What to expect in the NSA’s independent dispute resolution process

Who is involved in the independent dispute resolution process (IDR)?

The three main parties involved in the IDR process are: the healthcare provider, the health insurance company, and the independent dispute resolution entity.

The healthcare providers include air ambulance providers, out-of-network providers, and healthcare facilities. The provider delivers services to a patient, sends a claim notifying health plans of the care delivery, and may receive payment from the health insurer in return. Health plans can also reject a claim.

In the past, a claim rejection would result in surprise medical bills for patients, who were suddenly deemed financially responsible for the claims their payers rejected. However, under the NSA, it is now a potential trigger for the IDR process.

Health plans that fall under the NSA provisions include plans in the group health insurance marketplace, Federal Employees Health Benefits (FEHB) Program carriers, and health insurance issuers.

Whereas the provider and payer participants are broadly defined, only a narrow number of organizations qualify as certified IDR entities eligible to engage in the IDR process. These are all listed on the CMS website. As of May 7, 2023, thirteen organizations were considered certified independent dispute resolution entities.

Organizations seeking to become certified as IDR entities must be able to demonstrate certain areas of expertise such as arbitration and managed care work. They also have to provide a staffing plan and organizational structure, a conflict of interest attestation, a process for protecting individually identifiable health information, and more.

Each entity has its own set of fees that fall within a range defined by the Departments of Health and Human Services, Labor, and the Treasury (the Departments). They can set their fees based on the type of determination: single, batched, or tiered.

What are the components of the process?

The open negotiation period precedes an independent dispute resolution. During this phase, payers and providers have the opportunity to settle their payment disputes without bringing in a third party. However, parties rarely settle negotiations during the open negotiation period, according to a report from the Government Accountability Office (GAO). As a result, this phase has been rendered largely meaningless.

After the open negotiation period concludes, the payer and provider will choose an IDR entity from the list of certified IDR entities. In order to participate, the entities cannot have any conflicts of interest.

By this point, the payer and/or provider should have compiled all of the relevant information around the items or services at the center of the dispute, such as a complete explanation of benefits, the dispute’s claim numbers, and more. Also, they need to have an attestation stating that the subject of the dispute is within the scope of IDR and whichever party initiates the IDR needs to provide the non-initiating party’s contact information.

Importantly, non-initiating parties—who are often payers—have a chance to object to the IDR entity after the process starts. They have three days after they receive the Notice of IDR Initiation to either affirm or reject the proposed IDR entity. If they reject the suggested entity, the non-initiating party must reply with an alternative option. Failure to reply within the allotted timeframe will result in automatic approval of the suggested IDR entity.

Second, payers and providers submit their payment offers to the entity along with supporting evidence. They must also pay the administrative fee to their certified IDR entity. In December 2023, CMS finalized a rule that fixed the administrative fee at $115 per party.

Third, IDR entity decides between the disputing parties’ offers. There are a couple of factors that IDR entities will look for when making their determinations.

IDR entities have to determine the qualifying payment amount (QPA)—or the payer’s in-network contracted rate in that insurance market and geographic area for the same item or service. They might also look at the provider’s market share and patient mix, according to the Peterson-KFF Health System Tracker. However, they cannot reference certain factors like public payer rates.

Organizations can either request a batched determination, in which parties include up to 25 line items and services involved in the disputed patient encounter. In a single determination, parties dispute individual line items. A “fixed tiered fee” refers to the fee associated with submitting multiple batches for review.

What is the timeline for health plans engaged in an IDR?

Before a payer can start or engage in an IDR, the payer and provider parties must take at least 30 days to negotiate the payment. If the 30-day open negotiation period is unsuccessful, the companies have 4 business days to initiate a dispute. In some cases, the Departments may allow more time. Such extensions are posted on the CMS website.

Once the IDR process is underway, the payer and provider have up to 10 business days to submit their payment offers to a certified IDR entity, according to the Peterson-KFF Health System Tracker. The chosen IDR entity has 30 days for arbitration. Then, the payer has 30 calendar days to submit the additional payments, if required. The certified entity returns the administrative fee to the successful party within 30 days of the determination.

All in all, the process can take more than half a year.

Backlog realities

While this outline seems fairly straightforward—open negotiation, initiate IDR process, submit payment offers, receive IDR entity’s selection, and send payments if necessary—the reality has been much more complex.

The Departments vastly underestimated the number of disputes, according to a GAO report. As of June 2023, GAO found that healthcare stakeholders initiated 490,000 disputes—a little more than 22 times the Departments’ projections of 22,000 disputes in 2022. More than six out of ten disputes remained unresolved at the time of GAO’s report due to challenges assessing eligibility for the IDR process.

The policy’s challenges have left it open to criticism from payers and providers alike. In a February 2024 letter to the Departments, the American Hospital Association (AHA) has called for greater oversight of payers under the NSA and better regulation of the qualifying payment amount calculations. The letter alleged that payers “consistently are not complying with IDR determinations,” often delaying payments to providers once the determination was made.

However, for payment disputes that do make it through the entire IDR process, providers tend to prevail, a Commonwealth Fund post highlighted. Provider organizations won more than three-quarters of finalized disputes in the first half of 2023 and typically received 322 percent of the QPA when they succeeded. In contrast, payers that won received 100 percent of the QPA.

Despite the initial setbacks, stakeholders may be adjusting to the process. Most claims avoid entering the IDR process, the Commonwealth Fund post noted. The overall timeframe for these decisions may shorten as payers and providers acclimate to the procedure.