Federal Agencies Finalize Overhaul of No Surprises Act Dispute Resolution Process

This final rule has been long awaited by stakeholders, as changes were proposed by the Departments back in late 2023. It requires health insurers and plans (payers) to provide additional information on initial explanations of benefits (EOBs), reduces administrative fees to $15 per party per dispute, expands batching requirements, and implements substantial procedural reforms to the open negotiation and IDR initiation processes. These changes represent the most comprehensive revisions to the federal IDR process since its inception in 2022. The rule itself will become effective 60 days after it is published in the Federal Register, but some of its provisions will be implemented later.

As background, US Congress passed the NSA to prevent “surprise” medical bills — bills patients receive when they are forced to obtain emergency care at an out-of-network facility or non-emergency care from an out-of-network provider working at an in-network facility. Under the NSA, out-of-network providers cannot bill patients for balances unpaid by payers, but providers may engage in a “baseball style” arbitration-like process with payers to determine appropriate out-of-network reimbursement rates. Since the federal IDR portal launched in 2022, the volume of submitted disputes has far exceeded the levels predicted by the Departments; well over five million disputes have been submitted for review. The final rule, which can be accessed here, constitutes the Departments’ efforts to improve the process and address operational challenges in light of the extraordinary volume of disputes. While there are many changes included in the rule, some of the most significant are outlined below.

Additional Payer Disclosures Required

In the final rule, the Departments acknowledged the need for more information concerning the eligibility of claims for the IDR process to flow from payers to providers. Moving forward, when payers process medical claims submitted by out-of-network providers and send them EOBs or remittances, payers will be required to communicate information using claim adjustment reason codes (CARCs) and remittance advice remark codes (RARCs). These codes will convey NSA-specific information to help providers understand whether an item or service is subject to the NSA’s surprise billing protections. 

The Departments are also finalizing requirements for payers to (1) register with the federal IDR portal and receive unique registration numbers that they must then supply on EOBs and remittances and at various stages of the IDR process and (2) provide information about plan names, types, and sponsors. All of these requirements are intended to supply providers with information necessary to determine whether claims are eligible for the NSA’s IDR process. If providers have information about health plans and insurers available to them, the number of ineligible claims submitted should decrease. 

Changes to Open Negotiation Process – Expanded Use of Federal IDR Portal

The final rule will require parties to conduct open negotiations — which will still occur during a 30-business day period that begins within 30 business days of initial claim processing — through the federal IDR portal, not just between themselves. The parties must submit standardized open negotiation notices and responses electronically through the portal to each other and to the Departments. The party filing an open negotiation notice must include detailed identifying information for both parties, the initial payment amount for the item or service, an offer of an out-of-network rate, the qualifying payment amount (QPA), and a copy of any EOB or remittance associated with the initial payment or notice of denial. 

The party receiving an open negotiation notice must provide a response within 15 business days. If the responding party is a payer (which is almost always the case), it must confirm or correct the QPA listed in the provider’s open negotiation notice. These changes are intended to make the open negotiation process more useful and to encourage all parties to meaningfully participate.

Administrative Fee Reduced to $15

The final rule will set the non-refundable administrative fee amount at $15 per party per dispute — a substantial reduction from the $115 administrative fee that has been effective since January 2024. The Departments are lowering the fee in part to address accessibility concerns for small and rural providers and providers of lower-dollar services, and in part because the higher than anticipated volume of disputes means that the Departments can collect sufficient funds to run the IDR process with a lower dollar amount per dispute. This change will apply five business days after the final rule is published in the Federal Register (before the rule itself is even effective). 

The final rule will not change the separate certified independent dispute resolution entity (IDRE) fees, which are paid to the contracted IDREs that determine filed disputes. Those fees are significantly higher than the administrative fee, vary by IDRE, and are paid by each party to a dispute and then refunded to the prevailing party. 

Expanded Batching Flexibility

The final rule includes significant revisions to provisions governing how parties may “batch” claims to submit multiple claims as part of a single dispute. Under the new rule, there will be a limit of 50-line items per batched dispute, and parties will be able to batch qualified items and services if the same provider and payer are involved, timing requirements are met, and:

• The items and services were furnished to a single patient on one or more consecutive dates of service and billed on the same claim form (single patient encounter); 

• The items and services were furnished to one or more patients and billed under the same service code, or a comparable code under a different procedural code system (i.e., the same CPT or HCPCS code); or

• For anesthesiology, radiology, pathology, and laboratory qualified IDR items and services, they were furnished under service codes in the same Category I CPT code range, as will be specified in guidance issued by the Departments. 

Allowing batching across code ranges for certain types of providers is a marked change from the prior rules and guidance, and it should help providers in these categories to batch more relatively “small dollar” claims together. 

Assistance for IDREs With Eligibility Determinations

After the final selection of an IDRE for a dispute, the IDRE will have five business days to determine whether the claim(s) are eligible for the IDR process, a slightly longer timeframe than under the prior rules. To assist with eligibility reviews and determinations, the new rule will require the non-initiating party to provide a written response within three business days of a dispute being filed that includes, among other things, an attestation as to the dispute’s eligibility for the federal IDR process, supporting documentation if the non-initiating party believes the dispute is not eligible, and either agreement with or an objection to the initiating party’s preferred certified IDRE. These changes reflect an attempt by the Departments to relieve some of the bottleneck caused by eligibility determinations, which often require additional information from the parties and take longer than anticipated.

Cooling Period Change for Batched Claims Only

The final rule will also change the “cooling off” period — for batched submissions only — from 90 calendar days to 30 business days. The cooling period is a waiting period following a determination during which a provider cannot file additional claims involving the same payer and same type of item or service. The Departments will shorten the waiting period for batched disputes due to issues arising for providers submitting batched claims across patient encounters that often include a variety of CPT or HCPSC codes in the submission. However, the application of this change to batched submissions will likely cause further operational challenges for high-volume providers with relatively low-dollar claims. Those providers consider patient claims using the same CPT or HCPCS codes together and apply dollar value thresholds across claims to determine when it makes financial sense for the entities to submit claims to the process, whether on a single or batched basis. These providers typically consider all claims together to make these decisions, and it will be challenging for them to apply different waiting periods for batched versus single submissions. 

The Departments recognized complaints and confusion among stakeholders and IDREs regarding the impacts of the cooling period generally, and how “stacked” cooling periods may result in claims having to wait months and even years to enter the process, but did not provide any clear rule, promising only that guidance would be forthcoming.

Looking Ahead: Timelines and Practical Implications for Providers

The final rule overhauls several procedural aspects of the federal IDR process but it does not address other issues that providers have long wanted tackled, including challenges enforcing determinations and payment timelines. The rule does include several improvements that, once implemented, should benefit providers trying to access the federal IDR process. The reduction of the administrative fee coupled with the changes to batching rules should improve access to the process, particularly for smaller providers and those with lower-value claims, including anesthesiology, radiology, pathology, and laboratory providers, some of whom were previously priced out of the process. And the requirement that payers include additional information about their plans and whether claims are eligible for the NSA on EOBs should help providers who may struggle to determine precisely what plan or product covers a patient and whether particular claims are eligible for the federal IDR process. 

However, providers should be aware that the final rule will impose new procedural requirements that will demand updated workflows. For example, open negotiation notices and responses will need to be submitted through the federal IDR portal, and EOBs and remittances must be collected at that stage rather than upon dispute submission. And challenges related to the cooling period will remain and may even increase for some providers.

Providers should also be aware that many of these provisions will become effective on a staggered, and sometimes unclear, timeline. The lower administrative fee of $15 will become effective almost immediately, and the requirements for payers to include additional disclosures on EOBs about their plans will apply when the rule becomes effective (60 days after publication), though particular guidance on CARCs and RARCs is expected to take several additional months. Many of the other changes are expected to take much longer for the Departments to implement. Particularly changes that require updates to the federal IDR portal, like shifts in the open negotiation process and batching requirements, will not become effective until after the Departments have both updated the portal and published guidance documents. According to the Departments, some of the announced changes are unlikely to be fully implemented for approximately two years. 

At present, providers should continue to file open negotiation notices and timely initiate eligible claims for arbitration in accordance with existing regulations. As the new provisions take effect on a staggered basis, providers should monitor the Departments’ guidance for announcements regarding portal functionality and plan to update their systems and processes accordingly.