HR-10788-119
Referred to the Committee on Energy and Commerce, and in addition to the Committees on Education and Workforce, and Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsored by Frank Pallone (D-NJ)
What it does
For out-of-network services and air ambulance trips furnished on or after January 1, 2028, the bill would end the independent dispute resolution process under the No Surprises Act. It would instead make the plan's "qualifying payment amount" (a median in-network rate) the out-of-network rate. For 2028, that amount would be based on January 31, 2019 median contracted rates, adjusted for inflation (CPI-U), and then adjusted by CPI-U each later year. It would also require insurers to pay within 30 days after the bill is sent, direct HHS, Labor and Treasury to update the rules within 180 days (an interim final rule is allowed), require annual audits of at least 25 plans' claims data and public release of findings, and bar judicial review of the rate methodology. It amends the Public Health Service Act, the Internal Revenue Code and ERISA.
Who benefits
Employers that sponsor health plans and insurers, which could pay lower and more predictable out-of-network rates and avoid arbitration costs. Plan enrollees, who might see lower premiums if those savings are passed through. Providers who bill the plan-set amount might receive payment within a set 30-day window instead of waiting on arbitration. Federal regulators gain a single, uniform payment rule to administer, and the public gains access to audit findings.
Who is hurt
Out-of-network physicians, emergency and anesthesiology groups, hospital-based practices and air ambulance operators, who could no longer appeal to an arbitrator for payment above the plan's median in-network rate. Providers in high-cost areas, or those whose rates have risen faster than inflation since 2019, may be paid less than under arbitration. Private-equity-backed physician staffing firms that rely on arbitration outcomes may lose revenue. Providers and others who want to challenge the rate methodology would be barred from court review. Regulators would carry added rulemaking and audit work.
Supporters argue
Supporters argue that arbitration awards have often landed well above median in-network rates, pushing up costs that flow into premiums for employers and workers. They contend a fixed benchmark tied to 2019 median rates plus inflation, with 30-day payment and public audits, would make payment faster, cheaper and more predictable while keeping patients protected from surprise bills.
Opponents argue
Opponents argue that removing arbitration leaves insurers to set the benchmark and weakens providers' ability to negotiate, which could push some physicians and air ambulance operators out of networks or out of business. They contend a 2019 baseline adjusted by CPI-U may not track actual costs, and that barring judicial review leaves providers no way to challenge the methodology.
Constitutional context
Congress regulates health insurance and provider payment under the Commerce Clause and the Necessary and Proper Clause, as upheld in the framework of NFIB v. Sebelius (2012). The bar on judicial review of the rate methodology raises questions about Article III review and possible due process or takings claims by providers, and Loper Bright (2024) makes it more significant that agencies would write the methodology.
Checks and balances
Executive agencies (HHS, Labor, Treasury) gain rate-setting rulemaking authority, and courts lose the power to review the methodology; Congress keeps oversight through the audit reports submitted to it.
Historical precedent
The No Surprises Act (2020) created the current arbitration process, and the 2022 rules and litigation over the qualifying payment amount (such as the Texas Medical Association cases) concerned the same benchmark.