Rising Health Plan Costs and the IDR Process: An Analysis

Insurance brokers handling group benefits are grappling with rising health plan costs driven by unexpected factors, notably the independent dispute resolution (IDR) process under the No Surprises Act.

The Georgetown University Center on Health Insurance Reforms recently published research in Health Affairs, spotlighting how this IDR mechanism has significantly contributed to climbing expenses. The study reports that since the IDR's introduction, it has generated $22.4 billion in costs, and this trend is expected to continue through 2025. These expenses break down into $15.6 billion from excess provider payments above standard in-network rates, $4.2 billion in administrative costs, and $2.7 billion for arbitration firm fees. Research professor Jack Hoadley indicated that even this notable sum might be an understatement, as the internal expenses managed by insurers and providers are not entirely accounted for.

The Surge in Dispute Volume

Originally designed for resolving a limited number of payment disputes for out-of-network claims, the IDR system has far surpassed initial federal estimates. By 2025, the volume of disputes is projected to hit 2.6 million cases, a staggering increase from the anticipated 22,000 annually. This surge reflects broader use and growing complexities within the system. Early 2026 data already shows a 50% increase in disputes year-over-year, suggesting a worrying trend for future health plan costs.

Dominance of Key Players

A few major entities have emerged as predominant users of the IDR process. Radiology Partners, HaloMD, and TeamHealth were involved in nearly 75% of resolved disputes in 2025. Radiology Partners and TeamHealth are notably backed by private equity, while HaloMD has carved out a niche in provider billing and arbitration. Their significant engagement with the IDR process underscores the system's transformative financial implications.

Financial Implications for the Industry

Providers' success in the IDR process has been striking, with an 85% win rate in 2025. The financial outcomes of these arbitration cases have been substantial, with award values increasing by 264% from the previous year. Particularly in emergency medicine claims, awards reached 315% of the qualifying payment amount (QPA), putting pressure on insurers to adjust pricing structures and manage risk exposure.

Emerging Legal Challenges

The IDR process is now facing legal scrutiny, as evidenced by a notable case in California where a federal court dismissed Anthem Blue Cross's lawsuit against HaloMD. The decision, currently under appeal, underscores a growing call by employer groups for more oversight in arbitration processes. Additionally, the current methodology for calculating the QPA is under review, following a court ruling that its government-sanctioned formula is unlawful. This ruling could influence future cost benchmarks and arbitration strategies.

Implications for Insurance Professionals

For brokers advising self-insured plan sponsors, comprehending the ramifications of these arbitration trends is essential. IDR-related expenses are now evident in premium calculations, and insurers frequently cite these costs when justifying rate hikes. As regulators and legal systems continue to adjust IDR processes, brokers should prepare to help clients navigate potential impacts, including developing mitigation strategies to manage unforeseen cost increases effectively.