Revenue Recovery Series Part 4: Mastering the No Surprises Act & IDR Arbitration Focus

By: Pearl Walia

What is the No Surprises Act and Why was it Passed?

Before the COVID-19 pandemic, two-thirds of Americans feared they would not be able to afford an unexpected medical bill. For years, many people with private health insurance were surprised with high medical bills after being treated by an out-of-network (OON) provider. In December 2020, Congress passed the No Surprises Act (NSA) to address this problem and protect patients from these unexpected costs. The Act applies to both emergency and nonemergency services. 

 

Before the NSA, OON provider bills were common for patients admitted to hospitals or treated in emergency departments. A study from the Office of the Assistant Secretary for Planning and Evaluation (ASPE) found patients paid an average of $628 out of pocket for an emergency department visit, and $2,040 for an inpatient hospital admission. These unexpected costs caused significant financial distress for much of the population. 

 

The NSA addressed this by prohibiting surprise “balance billing” for services rendered by OON providers. Balance billing occurs when a provider bills a patient for the difference between the provider’s charges and the amount covered by insurance. For example, if a patient receives OON services (i.e air ambulance transport), or is treated by an OON provider at an in-network hospital, the patient cannot be billed for the amount their insurance does not cover. Instead, they only pay only the normal in-network costs: copay, coinsurance, or deductible. If the insurer and provider cannot agree on a price, either party may request an independent resolution process to determine appropriate reimbursement rate. 

 

What Happens if the Provider and Payer Can’t Agree on OON Reimbursement? 

When a dispute arises over OON payment, the parties must first attempt “open negotiation,” before proceeding to arbitration. If they reach no consensus within 30 days of the open negotiation notice, either party may initiate arbitration through Internal Dispute Resolution (IDR). 

 

IDR is a binding arbitration process overseen by the U.S. Department of Health and Human Services, the Department of Labor, and the Department of the Treasury. Under this system, the parties select a certified third-party entity from an approved list to resolve the dispute and determine a settlement amount that both sides must accept. Payment is then due within 30 calendar days. 

 

What Information Do Providers Need to Initiate the IDR Process? 

Before starting the IDR Notice of Initiation web form, providers should have the following information and documents ready: 

• Identification of the qualified IDR services, and whether they are batched or bundled. 
• Dates and location of qualified IDR services
• Type of qualified IDR services (i.e. emergency services and post-stabilization services)
• Item and service codes, along with the corresponding place of service 
• Attestation that qualified IDR services fall within the scope of the Federal IDR process
• The provider’s preferred IDR entity 

 

The Federal IDR Portal

In enforcing the NSA, the government recognized that providers often lacked sufficient information to determine whether a claim qualified for the IDR process. In response, the NSA now requires insurance companies to include special billing codes on their Explanation of Benefits (EOBs) and remittances, informing providers whether a claim is covered under the NSA and is eligible for IDR. Insurance companies must also register with the Federal IDR Portal, receive a unique ID number, and provide information about the health plan and employer sponsor at various stages of the process. Together, these requirements give providers the information they need to quickly determine whether a payment dispute is eligible for IDR. 

 

As noted above, before a payment dispute can proceed to arbitration, the parties must first engage in open negotiation for 30 business days through the IDR portal, not simply through emails or phone calls. The party initiating negotiation must submit a standard online form listing details such as the names of both parties, the amount the insurance company originally paid or denied, and the amount the provider believes it should be paid. The portal creates a clear, transparent record of the negotiation and ensures that both parties have the information they’ll need if the dispute later proceeds to arbitration. 

 

What is “Batching” of Claims?

Batching refers to grouping multiple OON claims together into a single dispute for the IDR process, allowing providers and insurers to resolve several claims at once. It is an economically efficient way to group lower-dollar disputes and reduce the need for repeated arbitration. NSA provisions limit batched disputes to 50-line items 

 

Parties may batch disputes if: 

• The same provider and payer are involved in the dispute
• Timing requirements are met (the services were furnished by the same provider to the same plan or issuer within 30 days). 
• The services were provided to a single patient on one date of service, or on consecutive dates of service
• The services share the same or comparable service (i.e. CPT codes, HCPCS, DRG codes)
• For specific high-volume specialities such as anesthesiology, radiology, pathology, and laboratory services, claims can be batched using specific CPT code ranges, as long as they fall into similar procedure types (i.e. scans or tests) or relate to the same body part

 

What are some Common Batching Errors? 

Some common batching errors include: 

• Batched services are recorded under a single emergency episode of care despite using multiple service codes 
• Disputes are submitted as single line items but include the total cost of all services provided during the episode of care 
• The services were not provided by the same provider 
• Payment for the services was not made by the same group health plan
• The services were provided outside the 30-day window following the first service in the batch

 

To avoid these mistakes, the party initiating the IDR process should contact the certified entity to clarify its batching guidelines. It is also recommended to include an EOB in the portal documentation to help the entity understand the batching method chosen. Providers and payers should continue to monitor upcoming federal guidance on batching criteria and IDR portal functionality, as changes may introduce new open negotiation and initiation requirements.

 

Strategies to Succeed in Arbitration

Arbitration can be costly, especially when the parties have not agreed on payment rates by contract. The NSA uses “baseball-style” arbitration, also known as final-offer or pendulum arbitration. Under this system, each party submits a final offer, and the arbitrator must choose one or the other; there is no middle ground. This means the losing side may end up paying or receiving significantly more than it considers fair. 

 

Strategies for succeeding in this style of arbitration include: 

1. Strong Documentation: There’s no such thing as too much evidence. Success in arbitration is closely tied to through preparation of strong data, solid evidence, and skilled negotiators. It is a strong practice to include EOBs that clearly explain why specific services were provided, along with complete patient medical records and treatment summaries. 
2. Know What Factors Arbitrators Consider: The Act requires arbitrators to weigh several factors equally, including: the qualifying payment amount; the market share of both parties; the training, expertise, and scope of services of the provider; and evidence of good-faith efforts to reach a prior agreement, including any contracted rates between the parties in the previous four years. 
3. Check How Your Proposed Rate Aligns with the QPA: The Qualifying Payment Amount (QPA) is a plan’s median contracted rate for same or similar services in the same geographic market. The QPA serves as a baseline that helps arbitrators judge the reasonableness of an offer. A submitted offer should align closely with the QPA, and any significant deviation should be backed by credible, objective evidence. 
4. Emphasize Provider Qualifications: Submit evidence of the clinician’s or facility’s training, expertise, and quality of care to further support the offer.

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It should be noted that I am not your lawyer (unless you have presently retained my services through a retainer agreement). This post is not intended as legal advice; it is purely educational and informational, and no attorney-client relationship shall result after reading it. Please consult your own attorney for legal advice. If you do not have one and would like to retain my legal services, please get in touch with me using the contact information listed above.

All information and references to laws, rules, regulations, and advisory opinions were accurate as of this time, but laws are constantly evolving. Please get in touch with me to ensure that the law governing your business is up to date. Thank you.