No Surprises Act Independent Dispute Resolution (IDR) Process Data Analysis for the First Half of 2023

The No Surprises Act (NSA), part of the Consolidated Appropriations Act, 2021 (P.L. 116-260), established various consumer protections related to surprise billing—that is, circumstances in which individuals receive large, unexpected medical bills when they are unknowingly, and potentially unavoidably, treated by out-of-network (OON) providers. The law generally recognizes surprise billing circumstances to include OON emergency services, OON nonemergency services provided during a visit at an in-network facility, and OON air ambulance services. In those situations, the NSA generally limits the amount consumers pay for care and specifies a methodology to be used to determine how much insurers must pay OON providers for care if the parties cannot agree on the payment amount. Under this methodology, either the insurer or the provider may initiate an independent dispute resolution (IDR) process before a private arbitrator (i.e., an IDR entity). The IDR entity selects between the parties’ payment offers after considering a list of statutory factors, including the qualifying payment amount (QPA) for an item or service, defined generally as an insurer’s 2019 median in-network rate for the item or service, indexed for inflation. In February 2024, the Departments of Health and Human Services, Labor, and the Treasury publicly made available certain data about the first two quarters of IDR operations in calendar year 2023. In general, the data show a continued increase in the use of the IDR process since it first became available in 2022. A total of 288,810 IDR disputes were initiated in the first two quarters of 2023, well above the total number of disputes initiated in all of 2022 (roughly 200,000 disputes). Providers initiated nearly all of the disputes in the first half of 2023 (over 99%). Providers with evidence of private equity affiliation were particularly heavy utilizers of the IDR process; those providers initiated over 70% of the disputes involving OON emergency/nonemergency services in each quarter and over 65% of the disputes involving OON air ambulance services in each quarter. The number of disputes rose over this period despite an increase in the administrative fee parties had to pay to access the IDR process (an increase from $50 to $350 per party per dispute during this period) and the fact that the median time to determination for a dispute involving OON emergency/nonemergency services was more than three months. One factor that may have contributed to providers’ willingness to use the IDR process during this period is providers’ general success with the process. Providers prevailed in a great majority of the payment determinations (approximately 77%), and a similar majority of selected offers (approximately 75%) were for an amount greater than the QPA. Emergency department services were the subject of the greatest number of payment determinations (over half of all determinations), and the median prevailing offer in those determinations was over two times the QPA. The volume of disputes and difficulties in determining dispute eligibility continues to present challenges to the federal IDR process, resulting in payment determinations often being made beyond statutory and regulatory timelines. However, there are signs of improvement. As examples, over twice as many disputes were closed in the first half of 2023 than in all of 2022 (134,036 disputes compared with 54,821 disputes); a smaller percentage of disputes were found to be ineligible during the first half of 2023 than in 2022 (22% of closed disputes in Q1 and Q2 of 2023 compared with 45% of closed disputes in 2022); and the percentage of disputes determined within statutory and regulatory timelines increased for both OON emergency/nonemergency service disputes and OON air ambulance service disputes from quarter 1 to quarter 2 of 2023 (10% to 17% and 7% to 35%, respectively). As the federal IDR process matures, continued analysis of future data is necessary to answer several open questions, including whether and how insurers respond to their general lack of success in the first half of 2023 and whether that response, in turn, alters provider behavior and affects use of the federal IDR process. Subsequent data may provide insights into any changes in IDR process utilization, the relative success rates of providers versus insurers, and whether such variations correspond to any changes or trends in the prevailing offer amounts.