Do state surprise-billing laws override the federal IDR process?
Verdict Consulting Group Research · Updated
Answer
Where they apply, yes. The No Surprises Act defers to a specified state law that sets the out-of-network payment amount for a plan the state can regulate, and to All-Payer Model Agreements. In those cases the state method, not federal IDR, sets payment. A state law reaches a plan only to the extent ERISA preemption allows.
Detail
How the statute sorts it out
The out-of-network rate under 42 U.S.C. 300gg-111(a)(3)(K) is set in this order:
| Situation | Out-of-network rate |
|---|---|
| A specified state law applies to the plan, provider and service | The amount determined under that state law |
| No specified state law applies | The amount agreed by the parties, or the federal IDR determination |
| The state has an All-Payer Model Agreement | The amount the state approves under that system |
A "specified State law" is a state law that provides a method for determining the total amount payable, to the extent it applies to the plan or coverage, subject to ERISA's preemption clause (29 U.S.C. 1144) (42 U.S.C. 300gg-111(a)(3)(I)).
In practice
CMS publishes a state-by-state chart to help determine whether items or services in a state are subject to the federal process. CMS also reports that disputes falling under a specified state law or All-Payer Model Agreement are among the most frequent reasons disputes were found ineligible since late 2024. State IDR awards are reviewed under state law; for example, a federal court in Texas applied the Texas Insurance Code's limits on judicial review in Blue Cross Blue Shield of Texas v. HaloMD (E.D. Tex. May 22, 2026).
Sources
- Legal Information Institute, Cornell Law School — 42 U.S. Code § 300gg-111 — Preventing surprise medical bills ()
- Centers for Medicare & Medicaid Services — About Independent Dispute Resolution ()
- U.S. District Court for the Eastern District of Texas (court filing hosted by the O'Neill Institute) — Blue Cross Blue Shield of Texas v. HaloMD LLC, No. 5:25-cv-00132 (E.D. Tex. May 22, 2026), order (exhibit to notice filed in S.D. Ohio No. 1:25-cv-00388) ()
General information only, not legal advice. Verdict Consulting Group is not a law firm.