Federal Independent Dispute Resolution Operations

Federal RegisterJun 4, 2026

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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206-AO48

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[TD 10049]

RIN 1545-BQ55

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2590

RIN 1210-AC17

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 149

[CMS-9897-F]

RIN 0938-AV15

Federal Independent Dispute Resolution Operations

AGENCY:

Office of Personnel Management; Internal Revenue Service, Department of the Treasury; Employee Benefits Security Administration, Department of Labor; Centers for Medicare & Medicaid Services, Department of Health and Human Services.

ACTION:

Final rule.

SUMMARY:

This document sets forth these final rules related to certain provisions of the No Surprises Act regarding the Federal independent dispute resolution (IDR) process, which was established as part of the Consolidated Appropriations Act, 2021 (CAA). These rules finalize new requirements relating to the disclosure of information that group health plans and health insurance issuers offering group or individual health insurance coverage must include along with the initial payment or notice of denial of payment for certain items and services subject to the surprise billing protections in the No Surprises Act. These final rules also require plans and issuers to communicate information by using claim adjustment reason codes (CARCs) and remittance advice remark codes (RARCs), as specified in guidance, when providing any paper or electronic remittance advice (ERA) to an entity that does not have a contractual relationship with the plan or issuer. This document also finalizes amendments to certain requirements related to the open negotiation period preceding the Federal IDR process, the initiation of the Federal IDR process, the Federal IDR dispute eligibility review process, and the payment and collection of administrative fees and certified IDR entity fees. This document also finalizes the definition of bundled payment arrangements, amends requirements related to batched items and services and amends the rules for extensions of timeframes due to extenuating circumstances. Additionally, this document finalizes provisions that require plans and issuers to register in the Federal IDR portal. In accordance with Federal law, a summary of these rules may be found at

https://www.regulations.gov/.

DATES:

Effective date:

These final rules are effective on August 3, 2026.

Applicability date:

See section II.H. of these final rules for information on the applicability dates.

FOR FURTHER INFORMATION CONTACT:

Cameron Stokes, Office of Personnel Management, at 202-936-0162; Alexander Krupnick, Internal Revenue Service, Department of the Treasury, at 202-317-5500; Elizabeth Schumacher or Rebecca Miller, Employee Benefits Security Administration, Department of Labor, at 202-693-8335; Bryan Kirk, Centers for Medicare & Medicaid Services, Department of Health and Human Services, at 301-492-4122.

Customer Service Information:

Information from the Office of Personnel Management (OPM) on health benefits plans offered under the Federal Employees Health Benefits (FEHB) Program can be found on the OPM website (

http://www.opm.gov/healthcare-insurance/healthcare/

). Individuals interested in obtaining information from the Department of Labor (DOL) concerning employment-based health coverage laws may call the Employee Benefits Security Administration (EBSA) Toll-Free Hotline at 1-866-444-EBSA (3272) or visit the DOL's website (

www.dol.gov/agencies/ebsa

). In addition, information from the Department of Health and Human Services (HHS) on private health insurance coverage and coverage provided by non-Federal governmental group health plans can be found on the Centers for Medicare & Medicaid Services (CMS) website (

http://www.cms.gov/marketplace

), information on health care reform can be found at

http://www.healthcare.gov,

and information on surprise medical bills can be found at

http://www.cms.gov/nosurprises.

SUPPLEMENTARY INFORMATION:

I. Background

A. Preventing Surprise Medical Bills and Establishing the Federal Independent Dispute Resolution (IDR) Process

The No Surprises Act 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) to provide 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.

Section 102 of the No Surprises Act added section 9816 of the Code, section 716 of ERISA, and section 2799A-1 of the PHS Act, 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. “Health care facilities” are generally defined as hospitals, hospital outpatient departments, critical access hospitals, and ambulatory surgical centers.

On December 27, 2020, the CAA was enacted. Title I of the CAA is also known as the No Surprises Act. Public Law 116-260 (December 27, 2020).

Section 102(d)(1) of the No Surprises Act amended the Federal Employees Health Benefits 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 for 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, section 716 of ERISA, and section 2799A-1 of the PHS Act.

Section 105 of the No Surprises Act added section 9817 of the Code, section 717 of ERISA, and section 2799A-2 of the PHS Act. 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.

The No Surprises Act also added provisions to title XXVII of the PHS Act in a new part E 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.

The Departments of the Treasury, Labor, and HHS (the Departments), along with the Office of Personnel Management (OPM), are issuing regulations in phases that implement provisions of the No Surprises Act and have issued multiple rulemakings since 2021 to implement various provisions. More specifically relevant to these final rules, the Departments and OPM issued interim final rules (July 2021 interim final rules

and October 2021 interim final rules

), and the Departments issued final rules (August 2022 final rules

) implementing provisions of sections 9816 and 9817 of the Code, sections 716 and 717 of ERISA, and sections 2799A-1 and 2799A-2 of the PHS Act. These 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

in certain circumstances, and air ambulance services furnished by nonparticipating providers of air ambulance services. These 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 in cases where a specified State law or an applicable All-Payer Model Agreement does not provide a method for determining the total amount payable.

86 FR 36872 (July 13, 2021).

86 FR 55980 (October 7, 2021).

87 FR 52618 (August 26, 2022).

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.

The August 2022 final rules became effective October 25, 2022, and are applicable for items and 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.

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 Federal Employees Health Benefits Act. These provisions apply to carriers in the FEHB Program for 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.

As outlined in sections I.D and I.F of the preamble to the Federal Independent Dispute Resolution Operations proposed rules

(2023 proposed rules), certain provisions of these rules relating to the methodology for calculating the qualifying payment amount (QPA), the information that a certified IDR entity must consider in making a payment determination, and certain restrictions on the qualified IDR items or services that may be considered jointly as part of a batched dispute have been vacated by the United States District Court for the Eastern District of Texas (District Court).

The District Court also vacated guidance

raising the Federal IDR administrative fee from $50 to $350 per party for disputes initiated during the calendar year beginning January 1, 2023. On October 30, 2024, the Fifth Circuit issued an opinion and order in

TMA III,

which partially reversed the district court's decision for certain provisions related to the methodology for calculating the QPA that had been vacated by the district court in

TMA III.

On May 30, 2025, the Fifth Circuit granted a request from the plaintiffs in

TMA III

for a rehearing en banc and vacated the Fifth Circuit's October 30, 2024 panel opinion. As a result, the district court's decision from August 24, 2023 continues to bind the Departments pending the Fifth Circuit's en banc decision.

88 FR 75744 (November 3, 2023).

See

Tex. Med. Ass'n

U.S. Dep't of Health & Hum. Servs.,

587 F. Supp. 3d 528 (E.D. Tex. 2022) (

TMA I

);

Tex. Med. Ass'n

U.S. Dep't of Health & Hum. Servs.,

654 F. Supp. 3d 575 (E.D. Tex. 2023),

aff'd,

No. 23-40217 (5th Cir. August 2, 2024) (

TMA II

);

Tex. Med. Ass'n

U.S. Dep't of Health & Hum. Servs.,

Case No. 6:22-cv-450-JDK (E.D. Tex. August 24, 2023),

Tex. Med. Ass'n

U.S. Dep't of Health & Hum. Servs.,

120 F.4th 494 (5th Cir. 2024), and

Tex. Med. Ass'n

U.S. Dep't of Health & Hum. Servs.,

Case No. 23-40605 (5th Cir. May 30, 2025) (collectively,

TMA III

); and

Tex. Med. Ass'n

U.S. Dep't of Health & Hum. Servs.,

Case No. 6:23-cv-00059-JDK, (E.D. Tex. August 3, 2023) (

TMA IV

See

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 23, 2022), available at

https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/amended-cy2023-fee-guidance-Federal-independent-dispute-resolution-process-nsa.pdf.

On September 26, 2023, the Departments published the Federal IDR Process Administrative Fee and Certified IDR Entity Fee Ranges Proposed Rules (IDR Process Fees proposed rules)

to amend the administrative fee and certified IDR entity fee provisions in the October 2021 interim final rules to provide additional guidance and promote transparency in the administrative fee calculation and certified IDR entity fee ranges. These rules were finalized on December 21, 2023 (IDR Process Fees final rules)

and are effective for disputes initiated on or after January 22, 2024.

88 FR 65888 (September 26, 2023).

88 FR 88494 (December 21, 2023).

On November 3, 2023, the Departments issued the Federal Independent Dispute Resolution Operations Proposed Rules (2023 proposed rules) to further amend existing requirements related to the Federal IDR process. The comment period for the 2023 proposed rules closed on January 2, 2024. On January 22, 2024, the Departments reopened the comment period from January 22, 2024, to February 5, 2024, to give interested parties additional time to review the 2023 proposed rules and submit comments.

B. The Federal IDR Process to Date

On April 15, 2022, the Departments launched the Federal IDR portal to accept disputes regarding the appropriate out-of-network rate for claims subject to the surprise billing protections of the No Surprises Act. In the first year of operations, disputing parties submitted 489,000 disputes, which is 14 times the number of disputes that the Departments had expected to receive in an entire calendar year.

13 14

The high volume of dispute submissions has continued, and as of January 31, 2026, disputing parties have

submitted over 5.1 million disputes for review.

See

Federal Independent Dispute Resolution Process—Status Update, available at

https://www.cms.gov/files/document/Federal-idr-processstatus-update-april-2023.pdf.

In the regulatory impact analysis of the October 2021 interim final rules (86 FR 55980, 56068-56070), the Departments estimated that 17,333 disputes involving non-air ambulance services and 4,899 disputes involving air ambulance services would be submitted to the Federal IDR process during the first year of implementation.

See

Federal IDR Bi-Monthly Reports, as of January 31, 2025, available at

https://www.cms.gov/nosurprises/policies-and-resources/reports.

Several factors likely contribute to the high volume of initiated disputes and longer timeframes for resolution of disputes in the Federal IDR process. First, providers, facilities, and providers of air ambulance services (providers)§

have alleged that plans' and issuers' QPA calculations are sometimes artificially low and that plans and issuers are making initial payments based on these artificially low QPAs, which incentivizes the use of the Federal IDR process for a larger number of items and services. Second, providers, plans and issuers have alleged, on numerous occasions, that the other party regularly fails to engage in meaningful open negotiation during the 30-business-day open negotiation period, resulting in relatively few disputes being settled outside of the Federal IDR process. Interested parties also shared that the lack of meaningful engagement in open negotiation contributes to inefficiencies within the Federal IDR process because disputing parties that fail to engage in open negotiation may not exchange information that would facilitate the Federal IDR process, such as contact information and other required disclosures, or may exchange only incomplete information. Third, the District Court's successive rulings in

TMA II, TMA IV,

and

TMA III

have necessitated multiple temporary shutdowns of the Federal IDR process to comply with the District Court's orders. Reopening the Federal IDR portal each time has required the Departments to draft new guidance, engage in new rulemaking, implement significant system updates, and communicate changes to disputing parties and certified IDR entities. Finally, initiating parties are submitting a large number of ineligible disputes, leading to both a high volume of dispute submissions and slow processing of disputes.

For purposes of these final rules, unless otherwise stated, whenever the Departments are referring to providers, facilities, and providers of air ambulance services, or to “providers” for short that are parties to Federal IDR process disputes, the Departments are referring to nonparticipating providers, facilities, and providers of air ambulance services.

From April 15, 2022 to December 31, 2024, non-initiating parties challenged the eligibility of 976,721 disputes for the Federal IDR process, and certified IDR entities found 355,804 disputes ineligible.

Ineligible disputes often involve an item or service that is not a qualified IDR item or service because it is payable by a health plan or coverage that is not subject to the surprise billing protections of the No Surprises Act, such as Medicare or Medicaid, or because the item or service is subject to a specified State law or an All-Payer Model Agreement. Additionally, many batched disputes were found ineligible due to the initiating party incorrectly batching items or services in a manner that did not comply with the regulations, such as batching claims paid by different plans or issuers.

Certified IDR entities have similarly reported encountering incorrectly bundled disputes. For example, a provider may incorrectly try to submit as a bundle an emergency room facility code with various item and service codes included as line items, rather than properly submitting a single service code (for example, a Diagnosis-Related Group (DRG) code under which a provider, facility, or provider of air ambulance services can bill for multiple items or services).

Disputes are also ineligible when the disputing parties initiate the Federal IDR process after failing to satisfy the 30-business-day open negotiation period requirements specified under 29 CFR 2590.716-8(b)(1) and 45 CFR 149.510(b)(1) or after 4 business days after the end of the 30-business-day open negotiation period as specified under 29 CFR 2590.716-8(b)(2)(i) and 45 CFR 149.510(b)(2)(i).

A dispute is not eligible for the Federal IDR process unless it concerns an item or service that meets the definition of a qualified IDR item or service. 29 CFR 2590.716-8(a)(2)(xi) and 45 CFR 149.510 (a)(2)(xi).

29 CFR 2590.716-8(c)(3)(i)(B) and 45 CFR 149.510(c)(3)(i)(B). The District Court vacated the batching provisions of 45 CFR 149.510(c)(3)(i)(C), 26 CFR 54.9816-8T(c)(3)(i)(C), and 29 CFR 2590.716-8(c)(3)(i)(C) in

Tex. Med. Ass'n

U.S. Dep't of Health & Hum. Servs.,

Case No. 6:23-cv-59-JDK (E.D. Tex. Aug. 3, 2023) (

TMA IV

29 CFR 2590.716-8(c)(3)(ii) and 45 CFR 149.510(c)(3)(ii).

To address the high volume of disputes submitted to the Federal IDR process, the Departments have provided ongoing technical assistance to certified IDR entities and disputing parties by issuing guidance as well as performing research and outreach on dispute eligibility determinations.

In addition, the Departments have implemented Federal IDR portal system enhancements, such as enabling non-initiating parties to submit supporting documentation to contest dispute eligibility within their response to the notice of IDR initiation and requiring non-initiating parties to attest to the health plan type.

This allows the Departments to collect information regarding dispute eligibility earlier in the process to identify whether the eligibility requirements are met. However, despite the efforts to date, the Departments and certified IDR entities continue to experience challenges related to determining eligibility for the Federal IDR process, such as delays due to necessary outreach by the certified IDR entities to the disputing parties to obtain or verify information regarding the eligibility of a dispute.

U.S. Department of Health and Human Services, U.S. Department of Labor, and U.S. Department of the Treasury, Federal Independent Dispute Resolution (IDR) Process Technical Assistance for Certified IDR Entities, August 2022,

available at https://www.cms.gov/files/document/TA-certified-independent-dispute-resolution-entities-August-2022.pdf.

See

notices of eligibility enhancements at

https://www.cms.gov/nosurprises/notices.

C. Federal IDR Operations Proposed Rules

The 2023 proposed rules were intended to address issues that are critical to the timely rendering of payment determinations and to address feedback from interested parties and certified IDR entities to improve the functioning of the Federal IDR process.

Specifically, the 2023 proposed rules sought to enhance sharing information for plans, issuers, and providers by requiring that these parties share specific information before initiating the Federal IDR process, including by providing No Surprises Act-specific claim adjustment reason codes (CARCs) and remittance advice remark codes (RARCs) with a remittance advice. The 2023 proposed rules also sought to amend the information that must be disclosed about the QPA. Additionally, the 2023 proposed rules proposed to require plans and issuers to register with the Federal IDR portal to facilitate identification of the parties to a dispute and determine whether coverage of an item or service that is the subject of the dispute is subject to a specified State law, an All-Payer Model Agreement, or the Federal IDR process for determining the out-of-network rate. To facilitate communication and improve open negotiation, the 2023 proposed rules sought to amend to the content requirements of the standard open negotiation notice, establish requirements related to an open negotiation response notice, and clarify the timing for when the open negotiation period begins. Additionally, the 2023 proposed rule included amendments to the notice of IDR initiation and new requirements for the initiation response from the non-initiating party.

The rules also proposed establishing a new process for

providing and receiving notices related to the IDR process.

OMB control number 1210-0169.

The 2023 proposed rules also sought to introduce clearer timeframes for certain steps in the Federal IDR process. More specifically, the 2023 proposed rules proposed procedures for selecting a certified IDR entity and handling conflict-of-interest reviews to account for the time it takes certified IDR entities to confirm that they do not have a conflict of interest with either party. The 2023 proposed rules also proposed to establish a departmental eligibility review process and require that additional information be submitted to support eligibility determinations, conflict-of-interest reviews, or payment determinations. The 2023 proposed rules also proposed to establish a standard process for disputes to be withdrawn from the Federal IDR process. The Departments also proposed amendments to adjust the timeframe for submission of offers and payment determination.

Regarding fee collections, the proposed rule included amendments related to the collection of certified IDR entity fees and administrative fees. The Departments proposed a reduced administrative fee amount for low-dollar disputes to address access concerns by certain interested parties that regularly provide services with low-dollar values. The Departments also proposed reduced administrative fee amounts for non-initiating parties in cases of ineligible disputes as well as pursuing Federal debt collection of the administrative fee from parties that do not pay as required.

The Departments proposed to amend requirements related to batched items and services and bundled payment arrangements. These amendments sought to provide clarity in how parties can submit multiple items and services as either batched items and services or bundled payment arrangements in a single dispute and to provide additional flexibility in submitting multiple items and services. The proposed rules also proposed to expand upon situations in which timeframes may be waived due to extenuating circumstances.

The Departments received 124 timely comments during both comment periods

in response to the proposed rules from a wide variety of interested parties, including private citizens; consumer and advocacy organizations; employers and other plan sponsors; health information technology, health care consulting, and health care staffing companies; health care providers and facilities and health systems; health insurance issuers; service providers, including third party administrators (TPAs) and revenue cycle management organizations; trade and professional associations; and researchers. Many commenters provided detailed feedback on multiple aspects of the proposed rules and in response to various specific comment solicitations included in the preamble to the proposed rules and the request for information. After reviewing the comments received, the Departments are finalizing the 2023 proposed rules, with some changes in response to comments as described in more detail later in this preamble, to improve the overall functioning of the Federal IDR process.

Comments on the 2023 proposed rules were due by January 2, 2024. However, the Departments subsequently reopened the comment period from January 22, 2024, to February 5, 2024, to provide additional time for interested parties to consider and comment on any implications of the IDR Process Fees final rules.

See

89 FR 3896 (Jan. 22, 2024).

II. Overview of the Final Rules—Departments of the Treasury, Labor, and HHS

A. Definition of Bundled Payment Arrangement

Section 9816(c)(3)(B) of the Code, section 716(c)(3)(B) of ERISA, and section 2799A-1(c)(3)(B) of the PHS Act state that the Departments shall provide that, in the case of items and services which are included by a provider or facility as part of a bundled payment, such items and services may be part of a single determination. The October 2021 interim final rules specify that in the case of qualified IDR items and services billed by a provider, facility, or provider of air ambulance services as part of a bundled payment arrangement, or if a plan or issuer makes or denies an initial payment as a bundled payment, the qualified IDR items and services may be submitted as part of one dispute and are subject to the rules for batched disputes and the certified IDR entity fee for single disputes.

The preamble to the October 2021 interim final rules describes a bundled payment arrangement as an instance in which a group health plan or health insurance issuer pays a provider, facility, or provider of air ambulance services a single payment for multiple services furnished during an episode of care to a single patient.

To clarify how certified IDR entities can identify a dispute that includes a bundled payment arrangement, the Departments provided a definition for a bundled arrangement in the

August 2022 Technical Assistance for Certified IDR Entities.

The 2023 proposed rules proposed to codify the definition set forth in the

August 2022 Technical Assistance for Certified IDR Entities.

86 FR 55980, 55994 (October 7, 2021).

U.S. Department of Health and Human Services, U.S. Department of Labor, and U.S. Department of the Treasury. (August 2022).

Federal Independent Dispute Resolution (IDR) Process Guidance for Certified IDR Entities: Technical Assistance for Certified IDR Entities,

available at

https://www.cms.gov/files/document/TA-certified-independent-dispute-resolution-entities-August-2022.pdf.

Specifically, the Departments proposed to amend 26 CFR 54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30 by defining the term “bundled payment arrangement” as an arrangement under which: (1) a provider, facility, or provider of air ambulance services bills for multiple items or services furnished to a single patient under a single service code that represents multiple items or services (for example, a diagnostic related group (DRG) code); or (2) a plan or issuer makes an initial payment or notice of denial of payment to a provider, facility, or provider of air ambulance services under a single service code that represents multiple items or services furnished to a single patient (for example, a DRG code).

To further clarify the process for resolving IDR disputes for bundled payment arrangements, the Departments proposed to remove the language under 26 CFR 54.9816-8T(c)(3)(ii), 29 CFR 2590.716-8(c)(3)(ii), and 45 CFR 149.510(c)(3)(ii) stating that a bundled payment arrangement is subject to the rules for batched disputes. While a bundled payment arrangement is, by definition, billed by the same provider or group of providers, facility, or same provider of air ambulance services and paid by the same group health plan or health insurance issuer, not all requirements for batched disputes, including those finalized under 26 CFR 54.9816-8(c)(4), 29 CFR 2590.716-8(c)(4) and 45 CFR 149.510(c)(4) of these final rules, apply to bundled payment arrangements. Therefore, it is not entirely accurate to say that bundled payment arrangements are subject to the rules for batched disputes.

The Departments solicited comment on the definition and treatment of bundled payment arrangements in the 2023 proposed rules. The Departments also solicited comment on examples of service or procedural codes other than DRGs that would meet the proposed definition of a bundled payment arrangement. After consideration of the comments received, and for the reasons described below, the Departments are finalizing the definition of the term “bundled payment arrangement” at 26

CFR 54.9816-3, 29 CFR 2590.716-3, and 45 CFR 149.30 as proposed. The Departments did not receive any comments on the proposed amendment to remove the language under 26 CFR 54.9816-8T(c)(3)(ii), 29 CFR 2590.716-8(c)(3)(ii), and 45 CFR 149.510(c)(3)(ii) stating that a bundled payment arrangement is subject to the rules for batched disputes, and are finalizing this amendment as proposed.

The 2023 proposed rules included language that would have amended Treasury Department temporary regulations issued in July and October 2021. Those temporary regulations have since expired and are not being amended as proposed in the 2023 proposed rules. Corresponding sections of the Department of Labor's interim final regulations at 86 FR 36872 and 86 FR 55980 may be relied upon until those sections of the previously proposed Treasury regulations are published in final form.

Commenters generally supported the proposed definition of bundled payment arrangement. However, the Departments also received a comment opposing the proposed definition, stating that bundled disputes should be defined as a single episode of care on a single claim form. This commenter stated that bundled payment arrangements are typically for contracted services and are not relevant to out-of-network claims subject to the No Surprises Act.

Several commenters also had additional recommendations regarding scenarios or types of services that could be defined as a bundled payment arrangement. Another commenter recommended that the definition of bundling used for the Medicare program be used for the purposes of the No Surprises Act. Another commenter suggested that bundled payment arrangements under the proposed definition be limited to situations where the provider or facility and the plan or issuer mutually agree to bundling, or a recognized DRG or all-patients refined diagnosis related group (APR DRG) applies to the claim. A few commenters provided examples of services or procedural codes other than DRGs that would meet the proposed bundled payment arrangement definition. One of these commenters stated that Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS) codes, particularly for laboratory services, could be used for bundled payment arrangements under the proposed definition.

Even if bundled payment arrangements are most often used for contracted services, as the commenter suggested, some qualified IDR items and services provided by out-of-network providers will still meet the definition of bundled payment arrangement as defined under the proposed rules. Section 9816(c)(3)(B) of the Code, section 716(c)(3)(B) of ERISA, and section 2799A-1(c)(3)(B) of the PHS Act explicitly contemplate bundled payments within the context of the Federal IDR process, which is a process that only applies to claims for out-of-network items and services, and therefore we disagree that bundled payment arrangements are not relevant to out-of-network claims subject to the No Surprises Act.

For the comment requesting additional guidance about the types of services that may be defined as bundled payment arrangements, the Departments believe that existing guidance provided in the

August 2022 Technical Assistance for Certified IDR Entities

and in the preamble to the 2023 proposed rules provides sufficient examples of bundled payment arrangements. The Departments restate the example in the preamble to the 2023 proposed rules: if a physician performs bilateral mammography, the provider shall report (or for the purpose of the Federal IDR process, the provider shall bill) the Current Procedural Terminology (CPT) code 77066 (

Diagnostic mammography . . . bilateral

). The provider should not submit CPT code 77065 (

Diagnostic mammography . . . unilateral

) with 2 UOS or CPT code 77065 LT (

unilateral left breast mammography

) plus CPT code 77065 RT (

unilateral right breast mammography

). Under this example, the provider performed multiple services, and therefore, under these final rules, if the services are billed or reimbursed under one service code (CPT code 77066), all services performed under that service code (CPT codes 77065 LT and 77065 RT) may be considered a bundled payment arrangement for purposes of the Federal IDR process.

The definition of bundled payment arrangements under these final rules allows disputes to be bundled by a single CPT code, DRG code, or HCPCS code, provided the dispute otherwise complies with such definition. We disagree that bundling should be limited to a recognized DRG or APR DRG, as doing so would be overly restrictive and would limit initiating parties' ability to submit bundled disputes. The Departments favor broader criteria for bundling to increase the number of claims eligible to be submitted as a bundled payment arrangement. Further, the Departments disagree that they should adopt the Medicare definition of bundled payments for purposes of submitting claims, because there are multiple definitions that exist in guidance and regulation that rely on a defined episode of care, single illness or condition, or course of treatment, which the Departments proposed as a method of batching at 26 CFR 54.9816-8(c)(4)(i)(C)(

), 29 CFR 2590.716-8(c)(4)(i)(C)(

), and 45 CFR 149.510(c)(4)(i)(C)(

Additionally, the Departments decline to finalize a rule limiting the use of bundled payment arrangements to situations where the provider and the plan or issuer mutually agree to the use of bundling, as a commenter suggested. Such a limitation creates an administrative barrier to submitting a bundled dispute and could disincentivize parties from using or relying on bundled payment arrangements, which could decrease the accessibility of the Federal IDR process for bundled payment arrangements.

For definitions of bundled payments,

see https://www.cms.gov/priorities/innovation/key-concepts/bundled-payments

and

https://www.cms.gov/priorities/innovation/innovation-models/bundled-payments.

For definitions of episode(s) of care,

see

42 CFR 414.1305 “Episode payment model” and 42 CFR 510.2 “Episode of care (or Episode).”

B. Use of CARCs and RARCs

1. Existing Payment Communication Practice and Requirements

As described in the preamble to the 2023 proposed rules, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) mandated the adoption of electronic standards for certain health care transactions, including health care payment and remittance advice.

When remittance advice is transmitted electronically, it is commonly referred to as an electronic remittance advice or ERA.

All ERAs must comply with the Accredited Standards Committee (ASC) X12 835 transaction standard adopted by HHS under 45 CFR 162.1602.

88 FR 75744, 75759 (November 3, 2023). The ASC X12N 835 Version 5010 (835 transaction), adopted at 45 CFR 162.1602, is the current HIPAA standard that plans and issuers must use to electronically transmit explanations of benefits (EOBs) or remittance advice information to providers and facilities.

An ERA explains how a plan or issuer has adjusted claim charges based on factors like contract agreements, secondary payers, benefits coverage, and expected cost sharing. Centers for Medicare & Medicaid Services. (June 16, 2022).

Health Care Payment and Remittance Advice and Electronic Funds Transfer,

available at

https://www.cms.gov/Regulations-and-Guidance/Administrative-Simplification/Transactions/HealthCarePaymentandRemittanceAdviceandElectronicFundsTransfer.

The ASC X12 835 implementation guide mandates the use of CARCs and RARCs to communicate remittance information (as opposed to any other code systems, such as proprietary codes developed by specific plans and

issuers).

CARCs explain why a claim or service line was paid differently than it was billed.

RARCs provide additional explanations for a remittance. RARCs are either “supplemental,” meaning that they provide additional explanation for an adjustment already described by a CARC, or “informational,” meaning they convey information about remittance processing and are not related to a specific adjustment or CARC.

The lists of approved CARCs and RARCs are maintained by separate committees (the CARC Committee and the RARC Committee) designated by HHS to review requests to add, remove, or modify existing CARCs and RARCs. The HIPAA operating rule adopted at 45 CFR 162.1603(a)(4) requires plans and issuers to use a uniform set of CARCs and RARCs for defined business scenarios.

Any interested party can use publicly available forms to submit requests for new or modified CARCs and RARCs and accompanying explanations to the respective committees on a rolling basis. Each committee meets on a regularly scheduled, periodic basis to discuss proposed new CARCs and RARCs or modifications of existing CARCs and RARCs with the sponsors of such changes and determine whether to approve or deny the recommended change or new CARC or RARC.

Updated lists of approved CARCs and RARCs, along with an updated list of approved CARC and RARC combinations and business scenarios, are published three times each year.

CARCs and RARCs are required by the ASC X12 835 transaction standard and are not currently required to be used on paper remittance advice.

X12. (Updated November 1, 2025).

Claim Adjustment Reason Codes. https://x12.org/codes/claim-adjustment-reason-codes.

X12. (Updated July 1, 2025).

Remittance Advice Remark Codes. https://x12.org/codes/remittance-advice-remark-codes.

CAQH CORE. (June 2012).

Phase III 360 CORE Uniform Use of CARCs and RARCs (835) Rule, Version 3.0.0,

available at

https://43908627.fs1.hubspotusercontent-na1.net/hubfs/43908627/CARCsRARCs_835_Rule.pdf.

See

Maintenance Request Form, available at

https://x12.org/codes/remittance-advice-remark-codes

(for RARCs) and

https://x12.org/codes/claim-adjustment-reason-codes

(for CARCs).

See also

CMS, Health Care Payment and Remittance Advice and Electronic Funds Transfer, Claim Adjustment Reason Codes and Remittance Advice Remark Codes, available at

https://www.cms.gov/priorities/key-initiatives/burden-reduction/administrative-simplification/transactions/health-care-payment-remittance-advice-electronic-funds-transfer.

CAQH CORE. (n.d).

Operating Rules, Keeping Up with the Core Code Combinations,

available at

https://www.caqh.org/core/operating-rules.

The RARC Committee has approved a set of specific RARCs that convey information related to the No Surprises Act, including which provisions apply to a claim, how cost sharing was calculated, and whether a payment for a claim was an initial or final payment.

While these RARCs are currently available for use by plans and issuers, the No Surprises Act-specific RARCs do not address all required QPA disclosures or all data elements relevant to whether a payment dispute arising from an item or service included on a remittance advice is eligible for the Federal IDR process. Furthermore, the current standards and operating rules that govern ERA transactions under HIPAA do not include specific requirements that dictate which combinations of CARCs and RARCs must be used to communicate claim adjudication information in business scenarios anticipated by the No Surprises Act.

X12. (Updated July 1, 2025).

Remittance Advice Remark Codes. https://x12.org/codes/remittance-advice-remark-codes

(complete list of approved RARC codes including No Surprises Act-specific codes); and Centers for Medicare & Medicaid Services. (March 1, 2022).

Remittance Advice Remark Codes Related to the No Surprises Act,

available at

https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/CAA-NSA-RARC-Codes.pdf

(unofficial reference list of No Surprises Act-specific RARC codes).

The ASC X12 835 transaction standard requires health plans to convey information about the adjudication of a claim using CARCs and RARCs. The Phase III 360 CORE Uniform Use of CARCs and RARCs (835) Rule, adopted at 45 CFR 162.1603, requires plans to use specified combinations of CARCs and RARCs in certain business scenarios. CAQH CORE. (June 2012).

Phase III 360 CORE Uniform Use of CARCs and RARCs (835) Rule, Version 3.0.0,

available at

https://43908627.fs1.hubspotusercontent-na1.net/hubfs/43908627/CARCsRARCs_835_Rule.pdf.

2. Requiring CARCs and RARCs To Improve Communication Between Parties

In the preamble to the 2023 proposed rules, the Departments identified communication gaps between plans or issuers and providers that contribute to inefficiencies in resolving disputes in the Federal IDR process including, but not limited to: (1) whether the consumer protections against balance billing and out-of-network cost sharing under the No Surprises Act apply to an item or service; (2) how cost sharing and the out-of-network rates are determined (that is, through an All-Payer Model Agreement, specified State law, or the Federal rules); (3) how and with whom to initiate open negotiation; and (4) which items or services eligible for the Federal IDR process can be batched or bundled into one dispute.

Under section 9816(a)(2)(B)(ii) of the Code, section 716(a)(2)(B) of ERISA, and section 2799A-1(a)(2)(B)(ii) of the PHS Act, the Departments are directed to establish through rulemaking the information that a plan or issuer must share with a provider or facility when making a determination of the QPA.

Under section 9833 of the Code, section 734 of ERISA, and section 2792 of the PHS Act, the Departments are authorized to issue such regulations as may be necessary and appropriate to carry out the provisions of chapter 100 of the Code, part 7 of ERISA, and title XXVII of the PHS Act, respectively, including the provisions directing the Departments to establish the Federal IDR process.

The No Surprises Act does not include the same language addressing disclosures to providers of air ambulance services. However, the July 2021 interim final rules implemented the statute's cost-sharing requirements for air ambulance services by requiring that plans and issuers base any coinsurance and deductible for air ambulance services furnished by a nonparticipating provider of air ambulance services on the lesser of the QPA or the billed amount for the services. 86 FR 36884 (July 13, 2021). Therefore, the July 2021 interim final rules also applied the requirement to make disclosures regarding the QPA for providers of air ambulance services. As stated in the preamble to the July 2021 interim final rules, the Departments recognize that providers of air ambulance services subject to the surprise billing rules (as well as providers and emergency facilities) need transparency regarding how the QPA was calculated to inform the open negotiation process, the decision whether to initiate the Federal IDR process, and the amount of the offer to submit. 86 FR 36898 (July 13, 2021).

In the 2023 proposed rules, the Departments proposed new disclosure rules at 26 CFR 54.9816-6A, 29 CFR 2590.716-6A, and 45 CFR 149.100. These proposals would require plans and issuers to use CARCs and RARCs, as specified in guidance issued by the Departments, or as required under any applicable adopted standards and operating rules under 45 CFR part 162, to communicate information related to whether a claim for an item or service furnished by an entity that does not have a direct or indirect contractual relationship with the plan or issuer for the furnishing of such item or service under the plan or coverage is subject to the provisions of 26 CFR 54.9816 and 54.9817; 29 CFR 2590.716 and 2590.717; or 45 CFR part 149, subpart B, E, or F.

The Departments sought comment on the CARC and RARC proposal. After reviewing comments, and in light of the considerations discussed in this section of these final rules, the Departments are finalizing the CARC and RARC proposal with minor modifications.

a. In General

Many commenters supported the proposal to require plans and issuers to use CARCs and RARCs to standardize communication between plans and issuers and providers early in the claims process for out-of-network items and

services. Several commenters noted that some plans and issuers currently use No Surprises Act-related RARCs, but usage is not consistent across all plans and issuers or in every circumstance in which they apply. Many commenters stated that the proposal would reduce the number of ineligible disputes submitted to the Federal IDR process by allowing parties to more easily identify ineligible claims, including, for example, allowing providers to automate some aspects of claims analysis, increasing the speed with which providers can review remittances and determine eligibility for the Federal IDR process compared to current manual review processes. One commenter highlighted that the proposal would provide more information for initiating parties and certified IDR entities, which would improve the certified IDR entity's ability to determine a dispute's eligibility.

The Departments agree with commenters who suggested that the CARC and RARC requirement will facilitate communication between plans or issuers and providers, thereby reducing the number of ineligible disputes submitted to the Federal IDR process and thus allowing certified IDR entities to focus resources more efficiently. In addition, the use of RARCs and CARCs will reduce the need for providers to engage in resource-intensive manual examination of paper or other non-standardized eligibility information.

However, a few commenters opposed the CARC and RARC proposal. One of these commenters stated that because only a few of the currently available RARCs specific to the No Surprises Act relate to how claims are paid and negotiated, requiring their use would not improve providers' ability to determine whether they may initiate open negotiation and the Federal IDR process. Another commenter noted that disclosures provided separately from the electronic transaction are often more detailed than what is likely to be communicated via CARCs and RARCs, and that requiring CARCs and RARCs to be added to a remittance advice provided with the initial payment or notice of denial of payment would be redundant with what plans are already providing in other steps of the Federal IDR process.

The Departments have determined that CARCs and RARCs provided on remittance advice as required under these final rules will help to address communication challenges between plans or issuers and providers, even when information that could be conveyed by a CARC or RARC may also be available through another mechanism or at a later point in the payment dispute process. Specifically, using a CARC or RARC to convey information in ASC X12 835 transactions, prior to the open negotiation period, could improve or replace later communications or render them entirely unnecessary. For example, the Departments are aware that because the ASC X12 835 electronic transaction standard does not accommodate the QPA disclosures that plans and issuers are required to provide under 26 CFR 54.9816-6(d), 29 CFR 2590.716-6(d), and 45 CFR 149.140(d), plans and issuers generally provide all required disclosures by an alternate mechanism, such as using email or sending in paper form. Providers therefore receive disclosures separately from, and often much later than, electronic transactions and have reported challenges linking the disclosures to the correct transaction.

However, requiring certain disclosure information to be provided using a CARC or RARC means that information will be conveyed to the provider as part of the ASC X12 835 transaction. A CARC or RARC provided in a remittance advice that clearly and accurately identifies an item or service as being eligible or ineligible for the Federal IDR process could remove delays in initiating the open negotiation period or prevent a dispute over payment for that item or service from incorrectly proceeding to the Federal IDR process.

See

FAQs About Consolidated Appropriations Act, 2021 Implementation Part 69 (January 14, 2025), Q3, available at

https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-69.pdf

and

https://www.cms.gov/files/document/faqs-part-69.pdf.

The use by a plan or issuer of a CARC or RARC that conveys that an item or service is ineligible for the Federal IDR process is not a dispositive determination of eligibility and would not prevent a certified IDR entity from determining that the item or service is eligible through the eligibility review process finalized in these final rules.

See

26 CFR 54.9816-8(c)(2), 29 CFR 2590.716-8(c)(2), and 45 CFR 149.510(c)(2) and section II.E.1.b of this preamble.

In other cases, CARCs and RARCs may provide information prior to the initiation of the Federal IDR process that is not available through other mechanisms and could be used to prevent the initiation of an incorrectly batched dispute. For example, as described elsewhere in this preamble, the Departments are finalizing requirements that certain plans and issuers provide specific data elements in the Federal IDR registry established under 26 CFR 54.9816-9, 29 CFR 2590.716-9, and 45 CFR 149.530, such as plan type or whether a self-insured plan has properly effectuated an election to opt in to a specified State law or an All-Payer Model Agreement under section 1115A of the Social Security Act. Such data will be provided at the level of the plan or coverage. By contrast, similar information could be provided through CARCs and RARCs for each specific line item on a remittance advice and convey information specific to a particular item or service. Line item level details are relevant to disputes in which a specified State law or All-Payer Model Agreement applies to certain items and services and the Federal IDR process applies to others.

The Departments clarify that the requirement to use specified CARCs and RARCs under these final rules will be in addition to the disclosure requirements at 26 CFR 54.9816-6(d), 29 CFR 2590.716-6(d), and 45 CFR 149.140(d) and Federal IDR registry requirements at 26 CFR 54.9816-9, 29 CFR 2590.716-9, and 45 CFR 149.530. To the extent that a CARC or RARC could be used to fulfill a separate disclosure requirement, such as the requirements at 29 CFR 2590.716-6(d) and 45 CFR 149.140(d), the Departments will issue future guidance to identify how and when a specific code can be used to meet a particular requirement.

b. Application to Items and Services Not Subject to No Surprises Act Surprise Billing Requirements

The Departments also proposed in the 2023 proposed rules that the requirements under 26 CFR 54.9816-6A, 29 CFR 2590.716-6A, and 45 CFR 149.100 relating to CARCs and RARCs would apply to plans and issuers when sending any paper or electronic remittance advice to entities with which they do not have a direct or indirect contractual relationship, including for items and services to which the No Surprises Act surprise billing requirements do not apply. The Departments proposed this approach so that CARCs and RARCs could be used to convey when the No Surprises Act does not apply to a particular item or service and reduce the submission of ineligible disputes to the Federal IDR process.

Several commenters supported this proposal, stressing the importance of understanding when the No Surprises Act does not apply to a particular item or service to avoid submission of ineligible disputes to the Federal IDR process. One commenter highlighted that requiring a RARC that identifies an item or service as being ineligible for a State or Federal balance billing protection would significantly and immediately reduce the number of

ineligible dispute initiations, allowing certified IDR entities to address future payment disputes more efficiently, while another commenter suggested the proposal would reduce financial and administrative burdens associated with identifying whether balance billing is prohibited. On the other hand, a small number of commenters indicated that applying the provision to out-of-network claims for items and services that are not subject to the surprise billing provisions in the No Surprises Act would require additional time to implement and could cause provider confusion and increase operational burden for plans and issuers.

The Departments acknowledge these final rules may require some plans and issuers to implement new processes to include CARCs and RARCs related to the No Surprises Act on remittance advice but have determined that there is a critical need to provide this information to improve the functioning of the Federal IDR process. Just as it is important for providers to understand when an item or service is subject to the surprise billing protections under the No Surprises Act, it is equally important to understand when an item or service is not subject to these protections, so that parties can take appropriate steps to resolve payment issues and avoid submission of ineligible disputes to the Federal IDR process. Therefore, the Departments are finalizing this aspect of the proposed requirements as proposed.

In the preamble to the 2023 proposed rules, the Departments stated that, because direct billing of patients for an amount greater than the applicable in-network cost-sharing requirement is largely limited to items and services to which the No Surprises Act does not apply, the 2023 proposed rules would not require plans and issuers to provide CARCs and RARCs on remittance advice provided directly to participants, beneficiaries, and enrollees.

However, the Departments sought comment on whether a plan or issuer should generate a remittance advice that can be obtained upon request by the provider when the plan or issuer makes a payment directly to a participant, beneficiary, or enrollee, and whether the proposed requirement to use CARCs and RARCs to convey No Surprises Act-specific information should apply in these circumstances.

See 88 FR 75744, 75762 and 75763 (November 3, 2023). While a plan or issuer should not send payment for items and services that are subject to the surprise billing provisions of the No Surprises Act to any individual or entity other than the provider, the Departments acknowledge there may be circumstances in which a plan or issuer initially determines that an item or service is not subject to the surprise billing provisions of the No Surprises Act and sends payment and a corresponding ERA to a participant, beneficiary, or enrollee, but subsequently, upon the receipt of new or updated information, revises that assessment (for example, when an in-network facility submits a claim for a non-emergency service after the plan or issuer has processed an out-of-network provider claim for the same item or service). In these cases, the plan or issuer would be required to provide an updated remittance advice to the provider that includes any relevant required CARCs or RARCs.

The Departments did not receive any comments on this provision in the 2023 proposed rules. These final rules do not require plans and issuers to use CARCs and RARCs on remittance advice for payments made directly to participants, beneficiaries, or enrollees—including if the remittance advice is requested by the provider that furnished the item or service for which payment is made. The proposed regulation text has been modified to make clear that the provision applies when providing remittance advice to an entity “(other than a participant, beneficiary, or enrollee)” that does not have a contractual relationship with the plan or issuer.

c. Use of Guidance

The Departments proposed that certain procedural aspects of the CARC and RARC requirement would be implemented through guidance, including the specific CARCs and RARCs that plans and issuers would be required to use to satisfy the disclosure requirements under proposed 26 CFR 54.9816-6A, 29 CFR 2590.716-6A, and 45 CFR 149.100.

The Departments are finalizing this part of the proposal as proposed. Accordingly, these final rules establish the general requirement that plans and issuers use CARCs and RARCs, in the manner and timeframe specified in guidance, to communicate information about whether an item or service identified on a claim is or is not subject to the surprise billing requirements under the No Surprises Act. Future guidance will identify the specific CARCs and RARCs to be used in particular circumstances, which, as discussed below in section II.B.2.e of this preamble, when surprise billing protections do apply, may include use of CARCs and RARCs to communicate relevant procedural or administrative information related to application of the surprise billing protections to the items or services at issue. Future guidance will also provide any administrative and technical instructions necessary to facilitate the use of mandated CARCs and RARCs in all paper or electronic remittance advice transactions to providers that do not have a contractual relationship with the plan or issuer. Approval of new CARCs and RARCs or modifications to existing CARCs and RARCs, including the existing list of No Surprises Act-related RARCs, will be subject to the existing CARC Committee and RARC Committee processes, as mentioned above.

Neither the proposal nor these final rules alter HHS' authority under HIPAA to implement future guidance for ERA or to adopt new or modified standards or operating rules in accordance with Title XI Part C—Administrative Simplification of the Social Security Act.

Most commenters generally supported the use of guidance to implement the proposal. Some of these commenters also provided specific recommendations for how the Departments could ensure future guidance would be clear and effective. Commenters recommended that any guidance should include explicit timelines for compliance and provide clear direction for how specified CARCs and RARCs must be used. As discussed in section II.B.2.g of this preamble, several commenters requested that guidance address potential non-compliance, including describing oversight mechanisms and penalties and providing contact information for filing complaints against parties that are non-compliant with the CARC and RARC requirement. As discussed in more detail in section II.H.1 of this preamble, several commenters emphasized the importance of implementing the CARC and RARC requirements as quickly as possible.

A few commenters recommended that the Departments use notice-and-comment rulemaking, rather than guidance, to change existing, or identify new, CARCs and RARCs. For example, one commenter stated that plans and issuers could provide feedback through rulemaking regarding the initial development of technically and operationally complex requirements, but once initial requirements were reviewed and agreed upon by industry, future updates could be issued via guidance. Another commenter recommended rulemaking to allow interested parties to comment on specific challenges that could be raised by individual CARCs and RARCs.

The Departments have determined that guidance, rather than notice-and-comment rulemaking, is appropriate for providing the technical and operational instruction needed to implement this provision. This approach will provide necessary flexibility, enabling the Departments to better respond to evolving needs and circumstances, including the flexibility to discontinue specification of certain CARCs and RARCs should the information they communicate become readily available to providers through a different mechanism or otherwise become unnecessary. Further, as discussed in

the preamble to the 2023 proposed rules, this approach mirrors the longstanding framework in which interested parties may submit requests to add, remove, or modify existing CARCs and RARCs, but updates to the lists of approved CARCs and RARCs and the required CARC and RARC code combinations provided for in the HIPAA-mandated operating rule are issued outside of the notice-and-comment rulemaking process.

See

45 CFR 162.1603(a)(3-4), and Phase III CORE 360 Uniform Use of Claim Adjustment Reason Codes and Remittance Advice Remark Codes (835) Rule, available at

https://www.caqh.org/core/operating-rules

(outlining the process for maintaining CORE-defined CARC, RARC & Claim Adjustment Group Code Combinations).

d. Technical and Operational Considerations

The Departments solicited comment on circumstances in which a plan or issuer would be unable to determine whether an item or service included on a remittance advice is, or is not, subject to the Federal IDR process at the time the remittance advice is issued to a provider, facility, or provider of air ambulance services. One commenter identified a scenario in which a provider submits a claim, but the related facility claim containing the information needed to determine applicability of the No Surprises Act is submitted later. The Departments understand that plans and issuers sometimes need to adjust remittance advice (for example, to reflect corrections or new information that could impact payment) and anticipate that plans and issuers will apply existing processes

to modify remittance advice as needed to ensure compliance with the CARC and RARC requirement being finalized in these final rules. Because the Departments anticipate corrections will be needed infrequently, the Departments do not expect making corrections with ERA using CARCs and RARCs as required by these final rules to be overly burdensome on plans or issuers.

See, for example,

CAQH, Operating Rules, available at

https://www.caqh.org/core/operating-rules.

The Departments also sought comment on the technical and operational steps that plans and issuers would need to take to initially implement new No Surprises Act-specific CARCs and RARCs, including plans and issuers that do not currently use CARCs and RARCs, or that are currently able to accommodate only one CARC and RARC combination per line item. Several commenters noted that many plans and issuers already use CARCs and RARCs, albeit inconsistently for No Surprises Act-specific RARCs, and are familiar with the use of such codes generally, and suggested that implementation of the proposed CARC and RARC requirement would not be technically or operationally difficult. However, several other commenters noted that ERAs have limited space to enter additional data, including CARCs and RARCs. In many cases, HIPAA-mandated standards for electronic data interchange already require plans and issuers to include specific code combinations on ERAs, further limiting the available space for additional No Surprises Act-specific CARCs and RARCs. Commenters explained that a plan's current system might only accommodate a single RARC per line item; in cases when an existing requirement already mandates the use of a CARC or RARC to describe, for example, a payment adjustment, the plan may not be able to accommodate an additional No Surprises Act-related CARC or RARC. As a partial solution, a few commenters requested that the Departments design CARCs and RARCs to convey multiple data elements in a single code and avoid a scenario where plans and issuers would have to combine multiple codes to convey required information related to the No Surprises Act.

The Departments have determined that because all plans and issuers that provide ERA transactions that are subject to the HIPAA Administrative Simplification requirements are required to use CARCs and RARCs, most plans and issuers already have the capacity to implement the CARC and RARC requirement. However, as stated in the preamble to the 2023 proposed rules, the Departments acknowledge that implementing any new requirements affecting remittance advice, including the CARC and RARC requirement, may increase burden and pose technical and operational challenges for some plans and issuers, particularly those whose systems do not currently accommodate multiple CARCs and RARCs per line item. In light of the comments described above, the Departments will consider providing technical direction in future guidance to facilitate implementation of the CARC and RARC requirements on ERA with limited space available for data elements. As discussed in the 2023 proposed rules

and section II.H.1 of this preamble, the Departments are aware that after guidance is issued identifying the specific CARCs and RARCs required to be used, plans and issuers will need additional time to implement the CARC and RARC requirement. The Departments will establish an appropriate applicability date in guidance, as further discussed in section II.H. of these final rules. Plans and issuers will not be required to use CARCs and RARCs under these final rules until such date as provided for in future guidance.

88 FR 75744, 75762 (November 3, 2023).

e. Additional CARCs and RARCs

As described in section II.B.1 of this preamble, the RARC Committee has approved a set of informational RARCs that plans and issuers can use to convey information about the No Surprises Act when providing remittances to providers. In the preamble to the 2023 proposed rules, the Departments solicited comment on whether, and if so, what information related to the No Surprises Act's surprise billing provisions that is not conveyed in the existing RARCs would be helpful to convey through the creation of additional RARCs. Many commenters provided feedback on the existing No Surprises Act-related RARCs, as well as recommendations for potential new CARCs and RARCs.

As noted in section II.B.2 of this preamble, multiple commenters noted that plans and issuers have not adopted a consistent approach to using RARCs to provide information related to the No Surprises Act. Given this lack of consistency, one commenter recommended that the Departments undertake an inventory of the current RARC list before introducing new CARCs and RARCs specific to the No Surprises Act. Another commenter requested utilizing a single, consistent list of CARCs and RARCs that provide a common language for understanding remittance information, regardless of payer. A few other commenters recommended that, because CARCs and RARCs are often generic, requiring a “plain language” explanation of the specific reason for a claim denial would benefit all parties.

Other commenters provided feedback on specific, current RARCs. Several commenters recommended that the Departments specify in guidance that plans and issuers must use one of two “mutually exclusive” RARCs: N871, which identifies an initial payment that was calculated based on a specified State law in accordance with the No Surprises Act; or N859, which identifies a claim that was processed subject to the No Surprises Act and that is eligible for Federal dispute resolution. Another commenter recommended requiring N883 to identify an item or service that

was processed according to State law.

Several commenters stated that the RARC Committee should deactivate RARC N830 and the Departments should not include it in future guidance.

Commenters identified N830 as the most common No Surprises Act-related RARC being provided by plans and issuers, but explained that N830 is problematically vague because it does not distinguish between claims that are subject to State dispute resolution processes and claims subject to the Federal IDR process. These commenters stated that N830 therefore does not provide meaningful guidance to providers and facilities seeking to determine the appropriate State or Federal venue for their payment dispute. Another commenter recommended deactivating several codes that distinguish between emergency, non-emergency, and air ambulance services, because providers are already aware of the services that they render and can typically identify more granular information about specific items and services from other information on the remittance.

The RARC text associated with N883 is: “Alert: Processed according to State law.”

See

X12, “Remittance Advice Remark Codes,” available at

https://x12.org/codes/remittance-advice-remark-codes.

The RARC text associated with N830 is: “Alert: The charge[s] for this service was processed in accordance with Federal/State, Balance Billing/No Surprise Billing regulations. As such, any amount identified with OA, CO, or PI cannot be collected from the member and may be considered provider liability or be billable to a subsequent payer. Any amount the provider collected over the identified PR amount must be refunded to the patient within applicable Federal/State timeframes. Payment amounts are eligible for dispute under any Federal/State documented appeal/grievance process(es).”

See

CMS, “Remittance Advice Remake Codes Related to the No Surprises Act,” available at

https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/CAA-NSA-RARC-Codes.pdf.

In the case of payments that are not on a fee-for-service basis, plans and issuers are required to calculate a QPA for each item or service according to the requirements at 29 CFR 2590.716-6(b)(2)(iii) and 45 CFR 149.140(b)(2)(iii) and disclose the QPA for each item or service involved in an initial payment or notice of denial of payment according to the requirements at 29 CFR 2590.716-6(d)(1)(i) and 45 CFR 149.140(d)(1)(i).

Many commenters also recommended creating new RARCs to communicate information that cannot be conveyed using existing RARCs. Commenters generally recommended creating RARCs that would convey the following information about a claim: (1) identifying when State or Federal surprise billing protections do not apply; (2) when surprise billing protections do apply, the applicable dispute resolution process or payment amount (such as the Federal IDR process; processes or amounts governed by a specified State law, including whether a self-insured plan has opted into a specified State law; or an amount determined by an All-Payer Model Agreement); and (3) plan type (such as a fully or self-insured ERISA plan, a non-Federal governmental plan, an FEHB plan, or individual health insurance coverage). A few commenters also recommended that the Departments require that plans and issuers convey information about the QPA using RARCs, such as a RARC that specifies when the allowed amount is the QPA or one or more RARCs that convey the QPA disclosures required under 29 CFR 2590.716-6(d) and 45 CFR 149.140(d), including the QPA itself. One commenter requested that the Departments require plans and issuers providing a payment in the form of a bundled payment to use CARCs and RARCs to disclose the application of a bundling methodology and identify each item or service included in such bundling, to ensure that plans and issuers provide a QPA for each item or service in a bundled payment.

In the case of payments that are not on a fee-for-service basis (such as bundled or capitated payments), plans and issuers are required to calculate a QPA for each item or service according to the requirements at 29 CFR 2590.716-6(b)(2)(iii) and 45 CFR 149.140(b)(2)(iii) and disclose the QPA for each item or service involved in an initial payment according to the requirements at 29 CFR 2590.716-6(d)(1)(i) and 45 CFR 149.140(d)(1)(i).

The Departments also solicited comment regarding any experiences with State-level CARC and RARC requirements related to State surprise billing laws. One commenter emphasized the importance of considering State-Federal interactions when developing guidance mandating plans and issuers use specific CARCs and RARCs to avoid conflicts with State requirements.

The Departments agree with commenters who recommend undertaking a thorough inventory of the existing No Surprises Act-related RARCs as part of the process for developing future guidance and recognize the importance of considering potential interactions with State-level code requirements. The Departments also acknowledge that it may be necessary to supplement the existing RARC list with new RARCs to comprehensively address whether and how the No Surprises Act applies to items and services included on a remittance advice. The Departments will take the commenters' recommendations into consideration when developing future guidance.

f. Applicability to Paper and Electronic Remittance Advice

The Departments proposed that plans and issuers be required to include CARCs and RARCs on “any paper or electronic remittance advice” provided to an out-of-network provider, facility, or provider of air ambulance services, and requested feedback on whether a more general term, such as “any remittance advice” would be helpful in characterizing the types of communications accompanying payments for items and services. A few commenters supported the use of the more general term “any remittance advice” instead of “any paper or electronic remittance advice,” provided that plans and issuers would retain the flexibility to choose whether to use paper or electronic communication. One commenter requested that plans and issuers retain the flexibility to provide all required disclosures on “separate page disclosures,” as they explained is commonly done today. Another commenter requested that the Departments apply the proposed CARC and RARC requirements to ERA only, excepting plans and issuers from the requirements when they issue a paper remittance advice or EOB. This commenter stated that paper remittance advice is generally prepared for the benefit of plan members or for providers who do not use HIPAA electronic transactions and do not generally furnish items and services that are subject to the No Surprises Act. A few commenters cited the added provider burden associated with paper remittance advice and requested that the Departments encourage the use of ERA. By contrast, other commenters supported the Departments' proposal to apply the requirements to paper and ERA and highlighted the importance of standardizing the communication between plans and issuers and providers, regardless of the method of communication. One commenter noted that out-of-network providers were particularly likely to rely on paper remittance advice because they were less likely to have established electronic communication with a plan with which they do not contract.

After reviewing comments, the Departments are finalizing a modified version of the proposal to require that, when providing any remittance advice (including in paper or electronic form) to an entity (other than a participant, beneficiary, or enrollee) that does not have a contractual relationship, directly or indirectly, with a group health plan or a health insurance issuer offering group or individual health insurance

coverage for the furnishing of an item or service under the plan or coverage, in response to a claim for payment for health care items and services furnished by that entity, the plan or issuer must use CARCs and RARCs, in the manner and timeframe specified in guidance issued by the Departments. This modification to the proposed language does not alter the requirements proposed in the 2023 proposed rules, but rather more clearly communicates that the requirement to use CARCs and RARCs, as specified in guidance, applies to a plan or issuer regardless of the format of the remittance advice it uses to communicate with an entity with which it does not have a direct or indirect contractual relationship.

In response to comments raising concerns generally related to the use of paper remittances or ERA, the Departments acknowledge that paper remittance advice may impose a higher administrative burden on providers. However, as noted in the 2023 proposed rules and in section II.B.1 of this preamble, the Departments understand that some plans and issuers routinely communicate with some providers using paper remittance advice and other formats outside the purview of the HIPAA transaction standards. Indeed, it is particularly important to ensure that the requirements apply to paper remittances, to the extent that plans or issuers use paper remittance advice for items and services provided by entities with which they do not have a direct or indirect contractual relationship. By applying the CARC and RARC requirement regardless of remittance advice format, these final rules ensure that entities that do not receive ERA will benefit from improved access to standardized Federal IDR process eligibility information early in the claims process. The Departments reiterate that the CARC and RARC requirement in these final rules only applies to plans and issuers when sending any paper or electronic remittance advice to entities with which they do not have a direct or indirect contractual relationship. It does not apply to any remittance information or EOB sent from plans and issuers directly to plan participants, beneficiaries, or enrollees.

The 2023 proposed rules did not propose any changes to requirements governing the format of remittances or remittance advice. The Departments clarify that these final rules neither establish a requirement to use a specific format nor alter existing requirements related to the use of electronic or paper remittance advice (such as the requirement that entities subject to electronic transactions requirements under HIPAA must use ERA at the request of a provider, facility, or provider of air ambulance services, regardless of its network status or other contractual relationship with the plan or issuer).

See

45 CFR 162.925(a)(1) (providing that if an entity requests a health plan to conduct a transaction as a standard transaction, the health plan must do so).

g. Enforcement of CARC and RARC Requirement

Many commenters highlighted the importance of ensuring that the CARC and RARC requirement is strictly and consistently enforced. Several commenters recommended imposing monetary penalties on plans and issuers that fail to provide required CARCs and RARCs. Several commenters recommended that the Departments modify the Federal IDR process to either create consequences for plans or issuers that fail to provide appropriate CARCs or RARCs, or provide relief for providers that are impacted by a plan's or issuer's failure to provide appropriate CARCs and RARCs.

In previously issued guidance, the Departments stated that when a plan or issuer fails to comply with the QPA disclosure requirements,

providers retain the right to initiate the open negotiation period within 30 business days of receiving the initial payment or notice of denial of payment.

The Departments further stated that in cases in which a plan or issuer fails to comply with the disclosure requirements, the provider did not have the information necessary to initiate the 30-business-day open negotiation period, and the provider subsequently missed the deadline to initiate the Federal IDR process, the provider may alternatively request an extension to initiate the Federal IDR process by emailing a request for extension due to extenuating circumstances to

FederalIDRQuestions@cms.hhs.gov.

26 CFR 54.9816-6(d)(1) or (2), 29 CFR 2590.716-6(d)(1) or (2), and 45 CFR 149.140(d)(1) or (2).

See

FAQs about Affordable Care Act and Consolidated Appropriations Act, 2021 Implementation Part 55 (August 19, 2022), Q20, available at

https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-55.pdf

and

https://www.cms.gov/files/document/faqs-part-55.pdf; see also

FAQs about Consolidated Appropriations Act, 2021 Implementation Part 69 (January 14, 2025), Q3 and Q4, available at

https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-69.pdf

and

https://www.cms.gov/files/document/faqs-part-69.pdf.

In response to comments, the Departments note that this option to request extensions will also apply in cases where a plan or issuer fails to provide CARCs and RARCs as required under these final rules. The Departments are not imposing additional Federal IDR process consequences in these final rules on plans and issuers that fail to provide CARCs and RARCs, which could complicate and delay payment determinations, but will continue to assess the need for Federal IDR process changes and propose any such changes in future rulemaking. The Departments will use existing processes to enforce requirements under the Code, ERISA, and the PHS Act that apply to group health plans and health insurance issuers, including the requirements added by these final rules.

C. Information To Be Shared About the QPA

As described in section I.B of this preamble, the July 2021 interim final rules and August 2022 final rules provide that if the recognized amount for an item or service is the QPA, plans and issuers must make certain disclosures about the QPA with each initial payment or notice of denial of payment and must also provide certain additional information upon request.

This information must be provided in writing, either on paper or electronically, to a provider, facility, or provider of air ambulance services, as applicable.

These requirements were intended to ensure the disclosure of information about the QPA in any instance in which an item or service could be eligible for the Federal IDR process. However, the current text of the regulations describing when such disclosures are required does not precisely mirror all instances in which an item or service could be eligible for the Federal IDR process.

86 FR 36898; 87 FR 52633.

29 CFR 2590.716-6(d) and 45 CFR 149.140(d).

The term “recognized amount” is not used in the statute or regulations for purposes of determining cost sharing for air ambulance services furnished by nonparticipating providers of air ambulance services. Accordingly, in the 2023 proposed rules, the Departments proposed a change to 26 CFR 54.9816-6T(d), 29 CFR 2590.716-6(d), and 45 CFR 149.140(d) to specify that, in the case of air ambulance services, plans and issuers must disclose the QPA and certain information about the QPA when cost sharing is calculated based on the lesser of the QPA or the amount billed by the provider of air ambulance services. The Departments similarly proposed that, in the case of emergency and applicable non-emergency services,

information about the QPA must be disclosed when the recognized amount is lesser of the QPA or the amount billed by the provider or facility. This proposal to require the disclosure when the amount billed is used to determine cost sharing takes into account the rare circumstances where the billed amount is less than the QPA. In such cases, cost sharing must be based on the billed amount, as specified in existing rules at 29 CFR 2590.716-3, 29 CFR 2590.717-1(b)(2), 45 CFR 149.30, and 45 CFR 149.130(b)(2).

Lastly, the Departments proposed technical changes to clarify several definitional terms and proposed several additional items of information that must be included as part of the disclosure. After considering the comments received, the Departments are finalizing the proposed changes with minor modifications.

The Departments received several comments expressing support for the proposed change to 26 CFR 54.9816-6T(d), 29 CFR 2590.716-6(d), and 45 CFR 149.140(d) to reflect that the term “recognized amount” does not apply for air ambulance services. These commenters stated that the change in terminology will result in plans and issuers providing necessary information for all items and services that may be subject to the Federal IDR process, making it easier for providers of air ambulance services to decide, prior to the open negotiation process, whether a claim is eligible for the IDR process.

After considering the comments, the Departments are finalizing this amendment as proposed. The amendment does not change existing policy but rather is a technical amendment to reflect that the term “recognized amount” is not used in the statute or the regulations for purposes of determining cost sharing for air ambulance services furnished by nonparticipating providers of air ambulance services. Instead, for air ambulance services, cost sharing is calculated based on the lesser of the QPA or the amount billed by the provider of air ambulance services.

The Departments also proposed amendments to 26 CFR 54.9816-6(d), 29 CFR 2590.716-6(d), and 45 CFR 149.140(d) to require plans and issuers to make the same disclosures regarding the QPA and related information when the recognized amount (or for air ambulance services, the amount on which cost sharing is based) is the amount billed by the provider, facility, or provider of air ambulance services.

Several commenters stated their support for this clarifying amendment, stating that in cases where the recognized amount (or the amount upon which cost sharing is based) is the billed amount, the QPA and its related disclosures are important information to have prior to the open negotiation period and when assessing whether to initiate a Federal IDR dispute. These commenters also explained that the change would facilitate certified IDR entities' determinations of whether a claim is eligible for the Federal IDR process, but did not expand further on this point. A few commenters urged that this change not be finalized. Those commenters stated that disclosing certain information about the QPA when the calculation of cost sharing involves the billed amount would incentivize providers to increase their billed charges to the QPA (or higher), which would in turn increase costs to patients and the larger health care system. In addition, one commenter stated that this change is unfeasible because the disclosure requirements would apply to items and services for which the payer is unable to generate QPA values, due to limited sample sizes.

The Departments disagree with the concerns stated by commenters about finalizing the amendment as proposed. When an All-Payer Model Agreement or specified State law does not apply, the recognized amount used to determine cost sharing (or for air ambulance services, the amount upon which cost sharing is based) for an item or service subject to the No Surprises Act is the lesser of the amount billed by the provider or facility or the QPA. When the QPA is not the lesser amount and therefore is not used to determine cost sharing, the item or service may nevertheless be eligible for the Federal IDR process, provided other conditions of eligibility are met. Because certified IDR entities are required under statute to consider the QPA in rendering a payment determination, the Departments have concluded that it is critical that plans and issuers share information about the QPA even when the billed amount, rather than the QPA, is used to determine cost sharing.

The Departments note that a plan or issuer must provide the required QPA disclosures, regardless of the cost-sharing requirement imposed under the plan or coverage, including for example, when the cost-sharing requirement for the item or service is $0 or is a copayment.

In response to the comment regarding inability to calculate QPA values due to a limited sample size, the Departments note that QPAs are based on contracted rates, and not on amounts billed by providers.

Accordingly, after considering the concerns raised and the many comments received supporting the proposed changes, the Departments are finalizing this amendment as proposed.

See

29 CFR 2590.716-6(b) and (c)(3) and 45 CFR 149.140(b) and (c)(3).

The Departments also proposed technical and conforming amendments to align the requirements under 26 CFR 54.9816-6T, 29 CFR 2590.716-6, and 45 CFR 149.140 with the October 2021 interim final rules and current practice. One of these proposed changes was to specify that “days,” as described in the disclosure provisions (for example, the 30-business-day open negotiation period), are counted using “business days” (rather than “calendar days”), where applicable. One commenter stated concern that specifying “business days” instead of “calendar days” would lead to delays and explained that the Congress did not specify the use of business days, suggesting that calendar days were intended. However, the proposed change is consistent with the Departments' previously described interpretation of the statute. Specifically, in the October 2021 interim final rules, the Departments noted, “[t]he statute is largely silent on whether the term ‘days’ used in these provisions means business days or calendar days. However, in certain provisions, the No Surprises Act specifies the use of calendar days or business days, indicating that where the statute is silent the Departments may choose either meaning.”

The Departments have determined that aligning the timeframes described in the disclosure with the existing timeframes for open negotiation will minimize confusion. Therefore, to ensure conformity and consistency between the disclosures and the regulatory timeframes, the Departments have finalized the amendments as proposed, interpreting “days” as “business days” for the purpose of the disclosures required under 29 CFR 2590.716-6(d) and 45 CFR 149.140(d), to align with the previously codified regulatory timeframes.

86 FR 55980, 55989 (October 7, 2021).

Id.

The Departments also proposed technical and conforming amendments to align the language in 29 CFR 2590.716-6(d)(1)(iv) and 45 CFR 149.140(d)(1)(iv) with the requirements established in the October 2021 interim final rules regarding initiation of open negotiation and the Federal IDR process by replacing the phrase “amount of total payment” with the term “out-of-network rate,” as defined in 29 CFR 2590.716-3 and 45 CFR 149.30, and by describing an unsuccessful open

negotiation period as not resulting in an “agreement on the amount of payment” rather than not resulting in a “determination.” The Departments received one comment supporting the proposed changes and did not receive any comments opposing these amendments. The Departments are finalizing these changes as proposed.

The Departments further proposed that plans' and issuers' disclosures must include a statement that explains that a provider, facility, or provider of air ambulance services must notify the Departments to initiate open negotiation. The requirement, which would update the disclosure language consistent with related changes that the Departments proposed in the 2023 proposed rules,

would apply to disclosures that are made after the open negotiation notice can be submitted through the Federal IDR portal. Commenters stated support for the proposed change and the Departments are finalizing this change in 29 CFR 2590.716-6(d)(1)(iv)(A)(

) and 45 CFR 140(d)(1)(iv)(A)(

) as proposed.

See

section II.D.1 of this preamble, for further discussion of the Federal IDR portal.

As the Departments explained in the preamble to the 2023 proposed rules, disclosure of additional information with the QPA as proposed is critical to ensuring that all parties have the information necessary to determine whether a payment dispute is eligible for the Federal IDR process. Accordingly, the Departments proposed amending the disclosure requirements at 26 CFR 54.9816-6T, 29 CFR 2590.716-6, and 45 CFR 149.140 by redesignating paragraph (d)(1)(v) as (d)(1)(vi) and adding a new paragraph (d)(1)(v) to require plans and issuers to disclose the legal business name of the plan (if any) or issuer; the legal business name of the plan sponsor (if applicable); and the registration number assigned under proposed 26 CFR 54.9816-9, 29 CFR 2590.716-9, or 45 CFR 149.530, if the plan or issuer is registered with the Federal IDR registry. The Departments also sought comment on the specific technical and operational steps that would be necessary for plans and issuers to disclose this additional information when providing an initial payment or notice of denial of payment, including the appropriate implementation period that would allow plans and issuers to complete these steps to comply with the 2023 proposed rules, if finalized, and any additional proposed disclosures that might be required to be communicated using a CARC or RARC as specified in guidance issued by the Departments. In consideration of the comments received, the Departments are finalizing the disclosure requirements with minor modifications as discussed below.

The Departments received many comments in support of these proposals. Many commenters in support explained that the new content elements would facilitate open negotiation by ensuring all parties have more accurate contact information for the specific plan or issuer. Commenters further stated that the proposed requirements would establish clearer standards for initiating IDR, ensure all parties have the information they need to efficiently determine eligibility for IDR, identify which entity is ultimately responsible for payment following a payment determination, and reduce confusion regarding the application of the “cooling off” period.

A few commenters were generally supportive of the proposed disclosure requirements but recommended minor changes. For example, a few commenters opposed the proposal to require inclusion of the legal business name of a plan sponsor, when applicable. One of these commenters recommended that plan sponsors be permitted to use the “does business as” or product marketing name recognized by the relevant State insurance regulator, instead of the legal business name when the plan sponsor has assigned the responsibility for managing claims administration to its issuer or TPA, stating that in such circumstances, the plan sponsor information is not necessary to adjudicate a Federal IDR dispute and may cause confusion. Another commenter recommended that the Departments require the disclosure of the legal business name of the group health plan and sponsor only for self-insured group health plans. Another commenter opposed the Departments' proposal, expressing concern that the additional items proposed to be required as part of the disclosure are duplicative of other steps in the Federal IDR process.

The Departments disagree that the proposed disclosures are duplicative of other steps in the Federal IDR process. As discussed in the preamble to the 2023 proposed rules, transparent and meaningful disclosure about the calculation of the QPA is crucial to inform the negotiation process. Ensuring consistency and uniformity between the information that plans and issuers provide in the Federal IDR registry discussed in section II.F of the preamble and the information disclosed by plans and issuers with their initial payment or notice of denial of payment is also necessary to ensure the efficient operation of the Federal IDR process. Allowing parties to choose whether to disclose their legal business name or their “does business as” name would undermine that uniformity.

As explained in more detail in section II.F of the preamble which outlines the Federal IDR registration process, self-insured plans must provide the legal business name of their plan sponsor even if the sponsor has apportioned responsibility to its TPA, as certified IDR entities and initiating parties must distinguish between self-insured group health plans with the same TPA to determine whether items and services were paid by the same self-insured group health plan and are therefore eligible to be batched together in a single dispute.

To align required disclosures with the Federal IDR registration process, the Departments are finalizing with a minor modification the requirement that plans and issuers include, as part of the required disclosures, the registration number assigned to the plan or issuer, as required under 26 CFR 54.9816-9, 29 CFR 2590.716-9, or 45 CFR 149.530, as applicable. The phrase, “if the plan or issuer is registered,” has been replaced with “as required” to better reflect that a plan or issuer is required to include a registration number as part of the disclosures when it becomes subject to the registration requirement. Under these final rules, each self-insured group health plan, FEHB Program carrier, and health insurance issuer offering group or individual health insurance coverage subject to the Federal IDR process must register with the Federal IDR Registry before the later of the date that is 90 business days after the date the registry becomes available or the date the plan sponsor or health insurance issuer begins offering a group health plan or health insurance coverage or FEHB Program carrier begins offering an FEHB plan subject to the Federal IDR process. Failure to comply with the registration requirement by the applicable date will be a violation of these final rules.

The Departments also received many comments suggesting additional information that could be included in the disclosures. Many commenters recommended that the Departments require that plans and issuers, when providing the QPA with the initial payment or notice of denial of payment, also disclose more detailed information on the specific methodology and data used for calculating the QPA. One commenter suggested requiring a fax number in addition to contact information that is already required. Some commenters recommended that the Departments require standardized

communication from plans and issuers that are beyond the proposed use of CARCs/RARCs so that the QPA and related disclosure information is presented clearly and consistently to providers and facilities. These commenters believe the QPA currently is not provided in a clearly identifiable manner, that the ASC X12 835 transaction standard should be used, and that since there are limits on the current ASC X12 835 transaction standard, it should be modified so that all information, including the QPA, is disclosed uniformly.

While nothing in these final rules precludes including a fax number as part of a plan's or issuer's contact information, the Departments decline to require that information at this time given that some plans and issuers may not have fax numbers, especially as fax machines become increasingly replaced by digital technology such as email. In addition, the Departments decline to require disclosure of additional information about the methodology and data used for calculating the QPA in these final rules because these additional disclosures would not assist parties in determining whether a payment dispute is eligible for the Federal IDR process and would be difficult to implement. These final rules also do not modify the ASC X12 835 transaction standard, which is outside the scope of this rulemaking.

The provisions of these final rules related to disclosure of information about the QPA apply to disclosures required to be provided on or after the effective date of the final rules, as discussed in more detail in section II.H.I of this preamble.

D. Open Negotiation and Initiation of the Federal IDR Process

1. Open Negotiation

a. Determination of Payment Amount Through Open Negotiation

The Departments proposed several amendments to the open negotiation provisions at 26 CFR 54.9816-8(b)(1), 29 CFR 2590.716-8(b)(1), and 45 CFR 149.510(b)(1) to impose new information exchange requirements and to establish a process for tracking open negotiation through the Federal IDR portal in anticipation of initiation of a Federal IDR process dispute.

First, the Departments proposed to amend paragraphs 26 CFR 54.9816-8(b)(1)(i), 29 CFR 2590.716-8(b)(1)(i), and 45 CFR 149.510(b)(1)(i) to establish a requirement that a party must provide a written open negotiation notice to the other party and to the Departments through the Federal IDR portal to initiate the open negotiation period, and that such notice must comply with the content requirements of proposed paragraph (b)(1)(ii) and in the manner specified in proposed (b)(3), as discussed in sections II.D.1.c and III.D.3 of this preamble, respectively.

The Departments sought comment on this proposed amendment. After consideration of comments, the Departments are finalizing this amendment as proposed.

As discussed in section II.D.3 of this preamble, the Departments are finalizing new paragraphs 26 CFR 54.9816-8(b)(3), 29 CFR 2590.716-8(b)(3), and 45 CFR 149.510(b)(3), which describe the manner in which the open negotiation, open negotiation response, and notice of IDR initiation notices must be transmitted. Specifically, a party must furnish to the other party, and the Departments, the notices and supporting documentation described in paragraphs (b)(1)(ii) (open negotiation notice), (b)(1)(iii) (open negotiation response notice), (b)(2)(ii) (notice of IDR initiation), and (b)(2)(iii) (notice of IDR initiation response) through the Federal IDR portal, using the standard forms to be developed by the Departments.

Many commenters supported the proposal to establish the requirement that a party must provide a written open negotiation notice to the other party and the Departments through the Federal IDR portal to initiate the open negotiation period. Many stated that the use of the Federal IDR portal would be beneficial for all parties. These commenters noted that using the portal to transmit the open negotiation notice and track the initiation of the 30-business-day open negotiation period would encourage meaningful participation in negotiations, improve transparency, support information sharing, and increase administrative efficiency. A few commenters stated that the proposal would improve certified IDR entities' ability to determine the eligibility of an item or service for the Federal IDR process.

Several other commenters generally supporting the proposal suggested additional changes or clarifications. Some of these commenters expressed concern that the current Federal IDR portal infrastructure would require extensive improvements to effectively implement the proposal and should undergo prototype testing to ensure successful implementation. A few commenters urged the Departments to utilize automation to reduce duplicative administrative requirements when submitting an open negotiation notice. Some commenters urged the Departments to clarify that a party initiating open negotiation is not required to submit open negotiation information through any mechanism other than the Federal IDR portal (for instance, through a payor's proprietary portal).

A few commenters opposed the proposal to establish the requirement that to initiate the open negotiation period, a party must provide a written open negotiation notice to the other party and the Departments through the Federal IDR portal. One commenter opposed the addition of any new requirements during the open negotiation process, as it would increase burden on the parties. Another commenter cautioned that this requirement would ultimately raise negotiated costs and increase overall upward pressure on health care prices because sharing additional information before IDR initiation would decrease the overall cost to providers of participating in the Federal IDR process, particularly for eligible disputes, by smoothing information exchanges and making filing easier, and increase provider leverage in pre-IDR negotiations.

After consideration of comments, the Departments are finalizing the proposal to amend paragraph 26 CFR 54.9816-8(b)(1)(i), 29 CFR 2590.716-8(b)(1)(i), and 45 CFR 149.510(b)(1)(i) to establish a requirement that a party must provide a written open negotiation notice to the other party and to the Departments through the Federal IDR portal to initiate the open negotiation period. This will improve communication and transparency between parties while enabling certified IDR entities to determine whether a dispute has completed the required open negotiation period. While the Departments understand the concern regarding upward pressure on healthcare pricing based on increased provider participation in open negotiation, these final rules incentivize parties to negotiate and may therefore discourage over-reliance on disputing claims through the Federal IDR process and help parties identify ineligible disputes prior to initiating IDR. This, in turn, could lower costs for both disputing parties who must pay fees to participate in the Federal IDR process, which could ultimately reduce costs for consumers. Further, prioritizing the negotiation of out-of-network rates before initiation of the Federal IDR process could contribute to improved contract or network negotiations between providers and plans. The Departments expect parties to negotiate in good faith and comply with the requirements finalized in these rules.

The Departments also acknowledge the concerns expressed regarding limited portal functionality and increasing administrative burden, but have determined that the administrative simplicity of having all notices go

through one portal will outweigh the operational burdens of using the portal.

Further, these final rules consolidate the exchange of all required open negotiation notices through the Federal IDR portal and do not require parties to submit multiple notices or submit notices through plan and issuer proprietary portals to initiate open negotiation. It is the Departments' position that a disputing party cannot require and should not expect the other party to also submit any notices under these final rules through such proprietary portals. The Departments will continue to pursue a streamlined open negotiation experience within the Federal IDR portal that collects the relevant information to facilitate negotiations while minimizing duplicative administrative work.

Second, the Departments proposed to amend 26 CFR 54.9816-8(b)(1)(i), 29 CFR 2590.716-8(b)(1)(i), and 45 CFR 149.510(b)(1)(i) to specify that the 30-business-day open negotiation period begins on the day on which the party first submits the open negotiation notice, including the remittance advice documentation specified in proposed 26 CFR 54.9816-8(b)(1)(ii)(A)(

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

), and 45 CFR 149.510(b)(1)(ii)(A)(

), to the other party and the Departments. This amendment does not change the 30-business-day timeframe for engaging in open negotiation, but instead would provide greater clarity for parties engaged in open negotiation and improve the shared understanding of deadlines related to the open negotiation period. After consideration of comments, the Departments are finalizing this amendment as proposed.

A few commenters generally supported this proposed amendment to 26 CFR 54.9816-8(b)(1)(i), 29 CFR 2590.716-8(b)(1)(i), and 45 CFR 149.510(b)(1)(i). One of these commenters noted that the proposal would minimize operational and resource issues for providers by establishing clear expectations about the open negotiation timeframe.

While no commenters explicitly opposed the proposal, a few commenters suggested additional requirements. One commenter suggested that the Departments clarify that the open negotiation period should only be considered to have been initiated once a completed open negotiation notice has been submitted to the Departments and the other party, regardless of whether the remittance advice has been sent.

The Departments are finalizing as proposed the amendment to 26 CFR 54.9816-8(b)(1)(i), 29 CFR 2590.716-8(b)(1)(i), and 45 CFR 149.510(b)(1)(i) to specify that the 30-business-day open negotiation period begins on the day a party first submits the open negotiation notice, including the remittance advice documentation specified in paragraph (b)(1)(ii)(A)(

) to the other party and the Departments. However, in the event that the party submitting the open negotiation notice did not receive the remittance advice because a plan or issuer failed to comply with the disclosure requirements in 26 CFR 54.9816-6(d)(1), 29 CFR 2590.716-6(d)(1) or (2), and 45 CFR 149.140(d)(1) or (2), that party retains the right to initiate the open negotiation within 30 business days of receiving the initial payment or notice of denial of payment, consistent with

FAQs About Affordable Care Act and Consolidated Appropriations Act, 2021 Implementation Part 55.

By clarifying the conditions required to initiate open negotiation, the Departments anticipate that the parties will have a better understanding of the requirements to initiate open negotiation and will be able to better allocate resources to negotiation efforts.

See

FAQs about Affordable Care Act and Consolidated Appropriations Act, 2021 Implementation Part 55, Q20 (August 19, 2022), available at

https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-55.pdf

and

https://www.cms.gov/files/document/faqs-part-55.pdf.

Finally, for the proposed amendments to the open negotiation provisions at 26 CFR 54.9816-8(b)(1), 29 CFR 2590.716-8(b)(1), and 45 CFR 149.510(b)(1), a few commenters noted that, if finalized, the open negotiation provisions may exceed the Departments' statutory authority to implement the Federal IDR process, as open negotiation is not explicitly included in the Departments' implementation mandate.

The Departments disagree. Under section 9816(c)(1)(B) of the Code, section 716(c)(1)(B) of ERISA, and section 2799A-1(c)(1)(B) of the PHS Act, the open negotiation period must conclude before a party may initiate IDR, making it a required component of the Federal IDR process. Additionally, the statute directs the Departments to jointly establish one Federal IDR process under which a certified IDR entity must determine the out-of-network rate for any qualified IDR item or service subject to IDR initiation. In implementing the Federal IDR process, the Departments have determined that the current requirements should be improved to facilitate beginning the open negotiation period. As a result, the Departments are finalizing the requirements for disputing parties to furnish the open negotiation notice and open negotiation response notice through the Federal IDR portal to capture this information.

b. Open Negotiation Response Notice

The Departments proposed language at 26 CFR 54.9816-8(b)(1)(i), 29 CFR 2590.716-8(b)(1)(i), and 45 CFR 149.510(b)(1)(i) to require that the party in receipt of the open negotiation notice provide a written notice and supporting documentation in response to the open negotiation notice (open negotiation response notice) to the other party and the Departments through the Federal IDR portal as soon as practicable, but no later than the 15th business day of the 30-business-day open negotiation period. The Departments solicited comment on this proposed requirement. After consideration of comments, the Departments are finalizing this requirement as proposed.

Many commenters generally supported the proposal to require the party in receipt of the open negotiation notice to provide an open negotiation response notice by the 15th business day of the 30-business-day open negotiation period. A few of these commenters noted that the proposal to require the open negotiation response notice would increase parties' accountability in negotiations and improve transparency of the information relevant to the item or service subject to negotiation.

A few commenters opposed the proposal to require an open negotiation response notice. These commenters shared concerns regarding the burden of such a requirement. One commenter noted that the current Federal IDR portal functionality would not support such a requirement, and that the operational disruption caused by the volume of open negotiation submissions would compromise the entire Federal IDR process.

The Departments requested comment on whether the party in receipt of the open negotiation notice should be required to furnish the open negotiation response notice to the other party and the Departments earlier than proposed to allow additional time for the party submitting the open negotiation notice to review the open negotiation response notice. The Departments also sought comment on imposing a deadline for the open negotiation response notice later than the proposed deadline, such as by the 20th business day or up to the last day of the 30-business-day open negotiation period.

Several commenters advised against extending the deadline to respond with the open negotiation response notice, asserting that the extra time would be

unnecessary. A few commenters also supported the Departments' clarification in the preamble to the 2023 proposed rules that the failure to respond to the open negotiation notice would not extend or otherwise alter the completion of the 30-business-day open negotiation timeframe. One commenter suggested that if a plan or issuer does not respond to the open negotiation notice by the 15th business day of the 30-business-day open negotiation period, the Departments should allow a provider to initiate the Federal IDR process before the end of the 30-business-day open negotiation period. Another commenter opposed the proposed 15-business-day deadline, stating that compliance with the requirement would not be possible due to the high volume of disputes, and suggested instead that the response should be accepted at any time during the 30-business-day open negotiation period. Several commenters recommended a shorter deadline for response. Several commenters were in favor of extending the timeline, stating that more time would be needed to review and meaningfully consider the content of the open negotiation notice. A few commenters suggested extending the timeline to 20 business days. A few commenters made suggestions regarding conditions to be satisfied by the open negotiation notice before the proposed 15-business-day deadline is triggered. These commenters requested that the Departments clarify the expectations for participation in the open negotiation period if either the provider or plan is not furnished with complete information regarding the item or service.

After reviewing comments received, the Departments are finalizing 26 CFR 54.9816-8(b)(1)(i), 29 CFR 2590.716-8(b)(1)(i), and 45 CFR 149.510(b)(1)(i) as proposed. The Departments maintain that the open negotiation response notice will increase transparency and improve the exchange of information during open negotiation. While finalizing this provision adds an additional requirement to the process, the efficiencies achieved by requiring a response from the parties in receipt of the open negotiation notice will likely result in more meaningful participation in open negotiation overall. The Departments have determined that the 15-business-day deadline to respond to the open negotiation notice provides an appropriate amount of time for the party to respond and will encourage a meaningful exchange of information during open negotiation. This deadline provides equal time for each party to review their respective notices, and either reducing or extending the deadline to submit the open negotiation response notice from 15 business days would disadvantage one of the two parties. Therefore, the Departments have determined that the proposed policy appropriately balances each party's interest and should be finalized.

The Departments note that under section 9816(c)(1) of the Code, section 716(c)(1) of ERISA, and section 2799A-1(c)(1) of the PHS Act, the parties must exhaust the open negotiation period prior to initiating the Federal IDR process. Accordingly, initiation of the Federal IDR process before the end of the 30-business day open negotiation period is not permitted.

The Departments acknowledge the importance of providing a party with complete information before it is expected to respond and note that all open negotiation notice elements in these final rules are required. The Departments reiterate that if a party fails to furnish an open negotiation response notice containing all required information to the other party and the Departments, the Departments may review and determine whether enforcement action may be appropriate. However, failure to timely furnish an open negotiation response notice in any specific open negotiation will not extend the open negotiation period, delay the timeframe for initiation of the Federal IDR process, or affect either party's ability to initiate the Federal IDR process.

Additionally, the Departments sought comment on allowing certified IDR entities, as a means of incentivizing participation in the proposed exchange of notices, to take into consideration a party's good faith compliance with the 15-business-day deadline for the open negotiation response notice when making their payment determinations. The Departments are declining to finalize this policy and therefore are not establishing a “good faith” requirement in regulation.

Many commenters supported this idea. Many of these commenters requested that the Departments allow certified IDR entities to penalize the party for non-compliance and specifically suggested that failure to timely respond to the open negotiation notice should result in a default determination, or the automatic selection of the provider's offer during the Federal IDR process. Several of these commenters also noted that if the Departments were to allow certified IDR entities to consider a party's compliance with the requirement to provide an open negotiation response notice, the Departments should explicitly connect non-compliance with a failure to engage in good faith negotiations. Some of these commenters suggested that the Departments adopt more explicit standards regarding good faith negotiation to support this interpretation. A few commenters offered that the Departments should establish a good faith requirement in regulation, while a few other commenters suggested that the Departments provide guidance to the certified IDR entities to consider failure to respond to the open negotiation notice as evidence of “bad faith.” Further, a few commenters provided recommendations related to the adoption of good faith requirements, specifically, that the Departments should allow certified IDR entities to consider any offers that deviate considerably between open negotiation and IDR offer to be evidence of “bad faith” engagement.

A few commenters opposed allowing certified IDR entities to consider compliance with the proposed requirement when making their payment determinations. One of these commenters noted that since the No Suprises Act does not specify how the parties must engage in open negotiation, parties have the discretion to decide whether to engage in negotiations, and penalizing parties for the way they engage in negotiations would be inappropriate and exceed the Departments' authority. Another commenter stated that certified IDR entities should not be requested to evaluate the substance of negotiations or allegations of failure to negotiate in good faith, as this is inconsistent with normal mediation rules and practices and may have a chilling effect on negotiations. Further, the commenter suggested that for operational ease, if either party fails to furnish required documents during open negotiation, the disputes should be presumed eligible for the Federal IDR process without requiring outreach on the part of the certified IDR entity. Another commenter noted that certified IDR entities are already permitted to consider any relevant information except for the prohibited factors identified in the statute and regulation, and therefore it would be inconsistent with the statute and regulation to suggest that a certified IDR entity could not consider the fact that a party failed to negotiate during open negotiation.

The No Surprises Act does not specify how parties must engage in open negotiation, only that it must occur prior to initiation of the Federal IDR process, and therefore it is more appropriate for disputing parties to

determine how they wish to negotiate. The Departments also agree with the commenter who stated that the proposal would not be consistent with normal mediation rules and practices, and that it could have a chilling effect on negotiation. Under the statute, certified IDR entities are permitted to consider any additional information provided by a disputing party related to the offer to determine the appropriate out-of-network rate, except for the prohibited factors identified in statute.

Further, a default determination refers only to a situation where one party's offer is not received (including in the circumstance where, under these final rules and as outlined in section II.E.3.d of this preamble, one party fails to timely pay the certified IDR entity fee or administrative fee). It would therefore not be appropriate for a certified IDR entity to render a default judgment based a party's noncompliance with the 15-business-day deadline for the open negotiation response notice, an activity that precedes initiation of the Federal IDR process.

Section 9816(c)(5)(C) and (D) of the Code, section 716(c)(5)(C) and (D) of ERISA, and section 2799A-1(c)(5)(C) and (D) of the PHS Act.

A few commenters made recommendations about the Departments' enforcement more broadly. A few commenters stated that the Departments should monitor and take enforcement action against non-compliant parties; one commenter suggested that the Departments impose an increased administrative fee for a party's failure to provide the open negotiation response notice. Several other commenters noted that, as proposed, the rules do not contain sufficiently strict enforcement language to prompt parties to comply with the requirement to provide an open negotiation response notice and urged the Departments to clarify the enforcement mechanisms or penalties for failure to respond in the final rule.

Finally, a few commenters encouraged the Departments to take a more active role in monitoring disputing parties' conduct and taking quality assurance measures. They recommended that the Departments monitor party responsiveness during open negotiation and evidence of engagement in pre- and post- IDR communications, such as the requirement to make timely payment. One commenter suggested that additional guidance on the calculation of business days be provided to avoid miscalculations and confusion.

The Departments clarify here that for the purposes of calculating Federal IDR process timelines, business days do not include Federal holidays and weekends.

In general, all parties are required to comply with the requirements established in these final rules, and the Departments will use existing processes to enforce requirements under the Code, ERISA, and PHS Act that apply to group health plans and health insurance issuers, including requirements under these final rules. The Departments note that disputing parties may report incidents of non-compliance to the No Surprises Help Desk, which will aid in conducting targeted oversight activities as needed. Furthermore, the Departments will evaluate the need for additional guidance and education resources to support interested parties' understanding of the timelines, requirements, and processes established in these final rules.

See

Federal Independent Dispute Resolution (IDR) Process Guidance for Certified IDR Entities, Q5 (August 2022), available at

https://www.cms.gov/files/document/ta-certified-independent-dispute-resolution-entities-august-2022.pdf.

c. Open Negotiation Notice Content

In the 2023 proposed rules, the Departments proposed to amend 26 CFR 54.9816-8(b)(1)(ii)(A), 29 CFR 2590.716-8(b)(1)(ii)(A), and 45 CFR 149.510(b)(1)(ii)(A) and add 26 CFR 54.9816-8(b)(1)(ii)(A)(

) through (

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

) through (

), and 45 CFR 149.510(b)(1)(ii)(A)(

) through (

) to require that the open negotiation notice include specified information regarding the item or service under dispute and the party sending the open negotiation notice. The proposed amendments would add new elements to the open negotiation notice. The elements that the Departments proposed to be included in the open negotiation notice were:

(1) Information sufficient to identify the provider, facility or provider of air ambulance services, including name and current contact information (including the legal business name, email address, phone number, and mailing address) as provided with the claim form submitted by the provider, facility, or air ambulance provider to the plan or issuer, and the National Provider Identifier (NPI);

(2) Information sufficient to identify the plan or issuer, including the plan's or issuer's registration number as required under § 54.9816-9, § 2590.716-9, and § 149.530, if the plan or issuer is registered under § 54.9816-9, § 2590.716-9, and § 149.530, or an attestation from the party submitting the open negotiation notice that the plan or issuer was not registered prior to the date it submitted the notice; the legal business name of the plan or issuer, as well as the current contact information (name, email address, phone number, and mailing address) of the plan or issuer as provided with the initial payment or notice of denial of payment; and if the party submitting the open negotiation notice is a plan or issuer, the plan type (for example, self-insured or fully-insured);

(3) The name and contact information (including the legal business name, email address, phone number, and mailing address) for any third party representing the party submitting the open negotiation notice, and an attestation that the third party has the authority to act on behalf of the party it represents in the open negotiation;

(4) Information sufficient to identify the item or service, including: the date(s) the item or service was furnished and, if the party submitting the open negotiation notice is a provider, facility, or provider of air ambulance services, the date(s) that the provider, facility, or provider of air ambulance services received the initial payment or notice of denial of payment for the item or service from the plan or issuer; the type of item or service (specifically, whether the item or service is an emergency service as defined § 54.9816-4T(c)(2)(i) or (ii), § 2590.716-4(c)(2)(i) or (ii), and § 149.110(c)(2)(i) or (ii), non-emergency item or service as described in § 54.9816-5T(b), § 2590.716-5(b), and § 149.120(b), or an air ambulance service as defined in § 54.9816-3T, § 2590.716-3 and § 149.30); whether the service is a professional service or facility-based service; the State where the item or service was furnished; the claim number; the service code; and information sufficient to identify the location where the item or service was furnished (such as place of service code or bill type code);

(5) The initial payment amount (including $0 if, for example, payment is denied);

(6) The qualifying payment amount, if provided with the initial payment or notice of denial of payment or if the party submitting the open negotiation notice is a plan or issuer;

(7) An offer of an out-of-network rate for each item or service;

(8) If the party submitting the open negotiation notice is a plan or issuer, the amount of cost sharing imposed for the item or service, if any;

(9) If the party submitting the open negotiation notice is a provider or facility, a statement that the items or services do not qualify for the notice

and provide consent exception described at 45 CFR 149.410(b) or 45 CFR 149.420(c) through (i);

(10) A statement that the provider, facility, or provider of air ambulance services was a nonparticipating provider, nonparticipating emergency facility, or nonparticipating provider of air ambulance services on the date the item or service was furnished;

(11) General information listed in the standard open negotiation notice developed by the Secretary under paragraph (b)(3) of this section describing the open negotiation period and the Federal IDR process (including a description of the purpose of the open negotiation period and Federal IDR process and key deadlines in the open negotiation period and Federal IDR process); and

(12) A copy of the initial payment or notice of denial of payment or other remittance advice that is required to include the disclosures under § 54.9816-6T(d)(1) and 54.9816-6(d)(1), § 2590.716-6(d)(1), and § 149.140(d)(1) for the item or service.

After consideration of comments, the Departments are finalizing the required elements on the open negotiation notice as proposed, with two exceptions. The Departments are modifying proposed 26 CFR 54.9816-8(b)(1)(ii)(A)(

and (

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

and (

), and 45 CFR 149.510(b)(1)(ii)(A)(

and (

). Specifically, the Departments are modifying the proposal at 26 CFR 54.9816-8(b)(1)(ii)(A)(

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

), and 45 CFR 149.510(b)(1)(ii)(A)(

) in three ways: (1) regarding the information sufficient to identify a plan or issuer, to remove the language “if the plan or issuer is registered under” § 54.9816-9, § 2590.716-9, and § 149.530; (2) to require, when applicable, that the party submitting the open negotiation notice attest that the plan or issuer's registration number was not provided on any remittance advice, rather than attest that the plan or issuer was not registered prior to the date the open negotiation notice was submitted; and (3) to require the open negotiation notice to include the legal business name of the plan sponsor when the entity furnishing the open negotiation notice is a self-insured group health plan that does not have a legal business name. With regard to the proposal at the proposal at 26 CFR 54.9816-8(b)(1)(ii)(A)(1

), 29 CFR 2590.716-8(b)(1)(ii)(A)(1

), and 45 CFR 149.510(b)(1)(ii)(A)(1

), the Departments are modifying the proposal by requiring the open negotiation notice to include a copy of any remittance advice associated with the initial payment or notice of denial of payment for the item or service, rather than a copy of the initial payment or notice of denial of payment or other remittance advice that includes the required disclosures.

The Departments did not receive comments on the proposals outlined at 26 CFR 54.9816-8(b)(1)(ii)(A)(

), (

), and (

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

), (

), and (

), and 45 CFR 149.510(b)(1)(ii)(A)(

), (

), and (

). The Departments are finalizing these provisions as proposed.

Many commenters generally supported the proposed elements on the open negotiation notice, with several stating that the proposed elements would improve engagement in open negotiation and enhance understanding of eligibility for the Federal IDR process. As discussed below, many commenters stated their support for, or opposition to, specific open negotiation notice content elements including required contact information, required payment information and documentation, and required statements.

Several commenters supported the proposal to require the open negotiation notice to include detailed contact information identifying the parties engaged in negotiations under proposed 26 CFR 54.9816-8(b)(1)(ii)(A)(

through (

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

through (

), and 45 CFR 149.510(b)(1)(ii)(A)(

through (

). These commenters specifically supported the provision of enhanced contact information for payers and providers, the NPI, the plan type (if the initiating party is a plan or issuer), and the plan or issuer registration number, and indicated that these elements would help facilitate negotiations between the correct parties. A few commenters stated various concerns regarding the requirement to provide information sufficient to identify the plan or issuer, including the plan's or issuer's registration number. One commenter noted that the registration number should be the only required contact information element in the open negotiation notice, while another commenter opposed the addition of this element entirely, asserting that it would increase the burden on providers. Another commenter opposed the proposal that a provider submitting an open negotiation notice should be responsible for attesting that the payer was not registered prior to the date the party submitted its open negotiation notice, stating that the provider should not be held responsible for providing information not in their control or possession.

The requirement to provide enhanced contact information sufficient to identify the provider, facility, or provider of air ambulance services under 26 CFR 54.9816-8(b)(1)(ii)(A)(

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

), and 45 CFR 149.510(b)(1)(ii)(A)(

) will improve communication in open negotiation and assist parties in correctly identifying the other party to engage during open negotiation. Further, the requirement to provide information sufficient to identify the plan or issuer, including the plan's or issuer's registration number, would not add undue burden since the registration number will be provided on the remittance advice associated with the initial payment or notice of denial of payment for the item or service and would provide the benefit of access to validated contact information from the plan or issuer. In the Departments' experience implementing the Federal IDR process, providers have struggled to identify the correct plan or issuer on documentation associated with the initial payment or the notice of denial of payment. The registry requirement, discussed in section II.F of this preamble, and associated registration number will help the provider accurately identify and contact the appropriate plan or issuer to initiate open negotiation, particularly if the plan or issuer fails to clearly disclose such information with its initial payment or denial of payment.

At 26 CFR 54.9816-8(b)(1)(ii)(A)(

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

), and 45 CFR 149.510(b)(1)(ii)(A)(

), the Departments proposed that, in the event the plan or issuer is not registered by the time the provider, facility, or provider of air ambulance services initiates the open negotiation period, the party submitting the open negotiation notice must attest that the party receiving the open negotiation notice was not registered prior to the date the party submitted its open negotiation notice, and would use the contact information currently required by the disclosure requirements for the initial payment or notice of denial of payment in sections 26 CFR 54.9816-6T(d)(1)(v), 29 CFR 2590.716-6(d)(1)(v), and 45 CFR 149.140(d)(1)(v) to complete the open negotiation notice.

The Departments are finalizing paragraph (b)(1)(ii)(A)(

) with a modification that,

if the party submitting the open negotiation notice does not include a registration number in the open negotiation notice, it must provide an attestation that the plan's or issuer's registration number was not provided on any remittance advice associated with the initial payment or notice of denial of payment for the item or service. This modification places appropriate responsibility on the provider as it requires them to attest only to something about which they have direct knowledge (that is, whether the remittance advice contained the plan's or issuer's registration number, rather than whether the plan or issuer registered). Additionally, the Departments recognize that not all self-insured group health plans will have a legal business name, and to ensure that a legal business name is captured in such cases, are finalizing a modification to require the open negotiation notice to include the legal business name of the plan sponsor in the case the party submitting the open negotiation notice is a self-insured group health plan that does not have a legal business name.

The contact information currently required under 26 CFR 54.9816-6T(d)(1)(v), 29 CFR 2590.716-6(d)(1)(v), and 45 CFR 149.140(d)(1)(v) is “[c]ontact information, including a telephone number and email address, for the appropriate person or office to initiate open negotiations for purposes of determining an amount of payment (including cost sharing) for such item or service.”

In addition, some commenters provided feedback on the requirement to provide information sufficient to identify the item or service under proposed 26 CFR 54.9816-8(b)(1)(ii)(A)(

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

), and 45 CFR 149.510(b)(1)(ii)(A)(

). They stated that this proposal would help the negotiating parties identify the item or service subject to the open negotiation. A few commenters noted that the requirement to provide the claim number would support the correct and timely identification of the item or service subject to negotiation. The Departments agree with the commenters' feedback.

Several commenters supported the proposal requiring that the open negotiation notice include the initial payment amount, the QPA, and the amount of cost-sharing related to the item or service subject to open negotiation under 26 CFR 54.9816-8(b)(1)(ii)(A)(

), (

), and (

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

), (

), and (

), and 45 CFR 149.510(b)(1)(ii)(A)(

), (

), and (

), respectively. A few commenters supported requiring disclosure of the amount of cost sharing if the party submitting the open negotiation notice is a plan or issuer. A few commenters generally supported the proposal to disclose the QPA on the open negotiation notice, if provided with the initial payment or notice of denial of payment, while several other commenters opposed it. Commenters that opposed this proposal also noted that since the plan or issuer already has the QPA, the provision of this information is duplicative and unnecessary. Further, a few commenters indicated that requiring submission of the QPA with an offer for a different out-of-network rate inappropriately signals that the QPA is the most relevant factor in determining the out-of-network rate during open negotiation. One commenter noted that the Departments should only allow plans or issuers to submit the QPA amount on the remittance advice or provide it upon request.

For 26 CFR 54.9816-8(b)(1)(ii)(A)(

) and (

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

) and (

), and 45 CFR 149.510(b)(1)(ii)(A)(

) and (

), the Departments maintain that submitting the QPA and the amount of cost sharing in the open negotiation notice will support parties in their efforts to negotiate an out-of-network rate and enhance their awareness of factors considered during the Federal IDR process, if they choose to initiate. In particular, because the amount of cost sharing for a qualified IDR item or service is determined by the QPA, requiring the amount of cost sharing paid or owed by the participant, beneficiary, or enrollee could support parties in making informed offers while negotiating. As discussed below, an open negotiation response notice provided by a plan or issuer must state either that the QPA reflected in the open negotiation notice accurately reflects the QPA disclosed with the initial payment for the item or service, or if not, state the QPA it believes to be correct, and documentation to support the statement (for example, the remittance advice confirming the QPA). Therefore, requiring the QPA to be disclosed on the open negotiation notice will facilitate better communication between parties in identifying whether there may be a mistake in the identified QPA, such as a typographical error or the incorrect use of the cost sharing amount rather than the QPA, so that the potential initiating party has the correct information before initiating the Federal IDR process. The purpose of including this element on the open negotiation notice is not to provide the plan or issuer with new information, but rather to provide an opportunity for the plan or issuer to validate that the provider or facility has identified the correct value as the QPA, or provide a correction on the open negotiation response notice as needed. This exchange of information is important to establish a common understanding of the item or service.

In addition, the inclusion of the QPA on the open negotiation notice would not signal that the QPA has disproportionate significance in determining an out-of-network rate. The amount of the offers made during the open negotiation period are determined by the parties engaged in negotiations. The Departments do not seek to restrict those offers or imply that the parties should consider the QPA in negotiating an out-of-network rate. Rather, the inclusion of the QPA in the open negotiation notice mirrors the requirement to submit the QPA as part of the notice of IDR initiation, which is required because certified IDR entities are required to consider the QPA when making a payment determination. Because the QPA is relevant to the payment determination and must be included in the notice of IDR initiation, it should be included in the open negotiation notice as well to facilitate negotiations.

Some commenters supported the proposal to require a copy of any remittance advice associated with the initial payment or notice of denial of payment for the item or service to be included in the open negotiation notice at proposed 26 CFR 54.9816-8(b)(1)(ii)(A)(

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

), and 45 CFR 149.510(b)(1)(ii)(A)(

). These commenters indicated that such a requirement would support the timely identification of the items and services subject to open negotiation and enable the party in receipt of the open negotiation notice to comply with response deadlines. One of these commenters also suggested that the Departments clarify that all pages of the remittance advice must be submitted, as the remark codes are often located at the end of the document. Several commenters opposed the requirement to submit copies of payment documents with the open negotiation notice, asserting that they are difficult to obtain and administratively burdensome to extract and provide. One of these commenters suggested that if the Departments finalize the requirement to provide a copy of the remittance advice, then the party should not have to manually enter the details of each item or service into the Federal IDR portal as a means of balancing the overall burden associated with submission. A few of the commenters that opposed this requirement noted that the Departments did not explain in the 2023 proposed rules how the uploaded documents would be used, and suggested that, if necessary, the Departments should require only plans and issuers to provide this documentation, as they originate the documents and have access to the information.

For 26 CFR 54.9816-8(b)(1)(ii)(A)(

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

), and 45 CFR 149.510(b)(1)(ii)(A)(

), provision of the remittance advice associated with the initial payment or notice of denial of payment for the item or service will support the shared understanding of the items and services being negotiated and their eligibility for the Federal IDR process. Further, the provision of this documentation will reduce confusion and miscommunication between the parties during open negotiation. In the Departments' experience, many plans and issuers are unable to identify the claims submitted by providers during open negotiation. Requiring disputing parties to include a copy of the remittance advice with the open negotiation notice will enable the party in receipt of the open negotiation notice to quickly identify the item or service subject to negotiation. The exchange of this documentation will also support the goal of reducing ineligible disputes, as the required disclosures will contain information allowing parties to determine whether an item or service is eligible for the Federal IDR process during open negotiation.

The Departments disagree with the commenters' assertion that submission of the remittance advice document with the open negotiation notice should not be finalized because they are difficult to extract and provide. The party initiating the open negotiation process should be prepared to provide the payment details it has received on the items and services subject to negotiation, including the remittance advice. Therefore, the potential burden of providing the remittance advice does not outweigh the benefits of reducing confusion and miscommunication between parties during open negotiation. In addition, the Departments are aware that, currently under the Federal IDR process, providers regularly provide copies of remittance advice documents to certified IDR entities when needed to confirm eligibility. The purpose of requiring these documents at the open negotiation stage is to encourage parties to evaluate the eligibility of an item or service before initiation of the Federal IDR process. As described in section II.B.2 of this preamble, these final rules require that remittance advice include disclosures supporting the accurate identification of whether items and services are subject to the No Surprises Act. Data from the 2024 Federal IDR Public Use Files (PUF) reflect that parties continue to submit disputes for items and services that are ineligible for the Federal IDR process.

Submission of remittance advice containing eligibility disclosures will ensure that both parties have access to information which clarifies the NSA's applicability to an item or service prior to initiating the Federal IDR process. After considering the comments received, the Departments maintain that the provision of the remittance advice during the open negotiation stage will improve the parties' understanding of IDR eligibility and reduce the submission of ineligible disputes. However, the Departments recognize that 26 CFR 54.9816-8(b)(1)(ii)(A)(

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

), and 45 CFR 149.510(b)(1)(ii)(A)(

), as proposed could have been interpreted to require only the initial payment or notice of denial of payment. Therefore, the Departments are finalizing a modification to the proposal by requiring a copy of any remittance advice associated with the initial payment or notice of denial of payment for the item or service, rather than a copy of the initial payment or notice of denial of payment or other remittance advice that includes the required disclosures.

According to data published in the IDR PUF for quarters 1 and 2 of 2025, 17 percent of closed disputes were closed by a certified IDR entity due to ineligibility.

See https://www.cms.gov/nosurprises/policies-and-resources/reports.

Finally, a few commenters offered additional recommendations regarding the content of the open negotiation notices. Such additional recommendations were beyond the scope of these final rules, but the Departments agree that provision of this information may enhance communication about the value of the services in the open negotiation process and encourage disputing parties to discuss such information in open negotiation if they so choose.

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

), and 45 CFR 149.510(b)(1)(ii)(A)(

) in three ways:

(1) regarding the information sufficient to identify a plan or issuer, to remove the language “if the plan or issuer is registered under” § 54.9816-9, § 2590.716-9, and § 149.530; (2) to require, when applicable, that the party submitting the open negotiation notice attest that the plan or issuer's registration number was not provided on any remittance advice, rather than attest that the plan or issuer was not registered prior to the date the open negotiation notice was submitted; and (3) to require the open negotiation notice to include the legal business name of the plan sponsor when the entity furnishing the open negotiation notice is a self-insured group health plan that does not have a legal business name.

At 26 CFR 54.9816-8(b)(1)(ii)(A)(1

), 29 CFR 2590.716-8(b)(1)(ii)(A)(1

), and 45 CFR 149.510(b)(1)(ii)(A)(1

) the Departments are modifying the proposal by requiring the open negotiation notice to include a copy of any remittance advice associated with the initial payment or notice of denial of payment for the item or service, rather than a copy of the initial payment or notice of denial of payment or other remittance advice that includes the required disclosures. Therefore, the elements required as finalized are:

(1) Information sufficient to identify the provider, facility, or provider of air ambulance services, including the name and current contact information (including the legal business name, email address, phone number, and mailing address) as provided with the claim form submitted by the provider, facility, or air ambulance provider to the plan or issuer, and the applicable National Provider Identifier (NPI);

(2) Information sufficient to identify the plan or issuer, including the plan's or issuer's registration number, as required under § 54.9816-9, § 2590.716-9, and § 149.530, or an attestation from the party submitting the open negotiation notice that the plan or issuer's registration number was not provided on any remittance advice associated with the initial payment or notice of denial of payment for the item or service; the legal business name of the plan or issuer (or, in the case of a self-insured group health plan that does not have a legal business name, the legal business name of the plan sponsor), as well as the current contact information (name, email address, phone number, and mailing address) of the plan or issuer as provided with any remittance advice associated with the initial payment or notice of denial of payment for the item or service; and if the party submitting the open negotiation notice is a plan or issuer, the plan type (for example, self-insured or fully-insured);

(4) Information sufficient to identify the item or service, including: the date(s) the item or service was furnished and, if the party submitting the open negotiation notice is a provider, facility, or provider of air ambulance services, the date(s) that the provider, facility, or provider of air ambulance services received the initial payment or notice of denial of payment for the item or service from the plan or issuer; the type of item or service (specifically, whether the item or service is an emergency service as defined in § 54.9816-4T(c)(2)(i) or (ii), § 2590.716-4(c)(2)(i) or (ii), and § 149.110(c)(2)(i) or (ii), a non-emergency service as described in § 54.9816-5T(b), § 2590.716-5(b), and § 149.120(b), or an air ambulance service as defined in § 54.9816-3T, § 2590.716-3, and § 149.30); whether the service is a professional service or facility-based service; the State where the item or service was furnished; the claim number; the service code; and information to identify the location where the item or service was furnished (such as, place of service code or bill type code);

(5) The initial payment amount (including $0 if payment is denied);

(6) The qualifying payment amount, if provided in a remittance advice associated with the initial payment or notice of denial of payment, or if the party submitting the open negotiation notice is a plan or issuer;

(7) An offer of an out-of-network rate for each item or service;

(8) If the party submitting the open negotiation notice is a plan or issuer, the amount of cost sharing imposed for the item or service, if any;

(9) If the party submitting the open negotiation notice is a provider or facility, a statement that the items and services do not qualify for the notice and consent exception described at 45 CFR 149.410(b) or 45 CFR 149.420(c) through (i);

(11) General information listed in the standard open negotiation notice developed by the Secretary pursuant to paragraph (b)(3) of this section describing the open negotiation period and the Federal IDR process (including a description of the purpose of the open negotiation period and Federal IDR process and key deadlines in the open negotiation period and Federal IDR process); and

(12) A copy of any remittance advice associated with the initial payment or notice of denial of payment for the item or service.

Finally, the Departments solicited comment on whether the party submitting the open negotiation notice should be required to provide a statement describing why the party is initiating the open negotiation period, including any of the considerations for certified IDR entity determinations currently described in 29 CFR 2590.716-8(c)(4)(iii) and 2590.717-2(b)(2) and 45 CFR 149.510(c)(4)(iii) and 149.520(b)(2). A few commenters supported requiring the party submitting the open negotiation notice to provide a statement describing why they are pursuing open negotiation, while several commenters opposed the proposal, stating that it is burdensome and unnecessary. Several of these commenters noted that providers generally pursue open negotiation because they are getting reimbursed at a rate below sustainable market clearing rates. One commenter cautioned that any statement regarding their rationale for negotiating should not bind the party in question, and that parties must be allowed to change their assessment of the dispute as information is exchanged. Another commenter noted that requiring such a statement would impose an additional barrier to accessing open negotiation and is beyond the Departments' authority to impose.

After consideration of these comments, the Departments are not adding a requirement for a party to include on the open negotiation notice a statement as to the party's reason for pursuing open negotiation. The Departments are persuaded by commenters' arguments that adding such a requirement would be burdensome and unnecessary, and that a party's assessment of a dispute may reasonably change between open negotiation and initiation of the Federal IDR process.

d. Open Negotiation Response Notice Content

The Departments proposed at 26 CFR 54.9816-8(b)(1)(iii)(A), 29 CFR 2590.716-8(b)(1)(iii)(A), and 45 CFR 149.510(b)(1)(iii)(A) to require that the party receiving an open negotiation notice must provide a response to the open negotiation notice that would include the same information being finalized at 26 CFR 54.9816-8(b)(1)(ii)(A)(

) through (

), 29 CFR 2590.716-8(b)(1)(ii)(A)(

) through (

), and 45 CFR 149.510(b)(1)(ii)(A)(

) through (

), which require that the party initiating open negotiation provide contact information sufficient to identify the provider, facility, or provider of air ambulance services; information sufficient to identify the plan or issuer; and the name and contact information for any third party representing a party in the open negotiation. The Departments further proposed that the open negotiation response notice would also include the following information under proposed 26 CFR 54.9816-8(b)(1)(iii)(A)(

) through (

), 29 CFR 2590.716-8(b)(1)(iii)(A)(

) through (

), and 45 CFR 149.510(b)(1)(iii)(A)(

) through (

(

) Information sufficient to identify the item or service included in the open negotiation notice, including the date(s) the item or service was furnished, and if the pa

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