Federal IDR Process Faces More Disputes Than Expected, Backlog Growing

Payers and providers are utilizing the independent dispute resolution (IDR) process far more than the government expected to resolve disagreements about payment for items and services covered by the New Surprises Act (NSA), according to a new government report.

From April 15 through September 30, 2022, payers and providers initiated over 90,000 disputes through the federal IDR portal. The volume was “significantly more than the number of disputes the Departments initially estimated would be submitted for a full year.”

In a 2021 interim final rule implementing NSA, the Departments—Health and Human Services (HHS), Labor, and the Treasury—estimated only 17,333 claims would be submitted as part of the federal IDR process each year. The federal IDR portal opened on April 15th, about 15 months after NSA was signed into law.

Payers and providers can submit a dispute to the IDR process if both parties fail to arrive at an agreed-upon payment amount during a 30-day open negotiation payment for items and services covered by NSA, which include surprise bills for emergency services, non-emergency items and services furnished by out-of-network providers at in-network facilities, and air ambulance services provided by out-of-network providers of air ambulance services.

Through the IDR process, an independent entity, either jointly selected by the disputing parties or the Departments, considers payment bids and supporting documentation to determine an appropriate reimbursement rate for the items or services in question.

The Departments had to delay the launch of the federal IDR portal after a lawsuit prompted changes to the implementation of the process. Specifically, the Departments updated how IDR entities should select the most appropriate payment bid.

During the second calendar quarter (April 15th through June 30th), disputing parties initiated 18,163 disputes. These disputes included those over items and services that would have been eligible for the Federal IDR process beginning January 1, 2022, when the surprise billing protections became effective, CMS noted.

By the third calendar quarter (July 1st through September 30th), there were four times more disputes at 71,915 disputes.

Most of the disputes submitted in both quarters were for emergency or non-emergency items or services. The vast majority of those disputes were also submitted by out-of-network healthcare providers and facilities.

Only about 23,100 disputes were closed during the period, with certified IDR entities reaching a payment determination in approximately 15 percent of closed disputes (3,576 disputes). They also found that about 69 percent of closed disputes (15,895 disputes) were ineligible for the federal IDR process.

The remaining closed disputes were either withdrawn by the disputing parties, were closed because the parties reached an outside settlement, or were closed for incorrect batching, data entry errors, unpaid fees, or other reasons.

The Departments said in the report that they are experiencing challenges determining the eligibility of the disputes since they are “requiring significantly more review and processing by certified IDR entities than initially anticipated.”

Eligibility for the IDR process depends on several factors, according to the report, including determining state versus federal jurisdiction, correct batching and bundling, compliance with applicable time periods, and completion of open negotiations.

From April 15th through September 30th, disputing parties that did not initiate the dispute challenged eligibility for the federal IDR process in 41,814 disputes, accounting for nearly half of those initiated.

As the IDR process gets bogged down in disputes, health payers are blaming providers for potentially misusing the process to settle payment disputes.

“The tens of thousands of arbitration claims filed by providers clearly demonstrate that more needs to be done to ensure that they don’t abuse the system for their financial gain,” David Merritt, senior vice president of policy and advocacy for the Blue Cross Blue Shield Association (BCBSA) said in a November 2022 statement.

A separate BCBSA report co-authored by America’s Health Insurance Plans (AHIP) found there were over 275,200 disputes submitted to the IDR process during the first nine months of 2022. They suspect that providers are sending claims in batches, leading to backlogs and unnecessary costs.

Providers have contended that the federal IDR process still favors payers despite updated language surrounding payment determinations.

According to the official report, the top initiating parties or their representatives from April 15th through September 30th included SCP Health, R1 Revenue Cycle Management, LogixHealth, Roundtable Medical Consultants, TEAMHealth, Envision Healthcare, Providence Anesthesiology, Singleton Associates, P.A., Gryphon Healthcare, and HCA Healthcare.

The top non-initiating party during the period was United Healthcare, which represented about a quarter of all disputes for emergency and non-emergency services, followed by Aetna, MultiPlan, Anthem, Cigna, BlueCross BlueShield of Texas, Clear Health Strategies, Florida Blue, BlueCross BlueShield of Illinois, and BlueCross BlueShield of Tennessee.