No Surprises in Dispute Resolution: Federal IDR Final Rule Brings Long-Awaited Clarity for Providers

Firm Publication

Key Takeaways

  • The 2026 Federal IDR Final Rule requires payers to provide additional information to providers when a claim is subject to the No Surprises Act, including standardized Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs), resolving longstanding gaps in communication that have triggered CMS enforcement inquiries against providers.
  • The final rule makes changes to the open negotiation process to ensure that only eligible claims are submitted for dispute resolution, but it also updates the batching rules and reduces the IDR administrative fee from $115 to $15 per party to make it easier for providers to submit claims.
  • Providers should monitor forthcoming Departmental guidance on mandatory CARC/RARC compliance and prepare to update billing, coding and compliance workflows accordingly.

On May 28, the Departments of Health and Human Services (HHS), Labor and the Treasury (collectively, the Departments), along with the Office of Personnel Management, released a final rule updating the federal Independent Dispute Resolution (IDR) process under the No Surprises Act (NSA). For an overview of the NSA at the time of its passage, please see the firm’s prior publication here. Prior interim changes are also discussed here.

The new final rule is designed to streamline communication among payers, providers and certified IDR entities; clarify timelines; and improve key aspects of the IDR process. Below, we summarize the provisions most relevant to healthcare providers and highlight implications for providers related to their compliance obligations under the NSA.

What is the New Information Payers Must Issue to Providers for Claims Subject to the NSA?

Congress enacted the NSA in December 2020 to protect commercially insured patients from receiving surprise medical bills in emergency and certain other situations and to impose related compliance obligations on providers and payors. The NSA created an IDR process available to settle payment disputes between payors and out-of-network providers. Under the existing regulatory framework, when a payer responds to a claim subject to the NSA with an initial payment or denial, it must disclose key information — including the qualifying payment amount (QPA) and contact information for initiating open negotiation. This information helps the provider determine whether to contest the payment and whether the dispute may be eligible for federal IDR.

The Departments noted significant difficulties in this information exchange. To address these issues, the final rule requires payers to provide additional information at the time of initial payment or denial, including: the legal business name of the plan, issuer, or Federal Employees Health Benefits Program (FEHB) carrier; the plan sponsor’s legal business name (if applicable) and the payer’s IDR registration number. Payers must also include a statement explaining that providers must notify the Departments to initiate open negotiation.

What Are the New CARC and RARC Requirements Under the No Surprises Act Final Rule?

One of the final rule’s most significant and helpful provisions for providers is a new requirement for payers to use Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs) to communicate whether a claim is subject to the NSA’s surprise billing protections and the federal IDR process. Payers must include the applicable CARCs and RARCs on any remittance advice — paper or electronic — sent to an out-of-network provider, giving providers clear, standardized notice of NSA applicability at the claim level.

This change responds to a persistent practical problem. Previously, the Centers for Medicare & Medicaid Services (CMS) published a list of RARC codes that plans and issuers could voluntarily use to communicate NSA-related information. However, usage was inconsistent, and the Departments acknowledged that the existing RARC list did not cover all required QPA disclosures or all data elements relevant to NSA applicability. Commenters confirmed that this inconsistency made it difficult for providers to reliably determine from remittance advice whether a claim triggers the NSA’s balance billing protections.

This inconsistency has had real consequences. Beginning in late 2023, CMS began contacting providers to investigate patient complaints alleging NSA non-compliance, including that the provider billed the patient more than the amount shown on the payer’s explanation of benefits. In many cases, after reviewing complaints, providers found that the payer’s remittance advice never indicated the claim was subject to the NSA, which meant the provider did not know it was required to limit patient charges to the in-network cost-sharing amount. The new CARC and RARC requirements will address this gap by ensuring providers receive clear, standardized information about NSA applicability on every relevant remittance.

The Departments have indicated they will issue future guidance specifying which CARCs and RARCs will be required and under what circumstances. Mandatory compliance will not take effect until a date announced in that forthcoming guidance. The Departments also acknowledged that new codes may need to be developed and said they will take public comments into account. Providers should monitor these developments closely, as the coding requirements will have significant operational implications for billing and compliance workflows.

How Does the Final Rule Change the Federal IDR Open Negotiation Process?

Under the current framework, providers and payers must engage in a 30-business-day open negotiation period to attempt to agree on a payment rate before resorting to filing a petition through the IDR process. The Departments reported that parties are not meaningfully engaging in open negotiation, highlighting instances where IDR petitions include many items and services that are ultimately not IDR-eligible. The final rule will require parties to submit a notice to the other party and the Departments through the federal IDR portal to initiate the open negotiation period. The 30-business-day period will begin on the date the initiating party submits the notice, along with a copy of the payment remittance or denial through the portal.

The federal IDR portal is not new: the Departments launched it on April 15, 2022, to facilitate the federal IDR process, and sub-regulatory guidance described it as the required mechanism to initiate federal IDR, select a certified IDR entity, and submit offers. Before the final rule updates, open negotiation largely occurred outside the portal, with a party initiating open negotiation by contacting the other party directly—an approach the Departments said created uncertainty about whether open negotiation had been properly initiated.

The final rule now makes the federal IDR portal the regulatorily required channel for exchanging key NSA dispute notices:

  • Open negotiation notices
  • Open negotiation response notices
  • Notices of IDR initiation
  • IDR initiation responses accompanied by supporting documentation

The Departments will enhance the portal to enable direct transmission, reduce duplication, improve communication and streamline processing. Note that the final rule does not require all negotiation communications to occur through the portal, and after the required notices are furnished, parties may continue negotiating through their preferred communication channels, including proprietary portals.

The final rule also introduces new content requirements for the open negotiation notice and finalizes a new open negotiation response notice, which the receiving party must furnish by the 15th business day of the open negotiation period. These changes are intended to create more certainty about whether and when negotiation occurred and reduce the number of ineligible disputes submitted to IDR, which is a significant factor in the current backlog.

What Are the New Batching Rules for Federal IDR Disputes?

Currently, initiating parties may include multiple items or services in a single “batched” dispute to minimize costs in limited circumstances, and providers have asked the Departments to permit batched disputes in more cases. Until now, the Departments have required batched disputes to satisfy the following four conditions:

  1. The items or services are billed by the same provider or facility (i.e., same NPI or Tax ID).
  2. Payment is made by the same group health plan or issuer.
  3. The items or services are the same or similar service code (or comparable code under a different procedural coding system).
  4. The services occur within the same 30-business-day period or have open negotiation periods within the same 90-day cooling-off period.

Under this original framework, there was no explicit regulatory cap on the number of line items that could be included in a single batched dispute, which created operational strain on certified IDR entities and the federal IDR portal system generally.

In response to stakeholder requests for greater flexibility, the final rule will expand batching beyond the current strict “same or comparable procedure code” criteria and will also begin to allow batching under the following two additional criteria:

  1. Items and services furnished to a single patient on the same or consecutive dates of service and billed on the same claim form
  2. Anesthesiology, radiology, pathology and laboratory items and services furnished under service codes in the same Category I CPT code section, as specified in Departmental guidance

The final rule caps batched determinations at 50 qualified IDR line items per dispute (doubling the Departments’ 2023 proposed rule cap of 25-line items).

Other batching requirements will remain, including:

  1. Services must be rendered by the same provider or facility.
  2. Payment of the disputed claims must be made by the same insurer.
  3. Batched services must occur within the same 30-business-day window period.

The final rule also finalizes a definition of “bundled payment arrangement,” which describes circumstances in which multiple items or services are billed or reimbursed under a single service code representing an episode of care (such as a DRG or certain CPT/HCPCS codes). Bundled claims may proceed as a single dispute in the IDR process, distinct from the batching rules applicable to individual line items mentioned above.

How Are IDR Eligibility Determinations Changing Under the 2026 Final Rule?

The Departments acknowledged that eligibility determinations have been complex, time-consuming and resource-intensive for certified IDR entities, which are often uncompensated for this work. The final rule requires IDR entities to determine eligibility within five business days of selection and notify both parties and the Departments. Parties must submit additional information requested by the IDR entity within five business days; failure to do so may result in the entity proceeding without the information or closing the dispute.

What Is the New Federal IDR Administrative Fee for 2026?

The final rule reduces the administrative fee to use the IDR process to $15 per party per dispute — down significantly from $115 — regardless of dispute amount or eligibility. The Departments said this updated amount balances the needs for accessibility and adequate funding for the IDR process. The rule also codifies that if a party fails to pay the administrative or IDR entity fee by the time its offer is due, the offer will not be considered received (though the party remains responsible for payment), and the Departments may collect unpaid fees under federal debt collection laws.

Notably, the Departments found good cause to waive the Administrative Procedure Act’s (APA’s) delayed effective date requirements, making the $15 fee applicable starting with disputes initiated five business days after publication of the final rule.

What Is the New IDR Registry and How Does It Affect Payers?

The final rule establishes a new IDR Registry requiring payers to register with the Departments and provide information about the federal IDR process’s applicability to their covered items or services. Upon registration, payers receive an IDR registration number designed to help providers verify dispute eligibility and resolve information-sharing issues that have historically impeded the process.

When Can IDR Deadlines Be Extended Under Extenuating Circumstances?

The final rule broadens the extenuating circumstances under which IDR process time periods may be extended to include events contributing to systemic delays, such as unforeseen dispute volume or portal system failures. The Departments will post public notice of any such extension. Parties may also continue to request extensions through the federal IDR portal.

When Do the Federal IDR Final Rule Changes Take Effect?

The final rule’s applicability dates vary by provision:

  • CARC/RARC communication requirements and QPA disclosures: Effective date of the final rule (August 3, 2026). However, mandatory plan and insurer compliance will not take effect until after the Departments issue future guidance, which the Departments intend to issue within six months of the final rule’s publication date. The Departments anticipate that mandatory compliance with CARC/RARC requirements will be required within four months of issuing this guidance.
  • Batching definition modifications: 90 days after the effective date of the final rule.
  • Open negotiation, IDR initiation, entity selection, eligibility review, and related process changes: 90 days after the Departments issue guidance announcing that supporting portal functionality is available.
  • Reduced $15 administrative fee: Five business days after publication of the final rule.
  • IDR Registry: 90 business days after the Departments issue guidance announcing that supporting IDR Registry functionality is available.
  • What Should Healthcare Providers Do Next in Response to the IDR Final Rule?

The final rule includes several changes that will make it easier for providers to use the IDR process and support provider compliance efforts. The new CARC and RARC requirements are a meaningful step toward ensuring clear, timely notice of NSA applicability, which will be particularly helpful given that providers have faced CMS enforcement inquiries triggered by patient complaints when the payer’s remittance advice failed to flag the claim as subject to the NSA.

Providers should closely monitor forthcoming guidance on the specific CARCs and RARCs that will be required, as this will directly affect billing, coding and compliance processes. The streamlined open negotiation process, updated batching rules, reduced administrative fees and new IDR Registry should also improve the overall accessibility and efficiency of federal IDR to providers.

We will continue to monitor developments related to the NSA and the Departments’ implementation of the federal IDR process. Please contact the authors if you have any questions.

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Key Takeaways

  • The 2026 Federal IDR Final Rule requires payers to provide additional information to providers when a claim is subject to the No Surprises Act, including standardized Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs), resolving longstanding gaps in communication that have triggered CMS enforcement inquiries against providers.
  • The final rule makes changes to the open negotiation process to ensure that only eligible claims are submitted for dispute resolution, but it also updates the batching rules and reduces the IDR administrative fee from $115 to $15 per party to make it easier for providers to submit claims.
  • Providers should monitor forthcoming Departmental guidance on mandatory CARC/RARC compliance and prepare to update billing, coding and compliance workflows accordingly.

On May 28, the Departments of Health and Human Services (HHS), Labor and the Treasury (collectively, the Departments), along with the Office of Personnel Management, released a final rule updating the federal Independent Dispute Resolution (IDR) process under the No Surprises Act (NSA). For an overview of the NSA at the time of its passage, please see the firm’s prior publication here. Prior interim changes are also discussed here.

The new final rule is designed to streamline communication among payers, providers and certified IDR entities; clarify timelines; and improve key aspects of the IDR process. Below, we summarize the provisions most relevant to healthcare providers and highlight implications for providers related to their compliance obligations under the NSA.

What is the New Information Payers Must Issue to Providers for Claims Subject to the NSA?

Congress enacted the NSA in December 2020 to protect commercially insured patients from receiving surprise medical bills in emergency and certain other situations and to impose related compliance obligations on providers and payors. The NSA created an IDR process available to settle payment disputes between payors and out-of-network providers. Under the existing regulatory framework, when a payer responds to a claim subject to the NSA with an initial payment or denial, it must disclose key information — including the qualifying payment amount (QPA) and contact information for initiating open negotiation. This information helps the provider determine whether to contest the payment and whether the dispute may be eligible for federal IDR.

The Departments noted significant difficulties in this information exchange. To address these issues, the final rule requires payers to provide additional information at the time of initial payment or denial, including: the legal business name of the plan, issuer, or Federal Employees Health Benefits Program (FEHB) carrier; the plan sponsor’s legal business name (if applicable) and the payer’s IDR registration number. Payers must also include a statement explaining that providers must notify the Departments to initiate open negotiation.

What Are the New CARC and RARC Requirements Under the No Surprises Act Final Rule?

One of the final rule’s most significant and helpful provisions for providers is a new requirement for payers to use Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs) to communicate whether a claim is subject to the NSA’s surprise billing protections and the federal IDR process. Payers must include the applicable CARCs and RARCs on any remittance advice — paper or electronic — sent to an out-of-network provider, giving providers clear, standardized notice of NSA applicability at the claim level.

This change responds to a persistent practical problem. Previously, the Centers for Medicare & Medicaid Services (CMS) published a list of RARC codes that plans and issuers could voluntarily use to communicate NSA-related information. However, usage was inconsistent, and the Departments acknowledged that the existing RARC list did not cover all required QPA disclosures or all data elements relevant to NSA applicability. Commenters confirmed that this inconsistency made it difficult for providers to reliably determine from remittance advice whether a claim triggers the NSA’s balance billing protections.

This inconsistency has had real consequences. Beginning in late 2023, CMS began contacting providers to investigate patient complaints alleging NSA non-compliance, including that the provider billed the patient more than the amount shown on the payer’s explanation of benefits. In many cases, after reviewing complaints, providers found that the payer’s remittance advice never indicated the claim was subject to the NSA, which meant the provider did not know it was required to limit patient charges to the in-network cost-sharing amount. The new CARC and RARC requirements will address this gap by ensuring providers receive clear, standardized information about NSA applicability on every relevant remittance.

The Departments have indicated they will issue future guidance specifying which CARCs and RARCs will be required and under what circumstances. Mandatory compliance will not take effect until a date announced in that forthcoming guidance. The Departments also acknowledged that new codes may need to be developed and said they will take public comments into account. Providers should monitor these developments closely, as the coding requirements will have significant operational implications for billing and compliance workflows.

How Does the Final Rule Change the Federal IDR Open Negotiation Process?

Under the current framework, providers and payers must engage in a 30-business-day open negotiation period to attempt to agree on a payment rate before resorting to filing a petition through the IDR process. The Departments reported that parties are not meaningfully engaging in open negotiation, highlighting instances where IDR petitions include many items and services that are ultimately not IDR-eligible. The final rule will require parties to submit a notice to the other party and the Departments through the federal IDR portal to initiate the open negotiation period. The 30-business-day period will begin on the date the initiating party submits the notice, along with a copy of the payment remittance or denial through the portal.

The federal IDR portal is not new: the Departments launched it on April 15, 2022, to facilitate the federal IDR process, and sub-regulatory guidance described it as the required mechanism to initiate federal IDR, select a certified IDR entity, and submit offers. Before the final rule updates, open negotiation largely occurred outside the portal, with a party initiating open negotiation by contacting the other party directly—an approach the Departments said created uncertainty about whether open negotiation had been properly initiated.

The final rule now makes the federal IDR portal the regulatorily required channel for exchanging key NSA dispute notices:

  • Open negotiation notices
  • Open negotiation response notices
  • Notices of IDR initiation
  • IDR initiation responses accompanied by supporting documentation

The Departments will enhance the portal to enable direct transmission, reduce duplication, improve communication and streamline processing. Note that the final rule does not require all negotiation communications to occur through the portal, and after the required notices are furnished, parties may continue negotiating through their preferred communication channels, including proprietary portals.

The final rule also introduces new content requirements for the open negotiation notice and finalizes a new open negotiation response notice, which the receiving party must furnish by the 15th business day of the open negotiation period. These changes are intended to create more certainty about whether and when negotiation occurred and reduce the number of ineligible disputes submitted to IDR, which is a significant factor in the current backlog.

What Are the New Batching Rules for Federal IDR Disputes?

Currently, initiating parties may include multiple items or services in a single “batched” dispute to minimize costs in limited circumstances, and providers have asked the Departments to permit batched disputes in more cases. Until now, the Departments have required batched disputes to satisfy the following four conditions:

  1. The items or services are billed by the same provider or facility (i.e., same NPI or Tax ID).
  2. Payment is made by the same group health plan or issuer.
  3. The items or services are the same or similar service code (or comparable code under a different procedural coding system).
  4. The services occur within the same 30-business-day period or have open negotiation periods within the same 90-day cooling-off period.

Under this original framework, there was no explicit regulatory cap on the number of line items that could be included in a single batched dispute, which created operational strain on certified IDR entities and the federal IDR portal system generally.

In response to stakeholder requests for greater flexibility, the final rule will expand batching beyond the current strict “same or comparable procedure code” criteria and will also begin to allow batching under the following two additional criteria:

  1. Items and services furnished to a single patient on the same or consecutive dates of service and billed on the same claim form
  2. Anesthesiology, radiology, pathology and laboratory items and services furnished under service codes in the same Category I CPT code section, as specified in Departmental guidance

The final rule caps batched determinations at 50 qualified IDR line items per dispute (doubling the Departments’ 2023 proposed rule cap of 25-line items).

Other batching requirements will remain, including:

  1. Services must be rendered by the same provider or facility.
  2. Payment of the disputed claims must be made by the same insurer.
  3. Batched services must occur within the same 30-business-day window period.

The final rule also finalizes a definition of “bundled payment arrangement,” which describes circumstances in which multiple items or services are billed or reimbursed under a single service code representing an episode of care (such as a DRG or certain CPT/HCPCS codes). Bundled claims may proceed as a single dispute in the IDR process, distinct from the batching rules applicable to individual line items mentioned above.

How Are IDR Eligibility Determinations Changing Under the 2026 Final Rule?

The Departments acknowledged that eligibility determinations have been complex, time-consuming and resource-intensive for certified IDR entities, which are often uncompensated for this work. The final rule requires IDR entities to determine eligibility within five business days of selection and notify both parties and the Departments. Parties must submit additional information requested by the IDR entity within five business days; failure to do so may result in the entity proceeding without the information or closing the dispute.

What Is the New Federal IDR Administrative Fee for 2026?

The final rule reduces the administrative fee to use the IDR process to $15 per party per dispute — down significantly from $115 — regardless of dispute amount or eligibility. The Departments said this updated amount balances the needs for accessibility and adequate funding for the IDR process. The rule also codifies that if a party fails to pay the administrative or IDR entity fee by the time its offer is due, the offer will not be considered received (though the party remains responsible for payment), and the Departments may collect unpaid fees under federal debt collection laws.

Notably, the Departments found good cause to waive the Administrative Procedure Act’s (APA’s) delayed effective date requirements, making the $15 fee applicable starting with disputes initiated five business days after publication of the final rule.

What Is the New IDR Registry and How Does It Affect Payers?

The final rule establishes a new IDR Registry requiring payers to register with the Departments and provide information about the federal IDR process’s applicability to their covered items or services. Upon registration, payers receive an IDR registration number designed to help providers verify dispute eligibility and resolve information-sharing issues that have historically impeded the process.

When Can IDR Deadlines Be Extended Under Extenuating Circumstances?

The final rule broadens the extenuating circumstances under which IDR process time periods may be extended to include events contributing to systemic delays, such as unforeseen dispute volume or portal system failures. The Departments will post public notice of any such extension. Parties may also continue to request extensions through the federal IDR portal.

When Do the Federal IDR Final Rule Changes Take Effect?

The final rule’s applicability dates vary by provision:

  • CARC/RARC communication requirements and QPA disclosures: Effective date of the final rule (August 3, 2026). However, mandatory plan and insurer compliance will not take effect until after the Departments issue future guidance, which the Departments intend to issue within six months of the final rule’s publication date. The Departments anticipate that mandatory compliance with CARC/RARC requirements will be required within four months of issuing this guidance.
  • Batching definition modifications: 90 days after the effective date of the final rule.
  • Open negotiation, IDR initiation, entity selection, eligibility review, and related process changes: 90 days after the Departments issue guidance announcing that supporting portal functionality is available.
  • Reduced $15 administrative fee: Five business days after publication of the final rule.
  • IDR Registry: 90 business days after the Departments issue guidance announcing that supporting IDR Registry functionality is available.
  • What Should Healthcare Providers Do Next in Response to the IDR Final Rule?

The final rule includes several changes that will make it easier for providers to use the IDR process and support provider compliance efforts. The new CARC and RARC requirements are a meaningful step toward ensuring clear, timely notice of NSA applicability, which will be particularly helpful given that providers have faced CMS enforcement inquiries triggered by patient complaints when the payer’s remittance advice failed to flag the claim as subject to the NSA.

Providers should closely monitor forthcoming guidance on the specific CARCs and RARCs that will be required, as this will directly affect billing, coding and compliance processes. The streamlined open negotiation process, updated batching rules, reduced administrative fees and new IDR Registry should also improve the overall accessibility and efficiency of federal IDR to providers.

We will continue to monitor developments related to the NSA and the Departments’ implementation of the federal IDR process. Please contact the authors if you have any questions.

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