— Michael N. Brown
The Economics of IDR: The Questions Healthcare Leaders Should Be Asking Now
As the Independent Dispute Resolution Market Matures, Healthcare Leaders Should Be Thinking Beyond Win Rates.
When Congress enacted the No Surprises Act, the Independent Dispute Resolution (IDR) process was designed to accomplish two important objectives: protect patients from unexpected medical bills and simultaneously provide providers and payers with a fair mechanism for resolving certain out-of-network payment disputes.
Since then, the market supporting the federal IDR process has expanded at a pace few anticipated. What began as a regulatory process has evolved into one of the fastest-growing administrative segments within healthcare. New vendors have entered the market, specialized service providers have emerged, and millions of disputes have moved through the federal system.
Much of the industry’s attention has focused on one question:
Does IDR work?
For many providers, the answer is yes.
A better question, however, may be: Is the industry asking the right questions about what it costs to make IDR work?
As the market matures, healthcare organizations should begin evaluating IDR differently, not simply by how much money is recovered, but by how efficiently those recoveries are achieved.
This article explores four questions that healthcare leaders should now be asking. First, when does pursuing IDR make strategic and financial sense? Second, how should organizations think about the changing economics of the IDR marketplace as technology and operational experience mature? Third, how should the industry respond to growing concerns about ineligible or abusive submissions without weakening access to fair reimbursement? And finally, how can providers evaluate success based not only on reimbursement recovered, but on the efficiency with which those results are achieved?
Not Every Eligible Out-of-Network Claim Should Go Through IDR
One of the biggest misconceptions surrounding the federal IDR process is the assumption that every eligible out-of-network claim should automatically move into dispute.
It is equally important to recognize that the federal IDR process was never intended to resolve every reimbursement disagreement. Instead, organizations should view IDR as one strategic option within a broader reimbursement strategy rather than a routine response to every underpayment.
In reality, pursuing IDR is not simply a reimbursement decision; it is a business decision.
Every eligible out-of-network dispute carries costs. Filing fees, administrative labor, documentation requirements, technology, attorney review in some cases, and ongoing claim management all consume resources. One of the most significant operational advances has been the ability to identify and batch similar eligible disputes when appropriate, allowing organizations to leverage standardized documentation, common legal and clinical arguments, and more efficient workflows across multiple claims. Rather than treating every dispute as an entirely separate project, thoughtful batching strategies can reduce administrative effort, improve consistency, shorten processing time, and lower the cost of pursuing reimbursement. Even contingency-based arrangements have an economic cost that ultimately reduces the amount retained by the provider.
Organizations should evaluate each IDR opportunity strategically.
Questions worth asking include:
- What is the historical reimbursement?
- What is the history of success?
- What will the administrative costs be?
- What will the organization actually retain after all fees have been paid?
As healthcare organizations gain more experience with IDR, many will likely become more selective, focusing resources on disputes where the expected financial return significantly outweighs the administrative investment required.
That evolution reflects a more mature approach to revenue cycle management—one that treats IDR as a strategic investment rather than an automatic operational response.
The Economics of IDR Are Changing
When the No Surprises Act was first implemented, nearly every aspect of the Independent Dispute Resolution (IDR) process was marked by uncertainty. Regulations were evolving, operational workflows had not yet matured, technology platforms were in their infancy, and many healthcare organizations lacked the expertise required to navigate an entirely new regulatory framework. Under those circumstances, higher administrative costs were understandable because vendors were building infrastructure, developing processes, and assuming significant regulatory and operational risk.
Today, the landscape looks very different. Millions of eligible disputes have now moved through the federal system, allowing organizations to refine workflows, standardize operational processes, and gain valuable experience. Technology has also advanced considerably. Automation helps manage the strict deadlines and communication flow, while artificial intelligence is beginning to support documentation review, workflow prioritization, and operational decision-making, enabling organizations to process disputes more efficiently than ever before.
In most industries, this type of market maturation leads to greater efficiency. As experience grows, technology improves, and competition increases, administrative costs typically decline while service quality improves. Healthcare leaders should reasonably expect the same evolution within the IDR marketplace. The question is no longer whether the process works; it is whether the economics of the process are evolving as efficiently as the technology and operational capabilities that now support it.
The Market Has Matured. Have the Economics?
There is one question that providers, payers, policymakers, and IDR vendors should all be willing to consider:
As technology continues to automate the IDR workflow, what represents a reasonable administrative cost for achieving the same financial outcome?
This is not an argument against contingency fees, nor is it a criticism of the organizations that invested early to build expertise in what was initially a highly complex and uncertain regulatory environment. Early participants assumed significant operational risk, developed specialized knowledge, and invested in the people, technology, and infrastructure necessary to navigate an entirely new dispute resolution process. Those investments created real value for healthcare providers at a time when few organizations possessed the experience or capabilities to manage IDR effectively.
However, markets do not remain static. As industries mature, competition increases, technology advances, and operational processes become more standardized. Over time, those improvements typically reduce the cost of delivering a service while maintaining—or even improving—its quality. Customers benefit from greater efficiency, increased transparency, and more competitive pricing.
Healthcare leaders should be careful not to confuse market acceptance with market efficiency. The fact that a particular fee structure has become common does not necessarily mean it reflects the most efficient or sustainable economics for the future. In most mature industries, innovation and scale place downward pressure on administrative costs. The important question is whether the IDR market will follow that same natural progression.
As automation, artificial intelligence, and standardized workflows continue to reduce the administrative effort required to process disputes, providers should reasonably expect the economics of IDR to evolve as well. At the same time, federal implementation of the No Surprises Act continues to mature. CMS has introduced ongoing enhancements to the Federal IDR Portal designed to improve usability, streamline submissions, strengthen dispute tracking, and reduce administrative friction for participating organizations. While operational challenges remain, these improvements reflect the natural evolution of a process moving from its early implementation phase toward greater standardization and efficiency. As technology, workflow automation, and regulatory processes continue to improve, the discussion should no longer focus solely on whether disputes can be won, but also on whether they can be resolved more efficiently while preserving the same financial outcome for providers.
Providers Should Understand What They’re Paying For
Many healthcare organizations evaluate IDR vendors using a single measure of success: the total amount of reimbursement recovered. While gross recoveries are certainly important, they provide only a partial picture of value. An effective evaluation should consider not only what was recovered, but also what it cost to achieve that outcome.
Healthcare leaders should understand metrics such as average win rates, recovery amounts per dispute, average time to payment, administrative costs, contingency fees, internal labor requirements, and the technology supporting the process. They should also understand whether state arbitration or federal IDR applies, how bids are priced and argued, and the expected net financial return after all administrative expenses have been deducted.
Without that level of transparency, meaningful comparisons between vendors become difficult. Gross recoveries alone cannot determine value. Ultimately, providers should evaluate IDR strategies based on the amount of revenue they retain—not simply the amount that is recovered.
Operational Transparency Creates Accountability
As IDR becomes a more established component of the healthcare reimbursement landscape, providers should expect greater visibility into the operational performance of the process itself. Beyond recovery percentages, organizations benefit from understanding metrics such as average resolution time, cost per dispute, batching efficiency, recovery rates by payer, administrative expense, and net reimbursement after all fees have been paid.
These operational measures help leaders evaluate whether their IDR strategy is improving over time rather than simply generating recoveries. They also create accountability among vendors and internal teams by shifting attention from gross collections to measurable operational performance. As reimbursement pressures continue to intensify, organizations that monitor both financial and operational metrics will be better positioned to identify opportunities for continuous improvement while ensuring that administrative costs remain aligned with the value delivered.
The Abuse Debate Can No Longer Be Ignored
Recent headlines have added a fourth question to the IDR discussion: how should the industry distinguish legitimate use of a statutory remedy from exploitation of an administrative process? That distinction matters. IDR remains essential when payers underpay eligible claims or fail to engage meaningfully in negotiation. But a process designed as a targeted backstop cannot remain credible if it is used as a volume-driven profit engine.
Federal data explain why scrutiny has intensified. As of May 31, 2026, more than 6.3 million disputes had been initiated since the federal portal opened, and more than 1.06 million closed disputes had been found ineligible. The Departments reported 489,000 submissions in the first year alone—roughly fourteen times the volume originally expected for an entire year. In the second half of 2025, the top ten initiating parties accounted for approximately 66% of all disputes; providers or their representatives initiated 76% of disputes and prevailed in about 85% of determinations, while the prevailing offer exceeded the qualifying payment amount in approximately 87% of decisions.[1][2][5]
The dollars are now drawing just as much attention as the volume. A Wall Street Journal analysis of newly released CMS data estimated $14.85 billion in IDR awards during 2025, more than triple the $4.08 billion estimated for 2024 and more than six times the amount those claims would have produced at estimated typical in-network rates. CMS publicly acknowledged concern that the system was being gamed to obtain higher prices.[4]
None of these statistics, standing alone, proves provider abuse. High win rates may also indicate that payer initial payments or qualifying payment amounts were too low. The 2026 final rule itself acknowledges provider allegations that some qualifying payment amount calculations are artificially low and that both sides sometimes fail to participate meaningfully in open negotiation. The same rule also acknowledges the large number of ineligible submissions and adds standardized claim codes, stronger eligibility information, and a centralized gateway intended to reduce errors and unnecessary disputes.[2][3]
The litigation is equally instructive. Multiple insurers have accused an IDR billing intermediary and provider groups of flooding the system with thousands of allegedly ineligible disputes, including claims already resolved or involving services not covered by the applicable plan. Several federal courts dismissed those cases, often because the No Surprises Act gives courts little authority to revisit an arbitrator’s eligibility and payment determinations; the allegations therefore should not be described as proven misconduct. But the dismissals expose a real governance problem: if courts cannot readily review awards after the fact, eligibility controls and auditability before submission become even more important.[6]
For legitimate providers, abuse is not a victimless efficiency. Ineligible, duplicative, or weak disputes consume arbitrator capacity, delay meritorious claims, increase administrative expense, and invite blunt reforms that could make fair reimbursement harder to obtain. The answer is not to weaken IDR. It is to professionalize it. Vendors and provider organizations should be able to show, by client and payer, the eligibility rate, duplicate and withdrawal rate, batching logic, offer methodology, net recovery, time to payment, and audit trail supporting every submission.
Automation should lower the cost of pursuing valid claims; it should not simply make it cheaper to file more claims. The most credible IDR organizations will be those that combine speed and scale with judgment, controls, and transparency. In the next phase of the market, integrity will be as important a measure of value as recovery.
Where the Market Should Go Next
As the IDR marketplace continues to mature, the conversation should gradually shift from maximizing recoveries to maximizing efficiency. Those objectives are not mutually exclusive. In fact, advances in automation, artificial intelligence, standardized workflows, and operational scale should make it increasingly possible to improve provider outcomes while simultaneously reducing administrative costs.
That evolution reflects the natural progression of most mature industries. Organizations that create the greatest long-term value are rarely those with the highest fees; they are the ones capable of delivering consistent results through more efficient operations. The same market forces that have transformed countless other service industries should eventually influence IDR as well, encouraging greater competition, improved transparency, and lower administrative costs without sacrificing quality or outcomes.
Conclusion
The No Surprises Act was designed to protect patients while establishing a fair process for resolving eligible reimbursement disputes between providers and insurers. In many respects, it has accomplished those objectives. At the same time, it has also given rise to one of healthcare’s fastest-growing administrative markets, prompting important questions about how that market should evolve as it matures.
The next chapter of IDR should not be measured solely by increasing dispute volumes or larger reimbursement recoveries. It should also be measured by greater efficiency, greater transparency, and a continued reduction in the administrative cost required to achieve those outcomes. As technology advances and operational processes become more standardized, providers should reasonably expect the economics of IDR to evolve alongside them.
Ultimately, the most important question is not simply whether IDR works, but how efficiently—and how responsibly—it works. Efficiency without integrity merely scales the wrong behavior. The next phase of the market should be defined not only by fair reimbursement, but by continued improvements in transparency, operational efficiency, administrative cost, and submission quality. In the years ahead, the organizations that create the greatest value may not be those that recover the most revenue; they may be the ones that help providers retain the greatest share of it while proving that every dispute pursued was eligible, documented, and economically rational.
As the IDR marketplace continues to evolve, the question should no longer be simply whether providers can recover more; it should be whether the industry can achieve the same outcomes with less administrative cost.
References
[1] Centers for Medicare & Medicaid Services (CMS). “Independent Dispute Resolution Reports.” Data through May 31, 2026; updated July 27, 2026.
[2] U.S. Departments of Health & Human Services, Labor, and the Treasury, and Office of Personnel Management. “Federal Independent Dispute Resolution Operations.” 91 Fed. Reg. 33898 (June 4, 2026).
[3] Centers for Medicare & Medicaid Services (CMS). “Federal Rule Takes Aim at Health Care Bureaucracy, Reducing Dispute Fees, and Boosting Transparency.” May 28, 2026.
[4] Mathews, Anna Wilde, and Tom McGinty. “Medical Billing Arbitration Paid Out $15 Billion to Providers in Surprise Bill Disputes.” The Wall Street Journal, July 22, 2026.
[5] Olsen, Emily. “No Surprises Disputes Continue to Swell, CMS Finds.” Healthcare Dive, July 23, 2026.
[6] Olsen, Emily. “Judge Tosses Another No Surprises Lawsuit Against HaloMD.” Healthcare Dive, July 15, 2026.
