Welcome back to the Bar! This month, Kerri and Ed invited a guest barkeeper, our own Karen Simmons, to help explain new regulations around the Independent Dispute Resolution process. Originally included as part of the No Surprises Act, IDR has been estimated to add $5 billion to employer costs since being enacted. Will these new final rules help bring that cost down? It doesn’t seem likely, but Ed, Kerri and Karen break down the pros and cons. And in Last Call, move over Spike and Timothee, our own celebrity Knicks fan (Ed) celebrates the champs.
Here's the New York Times article Karen mentioned: A $440,000 Breast Reduction: How Doctors Cashed In on the No Surprises Act and Arbitration - The New York Times
And here's an article from us last year about hidden medical costs: As Health Spend Soars, Employers Should Beware of Hidden Cost Threats
The Bar on Healthcare - June 2026
[00:00:00] Ed Doherty: Hello again, and welcome back to The Bar. The Bar on Healthcare is a monthly podcast from Aon's Health Solutions about the legal and regulatory issues surrounding employer group health plans. I'm Ed Doherty from Aon's Compliance and Policy Consulting Group.
[00:00:21] Kerri Willis: And hi, everyone. I'm Kerri Willis, also from the Compliance and Policy Consulting Group.
[00:00:26] Kerri Willis: If you're listening to us on aon.com, we'd love it if you made The Bar a part of your regular feed. Just search for The Bar and Healthcare on your favorite podcast app, subscribe, and if you're so inclined, please leave us a review. And with that, Ed, The Bar is open.
[00:00:41] Ed Doherty: Thanks, Kerri, and take a seat. This month, we wanna talk about some developments in the independent dispute resolution, or IDR process, under the No Surprises Act, so exciting stuff We've talked about IDR before and how it's added about $5 billion to plan sponsors' costs since it was implemented, but now the federal government has issued some new final rules around IDR.
[00:01:04] Kerri Willis: Yeah, that's right, Ed, and the question we had is whether those new rules help to address any of the real issues that we've talked about before that the IDR process has resulted in. So for that, we brought in Karen Simmons, who is a senior vice president and leader in our health data analytics practice here at Aon.
[00:01:26] Kerri Willis: Karen and our data analytics team have done a lot of analysis on what has actually been happening with the No Surprises Act and the independent dispute resolution process. So we're so glad to have Karen with us to discuss this really important issue and what it means for employers. Karen, welcome to the Bar.
[00:01:44] Kerri Willis: Can you tell us a little bit about yourself before we dive in?
[00:01:47] Karen Simmons: Yeah. Hi. Karen Simmons, and I am an actuary by background, and as Kerri mentioned, a part of our health analytics practice here at Aon. And I, myself and my team have had the pleasure of tracking the IDR process and cost implications pretty closely here for the past several months.
[00:02:07] Ed Doherty: So we have lawyers, and we have actuaries on this call. This is gonna be a banner episode for our listeners. It is the two people you really wanna encounter at the cocktail party. And so we're so glad to have the numbers folks along with us. So Karen, remind our listeners what the IDR process is, what its purpose is, and why these rules came about.
[00:02:30] Karen Simmons: Yeah, sure. So the IDR process is a part of the No Surprises Act from back in 2021, and basically what the act is saying is that insurers can no longer balance bill patients in emergency situations where they're treated in out-of-network facilities or where they do go to an in-network facility but maybe see a doctor or have a service performed by a non-network provider.
[00:02:54] Karen Simmons: So historically, what had happened is if the provider wanted to charge more than the insurer was going to pay to that out-of-network provider, the difference in cost was falling to the patient. And so the No Surprises Act was intended to eliminate that burden on the patient and require the provider and the insurer to come to terms on an appropriate payment amount
[00:03:14] Ed Doherty: Sounds great so far.
[00:03:15] Karen Simmons: Yeah, it does. So you know, I think the act has been really successful in removing that patient burden. That's been sort of the big banner part of the No Surprises Act. But through this process, the insurer and the provider are supposed to have 30 days to negotiate a fair price between the two of them, and if they can't come to agreement, then it goes through the IDR process, where they submit to what we call a baseball style arbitration.
[00:03:41] Kerri Willis: Oh, yeah, here we are back in the sports analogy. That's right. Just like everybody likes to hear on the bar, more sports.
[00:03:48] Karen Simmons: More sports. So what that means in this case is that each party, the provider and the insurer, submit their proposed payment, and then an independent arbiter has to pick one of the two.
[00:03:58] Karen Simmons: So the same way that salary arbitration works in baseball.
[00:04:02] Ed Doherty: See, here I thought it was something about calling balls and strikes, but okay, it's salary arbitration. So all right, the provider says it should be $5,000, and the insurer says it should be, like, $3,000, or more realistically what we've been seeing, it's something more like $30,000 and $3,000.
[00:04:21] Ed Doherty: But then the arbitrator has to pick one of those numbers. They can't just say that it's somewhere in between, like it's 4,000 or 10,000. It's gotta be $3,000 or $30,000.
[00:04:32] Kerri Willis: Yeah, and I know there's been a lot of back and forth that we're not gonna get into about, you know, the insurer or the plan payer, um, using the qualifying payment amount to determine what is a reasonable amount.
[00:04:47] Kerri Willis: But what we've seen playing out, right, is that even though in theory you want both parties to submit reasonable amounts because if one of them submits something that's far outside, you know, what is reasonable for that service, they would probably lose. But we're not really seeing that, right, Karen? And there's been a lot of problems with this IDR process and the open negotiation process that precedes it.
[00:05:16] Kerri Willis: Can you talk a little bit about some of those issues?
[00:05:18] Karen Simmons: Yeah. Yeah. I think you've hit on a couple of the big issues that we're seeing. So, you know, one of the main ones is really the volume and how often this process is being used. I think the volume of claims that are now flowing through IDR, it's about 100 times higher than what was initially estimated when the No Surprises Act went into place.
[00:05:38] Karen Simmons: And then what we're also seeing is that the providers are winning over 80% of the time. And not only are they winning over 80% of the time, the awards that we're seeing for those providers are, you know, many multiples higher than benchmark amounts. And we're also seeing some trends of providers increasing their asks over time for similar procedures.
[00:05:58] Karen Simmons: So, you know, they are successfully awarded an amount that's pretty high for a procedure, and then the next time they go in and ask for more and win again, and then ask for more and win again. There was a recent New York Times article that, you know, talked about a, a specific provider that had... where there was a claim that had over $400,000 in payments made through the IDR process for a procedure that insurance for an in-network provider would typically reimburse somewhere in the 15 to $20,000 range.
[00:06:26] Karen Simmons: So we're really seeing some significant award amounts come through on the provider side.
[00:06:30] Ed Doherty: Right. And so because the provider is submitting this higher price and winning a good significant amount of time, that's really ultimately driving up costs for the payers.
[00:06:39] Karen Simmons: Yeah. That's right. Again, you know, going back to when the No Surprises Act went into place, the estimate at the time was that it would actually reduce medical spend by about a percent, and instead we're seeing the opposite of that with, for some groups, we're now seeing, you know, cost impacts you know, 1, 2, 3% increase in cost driven directly by the No Surprises Act.
[00:07:01] Kerri Willis: As an aside, we just... this week, the Congressional Budget Office has asked for some information to kind of go back and revisit some of the estimates that they made around what the No Surprises Act was going to save, at the time it was passed. And we, as you have been saying, Karen, haven't really seen those results.
[00:07:21] Kerri Willis: But that leads us to these new rules that recently came out. Can you tell us a little bit about what the rules do and whether they help solve these issues for plan sponsors or not?
[00:07:32] Karen Simmons: I think from our perspective, the rules don't really do that much. They're really not going far enough to alleviate the major concerns around the volume of claims, the volume of ineligible claims that are going through the process, or, you know, the award amounts that we're seeing that are frequently much higher than those benchmark rates.
[00:07:52] Ed Doherty: But other than that, they're great, right? Okay. So diving into some specifics, one of the things the final rule does is reduce the administrative fees that both parties have to pay from $115 to just $15. We like reducing fees, right?
[00:08:09] Karen Simmons: Yeah, you know, it, fee reduction seems good. The fees that have been associated with IDR have been pretty massive.
[00:08:15] Karen Simmons: I think it was over eight hundred million dollars for the first half of 2025 alone in fees just related to this process. The net effect of this particular reduction is likely going to be that more claims go through this process because you lower that financial threshold for providers to submit those claims.
[00:08:33] Karen Simmons: So now there's less of a financial risk if they ultimately are not submitting the awarded amount. So we're likely to see more claims and more lower dollar claims starting to go through the IDR process, and it really was never intended for those types of claims to begin with.
[00:08:50] Kerri Willis: Yeah, I mean, it does seem to me like if the idea is to, you know, make sure that only eligible claims are going through the process and to lower the number of claims going through the process, that reducing the fee is just going to drive up the volume, like you said, Karen.
[00:09:10] Kerri Willis: There's also been some changes, like administrative changes, to the IDR process itself, and I just mentioned, you know, the fact that there's been issues with whether claims that are actually eligible or not are going through the IDR process. Can you talk a little bit about that?
[00:09:28] Karen Simmons: So there's new rules that require the IDR entity that's arbitrating the case to determine whether the claims are eligible within five business days and then notify both the parties and the departments of that determination.
[00:09:43] Karen Simmons: And the departments are also finalizing a requirement for parties to submit additional information related to eligibility, conflicts of interest concerns, or payment determinations to the IDR entity within that same five business days of the request. If the information's not provided, then the IDR entity will make a determination without the information or close the dispute if it cannot proceed without the information.
[00:10:06] Kerri Willis: And just to be clear, when we say departments, we're talking about the Departments of Labor, Treasury, and HHS, right? The departments that have jurisdiction over the No Surprises Act.
[00:10:18] Karen Simmons: Yeah, that's right.
[00:10:19] Ed Doherty: Our, favorite tri-agencies. Yes. So, so there is the hope that maybe requiring this bit more information, a little bit more loading up in the front of the process, that they might limit the ineligible claims?
[00:10:34] Karen Simmons: Yeah, that's the hope. We don't necessarily see that happening to the level that we need it to, and then especially with the potential for more claims to be flowing through the system, it just creates additional burden on trying to filter out any of those that may be ineligible.
[00:10:49] Kerri Willis: Yeah, and it seems like from the final rule that the departments were trying to make some changes to the open negotiation process to, you know, maybe try and address some of those issues with the volume of claims going through the IDR process.
[00:11:06] Kerri Willis: And just for our listeners that don't know, the open negotiation process is the process that the parties are supposed to engage in before the IDR process is triggered. But can you talk a little bit about some of those changes to the open negotiation process that's supposed to address some of these issues?
[00:11:25] Karen Simmons: Yeah. So, you know, we want to encourage more good faith negotiation 'cause the feeling really is that when there is a dispute, the parties, particularly the provider, may be more just willing to take their chances with the arbiter rather than actually negotiate before that process starts. And so what these rules do is encourage more negotiation by requiring that the party provide an open negotiation notice to both the other party and those same departments through the IDR portal and clarify when the clock starts on the 30-day negotiation period.
[00:11:58] Karen Simmons: There are also several new content elements designed to help parties understand what items and services are at issue and whether the IDR process applies. And the rules also include a requirement that the party receiving an open negotiation notice respond to the initiating party and to the departments by the 15th day of the 30 business day open negotiation period
[00:12:18] Ed Doherty: Yeah, even with all that, though, that doesn't really drive them together to actually require good faith negotiations, does it?
[00:12:27] Ed Doherty: Because it, everything here already sounds like there's sub- seeming some advantage on one side, and it's just, I don't know why you would then come in and openly negotiate if you feel like you're gonna get a better deal out of the arbitration.
[00:12:41] Karen Simmons: Yeah, I think that's exactly right. The rules don't go far enough.
[00:12:45] Karen Simmons: Um, they're encouraging better communication through the process, which is something, but there's not really anything in there that would require more true good faith negotiation.
[00:12:54] Kerri Willis: We've talked a lot about, and you've talked a lot, Karen, about helping us understand what some of the problems are with the current process and, you know, whether the rules go far enough to address it.
[00:13:05] Kerri Willis: But there's also, like, we're seeing a difference in how these rules are working from a regional perspective. Is that right?
[00:13:11] Karen Simmons: Yeah, that is right. So we're really seeing the vast majority of these IDR cases coming out of a handful of states. Texas is the most notable. I believe Florida, Arizona, Tennessee also have higher volume than other states.
[00:13:26] Karen Simmons: We're seeing more activity out of the New York and New Jersey area as well. And so really what we're seeing is for groups that have population, more population in these states, they're being much more affected by this IDR process than those that are located in other areas of the country.
[00:13:41] Kerri Willis: Yeah, so that's definitely something to watch as well.
[00:13:44] Kerri Willis: The rules also talk about a new federal registry that plan sponsors will have to sign up for. So that sounds like, you know, an administrative requirement that's gonna add to plan sponsors' administrative burden more generally. What is that registry, and what will plan sponsors have to do?
[00:14:03] Karen Simmons: Yeah, that's right.
[00:14:04] Karen Simmons: So the new rules say plan sponsors are going to have to provide additional information as to the items and services covered by the plan that may be subject to the IDR process, and then plans will receive an IDR registration number that's designed to hopefully make the process smoother, and that is gonna have to happen within 30 days of the registry opening.
[00:14:25] Karen Simmons: So plan sponsors should be discussing with their carrier partners to see who's gonna be responsible for that.
[00:14:31] Kerri Willis: And just to be clear, that registry isn't up and running yet, so we'll have to wait and get guidance on how exactly plan sponsors do that, right?
[00:14:42] Karen Simmons: Yeah, that's right.
[00:14:43] Ed Doherty: Great, another registration, another filing, another thing for us to be looking out for.
[00:14:48] Ed Doherty: Are there any other changes that you wanna talk about?
[00:14:50] Karen Simmons: Less important for our purposes, there's some new required disclosures that plan sponsors will want to ensure that their carriers or service providers have made and if implementing those disclosures may carry any cost to their plans.
[00:15:02] Ed Doherty: Of course, more disclosures, more registrations, more potential costs, and so hopefully our carrier and service provider partners will be- Cooperative and helping all of our clients with that.
[00:15:14] Ed Doherty: Registration's not open yet, but what about the changes? When do they go into, into effect?
[00:15:19] Karen Simmons: In general, the changes go into effect August 3rd of 2026, although certain provisions may have later applicability dates, and that will rely on additional guidance from the department.
[00:15:29] Kerri Willis: So it sounds like definitely more to come on this issue.
[00:15:34] Kerri Willis: And this has been so great to have you here to go through all of this information with us and talk about how it's been impacting plans and what may or may not be helpful to plans under these new final rules. And when we get additional guidance, we hope that you'll come back, Karen, and be on again to talk us all through this.
[00:15:53] Karen Simmons: Absolutely. I would love to.
[00:15:55] Kerri Willis: Great. Thank you so much. It was so great having you here.
[00:15:58] Ed Doherty: Now it's time for Last Call. As the ringing in my ears is finally calming down, I wanna say congratulations to the New York Knicks on an incredible NBA Finals victory. You can't see it everyone, but Kerri is rolling her eyes because it's sports again.
[00:16:13] Ed Doherty: But we're very happy here in New York City for the Knicks bringing a championship back to the Garden and just making everybody super excited. I, I'm sure you've seen all the, the videos of the folks celebrating, the kids from the Bronx all the way to Spike Lee in Brooklyn. So this is the first time they've won since 1973, and it's a testament to the team's resilience, talent, and unwavering determination all season long.
[00:16:39] Ed Doherty: The celebration will carry into the streets with a classic New York ticker tape parade that goes right in front of the Aon office here in New York City. So I'm expecting it's gonna be tomorrow. We're, recording this on Wednesday, and so it's gonna be a huge crowd, and we're all very excited. So it's a proud moment for the entire city, well-deserved and long-awaited.
[00:17:03] Kerri Willis: Absolutely. Congratulations, Ed, and to all the Knicks fans. And that's our report for today. Thanks very much to Karen Simmons for joining us, and thanks as always to our editor, Michael Thibodeaux, and our producer, Don Moorhead, for always making us sound way better than we deserve. And we'd like to thank you all for joining us this time, and until next time, the Bar is closed.
[00:17:26] Ed Doherty: You've been listening to The Bar on Healthcare, an Aon podcast. Aon is not engaged in the practice of law. The information in this podcast is not intended as, and should not be considered, legal advice. Please consult your own legal counsel to obtain such advice