The federal No Surprises Act’s Independent Dispute Resolution (IDR) process has caused physician frustration since its inception. Although the No Surprises Act appropriately protects patients from unexpected out-of-network medical bills, the law also removed physicians’ ability to balance bill in many circumstances and replaced that right with a payor-facing arbitration process. For many physician groups, especially hospital-based specialties including radiology, anesthesiology, emergency medicine, pathology, and laboratory medicine, the IDR process has too often proved expensive, procedurally burdensome, and difficult to use.

These hospital-based physician specialties are most likely to use the federal IDR process, particularly in circumstances where the physicians are out-of-network with a particular payor and treat patients covered by that payor without being separately selected by the patient. Because the federal No Surprises Act protects patients from balance billing in these circumstances, IDR is the statutory mechanism for these physicians to challenge inadequate initial payor reimbursement amounts and seek fair payment.

The Departments Finalize the No Surprises Act IDR Operations Rule

Last week, the Departments of Health and Human Services, Labor, and Treasury finalized long-awaited operational changes to the federal IDR process in a final rule. At the same time, the Departments also published a fact sheet detailing the major points of the rule. This final rule is a welcome step in the right direction for physicians. It does not solve every problem with the No Surprises Act payment framework, but it should make the process more accessible and workable for physician practices seeking fair payment for out-of-network services.

Key Provisions of the Final Rule

Reduced Administrative Fee

One of the most important changes is the reduction of the federal administrative fee. The Departments finalized a $15 per-party administrative fee per dispute, an 85% reduction from the prior $115 fee. For specialties like radiology, where many individual claims may involve relatively modest dollar amounts, the prior fee structure often made it economically irrational to pursue IDR, even where the payor’s initial payment was plainly inadequate. Significantly lowering the administrative fee should remove a real barrier to access, particularly for smaller and independent physician practices and for low-dollar claims.

Expanded Batching Rules

The rule also significantly improves the batching rules. The Departments recognized that requiring physicians to submit claims one at a time, or in overly narrow groups, undermines the practical utility of the IDR process. The final rule broadens the circumstances under which items and services may be batched to include: 

1. a single patient encounter (items and services furnished to the same patient on consecutive days and billed on the same claim form); 

2. the same or comparable service codes (such as CPT codes with modifiers, HCPCS codes, or DRG codes); 

3. for anesthesiology, radiology, pathology, and laboratory services, service codes within the same Category I CPT code section. 

The final rule also increases the limit of qualified IDR items or services in a single batched dispute to 50 items or services per batch. These changes are particularly important for hospital-based physicians who handle high volumes of relatively low-dollar claims and need a realistic way to aggregate similar disputes. Further, the expanded batching rules create efficiencies by allowing multiple claims to be resolved simultaneously, thereby lowering costs and decreasing the amount of time spent pursuing dispute resolution.

Improved Transparency and Communication

The final rule also takes steps to improve transparency and communication. Payors will be required to use specific claim adjustment reason codes and remittance advice remark codes to indicate whether a claim is subject to the No Surprises Act and the federal IDR process. Payors also must provide additional identifying information, including information about the applicable plan and, once operational, an IDR registration number. These changes are designed to help physicians determine whether a claim is IDR-eligible and reduce the costly problem of initiating disputes only to have them challenged as ineligible. 

Portal, Registry, and Withdrawal Process Improvements

The final rule centralizes key aspects of the IDR process through the federal portal. Open negotiation notices must now be submitted through the portal, with the receiving party required to respond by the 15th business day of the 30-business-day negotiation period. IDR initiation notices must follow within four (4) business days after open negotiation ends, with responses due within three (3) business days. 

The rule also establishes a registration requirement for group health plans, issuers, and Federal Employees Health Benefits (“FEHB”) Program carriers, who must provide identifying information including legal business names, plan types, and contact details for open negotiation. Finally, the Departments formalized a withdrawal process allowing disputes to be withdrawn by mutual agreement, non-response to a withdrawal request within five (5) business days, or non-responsiveness to eligibility requests.

Industry Reaction

The American College of Radiology (“ACR”) and other physician organizations have welcomed these changes. The ACR has stated that it is pleased the Departments addressed concerns about imaging providers’ access to IDR, including expanded dispute bundling, reduced administrative fees, and requirements that insurers provide necessary information with initial payments. Certain radiology, anesthesiology, and emergency medicine organizations have similarly praised the rule as a meaningful improvement to a process that has too often favored payors through delay, opacity, and procedural complexity.

Remaining Challenges

The rule unfortunately does not provide a complete IDR fix. Physician groups continue to face substantial costs from certified IDR entity fees, administrative burdens in preparing disputes, and payor behavior that may limit meaningful open negotiation. The final rule creates more structure around open negotiation, including portal-based notices and response requirements, but it does not necessarily ensure that payors will engage in substantive good-faith negotiation before forcing physicians into arbitration. The rule similarly does not impose the kind of payor accountability that many physician organizations have requested when plans fail to provide complete information or delay payment after an IDR award. 

Most importantly, the rule does not resolve the central controversy over the Qualifying Payment Amount (QPA). The QPA remains a powerful benchmark in the IDR process, and many physician groups believe payor-calculated QPAs often understate market-based payment rates. In a recent FAQ, the Departments and the Office of Personnel Management (OPM) extended enforcement discretion allowing plans and issuers to continue using the 2021 QPA methodology for items and services furnished on or after February 1, 2026 and before October 1, 2026, including for disclosures and submissions in the federal IDR process. Please refer to our prior client alert regarding the FAQ for more details.

That FAQ is problematic for physicians seeking a more immediate correction to QPA-driven outcomes. Even though litigation over the QPA methodology remains pending, the continued use of the 2021 methodology preserves the status quo. As a practical matter, this means arbitrators may continue to rely heavily on a payor-calculated benchmark that physicians contend is neither sufficiently transparent nor reflective of fair market reimbursement.

It also remains to be seen whether the new IDR rules will have any meaningful impact on the rapid growth of IDR middlemen—organizations that specialize in arbitration and now account for a significant share of IDR disputes—or on the wave of litigation by payors against these middlemen. Early 2025 data indicates that a single middleman organization accounted for more than one-fifth of all IDR disputes, and major insurers have filed multiple lawsuits alleging that middlemen and high-volume provider groups have “weaponized” the IDR process by flooding the system with ineligible claims. The outcome of these lawsuits may impact the future of the IDR process. 

The final IDR rule should be viewed as real progress, but not the end of the reform effort. Lower fees, broader batching, better payor disclosures, the plan and issuer registry, and improved IDR infrastructure should make the process more usable for physicians. But unless the QPA methodology becomes more transparent, accurate, and balanced, the IDR process may still fall short of its intended purpose: protecting patients from surprise bills while ensuring that physicians are paid fairly for the care they provide.

Effective Dates and Next Steps

The final rule becomes effective 60 days after publication in the Federal Register. Given that the rule was published on June 4, 2026, that means that rule will become generally effective on August 3, 2026. 

But certain provisions are subject to staggered applicability dates. For example, the $15 administrative fee applies to disputes initiated on or after the August 3 effective date. Several other provisions, including the portal-based open negotiation requirements, apply beginning 90 calendar days after the Departments issue forthcoming guidance announcing that supporting portal functionality is available. Also, certain modifications to eligibility and selection processes apply beginning November 1, 2026.

Physician practices should begin preparing for these changes now. This includes reviewing billing workflows to identify claims likely to be subject to the federal IDR process, familiarizing staff with the new portal-based notice requirements and understanding the expanded batching options that may make it more economical to pursue payment disputes for high-volume, lower-dollar services.

Reed Smith will continue to follow developments related to the No Surprises Act. If you have any questions about this final rule or anything involving the No Surprises Act, please do not hesitate to reach out to the authors or other health care lawyers at Reed Smith.