[Federal Register Volume 88, Number 244 (Thursday, December 21, 2023)]
[Rules and Regulations]
[Pages 88494-88525]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27931]
[[Page 88493]]
Vol. 88
Thursday,
No. 244
December 21, 2023
Part II
Department of the Treasury
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Internal Revenue Service
Department of Labor
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Employee Benefits Security Administration
Department of Health and Human Services
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26 CFR Part 54
29 CFR Part 2590
45 CFR Part 149
Federal Independent Dispute Resolution (IDR) Process Administrative Fee
and Certified IDR Entity Fee Ranges; Final Rule
Federal Register / Vol. 88 , No. 244 / Thursday, December 21, 2023 /
Rules and Regulations
[[Page 88494]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9985]
RIN 1545-BQ94
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AC24
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Part 149
[CMS-9890-F]
RIN 0938-AV39
Federal Independent Dispute Resolution (IDR) Process
Administrative Fee and Certified IDR Entity Fee Ranges
AGENCY: Internal Revenue Service (IRS), Department of the Treasury;
Employee Benefits Security Administration, Department of Labor; Centers
for Medicare & Medicaid Services, Department of Health and Human
Services (HHS).
ACTION: Final rules.
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SUMMARY: This document finalizes rules related to the fees established
by the No Surprises Act for the Federal independent dispute resolution
(IDR) process, as established by the Consolidated Appropriations Act,
2021 (CAA). These final rules amend existing regulations to provide
that the administrative fee amount charged by the Department of the
Treasury, the Department of Labor, and the Department of Health and
Human Services (the Departments) to participate in the Federal IDR
process, and the ranges for certified IDR entity fees for single and
batched determinations, will be set by the Departments through notice
and comment rulemaking. The preamble to these final rules also sets
forth the methodology used to calculate the administrative fee and the
considerations used to develop the certified IDR entity fee ranges.
This document also finalizes the amount of the administrative fee for
disputes initiated on or after the effective date of these rules.
Finally, this document finalizes the certified IDR entity fee ranges
for disputes initiated on or after the effective date of these rules.
DATES: These final rules are effective on January 22, 2024.
FOR FURTHER INFORMATION CONTACT: Shira B. McKinlay or William Fischer,
Internal Revenue Service, Department of the Treasury, 202-317-5500;
Shannon Hysjulien or Rebecca Miller, Employee Benefits Security
Administration, Department of Labor, 202-693-8335; and
Jacquelyn Rudich or Nora Simmons, Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 301-492-5211.
SUPPLEMENTARY INFORMATION:
I. Background
A. Preventing Surprise Medical Bills and Establishing the Federal IDR
Process Under the Consolidated Appropriations Act, 2021
On December 27, 2020, the CAA was enacted.\1\ Title I, also known
as the No Surprises Act, and title II (Transparency) of Division BB of
the CAA amended chapter 100 of the Internal Revenue Code (Code), part 7
of the Employee Retirement Income Security Act (ERISA), and title XXVII
of the Public Health Service Act (PHS Act). The No Surprises Act
provides Federal protections against surprise billing by limiting out-
of-network cost sharing and prohibiting balance billing in many of the
circumstances in which surprise bills most frequently arise. In
particular, the No Surprises Act added new provisions applicable to
group health plans and health insurance issuers offering group or
individual health insurance coverage. Section 102 of the No Surprises
Act added section 9816 of the Code,\2\ section 716 of ERISA,\3\ and
section 2799A-1 of the PHS Act,\4\ which contain limitations on cost
sharing and requirements regarding the timing of initial payments and
notices of denial of payment by plans and issuers for emergency
services furnished by nonparticipating providers and nonparticipating
emergency facilities, and for non-emergency services furnished by
nonparticipating providers for patient visits to participating health
care facilities, generally defined as hospitals, hospital outpatient
departments, critical access hospitals, and ambulatory surgical
centers.\5\
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\1\ Public Law 116-260 (Dec. 27, 2020).
\2\ 26 U.S.C. 9816, et seq.
\3\ 29 U.S.C. 1185e, et seq.
\4\ 42 U.S.C. 300gg-111, et seq.
\5\ Section 102(d)(1) of the No Surprises Act amended the
Federal Employees Health Benefits (FEHB) Act, 5 U.S.C. 8901 et seq.,
by adding a new subsection (p) to 5 U.S.C. 8902. Under this new
provision, each FEHB Program contract must require a carrier to
comply with requirements described in sections 9816 and 9817 of the
Code, sections 716 and 717 of ERISA, and sections 2799A-1 and 2799A-
2 of the PHS Act (as applicable) in the same manner as these
provisions apply with respect to a group health plan or health
insurance issuer offering group or individual health insurance
coverage.
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Section 103 of the No Surprises Act established a Federal IDR
process that plans and issuers and nonparticipating providers and
facilities may utilize to resolve certain disputes regarding out-of-
network rates under section 9816 of the Code,\6\ section 716 of
ERISA,\7\ and section 2799A-1 of the PHS Act.\8\ Section 9816(c)(8) of
the Code,\9\ section 716(c)(8) of ERISA,\10\ and section 2799A-1(c)(8)
of the PHS Act \11\ provide that each party to a determination under
the Federal IDR process shall pay a fee for participating in the
Federal IDR process, and the amount of the fee is an amount established
by the Departments in a manner such that the total amount of fees paid
by all parties is estimated to be equal to the amount of expenditures
estimated to be made by the Departments for the year in carrying out
the Federal IDR process.
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\6\ 26 U.S.C. 9816.
\7\ 29 U.S.C. 1185e, et seq.
\8\ 42 U.S.C. 300gg-111, et seq.
\9\ 26 U.S.C. 9816(c)(8).
\10\ 29 U.S.C. 1185e(c)(8).
\11\ 42 U.S.C. 300gg-111(c)(8).
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Section 105 of the No Surprises Act added section 9817 of the
Code,\12\ section 717 of ERISA,\13\ and section 2799A-2 of the PHS
Act.\14\ These sections contain limitations on cost sharing and
requirements for the timing of initial payments and notices of denial
of payment by plans and issuers for air ambulance services furnished by
nonparticipating providers of air ambulance services, and allow plans
and issuers and nonparticipating providers of air ambulance services to
utilize the Federal IDR process.
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\12\ 26 U.S.C. 9817.
\13\ 29 U.S.C. 1185f, et seq.
\14\ 42 U.S.C. 300gg-112, et seq.
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The No Surprises Act also added provisions to title XXVII of the
PHS Act in a new part E \15\ that apply to health care providers,
facilities, and providers of air ambulance services, such as
prohibitions on balance billing for certain items and services and
requirements related to disclosures about balance billing protections.
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\15\ 42 U.S.C. 300gg-131-139.
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The Departments, along with the Office of Personnel Management
(OPM), have issued rules in 2021 and 2022 to implement various
provisions of the No Surprises Act. More specifically relevant to this
rulemaking, the Departments and OPM issued interim final rules (July
2021 interim final
[[Page 88495]]
rules \16\ and October 2021 interim final rules) \17\ and final rules
(August 2022 final rules) \18\ implementing provisions of sections 9816
and 9817 of the Code,\19\ sections 716 and 717 of ERISA,\20\ and
sections 2799A-1 and 2799A-2 of the PHS Act.\21\ Those rules implement
provisions to protect consumers from surprise medical bills for
emergency services, non-emergency services furnished by
nonparticipating providers for patient visits to participating
facilities \22\ in certain circumstances, and air ambulance services
furnished by nonparticipating providers of air ambulance services.
Those rules also implement provisions to establish a Federal IDR
process to determine payment amounts when there is a dispute between
plans or issuers and providers, facilities, or providers of air
ambulance services about the out-of-network rate for these services if
a specified State law as defined in 26 CFR 54.9816-3T, 29 CFR 2590.716-
3, and 45 CFR 149.30 or an applicable All-Payer Model Agreement under
section 1115A of the Social Security Act does not provide a method for
determining the total amount payable.
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\16\ 86 FR 36872 (July 13, 2021).
\17\ 86 FR 55980 (October 7, 2021).
\18\ 87 FR 52618 (August 26, 2022).
\19\ 26 U.S.C. 9816 and 26 U.S.C. 9817.
\20\ 29 U.S.C. 1185e, et seq. and 29 U.S.C. 1185f, et seq.
\21\ 42 U.S.C. 300gg-111, et seq. and 42 U.S.C. 300gg-112, et
seq.
\22\ References to a ``participating facility'' in this preamble
mean a ``participating health care facility,'' as defined at 26 CFR
54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30.
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The July 2021 interim final rules and October 2021 interim final
rules generally apply to plans and issuers (including grandfathered
health plans) for plan years (in the individual market, policy years)
beginning on or after January 1, 2022, and to health care providers,
facilities, and providers of air ambulance services for items and
services furnished during plan years (in the individual market, policy
years) beginning on or after January 1, 2022.\23\ The August 2022 final
rules became effective October 25, 2022, and are applicable for items
or services provided or furnished on or after October 25, 2022, for
plan years (in the individual market, policy years) beginning on or
after January 1, 2022.
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\23\ The interim final rules also include interim final
regulations under 5 U.S.C. 8902(p) issued by OPM that specify how
certain provisions of the No Surprises Act apply to health benefit
plans offered by carriers under the FEHB Act. These provisions apply
to carriers in the FEHB Program with respect to contract years
beginning on or after January 1, 2022. The disclosure requirements
at 45 CFR 149.430 regarding patient protections against balance
billing are applicable as of January 1, 2022.
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B. October 2021 Interim Final Rules and Related Guidance
The October 2021 interim final rules implement the Federal IDR
process under sections 9816(c) and 9817(b) of the Code,\24\ sections
716(c) and 717(b) of ERISA,\25\ and sections 2799A-1(c) and 2799A-2(b)
of the PHS Act.\26\ The rules apply to emergency services, non-
emergency services furnished by nonparticipating providers for patient
visits to certain types of participating health care facilities \27\
(unless an individual has been provided notice and waived the
individual's surprise billing protections, in accordance with 45 CFR
149.410 or 149.420, as applicable), and air ambulance services
furnished by nonparticipating providers of air ambulance services, for
situations in which neither a specified State law as defined in 26 CFR
54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30 nor an All-Payer Model
Agreement under section 1115A of the Social Security Act applies.
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\24\ 26 U.S.C. 9816(c) and 26 U.S.C. 9817(b).
\25\ 29 U.S.C. 1185e(c) and 29 U.S.C. 1185f(b).
\26\ 42 U.S.C. 300gg-111(c) and 42 U.S.C. 300gg-112(b).
\27\ A health care facility, in the context of non-emergency
services, is defined as (1) a hospital (as defined in section
1861(e) of the Social Security Act), (2) a hospital outpatient
department, (3) a critical access hospital (as defined in section
1861(mm)(1) of the Social Security Act), or (4) an ambulatory
surgical center described in section 1833(i)(1)(A) of the Social
Security Act. Code section 9816(b)(2)(A)(ii), ERISA section
716(b)(2)(A)(ii), and PHS Act section 2799A-1(b)(2)(A)(ii). 26 CFR
54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30.
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To implement the Federal IDR process, the October 2021 interim
final rules include requirements governing the costs of the Federal IDR
process. Under section 9816(c)(5)(F)(i) of the Code,\28\ section
716(c)(5)(F)(i) of ERISA,\29\ section 2799A-1(c)(5)(F)(i) of the PHS
Act,\30\ and the October 2021 interim final rules, the party whose
offer is not selected is responsible for the payment of the fee charged
by the certified IDR entity (certified IDR entity fee).\31\ Under the
October 2021 interim final rules, as a condition of certification, the
certified IDR entity must notify the Departments of the amount of the
certified IDR entity fees it intends to charge for payment
determinations, which is limited to a fixed certified IDR entity fee
amount for single determinations and a separate fixed certified IDR
entity fee amount for batched determinations.\32\ Each of these fixed
certified IDR entity fees must be within a range set forth in guidance
by the Departments, unless the certified IDR entity receives written
approval from the Departments to charge a certified IDR entity fee
outside that range.\33\ The October 2021 interim final rules describe
the considerations that the Departments will use to develop the
certified IDR entity fee ranges, including the anticipated time and
resources needed for certified IDR entities to meet the requirements of
those interim final rules, the volume of payment determinations, and
the capacity of the Federal IDR process to efficiently handle the
volume of IDR initiations and payment determinations, and provide that
the Departments will review and update the allowable fee ranges
annually based on these factors, the impact of inflation, and other
cost increases. Those rules also provide that on an annual basis, the
certified IDR entity may update its certified IDR entity fees within
the ranges set forth in current guidance and seek approval from the
Departments to charge fixed certified IDR entity fees beyond the upper
or lower limits for certified IDR entity fees.\34\
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\28\ 26 U.S.C. 9816(c)(5)(F)(i).
\29\ 29 U.S.C. 1185e(c)(5)(F)(i).
\30\ 42 U.S.C. 300gg-111(c)(5)(F)(i).
\31\ In the case of a batched dispute, the party with fewest
determinations in its favor is considered the non-prevailing party
and is responsible for paying the certified IDR entity fee. In the
event that each party prevails in an equal number of determinations,
the certified IDR entity fee will be split evenly between the
parties. 86 FR 55980, 56001.
\32\ 26 CFR 54.9816-8T(e)(2)(vii), 29 CFR 2590.716-8(e)(2)(vii),
and 45 CFR 149.510(e)(2)(vii).
\33\ Id.
\34\ Id.
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Additionally, pursuant to section 9816(c)(8) of the Code,\35\
section 716(c)(8) of ERISA,\36\ and section 2799A-1(c)(8) of the PHS
Act,\37\ and under the October 2021 interim final rules, each party
must pay an administrative fee for participating in the Federal IDR
process. The administrative fee is established in guidance in a manner
so that, in accordance with the requirements of section 9816(c)(8)(B)
of the Code,\38\ section 716(c)(8)(B) of ERISA,\39\ and section 2799A-
1(c)(8)(B) of the PHS Act,\40\ the total administrative fees paid for a
year are estimated to be equal to the amount of expenditures estimated
to be made by the Departments in carrying
[[Page 88496]]
out the Federal IDR process for that year.\41\
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\35\ 26 U.S.C. 9816(c)(8).
\36\ 29 U.S.C. 1185e(c)(8).
\37\ 42 U.S.C. 300gg-111(c)(8).
\38\ 26 U.S.C. 9816(c)(8)(B).
\39\ 29 U.S.C. 1185e(c)(8)(B).
\40\ 42 U.S.C. 300gg-111(c)(8)(B).
\41\ 26 CFR 54.9816-8T(d)(2)(ii), 29 CFR 2590.716-8(d)(2)(ii),
and 45 CFR 149.510(d)(2)(ii).
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Contemporaneously with the October 2021 interim final rules, the
Departments released the Calendar Year 2022 Fee Guidance for the
Federal Independent Dispute Resolution Process Under the No Surprises
Act (October 2021 guidance), setting the administrative fee for both
parties to a dispute at $50 per party.\42\ The October 2021 guidance
also established the range for fixed certified IDR entity fees for
single determinations as $200-$500, and the range for fixed certified
IDR entity fees for batched determinations as $268-$670, unless the
Departments otherwise grant approval for the certified IDR entity to
charge a fee outside these ranges. In October 2022, the Departments
released the Calendar Year 2023 Fee Guidance for the Federal
Independent Dispute Resolution Process Under the No Surprises Act
(October 2022 guidance), again setting the administrative fee for both
parties to a dispute at $50 per party.\43\ The October 2022 guidance
explained that the data available regarding usage of the Federal IDR
process was not sufficiently reliable to support a change to either the
estimated number of payment determinations for which administrative
fees would be paid or the estimated ongoing program costs for 2023;
therefore, the 2023 administrative fee amount due from each party for
participating in the Federal IDR process would remain the same as the
2022 administrative fee amount. The October 2022 guidance permits
certified IDR entities to charge a fee between $200 and $700 for single
determinations and between $268 and $938 for batched determinations,
unless the Departments otherwise grant approval for the certified IDR
entity to charge a fee outside of these ranges. In addition, to account
for the heightened workload for batched determinations, the October
2022 guidance permits a certified IDR entity to charge the following
percentage of its approved certified IDR entity batched determination
fee (``batching percentage'') for batched determinations, which are
based on the number of line items initially submitted in the batch:
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\42\ Centers for Medicare & Medicaid Services (September 30,
2021). Calendar Year 2022 Fee Guidance for the Federal Independent
Dispute Resolution Process under the No Surprises Act. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Technical-Guidance-CY2022-Fee-Guidance-Federal-Independent-Dispute-Resolution-Process-NSA.pdf.
\43\ Centers for Medicare & Medicaid Services (October 31,
2022). Calendar Year 2023 Fee Guidance for the Federal Independent
Dispute Resolution Process under the No Surprises Act. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf.
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2-20 line items: 100 percent of the approved batched
determination fee;
21-50 line items: 110 percent of the approved batched
determination fee;
51-80 line items: 120 percent of the approved batched
determination fee; and
81 line items or more: 130 percent of the approved batched
determination fee.
In December 2022, the Departments released the Amendment to the
Calendar Year 2023 Fee Guidance for the Federal Independent Dispute
Resolution Process Under the No Surprises Act: Change in Administrative
Fee (December 2022 guidance), which amended the $50 per party
administrative fee set in the October 2022 guidance to $350 for
calendar year 2023.\44\ The change in the administrative fee for 2023
reflected the additional costs to the Departments to carry out the
Federal IDR process as a result of the Departments' enhanced role in
calendar year 2023 in conducting pre-eligibility reviews to allow the
certified IDR entities to complete their eligibility determinations
more efficiently,\45\ as well as systemic improvements that allowed for
the aggregation of data needed to estimate the rate at which disputes
were determined eligible for the Federal IDR process and the rate at
which one or both parties paid the administrative fee for purposes of
calculating the administrative fee. The December 2022 guidance did not
amend the certified IDR entity fee ranges provided in the October 2022
guidance.
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\44\ Centers for Medicare & Medicaid Services (December 23,
2022). Amendment to the Calendar Year 2023 Fee Guidance for the
Federal Independent Dispute Resolution Process under the No
Surprises Act: Change in Administrative Fee. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/amended-cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf.
\45\ Centers for Medicare & Medicaid Services (November 21,
2022). Notice of the Federal Independent Dispute Resolution (IDR)
Team Technical Assistance to Certified Independent Dispute
Resolution Entities (IDREs) in the Dispute Eligibility Determination
Process. https://www.cms.gov/files/document/idre-eligibility-support-guidance-11212022-final-updated.pdf.
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C. Recent Litigation
On November 30, 2022, the Texas Medical Association, Tyler Regional
Hospital, and a Texas physician filed a lawsuit (TMA III) \46\ against
the Departments and OPM, asserting that the July 2021 interim final
rules,\47\ including the regulations governing how the qualifying
payment amount (QPA) should be calculated, and certain related guidance
documents conflicted with the statutory language. On August 24, 2023,
the U.S. District Court for the Eastern District of Texas (District
Court) issued a memorandum opinion and order \48\ that vacated certain
portions of the July 2021 interim final rules and associated regulatory
provisions \49\ and portions of guidance documents,\50\ including
portions that provided the methodology for calculating the QPA and
interpretations for certified IDR entities related to the processing of
disputes for air ambulance services.
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\46\ Complaint, Tex. Med. Ass'n v. U. S. Dep't of Health and
Human Servs., No. 6:22-cv-00450-JDK (E.D. Tex. Nov. 30, 2022) (ECF
No. 1).
\47\ 86 FR 36872 (July 13, 2021).
\48\ See Memorandum Opinion and Order, Tex. Med. Ass'n. v. U.S.
Dep't of Health & Hum. Servs., No. 6:22-cv-00450-JDK, 2023 WL
5489028 (E.D. Tex. Aug. 24, 2023).
\49\ Specifically, the District Court vacated certain provisions
of 26 CFR 54.9816-6T and 54.9817-1T, 29 CFR 2590.716-6 and 2590.717-
1, and 45 CFR 149.130 and 149.140. The District Court also vacated 5
CFR 890.114(a), insofar as it requires compliance with the vacated
regulations and guidance.
\50\ Specifically, the District Court vacated FAQs 14 and 15 of
FAQs about Affordable Care Act and Consolidated Appropriations Act,
2021 Implementation Part 55 (August 19, 2022), as well as portions
of Technical Guidance for Certified IDR Entities at 2-3 (August 18,
2022).
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On January 30, 2023, the Texas Medical Association, Houston
Radiology Associated, Texas Radiological Society, Tyler Regional
Hospital, and a Texas physician filed a lawsuit (TMA IV) \51\ against
the Departments and OPM, asserting that the December 2022 guidance \52\
that set the $350 per party administrative fee amount for 2023 was
unlawfully issued without notice and comment rulemaking.\53\ On August
3, 2023, the District Court issued a memorandum opinion and order \54\
vacating the portion of the December 2022 guidance \55\ that increased
the
[[Page 88497]]
administrative fee for the Federal IDR process to $350 per party for
disputes initiated during the calendar year beginning January 1, 2023.
The District Court also vacated certain provisions of the October 2021
interim final rules setting forth the batching criteria under which
multiple IDR items or services may be considered jointly as part of a
single IDR dispute.\56\ On August 11, 2023, the Departments released
guidance \57\ to reflect the TMA IV opinion and order related to the
administrative fee to clarify that the $50 per party per dispute
administrative fee amount established in the October 2022 guidance
applies for disputes initiated on or after August 3, 2023, and until
the Departments take action to set a new administrative fee amount.
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\51\ Complaint, Tex. Med. Ass'n. v. U. S. Dep't of Health and
Human Servs., No. 6:23-cv-00059-JDK (E.D. Tex. Jan. 30, 2023) (ECF
No. 1).
\52\ Centers for Medicare & Medicaid Services (December 23,
2022). Amendment to the Calendar Year 2023 Fee Guidance for the
Federal Independent Dispute Resolution Process Under the No
Surprises Act: Change in Administrative Fee. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/amended-cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf.
\53\ Complaint, Tex. Med. Ass'n. v. U. S. Dep't of Health and
Human Servs., No. 6:23-cv-00059-JDK (E.D. Tex. Jan. 30, 2023) (ECF
No. 1).
\54\ See Memorandum Opinion and Order, Tex. Med. Ass'n. v. U.S.
Dep't of Health & Hum. Servs., No. 6:23-cv-00059-JDK, 2023 WL
4977746 (E.D. Tex. Aug. 3, 2023).
\55\ Centers for Medicare & Medicaid Services (December 23,
2022). Amendment to the Calendar Year 2023 Fee Guidance for the
Federal Independent Dispute Resolution Process under the No
Surprises Act: Change in Administrative Fee. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/amended-cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf.
\56\ Specifically, the District Court vacated the requirement
under 26 CFR 54.9816-8T(c)(3)(i)(C), 29 CFR 2590.716-8(c)(3)(i)(C),
and 45 CFR 149.510(c)(3)(i)(C) that for a qualified IDR item and
service to be considered the same or similar item and service, it
must be billed under the same service code or a comparable code
under a different procedural code system, such as the Current
Procedural Terminology (CPT) codes with modifiers, if applicable,
Healthcare Common Procedure Coding System (HCPCS) with modifiers, if
applicable, or Diagnosis-Related Group (DRG) codes with modifiers,
if applicable.
\57\ U.S. Department of Health and Human Services, U.S.
Department of Labor, and U.S. Department of the Treasury (August
2023). Federal Independent Dispute Resolution (IDR) Process
Administrative Fee FAQs. https://www.cms.gov/files/document/idr-admin-fees-faqs-081123-508.pdf-0.
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On October 6, 2023, the Departments and OPM released ``FAQs About
Consolidated Appropriations Act, 2021 Implementation Part 62'' \58\ to
provide guidance related to the TMA III opinion and order. On November
28, 2023, the Departments released guidance in accordance with the TMA
III and TMA IV opinions and orders \59\ to clarify how certified IDR
entities should determine whether a dispute is appropriately batched
and how to submit single and batched air ambulance disputes.\60\
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\58\ See U.S. Department of Health and Human Services, U.S.
Department of Labor, U.S. Department of Treasury, Office of
Personnel Management (October 6, 2023), FAQs about Consolidated
Appropriations Act, 2021 Implementation Part 62, available at
https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-62.pdf and https://www.cms.gov/files/document/faqs-part-62.pdf.
\59\ See U.S. Department of Health and Human Services, U.S.
Department of Labor, U.S. Department of Treasury, Office of
Personnel Management (November 28, 2023), FAQs about Consolidated
Appropriations Act, 2021 Implementation Part 63, available at
https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-62.pdf and https://www.cms.gov/files/document/faqs-part-63.pdf.
\60\ See U.S. Department of Health and Human Services, U.S.
Department of Labor, U.S. Department of Treasury, Office of
Personnel Management (November 28, 2023), Federal Independent
Dispute Resolution (IDR) Process Batching and Air Ambulance FAQs,
available at https://www.cms.gov/files/document/faqs-batching-air-ambulance.pdf.
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D. Federal Independent Dispute Resolution Operations Proposed Rules
On November 3, 2023, the Departments published the Federal
Independent Dispute Resolution Operations proposed rules \61\ (IDR
Operations proposed rules). Those proposed rules included new proposed
requirements for disclosing information when initiating the Federal IDR
process and the provision of certain claims codes with paper or
electronic remittances. Additionally, those proposed rules would amend
certain requirements related to the open negotiation period, initiation
of the Federal IDR process, eligibility determinations, batched
disputes, extensions due to extenuating circumstances, and the
collection of administrative fees and certified IDR entity fees.
Lastly, those proposed rules would require plans and issuers to
register with the Federal IDR portal.
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\61\ 88 FR 75744.
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With respect to the administrative fee, the Departments proposed in
the IDR Operations proposed rules to collect the administrative fee
directly from the parties rather than having the certified IDR entities
collect the administrative fee on the Departments' behalf. The
Departments also proposed required timeframes for the initiating and
non-initiating parties to pay the administrative fee and proposed to
establish consequences for non-payment of the administrative fee for
each party. Finally, to ensure that the Federal IDR process is
accessible to all parties, the Departments proposed to charge both
parties a reduced administrative fee when the highest offer made during
open negotiation by either party was less than a predetermined
threshold and proposed to charge the non-initiating party a reduced
administrative fee when the dispute is determined ineligible by either
the certified IDR entity or the Departments, as applicable.
To align with these proposals, the Departments also set forth the
methodology inputs used to calculate the proposed administrative fee
amounts in the preamble to the IDR Operations proposed rules that would
be effective for disputes initiated on or after January 1, 2025. The
Departments proposed that the full administrative fee amount would be
$150 per party per dispute, the reduced administrative fee for both
parties when the highest offer made by either party during open
negotiation was less than the threshold would be $75 per party per
dispute (50 percent of the full administrative fee amount), and the
reduced administrative fee for non-initiating parties in ineligible
disputes would be $30 per non-initiating party per ineligible dispute
(20 percent of the full administrative fee amount).
The inputs to the methodology set forth in this preamble and the
administrative fee amount the Departments are finalizing in these final
rules are effective for disputes initiated on or after the effective
date of these final rules. In contrast, the proposed administrative fee
structure and administrative fee amounts based on inputs to the
methodology set forth in the IDR Operations proposed rules, if
finalized, would be effective for disputes initiated on or after
January 1, 2025. The administrative fee policies finalized in these
final rules are effective, and unchanged by the proposals in the IDR
Operations proposed rules, unless and until superseding administrative
fee policies in the IDR Operations proposed rules are adopted.
E. Public Comments Received in Response to Proposed Rules
In the September 26, 2023 Federal Register, the Departments
published the Federal Independent Dispute Resolution (IDR) Process
Administrative Fee and Certified IDR Entity Fee Ranges proposed rules
(IDR Fees proposed rules),\62\ which proposed to amend existing
regulations to provide that the administrative fee amount charged by
the Departments to participate in the Federal IDR process, and the
ranges for certified IDR entity fees for single and batched
determinations, would be set by the Departments through notice and
comment rulemaking. The IDR Fees proposed rules also discussed the
methodology used to calculate the administrative fee and the
considerations used to develop the certified IDR entity fee ranges.
Finally, the IDR Fees proposed rules proposed the amount of the
administrative fee and the certified IDR entity fee ranges for disputes
initiated on or after the later of the effective date of these rules or
January 1, 2024.
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\62\ 88 FR 65888.
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The Departments received 44 comments on many different aspects of
the IDR Fees proposed rules. In
[[Page 88498]]
particular, the Departments received many comments stating that the
administrative fee amount and the certified IDR entity fee ranges
create a barrier to accessing the Federal IDR process for many parties,
particularly small, rural, or independent providers, and these comments
supported retaining the current $50 per party per dispute
administrative fee amount. The Departments also received many comments
on the proposed certified IDR entity fee ranges, particularly the
proposed additional tiered batched fee range for disputes with more
than 25 line items. While some commenters supported the increased
flexibility for certified IDR entity fee ranges, many commenters were
concerned about the proposed further increases in the certified IDR
entity fee ranges. The Departments respond to these comments in section
II of this preamble.
Many comments concerned matters that were outside of the scope of
the proposed rules and therefore are not addressed in these final
rules. For example, the Departments received comments stating that the
current Federal IDR process lacks the efficiency needed to resolve
disputes quickly. The Departments also received many comments related
to the eligibility determination process, including on difficulties
determining eligibility in States with a specified State law and the
lack of information provided by plans and issuers. Comments on the
efficiency of the Federal IDR process and eligibility determinations
relate to operations that are outside of the scope of these final
rules' limited focus on the administrative fee and certified IDR entity
fee ranges and the processes for setting such amounts. The Departments
encourage interested parties to submit comments regarding the proposals
included in the IDR Operations proposed rules, including the proposal
to establish a Departmental eligibility review process, in accordance
with the instructions set forth in those proposed rules.\63\
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\63\ See 88 FR 75744.
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Some other out-of-scope comments addressed the impacts of the
Federal IDR portal closure, which occurred in response to litigation
previously described in this preamble. For example, the Departments
received comments requesting that, as a result of TMA IV, the
Departments should refund $300 to each party that paid a $350
administrative fee between January 1, 2023 and August 3, 2023, and the
Departments should offer an extension to parties that would have
initiated a dispute if the administrative fee during that time was $50,
rather than $350, to now initiate that dispute. The Departments note
that this relief was requested by the plaintiffs in TMA IV and was
denied by the court.\64\ Comments also addressed the impact of TMA III
on the calculation of the QPA, specifically asking the Departments to
address underpayments to providers due to purported artificially
suppressed QPAs. Additionally, the Departments received comments
related to the batching requirements for submission of disputes. Some
of these comments addressed specific difficulties in batching emergency
medicine, radiology, and anesthesiology services and expressed a desire
to broaden the batching criteria. While the IDR Operations proposed
rules included proposals related to the batching requirements, these
comments were outside the scope of this rulemaking because the IDR Fees
proposed rules did not propose any changes to the batching requirements
or calculation of the QPA.
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\64\ See Memorandum Opinion and Order, Tex. Med. Ass'n., et al.
v. U.S. Dep't of Health and Human Servs., et al., No. 6:23-cv-00059-
JDK (E.D. Tex. August 3, 2023).
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Finally, the Departments received many comments suggesting
different administrative fee structures. For example, the Departments
received comments suggesting that the administrative fee amount be
split between the parties, be refundable to the prevailing party, be
funded 75 percent by plans and issuers and 25 percent by providers or
be payable at the end of the Federal IDR process. The Departments also
received comments recommending a variable administrative fee amount
tied to the amount in dispute or the QPA, either for all disputes or
just for batched disputes. Further comments suggested capping the
administrative fee amount or imposing a base administrative fee amount
and an additional tiered fee amount based on the amount in dispute.
As a result of the TMA IV opinion and order having set aside the
Departments' guidance establishing administrative fees, the Departments
set a goal of establishing in rulemaking administrative fee amounts
that would be effective as close to January 1, 2024 as possible,
because the current $50 administrative fee amount is insufficient to
satisfy the statutory requirement that the total amount of fees paid
for the year be estimated to be equal to the amount of expenditures
estimated to be made for the year in carrying out the Federal IDR
process. If the Departments were to continue to impose a $50 per party
per dispute administrative fee amount throughout 2024, the Departments
estimate that they would collect approximately $24.6 million in
administrative fees for the year (492,000 administrative fees paid x
$50 per party per dispute), as discussed further in section IV.D.2.a of
this preamble. As discussed further in section II.A of this preamble,
the Departments estimate that their expenditures to carry out the
Federal IDR process in 2024 will be approximately $56.6 million.
Therefore, if the administrative fee amount remains at $50 per party
per dispute in 2024, the Departments would significantly under-collect
administrative fees required to carry out the Federal IDR process.
Accordingly, to be able to implement an increase to the administrative
fee amount as soon as possible, consistent with the statutory
requirement, the IDR Fees proposed rules proposed the amount of the
administrative fee and the preamble to the proposed rules described the
methodology for calculating it.
The Departments did not propose any changes to the structure of the
administrative fee as this would take longer to develop and implement
and would be more efficiently operationalized with the changes proposed
in the IDR Operations proposed rules, which are intended to be more
comprehensive. While the Departments considered alternative fee
structures in this rulemaking, the Departments were of the view that
addressing the structure of the administrative fee in the IDR
Operations proposed rules would give interested parties more time to
comment, consider, and prepare for any fee structure change, because
the effective date of the IDR Operations proposed rules, if finalized,
will be later than the effective date of these final rules.
Additionally, the policies proposed in the IDR Operations proposed
rules would require more time for the Departments to develop and
implement due to the substantial changes to the Federal IDR portal
required by those proposals, if finalized, including adopting new
processes to collect the administrative fees directly from the parties
and collecting differing amounts of administrative fees from different
parties in certain circumstances, as described further in the IDR
Operations proposed rules. Therefore, the Departments deferred those
proposed changes to the Federal IDR process and administrative fee
structure and collection procedures to the IDR Operations proposed
rules and prioritized completing this rulemaking.
The Departments encourage interested parties to submit relevant
comments
[[Page 88499]]
regarding batching and the administrative fee structure, the new inputs
to the administrative fee methodology, and the amount of the fee
proposed in the IDR Operations proposed rules, in response to those
proposed rules.\65\
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\65\ See 88 FR 75744.
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The Departments also sought to establish in rulemaking certified
IDR entity fee ranges that would be effective as close to January 1,
2024 as possible, because this effective date would provide
predictability for certified IDR entities, who must plan for and
finalize their 2024 certified IDR entity fixed fee amounts, and
parties, who must budget for their participation in the Federal IDR
process taking into account both the administrative and certified IDR
entity fees. Establishing the certified IDR entity fee ranges in
rulemaking with an effective date close to January 1, 2024 would also
allow for greater transparency than the current method of establishing
the fee ranges in guidance.
F. Scope and Purpose of Rulemaking
These final rules amend 26 CFR 54.9816-8(d)(2)(ii) and (e)(2)(vii),
29 CFR 2590.716-8(d)(2)(ii) and (e)(2)(vii), and 45 CFR
149.510(d)(2)(ii) and (e)(2)(vii) to provide that the administrative
fee amount and the ranges for certified IDR entity fees for single and
batched disputes will be set by the Departments through notice and
comment rulemaking, rather than in guidance published annually. The
preamble to this rulemaking also sets forth the methodology used to
calculate the administrative fee amount and the considerations used to
develop the certified IDR entity fee ranges. These rules also finalize
the administrative fee amount and certified IDR entity fee ranges for
disputes initiated on or after the effective date of these rules. The
finalized administrative fee amount and certified IDR entity fee ranges
in these rules will remain in effect until changed by notice and
comment rulemaking.
The IDR Fees proposed rules proposed that the administrative fee
amount and certified IDR entity fee ranges finalized in these final
rules would be effective for disputes initiated on or after the later
of the effective date of these rules or January 1, 2024. As these final
rules will not be effective by January 1, 2024, the Departments are
finalizing the proposal that the administrative fee amount and
certified IDR entity fee ranges in these rules will be effective for
disputes initiated on or after the effective date of these rules, which
is 30 calendar days from publication in the Federal Register.
II. Overview of the Final Rules--Departments of the Treasury, Labor,
and HHS
A. Administrative Fee Amount and Methodology
1. Summary of Proposed and Finalized Policies
Under section 9816(c)(8)(A) of the Code,\66\ section 716(c)(8)(A)
of ERISA,\67\ section 2799A-1(c)(8)(A) of the PHS Act,\68\ and the
October 2021 interim final rules,\69\ each party to a determination for
which a certified IDR entity is selected must pay an administrative fee
for participating in the Federal IDR process. Under section
9816(c)(8)(B) of the Code,\70\ section 716(c)(8)(B) of ERISA,\71\
section 2799A-1(c)(8)(B) of the PHS Act,\72\ and the October 2021
interim final rules,\73\ the administrative fee is established in a
manner such that the total amount of administrative fees paid for a
year are estimated to be equal to the amount of expenditures estimated
to be made by the Departments in carrying out the Federal IDR process
for that year.
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\66\ 26 U.S.C. 9816(c)(8)(A).
\67\ 29 U.S.C. 1185e(c)(8)(A).
\68\ 42 U.S.C. 300gg-111(c)(8)(A).
\69\ 26 CFR 54.9816-8T(d)(2)(i), 29 CFR 2590.716-8(d)(2)(i), and
45 CFR 149.510(d)(2)(i).
\70\ 26 U.S.C. 9816(c)(8)(B).
\71\ 29 U.S.C. 1185e(c)(8)(B).
\72\ 42 U.S.C. 300gg-111(c)(8)(B).
\73\ 26 CFR 54.9816-8T(d)(2)(ii), 29 CFR 2590.716-8(d)(2)(ii),
and 45 CFR 149.510(d)(2)(ii).
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The Departments proposed to establish the amount of the
administrative fee through notice and comment rulemaking by amending 26
CFR 54.9816-8(d)(2)(ii), 29 CFR 2590.716-8(d)(2)(ii), and 45 CFR
149.510(d)(2)(ii). The Departments also proposed at 26 CFR 54.9816-
8(d)(2)(ii), 29 CFR 2590.716-8(d)(2)(ii), and 45 CFR 149.510(d)(2)(ii)
that, for disputes initiated on or after the later of the effective
date of these rules or January 1, 2024, the administrative fee amount
would be $150 per party per dispute, which would remain in effect until
changed by notice and comment rulemaking.\74\ Under the proposed rules,
the Departments would have retained the flexibility to update the
administrative fee more or less frequently than annually if the total
estimated amount of administrative fees paid or amount of expenditures
estimated to be made by the Departments in carrying out the Federal IDR
process changed such that a new administrative fee amount would be
required to satisfy the requirement that the total amount of
administrative fees paid is estimated to be equal to the amount of
expenditures estimated to be made by the Departments in carrying out
the Federal IDR process.
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\74\ As previously mentioned, in the event the effective date of
these final rules is after January 1, 2024, the $50 per party per
dispute administrative fee amount in effect for 2023, as provided in
the October 2022 guidance, will continue to apply to disputes
initiated between January 1, 2024 and the effective date of these
rules.
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The Departments proposed to set the administrative fee amount by
estimating the amount of expenditures made by the Departments in
carrying out the Federal IDR process and dividing this amount by the
estimated total number of administrative fees paid by the parties. As
explained in the preamble to the IDR Fees proposed rules, the
Departments estimated the total number of administrative fees paid
based on the total volume of closed disputes.
For the purpose of calculating the administrative fee amount in the
IDR Fees proposed rules, the Departments projected that approximately
225,000 disputes would be closed annually, resulting in 450,000
administrative fees paid. Additionally, the Departments estimated that
the expenditures made by the Departments for carrying out the Federal
IDR process in 2024 would be approximately $70 million.\75\ Using this
methodology, proposed in paragraphs 26 CFR 54.9816-8(d)(2)(ii), 29 CFR
2590.716-8(d)(2)(ii), and 45 CFR 149.510(d)(2)(ii), the Departments
calculated the proposed administrative fee for disputes initiated on or
after the effective date of these rules, and continuing until changed
by notice and comment rulemaking, by dividing the annual expenditures
of approximately $70 million estimated to be made by the Departments in
carrying out the Federal IDR process by 450,000, the estimated annual
number of administrative fees to be paid by the disputing parties. This
resulted in a proposed administrative fee amount of $150 per party per
dispute.\76\
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\75\ The list of expenditures associated with the estimated $70
million was provided in the IDR Fees proposed rules at 88 FR 65893.
\76\ As described in the IDR Fees proposed rules, the
Departments estimated that the proposed administrative fee amount of
$150 per party per dispute would result in an estimated annual
collection approximately equal to the estimated annual expenditures
of approximately $70 million. See 88 FR 65888 at 65899.
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After considering comments received on the proposals, as discussed
further in this preamble section, the Departments are finalizing the
policy to set the administrative fee amount in notice and comment
rulemaking no more frequently than once per calendar year. The
Departments may set the administrative fee less frequently than
annually if the Departments estimate
[[Page 88500]]
that the total amount of administrative fees paid under the current
administrative fee amount would continue to be equal to the amount of
expenditures estimated to be made by the Departments in carrying out
the Federal IDR process for the upcoming calendar year.
Additionally, in response to comments received on the proposals,
the Departments are modifying the administrative fee methodology used
to estimate the number of administrative fees paid. The Departments
will use the estimated number of administrative fees paid to certified
IDR entities, rather than the estimated number of closed disputes, to
estimate the total number of administrative fees paid. In addition, the
Departments will not assume, as set forth in the IDR Fees proposed
rules, a 25 percent reduction in the volume of disputes as the result
of the District Court vacating certain batching requirements in TMA IV.
The Departments are also revising the expenditures estimated to be made
by the Departments in carrying out the Federal IDR process from
approximately $70 million to approximately $56.6 million to reflect a
reduction in the Departments' anticipated assistance with eligibility
determinations, as discussed later in this preamble. Collectively,
these modifications to the methodology result in a finalized
administrative fee amount of $115 per party per dispute for disputes
initiated on or after the effective date of these rules. As the
administrative fee methodology in the IDR Operations proposed rules
included some of the same elements as the administrative fee
methodology in the IDR Fees proposed rules, the Departments will
consider whether any modifications made to the administrative fee
methodology in these final rules should also be adopted when finalizing
the administrative fee amount using the methodology proposed in the IDR
Operations proposed rules.
2. Summary of Comments Received and Responses to Comments
a. Establishing the Administrative Fee in Notice and Comment Rulemaking
Many commenters supported the proposal to establish the
administrative fee in notice and comment rulemaking. Commenters stated
that this transparent process would allow the public to evaluate the
administrative fee amount and provide feedback on the feasibility of
providers using the Federal IDR process. However, several commenters
opposed the proposal to establish the administrative fee amount more or
less frequently than annually and stated that adopting this proposal
would introduce uncertainty in the Federal IDR process and would make
budgeting more challenging. These commenters requested that the
Departments update the administrative fee annually, to balance
stability, transparency, and responsiveness, which they stated would
mitigate the impact of changes to the administrative fee. One commenter
supported the proposal to establish the administrative fee amount more
or less frequently than annually, but only if a mid-year change led to
a decrease to the administrative fee amount. Commenters also stated
that any increases to the administrative fee amount should be on an
annual basis with advance notice to interested parties. One of these
commenters stated that the administrative fee amount should be set
predictably and with at least 90 days' advance notice. Some commenters
requested further clarification on the process for proposing and
finalizing administrative fee amounts in notice and comment rulemaking.
The Departments agree that one of the goals of establishing the
administrative fee amount in notice and comment rulemaking is to foster
transparency and allow interested parties to provide feedback on the
methodology and process for setting the proposed fee amount. The
Departments recognize commenters' concerns about establishing the
administrative fee amount more or less frequently than annually, and
the Departments are finalizing a policy under which they would
establish the administrative fee amount no more frequently than once
per calendar year. In addition, the Departments are finalizing as
proposed the proposal to change the administrative fee amount less
frequently than annually if the expenditures estimated to be made by
the Departments in carrying out the Federal IDR process and the
estimated total amount of administrative fees paid in the upcoming year
are estimated to be equal. If the Departments determine that the
estimated total amount of administrative fees paid in a future year at
the current administrative fee amount would be less than the
expenditures estimated to be made by the Departments in carrying out
the Federal IDR process for that year, the Departments would propose to
raise the administrative fee amount in notice and comment rulemaking.
Alternatively, if the Departments determine that the estimated total
amount of administrative fees paid in a future year at the current
administrative fee amount would be more than the expenditures estimated
to be made in carrying out the Federal IDR process for that year, the
Departments would propose to lower the administrative fee amount in
notice and comment rulemaking. Consistent with the statute, the
Departments will set the administrative fee such that the estimated
total amount of administrative fees paid is equal to the amount of
expenditures estimated to be made by the Departments in carrying out
the Federal IDR process.\77\
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\77\ Section 9816(c)(8)(B) of the Code, section 716(c)(8)(B) of
ERISA, and section 2799A-1(c)(8)(B) of the PHS Act.
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The Departments also reiterate that using the notice and comment
rulemaking process to establish the administrative fee amount will
provide interested parties with substantial advance notice of fee
changes, so additional advance notice is not needed. As described in
the IDR Fees proposed rules, the Departments will provide details on
the methodology used to determine the proposed administrative fee
amount, and the proposed administrative fee amount, if finalized, would
be effective prospectively. Interested parties will be provided with a
period to submit public comments on the proposals, and the Departments
will consider all comments submitted within the comment period in
developing the final rules.
In addition, other commenters raised concerns regarding the amount
of the administrative fee changing between any proposed and final
rules. One commenter did not support making changes to the
administrative fee amount between the proposed and final rules, while
another commenter stated that any such changes should be by no more
than 10 percent.
The Departments acknowledge these commenters' suggestions but note
that the Departments may have more recent data available to estimate
the total amount of administrative fees paid or the amount of
expenditures estimated to be made by the Departments in carrying out
the Federal IDR process while developing the final rules than they had
while developing the IDR Fees proposed rules, and it is reasonable for
the Departments to rely on the more recent data in developing the final
rules, provided that they use the methodology described in the preamble
to the IDR Fees proposed rules or a methodology modified from the
preamble to the IDR Fees proposed rules in response to comments. As in
these final rules, these circumstances may result in the Departments
finalizing a different administrative fee amount than the amount
proposed. The finalized
[[Page 88501]]
administrative fee amount will differ from the amount proposed, if
necessary, to comply with the statutory requirement that the total
administrative fees paid are estimated to be equal to the amount of
expenditures estimated to be made by the Departments in carrying out
the Federal IDR process.\78\
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\78\ Id.
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One commenter was concerned about the ability to comment on the
administrative fee amount rather than just the methodology used to
calculate the amount and stated that only seeking comment on the
methodology could inhibit commenters' ability to accurately express the
impact of the proposed fee amount on a disputing party's access to the
Federal IDR process.
As previously explained, the Departments are finalizing a policy to
establish the administrative fee amount in notice and comment
rulemaking no more frequently than once per calendar year and will
provide opportunity for comment on any new proposed administrative fee
amount, as well as any changes to the methodology used to calculate the
administrative fee amount.
b. Administrative Fee Methodology--Estimated Total Number of
Administrative Fees Paid
Many commenters opposed the Departments' proposed administrative
fee methodology for estimating the total number of administrative fees
to be paid. Many commenters suggested that estimating the total number
of administrative fees paid based on the projected total number of
disputes closed would not capture all disputes in which administrative
fees are paid. Some commenters were concerned that this methodology
could result in an overpayment of administrative fees to the
Departments. One of these commenters was concerned that the data from
the six-month period in 2023 used to estimate the number of disputes
closed would be radically different from 2024 data. Several commenters
suggested using other metrics to calculate the estimated total number
of administrative fees paid, including the number of disputes
initiated, the number of disputes for which a certified IDR entity fee
was paid, and the number of disputes for which parties submitted
offers. Moreover, some commenters asserted that using disputes closed
contradicts the Departments' regulations requiring each party to pay
the administrative fee at the time the certified IDR entity is selected
and the Departments' guidance permitting certified IDR entities to
collect the administrative fee from parties up to the time of offer
submission.\79\
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\79\ See 26 CFR 54.9816-8(d)(2)(i), 29 CFR 2590.716-8(d)(2)(i),
and 45 CFR 149.510(d)(2)(i); see also section 4.8 of the Federal
Independent Dispute Resolution (IDR) Process Guidance for Certified
IDR Entities. October 2022. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/federal-independent-dispute-resolution-process-guidance-for-certified-idr-entities.pdf.
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The Departments proposed to use the projected total number of
disputes closed to calculate the administrative fee amount because that
metric reflected collections under current collections processes,\80\
and the Departments were of the view that it was a reliable metric upon
which to base the estimated total number of administrative fees to be
paid. However, after considering the comments, the Departments agree
with the commenters who stated that estimating the total number of
administrative fees paid using the projected number of disputes closed
would not capture all disputes in which administrative fees are paid
because administrative fees may be paid for disputes that have not yet
been closed. To capture all disputes in which parties pay
administrative fees, the Departments are finalizing the administrative
fee amount based on a methodology that estimates the total number of
administrative fees paid by projecting Federal IDR portal data on the
number of administrative fees paid to certified IDR entities, as
explained in the subsequent paragraphs. The number of administrative
fees paid to certified IDR entities is currently the best available
metric in the Federal IDR portal data to capture all administrative
fees parties pay for disputes in any stage of the Federal IDR process.
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\80\ Under current guidance, the administrative fee may be
collected by certified IDR entities up until the time the parties
submit their offers, and therefore the administrative fee is not
collected for all disputes initiated. See, for example, Centers for
Medicare & Medicaid Services (March 2023). Federal Independent
Dispute Resolution (IDR) Process Guidance for Certified IDR
Entities. https://www.cms.gov/files/document/federal-idr-guidance-idr-entities-march-2023.pdf.
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In the preamble to the IDR Fees proposed rules, the Departments set
the administrative fee amount based on the projection that 225,000
disputes would be closed annually. Because both initiating and non-
initiating parties to a dispute are required to pay the administrative
fee, the Departments estimated in the preamble to the IDR Fees proposed
rules that 450,000 administrative fees would be paid annually, or
37,500 per month. As explained above, in setting the administrative fee
in these final rules, the Departments are using the total number of
administrative fees paid to certified IDR entities for disputes in any
stage of the Federal IDR process after certified IDR entity selection.
Using the methodology being adopted in these final rules, the
Departments estimate that 492,000 administrative fees will be paid
annually, or 41,000 administrative fees will be paid per month, by the
parties. The Departments estimate the total number of administrative
fees paid annually based on the monthly average number of
administrative fees paid to certified IDR entities between February
2023 and July 2023. This monthly average was approximately 41,000, and
the Departments projected this figure forward by 12 months to estimate
that 492,000 administrative fees will be paid annually.
The Departments are using data from the same time period that was
used in the IDR Fees proposed rules (February 2023 to July 2023),
without updating to newer data. Data from this time period remains the
best available data to project future trends due to portal closures and
other Federal IDR process changes that began in August 2023 due to the
TMA III and TMA IV opinions and orders. While the Departments
considered using data from the most recent six-month period prior to
the finalization of this rule (June 2023 to November 2023), they
concluded this would inaccurately reflect the monthly average number of
administrative fees paid, as various aspects of the Federal IDR process
were temporarily suspended from August 4, 2023 to October 6, 2023 for
all disputes.\81\
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\81\ Of note, batched disputes and single disputes involving air
ambulance services also remained suspended after October 6, 2023 and
would not be reflected in the most recent data.
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The Departments considered comments providing alternatives for
estimating the total number of administrative fees paid in calculating
the administrative fee amount. Some commenters wanted the Departments
to estimate the total number of administrative fees paid based on the
number of disputes initiated. This metric is inaccurate for purposes of
calculating the administrative fee amount because the administrative
fee may not be collected for all disputes initiated. The obligation for
parties to pay the administrative fee attaches at the time of certified
IDR entity selection (with guidance permitting certified IDR entities
to collect the administrative fee from parties until the time of offer
submission). Therefore, if a dispute is withdrawn before selection of
the certified IDR entity, there is no obligation for the parties to pay
[[Page 88502]]
administrative fees for that dispute. For this reason, using the total
number of disputes initiated to estimate the number of administrative
fees to be paid in the administrative fee methodology risks the
Departments underfunding the Federal IDR process.\82\
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\82\ In the IDR Operations proposed rules, the Departments
proposed to use the total volume of disputes projected to be
initiated because the proposed operational changes in those rules,
if finalized, would result in the Departments' collection of
administrative fees closer to a dispute's date of initiation, and
therefore, it may be appropriate to estimate the total volume of
administrative fees paid using the total volume of disputes
initiated. 88 FR 75793.
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Other commenters requested the Departments to estimate the total
number of administrative fees paid based on the number of disputes for
which a certified IDR entity fee was paid. Because parties are not
required to pay their certified IDR entity fees and administrative fees
at the same time, the number of certified IDR entity fees paid would
not necessarily reflect the number of administrative fees paid.
Therefore, this metric would also be inaccurate for purposes of
calculating the administrative fee amount.
Finally, the Departments also considered estimating the total
number of administrative fees paid based on the number of disputes for
which parties submitted offers. However, the Departments did not
believe this metric would accurately reflect the estimated number of
administrative fees that would be paid, since parties may pay
administrative fees without submitting offers. Thus, the metric could
understate the total number of administrative fees paid.
In summary, the Departments are of the view that it is most
accurate to use the total number of administrative fees paid to
certified IDR entities in the administrative fee methodology rather
than the other metrics suggested by commenters in the prior paragraphs,
as this metric reflects actual administrative fees that have been paid
for disputes in any stage of the Federal IDR process after certified
IDR entity selection.\83\ Therefore, in recognition of commenters'
concerns about a methodology that could underestimate the total number
of administrative fees paid in 2024, resulting in an overestimate of
the amount of the administrative fee needed for 2024, the Departments
are establishing the administrative fee methodology using the total
number of administrative fees paid to certified IDR entities, rather
than the total number of closed disputes, to estimate the total number
of administrative fees paid in 2024.
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\83\ As explained in these final rules, under current processes,
the total volume of administrative fees paid to certified IDR
entities is the best metric to use in the administrative fee
methodology to align with statute requiring the Departments to
estimate the total number of administrative fees paid. As operations
of the Federal IDR process improve over time, the Departments will
consider changes to the methodology to best estimate the total
number of administrative fees paid.
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The Departments also received comments regarding the Departments'
projections of the total number of closed disputes used to estimate the
total number of administrative fees paid. Several commenters suggested
that the Departments' estimate of 225,000 closed disputes is too low. A
few commenters suggested that the Departments are underestimating
utilization of the Federal IDR process and recommended that the
Departments analyze the available data from States implementing similar
policies before the No Surprises Act.
In the IDR Fees proposed rules, the Departments estimated that
225,000 disputes would be closed annually, and because both the
initiating and non-initiating parties to a dispute are required to pay
the administrative fee, 450,000 administrative fees would be paid
annually. The Departments now estimate that 492,000 administrative fees
will be paid to certified IDR entities in the year, as described
earlier in this preamble section. The Departments continue to be of the
view that Federal IDR process data is the best available data to
project trends in the Federal IDR process, especially because
regulations and volume differ in State IDR processes. As mentioned in
the IDR Fees proposed rules, the Departments initially anticipated
17,333 disputes involving non-air ambulance services would be initiated
during the first year of implementation of the Federal IDR process. The
Departments developed this estimate based on the experience of New York
State. However, the use of State data resulted in the Departments
underestimating utilization of the Federal IDR process, as nearly
335,000 disputes were initiated in the Federal IDR process between
April 2022 and March 2023.\84\ As demonstrated by this result, past
data from State processes has limited applicability in predicting
future use of the Federal IDR process. For this reason, the Departments
are of the view that it is better to use Federal IDR process data
rather than State data to estimate the total number of administrative
fees paid.
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\84\ Centers for Medicare & Medicaid Services (April 27, 2023).
Federal Independent Dispute Resolution Process--Status Update.
https://www.cms.gov/files/document/federal-idr-processstatus-update-april-2023.pdf.
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In addition, several commenters disagreed with the Departments'
assumption of a 25 percent reduction in the volume of disputes in
estimating the total number of administrative fees paid to account for
the impact of TMA IV's vacatur of batching regulations and guidance, or
asked for more detail on how the projected 25 percent reduction factor
was determined, including the details on how the batching of claims
will be treated in the future. One commenter noted that the vacatur of
the $350 administrative fee amount and batching regulations as a result
of TMA IV allows many additional claims to become economically viable,
so the Departments should expect dispute volume to increase. Another
commenter stated that the Departments cannot know with certainty that
the TMA IV opinion and order will decrease the number of disputes. This
commenter also asserted that TMA IV did not affect the batching
criteria that serve as the largest obstacle for emergency medicine, and
therefore there will not be large batches in emergency medicine, which
the commenter noted comprised over 70 percent of disputes reflected in
the Partial Report on the Independent Dispute Resolution (IDR) Process
October 1-December 31, 2022.\85\ Moreover, a few commenters suggested
that the TMA III opinion and order will increase dispute volume as
providers will continue to see low QPAs from plans and issuers and will
rely on the Federal IDR process for appropriate payment. One commenter
agreed with the Departments' assumption that the TMA IV opinion and
order will decrease the volume of disputes but disagreed with the
Departments' rationale that the increased number of line items will
take more time to close. This commenter expected that providers
batching claims rather than submitting claims individually would
increase efficiencies in the Federal IDR process.
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\85\ U.S. Department of Health and Human Services, U.S.
Department of Labor, U.S. Department of the Treasury. Partial Report
on the Independent Dispute Resolution (IDR) Process October 1-
December 31, 2022. https://www.cms.gov/files/document/partial-report-idr-process-octoberdecember-2022.pdf.
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After reviewing the comments, the Departments have reconsidered the
assumption that the number of disputes will decrease by 25 percent as a
result of TMA IV's vacatur of batching regulations and guidance.
Therefore, the Departments are not finalizing the projected 25 percent
reduction in the estimated total number of administrative fees paid.
The Departments recognize that certain batching criteria remain in
place,
[[Page 88503]]
such as criteria that impact the batching of emergency medicine claims,
and items and services included in such claims will have to be
submitted as separate disputes if they do not comply with the
applicable batching criteria.\86\ Moreover, because the Departments are
finalizing the administrative fee amount based on a methodology that
estimates the total number of administrative fees paid based on the
total number of administrative fees paid to certified IDR entities,
rather than the total number of closed disputes, the methodology no
longer requires the Departments to make an assumption on whether
batched disputes will take more time to close after the vacatur of the
batching regulations as a result of TMA IV. In addition, the
Departments do not have data available to support commenters' assertion
that TMA III will lead more providers to rely on the Federal IDR
process for appropriate claims payment. Plans and issuers are required
to calculate QPAs using a good faith, reasonable interpretation of the
applicable statutes and regulations that remain in effect after the TMA
III opinion and order.\87\ Furthermore, in their experience operating
the Federal IDR process, the Departments have not seen a clear or
quantifiable relationship between changes in policy and changes in the
number of disputes initiated. The Departments are of the view that the
historical data from February 2023 to July 2023 is the best available
data at this time to project utilization of the Federal IDR process in
2024, and the Departments are therefore finalizing the administrative
fee amount based on a methodology that does not include a 25 percent
reduction in the volume of disputes.
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\86\ U.S. Department of Health and Human Services, U.S.
Department of Labor, U.S. Department of Treasury, Office of
Personnel Management (October 6, 2023). FAQs about Consolidated
Appropriations Act, 2021 Implementation Part 62. https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-62.pdf and https://www.cms.gov/files/document/faqs-part-62.pdf.
\87\ Id.
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c. Administrative Fee Methodology--Estimated Expenditures
The Departments also received comments related to their estimated
expenditures for purposes of calculating the administrative fee amount.
Several commenters suggested that the Departments should disclose more
data supporting the estimated costs to carry out the Federal IDR
process in the administrative fee methodology to provide the public
with an opportunity to comment. Some of these commenters asserted that
the IDR Fees proposed rules did not provide enough detail on the
estimated expenditures to allow interested parties to provide
meaningful comment on the proposed administrative fee amount. One
commenter urged the Departments to establish a regular process for
detailing the Departments' data on the administrative fee, including an
annual disclosure statement with a balance sheet, to promote
transparency and predictability. A few commenters disputed the
Departments' reference that Freedom of Information Act (FOIA)
regulations prevent the Departments from providing detail on certain
estimated expenditure amounts. These commenters stated that without
this transparency, interested parties were not afforded an opportunity
to meaningfully comment on the proposals related to the administrative
fee amount and methodology inputs.
The Departments are finalizing the administrative fee amount based
on a methodology that divides the ``estimated,'' rather than
``projected,'' expenditures to carry out the Federal IDR process by the
estimated total number of administrative fees to be paid in the year.
The use of ``estimated'' rather than ``projected'' expenditures is to
ensure the terminology used to describe the methodology is consistent
with that of the statutory text.\88\ To calculate the estimated
expenditures to carry out the Federal IDR process, the Departments
included the Federal resources needed to carry out the Federal IDR
process, such as future personnel and contract costs. The preamble to
the IDR Fees proposed rules provided an overview of the future contract
costs and Federal resources included in the estimated expenditures and
explained that the estimated expenditures to carry out the Federal IDR
process in 2024 were approximately $70 million. The Departments
disagree with commenters that the Departments did not provide
sufficient information to allow meaningful comment. In particular, in
the preamble to the IDR Fees proposed rules, the Departments provided
details on the types of costs that are included in the estimated
expenditures.\89\
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\88\ Section 9816(c)(8)(B) of the Code, section 716(c)(8)(B) of
ERISA, and section 2799A-1(c)(8)(B) of the PHS Act.
\89\ 88 FR 65893.
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While the Departments described the contract costs and Federal
resources associated with estimated expenditures to carry out the
Federal IDR process in the preamble to the IDR Fees proposed rules, in
response to comments requesting additional specifics on the estimated
expenditures and in an effort to promote transparency, the Departments
are providing further detail on costs included in the total estimated
expenditures in these final rules within the bounds of the Departments'
ability to disclose these amounts. To avoid releasing sensitive
contract information, the Departments are breaking down the costs,
which include the future contract and Federal personnel costs, by
category of expenditure, and providing approximate cost estimates for
carrying out the following categories of Federal IDR process
activities: \90\
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\90\ As discussed further later in this preamble section, the
Departments have reconsidered costs associated with total estimated
expenditures of carrying out the Federal IDR process and are
revising the total estimated expenditures for 2024 from
approximately $70 million to approximately $56.6 million.
Additionally, certain expenses apply across multiple categories that
were included in the IDR Fees proposed rules. This revised
combination of categories better provides a meaningful cost estimate
of these activities.
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Maintaining, operating, and improving the Federal IDR
portal, certifying IDR entities, and collecting data from certified IDR
entities (approximately $26,360,000);
Conducting program integrity activities, such as certain
QPA audits (as further described subsequently in this preamble) and IDR
decision audits, and receiving and investigating Federal IDR process-
related complaints (approximately $13,060,000, of which QPA audits
resulting from complaints filed by providers, facilities, or providers
of air ambulance services comprise approximately $5,000,000);
Providing outreach to parties and technical assistance to
certified IDR entities, including assisting with eligibility
determinations when the volume of disputes submitted exceeds the
capacity of certified IDR entities to perform those determinations
(approximately $11,630,000, of which assisting with eligibility
determinations comprises approximately $10,000,000); \91\ and
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\91\ Centers for Medicare & Medicaid Services (November 21,
2022). Notice of the Federal Independent Dispute Resolution (IDR)
Team Technical Assistance to Certified Independent Dispute
Resolution Entities (IDREs) in the Dispute Eligibility Determination
Process. https://www.cms.gov/files/document/idre-eligibility-support-guidance-11212022-final-updated.pdf.
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Collecting administrative fees (approximately $5,530,000),
which includes costs to invoice certified IDR entities for
administrative fees collected, provide the system infrastructure for
certified IDR entities to record and remit administrative fees
collected, track data on fees collected and make continuous
improvements to the collections process and invoicing systems.
[[Page 88504]]
The Departments are publishing summary-level estimated budget
information and have provided meaningful data for public input for the
purposes of calculating the administrative fee amount. The Departments
intend to continue to provide data on the Federal IDR process to
promote transparency and predictability in the administrative fee
amount, including publishing quarterly public reports with the
Departments' expenditures and administrative fee collections.\92\
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\92\ See, e.g., U.S. Department of Health and Human Services,
U.S. Department of Labor, U.S. Department of the Treasury. Initial
Report on the Independent Dispute Resolution (IDR) Process April 15-
September 30, 2022. https://www.cms.gov/files/document/initial-report-idr-april-15-september-30-2022.pdf. U.S. Department of Health
and Human Services, U.S. Department of Labor, U.S. Department of the
Treasury. Partial Report on the Independent Dispute Resolution (IDR)
Process October 1-December 31, 2022. https://www.cms.gov/files/document/partial-report-idr-process-octoberdecember-2022.pdf.
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In response to commenters' concerns regarding the Departments'
reference to the applicability of FOIA exemptions to information shared
during the rulemaking process, the Departments clarify that they will
disclose information in response to any requests in accordance with the
FOIA and accompanying regulations. However, the Departments are not
publishing specific future contract estimates in this rule in response
to commenters' requests for more detail on estimated expenditures of
Federal IDR process activities and the data underlying those estimates
because publishing those contract estimates could undermine future
contract procurements. For example, if the Departments were to publish
the projected future cost of the contracts used to maintain the Federal
IDR portal, the Federal Government would be meaningfully disadvantaged
in future contract negotiations related to the Federal IDR portal, as
bidders would know how much the Departments anticipate such a future
contract being worth. Although current contract awards are published
and publicly available,\93\ these award amounts do not necessarily
reflect the future value of the contract, as there may be future
changes in policy and operations and the scope of work.
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\93\ Available at www.sam.gov.
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The Departments are of the view that interested parties had
sufficient information to meaningfully comment on the IDR Fees proposed
rules. For example, commenters provided valuable information in their
comments regarding how the Departments should estimate the total number
of administrative fees paid. Based on these comments, the Departments
modified the methodology accordingly. Similarly, the Departments
provided detailed information in the IDR Fees proposed rules on their
calculation of the estimated expenditures to carry out the Federal IDR
process. Specifically, the Departments detailed the types of activities
included in estimating the annual expenditures of approximately $70
million and received comments on these activities. After considering
comments received on these details of the administrative fee
methodology, the Departments have revised this estimate of annual
expenditures down to approximately $56.6 million, as explained in later
paragraphs.
In addition, many commenters raised concerns about the inclusion of
certain types of expenses in the administrative fee methodology.
Several commenters recommended excluding all or some of the QPA audit
costs given that the QPA also serves a purpose outside of the Federal
IDR process in calculating patient cost sharing. Some commenters asked
the Departments to disclose their total expenditures on QPA audits and
the portion proposed to be funded by administrative fees compared to
other sources.
As previously mentioned, the Departments are required to include
estimated expenditures to carry out the Federal IDR process, which
include contract costs and Federal resources, in calculating the
administrative fee amount. Accordingly, the Departments disagree with
commenters who suggested that QPA audit costs should not be included in
the calculation of the administrative fee amount and are adopting an
administrative fee methodology that includes certain QPA audit costs in
the estimated expenditures. For any dispute in the Federal IDR process,
a plan or issuer would have been required to disclose the QPA to the
provider along with the initial payment or notice of denial of payment
for items and services, and disputing parties must include the QPA for
items and services when initiating a dispute. Certified IDR entities
are required to consider the QPA when selecting between the offers
submitted by disputing parties when determining the total out-of-
network payment rate for items and services subject to the Federal IDR
process.\94\
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\94\ Section 9816(c)(5)(C)(i)(I) of the Code, section
716(c)(5)(C)(i)(I) of ERISA, and section 2799A-1(c)(5)(C)(i)(I) of
the PHS Act.
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Furthermore, it is the responsibility of the Departments (or the
applicable State authorities), rather than the provider, facility,
provider of air ambulance services, or the certified IDR entity, to
monitor plan and issuer compliance with the QPA requirements.\95\ To
date, the Departments have only conducted audits as part of
investigations of complaints, and anticipate continuing to conduct
these risk-based audits in the future, though the No Surprises Act
permits the Departments to conduct random and risk-based audits.\96\
Given the role of the QPA in the Federal IDR process and the direct
impact on providers, performing audits on plans and issuers in response
to allegations that the plan's or issuer's QPAs are inaccurate is
necessary to carry out the Federal IDR process and promotes the
integrity of and confidence in the Federal IDR process.
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\95\ Section 9816(a)(2)(A)(i) of the Code, section 716(a)(2)(A)
of ERISA, and section 2799A-1(a)(2)(A)(i) of the PHS Act. See also
86 FR 36899. However, a provider or facility may always assert to
the certified IDR entity that additional information points in favor
of the selection of its offer as the out-of-network payment amount,
even where that offer is for a payment amount that is different from
the QPA. 87 FR 52627.
\96\ Section 9816(a)(2)(A)(ii) of the Code, and section 2799A-
1(a)(2)(A)(ii) of the PHS Act. The July 2021 interim final rules
describe the enforcement responsibilities for each Department and
OPM. 86 FR 36899 (July 13, 2021). https://www.federalregister.gov/documents/2021/07/13/2021-14382/requirements-related-to-surprise-billing-part-i.
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Moreover, addressing concerns about inaccurately calculated QPAs
helps to ensure plans and issuers provide correctly calculated QPAs
when they participate in the Federal IDR process. For example, in the
absence of QPA audits to investigate complaints from providers,
facilities, and providers of air ambulance services that one or more of
a plan's or issuer's QPAs are inaccurate, plan and issuer compliance
with QPA requirements would go unchecked.\97\ Certified IDR entities
must consider the relevant QPA in making each payment determination
under the No Surprises Act,\98\ and unchecked QPAs would significantly
threaten the integrity of QPAs and the payment determinations made by
certified IDR entities. These audits help to increase transparency into
the QPA calculation methodology and encourage compliance among plans
and issuers. Accordingly, QPA audits are an integral part of the
Federal IDR process, the costs of which are reasonably included in the
calculation of the administrative fee amount.
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\97\ The accuracy of a plan's or issuer's QPA (or QPA
methodology) may not be reviewed within a payment determination
under the Federal IDR process. See 86 FR 55996.
\98\ Section 9816(c)(5)(C)(i)(I) of the Code, section
716(c)(5)(C)(i)(I) of ERISA, and section 2799A-1(c)(5)(C)(i)(I) of
the PHS Act.
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[[Page 88505]]
In estimating the expenditures to carry out the Federal IDR
process, the Departments are including estimated costs only for certain
QPA audits that the Departments anticipate incurring to investigate
complaints regarding inaccurate QPAs made by providers, facilities, and
providers of air ambulance services under the Federal IDR process. The
Departments are not including the costs of QPA audits conducted: (1) in
connection with Department of Labor, OPM, or Department of the Treasury
investigations; (2) randomly; or (3) in response to complaints from
consumers, as not all of these audits are necessarily related to the
Federal IDR process. The Departments are of the view that only the
costs related to QPA audits conducted in response to complaints from
entities that are potential parties to a payment determination are
sufficiently related to the Federal IDR process to justify their
inclusion in the administrative fee calculation. For example, consumers
who complain that a plan or issuer inaccurately calculated their cost
sharing based on an erroneously calculated QPA will not be involved in
the Federal IDR process, and therefore the costs of such audits are
appropriately excluded from those costs supported by administrative
fees paid by parties to the Federal IDR process. Because HHS is
primarily responsible for the implementation of the Federal IDR
process, the Departments view similarly random QPA audits that may be
conducted by the Departments, as well as any QPA audits in connection
with Department of Labor, OPM, and Department of the Treasury
investigations.
The costs of HHS conducting QPA audits for complaints that a plan's
or issuer's QPAs are inaccurate are estimated to be approximately
$5,000,000 in 2024. As plans and issuers improve their compliance in
calculating QPAs correctly, the Departments anticipate that the costs
of conducting these audits will decrease, which would be reflected in
the estimated expenditures used to determine future administrative fee
amounts.
Several commenters also disagreed with including costs associated
with assisting with eligibility reviews in the estimated expenditures
to carry out the Federal IDR process. A few of these commenters noted
that certified IDR entities are responsible for conducting eligibility
reviews and therefore certified IDR entity fees should cover this cost.
Some commenters asserted that such costs should be recovered through
the non-prevailing party's certified IDR entity fee, as the eligibility
determination is part of the payment determination. One of these
commenters expressed concern that including this expense would
incentivize certified IDR entities to understaff as HHS would intervene
to address a staffing shortage.
The Departments disagree that the costs of assisting with
eligibility determinations should be excluded from estimated
expenditures. Certified IDR entities voluntarily participate in the
Federal IDR process and set their certified IDR entity fees within
ranges established by the Departments to ensure they remain financially
viable and that such fees can cover their operating expenses to
participate in the Federal IDR process, which include the costs
incurred in determining the eligibility of items and services for the
Federal IDR process. While certified IDR entities are responsible for
making eligibility determinations, and therefore incur costs associated
with this activity, the Departments have also incurred costs since
November 2022 to assist certified IDR entities in making these
determinations by performing research and outreach on disputes pending
eligibility determinations, including identifying and obtaining
information necessary for certified IDR entities to make eligibility
determinations, and will continue to incur such costs in 2024.\99\ The
Departments disagree with the commenter that stated that the
Departments' assistance would incentivize certified IDR entities to
understaff. Certified IDR entities could not have reasonably predicted
the amount of personnel they would need to make eligibility
determinations within the required timeframe given the extremely high
volume of disputes. Moreover, it has been difficult for certified IDR
entities to make staffing adjustments in response to utilization of the
Federal IDR process due to the repeated temporary pauses in the Federal
IDR portal resulting from litigation matters and changes in operations.
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\99\ Centers for Medicare & Medicaid Services (November 21,
2022). Notice of the Federal Independent Dispute Resolution (IDR)
Team Technical Assistance to Certified Independent Dispute
Resolution Entities (IDREs) in the Dispute Eligibility Determination
Process. https://www.cms.gov/files/document/idre-eligibility-support-guidance-11212022-final-updated.pdf.
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When the Departments first developed the Federal IDR process and
the rules and guidance establishing how certified IDR entities were to
calculate their fees for the scope of work they were expected to
perform, the Departments and the certified IDR entities did not
anticipate the significant difficulty and costs involved in determining
eligibility for the Federal IDR process. After six months of operating
the Federal IDR process and receiving feedback from disputing parties
and certified IDR entities, the Departments determined that it was
necessary to assist certified IDR entities with determining eligibility
through performing research and outreach on disputes pending
eligibility determinations, including identifying and obtaining
information necessary to make an eligibility determination.\100\ The
Departments determined that this course of action was necessary when it
became clear that eligibility determinations were taking significantly
longer than the Departments had anticipated.
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\100\ The Departments are providing technical assistance
regarding eligibility but are not making eligibility determinations,
as, under current regulations, only certified IDR entities may make
eligibility determinations. Id.
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In the IDR Operations proposed rules, the Departments proposed
several policies aimed at improving communication between the parties
that would make eligibility determinations less burdensome for
certified IDR entities and speed up the Federal IDR process, as well as
allow the Departments to make eligibility determinations under
extenuating circumstances.\101\ However, these policies, if finalized,
will take time to implement. In the interim, the Departments are
working to balance feedback from interested parties asking the
Departments to increase the efficiency of the Federal IDR process and
decrease the backlog of disputes with other feedback asking the
Departments to minimize expenditures and avoid increases to the
administrative fee. The Departments have also received comments urging
them to shorten the time it takes for payment determinations to be
reached. The Departments continue to believe that some level of
assistance is necessary to address the high volume of disputes
submitted and the backlog of disputes, due in part to the closing and
reopening of the Federal IDR process to make necessary systems updates
in light of the TMA III and TMA IV opinion and orders.
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\101\ 88 FR 75744.
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However, after reviewing comments, the Departments have
reconsidered the amount of estimated costs associated with pre-
eligibility reviews that should be included in the estimated
expenditures to carry out the Federal IDR process in calendar year
2024. In estimating the expenditures of approximately $70 million in
the IDR
[[Page 88506]]
Fees proposed rules, the Departments included an increase in costs to
reflect the Departments taking on a greater role in assisting with
eligibility determinations to improve the efficiency of the Federal IDR
process.\102\ Based on comments received urging the Departments to
avoid increasing the administrative fee, the Departments will not take
on a greater role in broadly assisting certified IDR entities with
eligibility determinations at this time. Instead, the Departments will
limit their assistance with eligibility determinations to more complex
disputes, such as disputes where there is missing information to
determine Federal versus State jurisdictions in a State with a
specified State law. This approach will ensure efficient use of the
Departments' resources by leveraging the Departments' assistance and
expertise in handling pre-eligibility reviews for disputes that
certified IDR entities may need to spend more time on, such as disputes
for which information was limited due to the systems in place when
those disputes were initiated, and will allow certified IDR entities to
focus on moving disputes through the Federal IDR process. Furthermore,
this will allow the Departments to keep the costs of assisting with
eligibility determinations lower in 2024 such that the expenditures
estimated to be made by the Departments to carry out the Federal IDR
process are now estimated to be approximately $56.6 million in 2024.
The total estimated expenditures in the IDR Fees proposed rules
included approximately $20 million for the Departments to assist with
eligibility determinations via conducting research and outreach. The
estimated cost of assisting with eligibility determinations in 2024, as
used to calculate the administrative fee as finalized, is approximately
$10 million.
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\102\ While there is an implementation appropriation, the
initial appropriation of $500 million in the CAA is finite and only
remains available until expended through 2024. Moreover, the
Departments note that additional mandatory funding for the Federal
IDR process has not been appropriated beyond the initial $500
million made available in the CAA. However, the Departments cannot
rely on budget requests or on appropriations enacted by Congress
when calculating this fee. The statute requires the fee to be set at
an amount such that the total amount of fees paid is estimated to be
equal to the amount of expenditures estimated to be made by the
Departments in carrying out the Federal IDR process.
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Furthermore, the Departments do not anticipate that the decision to
focus their assistance with pre-eligibility reviews on more complex
disputes and the revised administrative fee amount finalized in these
rules will impact the fees certified IDR entities choose to charge.
Given the backlog of disputes, utilization of the Federal IDR process
strains the current capacity of certified IDR entities to make timely
determinations. While the Departments' assistance with eligibility
determinations is currently helping to alleviate the backlog of
disputes, certified IDR entities' operating expenses are not expected
to decrease as a result. If the Departments are able to decrease their
assistance with eligibility determinations, the costs of pre-
eligibility reviews would decrease, which would be reflected in the
estimated expenditures used to determine future administrative fee
amounts.
In addition, some commenters disagreed with including the costs of
investigating complaints of non-compliance in the administrative fee
methodology. Commenters asked for clarity in the ``investigating
relevant complaints'' expense and asserted that ``relevant'' complaints
beyond the Federal IDR process would be inappropriate to include in the
calculation of the administrative fee amount. A few of these commenters
suggested that the party found to be non-compliant should bear the
costs of the investigation and asked the Departments to publicly report
summary data on these investigations and the costs covered by non-
compliant parties compared to those covered by administrative fees. One
commenter suggested that the investigation of complaints related to
violations of the No Surprises Act should be funded by a congressional
appropriation as these are largely unrelated to the Federal IDR
process.
The Departments clarify that the complaints costs included in the
estimated expenditures in the administrative fee methodology only
include costs associated with receiving and investigating Federal IDR
process-related complaints. For example, such costs include
investigating complaints within the Departments' jurisdiction regarding
the failure of a non-prevailing party to pay the payment determination
amount to the prevailing party within 30 days of the certified IDR
entity's payment determination as required by the No Surprises
Act.\103\ Complaints costs do not include costs for complaints that are
not related to the Federal IDR process, such as those related to the
QPA for patient cost sharing. Therefore, the Departments are of the
view that those costs are appropriate to include in the administrative
fee methodology and are necessary to ensure compliance with the Federal
IDR process.\104\
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\103\ Section 9816(c)(6) of the Code, section 716(c)(6) of
ERISA, and section 2799A-1(c)(6) of the PHS Act.
\104\ While there is an implementation appropriation, the
initial appropriation of $500 million in the CAA is finite and only
remains available until expended through 2024. Moreover, the
Departments note that additional mandatory funding for the Federal
IDR process has not been appropriated beyond the initial $500
million made available in the CAA. The Departments are unable to
appropriate this funding themselves, although they have made
numerous requests to Congress for additional funding, and therefore
this is not a reliable source of Federal IDR process funding.
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Many commenters suggested that the Departments consider other
funding sources besides the administrative fee to fund expenditures.
Several commenters suggested that implementing penalties could help
fund expenditures, including penalties for submitting ineligible
disputes, failing to comply with disclosure obligations, or delaying
the Federal IDR process. Some commenters suggested the CAA's $500
million appropriation to implement the No Surprises Act should cover at
least a portion of the Departments' estimated expenditures. One
commenter asked for confirmation that the implementation appropriation
has been exhausted fully and suggested requesting additional funds from
Congress in upcoming budget requests to support the funding of the
Departments' ongoing implementation. Another commenter asserted that
the administrative fee methodology set forth in the IDR Fees proposed
rules did not take into account any appropriations funding.
As required by the No Surprises Act,\105\ both parties to a dispute
must pay an administrative fee for participating in the Federal IDR
process. By statute, the administrative fee amount must be calculated
such that the total amount of fees paid for a year is estimated to be
equal to the amount of expenditures estimated to be made by the
Departments for such year in carrying out the Federal IDR process.
While the CAA appropriated $500 million to remain available until
expended through 2024 for preparing regulations, guidance, and reports,
collecting data, conducting audits and enforcement activities,\106\ and
[[Page 88507]]
establishing and initially implementing the No Surprises Act and Title
II Transparency provisions through calendar year 2024, this finite
appropriation is not solely for the Federal IDR process. Additionally,
while the Fiscal Year 2024 President's budget included another $500
million appropriation request for the continued implementation of the
No Surprises Act and Title II Transparency provisions, the
administrative fee amount finalized in these rules must still be
consistent with the statutory requirement to set the administrative fee
amount such that the total amount of administrative fees paid is
estimated to be equal to the amount of expenditures estimated to be
made by the Departments in carrying out the Federal IDR process. As a
result, when calculating this fee, the Departments cannot rely on
budget requests or on appropriations enacted by Congress.
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\105\ Section 9816(c)(8)(A) of the Code, section 716(c)(8)(A) of
ERISA, and section 2799A-1(c)(8)(A) of the PHS Act.
\106\ As previously explained in the preamble to these final
rules, the Departments may conduct random or risk-based QPA audits.
The Departments consider it appropriate to include some of the costs
of conducting risk-based QPA audits resulting from complaints filed
by providers, facilities, or providers of air ambulance services
alleging that the QPA was inaccurate as expenditures made in
carrying out the Federal IDR process, and therefore include the
costs of conducting these audits in estimating the expenditures made
by the Departments in carrying out the Federal IDR process. Other
audit costs, such as the QPA audits conducted in connection with
Department of Labor, OPM, or Department of Treasury investigations;
audits conducted randomly; or audits conducted in response to
complaints from consumers regarding QPAs may be funded using other
appropriations, as applicable.
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In addition, commenters urged the Departments to consider
strategies to decrease utilization of the Federal IDR process, decrease
administrative burden, increase the efficiency of the Federal IDR
process, and ultimately reduce the cost of administering the Federal
IDR process. Examples of commenters' suggestions include enforcing
disclosure requirements, requiring plans and issuers to include
remittance advance remark codes (RARCs) at the time of initial claim
determination, easing batching requirements, disincentivizing bad faith
conduct, making improvements to the Federal IDR portal, and
implementing a required initial payment amount for out-of-network
emergency services. Several commenters suggested that the volume of
ineligible disputes and the cost of conducting eligibility reviews
would be reduced or eliminated if the Departments enforced disclosure
requirements or required plans and issuers to provide adequate
information for providers to determine whether a claim is eligible for
the Federal IDR process. One commenter suggested that plans and issuers
should cover the cost of eligibility reviews when they fail to inform
the provider of eligibility for the Federal IDR process. Another
commenter suggested that the cost of eligibility reviews should be
assessed to the party that challenges eligibility as this cost would be
avoidable if the plan or issuer provided sufficient information. One
commenter suggested that the Departments could reduce the
administrative burden of the Federal IDR process by contracting with an
established claims processing clearinghouse that currently possesses
the capabilities to perform real-time eligibility determinations to
create an in-portal eligibility validation process.
The Departments continue to consider improvements to the Federal
IDR process and recently published the IDR Operations proposed
rules,\107\ which include policies aimed at reducing the volume of
ineligible disputes, establishing additional disclosure requirements
(such as requiring plans and issuers to use approved claim adjustment
reason codes (CARCs) and RARCs), incentivizing good faith conduct with
respect to open negotiation and exchange of information, and otherwise
improving the Federal IDR process. Overall, these policies would, if
finalized, support efficiency in Federal IDR process operations and
reduce the cost of administering the Federal IDR process in the future.
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\107\ 88 FR 75744.
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Recognizing that the cost of certifying IDR entities is included in
the administrative fee methodology, one commenter sought clarity on how
the methodology considers efficiencies gained from certifying more IDR
entities to make payment determinations and therefore reduce the
backlog.
The Departments note that the benefits of certifying new IDR
entities will be achieved over time, as new certified IDR entities
acclimate to the process and increase the speed at which they move
disputes through the Federal IDR process. As efficiencies in the
Federal IDR process are adopted over time, the expenditures required to
carry out the Federal IDR process could decrease, exerting downwards
pressure on the administrative fee amount. If any of these situations
results in changes to the data used to calculate the administrative fee
amount, the Departments intend to take these changes into consideration
when establishing the administrative fee amount in the future.
d. Administrative Fee Methodology--Other Comments
The Departments sought comments on whether, when calculating the
administrative fee amount in future years, they should apply an
inflationary adjustment, such as the consumer price index for all urban
consumers (CPI-U), to the amount of estimated expenditures to be made
by the Departments in carrying out the Federal IDR process. A few
commenters supported using an inflationary adjustment, such as the CPI-
U, to adjust the administrative fee amount in future years. Other
commenters opposed this approach, stating that it would not necessarily
correlate with the Departments' expenditures to operate the Federal IDR
process and may not align with the established methodology of dividing
the Departments' estimated expenditures by the estimated total number
of administrative fees to be paid. Another commenter stated that this
proposal would be unnecessary if the Departments finalize the proposal
to establish the administrative fee amount more or less frequently than
annually. Finally, another commenter asked the Departments to revisit
this proposal when data are more predictable after implementing planned
improvements to the Federal IDR process.
Upon consideration of the comments, the Departments are not
finalizing the use of an inflationary adjustment, such as the CPI-U, to
adjust the administrative fee amount in future years. The Departments
agree with commenters that the CPI-U may not correlate with projected
increases in the Departments' estimated expenditures to carry out the
Federal IDR process and therefore using it could be inconsistent with
the statute.
Several commenters urged the Departments to improve the Federal IDR
process before increasing the administrative fee amount by decreasing
the backlog, enforcing timely payment, and holding all parties
accountable to the regulatory requirements. Some commenters recommended
maintaining the current administrative fee amount until there is
stability in the Federal IDR process and more data are available to
accurately forecast long-term costs. A few commenters suggested that
the Departments modify the administrative fee amount in future years to
make up for any shortfall or surplus created by the finalized
administrative fee amount.
As previously mentioned, the Departments continue to consider
improvements to the Federal IDR process; however, implementing these
improvements would increase the costs of carrying out the Federal IDR
process in the short term and would take time to operationalize. As
previously mentioned, the Departments proposed policies in the IDR
Operations proposed rules aimed to improve the overall efficiency and
operations of the Federal
[[Page 88508]]
IDR process.\108\ The Departments were unable to propose those policies
in the IDR Fees proposed rules because they are much more comprehensive
than the fee-related policies proposed in the IDR Fees proposed rules
and would require more time to develop and implement, if finalized.
There is an urgency to publish these final rules due to the need to
sufficiently fund the Federal IDR process in 2024, because, as
explained above, the current $50 administrative fee amount is
insufficient to provide total administrative fees that are estimated to
be equal to the expenditures estimated to be made by the Departments in
carrying out the Federal IDR process, as required by the No Surprises
Act.\109\
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\108\ 88 FR 75744.
\109\ Section 9816(c)(8)(B) of the Code, section 716(c)(8)(B) of
ERISA, and section 2799A-1(c)(8)(B) of the PHS Act.
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e. Administrative Fee Amount and Impact
Many commenters opposed the proposed $150 per party per dispute
administrative fee amount and stated that it would make the Federal IDR
process cost-prohibitive to pursue for many providers, especially small
providers, rural providers, independent practices, and certain medical
specialties, such as psychiatry, emergency medicine, radiology, and
anesthesiology. Some commenters requested that the Departments analyze
how the proposed administrative fee amount would be cost-prohibitive
for providers and would deter and limit dispute resolution for small
providers. A few commenters asserted that the administrative fee amount
would unfairly favor plans and issuers over providers in the Federal
IDR process. One commenter recommended against using a methodology to
calculate the administrative fee amount that did not consider the
increased financial burdens on providers compared to plans and issuers.
Another commenter stated that the proposed administrative fee amount
prioritizes the interest of certified IDR entities and the Departments
in covering their costs at the expense of parties' access to the
Federal IDR process.
Similarly, some commenters stressed that it is important to keep
the administrative fee amount low to prevent the administrative fee
from serving as a de facto barrier to the Federal IDR process. These
commenters asserted that such a de facto barrier would not align with
congressional intent, as Congress decided against adding a dollar-value
threshold to the No Surprises Act despite considering this while
developing the legislation. Several commenters raised concerns that
reducing access to the Federal IDR process would reduce providers'
reimbursements for out-of-network services, as it would not be cost-
effective to dispute certain payment amounts in the Federal IDR
process. Some commenters asserted that a cost-prohibitive
administrative fee amount would reduce incentives for plans and issuers
to negotiate fair in-network contracts or, in some cases, renew
contracts, forcing providers out of networks.
A few commenters suggested that patients would also be impacted by
the increased administrative fee amount, either through plans and
issuers narrowing provider networks or increasing premiums and cost-
sharing amounts, or providers passing on costs to patients or going out
of business. However, several commenters noted that the proposed fee
amount was an improvement from the previous $350 amount.
For reasons described throughout this preamble, the Departments are
finalizing the administrative fee amount for disputes initiated on or
after the effective date of these rules as $115 per party per dispute.
This change in the administrative fee amount between the proposed and
final rules reflects modifications to the estimated expenditures and to
the administrative fee methodology described elsewhere in this
preamble.
While the Departments are statutorily required to set the
administrative fee amount such that the total amount of administrative
fees paid is estimated to be equal to the amount of expenditures
estimated to be made by the Departments in carrying out the Federal IDR
process, the Departments acknowledge the concerns of commenters related
to accessibility and affordability of the Federal IDR process and the
impact of the proposed administrative fee amount on the parties and
patients. In the Departments' effort to balance their statutory
obligations with the priority of ensuring equitable access for parties
to engage in the Federal IDR process, the Departments proposed in the
IDR Operations proposed rules to reduce the administrative fee amount
in certain circumstances. In the IDR Operations proposed rules, the
Departments proposed to reduce the administrative fee amount to $75 (50
percent of the full administrative fee amount proposed in those
proposed rules) for both parties when the highest offer by either party
in open negotiation was less than the full administrative fee amount
($150 as proposed in those proposed rules) \110\ and to $30 (20 percent
of the full administrative fee amount proposed in those proposed rules)
for non-initiating parties in ineligible disputes.\111\ The Departments
also proposed in the IDR Operations proposed rules to revise the
requirements for batching qualified IDR items and services together
into a single Federal IDR process dispute.\112\ The Departments
anticipate that these proposals would make the Federal IDR process more
accessible for all parties, but especially the parties for whom
commenters expressed concerns, such as small and rural providers and
certain medical specialties.
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\110\ 88 FR 75799.
\111\ 88 FR 75800.
\112\ 88 FR 75783 through 75791.
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The administrative fee amount being finalized in these final rules
is applied equally to both parties to a dispute. The Departments are of
the view that it would be inequitable to charge a smaller party a lower
administrative fee, because a dispute initiated by a smaller party
costs the Departments the same amount to process as a dispute initiated
by a larger party. Furthermore, the value of a dispute, rather than the
size of the party, determines whether it will be cost-effective for the
party to pursue the dispute. For example, a smaller party could
initiate a high dollar value dispute, while a larger party could
initiate a small dollar value dispute. The Departments proposed in the
IDR Operations proposed rules to charge both parties a reduced
administrative fee when the highest offer made during open negotiation
is less than the full administrative fee amount,\113\ which is intended
to improve the accessibility of the Federal IDR process for parties to
low-dollar disputes. The Departments anticipate that such parties may
be smaller providers and facilities or independent practices. However,
larger parties to low-dollar disputes would not be precluded from
paying the reduced administrative fee as long as the dispute meets the
aforementioned requirement.
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\113\ 88 FR 75799.
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The Departments considered the impact of the proposed $150
administrative fee amount on the parties compared to the current $50
administrative fee amount and the previous $350 administrative fee
amount. While the Departments understand that it may be economically
infeasible to initiate some claims in the Federal IDR process due to
the administrative and certified IDR entity fees associated with
accessing the process, as discussed previously, the Departments are
statutorily obligated to
[[Page 88509]]
charge an administrative fee amount such that the administrative fees
paid are estimated to be equal to the amount of expenditures estimated
to be made by the Departments in carrying out the Federal IDR
process.\114\ The methodology used by the Departments is derived from
this statutory language.
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\114\ Section 9816(c)(8)(B) of the Code, section 716(c)(8)(B) of
ERISA, and section 2799A-1(c)(8)(B) of the PHS Act.
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Congress did not include a dollar-value threshold for Federal IDR
process disputes in the No Surprises Act. Rather, Congress opted to
include a requirement in the No Surprises Act for each party to a
dispute for which a certified IDR entity is selected to pay to the
Departments, at such time and in such manner as specified by the
Departments, a fee for participating in the Federal IDR process.\115\
Therefore, regardless of the administrative fee amount, disputing
parties must always evaluate whether it would be economically efficient
to initiate a dispute in the Federal IDR process. Congress also
provided in the No Surprises Act that the administrative fee amount is
established by the Departments in a manner such that the total amount
of fees paid for such year is estimated to be equal to the amount of
expenditures estimated to be made by the Departments for such year in
carrying out the Federal IDR process.\116\
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\115\ Section 9816(c)(8)(A) of the Code, section 716(c)(8)(A) of
ERISA, and section 2799A-1(c)(8)(A) of the PHS Act.
\116\ Section 9816(c)(8)(B) of the Code, section 716(c)(8)(B) of
ERISA, and section 2799A-1(c)(8)(B) of the PHS Act.
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In regard to comments stating that the administrative fee could
result in narrowing networks, many factors may impact whether a
provider, facility, or provider of air ambulance services and a plan or
issuer will enter a network agreement with one another, including the
market power of each party, Federal and State network adequacy laws,
and other factors. The Departments acknowledge that the amount paid for
out-of-network services is one of the factors that impacts market
participants' decisions whether to enter network agreements. The No
Surprises Act represents a substantial change to the way the parties
come to agreement on payment for out-of-network services by
prohibiting, in many circumstances, the practice of sending surprise
medical bills to patients and establishing a Federal IDR process for
determining the appropriate out-of-network rate. Many providers report
that initial payments made by plans and issuers for out-of-network
services are now substantially lower than such payments were before
enactment of the No Surprises Act. Some providers report that plans'
and issuers' abilities to make lower payments for out-of-network
services has impacted their willingness to offer acceptable in-network
payment rates in network agreement negotiations. To the extent that the
Federal IDR process and the prohibition on surprise medical billing
change this equilibrium among parties, they could impact the number of
providers and plans and issuers that are able to agree on terms for
entering a network agreement and consequently network breadth.
In the IDR Operations proposed rules, the Departments are proposing
a number of steps to accelerate throughput in the Federal IDR
process,\117\ which would make it easier for the parties to use the
process to determine the appropriate payment amount for out-of-network
services. That said, the appropriate payment rate for out-of-network
services is only one factor among many that influences network breadth.
It is also important for the parties to meaningfully engage in open
negotiation to determine an appropriate out-of-network payment rate,
since agreeing to rates in open negotiation allow the parties to avoid
the costs of using the Federal IDR process. Even as the Federal IDR
process becomes faster and more parties avail themselves of the
opportunity to agree to out-of-network payment rates during the open
negotiation period, the price paid for out-of-network services will
remain one among many factors in a dynamic market. Furthermore, the
Departments anticipate that a Federal IDR process with consistent
payment determination outcomes will lead to fewer dispute initiations,
because parties will have a better understanding of what a
determination will likely be and more disputes would likely be settled
in open negotiation or even earlier, resulting in the parties avoiding
the costs associated with the Federal IDR process.
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\117\ 88 FR 75744.
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The Departments also do not anticipate that the policies finalized
in these rules would cause plans and issuers to increase premiums, as
further discussed in section IV.G of this preamble, or patient cost
sharing, because administrative fees paid would likely represent a very
small percentage of the costs considered by plans and issuers in
calculating annual premiums or cost sharing.
Many commenters emphasized the importance of considering the
proposed administrative fee amount alongside batching requirements to
determine whether the administrative fee amount would be cost-
prohibitive. Some commenters suggested that batching policies could
mitigate the financial challenges providers and facilities face,
especially when pursuing low-dollar claims. A few commenters suggested
it was premature to update the administrative fee amount or provide
feedback on a proposed amount until batching guidance is updated. One
commenter viewed an administrative fee of $150 per party as reasonable
so long as a claim is defined as an episode of care or a single medical
encounter in the batching policy.
The Departments are continuing to assess batching flexibilities and
the impact of batching on various parts of the Federal IDR process. To
further improve batching requirements, the Departments proposed
provisions in the IDR Operations proposed rules \118\ that would allow
for more clarity, certainty, and flexibility in batching multiple items
or services in a single dispute.\119\ These batching proposals are
designed so that the expenses of engaging in the Federal IDR process,
including the administrative fee, do not unreasonably impede parties'
access to the Federal IDR process. As previously mentioned, the IDR
Operations proposed rules \120\ also proposed a reduced administrative
fee for low-dollar disputes, identified as disputes for which the
highest offer by either party in open negotiation was less than the
administrative fee amount, which, if finalized, would mitigate
financial burden on providers and facilities when pursuing payment on
low-dollar claims. The Departments encourage interested parties to
submit comments on the IDR Operations proposed rules prior to the
comment deadline.\121\
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\118\ 88 FR 75744.
\119\ On November 28, 2023, the Departments released FAQs
pertaining to batching that will be effective until the IDR
Operations proposed rules are finalized and take effect. These FAQs
discuss how, in light of the TMA IV and TMA III opinions and orders,
the batching requirements of the No Surprises Act apply to qualified
IDR items and services for disputes eligible for initiation of the
Federal IDR process on or after August 3, 2023, until the
Departments engage in future notice and comment rulemaking. See U.S.
Department of Health and Human Services, U.S. Department of Labor,
U.S. Department of Treasury, Office of Personnel Management
(November 28, 2023), FAQs about Consolidated Appropriations Act,
2021 Implementation Part 63, available at https://www.cms.gov/files/document/faqs-part-63.pdf.
\120\ Id.
\121\ As discussed earlier in this preamble section, the
Departments were unable to propose these operational policies in the
IDR Fees proposed rules because they are more comprehensive than the
fee-related policies proposed in the IDR Fees proposed rules and
require more time to develop and implement if finalized. There is an
urgency to publish these final rules due to the need to sufficiently
fund the Federal IDR process in 2024.
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[[Page 88510]]
While the Departments continue to consider improvements to the
Federal IDR process, including policies surrounding batching and low-
dollar claims, the No Surprises Act requires that the administrative
fee be estimated to cover the expenditures estimated to be made by the
Departments in carrying out the Federal IDR process in the year, and
the Departments estimate that $115 per party per dispute is the
appropriate administrative fee amount to meet this requirement for
disputes initiated on or after the effective date of these rules.
B. Certified IDR Entity Fee Ranges
Under current regulations at 26 CFR 54.9816-8T(e)(2)(vii), 29 CFR
2590.716-8(e)(2)(vii), and 45 CFR 149.510(e)(2)(vii), the certified IDR
entity fees for single and batched determinations are set by the
certified IDR entities within the upper and lower limits of ranges for
each as set forth in guidance issued annually by the Departments.
In the IDR Fees proposed rules, the Departments proposed to amend
the provisions of the regulations establishing the ranges for certified
IDR entity fees for single and batched disputes to establish the ranges
in notice and comment rulemaking, rather than in guidance, at 26 CFR
54.9816-8(e)(2)(vii), 29 CFR 2590.716-8(e)(2)(vii), and 45 CFR
149.510(e)(2)(vii). Further, the IDR Fees proposed rules provided that,
consistent with current rules, certified IDR entities must annually
provide a fixed fee for single determinations and separate fixed fees
for batched determinations within the upper and lower limits for each
as set in notice and comment rulemaking. Additionally, the IDR Fees
proposed rules provided that the certified IDR entity fee ranges
established by the Departments in rulemaking would remain in effect
until new certified IDR entity fee ranges are established by notice and
comment rulemaking,\122\ allowing the Departments to update the
certified IDR entity fee ranges more or less frequently than annually.
Finally, the Departments proposed that the certified IDR entity or IDR
entity seeking certification may seek advance written approval from the
Departments to update its fees more often than once annually.
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\122\ 88 FR 65888.
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The Departments proposed that for disputes initiated on or after
the later of the effective date of these rules or January 1, 2024,
certified IDR entities would be permitted to charge a fixed certified
IDR entity fee for single determinations within the range of $200 to
$840, unless a fee not within that range is approved by the Departments
pursuant to paragraphs 26 CFR 54.9816-8(e)(2)(vii)(A) and (B), 29 CFR
2590.716-8(e)(2)(vii)(A) and (B), and 45 CFR 149.510(e)(2)(vii)(A) and
(B). The Departments also proposed that for disputes initiated on or
after the later of the effective date of these rules or January 1,
2024, certified IDR entities would be permitted to charge a fixed
certified IDR entity fee for batched determinations within the range of
$268 to $1,173, unless a fee outside this range is approved by the
Departments pursuant to paragraphs 26 CFR 54.9816-8(e)(2)(vii)(A) and
(B), 29 CFR 2590.716-8(e)(2)(vii)(A) and (B), and 45 CFR
149.510(e)(2)(vii)(A) and (B). The Departments proposed to continue to
use a tiered fee structure based on the number of line items within the
batch.\123\ Under the IDR Fees proposed rules, certified IDR entities
would be permitted to charge a fixed tiered fee within the range of $75
to $250 for every additional 25 line items within a batched dispute
beginning with the 26th line item.\124\ The IDR Fees proposed rules
explained the Departments' considerations for proposing the certified
IDR entity fee ranges, which included the anticipated time and
resources needed for certified IDR entities to make payment
determinations meeting the requirements of the statute, rules, and
guidance; the anticipated time and resources needed for data reporting;
the anticipated time and resources needed to comply with audit
requirements; the anticipated volume of Federal IDR initiations and
payment determination quality assessments; the anticipated volume of
Federal IDR initiations ineligible for the Federal IDR process; and the
level of complexity in determining the eligibility of items and
services for the Federal IDR process.\125\ These fee ranges would apply
until another set of fee ranges is proposed and finalized through
notice and comment rulemaking.
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\123\ A tiered fee structure was first proposed in the Calendar
Year 2023 Fee Guidance for the Federal Independent Dispute
Resolution Process under the No Surprises Act and implemented for
all disputes initiated as of January 1, 2023. See Centers for
Medicare & Medicaid Services (October 31, 2022). Calendar Year 2023
Fee Guidance for the Federal Independent Dispute Resolution Process
under the No Surprises Act. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf.
\124\ 88 FR 65888.
\125\ 88 FR 65888 at 65895 through 65896.
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If a certified IDR entity wishes to charge a fee outside either of
these fee ranges, it would continue to follow the existing process for
requesting written approval from the Departments outlined in 26 CFR
54.9816-8(e)(2)(vii)(A) and (B), 29 CFR 2590.716-8(e)(2)(vii)(A) and
(B), and 45 CFR 149.510(e)(2)(vii)(A) and (B).
Since the publication of the IDR Fees proposed rules, the
Departments have analyzed updated data and assumptions as applied to
the factors considered in the IDR Fees proposed rules' preamble to set
the fee ranges, and the Departments found that the results of the
analysis remain the same. The Departments received comments on these
proposals.
The Departments are finalizing as proposed the policy to establish
the certified IDR entity fee ranges through notice and comment
rulemaking, rather than guidance. The Departments are also finalizing
the certified IDR entity fee ranges for single and batched disputes as
proposed. Finally, the Departments are finalizing the fixed tier fee
structure for batched disputes, as well as the range for this
structure, as proposed.
However, after considering the public comments, the Departments are
not finalizing the proposal which would have allowed the Departments to
set the certified IDR entity fee ranges more frequently than annually
but are instead finalizing the proposal with modifications to reflect
that the certified IDR entity fee ranges may be established by the
Departments no more frequently than annually through notice and comment
rulemaking. Further, the Departments are finalizing the proposal that
the certified IDR entity or IDR entity seeking certification may seek
advance written approval from the Departments to update its fees more
often than once annually, with modifications to reflect that in
addition to setting their initial fee for the calendar year, certified
IDR entities may only request approval from the Departments to update
their fees one additional time per year, and with additional non-
substantive modifications for readability. Finalizing this policy would
result in a process where the certified IDR entity or IDR entity
seeking certification sets their fixed fees for single and batched
determinations for the year, and then is allowed one opportunity at any
point during the calendar year to update their fixed fees, provided
that their request is approved by the Departments.
[[Page 88511]]
Many commenters supported the proposal to establish the certified
IDR entity fee ranges through notice and comment rulemaking. Several
commenters noted that establishing the certified IDR entity fee ranges
through notice and comment rulemaking would increase transparency and
allow interested parties to provide feedback that would help the
Departments appropriately adjust the fee ranges. Many commenters
expressed opposition to the Departments' proposal to establish the
certified IDR entity fee ranges more or less frequently than annually.
The majority of these commenters encouraged the Departments to update
the certified IDR entity fee ranges only once annually to create a more
predictable and stable Federal IDR process. Several commenters
expressed concern that changing the certified IDR entity fee ranges
more frequently than once annually would prevent providers from
effectively budgeting for participation in the Federal IDR process,
which would create a barrier to access. A few commenters noted that
unpredictable changes to the certified IDR entity fee ranges could
impact plans' and issuers' abilities to budget for the Federal IDR
process and could lead plans and issuers to budget more conservatively
and pass on the cost increase to consumers.
A few commenters generally supported the flexibility to update the
certified IDR entity fee ranges more or less frequently than annually.
However, one commenter supported the proposed flexibility only if the
Departments adjusted the fee ranges less frequently than annually,
while another commenter supported the proposed flexibility if the
Departments provided adequate notice, such as 90 days, before
implementing the changed fee ranges. Further, several commenters
opposed the proposal to allow certified IDR entities or IDR entities
seeking certification to seek advance written approval from the
Departments to set their certified IDR entity fees more often than
annually. Similar to the proposal to establish the certified IDR entity
fees through notice and comment rulemaking more or less frequently than
annually, some commenters expressed concerns that the proposed policy
would cause unpredictability for the parties, which would impact their
ability to effectively budget for the Federal IDR process. One
commenter misinterpreted the proposed policy as proposing to require
certified IDR entities to adjust their fees whenever operational or
technological efficiencies could justify a decrease in cost, and
expressed concern that the proposed policy may discourage certified IDR
entities from participating in the Federal IDR process. One commenter
opposed multiple fee adjustments within a given year but supported
allowing certified IDR entities a limit of one additional fee
adjustment per year following a compelling request and formal approval.
The Departments agree with commenters that the proposal to
establish the certified IDR entity fee ranges through notice and
comment rulemaking will improve transparency and provide opportunity
for greater engagement by interested parties in the establishment of
the ranges. The Departments recognize commenters' concerns that the
proposed flexibility to set the certified IDR entity fee ranges through
notice and comment rulemaking more or less frequently than annually
would enable multiple changes to the certified IDR entity fee ranges
over the course of a year. In general, the Departments recognize that
frequent changes to the established certified IDR entity fee ranges
could increase unpredictability in the Federal IDR process and
potentially burden parties, but note that they did not propose this
policy with the intention of pursuing such frequent changes. The
Departments contemplated establishing this proposed flexibility so that
the certified IDR entity fee ranges could remain effective for multiple
years. Further, updating the certified IDR entity fee ranges does not
guarantee that certified IDR entities will set new fixed fee amounts.
Each certified IDR entity determines their fee amounts independently,
and there is no requirement to make a corresponding adjustment each
time the certified IDR entity fee ranges established by the Departments
change, provided the certified IDR entity's fee stays within the new
range.
While it would be unlikely that the Departments would pursue
multiple notice and comment rulemakings in a single year to adjust the
certified IDR entity fee ranges, the Departments acknowledge the
potential for the proposed policy to increase uncertainty within the
Federal IDR process. Therefore, to be responsive to commenters'
concerns, the Departments are finalizing this proposal with
modifications to reflect that the certified IDR entity fee ranges may
be established no more frequently than once per calendar year. This
allows the certified IDR entity fee ranges to remain effective over
multiple years until they are updated in notice and comment rulemaking,
while addressing commenters' concerns by preventing multiple
adjustments of the certified IDR entity fee ranges in a single year.
The Departments acknowledge that frequent increases to certified
IDR entity fees could lead to unpredictability and complicate the
ability of the parties to effectively budget for the Federal IDR
process. The Departments are of the view that the proposed mechanism
for certified IDR entities to request to set their fees more than once
annually includes sufficient guardrails to ensure that any changes to
the certified IDR entities' fees would not prevent parties from
accessing the Federal IDR process. Specifically, the Departments
proposed to require certified IDR entities to submit the following
information to the Departments in their requests: (1) the fixed fee
that the certified IDR entity is seeking to charge; (2) a description
that reasonably explains the circumstances that require a change to its
fee; and (3) a detailed description that reasonably explains how the
change to its fee will be used to mitigate the effects of these
circumstances. The Departments would use their discretion to determine
if the explanations included in the request demonstrate that the change
would ensure the certified IDR entity's financial viability and would
not impose on parties an undue barrier to accessing the Federal IDR
process.
The Departments seek to strike a balance between predictable fees
for parties participating in the Federal IDR process and certified IDR
entities' need for flexibility to respond to circumstances that require
fee adjustments to maintain program operations. For example, the
Departments acknowledge that certified IDR entities consider various
factors, including operational costs, in setting fees for the Federal
IDR process. However, certified IDR entities have needed to increase
staff resources, implement system updates, and adjust operations to
respond to unexpectedly frequent changes to guidance or regulations
governing the Federal IDR process or the volume of disputes initiated
and closed under the Federal IDR process. To ensure that certified IDR
entities have sufficient funding to respond to such circumstances,
providing certified IDR entities with the ability to request an update
to their fees one additional time during a calendar year is
appropriate.
To address some of the concerns expressed by commenters, the
Departments are finalizing this proposal with modifications to reflect
that certified IDR entities may only request approval from the
Departments to set their fee one additional time for a
[[Page 88512]]
calendar year. In other words, if a certified IDR entity wishes to
update its fees an additional time after already setting fees for the
calendar year, the certified IDR entity must seek approval from the
Departments to do so. A certified IDR entity may set its fees at most
two times for a calendar year, once at the initial setting of the fees,
and once after receiving approval from the Departments to update the
fees, regardless of whether the Departments have established new
certified IDR fee ranges in notice and comment rulemaking. If the
Departments reject a certified IDR entity's request to update its fees
during the calendar year, the certified IDR entity may continue to seek
approval by submitting subsequent requests as long as these requests
comply with the requirements finalized in this rule.
If a certified IDR entity requests to update its fees after
initially setting its fee for the calendar year, and the request is
approved by the Departments, the change to its fees will be made public
before those fees are effective, in a form and manner specified by the
Secretary, to allow the parties time to consider the fee change in
their decision making. Updated fees will apply to disputes initiated on
or after the effective date of the fee amount. The modified policy will
provide an appropriate amount of flexibility to certified IDR entities
to make a fee adjustment to account for efficiencies and fluctuations
in the conditions of the Federal IDR process in future years, while
also capping the number of fee adjustments in a given calendar year and
limiting cost volatility for parties participating in the Federal IDR
process.
The Departments solicited comment on whether they should apply an
inflationary adjustment, such as the CPI-U, to the considerations used
to develop the certified IDR entity fee ranges in future years. One
commenter supported the use of an inflationary adjustment and suggested
updating the certified IDR entity fee ranges annually based on
inflation rather than through notice and comment rulemaking. A few
commenters opposed updating the certified IDR entity fee ranges using
an inflationary adjustment such as the CPI-U. Specifically, one
commenter posited that since the CPI-U is updated on a monthly basis,
the Departments might pursue monthly adjustments to the certified IDR
entity fee ranges, which would severely complicate the Federal IDR
process. Another commenter expressed concern that applying an
inflationary adjustment would only drive costs up over time, prompting
plans and issuers to pass any additional costs on to consumers. One
commenter neither explicitly supported nor opposed the general use of
an inflationary adjustment to set the certified IDR entity fee ranges
but noted that setting the certified IDR entity fee ranges through
notice and comment rulemaking could be an opportunity to adjust based
on inflation. This commenter cautioned that if the Departments pursued
the use of an inflationary adjustment, such an adjustment should be the
only consideration used to update the certified IDR entity ranges.
The Departments appreciate the comments on the use of an
inflationary adjustment to update the certified IDR entity fee in
future years. The Department share the commenters' desire to maintain
predictable and accessible costs for participating in the Federal IDR
process and agree that additional adjustments to the fee ranges more
frequently than annually would complicate the Federal IDR process for
all parties. As stated earlier in this preamble, based on the comments
received, the Departments are finalizing the proposal to establish the
certified IDR entity fee ranges through notice and comment rulemaking,
which will allow for greater transparency and feedback related to the
establishment of the ranges. Further, the Departments are of the view
that the considerations being finalized in this rulemaking are
necessary to develop reasonable certified IDR entity fee ranges, and
that the addition of inflationary adjustment to the considerations, or
the exclusive use of an inflationary adjustment to develop the ranges,
is not practical or necessary at this time. The Departments will
continue to carefully consider whether such a policy may be appropriate
in future rulemaking.
Several commenters expressed concerns with the proposed certified
IDR entity fee ranges' increased upper limits. Some of these commenters
stated that the proposed certified IDR entity fee ranges may be cost-
prohibitive and limit access to the Federal IDR process, particularly
for small providers. A few of the commenters opposed to the proposed
increase in the upper limits of the certified IDR entity fee ranges
asserted that any increase in the certified IDR entity fee ranges would
limit participation in the Federal IDR process. Specifically, one of
these commenters asserted that the proposed ranges would result in
costs passed on to patients in the form of increased premiums and cost-
sharing amounts.
Some commenters, however, supported the proposed certified IDR
entity fee ranges. Some of these commenters asserted that the increase
to the upper limit of the certified IDR fee ranges is reasonable and
will encourage greater plan and issuer participation prior to the
Federal IDR process, such as during open negotiation, and will reduce
the time needed for certified IDR entities to render payment
determinations.
The Departments maintain the view that the proposed certified IDR
entity fee ranges will keep costs reasonable such that participating in
the Federal IDR process will not be cost-prohibitive, including for
smaller providers, while also ensuring that certified IDR entities are
able to cover their operating costs and continue participating in the
Federal IDR process. The Departments acknowledge that broadening the
certified IDR entity fee ranges could have an impact on the cost to
parties to engage in the Federal IDR process. However, the current
range of fees charged by certified IDR entities reflects that, since
the opening of the Federal IDR process, certified IDR entities do not
all charge the same fees, nor do they all charge the maximum fee amount
in the ranges set by the Departments.\126\ To remain competitive, the
certified IDR entities have an incentive to charge fees on the lower
end of the established range. As a result, the Departments do not
believe that an increase to the upper limits of the certified IDR
entity fee ranges will result in drastic increases to the fees charged
by certified IDR entities. Further, the Departments have not seen any
data suggesting that the proposed increases to the certified IDR entity
fee ranges will result in a substantial enough increase in costs to
plans and issuers that they will impact patients in the form of
increased premiums and cost-sharing amounts. However, the Departments
will continue to monitor this dynamic.
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\126\ See https://www.cms.gov/nosurprises/help-resolve-payment-disputes/certified-idre-list.
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The Departments agree with commenters asserting that the increases
to the certified IDR entity fee ranges will encourage greater plan and
issuer participation prior to the Federal IDR process, such as during
open negotiation. The Departments believe that the increases to the
certified IDR entity fee ranges will encourage parties to actively
participate in open negotiation to preclude the need for the Federal
IDR process, thereby eliminating the need for parties to pay the
certified IDR entity fee.
The Departments emphasize that while they establish ranges for the
certified IDR entity fees, certified IDR entities choose the fixed fees
they
[[Page 88513]]
charge for single and batched determinations based on a number of
factors. As noted earlier in this preamble, certified IDR entities have
needed to make numerous adjustments in response to high volumes of
disputes, complex determinations, and litigation resulting in changes
to guidance and regulations governing the Federal IDR process. The
proposed ranges for the single and batched determination fees,
including the proposed range for the tiered fee for batched
determinations, allow for appropriate compensation corresponding to the
complexity and effort associated with making eligibility and payment
determinations. The Departments remain of the view that the proposed
ranges would keep costs for participating in the Federal IDR process
reasonable and reduce the potential for increased costs to be passed on
to patients.
Several commenters opposed the proposed tiered fee structure for
batched determinations. Commenters were concerned that the proposed
tiered fee structure would be cost-prohibitive, particularly due to the
absence of a limitation on the number of line items considered in the
price tiers (that is, no line item cap to the application of the tiered
fee, as currently exists). Further, some commenters asserted that the
proposed tiered fee structure and range would disincentivize the
submission of batched disputes.
A few commenters supported an increased fee for larger batched
determinations but recommended that the tiering structure reflect
intervals of 50 line items rather than 25. Further, one commenter
supported a fixed-dollar tiered fee, as opposed to a range, suggesting
that a fixed-dollar fee would provide more consistency across the fees
charged by different certified IDR entities and avoid potential issues
such as certified IDR entities being overwhelmed with disputes and
resulting delays in the Federal IDR process.
The proposed tiered fee structure and range reflect the
Departments' intent to keep the costs of participating in the Federal
IDR process affordable while ensuring that certified IDR entities are
compensated for their work in rendering payment determinations on
complex batched disputes. Certified IDR entities have indicated to the
Departments that making determinations on large batches of dissimilar
items and services is particularly complex and burdensome and that they
generally do not realize economies of scale as the number of batched
line items increases. The Departments considered the impact of the TMA
IV opinion and order as discussed in section I.C of this preamble on
the anticipated complexity and volume of batched disputes while
determining the certified IDR entity fee ranges. The Departments
acknowledge the efficiencies gained by batching and believe that the
proposed tiered fee structure would maintain those efficiencies while
allowing certified IDR entities to charge a reasonable fee for the
level of work involved in batched determinations.
Several commenters stated that the proposed tiered fee structure
might increase the costs to disputing parties submitting batched
disputes with many line items because there is no cap to the number of
line items within a batched dispute after which the tiered fee would no
longer apply.
A tiered fee selected by each certified IDR entity from a dollar
range established by the Departments allows for greater flexibility, as
opposed to applying a standard fixed dollar amount or applying a
percentage of the certified IDR entity's batched determination fee as
is currently used.\127\ The tiered fee range reflects the costs
associated with increasing line items in a batched dispute and provides
certified IDR entities the appropriate flexibility to set fees
commensurate with their costs. Additionally, the Departments believe
that a dollar range based on the number of line items in a batched
dispute would provide transparent and consistent pricing for both
parties and certified IDR entities. The Departments agree that
instances of batched disputes with exceedingly high numbers of line
items occur infrequently but remain a possible occurrence. In addition,
as mentioned previously, certified IDR entities have indicated that
they generally do not realize economies of scale for batched disputes
with high numbers of line items. For instance, certified IDR entities
often need to verify the acuity of every patient in a batch, even when
the service is the same. Given the anticipated infrequency of batched
disputes with exceedingly high numbers of line items and in recognition
of the need for the certified IDR entity to cover its costs for such
batched disputes, the Departments believe the tiered fee structure is a
reasonable approach.
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\127\ See Centers for Medicare & Medicaid Services (December 23,
2022). Amendment to the Calendar Year 2023 Fee Guidance for the
Federal Independent Dispute Resolution Process under the No
Surprises Act: Change in Administrative Fee. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/amended-cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf.
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The Departments also considered whether certified IDR entities
should be permitted to charge only an additional fixed dollar amount
(for example, $125, $150, $200, etc.) per every additional 25 line
items but determined that the proposed range for a tiered fee would
provide the appropriate operational flexibility for certified IDR
entities. Providing this flexibility is important to maintain
participation of certified IDR entities in the Federal IDR process. The
operational costs for the Federal IDR process incurred by each
certified IDR entity may vary, requiring certified IDR entities to
consider their unique circumstances in determining their fixed fee
amounts to maintain financial viability. Therefore, allowing certified
IDR entities to select a tiered fee within a dollar range established
by the Departments will allow the certified IDR entities the
flexibility to tailor their pricing to fit their company's needs, while
ensuring reasonable costs for parties participating in the Federal IDR
process.
For the purposes of the batched tiered fee range intervals, the
Departments considered whether a grouping of 50 line items would be a
more appropriate interval than the proposed interval of 25 line items.
A few commenters suggested that 50 line items would be a more
appropriate interval than the proposed 25-line-item increment. In
determining the interval appropriate for the tiered fee range for
batched determinations, the Departments considered historical trends in
the number of line items submitted in batched disputes in addition to
the anticipated changes in batching behaviors due to the TMA IV vacatur
of certain batching provisions. The Departments remain of the view that
a 25-line-item increment is the most reasonable increment to balance
the affordability to parties and the amount of resources expended by
the certified IDR entities to review those line items. As a result, the
Departments are finalizing this policy as proposed.
III. Severability
In the event that any portion of these final rules is declared
invalid, the Departments intend that the various aspects of the
finalized administrative fee provisions and certified IDR entity fee
provisions be severable. The Departments proposed at 26 CFR 54.9816-
8(d)(3)(i), 29 CFR 2590.716-8(d)(3)(i), and 45 CFR 149.510(d)(3)(i)
that any provision of paragraph (d) or paragraphs (e)(2)(vii) through
(e)(2)(ix) held to be invalid or unenforceable as applied to any person
or circumstance would be construed so as to continue to give the
maximum effect to the provision permitted by law, including as applied
to persons not similarly
[[Page 88514]]
situated or to dissimilar circumstances, unless such holding is that
the provision of these paragraphs is invalid and unenforceable in all
circumstances, in which event the provision would be severable from the
remainder of these paragraphs and would not affect the remainder
thereof. The Departments further proposed at new 26 CFR 54.9816-
8(d)(3)(ii), 29 CFR 2590.716-8(d)(3)(ii), and 45 CFR 149.510(d)(3)(ii)
that the provisions in paragraphs (d) and (e)(2)(vii) through (ix) are
intended to be severable from each other. Additionally, the Departments
further proposed that if a court were to find unlawful the
administrative fee policies, the certified IDR entity fee policies
should stand. In the alternative, if a court were to find unlawful the
certified IDR entity fee policies, the administrative fee policies
should stand.
A few commenters supported the proposed severability provisions.
These commenters stated that the provisions would help mitigate
uncertainty that may result from future court decisions if a lawsuit
occurs.
The Departments agree that the severability clause will help
mitigate uncertainty. After considering the comments, the Departments
are finalizing these policies as proposed, with a technical
modification that the provisions in 26 CFR 54.9816-8(d) and (e)(2)(vii)
and (viii), 29 CFR 2590.716-8(d) and (e)(2)(vii) and (viii), and 45 CFR
149.510(d) and (e)(2)(vii) and (viii) are intended to be severable,
rather than 26 CFR 54.9816-8(d) and (e)(2)(vii) through (ix), 29 CFR
2590.716-8(d) and (e)(2)(vii) through (ix), and 45 CFR 149.510(d) and
(e)(2)(vii) through (ix). This technical modification is due to the
restructuring of the regulatory text in these final rules pertaining to
certified IDR entity fees at 26 CFR 54.9816-8(e)(2)(vii) and (viii), 29
CFR 2590.716-8(e)(2)(vii) and (viii), and 45 CFR 149.510(e)(2)(vii) and
(viii) compared to what was proposed, as discussed further in section
II.B of this preamble.
The Departments further clarify their intent that the methodology
being adopted here to set the administrative fee amount and the
considerations the Departments used in developing the certified IDR
entity fee ranges are also intended to be severable. Should any aspect
of the methodology or considerations be determined to be unlawful, the
Departments intend for the administrative fee amount or certified IDR
entity fee ranges to be adjusted by applying the methodology in
accordance with the remaining elements of the methodology or
considerations. For instance, if it is determined that certain
expenditures should not have been included in calculating the
administrative fee amount, then the Departments would implement these
rules by eliminating those expenditures from the total expenditures
estimated to be made by the Departments in carrying out the Federal IDR
process, and dividing the new expenditures amount by the same estimated
number of administrative fees paid to calculate the new administrative
fee amount. The resulting administrative fee amount would be
immediately effective, without requiring additional notice and comment
rulemaking.
IV. Economic Impact and Paperwork Burden
A. Summary--Departments of Health and Human Services and Labor
These final rules establish the administrative fee amount and the
certified IDR entity fee ranges in notice and comment rulemaking, and
the preamble sets forth the methodology for setting the administrative
fee amount and the considerations used to develop the certified IDR
entity fee. The Departments have examined the effects of these final
rules as required by Executive Order 13563 (76 FR 3821, January 21,
2011, Improving Regulation and Regulatory Review); Executive Order
12866 (58 FR 51735, October 4, 1993, Regulatory Planning and Review);
Executive Order 14094 (88 FR 21879, April 11, 2023, Modernizing
Regulatory Review); the Regulatory Flexibility Act (Pub. L. 96-354,
September 19, 1980); section 1102(b) of the Social Security Act (42
U.S.C. 1102(b)); section 202 of the Unfunded Mandates Reform Act of
1995 (Pub. L. 104-4, March 22, 1995); and Executive Order 13132 (64 FR
43255, August 10, 1999, Federalism).
B. Executive Orders 12866, 13563, and 14094--Departments of Health and
Human Services and Labor
Executive Orders 12866, 13563, and 14094 direct Federal agencies to
assess all costs and benefits of available regulatory alternatives and
if regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity).
Under Executive Order 12866, ``significant'' regulatory actions are
subject to review by the Office of Management and Budget (OMB).
Executive Order 14094, entitled ``Modernizing Regulatory Review''
(hereinafter, the Modernizing E.O.), amends section 3(f) of Executive
Order 12866 (Regulatory Planning and Review). The amended section 3(f)
of Executive Order 12866 defines a ``significant regulatory action'' as
an action that is likely to result in a rule: (1) having an annual
effect on the economy of $200 million or more in any 1 year (adjusted
every 3 years by the Administrator of OMB's Office of Information and
Regulatory Affairs (OIRA) for changes in gross domestic product), or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, territorial, or tribal governments
or communities; (2) creating a serious inconsistency or otherwise
interfering with an action taken or planned by another agency; (3)
materially altering the budgetary impacts of entitlement grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raising legal or policy issues for which centralized
review would meaningfully further the President's priorities or the
principles set forth in this Executive order, as specifically
authorized in a timely manner by the Administrator of OIRA in each
case.
A regulatory impact analysis (RIA) must be prepared for rules
deemed significant. OMB's OIRA has deemed this rule significant. The
Departments have prepared an RIA that to the best of their ability
presents the costs and benefits of these rules. OMB has reviewed these
final regulations, and the Departments have provided the following
assessment of their impact.
C. Need for Regulatory Action--Departments of Health and Human Services
and Labor
The Departments are amending the certified IDR entity and
administrative fee provisions of the rules for the Federal IDR process
to set the administrative fee amount and the certified IDR entity fee
ranges in notice and comment rulemaking, and set forth the methodology
for setting the administrative fee amount and the considerations for
developing the certified IDR entity fee ranges. These policies will
ensure that all interested parties are sufficiently notified and
provided an opportunity to comment on the fees associated with the
Federal IDR process.
D. Summary of Impacts and Accounting Table--Departments of Health and
Human Services and Labor
The expected benefits and costs of these final rules are summarized
in Table 1 and discussed in this section of the preamble. In accordance
with OMB Circular A-4, Table 1 depicts an
[[Page 88515]]
accounting statement summarizing the Departments' assessment of the
benefits, costs, and transfers associated with this regulatory action.
The Departments are unable to quantify all benefits and costs of these
final rules but have sought, where possible, to describe these non-
quantified impacts. The effects in Table 1 reflect non-quantified
impacts and estimated direct monetary costs resulting from the
provisions of these final rules.
[GRAPHIC] [TIFF OMITTED] TR21DE23.000
1. Benefits
The primary benefit of these final rules is to allow the Federal
IDR process to function through establishing the administrative fee
amount and certified IDR entity fee ranges in rulemaking and
establishing the amounts of these fees for disputes initiated on or
after the effective date of these rules. In response to the opinion and
order in TMA IV, these final rules are necessary in order to set the
administrative fee amount as close to January 1, 2024 as possible,
because the current $50 administrative fee amount is insufficient to
satisfy the statutory requirement that the total amount of fees paid
for the year be estimated to be equal to the amount of expenditures
estimated to be made by the Departments in carrying out the Federal IDR
process. The primary non-quantifiable benefit of these final rules is
the continuation of a functioning Federal IDR process, which helps to
protect consumers from certain surprise medical bills and helps
providers to receive compensation for certain out-of-network services.
Additional benefits specific to each Federal IDR process fee type
appear in the following sections.
a. Administrative Fee Amount and Methodology
The Departments are finalizing the proposal to establish the
administrative fee amount in notice and comment rulemaking for disputes
initiated on or after the effective date of these rules, and the
Departments are setting forth the methodology for determining the
administrative fee amount. Utilizing notice and comment rulemaking will
increase transparency of the administrative fee-setting process and
allow interested parties to provide feedback to the Departments prior
to the Departments setting the administrative fee amount.
The Departments sought comment on these benefits. The Departments
received comments on these benefits and respond to these comments in
section II.A of this preamble. The Departments are finalizing these
benefits as proposed.
b. Certified IDR Entity Fee Ranges
The Departments proposed to establish the certified IDR entity fee
ranges for single and batched determinations, which include a tiered
fee range for batched determinations that exceed 25 line items, in
notice and comment rulemaking for disputes initiated on or after the
effective date of these rules. Utilizing notice and comment rulemaking
to set the appropriate ranges for certified IDR entity fees will
increase transparency for parties interested in the certified IDR
entity fee ranges and allow these parties to identify in advance the
impacts of changing the certified IDR entity fee ranges.
The Departments sought comment on these benefits. The Departments
received comments on these benefits and respond to these comments in
section II.B of this preamble. The Departments are finalizing these
benefits as proposed.
[[Page 88516]]
2. Costs
a. Administrative Fee Amount and Methodology
The Departments are finalizing the proposal to establish the
administrative fee amount in notice and comment rulemaking for disputes
initiated on or after the effective date of these rules, and set forth
the methodology for setting the administrative fee amount with
modifications described in section II.A of this preamble to ensure that
disputing and other parties are sufficiently notified and provided an
opportunity to comment on the administrative fee amount. The
Departments are also finalizing the administrative fee amount for
disputes initiated on or after the effective date of these rules at
$115 per party per dispute.
The current administrative fee is $50 per party per dispute.\128\
In the IDR Fees proposed rules, the Departments estimated that
approximately 225,000 disputes are closed per year.\129\ Therefore, if
the current administrative fee were to remain applicable, the
Departments estimated in the IDR Fees proposed rules that the parties
would pay approximately $22.5 million in administrative fees annually
(225,000 disputes x 2 parties per dispute x $50 per party). In the IDR
Fees proposed rules, the Departments also estimated that if they were
to finalize an administrative fee amount of $150 per party per dispute
for disputes initiated on or after the effective date of these rules,
the parties would pay approximately $67.5 million in administrative
fees annually beginning in 2024 (225,000 disputes x 2 parties per
dispute x $150 per party), assuming the number of disputes remains
stable year over year and the administrative fee amount is not
subsequently changed through notice and comment rulemaking. Therefore,
in the IDR Fees proposed rules, the Departments estimated that the
costs associated with this proposal, if finalized, would be
approximately $45 million ($67.5 million if this proposal is finalized
minus $22.5 million if the status quo were to continue).
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\128\ As a result of the opinion and order in TMA IV, which
vacated the portion of the December 2022 guidance that increased the
administrative fee amount to $350 per party per dispute for disputes
initiated during calendar year 2023, the administrative fee amount
reverted to the amount established in the October 2022 guidance. See
Centers for Medicare & Medicaid Services (August 11, 2023). Federal
Independent Dispute Resolution (IDR) Process Administrative Fee
FAQs. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/no-surprises-act-independent-dispute-resolution-administrative-fee-frequently-asked-questions.pdf. Also see Centers
for Medicare & Medicaid Services (October 31, 2022). Calendar Year
2023 Fee Guidance for the Federal Independent Dispute Resolution
Process under the No Surprises Act. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf.
\129\ The details of the calculation of the number of disputes
are provided at 88 FR 65893.
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The Departments sought comment on these costs and assumptions. The
Departments received comments on these assumptions.
Several commenters suggested that the Departments' estimate of
225,000 closed disputes is too low. A few commenters suggested that the
Departments are underestimating utilization of the Federal IDR process
and recommended that the Departments analyze the available data from
States implementing similar policies before the No Surprises Act.
Several commenters disagreed with the assumption used to calculate the
225,000 closed disputes, which assumed that TMA IV's vacatur of
batching regulations and guidance would reduce the volume of disputes
by 25 percent.
As discussed in section II.A of this preamble, after consideration
of comments, the Departments are finalizing the administrative fee
using the estimated total number of administrative fees paid to
certified IDR entities, rather than the projected total number of
closed disputes, to estimate the number of administrative fees to be
paid under the administrative fee methodology. Federal IDR process data
show that the monthly average number of administrative fees paid to
certified IDR entities between February 2023 and July 2023 was 41,000.
The Departments project this monthly average forward by 12 months to
estimate 492,000 administrative fees paid in a year.
After consideration of public comments, the Departments are
modifying the proposed assumptions and cost estimates as follows. If
the current administrative fee were to remain applicable, the parties
would pay approximately $24.6 million in administrative fees annually
(492,000 administrative fees paid x $50 per party per dispute). As
stated in section II.A of this preamble, the estimated $24.6 million in
administrative fee collections if the Departments were to retain the
current $50 administrative fee would be inadequate for the Departments
to carry out the Federal IDR process in 2024, as they estimate the
expenditures to be made in 2024 to be approximately $56.6 million. As
the Departments are now finalizing an administrative fee amount of $115
per party per dispute for disputes initiated on or after the effective
date of these rules, the Departments estimate that the parties will pay
approximately $56.6 million in administrative fees annually beginning
in 2024 (492,000 administrative fees paid x $115 per party per
dispute), which is sufficient to cover the estimated annual
expenditures of approximately $56.6 million, assuming the number of
administrative fees paid remains stable year over year and the
administrative fee amount is not subsequently changed through notice
and comment rulemaking. Therefore, the costs associated with this
policy are approximately $32.0 million ($56.6 million minus $24.6
million if the status quo were to continue).
b. Certified IDR Entity Fee Ranges
The Departments are finalizing the proposal to set the certified
IDR entity fee ranges for single and batched determinations, with a
tiered fee range for batched determinations that exceed 25 line items,
in notice and comment rulemaking for disputes initiated on or after the
effective date of these rules in response to the opinion and order in
TMA IV to ensure that interested parties are sufficiently notified and
provided an opportunity to comment on the certified IDR entity fee
ranges. The certified IDR entity fee range for single determinations
for disputes initiated on or after the effective date of these rules is
$200 to $840. The certified IDR entity fee range for batched disputes
initiated on or after the effective date of these rules is $268 to
$1,173. Further, the tiered fee range for batched determination for
disputes initiated on or after the effective date of these rules is $75
to $250.
While the certified IDR entities are responsible for setting their
fees for single and batched determinations, the Departments acknowledge
that the changes to the certified IDR entity fee ranges may impact the
cost to the parties to participate in the Federal IDR process. The
Departments anticipate that the vacatur of batching standards by the
District Court's opinion and order in TMA IV could result in initiating
parties submitting single and batched disputes in proportions similar
to those prior to the issuance of the August 2022 guidance, which
interpreted the now-vacated standards for batching qualified IDR items
or services. Based on internal data relating to disputes initiated
prior to the establishment of the now vacated batching criteria that
were released in August 2022, approximately 70 percent of disputes at
the time were single disputes and approximately 30 percent were batched
disputes.\130\ The
[[Page 88517]]
Departments anticipate that, as a result of TMA IV, initiating parties
will return to the batching practices they engaged in prior to issuance
of the August 2022 guidance, such as initiating a higher proportion of
batched disputes and including more items or services within those
batched disputes.
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\130\ The Departments estimate that currently approximately 80
percent of disputes are single disputes and 20 percent of disputes
are batched disputes, and the Departments anticipate that this ratio
will return to 70 percent of disputes being single disputes and 30
percent of disputes being batched disputes beginning in calendar
year 2024.
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Based on internal Federal IDR process data, the Departments
estimate that certified IDR entities collect a certified IDR entity fee
for approximately 135,000 disputes annually.\131\ Therefore, for the
purposes of this analysis, the Departments estimate that certified IDR
entities will collect certified IDR entity fees for approximately
94,500 single disputes and 40,500 batched disputes annually (135,000 x
0.70 and 135,000 x 0.30, respectively). The Departments acknowledge
that each party must pay a certified IDR entity fee to the certified
IDR entity no later than the time that party submits its offer.
However, because the non-prevailing party is ultimately responsible for
the full certified IDR entity fee, which is retained by the certified
IDR entity for the IDR services it performed, it is the Departments'
position that providing a per-dispute calculation reasonably captures
the overall cost of the dispute with respect to the certified IDR
entity fee without implicating false precision on the amount of
certified IDR entity fee costs that initiating and non-initiating
parties ultimately may incur.
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\131\ While the administrative fee must be paid by the disputing
party for any dispute for which a certified IDR entity is selected,
the certified IDR entity fee is only assessed for disputes that are
determined eligible for the Federal IDR process.
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To develop a reasonable estimate for the certified IDR entity fee
amount for both single and batched disputes, the Departments assume
that the certified IDR entities will set single determination fixed
fees that approximate the median value of the finalized fee range and
will set batched determination fixed fees that approximate the 3rd
quartile of the finalized fee range.\132\ Therefore, for the purposes
of this analysis, the Departments estimate that the typical single
determination fixed fee (range $200-$840) will be approximately $520,
and that the typical batched determination fixed fee (range $268-
$1,173) will be approximately $947. At an estimated cost of $520 per
single determination for approximately 94,500 single determinations
annually, the Departments estimate that single determinations will cost
disputing parties approximately $49,140,000 annually ($520 x 94,500).
At an estimated cost of $947 per batched determination for
approximately 40,500 batched determinations annually, the Departments
estimate that batched determinations will cost disputing parties
approximately $38,353,500 annually ($947 x 40,500).
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\132\ The Departments anticipate that, due to the uncertainty
around batching practices as a result of the TMA IV opinion and
order, certified IDR entities will likely choose to increase their
batched determination fee. Therefore, using the 75th percentile of
the proposed fee range to calculate the cost of batched
determinations provides a reasonable approximation of the expected
increase.
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Further, the Departments estimate that using the finalized tiered
fee range for batched determinations, certified IDR entities will set
and apply a fixed fee that approximates the average of the proposed
range ($75-$250) for batched determinations based on the number of line
items. The Departments estimate that certified IDR entities will
typically set their tiered fee at approximately $163. The Departments
acknowledge the uncertainty surrounding the number of line items that
may be submitted in batched disputes due to the TMA IV opinion and
order. However, to produce an estimate, and for the purposes of this
analysis, the Departments estimate that of the total estimated 40,500
batched disputes, approximately 4,455 batched determinations will
potentially be subject to at least 2 applications of the tiered fee
($163 x 2 = $326).\133\ The Departments therefore estimate that this
subset of approximately 4,455 batched determinations exceeding 25 line
items will cost disputing parties approximately $1,452,330 annually
($326 x 4,455). In total, assuming the number of disputes remains
stable year over year, the Departments estimate the parties will pay
approximately $89 million in certified IDR entity fees annually in
accordance with the finalized policies ($49,140,000 for single
determinations + $38,353,500 for batched determinations + $1,452,330
for the subset of batched determinations subject to the tiered fee).
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\133\ Based on internal data the Departments estimate that
approximately 11 percent of batched disputes submitted prior to the
establishment of the batching criteria released in August 2022
exceeded 25 line items. For this reason, we project that a similar
number of batched disputes with number of line items exceeding 25
line items will be submitted due to TMA IV.
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The calendar year 2023 certified IDR entity fee ranges for single
determinations and batched determinations are $200-$700 and $268-$938,
respectively. Certified IDR entities currently charge a median fixed
fee of $549 for single determinations and $770 for batched
determinations in 2023. Therefore, for approximately 108,000 single
determinations and 24,840 batched determinations (not subject to the
batched percentage fee amount) annually,\134\ if current certified IDR
entity fixed fees remained applicable, the Departments estimate that
the parties would pay approximately $59,292,000 for single
determinations ($549 x 108,000) and $19,126,800 for batched
determinations ($770 x 24,840). Current guidance permits certified IDR
entities to charge a batching percentage on batched determinations
based on the number of line items.\135\ For the purposes of this
analysis, the Departments assume that a subset of approximately 8
percent of batched determinations, or 2,160 determinations, potentially
subject to the batched percentages would receive at least a 120 percent
increase from the median batched determination fixed fee ($770 x 1.20 =
$924). As such, the Departments estimate that the parties would pay
approximately $1,995,840 for this subset of batched determinations
potentially subject to a batching percentage (2,160 x $924), resulting
in a total cost of approximately $80 million under the current calendar
year 2023 certified IDR entity fee structure ($59,292,000 for single
determinations + $19,126,800 for batched determinations + $1,995,840
for the subset of batched determinations subject to the tiered fee).
Therefore, taking into account the current costs to the parties
associated with the current certified IDR entity fee structure, the
total cost to the parties
[[Page 88518]]
associated with this policy is approximately $9 million ($89 million as
finalized minus $80 million if the status quo fee ranges were to
continue).
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\134\ The Departments estimate that 80 percent of disputes are
single disputes and 20 percent are batched disputes (135,000 x 0.80
and 135,000 x 0.20, respectively). For the purposes of this
analysis, the Departments estimate that a subset of approximately 8
percent, or 2,160 batched disputes would be subject to a batching
percentage (27,000 x 0.08).
\135\ Without the need to seek further approval, to account for
the differential in the workload of batched determinations, a
certified IDR entity may charge the following percentages of its
approved certified IDR entity batched determination fee (``batching
percentage'') for batched determinations, which are based on the
number of line items initially submitted in the batch:
2-20 line items: 100 percent of the approved batched
determination fee;
21-50 line items: 110 percent of the approved batched
determination fee;
51-80 line items: 120 percent of the approved batched
determination fee; and
81 line items or more: 130 percent of the approved
batched determination fee.
See Centers for Medicare & Medicaid Services (October 31, 2022).
Calendar Year 2023 Fee Guidance for the Federal Independent Dispute
Resolution Process under the No Surprises Act. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/cy2023-fee-guidance-federal-independent-dispute-resolution-process-nsa.pdf.
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The Departments sought comment on these costs and assumptions. The
Departments did not receive comments on these costs or assumptions and
are finalizing them as proposed.
3. Uncertainties
It is unclear whether the Federal IDR process will experience the
same operating conditions when these rules are effective compared to
the current state, such as the number of disputes initiated, future
policy changes finalized after future notice and comment rulemaking, or
increased or decreased costs by the Departments to carry out the
Federal IDR process. Due to the need to take point-in-time estimates of
volume and expenditures for the purposes of developing the analyses in
the preamble to these rules, there is inherent uncertainty in the
estimates in these analyses as the data are constantly changing. It is
difficult to project the impact on the administrative fee amount
charged to the parties if the Federal IDR process landscape changes.
Although the Departments have analyzed the Federal IDR process data
available to inform their projections, it is uncertain whether the
trends in these data will remain applicable in the future. At the same
time, the Departments do not know what impact the changes to the
Federal IDR process as a result of the District Court's opinions and
orders in TMA IV and TMA III will have on the number of disputes
initiated and the time it will take certified IDR entities to close
those disputes. The Departments continue to monitor trends in the
Federal IDR process and will make any necessary changes through future
notice and comment rulemaking.
4. Regulatory Review Cost Estimation
If regulations impose administrative costs on entities, such as the
time needed to read and interpret rules, regulatory agencies should
estimate the total cost associated with regulatory review. Based on
comments received for the July 2021 interim final rules and October
2021 interim final rules, the Departments estimate that more than 2,100
entities will review these final rules, including 1,500 issuers, 205
third party administrators (TPAs), and at least 395 other interested
parties (for example, State insurance departments, State legislatures,
industry associations, advocacy organizations, and providers and
provider organizations). The Departments acknowledge that this
assumption may understate or overstate the number of entities that will
review these final rules.
Using the median hourly wage rate from the Bureau of Labor
Statistics for a Lawyer (Code 23-1011) to account for average labor
costs (including a 100 percent increase for the cost of fringe benefits
and other indirect costs), the Departments estimate that the cost of
reviewing these final rules will be $130.52 per hour.\136\ The
Departments estimate, based on an estimated rule length of
approximately 35,000 words and an average reading speed of 200 to 250
words per minute, that it will take each reviewing entity approximately
2.33 hours to review these final rules, with an associated cost of
approximately $304.11 (2.33 hours x $130.52 per hour). Therefore, the
Departments estimate that the total burden to review these final rules
will be approximately 4,893 hours (2,100 reviewers x 2.33 hours per
reviewer), with an associated cost of approximately $638,631 (2,100
reviewers x $304.11 per reviewer).
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\136\ U.S. Bureau of Labor Statistics (May 1, 2022). May 2022
National Occupational Employment and Wage Estimates. https://www.bls.gov/oes/current/oes_nat.htm.
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The Departments sought comments in the IDR Fees proposed rules on
this approach to estimating the total burden and cost for interested
parties to read and interpret the IDR Fees proposed rules, which is the
same approach used to estimate the total burden and cost for interested
parties to read and interpret these final rules. The Departments did
not receive comments on this approach and cost. The Departments are
finalizing these estimates as proposed.
E. Regulatory Alternatives--Departments of Health and Human Services
and Labor
In developing these final rules, the Departments considered various
alternative approaches.
1. Administrative Fee Amount and Methodology (26 CFR 54.9816-8(d)(2),
29 CFR 2590.716-8(d)(2), and 45 CFR 149.510(d)(2))
In its TMA IV opinion and order, the District Court indicated that
notice and comment rulemaking is necessary to set the administrative
fee, and the Departments are of the view that alternative approaches
would lead to unnecessary uncertainty. In addition, providing a
description of the methodology used to calculate the fee amount and
proposing the administrative fee amount in the IDR Fees proposed rules
would increase transparency for the parties and provide interested
parties the opportunity to be included in the fee setting process. The
Departments considered that guidance has historically been used to set
the administrative fee amount based on concerns that the requirement to
collect fees sufficient to fund the Federal IDR process. The lead time
required to set the fee amount in notice and comment rulemaking could
constrain the Departments' responsiveness to program needs and
artificially inflate the administrative fee amount due to the need to
ensure adequate funding of the process. However, in light of TMA IV,
the increased transparency and opportunity for interested parties to
provide feedback on the administrative fee methodology and amount
outweighed the potential concern that the administrative fee might be
artificially inflated by the need to make conservative estimates to set
the administrative fee amount further in advance through notice and
comment rulemaking.
The Departments considered proposing other administrative fee
policies in the IDR Fees proposed rules, such as those proposed in the
IDR Operations proposed rules.\137\ However, as discussed in section
II.A of this preamble, the Departments were unable to propose those
policies in the IDR Fees proposed rules because they are much more
comprehensive than the fee-related policies proposed in the IDR Fees
proposed rules and would require more time to develop and implement if
finalized. There is an urgency to publish these final rules to be
effective as close to January 1, 2024 as possible due to the need to
sufficiently fund the Federal IDR process in 2024. As discussed in
sections I.E and II.A of these final rules, the current $50
administrative amount is insufficient to satisfy the statutory
requirement that the total amount of fees paid for a year be estimated
to be equal to the amount of expenditures estimated to be made by the
Departments for the year in carrying out the Federal IDR process.
Therefore, the Departments deferred those substantial changes to the
Federal IDR process and administrative fee structure and collection
procedures to the IDR Operations proposed rules, which are aimed at
improving Federal IDR process operations and making the process more
accessible.
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\137\ 88 FR 75744.
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2. Certified IDR Entity Fee Ranges (26 CFR 54.9816-8(e)(2), 29 CFR
2590.716-8(e)(2), and 45 CFR 149.510(e)(2))
The Departments considered maintaining the current policy that the
allowable ranges for certified IDR entity
[[Page 88519]]
fees would be set in guidance yearly instead of through notice and
comment rulemaking. The Departments considered whether continuing to
set the certified IDR entity fee ranges in guidance would preserve
necessary flexibility for the certified IDR entities to choose their
fixed fees within the allowable ranges and submit those fees for
approval to the Departments, and would allow the Departments time to
review and approve each certified IDR entity's fees and publish them in
advance of the year to which the fees apply. The Departments concluded
that publishing the fee ranges in guidance could be a more expedient
process compared to rulemaking because of the lack of required comment
period; however, establishing the fee ranges through notice and comment
rulemaking would not prevent the Departments from reviewing and
approving each certified IDR entity's fixed fee amounts in a timely
manner. The Departments are of the view that there would be no impact
to the ability of the certified IDR entities to select their fees from
the established ranges if those ranges were published through notice
and comment rulemaking. Further, setting the certified IDR entity fee
ranges through guidance does not allow interested parties to engage
through the submission of public comments, while the notice and comment
rulemaking process increases transparency and will afford an
opportunity for the Departments to consider feedback from interested
parties on the appropriateness of proposed fee ranges.
F. Paperwork Reduction Act
These final rules are not subject to the requirements of the
Paperwork Reduction Act of 1995,\138\ because the Departments
anticipate that fewer than 10 certified IDR entities will submit
requests to update their certified IDR entity fees an additional time
during the calendar year based on current experience operating the
Federal IDR process, and they do not contain any other collection of
information as defined in 44 U.S.C. 3502(3). Therefore, clearance by
OMB under the Paperwork Reduction Act of 1995 is not required.
---------------------------------------------------------------------------
\138\ 44 U.S.C. 3501 et seq.
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G. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601, et seq.)
requires agencies to analyze options for regulatory relief of small
entities and to prepare a final regulatory flexibility analysis to
describe the impact of these final rules on small entities, unless the
head of the agency can certify that the rule would not have a
significant economic impact on a substantial number of small entities.
The RFA generally defines a ``small entity'' as (1) a proprietary firm
meeting the size standards of the Small Business Administration (SBA),
(2) a not-for-profit organization that is not dominant in its field, or
(3) a small government jurisdiction with a population of less than
50,000. States and individuals are not included in the definition of
``small entity.'' The Departments use a change in revenues of more than
3 to 5 percent as their measure of significant economic impact on a
substantial number of small entities. For purposes of the RFA, small
entities include small businesses, nonprofit organizations, and small
governmental jurisdictions. The Secretaries of Labor, the Treasury, and
Health and Human Services certify that these final rules will not have
a significant economic impact on a substantial number of small
entities, as presented in the analysis in the following subsections of
this preamble.
1. Small Entities Regulated
The provisions in these final rules will affect plans (or their
TPAs),\139\ health insurance issuers offering group or individual
health insurance coverage, and providers, facilities, and providers of
air ambulance services.
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\139\ The Departments expect that most self-insured group health
plans will work with a TPA to meet the requirements.
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For purposes of analysis under the RFA,\140\ the Departments
consider an employee benefit plan with fewer than 100 participants to
be a small entity.\141\ The basis of this definition is found in
section 104(a)(2) of ERISA,\142\ which permits the Secretary of Labor
to prescribe simplified annual reports for plans that cover fewer than
100 participants. Under section 104(a)(3),\143\ the Secretary may also
provide for exemptions or simplified annual reporting and disclosure
for welfare benefit plans. Under the authority of section
104(a)(3),\144\ the Department of Labor has previously issued
simplified reporting provisions and limited exemptions from reporting
and disclosure requirements for small plans, including unfunded or
insured welfare plans, which cover fewer than 100 participants and
satisfy certain requirements.\145\ While some large employers have
small plans, small plans are generally maintained by small employers.
Thus, the Departments are of the view that assessing the impact of
these final rules on small plans is an appropriate substitute for
evaluating the effect on small entities. The definition of a small
entity considered appropriate for this purpose differs, however, from a
definition of a small business based on size standards issued by the
SBA \146\ in accordance with the Small Business Act.\147\
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\140\ 5 U.S.C. 601, et seq.
\141\ The Department of Labor consulted with the Small Business
Administration Office of Advocacy in making this determination, as
required by 5 U.S.C. 603(c) and 13 CFR 121.903(c) in a memo dated
June 4, 2020.
\142\ 29 U.S.C. 1024(a)(2).
\143\ 29 U.S.C. 1024(a)(3).
\144\ Id.
\145\ 29 CFR 2520.104-20, 2520.104-21, 2520.104-41, 2520.104-46,
and 2520.104b-10.
\146\ 13 CFR 121.201 (2011).
\147\ 15 U.S.C. 631 et seq. (2011).
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In 2021, there were 1,500 issuers in the U.S. health insurance
market \148\ and 205 TPAs.\149\ Health insurance issuers are generally
classified under the North American Industry Classification System
(NAICS) code 524114 (Direct Health and Medical Insurance Carriers).
According to SBA size standards,\150\ entities with average annual
receipts of $47 million or less are considered small entities for this
NAICS code. The Departments expect that few, if any, insurance
companies underwriting health insurance policies fall below these size
thresholds. Based on data from Medical Loss Ratio (MLR) annual report
submissions for the 2021 MLR reporting year, approximately 87 out of
483 issuers of health insurance coverage nationwide had total premium
revenue of $47 million or less.\151\ However, it should be noted that
also based on MLR data, over 77 percent of these small companies belong
to larger holding groups, and many, if not all, of these small
companies, are likely to have non-health lines of business that would
result in their revenues exceeding $47 million. The Departments are of
the view that the same assumptions also apply to TPAs that would be
affected by these proposed rules.\152\ To produce a conservative
estimate, for the purposes of this analysis, the Departments assume 4.1
percent, or 62 issuers and 8 TPAs, of the total of 1,500 health
insurance
[[Page 88520]]
issuers and 205 TPAs across the country, are considered small
entities.\153\
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\148\ Centers for Medicare & Medicaid Services (2022). Medical
Loss Ratio Data and System Resources. https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.
\149\ Non-issuer TPAs based on data derived from the 2016
benefit year reinsurance program contributions.
\150\ United States Small Business Administration (March 17,
2023). Table of Size Standards. https://www.sba.gov/document/support--table-size-standards.
\151\ Centers for Medicare & Medicaid Services (2022). Medical
Loss Ratio Data and System Resources. https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.
\152\ The Departments are of the view that most TPAs are also
issuers.
\153\ These numbers are calculated as follows: 77 percent of
small companies belong to larger holding groups, so 23 percent do
not and would be small entities. 87 issuers x 0.23 = 20. 20/483 =
4.1 percent. Applying the 4.1 percent to 1,500 issuers and 205 TPAs
total = 62 small issuers and 8 small TPAs.
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These final rules also affect health care providers and facilities
due to the proposed requirements related to the certified IDR entity
and administrative fees. The Departments estimate that 140,270
physicians, on average, bill on an out-of-network basis annually.\154\
The number of small physician providers is estimated based on the SBA's
size standards. The size standard applied for providers is NAICS 62111
(Offices of Physicians), for which a business with less than $16
million in receipts is considered to be small. By this standard, the
Departments estimate that 47.2 percent or 66,207 physicians are
considered small under the SBA's size standards.\155\ The size standard
for facilities is NAICS 62211 (General Medical and Surgical Hospitals),
for which a business with less than $47 million in receipts is
considered to be small. By this standard, the Departments estimate that
43.5 percent or 1,113 facilities are considered small under the SBA's
size standards.\156\ These final rules are also expected to affect non-
physician providers who bill on an out-of-network basis. The
Departments lack data on the number of non-physician providers who will
be impacted by these final rules.
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\154\ See 86 FR 56051 for more information on this estimate.
\155\ Based on data from the NAICS Association for NAICS code
62111, the Departments estimate the percent of businesses within the
industry of Offices of Physicians with less than $16 million in
annual sales. United States Census Bureau (May 2021). 2017 SUSB
Annual Data Tables by Establishment Industry. https://www.census.gov/data/tables/2017/econ/susb/2017-susb-annual.html.
\156\ Based on data from the NAICS Association for NAICS code
62211, the Departments estimate the percent of businesses within the
industry of General Medical and Surgical Hospitals with less than
$47 million in annual sales. United States Census Bureau (May 2021).
2017 SUSB Annual Data Tables by Establishment Industry. https://www.census.gov/data/tables/2017/econ/susb/2017-susb-annual.html.
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The Departments do not have the same level of data for the air
ambulance subsector. In 2020, the total revenue of providers of air
ambulance services was estimated to be $4.2 billion, with 1,114 air
ambulance bases.\157\ This results in an industry average of $3.8
million per air ambulance base. Based on a 2020 U.S.C.-Brookings
Schaeffer report on air ambulance services,\158\ by 2017, large private
equity firms controlled roughly two-thirds of the air ambulance market.
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\157\ ASPE Office of Health Policy (September 10, 2021). Air
Ambulance Use and Surprise Billing. https://aspe.hhs.gov/sites/default/files/2021-09/aspe-air-ambulance-ib-09-10-2021.pdf.
\158\ Adler, L., Hannick, K., and Lee, S. ``High Air Ambulance
Charges Concentrated in Private Equity-Owned Carriers.'' U.S.C.-
Brookings Schaffer Initiative for Health Policy. October 13, 2020.
https://www.brookings.edu/articles/high-air-ambulance-charges-concentrated-in-private-equity-owned-carriers/.
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Although based on the Departments' experience operating the Federal
IDR process, significantly fewer than 67,320 small providers and
facilities have accessed the process to date,\159\ the Departments lack
adequate data to better inform the number of small providers impacted
by these final rules. Therefore, although the estimate of 67,320 small
providers and facilities is likely a significant overestimate of the
number of small providers and facilities impacted by these final rules,
the Departments use this number of small providers and facilities in
this analysis to be conservative.\160\
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\159\ See U.S. Department of Health and Human Services, U.S.
Department of Labor, and U.S. Department of the Treasury, Partial
Report on the Federal Independent Dispute Resolution (IDR) Process,
October 1-December 31, 2022. (n.d.). https://www.cms.gov/files/document/partial-report-idr-process-octoberdecember-2022.pdf.
\160\ Based on the Departments' experience operating the Federal
IDR process, the estimate of 67,320 small providers and facilities
is likely a significant overestimate, and therefore the Departments
assume that this estimate accounts for any non-physician providers
who may be impacted by these rules for whom the Departments lack
data to estimate.
---------------------------------------------------------------------------
Additionally, as discussed in the Partial Report on the Federal
Independent Dispute Resolution (IDR) Process, October 1-December 31,
2022, the top 10 initiating parties (or entities acting on behalf of
initiating parties) are large companies that initiate approximately 85
percent of disputes, and the top 10 non-initiating parties are large
companies that are initiated against in approximately 95 percent of
disputes.\161\ Therefore, for purposes of this analysis, the
Departments assume that only 15 percent of all disputes involve small
providers. The 5 percent of all disputes that do not involve the top 10
non-initiating parties could involve any of the 1,695 issuers and TPAs
that are not the top 10 non-initiating parties (1,500 issuers and 205
TPAs total -10 top non-initiating parties = 1,695 remaining issuers and
TPAs). The Departments assume that the proportion of small issuers and
TPAs to non-top 10 issuers and TPAs is the same as the proportion of
disputes involving small issuers and TPAs to disputes involving non-top
10 issuers and TPAs, as the volume of disputes issuers and TPAs are
involved in should be proportional to the size of their enrollment.
Taking into consideration these estimates of the small entities, the
policies in these rules that result in an increased burden to small
entities are described below.
---------------------------------------------------------------------------
\161\ Top initiating parties represent hundreds of individual
providers across multiple states. Top non-initiating parties operate
across multiple states and market segments. See U.S. Department of
Health and Human Services, U.S. Department of Labor, and U.S.
Department of the Treasury, Partial Report on the Federal
Independent Dispute Resolution (IDR) Process, October 1-December 31,
2022. (n.d.). https://www.cms.gov/files/document/partial-report-idr-process-octoberdecember-2022.pdf.
---------------------------------------------------------------------------
2. Compliance Costs
The Departments are finalizing the policy to establish the
administrative fee amount in notice and comment rulemaking and are
finalizing that the administrative fee amount for disputes initiated on
or after the effective date of these rules is $115 per party per
dispute. The annual burden per small provider or facility associated
with this policy is $115,\162\ and the annual burden per small issuer/
TPA is $805.\163\ For more details, please refer to the Regulatory
Impact Analysis in these final rules.
---------------------------------------------------------------------------
\162\ 492,000 administrative fees paid/2 types of parties =
246,000 administrative fees paid by providers. 246,000
administrative fees paid by providers -85 percent (209,100)
administrative fees paid for disputes initiated by the top 10
initiating parties = 36,900 administrative fees paid for disputes
initiated by other initiating parties. 36,900 disputes/67,320 small
providers and facilities = approximately 0.5 disputes initiated per
small provider or facility annually. For simplicity and to be
conservative, the Departments assume 1 dispute per provider or
facility. 1 dispute x $115 per dispute = $115 per small provider or
facility.
\163\ 492,000 administrative fees paid/2 types of parties =
246,000 administrative fees paid by issuers/TPAs. 246,000
administrative fees paid by issuers/TPAs -95 percent (233,700)
administrative fees paid for disputes initiated against the top 10
non-initiating parties = 12,300 administrative fees paid for
disputes initiated against other non-initiating parties. 12,300
disputes/1,695 issuers/TPAs = approximately 7 disputes per small
issuer/TPA annually. 7 disputes x $115 per dispute = $805.
---------------------------------------------------------------------------
[[Page 88521]]
The Departments are finalizing the policy to establish the
certified IDR entity fee ranges in notice and comment rulemaking and
are finalizing that the ranges are $200-$840 for single determinations
and $268-$1,173 for batched determinations, with a $75-$250 tiered fee
range for disputes that contain more than 25 line items. The annual
burden per small provider or facility associated with this policy is
$657,\164\ and the annual burden per small issuer/TPA is $1,971.\165\
For more details, please refer to the Regulatory Impact Analysis in
these final rules.
---------------------------------------------------------------------------
\164\ Data from the first full year of Federal IDR process
operations show that initiating parties prevail in approximately 70
percent of disputes. See Centers for Medicare & Medicaid Services
(April 27, 2023). Federal Independent Dispute Resolution Process--
Status Update. Therefore, as the prevailing party's certified IDR
entity fee is refunded per 26 CFR 54.9816-8T(d)(1)(ii), 29 CFR
2590.716-8(d)(1)(ii), and 45 CFR 149.510(d)(1)(ii), initiating
parties only pay the certified IDR entity fee for 30 percent of
disputes, while non-initiating parties pay for the other 70
percent.https://www.cms.gov/files/document/federal-idr-processstatus-update-april-2023.pdf. The Departments estimate based
on internal data that certified IDR entity fees are paid for
approximately 135,000 disputes annually. Of those 135,000 disputes,
the Departments estimate that 30 percent (or 40,500) have their
certified IDR entity fees paid by providers/facilities, and 70
percent (or 94,500) have their certified IDR entity fees paid by
issuers/TPAs. Of the 40,500 disputes for which the certified IDR
entity fee is paid by providers or facilities, 85 percent (or
34,425) are paid by the top 10 initiating parties. The remaining 15
percent (or 6,075) are paid by other initiating parties. 6,075
disputes/67,320 small providers and facilities = less than 1
certified IDR entity fee paid per small provider or facility. For
simplicity and to be conservative, the Departments assume 1
certified IDR entity fee paid per small provider or facility. The
average certified IDR entity fee across both single and batched
disputes, including the tiered batched fee, in 2024 is $657 as
calculated in accordance with these final rules.
\165\ Of the 94,500 disputes that have their certified IDR
entity fees paid by issuers, 95 percent (or 89,775) are paid by the
top 10 non-initiating parties. The remaining 5 percent (or 4,725)
are paid by other non-initiating parties. 4,725 disputes/1,695
issuers/TPAs = approximately 3 certified IDR entity fees paid per
small issuer/TPA. The average certified IDR entity fee across both
single and batched disputes, including the tiered batched fee, in
2024 is $657 as calculated in accordance with these final rules. 3
disputes x $657 per dispute = $1,971 per small issuer/TPA.
---------------------------------------------------------------------------
Thus, the per-entity annual cost for small providers and facilities
is $772, and the per-entity annual cost for small issuers and TPAs is
$2,776. The total estimated annual cost for small providers and
facilities is $51,971,040, and the total estimated annual cost for
small issuers and TPA is $194,320. See Tables 2 and 3.
[GRAPHIC] [TIFF OMITTED] TR21DE23.001
[GRAPHIC] [TIFF OMITTED] TR21DE23.002
3. Analysis and Certification Statement
The annual cost per small provider or facility of $772 is
approximately 0.07 percent of the average annual receipts per small
provider and approximately 0.04 percent of the average annual receipts
per small facility. The Departments anticipate that small providers and
facilities would be unlikely to initiate disputes and thereby incur
these costs unless they anticipate prevailing in the dispute and
receiving payment from plans or issuers that exceed the costs incurred
to initiate the dispute. Additionally, data from the public reports on
the Federal IDR process released to date by the Departments show that
providers and facilities prevail in approximately 70 percent of
disputes.\166\ Therefore, small providers and facilities are likely to
experience an increase in receipts commensurate or larger than the
increase in costs.
---------------------------------------------------------------------------
\166\ See U.S. Department of Health and Human Services, U.S.
Department of Labor, and U.S. Department of the Treasury, Partial
Report on the Federal Independent Dispute Resolution (IDR) Process,
October 1-December 31, 2022. (n.d.). https://www.cms.gov/files/document/partial-report-idr-process-octoberdecember-2022.pdf.
---------------------------------------------------------------------------
The annual cost per small issuer/TPA of $2,776 is approximately
0.15 percent of the average annual receipts per small issuer/TPA. While
small issuers/TPAs could pass on these increased costs to consumers in
the form of higher premiums (or for TPAs, higher administration fees),
resulting in an increase in receipts commensurate with the increase in
costs, the actual increase in costs and subsequent impact on revenue
would be de minimis as the annual cost per small issuer/TPA is so
small. Additionally, the Departments anticipate that by batching
qualified IDR items and services, there may be a reduction in the per-
service cost of the Federal IDR process to providers of certain
services and specialties, and potentially the aggregate administrative
costs, because the Federal IDR process is likely to exhibit at least
some economies of scale.\167\
---------------------------------------------------------------------------
\167\ Fielder, M., Adler, L., Ippolito, B. (March 16, 2021).
Recommendations for Implementing the No Surprises Act. U.S.C.-
Brookings Schaeffer on Health Policy. https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2021/03/16/recommendations-for-implementing-the-no-surprises-act/.
---------------------------------------------------------------------------
As its measure of significant economic impact on a substantial
number of small entities, HHS uses a change in revenue of more than 3
to 5
[[Page 88522]]
percent. The Departments are of the view that this threshold will not
be reached by the requirements in these final rules, given that the
annual per-entity cost of $2,776 per small issuer/TPA represents 0.15
percent of the average annual receipts for a small issuer/TPA and the
annual per-entity cost of $772 per small provider/facility represents
0.07 percent and 0.04 percent of the average annual receipts for a
small provider or facility, respectively.\168\ Therefore, the
Secretaries of Labor, the Treasury, and Health and Human Services
hereby certify that these final rules will not have a significant
economic impact on a substantial number of small entities.
---------------------------------------------------------------------------
\168\ United States Census Bureau (March 2020). 2017 SUSB Annual
Data Tables by Establishment Industry, Data by Enterprise Receipt
Size. https://www.census.gov/data/tables/2020/econ/susb/2020-susb-annual.html.
---------------------------------------------------------------------------
The Departments sought comment on this analysis and sought
information on the number of small plans (or TPAs), issuers, providers,
and facilities that may be affected by the provisions in the IDR Fees
proposed rules. The Departments did not receive comments on this
analysis. The Departments received comments on the impact of the
provisions in the IDR Fees proposed rules on small providers and
respond to those comments in section II of this preamble.
In addition, section 1102(b) of the Social Security Act requires
the Departments to prepare a regulatory impact analysis if a rule may
have a significant impact on the operations of a substantial number of
small rural hospitals. This analysis must conform to the provisions of
section 603 of the RFA.\169\ For purposes of section 1102(b) of the
Act, the Departments define a small rural hospital as a hospital that
is located outside of a metropolitan statistical area and has fewer
than 100 beds. These final rules are not subject to section 1102 of the
Act because the IDR Fees proposed rules were not proposed under title
XVIII, title XIX, or part B of title XI of the Act, and therefore
section 1102(b) of the Act does not apply.
---------------------------------------------------------------------------
\169\ 5 U.S.C. 603.
---------------------------------------------------------------------------
H. Special Analyses--Department of the Treasury
Pursuant to the Memorandum of Agreement, Review of Treasury
Regulations under Executive Order 12866 (June 9, 2023), tax regulatory
actions issued by the IRS are not subject to the requirements of
section 6 of Executive Order 12866, as amended. Therefore, a regulatory
impact assessment is not required. Pursuant to section 7805(f) of the
Code,\170\ these regulations have been submitted to the Chief Counsel
for Advocacy of the Small Business Administration for comment on their
impact on small business.
---------------------------------------------------------------------------
\170\ 26 U.S.C. 7805(f).
---------------------------------------------------------------------------
I. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
\171\ requires that agencies assess anticipated costs and benefits and
take certain other actions before issuing a proposed rule or any final
rule for which a general notice of proposed rulemaking was published
that includes any Federal mandate that may result in expenditures in
any 1 year by State, local, or tribal governments, in the aggregate, or
by the private sector, of $100 million in 1995 dollars, updated
annually for inflation. That threshold is approximately $177 million in
2023. As discussed earlier in the RIA, plans, issuers, TPAs, and
providers, facilities, and providers of air ambulance services will
incur costs to comply with the provisions of these final rules. The
Departments estimate the combined impact on State, local, or tribal
governments and the private sector will not be above the threshold.
---------------------------------------------------------------------------
\171\ 2 U.S.C. 1511.
---------------------------------------------------------------------------
J. Federalism
Executive Order 13132 outlines the fundamental principles of
federalism. It requires adherence to specific criteria by Federal
agencies in formulating and implementing policies that have
``substantial direct effects'' on the States, the relationship between
the National Government and States, or on the distribution of power and
responsibilities among the various levels of government. Federal
agencies issuing regulations that have these federalism implications
must consult with State and local officials and describe the extent of
their consultation and the nature of the concerns of State and local
officials in the preamble to the IDR Fees proposed rules.
The Departments do not anticipate that these final rules will have
federalism implications or limit the policy-making discretion of the
States in compliance with the requirement of Executive Order 13132.
State and local government health plans may be subject to the
Federal IDR process where a specified State law or All-Payer Model
Agreement does not apply. The No Surprises Act authorizes States to
enforce the new requirements, including those related to balance
billing, for issuers, providers, facilities, and providers of air
ambulance services, with HHS enforcing only in cases where the State
has notified HHS that the State does not have the authority to enforce
or is otherwise not enforcing, or HHS has made a determination that a
State has failed to substantially enforce the requirements. However, in
the Departments' view, the federalism implications of these final rules
are substantially mitigated because some States have their own process
for determining the total amount payable under a plan or coverage for
out-of-network emergency services and to out-of-network providers for
patient visits to in-network facilities for non-emergency services.
Where a State has a specified State law, the State law, rather than the
Federal IDR process, will apply.
In compliance with the requirement of Executive Order 13132 that
agencies examine closely any policies that may have federalism
implications or limit the policy making discretion of the States, the
Departments have engaged in efforts to consult with and work
cooperatively with affected States, including participating in
conference calls with and attending conferences of the National
Association of Insurance Commissioners and consulting with State
insurance officials on an individual basis.
While developing these rules, the Departments attempted to balance
the States' interests in regulating health insurance issuers with the
need to ensure market stability. By doing so, the Departments complied
with the requirements of Executive Order 13132.
In accordance with Federal law, a summary of these rules may be
found at https://www.regulations.gov/.
List of Subjects
26 CFR Part 54
Excise taxes, Pensions, Reporting and recordkeeping requirements.
29 CFR Part 2590
Continuation coverage, Disclosure, Employee benefit plans, Group
health plans, Health care, Health insurance, Medical child support,
Reporting and recordkeeping requirements.
[[Page 88523]]
45 CFR Part 149
Balance billing, Health care, Health insurance, Reporting, and
recordkeeping requirements, Surprise billing.
Douglas W. O'Donnell,
Deputy Commissioner for Services and Enforcement, Internal Revenue
Service.
Lily L. Batchelder,
Assistant Secretary of the Treasury (Tax Policy), Department of the
Treasury.
Lisa M. Gomez
Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
Xavier Becerra,
Secretary, Department of Health and Human Services.
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
For the reasons stated in the preamble, the Department of the
Treasury and the IRS amend 26 CFR part 54 as set forth below:
PART 54--PENSION EXCISE TAXES
0
1. The authority citation for part 54 is amended by adding an entry for
Sec. 54.9816-8 in numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Section 54.9816-8 also issued under 26 U.S.C. 9816.
* * * * *
0
2. Section 54.9816-8 is amended by revising paragraphs (a), (b), (c)
introductory text, (d), and (e) and adding headings for paragraphs (f)
and (g) to read as follows:
Sec. 54.9816-8 Independent dispute resolution process.
(a) Scope and definitions. For further guidance, see Sec. 54.9816-
8T(a).
(b) Determination of payment amount through open negotiation and
initiation of the Federal IDR process. For further guidance, see Sec.
54.9816-8T(b).
(c) Federal IDR process following initiation. For further guidance,
see Sec. 54.9816-8T(c) introductory text through (c)(3).
* * * * *
(d) Costs of IDR process--(1) Certified IDR entity fee. For further
guidance, see Sec. 54.9816-8T(d)(1).
(2) Administrative fee. (i) For further guidance, see Sec.
54.9816-8T(d)(2)(i).
(ii) The administrative fee amount will be established through
notice and comment rulemaking no more frequently than once per calendar
year in a manner such that the total administrative fees paid for a
year are estimated to be equal to the amount of expenditures estimated
to be made by the Secretaries of the Treasury, Labor, and Health and
Human Services for the year in carrying out the Federal IDR process.
The administrative fee amount will remain in effect until changed by
notice and comment rulemaking. For disputes initiated on or after
January 22, 2024, the administrative fee amount is $115 per party per
dispute.
(3) Severability. (i) Any provision of this paragraph (d) or
paragraphs (e)(2)(vii) and (viii) of this section held to be invalid or
unenforceable as applied to any person or circumstance shall be
construed so as to continue to give the maximum effect to the provision
permitted by law, including as applied to persons not similarly
situated or to dissimilar circumstances, unless such holding is that
the provision of this paragraph (d) or paragraphs (e)(2)(vii) and
(viii) is invalid and unenforceable in all circumstances, in which
event the provision shall be severable from the remainder of this
paragraph (d) or paragraphs (e)(2)(vii) and (viii) and shall not affect
the remainder thereof.
(ii) The provisions in this paragraph (d) and paragraphs
(e)(2)(vii) and (viii) of this section are intended to be severable
from each other.
(e) Certification of IDR entity--(1) In general. For further
guidance see Sec. 54.9816-8T(e)(1).
(2) Requirements. (i) For further guidance, see Sec. 54.8616-
8T(e)(2)(i) through (vi).
(ii) through (vi) [Reserved]
(vii) Provide, no more frequently than once per calendar year, a
fixed fee for single determinations and a separate fixed fee for
batched determinations, as well as additional fixed tiered fees for
batched determinations, if applicable, within the upper and lower
limits for each, as established by the Secretary in notice and comment
rulemaking. The certified IDR entity fee ranges established by the
Secretary in rulemaking will remain in effect until changed by notice
and comment rulemaking. The certified IDR entity may not charge a fee
outside the limits set forth in rulemaking unless the certified IDR
entity or IDR entity seeking certification receives advance written
approval from the Secretary to charge a fixed fee beyond the upper or
lower limits by following the process described in paragraph
(e)(2)(vii)(A) of this section. A certified IDR entity may also seek
advance written approval from the Secretary to update its fees one
additional time per calendar year by meeting the requirements described
in paragraph (e)(2)(vii)(A). The Secretary will approve a request to
charge a fixed fee beyond the upper or lower limits for fees as set
forth in rulemaking or to update the fixed fee during the calendar year
if, in their discretion, they determine the information submitted by a
certified IDR entity or IDR entity seeking certification demonstrates
that the proposed change to the certified IDR entity fee would ensure
the financial viability of the certified IDR entity or IDR entity
seeking certification and would not impose on parties an undue barrier
to accessing the Federal IDR process.
(A) In order for the certified IDR entity or IDR entity seeking
certification to receive the Secretary's written approval to charge a
fixed fee beyond the upper or lower limits for fees as set forth in
rulemaking or to update the fixed fee during the calendar year, the
certified IDR entity or IDR entity seeking certification must submit to
the Secretary, in the form and manner specified by the Secretary:
(1) The fixed fee the certified IDR entity or IDR entity seeking
certification believes is appropriate for the certified IDR entity or
IDR entity seeking certification to charge;
(2) A description of the circumstances that require the alternative
fixed fee, or that require a change to the fixed fee during the
calendar year, as applicable; and
(3) A detailed description that reasonably explains how the
alternative fixed fee or the change to the fixed fee during the
calendar year, as applicable, will be used to mitigate the effects of
those circumstances.
(B) [Reserved]
(viii) For disputes initiated on or after January 22, 2024,
certified IDR entities are permitted to charge a fixed certified IDR
entity fee for single determinations within the range of $200 to $840,
and a fixed certified IDR entity fee for batched determinations within
the range of $268 to $1,173, unless a fee outside such ranges is
approved by the Secretary, pursuant to paragraph (e)(2)(vii)(A) of this
section. As part of the batched determination fee, certified IDR
entities are permitted to charge an additional fixed tiered fee within
the range of $75 to $250 for every additional 25 line items within a
batched dispute, beginning with the 26th line item. The ranges for the
certified IDR entity fees for single and batched determinations will
remain in effect until changed by notice and comment rulemaking.
(ix) For further guidance, see Sec. 54.9816-8T(e)(2)(ix) through
(xii).
(x) through (xii) [Reserved]
[[Page 88524]]
(f) Reporting of information relating to the Federal IDR process. *
* *
* * * * *
(g) Extension of time periods for extenuating circumstances. * * *
* * * * *
0
3. Section 54.9816-8T is amended by:
0
a. Revising paragraph (d)(2)(ii);
0
b. Adding paragraph (d)(3);
0
c. Removing the semicolon at the end of paragraphs (e)(2)(iii) and (vi)
and adding a period in its place;
0
d. Revising paragraph (e)(2)(vii);
0
e. Redesignating paragraphs (e)(2)(viii) through (xi) as paragraphs
(e)(2)(ix) through (xii);
0
f. Adding new paragraph (e)(2)(viii);
0
g. Removing the semicolon at the end of newly redesignated paragraphs
(e)(2)(ix) and (x) and adding a period in its place; and
0
h. Removing ``; and'' at the end of newly redesignated paragraph
(e)(2)(xii) and adding a period in its place.
The revisions and additions read as follows:
Sec. 54.9816-8T Independent dispute resolution process (temporary).
* * * * *
(d) * * *
(2) * * *
(ii) For further guidance, see Sec. 54.9816-8(d)(2)(ii).
(3) Severability. For further guidance, see Sec. 54.9816-8(d)(3).
(e) * * *
(2) * * *
(vii) For further guidance, see Sec. 54.9816-8(e)(2)(vii).
(viii) For further guidance, see Sec. 54.9816-8(e)(2)(viii).
* * * * *
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Chapter XXV
For the reasons stated in the preamble, the Department of Labor
amends 29 CFR part 2590 as set forth below:
PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS
0
4. The authority citation for part 2590 continues to read as follows:
Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a-n, 1191, 1191a, 1191b, and 1191c; sec.
101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b), Pub. L. 105-
200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L. 110-
343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111-148,
124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 1029;
Division M, Pub. L. 113-235, 128 Stat. 2130; Pub. L. 116-260, 134
Stat. 1182; Secretary of Labor's Order 1-2011, 77 FR 1088 (Jan. 9,
2012).
0
5. Section 2590.716-8 is amended by:
0
a. Revising paragraph (d)(2)(ii);
0
b. Adding paragraph (d)(3);
0
c. Removing the semicolon at the end of paragraphs (e)(2)(iii) and (vi)
and adding a period in its place;
0
d. Revising paragraph (e)(2)(vii);
0
e. Redesignating paragraphs (e)(2)(viii) through (xi) as paragraphs
(e)(2)(ix) through (xii);
0
f. Adding new paragraph (e)(2)(viii);
0
g. Removing the semicolon at the end of newly redesignated paragraphs
(e)(2)(ix) and (x) and adding a period in its place; and
0
h. Removing ``; and'' at the end of newly redesignated paragraph
(e)(2)(xii) and adding a period in its place.
The revisions and additions read as follows:
Sec. 2590.716-8 Independent dispute resolution process.
* * * * *
(d) * * *
(2) * * *
(ii) The administrative fee amount will be established through
notice and comment rulemaking no more frequently than once per calendar
year in a manner such that the total administrative fees paid for a
year are estimated to be equal to the amount of expenditures estimated
to be made by the Secretaries of the Treasury, Labor, and Health and
Human Services for the year in carrying out the Federal IDR process.
The administrative fee amount will remain in effect until changed by
notice and comment rulemaking. For disputes initiated on or after
January 22, 2024, the administrative fee amount is $115 per party per
dispute.
(3) Severability. (i) Any provision of this paragraph (d) or
paragraphs (e)(2)(vii) and (viii) of this section held to be invalid or
unenforceable as applied to any person or circumstance shall be
construed so as to continue to give the maximum effect to the provision
permitted by law, including as applied to persons not similarly
situated or to dissimilar circumstances, unless such holding is that
the provision of this paragraph (d) or paragraphs (e)(2)(vii) and
(viii) is invalid and unenforceable in all circumstances, in which
event the provision shall be severable from the remainder of this
paragraph (d) or paragraphs (e)(2)(vii) and (viii) and shall not affect
the remainder thereof.
(ii) The provisions in this paragraph (d) and paragraphs
(e)(2)(vii) and (viii) of this section are intended to be severable
from each other.
(e) * * *
(2) * * *
(vii) Provide, no more frequently than once per calendar year, a
fixed fee for single determinations and a separate fixed fee for
batched determinations, as well as an additional fixed tiered fee for
batched determinations, if applicable, within the upper and lower
limits for each, as established by the Secretary in notice and comment
rulemaking. The certified IDR entity fee ranges established by the
Secretary in rulemaking will remain in effect until changed by notice
and comment rulemaking. The certified IDR entity may not charge a fee
outside the limits set forth in rulemaking unless the certified IDR
entity or IDR entity seeking certification receives advance written
approval from the Secretary to charge a fixed fee beyond the upper or
lower limits by following the process described in paragraph
(e)(2)(vii)(A) of this section. A certified IDR entity may also seek
advance written approval from the Secretary to update its fees one
additional time per calendar year by meeting the requirements described
in paragraph (e)(2)(vii)(A). The Secretary will approve a request to
charge a fixed fee beyond the upper or lower limits for fees as set
forth in rulemaking, or to update the fixed fee during the calendar
year if, in their discretion, they determine the information submitted
by a certified IDR entity or IDR entity seeking certification
demonstrates that the proposed change to the certified IDR entity fee
would ensure the financial viability of the certified IDR entity or IDR
entity seeking certification and would not impose on parties an undue
barrier to accessing the Federal IDR process.
(A) In order for the certified IDR entity or IDR entity seeking
certification to receive the Secretary's written approval to charge a
fixed fee beyond the upper or lower limits for fees as set forth in
rulemaking or to update the fixed fee during the calendar year, the
certified IDR entity or IDR entity seeking certification must submit to
the Secretary, in the form and manner specified by the Secretary:
(1) The fixed fee the certified IDR entity or IDR entity seeking
certification believes is appropriate for the certified IDR entity or
IDR entity seeking certification to charge;
(2) A description of the circumstances that require the alternative
fixed fee, or that require a change to the fixed fee during the
calendar year, as applicable; and
(3) A detailed description that reasonably explains how the
alternative fixed fee or the change to the fixed fee
[[Page 88525]]
during the calendar year, as applicable, will be used to mitigate the
effects of those circumstances.
(B) [Reserved]
(viii) For disputes initiated on or after January 22, 2024,
certified IDR entities are permitted to charge a fixed certified IDR
entity fee for single determinations within the range of $200 to $840,
and a fixed certified IDR entity fee for batched determinations within
the range of $268 to $1,173, unless a fee outside such ranges is
approved by the Secretary pursuant to paragraph (e)(2)(vii)(A) of this
section. As part of the batched determination fee, certified IDR
entities are permitted to charge an additional fixed tiered fee within
the range of $75 to $250 for every additional 25 line items within a
batched dispute, beginning with the 26th line item. The ranges for the
certified IDR entity fees for single and batched determinations will
remain in effect until changed by notice and comment rulemaking.
* * * * *
DEPARTMENT OF HEALTH AND HUMAN SERVICES
49 CFR Subtitle A
For the reasons stated in the preamble, the Department of Health
and Human Services amends 45 CFR part 149 as set forth below:
PART 149--SURPRISE BILLING AND TRANSPARENCY REQUIREMENTS
0
6. The authority citation for part 149 continues to read as follows:
Authority: 42 U.S.C. 300gg-92 and 300gg-111 through 300gg-139,
as amended.
0
7. Section 149.510 is amended by:
0
a. Revising paragraph (d)(2)(ii);
0
b. Adding paragraph (d)(3);
0
c. Removing the semicolon at the end of paragraphs (e)(2)(iii) and (vi)
and adding a period in its place;
0
d. Revising paragraph (e)(2)(vii);
0
e. Redesignating paragraphs (e)(2)(viii) through (xi) as paragraphs
(e)(2)(ix) through (xii);
0
f. Adding new paragraph (e)(2)(viii);
0
g. Removing the semicolon at the end of newly redesignated paragraphs
(e)(2)(ix) and (x) and adding a period in its place; and
0
h. Removing ``; and'' at the end of newly redesignated paragraph
(e)(2)(xii) and adding a period in its place.
The revisions and additions read as follows:
Sec. 149.510 Independent dispute resolution process.
* * * * *
(d) * * *
(2) * * *
(ii) The administrative fee amount will be established through
notice and comment rulemaking no more frequently than once per calendar
year in a manner such that the total administrative fees paid for a
year are estimated to be equal to the amount of expenditures estimated
to be made by the Secretaries of the Treasury, Labor, and Health and
Human Services for the year in carrying out the Federal IDR process.
The administrative fee amount will remain in effect until changed by
notice and comment rulemaking. For disputes initiated on or after
January 22, 2024, the administrative fee amount is $115 per party per
dispute.
(3) Severability. (i) Any provision of this paragraph (d) or
paragraphs (e)(2)(vii) and (viii) of this section held to be invalid or
unenforceable as applied to any person or circumstance shall be
construed so as to continue to give the maximum effect to the provision
permitted by law, including as applied to persons not similarly
situated or to dissimilar circumstances, unless such holding is that
the provision of this paragraph (d) or paragraphs (e)(2)(vii) and
(viii) is invalid and unenforceable in all circumstances, in which
event the provision shall be severable from the remainder of this
paragraph (d) or paragraphs (e)(2)(vii) and (viii) and shall not affect
the remainder thereof.
(ii) The provisions in this paragraph (d) and paragraphs
(e)(2)(vii) and (viii) of this section are intended to be severable
from each other.
(e) * * *
(2) * * *
(vii) Provide, no more frequently than once per calendar year, a
fixed fee for single determinations and a separate fixed fee for
batched determinations, as well as an additional fixed tiered fee for
batched determinations, if applicable, within the upper and lower
limits for each, as established by the Secretary in notice and comment
rulemaking. The certified IDR entity fee ranges established by the
Secretary in rulemaking will remain in effect until changed by notice
and comment rulemaking. The certified IDR entity may not charge a fee
outside the limits set forth in rulemaking unless the certified IDR
entity or IDR entity seeking certification receives advance written
approval from the Secretary to charge a fixed fee beyond the upper or
lower limits by following the process described in paragraph
(e)(2)(vii)(A) of this section. A certified IDR entity may also seek
advance written approval from the Secretary to update its fees one
additional time per calendar year by meeting the requirements described
in paragraph (e)(2)(vii)(A). The Secretary will approve a request to
charge a fixed fee beyond the upper or lower limits for fees as set
forth in rulemaking or to update the fixed fee during the calendar year
if, in their discretion, they determine the information submitted by a
certified IDR entity or IDR entity seeking certification demonstrates
that the proposed change to the certified IDR entity fee would ensure
the financial viability of the certified IDR entity or IDR entity
seeking certification and would not impose on parties an undue barrier
to accessing the Federal IDR process.
(A) In order for the certified IDR entity or IDR entity seeking
certification to receive the Secretary's written approval to charge a
fixed fee beyond the upper or lower limits for fees as set forth in
rulemaking or to update the fixed fee during the calendar year, the
certified IDR entity or IDR entity seeking certification must submit to
the Secretary, in the form and manner specified by the Secretary:
(1) The fixed fee the certified IDR entity or IDR entity seeking
certification believes is appropriate for the certified IDR entity or
IDR entity seeking certification to charge;
(2) A description of the circumstances that require the alternative
fixed fee, or that require a change to the fixed fee during the
calendar year, as applicable; and
(3) A detailed description that reasonably explains how the
alternative fixed fee or the change to the fixed fee during the
calendar year, as applicable, will be used to mitigate the effects of
those circumstances.
(B) [Reserved]
(viii) For disputes initiated on or after January 22, 2024,
certified IDR entities are permitted to charge a fixed certified IDR
entity fee for single determinations within the range of $200 to $840,
and a fixed certified IDR entity fee for batched determinations within
the range of $268 to $1,173, unless a fee outside such ranges is
approved by the Secretary, pursuant to paragraph (e)(2)(vii)(A) of this
section. As part of the batched determination fee, certified IDR
entities are permitted to charge an additional fixed tiered fee within
the range of $75 to $250 for every additional 25 line items within a
batched dispute, beginning with the 26th line item. The ranges for the
certified IDR entity fees for single and batched determinations will
remain in effect until changed by notice and comment rulemaking.
* * * * *
[FR Doc. 2023-27931 Filed 12-18-23; 4:15 pm]
BILLING CODE 4150-29-P; 4830-01-P; 4120-01-P]