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A 600% Increase: No Surprises Act IDR Process is Officially Draining Your Rev Cycle's Bottom Line

Analysis  |  By Amanda Norris  
   January 19, 2023

The independent dispute resolution (IDR) process has gotten more expensive for healthcare organizations—by 600%.

The No Surprises Act may be preventing unexpected bills, but it will now be adding to yours.

CMS recently announced that the nonrefundable administrative fee due from each party involved in any payment dispute that goes to arbitration increased from $50 to $350. This price change became affective January 1.

This news is coupled with the recent revelation that IDR disputes totaled 90,078 between April and September 2022, which far exceeded the estimated 17,333 claims annually by the federal government.

As revenue cycle leaders are trying to find ways to increase their bottom lines for 2023, this news is a step in the wrong direction, especially for smaller healthcare organizations. This huge price hike may put organizations in a losing situation as they consider whether to formally dispute a payer’s proposed out-of-network payment amount.

This is coming as a not-so-happy surprise to healthcare organizations since in prior guidance, CMS said the administrative fee for the IDR process would remain $50 in 2023.

So why the enormous change? CMS blames the mass influx of filed disputes.

CMS says the case load of disputes is nearly ten times greater than initially estimated it would be over the course of a full calendar year, requiring certified IDR entities to expend considerable time and resources to the disputes.

“Of the disputes initiated between April 15, 2022, and December 5, 2022, certified IDR entities rendered payment determinations for over 11,000 disputes but found over 23,000 disputes ineligible for the Federal IDR process,” the announcement said.

This, CMS says, has resulted in low collections of the administrative fee relative to both the volume of disputes processed in the portal and to the Departments’ expenditures in the first two calendar quarters of IDR process operations.

“Independent dispute resolution fees should be minimal to protect the ability of medical groups to initiate the IDR process. MGMA supports clear implementation guidance from the Administration to ensure practices have the information necessary to protect patients,” the MGMA said in it’s 2023 Advocacy Agenda.

Amanda Norris is the Revenue Cycle Editor for HealthLeaders.


KEY TAKEAWAYS

The nonrefundable administrative fee increased from $50 to $350.

CMS says the case load of disputes is nearly ten times greater than initially estimated, resulting in the fee increase.

Hospital groups fear this price hike will hinder medical groups from intiating the IDR process. 

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