On September 20, 2023, the Biden Administration released the first of two pending proposed rules related to the federal IDR process. This first rule is in response to the TMA4 decision regarding how IDRE fees are set. The rule would establish formal notice-and-comment rulemaking for the administration to set both the administrative fee amount, and the allowed fee ranges for IDREs. This process would replace the annual update requirement for both items and allow the administration to change both fees in response to cost increases or decreases.
The following describes the Administration’s proposed methodologies for calculating the administrative fee and the considerations for the IDRE fee range.
Administrative Fee Methodology
Administrative fees are expected to cover the administration’s annual expenses related to the IDR process. By moving to notice-and-comment rulemaking instead of an annual process to adjust the fees, the administration notes it can change the fee to compensate for changes in its costs.
The methodology proposed is to project the estimated expenditures related to the IDR process and divide that amount by the related number of fees that would be paid. The administration proposes using the projected number of IDR determinations to be closed, since some IDR determinations that are initiated are settled by the parties before the administrative fee is collected.
IDRE Fee Considerations
The administration notes the IDR process relies on the voluntary participation of IDREs, requiring a fee structure that will continue to permit IDREs to participate. When proposing increases to the fees range, the administration considered the variability of IDREs’ operations, structures, staffing patterns, and expenses. The administration’s goal is to allow IDREs to “set their fees commensurate with their costs” By considering:
- Time and resources needed for certified IDR entities to make payment determinations;
- Time and resources needed for required reporting and audit;
- Anticipated volume of IDR initiations;
- Anticipated volume of ineligible IDR submissions; and
- Complexity in determining the eligibility of items and services.
The administration proposed a 20% increase to the IDRE fee range for single determinations and a 25% increase to the IDRE fee range for batched determinations for 2024.
Once the administration finalizes the fee ranges, certified IDREs will continue to set their own rate within those ranges annually. The administration must approve any changes to those annual rates once they are set for the year.
2024 Fee Proposals
The administration estimates the cost to administer the IDR process in 2024 will be $70 million. Taking into consideration a reduction in the number of disputes based on changes to the batching rules under TMA4, the administration estimates 225,000 IDR determinations will be completed in 2024. This would result in the collection of 450,000 administration fees.
The Proposed Rule would set the fees for disputes initiated on or after January 1, 2024 as follows: For batched determinations, the tiered fee can be applied for every additional block of 25 line items, beginning with the 26th line item.
IDREs would still be able to request a fee outside of the established ranges; the administration would still need to approve that type of variance in writing.
Comment Period
Comments on these proposed rules will be accepted for 30 days after the Proposed Rule is published in the Federal Register. We expect that formal publication to be sometime the week of September 25.
Possible Future Rulemaking
The administration suggests it is working on future changes to the IDR process, including policies that would:
- Change the manner and timeframe in which the administrative fee is paid,
- Reduce the administrative fee amount for disputes that are determined ineligible or that involve low-dollar claims,
- Codify the consequences of failing to pay the administrative fee.
Claritev expects the second rule relating to these changes to be released within the next few weeks.
Other IDR News
CMS instructed IDR entities to resume processing disputes submitted on or before August 3, 2023. As you may recall, parts of the Federal IDR process were temporarily suspended in response to opinions on TMA4 on August 3, 2023 and TMA3 on August 24, 2023. On September 5, 2023, the Departments directed certified IDR entities to resume making eligibility and conflict of interest determinations for all single and bundled disputes submitted on or before August 3, 2023. On September 21, the Departments directed certified IDR entities to resume processing all single and bundled disputes submitted on or before August 3, 2023.
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