How independent dispute resolution impacts self-funded employers

Independent Dispute Resolution (IDR) was designed as a narrow arbitration process for rare surprise billing disputes.

Instead, it’s become one of the fastest-growing, least predictable cost pressures in employer-sponsored healthcare—a multibillion-dollar drain that self-funded employers absorb directly through inflated arbitration awards, mounting administrative fees, and rising stop-loss premiums.

Here’s what’s driving the surge, and how pre-negotiated, value-based pricing can take your plan out of the process altogether.

Quick review: What’s independent dispute resolution (IDR)? 

In December 2020, Congress passed the No Surprises Act (NSA)with strong bipartisan backing and signed it into law as part of the Consolidated Appropriations Act of 2021.

The NSA, which went into effect in 2022, was meant to protect patients from surprise out-of-network bills—like the classic scenario where someone has surgery at an in-network hospital, but the anesthesiologist is out of network (and the patient doesn’t find out until they receive their bill).

The law bans balance billing in these situations and instead requires the patient’s provider and health plan to settle the payment amount between themselves. When they can’t agree, either side can escalate the claim to Independent Dispute Resolution: a federal arbitration process where a certified third party picks either the provider’s or the payer’s final offer.

The intention was for IDR to be used sparingly, as a last resort. Regulators originally projected around 17,000 cases a year. Unfortunately, those projections were quite far off.

Why independent dispute resolution has become an employer problem 

Disputing parties have submitted more than 5.1 million cases through the Federal IDR process since it launched, and volume keeps accelerating rather than leveling off—nearly 1.4 million disputes were filed in the second half of 2025 alone, and monthly filings are still running in the hundreds of thousands in 2026.

To break it down even further: Regulators estimated about 1,500 IDR cases each month, yet in 2025 the monthly average of IDR filings surpassed 216,000—meaning the reality is 150 times higher than the projection.

For self-funded employers, three trends make this more than a background policy story:

• Providers are winning, and winning big. In 2025, providers prevailed in roughly 88% of payment determinations. And when a plan (i.e., an employer, in this case ) loses, the financial award isn’t modest—disputed claims have been settled at an average of around 4.5 times the qualifying payment amount, with some cases landing at nine to 17 times the in-network rate. Every one of those awards is paid directly out of plan assets, which for a self-funded employer means it comes straight out of the company’s own budget, not an insurer’s.
• Administrative costs are exploding too. Administrative fees tied to the IDR process totaled roughly $844 million in just the first half of 2025—nearly matching the combined total for 2022 through 2024. Independent of who wins any individual case, simply participating in IDR has gotten expensive.
• A meaningful share of disputes shouldn’t even be happening. Analyses have found that between 20% and 40% of filed disputes are technically ineligible for IDR in the first place, yet many still result in payment awards. That points to a system being used opportunistically rather than as the narrow safety valve it was designed to be.

The downstream effect is now showing up where employers feel it most directly: stop-loss. Stop-loss carriers have cited IDR-driven claim volatility as a factor in the double-digit stop-loss premium increases many employers are seeing at renewal in 2026, on top of a broader rise in large, unpredictable claims.

For benefits leaders and consultants building next year’s budget, IDR is no longer an obscure regulatory footnote—it’s a line item with real, growing dollars attached, and one that’s difficult to predict or control once a claim is in the pipeline.

Why pre-negotiated, value-based pricing changes the equation

IDR exists because a price wasn’t agreed to in advance. That’s the root of the problem, and it’s exactly what value-based pricing (e.g., bundled payments) is built to avoid.

At Carrum, we directly negotiate prices for specialty care—including surgeries, cancer care, and substance use treatment—with a rigorously curated network of high-performing Centers of Excellence before a member ever steps into a facility. Our surgical bundles, for example, cover the full episode of care—the surgeon, anesthesiologist, facility, imaging, and any related professional services—under one contracted rate. No separate out-of-network anesthesiologist or assistant surgeon bill will surface weeks later, because every professional involved in the episode is already included in the agreed price. Surgical bundles also come with a time-limited warranty covering complications or readmissions related to the procedure, which closes off another common source of surprise claims and follow-on disputes.

Because the price is fixed and agreed to before care happens, providers have no payment gap to escalate to IDR in the first place. The dispute-resolution process only comes into play when a health plan and an out-of-network provider haven’t settled on an amount, but that’s not an issue with Carrum—because pre-negotiated pricing removes that gap by design.

The financial upside compounds from there. Beyond removing IDR risk, Carrum can help employers reduce specialty care costs by up to 45% per episode; the model also lowers readmission, complication, and unnecessary surgery rates, leading to even more savings for employers. For a benefits leader weighing rising stop-loss premiums and IDR exposure against a predictable, all-in episode price, the math is increasingly one-sided.

The takeaway

IDR was meant to be a rare backstop. For self-funded employers, it’s become a recurring, unpredictable cost center—one that shows up in claims, in stop-loss renewals, and in the time benefits teams spend untangling disputed bills. Value-based pricing models don’t just soften the impact of that system; they largely take plans out of it, replacing arbitration risk with a price that’s known before care ever begins. For employers and consultants building a healthcare strategy for 2027 and beyond, that predictability is quickly becoming as valuable as the savings themselves.

Bottom line: Carrum’s specialty care solution and its upfront value-based pricing model help employers avoid IDR and the problems it causes.