No More Surprise Medical Bills: Biden Administration Issues New Rule Governing Arbitration Fees and Takes First Step to Restarting Arbitration Process

*This is the 11th article in a series analyzing the No Surprises Act and its implementation. To view the entire series, click here.

A link to the proposed rule is here. 

As background, Congress passed the Act to curb bills that patients receive when they are forced to obtain emergency care at an out-of-network facility or non-emergency care from an out-of-network provider at an in-network facility. In these situations, the out-of-network health care providers are prohibited from balance billing the patients for these so-called “surprise” medical bills. Instead, under the Act, health care providers and insurers may engage in a “baseball style” arbitration process to determine the appropriate out-of-network rate for the disputed services. Under this arbitration process, an independent dispute resolution entity (IDRE) selects an offer submitted by either the provider or the insurer. 

To access the arbitration process, parties must pay two fees: (1) a potentially refundable IDRE fee that is returned to the prevailing party after a case is decided; and (2) a non-refundable administrative fee that is submitted to the Centers for Medicare and Medicaid Services (CMS), which operates the arbitration process. When the arbitration processes first began in 2022, the non-refundable administrative fee had been set by the Departments at $50. However, in response to a higher than expected volume of cases filed under the Act, the Departments increased the 2023 administrative fee sevenfold from $50 to $350 at the tail end of 2022. 

The increased fee was previously the subject of a health care provider lawsuit in Texas that ended with a federal judge striking down the increased administrative fee. Crucially, the court there found that the increased administrative fee violated the Administrative Procedures Act as it was issued without first undergoing the required notice and comment period. In response, the Departments have now issued the proposed rule, which will undergo a 30-day public comment period. Under the proposed rule, the fee would be set at $150. The changes would become effective on January 1, 2024 (or whatever later date the rule ultimately becomes effective). In addition to setting the non-refundable administrative fee, the proposed rule also describes the methodology to calculate that fee, as well as setting the potentially refundable IDRE fee ranges for future disputes, and outlining considerations used to develop those ranges. 

In addition to the proposed rule, the Departments also recently announced that IDREs may resume processing single and bundled (but not batched) disputes that were submitted to the portal on or before August 3, 2023. Previously, the Departments had paused the arbitration process while they regrouped following losses in court. The Departments are considering this partial reactivation to be “Phase 1” of restarting the arbitration process. The Departments have also granted all parties affected by the pause a 10-business day extension to submit payments and offers following this limited resumption on the arbitration process. Under the extension, parties now have until October 4, 2023, to submit offers and payments for disputes where offers and payments otherwise would have been due during the pause. 

Looking Ahead: Additional Rulemaking Forthcoming and Partial Resumption of Arbitrations

As noted above, the proposed rule is currently undergoing review during a 30-day notice and comment period, and IDREs have already directed parties to begin submitting offers for single and bundled (but not batched) claims. Additionally, the House Ways and Means Committee recently held public hearings regarding the “Fallout from Flawed Implementation” of the Act. A link to the Chairman’s opening remarks is here. As a result of each of these developments, the Departments may issue additional rulemaking addressing other aspects of their prior rules that have been struck down in court challenges. While the Departments finalize their rulemaking, health care providers should continue to file open negotiation notices to preserve all rights under the Act, and should consider whether to file comments to any proposed rules that the Departments issue.