Federal Independent Dispute Resolution (IDR) Process

If a payer or provider is unable to reach a resolution on the value of the Qualifying Payment Amount (QPA) by the end of the 30-day period allowed, both parties must then enter the Federal Independent Dispute Resolution (IDR) process. Think of this like the Mediation process in court cases.

Determining a fair payment amount

Either the payer or provider involved with the furnished services is able to submit an IDR request within 4 business days after the 30-day open negotiation period ends. The goal of the IDR process is to determine a fair payment amount for items and services rendered if the open negotiation period fails to reach a resolution. After a significant number of IDR applications got rejected for errors in the submission process, The Centers for Medicare and Medicaid Services (CMS) issued a job aid to assist those creating an IDR request, minimize rejections, and offer clarity on what is required for review.

A certified IDR entity, which is a third-party organization approved by the United States Department of Health and Human Services (HHS) that must meet a specific set of requirements, gets selected to review the dispute. CMS puts the burden of IDR entity selection on whichever party did not initiate the IDR and that IDR entity must not have any conflicts of interest that would impact the final payment determination.

In the first iteration of the No Surprises Act (NSA), IDR entities were instructed to review the expected payment amounts submitted by the provider and insurer and select the amount closest to the Qualifying Payment Amount (QPA). Providers were understandably concerned about the fact that the QPA calculation came from the insurer, so if a QPA was considerably lower than the provider expected, the result of the IDR process would inherently favor the insurer. The vocal outcry was swift and effective in August 2022. The federal government published an interim final rule that updated numerous aspects of the IDR process and final payment determination. 

The Updated Rule

Overall, the updated rule requires greater transparency in the QPA calculation process and instructs the IDR entity to consider additional information submitted by both parties as part of the review process.

Additional information includes:

• Level of training, the experience of the provider or facility that furnished services
• Quality and outcome measurements of that same provider or facility
• Market share of the provider or facility or the market share of the plan in the geographic region of the furnished services
• Facility teaching status, case mix, and scope of services
• Demonstration of good faith efforts (or lack thereof) made by the furnishing provider or facility or issuer to enter into network agreements with each other
• If applicable, contracted rates between the two during the previous four plan years

Downcoding

During the QPA calculation process, the payer or issuer may downcode an item or service. The final rule defines “downcode” as, “The alteration, addition, or removal by a plan or issuer of a service code to another service code, or the alteration, addition, or removal by a plan or issuer of a modifier if the changed code or modifier is associated with a lower QPA than the service code or modifier billed by the provider, facility, or provider of air ambulance services.”

When an item or service gets downcoded, the issuer must provide the following to the provider or facility:

• Documentation of which item or service has been downcoded and why the item or service was downcoded
• The QPA based on the downcoded item or service as well as the QPA had the item or service not been downcoded

The provider can review accordingly and provide documentation to support the original coding, or, if the downcode is agreed upon, the provider can negotiate what they believe to be a fair payment rate for the downcoded items or services. Once again, all this information is shared with the IDR entity if no resolution is reached in the open negotiation process.

The IDR entity thoroughly reviews the laundry list of documentation and requirements laid out above. Finally, after the review is complete, the IDR entity is required to explain its final payment determination along with supporting rationale to the provider, payer, and federal government 30 business days after the IDR has been selected.

As of September 2022, the backlog of open IDR requests exceeded 46,000 and the number of resolved disputes was about 1,200. This is likely due to the clinical expertise required and the time-intensive nature of the requirements laid out. When you add in the time it takes for a provider or payer to accurately and completely enter the information required to initiate an IDR dispute, the entire process becomes exponentially difficult.

The IDR remains embroiled in lawsuits and continues to draw ire from providers who believe the current guidance for dispute resolution does not treat patients, providers, and payers equally. However, we believe it is mutually beneficial for all parties involved to resolve payment disputes in the 30-day open negotiation period. The importance of resolution cannot be overstated.

Otherwise, the timeline to payment is extended indefinitely and the administrative burden significantly increases for both sides. In the long term, the IDR process may get smoother and more efficient, but in the short term, avoiding it altogether where possible would be the least disruptive and most timely option.

How does the NSA interact with other transparency rules?

The NSA takes hospital and health plan transparency laws a step further:

• Data needs to not only be published but proactively shared whenever a service is scheduled
• Good Faith Estimates (GFE) are legal documents, and patients are given recourse if their final bill is $400 greater than the original estimate
• Within the same bill (the Consolidated Appropriations Act), there are additional transparency-related clauses that augment the other transparency rules

While legislators tend to consider all legislation and rules of price transparency as one collective, knowing how they interact and affect each other is essential for getting the full picture of price transparency legislation.