No Surprises: IROs Set to Excel Within ‘Surprise Billing’ Dispute-Resolution Process

Effective January 1, 2022, the No Surprises Act (NSA) ushered in sweeping changes to the dispute-resolution process between healthcare providers and payers, establishing a “baseball-style” arbitration system in which an independent arbiter settles payment differences for out-of-network (OON) charges.

The federal independent dispute resolution (IDR) process, which generally applies to group health plans, health insurance issuers offering group or individual health insurance coverage and Federal Employees Health Benefits (FEHB) carriers, includes the certification of IDR entities to make payment determinations.

A Look Behind the IDR Process

To date, 10 IDR entities have gained certification from the Departments of the Treasury, Labor, and Health and Human Services (the Departments), with each of the 10 entities approved to operate in all states in which the federal process applies. Under the NSA, patients are required to pay “no more than in-network cost-sharing amounts” in situations where the patient receives emergency services, certain non-emergency services furnished by an OON provider at in-network healthcare facilities, or air ambulance services furnished by OON providers of air ambulance services, according to federal guidance from the Departments.

State and Federal Scope
The Federal IDR Process applies to self-insured plans sponsored by private employers, private employee organizations, or both in all states, except in cases in which a self-insured plan has opted into a specified state law, in a state that permits these plans to opt in, or an All-Payer Model Agreement applies. Similarly, the federal IDR process will apply to federal employees’ health benefits plans in all states, except in cases where an Office of Personnel Management (OPM) contract with an FEHB carrier includes terms that adopt the state process.

“In such cases, the individual’s health plan often does not cover the full amount of the OON charges, and the OON provider, facility or provider of air ambulance services then bills the patient for the outstanding amount (also known as balance billing),” the Departments state. “Prior to the NSA, the patient would often be responsible for paying these balance bills.”

As of January 1, the NSA protections kickstart an IDR process in situations where payments are under dispute. In general, the following timeline shows how the IDR process may play out:

  • After services are rendered, the plan must make an initial payment or a denial of payment within 30 calendar days.
  • If either the plan or the provider believes the payment is not appropriate, either party has 30 business days from the time of the payment or denial to notify the other party that it would like to negotiate the payment terms or the denial.
  • Once notified, the parties enter a 30-business-day open negotiation period.
  • If terms are not agreed upon, either party can initiate dispute resolution through the federal IDR process. The 30-business-day open negotiation period must conclude before the federal IDR process is available.
  • The federal IDR process must be initiated within four business days from the close of the 30-business-day open negotiation period.

Note: The federal IDR process does not apply to all states. In states with an All-Payer Model Agreement or specified state law, health plans, issuers and FEHB program carriers are required to provide payment to OON providers in accordance with state regulations. Currently, 33 states have at least some level of consumer protections against surprise billing; 18 of those states have “comprehensive” protections, according to analysis conducted by the Georgetown University Center for Health Insurance Reform. Another 15 states have partial balance billing protections for consumers.

All of the states with comprehensive or partial protections offer a state-specific payment dispute resolution process. In Michigan, for example, the state provides a dispute resolution process that would take precedence over the federal IDR process. Some states are “bifurcated,” with portions of services eligible for state IDR, and others eligible for federal IDR. The 17 states without protections would automatically fall under the federal IDR process. (See chart, below, for a breakdown of which states adhere to a state-specific process, a federal process or a state and federal mix.)

The State of Provider-Payer Dispute Resolutions
State Process* Federal IDR Process Bifurcated Process*


District of Columbia
North Carolina
North Dakota
Rhode Island
South Carolina
South Dakota
West Virginia
American Samoa
Northern Mariana Islands
Puerto Rico
U. S. Virgin Islands

New Hampshire
New Jersey
New Mexico
New York

*Self-insured plans sponsored by private employers, private employee organizations or public payers in these states that have not opted into the state process should use the federal IDR process. Similarly, FEHB carriers that do not have contract terms with OPM to use a state process should also use the federal IDR process.

In most cases, a provider or facility, as opposed to a payer, is likely to initiate the federal IDR process, notes Candace Daigle, CHC, CHA, OHCC, CHCO, chair of the legislative and regulatory committee with the National Association of Independent Review Organizations (NAIRO) and Director of Compliance and HIPAA Privacy Officer with ProPeer Resources LLC, a certified IDR entity. While a payer may initiate the process should it seek payment redress, as in the case of an alleged overpayment, providers are more likely to launch an IDR.

To start the federal IDR process, the initiating party – i.e., the provider or payer – notifies the non-initiating party through the Federal IDR portal by filling out and saving a “Notice of IDR Initiation” web form with details of the case and selects a certified IDR entity as its preferred arbiter. The initiating party then sends notice to the non-initiating party, which has three business days to accept the certified IDR entity chosen by the initiating party. If the parties cannot agree on an IDR entity, CMS will auto-select an entity from the list and assign it to the case, Daigle says. The IDR entity then has three business days to attest that they have no conflict of interest with either party and make a determination whether the dispute is eligible for the federal IDR process.

Both parties pay the certified IDR entity’s fee (which are publicly shared), as well as a $50 administrative fee that is held in escrow, Daigle explains. Whoever is the prevailing party in the dispute receives a refund of the certified IDR entity fee.

The Benefits of IROs

The provisions of the NSA, including the federal arbitration process for settling disputed claims, add a significant new wrinkle to the health care payment environment. But similarities in the federal IDR process to other forms of dispute resolution in the medical review field provide longtime leaders in the space – accredited independent review organizations (IRO) – the opportunity to deliver.

NAIRO members, which hold URAC accreditation, have a more than 20-year track record of providing unbiased medical opinions as trusted independent clinical experts and are independently verified by a third party to ensure quality. Accredited IROs have the necessary resources and expertise, supported by clinical, coding and legal experts, to adequately fulfill the federal IDR process, as well as state-specific dispute resolution reviews.

With years of experience providing similar arbitration support in cases of internal and external review, utilization review and workers’ compensation utilization management, accredited IROs are well-positioned to take the lead in NSA-related and state-specific dispute resolutions. They hold proven case management tools and workflow systems. In addition, accredited IROs serving as IDR entities offer the following advantages:

  • Ensure quality and reliability. Accredited IROs are independent entities that possess the necessary expertise and organizational resources.
  • Offer transparency and reduce the potential for conflict of interest. Accredited IROs consistently render accurate and timely decisions in a transparent manner. As independent review entities, they have no interest in the outcome of the arbitration decision.
  • Understand the complexity of the IDR process. They utilize highly qualified and specialized clinical, coding and legal reviewers to ensure complete, accurate decisions. Accredited IROs consider the medical necessity of care during the review to ensure patients only receive clinically appropriate services.
  • Qualified and credentialed expertise.Accredited IROs maintain formal credentialing programs to ensure that all clinical, coding and legal staff are appropriately licensed, credentialed and board-certified, as applicable.


NAIRO (the National Association of Independent Review Organizations) was formed by the majority of URAC-accredited companies. The mission of NAIRO is to promote the quality and integrity of the independent review process at the internal and external levels. As surprise billing regulations continue to evolve, several NAIRO members have achieved certification for the federal independent dispute resolution process. Learn more about NAIRO here.

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