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On October 27, the Departments of Health and Human Services (HHS), Labor and the Treasury and the Office of Personnel Management (the Departments) released a proposed rule to revamp certain aspects of the No Surprises Act's (NSA) independent dispute resolution (IDR) process for out-of-network provider reimbursement. The Departments' proposal aims to smooth policy and operational road bumps to render more timely IDR determinations and payments, in response to stakeholder concerns.
The proposed rule comes as the volume of disputes far outpaces projections, causing delays in their resolution. The Departments projected in 2022 that there would be 17,000 disputes annually; the proposed rule estimates that 420,000 disputes will be initiated in 2024 (including a reduction of 25 percent they hope the proposed rule, if finalized, will achieve). The IDR process has also been mired in lawsuits. Several district court losses continue to cause the Departments to change how payment determinations are made and to cause temporary pauses in operations. (See Manatt's No Surprises Act webpage here.) This proposed rule aims to address both of those issues by keeping more ineligible claims out of the process, improving the functionality of the IDR portal maintained by the Departments, increasing the communication between parties, and changing the rules for consideration of multiple claims at the same time ("batching").
Comments are due January 3.
Open Negotiation
Under the NSA, the parties may engage in open negotiation prior to initiating an IDR dispute. The proposed rule would impose new information exchange requirements and, to centralize the open negotiation process, would require parties to submit an open negotiation notice and response through the IDR portal, each within 15 business days. The proposed rule spells out what must be included in this response, including an offer and counteroffer for the out-of-network rate for each item or service or an acceptance of the other party's offer and a statement of why any information in the open negotiation notice is inaccurate.
Initiation of the IDR Process
If parties have not agreed upon an out-of-network rate by the last day of the open negotiation period, either party may initiate the federal IDR process during the next four business days. The proposed changes to the notice of IDR initiation generally mirror those proposed to be required in the open negotiation notice. The Departments anticipate the portal could prepopulate the information from the open negotiation notices and responses and allow parties to make updates or identify information discrepancies. To further encourage communication between the parties, the proposed rule would require the initiating party to include a statement describing key aspects of the claim discussed by the parties during open negotiation, whether the reasons for initiating the IDR process are different from those discussed during open negotiation, and an explanation of why the party is initiating the IDR process. These notices and their supporting documentation would be submitted through the portal.
IDR Process Following Initiation
The proposed rule would make several changes to the IDR process.
- Selection of an IDR entity (IDRE): The parties must agree on an IDRE within three business days or the HHS Secretary will select one within six business days of IDR initiation. The selected IDRE must certify that they have no conflict of interest.
- IDR process eligibility determination: IDREs would be given five days, up from three days, to review the record and make an eligibility determination. But, at times when the volume of disputes outpaces the capacity of IDREs, the proposed rule would allow the Departments to make exceptions to the timeline and make the eligibility determinations. This is intended to decrease IDREs' eligibility screening workload so they can focus on meeting their statutory timeline for making a determination.
- Withdrawal: The proposed rule also provides for withdrawal of disputes through mutual agreement, when the non-initiating party is nonresponsive to a withdrawal request by the initiating party, when both parties are nonresponsive, or when neither party submits an offer for the out-of-network payment amount.
Batched Items and Services
The Departments propose changes to provide more flexibility in the rules for batching items or services—i.e., multiple items or services considered as part of a single IDR payment determination—to respond to stakeholder concerns, improve the efficiency of the IDR process, and comply with the order in the fourth Texas Medical Association case challenging the Departments (TMA IV), a district court case that vacated portions of the existing guidance. (For more on this case, see Manatt's August 8, 2023 newsletter.)
The Departments reiterated that items and services may be batched into a single IDR process as long as they are billed by the same health care provider, facility or air ambulance provider; are paid by the same plan or issuer; have been furnished within the same time period; and are related to the treatment of a similar condition.
The Departments propose to broaden the circumstances in which items and services qualify for batching due to being based on the same condition to include the following:
- When the items or services were furnished to a single patient during a single encounter;
- When items or services were furnished to different patients but had the same service code (e.g., CPT code); or
- When, for anesthesiology, radiology, pathology and laboratory items and services, the items and services were furnished to one or more patients and were billed under service codes belonging to the same CPT code range, as specified in guidance published by the secretary.
Items and services must also be furnished within the same 30-business-day period following the date on which the first item or service included in the batched determination was furnished and were the subjects of a 30-business-day open negotiation period that ended within four business days of IDR initiation.
To ensure that the proposed batching flexibility does not lead to unwieldy IDR arbitrations, the Departments also propose to impose a 25-line-item limit for qualified IDR items and services that are considered jointly as part of one payment determination.
Administrative and Certified IDR Entity Fee Collection
Administrative fees are charged to offset the federal government's expenditures on running the IDR process.
On September 26, the Departments released a proposed rule on the methodology for IDR process fees, proposing an administrative fee of $150 per dispute. The new proposed rule adjusts the methodology so administrative fees are based on the projected number of disputes initiated rather than the projected number of disputes closed. Regardless, the fees, which would begin January 1, 2025, are estimated to continue to be $150 per party per dispute, one-half of that fee per party per dispute for low-dollar disputes, and 20 percent of the fee for non-initiating parties responding to ineligible claims (with the initiating party paying the full fee). The proposed rule would have the administrative fee paid directly to the Departments instead of to the IDRE.
Other Changes
- The proposed rule makes relatively minor changes to payment determinations, mainly codifying existing guidance or making technical amendments.
- While providers, facilities and providers of air ambulance services have uniform identifiers (a National Provider Identifier or similar), group health plans, health insurance issuers and Federal Employee Health Benefits Program carriers often do not. The proposed rule would require these plans and issuers to register with the Departments and receive an identifier that could be used to help initiating parties identify the correct plan or issuer.
- The proposed rule would require plans and issuers to use certain claims adjustment reason codes (CARCs) and remittance advice remark codes (RARCs) to convey information to providers, facilities and providers of air ambulance services; these codes will inform claim eligibility and convey required information to adjudicate an NSA claim. CARCs and RARCs are created by federal committees under HIPAA authority and are already commonplace in plan communications to explain why, for example, a claim was paid differently than it was billed or to provide additional information about the remittance. The specific CARCs and RARCs required would be detailed in future guidance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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