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April 1, 2022
Surprise Billing: Independent Dispute Resolution Process
This In Focus summarizes statute and interim final rule
(IFR) regulations to describe the independent dispute
resolution (IDR) process available to insurers and out-of-
network providers in certain surprise medical billing
situations. It accounts for IFR aspects invalidated in the
Texas Medical Association v. U.S. Department of Health
and Human Services decision but predates a federal
response to that decision.
For more information on surprise billing in general and
corresponding consumer protections, see CRS Report
R46856, Surprise Billing in Private Health Insurance:
Overview of Federal Consumer Protections and Payment
for Out-of-Network Services. For more information on the
litigation related to the IDR process, see CRS Insight
IN 11906, No Surprises Act's Independent Dispute
Resolution Process and Related Litigation.
Surprise Billing
In general, surprise billing occurs when consumers are
unknowingly, and potentially unavoidably, treated by
providers outside of their health insurance plan's network.
As a result, these consumers unexpectedly receive larger
bills than they would have received had the provider been
in their plan's network. To address surprise billing,
Congress passed the No Surprises Act, which was part of
the Consolidated Appropriations Act, 2021 (P.L. 116-260).
Among other requirements, the No Surprises Act specified
a methodology to determine the amount insurers must pay
to providers for services provided in the following surprise
billing situations: out-of-network emergency services,
nonemergency services provided by an out-of-network
provider at an in-network facility, and out-of-network air
ambulance services. (For post-stabilization services [in
limited circumstances] and out-of-network nonemergency,
non-ancillary services provided at an in-network facility,
the federal methodology would not apply if notice and
consent requirements were satisfied.) The amount an
insurer pays, when combined with amounts consumers pay
in cost sharing, represents the total amount a provider
receives as payment for services.
Methodology to Determine Insurer
Payment to Providers
Under the federal methodology, insurers must make an
initial payment (or notice of denial of payment) to the
provider, after which the provider or the insurer may initiate
open negotiations to determine an agreed-upon payment
amount for the services. If negotiations are unsuccessful,
the parties may use an IDR process, which is a baseball-
style arbitration process.
This methodology does not apply in all situations. If a state
has its own surprise billing law that pertains to a given plan
type, provider type, and service, the state law methodology
would apply. In addition, if a state has an all-payer model
agreement, the amount designated under the agreement
would apply.
Initial Payment
Insurers are required to make an initial payment (or notice
of denial of payment) to a provider within 30 calendar days
of receiving a bill for services. Federal law and regulations
do not specify how to determine the amount of the initial
payment, though it should be an amount that the insurer
intends to be payment in full (i.e., not a first installment).
Open Negotiation
After the insurer makes an initial payment (or notice of
denial of payment), the provider or the insurer may initiate
open negotiations during the subsequent 30-business-day
period by providing a notice to the other party. The parties
then have 30 business days from the date the notice was
sent (i.e., the open negotiation period) to reach an
agreement on the payment amount. If the negotiations are
successful, the insurer is required to pay to the provider the
agreed-upon amount (or, after accounting for the initial
payment, any remaining balance) within 30 calendar days.
Independent Dispute Resolution Process
If a provider and insurer cannot reach an agreement during
the open negotiation period, then either party may initiate
the IDR process. The IDR process is a baseball-style
arbitration process under which the provider and the insurer
each submit to a neutral, certified third-party arbitrator (i.e.,
IDR entity) their best and final offers that represent the
amount that each party considers adequate payment. The
IDR entity must review both offers and make a
determination based on certain factors as to which of the
submitted offers is the final payment amount.
The provider and the insurer have four business days
following the end of the open negotiation period to initiate
the IDR process by submitting a notice to the other party
and the federal government. In some instances, a provider
and insurer seeking resolution regarding multiple identical
(or similar) services can combine (or batch) the services
to be considered as part of a single IDR determination.
If initiated, the parties have three business days to jointly
select an IDR entity. If the parties do not make a selection
by the deadline, they must notify the Departments of the
Treasury, Labor, and Health and Human Services (tri-
agencies) on the fourth business day and the tri-agencies
will randomly assign an IDR entity within six business days
of the IDR process initiation. Once selected, the IDR entity
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