CMS Finalizes Rule to Simplify Payer-Provider Disputes Under No Surprises Act 

The Centers for Medicare and Medicaid Services finalized a new rule on Thursday to improve the federal independent dispute resolution (IDR) process under the No Surprises Act. The update is designed to reduce costs and administrative burden for both providers and payers, the agency said.

The No Surprises Act, which went into effect in 2022, seeks to protect Americans from unexpected medical bills by banning many forms of surprise billing for out-of-network emergency care. It also established a federal arbitration process for payer-provider disagreements over out-of-network payment amounts. Both providers and payers have expressed frustrations with the current IDR process, with complaints about high administrative fees, long delays and a growing backlog of disputes. 

CMS said there have been more than 5 million disputes since the No Surprises Act went into effect. This is far more than the agency had expected — it originally estimated it would be handling about 17,000 disputes per year. 

In response to the high volume of disputes, CMS said the new rule seeks to make the IDR process more efficient and less costly for all parties involved. One of the biggest changes CMS made on Thursday was lowering the administrative fee from $115 to $15 per party per dispute. 

The agency will also allow for batching of certain eligible disputes, which lets providers and payers group similar claims together in a single arbitration process when they involve the same parties and comparable circumstances.

Additionally, CMS finalized changes aimed at streamlining how disputes enter the IDR system, including clearer eligibility and submission requirements to decrease ineligible or duplicative filings. By strengthening upfront screening, cases are less likely to stall on procedural issues once they reach arbitration, CMS said. 

“We are cutting fees, improving transparency and restoring order to a system that was overwhelmed. This is about making government processes efficient, accountable and focused on results,” CMS Administrator Mehmet Oz said in a statement.

Provider groups have generally welcomed the news. For instance, the Federation of American Hospitals told MedCity News it supports the rule because it believes the changes will make the IDR process more transparent and efficient, while reinforcing payers’ responsibilities during payment disputes.

Similarly, the Medical Group Management Association said CMS’ reforms are a step in the right direction.

“Cutting the administrative fee from $115 to just $15 per party removes a real barrier to access to the IDR process — particularly for smaller practices. Requiring health plans to clearly indicate whether a claim is subject to IDR will bring greater transparency and help eliminate the costly problem of ineligible claim submissions. We will continue to analyze the full rule in the days ahead, but MGMA is encouraged by these commonsense reforms,” said Anders Gilberg, MGMA’s senior vice president of government affairs, in a statement.

Another healthcare leader — Carol Skenes, chief of staff at Turquoise Health, a healthcare pricing and contract management startup — noted that while the new rule is an improvement, there is still a need for greater transparency around qualifying payment amount (QPA) calculations. These are the median in-network rates payers use as a benchmark during the IDR process.

“Ensuring the QPA is a trustworthy rate alongside a more streamlined open negotiation window and IDR process both work in tandem to help alleviate the dispute backlog and simplify the path to dispute resolution,” Skenes said in a statement sent to MedCity News.

The Coalition Against Surprise Medical Billing also thinks that the IDR could still use some additional work. The organization believes more needs to be done to eliminate the “ongoing abuse and misuse of IDR” by some providers.

Industry groups representing employers and payers have increasingly raised concerns that some providers are overwhelming the IDR process by filing large volumes of disputes in pursuit of higher reimbursement payments. 

“Patients and employers cannot afford continued exploitation of the law’s IDR process. Additional reforms are needed to address the flood of disputes from IDR middlemen and the misaligned incentives driving inflationary awards to a handful of private equity-backed providers,” the coalition said in a statement.

The organization urged the Trump administration to crack down on “persistent bad actor providers and IDR middlemen” so that the No Surprises Act can better deliver on its promise of protecting patients and reducing healthcare costs.

Photo: the_burtons, Getty Images