January 16, 2024
On December 21, 2023, the Departments of Labor/Employee Benefits Security Administration (DOL/EBSA), Health and Human Services/Centers for Medicare and Medicaid Services (HHS/CMS) and Treasury/Internal Revenue Service (Treasury/IRS) – collectively, the Departments – issued a final rule revising the fees associated with the federal independent dispute resolution (IDR) process established under the No Surprises Act. The Departments are amending existing federal IDR regulations in response to the latest court ruling in one of the many ongoing legal challenges to the No Surprises Act – Texas Medical Association v. United States Department of Health and Human Services, also known as TMA IV – in which the federal district court invalidated the Departments’ previous guidance establishing the IDR fees. Specifically, the final rule:
Review final rule amending the federal IDR administrative fee and certified IDR fee ranges that are effective January 22, 2024.
- Confirms that the IDR administrative fee amount and certified IDR fee ranges will be set and adjusted through notice-and-comment rulemaking, rather than in sub-regulatory guidance, as required by the federal district court’s order;
- Establishes a revised methodology, outlined in the preamble to the final rule, the federal government will use to calculate the administrative fee and the considerations it will use to develop the certified IDR fee ranges;
- Sets the amount of the federal IDR administrative fee at $115 per party (less than the proposed $150 per party fee) for disputes initiated on or after the effective date of January 22, 2024;
- Finalizes the Departments’ proposal establishing separate certified IDR entity fee ranges for single determinations and batched determinations;
- Sets the certified IDR fee ranges as $200-$840 for single determinations and $268-$1,173 for batched determinations, and sets a fixed tiered fee of $75-$250 for each additional increment of 25 dispute line items in batched disputes containing more than 25-line items; and
- Confirms that Departments will update the administrative fee and certified IDR fee amounts no more frequently than once per calendar year, respectively.
Background on IDR Fees and Recent Litigation
The No Surprises Act (NSA) prohibits surprise billing for out-of-network (OON) emergency care, air ambulance services, and facility-based nonemergency services, while also prohibiting balance billing circumstances in which surprise bills frequently occur. The NSA established a federal IDR process that group health plans and health insurance issuers and OON providers and facilities could use to resolve certain disputes regarding OON payment rates. The Departments issued an interim final rule in October 2021 implementing the federal IDR process, establishing that each disputing party must pay an administrative fee for participating in the federal IDR process. At the same time, the Departments also issued sub-regulatory guidance setting the initial administrative fee and other payment ranges for determinations made by certified IDR entities for calendar year 2022. The Departments subsequently announced in December 2022 increased fees for disputes initiated in calendar year 2023.
Since its enactment, there have been more than 20 different legal challenges to various aspects of the NSA and its implementing regulations, including related to the federal IDR process. Multiple of these challenges have been brought by the same set of plaintiffs, the Texas Medical Association, and several air ambulance providers, in the federal district court for the Eastern District of Texas. In one of these cases, TMA IV, the plaintiffs challenged the federal IDR administrative fee. In August 2023, the judge in the TMA IV case issued an opinion and order vacating the portions of the previous guidance the Departments used to establish the administrative fee amount for the Federal IDR process for disputes initiated during calendar year 2023. The Departments published the proposed rules amending the federal IDR administrative fee in response to the district court’s order in September 2023 (summarized by the Business Group at the time in our Policy Newsletter article), which the Departments are now finalizing.
The federal IDR administrative fee and certified IDR fee ranges outlined in the final rule are effective for disputes initiated on or after January 22, 2024. Plan sponsors should coordinate with the vendors supporting their IDR administration to confirm compliance with the amended fees.
Implementation of the No Surprises Act – and the federal IDR process specifically – remains a key focus for regulators in 2024. The Government Accountability Office (GAO) published a report in December 2023 detailing the federal government’s challenges implementing the surprise billing protections of the law. In particular, the GAO noted that regulators received almost 500,000 payment dispute resolutions between April 2022 and June 2023, hundreds of thousands more than the 22,000 disputes regulators expected in 2022, and highlighted that 61 percent of disputes remained unresolved as of June 2023. In the coming months, plans should expect the Departments to continue undertaking No Surprises Act rulemaking aimed at improving the efficiency of the federal IDR process. Shortly after the publishing the final rule announcing the revised federal IDR fees, the Departments also announced that they were reopening the public comment period for the Departments’ proposed rule on federal IDR operations that was published in November 2023. The Departments are also expected to issue rulemaking aimed at providing clarity on the batching criteria under which multiple IDR items or services may be considered jointly as part of a single IDR proceeding.
Business Group on Health continues to advocate with the Departments and to Congress on behalf of employer plan sponsors with respect to implementation of the No Surprises Act, and will continue to keep members informed of regulatory developments as well as future litigation. In case you missed it, we discussed developments in litigation challenging the No Surprises Act implementation – including litigation challenging the federal IDR fees – during our September 2023 and October 2023 Regulatory & Compliance Update webinars.
- Federal Register: Final Rule – Federal Independent Dispute Resolution (IDR) Process Administrative Fee and Certified IDR Entity Fee Ranges
- HMS/CMS: Fact Sheet on Final Rule – Federal Independent Dispute Resolution (IDR) Process Administrative Fee and Certified IDR Entity Fee Ranges
- HHS/CMS: Notices Homepage– Payment Disputes Between Providers and Health Plans
- HHS/CMS: No Surprises Act – Overview of Rules and Fact Sheets
- DOL/EBSA: No Surprises Act – Resources
- Business Group on Health: Regulatory & Compliance Update, October 2023
- Business Group on Health: Regulatory & Compliance Update, September 2023
If you have questions, comments, or concerns about these or other regulatory and compliance issues, please contact us.
We provide this material for informational purposes only; it is not a substitute for legal advice.