Understanding the No Surprises Act’s Independent Dispute Resolution (IDR)
The No Surprises Act went into effect on January 1, 2022. Passed as part of a COVID-19 relief bill, The No Surprises Act was designed to minimize surprise medical bills for patients who received unavoidable out-of-network medical care, to create new health insurance appeal processes, and eliminate out-of-network cost-sharing.
One of the most critical – and complicated – provisions of the No Surprises Act is the Independent Dispute Resolution (IDR). The Independent Dispute Resolution lays out the process of settling a health insurance appeal – key for determining costs for payers, providers, and patients.
So, how is the Independent Dispute Resolution (IDR) defined in the No Surprises Act? How are health appeals handled, how does the arbitration process work, and what does it mean for health care costs? We examine a critical piece of the No Surprises Act – the Independent Dispute Resolution (IDR) – and what it means for how health insurance appeals are resolved.
What Is The No Surprises Act?
The No Surprises Act protects patients covered under group and individual health plans from receiving “surprise” medical bills and prohibits providers from billing patients for more than the in-network cost-sharing obligations as outlined by their insurance.
The No Surprises Act:
- Prohibits surprise bills for most emergency services, even if they are out-of-network.
- Bars out-of-network cost-sharing for most emergency and some non-emergency services. The No Surprises Act prohibits providers from charging more than in-network cost-sharing for services.
- Bans out-of-network charges and balance bills for certain services – including anesthesiology and radiology – performed by OON providers.
- Requires that providers and facilities give patients an easy-to-understand written explanation of applicable billing protections, who to contact with concerns, and that patient consent is required to waive billing protections.
More importantly – at least for this blog – the No Surprises Act also creates a process for providers and payers to negotiate the correct billing amounts for out-of-network services, and a separate and independent resolution system when disputes arise and negotiations fail. This negotiation – and the prices they decide – is called the Independent Dispute Resolution, or IDR.
What is the Independent Dispute Resolution (IDR)?
The No Surprises Act carves a new framework between payers (insurance companies) and providers (out-of-network professionals) to determine correct billing amounts for out-of-network services. When these parties cannot agree, a provider can initiate an independent dispute resolution, or IDR. Essentially, the IDR is a health insurance appeal that results in arbitration by a third party.
Before the No Surprises Act, out-of-network providers commonly billed their unadjusted rates directly to the patient. The patient was then responsible for filing a health insurance appeal (otherwise known as a claim) with their insurance to receive whatever reimbursement they could. The No Surprises Act changed this billing practice.
Moving forward, providers must determine the patient’s insurance standing and submit the out-of-network bill to their insurance. Insurance companies have 30 days to respond with the applicable in-network amount for the submitted claim and initial payment. If settled, the insurance company sends the patient notification of the health appeal, and the amount the patient still owes the provider. If and when things don’t go so smoothly, the Independent Dispute Resolution begins.
In October 2021, a board of federal agencies including the IRS, Department of the Treasury, Department of Labor and others, published the final details on the No Surprises Act’s Independent Dispute Resolution (IDR) provision. The report outlined the specific mechanics of the federal IDR – the process by which health insurance appeals are resolved.
In short, the IDR Rule:
- Established the QPA as the presumptive reimbursement amount – the central determinant – to be considered by IDR arbitrators.
- Determined that an arbitrator may only select a different reimbursement amount if the QPA amount is rebutted by credible evidence, as outlined in the No Surprises Act and the IDR Rule.
- Confirmed and details the vagaries and holes in No Surprises Act’s IDR and health appeals processes.
- Explained that arbitrators’ services are sought and approved by the board of federal agencies.
Key Aspects of the IDR – aka Arbitration – Process
QPA
The Qualifying Payment Amount (QPA) is the central factor y arbitrators consider in an Independent Dispute Resolution (IDR). The Qualifying Payment Amount is defined as the median of an insurer’s contracted rates for a particular service, in a particular geography, for a particular market.
As mentioned above, the IDR Rule states that, absent credible evidence that the determined QPA is inappropriate, an arbitrator must select the QPA as the out-of-network rate in the IDR health appeal.
The QPA is not only the first and most concrete point of guidance in health insurance appeal arbitration – precise QPAs can directly impact health care costs. Because the QPA is central to what insurance companies pay healthcare providers, and thereby what patients and families pay for healthcare services, there are real consequences of how the QPA is calculated.
Other Factors Arbitrators May Consider
In order to rebuke reliance on the QPA, objecting parties must submit evidence for the IDR arbitrator’s consideration. Evidence addresses, but is not limited to, the following factors:
- The level of training and/or experience of the provider or facility.
- The quality and outcomes determiners of the provider or facility.
- The market share held by the out-of-network provider or facility or by the plan or issuer in the geographic region in which the item or service was provided.
- The patient acuity, and the complexity of services provided.
- The teaching status, case mix, and scope of services of the facility.
- Any good faith effort, or lack thereof, to join the insurer’s network.
- Any prior contracted rates over the previous four plan years.
What Comes Next
The IDR creates a new arbitration process to settle health appeals – and costs and payments. And, like with any other new law, the accompanying administrative work will likely be confusing and complex, especially in the first few months. It remains to be seen the exact challenges and sticking points to consider, as the No Surprises Act only went into effect in January.
To adapt to the health appeal changes the IDR requires, payers need a trustworthy partner in payment process and integrity. Alaffia Health’s integrated, turnkey solutions allow payers to successfully track and navigate the complexities of the IDR requirements, prevent errors and increase savings. Learn more today.