A process put in place by the federal No Surprises Act (NSA) to resolve payment disputes is costing insurers and health plans billions of dollars, according to one organization’s estimate.

While a final rule released in May 2026 has made some improvements to the process, groups are still calling for reforms. This blog post will explain the independent dispute resolution (IDR) process and discuss new developments. It will also offer tips for plan sponsors and fiduciaries.

Background

In her article, “(Surprise) Bills, Bills, Bills: Navigating Independent Dispute Resolution” in the September/October 2025 issue of Benefits Magazine, attorney Jennifer Rigterink explained the NSA and the IDR process that it created.

The NSA was enacted in 2020 to protect consumers from surprise billing, which occurs when plan participants receive unexpected medical bills after being treated by out-of-network (OON) providers.

In certain circumstances, the NSA prohibits out-of-network medical providers from balance-billing plan participants, which occurs when a provider bills a consumer for the balance remaining on the bill that the patient’s plan doesn’t cover. The NSA created a process to determine the amount that the health plan will pay to the OON provider for the NSA-covered service.

If the provider disagrees with the payment amount and the parties cannot work out an amount during a good-faith negotiation period required by the NSA, either party may engage a certified third-party IDR entity to select the amount that the plan will pay for the service.

During the IDR process, the plan and the OON provider each submit a payment offer for the service to the IDR entity, based on a set of statutory factors. Among other factors to consider is the qualifying payment amount (QPA), which is the plan’s median in-network rate for the service, indexed for inflation. In a process sometimes referred to as baseball-style arbitration, the IDR entity must select one of the offers; it cannot split the difference.

Disputes Exceed Projections

According to an article by Fierce Healthcare, when the law was enacted, federal regulators estimated that about 22,000 disputes would be submitted annually to the IDR process. However, 2.6 million disputes were initiated in 2025, up 77% from the prior year. In addition, 1.75 million disputes had been filed through the first six months of 2026.

Nearly all disputes have been initiated by health care providers. An article from the Georgetown University Center on Health Reform said that in 2025, more than three-fourths of the disputes were filed by three provider entities or provider representatives, two of which are owned by private equity firms. The article cited the following additional statistics.

• Total payment awards rose by 264% from 2024 to 2025.
• Providers won 85% of all IDR disputes in 2025 with a median award of more than four times the QPA.
• Research shows that costs attributed to IDR totaled $22.4 billion from 2022 to 2025.
• Payers challenged the eligibility of 41% of disputes in 2025, and 18% of IDR disputes were ruled ineligible.

While much of the criticism has focused on health care providers, a recent analysis sent to Congress by three physician groups contends that insurer practices have played a role in increased IDR case volume. In September 2026, the American Society of Anesthesiologists, American College of Emergency Physicians and the American College of Radiology cited narrow networks, low QPAs and low initial payments as factors in the OON disputes. The groups also maintain that insurers have failed to participate in the process or submit “unreasonably low offers.”

New Rule Attempts to Improve the Process

In May 2026, the Departments of Health and Human Services, Labor and Treasury and the Office of Personnel Management finalized updated standards for the IDR process. The final rule was effective August 3, although some portions have varying applicability dates.

A CMS fact sheet said that the final rules would “improve the functioning of the federal IDR process by streamlining communication between payers, providers and certified IDR entities and clarifying timelines and process.”

This blog post will not address all the changes included in the final rule. According to a Health Affairs article, the changes should “promote the identification of disputes either not subject to the NSA or ineligible for IDR, and should better facilitate the open negotiation period and IDR processes.”

Health care payers criticized the rule saying that it did not do enough to curb provider abuse of the IDR.

Groups Seek Further Change

In September 2026, 67 organizations representing patients, consumers, large and small employers and workers joined to submit a letter to the U.S. House of Representatives and Senate urging further change to the process.

The groups claimed that the IDR process is undermining the success of the NSA and “driving up health care costs for consumers across the board.” The letter went on to say “Congress must act to close these costly IDR loopholes to ensure that patients, consumers, and employees remain protected from unexpected out of network bills and that health insurance premiums are not driven higher as a result of the arbitration process.”

The letter also urges Congress to do the following.

• “Establish a predictable, transparent benchmark payment methodology that replaces the current arbitration system and provides certainty for patients, providers, and health plans.”
• “Protect patients and taxpayers by promoting fair, market-based payments that discourage gaming, prevent excessive reimbursement, and preserve the law’s core protections against surprise medical bills.”

What Can Plan Sponsors Do?

In her Benefits Magazine article, Rigterink advised health plan sponsors to take the following measures to help manage the IDR process.

• Identify the party responsible for monitoring NSA-covered claims paid by the plan. For fully insured plans, the insurer is responsible for the IDR process, and the plan sponsor is unlikely to have any control. For self-funded plans, either the third-party administrator (TPA) or the in-house administrator should be monitoring the process.

• Gather information. Plan sponsors and fiduciaries should request regular reporting from the TPA about the plan payments through the IDR process. The TPA typically sets the offer during the open negotiation period and IDR process. Reports should include the following information.
  • Details about the success of the plan in the IDR process relative to results achieved by other similar self-funded plans.
  • The median amount by which offers selected by the IDR exceed the in-network rate and QPA
  • Confirmation that the TPA is timely submitting all required documentation during the IDR process.

If the plan is self-administered, the sponsor should track this information to better inform future offers in the IDR process and to increase the chances that the plan offer is selected during IDR.

• Educate participants. Plan sponsors also may want to consider educating plan participants about the increased costs associated with using OON providers for scheduled nonemergency services. “Participant utilization of in-network providers when possible remains the best strategy to mitigate the potential risk of excess IDR awards and administrative costs associated with the IDR process,” Rigterink wrote.

Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.