News & Insights


October 30, 2023

Health Headlines – October 30, 2023

Back to the Drawing Board: Agencies Propose Changes to No Surprises Act IDR Process Operations

On October 27, 2023, the Departments of HHS, Labor, and Treasury and the Office of Personnel Management (the Departments) released a proposed rule updating the payor-provider dispute resolution process under the federal No Surprises Act. The proposed rule (the IDR Operations Proposed Rule) focuses on the operations of the independent dispute resolution (IDR) process and does not address the controversial dispute resolution criteria. If finalized, the IDR Operations Proposed Rule would modify the requirements for pre-dispute negotiation communications between plans and providers, expand upon the pre-dispute eligibility determination processes, and change the administrative fee structure. The IDR Operations Proposed Rule also provides new batching provisions.

The IDR Portal opened for disputes on April 15, 2022. The Departments reported that more than 489,000 disputes were submitted between April 2022 and July 2023, and that as a result of this unexpected high volume the dispute resolution process is taking longer than required under prior rulemaking. The Departments credit five reasons for the high volume of initiated results:

(1)   Providers, facilities, and air ambulance providers report that plans and issuers are calculating the QPA to be artificially low, and are paying claims based on an improperly low QPA calculation;

(2)   Disputing parties are not yet able to predict how disputes will be resolved by IDR entities;

(3)   Disputing parties are failing to engage in meaningful open negotiation;

(4)   Multiple District Court rulings vacating guidance and rulemaking related to the IDR process have necessitated multiple shutdowns of the IDR process; and

(5)   A large volume of ineligible disputes have been submitted.

The IDR Operations Proposed Rule, in part, is intended to address these inefficiencies and contribute to the timely rendering of payment determinations under the IDR process.

Pre-Dispute Communications and Open Negotiation

Parties have reported that efforts to engage in pre-dispute dialogue and negotiation have been largely unsuccessful. In response, the Departments propose to require plans to disclose additional information upon the issuance of an initial payment. Specifically, the payer would be required to disclose the legal business name of the plan (if any) or issuer, the legal business name of the plan sponsor (if applicable), and its IDR registration number. The payers would also be required to use specific claim adjustment reason codes (CARCs) and remittance advice remark codes (RARCs) to communicate information regarding whether the plan considered an item or service to be subject to the No Surprises Act. Additionally, the payers would be required to include a statement explaining how to initiate open negotiation.

The Departments also propose amendments to the methods of initiating open negotiation. Under the IDR Operations Proposed Rule, a party must use the federal IDR portal to notify the other party and the Departments of the initiation of open negotiation. The initiating party must include additional data elements on the notice to help the parties identify the item or service, the reasons for denial or initial payment, and the applicability of the No Surprises Act. The initiating party must attach a copy of the remittance advice or notice of denial of payment to the initiation notice.

The Departments also propose to require the non-initiating party to file an acknowledgement of receipt of the open negotiation notice within fifteen business days of receipt. The acknowledgement must also be filed through the IDR portal.

Eligibility Determinations

Prior IDR guidance does not impose a time limit on eligibility determinations for the IDR process, and the Departments credit complex eligibility determinations with much of the delay and backlog of IDR determinations. The Departments propose to require IDR entities to make eligibility determinations within five business days of being appointed as the IDR entity and to require disputing parties to provide additional information regarding eligibility within 5 business days, if requested.

The Departments also propose to establish a Departmental eligibility review process to assist IDR entities with eligibility determinations during a period of systemic delay or extenuating circumstances. If the Departments determined that assistance is required to facilitate timely payment determinations or the effective processing of disputes under the federal IDR process, the Departments could activate Departmental eligibility review by making an advance public notification of the date on which Departmental eligibility review will begin and of the reasons for such review. The same public notification is required to end Departmental eligibility review.


Current guidance only permits initiating parties to include multiple items or services in a single “batched dispute” if the item or service was billed under the same service code or a comparable code under a different procedural code system. This has the result of requiring multiple disputes for a single patient encounter. In response to feedback, the Departments propose to allow the following items and services to be batched: (1) items and services furnished to a single patient in a single patient encounter 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; and (3) anesthesiology, radiology, pathology, and laboratory items and services billed under service codes belonging to the same Category I CPT code section. However, batched determinations would be permitted to contain no more than twenty-five line items in a single dispute.

The Departments also propose to remove language from October 2021 guidance that subjects bundled payments to the rules regarding batched determinations. If finalized, the IDR Operations Proposed Rule would permit services paid under a bundled payment arrangement to be brought in a single IDR dispute.

Timeline Changes

In response to the unexpected volume and delays to the system, the Departments proposed amending a number of deadlines for the IDR process. The Departments also proposed new deadlines for intervals of the IDR process after initiation. The proposed new IDR timeline is summarized below:

  • Thirty days after the bill for services is submitted: The plan or issuer must issue an initial payment or notice of denial.
  • Thirty business days after the initial payment or notice of denial is received:The provider or facility must initiate the thirty business day open negotiation period.
  • Within first fifteen business days of the open negotiation period: The party in receipt of the open negotiation notice must provide notice of receipt to the other party.
  • Four business days after the close of the open negotiation period:Either party can initiate the IDR process.
  • Three business days after IDR initiation:The non-initiating party must submit notice of IDR initiation response form attesting to whether the federal IDR process applies to the item(s) or service(s) included in the notice of IDR initiation.
  • Three to six business days after IDR initiation:Preliminary selection of the certified IDR entity. If the parties fail to jointly select an entity, one will be appointed on the sixth day.
  • Two business days after preliminary selection of the certified IDR entity: The initiating party must pay the IDR administrative fee directly to the Departments.
  • Three business days after preliminary selection of the certified IDR entity: The IDR entity has three days to submit an attestation that it does not have a conflict of interest after being preliminary selected as the IDR entity for the dispute. If the IDR entity attests to a conflict, a new IDR entity will be randomly selected.
  • One business day after the conflict of interest attestation:Final selection of certified IDR entity.
  • Five business days after final selection of IDR entity:The IDR entity must review the information in the initiation notices and submissions to determine if the dispute is eligible for resolution in the IDR process.
  • Two business days after eligibility determination: The non-initiating party must pay the IDR administrative fee directly to the Departments.
  • Ten business days after final selection of the certified IDR entity:The parties must submit their offers and the certified IDR entity fee to the IDR entity.
  • Thirty business days after final selection of the certified IDR entity:The IDR entity must determine the payment amount and notify the parties of its decision.
  • Thirty calendar days after payment determination:The parties must pay the amount determined by the IDR entity. The IDR entity must also refund the prevailing party’s IDR entity fee.

The Departments also propose to expand the scenarios in which the above time periods can be extended by the Departments for “extenuating circumstances.” The Departments wish to include systematic delays, high volume of disputes, and portal system failures as the sorts of “extenuating circumstances” which could warrant an extension.

IDR Registry

The Departments propose to require payers subject to the federal IDR process to register with the Departments and provide general information on the applicability of the federal IDR process to items or services covered by the plan or coverage. The Departments would assign each payer a registration number that would allow parties to more easily access the information needed to initiate open negotiations and disputes through the IDR portal.

Administrative Fee Changes

The Departments have proposed specific deadlines for the payment of administrative fees, and direct IDR disputes to be closed if a party fails to make payment on time. The Departments also propose a flexibility that provides a lower administrative fee if the amount when a dispute is below a predetermined threshold. If finalized, the rule would permit low-dollar disputes to be submitted at 50% of the administrative fee.

The IDR Operations Proposed Rule does not address the calculation of the Qualifying Payment Amount (QPA) or the use of the QPA and the other statutory factors by IDR entities—two topics that have been highly contested and challenged in multiple federal lawsuits. The U.S. District Court for the Eastern District of Texas recently vacated rulemaking and informal guidance on these two topics, and the Departments are expected to issue additional conforming guidance or rulemaking on these topics. The Departments are also defending the vacated guidance in an appeal to the Fifth Circuit Court of Appeals.

The IDR Operations Proposed Rule is available here.  Comments on the IDR Operations Proposed Rule are due by January 2, 2024.

Reporters, Alana Broe, Atlanta, + 1 404 572 2720,, and Amanda Hayes-Kibreab, Los Angeles, + 1 213 443 4375,

OIG Issues Advisory Opinion Rejecting Proposal to Offer Free Compatible Hearing Aids to Certain Patients

On October 20, 2023, OIG issued a negative Advisory Opinion in response to a proposal from a cochlear implant manufacturer (Requestor) to offer and provide free compatible hearing aids to certain patients (Proposed Arrangement). These patients include federal healthcare program beneficiaries who receive cochlear implants manufactured by Requestor. 

Requestor manufactures cochlear implants for some patients who may be candidates for bimodal hearing. Bimodal hearing is the combined use of a hearing aid in one ear with a cochlear implant in the other ear. Hearing aids are not covered by Medicare. Under the Proposed Arrangement, Requestor proposed offering a “bimodal hearing bundle” where eligible bimodal hearing candidates would receive a free hearing aid with the purchase of a cochlear implant.  

OIG concluded that the Proposed Arrangement would implicate the federal Anti-Kickback Statute because the free hearing aid offered to patients may induce them to order and purchase the cochlear implant, which is reimbursable by federal healthcare programs. OIG explained that the safe harbor for patient engagement and support would not apply because the value of the hearing aid exceeds the safe harbor’s monetary cap, which is $570 for calendar year 2023.  

OIG also explained that it has “longstanding and continuing concerns” regarding the provision of free items and services to federal healthcare program beneficiaries because of potential “steering, unfair competition, improper utilization, and quality and cost concerns.”  

OIG also concluded that the Proposed Arrangement would implicate the civil monetary penalty provision prohibiting inducements to beneficiaries (Beneficiary Inducements CMP) because it may influence a beneficiary to choose Requestor’s hearing aid in states where Requestor bills Medicaid or Medicaid managed care for the hearing aid, which may be paid, in whole or in part, by Medicare or a state healthcare program. OIG explained that the exceptions to the Beneficiary Inducements CMP would not apply, and the Proposed Arrangement would cause a risk of steering and unfair competition.  

Based on the above, OIG concluded that the Proposed Arrangement (with the requisite intent) would violate the federal Anti-Kickback Statute and would also be subject to sanctions under the Beneficiary Inducements CMP.  

OIG Advisory Opinion No. 23-08 can be found here.

Reporter, Lindsay Greenblatt, Los Angeles, +1 213 218 4032,  

HRSA Ends PHE Waivers, Requiring Hospitals to Register Off-Site Outpatient Facilities for 340B Program

On October 27, 2023, the Health Resources and Services Administration of HHS (HRSA) issued a Federal Register Notice (the Notice) requiring hospitals to register their off-site outpatient facilities to continue participating in the federal 340B drug pricing program (340B Program), subject to a 90-day grace period. 

As part of the federal government’s response to the COVID-19 public health emergency (PHE), HHS waived requirements that (1) hospitals list their off-site outpatient facilities as reimbursable on their Medicare cost reports prior to participating in the 340B Program; and (2) hospitals register their off-site outpatient facilities in the 340B Office of Pharmacy Affairs Information System (OPAIS) prior to participating in the 340B Program. HRSA advised in the Notice that this waiver added risk and complexity to HRSA’s ability to effectively oversee compliance in the 340B Program, and that there are no longer exigent circumstances that require allowing hospitals to quickly adjust their operations for providing care off-site while maintaining immediate access to the 340B Program.

As a result, HRSA indicated in the Notice that it is ending these waivers and providing the following transition periods for covered hospital entities to comply with the off-site outpatient facility registration requirements:

  1. An off-site outpatient facility that is currently listed on the hospital’s most recently filed Medicare Cost Report, but not yet registered in OPAIS, must formally register in OPAIS by the next 340B Program quarterly registration period, occurring January 1–16, 2024.
  2. An off-site outpatient facility that began using 340B drugs prior to October 27, 2023, but is not yet listed as a reimbursable facility on the hospital’s most recently filed Medicare Cost Report must provide HRSA, via email to by January 25, 2024 (i.e., within 90 days after the Notice was published): (a) the name of the facility, (b) the date the facility will be listed on the hospital’s next filed Medicare Cost Report, and (c) the date the facility will register in OPAIS.

HRSA’s Notice is available here.

Reporter, Jason A. de Jesus, Los Angeles, +1 213 443 4343,

Also in the News

CMS Announces the End-Stage Renal Disease Prospective Payment System for Calendar Year 2024

On October 27, 2023, CMS issued a final rule that updates payment rates and policies under the end-stage renal disease (ESRD) prospective payment system (PPS) for renal dialysis services provided to Medicare beneficiaries on or after January 1, 2024. The changes to the ESRD PPS will provide a bundled, per-treatment payment to ESRD facilities that covers all renal analysis services provided for outpatient maintenance dialysis, including drugs, biological products, and other items and services that were previously separately payable. The final rule also includes several changes to the payment policies, such as reporting requirements for discarded dialysis drugs and biological products. More information about these updates to the ESRD PPS can be found here.

King & Spalding Client Alert: FDA’s Latest Salvo in the Laboratory Developed Tests (LDT) Wars

On September 29, 2023, the Food & Drug Administration (FDA) published a long-awaited proposed rule on laboratory developed tests. The proposed rule shows that FDA is still asserting that it has statutory authority over all laboratory developed tests and has not significantly changed its thinking on laboratory developed tests since it issued draft guidance on the topic in 2014. The proposed rule is open for public comment through December 2, 2023. King & Spalding can assist any healthcare providers that operate large laboratories with compliance issues that may arise if the proposed rule becomes final. Read more about this proposed rule from King & Spalding’s Client Alert on this topic here.