backDOJ Files Lawsuit against New York Department of Health and Private Administrator of State Home-Care Program for Ongoing Medicaid Fraud
On June 16, 2026, the Department of Justice (DOJ) filed a lawsuit in the Eastern District of New York against the State of New York Department of Health (DOH), New York State Medicaid Director Amir Bassiri, and Public Partnerships LLC (PPLLC), an Alpharetta, Georgia-based company that has managed New York’s Consumer Directed Personal Assistance Program (CDPAP) since 2025. DOJ alleges that the Defendants all engaged in an unlawful scheme in which DOH conducted a sham bid process to install PPLLC as the sole fiscal intermediary responsible for employing and managing home-care caregivers who participate in DOH’s Consumer Directed Personal Assistance Program. After PPLLC was hired, it allegedly failed to deliver substantial cost savings as promised and continually deviated from representations made in its contract with DOH. DOJ alleges that PPLLC’s fraud is ongoing and DOH has failed to take action to stop it. The lawsuit seeks injunctive relief to stop the Defendants from making false statements related to the CDPAP and to end funding to PPLLC unauthorized by its contract.
New York’s CDPAP program is a Medicaid program that provides home care through lay caregivers (including family members) to Medicaid patients with disabilities or significant medical needs. Before 2024, CDPAP was managed by hundreds of fiscal intermediaries. But in the fall of 2024, the New York Legislature enacted a statute that required a competitive bid process to select a single fiscal intermediary to manage the CDPAP program. Despite the requirement for a competitive bid process, however, DOJ’s lawsuit alleges that DOH preselected PPLLC as the winner through a sham bid process in late 2024. PPLLC allegedly included numerous material misrepresentations in its bid concerning the cost and time savings it could deliver.
According to the DOJ’s complaint, PPLLC’s specific misrepresentations included its alleged misuse of funds appropriated for direct care costs. Although DOH required some funds to be paid directly to caregivers, PPLLC allegedly extracted a percentage of each hour billed by direct caregivers as cost reimbursement for its administration of the program. This contradicted representations PPLLC made in its bid proposal. PPLLC also allegedly misrepresented its staffing plan, financial readiness to perform the contract, and the quality of its software. Additionally, DOH and PPLLC allegedly agreed before signing their contract that they would triple the timeline for PPLLC to transition into its role as sole administrator of the program.
The lawsuit further alleges that DOH and PPLLC have continued misrepresenting their work on the CDPAP program, including the status of the transition of patients and caregivers to PPLLC, disruptions to patient care, changes to caregiver pay, supposed cost savings, and other contract requirements. All the misrepresentations, according to DOJ, have cost and continue to cost the federal government millions of dollars.
A copy of the complaint is available here.
Reporter, Doug Comin, Atlanta, GA, +1 404 572 3525, dcomin@kslaw.com.
CMS Finalizes Overhaul of the Federal Independent Dispute Resolution Process Under the No Surprises Act
More than two and a half years after the federal agencies published the Federal Independent Dispute Resolution (IDR) Operations proposed rule, the Departments of Health and Human Services, Labor, the Treasury, and the Office of Personnel Management (Departments) published a final rule on June 4, 2026. The IDR Operations Final Rule (Final Rule) implements significant operational reforms to the IDR process under the No Surprises Act, including various proposals to streamline the process to accommodate the unanticipated volume of claims. With over 5.1 million disputes submitted since the process launched—far exceeding the Departments’ original projections of 35,000 per year—the rule overhauls administrative fees, dispute initiation procedures, batching rules, and compliance obligations.
Dramatic Reduction in the Administrative Fee
The Final Rule reduces the per-dispute administrative fee from $115 to $15 per party per dispute, effective five business days after publication. The Departments calculated this fee by dividing estimated annual expenditures of approximately $119.4 million by the estimated $6.9 million administrative fees expected to be paid annually, reflecting the dramatic increase in IDR process utilization.
The Departments declined to finalize proposals for tiered or reduced fees for low-dollar or ineligible disputes, concluding that the flat $15 fee adequately addresses access concerns without variable-fee complexity. For providers, this reduction removes a significant barrier to pursuing disputes over lower-dollar services—such as radiology, pathology, and laboratory claims—that were previously cost-prohibitive to contest.
The fee remains non-refundable for all parties once final selection of the certified IDR entity has been completed, regardless of whether the dispute is later withdrawn, settled, or found ineligible.
Each party also must pay a certified IDR entity fee at the time of offer submission, which will be returned to the prevailing party upon the resolution of the dispute. The certified IDR entity fees remain unchanged, ranging from $200 to $840 for single determinations and $268 to $1,173 for batched determinations.
Revised Open Negotiation and IDR Initiation Process
The Final Rule restructures the open negotiation and IDR initiation process to improve communication and accelerate dispute processing. As a prerequisite to dispute initiation, initiating parties must now submit an open negotiation notice and supporting documentation through the Federal IDR portal. Receiving parties are required to respond no later than the 15th business day of the 30-business-day open negotiation period.
If open negotiation does not result in an agreement, the initiating party must submit a written notice of IDR initiation during the four-business-day period beginning on the first business day after the last day of the open negotiation period.
The practical impact of these enhanced notice requirements will require providers to assemble more detailed information at the front-end of the dispute process. Initiating parties should prepare to provide the specified data elements—including claim numbers, dates of service, initial payment amounts, and qualifying payment amounts—at the time of open negotiation initiation.
New Rules to Streamline Eligibility Review
The Final Rule requires health plans or issuers to disclose identifying information at the time of the initial payment or notice of denial. Plans or issuers must indicate the business name of the plan, the business name of the plan sponsor (if applicable), and the registration identification number assigned to the health plan by the new IDR registry, discussed below. The initial payment or notice of denial must also communicate claim information using claim adjustment reason codes (CARCs) and remittance advice remark codes (RARCs) to indicate whether the claim is subject to the No Surprises Act. The CARC and RARC codes will be implemented in future guidance.
The Final Rule also creates an IDR Registry requiring all self-insured group health plans, health insurance issuers, and FEHB Program carriers to register with the Departments and provide standardized identifying and contact information. Initial registration must be completed by the later of 90 business days after the Departments announce registry availability, or the date the plan begins offering coverage subject to the Federal IDR process. Registration information must be updated within 30 calendar days of any change and confirmed annually in the fourth quarter of each calendar year. The registry will be accessible through the Federal IDR portal to parties seeking to initiate open negotiation or a dispute. For providers, the registry should reduce the time spent identifying the correct entity and decrease disputes improperly initiated against the wrong party or misdirected to an incorrect TPA.
Finally, the Rule also requires all initiating parties to include additional information in their notice of IDR initiation to assist in the eligibility analysis. The notice of IDR initiation must include enhanced contact details, the provider’s NPI, the plan or issuer’s IDR registration number, and information identifying whether the dispute involves batched or bundled items. The non-initiating party must respond to the initiation notice within three business days with an attestation as to whether the disputed item or service is eligible for the Federal IDR process, a statement agreeing or objecting to the initiating party’s preferred certified IDR entity, and supporting documentation. All notices must be furnished via the Federal IDR portal to both the other party and the Departments on the same day.
Following selection of the IDR entity, the certified IDR entity has five business days to make an eligibility determination—two additional business days than previously allowed. Once the dispute is deemed eligible, the IDR dispute timeline begins: Parties must submit their offers and certified IDR entity fees no later than 10 business days after the items or services are determined eligible, and the certified IDR entity must issue a payment determination no later than 30 business days after the eligibility determination.
Two-Step Certified IDR Entity Selection
The Final Rule establishes a two-step IDR entity selection process, made up of “preliminary selection” and “final selection.” Preliminary selection occurs three business days after IDR initiation if the parties agree on an entity. If the parties do not agree, the Departments randomly select an entity six business days after initiation. A conflict-of-interest review must be completed before selection becomes final – i.e., the “final selection.”
Revised Batching Rules: Greater Flexibility and a Batching Limit
The Final Rule significantly revises the batching criteria governing when multiple items and services may be grouped into a single dispute in response to a prior court order that vacated earlier batching rules.
Under the finalized rules, qualified IDR items and services may now be batched if they meet one of three criteria establishing relatedness: (1) items and services furnished to a single patient during a single patient encounter on one or more consecutive dates of service and billed on the same claim form; (2) items and services billed under the same service code or a comparable code under a different procedural code system; or (3) for anesthesiology, radiology, pathology, and laboratory services, items billed under service codes belonging to the same Category I CPT code range as specified in Departmental guidance. The line-item limit for batched disputes has been increased from 25 (as proposed) to 50 qualified IDR items and services per dispute.
The Final Rule also formally defines “bundled payment arrangement” as an arrangement under which a provider bills, or a plan pays, under a single service code representing multiple items or services furnished to a single patient (for example, a DRG code). Bundled payment arrangements may be submitted as a single payment determination and are subject to the certified IDR entity fee for single (rather than batched) determinations.
Standardized Withdrawal Process
The Final Rule establishes a uniform process for withdrawing disputes from the Federal IDR process. A dispute may be withdrawn before a payment determination in four circumstances: (1) both parties agree to withdraw and provide notification with authorized signatures; (2) the initiating party submits a standard withdrawal request and the non-initiating party agrees (or fails to respond) within five business days; (3) the certified IDR entity or Departments cannot determine eligibility because both parties are nonresponsive; or (4) the certified IDR entity cannot make a payment determination because both parties have failed to submit an offer.
If parties settle or withdraw after final entity selection but before a payment determination, the certified IDR entity must return each party’s full fee within 30 business days if no eligibility determination has been made. If an eligibility determination has been made but no payment determination has been issued, the certified IDR entity must return half of each party’s certified IDR entity fee within 30 business days.
Extenuating Circumstances Extensions
The Final Rule expands the circumstances under which Federal IDR process timeframes may be extended. Extensions may be granted when systematic processing delays or unforeseen circumstances beyond a party’s control prevent timely compliance. The statutory deadline for payment following a determination, however, cannot be extended.
Phased Applicability Dates
The Final Rule applicability dates include:
- The administrative fee of $15 per party per dispute applies to disputes initiated on or after June 11, 2026.
- Changes to the content required for open negotiation and IDR initiation notice requirements, as well as the timeline for selection of certified IDR entities and submission of offers provisions apply to disputes with open negotiation periods beginning 90 calendar days after the Departments issue guidance announcing portal functionality availability.
- Extenuating circumstances modifications and certain batching and withdrawal provisions apply November 1, 2026.
- The IDR registry requirement takes effect 90 business days after the Departments announce registry availability.
Key Takeaways
Providers may wish to re-evaluate their IDR strategy in light of the revised rules. The reduced administrative fee and more inclusive batching rules lower the profitability threshold for initiating disputes for low-dollar items and services. Additionally, providers should update internal processes for initiating disputes via open negotiation to better assemble the necessary data at the open negotiation stage, rather than the dispute initiation stage.
The IDR Final Rule is available here.
Reporter, Alana Broe, Atlanta, 4045272720, abroe@kslaw.com.
Editors: Chris Kenny and Ahsin Azim
Issue Editor: Morgan Cronin