# Federal Independent Dispute Resolution (IDR) Process Administrative Fee and Certified IDR Entity Fee Ranges > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2023-27931 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** December 21, 2023 - **Citation:** 88 FR 88494 ## Text DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 54 [TD 9985] RIN 1545-BQ94 DEPARTMENT OF LABOR Employee Benefits Security Administration 29 CFR Part 2590 RIN 1210-AC24 DEPARTMENT OF HEALTH AND HUMAN SERVICES 45 CFR Part 149 [CMS-9890-F] RIN 0938-AV39 Federal Independent Dispute Resolution (IDR) Process Administrative Fee and Certified IDR Entity Fee Ranges AGENCY: Internal Revenue Service (IRS), Department of the Treasury; Employee Benefits Security Administration, Department of Labor; Centers for Medicare & Medicaid Services, Department of Health and Human Services (HHS). ACTION: Final rules. SUMMARY: This document finalizes rules related to the fees established by the No Surprises Act for the Federal independent dispute resolution (IDR) process, as established by the Consolidated Appropriations Act, 2021 (CAA). These final rules amend existing regulations to provide that the administrative fee amount charged by the Department of the Treasury, the Department of Labor, and the Department of Health and Human Services (the Departments) to participate in the Federal IDR process, and the ranges for certified IDR entity fees for single and batched determinations, will be set by the Departments through notice and comment rulemaking. The preamble to these final rules also sets forth the methodology used to calculate the administrative fee and the considerations used to develop the certified IDR entity fee ranges. This document also finalizes the amount of the administrative fee for disputes initiated on or after the effective date of these rules. Finally, this document finalizes the certified IDR entity fee ranges for disputes initiated on or after the effective date of these rules. DATES: These final rules are effective on January 22, 2024. FOR FURTHER INFORMATION CONTACT: Shira B. McKinlay or William Fischer, Internal Revenue Service, Department of the Treasury, 202-317-5500; Shannon Hysjulien or Rebecca Miller, Employee Benefits Security Administration, Department of Labor, 202-693-8335; and Jacquelyn Rudich or Nora Simmons, Centers for Medicare & Medicaid Services, Department of Health and Human Services, 301-492-5211. SUPPLEMENTARY INFORMATION: I. Background A. Preventing Surprise Medical Bills and Establishing the Federal IDR Process Under the Consolidated Appropriations Act, 2021 On December 27, 2020, the CAA was enacted. 1 Title I, also known as the No Surprises Act, and title II (Transparency) of Division BB of the CAA amended chapter 100 of the Internal Revenue Code (Code), part 7 of the Employee Retirement Income Security Act (ERISA), and title XXVII of the Public Health Service Act (PHS Act). The No Surprises Act provides Federal protections against surprise billing by limiting out-of-network cost sharing and prohibiting balance billing in many of the circumstances in which surprise bills most frequently arise. In particular, the No Surprises Act added new provisions applicable to group health plans and health insurance issuers offering group or individual health insurance coverage. Section 102 of the No Surprises Act added section 9816 of the Code, 2 section 716 of ERISA, 3 and section 2799A-1 of the PHS Act, 4 which contain limitations on cost sharing and requirements regarding the timing of initial payments and notices of denial of payment by plans and issuers for emergency services furnished by nonparticipating providers and nonparticipating emergency facilities, and for non-emergency services furnished by nonparticipating providers for patient visits to participating health care facilities, generally defined as hospitals, hospital outpatient departments, critical access hospitals, and ambulatory surgical centers. 5 1 Public Law 116-260 (Dec. 27, 2020). 2 26 U.S.C. 9816, et seq. 3 29 U.S.C. 1185e, et seq. 4 42 U.S.C. 300gg-111, et seq. 5 Section 102(d)(1) of the No Surprises Act amended the Federal Employees Health Benefits (FEHB) Act, 5 U.S.C. 8901 et seq., by adding a new subsection (p) to 5 U.S.C. 8902. Under this new provision, each FEHB Program contract must require a carrier to comply with requirements described in sections 9816 and 9817 of the Code, sections 716 and 717 of ERISA, and sections 2799A-1 and 2799A-2 of the PHS Act (as applicable) in the same manner as these provisions apply with respect to a group health plan or health insurance issuer offering group or individual health insurance coverage. Section 103 of the No Surprises Act established a Federal IDR process that plans and issuers and nonparticipating providers and facilities may utilize to resolve certain disputes regarding out-of-network rates under section 9816 of the Code, 6 section 716 of ERISA, 7 and section 2799A-1 of the PHS Act. 8 Section 9816(c)(8) of the Code, 9 section 716(c)(8) of ERISA, 10 and section 2799A-1(c)(8) of the PHS Act 11 provide that each party to a determination under the Federal IDR process shall pay a fee for participating in the Federal IDR process, and the amount of the fee is an amount established by the Departments in a manner such that the total amount of fees paid by all parties is estimated to be equal to the amount of expenditures estimated to be made by the Departments for the year in carrying out the Federal IDR process. 6 26 U.S.C. 9816. 7 29 U.S.C. 1185e, et seq. 8 42 U.S.C. 300gg-111, et seq. 9 26 U.S.C. 9816(c)(8). 10 29 U.S.C. 1185e(c)(8). 11 42 U.S.C. 300gg-111(c)(8). Section 105 of the No Surprises Act added section 9817 of the Code, 12 section 717 of ERISA, 13 and section 2799A-2 of the PHS Act. 14 These sections contain limitations on cost sharing and requirements for the timing of initial payments and notices of denial of payment by plans and issuers for air ambulance services furnished by nonparticipating providers of air ambulance services, and allow plans and issuers and nonparticipating providers of air ambulance services to utilize the Federal IDR process. 12 26 U.S.C. 9817. 13 29 U.S.C. 1185f, et seq. 14 42 U.S.C. 300gg-112, et seq. The No Surprises Act also added provisions to title XXVII of the PHS Act in a new part E 15 that apply to health care providers, facilities, and providers of air ambulance services, such as prohibitions on balance billing for certain items and services and requirements related to disclosures about balance billing protections. 15 42 U.S.C. 300gg-131-139. The Departments, along with the Office of Personnel Management (OPM), have issued rules in 2021 and 2022 to implement various provisions of the No Surprises Act. More specifically relevant to this rulemaking, the Departments and OPM issued interim final rules (July 2021 interim final rules 16 and October 2021 interim final rules) 17 and final rules (August 2022 final rules) 18 implementing provisions of sections 9816 and 9817 of the Code, 19 sections 716 and 717 of ERISA, 20 and sections 2799A-1 and 2799A-2 of the PHS Act. 21 Those rules implement provisions to protect consumers from surprise medical bills for emergency services, non-emergency services furnished by nonparticipating providers for patient visits to participating facilities 22 in certain circumstances, and air ambulance services furnished by nonparticipating providers of air ambulance services. Those rules also implement provisions to establish a Federal IDR process to determine payment amounts when there is a dispute between plans or issuers and providers, facilities, or providers of air ambulance services about the out-of-network rate for these services if a specified State law as defined in 26 CFR 54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30 or an applicable All-Payer Model Agreement under section 1115A of the Social Security Act does not provide a method for determining the total amount payable. 16 86 FR 36872 (July 13, 2021). 17 86 FR 55980 (October 7, 2021). 18 87 FR 52618 (August 26, 2022). 19 26 U.S.C. 9816 and 26 U.S.C. 9817. 20 29 U.S.C. 1185e, et seq. and 29 U.S.C. 1185f, et seq. 21 42 U.S.C. 300gg-111, et seq. and 42 U.S.C. 300gg-112, et seq. 22 References to a “participating facility” in this preamble mean a “participating health care facility,” as defined at 26 CFR 54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30. The July 2021 interim final rules and October 2021 interim final rules generally apply to plans and issuers (including grandfathered health plans) for plan years (in the individual market, policy years) beginning on or after January 1, 2022, and to health care providers, facilities, and providers of air ambulance services for items and services furnished during plan years (in the individual market, policy years) beginning on or after January 1, 2022. 23 The August 2022 final rules became effective October 25, 2022, and are applicable for items or services provided or furnished on or after October 25, 2022, for plan years (in the individual market, policy years) beginning on or after January 1, 2022. 23 The interim final rules also include interim final regulations under 5 U.S.C. 8902(p) issued by OPM that specify how certain provisions of the No Surprises Act apply to health benefit plans offered by carriers under the FEHB Act. These provisions apply to carriers in the FEHB Program with respect to contract years beginning on or after January 1, 2022. The disclosure requirements at 45 CFR 149.430 regarding patient protections against balance billing are applicable as of January 1, 2022. B. October 2021 Interim Final Rules and Related Guidance The October 2021 interim final rules implement the Federal IDR process under sections 9816(c) and 9817(b) of the Code, 24 sections 716(c) and 717(b) of ERISA, 25 and sections 2799A-1(c) and 2799A-2(b) of the PHS Act. 26 The rules apply to emergency services, non-emergency services furnished by nonparticipating providers for patient visits to certain types of participating health care facilities 27 (unless an individual has been provided notice and waived the individual's surprise billing protections, in accordance with 45 CFR 149.410 or 149.420, as applicable), and air ambulance services furnished by nonparticipating providers of air ambulance services, for situations in which neither a specified State law as defined in 26 CFR 54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30 nor an All-Payer Model Agreement under section 1115A of the Social Security Act applies. 24 26 U.S.C. 9816(c) and 26 U.S.C. 9817(b). 25 29 U.S.C. 1185e(c) and 29 U.S.C. 1185f(b). 26 42 U.S.C. 300gg-111(c) and 42 U.S.C. 300gg-112(b). 27 A health care facility, in the context of non-emergency services, is defined as (1) a hospital (as defined in section 1861(e) of the Social Security Act), (2) a hospital outpatient department, (3) a critical access hospital (as defined in section 1861(mm)(1) of the Social Security Act), or (4) an ambulatory surgical center described in section 1833(i)(1)(A) of the Social Security Act. Code section 9816(b)(2)(A)(ii), ERISA section 716(b)(2)(A)(ii), and PHS Act section 2799A-1(b)(2)(A)(ii). 26 CFR 54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30. To implement the Federal IDR process, the October 2021 interim final rules include requirements governing the costs of the Federal IDR process. Under section 9816(c)(5)(F)(i) of the Code, 28 section 716(c)(5)(F)(i) of ERISA, 29 section 2799A-1(c)(5)(F)(i) of the PHS Act, 30 and the October 2021 interim final rules, the party whose offer is not selected is responsible for the payment of the fee charged by the certified IDR entity (certified IDR entity fee). 31 Under the October 2021 interim final rules, as a condition of certification, the certified IDR entity must notify the Departments of the amount of the certified IDR entity fees it intends to charge for payment determinations, which is limited to a fixed certified IDR entity fee amount for single determinations and a separate fixed certified IDR entity fee amount for batched determinations. 32 Each of these fixed certified IDR entity fees must be within a range set forth in guidance by the Departments, unless the certified IDR entity receives written approval from the Departments to charge a certified IDR entity fee outside that range. 33 The October 2021 interim final rules describe the considerations that the Departments will use to develop the certified IDR entity fee ranges, including the anticipated time and resources needed for certified IDR entities to meet the requirements of those interim final rules, the volume of payment determinations, and the capacity of the Federal IDR process to efficiently handle the volume of IDR initiations and payment determinations, and provide that the Departments will review and update the allowable fee ranges annually based on these factors, the impact of inflation, and other cost increases. Those rules also provide that on an annual basis, the certified IDR entity may update its certified IDR entity fees within the ranges set forth in current guidance and seek approval from the Departments to charge fixed certified IDR entity fees beyond the upper or lower limits for certified IDR entity fees. 34 28 26 U.S.C. 9816(c)(5)(F)(i). 29 29 U.S.C. 1185e(c)(5)(F)(i). 30 42 U.S.C. 300gg-111(c)(5)(F)(i). 31 In the case of a batched dispute, the party with fewest determinations in its favor is considered the non-prevailing party and is responsible for paying the certified IDR entity fee. In the event that each party prevails in an equal number of determinations, the certified IDR entity fee will be split evenly between the parties. 86 FR 55980, 56001. 32 26 CFR 54.9816-8T(e)(2)(vii), 29 CFR 2590.716-8(e)(2)(vii), and 45 CFR 149.510(e)(2)(vii). 33 Id. 34 Id. Additionally, pursuant to section 9816(c)(8) of the Code, 35 section 716(c)(8) of ERISA, 36 and section 2799A-1(c)(8) of the PHS Act, 37 and under the October 2021 interim final rules, each party must pay an administrative fee for participating in the Federal IDR process. The administrative fee is established in guidance in a manner so that, in accordance with the requirements of section 9816(c)(8)(B) of the Code, 38 section 716(c)(8)(B) of ERISA, 39 and section 2799A-1(c)(8)(B) of the PHS Act, 40 the total administrative fees paid for a year are estimated to be equal to the amount of expenditures estimated to be made by the Departments in carrying out the Federal IDR process for that year. 41 35 26 U.S.C. 9816(c)(8). 36 29 U.S.C. 1185e(c)(8). 37 42 U.S.C. 300gg-111(c)(8). 38 26 U.S.C. 9816(c)(8)(B). 39 29 U.S.C. 1185e(c)(8)(B). 40 42 U.S.C. 300gg-111(c)(8)(B). 41 26 CFR 54.9816-8T(d)(2)(ii), 29 CFR 2590.716-8(d)(2)(ii), and 45 CFR 149.510(d)(2)(ii). Contemporaneously with the October 2021 interim final rules, the Departments released the Calendar Year 2022 Fee Guidance for the Federal Independent Dispute Resolution Process Under the No Surprises Act (October 2021 guidance), setting the administrative fee for both parties to a dispute at $50 per party. 42 The October 2021 guidance also established the range for fixed certified IDR entity fees for single determinations as $200-$500, and the range for fixed certified IDR entity fees for batched determinations as $268-$670, unless the Departments otherwise grant approval for the certified IDR entity to charge a fee outside these ranges. In October 2022, the Departments released the Calendar Year 2023 Fee Guidance for the Federal Independent Dispute Resolution Process Under the No Surprises Act (October 2022 guidance), again setting the administrative fee for both parties to a dispute at $50 per party. 43 The October 2022 guidance explained that the data available regarding usage of the Federal IDR process was not sufficiently reliable to support a change to either the estimated number of payment determinations for which administrative fees would be paid or the estimated ongoing program costs for 2023; therefore, the 2023 administrative fee amount due from each party for participating in the Federal IDR process would remain the same as the 2022 administrative fee amount. The October 2022 guidance permits certified IDR entities to charge a fee between $200 and $700 for single determinations and between $268 and $938 for batched determinations, unless the Departments otherwise grant approval for the certified IDR entity to charge a fee outside of these ranges. In addition, to account for the heightened workload for batched determinations, the October 2022 guidance permits a certified IDR entity to charge the following percentage of its approved certified IDR entity batched determination fee (“batching percentage”) for batched determinations, which are based on the number of line items initially submitted in the batch: 42 Centers for Medicare & Medicaid Services (September 30, 2021). Calendar Year 2022 Fee Guidance for the Federal Independent Dispute Resolution Process under the No Surprises Act. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Technical-Guidance-CY2022-Fee-Guidance-Federal-Independent-Dispute-Resolution-Process-NSA.pdf. 43 Centers for Medicare & Medicaid Services (October 31, 2022). Calendar Year 2023 Fee Guidance for the Federal Independent Dispute Resolution Process under the No Surprises Act. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf. • 2-20 line items: 100 percent of the approved batched determination fee; • 21-50 line items: 110 percent of the approved batched determination fee; • 51-80 line items: 120 percent of the approved batched determination fee; and • 81 line items or more: 130 percent of the approved batched determination fee. In December 2022, the Departments released the Amendment to the Calendar Year 2023 Fee Guidance for the Federal Independent Dispute Resolution Process Under the No Surprises Act: Change in Administrative Fee (December 2022 guidance), which amended the $50 per party administrative fee set in the October 2022 guidance to $350 for calendar year 2023. 44 The change in the administrative fee for 2023 reflected the additional costs to the Departments to carry out the Federal IDR process as a result of the Departments' enhanced role in calendar year 2023 in conducting pre-eligibility reviews to allow the certified IDR entities to complete their eligibility determinations more efficiently, 45 as well as systemic improvements that allowed for the aggregation of data needed to estimate the rate at which disputes were determined eligible for the Federal IDR process and the rate at which one or both parties paid the administrative fee for purposes of calculating the administrative fee. The December 2022 guidance did not amend the certified IDR entity fee ranges provided in the October 2022 guidance. 44 Centers for Medicare & Medicaid Services (December 23, 2022). Amendment to the Calendar Year 2023 Fee Guidance for the Federal Independent Dispute Resolution Process under the No Surprises Act: Change in Administrative Fee. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/amended-cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf. 45 Centers for Medicare & Medicaid Services (November 21, 2022). Notice of the Federal Independent Dispute Resolution (IDR) Team Technical Assistance to Certified Independent Dispute Resolution Entities (IDREs) in the Dispute Eligibility Determination Process. https://www.cms.gov/files/document/idre-eligibility-support-guidance-11212022-final-updated.pdf. C. Recent Litigation On November 30, 2022, the Texas Medical Association, Tyler Regional Hospital, and a Texas physician filed a lawsuit ( TMA III ) 46 against the Departments and OPM, asserting that the July 2021 interim final rules, 47 including the regulations governing how the qualifying payment amount (QPA) should be calculated, and certain related guidance documents conflicted with the statutory language. On August 24, 2023, the U.S. District Court for the Eastern District of Texas (District Court) issued a memorandum opinion and order 48 that vacated certain portions of the July 2021 interim final rules and associated regulatory provisions 49 and portions of guidance documents, 50 including portions that provided the methodology for calculating the QPA and interpretations for certified IDR entities related to the processing of disputes for air ambulance services. 46 Complaint, Tex. Med. Ass'n v. U. S. Dep't of Health and Human Servs., No. 6:22-cv-00450-JDK (E.D. Tex. Nov. 30, 2022) (ECF No. 1). 47 86 FR 36872 (July 13, 2021). 48 See Memorandum Opinion and Order, Tex. Med. Ass'n. v. U.S. Dep't of Health & Hum. Servs., No. 6:22-cv-00450-JDK, 2023 WL 5489028 (E.D. Tex. Aug. 24, 2023). 49 Specifically, the District Court vacated certain provisions of 26 CFR 54.9816-6T and 54.9817-1T, 29 CFR 2590.716-6 and 2590.717-1, and 45 CFR 149.130 and 149.140. The District Court also vacated 5 CFR 890.114(a), insofar as it requires compliance with the vacated regulations and guidance. 50 Specifically, the District Court vacated FAQs 14 and 15 of FAQs about Affordable Care Act and Consolidated Appropriations Act, 2021 Implementation Part 55 (August 19, 2022), as well as portions of Technical Guidance for Certified IDR Entities at 2-3 (August 18, 2022). On January 30, 2023, the Texas Medical Association, Houston Radiology Associated, Texas Radiological Society, Tyler Regional Hospital, and a Texas physician filed a lawsuit ( TMA IV ) 51 against the Departments and OPM, asserting that the December 2022 guidance 52 that set the $350 per party administrative fee amount for 2023 was unlawfully issued without notice and comment rulemaking. 53 On August 3, 2023, the District Court issued a memorandum opinion and order 54 vacating the portion of the December 2022 guidance 55 that increased the administrative fee for the Federal IDR process to $350 per party for disputes initiated during the calendar year beginning January 1, 2023. The District Court also vacated certain provisions of the October 2021 interim final rules setting forth the batching criteria under which multiple IDR items or services may be considered jointly as part of a single IDR dispute. 56 On August 11, 2023, the Departments released guidance 57 to reflect the TMA IV opinion and order related to the administrative fee to clarify that the $50 per party per dispute administrative fee amount established in the October 2022 guidance applies for disputes initiated on or after August 3, 2023, and until the Departments take action to set a new administrative fee amount. 51 Complaint, Tex. Med. Ass'n. v. U. S. Dep't of Health and Human Servs., No. 6:23-cv-00059-JDK (E.D. Tex. Jan. 30, 2023) (ECF No. 1). 52 Centers for Medicare & Medicaid Services (December 23, 2022). Amendment to the Calendar Year 2023 Fee Guidance for the Federal Independent Dispute Resolution Process Under the No Surprises Act: Change in Administrative Fee. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/amended-cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf. 53 Complaint, Tex. Med. Ass'n. v. U. S. Dep't of Health and Human Servs., No. 6:23-cv-00059-JDK (E.D. Tex. Jan. 30, 2023) (ECF No. 1). 54 See Memorandum Opinion and Order, Tex. Med. Ass'n. v. U.S. Dep't of Health & Hum. Servs., No. 6:23-cv-00059-JDK, 2023 WL 4977746 (E.D. Tex. Aug. 3, 2023). 55 Centers for Medicare & Medicaid Services (December 23, 2022). Amendment to the Calendar Year 2023 Fee Guidance for the Federal Independent Dispute Resolution Process under the No Surprises Act: Change in Administrative Fee. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/amended-cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf. 56 Specifically, the District Court vacated the requirement under 26 CFR 54.9816-8T(c)(3)(i)(C), 29 CFR 2590.716-8(c)(3)(i)(C), and 45 CFR 149.510(c)(3)(i)(C) that for a qualified IDR item and service to be considered the same or similar item and service, it must be billed under the same service code or a comparable code under a different procedural code system, such as the Current Procedural Terminology (CPT) codes with modifiers, if applicable, Healthcare Common Procedure Coding System (HCPCS) with modifiers, if applicable, or Diagnosis-Related Group (DRG) codes with modifiers, if applicable. 57 U.S. Department of Health and Human Services, U.S. Department of Labor, and U.S. Department of the Treasury (August 2023). Federal Independent Dispute Resolution (IDR) Process Administrative Fee FAQs. https://www.cms.gov/files/document/idr-admin-fees-faqs-081123-508.pdf-0. On October 6, 2023, the Departments and OPM released “FAQs About Consolidated Appropriations Act, 2021 Implementation Part 62” 58 to provide guidance related to the TMA III opinion and order. On November 28, 2023, the Departments released guidance in accordance with the TMA III and TMA IV opinions and orders 59 to clarify how certified IDR entities should determine whether a dispute is appropriately batched and how to submit single and batched air ambulance disputes. 60 58 See U.S. Department of Health and Human Services, U.S. Department of Labor, U.S. Department of Treasury, Office of Personnel Management (October 6, 2023), FAQs about Consolidated Appropriations Act, 2021 Implementation Part 62, available at https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-62.pdf and https://www.cms.gov/files/document/faqs-part-62.pdf. 59 See U.S. Department of Health and Human Services, U.S. Department of Labor, U.S. Department of Treasury, Office of Personnel Management (November 28, 2023), FAQs about Consolidated Appropriations Act, 2021 Implementation Part 63, available at https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-62.pdf and https://www.cms.gov/files/document/faqs-part-63.pdf. 60 See U.S. Department of Health and Human Services, U.S. Department of Labor, U.S. Department of Treasury, Office of Personnel Management (November 28, 2023), Federal Independent Dispute Resolution (IDR) Process Batching and Air Ambulance FAQs, available at https://www.cms.gov/files/document/faqs-batching-air-ambulance.pdf. D. Federal Independent Dispute Resolution Operations Proposed Rules On November 3, 2023, the Departments published the Federal Independent Dispute Resolution Operations proposed rules 61 (IDR Operations proposed rules). Those proposed rules included new proposed requirements for disclosing information when initiating the Federal IDR process and the provision of certain claims codes with paper or electronic remittances. Additionally, those proposed rules would amend certain requirements related to the open negotiation period, initiation of the Federal IDR process, eligibility determinations, batched disputes, extensions due to extenuating circumstances, and the collection of administrative fees and certified IDR entity fees. Lastly, those proposed rules would require plans and issuers to register with the Federal IDR portal. 61 88 FR 75744. With respect to the administrative fee, the Departments proposed in the IDR Operations proposed rules to collect the administrative fee directly from the parties rather than having the certified IDR entities collect the administrative fee on the Departments' behalf. The Departments also proposed required timeframes for the initiating and non-initiating parties to pay the administrative fee and proposed to establish consequences for non-payment of the administrative fee for each party. Finally, to ensure that the Federal IDR process is accessible to all parties, the Departments proposed to charge both parties a reduced administrative fee when the highest offer made during open negotiation by either party was less than a predetermined threshold and proposed to charge the non-initiating party a reduced administrative fee when the dispute is determined ineligible by either the certified IDR entity or the Departments, as applicable. To align with these proposals, the Departments also set forth the methodology inputs used to calculate the proposed administrative fee amounts in the preamble to the IDR Operations proposed rules that would be effective for disputes initiated on or after January 1, 2025. The Departments proposed that the full administrative fee amount would be $150 per party per dispute, the reduced administrative fee for both parties when the highest offer made by either party during open negotiation was less than the threshold would be $75 per party per dispute (50 percent of the full administrative fee amount), and the reduced administrative fee for non-initiating parties in ineligible disputes would be $30 per non-initiating party per ineligible dispute (20 percent of the full administrative fee amount). The inputs to the methodology set forth in this preamble and the administrative fee amount the Departments are finalizing in these final rules are effective for disputes initiated on or after the effective date of these final rules. In contrast, the proposed administrative fee structure and administrative fee amounts based on inputs to the methodology set forth in the IDR Operations proposed rules, if finalized, would be effective for disputes initiated on or after January 1, 2025. The administrative fee policies finalized in these final rules are effective, and unchanged by the proposals in the IDR Operations proposed rules, unless and until superseding administrative fee policies in the IDR Operations proposed rules are adopted. E. Public Comments Received in Response to Proposed Rules In the September 26, 2023 Federal Register , the Departments published the Federal Independent Dispute Resolution (IDR) Process Administrative Fee and Certified IDR Entity Fee Ranges proposed rules (IDR Fees proposed rules), 62 which proposed to amend existing regulations to provide that the administrative fee amount charged by the Departments to participate in the Federal IDR process, and the ranges for certified IDR entity fees for single and batched determinations, would be set by the Departments through notice and comment rulemaking. The IDR Fees proposed rules also discussed the methodology used to calculate the administrative fee and the considerations used to develop the certified IDR entity fee ranges. Finally, the IDR Fees proposed rules proposed the amount of the administrative fee and the certified IDR entity fee ranges for disputes initiated on or after the later of the effective date of these rules or January 1, 2024. 62 88 FR 65888. The Departments received 44 comments on many different aspects of the IDR Fees proposed rules. In particular, the Departments received many comments stating that the administrative fee amount and the certified IDR entity fee ranges create a barrier to accessing the Federal IDR process for many parties, particularly small, rural, or independent providers, and these comments supported retaining the current $50 per party per dispute administrative fee amount. The Departments also received many comments on the proposed certified IDR entity fee ranges, particularly the proposed additional tiered batched fee range for disputes with more than 25 line items. While some commenters supported the increased flexibility for certified IDR entity fee ranges, many commenters were concerned about the proposed further increases in the certified IDR entity fee ranges. The Departments respond to these comments in section II of this preamble. Many comments concerned matters that were outside of the scope of the proposed rules and therefore are not addressed in these final rules. For example, the Departments received comments stating that the current Federal IDR process lacks the efficiency needed to resolve disputes quickly. The Departments also received many comments related to the eligibility determination process, including on difficulties determining eligibility in States with a specified State law and the lack of information provided by plans and issuers. Comments on the efficiency of the Federal IDR process and eligibility determinations relate to operations that are outside of the scope of these final rules' limited focus on the administrative fee and certified IDR entity fee ranges and the processes for setting such amounts. The Departments encourage interested parties to submit comments regarding the proposals included in the IDR Operations proposed rules, including the proposal to establish a Departmental eligibility review process, in accordance with the instructions set forth in those proposed rules. 63 63 See 88 FR 75744. Some other out-of-scope comments addressed the impacts of the Federal IDR portal closure, which occurred in response to litigation previously described in this preamble. For example, the Departments received comments requesting that, as a result of TMA IV, the Departments should refund $300 to each party that paid a $350 administrative fee between January 1, 2023 and August 3, 2023, and the Departments should offer an extension to parties that would have initiated a dispute if the administrative fee during that time was $50, rather than $350, to now initiate that dispute. The Departments note that this relief was requested by the plaintiffs in TMA IV and was denied by the court. 64 Comments also addressed the impact of TMA III on the calculation of the QPA, specifically asking the Departments to address underpayments to providers due to purported artificially suppressed QPAs. Additionally, the Departments received comments related to the batching requirements for submission of disputes. Some of these comments addressed specific difficulties in batching emergency medicine, radiology, and anesthesiology services and expressed a desire to broaden the batching criteria. While the IDR Operations proposed rules included proposals related to the batching requirements, these comments were outside the scope of this rulemaking because the IDR Fees proposed rules did not propose any changes to the batching requirements or calculation of the QPA. 64 See Memorandum Opinion and Order, Tex. Med. Ass'n., et al. v. U.S. Dep't of Health and Human Servs., et al., No. 6:23-cv-00059-JDK (E.D. Tex. August 3, 2023). Finally, the Departments received many comments suggesting different administrative fee structures. For example, the Departments received comments suggesting that the administrative fee amount be split between the parties, be refundable to the prevailing party, be funded 75 percent by plans and issuers and 25 percent by providers or be payable at the end of the Federal IDR process. The Departments also received comments recommending a variable administrative fee amount tied to the amount in dispute or the QPA, either for all disputes or just for batched disputes. Further comments suggested capping the administrative fee amount or imposing a base administrative fee amount and an additional tiered fee amount based on the amount in dispute. As a result of the TMA IV opinion and order having set aside the Departments' guidance establishing administrative fees, the Departments set a goal of establishing in rulemaking administrative fee amounts that would be effective as close to January 1, 2024 as possible, because the current $50 administrative fee amount is insufficient to satisfy the statutory requirement that the total amount of fees paid for the year be estimated to be equal to the amount of expenditures estimated to be made for the year in carrying out the Federal IDR process. If the Departments were to continue to impose a $50 per party per dispute administrative fee amount throughout 2024, the Departments estimate that they would collect approximately $24.6 million in administrative fees for the year (492,000 administrative fees paid × $50 per party per dispute), as discussed further in section IV.D.2.a of this preamble. As discussed further in section II.A of this preamble, the Departments estimate that their expenditures to carry out the Federal IDR process in 2024 will be approximately $56.6 million. Therefore, if the administrative fee amount remains at $50 per party per dispute in 2024, the Departments would significantly under-collect administrative fees required to carry out the Federal IDR process. Accordingly, to be able to implement an increase to the administrative fee amount as soon as possible, consistent with the statutory requirement, the IDR Fees proposed rules proposed the amount of the administrative fee and the preamble to the proposed rules described the methodology for calculating it. The Departments did not propose any changes to the structure of the administrative fee as this would take longer to develop and implement and would be more efficiently operationalized with the changes proposed in the IDR Operations proposed rules, which are intended to be more comprehensive. While the Departments considered alternative fee structures in this rulemaking, the Departments were of the view that addressing the structure of the administrative fee in the IDR Operations proposed rules would give interested parties more time to comment, consider, and prepare for any fee structure change, because the effective date of the IDR Operations proposed rules, if finalized, will be later than the effective date of these final rules. Additionally, the policies proposed in the IDR Operations proposed rules would require more time for the Departments to develop and implement due to the substantial changes to the Federal IDR portal required by those proposals, if finalized, including adopting new processes to collect the administrative fees directly from the parties and collecting differing amounts of administrative fees from different parties in certain circumstances, as described further in the IDR Operations proposed rules. Therefore, the Departments deferred those proposed changes to the Federal IDR process and administrative fee structure and collection procedures to the IDR Operations proposed rules and prioritized completing this rulemaking. The Departments encourage interested parties to submit relevant comments regarding batching and the administrative fee structure, the new inputs to the administrative fee methodology, and the amount of the fee proposed in the IDR Operations proposed rules, in response to those proposed rules. 65 65 See 88 FR 75744. The Departments also sought to establish in rulemaking certified IDR entity fee ranges that would be effective as close to January 1, 2024 as possible, because this effective date would provide predictability for certified IDR entities, who must plan for and finalize their 2024 certified IDR entity fixed fee amounts, and parties, who must budget for their participation in the Federal IDR process taking into account both the administrative and certified IDR entity fees. Establishing the certified IDR entity fee ranges in rulemaking with an effective date close to January 1, 2024 would also allow for greater transparency than the current method of establishing the fee ranges in guidance. F. Scope and Purpose of Rulemaking These final rules amend 26 CFR 54.9816-8(d)(2)(ii) and (e)(2)(vii), 29 CFR 2590.716-8(d)(2)(ii) and (e)(2)(vii), and 45 CFR 149.510(d)(2)(ii) and (e)(2)(vii) to provide that the administrative fee amount and the ranges for certified IDR entity fees for single and batched disputes will be set by the Departments through notice and comment rulemaking, rather than in guidance published annually. The preamble to this rulemaking also sets forth the methodology used to calculate the administrative fee amount and the considerations used to develop the certified IDR entity fee ranges. These rules also finalize the administrative fee amount and certified IDR entity fee ranges for disputes initiated on or after the effective date of these rules. The finalized administrative fee amount and certified IDR entity fee ranges in these rules will remain in effect until changed by notice and comment rulemaking. The IDR Fees proposed rules proposed that the administrative fee amount and certified IDR entity fee ranges finalized in these final rules would be effective for disputes initiated on or after the later of the effective date of these rules or January 1, 2024. As these final rules will not be effective by January 1, 2024, the Departments are finalizing the proposal that the administrative fee amount and certified IDR entity fee ranges in these rules will be effective for disputes initiated on or after the effective date of these rules, which is 30 calendar days from publication in the Federal Register . II. Overview of the Final Rules—Departments of the Treasury, Labor, and HHS A. Administrative Fee Amount and Methodology 1. Summary of Proposed and Finalized Policies Under section 9816(c)(8)(A) of the Code, 66 section 716(c)(8)(A) of ERISA, 67 section 2799A-1(c)(8)(A) of the PHS Act, 68 and the October 2021 interim final rules, 69 each party to a determination for which a certified IDR entity is selected must pay an administrative fee for participating in the Federal IDR process. Under section 9816(c)(8)(B) of the Code, 70 section 716(c)(8)(B) of ERISA, 71 section 2799A-1(c)(8)(B) of the PHS Act, 72 and the October 2021 interim final rules, 73 the administrative fee is established in a manner such that the total amount of administrative fees paid for a year are estimated to be equal to the amount of expenditures estimated to be made by the Departments in carrying out the Federal IDR process for that year. 66 26 U.S.C. 9816(c)(8)(A). 67 29 U.S.C. 1185e(c)(8)(A). 68 42 U.S.C. 300gg-111(c)(8)(A). 69 26 CFR 54.9816-8T(d)(2)(i), 29 CFR 2590.716-8(d)(2)(i), and 45 CFR 149.510(d)(2)(i). 70 26 U.S.C. 9816(c)(8)(B). 71 29 U.S.C. 1185e(c)(8)(B). 72 42 U.S.C. 300gg-111(c)(8)(B). 73 26 CFR 54.9816-8T(d)(2)(ii), 29 CFR 2590.716-8(d)(2)(ii), and 45 CFR 149.510(d)(2)(ii). The Departments proposed to establish the amount of the administrative fee through notice and comment rulemaking by amending 26 CFR 54.9816-8(d)(2)(ii), 29 CFR 2590.716-8(d)(2)(ii), and 45 CFR 149.510(d)(2)(ii). The Departments also proposed at 26 CFR 54.9816-8(d)(2)(ii), 29 CFR 2590.716-8(d)(2)(ii), and 45 CFR 149.510(d)(2)(ii) that, for disputes initiated on or after the later of the effective date of these rules or January 1, 2024, the administrative fee amount would be $150 per party per dispute, which would remain in effect until changed by notice and comment rulemaking. 74 Under the proposed rules, the Departments would have retained the flexibility to update the administrative fee more or less frequently than annually if the total estimated amount of administrative fees paid or amount of expenditures estimated to be made by the Departments in carrying out the Federal IDR process changed such that a new administrative fee amount would be required to satisfy the requirement that the total amount of administrative fees paid is estimated to be equal to the amount of expenditures estimated to be made by the Departments in carrying out the Federal IDR process. 74 As previously mentioned, in the event the effective date of these final rules is after January 1, 2024, the $50 per party per dispute administrative fee amount in effect for 2023, as provided in the October 2022 guidance, will continue to apply to disputes initiated between January 1, 2024 and the effective date of these rules. The Departments proposed to set the administrative fee amount by estimating the amount of expenditures made by the Departments in carrying out the Federal IDR process and dividing this amount by the estimated total number of administrative fees paid by the parties. As explained in the preamble to the IDR Fees proposed rules, the Departments estimated the total number of administrative fees paid based on the total volume of closed disputes. For the purpose of calculating the administrative fee amount in the IDR Fees proposed rules, the Departments projected that approximately 225,000 disputes would be closed annually, resulting in 450,000 administrative fees paid. Additionally, the Departments estimated that the expenditures made by the Departments for carrying out the Federal IDR process in 2024 would be approximately $70 million. 75 Using this methodology, proposed in paragraphs 26 CFR 54.9816-8(d)(2)(ii), 29 CFR 2590.716-8(d)(2)(ii), and 45 CFR 149.510(d)(2)(ii), the Departments calculated the proposed administrative fee for disputes initiated on or after the effective date of these rules, and continuing until changed by notice and comment rulemaking, by dividing the annual expenditures of approximately $70 million estimated to be made by the Departments in carrying out the Federal IDR process by 450,000, the estimated annual number of administrative fees to be paid by the disputing parties. This resulted in a proposed administrative fee amount of $150 per party per dispute. 76 75 The list of expenditures associated with the estimated $70 million was provided in the IDR Fees proposed rules at 88 FR 65893. 76 As described in the IDR Fees proposed rules, the Departments estimated that the proposed administrative fee amount of $150 per party per dispute would result in an estimated annual collection approximately equal to the estimated annual expenditures of approximately $70 million. See 88 FR 65888 at 65899. After considering comments received on the proposals, as discussed further in this preamble section, the Departments are finalizing the policy to set the administrative fee amount in notice and comment rulemaking no more frequently than once per calendar year. The Departments may set the administrative fee less frequently than annually if the Departments estimate that the total amount of administrative fees paid under the current administrative fee amount would continue to be equal to the amount of expenditures estimated to be made by the Departments in carrying out the Federal IDR process for the upcoming calendar year. Additionally, in response to comments received on the proposals, the Departments are modifying the administrative fee methodology used to estimate the number of administrative fees paid. The Departments will use the estimated number of administrative fees paid to certified IDR entities, rather than the estimated number of closed disputes, to estimate the total number of administrative fees paid. In addition, the Departments will not assume, as set forth in the IDR Fees proposed rules, a 25 percent reduction in the volume of disputes as the result of the District Court vacating certain batching requirements in TMA IV. The Departments are also revising the expenditures estimated to be made by the Departments in carrying out the Federal IDR process from approximately $70 million to approximately $56.6 million to reflect a reduction in the Departments' anticipated assistance with eligibility determinations, as discussed later in this preamble. Collectively, these modifications to the methodology result in a finalized administrative fee amount of $115 per party per dispute for disputes initiated on or after the effective date of these rules. As the administrative fee methodology in the IDR Operations proposed rules included some of the same elements as the administrative fee methodology in the IDR Fees proposed rules, the Departments will consider whether any modifications made to the administrative fee methodology in these final rules should also be adopted when finalizing the administrative fee amount using the methodology proposed in the IDR Operations proposed rules. 2. Summary of Comments Received and Responses to Comments a. Establishing the Administrative Fee in Notice and Comment Rulemaking Many commenters supported the proposal to establish the administrative fee in notice and comment rulemaking. Commenters stated that this transparent process would allow the public to evaluate the administrative fee amount and provide feedback on the feasibility of providers using the Federal IDR process. However, several commenters opposed the proposal to establish the administrative fee amount more or less frequently than annually and stated that adopting this proposal would introduce uncertainty in the Federal IDR process and would make budgeting more challenging. These commenters requested that the Departments update the administrative fee annually, to balance stability, transparency, and responsiveness, which they stated would mitigate the impact of changes to the administrative fee. One commenter supported the proposal to establish the administrative fee amount more or less frequently than annually, but only if a mid-year change led to a decrease to the administrative fee amount. Commenters also stated that any increases to the administrative fee amount should be on an annual basis with advance notice to interested parties. One of these commenters stated that the administrative fee amount should be set predictably and with at least 90 days' advance notice. Some commenters requested further clarification on the process for proposing and finalizing administrative fee amounts in notice and comment rulemaking. The Departments agree that one of the goals of establishing the administrative fee amount in notice and comment rulemaking is to foster transparency and allow interested parties to provide feedback on the methodology and process for setting the proposed fee amount. The Departments recognize commenters' concerns about establishing the administrative fee amount more or less frequently than annually, and the Departments are finalizing a policy under which they would establish the administrative fee amount no more frequently than once per calendar year. In addition, the Departments are finalizing as proposed the proposal to change the administrative fee amount less frequently than annually if the expenditures estimated to be made by the Departments in carrying out the Federal IDR process and the estimated total amount of administrative fees paid in the upcoming year are estimated to be equal. If the Departments determine that the estimated total amount of administrative fees paid in a future year at the current administrative fee amount would be less than the expenditures estimated to be made by the Departments in carrying out the Federal IDR process for that year, the Departments would propose to raise the administrative fee amount in notice and comment rulemaking. Alternatively, if the Departments determine that the estimated total amount of administrative fees paid in a future year at the current administrative fee amount would be more than the expenditures estimated to be made in carrying out the Federal IDR process for that year, the Departments would propose to lower the administrative fee amount in notice and comment rulemaking. Consistent with the statute, the Departments will set the administrative fee such that the estimated total amount of administrative fees paid is equal to the amount of expenditures estimated to be made by the Departments in carrying out the Federal IDR process. 77 77 Section 9816(c)(8)(B) of the Code, section 716(c)(8)(B) of ERISA, and section 2799A-1(c)(8)(B) of the PHS Act. The Departments also reiterate that using the notice and comment rulemaking process to establish the administrative fee amount will provide interested parties with substantial advance notice of fee changes, so additional advance notice is not needed. As described in the IDR Fees proposed rules, the Departments will provide details on the methodology used to determine the proposed administrative fee amount, and the proposed administrative fee amount, if finalized, would be effective prospectively. Interested parties will be provided with a period to submit public comments on the proposals, and the Departments will consider all comments submitted within the comment period in developing the final rules. In addition, other commenters raised concerns regarding the amount of the administrative fee changing between any proposed and final rules. One commenter did not support making changes to the administrative fee amount between the proposed and final rules, while another commenter stated that any such changes should be by no more than 10 percent. The Departments acknowledge these commenters' suggestions but note that the Departments may have more recent data available to estimate the total amount of administrative fees paid or the amount of expenditures estimated to be made by the Departments in carrying out the Federal IDR process while developing the final rules than they had while developing the IDR Fees proposed rules, and it is reasonable for the Departments to rely on the more recent data in developing the final rules, provided that they use the methodology described in the preamble to the IDR Fees proposed rules or a methodology modified from the preamble to the IDR Fees proposed rules in response to comments. As in these final rules, these circumstances may result in the Departments finalizing a different administrative fee amount than the amount proposed. The finalized administrative fee amount will differ from the amount proposed, if necessary, to comply with the statutory requirement that the total administrative fees paid are estimated to be equal to the amount of expenditures estimated to be made by the Departments in carrying out the Federal IDR process. 78 78 Id. One commenter was concerned about the ability to comment on the administrative fee amount rather than just the methodology used to calculate the amount and stated that only seeking comment on the methodology could inhibit commenters' ability to accurately express the impact of the proposed fee amount on a disputing party's access to the Federal IDR process. As previously explained, the Departments are finalizing a policy to establish the administrative fee amount in notice and comment rulemaking no more frequently than once per calendar year and will provide opportunity for comment on any new proposed administrative fee amount, as well as any changes to the methodology used to calculate the administrative fee amount. b. Administrative Fee Methodology—Estimated Total Number of Administrative Fees Paid Many commenters opposed the Departments' proposed administrative fee methodology for estimating the total number of administrative fees to be paid. Many commenters suggested that estimating the total number of administrative fees paid based on the projected total number of disputes closed would not capture all disputes in which administrative fees are paid. Some commenters were concerned that this methodology could result in an overpayment of administrative fees to the Departments. One of these commenters was concerned that the data from the six-month period in 2023 used to estimate the number of disputes closed would be radically different from 2024 data. Several commenters suggested using other metrics to calculate the estimated total number of administrative fees paid, including the number of disputes initiated, the number of disputes for which a certified IDR entity fee was paid, and the number of disputes for which parties submitted offers. Moreover, some commenters asserted that using disputes closed contradicts the Departments' regulations requiring each party to pay the administrative fee at the time the certified IDR entity is selected and the Departments' guidance permitting certified IDR entities to collect the administrative fee from parties up to the time of offer submission. 79 79 See 26 CFR 54.9816-8(d)(2)(i), 29 CFR 2590.716-8(d)(2)(i), and 45 CFR 149.510(d)(2)(i); see also section 4.8 of the Federal Independent Dispute Resolution (IDR) Process Guidance for Certified IDR Entities. October 2022. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/federal-independent-dispute-resolution-process-guidance-for-certified-idr-entities.pdf. The Departments proposed to use the projected total number of disputes closed to calculate the administrative fee amount because that metric reflected collections under current collections processes, 80 and the Departments were of the view that it was a reliable metric upon which to base the estimated total number of administrative fees to be paid. However, after considering the comments, the Departments agree with the commenters who stated that estimating the total number of administrative fees paid using the projected number of disputes closed would not capture all disputes in which administrative fees are paid because administrative fees may be paid for disputes that have not yet been closed. To capture all disputes in which parties pay administrative fees, the Departments are finalizing the administrative fee amount based on a methodology that estimates the total number of administrative fees paid by projecting Federal IDR portal data on the number of administrative fees paid to certified IDR entities, as explained in the subsequent paragraphs. The number of administrative fees paid to certified IDR entities is currently the best available metric in the Federal IDR portal data to capture all administrative fees parties pay for disputes in any stage of the Federal IDR process. 80 Under current guidance, the administrative fee may be collected by certified IDR entities up until the time the parties submit their offers, and therefore the administrative fee is not collected for all disputes initiated. See, for example, Centers for Medicare & Medicaid Services (March 2023). Federal Independent Dispute Resolution (IDR) Process Guidance for Certified IDR Entities. https://www.cms.gov/files/document/federal-idr-guidance-idr-entities-march-2023.pdf. In the preamble to the IDR Fees proposed rules, the Departments set the administrative fee amount based on the projection that 225,000 disputes would be closed annually. Because both initiating and non-initiating parties to a dispute are required to pay the administrative fee, the Departments estimated in the preamble to the IDR Fees proposed rules that 450,000 administrative fees would be paid annually, or 37,500 per month. As explained above, in setting the administrative fee in these final rules, the Departments are using the total number of administrative fees paid to certified IDR entities for disputes in any stage of the Federal IDR process after certified IDR entity selection. Using the methodology being adopted in these final rules, the Departments estimate that 492,000 administrative fees will be paid annually, or 41,000 administrative fees will be paid per month, by the parties. The Departments estimate the total number of administrative fees paid annually based on the monthly average number of administrative fees paid to certified IDR entities between February 2023 and July 2023. This monthly average was approximately 41,000, and the Departments projected this figure forward by 12 months to estimate that 492,000 administrative fees will be paid annually. The Departments are using data from the same time period that was used in the IDR Fees proposed rules (February 2023 to July 2023), without updating to newer data. Data from this time period remains the best available data to project future trends due to portal closures and other Federal IDR process changes that began in August 2023 due to the TMA III and TMA IV opinions and orders. While the Departments considered using data from the most recent six-month period prior to the finalization of this rule (June 2023 to November 2023), they concluded this would inaccurately reflect the monthly average number of administrative fees paid, as various aspects of the Federal IDR process were temporarily suspended from August 4, 2023 to October 6, 2023 for all disputes. 81 81 Of note, batched disputes and single disputes involving air ambulance services also remained suspended after October 6, 2023 and would not be reflected in the most recent data. The Departments considered comments providing alternatives for estimating the total number of administrative fees paid in calculating the administrative fee amount. Some commenters wanted the Departments to estimate the total number of administrative fees paid based on the number of disputes initiated. This metric is inaccurate for purposes of calculating the administrative fee amount because the administrative fee may not be collected for all disputes initiated. The obligation for parties to pay the administrative fee attaches at the time of certified IDR entity selection (with guidance permitting certified IDR entities to collect the administrative fee from parties until the time of offer submission). Therefore, if a dispute is withdrawn before selection of the certified IDR entity, there is no obligation for the parties to pay administrative fees for that dispute. For this reason, using the total number of disputes initiated to estimate the number of administrative fees to be paid in the administrative fee methodology risks the Departments underfunding the Federal IDR process. 82 82 In the IDR Operations proposed rules, the Departments proposed to use the total volume of disputes projected to be initiated because the proposed operational changes in those rules, if finalized, would result in the Departments' collection of administrative fees closer to a dispute's date of initiation, and therefore, it may be appropriate to estimate the total volume of administrative fees paid using the total volume of disputes initiated. 88 FR 75793. Other commenters requested the Departments to estimate the total number of administrative fees paid based on the number of disputes for which a certified IDR entity fee was paid. Because parties are not required to pay their certified IDR entity fees and administrative fees at the same time, the number of certified IDR entity fees paid would not necessarily reflect the number of administrative fees paid. Therefore, this metric would also be inaccurate for purposes of calculating the administrative fee amount. Finally, the Departments also considered estimating the total number of administrative fees paid based on the number of disputes for which parties submitted offers. However, the Departments did not believe this metric would accurately reflect the estimated number of administrative fees that would be paid, since parties may pay administrative fees without submitting offers. Thus, the metric could understate the total number of administrative fees paid. In summary, the Departments are of the view that it is most accurate to use the total number of administrative fees paid to certified IDR entities in the administrative fee methodology rather than the other metrics suggested by commenters in the prior paragraphs, as this metric reflects actual administrative fees that have been paid for disputes in any stage of the Federal IDR process after certified IDR entity selection. 83 Therefore, in recognition of commenters' concerns about a methodology that could underestimate the total number of administrative fees paid in 2024, resulting in an overestimate of the amount of the administrative fee needed for 2024, the Departments are establishing the administrative fee methodology using the total number of administrative fees paid to certified IDR entities, rather than the total number of closed disputes, to estimate the total number of administrative fees paid in 2024. 83 As explained in these final rules, under current processes, the total volume of administrative fees paid to certified IDR entities is the best metric to use in the administrative fee methodology to align with statute requiring the Departments to estimate the total number of administrative fees paid. As operations of the Federal IDR process improve over time, the Departments will consider changes to the methodology to best estimate the total number of administrative fees paid. The Departments also received comments regarding the Departments' projections of the total number of closed disputes used to estimate the total number of administrative fees paid. Several commenters suggested that the Departments' estimate of 225,000 closed disputes is too low. A few commenters suggested that the Departments are underestimating utilization of the Federal IDR process and recommended that the Departments analyze the available data from States implementing similar policies before the No Surprises Act. In the IDR Fees proposed rules, the Departments estimated that 225,000 disputes would be closed annually, and because both the initiating and non-initiating parties to a dispute are required to pay the administrative fee, 450,000 administrative fees would be paid annually. The Departments now estimate that 492,000 administrative fees will be paid to certified IDR entities in the year, as described earlier in this preamble section. The Departments continue to be of the view that Federal IDR process data is the best available data to project trends in the Federal IDR process, especially because regulations and volume differ in State IDR processes. As mentioned in the IDR Fees proposed rules, the Departments initially anticipated 17,333 disputes involving non-air ambulance services would be initiated during the first year of implementation of the Federal IDR process. The Departments developed this estimate based on the experience of New York State. However, the use of State data resulted in the Departments underestimating utilization of the Federal IDR process, as nearly 335,000 disputes were initiated in the Federal IDR process between April 2022 and March 2023. 84 As demonstrated by this result, past data from State processes has limited applicability in predicting future use of the Federal IDR process. For this reason, the Departments are of the view that it is better to use Federal IDR process data rather than State data to estimate the total number of administrative fees paid. 84 Centers for Medicare & Medicaid Services (April 27, 2023). Federal Independent Dispute Resolution Process—Status Update. https://www.cms.gov/files/document/federal-idr-processstatus-update-april-2023.pdf. In addition, several commenters disagreed with the Departments' assumption of a 25 percent reduction in the volume of disputes in estimating the total number of administrative fees paid to account for the impact of TMA IV' s vacatur of batching regulations and guidance, or asked for more detail on how the projected 25 percent reduction factor was determined, including the details on how the batching of claims will be treated in the future. One commenter noted that the vacatur of the $350 administrative fee amount and batching regulations as a result of TMA IV allows many additional claims to become economically viable, so the Departments should expect dispute volume to increase. Another commenter stated that the Departments cannot know with certainty that the TMA IV opinion and order will decrease the number of disputes. This commenter also asserted that TMA IV did not affect the batching criteria that serve as the largest obstacle for emergency medicine, and therefore there will not be large batches in emergency medicine, which the commenter noted comprised over 70 percent of disputes reflected in the Partial Report on the Independent Dispute Resolution (IDR) Process October 1-December 31, 2022. 85 Moreover, a few commenters suggested that the TMA III opinion and order will increase dispute volume as providers will continue to see low QPAs from plans and issuers and will rely on the Federal IDR process for appropriate payment. One commenter agreed with the Departments' assumption that the TMA IV opinion and order will decrease the volume of disputes but disagreed with the Departments' rationale that the increased number of line items will take more time to close. This commenter expected that providers batching claims rather than submitting claims individually would increase efficiencies in the Federal IDR process. 85 U.S. Department of Health and Human Services, U.S. Department of Labor, U.S. Department of the Treasury. Partial Report on the Independent Dispute Resolution (IDR) Process October 1-December 31, 2022. https://www.cms.gov/files/document/partial-report-idr-process-octoberdecember-2022.pdf. After reviewing the comments, the Departments have reconsidered the assumption that the number of disputes will decrease by 25 percent as a result of TMA IV' s vacatur of batching regulations and guidance. Therefore, the Departments are not finalizing the projected 25 percent reduction in the estimated total number of administrative fees paid. The Departments recognize that certain batching criteria remain in place, such as criteria that impact the batching of emergency medicine claims, and items and services included in such claims will have to be submitted as separate disputes if they do not comply with the applicable batching criteria. 86 Moreover, because the Departments are finalizing the administrative fee amount based on a methodology that estimates the total number of administrative fees paid based on the total number of administrative fees paid to certified IDR entities, rather than the total number of closed disputes, the methodology no longer requires the Departments to make an assumption on whether batched disputes will take more time to close after the vacatur of the batching regulations as a result of TMA IV. In addition, the Departments do not have data available to support commenters' assertion that TMA III will lead more providers to rely on the Federal IDR process for appropriate claims payment. Plans and issuers are required to calculate QPAs using a good faith, reasonable interpretation of the applicable statutes and regulations that remain in effect after the TMA III opinion and order. 87 Furthermore, in their experience operating the Federal IDR process, the Departments have not seen a clear or quantifiable relationship between changes in policy and changes in the number of disputes initiated. The Departments are of the view that the historical data from February 2023 to July 2023 is the best available data at this time to project utilization of the Federal IDR process in 2024, and the Departments are therefore finalizing the administrative fee amount based on a methodology that does not include a 25 percent reduction in the volume of disputes. 86 U.S. Department of Health and Human Services, U.S. Department of Labor, U.S. Department of Treasury, Office of Personnel Management (October 6, 2023). FAQs about Consolidated Appropriations Act, 2021 Implementation Part 62. https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-62.pdf and https://www.cms.gov/files/document/faqs-part-62.pdf. 87 Id. c. Administrative Fee Methodology—Estimated Expenditures The Departments also received comments related to their estimated expenditures for purposes of calculating the administrative fee amount. Several commenters suggested that the Departments should disclose more data supporting the estimated costs to carry out the Federal IDR process in the administrative fee methodology to provide the public with an opportunity to comment. Some of these commenters asserted that the IDR Fees proposed rules did not provide enough detail on the estimated expenditures to allow interested parties to provide meaningful comment on the proposed administrative fee amount. One commenter urged the Departments to establish a regular process for detailing the Departments' data on the administrative fee, including an annual disclosure statement with a balance sheet, to promote transparency and predictability. A few commenters disputed the Departments' reference that Freedom of Information Act (FOIA) regulations prevent the Departments from providing detail on certain estimated expenditure amounts. These commenters stated that without this transparency, interested parties were not afforded an opportunity to meaningfully comment on the proposals related to the administrative fee amount and methodology inputs. The Departments are finalizing the administrative fee amount based on a methodology that divides the “estimated,” rather than “projected,” expenditures to carry out the Federal IDR process by the estimated total number of administrative fees to be paid in the year. The use of “estimated” rather than “projected” expenditures is to ensure the terminology used to describe the methodology is consistent with that of the statutory text. 88 To calculate the estimated expenditures to carry out the Federal IDR process, the Departments included the Federal resources needed to carry out the Federal IDR process, such as future personnel and contract costs. The preamble to the IDR Fees proposed rules provided an overview of the future contract costs and Federal resources included in the estimated expenditures and explained that the estimated expenditures to carry out the Federal IDR process in 2024 were approximately $70 million. The Departments disagree with commenters that the Departments did not provide sufficient information to allow meaningful comment. In particular, in the preamble to the IDR Fees proposed rules, the Departments provided details on the types of costs that are included in the estimated expenditures. 89 88 Section 9816(c)(8)(B) of the Code, section 716(c)(8)(B) of ERISA, and section 2799A-1(c)(8)(B) of the PHS Act. 89 88 FR 65893. While the Departments described the contract costs and Federal resources associated with estimated expenditures to carry out the Federal IDR process in the preamble to the IDR Fees proposed rules, in response to comments requesting additional specifics on the estimated expenditures and in an effort to promote transparency, the Departments are providing further detail on costs included in the total estimated expenditures in these final rules within the bounds of the Departments' ability to disclose these amounts. To avoid releasing sensitive contract information, the Departments are breaking down the costs, which include the future contract and Federal personnel costs, by category of expenditure, and providing approximate cost estimates for carrying out the following categories of Federal IDR process activities: 90 90 As discussed further later in this preamble section, the Departments have reconsidered costs associated with total estimated expenditures of carrying out the Federal IDR process and are revising the total estimated expenditures for 2024 from approximately $70 million to approximately $56.6 million. Additionally, certain expenses apply across multiple categories that were included in the IDR Fees proposed rules. This revised combination of categories better provides a meaningful cost estimate of these activities. • Maintaining, operating, and improving the Federal IDR portal, certifying IDR entities, and collecting data from certified IDR entities (approximately $26,360,000); • Conducting program integrity activities, such as certain QPA audits (as further described subsequently in this preamble) and IDR decision audits, and receiving and investigating Federal IDR process-related complaints (approximately $13,060,000, of which QPA audits resulting from complaints filed by providers, facilities, or providers of air ambulance services comprise approximately $5,000,000); • Providing outreach to parties and technical assistance to certified IDR entities, including assisting with eligibility determinations when the volume of disputes submitted exceeds the capacity of certified IDR entities to perform those determinations (approximately $11,630,000, of which assisting with eligibility determinations comprises approximately $10,000,000); 91 and 91 Centers for Medicare & Medicaid Services (November 21, 2022). Notice of the Federal Independent Dispute Resolution (IDR) Team Technical Assistance to Certified Independent Dispute Resolution Entities (IDREs) in the Dispute Eligibility Determination Process. https://www.cms.gov/files/document/idre-eligibility-support-guidance-11212022-final-updated.pdf. • Collecting administrative fees (approximately $5,530,000), which includes costs to invoice certified IDR entities for administrative fees collected, provide the system infrastructure for certified IDR entities to record and remit administrative fees collected, track data on fees collected and make continuous improvements to the collections process and invoicing systems. The Departments are publishing summary-level estimated budget information and have provided meaningful data for public input for the purposes of calculating the administrative fee amount. The Departments intend to continue to provide data on the Federal IDR process to promote transparency and predictability in the administrative fee amount, including publishing quarterly public reports with the Departments' expenditures and administrative fee collections. 92 92 See, e.g., U.S. Department of Health and Human Services, U.S. Department of Labor, U.S. Department of the Treasury. Initial Report on the Independent Dispute Resolution (IDR) Process April 15-September 30, 2022. https://www.cms.gov/files/document/initial-report-idr-april-15-september-30-2022.pdf. U.S. Department of Health and Human Services, U.S. Department of Labor, U.S. Department of the Treasury. Partial Report on the Independent Dispute Resolution (IDR) Process October 1-December 31, 2022. https://www.cms.gov/files/document/partial-report-idr-process-octoberdecember-2022.pdf. In response to commenters' concerns regarding the Departments' reference to the applicability of FOIA exemptions to information shared during the rulemaking process, the Departments clarify that they will disclose information in response to any requests in accordance with the FOIA and accompanying regulations. However, the Departments are not publishing specific future contract estimates in this rule in response to commenters' requests for more detail on estimated expenditures of Federal IDR process activities and the data underlying those estimates because publishing those contract estimates could undermine future contract procurements. For example, if the Departments were to publish the projected future cost of the contracts used to maintain the Federal IDR portal, the Federal Government would be meaningfully disadvantaged in future contract negotiations related to the Federal IDR portal, as bidders would know how much the Departments anticipate such a future contract being worth. Although current contract awards are published and publicly available, 93 these award amounts do not necessarily reflect the future value of the contract, as there may be future changes in policy and operations and the scope of work. 93 Available at www.sam.gov. The Departments are of the view that interested parties had sufficient information to meaningfully comment on the IDR Fees proposed rules. For example, commenters provided valuable information in their comments regarding how the Departments should estimate the total number of administrative fees paid. Based on these comments, the Departments modified the methodology accordingly. Similarly, the Departments provided detailed information in the IDR Fees proposed rules on their calculation of the estimated expenditures to carry out the Federal IDR process. Specifically, the Departments detailed the types of activities included in estimating the annual expenditures of approximately $70 million and received comments on these activities. After considering comments received on these details of the administrative fee methodology, the Departments have revised this estimate of annual expenditures down to approximately $56.6 million, as explained in later paragraphs. In addition, many commenters raised concerns about the inclusion of certain types of expenses in the administrative fee methodology. Several commenters recommended excluding all or some of the QPA audit costs given that the QPA also serves a purpose outside of the Federal IDR process in calculating patient cost sharing. Some commenters asked the Departments to disclose their total expenditures on QPA audits and the portion proposed to be funded by administrative fees compared to other sources. As previously mentioned, the Departments are required to include estimated expenditures to carry out the Federal IDR process, which include contract costs and Federal resources, in calculating the administrative fee amount. Accordingly, the Departments disagree with commenters who suggested that QPA audit costs should not be included in the calculation of the administrative fee amount and are adopting an administrative fee methodology that includes certain QPA audit costs in the estimated expenditures. For any dispute in the Federal IDR process, a plan or issuer would have been required to disclose the QPA to the provider along with the initial payment or notice of denial of payment for items and services, and disputing parties must include the QPA for items and services when initiating a dispute. Certified IDR entities are required to consider the QPA when selecting between the offers submitted by disputing parties when determining the total out-of-network payment rate for items and services subject to the Federal IDR process. 94 94 Section 9816(c)(5)(C)(i)(I) of the Code, section 716(c)(5)(C)(i)(I) of ERISA, and section 2799A-1(c)(5)(C)(i)(I) of the PHS Act. Furthermore, it is the responsibility of the Departments (or the applicable State authorities), rather than the provider, facility, provider of air ambulance services, or the certified IDR entity, to monitor plan and issuer compliance with the QPA requirements. 95 To date, the Departments have only conducted audits as part of investigations of complaints, and anticipate continuing to conduct these risk-based audits in the future, though the No Surprises Act permits the Departments to conduct random and risk-based audits. 96 Given the role of the QPA in the Federal IDR process and the direct impact on providers, performing audits on plans and issuers in response to allegations that the plan's or issuer's QPAs are inaccurate is necessary to carry out the Federal IDR process and promotes the integrity of and confidence in the Federal IDR process. 95 Section 9816(a)(2)(A)(i) of the Code, section 716(a)(2)(A) of ERISA, and section 2799A-1(a)(2)(A)(i) of the PHS Act. See also 86 FR 36899. However, a provider or facility may always assert to the certified IDR entity that additional information points in favor of the selection of its offer as the out-of-network payment amount, even where that offer is for a payment amount that is different from the QPA. 87 FR 52627. 96 Section 9816(a)(2)(A)(ii) of the Code, and section 2799A-1(a)(2)(A)(ii) of the PHS Act. The July 2021 interim final rules describe the enforcement responsibilities for each Department and OPM. 86 FR 36899 (July 13, 2021). https://www.federalregister.gov/documents/2021/07/13/2021-14382/requirements-related-to-surprise-billing-part-i. Moreover, addressing concerns about inaccurately calculated QPAs helps to ensure plans and issuers provide correctly calculated QPAs when they participate in the Federal IDR process. For example, in the absence of QPA audits to investigate complaints from providers, facilities, and providers of air ambulance services that one or more of a plan's or issuer's QPAs are inaccurate, plan and issuer compliance with QPA requirements would go unchecked. 97 Certified IDR entities must consider the relevant QPA in making each payment determination under the No Surprises Act, 98 and unchecked QPAs would significantly threaten the integrity of QPAs and the payment determinations made by certified IDR entities. These audits help to increase transparency into the QPA calculation methodology and encourage compliance among plans and issuers. Accordingly, QPA audits are an integral part of the Federal IDR process, the costs of which are reasonably included in the calculation of the administrative fee amount. 97 The accuracy of a plan's or issuer's QPA (or QPA methodology) may not be reviewed within a payment determination under the Federal IDR process. See 86 FR 55996. 98 Section 9816(c)(5)(C)(i)(I) of the Code, section 716(c)(5)(C)(i)(I) of ERISA, and section 2799A-1(c)(5)(C)(i)(I) of the PHS Act. In estimating the expenditures to carry out the Federal IDR process, the Departments are including estimated costs only for certain QPA audits that the Departments anticipate incurring to investigate complaints regarding inaccurate QPAs made by providers, facilities, and providers of air ambulance services under the Federal IDR process. The Departments are not including the costs of QPA audits conducted: (1) in connection with Department of Labor, OPM, or Department of the Treasury investigations; (2) randomly; or (3) in response to complaints from consumers, as not all of these audits are necessarily related to the Federal IDR process. The Departments are of the view that only the costs related to QPA audits conducted in response to complaints from entities that are potential parties to a payment determination are sufficiently related to the Federal IDR process to justify their inclusion in the administrative fee calculation. For example, consumers who complain that a plan or issuer inaccurately calculated their cost sharing based on an erroneously calculated QPA will not be involved in the Federal IDR process, and therefore the costs of such audits are appropriately excluded from those costs supported by administrative fees paid by parties to the Federal IDR process. Because HHS is primarily responsible for the implementation of the Federal IDR process, the Departments view similarly random QPA audits that may be conducted by the Departments, as well as any QPA audits in connection with Department of Labor, OPM, and Department of the Treasury investigations. The costs of HHS conducting QPA audits for complaints that a plan's or issuer's QPAs are inaccurate are estimated to be approximately $5,000,000 in 2024. As plans and issuers improve their compliance in calculating QPAs correctly, the Departments anticipate that the costs of conducting these audits will decrease, which would be reflected in the estimated expenditures used to determine future administrative fee amounts. Several commenters also disagreed with including costs associated with assisting with eligibility reviews in the estimated expenditures to carry out the Federal IDR process. A few of these commenters noted that certified IDR entities are responsible for conducting eligibility reviews and therefore certified IDR entity fees should cover this cost. Some commenters asserted that such costs should be recovered through the non-prevailing party's certified IDR entity fee, as the eligibility determination is part of the payment determination. One of these commenters expressed concern that including this expense would incentivize certified IDR entities to understaff as HHS would intervene to address a staffing shortage. The Departments disagree that the costs of assisting with eligibility determinations should be excluded from estimated expenditures. Certified IDR entities voluntarily participate in the Federal IDR process and set their certified IDR entity fees within ranges established by the Departments to ensure they remain financially viable and that such fees can cover their operating expenses to participate in the Federal IDR process, which include the costs incurred in determining the eligibility of items and services for the Federal IDR process. While certified IDR entities are responsible for making eligibility determinations, and therefore incur costs associated with this activity, the Departments have also incurred costs since November 2022 to assist certified IDR entities in making these determinations by performing research and outreach on disputes pending eligibility determinations, including identifying and obtaining information necessary for certified IDR entities to make eligibility determinations, and will continue to incur such costs in 2024. 99 The Departments disagree with the commenter that stated that the Departments' assistance would incentivize certified IDR entities to understaff. Certified IDR entities could not have reasonably predicted the amount of personnel they would need to make eligibility determinations within the required timeframe given the extremely high volume of disputes. Moreover, it has been difficult for certified IDR entities to make staffing adjustments in response to utilization of the Federal IDR process due to the repeated temporary pauses in the Federal IDR portal resulting from litigation matters and changes in operations. 99 Centers for Medicare & Medicaid Services (November 21, 2022). Notice of the Federal Independent Dispute Resolution (IDR) Team Technical Assistance to Certified Independent Dispute Resolution Entities (IDREs) in the Dispute Eligibility Determination Process. https://www.cms.gov/files/document/idre-eligibility-support-guidance-11212022-final-updated.pdf. When the Departments first developed the Federal IDR process and the rules and guidance establishing how certified IDR entities were to calculate their fees for the scope of work they were expected to perform, the Departments and the certified IDR entities did not anticipate the significant difficulty and costs involved in determining eligibility for the Federal IDR process. After six months of operating the Federal IDR process and receiving feedback from disputing parties and certified IDR entities, the Departments determined that it was necessary to assist certified IDR entities with determining eligibility through performing research and outreach on disputes pending eligibility determinations, including identifying and obtaining information necessary to make an eligibility determination. 100 The Departments determined that this course of action was necessary when it became clear that eligibility determinations were taking significantly longer than the Departments had anticipated. 100 The Departments are providing technical assistance regarding eligibility but are not making eligibility determinations, as, under current regulations, only certified IDR entities may make eligibility determinations. Id. In the IDR Operations proposed rules, the Departments proposed several policies aimed at improving communication between the parties that would make eligibility determinations less burdensome for certified IDR entities and speed up the Federal IDR process, as well as allow the Departments to make eligibility determinations under extenuating circumstances. 101 However, these policies, if finalized, will take time to implement. In the interim, the Departments are working to balance feedback from interested parties asking the Departments to increase the efficiency of the Federal IDR process and decrease the backlog of disputes with other feedback asking the Departments to minimize expenditures and avoid increases to the administrative fee. The Departments have also received comments urging them to shorten the time it takes for payment determinations to be reached. The Departments continue to believe that some level of assistance is necessary to address the high volume of disputes submitted and the backlog of disputes, due in part to the closing and reopening of the Federal IDR process to make necessary systems updates in light of the TMA III and TMA IV opinion and orders. 101 88 FR 75744. However, after reviewing comments, the Departments have reconsidered the amount of estimated costs associated with pre-eligibility reviews that should be included in the estimated expenditures to carry out the Federal IDR process in calendar year 2024. In estimating the expenditures of approximately $70 million in the IDR Fees proposed rules, the Departments included an increase in costs to reflect the Departments taking on a greater role in assisting with eligibility determinations to improve the efficiency of the Federal IDR process. 102 Based on comments received urging the Departments to avoid increasing the administrative fee, the Departments will not take on a greater role in broadly assisting certified IDR entities with eligibility determinations at this time. Instead, the Departments will limit their assistance with eligibility determinations to more complex disputes, such as disputes where there is missing information to determine Federal versus State jurisdictions in a State with a specified State law. This approach will ensure efficient use of the Departments' resources by leveraging the Departments' assistance and expertise in handling pre-eligibility reviews for disputes that certified IDR entities may need to spend more time on, such as disputes for which information was limited due to the systems in place when those disputes were initiated, and will allow certified IDR entities to focus on moving disputes through the Federal IDR process. Furthermore, this will allow the Departments to keep the costs of assisting with eligibility determinations lower in 2024 such that the expenditures estimated to be made by the Departments to carry out the Federal IDR process are now estimated to be approximately $56.6 million in 2024. The total estimated expenditures in the IDR Fees proposed rules included approximately $20 million for the Departments to assist with eligibility determinations via conducting research and outreach. The estimated cost of assisting with eligibility determinations in 2024, as used to calculate the administrative fee as finalized, is approximately $10 million. 102 While there is an implementation appropriation, the initial appropriation of $500 million in the CAA is finite and only remains available until expended through 2024. Moreover, the Departments note that additional mandatory funding for the Federal IDR process has not been appropriated beyond the initial $500 million made available in the CAA. However, the Departments cannot rely on budget requests or on appropriations enacted by Congress when calculating this fee. The statute requires the fee to be set at an amount such that the total amount of fees paid is estimated to be equal to the amount of expenditures estimated to be made by the Departments in carrying out the Federal IDR process. Furthermore, the Departments do not anticipate that the decision to focus their assistance with pre-eligibility reviews on more complex disputes and the revised administrative fee amount finalized in these rules will impact the fees certified IDR entities choose to charge. Given the backlog of disputes, utilization of the Federal IDR process strains the current capacity of certified IDR entities to make timely determinations. While the Departments' assistance with eligibility determinations is currently helping to alleviate the backlog of disputes, certified IDR entities' operating expenses are not expected to decrease as a result. If the Departments are able to decrease their assistance with eligibility determinations, the costs of pre-eligibility reviews would decrease, which would be reflected in the estimated expenditures used to determine future administrative fee amounts. In addition, some commenters disagreed with including the costs of investigating complaints of non-compliance in the administrative fee methodology. Commenters asked for clarity in the “investigating relevant complaints” expense and asserted that “relevant” complaints beyond the Federal IDR process would be inappropriate to include in the calculation of the administrative fee amount. A few of these commenters suggested that the party found to be non-compliant should bear the costs of the investigation and asked the Departments to publicly report summary data on these investigations and the costs covered by non-compliant parties compared to those covered by administrative fees. One commenter suggested that the investigation of complaints related to violations of the No Surprises Act should be funded by a congressional appropriation as these are largely unrelated to the Federal IDR process. The Departments clarify that the complaints costs included in the estimated expenditures in the administrative fee methodology only include costs associated with receiving and investigating Federal IDR process-related complaints. For example, such costs include investigating complaints within the Departments' jurisdiction regarding the failure of a non-prevailing party to pay the payment determination amount to the prevailing party within 30 days of the certified IDR entity's payment determination as required by the No Surprises Act. 103 Complaints costs do not include costs for complaints that are not related to the Federal IDR process, such as those related to the QPA for patient cost sharing. Therefore, the Departments are of the view that those costs are appropriate to include in the administrative fee methodology and are necessary to ensure compliance with the Federal IDR process. 104 103 Section 9816(c)(6) of the Code, section 716(c)(6) of ERISA, and section 2799A-1(c)(6) of the PHS Act. 104 While there is an implementation appropriation, the initial appropriation of $500 million in the CAA is finite and only remains available until expended through 2024. Moreover, the Departments note that additional mandatory funding for the Federal IDR process has not been appropriated beyond the initial $500 million made available in the CAA. The Departments are unable to appropriate this funding themselves, although they have made numerous requests to Congress for additional funding, and therefore this is not a reliable source of Federal IDR process funding. Many commenters suggested that the Departments consider other funding sources besides the administrative fee to fund expenditures. Several commenters suggested that implementing penalties could help fund expenditures, including penalties for submitting ineligible disputes, failing to comply with disclosure obligations, or delaying the Federal IDR process. Some commenters suggested the CAA's $500 million appropriation to implement the No Surprises Act should cover at least a portion of the Departments' estimated expenditures. One commenter asked for confirmation that the implementation appropriation has been exhausted fully and suggested requesting additional funds from Congress in upcoming budget requests to support the funding of the Departments' ongoing implementation. Another commenter asserted that the administrative fee methodology set forth in the IDR Fees proposed rules did not take into account any appropriations funding. As required by the No Surprises Act, 105 both parties to a dispute must pay an administrative fee for participating in the Federal IDR process. By statute, the administrative fee amount must be calculated such that the total amount of fees paid for a year is estimated to be equal to the amount of expenditures estimated to be made by the Departments for such year in carrying out the Federal IDR process. While the CAA appropriated $500 million to remain available until expended through 2024 for preparing regulations, guidance, and reports, collecting data, conducting audits and enforcement activities, 106 and establishing and initially implementing the No Surprises Act and Title II Transparency provisions through calendar year 2024, this finite appropriation is not solely for the Federal IDR process. Additionally, while the Fiscal Year 2024 President's budget included another $500 million appropriation request for the continued implementation of the No Surprises Act and Title II Transparency provisions, the administrative fee amount finalized in these rules must still be consistent with the statutory requirement to set the administrative fee amount such that the total amount of administrative fees paid is estimated to be equal to the amount of expenditures estimated to be made by the Departments in carrying out the Federal IDR process. As a result, when calculating this fee, the Departments cannot rely on budget requests or on appropriations enacted by Congress. 105 Section 9816(c)(8)(A) of the Code, section 716(c)(8)(A) of ERISA, and section 2799A-1(c)(8)(A) of the PHS Act. 106 As previously explained in the preamble to these final rules, the Departments may conduct random or risk-based QPA audits. The Departments consider it appropriate to include some of the costs of conducting risk-based QPA audits resulting from complaints filed by providers, facilities, or providers of air ambulance services alleging that the QPA was inaccurate as expenditures made in carrying out the Federal IDR process, and therefore include the costs of conducting these audits in estimating the expenditures made by the Departments in carrying out the Federal IDR process. Other audit costs, such as the QPA audits conducted in connection with Department of Labor, OPM, or Department of Treasury investigations; audits conducted randomly; or audits conducted in response to complaints from consumers regarding QPAs may be funded using other appropriations, as applicable. In addition, commenters urged the Departments to consider strategies to decrease utilization of the Federal IDR process, decrease administrative burden, increase the efficiency of the Federal IDR process, and ultimately reduce the cost of administering the Federal IDR process. Examples of commenters' suggestions include enforcing disclosure requirements, requiring plans and issuers to include remittance advance remark codes (RARCs) at the time of initial claim determination, easing batching requirements, disincentivizing bad faith conduct, making improvements to the Federal IDR portal, and implementing a required initial payment amount for out-of-network emergency services. Several commenters suggested that the volume of ineligible disputes and the cost of conducting eligibility reviews would be reduced or eliminated if the Departments enforced disclosure requirements or required plans and issuers to provide adequate information for providers to determine whether a claim is eligible for the Federal IDR process. One commenter suggested that plans and issuers should cover the cost of eligibility reviews when they fail to inform the provider of eligibility for the Federal IDR process. Another commenter suggested that the cost of eligibility reviews should be assessed to the party that challenges eligibility as this cost would be avoidable if the plan or issuer provided sufficient information. One commenter suggested that the Departments could reduce the administrative burden of the Federal IDR process by contracting with an established claims processing clearinghouse that currently possesses the capabilities to perform real-time eligibility determinations to create an in-portal eligibility validation process. The Departments continue to consider improvements to the Federal IDR process and recently published the IDR Operations proposed rules, 107 which include policies aimed at reducing the volume of ineligible disputes, establishing additional disclosure requirements (such as requiring plans and issuers to use approved claim adjustment reason codes (CARCs) and RARCs), incentivizing good faith conduct with respect to open negotiation and exchange of information, and otherwise improving the Federal IDR process. Overall, these policies would, if finalized, support efficiency in Federal IDR process operations and reduce the cost of administering the Federal IDR process in the future. 107 88 FR 75744. Recognizing that the cost of certifying IDR entities is included in the administrative fee methodology, one commenter sought clarity on how the methodology considers efficiencies gained from certifying more IDR entities to make payment determinations and therefore reduce the backlog. The Departments note that the benefits of certifying new IDR entities will be achieved over time, as new certified IDR entities acclimate to the process and increase the speed at which they move disputes through the Federal IDR process. As efficiencies in the Federal IDR process are adopted over time, the expenditures required to carry out the Federal IDR process could decrease, exerting downwards pressure on the administrative fee amount. If any of these situations results in changes to the data used to calculate the administrative fee amount, the Departments intend to take these changes into consideration when establishing the administrative fee amount in the future. d. Administrative Fee Methodology—Other Comments The Departments sought comments on whether, when calculating the administrative fee amount in future years, they should apply an inflationary adjustment, such as the consumer price index for all urban consumers (CPI-U), to the amount of estimated expenditures to be made by the Departments in carrying out the Federal IDR process. A few commenters supported using an inflationary adjustment, such as the CPI-U, to adjust the administrative fee amount in future years. Other commenters opposed this approach, stating that it would not necessarily correlate with the Departments' expenditures to operate the Federal IDR process and may not align with the established methodology of dividing the Departments' estimated expenditures by the estimated total number of administrative fees to be paid. Another commenter stated that this proposal would be unnecessary if the Departments finalize the proposal to establish the administrative fee amount more or less frequently than annually. Finally, another commenter asked the Departments to revisit this proposal when data are more predictable after implementing planned improvements to the Federal IDR process. Upon consideration of the comments, the Departments are not finalizing the use of an inflationary adjustment, such as the CPI-U, to adjust the administrative fee amount in future years. The Departments agree with commenters that the CPI-U may not correlate with projected increases in the Departments' estimated expenditures to carry out the Federal IDR process and therefore using it could be inconsistent with the statute. Several commenters urged the Departments to improve the Federal IDR process before increasing the administrative fee amount by decreasing the backlog, enforcing timely payment, and holding all parties accountable to the regulatory requirements. Some commenters recommended maintaining the current administrative fee amount until there is stability in the Federal IDR process and more data are available to accurately forecast long-term costs. A few commenters suggested that the Departments modify the administrative fee amount in future years to make up for any shortfall or surplus created by the finalized administrative fee amount. As previously mentioned, the Departments continue to consider improvements to the Federal IDR process; however, implementing these improvements would increase the costs of carrying out the Federal IDR process in the short term and would take time to operationalize. As previously mentioned, the Departments proposed policies in the IDR Operations proposed rules aimed to improve the overall efficiency and operations of the Federal IDR process. 108 The Departments were unable to propose those policies in the IDR Fees proposed rules because they are much more comprehensive than the fee-related policies proposed in the IDR Fees proposed rules and would require more time to develop and implement, if finalized. There is an urgency to publish these final rules due to the need to sufficiently fund the Federal IDR process in 2024, because, as explained above, the current $50 administrative fee amount is insufficient to provide total administrative fees that are estimated to be equal to the expenditures estimated to be made by the Departments in carrying out the Federal IDR process, as required by the No Surprises Act. 109 108 88 FR 75744. 109 Section 9816(c)(8)(B) of the Code, section 716(c)(8)(B) of ERISA, and section 2799A-1(c)(8)(B) of the PHS Act. e. Administrative Fee Amount and Impact Many commenters opposed the proposed $150 per party per dispute administrative fee amount and stated that it would make the Federal IDR process cost-prohibitive to pursue for many providers, especially small providers, rural providers, independent practices, and certain medical specialties, such as psychiatry, emergency medicine, radiology, and anesthesiology. Some commenters requested that the Departments analyze how the proposed administrative fee amount would be cost-prohibitive for providers and would deter and limit dispute resolution for small providers. A few commenters asserted that the administrative fee amount would unfairly favor plans and issuers over providers in the Federal IDR process. One commenter recommended against using a methodology to calculate the administrative fee amount that did not consider the increased financial burdens on providers compared to plans and issuers. Another commenter stated that the proposed administrative fee amount prioritizes the interest of certified IDR entities and the Departments in covering their costs at the expense of parties' access to the Federal IDR process. Similarly, some commenters stressed that it is important to keep the administrative fee amount low to prevent the administrative fee from serving as a de facto barrier to the Federal IDR process. These commenters asserted that such a de facto barrier would not align with congressional intent, as Congress decided against adding a dollar-value threshold to the No Surprises Act despite considering this while developing the legislation. Several commenters raised concerns that reducing access to the Federal IDR process would reduce providers' reimbursements for out-of-network services, as it would not be cost-effective to dispute certain payment amounts in the Federal IDR process. Some commenters asserted that a cost-prohibitive administrative fee amount would reduce incentives for plans and issuers to negotiate fair in-network contracts or, in some cases, renew contracts, forcing providers out of networks. A few commenters suggested that patients would also be impacted by the increased administrative fee amount, either through plans and issuers narrowing provider networks or increasing premiums and cost-sharing amounts, or providers passing on costs to patients or going out of business. However, several commenters noted that the proposed fee amount was an improvement from the previous $350 amount. For reasons described throughout this preamble, the Departments are finalizing the administrative fee amount for disputes initiated on or after the effective date of these rules as $115 per party per dispute. This change in the administrative fee amount between the proposed and final rules reflects modifications to the estimated expenditures and to the administrative fee methodology described elsewhere in this preamble. While the Departments are statutorily required to set the administrative fee amount such that the total amount of administrative fees paid is estimated to be equal to the amount of expenditures estimated to be made by the Departments in carrying out the Federal IDR process, the Departments acknowledge the concerns of commenters related to accessibility and affordability of the Federal IDR process and the impact of the proposed administrative fee amount on the parties and patients. In the Departments' effort to balance their statutory obligations with the priority of ensuring equitable access for parties to engage in the Federal IDR process, the Departments proposed in the IDR Operations proposed rules to reduce the administrative fee amount in certain circumstances. In the IDR Operations proposed rules, the Departments proposed to reduce the administrative fee amount to $75 (50 percent of the full administrative fee amount proposed in those proposed rules) for both parties when the highest offer by either party in open negotiation was less than the full administrative fee amount ($150 as proposed in those proposed rules) 110 and to $30 (20 percent of the full administrative fee amount proposed in those proposed rules) for non-initiating parties in ineligible disputes. 111 The Departments also proposed in the IDR Operations proposed rules to revise the requirements for batching qualified IDR items and services together into a single Federal IDR process dispute. 112 The Departments anticipate that these proposals would make the Federal IDR process more accessible for all parties, but especially the parties for whom commenters expressed concerns, such as small and rural providers and certain medical specialties. 110 88 FR 75799. 111 88 FR 75800. 112 88 FR 75783 through 75791. The administrative fee amount being finalized in these final rules is applied equally to both parties to a dispute. The Departments are of the view that it would be inequitable to charge a smaller party a lower administrative fee, because a dispute initiated by a smaller party costs the Departments the same amount to process as a dispute initiated by a larger party. Furthermore, the value of a dispute, rather than the size of the party, determines whether it will be cost-effective for the party to pursue the dispute. For example, a smaller party could initiate a high dollar value dispute, while a larger party could initiate a small dollar value dispute. The Departments proposed in the IDR Operations proposed rules to charge both parties a reduced administrative fee when the highest offer made during open negotiation is less than the full administrative fee amount, 113 which is intended to improve the accessibility of the Federal IDR process for parties to low-dollar disputes. The Departments anticipate that such parties may be smaller providers and facilities or independent practices. However, larger parties to low-dollar disputes would not be precluded from paying the reduced administrative fee as long as the dispute meets the aforementioned requirement. 113 88 FR 75799. The Departments considered the impact of the proposed $150 administrative fee amount on the parties compared to the current $50 administrative fee amount and the previous $350 administrative fee amount. While the Departments understand that it may be economically infeasible to initiate some claims in the Federal IDR process due to the administrative and certified IDR entity fees associated with accessing the process, as discussed previously, the Departments are statutorily obligated to charge an administrative fee amount such that the administrative fees paid are estimated to be equal to the amount of expenditures estimated to be made by the Departments in carrying out the Federal IDR process. 114 The methodology used by the Departments is derived from this statutory language. 114 Section 9816(c)(8)(B) of the Code, section 716(c)(8)(B) of ERISA, and section 2799A-1(c)(8)(B) of the PHS Act. Congress did not include a dollar-value threshold for Federal IDR process disputes in the No Surprises Act. Rather, Congress opted to include a requirement in the No Surprises Act for each party to a dispute for which a certified IDR entity is selected to pay to the Departments, at such time and in such manner as specified by the Departments, a fee for participating in the Federal IDR process. 115 Therefore, regardless of the administrative fee amount, disputing parties must always evaluate whether it would be economically efficient to initiate a dispute in the Federal IDR process. Congress also provided in the No Surprises Act that the administrative fee amount is established by the Departments in a manner such that the total amount of fees paid for such year is estimated to be equal to the amount of expenditures estimated to be made by the Departments for such year in carrying out the Federal IDR process. 116 115 Section 9816(c)(8)(A) of the Code, section 716(c)(8)(A) of ERISA, and section 2799A-1(c)(8)(A) of the PHS Act. 116 Section 9816(c)(8)(B) of the Code, section 716(c)(8)(B) of ERISA, and section 2799A-1(c)(8)(B) of the PHS Act. In regard to comments stating that the administrative fee could result in narrowing networks, many factors may impact whether a provider, facility, or provider of air ambulance services and a plan or issuer will enter a network agreement with one another, including the market power of each party, Federal and State network adequacy laws, and other factors. The Departments acknowledge that the amount paid for out-of-network services is one of the factors that impacts market participants' decisions whether to enter network agreements. The No Surprises Act represents a substantial change to the way the parties come to agreement on payment for out-of-network services by prohibiting, in many circumstances, the practice of sending surprise medical bills to patients and establishing a Federal IDR process for determining the appropriate out-of-network rate. Many providers report that initial payments made by plans and issuers for out-of-network services are now substantially lower than such payments were before enactment of the No Surprises Act. Some providers report that plans' and issuers' abilities to make lower payments for out-of-network services has impacted their willingness to offer acceptable in-network payment rates in network agreement negotiations. To the extent that the Federal IDR process and the prohibition on surprise medical billing change this equilibrium among parties, they could impact the number of providers and plans and issuers that are able to agree on terms for entering a network agreement and consequently network breadth. In the IDR Operations proposed rules, the Departments are proposing a number of steps to accelerate throughput in the Federal IDR process, 117 which would make it easier for the parties to use the process to determine the appropriate payment amount for out-of-network services. That said, the appropriate payment rate for out-of-network services is only one factor among many that influences network breadth. It is also important for the parties to meaningfully engage in open negotiation to determine an appropriate out-of-network payment rate, since agreeing to rates in open negotiation allow the parties to avoid the costs of using the Federal IDR process. Even as the Federal IDR process becomes faster and more parties avail themselves of the opportunity to agree to out-of-network payment rates during the open negotiation period, the price paid for out-of-network services will remain one among many factors in a dynamic market. Furthermore, the Departments anticipate that a Federal IDR process with consistent payment determination outcomes will lead to fewer dispute initiations, because parties will have a better understanding of what a determination will likely be and more disputes would likely be settled in open negotiation or even earlier, resulting in the parties avoiding the costs associated with the Federal IDR process. 117 88 FR 75744. The Departments also do not anticipate that the policies finalized in these rules would cause plans and issuers to increase premiums, as further discussed in section IV.G of this preamble, or patient cost sharing, because administrative fees paid would likely represent a very small percentage of the costs considered by plans and issuers in calculating annual premiums or cost sharing. Many commenters emphasized the importance of considering the proposed administrative fee amount alongside batching requirements to determine whether the administrative fee amount would be cost-prohibitiv [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2023-27931. Public record. Not legal advice.