Proposed Rule2023-23716
Federal Independent Dispute Resolution Operations
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 3, 2023
Issuing agencies
Personnel Management OfficeTreasury DepartmentInternal Revenue ServiceLabor DepartmentEmployee Benefits Security AdministrationHealth and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This document sets forth proposed rules related to certain provisions of the No Surprises Act regarding the Federal independent dispute resolution (IDR) process, which was established as part of the Consolidated Appropriations Act, 2021 (CAA). These proposed rules would set forth new requirements relating to the disclosure of information that group health plans and health insurance issuers offering group or individual health insurance coverage must include along with the initial payment or notice of denial of payment for certain items and services subject to the surprise billing protections in the No Surprises Act. These proposed rules would also require plans and issuers to communicate information by using claim adjustment reason codes (CARCs) and remittance advice remark codes (RARCs), as specified in guidance, when providing any paper or electronic remittance advice to an entity that does not have a contractual relationship with the plan or issuer. This document also proposes to amend certain requirements related to the open negotiation period preceding the Federal IDR process, the initiation of the Federal IDR process, the Federal IDR dispute eligibility review, and the payment and collection of administrative fees and certified IDR entity fees. This document also proposes to define bundled payment arrangements, amend requirements related to batched items and services, and amend the rules for extensions of timeframes due to extenuating circumstances. Additionally, this document proposes to require plans and issuers to register in the Federal IDR portal. In accordance with Federal law, a summary of these rules may be found at https://www.regulations.gov/.
Full Text
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<title>Federal Register, Volume 88 Issue 212 (Friday, November 3, 2023)</title>
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[Federal Register Volume 88, Number 212 (Friday, November 3, 2023)]
[Proposed Rules]
[Pages 75744-75888]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-23716]
[[Page 75743]]
Vol. 88
Friday,
No. 212
November 3, 2023
Part III
Office of Personnel Management
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5 CFR Part 890
Department of the Treasury
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Internal Revenue Service
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26 CFR Part 54
Department of Labor
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Employee Benefits Security Administration
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29 CFR Part 2590
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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45 CFR Part 149
Federal Independent Dispute Resolution Operations; Proposed Rule
Federal Register / Vol. 88 , No. 212 / Friday, November 3, 2023 /
Proposed Rules
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OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 890
RIN 3206-AO48
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[REG-122319-22]
RIN 1545-BQ55
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AC17
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
45 CFR Part 149
[CMS-9897-P]
RIN 0938-AV15
Federal Independent Dispute Resolution Operations
AGENCY: Office of Personnel Management; Internal Revenue Service,
Department of the Treasury; Employee Benefits Security Administration,
Department of Labor; Centers for Medicare & Medicaid Services,
Department of Health and Human Services.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document sets forth proposed rules related to certain
provisions of the No Surprises Act regarding the Federal independent
dispute resolution (IDR) process, which was established as part of the
Consolidated Appropriations Act, 2021 (CAA). These proposed rules would
set forth new requirements relating to the disclosure of information
that group health plans and health insurance issuers offering group or
individual health insurance coverage must include along with the
initial payment or notice of denial of payment for certain items and
services subject to the surprise billing protections in the No
Surprises Act. These proposed rules would also require plans and
issuers to communicate information by using claim adjustment reason
codes (CARCs) and remittance advice remark codes (RARCs), as specified
in guidance, when providing any paper or electronic remittance advice
to an entity that does not have a contractual relationship with the
plan or issuer. This document also proposes to amend certain
requirements related to the open negotiation period preceding the
Federal IDR process, the initiation of the Federal IDR process, the
Federal IDR dispute eligibility review, and the payment and collection
of administrative fees and certified IDR entity fees. This document
also proposes to define bundled payment arrangements, amend
requirements related to batched items and services, and amend the rules
for extensions of timeframes due to extenuating circumstances.
Additionally, this document proposes to require plans and issuers to
register in the Federal IDR portal. In accordance with Federal law, a
summary of these rules may be found at <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below by January 2, 2024.
ADDRESSES: Written comments may be submitted to the addresses specified
below. Any comment that is submitted will be shared among the
Department of the Treasury, the Department of Labor, the Department of
Health and Human Services (the Departments), and the Office of
Personnel Management. Please do not submit duplicates.
Comments will be made available to the public. Warning: Do not
include any personally identifiable information (such as name, address,
or other contact information) or confidential business information that
you do not want publicly disclosed. Comments are posted on the internet
exactly as received and can be retrieved by most internet search
engines. No deletions, modifications, or redactions will be made to the
comments received, as they are public records. Comments may be
submitted anonymously.
In commenting, refer to file code RIN 0938-AV15. Because of staff
and resource limitations, the Departments cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-9897-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-9897-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Padma Babubhai Shah, Office of
Personnel Management, at 202-606-4056; Shira B. McKinlay, Internal
Revenue Service, Department of the Treasury, at 202-317-5500; Elizabeth
Schumacher or Shannon Hysjulien, Employee Benefits Security
Administration, Department of Labor, at 202-693-8335; Zarah Ghiasuddin
or Bryan Kirk, Centers for Medicare & Medicaid Services, Department of
Health and Human Services, at 301-492-4308.
Customer Service Information: Information from the Office of
Personnel Management (OPM) on health benefits plans offered under the
Federal Employees Health Benefits (FEHB) Program can be found on the
OPM website (<a href="http://www.opm.gov/healthcare-insurance/healthcare/">http://www.opm.gov/healthcare-insurance/healthcare/</a>).
Individuals interested in obtaining information from the Department of
Labor (DOL) concerning employment-based health coverage laws may call
the Employee Benefits Security Administration (EBSA) Toll-Free Hotline
at 1-866-444-EBSA (3272) or visit the DOL's website (<a href="http://www.dol.gov/agencies/ebsa">www.dol.gov/agencies/ebsa</a>). In addition, information from the Department of Health
and Human Services (HHS) on private health insurance coverage and
coverage provided by non-Federal governmental group health plans can be
found on the Centers for Medicare & Medicaid Services (CMS) website
(<a href="http://www.cms.gov/marketplace">http://www.cms.gov/marketplace</a>), information on health care reform can
be found at <a href="http://www.healthcare.gov">http://www.healthcare.gov</a>, and information on surprise
medical bills can be found at <a href="http://www.cms.gov/nosurprises">http://www.cms.gov/nosurprises</a>.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: Comments received before the close
of the comment period are available for viewing by the public,
including any personally identifiable or confidential
[[Page 75745]]
business information that is included in a comment. The Departments
post comments received before the close of the comment period on the
following website as soon as possible after they have been received:
<a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the search instructions on that
website to view public comments. The Departments will not post on
<a href="http://Regulations.gov">Regulations.gov</a> public comments that make threats to individuals or
institutions or suggest that the commenter will take actions to harm an
individual. The Departments continue to encourage individuals not to
submit duplicative comments. The Departments will post acceptable
comments from multiple unique commenters even if the content is
identical or nearly identical to other comments.
I. Background
A. Preventing Surprise Medical Bills and Establishing the Federal IDR
Process Under the Consolidated Appropriations Act, 2021
On December 27, 2020, the Consolidated Appropriations Act, 2021
(CAA) was enacted.\1\ Title I, also known as the No Surprises Act, and
title II (Transparency) of Division BB of the CAA amended chapter 100
of the Internal Revenue Code (Code), Part 7 of the Employee Retirement
Income Security Act (ERISA), and title XXVII of the Public Health
Service Act (PHS Act). The No Surprises Act provides Federal
protections against surprise billing by limiting out-of-network cost
sharing and prohibiting balance billing in many of the circumstances in
which surprise bills most frequently arise. In particular, the No
Surprises Act added new provisions applicable to group health plans and
health insurance issuers offering group or individual health insurance
coverage. Section 102 of the No Surprises Act added section 9816 of the
Code, section 716 of ERISA, and section 2799A-1 of the PHS Act, which
contain limitations on cost sharing and requirements regarding the
timing of initial payments and notices of denial of payment by plans
and issuers for emergency services furnished by nonparticipating
providers and nonparticipating emergency facilities, and for non-
emergency services furnished by nonparticipating providers with respect
to patient visits to participating health care facilities, generally
defined as hospitals, hospital outpatient departments, critical access
hospitals, and ambulatory surgical centers.\2\
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\1\ Public Law 116-260 (Dec. 27, 2020).
\2\ Section 102(d)(1) of the No Surprises Act amended the
Federal Employees Health Benefits Act, 5 U.S.C. 8901 et seq., by
adding a new subsection (p) to 5 U.S.C. 8902. Under this new
provision, each FEHB Program contract must require a carrier to
comply with requirements described in sections 9816 and 9817 of the
Code, sections 716 and 717 of ERISA, and sections 2799A-1 and 2799A-
2 of the PHS Act (as applicable) in the same manner as these
provisions apply with respect to a group health plan or health
insurance issuer offering group or individual health insurance
coverage.
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Section 103 of the No Surprises Act established a Federal IDR
process that plans and issuers and nonparticipating providers and
facilities may utilize to resolve certain disputes regarding out-of-
network rates under section 9816 of the Code, section 716 of ERISA, and
section 2799A-1 of the PHS Act.
Section 105 of the No Surprises Act added section 9817 of the Code,
section 717 of ERISA, and section 2799A-2 of the PHS Act. These
sections contain limitations on cost sharing and requirements for the
timing of initial payments and notices of denial of payment by plans
and issuers for air ambulance services furnished by nonparticipating
providers of air ambulance services and allow plans and issuers and
nonparticipating providers of air ambulance services to utilize the
Federal IDR process.
The No Surprises Act also added provisions to title XXVII of the
PHS Act in a new part E that apply to health care providers,
facilities, and providers of air ambulance services, such as
prohibitions on balance billing for certain items and services and
requirements related to disclosures about balance billing protections.
The Departments of the Treasury, Labor, and HHS (the Departments),
along with the Office of Personnel Management (OPM), are issuing
regulations in phases that implement provisions of the No Surprises Act
and have issued multiple rulemakings since 2021 to implement various
provisions. More specifically relevant to this proposed rulemaking, the
Departments and OPM issued interim final rules (July 2021 interim final
rules \3\ and October 2021 interim final rules),\4\ and the Departments
issued final rules (August 2022 final rules) \5\ implementing
provisions of sections 9816 and 9817 of the Code, sections 716 and 717
of ERISA, and sections 2799A-1 and 2799A-2 of the PHS Act. These rules
implement provisions to protect consumers from surprise medical bills
for emergency services, non-emergency services furnished by
nonparticipating providers with respect to patient visits to
participating facilities \6\ in certain circumstances, and air
ambulance services furnished by nonparticipating providers of air
ambulance services. These rules also implement provisions to establish
a Federal IDR process to determine payment amounts when there is a
dispute between plans or issuers and providers, facilities, or
providers of air ambulance services about the out-of-network rate for
these services in cases where a specified State law or an applicable
All-Payer Model Agreement does not provide a method for determining the
total amount payable.
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\3\ 86 FR 36872 (July 13, 2021).
\4\ 86 FR 55980 (Oct. 7, 2021).
\5\ 87 FR 52618 (Aug. 26, 2022).
\6\ References to a ``participating facility'' in this preamble
mean a ``participating health care facility,'' as defined at 26 CFR
54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30.
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The July 2021 interim final rules and October 2021 interim final
rules generally apply to plans and issuers (including grandfathered
health plans) for plan years (in the individual market, policy years)
beginning on or after January 1, 2022, and to health care providers,
facilities, and providers of air ambulance services for items and
services furnished during plan years (in the individual market, policy
years) beginning on or after January 1, 2022.\7\ The August 2022 final
rules became effective October 25, 2022, and are applicable for items
and services provided or furnished on or after October 25, 2022, for
plan years (in the individual market, policy years) beginning on or
after January 1, 2022. As discussed in sections I.D and I.F of this
preamble, certain provisions of these rules relating to the methodology
for calculating the qualifying payment amount (QPA), the information
that a certified IDR entity must consider in making a payment
determination, the establishment of the administrative fee to use the
IDR process, and certain restrictions on the qualified IDR items or
services that may be considered jointly as part of a batched
determination have been vacated \8\ by
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the United States District Court for the Eastern District of Texas
(District Court). On September 26, 2023, the Departments published the
Federal IDR Process Administrative Fee and Certified IDR Entity Fee
Ranges Proposed Rules (IDR Process Fees proposed rules) \9\ to amend
the administrative fee and certified IDR entity fee provisions in the
October 2021 interim final rules to provide additional guidance and
promote transparency in the administrative fee calculation and
certified IDR fee ranges. If finalized, the rules would apply for
disputes initiated on or after the later of the effective date or
January 1, 2024.
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\7\ The interim final rules also include interim final
regulations under 5 U.S.C. 8902(p) issued by OPM that specify how
certain provisions of the No Surprises Act apply to health benefit
plans offered by carriers under the Federal Employees Health
Benefits Act. These provisions apply to carriers in the FEHB Program
with respect to contract years beginning on or after January 1,
2022. The disclosure requirements at 45 CFR 149.430 regarding
patient protections against balance billing are applicable as of
January 1, 2022.
\8\ See Tex. Med. Ass'n, et al. v. U.S. Dep't of Health and
Human Servs., 587 F. Supp. 3d 528 (E.D. Tex. 2022) (TMA I), Tex.
Med. Ass'n, et al. v. U.S. Dep't of Health and Human Servs., Case
No. 6:22-cv-372 (E.D. Tex.) (Feb. 6, 2023) (TMA II), Tex. Med.
Ass'n, et al. v. U.S. Dep't of Health and Human Servs., Case No.
6:22-cv-450-JDK (E.D. Tex. Aug. 24, 2023) (TMA III), and Tex. Med.
Ass'n, et al. v. U.S. Dep't of Health and Human Servs., Case No.
6:23-cv-00059-JDK, (E.D. Tex. Aug. 3, 2023) (TMA IV).
\9\ 88 FR 65888 (Sept. 26, 2023).
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B. July 2021 Interim Final Rules
The July 2021 interim final rules implement sections 9816(a)-(b)
and 9817(a) of the Code, sections 716(a)-(b) and 717(a) of ERISA, and
sections 2799A-1(a)-(b), 2799A-2(a), 2799A-7, 2799B-1, 2799B-2, 2799B-
3, and 2799B-5 of the PHS Act.
The No Surprises Act directs the Departments to specify the
information that a plan or issuer must share with a nonparticipating
provider or nonparticipating emergency facility when determining the
QPA. Therefore, 26 CFR 54.9816-6T(d), 29 CFR 2590.716-6(d), and 45 CFR
149.140(d) require that plans and issuers make certain disclosures
about the QPA with each initial payment or notice of denial of payment,
and that plans and issuers provide certain additional information upon
the request of the provider, facility, or provider of air ambulance
services. This information must be provided in writing, either on paper
or electronically, to a nonparticipating provider, facility, or
provider of air ambulance services, as applicable, when the QPA serves
as the recognized amount.
With an initial payment or notice of denial of payment, a plan or
issuer must provide the QPA for each item or service involved, as well
as a statement certifying that based on the determination of the plan
or issuer: (1) the QPA applies for purposes of the recognized amount
(or, in the case of air ambulance services, for calculating the
participant's, beneficiary's, or enrollee's cost sharing), and (2) each
QPA shared with the provider, facility, or provider of air ambulance
services was determined in compliance with the methodology outlined in
the July 2021 interim final rules.\10\
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\10\ 86 FR 36888; 26 CFR 54.9816-6T(d)(1)(iii), 29 CFR 2590.716-
6(d)(1)(iii), and 45 CFR 149.140(d)(1)(iii). For guidance regarding
the certification statement in light of the decision in TMA III, see
U.S. Department of Health and Human Services, U.S. Department of
Labor, U.S. Department of the Treasury, Office of Personnel
Management, FAQs about Consolidated Appropriations Act, 2021
Implementation Part 62 (Oct. 6, 2023), Q3, available at <a href="https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-62.pdf">https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-62.pdf</a> and <a href="https://www.cms.gov/files/document/faqs-part-62.pdf">https://www.cms.gov/files/document/faqs-part-62.pdf</a>.
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A plan or issuer is also required to provide a statement that if
the provider, facility, or provider of air ambulance services wishes to
initiate a 30-day open negotiation period for purposes of determining
the amount of total payment, the provider, facility, or provider of air
ambulance services may contact the appropriate person or office to
initiate open negotiation, and that if the 30-day open negotiation
period does not result in an agreement on the payment amount,
generally, the provider, facility, or provider of air ambulance
services may initiate the Federal IDR process within 4 days after the
end of the open negotiation period.\11\ The plan or issuer must provide
contact information, including a telephone number and email address,
for the appropriate office or person for the provider, facility, or
provider of air ambulance services to contact to initiate open
negotiation for purposes of determining a payment amount (inclusive of
cost sharing) for the item or service.\12\
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\11\ 86 FR 36899; 26 CFR 54.9816-6T(d)(1)(iv), 29 CFR 2590.716-
6(d)(1)(iv), and 45 CFR 149.140(d)(1)(iv).
\12\ 86 FR 36899; 26 CFR 54.9816-6T(d)(1)(v), 29 CFR 2590.716-
6(d)(1)(v), and 45 CFR 149.140(d)(1)(v).
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In addition, upon request by the provider or facility,\13\ a plan
or issuer must provide in a timely manner information about whether the
QPA includes contracted rates that were not set on a fee-for-service
basis for the specific items and services and whether the QPA for those
items and services was determined using underlying fee schedule rates
or a derived amount.\14\ If an eligible database was used to determine
the QPA, upon request by the provider or facility, the plan or issuer
must provide information to identify which database was used.\15\
Similarly, if a related service code was used to determine the QPA for
an item or service billed under a new service code, upon request by the
provider or facility the plan or issuer must provide information to
identify which related service code was used.\16\
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\13\ As discussed further in section II.C. of this preamble,
this proposed rule would add a reference to providers of air
ambulance services in 26 CFR 54.9816-6T(d)(2), 29 CFR 2590.716-
6(d)(2), and 45 CFR 149.140(d)(2).
\14\ 26 CFR 54.9816-6T(d)(2)(i), 29 CFR 2590.716-6(d)(2)(i), and
45 CFR 149.140(d)(2)(i). Under the July 2021 interim final rules,
plans and issuers are required to calculate the QPA using underlying
fee schedule rates or derived amounts when the plan or issuer has
sufficient information to calculate the median of its contracted
rates but the payments under the contractual agreements are not on a
fee-for-service basis (such as bundled or capitation payments). 86
FR 36893; 26 CFR 54.9816-6T(b)(2)(iii), 29 CFR 2590.716-
6(b)(2)(iii), 45 CFR 149.140(b)(2)(iii). Plans and issuers are not
otherwise permitted to use underlying fee schedule rates or derived
amounts to calculate the QPA.
\15\ 86 FR 36899; 26 CFR 54.9816-6T(d)(2)(ii), 29 CFR 2590.716-
6(d)(2)(ii), and 45 CFR 149.140(d)(2)(ii).
\16\ 86 FR 36899; 26 CFR 54.9816-6T(d)(2)(iii), 29 CFR 2590.716-
6(d)(2)(iii), and 45 CFR 149.140(d)(2)(iii).
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Finally, upon request by the provider or facility, the plan or
issuer must provide a statement, if applicable, that the plan's or
issuer's contracted rates include risk-sharing, bonus, penalty, or
other incentive-based or retrospective payments or payment adjustments
that were excluded for purposes of calculating the QPA for the items
and services involved.\17\
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\17\ 86 FR 36899; 26 CFR 54.9816-6T(d)(2)(iv), 29 CFR 2590.716-
6(d)(2)(iv), and 45 CFR 149.140(d)(2)(iv).
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C. October 2021 Interim Final Rules and Related Guidance
The October 2021 interim final rules implement the Federal IDR
process under sections 9816(c) and 9817(b) of the Code, sections 716(c)
and 717(b) of ERISA, and sections 2799A-1(c) and 2799A-2(b) of the PHS
Act. The Federal IDR process may be used by group health plans and
health insurance issuers offering group or individual health insurance
coverage and nonparticipating providers, facilities, and providers of
air ambulance services to determine the out-of-network rate for certain
items and services. These are emergency services, non-emergency
services furnished by nonparticipating providers for patient visits to
certain participating facilities (unless an individual has been
provided notice and waived the individual's balance billing
protections, in accordance with 45 CFR 149.410 or 149.420, as
applicable), and air ambulance services furnished by nonparticipating
providers of air ambulance services, for situations in which neither an
All-Payer Model Agreement under section 1115A of the Social Security
Act nor a specified State law as defined in 26 CFR 54.9816-3T, 29 CFR
2590.716-3, and 45 CFR 149.30 applies.
To implement the Federal IDR process, the October 2021 interim
final
[[Page 75747]]
rules include requirements governing the 30-business-day open
negotiation period; the initiation of the Federal IDR process; the
Federal IDR process following initiation, including the selection of a
certified IDR entity, submission of offers, payment determinations, and
written decisions; costs of the Federal IDR process; certification of
IDR entities, including the denial or revocation of certification of an
IDR entity; and the collection of information related to the Federal
IDR process from certified IDR entities to satisfy reporting
requirements under the statute.
To be eligible for the Federal IDR process, the subject of the
dispute must be a qualified IDR item or service as defined in 26 CFR
54.9816-8T(a)(2)(xi), 29 CFR 2590.716-8(a)(2)(xi), and 45 CFR
149.510(a)(2)(xi). The October 2021 interim final rules define
``qualified IDR item or service'' to mean an emergency service
furnished by a nonparticipating provider or nonparticipating facility
subject to the protections of 26 CFR 54.9816-4T, 29 CFR 2590.716-4, or
45 CFR 149.110, for which the exception under 45 CFR 149.410(b)
(regarding receipt of notice and consent to waive surprise billing
protections) does not apply. A qualified IDR item or service may also
be an item or service furnished by a nonparticipating provider at a
participating health care facility subject to the requirements of 26
CFR 54.9816-5T, 29 CFR 2590.716-5, and 45 CFR 149.120, for which the
exception under 45 CFR 149.420(c)-(i) (regarding receipt of notice and
consent to waive surprise billing protections) does not apply. For an
item or service to be considered a qualified IDR item or service, the
provider, facility, or provider of air ambulance services or plan or
issuer, as applicable, must submit a valid notice of IDR initiation
through the Federal IDR portal for the item or service. The notice of
IDR initiation is not valid if the 30-business-day open negotiation
period under 26 CFR 54.9816-8T(b)(1), 29 CFR 2590.716-8(b)(1), and 45
CFR 149.510(b)(1) has not elapsed or an agreement on the payment amount
has been reached. The term ``qualified IDR item or service'' also
includes air ambulance services furnished by nonparticipating providers
of air ambulance services subject to the protections of 26 CFR 54.9817-
1T, 29 CFR 2590.717-1, and 45 CFR 149.130, as these services are
defined in 26 CFR 54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30, for
which the open negotiation period under 26 CFR 54.9816-8T(b)(1), 29 CFR
2590.716-8(b)(1), and 45 CFR 149.510(b)(1) has elapsed, no agreement on
the payment amount has been reached, and a valid notice of IDR
initiation has been submitted after the 30-business-day open
negotiation period has been satisfied.
The term ``qualified IDR item or service'' does not include items
and services for which the out-of-network rate is determined by an All-
Payer Model Agreement under section 1115A of the Social Security Act or
by reference to a specified State law. Additionally, this term does not
include an item or service submitted by the initiating party that is
subject to the 90-calendar-day suspension period (also referred to as
the ``cooling-off period'') under 26 CFR 54.9816-8T(c)(4)(vii)(B), 29
CFR 2590.716-8(c)(4)(vii)(B), and 45 CFR 149.510(c)(4)(vii)(B) except
to the extent that it is submitted during the subsequent 30-business-
day period, as allowed under the October 2021 interim final rules.\18\
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\18\ In the case of a determination made by a certified IDR
entity, the party that submitted the initial notification initiating
the Federal IDR process may not submit a subsequent notification
involving the same other party with respect to a claim for the same
or similar item or service that was the subject of the initial
notification during the 90-calendar-day period following the
determination (the ``cooling off period'').
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The open negotiation period may be initiated by either party during
the 30-business-day period beginning on the day the nonparticipating
provider, facility, or nonparticipating provider of air ambulance
services receives either an initial payment or a notice of denial of
payment for an item or service.\19\ In order for a plan, issuer,
provider, facility, or provider of air ambulance services to know when
it is a party to an open negotiation and the item or service for which
the payment is to be negotiated, the party initiating the open
negotiation period must provide written notice to the other party of
its intent to negotiate using a standardized form, referred to as an
open negotiation notice. The open negotiation notice must include
information sufficient to identify the item or service subject to
negotiation, including the date the item or service was furnished, the
service code, the initial payment amount or notice of denial of
payment, as applicable, an offer for the out-of-network rate, and the
contact information of the party sending the open negotiation notice.
The open negotiation notice must be sent during the 30-business-day
period beginning on the day the initial payment or notice of denial of
payment from the plan or issuer regarding such item or service was
received and must be provided in writing. The party sending the open
negotiation notice may satisfy this requirement by providing the notice
to the opposing party electronically (such as by email) if the
following two conditions are satisfied: (1) the party sending the open
negotiation notice has a good faith belief that the electronic method
is readily accessible to the other party; and (2) the notice is
provided in paper form free of charge upon request. The 30-business-day
open negotiation period begins on the day on which the open negotiation
notice is first sent by a party.
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\19\ As clarified in the July 2021 interim final rules, the
initial payment should be an amount that the plan or issuer
reasonably intends to be payment in full based on the relevant facts
and circumstances, prior to the beginning of any open negotiations
or initiation of the Federal IDR process. See 86 FR 36900-36901.
---------------------------------------------------------------------------
As stated in the preamble to the October 2021 interim final rules,
parties should be able to provide effective notice because the parties
have already made initial contact (that is, the provider, facility, or
provider of air ambulance services has transmitted a bill to the plan
or issuer, and the plan or issuer sent an initial payment or a notice
of denial of payment to the provider, facility, or provider of air
ambulance services).\20\ The Departments encouraged the parties to take
reasonable measures to ensure that actual notice is provided, such as
by confirming that the email address is correct, and cautioned that if
the open negotiation notice is not properly provided to the other party
(and no reasonable measures have been taken to ensure actual notice has
been provided), the Departments or a certified IDR entity may determine
that the 30-business-day open negotiation period has not begun. In such
a case, any subsequent payment determination from a certified IDR
entity may be unenforceable due to the failure of the party sending the
open negotiation notice to meet the open negotiation requirement of the
October 2021 interim final rules. In guidance, the Departments
clarified how a provider, facility, or provider of air ambulance
services should proceed if the plan or issuer fails to disclose
information necessary to initiate the open negotiation period when
providing the initial payment or notice of denial of payment and
whether providers, facilities, or providers of air ambulance services
are required to use a plan's or issuer's online portal to submit an
open negotiation notice.\21\
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\20\ 86 FR 55980, 55990.
\21\ See U.S. Department of Health and Human Services, U.S.
Department of Labor, and U.S. Department of the Treasury FAQs about
Affordable Care Act and Consolidated Appropriations Act, 2021
Implementation Part 55, Q20 and Q21 (Aug. 19, 2022), available at
<a href="https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-55.pdf">https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-55.pdf</a> and <a href="https://www.cms.gov/files/document/faqs-part-55.pdf">https://www.cms.gov/files/document/faqs-part-55.pdf</a>.
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[[Page 75748]]
The October 2021 interim final rules provide that if the parties
have not negotiated an agreement on the out-of-network rate by the last
day of the open negotiation period, either party may initiate the
Federal IDR process during the 4-business-day period beginning on the
31st business day after the start of the open negotiation period.\22\
To initiate the Federal IDR process, the initiating party must submit
the standard notice of IDR initiation to the other party and to the
Departments. As stated in the preamble of the October 2021 interim
final rules, this notice must be provided to the Departments and the
other party on the same day.\23\ The notice of IDR initiation must
include: (1) information sufficient to identify the qualified IDR items
and services (and whether the qualified IDR items or services are
designated as batched items and services), including the furnishing
date(s) and location(s) of the item or service, the type of qualified
IDR item or service (such as emergency services, post-stabilization
professional services, hospital-based services), corresponding service
and place-of-service code(s), the amount of cost sharing allowed, and
the amount of the initial payment made by the plan or issuer for the
qualified IDR item or service, if applicable; (2) the names and contact
information of the parties involved, including email addresses, phone
numbers, and mailing addresses; (3) the State where the qualified IDR
item or service was furnished; (4) the commencement date of the open
negotiation period; (5) the initiating party's preferred certified IDR
entity; (6) an attestation that the item or service is a qualified IDR
item or service within the scope of the Federal IDR process; (7) the
QPA; (8) information about the QPA as described in 26 CFR 54.9816-
6T(d), 29 CFR 2590.716-6(d), and 45 CFR 149.140(d); and (9) general
information describing the Federal IDR process as specified by the
Departments.\24\ The general information should include a description
of the scope of the Federal IDR process and key deadlines in the
Federal IDR process, including the dates to initiate the Federal IDR
process, how to select a certified IDR entity, and the process for
selecting an offer.\25\ The Departments have developed a form that
parties must use to satisfy this requirement to provide general
information describing the Federal IDR process.
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\22\ 86 FR 55991; 26 CFR 54.9816-8T(b)(2)(i), 29 CFR 2590.716-
8(b)(2)(i), and 45 CFR 149.510(b)(2)(i).
\23\ 86 FR 55991.
\24\ 26 CFR 54.9816-8T(b)(2)(iii)(A), 29 CFR 2590.716-
8(b)(2)(iii)(A), and 45 CFR 149.510(b)(2)(iii)(A).
\25\ 86 FR 55991.
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Under section 9816(c)(1)(B) of the Code, section 716(c)(1)(B) of
ERISA, and section 2799A-1(c)(1)(B) of the PHS Act, the date of
initiation of the Federal IDR process is the date of the submission of
the notice of IDR initiation or another date specified by the
Departments that is not later than the date of receipt of the notice of
IDR initiation by both the other party to the dispute and the
Departments. The October 2021 interim final rules establish that the
initiation date of the Federal IDR process is the date of receipt of
the notice of IDR initiation by the Departments.\26\
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\26\ Id.
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Under the October 2021 interim final rules, the plan or issuer and
the nonparticipating provider, nonparticipating emergency facility, or
nonparticipating provider of air ambulance services (as applicable) may
jointly select a certified IDR entity no later than 3 business days
following the date of the IDR initiation.\27\ As previously stated, the
initiating party will select its preferred certified IDR entity in the
notice of IDR initiation. The party in receipt of the notice of IDR
initiation (non-initiating party) may agree or object to the preferred
certified IDR entity identified by the initiating party in the notice
of IDR initiation. If the non-initiating party does not object within 3
business days of the date of initiation of the Federal IDR process, the
preferred certified IDR entity identified in the notice of IDR
initiation will be the selected certified IDR entity, provided that the
certified IDR entity does not have a conflict of interest. If the non-
initiating party objects, that party must timely notify the initiating
party of the objection and propose an alternative preferred certified
IDR entity. The initiating party must then agree or object to the
alternative preferred certified IDR entity. If the initiating party
fails to object to the alternative preferred certified IDR entity
within 3 business days of the date of initiation of the Federal IDR
process, the alternative preferred certified IDR entity proposed by the
non-initiating party will be the selected certified IDR entity,
provided that the certified IDR entity does not have a conflict of
interest. If both parties agree on and select a certified IDR entity or
fail to agree upon a certified IDR entity within the specified
timeframe, the initiating party must notify the Departments by
electronically submitting the notice of the certified IDR entity
selection or failure to select (as applicable), no later than 1
business day after the end of the 3-business-day period (or in other
words, 4 business days after the date of initiation of the Federal IDR
process) through the Federal IDR portal. If the parties fail to jointly
select a certified IDR entity, the Departments will then randomly
select a certified IDR entity not later than 6 business days after the
date of initiation of the Federal IDR process and will notify the
parties of the selection. In addition, in instances in which the non-
initiating party believes that an item or service is not eligible for
the Federal IDR process, the non-initiating party must notify the
Departments through the Federal IDR portal within the same timeframe
that the notice of certified IDR entity selection or failure to select
is required (or in other words, 4 business days after the date of
initiation of the Federal IDR process) and provide information that
demonstrates why an item or service is not eligible for the Federal IDR
process.
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\27\ 86 FR 55991 through 55992, 26 CFR 54.9816-8T(c)(1)(i), 29
CFR 2590.716-8(c)(1)(i), and 45 CFR 149.510(c)(1)(i).
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After being notified of selection (either by the parties or the
Departments), certified IDR entities are required within 3 business
days of selection to attest that they do not have a conflict of
interest as specified under 26 CFR 54.9816-8T(c)(1)(ii), 29 CFR
2590.716-8(c)(1)(ii), and 45 CFR 149.510(c)(1)(ii). Certified IDR
entities are also required to review the information submitted in the
notice of IDR initiation and any additional requested information to
determine whether the dispute is for a qualified IDR item or service,
as defined in 26 CFR 54.9816-8T(a)(2)(xi), 29 CFR 2590.716-8(a)(2)(xi),
and 45 CFR 149.510(a)(2)(xi), that is eligible for the Federal IDR
process, including whether an All-Payer Model Agreement or specified
State law applies. If an item or service is not a qualified IDR item or
service eligible for the Federal IDR process, certified IDR entities
must notify the Departments and the parties within 3 business days of
making this determination.
The October 2021 interim final rules provide that, not later than
30 business days after the selection of a certified IDR entity, the
certified IDR entity must select one of the offers submitted by either
party to the dispute to be the out-of-network rate for the qualified
IDR
[[Page 75749]]
item or service.\28\ For each qualified IDR item or service, the total
plan or coverage payment is the amount by which this out-of-network
rate exceeds the cost-sharing amount for the qualified IDR item or
service (with any initial payment made by the plan or issuer counted
toward the total plan or coverage payment).
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\28\ 26 CFR 54.9816-8T(c)(4)(ii), 29 CFR 2590.716-8(c)(4)(ii),
and 45 CFR 149.510(c)(4)(ii).
---------------------------------------------------------------------------
The October 2021 interim final rules also provided that, after
considering the QPA, the statutory factors under sections
9816(c)(5)(C)(ii) and 9817(b)(5)(C)(ii) of the Code, sections
716(c)(5)(C)(ii) and 717(b)(5)(C)(ii) of ERISA, and sections 2799A-
1(c)(5)(C)(ii) and 2799A-2(b)(5)(C)(ii) of the PHS Act, additional
information requested by the certified IDR entity from the parties, and
all of the additional credible information submitted by the parties
that was not prohibited information under 26 CFR 54.9816-8T(c)(4)(v),
29 CFR 2590.716-8(c)(4)(v), and 45 CFR 149.510(c)(4)(v), the certified
IDR entity must select the offer closest to the QPA, unless the
certified IDR entity determined that the credible information submitted
by the parties clearly demonstrated that the QPA was materially
different from the appropriate out-of-network rate, or the offers were
equally distant from the QPA but in opposing directions.\29\ In those
situations, the October 2021 interim final rules required the certified
IDR entity to select the offer that the certified IDR entity determined
best represented the value of the item or service, which could be
either party's offer.\30\ However, as discussed in sections I.D. and
I.F. of this preamble, the District Court vacated portions of these
rules related to certified IDR entity determinations.\31\
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\29\ 86 FR 55995.
\30\ Id.
\31\ TMA I and TMA II.
---------------------------------------------------------------------------
The October 2021 interim final rules also provide that not later
than 30 business days after the selection of the certified IDR entity,
the certified IDR entity must notify parties to the dispute of the
selection of the offer and provide a written decision,\32\ which must
be submitted to the parties and the Departments through the Federal IDR
portal.\33\
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\32\ 86 FR 55995, 26 CFR 54.9816-8T(c)(4)(ii), 29 CFR 2590.716-
8(c)(4)(ii), and 45 CFR 149.510(c)(4)(ii).
\33\ The Federal IDR portal is available at <a href="https://www.nsa-idr.cms.gov">https://www.nsa-idr.cms.gov</a> and must be used throughout the Federal IDR process to
maximize efficiency and reduce burden.
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Section 9816(c)(3)(A) of the Code, section 716(c)(3)(A) of ERISA,
and section 2799A-1(c)(3)(A) of the PHS Act direct the Departments to
specify criteria under which multiple qualified IDR items and services
are permitted to be considered jointly as part of a single
determination (``batched determination'' or ``batched dispute'') by a
certified IDR entity for purposes of encouraging the efficiency
(including minimizing costs) of the Federal IDR process. These sections
further require that items and services may be considered as part of a
batched determination only if the items and services are furnished by
the same provider or facility; payment for the items and services is
required to be made by the same group health plan or health insurance
issuer; such items and services are related to the treatment of a
similar condition; and the items and services were furnished during the
30-day period following the date on which the first item or service
included in the batched determination was furnished, or during an
alternative period as determined by the Departments, for use in limited
situations, such as by the consent of the parties or in the case of
low-volume items and services, to encourage procedural efficiency and
minimize health plan and provider administrative costs. The October
2021 interim final rules implemented these requirements for batched
determinations at 26 CFR 54.9816-8T(c)(3)(i), 29 CFR 2590.716-
8(c)(3)(i), and 45 CFR 149.510(c)(3)(i), which are subject to the
certified IDR entity fee for batched determinations.\34\
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\34\ 86 FR 55994. See also the October 2021 interim final rules
in which the Departments defined ``batched items and services'' as
``multiple qualified IDR items or services that are considered
jointly as part of one payment determination by a certified IDR
entity for purposes of the Federal IDR process.'' 86 FR 55987
---------------------------------------------------------------------------
The October 2021 interim final rules also establish requirements
related to the costs of the Federal IDR process. Under the October 2021
interim final rules, each party must pay a non-refundable
administrative fee for participating in the Federal IDR process.\35\
The certified IDR entity may invoice the parties for the administrative
fee at the time the certified IDR entity is selected, and the parties
must pay the administrative fee by the time of offer submission.\36\
The administrative fee is paid by each party to the certified IDR
entity and remitted to the Departments.\37\ Under the October 2021
interim final rules, the administrative fee was to be established
annually through guidance in a manner such that the total
administrative fees collected for a year are estimated to be equal to
the amount of expenditures estimated to be made by the Departments to
carry out the Federal IDR process for that year.
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\35\ 26 CFR 54.9816-8T(d)(2)(i), 29 CFR 2590.716-8(d)(2)(i), and
45 CFR 149.510(d)(2)(i).
\36\ See Federal Independent Dispute Resolution (IDR) Process
Guidance for Disputing Parties, available at: <a href="https://www.cms.gov/files/document/rev-102822-idr-guidance-disputing-parties.pdf">https://www.cms.gov/files/document/rev-102822-idr-guidance-disputing-parties.pdf</a>.
\37\ 26 CFR 54.9816-8T(e)(2)(ix), 29 CFR 2590.716-8(e)(2)(ix),
and 45 CFR 149.510(e)(2)(ix). The No Surprises Act directed the
Departments to jointly establish one Federal IDR process. To
operationalize the Federal IDR process, HHS collects administrative
fees for all disputes initiated under the Federal IDR process,
including the administrative fees paid in connection with the
Federal IDR process for health plans that are subject to the Code or
ERISA.
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Additionally, under the October 2021 interim final rules, each
party must also pay a certified IDR entity fee to the certified IDR
entity at the time that the party submits its offer.\38\ However, the
non-prevailing party is ultimately responsible for the full certified
IDR entity fee, which is retained by the certified IDR entity for the
services it performed.\39\ The certified IDR entity fee that was paid
by the prevailing party is returned to the prevailing party by the
certified IDR entity within 30 business days following the date of the
payment determination.\40\ If the parties reach an agreement after
initiating the Federal IDR process but before the certified IDR entity
makes a payment determination, the certified IDR entity fee is split
evenly between the parties, unless the parties agree on an alternative
method for allocating the certified IDR entity fee.\41\ Similarly, if
the initiating party withdraws a dispute after a certified IDR entity
has been assigned but before the certified IDR entity makes a payment
determination, responsibility for the certified IDR entity fee is split
evenly between the parties.\42\ In the case of batched determinations,
the certified IDR entity may make different payment determinations for
each qualified IDR item or service under dispute. In these cases, the
party with the fewest determinations in its favor is considered the
non-prevailing party and is responsible for the full certified IDR
entity fee. If each party prevails in an equal number of
determinations, the certified IDR entity fee is split evenly between
the parties. Under the October 2021 interim final rules, the
[[Page 75750]]
Departments set certified IDR entity fee ranges annually through
guidance.
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\38\ 26 CFR 54.9816-8T(d)(1)(ii), 29 CFR 2590.716-8(d)(1)(ii),
and 45 CFR 149.510(d)(1)(ii).
\39\ 26 CFR 54.9816-8T(d)(1)(i), 29 CFR 2590.716-8(d)(1)(i), and
45 CFR 149.510(d)(1)(i).
\40\ 26 CFR 54.9816-8T(d)(1)(ii), 29 CFR 2590.716-8(d)(1)(ii),
and 45 CFR 149.510(d)(1)(ii).
\41\ 26 CFR 54.9816-8T(c)(2)(ii), 29 CFR 2590.716-8(c)(2)(ii),
and 45 CFR 149.510(c)(2)(ii).
\42\ See <a href="https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/patient-provider-dispute-resolution-administrative-fee-cy-2023.pdf">https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/patient-provider-dispute-resolution-administrative-fee-cy-2023.pdf</a>.
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D. Litigation Regarding the July 2021 and October 2021 Interim Final
Rules and Related Guidance
On October 28, 2021, the Texas Medical Association, a trade
association representing physicians, and a Texas physician filed a
lawsuit against the Departments and OPM (TMA I),\43\ stating that
certain provisions of the October 2021 interim final rules relating to
the certified IDR entities' consideration of the QPA, as well as
additional factors related to items and services that are not air
ambulance services, should be vacated. Plaintiffs argued that the
October 2021 interim final rules ignored Congress's intent that
certified IDR entities weigh the QPA and other factors without favoring
any factor, and the plaintiffs stated that as a result, the rules would
skew IDR results in favor of plans and issuers. On February 23, 2022,
the District Court issued a memorandum opinion and order that vacated
portions of the October 2021 interim final rules governing aspects of
the Federal IDR process related to non-air ambulance qualified IDR
items or services including: (1) the definition of ``material
difference''; (2) the requirement that a certified IDR entity must
select the offer closest to the QPA unless the certified IDR entity
determines that credible information submitted by either party under 26
CFR 54.9816-8T(c)(4)(i), 29 CFR 2590.716-8(c)(4)(i), and 45 CFR
149.510(c)(4)(i) clearly demonstrates that the QPA is materially
different from the appropriate out-of-network rate for non-air
ambulance qualified IDR items or services, or if the offers are equally
distant from the QPA but in opposing directions; (3) the requirement
that the certified IDR entity may only consider the additional
information submitted by either party to the extent that the credible
information related to the circumstances under 26 CFR 54.9816-
8T(c)(4)(i), 29 CFR 2590.716-8(c)(4)(i), and 45 CFR 149.510(c)(4)(i)
clearly demonstrates that the QPA is materially different from the
appropriate out-of-network rate for non-air ambulance qualified IDR
items or services; (4) the dispute resolution examples; and (5) the
requirement that, if the certified IDR entity does not choose the offer
closest to the QPA, the certified IDR entity's written decision must
include an explanation of the credible information that the certified
IDR entity determined demonstrated that the QPA was materially
different from the appropriate out-of-network rate, based on the
factors certified IDR entities are permitted to consider for the
qualified IDR item or service.\44\
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\43\ Tex. Med. Ass'n, et al. v. U.S. Dep't of Health and Human
Servs., 587 F. Supp. 3d 528 (E.D. Tex. 2022).
\44\ Id.
---------------------------------------------------------------------------
On April 27, 2022, LifeNet, Inc., a provider of air ambulance
services, filed a lawsuit against the Departments and OPM (LifeNet)
\45\ seeking the vacatur of additional provisions of the October 2021
interim final rules applicable to air ambulance services. In
particular, LifeNet alleged that the requirement codified in the last
sentence of 26 CFR 54.9817-2T(b)(2), 29 CFR 2590.717-2(b)(2), and 45
CFR 149.520(b)(2), which specifies the certified IDR entity may
consider information submitted by a party only if the information
``clearly demonstrate[s] that the qualifying payment amount is
materially different from the appropriate out-of-network rate,'' should
be vacated. On July 26, 2022, the District Court issued a memorandum
opinion and order vacating this language.\46\
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\45\ LifeNet, Inc. v. U.S. Dep't of Health and Human Servs., 617
F.Supp.3d 547 (E.D. Tex. July 26, 2022).
\46\ Id.
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On November 30, 2022, the Texas Medical Association, Tyler Regional
Hospital, and a Texas physician filed a lawsuit (TMA III) \47\ against
the Departments and OPM, asserting that the July 2021 interim final
rules, including the provisions of the regulations governing the
methodology for calculating the QPA, and certain related guidance
documents were in conflict with the statutory language. On August 24,
2023, the District Court issued a memorandum opinion and order \48\
that vacated certain portions of the July 2021 interim final rules and
associated regulatory provisions \49\ and portions of guidance
documents,\50\ including portions related to the methodology for
calculating the QPA and interpretations for certified IDR entities
related to the processing of disputes for air ambulance services.
---------------------------------------------------------------------------
\47\ Tex. Med. Ass'n., et al. v. U.S. Dep't of Health and Human
Servs., Case No. 6:22-cv-00450-JDK (E.D. Tex. November 30, 2022).
\48\ See Memorandum Opinion and Order, Tex. Med. Ass'n., et al.
v. U.S. Dep't of Health and Human Servs., No. 6:22-cv-00450-JDK
(E.D. Tex. August 24, 2023).
\49\ Specifically, the District Court vacated certain provisions
of 54.9816-6T and 54.9817-1T, 29 CFR 2590.716-6 and 2590.717-1, and
45 CFR 149.130 and 149.140. The District Court also vacated 5 CFR
890.114(a), insofar as it requires compliance with the vacated
regulations and guidance.
\50\ Specifically, the District Court vacated FAQs about
Affordable Care Act and Consolidated Appropriations Act, 2021
Implementation Part 55 (Aug. 19, 2022), Q14 and 15, as well as
portions of Technical Guidance for Certified IDR Entities at 2-3
(Aug. 18, 2022).
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On January 30, 2023, the Texas Medical Association, Houston
Radiology Associated, Texas Radiological Society, Tyler Regional
Hospital, and a Texas physician filed a lawsuit (TMA IV) \51\ against
the Departments and OPM, asserting that the December 2022 fee guidance
\52\ and the October 2021 interim final rules were unlawfully issued
without notice and comment rulemaking and were arbitrary and
capricious.\53\ On August 3, 2023, the District Court issued a
memorandum opinion and order \54\ that vacated the portion of the
December 2022 fee guidance increasing the administrative fee for the
Federal IDR process to $350 per party for disputes initiated during the
calendar year beginning January 1, 2023. The District Court also
vacated certain provisions of the October 2021 interim final rules
setting forth the batching criteria under which multiple IDR items or
services are treated as related to the ``treatment of a similar
condition.'' \55\ In light of the TMA IV order, on August 3, 2023, the
Departments instructed certified IDR entities to pause all work in the
Federal IDR portal until the Departments updated Federal IDR process
guidance, systems, and related documents to make them consistent with
the TMA IV order. Subsequently, on August 7, 2023, the Departments
directed certified IDR entities to resume processing all single and
bundled disputes for which the administrative fee had already been paid
and all batched disputes for which the certified IDR entity had already
determined the dispute eligible and
[[Page 75751]]
administrative fees had been paid (or the deadline for collecting fees
had expired) before August 3, 2023.\56\ On August 8, 2023, the
Departments directed certified IDR entities to resume processing single
and bundled disputes initiated in 2022 for which the administrative fee
had not been paid before August 3, 2023. On August 11, 2023, the
Departments released guidance to reflect the TMA IV order related to
the administrative fee and to clarify the administrative fee amount for
2023.\57\ On the same date, the Departments directed certified IDR
entities to resume processing single and bundled disputes initiated in
2023 for which the administrative fees had not been paid before August
3, 2023.
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\51\ Tex. Med. Ass'n., et al. v. U.S. Dep't of Health and Human
Servs., Case No. 6:23-cv-00059-JDK, (E.D. Tex. Jan. 30, 2023).
\52\ Centers for Medicare & Medicaid Services (Dec. 23, 2022).
Amendment to the Calendar Year 2023 Fee Guidance for the Federal
Independent Dispute Resolution Process Under the No Surprises Act:
Change in Administrative Fee. <a href="https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/amended-cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf">https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/amended-cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf</a>.
\53\ See Motion for Summary Judgment and Reply in Support of
Summary Judgment, p. 1, Tex. Med. Ass'n., et al. v. U.S. Dep't of
Health and Human Servs., No. 6:23-cv-00059-JDK (E.D. Tex. March 27,
2023).
\54\ See Memorandum Opinion and Order, Tex. Med. Ass'n. v. U.S.
Dep't of Health and Hum. Servs, No. 6:23-cv-00059-JDK (E.D. Tex.
August 3, 2023).
\55\ Specifically, the District Court vacated the requirement
under 26 CFR 54.9816-8T(c)(3)(i)(C), 29 CFR 2590.716-8(c)(3)(i)(C),
and 45 CFR 149.510(c)(3)(i)(C) that for a qualified IDR item and
service to be considered the same or similar item and service, it
must be billed under the same service code or a comparable code
under a different procedural code system, such as the Current
Procedural Terminology (CPT) codes with modifiers, if applicable,
Healthcare Common Procedure Coding System (HCPCS) with modifiers, if
applicable, or Diagnosis-Related Group (DRG) codes with modifiers,
if applicable.
\56\ For the purposes of the Federal IDR process, the
Departments in guidance interpreted a bundled payment arrangement to
be an arrangement under which: (1) a provider, facility, or provider
of air ambulance services bills for multiple items or services under
a single service code; or (2) a plan or issuer makes an initial
payment or denial of payment to a provider, facility, or provider of
air ambulance services under a single service code that represents
multiple items or services (e.g., a DRG). See U.S. Department of
Health and Human Services, U.S. Department of Labor, and U.S.
Department of Treasury, Federal Independent Dispute Resolution (IDR)
Process Technical Assistance for Certified IDR Entities, August
2022, available at <a href="https://www.cms.gov/files/document/TA-certified-independent-dispute-resolution-entities-August-2022.pdf">https://www.cms.gov/files/document/TA-certified-independent-dispute-resolution-entities-August-2022.pdf</a>. These
rules, discussed in section II.A. of this preamble, propose to
codify that definition in the regulations.
\57\ Centers for Medicare & Medicaid Services (Aug. 11, 2023).
Federal Independent Dispute Resolution (IDR) Process Administrative
Fee FAQs. <a href="https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/no-surprises-act-independent-dispute-resolution-administrative-fee-frequently-asked-questions.pdf">https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/no-surprises-act-independent-dispute-resolution-administrative-fee-frequently-asked-questions.pdf</a>.
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As a result of the TMA III order issued on August 24, 2023, the
Departments again paused all IDR-related activities in order to
evaluate the District Court's order and review current Federal IDR
processes, templates, and system functions necessary to comply with the
order. On September 5, 2023, the Departments directed certified IDR
entities to resume making eligibility and conflict-of-interest
determinations for all single and bundled disputes submitted on or
before August 3, 2023, and encouraged disputing parties to continue
engaging in open negotiations. On September 21, 2023, the Departments
directed certified IDR entities to resume processing all single and
bundled disputes submitted on or before August 3, 2023. On October 6,
2023, the Departments and OPM released ``FAQs About Consolidated
Appropriations Act, 2021 Implementation Part 62'' \58\ to provide
guidance in light of the TMA III order. On the same day, the
Departments reopened the Federal IDR portal for the initiation of
certain new single and bundled disputes. At the time of this proposed
rulemaking and in accordance with the TMA III and TMA IV orders, the
Departments plan to release guidance to clarify how certified IDR
entities should determine whether a dispute is appropriately batched.
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\58\ See U.S. Department of Health and Human Services, U.S.
Department of Labor, U.S. Department of the Treasury, Office of
Personnel Management, FAQs about Consolidated Appropriations Act,
2021 Implementation Part 62 (Oct. 6, 2023), available at <a href="https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-62.pdf">https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-62.pdf</a> and <a href="https://www.cms.gov/files/document/faqs-part-62.pdf">https://www.cms.gov/files/document/faqs-part-62.pdf</a>.
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E. August 2022 Final Rules
The August 2022 final rules included amendments to remove from the
regulations the language vacated by the District Court in TMA I and
LifeNet,\59\ as described in section I.D. of this preamble. In
addition, the August 2022 final rules amended and finalized certain
disclosure requirements related to information that plans and issuers
must share about the QPA under the July 2021 interim final rules.\60\
The August 2022 final rules also amended and finalized select
provisions of the October 2021 interim final rules on the information
to be considered by a certified IDR entity when it makes a payment
determination under the Federal IDR process.\61\
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\59\ 87 FR 52622.
\60\ 87 FR 52622-52623.
\61\ 87 FR 52628.
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Specifically, the Departments amended and finalized parts of the
July 2021 and October 2021 interim final rules related to: (1) the
information that must be disclosed about the QPA under 26 CFR 54.9816-
6T(d), 29 CFR 2590.716-6(d), and 45 CFR 149.140(d) to address
downcoding; (2) the certified IDR entity's consideration of the
statutory factors when making a payment determination under the Federal
IDR process at 26 CFR 54.9816-8T(c)(4)(iii)-(iv) and 54.9817-2T(b)(2),
29 CFR 2590.716-8(c)(4)(iii)-(iv) and 2590.717-2(b)(2), and 45 CFR
149.510(c)(4)(iii)-(iv) and 149.520(b)(2); and (3) the certified IDR
entity's written decision at 26 CFR 54.9816-8T(c)(4)(vi)(B), 29 CFR
2590.716-8(c)(4)(vi)(B), and 45 CFR 149.510(c)(4)(vi)(B).
For the information that must be disclosed with the QPA, the August
2022 final rules require that if a QPA is based on a downcoded service
code or modifier, in addition to the information already required to be
provided with an initial payment or notice of denial of payment, a plan
or issuer must provide a statement that the service code or modifier
billed by the provider, facility, or provider of air ambulance services
was downcoded; an explanation of why the claim was downcoded, including
a description of which service codes were altered, if any, and which
modifiers were altered, added, or removed, if any; and the amount that
would have been the QPA had the service code or modifier not been
downcoded. The August 2022 final rules define the term ``downcode,'' as
described in the preamble to the October 2021 interim final rules, to
mean the alteration by a plan or issuer of a service code to another
service code, or the alteration, addition, or removal by a plan or
issuer of a modifier, if the changed code or modifier is associated
with a lower QPA than the service code or modifier billed by the
provider, facility, or provider of air ambulance services.\62\
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\62\ 87 FR 52626.
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The August 2022 final rules also provided that in determining which
offer to select during the Federal IDR process, the certified IDR
entity must consider the QPA for the applicable year for the same or
similar item or service and then must consider all additional
information submitted by a party to determine which offer best reflects
the appropriate out-of-network rate, provided that the information
relates to the party's offer for the payment amount for the qualified
IDR item or service that is the subject of the payment determination
and does not include information that the certified IDR entity is
prohibited from considering in making the payment determination under
section 9816(c)(5)(D) of the Code, section 716(c)(5)(D) of ERISA, and
section 2799A-1(c)(5)(D) of the PHS Act. For this purpose, the preamble
to the August 2022 final rules stated that information requested by a
certified IDR entity, or submitted by a party, would be information
relating to a party's offer if it tends to show that the offer best
represents the value of the item or service under dispute. The August
2022 final rules required the certified IDR entity to evaluate whether
the information relates to the offer submitted by either party for the
payment amount for the qualified IDR item or service that is the
subject of the payment determination. The August 2022 final rules
clarified that in considering this additional information, the
certified IDR entity should evaluate whether the information that is
offered is credible and should not give weight to information that is
not credible. The appropriate out-of-network rate must be the offer
that the certified IDR entity
[[Page 75752]]
determines best represents the value of the qualified IDR item or
service.
Additionally, the August 2022 final rules provided that when
considering the additional information under 26 CFR 54.9816-
8(c)(4)(iii), 29 CFR 2590.716-8(c)(4)(iii), and 45 CFR
149.510(c)(4)(iii), the certified IDR entity should evaluate the
information and should not give weight to that information if it is
already accounted for by any of the other information submitted by the
parties, to avoid weighting the same information twice.
For the written decision, the August 2022 final rules require the
certified IDR entity to include what information the certified IDR
entity used to determine that the offer selected as the out-of-network
rate is the offer that best represents the value of the qualified IDR
item or service, including the weight given to the QPA and any
additional credible information submitted in accordance with the rules.
The August 2022 final rules required that if the certified IDR entity
relied on additional information in selecting an offer, its written
decision must include an explanation of why the certified IDR entity
concluded that this information was not already reflected in the QPA.
F. Litigation Regarding the August 2022 Final Rules
On September 22, 2022, the Texas Medical Association, Tyler
Regional Hospital, a Texas physician, LifeNet, Inc., Air Methods
Corporation, Rocky Mountain Holdings, LLC, and East Texas Air One, LLC
filed a lawsuit against the Departments (TMA II),\63\ asserting that
certain provisions of the August 2022 final rules relating to the
certified IDR entities' consideration of the QPA, as well as additional
factors, should be vacated. Plaintiffs argued that the August 2022
final rules unlawfully conflict with the No Surprises Act in the same
manner as the vacated provisions of the October 2021 interim final
rules--that is, such rules improperly restrict arbitrators' discretion
and unlawfully tilt the arbitration process in favor of the QPA. On
February 6, 2023, the District Court issued a memorandum opinion and
order that vacated portions of the August 2022 final rules related to
the certified IDR entity's consideration of the statutory factors when
making a payment determination under the Federal IDR process at 26 CFR
54.9816-8(c)(4)(iii)-(iv) and 54.9817-2(b)(3), 29 CFR 2590.716-
8(c)(4)(iii)-(iv) and 2590.717-2(b)(3), and 45 CFR 149.510(c)(4)(iii)-
(iv) and 149.520(b)(3) and part of the provision related to the
certified IDR entity's written decision at 26 CFR 54.9816-
8(c)(4)(vi)(B), 29 CFR 2590.716-8(c)(4)(vi)(B), and 45 CFR
149.510(c)(4)(vi)(B). The vacated portions of the rules include: (1)
the requirement that certified IDR entities consider the QPA and then
the additional statutory factors under 26 CFR 54.9816-
8(c)(4)(iii)(B)(1)-(5) and 54.9817-2(b)(3), 29 CFR 2590.716-
8(c)(4)(iii)(B)(1)-(5) and 2590.717-2(b)(3), and 45 CFR
149.510(c)(4)(iii)(B)(1)-(5) and 149.520(b)(3); (2) the provision that
a certified IDR entity should evaluate whether the information
submitted under 26 CFR 54.9816-8(c)(4)(iii)(B)-(D) and 54.9817-2(b)(3),
29 CFR 2590.716-8(c)(4)(iii)(B)-(D) and 2590.717-2(b)(3), and 45 CFR
149.510(c)(4)(iii)(B)-(D) and 149.520(b)(3) is credible and relates to
the offer submitted by either party for the payment amount for the
qualified IDR item or service that is the subject of the payment
determination, and the certified IDR entity should not give weight to
information to the extent it is not credible, it does not relate to
either party's offer for the payment amount for the qualified IDR item
or service, or it is already accounted for by the QPA or another
factor; (3) the dispute resolution examples; and (4) the requirement
that, if the certified IDR entity relies on additional information in
selecting an offer, its written decision must include an explanation of
why the certified IDR entity concluded that this information was not
already reflected in the QPA.
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\63\ Tex. Med. Ass'n, et. al. v. U.S. Dep't of Health and Human
Servs., Case No. 6:22-cv-372 (E.D. Tex. February 06, 2023) (TMA II).
Air Methods Corporation, Rocky Mountain Holdings, LLC, and East
Texas Air One, LLC are providers of air ambulance services.
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As a result of the TMA II order, on February 10, 2023, the
Departments instructed certified IDR entities to hold all payment
determinations until the Departments updated Federal IDR process
guidance, systems, and related documents to make them consistent with
the TMA II order.\64\ Subsequently, the Departments directed certified
IDR entities to resume making payment determinations on February 27,
2023, for disputes involving an item or service furnished before
October 25, 2022 (the effective date of the August 2022 Final
Rules).\65\ On March 17, 2023, the Departments released updated
guidance \66\ to reflect the TMA II order and directed certified IDR
entities to resume making payment determinations in accordance with the
guidance for disputes involving items or services furnished on or after
October 25, 2022.
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\64\ Centers for Medicare & Medicaid Services. (February 10,
2023). Payment Disputes Between Providers and Health Plans, Notices.
<a href="https://www.cms.gov/nosurprises/help-resolve-payment-disputes/payment-disputes-between-providers-and-health-plans">https://www.cms.gov/nosurprises/help-resolve-payment-disputes/payment-disputes-between-providers-and-health-plans</a>.
\65\ Centers for Medicare & Medicaid Services. (February 27,
2023). Payment Disputes Between Providers and Health Plans, Notices.
<a href="https://www.cms.gov/nosurprises/help-resolve-payment-disputes/payment-disputes-between-providers-and-health-plans">https://www.cms.gov/nosurprises/help-resolve-payment-disputes/payment-disputes-between-providers-and-health-plans</a>.
\66\ Centers for Medicare & Medicaid Services. (March 2023).
Federal Independent Dispute Resolution (IDR) Process for Certified
IDR Entities (Revised). <a href="https://www.cms.gov/files/document/federal-idr-guidance-idr-entities-march-2023.pdf">https://www.cms.gov/files/document/federal-idr-guidance-idr-entities-march-2023.pdf</a> and Federal Independent
Dispute Resolution (IDR) Process for Disputing Parties (Revised).
<a href="https://www.cms.gov/files/document/federal-idr-guidance-disputing-parties-march-2023.pdf">https://www.cms.gov/files/document/federal-idr-guidance-disputing-parties-march-2023.pdf</a>.
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On April 6, 2023, the Departments filed a notice of appeal to the
United States Court of Appeals for the Fifth Circuit from the District
Court's order granting summary judgement to the plaintiffs and denying
summary judgment to the Departments.
G. Federal IDR Process Administrative Fee and Certified IDR Entity Fee
Ranges 2023 Proposed Rules
In light of TMA IV and to promote transparency in the
administrative fee calculation, the Departments published the IDR
Process Fees proposed rules on September 26, 2023. The IDR Process Fees
proposed rules propose to amend the October 2021 interim final rules to
provide that the administrative fee would be set in notice and comment
rulemaking rather than annual guidance, propose an administrative fee
amount that, if finalized, would apply for disputes initiated on or
after the later of the effective date of the IDR Process Fees proposed
rules or January 1, 2024, and propose a methodology that the
Departments would use to calculate the administrative fee in the
future. Additionally, the IDR Process Fees proposed rules would propose
to amend the October 2021 interim final rules to provide that the
certified IDR entity fee ranges for single and batched determinations
would be set in notice and comment rulemaking rather than annual
guidance, propose the certified IDR entity fee ranges for single and
batched determinations, including a fixed tiered fee for batched
disputes, and propose the considerations that the Departments would use
to calculate the certified IDR entity fee ranges in the future. If
finalized, the proposed certified IDR entity fee ranges and fixed
tiered fees would apply for disputes initiated on or after the later of
the effective date of the IDR Process Fees proposed rules or January 1,
2024. If finalized, the proposed administrative fee and certified IDR
entity fee ranges would remain in effect until changed by subsequent
rulemaking.
[[Page 75753]]
H. The Federal IDR Process to Date
On April 15, 2022, the Departments launched the Federal IDR portal
to accept disputes regarding the appropriate out-of-network rate for
claims subject to the surprise billing protections of the No Surprises
Act. From April 15, 2022 to July 1, 2023, disputing parties submitted
over 489,000 disputes. In the first year of operations, disputing
parties submitted 14 times the number of disputes that the Departments
had expected to receive in an entire calendar year.<SUP>67 68</SUP> Due
to this unexpectedly high volume, the limited number of certified IDR
entities,\69\ the complexity of determining disputes' eligibility for
the Federal IDR process, and a large number of ineligible disputes
submitted, it is taking certified IDR entities longer than the
timeframes established under the No Surprises Act and the October 2021
interim final rules to process payment disputes. Further, the District
Court's successive orders have resulted in multiple temporary closures
of the Federal IDR portal, requiring the Departments to alter guidance,
implement significant system updates, and communicate changes to
disputing parties and certified IDR entities to comply with the orders.
These interruptions to the Federal IDR process have exacerbated delays
and required certified IDR entities and disputing parties to rapidly
adjust to changing operations and guidance. Accordingly, a large number
of disputes still await payment determinations.
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\67\ Federal Independent Dispute Resolution Process--Status
update. Available at: <a href="https://www.cms.gov/files/document/federal-idr-processstatus-update-april-2023.pdf">https://www.cms.gov/files/document/federal-idr-processstatus-update-april-2023.pdf</a>.
\68\ In the regulatory impact analysis of the October 2021
interim final rules, the Departments estimated that 17,333 disputes
involving non-air ambulance services and 4,899 disputes involving
air ambulance services would be submitted to the Federal IDR process
during the first year of implementation.
\69\ <a href="https://www.cms.gov/nosurprises/help-resolve-payment-disputes/certified-idre-list">https://www.cms.gov/nosurprises/help-resolve-payment-disputes/certified-idre-list</a>.
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Several factors are likely contributing to the high volume of
initiated disputes. First, providers, facilities, and providers of air
ambulance services \70\ have alleged that plans' and issuers' QPA
calculations are sometimes artificially low and are even at times lower
than Medicare rates. Providers, facilities, and providers of air
ambulance services further allege that plans and issuers are making
initial payments based on these artificially low QPAs, which
incentivizes providers, facilities, and providers of air ambulance
services to use the Federal IDR process for a larger number of items
and services than they otherwise would.
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\70\ For purposes of these proposed rules, unless otherwise
stated, whenever the Departments are referring to providers,
facilities, and providers of air ambulance services, the Departments
are referring to nonparticipating providers, facilities, and
providers of air ambulance services.
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A second factor contributing to the high volume of disputes is that
the disputing parties are not yet able to predict how disputes will be
resolved by certified IDR entities. As the Departments stated in the
preamble to the October 2021 interim final rules, a Federal IDR process
with predictable outcomes will reduce the use of the Federal IDR
process over time because, if outcomes are predictable in advance,
parties will generally prefer to reach an agreement in line with the
predicted outcome outside of the Federal IDR process to avoid the
administrative costs of utilizing the process.
Third, disputing parties are failing to engage in meaningful open
negotiations. Parties representing providers, facilities, providers of
air ambulance services, plans, and issuers have all asserted that they
experience challenges in negotiating with other parties during the 30-
business-day open negotiation period, resulting in low levels of
engagement during open negotiation. This lack of engagement has
resulted in relatively few disputes being settled outside of the
Federal IDR process, contributing to a higher-than-expected volume of
disputes being initiated in the Federal IDR process. As discussed later
in this section, interested parties also shared that the lack of
meaningful engagement in open negotiation contributes to inefficiencies
within the Federal IDR process, because disputing parties that fail to
engage in open negotiation may not exchange information that would
facilitate the Federal IDR process, such as contact information and
other required disclosures, or may exchange only incomplete
information.
Fourth, the District Court's successive rulings have necessitated
multiple temporary shutdowns of the Federal IDR process to comply with
the District Court's orders. Each shutdown has halted parts, or all, of
the Federal IDR process, interrupting the advancement of ongoing
disputes through the process and preventing new disputes from being
submitted. Reopening the Federal IDR portal each time has required the
Departments to draft new guidance, engage in new rulemaking, implement
significant system updates, and communicate changes to disputing
parties and certified IDR entities. These interruptions to the Federal
IDR process have exacerbated delays and required certified IDR entities
and disputing parties to rapidly adjust to changing operations and
guidance, which causes confusion regarding the current state of the
process while certified IDR entities and disputing parties adapt to new
or different processes, such as those discussed in section I.D. of this
preamble related to the TMA III order.
Finally, initiating parties are submitting a large number of
disputes that are not eligible for the Federal IDR process, leading to
both a high volume of dispute submissions and slow processing of
disputes. Certified IDR entities have indicated to the Departments that
determining the eligibility of disputes for the Federal IDR process is
more time-consuming and burdensome than they expected. In fact,
certified IDR entities report spending 50 to 80 percent of their time
working on eligibility determinations. From April 15, 2022 to July 1,
2023, non-initiating parties challenged the eligibility of 190,465
disputes for the Federal IDR process, and certified IDR entities found
59,604 disputes ineligible. A dispute is not eligible for the Federal
IDR process unless it concerns an item or service that meets the
definition of a qualified IDR item or service.\71\ Ineligible disputes
often involve an item or service that is not a qualified IDR item or
service because it is covered by a health plan or coverage that is not
subject to the surprise billing protections of the No Surprises Act,
such as Medicare or Medicaid, or because the item or service is subject
to a specified State law or an All-Payer Model Agreement. Additionally,
many batched disputes were found ineligible due to the initiating party
incorrectly batching items or services in a manner that did not comply
with the regulations, such as batching claims paid by different plans
or issuers.\72\ Certified IDR entities have similarly reported
encountering incorrectly bundled disputes for which providers are
attempting to submit, for example, an emergency room facility code as a
bundled code with various item and service codes included as line
items, rather than properly submitting a single service code (for
example, a Diagnosis-Related Group (DRG) code under which a provider,
facility, or provider of air ambulance services can bill for multiple
items or services).\73\ Disputes are also ineligible when the disputing
parties have failed to satisfy the 30-business-day open negotiation
period requirements specified under 26 CFR
[[Page 75754]]
54.9816-8T(b)(1), 29 CFR 2590.716-8(b)(1), and 45 CFR 149.510(b)(1) or
have failed to initiate the Federal IDR process within 4 business days
after the end of the 30-business-day open negotiation period as
specified under 26 CFR 54.9816-8T(b)(2)(i), 29 CFR 2590.716-8(b)(2)(i),
and 45 CFR 149.510(b)(2)(i).
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\71\ 26 CFR 54.9816-8T(a)(2)(xi), 29 CFR 2590.716-8(a)(2)(xi),
and 45 CFR 149.510 (a)(2)(xi).
\72\ 26 CFR 54.9816-8T(c)(3)(i)(B), 29 CFR 2590.716-
8(c)(3)(i)(B), and 45 CFR 149.510(c)(3)(i)(B).
\73\ 26 CFR 54.9816-8T(c)(3)(ii), 29 CFR 2590.716-8(c)(3)(ii),
and 45 CFR 149.510(c)(3)(ii).
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The Departments' review of the disputes submitted to date and
feedback received from interested parties and certified IDR entities
via letters, email communication and listening sessions shows a pattern
of initiating parties submitting ineligible disputes to the Federal IDR
process due to miscommunication or a lack of communication between the
disputing parties. The Departments intended that sufficient information
would be communicated through the disclosures that plans and issuers
are required to provide with their initial payment or notice of denial
of payment or would be subsequently communicated during the required
30-business-day open negotiation period to identify whether the item(s)
or service(s) involved in the dispute is a qualified IDR item(s) or
service(s). Plans and issuers assert that providers, facilities, and
providers of air ambulance services submit overwhelming numbers of
ineligible disputes that overload the plans' and issuers' ability to
identify and respond to dispute initiations, while providers,
facilities, and providers of air ambulance services assert that plans
and issuers do not provide required contact information and disclosures
in a clear and convenient manner and fail to respond to their notices
initiating open negotiation.
Although plans and issuers are required to provide disclosures with
the initial payment or notice of denial of payment containing
information related to the QPA and contact information to initiate open
negotiations, providers, facilities, and providers of air ambulance
services have reported difficulty locating this information. The
inability of providers, facilities, and providers of air ambulance
services to locate required disclosures has led to confusion about how
they should contact and engage in open negotiations with the plan or
issuer and ultimately submit the dispute to the Federal IDR process. If
disputing parties fail to share the required information, or if they
provide inaccurate information, certified IDR entities will have
incomplete or inaccurate information when making eligibility
determinations. As a result, certified IDR entities must dedicate
additional resources and conduct outreach to determine eligibility.
Many interested parties have stated that the exchange of key
information in a more standardized fashion, such as through the
inclusion of the information on electronic remittance advice (ERA)
transactions, discussed in greater detail in section II.B. of this
preamble, would ensure that disputing parties have timely access to
complete and accurate information and therefore help reduce the number
of ineligible disputes submitted to the Federal IDR process. This is
primarily because disputing parties would have timely access to the
information they need to determine whether (1) an item or service is a
qualified IDR item or service and (2) it is in their interest to
initiate the Federal IDR process regarding such item or service. The
Departments are of the view that timely access to that type of
information would help reduce the overall number of ineligible
disputes, resulting in more manageable workloads for certified IDR
entities and more efficient dispute processing overall.
Additionally, providers and facilities have raised concerns that
the existing disclosure rules do not require plans and issuers to
provide information necessary for determining whether the item or
service is subject to a specified State law, an All-Payer Model
Agreement, or the Federal IDR process for determining the out-of-
network rate. In particular, providers, facilities, and providers of
air ambulance services have identified significant challenges in
determining whether a claim involves a plan that is a self-insured
group health plan subject to ERISA (and, if the claim involves an item
or service covered by the No Surprises Act, is therefore generally
subject to the Federal IDR process) or a fully-insured plan to which a
specified State law or All-Payer Model Agreement may apply.\74\ The
Departments also are aware that there are further challenges in
identifying whether a plan subject to ERISA has opted into a specified
State law and, separately, whether a specific item or service, or
specific provider, facility, or provider of air ambulance services, is
subject to a given specified State law or All-Payer Model Agreement.
Additionally, providers, facilities, and providers of air ambulance
services have identified difficulties in determining the correct legal
business name of the plan or issuer. As a result, when initiating the
Federal IDR process, providers, facilities, and providers of air
ambulance services may initiate their dispute against the wrong party
or may incorrectly batch claims that were paid by different plans or
issuers.
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\74\ The July 2021 interim final rules allow self-insured group
health plans, including self-insured non-Federal governmental plans,
to voluntarily opt in to a State law that provides for a method for
determining the total amount payable under such a plan, where a
State has chosen to expand access to such plans, to satisfy their
obligations under section 9816(a)-(d) of the Code, section 716(a)-
(d) of ERISA, and section 2799A-1(a)-(d) of the PHS Act. A self-
insured plan that has chosen to opt-in to a State law must
prominently display in its plan materials describing the coverage of
out-of-network services a statement that the plan has opted in to a
specified State law, identify the relevant State (or States), and
include a general description of the items and services provided by
nonparticipating facilities, providers, and providers of air
ambulance services that are covered by the specified State law.
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To address the high volume of disputes submitted to the Federal IDR
process and the growing backlog of cases, the Departments have provided
ongoing technical assistance to certified IDR entities and disputing
parties by issuing guidance as well as performing research and outreach
on dispute eligibility determinations.\75\ In addition, the Departments
have implemented Federal IDR portal system enhancements. These system
enhancements, such as enabling non-initiating parties to submit
supporting documentation to contest dispute eligibility within their
response to the notice of IDR initiation, allow the Departments to
collect information regarding dispute eligibility earlier in the
process to identify whether the eligibility requirements are met.
However, despite the efforts to date, the Departments and certified IDR
entities continue to experience challenges related to determining
eligibility for the Federal IDR process, such as delays due to
necessary outreach by the certified IDR entities to the disputing
parties to obtain or verify information regarding the eligibility of a
dispute.
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\75\ U.S. Department of Health and Human Services, U.S.
Department of Labor, and U.S. Department of the Treasury, Federal
Independent Dispute Resolution (IDR) Process Technical Assistance
for Certified IDR Entities, August 2022, available at <a href="https://www.cms.gov/files/document/TA-certified-independent-dispute-resolution-entities-August-2022.pdf">https://www.cms.gov/files/document/TA-certified-independent-dispute-resolution-entities-August-2022.pdf</a>.
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I. Scope and Purpose of Rulemaking
This proposed rulemaking is intended to address specific issues
that are critical to ensuring the timely rendering of payment
determinations and to address feedback from interested parties and
certified IDR entities to improve the functioning of the Federal IDR
process.
These proposed rules are intended to address some of the common
communication issues between disputing parties, including those
stemming from a lack of clarity as to whether items and services are
qualified IDR items and services covered by the
[[Page 75755]]
No Surprises Act. These proposed rules would impose requirements and
create incentives for parties to engage with one another during the
open negotiation period, which would help reduce the volume of
ineligible disputes being submitted. Specifically, these proposed rules
would make changes to the information that plans, issuers, providers,
facilities, and providers of air ambulance services must share before
initiating the Federal IDR process by including proposals at 26 CFR
54.9816-6A, 29 CFR 2590.716-6A, and 45 CFR 149.100 to require plans and
issuers to provide claim adjustment reason codes (CARCs) and remittance
advice remark codes (RARCs) when providing any paper or electronic
remittance advice in response to a claim for payment for health care
items or services furnished by an entity with which it does not have a
direct or indirect contractual relationship. Additionally, the
Departments propose amendments at 26 CFR 54.9816-6, 29 CFR 2590.716-6,
and 45 CFR 149.140 to the information that must be disclosed about the
QPA. These proposed rules would also establish new requirements at 26
CFR 54.9816-9, 29 CFR 2590.716-9, and 45 CFR 149.530, which would
require plans and issuers to register with the Federal IDR portal to
better enable a provider, facility, or provider of air ambulance
services to identify the appropriate plan or issuer with which it has a
dispute and determine whether its coverage of an item or service that
is the subject of the dispute is subject to a specified State law, an
All-Payer Model Agreement, or the Federal IDR process for determining
the out-of-network rate.
To further facilitate communication and improve open negotiations,
these proposed rules would amend the open negotiation process that
precedes the Federal IDR process. Specifically, at 26 CFR 54.9816-
8(b)(1), 29 CFR 2590.716-8(b)(1), and 45 CFR 149.510(b)(1), these
proposed rules would amend the content requirements of the standard
open negotiation notice, would establish requirements related to an
open negotiation response notice, and would clarify the timing for when
the open negotiation period begins. These proposed rules would also
amend the process for initiating the Federal IDR process. Specifically,
at 26 CFR 54.9816-8(b)(2), 29 CFR 2590.716-8(b)(2), and 45 CFR
149.510(b)(2), these proposed rules would amend the content of the
notice of IDR initiation and establish new requirements for a notice of
IDR initiation response from the non-initiating party. At 26 CFR
54.9816-8T(b)(3), 29 CFR 2590.716-8(b)(3), and 45 CFR 149.510(b)(3)
these proposed rules would also establish a new manner for providing
notices to the other party and the Departments.
These proposed rules would also provide additional clarity
regarding timeframes within the Federal IDR process. The No Surprises
Act includes timeframes by which certain steps of the Federal IDR
process must be completed. For example, the parties to a dispute must
jointly select a certified IDR entity not later than the last day of
the 3-business-day period following the date of the initiation of the
Federal IDR process, and if the parties fail to jointly select a
certified IDR entity, the Departments must select a certified IDR
entity not later than 6 business days after the date of IDR
initiation.\76\ While the No Surprises Act also provides detailed
timeframes for certain other steps in the process, the steps that must
be conducted before a payment determination can be issued are not as
clearly defined, such as when a certified IDR entity must conduct a
conflict-of-interest review and must determine whether an item or
service is a qualified IDR item or service, as defined in 26 CFR
54.9816-8T(a)(2)(xi), 29 CFR 2590.716-8(a)(2)(xi), and 45 CFR
149.510(a)(2)(xi), and eligible for the Federal IDR process. Therefore,
the provisions in these proposed rules would adjust certain steps and
establish associated timeframes (see Table 1). This includes proposed
provisions related to establishing a process for the preliminary
selection of the certified IDR entity and the final selection of the
certified IDR entity as set out in 26 CFR 54.9816-8(c)(1), 29 CFR
2590.716-8(c)(1), and 45 CFR 149.510(c)(1), in order to account for the
time it takes certified IDR entities to confirm that they do not have a
conflict of interest with either party. To allow more time for
certified IDR entities to conduct eligibility reviews, these proposed
rules would include proposed amendments to the Federal IDR process
eligibility review proposed in 26 CFR 54.9816-8T(c)(2), 29 CFR
2590.716-8(c)(2), and 45 CFR 149.510(c)(2). As discussed in section
I.H. of this preamble, eligibility reviews have proven to be complex
and time consuming. In extenuating circumstances, such as when dispute
volume is high, it may be more appropriate for the Departments, rather
than certified IDR entities, to conduct eligibility reviews to
facilitate quicker dispute processing. Therefore, these proposed rules
would establish a departmental eligibility review process in proposed
paragraph 26 CFR 54.9816-8(c)(2)(ii), 29 CFR 2590.716-8(c)(2)(ii), and
45 CFR 149.510(c)(2)(ii). Further, to support eligibility
determinations, conflict-of-interest reviews, or payment
determinations, the Departments propose requirements for the submission
of additional information from the disputing parties at 26 CFR 54.9816-
8(c)(2)(iii), 29 CFR 2590.716-8(c)(2)(iii), and 45 CFR
149.510(c)(2)(iii). To clarify and establish a standard process for
disputes to be withdrawn from the Federal IDR process, the Departments
propose four conditions in which a dispute may be withdrawn at 26 CFR
54.9816-8(c)(3)(i), 29 CFR 2590.716-8(c)(3)(i), and 45 CFR
149.510(c)(3)(ii). To further adjust timeframes and processes
associated with the Federal IDR process, these proposed rules would
include proposed amendments related to submission of offers and payment
determination and notification at 26 CFR 54.9816-8(c)(5), 29 CFR
2590.716-8(c)(5), and 45 CFR 149.510(c)(5); the collection of the
certified IDR entity fee at 26 CFR 54.9816-8(d)(1), 29 CFR 2590.716-
8(d)(1), and 45 CFR 149.510(d)(1); and the collection of the
administrative fee, including a process for setting a reduced
administrative fee for low-dollar amount disputes and for non-
initiating parties in cases of ineligible disputes, at 26 CFR 54.9816-
8(d)(2), 29 CFR 2590.716-8(d)(2), and 45 CFR 149.510(d)(2). These
proposed rules also include provisions to expand upon situations in
which Federal IDR process timeframes may be waived due to extenuating
circumstances at 26 CFR 54.9816-8T(g), 29 CFR 2590.716-8(g), and 45 CFR
149.510(g).
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\76\ Section 9816(c)(4)(F) of the Code, section 716(c)(4)(F) of
ERISA, and section 2799A-1(c)(4)(F) of the PHS Act.
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Lastly, to address concerns regarding the vacated batching
provision at 26 CFR 54.9816-8T(c)(3)(i)(C), 29 CFR 2590.716-
8(c)(3)(i)(C), and 45 CFR 149.510(c)(3(i)(C) and to create more
efficiencies in the process, these proposed rules at 26 CFR 54.9816-
8(c)(4), 29 CFR 2590.716-8(c)(4), and 45 CFR 149.510(c)(4) would
include provisions that would allow for more flexibility in batching
multiple items or services in a single dispute.
It is the Departments' intention that the implementation of the
proposed provisions in these proposed rules, if finalized, would lead
to a more efficient
[[Page 75756]]
Federal IDR process and more timely payment determinations.
BILLING CODE 6325-63-P; 4830-01-P; 4510-29-P; 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP03NO23.002
[[Page 75757]]
[GRAPHIC] [TIFF OMITTED] TP03NO23.003
[[Page 75758]]
[GRAPHIC] [TIFF OMITTED] TP03NO23.004
BILLING CODE 6325-63-C; 4830-01-C; 4510-29-C; 4120-01-C
II. Overview of the Proposed Rules--Departments of the Treasury, Labor,
and HHS
A. Definition of Bundled Payment Arrangement
Section 9816(c)(3)(B) of the Code, section 716(c)(3)(B) of ERISA,
and section 2799A-1(c)(3)(B) of the PHS Act state that the Departments
shall provide that, in the case of items and services which are
included by a provider or facility as part of a bundled payment, such
items and services included in such bundled payment may be part of a
single determination. The October 2021 interim final rules specify that
in the case of qualified IDR items and services billed by a provider,
facility, or provider of air ambulance services as part of a bundled
payment arrangement, or if a plan or issuer makes or denies an initial
payment as a bundled payment, the qualified IDR items and services may
be submitted as part of one payment determination and are subject to
the rules for batched determinations and the certified IDR entity fee
for single determinations.\78\ The preamble to the October 2021 interim
final rules describes a bundled payment arrangement as an instance in
which a group health plan or health insurance issuer pays a provider,
facility, or provider of air ambulance services a single payment for
multiple items or services furnished during an episode of care to a
single patient.\79\ To clarify how certified IDR entities can identify
a dispute that includes a bundled payment arrangement, the Departments
provided a definition for a bundled payment arrangement in the August
2022 Technical Assistance for Certified IDR Entities.\80\ In that
guidance, the Departments clarified that a single payment to one
provider, facility, or provider of air ambulance services for multiple
items or services must be made at the service code level for the entire
bundle in order to be considered a bundled payment and therefore be
treated as a single payment determination for the multiple items and
services under the Federal IDR process. The Departments defined a
bundled payment arrangement at the service code level because service
codes are the principal mechanism by which health care services and
supplies are identified and reimbursed. These rules propose to codify
the clarification set forth in the August 2022 Technical Assistance for
Certified IDR Entities. Specifically, the Departments propose to amend
26 CFR 54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30 by defining the
term ``bundled payment arrangement'' as an arrangement under which: (1)
a provider, facility, or provider of air ambulance services bills for
multiple items or services furnished to a single patient under a single
service code that represents multiple items or services (for example, a
DRG code); or
[[Page 75759]]
(2) a plan or issuer makes an initial payment or notice of denial of
payment to a provider, facility, or provider of air ambulance services
under a single service code that represents multiple items or services
furnished to a single patient (for example, a DRG code).
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\77\ For a chart outlining the Federal IDR Process under the
current regulations, see the Federal IDR Process Guidance for
Disputing Parties at <a href="https://www.cms.gov/files/document/federal-idr-guidance-disputing-parties-march-2023.pdf">https://www.cms.gov/files/document/federal-idr-guidance-disputing-parties-march-2023.pdf</a>.
\78\ 86 FR 55994.
\79\ Id.
\80\ U.S. Department of Health and Human Services, U.S.
Department of Labor, and U.S. Department of the Treasury. (August
2022). Technical Assistance for Certified IDR Entities. <a href="https://www.cms.gov/files/document/TA-certified-independent-dispute-resolution-entities-August-2022.pdf">https://www.cms.gov/files/document/TA-certified-independent-dispute-resolution-entities-August-2022.pdf</a>.
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For example, the August 2022 Technical Assistance for Certified IDR
Entities, the National Correct Coding Initiative (NCCI) Policy Manual
\81\ explains that if a physician performs bilateral mammography, the
provider shall report (or for the purpose of the Federal IDR process,
the provider shall bill) Current Procedural Terminology (CPT) code
77066 (Diagnostic mammography . . . bilateral). The provider should not
submit CPT code 77065 (Diagnostic mammography . . . unilateral) with 2
UOS or CPT code 77065 LT (unilateral left breast mammography) plus CPT
code 77065 RT (unilateral right breast mammography). Under this
example, the provider performed multiple services, and therefore, if
the services are billed or reimbursed under one service code (CPT code
77066), all services performed under that service code (CPT codes 77065
LT and 77065 RT) may be considered a bundled payment arrangement for
purposes of the Federal IDR process.
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\81\ The NCCI, developed by the Centers for Medicare & Medicaid
Services, promotes correct national coding methodologies. Although
created for the purpose of reducing improper Medicare Part B
payments, the NCCI policy manual is also used by commercial payers.
CMS. (Feb. 28, 2023). Medicare National Correct Coding Initiative
(NCCI) Edits. <a href="https://www.cms.gov/medicare-medicaid-coordination/national-correct-coding-initiative-ncci/ncci-medicare/medicare-ncci-policy-manual">https://www.cms.gov/medicare-medicaid-coordination/national-correct-coding-initiative-ncci/ncci-medicare/medicare-ncci-policy-manual</a>.
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Further, under current rules at 26 CFR 54.9816-8T(c)(3)(ii), 29 CFR
2590.716-8(c)(3)(ii), and 45 CFR 149.510(c)(3)(ii), bundled payment
arrangements can be submitted as a single dispute and are subject to
certified IDR entity fees for a single dispute rather than the higher
fees for batched disputes (which may include multiple items or services
from different claims between the same provider and plan but reflect
the same service code or a similar code under a different procedural
coding system).
To further clarify the process for resolving IDR disputes for
bundled payment arrangements, the Departments propose an amendment that
would remove the language in the October 2021 interim final rules
stating that a bundled payment arrangement is subject to the rules for
batched determinations. While a bundled payment arrangement by
definition is billed by the same provider or group of providers,
facility, or same provider of air ambulance services and paid by the
same group health plan or health insurance issuer, not all requirements
for batched determinations \82\ apply to bundled payment arrangements.
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\82\ 26 CFR 54.9816-8T(c)(3), 29 CFR 2590.716-8(c)(3), and 45
CFR 149.510(c)(3).
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The Departments solicit comment on the definition and treatment of
bundled payment arrangements. The Departments also solicit comment on
examples of service or procedural codes other than DRGs that would meet
the proposed definition of a bundled payment arrangement.
B. Use of CARCs and RARCs
1. Existing Payment Communication Practice and Requirements
As described in section I.E. of this preamble, plans and issuers
are currently required to disclose certain information to providers,
facilities, and providers of air ambulance services when making an
initial payment or notice of denial of payment when the recognized
amount is the QPA.\83\ The Health Insurance Portability and
Accountability Act of 1996 (HIPAA) mandated the adoption of electronic
standards for certain health care transactions, including health care
payment and remittance advice. Under HIPAA and regulations implementing
the electronic transaction standards, these disclosures, when
transmitted from a plan or issuer to a provider, facility, or provider
of air ambulance services,\84\ meet the definition of a health care
remittance advice transaction.\85\ Therefore, plans and issuers must
comply with the Accredited Standards Committee (ASC) X12 implementation
guide adopted at 45 CFR 162.1602 when electronically transmitting the
QPA disclosures required under 26 CFR 54.9816-6T(d), 29 CFR 2590.716-
6(d), and 45 CFR 149.140(d) to a provider, facility, or provider of air
ambulance services.\86\ Further, plans and issuers are required to send
remittance information electronically upon the request of a provider,
facility, or provider of air ambulance services, regardless of whether
the requesting individual or entity is in the plan's or issuer's
network or otherwise affiliated with the plan or issuer.\87\ When
remittance advice is transmitted electronically, it is commonly
referred to as an ERA.
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\83\ 26 CFR 54.9816-6T(d), 29 CFR 2590.716-6(d), and 45 CFR
149.140(d). As explained in section II.C. of this preamble, the
Departments are proposing the following amendments to 26 CFR
54.9816-6T(d), 29 CFR 2590.716-6(d), and 45 CFR 149.140(d) to
reflect that the concept of the recognized amount is not applicable
to providers of air ambulance services: (1) requiring plans and
issuers to disclose the QPA and certain information about the QPA
when cost sharing is calculated using the QPA for an air ambulance
service; and (2) requiring plans and issuers to provide these
disclosures when the recognized amount (or with respect to air
ambulance services, the amount on which cost sharing is based) is
the QPA or the amount billed by the provider, facility, or provider
of air ambulance services.
\84\ HIPAA requirements related to health care remittance advice
transactions apply to ``covered entities,'' including ``health
plans'' (which generally include plans and issuers) and ``health
care providers'' (which include providers, facilities, and providers
of air ambulance services that transmit any health information in
electronic form in connection with an electronic transaction for
which a standard has been adopted under HIPAA). 45 CFR 160.102 and
45 CFR 160.103. For purposes of continuity with the rest of this
preamble, this section uses the terms ``plan'' and ``issuer'' to
refer to entities that are subject to HIPAA requirements that apply
to ``health plans'' and the term ``providers, facilities, and
providers of air ambulance services'' to refer to entities that are
subject to HIPAA requirements that apply to ``health care
providers.'' However, self-administered group health plans with
fewer than 50 participants are excluded from the term ``health
plan'' under 45 CFR 160.103 and are not subject to HIPAA
requirements.
\85\ 45 CFR 162.1601 (``The health care electronic funds
transfers (EFT) and remittance advice transaction is the
transmission of either of the following for health care: (a) The
transmission of any of the following from a health plan to a health
care provider: (1) Payment. (2) Information about the transfer of
funds. (3) Payment processing information. (b) The transmission of
either of the following from a health plan to a health care
provider: (1) Explanation of benefits. (2) Remittance advice.'').
\86\ The ASC X12N 835 Version 5010 (835 transaction) is the
current HIPAA standard that plans and issuers must use to
electronically transmit explanation of benefits or remittance advice
information to providers and facilities. As discussed later in this
section II.B. of this preamble, the current ASC X12 standards
predate, and therefore do not address, the No Surprises Act
requirements.
\87\ 45 CFR 162.925(a)(1). See also Gerhardt, C. (March 22,
2022). Guidance on health plans' payment of health care claims using
Virtual Credit Cards (VCCs) and adopted HIPAA standards for Health
Care Electronic Funds Transfers (EFT) and Electronic Remittance
Advice (ERA) transactions. Centers for Medicare & Medicaid Services.
<a href="https://www.cms.gov/files/document/guidance-letter-vcc-eft-era.pdf">https://www.cms.gov/files/document/guidance-letter-vcc-eft-era.pdf</a>.
HIPAA regulations require that a covered entity conduct a
transaction as a standard transaction when using electronic media to
transmit a transaction for which the Secretary has adopted a
standard (see 45 CFR 162.923(a)). HIPAA regulations also require a
health plan to conduct transactions as standard transactions when
requested to do so (see 45 CFR 162.925(a)(1)). HIPAA does not,
however, obligate a health plan to conduct a transaction(s) that it
would not otherwise conduct.
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An ERA explains how a plan or issuer has adjusted claim charges
based on factors like contract agreements, secondary payers, benefits
coverage, and expected cost sharing.\88\ As noted earlier in this
preamble section with reference to QPA disclosures, all ERAs must
[[Page 75760]]
comply with the ASC X12 835 transaction standard adopted by HHS under
45 CFR 162.1602. The X12 835 implementation guide mandates the use of
CARCs and RARCs to communicate remittance information (as opposed to
any other code systems, such as proprietary codes developed by
individual plans and issuers).\89\ The terms ``CARC'' and ``RARC'' are
not defined in Federal statute but are described in the ASC X12 835
implementation guide and the Council for Affordable Quality Healthcare
Committee on Operating Rule for Information Exchange (CAQH CORE)
operating rule adopted at 45 CFR 162.1603(a)(4). CARCs explain why a
claim or service line was paid differently than it was billed.\90\
RARCs provide additional explanations for an adjustment already
described by a CARC or convey information about remittance processing.
RARCs are either ``supplemental,'' meaning that they provide additional
explanation for an adjustment already described by a CARC, or
``informational,'' meaning they convey information about remittance
processing and are never related to a specific adjustment or CARC.\91\
The lists of approved CARCs and RARCs are maintained by separate
committees (the CARC Committee and the RARC Committee) designated by
HHS to review requests to add, remove, or modify existing CARCs and
RARCs. The HIPAA operating rule adopted at 45 CFR 162.1603(a)(4)
requires plans and issuers to use a uniform set of CARCs and RARCs for
defined business scenarios. Updated lists of approved CARCs and RARCs,
along with an updated list of approved code combinations and business
scenarios, are published three times each year.\92\
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\88\ Centers for Medicare & Medicaid Services. (June 16, 2022).
Health Care Payment and Remittance Advice and Electronic Funds
Transfer. <a href="https://www.cms.gov/Regulations-and-Guidance/Administrative-Simplification/Transactions/HealthCarePaymentandRemittanceAdviceandElectronicFundsTransfer">https://www.cms.gov/Regulations-and-Guidance/Administrative-Simplification/Transactions/HealthCarePaymentandRemittanceAdviceandElectronicFundsTransfer</a>.
\89\ CARCs and RARCs are required by the ASC X12 835 transaction
standard and are not currently required to be used on paper
remittance advice.
\90\ X12. (Nov. 16, 2022). Claim Adjustment Reason Codes.
<a href="https://x12.org/codes/claim-adjustment-reason-codes">https://x12.org/codes/claim-adjustment-reason-codes</a>.
\91\ X12. (March 1, 2023). Remittance Advice Remark Codes.
<a href="https://x12.org/codes/remittance-advice-remark-codes">https://x12.org/codes/remittance-advice-remark-codes</a>.
\92\ CAQH CORE. (n.d). Ongoing Maintenance of the CORE Code
Combinations. <a href="https://www.caqh.org/core/ongoing-maintenance-core-code-combinations">https://www.caqh.org/core/ongoing-maintenance-core-code-combinations</a>.
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The RARC Committee has approved a set of specific RARCs that convey
information related to the No Surprises Act, including which of the No
Surprises Act provisions apply to a claim, how cost sharing was
calculated under the No Surprises Act, and whether a payment for a
claim was an initial or final payment calculated in accordance with the
No Surprises Act.\93\ These RARCs are currently available for use by
plans and issuers, although the existing No Surprises Act-specific
RARCs do not address all required QPA disclosures. The current
standards and operating rules that govern ERA transactions under HIPAA
were adopted prior to the enactment of the No Surprises Act and do not
include specific requirements that dictate which combinations of CARCs
and RARCs must be used to communicate claim adjudication information in
business scenarios anticipated by the No Surprises Act.\94\
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\93\ X12. (March 1, 2023). Remittance Advice Remark Codes.
<a href="https://x12.org/codes/remittance-advice-remark-codes">https://x12.org/codes/remittance-advice-remark-codes</a> (complete list
of approved RARC codes including No Surprises Act-specific codes);
and Centers for Medicare & Medicaid Services. (March 1, 2022).
Remittance Advice Remark Codes Related to the No Surprises Act.
(unofficial reference list of No Surprises Act-specific RARC codes).
\94\ The ASC X12 835 transaction standard requires health plans
to convey information about the adjudication of a claim using CARCS
and RARCS. The Phase III 360 CORE Uniform Use of CARCs and RARCs
(835) Rule, adopted at 45 CFR 162.1603 requires plans to use
specified combinations of CARCs and RARCs in certain business
scenarios. CAQH CORE. (August 2022). CAQH CORE Payment and
Remittance (835) Uniform Use of CARCs and RARCs Rule, Version
PR.1.1. <a href="https://www.caqh.org/sites/default/files/core/Payment-Remittance-CARCs-RARCs-Rule.pdf">https://www.caqh.org/sites/default/files/core/Payment-Remittance-CARCs-RARCs-Rule.pdf</a>.
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Plans and issuers consequently convey the disclosures required
under the No Surprises Act to providers, facilities, and providers of
air ambulances through a variety of methods, including electronic and
paper remittance advice. These disclosures, if more effectively
communicated, would provide providers, facilities, and providers of air
ambulance services with more accessible information to determine
whether they may initiate open negotiation and the Federal IDR process.
However, in part because plans and issuers are not able to transmit all
of the required disclosures through standard transactions,\95\ such as
the ASC X12 835 transaction, providers, facilities, and providers of
air ambulance services have reported to the Departments that they are
not always aware of, or cannot understand, the disclosures even when
the plan or issuer claims to have met the disclosure requirements.\96\
Moreover, the Departments' ability to assess how often CARCs and RARCs
are used to convey information related to the No Surprises Act is
limited due to the minimal available data on uptake and the absence of
guidance, standards, or operational rules specifying how these codes
must be used. Informal feedback from providers, facilities, and
providers of air ambulance services and plans and issuers suggests that
some plans and issuers are using some of these codes, including when
providing paper remittance advice, but there is not yet widespread
usage.
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\95\ ``Standard transaction'' means a transaction that complies
with an applicable standard and associated operating rules adopted
under the HIPAA Administrative Simplification requirements at 45 CFR
part 162. 45 CFR 162.103.
\96\ For example, the Departments are aware of some cases where
providers, facilities, and providers of air ambulance services used
third parties to process remittances and did not realize the process
for viewing the remittances through those third parties was
filtering out information related to the No Surprises Act.
Similarly, some providers, facilities, and providers of air
ambulance services may view electronic remittance advice without
realizing plans and issuers provided the QPA and related information
on paper remittance advice.
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2. Proposal To Require CARCs and RARCs To Improve Communication Between
Plans and Issuers and Providers, Facilities, and Providers of Air
Ambulance Services
Gaps in communication between plans and issuers and providers,
facilities, and providers of air ambulance services contribute to
inefficiencies in resolving disputes in the Federal IDR process. The
Departments have identified the following areas of confusion, reported
by plans, issuers, providers, facilities, providers of air ambulance
services, and certified IDR entities, which are also consistent with
the Departments' experience administering the Federal IDR process: (1)
whether the consumer protections against balance billing and out-of-
network cost sharing under the No Surprises Act apply to an item or
service; (2) how cost sharing and the out-of-network rates are
determined (that is, through an All-Payer Model Agreement, specified
State law, or the Federal rules); (3) how and with whom to initiate
open negotiations; and (4) which items or services eligible for the
Federal IDR process can be batched or bundled into one dispute.
To address communication challenges described in section II.B.1. of
this preamble, the Departments propose new disclosure rules at 26 CFR
54.9816-6A, 29 CFR 2590.716-6A, and 45 CFR 149.100. These proposed
provisions would require plans and issuers to use CARCs and RARCs, as
specified in guidance issued by the Departments (and discussed
elsewhere in this section II.B. of this preamble), or as required under
any applicable adopted standards and operating rules under 45 CFR part
162, to communicate information related to whether a claim for an item
or service furnished by an entity that does not have a direct or
indirect
[[Page 75761]]
contractual relationship with the plan or issuer with respect to the
furnishing of such item or service under the plan or coverage is
subject to the provisions of 26 CFR 54.9816 and 54.9817; 29 CFR
2590.716 and 2590.717; or 45 CFR part 149, subparts B, E, or F. To
improve the functioning of the Federal IDR process and ensure timely
rendering of payment determinations, the Departments are of the view
that providers, facilities, and providers of air ambulance services
need information to understand not only when items and services are
subject to the No Surprises Act, but also when they are not, to avoid
submission of ineligible disputes to the Federal IDR process.
The Departments have the authority under section 9816(a)(2)(B)(ii)
of the Code, section 716(a)(2)(B) of ERISA, and section 2799A-
1(a)(2)(B)(ii) of the PHS Act to establish through rulemaking the
information that a plan or issuer must share with a provider or
facility when making a determination of the QPA, including the form and
manner of such disclosures.\97\ The Departments also have authority
under section 9833 of the Code, section 734 of ERISA, and section 2792
of the PHS Act to issue such regulations as may be necessary and
appropriate to carry out the provisions of chapter 100 of the Code,
part 7 of ERISA, and title XXVII of the PHS Act, including the
provisions directing the Departments to establish the Federal IDR
process.
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\97\ The No Surprises Act does not include the same language
addressing disclosures to providers of air ambulance services.
However, the July 2021 interim final rules implemented the statute's
cost-sharing requirements for air ambulance services by requiring
that plans and issuers base any coinsurance and deductible for air
ambulance services furnished by a nonparticipating provider of air
ambulance services on the lesser of the QPA or the billed amount for
the services. 86 FR 36884. Therefore, the July 2021 interim final
rules also applied the requirement to make disclosures regarding the
QPA with respect to providers of air ambulance services. As stated
in the preamble to the July 2021 interim final rules, the
Departments recognize that providers of air ambulance services
subject to the surprise billing rules (as well as providers and
emergency facilities) need transparency regarding how the QPA was
calculated in order to inform the open negotiation process and the
decision whether to initiate the Federal IDR process and what offer
to submit. 86 FR 36898.
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Under these authorities, the Departments propose to require plans
and issuers to use CARCs and RARCs to convey specific information about
the No Surprises Act when a plan or issuer provides a paper or
electronic remittance advice to any entity with which it does not have
a direct or indirect contractual relationship with respect to the
furnishing of an item or service under the plan or coverage.
Specifically, under these proposed rules, a plan or issuer would be
required to use CARCs and RARCs in accordance with guidance issued by
the Departments when, with respect to an entity with which it does not
have a direct or indirect contractual relationship, the plan or issuer
provides a paper or electronic remittance advice to a provider,
facility, or provider of air ambulance services for an initial payment,
notice of denial of payment, or total plan or coverage payment required
under the No Surprises Act.
These proposed requirements would also apply to plans and issuers
when sending remittance advice to entities with which they do not have
a direct or indirect contractual relationship with respect to items and
services to which the No Surprises Act surprise billing requirements do
not apply, in order to convey that the No Surprises Act does not apply.
Requiring plans and issuers to use approved CARCs and RARCs to
convey information related to the No Surprises Act on both electronic
and paper remittance advice would better facilitate the flow of
information between plans and issuers and providers, facilities, and
providers of air ambulance services and increase efficiencies in the
processing of claims subject to the No Surprises Act's surprise billing
protections. This requirement would also assist providers, facilities,
and providers of air ambulance services in identifying items and
services that are not eligible for the Federal IDR process as early as
the initial payment or notice of denial of payment, thereby reducing
the submission of ineligible payment disputes to the Federal IDR
process. This would decrease the need for outreach by certified IDR
entities and allow them to concentrate resources on making payment
determinations for eligible disputes.
In addition, the Departments anticipate that the proposed
requirement to use CARCs and RARCs would provide valuable information
to certified IDR entities in determining whether disputing parties
agree on the eligibility of a dispute for the Federal IDR process after
it has been submitted. As described in section II.D.1. of this
preamble, the Departments propose to require that the open negotiation
notice include a copy of the initial payment or notice of denial of
payment, which would, under the proposal described in this section of
this preamble, include CARCs and RARCs related to the No Surprises Act.
The Departments also propose, as described in section II.D.1. of this
preamble, to require the open negotiation notice be submitted to the
Departments through the Federal IDR portal. This would help ensure
that, even if a plan or issuer does not respond to a notice of IDR
initiation, the certified IDR entity has access to certain information
regarding whether the plan or issuer believes the dispute could be
eligible for the Federal IDR process, thereby avoiding unnecessary or
duplicative outreach to the parties when possible.
As discussed in section V.D. of this preamble, requiring the use of
CARCs and RARCs as described in these proposed rules would result in an
increase in burden for plans (or their third party administrators
(TPAs)) and issuers, as they would need to implement and automate the
use of new CARCs and RARCs. However, because all plans and issuers that
provide ERA transactions subject to the HIPAA Administrative
Simplification requirements already are required to use CARCs and
RARCs, the Departments anticipate that most plans and issuers would
generally have the capacity to provide No Surprises Act-specific CARCs
and RARCs. The Departments seek comment on any circumstances in which
it would not be possible for a plan or issuer to determine whether an
item or service included on a remittance advice is, or is not, subject
to the Federal IDR process at the time the remittance advice is issued
to a provider, facility, or provider of air ambulance services. The
Departments also seek comment on the technical and operational steps
that would be necessary to initially implement new No Surprises Act-
specific CARCs and RARCs, including for plans and issuers that do not
currently use CARCs and RARCs, or that are currently able to
accommodate only one CARC and RARC combination per line item.
The Departments propose that certain procedural aspects of this
proposal would be implemented through guidance issued by the
Departments.\98\ Should the proposal described in this section of the
preamble be finalized, the Departments would be authorized to require
plans and issuers to use CARCs and RARCs to communicate information
related to whether a claim for an out-of-network item or service is or
is not subject to the surprise billing provisions of the No Surprises
Act. The guidance issued under this authority would identify specific
CARCs and RARCs and describe the specific circumstances in
[[Page 75762]]
which the identified CARCs and RARCs must be used. As discussed in
section II.B.1. of this preamble, this approach also mirrors the
existing framework under HIPAA, in which required CARC and RARC code
combinations are issued through guidance, as authorized by regulation.
This would provide the Departments with the flexibility to specify the
use of CARCs and RARCs, including new No Surprises Act-specific RARCs
that may be developed in the future, while the Departments work to
address communication challenges affecting the surprise billing
provisions of the No Surprises Act. It would also provide flexibility
for the Departments to discontinue the use of certain CARCs and RARCs
should the information communicated using those CARCs and RARCs become
readily available to providers, facilities, or providers of air
ambulance services through a different mechanism or otherwise become
unnecessary. As discussed in more detail in section II.H.1. of this
preamble, the Departments propose that plans and issuers would have a
period of time following the issuance of guidance to implement the use
of CARCs and RARCs in accordance with the guidance.
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\98\ This proposal would not alter HHS' authority under HIPAA to
implement future guidance with respect to electronic remittance
advice or to adopt new or modified standards or operating rules in
accordance with Title XI Part C--Administrative Simplification of
the Social Security Act.
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HHS is not proposing changes to the HIPAA transaction standards
(such as the X12 835 standard) or operating rules in these proposed
rules. HHS continues to monitor the implementation of the No Surprises
Act in order to determine whether future changes to the HIPAA
transaction standards and operating rules, in accordance with the
mandated HIPAA standards and operating rules development and adoption
processes,\99\ might provide a long-term mechanism for facilitating
communication related to the No Surprises Act between plans and issuers
and providers, facilities, and providers of air ambulance services.
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\99\ Sections 1172 and 1173 of the Social Security Act and 45
CFR 162.910.
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The Departments are of the view that it would be beneficial to
standardize No Surprises Act-related communications between plans and
issuers and providers, facilities, and providers of air ambulance
services, regardless of whether the information is transmitted using
HIPAA standard transactions. Therefore, under this proposal, the
Departments would issue guidance regarding the use of CARCs and RARCs
in both electronic transactions as well as formats outside the purview
of the HIPAA transaction standards, including paper remittance advice.
While CARCs and RARCs have not been widely used to transmit information
outside of ERA transactions, the Departments understand that some plans
and issuers routinely communicate with providers, facilities, and
providers of air ambulance services using paper remittance advice and
other formats outside the purview of the HIPAA transaction standards.
In addition to the RARCs related to the No Surprises Act described
previously in this section of the preamble that have been approved for
use, the Departments are assessing whether additional CARCs or RARCs
could be helpful for improving communication between parties about how
out-of-network claims are being processed in relation to the No
Surprises Act. For example, the Departments are considering whether it
would be beneficial to require the use of CARCs and RARCs when plans
and issuers have insufficient information to determine coverage for a
claim from a nonparticipating provider of air ambulance services.\100\
The Departments are also considering whether it would be beneficial to
require the use of RARCs that could be used to provide any of the
information required to be disclosed about the QPA under 26 CFR
54.9816-6T(d), 26 CFR 54.9816-6(d), 29 CFR 2590.716-6(d), and 45 CFR
149.140(d). It also may be helpful to have a RARC that specifies that
the No Surprises Act surprise billing protections do not apply. In
addition, a large proportion of the disputes determined ineligible for
the Federal IDR process by certified IDR entities involve items or
services that providers, facilities, or providers of air ambulance
services batched improperly because they did not realize that a TPA was
administering coverage for multiple self-insured plans rather than a
single issuer or group health plan, and the items and services were
thus ineligible to be batched.\101\ Certified IDR entities have
determined that other disputes are ineligible for the Federal IDR
process because the self-insured plan involved in the dispute had
voluntarily opted in to a specified State law.\102\ A RARC that could
clearly identify a payer as a self-insured plan may reduce the number
of disputes that are initiated and determined ineligible on the basis
of a batching or jurisdictional error. The Departments solicit comment
on whether and what information not conveyed in the existing RARCs
would be helpful to convey through the creation of additional RARCs
related to the No Surprises Act's surprise billing provisions.
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\100\ In TMA III, the District Court vacated the language in 26
CFR 54.9817-1T(b)(4)(i), 29 CFR 2590.717-1(b)(4)(i), and 45 CFR
149.130(b)(4)(i), that stated with respect to air ambulance
services, ``For purposes of this paragraph (b)(4)(i), the 30-
calendar-day period begins on the date the plan or issuer receives
the information necessary to decide a claim for payment for the
services.'' See Memorandum Opinion and Order, Tex. Med. Ass'n., et
al. v. U.S. Dep't of Health and Hum. Servs., No. 6:22-cv-00450-JDK
(E.D. Tex. August 24, 2023). Because a plan or issuer may not have
the information necessary to decide a claim for payment within the
30-calendar-day period, the Departments are considering whether
CARCs and RARCs may be useful in such circumstances.
\101\ 26 CFR 54.9816-8T(c)(3)(i)(B), 29 CFR 2590.716-
8(c)(3)(i)(B), and 45 CFR 149.510(c)(3)(i)(B).
\102\ See discussion in section I.H. of of this preamble related
to the provisions of the July 2021 interim final rules that allow
self-insured group health plans, including self-insured non-Federal
governmental plans, to voluntarily opt into a specified State law.
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The Departments are aware that some States require issuers to use
CARCs and RARCs to communicate information about State surprise billing
laws. The Departments seek comment regarding experience with these
requirements, including whether such requirements have been effective,
and any challenges related to implementing such requirements. Should
these proposed rules be finalized, the Departments note that nothing in
these proposed rules would prevent a State from requiring that issuers
use specific CARCs or RARCs in addition to those specified in the No
Surprises Act-specific Federal guidance that the Departments would be
authorized to issue; nor would a State or other entity be prevented
from engaging with the relevant committees to request the creation or
use of a CARC or RARC in addition to those specified in such guidance.
Prior to the enactment of the No Surprises Act, out-of-network
providers, facilities, and providers of air ambulance services commonly
sought reimbursement directly from patients rather than from a plan or
issuer, requiring a participant, beneficiary, or enrollee to then seek
reimbursement for all or part of the cost of the out-of-network service
directly from their plan or issuer. Because the No Surprises Act
prohibits nonparticipating providers, facilities, and providers of air
ambulance services from billing or holding liable a participant,
beneficiary, or enrollee for an amount greater than the applicable in-
network cost-sharing requirement for items and services subject to the
No Surprises Act, direct billing of patients is now largely limited to
items and services to which surprise billing protections in the No
Surprises Act do not apply. The Departments understand that requiring
the plan or issuer to convey CARC or RARC information related to
eligibility for such processes to a participant,
[[Page 75763]]
beneficiary, or enrollee in this circumstance would represent an
administrative burden on the plan or issuer without any clear benefit
to the participant, beneficiary, or enrollee. In addition, such a
requirement would not further the aims of these proposed rules to
facilitate timely rendering of payment determinations and to improve
the functioning of the Federal IDR process, in which a participant,
beneficiary, or enrollee cannot participate as a party. Therefore, the
requirement to use CARCs and RARCs under these proposed rules would not
apply for out-of-network items and services for which the plan or
issuer makes payment directly to the participant, beneficiary, or
enrollee. The Departments seek comment on whether a plan or issuer
should generate a remittance advice that can be obtained upon request
by the provider, facility, or provider of air ambulance services when
the plan or issuer makes a payment directly to a participant,
beneficiary, or enrollee, and whether the requirement to use CARCs and
RARCs to convey No Surprises Act-specific information as proposed in
these rules should apply in these circumstances.
While the proposal refers to any paper or electronic remittance
advice,\103\ the Departments seek comment on whether a more general
term, such as ``any remittance advice,'' would be helpful in
characterizing the types of communications accompanying payments for
items and services. The Departments also seek comment on this proposal
generally.
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\103\ The Departments are aware that different terms are
sometimes used, such as paper remittance advice or explanation of
payment, when referring to the paper communication that accompanies
a payment or notice of denial of payment to a provider or facility
for a claim and provides additional information about the
adjudication of the claim for which payment is being made.
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C. Information To Be Shared About the QPA
As described in sections I.B. and I.E. of this preamble, the July
2021 interim final rules and August 2022 final rules provide that if
the recognized amount with respect to an item or service is the QPA,
plans and issuers must make certain disclosures about the QPA with each
initial payment or notice of denial of payment and must also provide
certain additional information upon request.\104\ This information must
be provided in writing, either on paper or electronically, to a
provider, facility, or provider of air ambulance services, as
applicable.\105\
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\104\ 86 FR 36898; 87 FR 52633.
\105\ 26 CFR 54.9816-6T(d) and 54.9816-6(d), 29 CFR 2590.716-
6(d), and 45 CFR 149.140(d).
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While these requirements were intended to ensure the disclosure of
information about the QPA in any instance in which an item or service
would be eligible for the Federal IDR process, the text of the current
regulation directs plans and issuers to make these disclosures only if
the recognized amount with respect to an item or service furnished by a
provider, facility, or provider of air ambulance services is the QPA.
The Departments propose a change to reflect that the term ``recognized
amount'' is not used in the statute or regulations for purposes of
determining cost sharing with respect to air ambulance services
furnished by nonparticipating providers of air ambulance services.
Rather, under the July 2021 interim final rules, plans and issuers must
calculate the cost-sharing amount for air ambulance services furnished
by a nonparticipating provider of air ambulance services as if the
total amount that would have been charged were equal to the lesser of
the QPA or the billed amount for the services.\106\ Therefore, the
Departments propose to amend the regulations to specify that plans and
issuers must, in the case of air ambulance services, disclose the QPA
and certain information about the QPA when cost sharing is calculated
using the QPA. In addition, the Departments propose to require plans
and issuers to make the same disclosures when the recognized amount (or
with respect to air ambulance services, the amount on which cost
sharing is based) is the amount billed by the provider, facility, or
provider of air ambulance services, and not only when the recognized
amount (or with respect to air ambulance services, the amount on which
cost sharing is based) is the QPA, as these items and services would
also be eligible for the Federal IDR process (provided all other
eligibility criteria are satisfied).
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\106\ 86 FR 36884.
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Under 26 CFR 54.9816-6T(d)(1)(iv), 29 CFR 2590.716-6(d)(1)(iv), and
45 CFR 149.140(d)(1)(iv), a plan or issuer making disclosures about the
QPA must include a statement that if the provider or facility wishes to
initiate a 30-day open negotiation period for purposes of determining
the amount of total payment, the provider or facility may contact the
appropriate person or office to initiate open negotiation, and if the
30-day open negotiation period does not result in a determination,
generally the provider or facility may initiate the Federal IDR process
4 days after the end of the open negotiation period. Under 26 CFR
54.9816-6T(d)(2), 29 CFR 2590.716-6(d)(2), and 45 CFR 149.140(d)(2),
plans and issuers are required to disclose additional information in a
timely manner upon the request of the provider or facility.
The Departments propose technical and conforming amendments to
align these requirements with the October 2021 interim final rules
\107\ and current practice. First, the Departments acknowledge that 26
CFR 54.9816-6T(d), 29 CFR 2590.716-6(d), and 45 CFR 149.140(d) do not
consistently include references to providers of air ambulances services
when referring to providers and facilities, and propose amendments to
clarify that these disclosure requirements apply with respect to
providers of air ambulance services (in addition to providers and
facilities). Specifically, in 26 CFR 54.9816-6T, 29 CFR 2590.716-6, and
45 CFR 149.140, the Departments propose to amend the introductory
language in paragraph (d), paragraph (d)(1)(iv), and the introductory
language of paragraph (d)(2) to clarify the applicability with respect
to disclosures to providers of air ambulance services.\108\ Second, the
Departments propose to align the timeframes described in the disclosure
with the timeframes established in the October 2021 interim final
rules,\109\ by specifying that days are counted using business days
(rather than calendar days), where applicable. The Departments also
propose an amendment to align the language in 26 CFR 54.9816-
6T(d)(1)(iv), 29 CFR 2590.716-6(d)(1)(iv), and 45 CFR 149.140(d)(1)(iv)
with the same requirements established in the October 2021 interim
final rules by replacing the phrase ``amount of total payment'' with
the term ``out-of-network rate,'' as defined in 26 CFR 54.9816-3T, 29
CFR 2590.716-3, and 45 CFR 149.30, and by describing an unsuccessful
open negotiation period as not resulting in an ``agreement on the
amount of payment'' rather than a ``determination.''
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\107\ 86 FR 55980.
\108\ The Departments anticipate finalizing additional
corrections to address this issue when finalizing the remainder of
the July 2021 interim final rules.
\109\ 26 CFR 54.9816-8T(b)(1)(i), 29 CFR 2590.716-8(b)(1)(i),
and 45 CFR 149.510(b)(1)(i).
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The Departments further propose to require that the statement also
explain that the provider, facility, or provider of air ambulance
services must notify the Departments as described under proposed 26 CFR
54.9816-8(b)(1)(i), 29 CFR 2590.716-8(b)(1)(i), and 45 CFR
149.510(b)(1)(i), as applicable, to initiate
[[Page 75764]]
open negotiation.\110\ The Departments propose that plans and issuers
include this explanation as part of the disclosure once the open
negotiation notice can be submitted through the Federal IDR portal.
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\110\ For a discussion of the proposed requirement to notify the
Departments when initiating open negotiation, see section II.D.1.c.
of this preamble.
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As stated in the preamble to the July 2021 interim final rules
\111\ and the August 2022 final rules,\112\ the Departments seek to
ensure transparent and meaningful disclosure of information relating to
the calculation of the QPA for providers, facilities, and providers of
air ambulance services, while at the same time minimizing
administrative burdens on plans and issuers and on the Federal IDR
process. The Departments are now of the view that additional disclosure
of information with the QPA is critical to ensuring that all parties
have the information necessary to determine whether a payment dispute
is eligible for the Federal IDR process. The Departments therefore
propose to amend 26 CFR 54.9816-6T, 29 CFR 2590.716-6, and 45 CFR
149.140 by re-designating paragraph (d)(1)(v) as (d)(1)(vi) and adding
a new paragraph (d)(1)(v) that would require plans and issuers to
disclose the legal business name of the plan (if any) or issuer; the
legal business name of the plan sponsor (if applicable); and the
registration number assigned under proposed 26 CFR 54.9816-9, 29 CFR
2590.716-9, or 45 CFR 149.530, as applicable, if the plan or issuer is
registered with the Federal IDR registry.\113\ The Departments seek
comment on the specific technical and operational steps that would be
necessary for plans and issuers to disclose this additional information
when providing an initial payment or notice of denial of payment.
Further, the Departments are seeking comment on the appropriate
implementation period that would allow plans and issuers to complete
these steps to comply with these proposed rules, if finalized. As noted
in section II.B. of this preamble, the Departments are also seeking
comment on whether any of the additional proposed disclosures should be
required to be communicated using a CARC or RARC specified in guidance
issued by the Departments.
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\111\ 86 FR 36898.
\112\ 87 FR 52625.
\113\ For a discussion of the proposal to establish a Federal
IDR registry and assign a registration number to each plan and
issuer, see section II.F. of this preamble.
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D. Open Negotiation and Initiation of the Federal IDR Process
Section 9816(c)(1)(A) of the Code, section 716(c)(1)(A) of ERISA,
section 2799A-1(c)(1)(A) of the PHS Act, and the October 2021 interim
final rules establish that, when the out-of-network rate is not
determined by reference to an All-Payer Model Agreement under section
1115A of the Social Security Act or specified State law as defined in
26 CFR 54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30, the plan or
issuer or provider or facility may engage in open negotiations to
determine the total out-of-network rate (inclusive of any cost
sharing).\114\ If the parties fail to reach an agreement through open
negotiation, they may initiate the Federal IDR process. Section 9817(b)
of the Code, section 717(b) of ERISA, and section 2799A-2(b) of the PHS
Act provide that out-of-network rates for air ambulance services may be
determined through open negotiation or an IDR process that is largely
identical to the process provided for in section 9816(c) of the Code,
section 716(c) of ERISA, and section 2799A-1(c) of the PHS Act. Thus,
the preamble and regulatory text describing open negotiations and the
Federal IDR process generally apply to providers of air ambulance
services, unless otherwise specified.
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\114\ 86 FR 55990.
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1. Open Negotiation
The Departments propose to amend the open negotiation provisions of
26 CFR 54.9816-8T(b)(1)(i) and (ii), 29 CFR 2590.716-8(b)(1)(i) and
(ii), and 45 CFR 149.510(b)(1)(i) and (ii) to establish additional
requirements for initiating open negotiation and to revise the open
negotiation period start date. In addition, the Departments propose to
add a new paragraph at 26 CFR 54.9816-8(b)(1)(iii), 29 CFR 2590.716-
8(b)(1)(iii), and 45 CFR 149.510(b)(1)(iii) that would establish a
requirement that in response to a party's written notice of its intent
to negotiate (open negotiation notice), the party in receipt of the
notice must provide a written open negotiation response notice. In
these proposed rules, the Departments propose amendments to the content
requirements for the open negotiation notice. The Departments also
propose to require an open negotiation response notice from non-
initiating parties, including specific content requirements.
Section 9816(c)(1)(A) of the Code, section 716(c)(1)(A) of ERISA,
section 2799A-1(c)(1)(A) of the PHS Act, and the October 2021 interim
final rules establish that the open negotiation period may be initiated
by either party during the 30-business-day period beginning on the day
the provider, facility, or provider of air ambulance services receives
either an initial payment or a notice of denial of payment for an item
or service.\115\ The October 2021 interim final rules provide that in
order for a plan, issuer, provider, facility, or provider of air
ambulance services to know when it is a party to an open negotiation
period and the item or service for which the payment is the subject of
open negotiation, the party initiating open negotiation must provide to
the other party a written open negotiation notice.\116\ Under 26 CFR
54.9816-8T(b)(1)(ii)(A), 29 CFR 2590.716-8(b)(1)(ii)(A), and 45 CFR
149.510(b)(1)(ii)(A), an open negotiation notice must include
information sufficient to identify the item(s) and service(s)
(including the date(s) the item(s) or service(s) were furnished, the
service code, and the initial amount, if applicable, an offer of an
out-of-network rate, and contact information for the party sending the
open negotiation notice). The day on which the open negotiation notice
is first sent by the party is the date that the 30-business-day open
negotiation period begins. Consistent with the October 2021 interim
final rules, negotiation during the open negotiation period occurs
without the involvement of the Departments or a certified IDR
entity.\117\ Furthermore, the requirement to complete a 30-business-day
open negotiation period before initiating the Federal IDR process does
not preclude the parties from reaching an agreement in fewer than 30
business days. However, in the event the parties do not reach an
agreement, they still must exhaust the 30-business-day open negotiation
period before either party may initiate the Federal IDR process. The
Departments encourage disputing parties to negotiate in good faith
during this time period to reach an agreement on the out-of-network
rate. The Departments expect parties to make a genuine effort to
exchange information with one another at reasonable times and intervals
with the goal of reaching a solution satisfactory to both parties. To
the extent parties reach an agreement during the open negotiation
period, they can avoid the administrative fee and
[[Page 75765]]
other costs associated with the Federal IDR process.
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\115\ As clarified in the July 2021 interim final rules, the
initial payment should be an amount that the plan or issuer
reasonably intends to be payment in full based on the relevant facts
and circumstances, prior to the beginning of any open negotiations
or initiation of the Federal IDR process. (86 FR 36900 through
36901).
\116\ 86 FR 55990.
\117\ See 86 FR 55991.
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The preamble to the October 2021 interim final rules explained
that, given that the parties already would have made initial contact
(namely, the provider, facility, or provider of air ambulance services
transmitted a bill to the plan or issuer, and the plan or issuer sent
an initial payment or notice of denial of payment to the provider,
facility, or provider of air ambulance services), the Departments
expected the parties to provide effective notice and encouraged the
parties to take reasonable measures to confirm the other party's
contact information and confirm electronic receipt through approaches
such as read receipts, especially if a party does not initially respond
to an open negotiation notice.\118\ Further, the Departments
contemplated that issues related to eligibility and jurisdiction would
be resolved through the disclosures that plans and issuers are required
to provide with their initial payment or notice of denial of payment
or, through the required 30-business-day open negotiation period.
However, disputing parties and certified IDR entities have reported
that disputing parties are sometimes not actively negotiating with each
other during the required period as expected by the Departments. In
addition, non-initiating parties and certified IDR entities continue to
express concern that initiating parties sometimes do not properly
initiate or complete the open negotiation period before initiating the
Federal IDR process. Plans and issuers also have expressed concern with
the Departments and the certified IDR entities, that providers,
facilities, and providers of air ambulance services overwhelm them with
requests to negotiate items or services that are ineligible for the
Federal IDR process. At the same time, providers, facilities, and
providers of air ambulance services assert that plans and issuers
rarely respond to their notices initiating open negotiation or provide
inadequate information to determine whether the Federal IDR process
applies during the open negotiation period.
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\118\ 86 FR 55990.
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a. Determination of Payment Amount Through Open Negotiation
To improve communication and information exchange between disputing
parties and promote efficiencies in the Federal IDR process, the
Departments propose to amend the open negotiation provisions of 26 CFR
54.9816-8(b), 29 CFR 2590.716-8(b), and 45 CFR 149.510(b)(1) to impose
new information exchange requirements and processes and to establish a
process for tracking open negotiations through the Federal IDR portal
in anticipation of initiation of a Federal IDR dispute.
First, the Departments propose to amend paragraph 26 CFR 9816-
8(b)(1)(i), 29 CFR 2590.716-8(b)(1)(i), and 45 CFR 149.510(b)(1)(i) to
establish a requirement that a party must provide a written open
negotiation notice to the other party and to the Departments through
the Federal IDR portal to initiate the open negotiation period.\119\
Requiring a party to submit the open negotiation notice to the
Departments in addition to the other party would provide a record of
whether and when the open negotiation period was properly initiated,
which is essential in determining eligibility for the Federal IDR
process, and would create greater transparency among parties engaged in
open negotiation, the Departments, and certified IDR entities.
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\119\ 26 CFR 9816-8T(b)(3), 29 CFR 2590.716-8(b)(3), and 45 CFR
149.510(b)(3).
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Second, the Departments propose to amend 26 CFR 54.9816-8(b)(1)(i),
29 CFR 2590.716-8(b)(1)(i), and 45 CFR 149.510(b)(1)(i) to specify that
the 30-business-day open negotiation period begins on the day a party
first submits the open negotiation notice and a copy of the initial
payment, notice of denial of payment, or other remittance advice, as
specified at proposed 26 CFR 54.9816-8(b)(1)(ii)(A)(12), 29 CFR
2590.716-8(b)(1)(ii)(A)(12), and 45 CFR 149.510(b)(1)(ii)(A)(12), to
the other party and the Departments through the Federal IDR portal.
This amendment would not change the timeframe for engaging in open
negotiations but would provide greater clarity for parties engaged in
open negotiation and improve the shared understanding of deadlines
related to the open negotiation period. The Departments seek comment on
these proposed amendments.
b. Open Negotiation Response Notice
To have a meaningful open negotiation, the Departments are of the
view that both parties must be active and responsive participants. The
Departments' experience and feedback from disputing parties and
certified IDR entities indicate that the Federal IDR process is less
efficient overall when disputing parties are not engaging with each
other during the open negotiation period. Therefore, the Departments
propose at 26 CFR 54.9816-8(b)(1)(iii), 29 CFR 2590.716-8(b)(1)(iii),
and 45 CFR 149.510(b)(1)(iii) to require that the party in receipt of
the open negotiation notice provide a written notice and supporting
documentation in response to the open negotiation notice (open
negotiation response notice) to the other party and the Departments
through the Federal IDR portal as soon as practicable, but no later
than the 15th business day of the 30-business-day open negotiation
period. Requiring the party in receipt of the open negotiation notice
to submit an open negotiation response notice to both the other party
and the Departments through the Federal IDR portal would help ensure
that parties are responding to open negotiation notices and engaging
with one another during the open negotiation period. To better inform
the parties' negotiations, the Departments are proposing this 15-
business-day timeframe to give the party in receipt of the open
negotiation notice sufficient time to review and respond to the open
negotiation notice. This would also allow the party that submitted the
open negotiation notice to consider, at its discretion, the information
included in the open negotiation response notice during (at a minimum)
the remaining 15 business days in the 30-business-day open negotiation
period.
These deadlines are intended to encourage meaningful participation
in open negotiations and allow both parties time to consider offers and
raise eligibility concerns prior to initiating the Federal IDR process.
If a party were to fail to furnish an open negotiation response notice
containing all required information to the other party and the
Departments, the Departments would review and determine whether
enforcement actions may be appropriate. However, failure to timely
furnish an open negotiation response notice in any specific open
negotiation would not extend the open negotiation period, delay the
timeframe for initiation of the Federal IDR process, or affect either
party's ability to initiate the Federal IDR process.
The Departments solicit comment on the proposed modifications to
the requirements for submitting the open negotiation notice and the
newly proposed open negotiation response notice. Specifically, the
Departments seek comment on whether the party in receipt of the open
negotiation notice should be required to furnish the open negotiation
response notice to the other party and the Departments earlier than
proposed to allow additional time for the party submitting the open
negotiation notice to review the open negotiation response notice. The
Departments also seek comment on imposing a deadline for the open
[[Page 75766]]
negotiation response notice later than the proposed deadline, including
by the 20th business day or up to the last day of the 30-business-day
open negotiation period. A longer response timeframe may be necessary
for a party in receipt of open negotiation notice to review and respond
if the party receives a high number of open negotiation notices within
a short time period. However, submission of the open negotiation
response notice at the end of the open negotiation period would not
provide the party that submitted the open negotiation notice sufficient
time to review, consider, and engage with the party submitting the open
negotiation response notice in a meaningful manner prior to the
deadline for initiation of the Federal IDR process. Additionally, the
Departments seek comment on allowing the certified IDR entities, as a
means of incentivizing participation in the proposed exchange of
notices, to take into consideration a party's compliance with the 15-
business-day deadline for the open negotiation response notice when
making their payment determinations.
c. Open Negotiation Notice Content
The Departments propose to amend 26 CFR 54.9816-8(b)(1)(ii)(A), 29
CFR 2590.716-8(b)(1)(ii)(A), and 45 CFR 149.510(b)(1)(ii)(A) and add 26
CFR 54.9816-8(b)(1)(ii)(A)(1) through (12), 29 CFR 2590.716-
8(b)(1)(ii)(A)(1) through (12), and 45 CFR 149.510(b)(1)(ii)(A)(1)
through (12) to require that the open negotiation notice include
additional information regarding the item or service under dispute and
the party sending the open negotiation notice. The proposed amendments
would add new elements and expand the information required on the open
negotiation notice.
Under these proposed rules, the content elements to identify the
item or service on the open negotiation notice would align with those
that the Departments propose to require in the notice of IDR initiation
to identify an item or service under dispute as specified in 26 CFR
54.9816-8(b)(2)(iii)(A), 29 CFR 2590.716-8(b)(2)(iii)(A), and 45 CFR
149.510(b)(2)(iii)(A) and would encourage consistency between open
negotiation and the Federal IDR process. The Departments are of the
view that requiring the additional elements as part of the open
negotiation notice would help parties identify the item or service, the
reasons for the denial of payment or initial payment amount, and
whether the Federal IDR process applies. Each proposed new or amended
element on the open negotiation notice is described in this section,
and the Departments' reasoning for the proposed change is explained.
Under current rules, the open negotiation notice must include
contact information for the party sending the notice. At proposed
paragraphs 26 CFR 54.9816-8(b)(2)(iii)(A)(1) through (3), 29 CFR
2590.716-8(b)(2)(iii)(A)(1) through (3), and 45 CFR
149.510(b)(1)(ii)(A)(1) through (3), the Departments would require
specific contact information sufficient to identify the provider,
facility, or provider of air ambulance services, the plan or issuer,
and any third party representing the parties in the open negotiation.
This contact information would include legal business name, email
address, phone number, and mailing address, as provided with the claim
form submitted by the provider, facility, or air ambulance provider to
the plan or issuer, which would encourage open negotiation initiation
between the correct parties and effective communication of the required
information.
In addition to the proposed standard contact information elements,
parties would also be required to include the National Provider
Identification (NPI) number to identify the provider, facility, or
provider of air ambulance services and the IDR registration number,
assigned under proposed 26 CFR 54.9816-9, 29 CFR 2590.716-9, and 45 CFR
149.530, to identify the plan or issuer (described further in section
II.F. of this preamble).
Providers, facilities, and providers of air ambulance services
would obtain the IDR registration number from the plan or issuer when
the plan or issuer provides it with the initial payment or notice of
denial of payment. The proposed registration number would help the
provider, facility, or provider of air ambulance services to accurately
identify the plan and issuer with which to initiate open negotiation,
and the contact and plan information necessary to initiate open
negotiation, particularly if the plan or issuer fails to clearly
disclose such information. Including this element on the open
negotiation notice would streamline the process of submitting the open
negotiation notice by providing a validated source of plan and issuer
business and contact information, which providers, facilities, and
providers of air ambulance services often struggle to identify on
documentation provided with the initial payment or the notice of denial
of payment and would promote greater consistency and accuracy in
initiating open negotiation with the correct plan or issuer.
The Departments acknowledge, as described in section II.F. of this
preamble, that the plan or issuer may not be registered in the IDR
registry at the time the provider, facility, or provider of air
ambulance services initiates the open negotiation period. In these
circumstances, the party submitting the open negotiation notice would
attest that the party receiving the open negotiation notice was not
registered prior to the date the party submitted its open negotiation
notice and the registration number would not be required to be included
in the notice. The submitting party would use the contact information
currently required by the disclosure requirements established in
sections 26 CFR 54.9816-6T(d)(1), 29 CFR 2590.716-6(d)(1), and 45 CFR
149.140(d)(1) with the initial payment or notice of denial of payment
to complete the open negotiation notice. Finally, if the party
submitting the open negotiation notice is a plan or issuer, the plan or
issuer would be required to include the plan type. It is the
Departments' view that the plan or issuer is best positioned to provide
this information and that this information is necessary in assessing
applicability of the Federal IDR process. If the plan or issuer is not
the party initiating open negotiation, the plan or issuer would be
required to include this information on the open negotiation response
notice form, as discussed in section II.D.1.d. of this preamble.
Under the current regulations, the open negotiation notice must
include information sufficient to identify the item(s) and service(s)
furnished by the provider, facility, or provider of air ambulance
services. These include the date(s) the item(s) or service(s) were
furnished, the service code, and initial payment amount, if applicable,
an offer of an out-of-network rate, and contact information for the
party sending the open negotiation notice. If finalized, these proposed
rules would add to this list of elements considered information
sufficient to identify the item or service and, therefore, required to
be included in the open negotiation notice at proposed paragraphs 26
CFR 54.9816-8(b)(1)(ii)(A)(4), 29 CFR 2590.716-8(b)(1)(ii)(A)(4), and
45 CFR 149.510(b)(1)(ii)(A)(4). The proposed additions include
information to identify the location where the item or service was
furnished (such as place of service code or bill type code \120\), type
of item or service, the State where the item or service was furnished,
and the
[[Page 75767]]
claim number. The place of service code is a two-digit code on health
care professional claims that indicates the setting in which a service
was furnished.\121\ Place of service code information is often needed
to determine the acceptability of direct billing of Medicare, Medicaid,
and private insurance services furnished by a given provider.\122\
Further, these proposed rules would require the open negotiation notice
to include the type of item or service, including whether the item or
service is an emergency service or a non-emergency service; whether the
item or service is an air ambulance service as defined in 26 CFR
54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30; and whether any
service is a professional service or a facility-based service. Parties
engaged in open negotiations may use place of service code and
information on the type of item or service to analyze the
appropriateness of the payment for the item or service and the
applicability of the Federal IDR process. The place of service code and
type of item or service along with the proposed requirement to include
the State where the item or service was furnished would help the
parties assess whether a specified State law or an All-Payer Model
Agreement might apply. In some States, a specified State law or All-
Payer Model Agreement may apply only to certain items or services or
with respect to services furnished by certain out-of-network providers
or at certain locations (``bifurcated States'').\123\
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\120\ Bill type code is the code relevant for billing by
facilities (as opposed to place of service code for providers).
\121\ See Centers for Medicare & Medicaid Services. (December 1,
2021). Place of Service Codes. https://www.cms.gov/Medicare/Coding/
place-of-service-
codes#:~:text=Place%20of%20Service%20Codes%20are,throughout%20the%20h
ealth%20care%20industry.
\122\ Id.
\123\ There are currently 21 bifurcated States: California,
Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Maine,
Maryland, Michigan, Missouri, Nebraska, Nevada, New Hampshire, New
Jersey, New Mexico, New York, Ohio, Texas, Virginia, and Washington.
See <a href="https://www.cms.gov/files/document/applicability-federal-idr-bifurcated-states.pdf">https://www.cms.gov/files/document/applicability-federal-idr-bifurcated-states.pdf</a>.
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The combination of these requirements would help parties identify
whether the Federal IDR process applies or whether an applicable
specified State law or All-Payer Model Agreement governs the out-of-
network payment amount. The Departments are of the view that requiring
parties to provide this information on the open negotiation notice
would improve communication between parties and help identify and
resolve differences in their understanding of the items or services
that are the subject of open negotiation. Further, the Departments
expect that as the Federal IDR portal continues to evolve, this
information may also be helpful in providing automatic verifications
upon a party's initiation of the open negotiation period of eligibility
for the Federal IDR process, which may result in a reduction in
submission of ineligible items and services.\124\
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\124\ The Departments note that while this information may
assist parties in preliminarily assessing eligibility based on the
location of service, it would not eliminate the need for the
certified IDR entity or the Departments to determine whether a
specified State law applies to the specific item or service and
provider at issue.
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Plans and issuers have expressed concern that it is often difficult
to identify the item or service subject to the dispute within their
billing systems without the associated claim number provided by the
provider, facility, or provider of air ambulance services. Therefore,
the Departments amended the standard open negotiation notice to include
the claim number, as it is necessary to identify the item or service
that is subject of the dispute.\125\ Under these proposed rules, the
Departments are proposing to codify the requirement to include the
associated claim number in the open negotiation notice.
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\125\ U.S. Department of Health and Human Services, U.S.
Department of Labor, and U.S. Department of Treasury. (expiration
Nov. 30, 2025). Open Negotiation Notice. (OMB Control No. 1210-
0169). <a href="https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/no-surprises-act/surprise-billing-part-ii-information-collection-documents-attachment-2.pdf">https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/no-surprises-act/surprise-billing-part-ii-information-collection-documents-attachment-2.pdf</a>.
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At proposed paragraph 26 CFR 54.9816-8(b)(1)(ii)(A)(5), 29 CFR
2590.716-8(b)(1)(ii)(A)(5), and 45 CFR 149.510(b)(1)(ii)(A)(5), the
Departments would specify that the open negotiation notice must include
the initial payment amount (including $0 if, for example, the payment
is denied) of the item or service subject to the open negotiation. The
initial payment amount is an existing requirement of the open
negotiation notice, and this proposed amendment relocates it to 26 CFR
54.9816-8(b)(1)(ii)(A)(5), 29 CFR 2590.716-8(b)(1)(ii)(A)(5), and 45
CFR 149.510(b)(1)(ii)(A)(5) in the regulatory text and clarifies that
the plan or issuer must specify $0 if payment is denied.
The Departments propose to add paragraph 26 CFR 54.9816-
8(b)(1)(ii)(A)(6), 29 CFR 2590.716-8(b)(1)(ii)(A)(6), and 45 CFR
149.510(b)(1)(ii)(A)(6) to require a party initiating open negotiations
to provide the QPA for the item or service that is the subject of the
negotiation if it has been provided on the initial payment or notice of
denial of payment or if the party submitting the open negotiation
notice is a plan or issuer. Similarly, by requiring the QPA to be
disclosed on the open negotiation notice, the Departments intend to
facilitate better communication between parties in identifying whether
there may be a mistake in the identified QPA, such as a typographical
error or the incorrect use of the cost sharing amount rather than the
QPA, so the information can be rectified before initiating the Federal
IDR process, if applicable.
At proposed paragraph 26 CFR 54.9816-8(b)(1)(ii)(A)(7), 29 CFR
2590.716-8(b)(1)(ii)(A)(7), and 45 CFR 149.510(b)(1)(ii)(A)(7) the
Departments would specify that the open negotiation notice must include
an offer of an out-of-network rate for each item or service that is the
subject of the open negotiation. The offer of an out-of-network-rate is
an existing requirement of the open negotiation notice, and this
proposed amendment relocates it to new paragraph (b)(1)(ii)(A)(7) in
the regulatory text.
Under proposed 26 CFR 54.9816-8(b)(1)(ii)(A)(8), 29 CFR 2590.716-
8(b)(1)(ii)(A)(8), and 45 CFR 149.510(b)(1)(ii)(A)(8) the Departments
propose to require that if the party submitting the open negotiation
notice is a plan or issuer, it must include the amount of cost sharing
imposed for the item or service, if any. The Departments are of the
view that the plan or issuer is in the best position to provide this
information since non-participating providers, facilities, or providers
of air ambulance services generally would not have access to this
information. Because the amount of cost sharing for a qualified IDR
item or service would be determined by the QPA amount, requiring the
amount of cost sharing paid or owed by the participant, beneficiary, or
enrollee could help parties better inform their offers while
negotiating. The amount of cost sharing paid or owed by the
participant, beneficiary, or enrollee would be used, along with the
prevailing offer to calculate the final payment amount, should a party
choose to initiate the Federal IDR process for the item or service in
question. Having a shared understanding of this value and its impact on
payment during open negotiations would support the parties' ability to
negotiate with one another in good faith.
A non-emergency item or service is ineligible for the Federal IDR
process if the patient was properly provided notice and consented to
waive their protections from balance billing under
[[Page 75768]]
the No Surprises Act.\126\ To reduce the number of Federal IDR process
disputes initiated for items or services that are ineligible for this
reason, the Departments propose to require at new 26 CFR 54.9816-
8(b)(1)(ii)(A)(9), 29 CFR 2590.716-8(b)(1)(ii)(A)(9), and 45 CFR
149.510(b)(1)(ii)(A)(9) that if the party submitting the open
negotiation notice is a provider or facility, that party must provide a
statement that the items and services do not qualify for the notice and
consent exception described at 45 CFR 149.410(b) or 149.420(c) through
(i), either because the items and services are subject to the
prohibition on balance billing without exception or because the
provider or facility did not provide notice and receive consent.
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\126\ The notice and consent exception does not apply to
ancillary services, which include items and services related to
emergency medicine, anesthesiology, pathology, radiology, and
neonatology, whether furnished by a physician or non-physician
practitioner; items and services furnished by assistant surgeons,
hospitalists, and intensivists; diagnostic services, including
radiology and laboratory services; and items and services furnished
by a nonparticipating provider, if there is no participating
provider who can furnish such item or service at such facility.
Additionally, as specified in PHS Act section 2799B-2(c), the notice
and consent exception does not apply to items or services furnished
as a result of unforeseen, urgent medical needs that arise at the
time an item or service is furnished for which a nonparticipating
provider satisfied the notice and consent criteria.
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To further reduce the number of Federal IDR disputes initiated for
ineligible items or services, the Departments propose at 26 CFR
54.9816-8(b)(1)(ii)(A)(10), 29 CFR 2590.716-8(b)(1)(ii)(A)(10), and 45
CFR 149.510(b)(1)(ii)(A)(10) to require that the party submitting the
open negotiation notice provide a statement that the provider,
facility, or provider of air ambulance services was a nonparticipating
provider, facility, or provider of air ambulance services on the date
the item or service was furnished. Identification of this eligibility
factor at open negotiation may decrease the number of ineligible
disputes initiated by drawing the attention of the parties to the
statutory eligibility standards underlying the Federal IDR process.
Currently, the standard form \127\ for the open negotiation notice
provided by the Departments contains general information including a
description of the open negotiation period, what happens at the end of
the open negotiation period, and the Federal IDR process. The
Departments propose at 26 CFR 54.9816-8(b)(1)(ii)(A)(11), 29 CFR
2590.716-8(b)(1)(ii)(A)(11), and 45 CFR 149.510(b)(1)(ii)(A)(11) to
align the general information requirements for the open negotiation
notice with existing requirements under the October 2021 interim final
rules regarding the notice of IDR initiation, which specify that the
notice of IDR initiation must include a statement describing the
Federal IDR process and general information to help ensure that the
non-initiating party is informed about the process and is familiar with
the next steps.\128\
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\127\ See U.S. Department of Health and Human Services, U.S.
Department of Labor, and U.S. Department of the Treasury.
(expiration Nov. 30, 2025). Open Negotiation Notice. (OMB Control
No. 1210-0169). <a href="https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/no-surprises-act/surprise-billing-part-ii-information-collection-documents-attachment-2.pdf">https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/no-surprises-act/surprise-billing-part-ii-information-collection-documents-attachment-2.pdf</a>.
\128\ 86 FR 55991.
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To support the identification of items or services ineligible for
the Federal IDR process, the Departments propose to require the party
submitting the open negotiation notice to provide a copy of the initial
payment or notice of denial of payment or other remittance advice that
is required to include the proposed CARC and RARC disclosures described
in section II.B. of this preamble at proposed 26 CFR 54.9816-
8(b)(1)(ii)(A)(12), 29 CFR 2590.716-8(b)(1)(ii)(A)(12), and 45 CFR
149.510(b)(1)(ii)(A)(12). The remittance advice containing the proposed
CARC and RARC disclosures would provide information as to whether the
plan or issuer believes the claim is eligible for the Federal IDR
process and ensure that a provider initiating open negotiation
understands the position of the plan or issuer regarding the
eligibility of an item or service, even in situations in which a plan
or issuer in receipt of an open negotiation notice is not otherwise
responsive.
The Departments seek comment on the addition of these proposed
required elements to the open negotiation notice. The Departments also
solicit comment on whether the party submitting the open negotiation
notice should be required to provide a statement describing why the
party is initiating the open negotiation period, including any
considerations that serve as the basis for the initiation of open
negotiation for the item or service, such as any of the considerations
currently described in 26 CFR 54.9816-8T(c)(4)(iii) and 54.9817-
2T(b)(2), 29 CFR 2590.716-8(c)(4)(iii) and 2590.717-2(b)(2), and 45 CFR
149.510(c)(4)(iii) and 149.520(b)(2).
d. Open Negotiation Response Notice Content
The Departments propose to establish requirements for an open
negotiation response notice at 26 CFR 54.9816-8(b)(1)(iii)(A), 29 CFR
2590.716-8(b)(1)(iii)(A), and 45 CFR 149.510(b)(1)(iii)(A).
Specifically, the Departments propose to require that the party
receiving an open negotiation notice must provide a response to the
open negotiation notice, which would include the same information
specified in proposed 26 CFR 54.9816-8(b)(1)(ii)(A)(1) through (3), 29
CFR 2590.716-8(b)(1)(ii)(A)(1) through (3), and 45 CFR
149.510(b)(1)(ii)(A)(1) through (3) related to the requirements to
provide contact information sufficient to identify the provider,
facility, or provider of air ambulance services, the plan or issuer
that are parties to the open negotiation, and any third party
representing a party in the open negotiation. The Departments further
propose that the open negotiation response notice would include the
following additional information under proposed 26 CFR 54.9816-
8(b)(1)(iii)(A)(4) through (11), 29 CFR 2590.716-8(b)(1)(iii)(A)(4)
through (11), and 45 CFR 149.510(b)(1)(iii)(A)(4) through (11): (4)
information sufficient to identify the item or service included in the
open negotiation notice, including the date(s) the item or service was
furnished, the claim number, and if the party in receipt of the open
negotiation notice is a provider, facility, or provider of air
ambulance services, the date(s) that the provider, facility, or
provider of air ambulance services received the initial payment or
notice of denial of payment for such item or service from the plan or
issuer; (5) if the party in receipt of the open negotiation notice is a
plan or issuer, a statement as to whether it agrees that the initial
payment amount (including $0 if, for example, payment is denied) and
the QPA reflected in the open negotiation notice accurately reflects
the initial payment amount and QPA disclosed with the initial payment
for the item or service, and if not, the initial payment amount
(including $0 if, for example, payment is denied) and/or the QPA it
believes to be correct and documentation to support the statement (for
example, the remittance advice confirming the QPA amount); (6) if the
party in receipt of the open negotiation notice is a plan or issuer,
the amount of cost sharing imposed for the item or service, if any; (7)
a counteroffer of an out-of-network rate for each item or service or an
acceptance of the other party's offer; (8) if the party in receipt of
the open negotiation notice is a provider or facility, a statement that
the items and services do not qualify for the notice and consent
exception described at 45 CFR 149.410(b) or 149.420(c) through (i); (9)
with respect to each item
[[Page 75769]]
or service, a statement and supporting documentation that explains why
the item or service is ineligible for the Federal IDR process or a
statement agreeing that the item or service is eligible for the Federal
IDR process; (10) a statement as to whether any of the information
provided in the open negotiation notice is inaccurate and the basis for
the statement, as well as supporting documentation; and (11) a
statement confirming that the initial payment or notice of denial of
payment or other remittance advice provided by the party submitting the
open negotiation notice is accurate, and if inaccurate, a copy of the
accurate initial payment or notice of denial of payment or other
remittance advice that is required to include the disclosures under 26
CFR 54.9816-6T(d)(1), 26 CFR 54.9816-6(d)(1), 29 CFR 2590.716-6(d)(1),
and 45 CFR 149.140(d)(1), with respect to the item or service.
Based on feedback from the certified IDR entities, non-initiating
parties often do not object to the applicability of the Federal IDR
process or to the accuracy of the QPA until after the certified IDR
entity has been selected, including at the time of offer submission.
Also, at times, disputing parties disagree about the accuracy of
information relevant to the claim under dispute. In these cases, the
initiating party is unaware of the non-initiating party's statement
because this information is sent to the certified IDR entity and not to
the initiating party well after the open negotiation period has ended.
This significantly slows down the processing of disputes, as the
certified IDR entity then must contact both parties to determine the
appropriate QPA or solicit information necessary to confirm the Federal
IDR process applies. To implement an efficient Federal IDR process,
both parties must be active participants in the process. For this
reason, and to minimize communication challenges between parties, the
Departments are of the view that the party in receipt of the open
negotiation notice should provide the proposed content elements to the
party sending the open negotiation notice and to the Departments. All
of the proposed open negotiation response notice content requirements
are also included in the proposed open negotiation notice content
requirements, except for: (1) a statement that explains why the item or
service is not subject to the Federal IDR process or a statement
agreeing that the item or service is subject to the Federal IDR
process; (2) a statement as to whether the QPA reflected in the open
negotiation notice is accurate for the item or service, and if not, a
statement providing the QPA it believes to be correct and documentation
to support the statement (for example, the remittance advice confirming
the QPA amount); and (3) a statement confirming the accuracy of the
initial payment, notice of denial of payment, or other remittance
advice provided by the party submitting the open negotiation notice,
and a copy of an accurate initial payment, notice of denial of payment
or other remittance advice if inaccurate. By restating information on
both the open negotiation notice and open negotiation response notice,
parties would have an opportunity to confirm or update information
necessary to negotiate and identify any information discrepancies which
could impact eligibility and decisions to negotiate or participate in
the Federal IDR process. With respect to the three proposed open
negotiation response notice content requirements not included in the
open negotiation notice, this proposal, if finalized, would make the
party submitting the open negotiation notice aware of any objection
that the party in receipt of the open negotiation notice has to the
dispute's eligibility for the Federal IDR process or its objection to
the QPA or remittance advice accuracy. Additionally, this proposal
would require the party in receipt of the open negotiation notice to
provide an explanation and documentation to support its statement(s).
The Departments are of the view that this proposed method of
exchanging information would facilitate communication and understanding
between the parties as to the eligibility of an item or service for the
Federal IDR process. The Departments seek comment on the content
elements of the open negotiation response notice. The Departments also
seek comment on the requirement to submit a counteroffer for an out-of-
network rate for the item or service or a statement accepting the other
party's offer on the open negotiation response notice. Specifically,
the Departments seek comment on whether it would hinder meaningful
negotiation between the parties outside the Federal IDR portal, or
whether it would promote negotiation among parties that might otherwise
not negotiate.
e. Technical Amendments
The Departments propose several technical amendments to the open
negotiation regulatory text. These proposed changes correct or remove
regulatory text that is being updated by the open negotiation proposals
in these proposed rules. First, the Departments propose a technical
correction for the cross reference at 26 CFR 54.9816-8T(b)(1)(i), 29
CFR 2590.716-8(b)(1)(i), and 45 CFR 149.510(b)(1)(i) which directs
readers to the definition of a qualified IDR item or service at
paragraph (a)(2)(xii)(A), but should instead reference paragraph
(a)(2)(xi)(A) for the appropriate cross reference to the definition of
a qualified IDR item or service.
Second, the Departments propose to remove the current regulatory
text that describes the manner in which the open negotiation notice
must be provided. The requirements for submitting the open negotiation
notice described in paragraphs 26 CFR 54.9816-8T(b)(1)(ii)(B), 29 CFR
2590.716-8(b)(1)(ii)(B), and 45 CFR 149.510(b)(1)(ii)(B) would be
removed because they would no longer apply under the proposed changes
to the open negotiation notice, and the removal of this paragraph
aligns with the proposal described at section II.D.3. of this preamble,
which would establish uniform standards for submitting notices for both
open negotiations and the IDR initiation through the Federal IDR
portal.
f. Implementation of Open Negotiation Through the Federal IDR Portal
As discuss
[…truncated; see source link]Indexed from Federal Register on November 3, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.