Departments Propose New Rules for No Surprises Act Federal Independent Dispute Resolution Process

On October 27, 2023, the DOL, HHS, and IRS (the departments) proposed a rule imposing new requirements for group health plans, insurers and healthcare providers under the No Surprises Act (NSA) federal independent dispute resolution (IDR) process. According to the departments, the proposed rule is designed to streamline the current IDR process and address legal challenges to previously issued rules.

The NSA provisions, which took effect in 2022, protect participants from surprise bills by limiting their cost-sharing for out-of-network (OON) emergency and air ambulance services and certain OON services received at in-network facilities. In states with an applicable All-Payer Model Agreement or specified state law (which generally applies to fully insured plans), the OON provider rate for covered items and services is determined by such agreement or state law. Otherwise, if a plan or insurer (a “payer”) and healthcare provider (“provider”) cannot agree on the OON payment amount after a 30-day open negotiation period, either party can initiate the federal IDR process. To use the federal IDR process, each party must pay an administrative fee; additionally, a fee is payable to the certified IDR entity (i.e., the entity that determines the final payment amount).

To implement the surprise billing prohibitions and federal IDR process, the departments have issued multiple rules, including interim final rules in July 2021 and October 2021 and final rules in August 2022. However, some of the departments’ guidance has been vacated in a series of lawsuits brought by the Texas Medical Association and other providers. As a result, the federal IDR process has been halted several times while the departments drafted new guidance to conform to the court rulings. Additionally, disputing parties have initiated the federal IDR process far more than anticipated, although some are not even eligible to use it. These factors, among others, have led to case backlogs and delayed payment determinations.

Proposed Changes to the IDR Process
Accordingly, the proposed rule seeks to respond to the outstanding legal issues and create a more efficient federal IDR process through several specific changes.

First, the proposed rule aims to improve early communications between payers and providers so both parties have the necessary information to engage in meaningful negotiations, determine if they wish to initiate a dispute, and assess whether the claim is eligible for the federal IDR process. In particular, the proposed rule requires that payers provide additional information, including plan data, claim adjustment reason codes and related supplemental information, to the provider with the initial payment or denial of payment.

Second, the proposed rule would require that a party provide an open negotiation notice, with further details regarding the disputed payment, to the other party and the departments through the federal IDR portal to initiate the 30-day open negotiation period. The party receiving the notice would be required to provide a response notice to the other party and the departments by the 15th business day of the 30-day open negotiation period. The proposed rule would also require payers subject to the federal IDR process to register with the departments, provide general information regarding the items and services covered by the plan or coverage, and receive a registration number. The departments believe these changes may reduce the number of ineligible disputes, which they view as the primary cause of delays in processing disputes.

Third, the departments propose changes to the timing and process for determining whether parties are eligible to use the federal IDR process. For example, the proposed rule requires a certified IDR entity to determine eligibility within five business days of their selection and to notify both the disputing parties and the departments. Furthermore, a process would be established for the departments to make eligibility determinations during periods of systemic delays or extenuating circumstances affecting the federal IDR process to enable the certified IDR entity to focus primarily on payment determinations.

Fourth, the departments propose changes to expand the current batching rules, which allow parties to include multiple claims for resolution in a single proceeding to improve efficiency and minimize costs. For example, the provisions would allow for batching of items and services billed under the same service code or provided to a single patient on one or more consecutive dates that are billed on the same claim form by the same payer (e.g., insurer or self-insured plan). However, the departments propose to limit batched determinations to 25 qualified IDR items and services to ensure the certified IDR entity can make timely eligibility and payment determinations.

Finally, the departments propose changes to the collection of administrative fees to ensure timely collection and fair allocation. The departments propose the fees be paid directly to the departments (instead of the certified IDR entity) within specific timeframes. Additionally, fee reductions would apply under certain circumstances, such as when the dispute is determined to be ineligible for the federal IDR process.

Many employers rely upon their carriers or TPAs to address out-of-network payment disputes. However, employers, particularly those who sponsor self-insured plans, should be aware of the proposed changes to the federal IDR process, which is an integral part of the NSA surprise billing requirements. Comments regarding the proposed rule can be submitted through January 2, 2024, in accordance with the specified instructions.

Departments' Guidance – November 3 Proposed Rules »
CMS – No Surprises Act Independent Dispute Resolution Process Proposed Rule Fact Sheet »