The No Surprises Act’s independent dispute resolution (IDR) process has added an estimated $5 billion to U.S. health system costs since taking effect January 1, 2022, with arbitrators selecting the provider’s requested amount in 88 percent of disputes, according to Blue Cross Blue Shield Association research synthesized in Segal’s 2027 Health Plan Cost Trend Survey, published August 5, 2026. Georgetown University’s Center on Health Insurance Reforms separately reported that 88 percent of first-half 2025 IDR disputes were decided in providers’ favor, the highest rate on record, up from 85 percent in 2024 and 81 percent in 2023.
For self-insured employer plan sponsors managing their own IBNR, this is a data contamination problem. Actuarial development triangles built on 2018-2021 paid claims do not contain a single IDR-resolved payment. Blending those pre-IDR years with 2022 and later diagonals in a single triangle embeds a structural break that most review opinions have not explicitly flagged.
Who it affects
Self-insured employers and trust-based health plans with out-of-network cost sharing, particularly those whose networks leave gaps in specialty or emergency coverage. Public-entity pools and group captives writing stop-loss over a self-funded benefit are exposed twice: first on the plan’s retained IBNR, and again if the stop-loss carrier did not price aggregate attachment points assuming an 88 percent IDR provider win rate. A stop-loss contract renewed using pre-2022 experience as the primary credibility weight likely carries an implicit assumption that most out-of-network claims settle near the contracted rate. That assumption has been wrong in 88 percent of disputed cases since 2022.
The reserve mechanism
Two levers are affected simultaneously.
Expected claim ratio. IDR arbitrators consistently award amounts well above the qualifying payment amount (QPA), which is pegged to the plan’s median contracted rate for equivalent services. Georgetown’s 2025 data shows median awards running 277 percent to 920 percent of QPA depending on the provider group. A plan’s expected claim ratio model built on contracted-rate assumptions prices out-of-network utilization as if it would settle near the QPA. It won’t, and hasn’t since 2022.
Development pattern. IDR disputes create a payment lag between date of service and final cash resolution. Georgetown found roughly two-thirds of IDR determinations exceeded the federally mandated 30-day resolution window. On a paid-claims triangle, a 30-to-90-day resolution delay means early diagonals (the 3-month and 6-month paid factors) look favorably low. A chain-ladder method applied to paid data without segmenting IDR-influenced claims will interpret pending disputes as faster settlement, understating IBNR on 2022 and later accident years.
Two additional cost drivers from the Segal survey compound the problem. Plans covering GLP-1 drugs for obesity faced 18.3 percent Rx trend in 2025 versus 10.5 percent for plans without that coverage; if the actuary uses industry-average pharmacy trend, the 7.8-point gap absorbs into the expected claim ratio as an unexplained residual. AI-assisted medical coding drove roughly 20 percent of inpatient cost growth within a 9 percent overall increase through coding intensity rather than additional care delivery. Each of these inflations enters paid triangles gradually and distorts development factors calibrated on pre-inflation data.
Where this shows up in your reserves
On the out-of-network claim rows of your development triangle and in the 3-to-12-month paid factors for accident years 2022 through 2025. If the actuarial report does not segment IDR-resolved claims, the early diagonals on recent accident years are suppressed by pending disputes. Stop-loss aggregate deductible reconciliation is the second place to look: if your TPA’s claim report does not flag which open claims carry active IDR filings, the aggregate stop-loss calculation is using incomplete incurred data. The prior Segal analysis on leveraged medical stop-loss trend illustrates how rapidly a modest trend error compounds through a specific-to-aggregate structure.
What this means for your next review
Ask your actuary whether the development triangle separates IDR-resolved claims from contracted-rate settlements on accident years 2022 and later, and whether the expected claim ratio model reflects an 88 percent provider win rate for out-of-network disputes. If neither question has been asked explicitly, those are the two scope items for the next actuarial opinion. Segal’s 2027 survey projects overall medical trend near 9.9 percent for 2027 with Rx above 11 percent; our earlier piece on why medical CPI understates health plan trend explains why headline CPI figures systematically understate employer plan experience.
For a plain-English walkthrough of how health plan IBNR works and what the development factors represent, see our guide on self-funded health plan IBNR.
Decision-maker checklist
- Confirm your actuary segmented the paid development triangle to isolate IDR-resolved claims from contracted-rate settlements on accident years 2022 and later.
- Ask whether the expected claim ratio model assumes an 88 percent provider win rate for out-of-network IDR disputes, not a contracted-rate settlement assumption for all out-of-network claims.
- Ask your TPA whether claim reports flag open disputes with active IDR filings, and whether those disputed amounts are included in the incurred figures provided to the actuary.
- If your stop-loss aggregate deductible was priced on pre-2022 experience, ask the carrier whether IDR-inflated out-of-network costs are reflected in the 2027 attachment point.
- Flag the GLP-1 Rx trend split against your benefit design; if obesity coverage is in place, confirm the actuary is not using industry-average pharmacy trend.
New Hampshire’s stop-loss floor guidance requires aggregate attachment points at 110 percent of actuarially supported expected claims. If the expected claims figure does not reflect IDR-inflated out-of-network costs, the calculated floor may be lower than the regulatory requirement, even in states without a formal minimum.
An independent reserve review brings a second pair of eyes free of the TPA’s or fronting carrier’s incentive structure. We’re working on a directory of independent reviewing actuaries. If you’d like to be considered, get in touch.
Sources
- Segal 2027 Health Plan Cost Trend Survey (August 5, 2026)
- Georgetown CHIR: The No Surprises Act IDR Process: An Early Look at 2025 Data
- Insurance Business: Employer Health Costs Near 15-Year High as Billing Pressures Mount (August 2026)
- Blue Cross Blue Shield Association: IDR outcomes research (cited in Segal 2027 survey)
- CMS: Calendar Year 2027 Hospital OPPS Proposed Rule Fact Sheet (July 2, 2026)