HHS sets new administrative fee to be paid by parties in No Surprises Act independent dispute resolution cases

Oct. 6 update: The lead section of this article was updated where noted with news about the arbitration portal.

The administrative fee for taking out-of-network payment disputes to arbitration under the No Surprises Act in 2024 would be significantly lower than it was for much of 2023, but triple the current rate, according to proposed regulations.

The U.S. Departments of Health and Human Services, Labor and Treasury on Sept. 21 issued a proposed rule in which they set the new fee at $150, up from the current $50 fee but down from the $350 charge that was in place this year through early August. That’s when a federal judge ruled the 600% toll hike for 2023 was invalid because the departments had not used a notice-and-comment period in implementing the increase. As a result, the $50 fee was reinstated for the remainder of this year.

The fee amount is irrelevant for the time being because the departments closed the arbitration portal to new cases starting Aug. 4 while making adjustments in response to court decisions about the administrative fee and, later, the qualifying payment amount. On Sept. 21, for the first time in nearly a month, arbitrators could resume making payment determinations for cases submitted on or before Aug. 3.

Update: On Oct. 6, the portal reopened to allow most single and bundled disputes to be submitted. The portal remains closed to batched disputes and air ambulance disputes for now.

The departments are offering a bit of flexibility on deadlines, given the turmoil that has affected portal operations. All parties for whom the deadline to file a dispute would have fallen between Aug. 3 and Nov. 3 can take until Nov. 3. There is also extra time for arbitrator selection and submission of fees and offers. See this FAQ for more information.

In testimony Sept. 19 during a House Ways and Means Committee hearing to scrutinize problems with the independent dispute resolution (IDR) process, an IDR official called for the portal to be opened immediately.

Saying 40,000 cases are filed in a typical month, James L. Bobeck, Esq., president of Federal Hearings and Appeals Services Inc., noted “a significant backlog” has arisen from the shutdown.

“We have a large staff that is standing ready,” he said. “They are training, they are going through everything possible to be ready, because we do know that there is going to be a large tsunami of cases that will be coming through that door.”

New protocols for the administrative fee

In the newly proposed rule, the departments committed to using a notice-and-comment period in setting the fee, with comments due to CMS within 30 days of the rule’s imminent publication in the Federal Register. Future changes to the fee could happen more often than annually, the proposed rule states, but likewise would be subject to notice-and-comment procedures.

The $150 fee per party is intended to cover the federal government’s costs based on projections that 225,000 payment disputes a year will go through the IDR process. That estimate incorporates a 25% reduction in volume stemming from the Aug. 3 court ruling — which, along with striking down the 2023 fee increase, nullified the departments’ tightened restrictions on dispute batching. The volume drop-off will result in part because “batched disputes [going forward] may involve more line items and take more time to close,” the proposed rule states.

Among the feedback being sought on the proposed rule is whether a $150 fee would be cost-prohibitive for providers disputing payment amounts for low-dollar items and services.

Future rulemaking could address potentially lowering the fee for cases that are deemed ineligible for the IDR process or that involve low-dollar claims, the proposed rule states. However, any such provision could necessitate raising the fee as applicable in other instances to ensure administrative costs are covered.

IDR entity fees set to increase

A separate fee charged by certified IDR entities (i.e., arbitrators), which is payable by the party that loses the dispute, would be $200-$840 for single (i.e., non-batched) cases in 2024. The upper range represents a 20% increase from 2023.

The year-over-year increase would be 25% for batched disputes, with a fee range of $268-$1,173, and the upper limit could increase for batches with more than 25 line items. A factor in the proposed range is the impact of the Aug. 3 court decision “on the anticipated complexity of batched determinations.”

The departments project that about 30% of cases will be batched based on the track record from the first four months of portal operations, before August 2022 regulatory guidance served to restrict batching eligibility. That guidance was negated by the court, which cited a failure to apply a notice-and-comment process.

The expected high volume of batched cases “increases the systemic burden for certified IDR entities in the administration of their duties,” with the departments projecting an increase in the number of items or services per batch, the proposed rule states.

During the Ways and Means Committee hearing, Bobeck said resolving confusion over batching would be key to improving the IDR process.

“Making those rules more in tune with how people bill would be a very good step in the right direction,” he said.

According to the regulations, for example, cases are eligible for batching if they have the same service code.

However, said Bobeck, “That simply is not how providers and payers track their claims. They don’t track them over all of these different patients. They track a patient’s claim and all the ancillary care that goes along with that.”

More changes in store

The departments have completed work on a yet-to-be-published separate rule related to the IDR process. That rule, which was in the drafting stages for the better part of a year, could set up a more rigorous process for keeping ineligible cases out of the portal. According to the most recently published data, from April, nearly 335,000 disputes were initiated during the portal’s first 11 ½ months of operation. Of those, nearly 40,000 ultimately were found to be ineligible.

There are instances, Bobeck said, when a provider has been dealing with a third-party administrator that contracts with a self-funded employer plan, and the provider is not even clear about which of the TPA’s affiliated health plans issued the disputed payment amount. Such confusion leads to a higher number of delayed or ineligible cases.

“Parties are supposed to be sharing that type of information throughout the process,” he said.

Stakeholders are getting better at doing so, he said, which helps explain why among cases arbitrated by his company, the share deemed eligible for IDR has improved from about half to 87%.

At one point during the Ways and Means hearing, Rep. David Schweikert (R-Ariz.) mused about whether arbitration decisions could rely on automation and algorithms more extensively.

“What we should also maybe have an interesting discussion [about] is what would make this as seamless as possible — that if there’s going to be a dispute, it moves fast, quick, efficiently, inexpensively,” Schweikert said. “And that may be making it very clear that technology can be the arbitrator.”