

Pallone gave the six firms until Sept. 24 to hand over detailed records. He wants hard numbers on dispute volume over the past several years, along with a breakdown of eligibility determinations, meaning how often claims sent to arbitration actually qualified to be there in the first place. He's also asking for data on default judgments, the outcomes that occur when one side simply doesn't participate or respond.

Beyond the numbers, Pallone wants to understand the people, and increasingly the machines, behind the decisions. His letters ask each entity to disclose the training, credentials, and compensation structure of the staff who determine eligibility and set payment amounts. That's a reasonable ask on its own. Medical billing disputes can be technical, and the people resolving them should have relevant expertise.

But Pallone goes further, asking specifically what role artificial intelligence plays in these determinations, if any. This is worth pausing on. If an algorithm is helping decide whether a $50,000 claim is eligible for arbitration, or what a hospital should be paid for an emergency procedure, patients and regulators alike deserve to know how that tool was built, what data trained it, and who's accountable when it gets something wrong. An AI system sorting claims is a bit like a triage nurse working from a checklist. Useful, often fast, but only as fair as the checklist itself, and someone needs to be watching to make sure the checklist doesn't quietly start favoring one side.

There's also a structural question buried in the numbers. Pallone's letters seek information on the 10 organizations that generate the most disputes at each IDR entity. That request lands squarely on a pattern researchers, including the Georgetown team, have already flagged: a small number of organizations, many backed by private equity, are responsible for a disproportionate share of the disputes flowing into the system. If a handful of well-resourced players are driving most of the volume, that changes how policymakers should think about who the IDR process is actually serving.

Why It Matters

Surprise billing protections were never just a technical fix. They were a response to a very human problem: people getting devastating bills for care they had no meaningful choice in receiving. The No Surprises Act closed that gap for millions of families, and that achievement shouldn't get lost in this conversation.

But a consumer protection law is only as good as the machinery running underneath it. If IDR has quietly become a profit lever for a small set of well-capitalized players, and if rising arbitration costs are getting passed along through premiums, then the law's original beneficiaries, ordinary patients, could end up paying for a fight they're not even part of.

The presence of AI in these decisions raises the stakes further. Automated tools can bring speed and consistency to a process buckling under 2.6 million disputes a year. They can also embed bias or error at scale if left unexamined. Pallone's inquiry doesn't assume the worst. It asks for transparency, which is the minimum standard for a process that ultimately shapes what people pay for their own healthcare. Whether the six firms respond with real answers, and whether Congress acts on what it learns, will say a lot about whether the No Surprises Act can keep the promise it made back when it passed.