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Update on the Federal IDR Process

By: Kendall Jackson, Esq.

Recently there has been significant discussion about the federal IDR process. The IDR process is an important tool of the No Surprises Act (“NSA”) as it resolves claims for payment for out-of-network items and services. It not only provides a procedure for settling disputed claims but is also an integral mechanism for supporting the NSA’s protection for plan members against potentially crippling expenses from balance billing for high-cost out-of-network claims.

In Texas Medical Association v. United States Department of Health and Human Services, Case No. 6:23-cv-59-JDK (TMA IV), the U.S. District Court for the Eastern District of Texas vacated several provisions of the NSA—specifically, the batching provisions and the $350 administrative fee. In response to this decision, on August 3, 2023, the U.S. Department of Health & Human Services, the Department of Labor, and the Department of Treasury (collectively, the “Departments”) temporarily paused all federal IDR processes, including dispute initiation. On August 8, 2023, IDR entities were permitted to process batched disputes if, prior to August 3, 2023, they were already deemed eligible and administrative fees were paid. Other batched disputes that did not meet this criteria were paused.

Only a few weeks later, the same court issued another opinion in Texas Medical Association, et al. v. United States Department of Health and Human Services, Case No. 6:22-cv-450-JDK (TMA III) and vacated several other provisions of the NSA, including portions of the QPA calculation methodology and the condition that a single medical air transport requires two separate IDR processes. Effective August 25, 2023, the Departments paused all federal IDR processes, including the batched disputes that were still being processed under the prior pause. Disputing parties in the open negotiations phase were permitted to continue with negotiations while all other processes were paused to allow the Departments to modify existing guidelines to comply with the court’s orders.

On October 5, 2023, access to the Notice of Initiation, Selection Response, and Reselection Response webforms was restored. Access is available only for single disputes, which includes disputes submitted as a bundled item or service. Disputing parties are able to resume operations related to IDR entity selection and reselection and may also initiate new single disputes. Batched disputes, whether new or in-progress, as well as new air ambulance disputes remain paused. Parties whose IDR initiation deadline is between August 3 and November 3, 2023, will have until November 3, 2023, to initiate new single disputes. For disputes initiated between October 6 and November 3, 2023, parties will have ten business days from initiation to select a certified IDR entity. The deadline to submit fees and offers will be ten business days after the selection of the certified IDR entity. The administrative fee for new disputes is currently $50, as it reverted back to the fee that was established prior to the introduction of the $350 administrative fee in December 2022.

We are likely to see more established rules in response to TMA IV and TMA III in the near future. In late September, the Departments, along with the Employee Benefits Security Administration and the Centers for Medicare & Medicaid Services, collectively issued a proposed rule to address the administrative fee and the fee ranges for certified IDR entities. The proposed rule is intended to apply to disputes initiated on or after the later of the effective date of the rule or January 1, 2024. The Departments proposed an administrative fee of $150 per party per dispute, which was determined based on the costs of operating the federal IDR process. In regard to the fees for certified IDR entities, the fees are currently set by the IDR entities within a range issued annually by the Departments. The rule proposes to alter the frequency in which guidance on ranges will be provided, suggesting a shift to issuing notices more or less frequently than annually. The Departments proposed the updated ranges for disputes initiated on or after the later of the effective date of the rule or January 1, 2024, would be $200 to $840 for single determinations and $268 to $1,173 for batched disputes. Comments on the proposed rule were due by October 26, 2023. With the period recently closing, there will surely be new developments in the federal IDR process in the coming months.