This document is provided for general information purposes only and should not be considered legal or tax advice or legal or tax opinion on any specific facts or circumstances. Readers are urged to consult their legal counsel and tax advisor concerning any legal or tax questions that may arise.


On October 7, 2021, the regulatory agencies published interim final regulations implementing the independent dispute resolution (IDR) process that is part of the federal surprise billing rules.  The surprise billing requirements were part of the No Surprises Act (the “Act”).  We wrote about the first set of regulations implementing these surprise billing requirements (the “Part I regulations”) in a prior article.

As described in our prior article, the federal surprise billing requirements generally apply in three situations: (1) when a covered individual receives emergency services in an emergency department of a hospital or in an independent freestanding emergency department and either the provider or the facility is out-of-network; (2) when a covered individual receives services from an out-of-network provider during a visit to an in-network facility; and (3) when a covered individual receives air ambulance services from an out-of-network provider.  The rules generally require group health plans to treat such claims as in-network claims and prohibits the provider/facility from balance billing the patient.

The Act establishes rules governing the amount a group health plan must pay the out-of-network provider/facility when the law applies to a claim.  When applicable, the amount is determined by reference to an All-Payer Model Agreement or a specified State law.[1]  If neither an All-Payer Model Agreement nor a specified State law applies, the payment amount is determined under the IDR process established in the Act and implemented in the new regulations (the “Part II regulations”).

IDR PROCESS

Under the Part II regulations, if neither an All-Payer Model Agreement nor a specified State law applies, group health plans and providers will use the following IDR process to determine the amount the plan will pay for an out-of-network claim subject to the rules:

  1. The plan makes an initial payment or issues a notice of denial of payment. Under the Part I regulations, the initial payment or notice of denial must typically be made or issued by a group health plan within 30 days after the bill for the services is transmitted by the provider or facility to the plan.[2]
  2. During the 30-business day period beginning on the day on which the provider or facility receives the initial payment or notice of denial from the plan, the provider, facility, or plan (i.e., a party) may initiate an open negotiation period for the purpose of determining the out-of-network rate.[3] A party initiates the open negotiation period by sending a notice to the other party (referred to as the “open negotiation notice”).  The open negotiation notice must include certain information specified in the Part II regulations and must be provided using a standard form developed by the regulatory agencies.  The open negotiation notice may be sent in writing or electronically (e.g., email) if the party sending the notice believes, in good faith, that the electronic method is readily accessible by the other party and a paper notice is provided free of charge upon request.

Observation:  In most cases, the provider/facility will initiate the open negotiation period.  The plan must inform the provider/facility of the person to contact to initiate the open negotiation period in a notice that must be provided with initial payment or notice of denial.

Note:  The open negotiation notice form that must be used, along with certain other required notices and forms, are currently available on this EBSA website.

  1. Once the open negotiation period begins, the parties attempt to negotiate an agreement regarding the out-of-network rate. The parties have 30 business days for open negotiation beginning on the date on which the open negotiation notice is sent by the party initiating the period.  If they reach an agreement and the out-of-network rate exceeds the initial payment plus any applicable cost sharing paid or owed by the covered individual, the plan will pay the difference to the provider/facility.  The regulations do not address the timing of any payment due from the plan to the provider/facility based an agreement reached during the open negotiation period.

[1] See DOL Reg. §2590.716-3 (definition of “out-of-network rate”).

[2] See, e.g., DOL Reg. §2590.716-4(b)(3)(iv)(A).

[3] See DOL Reg. §2590.716-8(b)(1).


This document is provided for general information purposes only and should not be considered legal or tax advice or legal or tax opinion on any specific facts or circumstances. Readers are urged to consult their legal counsel and tax advisor concerning any legal or tax questions that may arise.


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