No Surprises Act end-of-year update: A new administrative fee is set, and the arbitration portal is fully functional

Bringing out-of-network payment disputes to arbitration under the No Surprises Act in 2024 will be less expensive than previously described.

In a final rule, the U.S. Departments of Health and Human Services (HHS), Labor and Treasury set the administrative fee for using the independent dispute resolution (IDR) portal at $115 per case, effective 30 days after publication of the rule in the Federal Register (scheduled for Dec. 21).

Update: The effective date for the new fee officially has been set for Jan. 22.

That’s down from $150 in the proposed rule issued in September. It’s significantly higher than the $50 rate that’s currently in place, but also well under the $350 charge that was implemented without warning for 2023 until August, when the outcome of a lawsuit obligated the departments to revert the fee to $50.

Earlier this month, the IDR portal was declared open to all cases for the first time since early August. That’s when the first of two federal-court decisions in Texas vacated both the $350 fee and previously published restrictions on batched disputes. Later that month, the outcome of the second lawsuit affected the calculation of the qualifying payment amount as applicable to the IDR process.

After being closed altogether for the better part of a month, the portal began reopening in phases. But up until Dec. 15, batched disputes and air ambulance disputes could not be processed. Because of the lengthy interruption, the departments have provided extensions of deadlines for various steps required of the parties in a dispute.

Setting the fee

In response to one of the lawsuits, the departments pledged to use a notice-and-comment period before enacting any fee change. The comments on the proposed rule generally recommended keeping the fee at $50.

The departments opted to increase the rate but heeded suggestions to tweak the methodology for projecting the volume of administrative fees that would be paid in the upcoming year. The resulting higher number allowed for a lower fee per case than had been proposed.

The final rule also stipulates that the administrative fee will be determined no more than once per year. The proposed rule had stated that the departments would retain authority to adjust the fee more frequently.

In addition, after positing the idea of using an inflation-based adjustment in calculating the administrative fee in future years, the departments chose not to incorporate such an adjustment.

Concerns about the fee

In the final rule, the departments did not yield to concerns from commenters that a big increase over the current fee would be cost-prohibitive for smaller providers. No Surprises Act statutory language requires a rate that covers projected departmental costs in adjudicating IDR cases, the final rule states.

Commenters also noted that a higher fee may lead to narrow insurance networks because there would be less of a check on insurers’ out-of-network payment determinations, thus removing an incentive for health plans to contract with providers.

“The appropriate payment rate for out-of-network services is only one factor among many that influences network breadth,” the departments responded in the final rule.

The departments said a higher fee should not lead to higher premiums or patient cost-sharing because the fee still would be a small percentage of the costs that factor into such calculations.

Establishing the certified IDR entity fee

The final rule maintains earlier proposed rates for the fees charged by certified IDR entities in 2024. Those fees will be between $200 and $840 for single determinations, with an add-on fee for batched disputes of $75 to $250 for every additional 25 line items (beginning with the 26^th line item). The upper limit for single determinations is a sizable increase from $500 in 2023, while batched determinations currently have a flat rate of between $268 and $670.

“To remain competitive, the certified IDR entities have an incentive to charge fees on the lower end of the established range,” the final rule states. “As a result, the departments do not believe that an increase to the upper limits of the certified IDR entity fee will result in drastic increases to the fees charged.”

Certified IDR entities can request approval to reset their fee one time during a given calendar year, according to the final rule.

To limit the increase in the administrative fee, the departments “will not take on a greater role in broadly assisting certified IDR entities with eligibility determinations at this time.” There had been an argument that the departments should become more involved in eligibility determinations for the sake of easing the case backlog that has hampered portal operations.

The departments’ focus regarding eligibility determination instead will be on “more complex disputes,” such as those in which federal versus state jurisdiction is difficult to determine. Restrained involvement from the departments in eligibility reviews likely will not affect the fees assessed by certified IDR entities, the final rule states.

Pending IDR regulations

Scheduled for some point in early 2024 is the issuance of a final rule on improving overall IDR operations. The comment period for the proposed rule remains open through Jan. 2.

HFMA submitted a comment letter on the rule, drawing attention to several concerns. Among them is a proposal to limit a batched determination to 25 items or services in a single dispute.

“It is common practice for insurers and plans to consolidate multiple CPT codes on a single claim depending on grouper methodology,” HFMA wrote in the letter signed by Richard L. Gundling, senior vice president for content and professional practice guidance. “Requiring providers to fragment a claim exceeding a 25-line-item cap not only raises the provider’s submission costs to the IDR process but also severs related items and services furnished during that encounter.

“This division complicates the task for IDR entities to accurately determine the appropriate payment amount for emergency and out-of-network services and in other circumstances would be construed as fraudulent billing since it could secure higher payment by circumventing bundling methodologies.”

The proposed rule also would require health plans to include claim adjustment reason codes and remittance advice remark codes with the initial payment notice or notice of payment denial for services covered by the No Surprises Act. HFMA supports that recommendation but requested specific compliance guidelines.

The rule also would establish time frames for various steps in the IDR process (e.g., initial payment or denial, responding to a notice of open negotiation, responding to initiation of the IDR process). HFMA acknowledged the need for such time frames to improve efficiency but called for adjustments to specific provisions with which compliance would be difficult.