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February 22, 2023
- Payment determinations under the IDR process have been suspended due to a recent court case that invalidated key parts of the process.
- The IDR process can be used by OON providers and health plans or issuers to settle payment disputes covered by the NSA in certain situations.
- CMS will be updating the IDR process in response to the court decision.
- This suspension will likely add to the growing backlog of cases submitted to the IDR process.
On Feb. 10, 2023, the Centers for Medicare and Medicaid Services (CMS) announced that it has suspended payment determinations under the independent dispute resolution (IDR) process. The IDR process can be used to determine payment amounts for out-of-network (OON) providers under the No Surprises Act (NSA) in certain circumstances.
This suspension was triggered by a recent court case in which a Texas judge vacated certain portions of the IDR process. According to CMS, it is in the process of evaluating and updating the IDR process to make it consistent with the Texas court decision. At this time, certified IDR entities have been directed to stop issuing new payment determinations and to recall any payment determinations issued after Feb. 6, 2023. However, certified IDR entities can continue to work through other parts of the IDR process as they wait for additional direction from CMS.
IDR Process for Surprise Medical Bills
Effective for plan years beginning on or after Jan. 1, 2022, the NSA provides federal protections against surprise medical billing by limiting OON cost sharing and prohibiting balance billing in many situations where surprise medical bills arise most frequently.
For situations covered by the NSA, health plans and health insurance issuers must pay OON providers based on a state All-payer Model Agreement or specified state law, if applicable. In the absence of this state authority, OON providers and health plans or issuers must negotiate any payment disputes. If the negotiation is unsuccessful, either party can initiate the IDR process. Under the IDR process, a certified entity reviews the dispute and determines a final payment amount for the OON provider.
Texas Court Decision
On Feb. 6, 2023, a federal district court in Texas ruled in favor of a physician association, concluding that certain aspects of the IDR process conflict with the NSA. More specifically, the court ruled that the method used by the IDR process to settle payment disputes is unlawful because it restricts the certified IDR entity’s discretion and skews the process in favor of health plans and issuers. Accordingly, the court vacated the unlawful provisions of the IDR process.
Impact of Suspension
Since the IDR process became available in 2022, it has been affected by higher-than-expected volume and substantial delays in processing disputes, as highlighted in an initial report on IDR activity. This suspension will likely add to the growing backlog of disputes submitted to the IDR process.