How the No Surprises Act IDR Is Driving Employer Costs

How the No Surprises Act IDR Is Driving Employer Costs
April 7, 2026 7 mins

How the No Surprises Act IDR Is Driving Employer Costs

How the No Surprises Act IDR Is Driving Employer Costs

When “No Surprises” Means Higher Costs: How the No Surprises Act’s IDR Process Is Increasing Employer Spend.

Key Takeaways
  1. Independent Dispute Resolution (IDR) is creating cost burden in both awards and operations. Employers face higher effective payment levels (often multiples of benchmark ratees) plus significant fees and growing operational costs as carriers scale IDR response capabilities.
  2. A few high volume players are driving outsized impact. For certain providers and third party firms, IDR is a revenue strategy, creating localized cost and volatility hotspots.
  3. Employers must treat IDR as a strategic cost issue. Plan sponsors should demand clear IDR reporting, shape carrier negotiation and arbitration strategies, and factor IDR performance into carrier and network decisions.

The federal No Surprises Act (NSA) has largely delivered on its promise of shielding patients from most surprise medical bills. But four years into implementation, attention is focused on an unintended side effect of the law’s Independent Dispute Resolution (IDR) process: rising costs for employers and health plans.

When the NSA originally passed, it was widely expected to lower costs on the theory that eliminating balance billing would reduce providers’ leverage, drive more providers in‑network and pull payments closer to median contracted rates. However, early experience shows the opposite dynamic emerging.

Intended as a limited backstop when payers and providers couldn’t agree on a reasonable out of network payment, IDR has evolved into a high volume, high stakes arena with real financial consequences. IDR case volumes are now over 100 times higher than initial federal projections, providers are prevailing in the vast majority of disputes, often at levels well above benchmark payments, and insurers are beginning to quantify IDR as a measurable driver of medical trend.

IDR as a Business Model

Market behavior suggests that for a subset of providers, IDR is no longer a last resort—it is a business strategy, and that strategy is helping to create sharp geographic differences in dispute volumes. Arbitration activity is being driven disproportionately by “frequent flyer” organizations that file disputes at scale, often through specialized third parties. HaloMD is a leading example: as a third party firm that manages the IDR process for thousands of providers, it filed more disputes than any other initiating party in the first half of 2025, accounting for nearly 20% of all federal IDR submissions with more than 230,000 total disputes filed.

The outsized role of Texas based HaloMD and similar entities helps explain why IDR volume is heavily concentrated in certain states rather than evenly distributed across the country. Texas, in particular, has emerged as a national outlier, accounting for nearly 40% of all federal IDR disputes in the first half of 2025. Other high volume states (e.g. Arizona, Florida) show a similar pattern: a relatively small set of large provider organizations and their IDR intermediaries account for a disproportionate share of filings.

Payers report that in these hotspot markets, groups working with high volume IDR vendors are systematically routing a large share of claims into arbitration, treating IDR as a routine revenue lever rather than an exception pathway. For national employers, the result is that NSA related IDR is not just a broad national phenomenon but a localized risk: costs and volatility are concentrated in a handful of states and metro areas where players like HaloMD and their affiliated providers are most active.

Total IDR Disputes: Top 10 States Account for 80% of all disputes (2024 – 2025 Q2 CMS Data)

A Growing Cost Burden

Public federal reporting over the past several cycles shows consistent patterns. The number of disputes initiated continues to grow with IDR volumes increasing nearly 40% from the first half of 2024 to the first half of 2025. Additionally, providers’ offers are selected in the vast majority of disputes - approximately 85% of the time - with median IDR awards that are several multiples of the Qualifying Payment Amount (QPA) at roughly four times the benchmark.

The IDR fees alone are staggering. These fees include both an administrative fee as well as a fee paid to the IDR entity adjudicating each dispute. Total federal administrative fees and IDR entity compensation exceeded $800M in the first half of 2025 - but these fees are only a small piece of the equation:

  • The disproportionately high results in favor of providers have some carriers voicing that IDR is adding visible basis points to trend. In a February earnings call, major insurer Centene, reported the No Surprises Act’s IDR process as a visible contributor to their 1% increase in medical loss ratio.
  • Beyond dispute fees, the process is generating significant structural administrative overhead to stand up IDR operations, with carriers – particularly those that operate in hard hit states – reporting that the overwhelming volume of cases is requiring them to expand teams to support the caseload.

For large employers, these dynamics are now embedded in the health cost equation. Even if the IDR process is largely invisible to members and HR teams, it is driving real dollars at both the claim level and the administrative level.

IDR Dispute Analytics

What Employers Should Do Now

For most employers, the mechanics of managing individual IDR cases resides with their carrier or TPA partner. While operationally convenient, this can be strategically incomplete. The scale and direction of IDR trends mean that plan sponsors need to play an active role in monitoring their costs and asking targeted strategic and governance questions:

  • 1. Elevate IDR from Compliance Topic to Strategic Risk

    Employers should push for clear visibility into IDR performance and financial impact, including:

    • Volumes and trends in IDR filings by service category, provider type, and geography,
    • Default rates, Win/loss rates, and median awards relative to the QPA,
    • Identification of top provider groups driving disputes, particularly in IDR dense markets like Texas, and
    • Quantification of medical and administrative cost impacts attributable to IDR.
  • 2. Define Your Plan’s Strategy for IDR

    Armed with data, sponsors can more effectively challenge, validate, or refine their carriers’ negotiation and arbitration strategies. Employers should provide direction on questions such as:

    • How aggressive or conservative should carrier offers be in categories with high dispute rates and unfavorable arbitration trends?
    • Under what circumstances should plans lean toward higher negotiated payments before a dispute is filed to avoid potentially worse outcomes through IDR?
    • How should IDR performance (e.g. win rates, award levels, and dispute volumes, etc.) factor into carrier selection, performance guarantees, and network design decisions?
    • What expectations should carriers meet around IDR management (negotiation philosophy, escalation thresholds, and reporting transparency and cadence)?

With clear direction, HR, finance, and legal stakeholders can ensure carriers manage IDR related decisions in a way that reflects the organization’s overall objectives.

The Bottom Line

The No Surprises Act has significantly reduced catastrophic surprise bills for employees and their families—a major win for member financial protection. But the statute’s IDR mechanism is not, on its own, a cost reduction tool for employers.

Instead, emerging evidence points to:

  • Higher effective payment levels in key niches, with arbitration decisions skewing toward provider offers at multiples of the QPA;
  • Concentrated financial risk driven by a relatively small set of high IDR provider groups and geographies, including outsized dispute volumes in specific geographies; and
  • New structural administrative complexity and cost as carriers and TPAs build and run IDR operations at scale.

Employers that take a proactive, data driven stance will be better equipped to manage costs and avoid unwelcome surprises on their benefit plans.

Sources:
Federal IDR Supplemental Tables and Public Use Files (2023-2025),
Centene Q4 2025 Earnings Call Transcript,
How a Texas couple is getting rich off out-of-network medical bills,
Congress must fix the No Surprises Act before it bankrupts patients and employers,
Fact Sheet: Clearing the Independent Dispute Resolution Backlog,
The Implications of the No Surprises Act on Contract Dynamics, Negotiations, and Finances

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

Terms of Use

The contents herein may not be reproduced, reused, reprinted or redistributed without the expressed written consent of Aon, unless otherwise authorized by Aon. To use information contained herein, please write to our team.

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