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Recent Changes to the No Surprises Act’s Federal IDR Process

Client Alert

Proposed changes to the No Surprises Act’s independent dispute resolution (IDR) process were recently issued by the Department of Health and Human Services, Department of Labor, Department of Treasury, and the Office of Personnel Management. The October 27, 2023, proposed rule overhauls the current Federal IDR process in an effort to create efficiencies and reduce delays relating to eligibility determinations and address feedback from interested parties and certified IDR entities.

The Goals of the No Surprises Act

The federal No Surprises Act (NSA) was passed in 2020 to protect consumers from surprise billing. The NSA includes a federal IDR process that providers, facilities, and health plans can use to resolve payment disputes for certain out-of-network charges. However, after numerous lawsuits, many regarding the cost-prohibitive IDR administrative fee, the IDR process was paused in August 2023.

Now, the proposed rule aims to make the entire Federal IDR process more efficient. The rule specifically focuses on transforming how payers, providers, and certified IDR entities (who make payment determinations) communicate; changing the open negotiation process; creating a more efficient Federal IDR process; overhauling the administrative fee structure; and establishing new batching criteria.

Communication Between Payers, Providers, and IDR Entities

One of the earliest exchanges of information between disputing parties occurs when a payer sends a provider an initial payment or notice of denial of payment in response to a submitted claim that may be subject to the NSA. The payer must disclose the qualifying payment amount (QPA) and contact information for initiating the open negotiation period. This information is crucial in helping parties decide 1) whether they want to dispute the initial payment or notice of denial of payment and 2) whether the claim is eligible for the Federal IDR process.

The proposed rules require payers to use standardized codes to communicate whether a claim for an item or service furnished by an out-of-network provider or facility is or is not subject to the No Surprises Act's surprise billing provisions and the federal IDR process. Specifically, payers will communicate to providers by using specific claim adjustment reason codes (CARCs) and remittance advice remark codes (RARCs) when they provide any paper or electronic remittance advice to an entity that does not have a contractual relationship with the payer.

Open Negotiation

The IDR process currently requires the parties to undergo 30 days of negotiation prior to arbitration. Currently, an initiating party (either the payer or the provider) contacts the other party directly to initiate open negotiations. This can lead to confusion about when the negotiation actually begins. To encourage open negotiations before IDR initiation, the proposed rule centralizes the open negotiation process through the Federal IDR portal. Under this proposed rule, a party choosing to initiate open negotiation must provide an open negotiation notice and a copy of the remittance advice or notice of denial of payment to the other party and the Departments through the Federal IDR portal. The receiving party must then furnish an open negotiation response notice by day 15 of the 30-business-day open negotiation period.  Further, moving forward, the open negotiation notice must contain information like plan type, the location of service, and the claim number to help parties identify the relevant item or service and whether the Federal IDR process applies to the parties.

IDR Initiation

Currently, the IDR process must be initiated within four business days of the end of the open negotiation period. If finalized, the proposed rule would overhaul how the Federal IDR process is initiated by 1) amending the requirements for the content of the notice of IDR initiation and 2) establishing new requirements for a notice of IDR initiation response from the non-initiating party. Specifically, the non-initiating party must submit the notice of IDR initiation response form, indicating whether the federal IDR process applies to the items or services and agreeing or objecting to the initiating party’s preferred certified IDR entity within three business days of receipt of the notice of IDR initiation.

Eligibility Review

To streamline the eligibility determination process and prevent future delays in eligibility determinations, the proposed rule creates a Departmental eligibility review process. Since the NSA was enacted, eligibility determinations for the Federal IDR process have proven to be complex and slow. Certified IDR entities are often uncompensated for such eligibility work.

Under the proposed rule, certified IDR entities are required to determine eligibility within five business days of final certified IDR entity selection. However, a Departmental eligibility review would apply when the Departments determine that there are extenuating circumstances that make it so eligibility cannot be determined in five business days and require the application of the eligibility review process to facilitate timely payment determinations.

Administrative Fees

Federal law requires both parties to pay a non-refundable administrative fee for participating in the Federal IDR process to ensure that the process is financially viable. The proposed rule includes a reduced administrative fee structure and reduced fees for parties in low-dollar disputes so that more people can utilize the process.

The reduced administration fee structure is as follows:

Admin Fee for Calendar Years 2021 and 2022

Admin Fee for Calendar Year 2023

Admin Fee under Proposed Rule

$50 per party

$350 per party

$150 per party

 

Previously, for calendar year 2023, the nonrefundable administrative fee for IDR increased from $50 to $350 (an increase of 600%), which motivated the filing of numerous lawsuits to block the implementation of the increased fees. In response, the Departments’ proposed rule lowers the administrative fees for the Federal IDR Process. The new proposed fees of $150 will take effect on January 1, 2024.

Additionally, the proposed rule allows the Departments to collect the non-refundable administrative fee directly from the disputing parties to streamline the collection of administrative fees. Further, under the proposed rule, the initiating party would be required to pay the administrative fee within two business days of the date of preliminary certified IDR entity selection, while the non-initiating party would be required to pay within two business days of receiving notice of an eligibility determination. If the initiating party fails to make timely payment of the administrative fee, then the dispute will be closed for non-payment, and neither party will owe the administrative fee. However, if the non-initiating party fails to pay the fee, then the non-initiating party’s offer will not be counted as received. This could result in an adverse finding for the non-initiating party.

Batching

A batched dispute means that multiple items or services are included as separate payment determinations in a single dispute. Batched disputes are faster, easier, and more cost-effective for the parties involved. The proposed rule would allow for the following qualified IDR items and services to be batched: 

  • Those furnished to a single patient on one or more consecutive dates of service and billed on the same claim form;
  • Those billed under the same service code or a comparable code under a different procedural code system; and
  • Anesthesiology, radiology, pathology and laboratory items and services billed under service codes belonging to the same Category I CPT code section.

Finally, the proposed rule would limit batched determination to 25 qualified IDR items and services.

The public has until January 2, 2024, to submit comments on the proposed rule.

If you would like assistance with commenting, or if you have questions about the No Surprises Act or the federal IDR process, please contact your local BMD Healthcare attorneys Daphne Kackloudis at dlkackloudis@bmdllc.com, Ashley Watson at abwatson@bmdllc.com, or Jordan Burdick at jaburdick@bmdllc.com.

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