Navigating the Surprise Billing Payment Dispute Process: Tri-Agencies Issue Proposed Rule

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In 2020, the federal government signed into law the Surprise Billing Act, officially known as the No Surprises Act, (the “Act”) in an effort to address surprise medical billing and establish certain patient protections, price transparency measures, and the federal independent dispute resolution (“IDR”) process. The federal IDR process is a crucial component of the Act and is designed to resolve payment disputes between insurers and healthcare providers.

On October 27, 2023, the tri-agencies—the Departments of Health and Human Services (“HHS”), the Department of Labor, and the Department of the Treasury (collectively, the “Departments”)—together with the Office of Personnel Management released a proposed rule on the Act and the associated federal IDR process. The proposed rule aims at enhancing various aspects of the Act, as detailed below. For a full reading of the proposed rule, please see: https://www.federalregister.gov/public-inspection/2023-23716/federal-independent-dispute-resolution-process.

Federal IDR Process

The federal IDR process is initiated when either the healthcare provider or the insurer submits a request for dispute resolution to HHS. The request must include all relevant information (i.e., the charges and payment offers). As the next step, HHS will assign an IDR entity, which comprises of healthcare experts, to evaluate the dispute and make a determination on the appropriate payment amount. Multiple factors are to be considered in review, including the provider’s quality and the complexity of the case. The IDR entity’s determination is binding on the payment amount and thus both the healthcare provider and the insurer are legally bound to abide by it. As a result, the patient’s bill will be adjusted in accordance with the IDR entity’s decision.

Proposed Rule

The proposed rule (if finalized) will impact the following aspects of medical surprise billing and the Act:

• Communication Between Payers and Providers: Payers and providers have expressed challenges relating to communication and acquisition of the information necessary for resolving disputes. To improve information exchange and ensure that all parties possess the requisite data, the Departments suggest that payers furnish additional information when making an initial payment or providing notice of payment denial. The Departments also recommend the use of standardized codes—specific claim adjustment reason codes and remittance advice remark codes—to indicate whether a claim is or is not subject to the Act and the federal IDR process.

• Open Negotiation and IDR Initiation: The Act and the related regulations established a 30-business-day open negotiation period to give the involved parties a chance to agree on a payment rate without the need of the federal IDR process. One of the proposals touches upon several modifications to the open negotiation process with the aim of promoting a pre-IDR engagement among parties. Under the proposed rule, when a party commences open negotiation, the party must submit a notice along with a copy of the remittance advice or payment denial notice to the other party and the Departments through the federal IDR portal. The Departments are also considering the addition of new content requirements for the open negotiation notice, such as the plan type, the location service, and the claim number for identification purposes, as well the implementation of an open negotiation response notice.

• IDR Eligibility and Administrative Fees: Determining eligibility for the federal IDR process is challenging and time-consuming, which often leads to a delay in timely decisions on payment disputes. The proposed rule intends to rectify this issue by introducing a “Departmental eligibility review process” to be invoked during periods of high volume and thus expediting the resolution of disputes. With regard to the statutorily required non-refundable administrative fees, the Departments propose a direct collection of such fees from the disputing parties and set forth requirements for when the parties would be required to pay them. Penalties for failure to pay the fees are also being considered by the Departments. In addition, the Departments are contemplating reduced fees for low-dollar disputes and non-initiating parties in ineligible disputes.

• Batching: Certain stakeholders have suggested “batching,” which is a process by which multiple items or services may be combined within a single dispute in order to enhance efficiency and reduce costs of the federal IDR process. The Departments generally agree and recommend a new set of provisions for batching that would permit eligible items and services to be grouped together. Note that, under the proposed rule, batching would be permitted only with relation to certain IDR items and services.

Impact on Healthcare Providers and Insurers

The financial burden of surprise medical billing can be overwhelming to patients; however, the healthcare providers and insurers also suffer at the hand of this discrepancy in the system. The aforementioned parties generally celebrate the proposed rule given the introduction of a level of certainty in billing disputes. While the full amount of payment is not guaranteed, all parties benefit from the federal IDR process as it prevents them from being stuck with either the entire bill or no payment at all. A reasonable payment based on the median rates in the area reduces the financial uncertainty and administrative burdens that often accompany payment disputes. Generally, the changes under the proposed rule seek to avoid creating new operational complexities and promote efficiency and cost reduction for all parties involved.

Conclusion

The federal IDR process within the Act is a major step in the right direction to address the issue of payment disputes. The federal IDR process does not intend to and cannot possibly completely eradicate surprise medical billing and the issues associated with payment disputes; however, the proposed rule will inevitably help stabilize the process and prevent significant fluctuations in payments and medical debt.