The No Surprises Act (Act) that took effect on January 1, 2022, has reportedly spared 9 million Americans from surprise medical bills; but it hasn’t made payment disputes between payors and out-of-network providers go away. The only surprise is that the arbitration system established to resolve these disputes is being swamped by the case load. At least that’s the key finding of a new Centers for Medicare & Medicaid Services (CMS) report.
The IDR Process
The Act bans labs and other providers from billing privately insured patients for more than the in-network cost-sharing due under the patient’s insurance. It also establishes a new independent dispute resolution (IDR), aka, “final offer” arbitration process for providers and payors to resolve disputes over the payment amount.
However, the CMS report finds that the IDR system has been encumbered by an unexpectedly large caseload. The federal Departments of Health and Human Services (HHS), Treasury, and Labor estimated that there would be 17,333 cases per year submitted to the IDR process. But according to the CMS report, over 90,000 IDR claims have been initiated—and that’s just for the first six months of 2022 when the system took effect. A report from America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association (BCBSA) finds that there were at least 275,000 total claims submitted during the first three quarters of the year.
Not only is dispute volume unexpectedly high, but individual disputes are taking longer than expected to resolve. “The primary cause of delays in processing disputes has been the complexity of determining whether disputes are eligible for the Federal IDR process,” the CMS report explains. Only 22,194 of the over 80,000 disputes involving emergency and non-emergency items or services were closed between April 15 and September 30 in 2022.
CMS also sheds light on who’s initiating the disputes. According to the report, many of the most frequent initiators “are large practice management companies, medical practices, or revenue management companies representing hundreds of individual practices, providers, or facilities.” For example, the party that initiated the most disputes, SCP Health, “represents thousands of clinicians across multiple states.”
Top 10 IDR Dispute Initiators (Out of Network Emergency and Non-Emergency Items or Services, April 15 – September 30, 2022)
|Initiating Party or their|
|2022 Q2||2022 Q3||Overall||Percent of All|
Emergency and Non-Emergency Services
|R1 Revenue Cycle Management||1,563||8,304||9,867||11%|
|Roundtable Medical Consultants||1,611||3,178||4,789||6%|
|Singleton Associates, P.A.||670||1,454||2,124||2%|
Independent Dispute Resolution (IDR) Process April 15 – September 30, 2022.
Notes: Parties and their representatives were identified and aggregated by the email domain of the initiating party on the Notice of IDR Initiation.
Insurers are accusing providers of causing the backlog by abusing the system. Meanwhile, providers continue to contend that the IDR process is unfairly skewed in favor of insurers to the extent that the regulations require arbitrators to look to the so-called “qualifying payment amount” (QPA), essentially, the insurer’s median in-network rate for similar services in the geographic region as of 2019, indexed for inflation by the Consumer Price Index for All Urban Consumers (CPI-U), as the primary factor for determining the reasonable payment amount for an item or service. Litigation over the issue continues, including a federal court case brought by the Texas Medical Association challenging the legality of the QPA rule.