CMS Dispute Resolution Rule Makes Some Progress, But Lacks Teeth

To close the gap between providers and plans and address the issues specified in the Texas Medical Association decisions, such as bundling and batching criteria and certain independent dispute resolution timelines and processes, the Departments of Health and Human Services, Labor, and the Treasury released a proposed rule regarding the No Surprises Act’s Independent Dispute Resolution process in October.

The departments introduced numerous changes to the regulations. The proposed rule solves some challenges but lacks enforcement teeth. Concern remains whether the Centers for Medicare and Medicaid Services is doing enough to even the playing field in the IDR process.

Batching Items and Services

The departments simplify the standard regarding which items and services may be batched into a single dispute. If finalized, parties would be allowed to submit up to 25 qualified IDR items and services to be batched in a single dispute—if the items and services are billed by the same provider, paid by the same payor, related to the treatment of a similar condition, and furnished in the same 30-business-day time frame.

Given the fees involved with pursuing the IDR process, this proposal is a win for providers by eliminating financial and administrative hurdles.

Prior, the departments took a more far-reaching approach in interpreting the No Surprises Act, and prevented providers from batching health-care goods and services even when the services were performed during the same patient encounter.

If finalized, barriers to entry will be reduced, which will improve providers’ ability to recoup revenue. This proposal doesn’t accommodate single-patient encounters where the patient received more than 25 items and services.

This isn’t uncommon for emergency services, and would prevent providers from batching all otherwise qualified services together—this is particularly relevant to hospital-based physician claims such as anesthesiology and pathology.

Bundled Payment Arrangements

After pushback from providers, the departments propose to allow qualified IDR items and services that meet the definition of a “bundled payment arrangement” to be treated as a single payment determination.

Parties will need to submit one offer that reflects all items and services in the bundle, and the arbitrator will determine the appropriate payment amount for everything included.

The proposed rule allows providers to submit a single dispute if the plan makes an initial payment under a single service code that represents multiple items or services furnished to a single patient, allowing providers to pursue smaller claims with improved monetary outcomes.

However, plans still have the final say whether to make the initial payment under a single service code.

Provider Remittance

The proposed rule adds requirements for provider remittances to assist the parties in determining when the federal IDR process applies. First, the proposed rule requires plans to use Claim Adjustment Reason Codes (CARC) and Remittance Advice Remark Codes (RARCs) on the Explanation of Benefits/Payment.

The codes convey specific information to providers regarding IDR applicability, such as whether the payer is a self-insured plan and has opted into a specified state law.

Identifying claims eligible for the No Surprises Act process has been a particularly difficult task for providers, given the complexity and non-standard characteristics of member identification cards.

The requirement to use standardized CARC/RARC codes is consistent with existing HIPAA administrative simplification rules and is a big step in the right direction for helping providers timely identify eligible claims so that they don’t waive their right to the IDR process.

Second, plans would be required to disclose the legal business name of the plan or issuer. Plans would have the option to register with the Federal IDR Registry and obtain a registration number.

Plans with registration numbers would be required to convey that number on provider remittances, further reducing the administrative burden and eliminating extraneous communications to obtain additional information.

This proposal doesn’t contain enforcement mechanisms to ensure compliance. However, providers may be able to dispute an EOB/P if it doesn’t contain the correct information and require that the plan reissue the EOB/P with the correct details.

Open Negotiation

Under the proposed rule, the open negotiation notice will need to be submitted to the non-initiating party and to CMS through the IDR portal.

The non-initiating party would be required to submit a response notice within 15 business days of the open negotiation period. If finalized, the rule would encourage negotiations between the parties during the open negotiation period and result in fewer IDR disputes.

A major shortcoming is that the rule doesn’t provide a strict enforcement provision or penalty for failure to submit a response. Failing to timely respond—or respond at all—doesn’t cause such party to default. To date, plans consistently fail to respond or fail to negotiate in good faith during the open negotiation period.

This proposed rule could have implemented harsher enforcement efforts against parties that failed to participate in good faith in the process; however, it appears the departments punted.

While the departments claim they will have increased oversight over the process because the open negotiation process will be through the departments’ portal, their enforcement of bad behavior is voluntary.

What’s Next?

Overall, the proposed rule demonstrates that the departments are getting their act together. However, we believe the biggest failure to date is to implement strict enforcement guidelines on plans.

Providers are still getting the short end of the stick. While we believe these regulations will assist in some capacity to level the playing field, the departments have a way to go.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Rebecca Falk is an associate attorney at Wolfe Pincavage and represents provider-side health-care clients.

Andrea Greenblatt is an associate attorney at Wolfe Pincavage and a member of the firm’s health-care transactional team.