The Federal IDR (Independent Dispute Resolution) Process. What It Is and What You Should Know.

The process may be used by group health plans and health insurance issuers offering group or individual health insurance coverage and nonparticipating providers, facilities, and providers of air ambulance services to determine the out-of-network rate for certain items and services.

The Federal IDR process is used when #payers and #physicians cannot agree on the payment amount for #outofnetwork items and services.

Fees Set In Independent Dispute Resolution Process for Providers and Payers

In a final rule on fees for disputed claims, Health and Human Services and other departments are finalizing an amount of $115 per party for disputes initiated on or after the effective date of this rule on Jan. 1, 2024.

The departments are also finalizing a certified IDR entity fee range of $200-$840 for single determinations and $268-$1,173 for batched determinations.

Further, for batched determinations exceeding 25 dispute line items, the departments are finalizing the proposal that certified IDR entities may set a fixed fee within the range of $75-$250 for each increment of 25 dispute line items included in the batched dispute, beginning with the 26th line item.

IDR Process Timeline

For disputes submitted to the federal IDR, the process from provider claim filing to payment determination can take 6-months.

After the provider files a claim, the plan generally has 30 days to make an initial determination on whether and how to cover a claim.?Once a claim is filed, by day 30, the health plan must decide whether it will pay, deny, or adjust the claim. There are rules permitting extensions in certain circumstances.

Open negotiation period must be exhausted before initiating a federal IDR process. After the plan determination, the plan or provider initiate open negotiation on the payment. Parties must exhaust 30 business days (or about 42 calendar days) of open negotiations before entering the federal IDR process.

Federal independent dispute resolution entities select one of the offers submitted. Parties have 10 business days to select a certified IDR entity and submit offers of payment.

IDR Entity

IDR entities are third-party organizations that are certified by the federal government to arbitrate the payment amount between plans and providers. The selected IDR entity picks one of the two offers within 30 business days of offer submissions.

Implications of the IDR Process for Plans, Providers and Patients

The IDR process incentivizes good faith plan and provider offers. The federal IDR process is established as a last resort in case all other plan-provider negotiations fail. If the parties choose to use the federal IDR process, then the process incentivizes both parties to make reasonable offers, as one of the two offers will be selected.

Providers not participating in any plan networks could face longer timelines for reimbursement. The time from plan initial claim determination to IDR decision and plan payment could take over 6 months. Providers with many out-of-network claims could face cashflow issues while waiting to resolve payment disputes.

The process has the potential to put downward pressure on prices, particularly among providers charging extremely high prices.

Patients generally should not be affected by the IDR process, so long as the plan or provider did not make a billing mistake. The out-of-network provider is permitted to bill the patient only the applicable in-network cost sharing amount for surprise out-of-network bills, regardless of the IDR entity’s determination.

Summary

The Federal Independent Dispute Resolution Process has been controversial as providers wait for payment on backlogged claims and raise concerns that the payment amount calculation favors insurers.

A proposed rule released in October requires payers to provide additional information at the time of initial payment or notice of denial of payment.

The proposal aims to increase clarity and speed up the Federal Independent Dispute Resolution process, which has been backlogged by claims.

The IDR is part of the No Surprises Act Dispute Resolution process, which was enacted as part of the Consolidated Appropriations Act, 2021.

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