Federal IDR Process Overhaul Finalized: What Stakeholders Need to Know

The U.S. Departments of the Treasury, Labor, and Health and Human Services (the Departments), along with the U.S. Office of Personnel Management, issued a final rule on May 28, 2026, implementing several modifications to the federal Independent Dispute Resolution (IDR) process established under the 2020 No Surprises Act (NSA), which was enacted as part of the 2021 Consolidated Appropriations Act. The final rule addresses long-standing provider concerns regarding communication gaps, difficulty identifying the correct plan or issuer against which to initiate a dispute, and processing delays that have hampered federal IDR operations since its inception.

The final rule also responds to significant judicial disruption of the federal IDR process. In a series of cases brought in the U.S. District Court for the Eastern District of Texas, the court vacated several key provisions of the Departments' implementing regulations, including rules governing the qualifying payment amount (QPA) methodology and weight afforded to the QPA in payment determinations, as well as batching provisions that restricted how providers could group related items and services into a single dispute. These rulings necessitated multiple temporary shutdowns of the federal IDR portal, the issuance of new guidance and significant system updates, which contributed to dispute backlogs and widespread uncertainty among providers and payers. The final rule replaces the vacated batching provisions with a new framework and makes conforming amendments to align with the opinions issued in the federal district court cases – some of which remain pending before the U.S. Court of Appeals for the Fifth Circuit.

Notably, however, this final rule stops short of addressing broader, systemic problems with NSA implementation, including arguments that QPA calculations are artificially low. QPAs are the benchmark used by payers to establish patient cost-sharing and, by statute, must be considered by certified Independent Dispute Resolution Entities (IDREs) in making payment determinations. The final rule also does not address the lack of timely payments once a certified IDRE makes a payment determination. Separate advocacy efforts to increase transparency of payers' QPA calculations and enforce statutory payment deadlines are ongoing with both the Departments and U.S. Congress. The bipartisan, bicameral No Surprises Act Enforcement Act (H.R. 4710 and S. 2420) would authorize penalties on any party that does not adhere to statutory payment timelines to providers.

Key Provisions

• Lower Costs and Faster Access: Under the final rule, regardless of the amount in dispute or the dispute's eligibility, the administrative fee for parties participating in the federal IDR process will be reduced from $115 to $15 per party per dispute for those initiated five business days after the final rule's publication in the Federal Register (i.e., June 11, 2026). This fee reduction represents a substantial benefit for smaller practices, rural hospitals and providers of lower-dollar services such as radiology, pathology and emergency medicine that may have previously found the cost of initiating disputes prohibitive. The Departments waived the delayed effective date requirement established in the Administrative Procedure Act so that providers may benefit immediately. In addition, certified IDREs must now determine eligibility within five business days of final entity selection and notify both disputing parties. The disputing parties must also respond to information requests from certified IDREs within five business days, accelerating overall dispute timelines. Providers should note that failure to pay the administrative fee or certified IDRE fee by the time a payment offer is due will result in the offer not being considered as received, though liability for the fee continues.
• Improved Information Sharing Before and During Disputes: Plans and issuers are now required to use standardized Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs) on any remittance advice provided to out-of-network providers, furnishing revenue cycle teams with clearer and earlier signals regarding whether a claim is eligible for the federal IDR process. Plans and issuers must also register with a new federal IDR registry that serves as a centralized, searchable database of contact information. This registry addresses a persistent operational challenge for providers by making it substantially easier to identify the correct entity for open negotiation and to determine whether a claim is subject to a specified state law, an all-payer model agreement or the federal IDR process.
• Restructured Open Negotiation and Dispute Initiation: Providers and payers desiring to enter into open negotiations must now submit a formal open negotiation notice through the federal IDR portal (replacing the current patchwork of issuer-specific portals), and the plan or issuer is required to furnish a response by the 15th business day of the 30-business-day open negotiation period. The notice of IDR initiation must include the plan's registration number, and providers utilizing billing agents or third-party representatives must include an attestation of authority to act on the provider's behalf. In addition, the rule codifies a formal withdrawal process with four permissible conditions, establishes a conflict-of-interest review separating preliminary and final IDRE selection, and expands the definition of extenuating circumstances to include events causing systematic delays (such as portal failures), with the Departments required to post public notice of any such extension.
• Expanded Batching Flexibility: Providers may now batch up to 50 qualified IDR line items per determination under three grouping criteria: 1) items and services furnished to a single patient during a 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 (e.g., Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System), or 3) for anesthesiology, radiology, pathology and laboratory services, items and services furnished under service codes belonging to the same Category I CPT code range. This expanded flexibility is particularly beneficial to specialty providers that previously encountered difficulty batching low-dollar claims efficiently. Providers should be aware, however, that the ability to resubmit improperly batched disputes will be rescinded 120 days after the registry requirement takes effect, making proper batching essential from the outset.
• Air Ambulance Services: For air ambulance providers,¹ the provision to allow batching per single patient encounter is significant – it codifies the ability to submit a single dispute for a patient's air ambulance transport, allowing mileage and base rates, as well as other items or services furnished during a single transport and billed on the same claim form, to be batched together. This resolves the issue created by prior guidance that effectively required each air ambulance service code to be submitted as a separate dispute. The Departments declined to allow batching of multiple emergency medicine evaluation and management CPT codes (99281-99285) across different patients, maintaining that the variability of conditions represented across those codes would not satisfy the statutory requirement that batched items relate to the treatment of a similar condition.

Applicability Dates

The administrative fee reduction takes effect on June 11, 2026. The CARC and RARC requirements and fee-failure provisions take effect on the effective date of the final rule (60 days after publication); however, the Departments will establish specific codes through subsequent guidance. The revised definition of "batched disputes" applies 90 days after the effective date. Most other procedural changes – including open negotiation, IDR initiation, certified IDRE selection, eligibility review and batching – apply 90 days after the Departments issue guidance announcing that the federal IDR portal functionality supporting these provisions is available (anticipated on a rolling basis beginning in summer 2026). The federal IDR registry provisions apply 90 business days after the Departments issue registry-specific guidance. Withdrawal and extenuating-circumstances provisions apply 90 days after the effective date.

What Providers and Payers Should Know

The reduced $15 administrative fee renders the federal IDR process economically viable for a substantially broader range of claims, and providers should reassess whether previously uneconomical disputes now merit pursuit. Payers – and, as discussed below, IDREs – may also need to plan for operational enhancements to accommodate a potential increase in case volume.

Revenue cycle teams should prepare to incorporate the new CARC and RARC data from remittance advice into their workflows to identify IDR-eligible claims earlier and with greater accuracy. Providers and payers should closely monitor forthcoming guidance from the Departments on federal IDR portal functionality and batching criteria, anticipated to begin in summer 2026, as these announcements will trigger the applicability of the new open negotiation and initiation requirements. Finally, providers that utilize third-party representatives or billing agents for IDR disputes should ensure that proper attestation and authority documentation is in place to satisfy the new initiation notice requirements.

Certified IDRE Considerations

Certified IDREs and other entities considering entry into the federal IDR market should consider two countervailing factors arising from this final rule. On one hand, the significantly lower administrative fee of $15 per dispute is projected to increase the volume of disputes by 30 percent. This will create significant demand and market opportunity for existing and new certified IDREs. On the other hand, the rolling applicability dates for major operational changes to the Federal IDR process – including batching and bundling changes, certified IDRE selection processes and eligibility review – will create considerable uncertainty in the near term.

Although the Departments anticipate releasing all applicable guidance within 24 months, they simultaneously estimate that the upgrades will cost $11 million in 2026, $17.5 million in 2027 and $18 million annually from 2028 through 2030. This signals that the necessary functionality improvements will be substantial, and the Departments' projected timeline may slip. Certified IDREs will need to be prepared to comply with existing requirements while making technology and systems upgrades in preparation for new federal IDR processes.

Holland & Knight is positioned to assist all stakeholders in the IDR process in weighing these recent developments and determining the specific impact on their businesses. For more information or questions, please contact the authors.

Notes

¹ The Departments reiterated that the NSA's surprise billing provisions do not apply to ground ambulance services, including situations in which a patient is stabilized and later transported by ground ambulance to another facility. The Departments also noted that the congressional advisory committee on ground ambulance services issued its final report on August 28, 2024. The report recommends that Congress require coverage of ground ambulance emergency medical services outside the NSA's emergency services framework, prohibit balance billing for such services, and establish a national rate or rate-setting methodology.

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