Surprise Billing: Independent Dispute Resolution Process

Surprise Billing: Independent Dispute Resolution Process

April 1, 2022
Surprise Billing: Independent Dispute Resolution Process
This In Focus summarizes statute and interim final rule
This methodology does not apply in all situations. If a state
(IFR) regulations to describe the independent dispute
has its own surprise billing law that pertains to a given plan
resolution (IDR) process available to insurers and out-of-
type, provider type, and service, the state law methodology
network providers in certain surprise medical billing
would apply. In addition, if a state has an all-payer model
situations. It accounts for IFR aspects invalidated in the
agreement, the amount designated under the agreement
Texas Medical Association v. U.S. Department of Health
would apply.
and Human Services decision but predates a federal
response to that decision.
Initial Payment
Insurers are required to make an initial payment (or notice
For more information on surprise billing in general and
of denial of payment) to a provider within 30 calendar days
corresponding consumer protections, see CRS Report
of receiving a bill for services. Federal law and regulations
R46856, Surprise Billing in Private Health Insurance:
do not specify how to determine the amount of the initial
Overview of Federal Consumer Protections and Payment
payment, though it should be an amount that the insurer
for Out-of-Network Services. For more information on the
intends to be payment in full (i.e., not a first installment).
litigation related to the IDR process, see CRS Insight
IN11906, No Surprises Act’s Independent Dispute
Open Negotiation
Resolution Process and Related Litigation.
After the insurer makes an initial payment (or notice of
denial of payment), the provider or the insurer may initiate
Surprise Billing
open negotiations during the subsequent 30-business-day
In general, surprise billing occurs when consumers are
period by providing a notice to the other party. The parties
unknowingly, and potentially unavoidably, treated by
then have 30 business days from the date the notice was
providers outside of their health insurance plan’s network.
sent (i.e., the open negotiation period) to reach an
As a result, these consumers unexpectedly receive larger
agreement on the payment amount. If the negotiations are
bills than they would have received had the provider been
successful, the insurer is required to pay to the provider the
in their plan’s network. To address surprise billing,
agreed-upon amount (or, after accounting for the initial
Congress passed the No Surprises Act, which was part of
payment, any remaining balance) within 30 calendar days.
the Consolidated Appropriations Act, 2021 (P.L. 116-260).
Independent Dispute Resolution Process
Among other requirements, the No Surprises Act specified
If a provider and insurer cannot reach an agreement during
a methodology to determine the amount insurers must pay
the open negotiation period, then either party may initiate
to providers for services provided in the following surprise
the IDR process. The IDR process is a baseball-style
billing situations: out-of-network emergency services,
arbitration process under which the provider and the insurer
nonemergency services provided by an out-of-network
each submit to a neutral, certified third-party arbitrator (i.e.,
provider at an in-network facility, and out-of-network air
IDR entity) their best and final offers that represent the
ambulance services. (For post-stabilization services [in
amount that each party considers adequate payment. The
limited circumstances] and out-of-network nonemergency,
IDR entity must review both offers and make a
non-ancillary services provided at an in-network facility,
determination based on certain factors as to which of the
the federal methodology would not apply if notice and
submitted offers is the final payment amount.
consent requirements were satisfied.) The amount an
insurer pays, when combined with amounts consumers pay
The provider and the insurer have four business days
in cost sharing, represents the total amount a provider
following the end of the open negotiation period to initiate
receives as payment for services.
the IDR process by submitting a notice to the other party
and the federal government. In some instances, a provider
Methodology to Determine Insurer
and insurer seeking resolution regarding multiple identical
Payment to Providers
(or similar) services can combine (or “batch”) the services
Under the federal methodology, insurers must make an
to be considered as part of a single IDR determination.
initial payment (or notice of denial of payment) to the
provider, after which the provider or the insurer may initiate
If initiated, the parties have three business days to jointly
open negotiations to determine an agreed-upon payment
select an IDR entity. If the parties do not make a selection
amount for the services. If negotiations are unsuccessful,
by the deadline, they must notify the Departments of the
the parties may use an IDR process, which is a “baseball-
Treasury, Labor, and Health and Human Services (tri-
style” arbitration process.
agencies) on the fourth business day and the tri-agencies
will randomly assign an IDR entity within six business days
of the IDR process initiation. Once selected, the IDR entity
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Surprise Billing: Independent Dispute Resolution Process
must attest whether it satisfies conflict of interest
status, case mix, and scope of services of the facility that
requirements within three business days. The IDR entity
furnished the service; and (5) demonstrations of good faith
also must determine whether the IDR process applies to the
efforts (or lack thereof) made by the provider or the insurer
situation and, if it is determined that the process does not
to enter into network agreements and, if applicable,
apply, the IDR entity must notify the tri-agencies and the
contracted rates between the provider and the insurer during
parties within three business days of the determination.
the previous four plan years.
At the time the IDR entity is selected, both parties must pay
For air ambulance situations, the IDR entity is required to
an administrative fee to the tri-agencies for participating in
consider the following (if submitted): (1) quality and
the IDR process. This fee amount is set annually so that the
outcomes measurements of the provider that furnished the
total amount of fees collected equals the total estimated cost
service; (2) acuity of the individual receiving the service or
for the tri-agencies to carry out the IDR process. For 2022,
the complexity of furnishing the service to the individual;
the administrative fee is $50. This fee is initially collected
(3) training, experience, and quality of the provider that
by the IDR entity, which then remits the fee to the
furnished the service; (4) ambulance vehicle type, including
government.
the clinical capability level of the vehicle; (5) population
density of the pick-up location (e.g., urban, suburban, rural,
No later than 10 business days after the IDR entity has been
or frontier); and (6) demonstrations of good faith efforts (or
selected, the provider and the health insurer each must
lack thereof) made by the provider or the insurer to enter
submit to the IDR entity an offer for the payment amount;
into network agreements and, if applicable, contracted rates
any information requested by the IDR entity; and, if so
between the provider and the insurer during the previous
choosing, other information related to the offer. At this
four plan years.
time, both parties must pay a fee to the IDR entity for its
payment determination services. (This fee is in addition to
In all situations, the IDR entity is prohibited from
the administrative fee.) Each IDR entity can determine its
considering usual and customary charges, the amount that
own fee amount, but generally these fees will fall in
would have been billed by the provider for the service had
between a range determined annually by the federal
the surprise billing protections not applied, and the amounts
government. For 2022, the fee range for a single
that public payors (including Medicare, Medicaid, the
determination is $200-$500; for batched determinations, it
Children’s Health Insurance Program [CHIP], or
is $268-$670. IDR entity fees are held in a trust or escrow
TRICARE) would pay or reimburse the provider for the
account until a final determination is made.
service.
After the IDR process is initiated but before there is a
After considering the qualifying payment amount,
determination, insurers and providers may continue to
additional circumstances, and any additional information,
negotiate a payment amount. If the parties reach an
the IDR entity must select the offer that best represents the
agreement through negotiation during this period, the
value for the services under consideration. The IDR entity’s
agreed-upon rate is treated as the final payment rate. The
decision is binding on both parties, unless there is fraud or
parties would split the IDR entity fee unless the parties
an intentional misrepresentation of facts. A binding
agree otherwise. The administrative fee is nonrefundable.
payment determination generally is not subject to judicial
review except in limited situations.
The IDR entity has 30 business days from the entity’s
selection to determine which of the submitted offers
After the IDR entity makes a decision, if the payment
represents the payment amount. To make this decision, the
decision is more than the initial payment, the insurer must
IDR entity must consider the insurer’s 2019 median in-
pay the remaining balance to the provider within 30
network amount for the same or similar service provided by
calendar days of the decision. If the payment decision is
a provider in the same or similar specialty in the same
less than the initial payment, the provider must reimburse
geographic region (indexed for inflation), which is referred
the insurer within 30 calendar days of the decision. The
to as the qualifying payment amount, or QPA. The IDR
party whose offer is not chosen is responsible for paying the
entity also must consider a set of additional circumstances
IDR entity fee, and the IDR entity must refund the IDR
if submitted by the parties (specified below), any
entity fee paid by the party with the chosen offer within 30
information requested by the IDR entity, and any other
business days.
information about the submitted offer supplied by the
provider or the insurer. To be considered, this information
During the 90 calendar days after an IDR decision has been
must be credible and must not include information that the
made, the party that initiated the IDR process may not
IDR entity is prohibited from considering.
subsequently attempt to initiate the IDR process to seek a
payment determination involving the same opposing party
For all situations, excluding air ambulance, the IDR entity
and the same (or similar) services that were subject to the
is required to consider the following (if submitted): (1) the
initial determination. In instances where the same parties
level of training, experience, and quality and outcomes
are again in a surprise billing situation regarding the same
measurements of the provider that furnished the service; (2)
(or similar) service and the open negotiation period for such
the market share of the provider or insurer in the geographic
services ends during this 90-day “cooling-off” period, either
region where the service was provided; (3) the acuity of the
party may initiate the IDR process within the 30 business
individual receiving the service or the complexity of
days following the cooling-off period.
furnishing the service to the individual; (4) the teaching
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Surprise Billing: Independent Dispute Resolution Process

IF12073
Ryan J. Rosso, Analyst in Health Care Financing

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