What's Happening?
A recent study published in Health Affairs by researchers from Georgetown University has revealed that the independent dispute resolution (IDR) process under the No Surprises Act has incurred significant costs. Between 2022 and 2024, the IDR system cost approximately $5 billion to manage. This includes $2.24 billion in additional payments from health plans to providers, $1.9 billion in internal costs for payers and providers, and $656 million in fees for IDR entities. The IDR process, which uses a baseball-style arbitration method, was designed to protect patients from unexpected out-of-network charges. However, the volume of disputes has far exceeded federal estimates, with over 3.3 million disputes filed by May 2025, including those from air ambulances. The resolution rate has improved over time, reaching 41% by the end of 2023, but the high volume has led to delays in meeting the 30-day deadline for payment determinations.
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Why It's Important?
The findings of this study highlight the financial burden that the IDR process under the No Surprises Act places on the healthcare system. The significant costs associated with managing these disputes could lead to higher overall healthcare costs and increased consumer premiums. The study also points out that a small number of providers are responsible for a large portion of the disputes, which raises questions about the efficiency and fairness of the current system. The growing median payouts through IDR, which were 459% above the qualifying payment amount in late 2024, suggest that the arbitration process may be leading to inflated costs. This situation underscores the need for potential policy adjustments to reduce the use of IDR and control the size of awards.
What's Next?
The study suggests that policymakers may need to consider steps to reduce the reliance on the IDR process and address the size of the awards being granted. This could involve exploring policy levers to streamline the process and ensure that it is used more judiciously. Additionally, there may be a need to address the concentration of disputes among a small number of providers to prevent potential abuse of the system. As the healthcare industry continues to adapt to the No Surprises Act, stakeholders will likely engage in discussions to refine the IDR process and mitigate its financial impact.
Beyond the Headlines
The study's findings also raise ethical and legal questions about the arbitration process and its implications for healthcare providers and patients. The concentration of disputes among a few providers suggests potential strategic behavior that could undermine the intent of the No Surprises Act. Furthermore, the delays in resolving disputes highlight the challenges of implementing a fair and efficient arbitration system. These issues may prompt further scrutiny and calls for reform to ensure that the IDR process aligns with the goals of protecting patients and maintaining a sustainable healthcare system.
