Insurers hoping for a reprieve from an out-of-network billing system largely favoring healthcare providers will likely be left wanting as federal policymakers sit on their hands and one large payer’s bid to limit the claims faces an uphill battle, strategy firm Capstone concluded in a new report.
A quarter-by-quarter rise in total payment dispute volumes is likely to continue due to the structural incentives for providers to engage in the process, the firm’s analysts wrote in its report. Such a trend would be slightly positive for hospitals, solidly beneficial for specialty providers and a roadblock for payers—“however, employers could face an additional burden,” they said.
Independent Dispute Resolution (IDR), the process for adjudicating out-of-network (OON) claims created by 2020’s No Surprises Act, has largely favored providers over payers in the wake of court decisions that revised the guidance the Centers for Medicare & Medicaid Services provides to third-party arbitrators.
In the second quarter of 2025, for instance, the rates put forth by providers during an IDR dispute were selected in about 87% of closed disputes. A February Congressional Research Service report reviewing emergency service disputes in 14 states often found adjudications in providers’ favor at rates far exceeding the qualifying payment amount (QPA, the starting price point for IDR disputes,) even when the QPA was already above median in-network rates.
Beyond that ruling trend, Capstone noted that a rise of third-party vendors like HaloMD, which help providers file disputes and recover payments and is responsible for 22% of total dispute volume, has helped increase IDR volumes over time. Additionally, government efforts to clear dispute backlogs (58% in Q4 2023 to 9% in Q4 2025) have reduced the time to payment, giving smaller providers more reason to pursue payments through the IDR process. In the back half of 2025, nearly 1.4 million cases were filed, according to CMS data.
“The theory was that [the IDR] structure would incentivize both parties to converge on reasonable rates, reducing the need for arbitration over time,” Capstone wrote in its report. “That has not happened. IDR initiation volumes are growing substantially, suggesting the process is functioning less as a convergence mechanism and more as a permanent feature of OON rate-setting.”
A downstream effect of the process is providers’ willingness to play ball with payers during network contract negotiations, Capstone analysts noted. Whereas the IDR process initially pushed specialty providers into the network, scaled providers with substantial market share now have less reason to do so.
“The result is a self-reinforcing cycle in which providers see little reason to accept in-network rates they view as inadequate, given that the IDR process consistently delivers better outcomes,” the firm wrote.
Direct payer action most likely avenue to reverse IDR trends
The trends are unlikely to change without “a meaningful shift in market dynamics,” Capstone’s report continues. That could potentially mean legislative action addressing the 2020 statute’s IDR framework or a regulatory change from CMS, though new developments on those fronts seem unlikely.
There appears to be a “limited” appetite for changes from lawmakers due to the No Surprises Act’s general popularity. CMS has limited authority to make changes, and a pending IDR Operations rule currently under review is expected to increase IDR dispute volume by allowing more “batching” of multiple services in a single dispute to reduce provider administrative expenses.
Rather, Capstone expects any meaningful reversal of the IDR trend to most likely stem from direct action by payers. Chief among these is an administrative penalty Elevance Health implemented in 11 states for its Anthem BCBS commercial business. The policy levies a fee equal to 10% of the allowed amount on facility claims involving OON providers.
The policy has faced substantial pushback from provider groups, though it still went into effect Jan. 1 in the 11 states with plans to expand similar fees in two more. Capstone noted that one of the initial states, Indiana, has already enacted legislation against the practice and that the broader policy is primed for legal challenges.
“However, if Elevance’s model is adopted more broadly, the OON ecosystem could shrink as facilities internalize the direct financial cost of hosting OON providers,” Capstone wrote. “In that scenario, provider groups would face pressure to either absorb the loss of facility relationships or accept often-lower in-network rates.”
Elevance has also taken to the courts itself to tackle the large volume of disputes being filed. That push is already off to a rocky start after a federal judge tossed Anthem Blue Cross’ lawsuit alleging HaloMD had been abusing the IDR process—though lawsuits in three other states filed by Elevance subsidiaries against the third-party vendor are still pending.