The Department of HHS, Labor, and Treasury have issued a Final Rule revising the Federal Independent Dispute Resolution (IDR) process under the No Surprise Act (NSA). The Rule introduced major operational and procedural changes that will directly impact providers participating in the Federal IDR process, including air ambulance providers.
BACKGROUND
As part of the Consolidated Appropriations Act of 2021, Congress enacted the No Surprises Act (NSA), which also established the Federal Independent Dispute Resolution (IDR) process – a binding arbitration mechanism that permits out-of-network providers, including air ambulance providers, to challenge payer reimbursement determinations when the parties cannot resolve the dispute during the required 30 business day open negotiation period. The Federal IDR process became operational on April 15, 2022.
For air ambulance providers, the creation of the IDR process represented a major shift as providers for the first time had access to a formal Federal mechanism to challenge insurer payment determinations for transports subject to the NSA’s balance billing protections. In practice, however, the process has been plagued by significant operational dysfunction, delays, litigation, administrative backlogs, and ongoing regulatory uncertainty.
CURRENT STATE
Since its implementation, the Federal IDR process has been overwhelmed by dispute volume far beyond what the Departments originally anticipated. During the first year alone, disputing parties submitted approximately 489,000 disputes, roughly fourteen times higher than the government’s original projections. As of January 31, 2026, cumulative dispute submissions have now exceeded 5.1 million.
A number of factors have contributed to the continuing dysfunction within the system
- Providers, including air ambulance operators, have consistently alleged that payers are artificially depressing Qualifying Payment Amounts (QPAs) through flawed or improperly constructed methodologies. Because the QPA functions both as the benchmark for patient cost sharing and the practical anchor point during the IDR process, providers argue that artificially low QPAs suppress reimbursement levels and substantially increase the incentive to pursue arbitration;
- The open negotiation process itself often appears largely performative. Both providers and payers routinely accuse the other side of failing to engage in meaningful good faith negotiations during the required 30 business day negotiation period. As a result, relatively few disputes resolve before arbitration, further overwhelming the IDR system;
- The process has been repeatedly disrupted by ongoing Federal litigation, particularly a series of Federal court decisions in Texas involving the Texas Medical Association (TMA). The successive decisions in TMA I – TMA IV forced multiple shutdowns and restarts of the IDR portal, requiring repeated rulemaking revisions, operational changes, and administrative restructuring. At present, following the Fifth Circuit’s en banc review in TMA III, the prior panel decision has been vacated, leaving the district court’s August 2023 decision as the operative ruling (holding that the Departments unlawfully elevated the Qualifying Payment Amount (QPA) above the other statutory factors Congress required IDR entities to consider under the No Surprises Act); and
- The system has been burdened by a massive number of disputes later determined to be ineligible for the IDR process altogether. Between April 2022 and December 2024, non-initiating parties challenged the eligibility of nearly 977,000 disputes. Certified IDR entities ultimately determined that more than 355,000 of those disputes were ineligible, largely due to improperly batched claims or disputes involving items and services not actually subject to the NSA. That volume alone has placed enormous strain on an already overloaded system.
WHY A FINAL RULE?
The Departments of HHS, Labor, and Treasury jointly published the Federal IDR Operations Proposed Rules in November 2023 to address the structural failures plaguing the system. After receiving 124 comments, the Departments have now issued this Final Rule to overhaul IDR process mechanics. The core goals are to:
- Improve information flow between payers and providers before and during the IDR process;
- Reduce the volume of ineligible disputes clogging the system;
- Standardize and formalize the open negotiation process;
- Lower financial barriers to IDR participation; and
- Require payer registration to improve dispute management.
KEY CHANGES: WHAT AIR AMBULANCE PROVIDERS NEED TO KNOW
- Formalized and Portal-Driven Open Negotiation Process
The Final Rule substantially restructures the open negotiation process by moving it into a far more formalized, centralized, and portal driven system. Moving forward, open negotiation notices and responses must be submitted directly through the Federal IDR portal using standardized forms created by the Departments. This eliminates the current patchwork system where parties often exchange notices through proprietary payer portals, email chains, or other informal bilateral processes.
Under the Final Rule, the 30 business day open negotiation period generally begins on the date the initiating party submits the notice, together with the required remittance advice documentation, through the portal. Importantly, where a payer fails to provide the required remittance advice, the initiating party’s deadline to initiate open negotiation runs from receipt of the initial payment or denial itself, rather than from submission of the notice. The Rule also expressly prohibits payers from forcing providers to utilize proprietary payer portals or other payer controlled systems as a condition of participating in open negotiation.
From a practical standpoint, this change is significant for air ambulance providers. The Federal portal will now effectively serve as the official tracking mechanism for negotiation activity/timing compliance, which should reduce many of the gamesmanship issues that have afflicted the process to date, including delayed responses, non-receipt claims, and procedural stalling tactics.
- Enhanced QPA and Remittance Disclosures
The Final Rule also imposes significantly more detailed remittance and payment disclosure requirements on payers. Payers will now be required to utilize standardized Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs) on remittance advice issued to out of network providers, including air ambulance providers. These codes are intended to create a more uniform and transparent system for communicating key information relating to NSA applicability, payment methodology, cost sharing calculations, open negotiation rights, and batching eligibility.
More specifically, the standardized codes will identify whether the NSA applies to the claim, explain how the out-of-network rate and patient cost sharing were calculated, provide information regarding how to initiate open negotiation, and identify whether the claim may qualify for batching or bundling purposes within the IDR process.
The Departments have indicated that the specific CARC and RARC codes will be issued through future guidance within six (6) months following publication of the Final Rule, with an additional compliance period of at least four (4) months after the guidance is released. Until that guidance becomes effective, payers are not yet obligated to utilize the new coding structure.
The Final Rule also further refines the existing QPA disclosure requirements applicable to air ambulance claims. Under the revised framework, payers must disclose the QPA and related payment information whenever issuing an initial payment or notice of denial for air ambulance services. This requirement ties directly into the NSA’s air ambulance cost sharing framework, which generally bases patient responsibility on the lesser of the billed charge or the QPA.
Importantly, the Departments acknowledged within the Final Rule that the NSA’s statutory QPA disclosure language does not expressly reference air ambulance providers. Nevertheless, the Departments noted that prior regulations extended the QPA disclosure framework to air ambulance claims, and the Final Rule largely maintains and clarifies that existing regulatory approach.
- New Payer Registration Requirements
The Final Rule also creates a new mandatory registration requirement for group health plans, health insurance issuers, and FEHB carriers participating in the Federal IDR process. Under the Rule, payers must register through the Federal IDR portal by the later of thirty (30) business days after the Rule’s effective date or thirty (30) business days after the Departments announce that the registration system has become operational.
Although this may appear administrative on its face, the requirement is actually fairly significant from a practical IDR standpoint, particularly for air ambulance providers. One of the recurring operational problems within the IDR process has been the difficulty providers face in identifying the proper payer entity responsible for the claim. In many cases, providers encounter unclear plan structures, third party administrators, delegated entities, or incomplete remittance information that complicates the identification of the actual responsible party and delay eligibility determinations.
The registration requirement is intended to create a more centralized and standardized identification process within the Federal IDR system. Open negotiation notices, IDR initiation submissions, and initiation responses will now require inclusion of the payer’s Federal IDR registration number. If a payer has not yet registered at the time of filing, the submitting party must provide an attestation stating as much.
From an operational perspective, these changes should improve transparency, streamline payer identification, and reduce some of the procedural confusion that has historically delayed dispute processing and eligibility review within the IDR system.
- Clearer Rules for Batching and Bundled Payment Arrangements
The Final Rule also attempts to bring greater clarity and structure to the batching process, particularly with respect to bundled payment arrangements. Most notably, the Rule formally defines the term “bundled payment arrangement” for purposes of the Federal IDR process.
Under the Rule, a bundled payment arrangement generally exists where a provider, including an air ambulance provider, bills for multiple items or services furnished to a single patient under a single service code, such as a DRG style payment structure, or where the payer itself issues payment or a denial under a single service code encompassing multiple underlying services.
The Rule provides that disputes involving bundled payment arrangements will follow the same general procedural framework applicable to batched disputes. Those disputes will also be subject to only a single certified IDR entity fee, which may materially reduce the administrative cost associated with pursuing certain categories of claims through the arbitration process.
The revised batching provisions appear intended, at least in part, to make the batching process more workable and economically realistic for smaller providers and providers pursuing lower dollar disputes. Historically, restrictive batching interpretations and procedural complexity often made the economics of IDR unfavorable for many smaller claims.
The batching changes will not become effective immediately. Instead, implementation is tied to the payer registration framework discussed above. Specifically, the batching provisions become effective 120 days after payers are first required to register in the Federal IDR registry. The Departments appear to have intentionally structured this phased rollout in an effort to align the new batching framework with the broader payer identification and registration infrastructure being implemented under the Final Rule.
- Administrative Fee Reductions
One of the most significant changes in the Final Rule is the substantial reduction in the Federal IDR administrative fee. Rather than adopting the previously proposed $150 per party fee, the Departments ultimately finalized an administrative fee of only $15 per party per dispute for disputes initiated on or after five (5) business days following publication of the Rule.
This represents a dramatic decrease not only from the proposed amount, but also from the $115 administrative fee that has been in effect since January 22, 2024. The reduction is particularly significant given the substantial criticism the Departments received regarding whether escalating administrative costs were undermining provider access to the IDR process, especially for lower dollar disputes.
- Codified Eligibility Review
The Final Rule will formally codify a departmental eligibility review process within the Federal IDR framework. Practically speaking, the Rule requires parties to provide substantially more information at the front end of the dispute process to facilitate eligibility determinations, conflict of interest reviews, and payment review functions before disputes proceed deeper into arbitration.
To accomplish this, the Rule imposes expanded content requirements for both the notice of IDR initiation and the non-initiating party’s initiation response. The Departments’ stated objective is to front load eligibility related information earlier in the process so that clearly defective, improperly batched, or otherwise ineligible disputes can be identified sooner rather than consuming substantial administrative/arbitration resources before ultimately being dismissed.
This is a fairly significant operational change given the enormous volume of disputes that have historically been challenged as ineligible after initiation. As the Departments themselves acknowledged, the IDR system has been burdened by hundreds of thousands of disputes later determined to fall outside the NSA or otherwise fail procedural eligibility requirements. The revised framework appears designed to reduce those inefficiencies by forcing parties to substantiate eligibility issues much earlier in the dispute lifecycle.
From a practical standpoint, this will likely increase the amount of documentation and claim level detail providers, including air ambulance operators, must assemble before formally initiating IDR. At the same time, however, the changes may reduce downstream delays, administrative dismissals, and wasted arbitration costs associated by weeding out those disputes that should never have advanced into the system in the first place.
- Flexibility for Extenuating Circumstances
The Final Rule expands the circumstances under which Federal IDR deadlines and process timelines may be extended due to extenuating circumstances. The revisions are intended to provide greater flexibility for both disputing parties and certified IDR entities when unforeseen events interfere with the normal progression of the arbitration process.
Although prior versions of the IDR framework recognized limited extensions in certain situations, the revised Rule appears to consider a broader and more practical approach to real-world disruptions that may affect dispute processing. This includes circumstances where technological failures, portal issues, administrative disruptions, natural disasters, or other unforeseen events materially impair a party’s ability to comply with otherwise applicable deadlines.
This change reflects the Departments’ recognition that the Federal IDR system has experienced significant operational instability since implementation, including portal shutdowns, system outages, evolving guidance, and repeated procedural revisions. The expanded flexibility may help reduce situations where disputes are dismissed or prejudiced solely due to circumstances outside a party’s reasonable control.
Despite this expanded flexibility, providers and payers will still need to closely monitor deadlines and preserve documentation supporting any request for extensions or delayed compliance arising from extenuating circumstances.
EFFECTIVE DATES/TIMELINES
The Final Rule becomes effective sixty (60) days after its publication in the Federal Register. However, the applicability dates for several key provisions vary and, in many instances, depend upon future guidance and portal implementation timelines.
- Administrative fee reduction to $15: Effective five (5) business days after publication
- Open negotiation and IDR initiation reforms: Subject to phased implementation tied to Federal IDR portal readiness and future departmental guidance
- CARC and RARC remittance coding requirements: The Departments will issue implementing guidance within six (6) months after publication; Compliance will be required no sooner than four (4) months after issuance of that guidance
- Payer registration requirements: Payers must register within thirty (30) business days after either the Rule’s effective date or launch of the Federal IDR registration system, whichever occurs later
- Revised batching provisions: Effective 120 days after payers become subject to the Federal IDR registration requirement
PWW|AG WHITE PAPER
Before publication of this Final Rule, PWW|AG conducted an extensive review of what the Federal IDR data actually reveals regarding air ambulance reimbursement disputes and payer conduct under the No Surprises Act.
Our White Paper, Waiting for Clearance at 10,000 Feet: What Ambulance Independent Dispute Resolution (IDR) Data Reveals, examines the real world operation of the Federal IDR process for air ambulance providers, including dispute volume trends, payer behavior, arbitration outcomes, batching issues, and what the available data suggests about the systemic reimbursement pressures driving the explosive growth of air ambulance IDR activity.
Furthermore, it analyzes the broader operational dysfunction within the Federal IDR system, including eligibility disputes, administrative delays, litigation driven disruptions, and the practical implications these issues create for providers attempting to navigate the NSA reimbursement framework.
Our White Paper is available for free download at the PWW|AG website under the Resource Hub tab.
JOIN US AT abc360 VIRTUAL
PWW|AG will be discussing the Final Rule in depth during the upcoming abc360 Virtual conference in Clearwater Beach, including a detailed breakdown of the provisions most likely to impact air ambulance providers and operators. REGISTER HERE.
