Rule2026-11140
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
June 4, 2026
Effective
August 3, 2026
Issuing agencies
Personnel Management OfficeTreasury DepartmentInternal Revenue ServiceLabor DepartmentEmployee Benefits Security AdministrationHealth and Human Services Department
Abstract
This document sets forth these final 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 rules finalize 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 final rules 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 (ERA) to an entity that does not have a contractual relationship with the plan or issuer. This document also finalizes amendments to 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 process, and the payment and collection of administrative fees and certified IDR entity fees. This document also finalizes the definition of bundled payment arrangements, amends requirements related to batched items and services and amends the rules for extensions of timeframes due to extenuating circumstances. Additionally, this document finalizes provisions that 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 91 Issue 107 (Thursday, June 4, 2026)</title>
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[Federal Register Volume 91, Number 107 (Thursday, June 4, 2026)]
[Rules and Regulations]
[Pages 33900-34081]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-11140]
[[Page 33899]]
Vol. 91
Thursday,
No. 107
June 4, 2026
Part II
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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45 CFR Part 149
Federal Independent Dispute Resolution Operations; Final Rule
Federal Register / Vol. 91, No. 107 / Thursday, June 4, 2026 / Rules
and Regulations
[[Page 33900]]
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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
[TD 10049]
RIN 1545-BQ55
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AC17
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Part 149
[CMS-9897-F]
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: Final rule.
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SUMMARY: This document sets forth these final 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 rules finalize 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
final rules 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 (ERA) to an entity that does not
have a contractual relationship with the plan or issuer. This document
also finalizes amendments to 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
process, and the payment and collection of administrative fees and
certified IDR entity fees. This document also finalizes the definition
of bundled payment arrangements, amends requirements related to batched
items and services and amends the rules for extensions of timeframes
due to extenuating circumstances. Additionally, this document finalizes
provisions that 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:
Effective date: These final rules are effective on August 3, 2026.
Applicability date: See section II.H. of these final rules for
information on the applicability dates.
FOR FURTHER INFORMATION CONTACT: Cameron Stokes, Office of Personnel
Management, at 202-936-0162; Alexander Krupnick, Internal Revenue
Service, Department of the Treasury, at 202-317-5500; Elizabeth
Schumacher or Rebecca Miller, Employee Benefits Security
Administration, Department of Labor, at 202-693-8335; Bryan Kirk,
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, at 301-492-4122.
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:
I. Background
A. Preventing Surprise Medical Bills and Establishing the Federal
Independent Dispute Resolution (IDR) Process
The No Surprises Act 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) to
provide 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.\1\ 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 for patient visits to
participating health care facilities. ``Health care facilities'' are
generally defined as hospitals, hospital outpatient departments,
critical access hospitals, and ambulatory surgical centers.\2\
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\1\ On December 27, 2020, the CAA was enacted. Title I of the
CAA is also known as the No Surprises Act. Public Law 116-260
(December 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 for 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
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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 these final rules, 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 for 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 (October 7, 2021).
\5\ 87 FR 52618 (August 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.
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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
for 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.
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As outlined in sections I.D and I.F of the preamble to the Federal
Independent Dispute Resolution Operations proposed rules \8\ (2023
proposed rules), 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, and certain restrictions on the qualified IDR
items or services that may be considered jointly as part of a batched
dispute have been vacated by the United States District Court for the
Eastern District of Texas (District Court).\9\ The District Court also
vacated guidance \10\ raising the Federal IDR administrative fee from
$50 to $350 per party for disputes initiated during the calendar year
beginning January 1, 2023. On October 30, 2024, the Fifth Circuit
issued an opinion and order in TMA III, which partially reversed the
district court's decision for certain provisions related to the
methodology for calculating the QPA that had been vacated by the
district court in TMA III. On May 30, 2025, the Fifth Circuit granted a
request from the plaintiffs in TMA III for a rehearing en banc and
vacated the Fifth Circuit's October 30, 2024 panel opinion. As a
result, the district court's decision from August 24, 2023 continues to
bind the Departments pending the Fifth Circuit's en banc decision.
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\8\ 88 FR 75744 (November 3, 2023).
\9\ See Tex. Med. Ass'n v. U.S. Dep't of Health & Hum. Servs.,
587 F. Supp. 3d 528 (E.D. Tex. 2022) (TMA I); Tex. Med. Ass'n v.
U.S. Dep't of Health & Hum. Servs., 654 F. Supp. 3d 575 (E.D. Tex.
2023), aff'd, No. 23-40217 (5th Cir. August 2, 2024) (TMA II); Tex.
Med. Ass'n v. U.S. Dep't of Health & Hum. Servs., Case No. 6:22-cv-
450-JDK (E.D. Tex. August 24, 2023), Tex. Med. Ass'n v. U.S. Dep't
of Health & Hum. Servs., 120 F.4th 494 (5th Cir. 2024), and Tex.
Med. Ass'n v. U.S. Dep't of Health & Hum. Servs., Case No. 23-40605
(5th Cir. May 30, 2025) (collectively, TMA III); and Tex. Med. Ass'n
v. U.S. Dep't of Health & Hum. Servs., Case No. 6:23-cv-00059-JDK,
(E.D. Tex. August 3, 2023) (TMA IV).
\10\ See Amendment to the Calendar Year 2023 Fee Guidance for
the Federal Independent Dispute Resolution Process Under the No
Surprises Act: Change in Administrative Fee (December 23, 2022),
available at <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>.
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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) \11\ 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 entity fee ranges. These rules were finalized on December
21, 2023 (IDR Process Fees final rules) \12\ and are effective for
disputes initiated on or after January 22, 2024.
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\11\ 88 FR 65888 (September 26, 2023).
\12\ 88 FR 88494 (December 21, 2023).
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On November 3, 2023, the Departments issued the Federal Independent
Dispute Resolution Operations Proposed Rules (2023 proposed rules) to
further amend existing requirements related to the Federal IDR process.
The comment period for the 2023 proposed rules closed on January 2,
2024. On January 22, 2024, the Departments reopened the comment period
from January 22, 2024, to February 5, 2024, to give interested parties
additional time to review the 2023 proposed rules and submit comments.
B. 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. In the first year of operations, disputing parties submitted
489,000 disputes, which is 14 times the number of disputes that the
Departments had expected to receive in an entire calendar
year.<SUP>13 14</SUP> The high volume of dispute submissions has
continued, and as of January 31, 2026, disputing parties have
[[Page 33902]]
submitted over 5.1 million disputes for review.\15\
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\13\ See 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>.
\14\ In the regulatory impact analysis of the October 2021
interim final rules (86 FR 55980, 56068-56070), 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.
\15\ See Federal IDR Bi-Monthly Reports, as of January 31, 2025,
available at <a href="https://www.cms.gov/nosurprises/policies-and-resources/reports">https://www.cms.gov/nosurprises/policies-and-resources/reports</a>.
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Several factors likely contribute to the high volume of initiated
disputes and longer timeframes for resolution of disputes in the
Federal IDR process. First, providers, facilities, and providers of air
ambulance services (providers)Sec. \16\ have alleged that plans' and
issuers' QPA calculations are sometimes artificially low and that plans
and issuers are making initial payments based on these artificially low
QPAs, which incentivizes the use of the Federal IDR process for a
larger number of items and services. Second, providers, plans and
issuers have alleged, on numerous occasions, that the other party
regularly fails to engage in meaningful open negotiation during the 30-
business-day open negotiation period, resulting in relatively few
disputes being settled outside of the Federal IDR process. 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. Third, the
District Court's successive rulings in TMA II, TMA IV, and TMA III have
necessitated multiple temporary shutdowns of the Federal IDR process to
comply with the District Court's orders. 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.
Finally, initiating parties are submitting a large number of ineligible
disputes, leading to both a high volume of dispute submissions and slow
processing of disputes.
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\16\ For purposes of these final rules, unless otherwise stated,
whenever the Departments are referring to providers, facilities, and
providers of air ambulance services, or to ``providers'' for short
that are parties to Federal IDR process disputes, the Departments
are referring to nonparticipating providers, facilities, and
providers of air ambulance services.
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From April 15, 2022 to December 31, 2024, non-initiating parties
challenged the eligibility of 976,721 disputes for the Federal IDR
process, and certified IDR entities found 355,804 disputes
ineligible.\17\ Ineligible disputes often involve an item or service
that is not a qualified IDR item or service because it is payable 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.\18\ Certified
IDR entities have similarly reported encountering incorrectly bundled
disputes. For example, a provider may incorrectly try to submit as a
bundle an emergency room facility 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).\19\ Disputes are also ineligible
when the disputing parties initiate the Federal IDR process after
failing to satisfy the 30-business-day open negotiation period
requirements specified under 29 CFR 2590.716-8(b)(1) and 45 CFR
149.510(b)(1) or after 4 business days after the end of the 30-
business-day open negotiation period as specified under 29 CFR
2590.716-8(b)(2)(i) and 45 CFR 149.510(b)(2)(i).
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\17\ 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. 29 CFR 2590.716-8(a)(2)(xi) and 45
CFR 149.510 (a)(2)(xi).
\18\ 29 CFR 2590.716-8(c)(3)(i)(B) and 45 CFR
149.510(c)(3)(i)(B). The District Court vacated the batching
provisions of 45 CFR 149.510(c)(3)(i)(C), 26 CFR 54.9816-
8T(c)(3)(i)(C), and 29 CFR 2590.716-8(c)(3)(i)(C) in Tex. Med. Ass'n
v. U.S. Dep't of Health & Hum. Servs.,Case No. 6:23-cv-59-JDK (E.D.
Tex. Aug. 3, 2023) (TMA IV).
\19\ 29 CFR 2590.716-8(c)(3)(ii) and 45 CFR 149.510(c)(3)(ii).
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To address the high volume of disputes submitted to the Federal IDR
process, 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.\20\ In addition, the Departments have implemented
Federal IDR portal 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 and
requiring non-initiating parties to attest to the health plan type.\21\
This allows 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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\20\ 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>.
\21\ See notices of eligibility enhancements at <a href="https://www.cms.gov/nosurprises/notices">https://www.cms.gov/nosurprises/notices</a>.
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C. Federal IDR Operations Proposed Rules
The 2023 proposed rules were intended to address issues that are
critical to 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.
Specifically, the 2023 proposed rules sought to enhance sharing
information for plans, issuers, and providers by requiring that these
parties share specific information before initiating the Federal IDR
process, including by providing No Surprises Act-specific claim
adjustment reason codes (CARCs) and remittance advice remark codes
(RARCs) with a remittance advice. The 2023 proposed rules also sought
to amend the information that must be disclosed about the QPA.
Additionally, the 2023 proposed rules proposed to require plans and
issuers to register with the Federal IDR portal to facilitate
identification of the parties to a dispute and determine whether
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
facilitate communication and improve open negotiation, the 2023
proposed rules sought to amend to the content requirements of the
standard open negotiation notice, establish requirements related to an
open negotiation response notice, and clarify the timing for when the
open negotiation period begins. Additionally, the 2023 proposed rule
included amendments to the notice of IDR initiation and new
requirements for the initiation response from the non-initiating
party.\22\ The rules also proposed establishing a new process for
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providing and receiving notices related to the IDR process.
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\22\ OMB control number 1210-0169.
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The 2023 proposed rules also sought to introduce clearer timeframes
for certain steps in the Federal IDR process. More specifically, the
2023 proposed rules proposed procedures for selecting a certified IDR
entity and handling conflict-of-interest reviews to account for the
time it takes certified IDR entities to confirm that they do not have a
conflict of interest with either party. The 2023 proposed rules also
proposed to establish a departmental eligibility review process and
require that additional information be submitted to support eligibility
determinations, conflict-of-interest reviews, or payment
determinations. The 2023 proposed rules also proposed to establish a
standard process for disputes to be withdrawn from the Federal IDR
process. The Departments also proposed amendments to adjust the
timeframe for submission of offers and payment determination.
Regarding fee collections, the proposed rule included amendments
related to the collection of certified IDR entity fees and
administrative fees. The Departments proposed a reduced administrative
fee amount for low-dollar disputes to address access concerns by
certain interested parties that regularly provide services with low-
dollar values. The Departments also proposed reduced administrative fee
amounts for non-initiating parties in cases of ineligible disputes as
well as pursuing Federal debt collection of the administrative fee from
parties that do not pay as required.
The Departments proposed to amend requirements related to batched
items and services and bundled payment arrangements. These amendments
sought to provide clarity in how parties can submit multiple items and
services as either batched items and services or bundled payment
arrangements in a single dispute and to provide additional flexibility
in submitting multiple items and services. The proposed rules also
proposed to expand upon situations in which timeframes may be waived
due to extenuating circumstances.
The Departments received 124 timely comments during both comment
periods \23\ in response to the proposed rules from a wide variety of
interested parties, including private citizens; consumer and advocacy
organizations; employers and other plan sponsors; health information
technology, health care consulting, and health care staffing companies;
health care providers and facilities and health systems; health
insurance issuers; service providers, including third party
administrators (TPAs) and revenue cycle management organizations; trade
and professional associations; and researchers. Many commenters
provided detailed feedback on multiple aspects of the proposed rules
and in response to various specific comment solicitations included in
the preamble to the proposed rules and the request for information.
After reviewing the comments received, the Departments are finalizing
the 2023 proposed rules, with some changes in response to comments as
described in more detail later in this preamble, to improve the overall
functioning of the Federal IDR process.
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\23\ Comments on the 2023 proposed rules were due by January 2,
2024. However, the Departments subsequently reopened the comment
period from January 22, 2024, to February 5, 2024, to provide
additional time for interested parties to consider and comment on
any implications of the IDR Process Fees final rules. See 89 FR 3896
(Jan. 22, 2024).
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II. Overview of the Final 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 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
dispute and are subject to the rules for batched disputes and the
certified IDR entity fee for single disputes.\24\ 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 services furnished
during an episode of care to a single patient.\25\ To clarify how
certified IDR entities can identify a dispute that includes a bundled
payment arrangement, the Departments provided a definition for a
bundled arrangement in the August 2022 Technical Assistance for
Certified IDR Entities.\26\ The 2023 proposed rules proposed to codify
the definition set forth in the August 2022 Technical Assistance for
Certified IDR Entities.
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\24\ 86 FR 55980, 55994 (October 7, 2021).
\25\ Id.
\26\ U.S. Department of Health and Human Services, U.S.
Department of Labor, and U.S. Department of the Treasury. (August
2022). Federal Independent Dispute Resolution (IDR) Process Guidance
for Certified IDR Entities: Technical Assistance for Certified IDR
Entities, 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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Specifically, the Departments proposed 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
diagnostic related group (DRG) code); or (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).
To further clarify the process for resolving IDR disputes for
bundled payment arrangements, the Departments proposed to remove the
language under 26 CFR 54.9816-8T(c)(3)(ii), 29 CFR 2590.716-
8(c)(3)(ii), and 45 CFR 149.510(c)(3)(ii) stating that a bundled
payment arrangement is subject to the rules for batched disputes. While
a bundled payment arrangement is, by definition, 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 disputes, including
those finalized under 26 CFR 54.9816-8(c)(4), 29 CFR 2590.716-8(c)(4)
and 45 CFR 149.510(c)(4) of these final rules, apply to bundled payment
arrangements. Therefore, it is not entirely accurate to say that
bundled payment arrangements are subject to the rules for batched
disputes.
The Departments solicited comment on the definition and treatment
of bundled payment arrangements in the 2023 proposed rules. The
Departments also solicited comment on examples of service or procedural
codes other than DRGs that would meet the proposed definition of a
bundled payment arrangement. After consideration of the comments
received, and for the reasons described below, the Departments are
finalizing the definition of the term ``bundled payment arrangement''
at 26
[[Page 33904]]
CFR 54.9816-3, 29 CFR 2590.716-3, and 45 CFR 149.30 as proposed. The
Departments did not receive any comments on the proposed amendment to
remove the language under 26 CFR 54.9816-8T(c)(3)(ii), 29 CFR 2590.716-
8(c)(3)(ii), and 45 CFR 149.510(c)(3)(ii) stating that a bundled
payment arrangement is subject to the rules for batched disputes, and
are finalizing this amendment as proposed.\27\
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\27\ The 2023 proposed rules included language that would have
amended Treasury Department temporary regulations issued in July and
October 2021. Those temporary regulations have since expired and are
not being amended as proposed in the 2023 proposed rules.
Corresponding sections of the Department of Labor's interim final
regulations at 86 FR 36872 and 86 FR 55980 may be relied upon until
those sections of the previously proposed Treasury regulations are
published in final form.
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Commenters generally supported the proposed definition of bundled
payment arrangement. However, the Departments also received a comment
opposing the proposed definition, stating that bundled disputes should
be defined as a single episode of care on a single claim form. This
commenter stated that bundled payment arrangements are typically for
contracted services and are not relevant to out-of-network claims
subject to the No Surprises Act.
Several commenters also had additional recommendations regarding
scenarios or types of services that could be defined as a bundled
payment arrangement. Another commenter recommended that the definition
of bundling used for the Medicare program be used for the purposes of
the No Surprises Act. Another commenter suggested that bundled payment
arrangements under the proposed definition be limited to situations
where the provider or facility and the plan or issuer mutually agree to
bundling, or a recognized DRG or all-patients refined diagnosis related
group (APR DRG) applies to the claim. A few commenters provided
examples of services or procedural codes other than DRGs that would
meet the proposed bundled payment arrangement definition. One of these
commenters stated that Current Procedural Terminology (CPT) and
Healthcare Common Procedure Coding System (HCPCS) codes, particularly
for laboratory services, could be used for bundled payment arrangements
under the proposed definition.
Even if bundled payment arrangements are most often used for
contracted services, as the commenter suggested, some qualified IDR
items and services provided by out-of-network providers will still meet
the definition of bundled payment arrangement as defined under the
proposed rules. 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 explicitly
contemplate bundled payments within the context of the Federal IDR
process, which is a process that only applies to claims for out-of-
network items and services, and therefore we disagree that bundled
payment arrangements are not relevant to out-of-network claims subject
to the No Surprises Act.
For the comment requesting additional guidance about the types of
services that may be defined as bundled payment arrangements, the
Departments believe that existing guidance provided in the August 2022
Technical Assistance for Certified IDR Entities and in the preamble to
the 2023 proposed rules provides sufficient examples of bundled payment
arrangements. The Departments restate the example in the preamble to
the 2023 proposed rules: if a physician performs bilateral mammography,
the provider shall report (or for the purpose of the Federal IDR
process, the provider shall bill) the 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, under these final rules, 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.
The definition of bundled payment arrangements under these final
rules allows disputes to be bundled by a single CPT code, DRG code, or
HCPCS code, provided the dispute otherwise complies with such
definition. We disagree that bundling should be limited to a recognized
DRG or APR DRG, as doing so would be overly restrictive and would limit
initiating parties' ability to submit bundled disputes. The Departments
favor broader criteria for bundling to increase the number of claims
eligible to be submitted as a bundled payment arrangement. Further, the
Departments disagree that they should adopt the Medicare definition of
bundled payments for purposes of submitting claims, because there are
multiple definitions that exist in guidance and regulation that rely on
a defined episode of care, single illness or condition, or course of
treatment, which the Departments proposed as a method of batching at 26
CFR 54.9816-8(c)(4)(i)(C)(2), 29 CFR 2590.716-8(c)(4)(i)(C)(2), and 45
CFR 149.510(c)(4)(i)(C)(2).\28\ Additionally, the Departments decline
to finalize a rule limiting the use of bundled payment arrangements to
situations where the provider and the plan or issuer mutually agree to
the use of bundling, as a commenter suggested. Such a limitation
creates an administrative barrier to submitting a bundled dispute and
could disincentivize parties from using or relying on bundled payment
arrangements, which could decrease the accessibility of the Federal IDR
process for bundled payment arrangements.
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\28\ For definitions of bundled payments, see <a href="https://www.cms.gov/priorities/innovation/key-concepts/bundled-payments">https://www.cms.gov/priorities/innovation/key-concepts/bundled-payments</a> and
<a href="https://www.cms.gov/priorities/innovation/innovation-models/bundled-payments">https://www.cms.gov/priorities/innovation/innovation-models/bundled-payments</a>. For definitions of episode(s) of care, see 42 CFR 414.1305
``Episode payment model'' and 42 CFR 510.2 ``Episode of care (or
Episode).''
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B. Use of CARCs and RARCs
1. Existing Payment Communication Practice and Requirements
As described in the preamble to the 2023 proposed rules, 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.\29\
When remittance advice is transmitted electronically, it is commonly
referred to as an electronic remittance advice or ERA.\30\ All ERAs
must comply with the Accredited Standards Committee (ASC) X12 835
transaction standard adopted by HHS under 45 CFR 162.1602.
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\29\ 88 FR 75744, 75759 (November 3, 2023). The ASC X12N 835
Version 5010 (835 transaction), adopted at 45 CFR 162.1602, is the
current HIPAA standard that plans and issuers must use to
electronically transmit explanations of benefits (EOBs) or
remittance advice information to providers and facilities.
\30\ 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. Centers for Medicare &
Medicaid Services. (June 16, 2022). Health Care Payment and
Remittance Advice and Electronic Funds Transfer, available at
<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>.
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The ASC 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 specific plans and
[[Page 33905]]
issuers).\31\ CARCs explain why a claim or service line was paid
differently than it was billed.\32\ RARCs provide additional
explanations for a remittance. 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 not related to a
specific adjustment or CARC.\33\ 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.\34\ Any interested
party can use publicly available forms to submit requests for new or
modified CARCs and RARCs and accompanying explanations to the
respective committees on a rolling basis. Each committee meets on a
regularly scheduled, periodic basis to discuss proposed new CARCs and
RARCs or modifications of existing CARCs and RARCs with the sponsors of
such changes and determine whether to approve or deny the recommended
change or new CARC or RARC.\35\ Updated lists of approved CARCs and
RARCs, along with an updated list of approved CARC and RARC
combinations and business scenarios, are published three times each
year.\36\
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\31\ CARCs and RARCs are required by the ASC X12 835 transaction
standard and are not currently required to be used on paper
remittance advice.
\32\ X12. (Updated November 1, 2025). Claim Adjustment Reason
Codes. <a href="https://x12.org/codes/claim-adjustment-reason-codes">https://x12.org/codes/claim-adjustment-reason-codes</a>.
\33\ X12. (Updated July 1, 2025). Remittance Advice Remark
Codes. <a href="https://x12.org/codes/remittance-advice-remark-codes">https://x12.org/codes/remittance-advice-remark-codes</a>.
\34\ CAQH CORE. (June 2012). Phase III 360 CORE Uniform Use of
CARCs and RARCs (835) Rule, Version 3.0.0, available at <a href="https://43908627.fs1.hubspotusercontent-na1.net/hubfs/43908627/CARCsRARCs_835_Rule.pdf">https://43908627.fs1.hubspotusercontent-na1.net/hubfs/43908627/CARCsRARCs_835_Rule.pdf</a>.
\35\ See Maintenance Request Form, available at <a href="https://x12.org/codes/remittance-advice-remark-codes">https://x12.org/codes/remittance-advice-remark-codes</a> (for RARCs) and <a href="https://x12.org/codes/claim-adjustment-reason-codes">https://x12.org/codes/claim-adjustment-reason-codes</a> (for CARCs). See also
CMS, Health Care Payment and Remittance Advice and Electronic Funds
Transfer, Claim Adjustment Reason Codes and Remittance Advice Remark
Codes, available at <a href="https://www.cms.gov/priorities/key-initiatives/burden-reduction/administrative-simplification/transactions/health-care-payment-remittance-advice-electronic-funds-transfer">https://www.cms.gov/priorities/key-initiatives/burden-reduction/administrative-simplification/transactions/health-care-payment-remittance-advice-electronic-funds-transfer</a>.
\36\ CAQH CORE. (n.d). Operating Rules, Keeping Up with the Core
Code Combinations, available at <a href="https://www.caqh.org/core/operating-rules">https://www.caqh.org/core/operating-rules</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 provisions
apply to a claim, how cost sharing was calculated, and whether a
payment for a claim was an initial or final payment.\37\ While these
RARCs are currently available for use by plans and issuers, the No
Surprises Act-specific RARCs do not address all required QPA
disclosures or all data elements relevant to whether a payment dispute
arising from an item or service included on a remittance advice is
eligible for the Federal IDR process. Furthermore, the current
standards and operating rules that govern ERA transactions under HIPAA
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.\38\
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\37\ X12. (Updated July 1, 2025). 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, available at <a href="https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/CAA-NSA-RARC-Codes.pdf">https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/CAA-NSA-RARC-Codes.pdf</a>
(unofficial reference list of No Surprises Act-specific RARC codes).
\38\ 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. (June 2012). Phase III 360 CORE Uniform Use of
CARCs and RARCs (835) Rule, Version 3.0.0, available at <a href="https://43908627.fs1.hubspotusercontent-na1.net/hubfs/43908627/CARCsRARCs_835_Rule.pdf">https://43908627.fs1.hubspotusercontent-na1.net/hubfs/43908627/CARCsRARCs_835_Rule.pdf</a>.
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2. Requiring CARCs and RARCs To Improve Communication Between Parties
In the preamble to the 2023 proposed rules, the Departments
identified communication gaps between plans or issuers and providers
that contribute to inefficiencies in resolving disputes in the Federal
IDR process including, but not limited to: (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 negotiation; and (4)
which items or services eligible for the Federal IDR process can be
batched or bundled into one dispute.
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, the
Departments are directed 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.\39\ Under section 9833
of the Code, section 734 of ERISA, and section 2792 of the PHS Act, the
Departments are authorized 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,
respectively, including the provisions directing the Departments to
establish the Federal IDR process.
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\39\ 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 (July 13, 2021). Therefore, the July 2021
interim final rules also applied the requirement to make disclosures
regarding the QPA for 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 to inform the open negotiation process, the decision
whether to initiate the Federal IDR process, and the amount of the
offer to submit. 86 FR 36898 (July 13, 2021).
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In the 2023 proposed rules, the Departments proposed new disclosure
rules at 26 CFR 54.9816-6A, 29 CFR 2590.716-6A, and 45 CFR 149.100.
These proposals would require plans and issuers to use CARCs and RARCs,
as specified in guidance issued by the Departments, 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 contractual relationship with the plan or issuer for 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, subpart B, E, or F.
The Departments sought comment on the CARC and RARC proposal. After
reviewing comments, and in light of the considerations discussed in
this section of these final rules, the Departments are finalizing the
CARC and RARC proposal with minor modifications.
a. In General
Many commenters supported the proposal to require plans and issuers
to use CARCs and RARCs to standardize communication between plans and
issuers and providers early in the claims process for out-of-network
items and
[[Page 33906]]
services. Several commenters noted that some plans and issuers
currently use No Surprises Act-related RARCs, but usage is not
consistent across all plans and issuers or in every circumstance in
which they apply. Many commenters stated that the proposal would reduce
the number of ineligible disputes submitted to the Federal IDR process
by allowing parties to more easily identify ineligible claims,
including, for example, allowing providers to automate some aspects of
claims analysis, increasing the speed with which providers can review
remittances and determine eligibility for the Federal IDR process
compared to current manual review processes. One commenter highlighted
that the proposal would provide more information for initiating parties
and certified IDR entities, which would improve the certified IDR
entity's ability to determine a dispute's eligibility.
The Departments agree with commenters who suggested that the CARC
and RARC requirement will facilitate communication between plans or
issuers and providers, thereby reducing the number of ineligible
disputes submitted to the Federal IDR process and thus allowing
certified IDR entities to focus resources more efficiently. In
addition, the use of RARCs and CARCs will reduce the need for providers
to engage in resource-intensive manual examination of paper or other
non-standardized eligibility information.
However, a few commenters opposed the CARC and RARC proposal. One
of these commenters stated that because only a few of the currently
available RARCs specific to the No Surprises Act relate to how claims
are paid and negotiated, requiring their use would not improve
providers' ability to determine whether they may initiate open
negotiation and the Federal IDR process. Another commenter noted that
disclosures provided separately from the electronic transaction are
often more detailed than what is likely to be communicated via CARCs
and RARCs, and that requiring CARCs and RARCs to be added to a
remittance advice provided with the initial payment or notice of denial
of payment would be redundant with what plans are already providing in
other steps of the Federal IDR process.
The Departments have determined that CARCs and RARCs provided on
remittance advice as required under these final rules will help to
address communication challenges between plans or issuers and
providers, even when information that could be conveyed by a CARC or
RARC may also be available through another mechanism or at a later
point in the payment dispute process. Specifically, using a CARC or
RARC to convey information in ASC X12 835 transactions, prior to the
open negotiation period, could improve or replace later communications
or render them entirely unnecessary. For example, the Departments are
aware that because the ASC X12 835 electronic transaction standard does
not accommodate the QPA disclosures that plans and issuers are required
to provide under 26 CFR 54.9816-6(d), 29 CFR 2590.716-6(d), and 45 CFR
149.140(d), plans and issuers generally provide all required
disclosures by an alternate mechanism, such as using email or sending
in paper form. Providers therefore receive disclosures separately from,
and often much later than, electronic transactions and have reported
challenges linking the disclosures to the correct transaction.\40\
However, requiring certain disclosure information to be provided using
a CARC or RARC means that information will be conveyed to the provider
as part of the ASC X12 835 transaction. A CARC or RARC provided in a
remittance advice that clearly and accurately identifies an item or
service as being eligible or ineligible for the Federal IDR process
could remove delays in initiating the open negotiation period or
prevent a dispute over payment for that item or service from
incorrectly proceeding to the Federal IDR process.\41\
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\40\ See FAQs About Consolidated Appropriations Act, 2021
Implementation Part 69 (January 14, 2025), Q3, available at <a href="https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-69.pdf">https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-69.pdf</a> and <a href="https://www.cms.gov/files/document/faqs-part-69.pdf">https://www.cms.gov/files/document/faqs-part-69.pdf</a>.
\41\ The use by a plan or issuer of a CARC or RARC that conveys
that an item or service is ineligible for the Federal IDR process is
not a dispositive determination of eligibility and would not prevent
a certified IDR entity from determining that the item or service is
eligible through the eligibility review process finalized in these
final rules. See 26 CFR 54.9816-8(c)(2), 29 CFR 2590.716-8(c)(2),
and 45 CFR 149.510(c)(2) and section II.E.1.b of this preamble.
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In other cases, CARCs and RARCs may provide information prior to
the initiation of the Federal IDR process that is not available through
other mechanisms and could be used to prevent the initiation of an
incorrectly batched dispute. For example, as described elsewhere in
this preamble, the Departments are finalizing requirements that certain
plans and issuers provide specific data elements in the Federal IDR
registry established under 26 CFR 54.9816-9, 29 CFR 2590.716-9, and 45
CFR 149.530, such as plan type or whether a self-insured plan has
properly effectuated an election to opt in to a specified State law or
an All-Payer Model Agreement under section 1115A of the Social Security
Act. Such data will be provided at the level of the plan or coverage.
By contrast, similar information could be provided through CARCs and
RARCs for each specific line item on a remittance advice and convey
information specific to a particular item or service. Line item level
details are relevant to disputes in which a specified State law or All-
Payer Model Agreement applies to certain items and services and the
Federal IDR process applies to others.
The Departments clarify that the requirement to use specified CARCs
and RARCs under these final rules will be in addition to the disclosure
requirements at 26 CFR 54.9816-6(d), 29 CFR 2590.716-6(d), and 45 CFR
149.140(d) and Federal IDR registry requirements at 26 CFR 54.9816-9,
29 CFR 2590.716-9, and 45 CFR 149.530. To the extent that a CARC or
RARC could be used to fulfill a separate disclosure requirement, such
as the requirements at 29 CFR 2590.716-6(d) and 45 CFR 149.140(d), the
Departments will issue future guidance to identify how and when a
specific code can be used to meet a particular requirement.
b. Application to Items and Services Not Subject to No Surprises Act
Surprise Billing Requirements
The Departments also proposed in the 2023 proposed rules that the
requirements under 26 CFR 54.9816-6A, 29 CFR 2590.716-6A, and 45 CFR
149.100 relating to CARCs and RARCs would apply to plans and issuers
when sending any paper or electronic remittance advice to entities with
which they do not have a direct or indirect contractual relationship,
including for items and services to which the No Surprises Act surprise
billing requirements do not apply. The Departments proposed this
approach so that CARCs and RARCs could be used to convey when the No
Surprises Act does not apply to a particular item or service and reduce
the submission of ineligible disputes to the Federal IDR process.
Several commenters supported this proposal, stressing the
importance of understanding when the No Surprises Act does not apply to
a particular item or service to avoid submission of ineligible disputes
to the Federal IDR process. One commenter highlighted that requiring a
RARC that identifies an item or service as being ineligible for a State
or Federal balance billing protection would significantly and
immediately reduce the number of
[[Page 33907]]
ineligible dispute initiations, allowing certified IDR entities to
address future payment disputes more efficiently, while another
commenter suggested the proposal would reduce financial and
administrative burdens associated with identifying whether balance
billing is prohibited. On the other hand, a small number of commenters
indicated that applying the provision to out-of-network claims for
items and services that are not subject to the surprise billing
provisions in the No Surprises Act would require additional time to
implement and could cause provider confusion and increase operational
burden for plans and issuers.
The Departments acknowledge these final rules may require some
plans and issuers to implement new processes to include CARCs and RARCs
related to the No Surprises Act on remittance advice but have
determined that there is a critical need to provide this information to
improve the functioning of the Federal IDR process. Just as it is
important for providers to understand when an item or service is
subject to the surprise billing protections under the No Surprises Act,
it is equally important to understand when an item or service is not
subject to these protections, so that parties can take appropriate
steps to resolve payment issues and avoid submission of ineligible
disputes to the Federal IDR process. Therefore, the Departments are
finalizing this aspect of the proposed requirements as proposed.
In the preamble to the 2023 proposed rules, the Departments stated
that, because direct billing of patients for an amount greater than the
applicable in-network cost-sharing requirement is largely limited to
items and services to which the No Surprises Act does not apply, the
2023 proposed rules would not require plans and issuers to provide
CARCs and RARCs on remittance advice provided directly to participants,
beneficiaries, and enrollees.\42\ However, the Departments sought
comment on whether a plan or issuer should generate a remittance advice
that can be obtained upon request by the provider when the plan or
issuer makes a payment directly to a participant, beneficiary, or
enrollee, and whether the proposed requirement to use CARCs and RARCs
to convey No Surprises Act-specific information should apply in these
circumstances.
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\42\ See 88 FR 75744, 75762 and 75763 (November 3, 2023). While
a plan or issuer should not send payment for items and services that
are subject to the surprise billing provisions of the No Surprises
Act to any individual or entity other than the provider, the
Departments acknowledge there may be circumstances in which a plan
or issuer initially determines that an item or service is not
subject to the surprise billing provisions of the No Surprises Act
and sends payment and a corresponding ERA to a participant,
beneficiary, or enrollee, but subsequently, upon the receipt of new
or updated information, revises that assessment (for example, when
an in-network facility submits a claim for a non-emergency service
after the plan or issuer has processed an out-of-network provider
claim for the same item or service). In these cases, the plan or
issuer would be required to provide an updated remittance advice to
the provider that includes any relevant required CARCs or RARCs.
---------------------------------------------------------------------------
The Departments did not receive any comments on this provision in
the 2023 proposed rules. These final rules do not require plans and
issuers to use CARCs and RARCs on remittance advice for payments made
directly to participants, beneficiaries, or enrollees--including if the
remittance advice is requested by the provider that furnished the item
or service for which payment is made. The proposed regulation text has
been modified to make clear that the provision applies when providing
remittance advice to an entity ``(other than a participant,
beneficiary, or enrollee)'' that does not have a contractual
relationship with the plan or issuer.
c. Use of Guidance
The Departments proposed that certain procedural aspects of the
CARC and RARC requirement would be implemented through guidance,
including the specific CARCs and RARCs that plans and issuers would be
required to use to satisfy the disclosure requirements under proposed
26 CFR 54.9816-6A, 29 CFR 2590.716-6A, and 45 CFR 149.100.\43\ The
Departments are finalizing this part of the proposal as proposed.
Accordingly, these final rules establish the general requirement that
plans and issuers use CARCs and RARCs, in the manner and timeframe
specified in guidance, to communicate information about whether an item
or service identified on a claim is or is not subject to the surprise
billing requirements under the No Surprises Act. Future guidance will
identify the specific CARCs and RARCs to be used in particular
circumstances, which, as discussed below in section II.B.2.e of this
preamble, when surprise billing protections do apply, may include use
of CARCs and RARCs to communicate relevant procedural or administrative
information related to application of the surprise billing protections
to the items or services at issue. Future guidance will also provide
any administrative and technical instructions necessary to facilitate
the use of mandated CARCs and RARCs in all paper or electronic
remittance advice transactions to providers that do not have a
contractual relationship with the plan or issuer. Approval of new CARCs
and RARCs or modifications to existing CARCs and RARCs, including the
existing list of No Surprises Act-related RARCs, will be subject to the
existing CARC Committee and RARC Committee processes, as mentioned
above.
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\43\ Neither the proposal nor these final rules alter HHS'
authority under HIPAA to implement future guidance for ERA 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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Most commenters generally supported the use of guidance to
implement the proposal. Some of these commenters also provided specific
recommendations for how the Departments could ensure future guidance
would be clear and effective. Commenters recommended that any guidance
should include explicit timelines for compliance and provide clear
direction for how specified CARCs and RARCs must be used. As discussed
in section II.B.2.g of this preamble, several commenters requested that
guidance address potential non-compliance, including describing
oversight mechanisms and penalties and providing contact information
for filing complaints against parties that are non-compliant with the
CARC and RARC requirement. As discussed in more detail in section
II.H.1 of this preamble, several commenters emphasized the importance
of implementing the CARC and RARC requirements as quickly as possible.
A few commenters recommended that the Departments use notice-and-
comment rulemaking, rather than guidance, to change existing, or
identify new, CARCs and RARCs. For example, one commenter stated that
plans and issuers could provide feedback through rulemaking regarding
the initial development of technically and operationally complex
requirements, but once initial requirements were reviewed and agreed
upon by industry, future updates could be issued via guidance. Another
commenter recommended rulemaking to allow interested parties to comment
on specific challenges that could be raised by individual CARCs and
RARCs.
The Departments have determined that guidance, rather than notice-
and-comment rulemaking, is appropriate for providing the technical and
operational instruction needed to implement this provision. This
approach will provide necessary flexibility, enabling the Departments
to better respond to evolving needs and circumstances, including the
flexibility to discontinue specification of certain CARCs and RARCs
should the information they communicate become readily available to
providers through a different mechanism or otherwise become
unnecessary. Further, as discussed in
[[Page 33908]]
the preamble to the 2023 proposed rules, this approach mirrors the
longstanding framework in which interested parties may submit requests
to add, remove, or modify existing CARCs and RARCs, but updates to the
lists of approved CARCs and RARCs and the required CARC and RARC code
combinations provided for in the HIPAA-mandated operating rule are
issued outside of the notice-and-comment rulemaking process.\44\
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\44\ See 45 CFR 162.1603(a)(3-4), and Phase III CORE 360 Uniform
Use of Claim Adjustment Reason Codes and Remittance Advice Remark
Codes (835) Rule, available at <a href="https://www.caqh.org/core/operating-rules">https://www.caqh.org/core/operating-rules</a> (outlining the process for maintaining CORE-defined CARC, RARC
& Claim Adjustment Group Code Combinations).
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d. Technical and Operational Considerations
The Departments solicited comment on circumstances in which a plan
or issuer would be unable 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. One commenter
identified a scenario in which a provider submits a claim, but the
related facility claim containing the information needed to determine
applicability of the No Surprises Act is submitted later. The
Departments understand that plans and issuers sometimes need to adjust
remittance advice (for example, to reflect corrections or new
information that could impact payment) and anticipate that plans and
issuers will apply existing processes \45\ to modify remittance advice
as needed to ensure compliance with the CARC and RARC requirement being
finalized in these final rules. Because the Departments anticipate
corrections will be needed infrequently, the Departments do not expect
making corrections with ERA using CARCs and RARCs as required by these
final rules to be overly burdensome on plans or issuers.
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\45\ See, for example, CAQH, Operating Rules, available at
<a href="https://www.caqh.org/core/operating-rules">https://www.caqh.org/core/operating-rules</a>.
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The Departments also sought comment on the technical and
operational steps that plans and issuers would need to take to
initially implement new No Surprises Act-specific CARCs and RARCs,
including 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. Several commenters noted that many plans and
issuers already use CARCs and RARCs, albeit inconsistently for No
Surprises Act-specific RARCs, and are familiar with the use of such
codes generally, and suggested that implementation of the proposed CARC
and RARC requirement would not be technically or operationally
difficult. However, several other commenters noted that ERAs have
limited space to enter additional data, including CARCs and RARCs. In
many cases, HIPAA-mandated standards for electronic data interchange
already require plans and issuers to include specific code combinations
on ERAs, further limiting the available space for additional No
Surprises Act-specific CARCs and RARCs. Commenters explained that a
plan's current system might only accommodate a single RARC per line
item; in cases when an existing requirement already mandates the use of
a CARC or RARC to describe, for example, a payment adjustment, the plan
may not be able to accommodate an additional No Surprises Act-related
CARC or RARC. As a partial solution, a few commenters requested that
the Departments design CARCs and RARCs to convey multiple data elements
in a single code and avoid a scenario where plans and issuers would
have to combine multiple codes to convey required information related
to the No Surprises Act.
The Departments have determined that because all plans and issuers
that provide ERA transactions that are subject to the HIPAA
Administrative Simplification requirements are required to use CARCs
and RARCs, most plans and issuers already have the capacity to
implement the CARC and RARC requirement. However, as stated in the
preamble to the 2023 proposed rules, the Departments acknowledge that
implementing any new requirements affecting remittance advice,
including the CARC and RARC requirement, may increase burden and pose
technical and operational challenges for some plans and issuers,
particularly those whose systems do not currently accommodate multiple
CARCs and RARCs per line item. In light of the comments described
above, the Departments will consider providing technical direction in
future guidance to facilitate implementation of the CARC and RARC
requirements on ERA with limited space available for data elements. As
discussed in the 2023 proposed rules \46\ and section II.H.1 of this
preamble, the Departments are aware that after guidance is issued
identifying the specific CARCs and RARCs required to be used, plans and
issuers will need additional time to implement the CARC and RARC
requirement. The Departments will establish an appropriate
applicability date in guidance, as further discussed in section II.H.
of these final rules. Plans and issuers will not be required to use
CARCs and RARCs under these final rules until such date as provided for
in future guidance.
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\46\ 88 FR 75744, 75762 (November 3, 2023).
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e. Additional CARCs and RARCs
As described in section II.B.1 of this preamble, the RARC Committee
has approved a set of informational RARCs that plans and issuers can
use to convey information about the No Surprises Act when providing
remittances to providers. In the preamble to the 2023 proposed rules,
the Departments solicited comment on whether, and if so, what
information related to the No Surprises Act's surprise billing
provisions that is not conveyed in the existing RARCs would be helpful
to convey through the creation of additional RARCs. Many commenters
provided feedback on the existing No Surprises Act-related RARCs, as
well as recommendations for potential new CARCs and RARCs.
As noted in section II.B.2 of this preamble, multiple commenters
noted that plans and issuers have not adopted a consistent approach to
using RARCs to provide information related to the No Surprises Act.
Given this lack of consistency, one commenter recommended that the
Departments undertake an inventory of the current RARC list before
introducing new CARCs and RARCs specific to the No Surprises Act.
Another commenter requested utilizing a single, consistent list of
CARCs and RARCs that provide a common language for understanding
remittance information, regardless of payer. A few other commenters
recommended that, because CARCs and RARCs are often generic, requiring
a ``plain language'' explanation of the specific reason for a claim
denial would benefit all parties.
Other commenters provided feedback on specific, current RARCs.
Several commenters recommended that the Departments specify in guidance
that plans and issuers must use one of two ``mutually exclusive''
RARCs: N871, which identifies an initial payment that was calculated
based on a specified State law in accordance with the No Surprises Act;
or N859, which identifies a claim that was processed subject to the No
Surprises Act and that is eligible for Federal dispute resolution.
Another commenter recommended requiring N883 to identify an item or
service that
[[Page 33909]]
was processed according to State law.\47\ Several commenters stated
that the RARC Committee should deactivate RARC N830 and the Departments
should not include it in future guidance.\48\ Commenters identified
N830 as the most common No Surprises Act-related RARC being provided by
plans and issuers, but explained that N830 is problematically vague
because it does not distinguish between claims that are subject to
State dispute resolution processes and claims subject to the Federal
IDR process. These commenters stated that N830 therefore does not
provide meaningful guidance to providers and facilities seeking to
determine the appropriate State or Federal venue for their payment
dispute. Another commenter recommended deactivating several codes that
distinguish between emergency, non-emergency, and air ambulance
services, because providers are already aware of the services that they
render and can typically identify more granular information about
specific items and services from other information on the
remittance.\49\
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\47\ The RARC text associated with N883 is: ``Alert: Processed
according to State law.'' See X12, ``Remittance Advice Remark
Codes,'' available at <a href="https://x12.org/codes/remittance-advice-remark-codes">https://x12.org/codes/remittance-advice-remark-codes</a>.
\48\ The RARC text associated with N830 is: ``Alert: The
charge[s] for this service was processed in accordance with Federal/
State, Balance Billing/No Surprise Billing regulations. As such, any
amount identified with OA, CO, or PI cannot be collected from the
member and may be considered provider liability or be billable to a
subsequent payer. Any amount the provider collected over the
identified PR amount must be refunded to the patient within
applicable Federal/State timeframes. Payment amounts are eligible
for dispute under any Federal/State documented appeal/grievance
process(es).'' See CMS, ``Remittance Advice Remake Codes Related to
the No Surprises Act,'' available at <a href="https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/CAA-NSA-RARC-Codes.pdf">https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/CAA-NSA-RARC-Codes.pdf</a>.
\49\ In the case of payments that are not on a fee-for-service
basis, plans and issuers are required to calculate a QPA for each
item or service according to the requirements at 29 CFR 2590.716-
6(b)(2)(iii) and 45 CFR 149.140(b)(2)(iii) and disclose the QPA for
each item or service involved in an initial payment or notice of
denial of payment according to the requirements at 29 CFR 2590.716-
6(d)(1)(i) and 45 CFR 149.140(d)(1)(i).
---------------------------------------------------------------------------
Many commenters also recommended creating new RARCs to communicate
information that cannot be conveyed using existing RARCs. Commenters
generally recommended creating RARCs that would convey the following
information about a claim: (1) identifying when State or Federal
surprise billing protections do not apply; (2) when surprise billing
protections do apply, the applicable dispute resolution process or
payment amount (such as the Federal IDR process; processes or amounts
governed by a specified State law, including whether a self-insured
plan has opted into a specified State law; or an amount determined by
an All-Payer Model Agreement); and (3) plan type (such as a fully or
self-insured ERISA plan, a non-Federal governmental plan, an FEHB plan,
or individual health insurance coverage). A few commenters also
recommended that the Departments require that plans and issuers convey
information about the QPA using RARCs, such as a RARC that specifies
when the allowed amount is the QPA or one or more RARCs that convey the
QPA disclosures required under 29 CFR 2590.716-6(d) and 45 CFR
149.140(d), including the QPA itself. One commenter requested that the
Departments require plans and issuers providing a payment in the form
of a bundled payment to use CARCs and RARCs to disclose the application
of a bundling methodology and identify each item or service included in
such bundling, to ensure that plans and issuers provide a QPA for each
item or service in a bundled payment.\50\
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\50\ In the case of payments that are not on a fee-for-service
basis (such as bundled or capitated payments), plans and issuers are
required to calculate a QPA for each item or service according to
the requirements at 29 CFR 2590.716-6(b)(2)(iii) and 45 CFR
149.140(b)(2)(iii) and disclose the QPA for each item or service
involved in an initial payment according to the requirements at 29
CFR 2590.716-6(d)(1)(i) and 45 CFR 149.140(d)(1)(i).
---------------------------------------------------------------------------
The Departments also solicited comment regarding any experiences
with State-level CARC and RARC requirements related to State surprise
billing laws. One commenter emphasized the importance of considering
State-Federal interactions when developing guidance mandating plans and
issuers use specific CARCs and RARCs to avoid conflicts with State
requirements.
The Departments agree with commenters who recommend undertaking a
thorough inventory of the existing No Surprises Act-related RARCs as
part of the process for developing future guidance and recognize the
importance of considering potential interactions with State-level code
requirements. The Departments also acknowledge that it may be necessary
to supplement the existing RARC list with new RARCs to comprehensively
address whether and how the No Surprises Act applies to items and
services included on a remittance advice. The Departments will take the
commenters' recommendations into consideration when developing future
guidance.
f. Applicability to Paper and Electronic Remittance Advice
The Departments proposed that plans and issuers be required to
include CARCs and RARCs on ``any paper or electronic remittance
advice'' provided to an out-of-network provider, facility, or provider
of air ambulance services, and requested feedback 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. A few commenters supported the use of the more
general term ``any remittance advice'' instead of ``any paper or
electronic remittance advice,'' provided that plans and issuers would
retain the flexibility to choose whether to use paper or electronic
communication. One commenter requested that plans and issuers retain
the flexibility to provide all required disclosures on ``separate page
disclosures,'' as they explained is commonly done today. Another
commenter requested that the Departments apply the proposed CARC and
RARC requirements to ERA only, excepting plans and issuers from the
requirements when they issue a paper remittance advice or EOB. This
commenter stated that paper remittance advice is generally prepared for
the benefit of plan members or for providers who do not use HIPAA
electronic transactions and do not generally furnish items and services
that are subject to the No Surprises Act. A few commenters cited the
added provider burden associated with paper remittance advice and
requested that the Departments encourage the use of ERA. By contrast,
other commenters supported the Departments' proposal to apply the
requirements to paper and ERA and highlighted the importance of
standardizing the communication between plans and issuers and
providers, regardless of the method of communication. One commenter
noted that out-of-network providers were particularly likely to rely on
paper remittance advice because they were less likely to have
established electronic communication with a plan with which they do not
contract.
After reviewing comments, the Departments are finalizing a modified
version of the proposal to require that, when providing any remittance
advice (including in paper or electronic form) to an entity (other than
a participant, beneficiary, or enrollee) that does not have a
contractual relationship, directly or indirectly, with a group health
plan or a health insurance issuer offering group or individual health
insurance
[[Page 33910]]
coverage for the furnishing of an item or service under the plan or
coverage, in response to a claim for payment for health care items and
services furnished by that entity, the plan or issuer must use CARCs
and RARCs, in the manner and timeframe specified in guidance issued by
the Departments. This modification to the proposed language does not
alter the requirements proposed in the 2023 proposed rules, but rather
more clearly communicates that the requirement to use CARCs and RARCs,
as specified in guidance, applies to a plan or issuer regardless of the
format of the remittance advice it uses to communicate with an entity
with which it does not have a direct or indirect contractual
relationship.
In response to comments raising concerns generally related to the
use of paper remittances or ERA, the Departments acknowledge that paper
remittance advice may impose a higher administrative burden on
providers. However, as noted in the 2023 proposed rules and in section
II.B.1 of this preamble, the Departments understand that some plans and
issuers routinely communicate with some providers using paper
remittance advice and other formats outside the purview of the HIPAA
transaction standards. Indeed, it is particularly important to ensure
that the requirements apply to paper remittances, to the extent that
plans or issuers use paper remittance advice for items and services
provided by entities with which they do not have a direct or indirect
contractual relationship. By applying the CARC and RARC requirement
regardless of remittance advice format, these final rules ensure that
entities that do not receive ERA will benefit from improved access to
standardized Federal IDR process eligibility information early in the
claims process. The Departments reiterate that the CARC and RARC
requirement in these final rules only applies to plans and issuers when
sending any paper or electronic remittance advice to entities with
which they do not have a direct or indirect contractual relationship.
It does not apply to any remittance information or EOB sent from plans
and issuers directly to plan participants, beneficiaries, or enrollees.
The 2023 proposed rules did not propose any changes to requirements
governing the format of remittances or remittance advice. The
Departments clarify that these final rules neither establish a
requirement to use a specific format nor alter existing requirements
related to the use of electronic or paper remittance advice (such as
the requirement that entities subject to electronic transactions
requirements under HIPAA must use ERA at the request of a provider,
facility, or provider of air ambulance services, regardless of its
network status or other contractual relationship with the plan or
issuer).\51\
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\51\ See 45 CFR 162.925(a)(1) (providing that if an entity
requests a health plan to conduct a transaction as a standard
transaction, the health plan must do so).
---------------------------------------------------------------------------
g. Enforcement of CARC and RARC Requirement
Many commenters highlighted the importance of ensuring that the
CARC and RARC requirement is strictly and consistently enforced.
Several commenters recommended imposing monetary penalties on plans and
issuers that fail to provide required CARCs and RARCs. Several
commenters recommended that the Departments modify the Federal IDR
process to either create consequences for plans or issuers that fail to
provide appropriate CARCs or RARCs, or provide relief for providers
that are impacted by a plan's or issuer's failure to provide
appropriate CARCs and RARCs.
In previously issued guidance, the Departments stated that when a
plan or issuer fails to comply with the QPA disclosure
requirements,\52\ providers retain the right to initiate the open
negotiation period within 30 business days of receiving the initial
payment or notice of denial of payment.\53\ The Departments further
stated that in cases in which a plan or issuer fails to comply with the
disclosure requirements, the provider did not have the information
necessary to initiate the 30-business-day open negotiation period, and
the provider subsequently missed the deadline to initiate the Federal
IDR process, the provider may alternatively request an extension to
initiate the Federal IDR process by emailing a request for extension
due to extenuating circumstances to <a href="/cdn-cgi/l/email-protection#165073727364777a5f524447637365627f79786556757b65387e7e6538717960"><span class="__cf_email__" data-cfemail="83c5e6e7e6f1e2efcac7d1d2f6e6f0f7eaecedf0c3e0eef0adebebf0ade4ecf5">[email protected]</span></a>.
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\52\ 26 CFR 54.9816-6(d)(1) or (2), 29 CFR 2590.716-6(d)(1) or
(2), and 45 CFR 149.140(d)(1) or (2).
\53\ See FAQs about Affordable Care Act and Consolidated
Appropriations Act, 2021 Implementation Part 55 (August 19, 2022),
Q20, 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>; see also FAQs about
Consolidated Appropriations Act, 2021 Implementation Part 69
(January 14, 2025), Q3 and Q4, available at <a href="https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-69.pdf">https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-69.pdf</a> and <a href="https://www.cms.gov/files/document/faqs-part-69.pdf">https://www.cms.gov/files/document/faqs-part-69.pdf</a>.
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In response to comments, the Departments note that this option to
request extensions will also apply in cases where a plan or issuer
fails to provide CARCs and RARCs as required under these final rules.
The Departments are not imposing additional Federal IDR process
consequences in these final rules on plans and issuers that fail to
provide CARCs and RARCs, which could complicate and delay payment
determinations, but will continue to assess the need for Federal IDR
process changes and propose any such changes in future rulemaking. The
Departments will use existing processes to enforce requirements under
the Code, ERISA, and the PHS Act that apply to group health plans and
health insurance issuers, including the requirements added by these
final rules.
C. Information To Be Shared About the QPA
As described in section I.B of this preamble, the July 2021 interim
final rules and August 2022 final rules provide that if the recognized
amount for 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.\54\ This information must be provided in
writing, either on paper or electronically, to a provider, facility, or
provider of air ambulance services, as applicable.\55\ These
requirements were intended to ensure the disclosure of information
about the QPA in any instance in which an item or service could be
eligible for the Federal IDR process. However, the current text of the
regulations describing when such disclosures are required does not
precisely mirror all instances in which an item or service could be
eligible for the Federal IDR process.
---------------------------------------------------------------------------
\54\ 86 FR 36898; 87 FR 52633.
\55\ 29 CFR 2590.716-6(d) and 45 CFR 149.140(d).
---------------------------------------------------------------------------
The term ``recognized amount'' is not used in the statute or
regulations for purposes of determining cost sharing for air ambulance
services furnished by nonparticipating providers of air ambulance
services. Accordingly, in the 2023 proposed rules, the Departments
proposed a change to 26 CFR 54.9816-6T(d), 29 CFR 2590.716-6(d), and 45
CFR 149.140(d) to specify that, in the case of air ambulance services,
plans and issuers must disclose the QPA and certain information about
the QPA when cost sharing is calculated based on the lesser of the QPA
or the amount billed by the provider of air ambulance services. The
Departments similarly proposed that, in the case of emergency and
applicable non-emergency services,
[[Page 33911]]
information about the QPA must be disclosed when the recognized amount
is lesser of the QPA or the amount billed by the provider or facility.
This proposal to require the disclosure when the amount billed is used
to determine cost sharing takes into account the rare circumstances
where the billed amount is less than the QPA. In such cases, cost
sharing must be based on the billed amount, as specified in existing
rules at 29 CFR 2590.716-3, 29 CFR 2590.717-1(b)(2), 45 CFR 149.30, and
45 CFR 149.130(b)(2).
Lastly, the Departments proposed technical changes to clarify
several definitional terms and proposed several additional items of
information that must be included as part of the disclosure. After
considering the comments received, the Departments are finalizing the
proposed changes with minor modifications.
The Departments received several comments expressing support for
the proposed change to 26 CFR 54.9816-6T(d), 29 CFR 2590.716-6(d), and
45 CFR 149.140(d) to reflect that the term ``recognized amount'' does
not apply for air ambulance services. These commenters stated that the
change in terminology will result in plans and issuers providing
necessary information for all items and services that may be subject to
the Federal IDR process, making it easier for providers of air
ambulance services to decide, prior to the open negotiation process,
whether a claim is eligible for the IDR process.
After considering the comments, the Departments are finalizing this
amendment as proposed. The amendment does not change existing policy
but rather is a technical amendment to reflect that the term
``recognized amount'' is not used in the statute or the regulations for
purposes of determining cost sharing for air ambulance services
furnished by nonparticipating providers of air ambulance services.
Instead, for air ambulance services, cost sharing is calculated based
on the lesser of the QPA or the amount billed by the provider of air
ambulance services.
The Departments also proposed amendments to 26 CFR 54.9816-6(d), 29
CFR 2590.716-6(d), and 45 CFR 149.140(d) to require plans and issuers
to make the same disclosures regarding the QPA and related information
when the recognized amount (or for 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.
Several commenters stated their support for this clarifying
amendment, stating that in cases where the recognized amount (or the
amount upon which cost sharing is based) is the billed amount, the QPA
and its related disclosures are important information to have prior to
the open negotiation period and when assessing whether to initiate a
Federal IDR dispute. These commenters also explained that the change
would facilitate certified IDR entities' determinations of whether a
claim is eligible for the Federal IDR process, but did not expand
further on this point. A few commenters urged that this change not be
finalized. Those commenters stated that disclosing certain information
about the QPA when the calculation of cost sharing involves the billed
amount would incentivize providers to increase their billed charges to
the QPA (or higher), which would in turn increase costs to patients and
the larger health care system. In addition, one commenter stated that
this change is unfeasible because the disclosure requirements would
apply to items and services for which the payer is unable to generate
QPA values, due to limited sample sizes.
The Departments disagree with the concerns stated by commenters
about finalizing the amendment as proposed. When an All-Payer Model
Agreement or specified State law does not apply, the recognized amount
used to determine cost sharing (or for air ambulance services, the
amount upon which cost sharing is based) for an item or service subject
to the No Surprises Act is the lesser of the amount billed by the
provider or facility or the QPA. When the QPA is not the lesser amount
and therefore is not used to determine cost sharing, the item or
service may nevertheless be eligible for the Federal IDR process,
provided other conditions of eligibility are met. Because certified IDR
entities are required under statute to consider the QPA in rendering a
payment determination, the Departments have concluded that it is
critical that plans and issuers share information about the QPA even
when the billed amount, rather than the QPA, is used to determine cost
sharing.\56\
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\56\ The Departments note that a plan or issuer must provide the
required QPA disclosures, regardless of the cost-sharing requirement
imposed under the plan or coverage, including for example, when the
cost-sharing requirement for the item or service is $0 or is a
copayment.
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In response to the comment regarding inability to calculate QPA
values due to a limited sample size, the Departments note that QPAs are
based on contracted rates, and not on amounts billed by providers.\57\
Accordingly, after considering the concerns raised and the many
comments received supporting the proposed changes, the Departments are
finalizing this amendment as proposed.
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\57\ See 29 CFR 2590.716-6(b) and (c)(3) and 45 CFR 149.140(b)
and (c)(3).
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The Departments also proposed technical and conforming amendments
to align the requirements under 26 CFR 54.9816-6T, 29 CFR 2590.716-6,
and 45 CFR 149.140 with the October 2021 interim final rules and
current practice. One of these proposed changes was to specify that
``days,'' as described in the disclosure provisions (for example, the
30-business-day open negotiation period), are counted using ``business
days'' (rather than ``calendar days''), where applicable. One commenter
stated concern that specifying ``business days'' instead of ``calendar
days'' would lead to delays and explained that the Congress did not
specify the use of business days, suggesting that calendar days were
intended. However, the proposed change is consistent with the
Departments' previously described interpretation of the statute.
Specifically, in the October 2021 interim final rules, the Departments
noted, ``[t]he statute is largely silent on whether the term `days'
used in these provisions means business days or calendar days. However,
in certain provisions, the No Surprises Act specifies the use of
calendar days or business days, indicating that where the statute is
silent the Departments may choose either meaning.'' \58\ The
Departments have determined that aligning the timeframes described in
the disclosure with the existing timeframes for open negotiation will
minimize confusion. Therefore, to ensure conformity and consistency
between the disclosures and the regulatory timeframes, the Departments
have finalized the amendments as proposed, interpreting ``days'' as
``business days'' for the purpose of the disclosures required under 29
CFR 2590.716-6(d) and 45 CFR 149.140(d), to align with the previously
codified regulatory timeframes.\59\
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\58\ 86 FR 55980, 55989 (October 7, 2021).
\59\ Id.
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The Departments also proposed technical and conforming amendments
to align the language in 29 CFR 2590.716-6(d)(1)(iv) and 45 CFR
149.140(d)(1)(iv) with the requirements established in the October 2021
interim final rules regarding initiation of open negotiation and the
Federal IDR process by replacing the phrase ``amount of total payment''
with the term ``out-of-network rate,'' as defined in 29 CFR 2590.716-3
and 45 CFR 149.30, and by describing an unsuccessful open
[[Page 33912]]
negotiation period as not resulting in an ``agreement on the amount of
payment'' rather than not resulting in a ``determination.'' The
Departments received one comment supporting the proposed changes and
did not receive any comments opposing these amendments. The Departments
are finalizing these changes as proposed.
The Departments further proposed that plans' and issuers'
disclosures must include a statement that explains that a provider,
facility, or provider of air ambulance services must notify the
Departments to initiate open negotiation. The requirement, which would
update the disclosure language consistent with related changes that the
Departments proposed in the 2023 proposed rules,\60\ would apply to
disclosures that are made after the open negotiation notice can be
submitted through the Federal IDR portal. Commenters stated support for
the proposed change and the Departments are finalizing this change in
29 CFR 2590.716-6(d)(1)(iv)(A)(2) and 45 CFR 140(d)(1)(iv)(A)(2) as
proposed.
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\60\ See section II.D.1 of this preamble, for further discussion
of the Federal IDR portal.
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As the Departments explained in the preamble to the 2023 proposed
rules, disclosure of additional information with the QPA as proposed is
critical to ensuring that all parties have the information necessary to
determine whether a payment dispute is eligible for the Federal IDR
process. Accordingly, the Departments proposed amending the disclosure
requirements at 26 CFR 54.9816-6T, 29 CFR 2590.716-6, and 45 CFR
149.140 by redesignating paragraph (d)(1)(v) as (d)(1)(vi) and adding a
new paragraph (d)(1)(v) to 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, if the plan or issuer is registered with the Federal IDR
registry. The Departments also sought 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, including the appropriate
implementation period that would allow plans and issuers to complete
these steps to comply with the 2023 proposed rules, if finalized, and
any additional proposed disclosures that might be required to be
communicated using a CARC or RARC as specified in guidance issued by
the Departments. In consideration of the comments received, the
Departments are finalizing the disclosure requirements with minor
modifications as discussed below.
The Departments received many comments in support of these
proposals. Many commenters in support explained that the new content
elements would facilitate open negotiation by ensuring all parties have
more accurate contact information for the specific plan or issuer.
Commenters further stated that the proposed requirements would
establish clearer standards for initiating IDR, ensure all parties have
the information they need to efficiently determine eligibility for IDR,
identify which entity is ultimately responsible for payment following a
payment determination, and reduce confusion regarding the application
of the ``cooling off'' period.
A few commenters were generally supportive of the proposed
disclosure requirements but recommended minor changes. For example, a
few commenters opposed the proposal to require inclusion of the legal
business name of a plan sponsor, when applicable. One of these
commenters recommended that plan sponsors be permitted to use the
``does business as'' or product marketing name recognized by the
relevant State insurance regulator, instead of the legal business name
when the plan sponsor has assigned the responsibility for managing
claims administration to its issuer or TPA, stating that in such
circumstances, the plan sponsor information is not necessary to
adjudicate a Federal IDR dispute and may cause confusion. Another
commenter recommended that the Departments require the disclosure of
the legal business name of the group health plan and sponsor only for
self-insured group health plans. Another commenter opposed the
Departments' proposal, expressing concern that the additional items
proposed to be required as part of the disclosure are duplicative of
other steps in the Federal IDR process.
The Departments disagree that the proposed disclosures are
duplicative of other steps in the Federal IDR process. As discussed in
the preamble to the 2023 proposed rules, transparent and meaningful
disclosure about the calculation of the QPA is crucial to inform the
negotiation process. Ensuring consistency and uniformity between the
information that plans and issuers provide in the Federal IDR registry
discussed in section II.F of the preamble and the information disclosed
by plans and issuers with their initial payment or notice of denial of
payment is also necessary to ensure the efficient operation of the
Federal IDR process. Allowing parties to choose whether to disclose
their legal business name or their ``does business as'' name would
undermine that uniformity.
As explained in more detail in section II.F of the preamble which
outlines the Federal IDR registration process, self-insured plans must
provide the legal business name of their plan sponsor even if the
sponsor has apportioned responsibility to its TPA, as certified IDR
entities and initiating parties must distinguish between self-insured
group health plans with the same TPA to determine whether items and
services were paid by the same self-insured group health plan and are
therefore eligible to be batched together in a single dispute.
To align required disclosures with the Federal IDR registration
process, the Departments are finalizing with a minor modification the
requirement that plans and issuers include, as part of the required
disclosures, the registration number assigned to the plan or issuer, as
required under 26 CFR 54.9816-9, 29 CFR 2590.716-9, or 45 CFR 149.530,
as applicable. The phrase, ``if the plan or issuer is registered,'' has
been replaced with ``as required'' to better reflect that a plan or
issuer is required to include a registration number as part of the
disclosures when it becomes subject to the registration requirement.
Under these final rules, each self-insured group health plan, FEHB
Program carrier, and health insurance issuer offering group or
individual health insurance coverage subject to the Federal IDR process
must register with the Federal IDR Registry before the later of the
date that is 90 business days after the date the registry becomes
available or the date the plan sponsor or health insurance issuer
begins offering a group health plan or health insurance coverage or
FEHB Program carrier begins offering an FEHB plan subject to the
Federal IDR process. Failure to comply with the registration
requirement by the applicable date will be a violation of these final
rules.
The Departments also received many comments suggesting additional
information that could be included in the disclosures. Many commenters
recommended that the Departments require that plans and issuers, when
providing the QPA with the initial payment or notice of denial of
payment, also disclose more detailed information on the specific
methodology and data used for calculating the QPA. One commenter
suggested requiring a fax number in addition to contact information
that is already required. Some commenters recommended that the
Departments require standardized
[[Page 33913]]
communication from plans and issuers that are beyond the proposed use
of CARCs/RARCs so that the QPA and related disclosure information is
presented clearly and consistently to providers and facilities. These
commenters believe the QPA currently is not provided in a clearly
identifiable manner, that the ASC X12 835 transaction standard should
be used, and that since there are limits on the current ASC X12 835
transaction standard, it should be modified so that all information,
including the QPA, is disclosed uniformly.
While nothing in these final rules precludes including a fax number
as part of a plan's or issuer's contact information, the Departments
decline to require that information at this time given that some plans
and issuers may not have fax numbers, especially as fax machines become
increasingly replaced by digital technology such as email. In addition,
the Departments decline to require disclosure of additional information
about the methodology and data used for calculating the QPA in these
final rules because these additional disclosures would not assist
parties in determining whether a payment dispute is eligible for the
Federal IDR process and would be difficult to implement. These final
rules also do not modify the ASC X12 835 transaction standard, which is
outside the scope of this rulemaking.
The provisions of these final rules related to disclosure of
information about the QPA apply to disclosures required to be provided
on or after the effective date of the final rules, as discussed in more
detail in section II.H.I of this preamble.
D. Open Negotiation and Initiation of the Federal IDR Process
1. Open Negotiation
a. Determination of Payment Amount Through Open Negotiation
The Departments proposed several amendments to the open negotiation
provisions at 26 CFR 54.9816-8(b)(1), 29 CFR 2590.716-8(b)(1), and 45
CFR 149.510(b)(1) to impose new information exchange requirements and
to establish a process for tracking open negotiation through the
Federal IDR portal in anticipation of initiation of a Federal IDR
process dispute.
First, the Departments proposed to amend paragraphs 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
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, and
that such notice must comply with the content requirements of proposed
paragraph (b)(1)(ii) and in the manner specified in proposed (b)(3), as
discussed in sections II.D.1.c and III.D.3 of this preamble,
respectively.\61\ The Departments sought comment on this proposed
amendment. After consideration of comments, the Departments are
finalizing this amendment as proposed.
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\61\ As discussed in section II.D.3 of this preamble, the
Departments are finalizing new paragraphs 26 CFR 54.9816-8(b)(3), 29
CFR 2590.716-8(b)(3), and 45 CFR 149.510(b)(3), which describe the
manner in which the open negotiation, open negotiation response, and
notice of IDR initiation notices must be transmitted. Specifically,
a party must furnish to the other party, and the Departments, the
notices and supporting documentation described in paragraphs
(b)(1)(ii) (open negotiation notice), (b)(1)(iii) (open negotiation
response notice), (b)(2)(ii) (notice of IDR initiation), and
(b)(2)(iii) (notice of IDR initiation response) through the Federal
IDR portal, using the standard forms to be developed by the
Departments.
---------------------------------------------------------------------------
Many commenters supported the proposal to establish the requirement
that a party must provide a written open negotiation notice to the
other party and the Departments through the Federal IDR portal to
initiate the open negotiation period. Many stated that the use of the
Federal IDR portal would be beneficial for all parties. These
commenters noted that using the portal to transmit the open negotiation
notice and track the initiation of the 30-business-day open negotiation
period would encourage meaningful participation in negotiations,
improve transparency, support information sharing, and increase
administrative efficiency. A few commenters stated that the proposal
would improve certified IDR entities' ability to determine the
eligibility of an item or service for the Federal IDR process.
Several other commenters generally supporting the proposal
suggested additional changes or clarifications. Some of these
commenters expressed concern that the current Federal IDR portal
infrastructure would require extensive improvements to effectively
implement the proposal and should undergo prototype testing to ensure
successful implementation. A few commenters urged the Departments to
utilize automation to reduce duplicative administrative requirements
when submitting an open negotiation notice. Some commenters urged the
Departments to clarify that a party initiating open negotiation is not
required to submit open negotiation information through any mechanism
other than the Federal IDR portal (for instance, through a payor's
proprietary portal).
A few commenters opposed the proposal to establish the requirement
that to initiate the open negotiation period, a party must provide a
written open negotiation notice to the other party and the Departments
through the Federal IDR portal. One commenter opposed the addition of
any new requirements during the open negotiation process, as it would
increase burden on the parties. Another commenter cautioned that this
requirement would ultimately raise negotiated costs and increase
overall upward pressure on health care prices because sharing
additional information before IDR initiation would decrease the overall
cost to providers of participating in the Federal IDR process,
particularly for eligible disputes, by smoothing information exchanges
and making filing easier, and increase provider leverage in pre-IDR
negotiations.
After consideration of comments, the Departments are finalizing the
proposal to amend paragraph 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 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. This will improve communication and
transparency between parties while enabling certified IDR entities to
determine whether a dispute has completed the required open negotiation
period. While the Departments understand the concern regarding upward
pressure on healthcare pricing based on increased provider
participation in open negotiation, these final rules incentivize
parties to negotiate and may therefore discourage over-reliance on
disputing claims through the Federal IDR process and help parties
identify ineligible disputes prior to initiating IDR. This, in turn,
could lower costs for both disputing parties who must pay fees to
participate in the Federal IDR process, which could ultimately reduce
costs for consumers. Further, prioritizing the negotiation of out-of-
network rates before initiation of the Federal IDR process could
contribute to improved contract or network negotiations between
providers and plans. The Departments expect parties to negotiate in
good faith and comply with the requirements finalized in these rules.
The Departments also acknowledge the concerns expressed regarding
limited portal functionality and increasing administrative burden, but
have determined that the administrative simplicity of having all
notices go
[[Page 33914]]
through one portal will outweigh the operational burdens of using the
portal.
Further, these final rules consolidate the exchange of all required
open negotiation notices through the Federal IDR portal and do not
require parties to submit multiple notices or submit notices through
plan and issuer proprietary portals to initiate open negotiation. It is
the Departments' position that a disputing party cannot require and
should not expect the other party to also submit any notices under
these final rules through such proprietary portals. The Departments
will continue to pursue a streamlined open negotiation experience
within the Federal IDR portal that collects the relevant information to
facilitate negotiations while minimizing duplicative administrative
work.
Second, the Departments proposed 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 on which the party first submits the open negotiation notice,
including the remittance advice documentation specified in 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. This amendment does not change the 30-business-day
timeframe for engaging in open negotiation, but instead would provide
greater clarity for parties engaged in open negotiation and improve the
shared understanding of deadlines related to the open negotiation
period. After consideration of comments, the Departments are finalizing
this amendment as proposed.
A few commenters generally supported this proposed amendment to 26
CFR 54.9816-8(b)(1)(i), 29 CFR 2590.716-8(b)(1)(i), and 45 CFR
149.510(b)(1)(i). One of these commenters noted that the proposal would
minimize operational and resource issues for providers by establishing
clear expectations about the open negotiation timeframe.
While no commenters explicitly opposed the proposal, a few
commenters suggested additional requirements. One commenter suggested
that the Departments clarify that the open negotiation period should
only be considered to have been initiated once a completed open
negotiation notice has been submitted to the Departments and the other
party, regardless of whether the remittance advice has been sent.
The Departments are finalizing as proposed the amendment to 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, including the remittance advice documentation specified in
paragraph (b)(1)(ii)(A)(12) to the other party and the Departments.
However, in the event that the party submitting the open negotiation
notice did not receive the remittance advice because a plan or issuer
failed to comply with the disclosure requirements in 26 CFR 54.9816-
6(d)(1), 29 CFR 2590.716-6(d)(1) or (2), and 45 CFR 149.140(d)(1) or
(2), that party retains the right to initiate the open negotiation
within 30 business days of receiving the initial payment or notice of
denial of payment, consistent with FAQs About Affordable Care Act and
Consolidated Appropriations Act, 2021 Implementation Part 55.\62\ By
clarifying the conditions required to initiate open negotiation, the
Departments anticipate that the parties will have a better
understanding of the requirements to initiate open negotiation and will
be able to better allocate resources to negotiation efforts.
---------------------------------------------------------------------------
\62\ See FAQs about Affordable Care Act and Consolidated
Appropriations Act, 2021 Implementation Part 55, Q20 (August 19,
2022), available at https://www.dol.gov/sites/dolgov/files/EBSA/
about-ebsa/our-activities/resource-center/faqs/aca-part-55.pdf and
<a href="https://www.cms.gov/files/document/faqs-part-55.pdf">https://www.cms.gov/files/document/faqs-part-55.pdf</a>.
---------------------------------------------------------------------------
Finally, for the proposed amendments to the open negotiation
provisions at 26 CFR 54.9816-8(b)(1), 29 CFR 2590.716-8(b)(1), and 45
CFR 149.510(b)(1), a few commenters noted that, if finalized, the open
negotiation provisions may exceed the Departments' statutory authority
to implement the Federal IDR process, as open negotiation is not
explicitly included in the Departments' implementation mandate.
The Departments disagree. 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 open negotiation period must conclude before a party may
initiate IDR, making it a required component of the Federal IDR
process. Additionally, the statute directs the Departments to jointly
establish one Federal IDR process under which a certified IDR entity
must determine the out-of-network rate for any qualified IDR item or
service subject to IDR initiation. In implementing the Federal IDR
process, the Departments have determined that the current requirements
should be improved to facilitate beginning the open negotiation period.
As a result, the Departments are finalizing the requirements for
disputing parties to furnish the open negotiation notice and open
negotiation response notice through the Federal IDR portal to capture
this information.
b. Open Negotiation Response Notice
The Departments proposed language at 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 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. The Departments solicited comment on this proposed
requirement. After consideration of comments, the Departments are
finalizing this requirement as proposed.
Many commenters generally supported the proposal to require the
party in receipt of the open negotiation notice to provide an open
negotiation response notice by the 15th business day of the 30-
business-day open negotiation period. A few of these commenters noted
that the proposal to require the open negotiation response notice would
increase parties' accountability in negotiations and improve
transparency of the information relevant to the item or service subject
to negotiation.
A few commenters opposed the proposal to require an open
negotiation response notice. These commenters shared concerns regarding
the burden of such a requirement. One commenter noted that the current
Federal IDR portal functionality would not support such a requirement,
and that the operational disruption caused by the volume of open
negotiation submissions would compromise the entire Federal IDR
process.
The Departments requested 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 sought comment on imposing a deadline for
the open negotiation response notice later than the proposed deadline,
such as by the 20th business day or up to the last day of the 30-
business-day open negotiation period.
Several commenters advised against extending the deadline to
respond with the open negotiation response notice, asserting that the
extra time would be
[[Page 33915]]
unnecessary. A few commenters also supported the Departments'
clarification in the preamble to the 2023 proposed rules that the
failure to respond to the open negotiation notice would not extend or
otherwise alter the completion of the 30-business-day open negotiation
timeframe. One commenter suggested that if a plan or issuer does not
respond to the open negotiation notice by the 15th business day of the
30-business-day open negotiation period, the Departments should allow a
provider to initiate the Federal IDR process before the end of the 30-
business-day open negotiation period. Another commenter opposed the
proposed 15-business-day deadline, stating that compliance with the
requirement would not be possible due to the high volume of disputes,
and suggested instead that the response should be accepted at any time
during the 30-business-day open negotiation period. Several commenters
recommended a shorter deadline for response. Several commenters were in
favor of extending the timeline, stating that more time would be needed
to review and meaningfully consider the content of the open negotiation
notice. A few commenters suggested extending the timeline to 20
business days. A few commenters made suggestions regarding conditions
to be satisfied by the open negotiation notice before the proposed 15-
business-day deadline is triggered. These commenters requested that the
Departments clarify the expectations for participation in the open
negotiation period if either the provider or plan is not furnished with
complete information regarding the item or service.
After reviewing comments received, the Departments are finalizing
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 proposed. The Departments maintain that the open
negotiation response notice will increase transparency and improve the
exchange of information during open negotiation. While finalizing this
provision adds an additional requirement to the process, the
efficiencies achieved by requiring a response from the parties in
receipt of the open negotiation notice will likely result in more
meaningful participation in open negotiation overall. The Departments
have determined that the 15-business-day deadline to respond to the
open negotiation notice provides an appropriate amount of time for the
party to respond and will encourage a meaningful exchange of
information during open negotiation. This deadline provides equal time
for each party to review their respective notices, and either reducing
or extending the deadline to submit the open negotiation response
notice from 15 business days would disadvantage one of the two parties.
Therefore, the Departments have determined that the proposed policy
appropriately balances each party's interest and should be finalized.
The Departments note that under section 9816(c)(1) of the Code,
section 716(c)(1) of ERISA, and section 2799A-1(c)(1) of the PHS Act,
the parties must exhaust the open negotiation period prior to
initiating the Federal IDR process. Accordingly, initiation of the
Federal IDR process before the end of the 30-business day open
negotiation period is not permitted.
The Departments acknowledge the importance of providing a party
with complete information before it is expected to respond and note
that all open negotiation notice elements in these final rules are
required. The Departments reiterate that if a party fails to furnish an
open negotiation response notice containing all required information to
the other party and the Departments, the Departments may review and
determine whether enforcement action may be appropriate. However,
failure to timely furnish an open negotiation response notice in any
specific open negotiation will 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.
Additionally, the Departments sought comment on allowing certified
IDR entities, as a means of incentivizing participation in the proposed
exchange of notices, to take into consideration a party's good faith
compliance with the 15-business-day deadline for the open negotiation
response notice when making their payment determinations. The
Departments are declining to finalize this policy and therefore are not
establishing a ``good faith'' requirement in regulation.
Many commenters supported this idea. Many of these commenters
requested that the Departments allow certified IDR entities to penalize
the party for non-compliance and specifically suggested that failure to
timely respond to the open negotiation notice should result in a
default determination, or the automatic selection of the provider's
offer during the Federal IDR process. Several of these commenters also
noted that if the Departments were to allow certified IDR entities to
consider a party's compliance with the requirement to provide an open
negotiation response notice, the Departments should explicitly connect
non-compliance with a failure to engage in good faith negotiations.
Some of these commenters suggested that the Departments adopt more
explicit standards regarding good faith negotiation to support this
interpretation. A few commenters offered that the Departments should
establish a good faith requirement in regulation, while a few other
commenters suggested that the Departments provide guidance to the
certified IDR entities to consider failure to respond to the open
negotiation notice as evidence of ``bad faith.'' Further, a few
commenters provided recommendations related to the adoption of good
faith requirements, specifically, that the Departments should allow
certified IDR entities to consider any offers that deviate considerably
between open negotiation and IDR offer to be evidence of ``bad faith''
engagement.
A few commenters opposed allowing certified IDR entities to
consider compliance with the proposed requirement when making their
payment determinations. One of these commenters noted that since the No
Suprises Act does not specify how the parties must engage in open
negotiation, parties have the discretion to decide whether to engage in
negotiations, and penalizing parties for the way they engage in
negotiations would be inappropriate and exceed the Departments'
authority. Another commenter stated that certified IDR entities should
not be requested to evaluate the substance of negotiations or
allegations of failure to negotiate in good faith, as this is
inconsistent with normal mediation rules and practices and may have a
chilling effect on negotiations. Further, the commenter suggested that
for operational ease, if either party fails to furnish required
documents during open negotiation, the disputes should be presumed
eligible for the Federal IDR process without requiring outreach on the
part of the certified IDR entity. Another commenter noted that
certified IDR entities are already permitted to consider any relevant
information except for the prohibited factors identified in the statute
and regulation, and therefore it would be inconsistent with the statute
and regulation to suggest that a certified IDR entity could not
consider the fact that a party failed to negotiate during open
negotiation.
The No Surprises Act does not specify how parties must engage in
open negotiation, only that it must occur prior to initiation of the
Federal IDR process, and therefore it is more appropriate for disputing
parties to
[[Page 33916]]
determine how they wish to negotiate. The Departments also agree with
the commenter who stated that the proposal would not be consistent with
normal mediation rules and practices, and that it could have a chilling
effect on negotiation. Under the statute, certified IDR entities are
permitted to consider any additional information provided by a
disputing party related to the offer to determine the appropriate out-
of-network rate, except for the prohibited factors identified in
statute.\63\ Further, a default determination refers only to a
situation where one party's offer is not received (including in the
circumstance where, under these final rules and as outlined in section
II.E.3.d of this preamble, one party fails to timely pay the certified
IDR entity fee or administrative fee). It would therefore not be
appropriate for a certified IDR entity to render a default judgment
based a party's noncompliance with the 15-business-day deadline for the
open negotiation response notice, an activity that precedes initiation
of the Federal IDR process.
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\63\ Section 9816(c)(5)(C) and (D) of the Code, section
716(c)(5)(C) and (D) of ERISA, and section 2799A-1(c)(5)(C) and (D)
of the PHS Act.
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A few commenters made recommendations about the Departments'
enforcement more broadly. A few commenters stated that the Departments
should monitor and take enforcement action against non-compliant
parties; one commenter suggested that the Departments impose an
increased administrative fee for a party's failure to provide the open
negotiation response notice. Several other commenters noted that, as
proposed, the rules do not contain sufficiently strict enforcement
language to prompt parties to comply with the requirement to provide an
open negotiation response notice and urged the Departments to clarify
the enforcement mechanisms or penalties for failure to respond in the
final rule.
Finally, a few commenters encouraged the Departments to take a more
active role in monitoring disputing parties' conduct and taking quality
assurance measures. They recommended that the Departments monitor party
responsiveness during open negotiation and evidence of engagement in
pre- and post- IDR communications, such as the requirement to make
timely payment. One commenter suggested that additional guidance on the
calculation of business days be provided to avoid miscalculations and
confusion.
The Departments clarify here that for the purposes of calculating
Federal IDR process timelines, business days do not include Federal
holidays and weekends.\64\ In general, all parties are required to
comply with the requirements established in these final rules, and the
Departments will use existing processes to enforce requirements under
the Code, ERISA, and PHS Act that apply to group health plans and
health insurance issuers, including requirements under these final
rules. The Departments note that disputing parties may report incidents
of non-compliance to the No Surprises Help Desk, which will aid in
conducting targeted oversight activities as needed. Furthermore, the
Departments will evaluate the need for additional guidance and
education resources to support interested parties' understanding of the
timelines, requirements, and processes established in these final
rules.
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\64\ See Federal Independent Dispute Resolution (IDR) Process
Guidance for Certified IDR Entities, Q5 (August 2022), available at
https://www.cms.gov/files/document/ta-certified-independent-dispute-
resolution-entities-august-2022.pdf.
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c. Open Negotiation Notice Content
In the 2023 proposed rules, the Departments proposed 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 specified information regarding the item or
service under dispute and the party sending the open negotiation
notice. The proposed amendments would add new elements to the open
negotiation notice. The elements that the Departments proposed to be
included in the open negotiation notice were:
(1) Information sufficient to identify the provider, facility or
provider of air ambulance services, including name and current contact
information (including the 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, and the National Provider Identifier (NPI);
(2) Information sufficient to identify the plan or issuer,
including the plan's or issuer's registration number as required under
Sec. 54.9816-9, Sec. 2590.716-9, and Sec. 149.530, if the plan or
issuer is registered under Sec. 54.9816-9, Sec. 2590.716-9, and Sec.
149.530, or an attestation from the party submitting the open
negotiation notice that the plan or issuer was not registered prior to
the date it submitted the notice; the legal business name of the plan
or issuer, as well as the current contact information (name, email
address, phone number, and mailing address) of the plan or issuer as
provided with the initial payment or notice of denial of payment; and
if the party submitting the open negotiation notice is a plan or
issuer, the plan type (for example, self-insured or fully-insured);
(3) The name and contact information (including the legal business
name, email address, phone number, and mailing address) for any third
party representing the party submitting the open negotiation notice,
and an attestation that the third party has the authority to act on
behalf of the party it represents in the open negotiation;
(4) Information sufficient to identify the item or service,
including: the date(s) the item or service was furnished and, if the
party submitting 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 the item or service from the
plan or issuer; the type of item or service (specifically, whether the
item or service is an emergency service as defined Sec. 54.9816-
4T(c)(2)(i) or (ii), Sec. 2590.716-4(c)(2)(i) or (ii), and Sec.
149.110(c)(2)(i) or (ii), non-emergency item or service as described in
Sec. 54.9816-5T(b), Sec. 2590.716-5(b), and Sec. 149.120(b), or an
air ambulance service as defined in Sec. 54.9816-3T, Sec. 2590.716-3
and Sec. 149.30); whether the service is a professional service or
facility-based service; the State where the item or service was
furnished; the claim number; the service code; and information
sufficient to identify the location where the item or service was
furnished (such as place of service code or bill type code);
(5) The initial payment amount (including $0 if, for example,
payment is denied);
(6) The qualifying payment amount, if provided with the initial
payment or notice of denial of payment or if the party submitting the
open negotiation notice is a plan or issuer;
(7) An offer of an out-of-network rate for each item or service;
(8) If the party submitting the open negotiation notice is a plan
or issuer, the amount of cost sharing imposed for the item or service,
if any;
(9) If the party submitting the open negotiation notice is a
provider or facility, a statement that the items or services do not
qualify for the notice
[[Page 33917]]
and provide consent exception described at 45 CFR 149.410(b) or 45 CFR
149.420(c) through (i);
(10) A statement that the provider, facility, or provider of air
ambulance services was a nonparticipating provider, nonparticipating
emergency facility, or nonparticipating provider of air ambulance
services on the date the item or service was furnished;
(11) General information listed in the standard open negotiation
notice developed by the Secretary under paragraph (b)(3) of this
section describing the open negotiation period and the Federal IDR
process (including a description of the purpose of the open negotiation
period and Federal IDR process and key deadlines in the open
negotiation period and Federal IDR process); and
(12) A copy of the initial payment or notice of denial of payment
or other remittance advice that is required to include the disclosures
under Sec. 54.9816-6T(d)(1) and 54.9816-6(d)(1), Sec. 2590.716-
6(d)(1), and Sec. 149.140(d)(1) for the item or service.
After consideration of comments, the Departments are finalizing the
required elements on the open negotiation notice as proposed, with two
exceptions. The Departments are modifying proposed 26 CFR 54.9816-
8(b)(1)(ii)(A)(2) and (12), 29 CFR 2590.716-8(b)(1)(ii)(A)(2) and (12),
and 45 CFR 149.510(b)(1)(ii)(A)(2) and (12). Specifically, the
Departments are modifying the proposal at 26 CFR 54.9816-
8(b)(1)(ii)(A)(2), 29 CFR 2590.716-8(b)(1)(ii)(A)(2), and 45 CFR
149.510(b)(1)(ii)(A)(2) in three ways: (1) regarding the information
sufficient to identify a plan or issuer, to remove the language ``if
the plan or issuer is registered under'' Sec. 54.9816-9, Sec.
2590.716-9, and Sec. 149.530; (2) to require, when applicable, that
the party submitting the open negotiation notice attest that the plan
or issuer's registration number was not provided on any remittance
advice, rather than attest that the plan or issuer was not registered
prior to the date the open negotiation notice was submitted; and (3) to
require the open negotiation notice to include the legal business name
of the plan sponsor when the entity furnishing the open negotiation
notice is a self-insured group health plan that does not have a legal
business name. With regard to the proposal at the proposal at 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 Departments are modifying the
proposal by requiring the open negotiation notice to include a copy of
any remittance advice associated with the initial payment or notice of
denial of payment for the item or service, rather than a copy of the
initial payment or notice of denial of payment or other remittance
advice that includes the required disclosures.
The Departments did not receive comments on the proposals outlined
at 26 CFR 54.9816-8(b)(1)(ii)(A)(7), (9), (10), and (11), 29 CFR
2590.716-8(b)(1)(ii)(A)(7), (9), (10), and (11), and 45 CFR
149.510(b)(1)(ii)(A)(7), (9), (10), and (11). The Departments are
finalizing these provisions as proposed.
Many commenters generally supported the proposed elements on the
open negotiation notice, with several stating that the proposed
elements would improve engagement in open negotiation and enhance
understanding of eligibility for the Federal IDR process. As discussed
below, many commenters stated their support for, or opposition to,
specific open negotiation notice content elements including required
contact information, required payment information and documentation,
and required statements.
Several commenters supported the proposal to require the open
negotiation notice to include detailed contact information identifying
the parties engaged in negotiations under 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). These
commenters specifically supported the provision of enhanced contact
information for payers and providers, the NPI, the plan type (if the
initiating party is a plan or issuer), and the plan or issuer
registration number, and indicated that these elements would help
facilitate negotiations between the correct parties. A few commenters
stated various concerns regarding the requirement to provide
information sufficient to identify the plan or issuer, including the
plan's or issuer's registration number. One commenter noted that the
registration number should be the only required contact information
element in the open negotiation notice, while another commenter opposed
the addition of this element entirely, asserting that it would increase
the burden on providers. Another commenter opposed the proposal that a
provider submitting an open negotiation notice should be responsible
for attesting that the payer was not registered prior to the date the
party submitted its open negotiation notice, stating that the provider
should not be held responsible for providing information not in their
control or possession.
The requirement to provide enhanced contact information sufficient
to identify the provider, facility, or provider of air ambulance
services under 26 CFR 54.9816-8(b)(1)(ii)(A)(1), 29 CFR 2590.716-
8(b)(1)(ii)(A)(1), and 45 CFR 149.510(b)(1)(ii)(A)(1) will improve
communication in open negotiation and assist parties in correctly
identifying the other party to engage during open negotiation. Further,
the requirement to provide information sufficient to identify the plan
or issuer, including the plan's or issuer's registration number, would
not add undue burden since the registration number will be provided on
the remittance advice associated with the initial payment or notice of
denial of payment for the item or service and would provide the benefit
of access to validated contact information from the plan or issuer. In
the Departments' experience implementing the Federal IDR process,
providers have struggled to identify the correct plan or issuer on
documentation associated with the initial payment or the notice of
denial of payment. The registry requirement, discussed in section II.F
of this preamble, and associated registration number will help the
provider accurately identify and contact the appropriate plan or issuer
to initiate open negotiation, particularly if the plan or issuer fails
to clearly disclose such information with its initial payment or denial
of payment.
At 26 CFR 54.9816-8(b)(1)(ii)(A)(2), 29 CFR 2590.716-
8(b)(1)(ii)(A)(2), and 45 CFR 149.510(b)(1)(ii)(A)(2), the Departments
proposed that, in the event the plan or issuer is not registered by the
time the provider, facility, or provider of air ambulance services
initiates the open negotiation period, the party submitting the open
negotiation notice must attest that the party receiving the open
negotiation notice was not registered prior to the date the party
submitted its open negotiation notice, and would use the contact
information currently required by the disclosure requirements for the
initial payment or notice of denial of payment in sections 26 CFR
54.9816-6T(d)(1)(v), 29 CFR 2590.716-6(d)(1)(v), and 45 CFR
149.140(d)(1)(v) to complete the open negotiation notice.\65\ The
Departments are finalizing paragraph (b)(1)(ii)(A)(2) with a
modification that,
[[Page 33918]]
if the party submitting the open negotiation notice does not include a
registration number in the open negotiation notice, it must provide an
attestation that the plan's or issuer's registration number was not
provided on any remittance advice associated with the initial payment
or notice of denial of payment for the item or service. This
modification places appropriate responsibility on the provider as it
requires them to attest only to something about which they have direct
knowledge (that is, whether the remittance advice contained the plan's
or issuer's registration number, rather than whether the plan or issuer
registered). Additionally, the Departments recognize that not all self-
insured group health plans will have a legal business name, and to
ensure that a legal business name is captured in such cases, are
finalizing a modification to require the open negotiation notice to
include the legal business name of the plan sponsor in the case the
party submitting the open negotiation notice is a self-insured group
health plan that does not have a legal business name.
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\65\ The contact information currently required under 26 CFR
54.9816-6T(d)(1)(v), 29 CFR 2590.716-6(d)(1)(v), and 45 CFR
149.140(d)(1)(v) is ``[c]ontact information, including a telephone
number and email address, for the appropriate person or office to
initiate open negotiations for purposes of determining an amount of
payment (including cost sharing) for such item or service.''
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In addition, some commenters provided feedback on the requirement
to provide information sufficient to identify the item or service under
proposed 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). They stated that
this proposal would help the negotiating parties identify the item or
service subject to the open negotiation. A few commenters noted that
the requirement to provide the claim number would support the correct
and timely identification of the item or service subject to
negotiation. The Departments agree with the commenters' feedback.
Several commenters supported the proposal requiring that the open
negotiation notice include the initial payment amount, the QPA, and the
amount of cost-sharing related to the item or service subject to open
negotiation under 26 CFR 54.9816-8(b)(1)(ii)(A)(5), (6), and (8), 29
CFR 2590.716-8(b)(1)(ii)(A)(5), (6), and (8), and 45 CFR
149.510(b)(1)(ii)(A)(5), (6), and (8), respectively. A few commenters
supported requiring disclosure of the amount of cost sharing if the
party submitting the open negotiation notice is a plan or issuer. A few
commenters generally supported the proposal to disclose the QPA on the
open negotiation notice, if provided with the initial payment or notice
of denial of payment, while several other commenters opposed it.
Commenters that opposed this proposal also noted that since the plan or
issuer already has the QPA, the provision of this information is
duplicative and unnecessary. Further, a few commenters indicated that
requiring submission of the QPA with an offer for a different out-of-
network rate inappropriately signals that the QPA is the most relevant
factor in determining the out-of-network rate during open negotiation.
One commenter noted that the Departments should only allow plans or
issuers to submit the QPA amount on the remittance advice or provide it
upon request.
For 26 CFR 54.9816-8(b)(1)(ii)(A)(6) and (8), 29 CFR 2590.716-
8(b)(1)(ii)(A)(6) and (8), and 45 CFR 149.510(b)(1)(ii)(A)(6) and (8),
the Departments maintain that submitting the QPA and the amount of cost
sharing in the open negotiation notice will support parties in their
efforts to negotiate an out-of-network rate and enhance their awareness
of factors considered during the Federal IDR process, if they choose to
initiate. In particular, because the amount of cost sharing for a
qualified IDR item or service is determined by the QPA, requiring the
amount of cost sharing paid or owed by the participant, beneficiary, or
enrollee could support parties in making informed offers while
negotiating. As discussed below, an open negotiation response notice
provided by a plan or issuer must state either that the QPA reflected
in the open negotiation notice accurately reflects the QPA disclosed
with the initial payment for the item or service, or if not, state the
QPA it believes to be correct, and documentation to support the
statement (for example, the remittance advice confirming the QPA).
Therefore, requiring the QPA to be disclosed on the open negotiation
notice will 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 that the potential initiating party has
the correct information before initiating the Federal IDR process. The
purpose of including this element on the open negotiation notice is not
to provide the plan or issuer with new information, but rather to
provide an opportunity for the plan or issuer to validate that the
provider or facility has identified the correct value as the QPA, or
provide a correction on the open negotiation response notice as needed.
This exchange of information is important to establish a common
understanding of the item or service.
In addition, the inclusion of the QPA on the open negotiation
notice would not signal that the QPA has disproportionate significance
in determining an out-of-network rate. The amount of the offers made
during the open negotiation period are determined by the parties
engaged in negotiations. The Departments do not seek to restrict those
offers or imply that the parties should consider the QPA in negotiating
an out-of-network rate. Rather, the inclusion of the QPA in the open
negotiation notice mirrors the requirement to submit the QPA as part of
the notice of IDR initiation, which is required because certified IDR
entities are required to consider the QPA when making a payment
determination. Because the QPA is relevant to the payment determination
and must be included in the notice of IDR initiation, it should be
included in the open negotiation notice as well to facilitate
negotiations.
Some commenters supported the proposal to require a copy of any
remittance advice associated with the initial payment or notice of
denial of payment for the item or service to be included in the open
negotiation notice 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).
These commenters indicated that such a requirement would support the
timely identification of the items and services subject to open
negotiation and enable the party in receipt of the open negotiation
notice to comply with response deadlines. One of these commenters also
suggested that the Departments clarify that all pages of the remittance
advice must be submitted, as the remark codes are often located at the
end of the document. Several commenters opposed the requirement to
submit copies of payment documents with the open negotiation notice,
asserting that they are difficult to obtain and administratively
burdensome to extract and provide. One of these commenters suggested
that if the Departments finalize the requirement to provide a copy of
the remittance advice, then the party should not have to manually enter
the details of each item or service into the Federal IDR portal as a
means of balancing the overall burden associated with submission. A few
of the commenters that opposed this requirement noted that the
Departments did not explain in the 2023 proposed rules how the uploaded
documents would be used, and suggested that, if necessary, the
Departments should require only plans and issuers to provide this
documentation, as they originate the documents and have access to the
information.
[[Page 33919]]
For 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), provision of
the remittance advice associated with the initial payment or notice of
denial of payment for the item or service will support the shared
understanding of the items and services being negotiated and their
eligibility for the Federal IDR process. Further, the provision of this
documentation will reduce confusion and miscommunication between the
parties during open negotiation. In the Departments' experience, many
plans and issuers are unable to identify the claims submitted by
providers during open negotiation. Requiring disputing parties to
include a copy of the remittance advice with the open negotiation
notice will enable the party in receipt of the open negotiation notice
to quickly identify the item or service subject to negotiation. The
exchange of this documentation will also support the goal of reducing
ineligible disputes, as the required disclosures will contain
information allowing parties to determine whether an item or service is
eligible for the Federal IDR process during open negotiation.
The Departments disagree with the commenters' assertion that
submission of the remittance advice document with the open negotiation
notice should not be finalized because they are difficult to extract
and provide. The party initiating the open negotiation process should
be prepared to provide the payment details it has received on the items
and services subject to negotiation, including the remittance advice.
Therefore, the potential burden of providing the remittance advice does
not outweigh the benefits of reducing confusion and miscommunication
between parties during open negotiation. In addition, the Departments
are aware that, currently under the Federal IDR process, providers
regularly provide copies of remittance advice documents to certified
IDR entities when needed to confirm eligibility. The purpose of
requiring these documents at the open negotiation stage is to encourage
parties to evaluate the eligibility of an item or service before
initiation of the Federal IDR process. As described in section II.B.2
of this preamble, these final rules require that remittance advice
include disclosures supporting the accurate identification of whether
items and services are subject to the No Surprises Act. Data from the
2024 Federal IDR Public Use Files (PUF) reflect that parties continue
to submit disputes for items and services that are ineligible for the
Federal IDR process.\66\ Submission of remittance advice containing
eligibility disclosures will ensure that both parties have access to
information which clarifies the NSA's applicability to an item or
service prior to initiating the Federal IDR process. After considering
the comments received, the Departments maintain that the provision of
the remittance advice during the open negotiation stage will improve
the parties' understanding of IDR eligibility and reduce the submission
of ineligible disputes. However, the Departments recognize that 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), as proposed could have been interpreted
to require only the initial payment or notice of denial of payment.
Therefore, the Departments are finalizing a modification to the
proposal by requiring a copy of any remittance advice associated with
the initial payment or notice of denial of payment for the item or
service, rather than a copy of the initial payment or notice of denial
of payment or other remittance advice that includes the required
disclosures.
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\66\ According to data published in the IDR PUF for quarters 1
and 2 of 2025, 17 percent of closed disputes were closed by a
certified IDR entity due to ineligibility. See <a href="https://www.cms.gov/nosurprises/policies-and-resources/reports">https://www.cms.gov/nosurprises/policies-and-resources/reports</a>.
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Finally, a few commenters offered additional recommendations
regarding the content of the open negotiation notices. Such additional
recommendations were beyond the scope of these final rules, but the
Departments agree that provision of this information may enhance
communication about the value of the services in the open negotiation
process and encourage disputing parties to discuss such information in
open negotiation if they so choose.
After consideration of comments, the Departments are finalizing the
required elements on the open negotiation notice as proposed, with two
exceptions. The Departments are modifying 26 CFR 54.9816-
8(b)(1)(ii)(A)(2), 29 CFR 2590.716-8(b)(1)(ii)(A)(2), and 45 CFR
149.510(b)(1)(ii)(A)(2) in three ways:
(1) regarding the information sufficient to identify a plan or
issuer, to remove the language ``if the plan or issuer is registered
under'' Sec. 54.9816-9, Sec. 2590.716-9, and Sec. 149.530; (2) to
require, when applicable, that the party submitting the open
negotiation notice attest that the plan or issuer's registration number
was not provided on any remittance advice, rather than attest that the
plan or issuer was not registered prior to the date the open
negotiation notice was submitted; and (3) to require the open
negotiation notice to include the legal business name of the plan
sponsor when the entity furnishing the open negotiation notice is a
self-insured group health plan that does not have a legal business
name.
At 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 Departments
are modifying the proposal by requiring the open negotiation notice to
include a copy of any remittance advice associated with the initial
payment or notice of denial of payment for the item or service, rather
than a copy of the initial payment or notice of denial of payment or
other remittance advice that includes the required disclosures.
Therefore, the elements required as finalized are:
(1) Information sufficient to identify the provider, facility, or
provider of air ambulance services, including the name and current
contact information (including the 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, and the applicable National Provider Identifier (NPI);
(2) Information sufficient to identify the plan or issuer,
including the plan's or issuer's registration number, as required under
Sec. 54.9816-9, Sec. 2590.716-9, and Sec. 149.530, or an attestation
from the party submitting the open negotiation notice that the plan or
issuer's registration number was not provided on any remittance advice
associated with the initial payment or notice of denial of payment for
the item or service; the legal business name of the plan or issuer (or,
in the case of a self-insured group health plan that does not have a
legal business name, the legal business name of the plan sponsor), as
well as the current contact information (name, email address, phone
number, and mailing address) of the plan or issuer as provided with any
remittance advice associated with the initial payment or notice of
denial of payment for the item or service; and if the party submitting
the open negotiation notice is a plan or issuer, the plan type (for
example, self-insured or fully-insured);
(3) The name and contact information (including the legal business
name, email address, phone number, and mailing address) for any third
party representing the party submitting the open negotiation notice,
and an attestation that the third party has the authority to act on
behalf of the party it represents in the open negotiation;
[[Page 33920]]
(4) Information sufficient to identify the item or service,
including: the date(s) the item or service was furnished and, if the
party submitting 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 the item or service from the
plan or issuer; the type of item or service (specifically, whether the
item or service is an emergency service as defined in Sec. 54.9816-
4T(c)(2)(i) or (ii), Sec. 2590.716-4(c)(2)(i) or (ii), and Sec.
149.110(c)(2)(i) or (ii), a non-emergency service as described in Sec.
54.9816-5T(b), Sec. 2590.716-5(b), and Sec. 149.120(b), or an air
ambulance service as defined in Sec. 54.9816-3T, Sec. 2590.716-3, and
Sec. 149.30); whether the service is a professional service or
facility-based service; the State where the item or service was
furnished; the claim number; the service code; and information to
identify the location where the item or service was furnished (such as,
place of service code or bill type code);
(5) The initial payment amount (including $0 if payment is denied);
(6) The qualifying payment amount, if provided in a remittance
advice associated with the initial payment or notice of denial of
payment, or if the party submitting the open negotiation notice is a
plan or issuer;
(7) An offer of an out-of-network rate for each item or service;
(8) If the party submitting the open negotiation notice is a plan
or issuer, the amount of cost sharing imposed for the item or service,
if any;
(9) If the party submitting 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 45 CFR 149.420(c) through (i);
(10) A statement that the provider, facility, or provider of air
ambulance services was a nonparticipating provider, nonparticipating
emergency facility, or nonparticipating provider of air ambulance
services on the date the item or service was furnished;
(11) General information listed in the standard open negotiation
notice developed by the Secretary pursuant to paragraph (b)(3) of this
section describing the open negotiation period and the Federal IDR
process (including a description of the purpose of the open negotiation
period and Federal IDR process and key deadlines in the open
negotiation period and Federal IDR process); and
(12) A copy of any remittance advice associated with the initial
payment or notice of denial of payment for the item or service.
Finally, the Departments solicited 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 of the considerations for certified IDR entity
determinations currently described in 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). A few
commenters supported requiring the party submitting the open
negotiation notice to provide a statement describing why they are
pursuing open negotiation, while several commenters opposed the
proposal, stating that it is burdensome and unnecessary. Several of
these commenters noted that providers generally pursue open negotiation
because they are getting reimbursed at a rate below sustainable market
clearing rates. One commenter cautioned that any statement regarding
their rationale for negotiating should not bind the party in question,
and that parties must be allowed to change their assessment of the
dispute as information is exchanged. Another commenter noted that
requiring such a statement would impose an additional barrier to
accessing open negotiation and is beyond the Departments' authority to
impose.
After consideration of these comments, the Departments are not
adding a requirement for a party to include on the open negotiation
notice a statement as to the party's reason for pursuing open
negotiation. The Departments are persuaded by commenters' arguments
that adding such a requirement would be burdensome and unnecessary, and
that a party's assessment of a dispute may reasonably change between
open negotiation and initiation of the Federal IDR process.
d. Open Negotiation Response Notice Content
The Departments proposed 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) to require
that the party receiving an open negotiation notice must provide a
response to the open negotiation notice that would include the same
information being finalized at 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), which require that the party
initiating open negotiation provide contact information sufficient to
identify the provider, facility, or provider of air ambulance services;
information sufficient to identify the plan or issuer; and the name and
contact information for any third party representing a party in the
open negotiation. The Departments further proposed that the open
negotiation response notice would also include the following
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, and if the party submitting the open negotiation
response 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, and the claim
number;
(5) If the party submitting the open negotiation response 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 qualifying payment amount reflected in the open negotiation notice
accurately reflects the initial payment amount and qualifying payment
amount disclosed with the initial payment for the item or service, and
if not, or if the open negotiation notice indicates that the initial
payment amount or qualifying payment amount was not communicated by the
plan or issuer with the initial payment or notice of denial of payment
or other remittance advice, the initial payment amount (including $0
if, for example, payment is denied) and/or qualifying payment amount it
believes to be correct, and documentation to support the statement (for
example, the remittance advice confirming the qualifying payment
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 submitting the open negotiation response 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);
[[Page 33921]]
(9) With respect to each item or service, either a statement and
supporting documentation 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;
(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 under paragraph
(b)(1)(ii)(A)(12) of this section is accurate, and if inaccurate, a
copy of the accurate initial payment or notice of denial of payment or
other remittance advice required to include the disclosures under Sec.
54.9816-6(d)(1), Sec. 54.9816-6T(d)(1), Sec. 2590.716-6(d)(1), and
Sec. 149.140(d)(1), for the item or service.
The Departments sought comment on the content elements of the open
negotiation response notice, including the proposed 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 sought
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.
After consideration of comments, the Departments are finalizing as
proposed the 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), with two exceptions. The Departments are
finalizing the proposal at 26 CFR 54.9816-8(b)(1)(iii)(A)(2), 29 CFR
2590.716-8(b)(1)(iii)(A)(2), and 45 CFR 149.510(b)(1)(iii)(A)(2) with
three modifications: (1) regarding the information sufficient to
identify a plan or issuer, to remove the language ``if the plan or
issuer is registered under'' Sec. 54.9816-9, Sec. 2590.716-9, and
Sec. 149.530; (2) to require, when applicable, that the party
submitting the open negotiation response notice attest that the plan or
issuer's registration number was not provided on any remittance advice,
rather than attest that the plan or issuer was not registered prior to
the date the open negotiation response notice was submitted; and (3) to
require the open negotiation response notice to include the legal
business name of the plan sponsor when the entity furnishing the open
negotiation notice is a self-insured group health plan that does not
have a legal business name. The Departments are also declining to
finalize the proposed requirement at 26 CFR 54.9816-8(b)(1)(iii)(A)(7),
29 CFR 2590.716-8(b)(1)(iii)(A)(7), and 45 CFR 149.510(b)(1)(iii)(A)(7)
that an open negotiation response notice include a counteroffer of an
out-of-network rate for each item or service or an acceptance of the
other party's offer. The Departments did not receive comments on the
proposed required elements on the open negotiation response notice at
26 CFR 54.9816-8(b)(1)(iii)(A)(1), (4), (8), (10), and (11), 29 CFR
2590.716-8(b)(1)(iii)(A)(1), (4), (8), (10), and (11), and 45 CFR
149.510(b)(1)(iii)(A)(1), (4), (8), (10), and (11), and therefore are
finalizing as proposed. The Departments are finalizing the proposed
elements at 26 CFR 54.9816-8(b)(1)(iii)(A)(8) through (11), 29 CFR
2590.716-8(b)(1)(iii)(A)(8) through (11), and 45 CFR
149.510(b)(1)(iii)(A)(8) through (11) at redesignated 26 CFR 54.9816-
8(b)(1)(iii)(A)(7) through (10), 29 CFR 2590.716-8(b)(1)(iii)(A)(7)
through (10), and 45 CFR 149.510(b)(1)(iii)(A)(7) through (10).
Many commenters generally supported the proposed required elements
on the open negotiation response notice, and one commenter opposed the
requirement to provide the notice altogether. Of those in support, a
few indicated that requiring the proposed elements would encourage
meaningful exchange between parties during the open negotiation period.
A few commenters stated concern regarding the additional burden and
cost to the responding party, and one suggested narrowing the required
elements to a subset of the proposed content or providing clear
templates and guidance for parties on how to submit the required
information. Some commenters provided feedback on specific content
elements, as described in greater detail below.
Several commenters supported the proposal under 26 CFR 54.9816-
8(b)(1)(iii)(A)(2), 29 CFR 2590.716-8(b)(1)(iii)(A)(2), and 45 CFR
149.510(b)(1)(iii)(A)(2) to require the identification of the plan type
on the open negotiation response notice if the party submitting the
open negotiation response notice is a plan or issuer. Commenters noted
that this element would help providers correctly identify the plan type
as fully-insured or self-insured. One commenter recommended the
Departments clarify that any required field which relates to
identifying a group health plan is applicable only in the case of a
self-insured group health plan, as the identity of the group health
plan is not relevant to the Federal IDR process if the plan is fully-
insured. Another commenter supported the requirements under proposed 26
CFR 54.9816-8(b)(1)(iii)(A)(2) and (3), 29 CFR 2590.716-
8(b)(1)(iii)(A)(2) and (3), and 45 CFR 149.510(b)(1)(iii)(A)(2) and (3)
to provide enhanced contact information on the open negotiation
response notice.
The Departments agree that the collection of plan or issuer
information generally, including information regarding any third party
representing a plan or issuer, will improve the exchange of accurate
information prior to initiation of the Federal IDR process. In
particular, providers receiving correct information during open
negotiation about group health plans' fully-insured or self-insured
status will help them to determine whether disputed items and services
are eligible for a State or Federal process, and, if eligible for the
Federal process, enable them to batch correctly. Since this is the only
proposed field that would identify group health plans as such, the
Departments maintain that this piece of information should be included
in the open negotiation response notice. Additionally, the Departments
acknowledge that the requirement to provide a legal business name may
apply slightly differently to fully-insured group health plans and
self-insured group health plans, and therefore are finalizing a
modification at 26 CFR 54.9816-8(b)(1)(iii)(A)(2), 29 CFR 2590.716-
8(b)(1)(iii)(A)(2), and 45 CFR 149.510(b)(1)(iii)(A)(2) to require
group health plans to provide their own legal business name, unless
they are a self-insured group health plan without a legal business
name, in which case they must provide the legal business name of its
plan sponsor. In alignment with the required elements for the open
negotiation notice, the Departments are also finalizing paragraph
(b)(1)(iii)(A)(2) with a modification to require, when applicable, that
the party submitting the open negotiation response notice attest that
the plan or issuer's registration number was not provided on any
remittance advice, rather than attest that the plan or issuer was not
registered prior to the date the open negotiation response notice was
submitted. The Departments are finalizing 26 CFR 54.9816-
8(b)(1)(iii)(A)(3), 29 CFR 2590.716-8(b)(1)(iii)(A)(3), and 45 CFR
149.510(b)(1)(iii)(A)(3) as proposed.
A few commenters supported the requirement at 26 CFR 54.9816-
8(b)(1)(iii)(A)(5), 29 CFR 2590.716-
[[Page 33922]]
8(b)(1)(iii)(A)(5), and 45 CFR 149.510(b)(1)(iii)(A)(5) that, if the
open negotiation notice indicates that the QPA was not communicated by
the plan or issuer with the initial payment or notice of denial of
payment or other remittance advice, the responding party (if a plan or
issuer) must indicate the QPA it believes to be correct, and provide
documentation to support the statement (for example, the remittance
advice confirming the QPA). These commenters stated that the QPA is
sometimes misunderstood or miscommunicated between the parties. Several
commenters recommended amendments to the proposed collection of the QPA
on the open negotiation response notice. One suggested that if the QPA
is not provided with the initial payment or notice of denial of
payment, the non-initiating party must provide the QPA related to the
claim to the Departments and the provider on the open negotiation
response notice. A few other commenters recommended adding the QPA
methodology to the response notice. One of these commenters further
recommended that the response notice include a certification that the
QPA has been calculated in accordance with the regulations invalidated
by TMA III.\67\
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\67\ Tex. Med. Ass'n v. U.S. Dep't of Health & Hum. Servs., Case
No. 6:22-cv-450-JDK (E.D. Tex. August 24, 2023), Tex. Med. Ass'n v.
U.S. Dep't of Health & Hum. Servs., 120 F.4th 494 (5th Cir. 2024),
and Tex. Med. Ass'n v. U.S. Dep't of Health & Hum. Servs., Case No.
23-40605 (5th Cir. May 30, 2025).
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The Departments agree that the requirement to confirm the accuracy
of the QPA will assist parties in understanding the QPA and the details
of the claim prior to initiating the Federal IDR process. The
Departments also agree with commenters who highlighted the importance
of ensuring providers receive an accurate QPA, even if one was not
included with the initial payment, notice of denial of payment, or
other remittance advice. For that reason, the Departments proposed at
26 CFR 54.9816-8(b)(1)(iii)(A)(5), 29 CFR 2590.716-8(b)(1)(iii)(A)(5),
and 45 CFR 149.510(b)(1)(iii)(A)(5) that if the open negotiation notice
does not accurately reflect the initial payment amount and qualifying
payment amount disclosed with the initial payment for the item or
service, or the initial payment amount or qualifying payment amount was
not communicated by the plan or issuer in a remittance at alle, then
the responding party (if a plan or issuer,) must provide the QPA it
believes to be correct and provide documentation to support the QPA
(for example, the remittance advice confirming the QPA). The goal of
this requirement is to build mutual understanding of the claim, and to
correct any mistakes made on the part of the party submitting the open
negotiation notice. It is not intended to be an opportunity to
recalculate or dispute the QPA or initial payment amount, which are
established values and, in the case of the initial payment amount, may
be addressed through the negotiation or the Federal IDR process. The
Departments acknowledge commenters' recommendations to add the QPA
methodology to the open negotiation response notice. However, as noted
above, the Departments do not intend the sharing of QPA on the open
negotiation response notice to provide an opportunity to dispute the
QPA; rather, the purpose is simply to ensure each party is considering
the same QPA during the open negotiation process. The Departments will
rely on the existing agency processes, such as QPA audits, to ensure
plans and issuers are calculating QPAs in accordance with the
established methodology.
One commenter supported the proposal to require, if the responding
party is a plan or issuer, inclusion of the amount of cost sharing
imposed for the item or service at issue under proposed 26 CFR 54.9816-
8(b)(1)(iii)(A)(6), 29 CFR 2590.716-8(b)(1)(iii)(A)(6), and 45 CFR
149.510(b)(1)(iii)(A)(6). Another commenter identified a discrepancy
between the proposed regulatory text about the open negotiation
response notice at 26 CFR 54.9816-8(b)(1)(iii)(A)(6), 29 CFR 2590.716-
8(b)(1)(iii)(A)(6), and 45 CFR 149.510(b)(1)(iii)(A)(6), which requires
submission of cost sharing ``imposed,'' whereas the relevant preamble
language of the 2023 proposed rules \68\ references cost sharing ``paid
or owed.'' This commenter requested clarification on this point because
while plans and issuers would know and could report the cost-sharing
imposed, providers are not in a position to know whether the cost-
sharing was paid or is owed.
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\68\ 88 FR 75744, 75767 (November 3, 2023).
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Several commenters supported the proposal to provide a counteroffer
on the open negotiation response notice under proposed 26 CFR 54.9816-
8(b)(1)(iii)(A)(7), 29 CFR 2590.716-8(b)(1)(iii)(A)(7), and 45 CFR
149.510(b)(1)(iii)(A)(7). These commenters stated that such a
requirement would encourage participation in negotiations and prompt
settlement prior to initiating the Federal IDR process. A few others
noted that it would create a clear record of the parties' negotiation
positions for certified IDR entities. Relatedly, a few supportive
commenters recommended certain parameters on the provision of the
counteroffers, including that final offers during the Federal IDR
process should not be allowed to be more than 10 percent higher than
offers submitted during open negotiation. Another commenter recommended
that the open negotiation response notice permit the responding party
to describe its methodology for arriving at a counteroffer, such as
reimbursement calculations, and its sources of information.
Several other commenters opposed requiring a counteroffer on the
open negotiation response notice. Some commenters noted that the
counteroffer is not required under statute and imposing such a
requirement exceeds the Departments' authority, with one of these
commenters also stating that this requirement could encourage gaming.
Another commenter suggested that the Departments finalize this field as
optional, rather than required, to align with statutory authority. A
few commenters also stated concerns that such an amount would devalue
the QPA. Commenters stated that the QPA or the initial payment amount
should always be considered the counteroffer on the part of the plan or
issuer. One commenter noted that all offers should be constrained by
the QPA. Some commenters stated concerns about the certified IDR
entity's ability to see a counteroffer provided during open negotiation
for disputes later submitted to the Federal IDR process. These
commenters noted that negotiations should be kept private and only
limited information should be available to the certified IDR entities
through the Federal IDR portal. A few commenters stated that the
Departments should not have access to negotiation information.
The Departments appreciate the support for the inclusion of the
amount of cost sharing imposed for the item or service at issue, if the
responding party is a plan or issuer, under proposed 26 CFR 54.9816-
8(b)(1)(iii)(A)(6), 29 CFR 2590.716-8(b)(1)(iii)(A)(6), and 45 CFR
149.510(b)(1)(iii)(A)(6). The Departments clarify that regarding the
discrepancy between cost sharing ``paid or owed'' in the preamble to
the 2023 proposed rules \69\ and ``imposed'' in the regulation, the
latter was the intent of the Departments. As a result, the Departments
are finalizing this requirement at 26 CFR 54.9816-8(b)(1)(iii)(A)(6),
29 CFR 2590.716-8(b)(1)(iii)(A)(6), and 45 CFR 149.510(b)(1)(iii)(A)(6)
as proposed.
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\69\ 88 FR 75744, 75767 (November 3, 2023).
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As stated above, the Departments are not finalizing the proposed
requirement to provide a counteroffer of an out-of-
[[Page 33923]]
network rate for each item or service or an acceptance of the other
party's offer under proposed 26 CFR 54.9816-8(b)(1)(iii)(A)(7), 29 CFR
2590.716-8(b)(1)(iii)(A)(7), and 45 CFR 149.510(b)(1)(iii)(A)(7). The
Departments understand commenters' concerns about the private nature of
negotiations and agree that neither the Departments nor certified IDR
entities need to see the details of the parties' negotiations. The
Departments also understand that the provision of this additional
information would constitute an additional burden on non-initiating
parties. As such, the Departments are not finalizing the requirement to
provide a counteroffer in the open negotiation response notice. The
Departments note that the parties may share counteroffers via their
preferred method of communication during open negotiation, but need not
do so at all, or, if they chose to do so, need not use the Federal IDR
portal.
Several commenters supported the proposal under 26 CFR 54.9816-
8(b)(1)(iii)(A)(9), 29 CFR 2590.716-8(b)(1)(iii)(A)(9), and 45 CFR
149.510(b)(1)(iii)(A)(9) to require a statement on whether and why the
item or service subject to open negotiation is or is not eligible for
the Federal IDR process. A few commenters noted that it is most useful
to require this exchange of information during the open negotiation
period because it can prevent the initiation of ineligible disputes.
One commenter in support of the requirement suggested that if a
responding party fails to raise eligibility concerns (and support them
with documentation), any eligibility objections raised by that party
during the Federal IDR process should be waived to encourage
identification of ineligible items and services prior to IDR initiation
and to eliminate time-consuming follow up performed by certified IDR
entities in response to eligibility objections raised during the
Federal IDR process. One commenter opposed the use of eligibility
information submitted during the open negotiation period to prevent a
party from initiating the Federal IDR process. Another commenter
requested that the Departments clarify what ``supporting
documentation'' under 26 CFR 54.9816-8(b)(1)(iii)(A)(9), 29 CFR
2590.716-8(b)(1)(iii)(A)(9), and 45 CFR 149.510(b)(1)(iii)(A)(9) would
be required on the part of the responding party and stated that only
previously unavailable information would be useful, while submitting an
EOB which is already available to both parties would not be productive.
This commenter suggested that the Departments require supporting
documentation such as an explanation of the QPA calculation,
eligibility concerns, or reasons why the non-initiating party believes
the Federal IDR process does not apply. Another commenter requested
that the Departments specify in greater detail documentation that would
adequately support an assertion that the 90-day cooling off period was
in effect for an item or service.
The requirement under 26 CFR 54.9816-8(b)(1)(iii)(A)(9), 29 CFR
2590.716-8(b)(1)(iii)(A)(9), and 45 CFR 149.510(b)(1)(iii)(A)(9) to
provide a statement as to whether the item and service subject to
negotiation are eligible for the Federal IDR process and supporting
documentation during open negotiation will enhance the efficiency of
the parties' communication and reduce the number of ineligible disputes
entering the Federal IDR process. Recently published data reflects that
parties continue to struggle to correctly identify the eligibility of
items and services for the Federal IDR process.\70\ By requiring
parties to exchange information during open negotiation on the
eligibility of an item or service for the Federal IDR process prior to
IDR initiation, both parties will benefit from a mutual understanding
of eligibility which will aid them in pursuing negotiations and
assessing the cost of participating in the Federal IDR process.
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\70\ According to the 2025 Federal IDR PUF, 40 percent of
disputes initiated were challenged by the non-initiating party as
ineligible. As mentioned above, 17 percent of disputes closed were
closed due to ineligibility by a certified IDR entity. See: <a href="https://www.cms.gov/nosurprises/policies-and-resources/reports">https://www.cms.gov/nosurprises/policies-and-resources/reports</a>.
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The Departments note that the provisions in these final rules
requiring parties to submit a statement as to whether the items or
services subject to negotiation are eligible for the Federal IDR
process will not prevent a party from initiating the Federal IDR
process for an ineligible item or service. While this information is
intended to support disputing parties' determination of eligibility
prior to the Federal IDR process and avoid initiating ineligible
disputes, the provision of this information does not limit either
party's ability to initiate the Federal IDR process. Certified IDR
entities will make their own eligibility determinations based on the
information provided to them via the notices of IDR initiation,
initiation response, and certified IDR entity selection. As explained
in section II.D.2.b of this preamble, eligibility objections can be
raised in the notice of IDR initiation response, and the reason(s) for
objective can vary from those raised during open negotiation. Further,
the provision of supporting documentation is essential to the effective
implementation of this requirement to allow non-initiating parties to
substantiate an eligibility objection. In implementing the Federal IDR
process, the Departments have learned that often when a non-initiating
party objects to the eligibility of an item or service in its initial
payment or notice of denial of payment, it does not provide sufficient
information for the certified IDR entity or the other party to
understand the basis for its objection, and when the non-initiating
party submits documentation demonstrating ineligibility in the course
of the current IDR process, the certified IDR entity may receive this
information, but the initiating party may not. Therefore, the
Departments will require the party sending the open negotiation
response notice to provide both a statement regarding eligibility, and
documentation that supports the statement, to the other party and the
Departments.
The Departments clarify that examples of such documentation could
include, but are not limited to, a remittance advice with a RARC
clarifying that an item or service is subject to a specified State law,
an EOB reflecting an item or service is subject to payment by Medicare,
or an external review decision reflecting an adverse benefit
determination due to an item or service not being covered by the plan
or issuer. However, these represent illustrative examples, as the
Departments do not intend to restrict the types of documents a party
may submit to corroborate that an item or service is not subject to the
Federal IDR process.
The Departments emphasize that if the Federal IDR process is
initiated, the responding party is not confined to raising eligibility
concerns in its open negotiation response notice. As explained in
section II.D.2.b of this preamble, disputing parties can raise
eligibility objections in the notice of IDR initiation response, and
the reason(s) for objections can vary from those raised during open
negotiation. The Departments are finalizing as proposed 26 CFR 54.9816-
8(b)(1)(iii)(A)(9), 29 CFR 2590.716-8(b)(1)(iii)(A)(9), and 45 CFR
149.510(b)(1)(iii)(A)(9), but redesignating this provision as 26 CFR
54.9816-8(b)(1)(iii)(A)(8), 29 CFR 2590.716-8(b)(1)(iii)(A)(8), and 45
CFR 149.510(b)(1)(iii)(A)(8).
The Departments are finalizing as proposed the requirements for an
open negotiation response notice at 26 CFR 54.9816-8(b)(1)(iii)(A), 29
CFR
[[Page 33924]]
2590.716-8(b)(1)(iii)(A), and 45 CFR 149.510(b)(1)(iii)(A), with two
exceptions. The Departments are finalizing 26 CFR 54.9816-
8(b)(1)(iii)(A)(2), 29 CFR 2590.716-8(b)(1)(iii)(A)(2), and 45 CFR
149.510(b)(1)(iii)(A)(2) with three modifications: (1) regarding the
information sufficient to identify a plan or issuer, to remove the
language ``if the plan or issuer is registered under'' Sec. 54.9816-9,
Sec. 2590.716-9, and Sec. 149.530; (2) to require, when applicable,
that the party submitting the open negotiation response notice attest
that the plan or issuer's registration number was not provided on any
remittance advice, rather than attest that the plan or issuer was not
registered prior to the date the open negotiation response notice was
submitted; and (3) to require the open negotiation response notice to
include the legal business name of the plan sponsor when the entity
furnishing the open negotiation notice is a self-insured group health
plan that does not have a legal business name. At 26 CFR 54.9816-
8(b)(1)(iii)(A)(7), 29 CFR 2590.716-8(b)(1)(iii)(A)(7), and 45 CFR
149.510(b)(1)(iii)(A)(7) the Departments are declining to finalize the
proposed requirement to provide a counteroffer of an out-of-network
rate for each item or service or an acceptance of the other party's
offer. As a result, the Departments are redesignating 26 CFR 54.9816-
8(b)(1)(iii)(A)(8) through (11), 29 CFR 2590.716-8(b)(1)(iii)(A)(8)
through (11), and 45 CFR 149.510(b)(1)(iii)(A)(8) through (11) as 26
CFR 54.9816-8(b)(1)(iii)(A)(7) through (10), 29 CFR 2590.716-
8(b)(1)(iii)(A)(7) through (10), and 45 CFR 149.510(b)(1)(iii)(A)(7)
through (10).
Therefore, the elements required as finalized are:
(1) Information sufficient to identify the provider, facility, or
provider of air ambulance services, including the name and current
contac
[…truncated; see source link]Indexed from Federal Register on June 4, 2026.
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