Federal Independent Dispute Resolution Operations Final Rule
In the Federal Independent Dispute Resolution (IDR) Operations final rules released today, the Departments of Health and Human Services, Labor, and Treasury (the Departments) and the Office of Personnel Management finalized updated standards for group health plans and health insurance issuers (also known as “payers”); providers, facilities, and providers of air ambulance services (also known as “providers”); and certified IDR entities related to the Federal IDR process under the No Surprises Act (NSA).
These final rules will improve the functioning of the Federal IDR process by streamlining communication between payers, providers, and certified IDR entities and clarifying timelines and processes.
Improving Communication Between Payers and Providers
Under current regulations, an early and critical exchange of information between payers and providers is meant to occur when a payer, in response to a submitted claim subject to the NSA, sends a provider either an initial payment or a notice of denial of payment. At that time, the payer must disclose to the provider important information about the claim, including the qualifying payment amount (QPA) and contact information for initiating open negotiation. This information helps parties decide whether they would like to contest the initial payment or notice of denial of payment and determine whether a dispute over payment may be eligible for the Federal IDR process if negotiations over the amount of payment fail.
Payers and providers have reported difficulties in communicating and receiving key information necessary to resolve payment disputes. To ensure that all parties have the information necessary to determine whether a payment dispute is subject to the Federal IDR process, the Departments are finalizing a requirement for payers to communicate information 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. Payers will provide the applicable CARCs and RARCs to indicate whether a claim for an item or service furnished by a provider that does not have a contractual relationship with the payer is or is not subject to the NSA’s surprise billing provisions and the Federal IDR process. These changes, as finalized, will facilitate better communication between parties prior to and during open negotiation, and ultimately reduce the number of ineligible payment disputes submitted to the Federal IDR process.
The Departments are also finalizing a requirement that payers provide additional information at the time of sending an initial payment or notice of denial of payment, including the legal business name (if any) of the self-insured group health plan, issuer, or Federal Employees Health Benefits Program carrier, the legal business name of the self-insured group health plan sponsor (if applicable), and the registration number described under the “IDR Registry” section of this fact sheet. The Departments are also finalizing a requirement that payers include in these disclosures a statement explaining that providers must notify the Departments to initiate open negotiation, as described in the “Open Negotiation” section of this fact sheet.
Open Negotiation
The NSA and its implementing regulations established a 30-business-day open negotiation period to provide payers and providers (“disputing parties”) with an opportunity to agree on an appropriate payment rate without resorting to the Federal IDR process. Beyond giving parties a chance to reach an agreement without incurring the fees and costs associated with the Federal IDR process, open negotiation allows disputing parties to exchange information about the items and services under dispute to better assess whether it is permitted to proceed to the Federal IDR process. The Departments have received numerous reports that the parties are not meaningfully engaging in open negotiation before proceeding with IDR, including reports of open negotiation notices submitted containing vast numbers of items and services, not all of which would ultimately be eligible for the Federal IDR process.
To improve information exchange between parties and promote efficiencies in the Federal IDR process, the Departments are finalizing several changes to the open negotiation requirements. First, the Departments are finalizing a requirement that a party provide an open negotiation notice to the other party and the Departments through the Federal IDR portal to initiate the open negotiation period. The Departments are also finalizing a specification that the 30-business-day open negotiation period begins on the date when the party submits the open negotiation notice and payment remittance or notice of denial of payment to the other party and the Departments through the Federal IDR portal. Under these final rules, the open negotiation notice will include several new required content elements to help parties identify the item or service and whether the Federal IDR process applies.
In addition to amending the open negotiation notice requirements, the Departments are finalizing the establishment of an open negotiation response notice. Specifically, the Departments are finalizing a requirement that the open negotiation response notice be furnished by the party in receipt of the open negotiation notice to the other party and the Departments by the 15th business day of the 30-business-day open negotiation period.
These changes will create more certainty regarding whether and when an open negotiation period occurred by ensuring that start and end dates are documented in the Federal IDR portal and may reduce the number of ineligible disputes.
Batching
The NSA and its implementing regulations give initiating parties the ability to include multiple items or services as separate payment determinations in a single dispute (referred to as a “batched dispute”) to minimize costs for disputing parties. Many interested parties have suggested that the Departments should allow for more flexibility when items and services may be batched into a single dispute.
After carefully reviewing this input, the Departments are finalizing a few amendments to the current batching provisions. Specifically, the Departments are finalizing that qualified IDR items and services may be batched in the following circumstances: (1) items and services are furnished to a single patient on the same, or consecutive dates of service, and billed on the same claim form (a patient encounter); (2) items and services are furnished to one or more patients and are billed under the same service code or a comparable code under a different procedural code systems (e.g., CPT and HCPCS); and (3) anesthesiology, radiology, pathology, and laboratory items and services that are furnished to one or more patients under service codes belonging to the same Category I CPT code section, as specified in guidance by the Departments, in order to address the unique circumstances of certain medical specialties and provider types.
The Departments are also finalizing a limitation to batched determinations of 50 qualified IDR items and services (or “line items”) in a single dispute to ensure certified IDR entities can make timely eligibility and payment determinations and are able to reasonably forecast and cover their costs.
These changes, as finalized, achieve a balance among several important objectives including encouraging efficiency (including minimizing costs) within the Federal IDR process without unreasonably impeding payers’ or providers’ access to the Federal IDR process; avoiding creating new operational complexities; and ensuring that items and services included in batched determinations have a clear organizing principle.
IDR Eligibility
Eligibility determinations have proven to be complex, time-consuming, and resource-intensive for certified IDR entities, who often are uncompensated for their eligibility work. Eligibility questions also impede timely payment determinations. The Departments have observed that the primary cause of delays in processing disputes has been the complexity of determining whether disputes are eligible for the Federal IDR process. The NSA does not specify a timeframe in which eligibility for the Federal IDR process for disputes must be assessed.
To address these issues, the Departments are finalizing a requirement that certified IDR entities determine eligibility within 5 business days of final certified IDR entity selection and notify both disputing parties and the Departments. To support eligibility determinations, conflict of interest reviews, or payment determinations, the Departments are finalizing a requirement for parties to submit additional information to the certified IDR entity within 5 business days of the request for additional information, and in the event that a party fails to provide the requested information, the certified IDR entity will proceed with their determination without the requested information if possible, or close the dispute if it is not possible to proceed.
These changes, as finalized, will ensure certified IDR entities are able to spend most of their time and resources on payment determinations for eligible IDR items and services.
Administrative and Certified IDR Entity Fees
As required by statute, both parties to a dispute must pay a non-refundable administrative fee for participating in the Federal IDR process to ensure that the process is financially self-sustaining. It is a priority of the Departments to ensure that, when parties are unable to resolve disputes in open negotiation, the Federal IDR process is available and accessible. In these final rules, the Departments balance that priority with the need to ensure adequate funding to operate the Federal IDR process, as required by law. Therefore, the Departments are finalizing an administrative fee amount of $15 per party per dispute, regardless of the amount in dispute or the dispute’s eligibility.
The Departments are also codifying existing guidance in regulation that if either party fails to pay the administrative fee or the certified IDR entity fee by the time the party’s offer is due, that party’s offer will not be considered received. In these circumstances, the party will continue to be responsible for payment of the administrative and certified IDR entity fees. While certified IDR entities will continue to collect administrative fees on behalf of the Departments, the Departments are also finalizing a clarification regarding the Departments’ right to collect unpaid administrative fees, consistent with Federal debt collection laws.
These changes to the administrative and certified IDR entity fees, as finalized, will align financial incentives for disputing parties with the efforts associated with administering the Federal IDR process, and ensure the sustainability of the Federal IDR process.
Extenuating Circumstances
The Departments are also finalizing a revision to the types of extenuating circumstances in which the Federal IDR process time periods may be extended. Specifically, the Departments are finalizing that such extenuating circumstances include events that contribute to systematic delays in processing disputes under the Federal IDR process, such as an unforeseen volume of disputes or Federal IDR portal system failures. The Departments are also finalizing that the Departments will post a public notice regarding any extension of time periods due to extenuating circumstances that contribute to system delays in processing disputes. Parties may also continue to request an extension through the Federal IDR portal.
IDR Registry
Providers have reported that when they initiate open negotiation, it is often difficult to identify the payer and find the correct contact information, particularly when trying to distinguish between different group health plans offered by the same plan sponsor. Likewise, certified IDR entities have reported difficulty tracking cooling off periods because it is difficult to delineate between payers. Additionally, certified IDR entities have reported that outreach to payers for eligibility-related information, such as plan type and specified state law opt-in status, significantly delays dispute processing. Additionally, inability to determine plan type information poses a barrier to effective enforcement of IDR requirements, because plan type determines enforcement jurisdiction.
To address these issues, the Departments are finalizing a requirement that payers subject to the Federal IDR process must register with the Departments and provide certain general information on the application of the Federal IDR process to items or services covered by the plan or coverage. Upon submission of this information, the plan or issuer will receive an IDR registration number (“registration number”). This registration number will make it easier for parties initiating disputes to acquire the information needed to ensure those disputes are eligible for the Federal IDR process. Parties will have access to the relevant registration number through the disclosures described in the final rules and may access associated registration information through the Federal IDR portal. Additionally, the Departments and OPM may access the IDR Registry for enforcement purposes, and certified IDR entities may access the IDR Registry to assist in eligibility determinations.
This change, as finalized, will help parties distinguish between different types of coverage (such as distinguishing between an issuer that offers health insurance coverage and a group health plan administered by a third-party administrator with the same name) and resolve information-sharing issues between parties.
Applicability Dates and Effective Dates
The requirement that payers communicate information using CARCs and RARCs and the modifications to the regulations addressing information to be shared about the QPA will take effect on the effective date of the final rules. The Departments intend to issue future guidance to implement the CARC and RARC provisions of the final rules.
The modifications to the definition of a batched dispute will be applicable for disputes with open negotiation periods beginning 90 days after the effective date of these final rules. The modifications to the Federal IDR process, including the provisions regarding open negotiation, IDR initiation, selection of the certified IDR entity, the Federal IDR process eligibility review, treatment of batched and bundled qualified IDR item and services, amendments made to the deadline for the submission of offers and payment determination and notification, and certain provisions related to withdrawals will apply to disputes with open negotiation periods beginning 90 days after the Departments issue guidance announcing that the functionality supporting these provisions has become available. The Departments will provide updates as each provision is operationalized and intend to publish clarifying guidance regarding the implementation of these provisions.
With respect to the administrative fee amount finalized in these rules, the Departments have found good cause to waive the Administrative Procedure Act’s delayed effective date requirements, and therefore, the lower administrative fee amount of $15 per party per dispute will be applicable to disputes initiated on or after 5 business days after the publication of these final rules. The procedures of the Federal IDR process in the event that either party fails to timely pay the administrative or certified IDR entity fee will be applicable on the effective date of these final rules.
Finally, the provisions that establish the Federal IDR Registry and the associated requirements would become applicable 90 business days after the Departments issue guidance announcing that the functionality supporting the IDR Registry provisions has become available.
This communication was printed, published, or produced and disseminated at U.S. taxpayer expense.
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