Lessons from the NSA’s Independent Dispute Resolution (IDR) Process

February 15, 2023 - Nearly a year since the federal government launched the independent dispute resolution (IDR) process, Becky Greenfield, partner at Wolfe Pincavage, has learned a few things about the No Surprises Act (NSA) and out-of-network claim disputes.

“It’s apparent there needs to be some significant changes to the law in order for [the IDR process] to be workable,” Greenfield recently told RevCycleIntelligence.

The NSA protects patients from surprise medical bills when they receive emergency services, non-emergency services from out-of-network providers at in-network facilities, and services from out-of-network air ambulance providers. It also establishes the IDR process, so providers get paid for those out-of-network services.

Through the IDR process, payers and providers submit payment amounts and supporting information for the services in question to an independent entity they select from a list of certified organizations. The entity, known as an IDR entity, then selects a payment offer based on the qualifying payment amount (QPA), or the median contracted rate for the same or similar service in the same geographic region, as well as other relevant factors, such as patient acuity, clinician characteristics, and market share of both parties.

The IDR process is no stranger to controversy. Providers have criticized the process, arguing that it tips the scales in favor of payers, especially since the regulation establishing the process has emphasized the use of the QPA in determining final payment amounts. The IDR process is also the subject of several lawsuits seeking to change how IDR entities choose the final payment amounts.

Greenfield, who has worked with hospitals to go through the IDR process since it launched last April, has seen some issues pop up regarding the QPA. However, she has also encountered several unanticipated obstacles with the IDR process, which has influenced provider strategies when it comes to engaging in the IDR process.

The QPA problem

The QPA problem has existed since before the IDR process launched last year. Leading up to the launch, the federal government has attempted to clarify what the QPA is and how IDR entities are to use it when selecting payment amounts. However, there is still a lot of confusion around it.

“There has got to be some transparency into what the QPA is,” Greenfield said. “My understanding is that some plans are including ghost rates into their QPA, which artificially deflates the median network rate in a market.”

Greenfield has also noticed that QPAs are “all over the place” depending on the type of service on the claim.

“Sometimes the QPA is more than what a prior contract rate would’ve been, sometimes its relatively in line with in-network rates, especially on the outpatient side. We’re not seeing the same thing for inpatient claims,” she elaborated. “Those seem really low.”

QPAs for inpatient services may not be in line with the actual value of the services because of outlier payment provisions, Greenfield stated. Inpatient services are complex and expensive because of the complexity of the disease state, especially compared to outpatient services. Contracts switch payment from contracted rates to a percentage of charges to manage this.

In Greenfield’s experience, providers are winning more with inpatient claims because of the complexity of services. Providers can support a higher payment bid with documentation from the medical record that can substantiate the complexity and acuity of the patient’s disease.

Emergency department (ED) services, on the other hand, are presenting a challenge because of some unexpected obstacles with the IDR process.

Two unexpected obstacles

Medical billing is a complicated task. Billing teams deal with a variety of codes to document and bill for a service, especially in the emergency department. In many cases, medical billers batch or bundle several codes to describe an entire billable encounter, including but not limited to, Current Procedural Terminology (CPT) codes, Healthcare Common Procedure Coding System (HCPCS) codes, and revenue cycle-specific codes.

A lot goes into creating a claim for reimbursement and the IDR process has not been able to keep up.

“There was an understanding that you could bring a whole claim,” Greenfield explained. “For a little while, one of the IDR entities that we worked with was allowing us to batch an emergency code with a bunch of rev codes that were tied to the same service for the same day of care. It has now become very apparent that is not what CMS intended.”

According to guidance released by HHS in October 2022, “[m]ultiple qualified IDR items or services may be considered as part of a single IDR determination (batching), if they satisfy certain criteria.” Among the criteria are qualified IDR items or services that are “the same or similar items and services.”

“That ‘same or similar service’ kept popping up as I first looked through the regulations and walked through guidance with our clients,” Greenfield said. “It is a criterion HHS came out with on how you can batch services together, but I’m not sure that really stuck.”

HHS says that the term is defined by October 2021 interim final rules, which state that “qualified IDR items or services must be billed under the same service code with modifiers, or billed under comparable codes with modifiers under different procedural code systems.”

Despite the guidance, there has been a lot of confusion about what qualifies for batching and bundling. Even the IDR entity that allowed batching for Greenfield’s clients has let her know that it will no longer accept certain batched claims and might be retroactively rejecting previous offers.

The batching confusion will create a bottleneck for providers who will now have to submit claims code by code, according to Greenfield.

“This is really important because of cost,” she stated. “If you have one person who goes to the ED, the charges might be up to $6,000. But when you break off the emergency code from the other stuff, like the observation code and all your rev codes, which can include pharmacy codes, then you’re not really left with a lot. And by the way, the emergency and observation codes are the ones you can actually submit because they’re CPT codes. You cannot submit revenue codes to the IDR entity.”

If payers do not bundle revenue codes in their reimbursement to providers, then providers are losing out on a significant portion of their reimbursement, Greenfield explained.

“It does not make sense from a cost perspective to have to submit four or five different IDR offers for one person, for one service, especially because IDR fees have increased substantially. The administrative cost has increased by 600 percent this year alone,” she said.

For 2023, IDR administrative fees are $350 for each disputing party.*

Another unanticipated obstacle Greenfield has encountered with the IDR process so far is the buildup of disputed claims because payers don’t respond to IDR initiation.

“One of the arbitrators that we’ve done a lot of the claims with, they took the approach that if a payer doesn’t participate, then they’re going to choose the provider’s number by default. We’ve seen that within our firm and among our clients,” she shared. “But it differs between IDR entity.”

Some IDR entities are not reviewing disputed claims because a payer has not responded to a provider’s request for payment through the IDR process.

Greenfield acknowledged that payers, just like every other stakeholder in this process, are still figuring out workflows for the relatively new IDR process. But deadlines are important to the process, she stressed.

Right now, the official advice from IDR entities is to send a complaint to CMS whether the issue at hand is regarding deadlines or batching.

“I’m sure they are being inundated. They are also trying to figure out how the IDR process is supposed to work,” Greenfield said. “But when you have hundreds of claims sitting there for months, that’s not great for the hospital’s bottom line.”

Tips for providers

The IDR process is new to everyone. From HHS to individual providers, all stakeholders are having to establish new workflows and strategies to ensure the process runs smoothly. And with anything new, time has revealed some bumps in the road with implementation.

Until the federal government addresses the unanticipated obstacles )and some of the anticipated challenges), providers may want to put a limit on how many out-of-network claims they chase through the IDR process.

“It may not make sense to go after every claim, especially if you are using an outside party to do that,” Greenfield advised. “You need to develop some kind of threshold just because of how expensive it is to submit for arbitration. I don’t see who you can go after every claim unless CMS comes back and changes the rules on batching and bundling.”

Greenfield recommended that providers “do a real dive into the numbers and see what makes sense.” It’ll be a data collection project for providers. Still, to reap the benefits of the IDR process, they need to know who the IDR entities are, what offers they are seeing, how negotiations are going, and what decisions IDR entities made.

Data is also key to making the right payment bid to IDR entities. Providers can be successful with their bids when they have analyzed their data and know what they can accept for reimbursement.

“If you think you are only going to accept 90 percent of your charges, you’re probably not going to get that, especially on the outpatient claims,” Greenfield explained. “Really look at your data and figure out what you can accept and what you’re accepting from your in-network payers. You have a better chance of winning if you’re in that world.”

Finally, Greenfield advised providers to keep submitting feedback to CMS and advocating for change.

“What we’re hearing is there are a lot of things HHS had not anticipated and they want to know what the issues are,” she concluded. “They may not respond quickly, but I do believe they are tracking feedback and they want to come up with a solution or a process that is workable.”

*UPDATED 02/17/2023: Article has been updated to reflect the most up-to-date administrative fees for the IDR process.