On the Hill, employers sound the alarm on IDR 

Is there a business event that you look forward to every year? A conference, convening, or celebration? For me, it is the summer Capitol Hill visits during the American Benefits Council Policy Board Meeting in Washington DC. This year did not disappoint.

We had plenty to talk about with lawmakers and their staff in Washington.

Since I know I had you at "IDR", I will start there.

The No Surprises Act took effect in January 2022 to protect consumers from "surprise medical bills" when they unknowingly utilized an out-of-network provider. While the legislation was well intentioned, the cost to plan sponsors participating in the Independent Dispute Resolution process has become in itself an unintended surprise.

In the Federal IDR process, disputing parties have the option to choose a third-party entity, known as a certified IDR entity, from a list of certified organizations to resolve their dispute. Everyone involved must attest to having no conflicts of interest. The provider or facility and the health plan or issuer must submit payment offers and additional information supporting their payment offers to the certified IDR entity. The certified IDR entity must select from the disputing parties' payment offers. Both the provider or facility and the health plan or issuer must abide by the decision, and payment must be made within 30 calendar days.

A recent WSJ article reported that “for 2025, total payouts under the arbitration process reached $14.85 billion, according to a Journal analysis of new, previously unreleased data from the Centers for Medicare and Medicaid Services. The figure for 2024 was $4.08 billion, according to the analysis.” That’s a 264% increase in one year and employers are sounding the alarm about how much worse it has been in 2026.

During our meetings with lawmakers and staffers, employers shared how IDR is adding an additional 2% to their total medical spend on top of the highest medical trend we have seen in the last 15 years.

The crux of why costs are rising so fast at such excessive amounts can be traced to a legal decision in a Texas case that struck down a helpful part of the implementing regulations. The case, which was won by the Texas Medical Association, has had the effect of untethering IDR entity payment determinations from in-network payment amounts.

Currently, the only legislation that is active right now on this topic is the No Surprises Act Enforcement Act . The bill would penalize payors if payment lagged beyond 30 days. The penalty is three times the difference between the payor offer and the IDR-awarded payment amount for bills not paid within 30 days. The penalties and interest still accrue even if the claim has been challenged as ineligible by the employer, union, or health plan. According to data from the AHIP/BCBSA report, roughly three-fourths of these adjudicated awards are successfully paid within the mandated 30-day window, delayed payments “stemmed from misdirected notices or missing information.” Several staffers mentioned rumblings from the Congressional Budget Office that this bill would increase the federal deficit by tens of billions of dollars — most likely because CBO expects it will increase premiums. It’s clear this would add additional cost to plan sponsors on top of the current shock of current IDR claims expense.

For these reasons, we shared a letter that was signed by 58 employers and employer organizations opposing the bill and encouraging Congress to work instead on legislation that would address the fraud and abuse evident in the arbitration process while lowering costs for employers. We also offered suggestions. For example, the screening process could be tightened up — perhaps using artificial intelligence — to eliminate ineligible claims before they proceed through the IDR pipeline.

The AHIP/BCBSA report found that 39% of claims submitted to IDR were ineligible under the terms of the law, but only 17% were dismissed as ineligible with more than half of the ineligible cases resulting in binding payment determinations. All told, this discrepancy resulted in payors being required to make payments on 184,000 ineligible claims.

Further, plan sponsors also think the basis for determining the reimbursement amounts needs to be adjusted. The Coalition Against Surprise Medical Billing — comprised of employer advocacy groups, unions, and carriers — is working on a solution. Based on our experience with the Affordable Care Act Cadillac Tax repeal, we know working as a multistakeholder group increases our chances for success. That group has been floating ideas to members of Congress and staff.

A personal highlight of the day was sharing a new paper co-authored by The American Benefits Council and Mercer on Employee Innovations in Health Care Affordability and Value. The report spotlights more than a dozen large US employers who are making strides in the areas of affordability, quality, access, and holistic well-being. One of the case studies details an employer’s evolving experience with the IDR process.

Employers provide healthcare coverage to 181 million Americans — approximately half of the US population. Employers have an opportunity, and a responsibility, to have their voices heard by lawmakers and regulators. Supporting the employer advocacy groups is a great way to do just that.