By Jennifer F. Hananoki, Jennifer Rangel, Melissa A. Wong, Parker M. Reynolds and Kat Denney
The U.S. Departments of the Treasury, Labor, and Health and Human Services (the Departments), along with the U.S. Office of Personnel Management, have issued a final rule implementing several modifications to the federal Independent Dispute Resolution (IDR) process established under the 2020 No Surprises Act (NSA), which was enacted as part of the 2021 Consolidated Appropriations Act. The final rule addresses long-standing provider concerns regarding communication gaps, difficulty identifying the correct plan or issuer against which to initiate a dispute, and processing delays that have hampered federal IDR operations since its inception.
The final rule also responds to significant judicial disruption of the federal IDR process. In a series of cases brought in the U.S. District Court for the Eastern District of Texas, the court vacated several key provisions of the Departments’ implementing regulations, including rules governing the qualifying payment amount (QPA) methodology and weight afforded to the QPA in payment determinations, as well as batching provisions that restricted how providers could group related items and services into a single dispute. These rulings necessitated multiple temporary shutdowns of the federal IDR portal, the issuance of new guidance and significant system updates, which contributed to dispute backlogs and widespread uncertainty among providers and payers. The final rule replaces the vacated batching provisions with a new framework and makes conforming amendments to align with the opinions issued in the federal district court cases – some of which remain pending before the U.S. Court of Appeals for the Fifth Circuit.
Notably, however, the rule stops short of addressing broader, systemic problems with NSA implementation, including arguments that QPA calculations are artificially low. QPAs are the benchmark used by payers to establish patient cost-sharing and, by statute, must be considered by certified Independent Dispute Resolution Entities (IDREs) in making payment determinations.
Key Provisions
Lower Costs and Faster Access: Under the final rule, regardless of the amount in dispute or the dispute’s eligibility, the administrative fee for parties participating in the federal IDR process will be reduced from $115 to $15 per party per dispute. This fee reduction represents a substantial benefit for smaller practices, rural hospitals and providers of lower-dollar services such as radiology, pathology and emergency medicine that may have previously found the cost of initiating disputes prohibitive. In addition, certified IDREs must now determine eligibility within five business days of final entity selection and notify both disputing parties. The disputing parties must also respond to information requests from certified IDREs within five business days, accelerating overall dispute timelines.
Improved Information Sharing Before and During Disputes: Plans and issuers are now required to use standardized Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs) on any remittance advice provided to out-of-network providers, furnishing revenue cycle teams with clearer and earlier signals regarding whether a claim is eligible for the federal IDR process. Plans and issuers must also register with a new federal IDR registry that serves as a centralized, searchable database of contact information.
Restructured Open Negotiation and Dispute Initiation: Providers and payers desiring to enter into open negotiations must now submit a formal open negotiation notice through the federal IDR portal (replacing the current patchwork of issuer-specific portals), and the plan or issuer is required to furnish a response by the 15th business day of the 30-business-day open negotiation period. The notice of IDR initiation must include the plan’s registration number, and providers utilizing billing agents or third-party representatives must include an attestation of authority to act on the provider’s behalf.
Expanded Batching Flexibility: Providers may now batch up to 50 qualified IDR line items per determination under three grouping criteria: 1) items and services furnished to a single patient during a patient encounter on one or more consecutive dates of service and billed on the same claim form, 2) items and services billed under the same service code or a comparable code under a different procedural code system (e.g., Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System), or 3) for anesthesiology, radiology, pathology and laboratory services, items and services furnished under service codes belonging to the same Category I CPT code range.
Air Ambulance Services: For air ambulance providers, the provision to allow batching per single patient encounter is significant – it codifies the ability to submit a single dispute for a patient’s air ambulance transport, allowing mileage and base rates, as well as other items or services furnished during a single transport and billed on the same claim form, to be batched together. This resolves the issue created by prior guidance that effectively required each air ambulance service code to be submitted as a separate dispute.
What Providers and Payers Should Know
The reduced $15 administrative fee renders the federal IDR process economically viable for a substantially broader range of claims, and providers should reassess whether previously uneconomical disputes now merit pursuit. Payers – and, as discussed below, IDREs – may also need to plan for operational enhancements to accommodate a potential increase in case volume.
Revenue cycle teams should prepare to incorporate the new CARC and RARC data from remittance advice into their workflows to identify IDR-eligible claims earlier and with greater accuracy. Providers and payers should closely monitor forthcoming guidance from the Departments on federal IDR portal functionality and batching criteria, anticipated to begin in summer 2026, as these announcements will trigger the applicability of the new open negotiation and initiation requirements. Finally, providers that utilize third-party representatives or billing agents for IDR disputes should ensure that proper attestation and authority documentation is in place to satisfy the new initiation notice requirements.
Jennifer F. Hananoki is a senior counsel based in Holland & Knight’s Washington, D.C., office, Jennifer Rangel is a partner based in Austin, Melissa A. Wong is a partner based in Boston, Parker M. Reynolds is an associate based in Washington, D.C., and Kat Denney is an associate based in Nashville.
