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These bills can catch people off guard, especially in emergencies when they have no choice over which emergency room, doctors, or ambulance services treat them. Research released by Peterson-KFF in 2020 found this happened roughly in about 1 in 5 ER visits. Although, it can occur with planned care visits as well.
No matter the situation, surprise medical bills leave patients with unexpected costs.
The No Surprise Act aimed to eliminate this.
Passed in 2021 and taking effect in 2022, the law prohibits doctors, hospitals, and other healthcare providers from charging patients more than their plan’s in-network rate for certain situations, including:
If a patient receives one of these services, their cost will be limited to what they would pay in-network, even if the provider is technically out-of-network.
So, who covers the difference?
The No Surprise Act answered this question by setting up an Independent Dispute Resolution (IDR) process that removes patients from the financial debate between health plans and providers.
When it’s time to determine the payment to the out-of-network provider or facility, a third-party decision-maker, rather than the patient or the provider, may decide what the plan should pay.
This is done through the IDR process. However, before that happens, the following must take place:
If the negotiation period is unsuccessful, the health plan or the provider can start the IDR process. The federal IDR process applies to all self-funded group plans, but in some states, self-funded employer plans can choose to follow state rules instead.
The federal IDR process must be initiated within four business days following the end of open negotiations. Once it has started, a three-step process is followed to reach a conclusion.
Within 10 business days, both sides pick a third-party decision-maker that has been certified by the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury and submit payment offers. These are referred to as “IDR entities”.
This part of the process can take up to 30 days. In their review, the IDR arbitrators consider the QPA and other supporting materials such as provider’s or facility’s quality, market share, and complexity of population served. The arbitrators are not allowed to consider typical provider charges or public payers’ payment rates.
Once the IDR arbitrator decides, the health plan has 30 days to make the payment as decided. In the IDR process, it can take up to six months from the initial claim to final payment submission.
The Centers for Medicare and Medicaid Services (CMS) is responsible for implementing the law. Originally, CMS initially expected less than 20,000 disputes to use the process in 2022.
From April to September of 2022, about 90,000 disputes went through the federal IDR process.
This was far more than CMS initially expected with the majority of disputes filed by providers or consulting firms acting for provider groups. Health plans filed less than 1% of the total disputes.
Ultimately, the IDR process is meant to be a last resort if all other negotiations fail. It encourages both health plans and providers to make reasonable offers because one will be selected in what is called “baseball style” arbitration. If either side submits an extreme (or “outlier”) offer, it’s less likely to be chosen.
This incentive for everyone to offer fair amounts also extends to the IDR fees. According to the arbitration rules, the party whose offer is not accepted must pay the IDR fee. In 2023, these ranged from $350-$938.
It’s also important to note that health plans and providers may be issued penalties for not correctly covering surprise medical bills or sending incorrect bills to patients. Under federal law, plans who incorrectly process claims can be charged up to $100 per day per affected beneficiary. Providers face similarly steep fines with the penalty for incorrect billing up to $10,000 per violation.
Typically, patients should not be affected by the IDR process. The No Surprise Act ensures the out-of-network provider only bills the patient the applicable in-network amount for surprise out-of-network bills, no matter how much they are required to pay as a result of the IDR process. As soon as the patient pays this, they are no longer responsible.
Historically, out-of-network providers could charge outrageous prices, leaving patients scrambling to pay off bills.
The No Surprise Act and the IDR process works to keep this system in check, protect patients, and encourage all parties to resolve payment disputes quickly. Although early data shows the number of IDR arbitrations is higher than initially anticipated, there is still potential to increase the pressure on providers and plans to offer fair pricing.
For self-funded health plans, it’s critical to choose an integrated TPA partner that has the necessary compliance expertise and in-house resources to comply with IDR requirements and timeframes. To successfully navigate the IDR process, a TPA partner must have robust claim processing capabilities to ensure out-of-network claims are processed accurately in the first place.
To learn more about how Healthgram can help you navigate the IDR process, contact us today.
