The Dark Side of Independent Dispute Resolution: How Some Providers Are Exploiting the No Surprises Act

The No Surprises Act was passed in 2020 with a clear goal: protect patients from unexpected bills when they receive care for emergency services at out-of-network facilities and certain non-emergency services from out-of-network providers at in-network facilities. For patients, it has largely delivered on that promise. But for the health plans footing the bill, the law’s federal arbitration mechanism, known as independent dispute resolution or IDR, has created an entirely different kind of problem.

Providers have flooded the IDR system with claims, and they are winning at an extraordinary rate. What was designed as a fair, structured dispute process has become a revenue strategy for some provider groups, with arbitration awards running dozens of times higher than what an insurer would pay under a negotiated contract. For multiemployer health plans and Labor funds, which often operate on tight margins and serve members who depend on their benefits, the cost is real and growing.

This article explains how the IDR process works, where it is being taken advantage of and what fund administrators and their TPAs can do to protect their plans.

The IDR Process: How It Was Designed to Work

When a provider delivers care to a plan member and there is no agreed-upon rate (typically because the provider is out of network), the No Surprises Act establishes a structured process for resolving the payment dispute. The starting point is the Qualifying Payment Amount (QPA).

The QPA represents the median contracted rate for a given service, based on the specific specialty and geographic area where the care was delivered. It is updated annually and serves as the benchmark the plan pays while the dispute is resolved.

If the provider does not accept the QPA, the parties enter a 30-business-day open negotiation period. If that fails to produce agreement, either party can initiate IDR. From there, both sides submit their proposed payment amount to a certified IDR entity, a neutral third party approved by the Departments of Health and Human Services, Labor and Transportation. The IDR entity reviews the submissions and picks one of the two offers. There is no middle ground and no appeal.

The full timeline from claim payment to IDR determination can stretch across several months, with each stage carrying its own deadlines, fee requirements and administrative obligations.

Where the System Is Being Gamed

The IDR process was built on an assumption of good-faith negotiation between two parties with roughly comparable resources and motivation to settle. That assumption has not held. Several patterns have emerged that are driving disproportionate outcomes at the expense of health plans.

Volume flooding by specialized firms

Providers are no longer navigating IDR alone. A growing industry of revenue cycle management companies and law firms now exists specifically to file arbitration claims at scale on behalf of physicians. These firms understand the submission process, know which IDR entities tend to favor providers and have developed templates for maximizing awards. Some advertise win rates above 90% and average reimbursement increases measured in the hundreds of percentage points per claim.

The numbers reflect this industrialization. Nationally, providers filed 1.2 million IDR cases in the first half of 2025 alone, a figure that dwarfs the 17,000 annual cases the government originally projected when the law passed. In New York state, arbitration cases jumped 160% in 2025 alone.

Specialty concentration in elective services

IDR disputes are not evenly distributed across care types. The highest-volume specialties (general surgery, plastic surgery, neurological surgery, anesthesiology and orthopedic surgery) are also the specialties where out-of-network billing was rare before the No Surprises Act. Elective procedures that were never the law’s intended focus now generate a disproportionate share of arbitration activity.

Some providers have structured their practices specifically to take advantage of the IDR pathway. A common pattern involves a provider group that remains out of network while operating through or alongside an in-network facility. Because the facility is in-network, the services qualify for No Surprises Act protections. The patient is protected from balance billing, but the provider can take the payment dispute to IDR and seek awards far above the QPA.

Unbundling and repeated disputes

A related pattern involves splitting a course of treatment that could be handled in one visit into multiple separate procedures across multiple visits, generating multiple IDR claims from a single episode of care. Each claim enters the IDR pipeline independently, multiplying the administrative burden on the plan while increasing the provider’s total potential recovery.

Compound this with the fact that IDR disputes are frequently initiated by the same providers, against the same plans, repeatedly. The plan bears the cost of participation in every case, including non-refundable administrative fees that accrue regardless of outcome.

Arbitrator bias and inconsistent outcomes

The IDR entity chosen to resolve a dispute has a significant effect on how a dispute is decided. MagnaCare’s own IDR data shows fund win rates ranging from 0% to 67% depending on which entity handles the case. The same clinical facts, the same procedure, the same supporting documentation can produce dramatically different results depending on who is assigned.

Health policy researchers have noted that arbitrators, who are paid per case, may have structural incentives to render decisions that keep providers submitting claims. Whatever the cause, the results have been lopsided: providers are winning approximately 88% of federal IDR cases nationally, according to analysis from the New York Times.

What This Costs Your Fund

The financial impact on multiemployer plans goes beyond individual claim awards. Consider a real example: a lumbar spinal fusion case where the billed charges totaled approximately $294,000. The QPA for the same set of services was $2,259. The final IDR payment determination came in at $179,446, nearly 80 times the QPA, and a figure the plan had no ability to appeal once the arbitrator ruled.

Add to that the cost of participation itself. Both parties pay administrative fees upon IDR initiation, and those fees are non-refundable. Entity fees are also paid upfront, with only the prevailing party receiving a refund. For a plan losing the majority of its IDR cases, those fees compound into a meaningful operational expense on top of the elevated claim payments.

The operational lift is substantial as well. Each dispute requires tracking deadlines across a multi-month timeline, preparing submissions, coordinating with legal or compliance resources, and managing follow-up if a winning determination goes unpaid. Plans that do not have dedicated IDR management capacity often find themselves outmatched by providers who have built entire teams around the arbitration process.

What Fund Administrators Can Do

There is no single fix for the structural problems in the IDR system. But funds and their TPAs can take steps to reduce exposure, improve outcomes and make better-informed decisions about when and how to participate.

Benefit design modifications

Removing or restricting out-of-network coverage for elective procedures is the most direct way to limit IDR exposure in the specialties where abuse is most concentrated. Excluding out-of-network coverage for elective surgery in particular cuts off the pathway that many provider groups are using to generate arbitration claims. However, funds should note that this strategy is strictly applicable to elective care; it will not mitigate exposure to emergency claims involving an out-of-network provider at an out-of-network facility. Funds considering these changes should evaluate their member population and existing utilization patterns before making modifications.

Provider contract and network strategy

Facility-level contract language can help deter the facility-par/provider-nonpar arrangement that generates a significant share of elective IDR claims. Penalty provisions for out-of-network charges at in-network facilities give plans more leverage when providers attempt to exploit the gap between facility and professional billing status.

Strong network management also matters upstream. The more robust the plan’s in-network coverage for a given specialty and geography, the less exposure the fund has to out-of-network disputes in that area.

Active IDR management

Passive participation in IDR (accepting QPA, responding to submissions without a strategic approach) produces worse outcomes than active management. Plans benefit from understanding which IDR entities are assigned to their disputes and what the historical win rates look like, building well-supported counter-submissions that address the specific factors arbitrators are required to consider, and tracking patterns across repeated disputes with the same providers.

The IDR process is provider-driven by design. Providers initiate it, they often come prepared with legal representation and specialized billing firms, and they have more experience with the system than most plans. Closing that gap requires a TPA that treats IDR as an ongoing operational responsibility, not a one-off administrative task.

Documentation and eligibility screening

Not every claim that reaches IDR is actually eligible for the process. Claims involving Medicare, Medicaid and certain other government programs should not qualify, yet ineligible claims regularly move through the system and reach final determination. Catching those claims early, before IDR is initiated, can eliminate disputes that should never have started.

Early documentation of the clinical and contractual facts surrounding a claim also strengthens the plan’s position in open negotiation, where resolution before IDR is still possible and often preferable.

Frequently Asked Questions

Does IDR apply to self-insured multiemployer plans the same way it applies to fully insured plans?

Yes. The No Surprises Act applies to both fully insured and self-funded group health plans, including multiemployer plans governed by ERISA. Fund administrators sometimes assume the law’s reach is limited to commercial insurance, but multiemployer plans are fully subject to the IDR process for qualifying out-of-network claims. That means the same exposure to elevated arbitration awards, administrative fees and operational burden applies regardless of how the fund is structured.

What happens if a provider wins an IDR determination but the plan doesn’t pay?

IDR decisions are binding, but enforcement is not automatic. Some plans have refused to pay arbitration awards they view as excessive or procedurally improper, and providers have responded by filing lawsuits to compel payment. Courts have generally been reluctant to review the merits of IDR awards, with some judges ruling that disputes over arbitration outcomes belong back in the IDR process rather than in court. Plans that withhold payment face ongoing litigation risk, which is why preventing unfavorable determinations upstream — through active open negotiation and well-prepared IDR submissions — is a more reliable strategy than contesting awards after the fact.

How can we tell if a provider group is a repeat IDR filer targeting our fund?

CMS publishes federal IDR data that includes information on disputing parties, which can be used to identify providers or billing firms filing claims at volume. Your TPA should also be tracking IDR activity across your fund’s claims and flagging patterns — same provider, same procedure type, repeated disputes with escalating offer amounts. That kind of pattern recognition is what allows a fund to build a more strategic response rather than treating each dispute as an isolated event.

Can an IDR determination be appealed?

Effectively, no. The IDR process does not include a formal appeal mechanism. Once a certified IDR entity issues a determination, that decision is final and binding on both parties. Legal challenges are possible in narrow circumstances — for example, if a party can demonstrate fraud or that the arbitrator exceeded their authority — but courts have set a high bar and have generally declined to substitute their judgment for the arbitrator’s. This makes the preparation and submission stage the most important point of intervention, not the aftermath.

What should we look for when evaluating a TPA’s IDR capabilities?

The right questions to ask are whether the TPA actively manages the open negotiation period or simply accepts the QPA by default, whether they track IDR entity assignment and historical outcomes, and whether they prepare tailored counter-submissions or use a generic template. Funds should also ask how the TPA handles ineligible claim screening — catching claims that shouldn’t qualify for IDR at all before the process is initiated. A TPA that treats IDR as an administrative checkbox rather than an ongoing clinical and legal function will consistently underperform against providers who have dedicated teams and specialized firms working on their behalf.

Work With a TPA That Knows the IDR Landscape

MagnaCare works with multiemployer and Labor health plans across the Northeast and brings direct experience managing IDR disputes on behalf of funds. From claim screening and QPA analysis to open negotiation and IDR submission support, we help plans engage the process strategically rather than absorbing its costs passively.

If your fund is seeing increased IDR activity or wants to evaluate your current exposure, schedule a call with our team to discuss your options.