Over the 2023 holiday season, CMS filled our stockings with numerous bulletins on behalf of The Departments of Health and Human Services, Treasury, and Labor (The Departments) about the Independent Dispute Resolution (IDR) process.

These bulletins included updates on the IDR portal (reported as now fully operational), extension dates for certain qualified parties, Certified IDR Entity fee ranges, and finally, a heads up that The Departments will be reopening the comment period on the proposed rule related to IDR operations.

The laundry list of announcements wasn’t particularly surprising on the heels of last month’s bleak GAO report entitled “Roll Out of Independent Dispute Resolution Process for Out-of-Network Claims Has Been Challenging.” To wit: unresolved disputes remain piled up, confusion over a claim’s IDR eligibility slows review times, and budget constraints loom.

This blog delves into root cause analysis surrounding some of the IDR woes. It also explores the idea that changes to the QPA calculation further upstream may lead to improvement in the entire Out-of-Network (OON) billing and payment process as defined by the No Surprises Act (NSA).

Background and IDR Design

The IDR is a federal dispute resolution process established by the NSA. Its goal is to resolve disputes between payers and providers that stem from payment amounts calculated after providers treat OON patients.

Much has been documented since the first disputes entered the IDR queue, but as a recap, for anyone relatively new to the process:

  • Four lawsuits brought by the Texas Medical Association (TMA)
  • Numerous Interim and Final Rules adjusting processes
  • Massive administrative fee hikes
  • Backlogged queue
  • Confusion over eligibility, batching processes, and required documentation
  • Obfuscated Qualified Payment Amount (QPA) definition and calculations

The IDR order of operations was seemingly designed under the assumption that a relatively small percentage of claims reimbursed via QPA would end up in the IDR queue. As defined within the NSA, once a payer calculates and subsequently issues a QPA payment to a provider, the process is as follows:

And while every OON claim hasn’t entered the IDR queue, the floodgates were certainly opened in a way that immediately exposed numerous flaws in the defined process. By CMS’ own admission, the onslaught of submitted IDR disputes was 14 times the expected submission amount. The number of disputes in the queue points to a significant utilization problem: the IDR, which appears to have been designed as a manual, time- and resource-intensive process of last resort, has more or less become an essential step in determining fair payment rates for OON treatment covered under the NSA.

Put simply, the IDR in its current state was not designed to handle OON payment review at scale.

Payers and Providers Aren’t Working it Out Themselves

All this begs the question of why so many disputes are entering the IDR queue in the first place. One major factor to consider is the relationship between providers and payers, the two parties most impacted by QPA calculations and the IDR. Payers and providers tend to view the world of OON billing and reimbursement through fundamentally different lenses. Generally, providers believe they are underpaid by payers for OON treatment, and payers are wary of providers inflating charges to maximize reimbursement beyond the actual cost of care. Thus, any process that puts the burden of initial payment calculation on one party or the other is likely going to be met with immediate backlash from the opposite party.

This brings us to a second major factor to consider: per the NSA, the initial QPA calculation is always completed by payers. As a result, the backlash mentioned above actively played out surrounding the QPA calculations in the form of the TMA lawsuits on behalf of providers. The massive queue for IDR disputes where providers are asking a third party to review payers’ QPA calculations also further points to a lack of trust.

Lastly, providers and payers are not utilizing the 30-day negotiation window for a number of reasons. The GAO report points to slow responses between parties and also the general assumption that the parties came to the negotiation table already at a stalemate (remember those differing world views). As a result, payers and providers figure they may as well just wait for a neutral third party, which, in this case, means a certified IDR entity, to determine what a fair payment amount should be.

Analogous to A Toll Road Problem

Another way to consider the backlog is through a traffic lens. When cars encounter a point of toll collection on a highway, they have two options:

  • Enter a lane that clearly states DO NOT STOP. This lane is designed for vehicles that have some sort of decal or barcode affixed to their windshield that a reader scans, processes, and charges the affiliated account, all while cars move through the lane.
  • Enter a lane for vehicles that need to stop and pay the toll to an attendant before resuming their drive.

The Department of Transportation and drivers alike benefit from a smooth and automated process where the majority of drivers go through the automated lane.

But if that first lane, designed to be more efficient, has a barcode reader that malfunctions 75% of the time, most drivers would probably start ignoring the DO NOT STOP lane because the process is not working as intended. Instead, they would pull into the queue to wait to pay an attendant directly. A traffic jam would occur almost instantly, and there would be a noticeable ripple effect as a result.

The optimal solution would not be to staff up the attendant lanes and leave the automated lane broken. Fixing the technology in the barcode reader in the automated lane would solve the root of the traffic jam.

The QPA Problem

That solution seems obvious when we think about toll roads, and yet, the industry continues to push for improvements specifically within the IDR.

While the IDR process does have significant room for improvement, that process is primarily bogged down because neither the QPA nor the 30-day negotiation window is working as intended. Providers are inherently distrustful of the QPA calculations payers are utilizing, and their distrust appears to be warranted: of the disputes that have finally received a decision from the IDR entity, 71% ruled in favor of the provider.

Therefore, it stands to reason that if we want to fix the IDR, we first need to fix the QPA.

Price Transparency Data as a QPA Calculator

What can be done?

Strong consideration should be given to removing initial calculation requirements from either party. There’s currently language in the NSA that allows payers to utilize a neutral third-party database to calculate the QPA in scenarios where the payer is unable to calculate the QPA themselves. Why not eliminate the provider/payer finger-pointing entirely and require that a Department-approved database be utilized to calculate all QPAs?

The Departments have an opportunity to use price transparency data within these calculations. Although much has been made about price transparency data and its usefulness for patients as consumers, there are numerous immediate opportunities to employ the data to simplify other federal and state requirements, such as OON payments within the NSA.

At a high level, the QPA, when calculated correctly, should serve as a fair payment amount for services rendered that closely aligns with an in-network payment amount. This ties into the world of price transparency because MRF data includes all negotiated rates. That same MRF data can be distilled down to the relevant rates useful for calculating a QPA.

On the flip side, if providers or payers are displeased with a database-driven QPA calculation built off MRFs, their first step to remedy the payment amount would be to examine their own published rates. It behooves all parties involved to improve the underlying data in order to efficiently and accurately pay OON claims. Providers or payers that publish unusable or inaccurate data end up causing avoidable headaches for their own teams because they may wind up in the IDR when their own files need improvement.

Upstream Solutions Help Downstream Problems

Ultimately, the QPA should instill confidence in both providers and payers that the payment for OON services is fair. Providers want to know they can treat OON patients without suffering a financial hit. Payers want to ensure their members receive high-quality care at the appropriate place of service when possible. Thus far, neither the QPA nor the IDR has done a good job of understanding or mitigating the concerns of either party.

The goal of utilizing a third-party database to calculate the QPA would be to increase confidence that the QPA was calculated correctly. If that initial calculation is trustworthy, providers and payers alike would need to spend less time and resources preparing for the IDR process. They’d be more likely to get back in the automated toll lane.

Does the IDR process still need improvement? Absolutely. There’s no doubt it’s an administrative burden and a waste of money and resources for all parties involved. But all of that is exacerbated by the half a million claims sitting and waiting to get through the equivalent of one open toll lane managed by just a handful of attendants.

Unless the QPA is fundamentally redefined and changed to acknowledge the relationship between payers and providers, no amount of tinkering with the IDR, Proposed, or Final Rules would fix the root problem. The Departments should think outside of the box and consider how price transparency data can be part of a more upstream solution to help mitigate the effects of this downstream problem.