HHS and Federal Departments Release Final Rules to Clarify Dispute Resolution Process in Law with No Surprises


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The US Departments of Labor, Health, and Human Services and the Treasury have issued final rules regarding standards related to the arbitration process in the implementation of the law without surprise.

The final rules are intended to clarify the process for providers and health insurance companies to resolve disputes, the departments said in a statement Friday.


Importantly for hospitals, the final rules reflect a district court ruling reversing a portion of the October 2021 interim final rules that required independent dispute resolution entities to select the offer closest to the qualified payment amount.

This process favored insurers, hospitals argued.

The district court overturned that requirement in rulings in February and July.

The final rules specify that Certified IDR Entities must select the offer that best represents the value of the item or service in dispute after considering the qualified payment amount and all authorized information submitted by the parties.

The departments add a definition of the term “downcode” to require additional information from insurers on the QPA. This must be accompanied by an initial payment or a notice of disallowance of payment, without a supplier, facility or air ambulance service provider having to make a request for this information, in cases where the scheme or the issuer has coded the billed claim, according to the final rules.

These Final Rules also specify that, if a QPA is based on a bottom-coded service code or modifier, in addition to the information already required, a plan or issuer must provide a statement that the service code or modifier charged by the provider, facility or air ambulance service provider was undercoded; an explanation of why the complaint was coded, including a description of the service codes that were changed, if any, and the modifiers that were changed, added, or removed, if any; and the amount that would have been the QPA if the service code or modifier had not been coded.

The ministries continue to review comments on the July 2021 draft final rules as to whether additional information related to the APQ calculation methodology should be required.

In releasing the final rules, the departments said they received “significantly more” disputed claims than expected.

Between April 15 and August 11, parties to the conflict initiated more than 46,000 disputes through the federal Independent Dispute Resolution Portal, which is far more than departments had originally estimated to be submitted for a full year.

Of these, certified IDR entities have issued a payment decision in more than 1,200 disputes.


In December 2021, the American Hospital Association and the American Medical Association and others sued HHS and other federal agencies for implementing the law unsurprisingly.

The groups were not against the legislation, they said in the lawsuit, but took issue with how HHS implemented the internal dispute resolution process to resolve payment rates between provider and payer. The interim final rule stated that the arbitrator should select the offer closest to the eligible payment amount, which is set by the insurer.

The Texas Medical Association also challenged the implementation of the interim rules released in October 2021.

According to the final rules, on February 23 and July 26, the United States District Court for the Eastern District of Texas, in the cases Texas Medical Association, et al. vs. United States Department of Health and Human Services; and LifeNet, Inc. v. United States Department of Health and Human Services, rescinded portions of the final published interim rules.

On December 27, 2020, the Consolidated Appropriations Act, which includes the No Surprises Act, was enacted to provide surprise billing protections by limiting out-of-network cost sharing and prohibiting balance billing.

Twitter: @SusanJMorse
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