As ACR members, you probably have heard about the No Surprises Act (NSA) which prohibits doctors, hospitals and other covered providers from billing more than the “in-network” approved cost sharing amount, even in the case of out-of-network services (read more in the April 2023 edition of RADLAW). Since the cost of the out-of-network provider’s service is not covered by a contract between the provider and the insurer, the actual cost amount will need to be negotiated between the provider and insurer. In this edition of RADLAW, we will explore the basics of this independent dispute resolution (IDR) process.

The NSA establishes an IDR process for the negotiation of the cost of out-of-network services. This is a federal process which the majority of states follow; however, some states have established their own IDR processes. Please consult your state or federal regulators or legal counsel to determine whether your state law or the federal process will apply.²

You may provide an imaging service but are not in-network for the patient’s insurance plan. The patient’s insurer provides a payment that does not fully compensate you for your services. To obtain higher payment for your services, you must dispute the payment and initiate the claims process under the IDR.

Since the cost of out-of-network provider's service is not covered by a contract between the provider and the insurer, the actual cost amount will need to be negotiated between the provider and insurer.

These are the fundamental steps for this process:^1,2

Step 1:  Provider files a claim for payment for services with the patient’s insurer.

1. The insurance plan then has 30 days in which to make an initial determination of whether or how to cover the claim. 
2. The insurer can decide to deny or pay the claim or adjust its payment amount.
3. If the plan decides to pay or adjust the cost sharing amount, the plan bases its calculation on its Qualified Payment Amount (QPA), which is unique to the plan and is the median contracted rate for the same or similar service as the plan’s in-network benefits to the patient.

Step 2:  Once the insurance plan makes its determination (to deny or make a payment), negotiations can be opened. 

1. Either the plan or the provider may initiate the negotiations by providing notice using the standard form. 
2. Both parties must then engage in 30 business days of negotiations before entering the federal IDR process.
3. If no agreement is reached between the parties, then either party can initiate the federal IDR process within four business days of the open negotiations’ conclusion.

Step 3: Federal IDR Process

1. To initiate the federal IDR process, the party must submit written notice using the standard form. 
2. The parties have 10 business days to choose a certified IDR entity and each submit their proposed payment amount. 
3. If the parties reach a settlement on their own once this review has begun, the parties must each pay half of the IDR entity’s fee unless they otherwise agree to allocate the fee.
4. The certified IDR entity selects one of the two offers within 30 business days. 
5. The IDR entity notifies the parties in a written decision. 
6. Once the certified IDR entity selects an offer, the plan has 30 days to make any additional payments. 

So, what are the consequences of the federal IDR process for plans, providers and patients? The federal IDR process is considered a last resort in the event the provider and plan negotiations fail. If the parties do not have a state option and choose to use the federal IDR process, there is incentive for both parties to make reasonable offers since one of the two offers will be chosen. The parties must be able to justify their offer amount as very high or very low offers could possibly result in the other party’s offer being selected.³

The party whose offer is not selected by the certified IDR entity is responsible for paying the IDR fees. In 2023, these ranged from $350–700 for a single determination.³

One tactic that has been employed by insurers is to make an initial payment that is significantly below the insurer’s QPA. This allows the insurer to maintain its cash flow but creates cash flow issues for the provider. If the provider does not participate in any plan networks, the potential cash flow issue could be significant as the process could take over six months.³ When an insurer’s individual QPA calculations create lower out-of-network rates, their in-network rates are also depressed, resulting in higher burdens to ACR members in negotiating their contracts with these insurers.

There are penalties for incorrectly billing patients or processing claims. Under federal law, the violating insurer can be charged up to $100 per day per beneficiary. If a provider sends incorrect bills, the penalty is up to $10,000 per violation. States also may have additional authority to enforce their laws and issue penalties.³

Earlier this year, the ACR reported that providers succeeded in more than 75% of initiated disputes under IDR. Moreover, the resulting offer for providers was higher than the insurer’s QPA in over 80% of the determinations. For imaging services, the median prevailing offer was more than 300% of the QPA. 

Patients will not feel the impact of the decision made under the IDR process. The out-of-network provider is only allowed to bill the patient for the applicable in-network cost for a surprise out-of-network bill regardless of the IDR outcome. The ACR has emphasized while participating in the NSA court challenges to the federal IDR regulations that we support patients getting out of the middle of provider-payer disputes.

Certified IDR Entity

A Certified IDR Entity is a third-party organization that has been certified by the federal government to arbitrate the payment amount between plans and providers. The organization must meet certain standards that include having 1) sufficient arbitration and healthcare claims administration experience to make the payment determinations; 2) sufficient personnel to perform these determinations; 3) current accreditation from a nationally recognized and relevant accrediting organization; 4) process to determine conflicts of interest; and 5) ability to maintain confidentiality of identifiable health information. Find a Certitied IDR Entity  by reviewing the CMS listing which is updated as additional organizations become certified. In making its selection, the IDR entity will consider information including the QPA, the provider’s practice size, practice specialty, market share and patient population complexity. The IDR entity cannot consider customary or billed charges, or rates of government reimbursement programs.^1,3