Federal regulators are trying to reduce the number of bitter No Surprises Act claim fights by helping insurers and health plans communicate more clearly with health care providers.
The regulators have published a list of nine “remittance advice remark codes,” or RARCs, that payers can use to explain why a payer paid an amount other than what the provider billed.
The new RARC list supplements an existing list of “claim adjustment reason codes,” or CARCs. For a payer, the RARC list is like a list of short-form letters.
One RARC, for example, explains that a state has set a limit on how much a service can cost. Other RARCs state that a claim is not eligible for the No Surprises Act independent dispute resolution process or that a plan does not cover the service identified in the claim.
See also: Federal dispute process driving up costs for planned procedures
The Centers for Medicare & Medicaid Services’ Center for Consumer Information & Insurance Oversight posted the RARC list.
The Federal Independent Dispute Resolution Operations team includes representatives from the Internal Revenue Service, the Employee Benefits Security Administration and the Office of Personnel Management, as well as from CMS.
The RARC guidance will be effective Aug. 6, and payers will have to start using the RARCs in some situations starting Jan. 1, 2027, officials said.
Regulators want to show progress on overhauling IDR system
What it means: Federal regulators want to show employers, insurers, providers and others that they are working on the previously announced efforts to overhaul the No Surprises Act IDR system.
The No Surprises Act IDR system: The No Surprises Act is supposed to protect patients with commercial health coverage, including coverage from self-insured employer plans, against some types of unexpected bills.
The act can help insured patients who seek out-of-network emergency care, patients who use emergency air transportation services and some patients who end up seeing out-of-network providers while in in-network hospitals.
The IDR system gives the providers and payers a way to get patients out of the middle and handle billing disputes directly.
The system is subject to some Federal Arbitration Act requirements but not all, and some parties in litigation have debated whether the system should be called arbitration and whether the IDR entities can be called arbitrators.
The frustration: Employers and insurers say they expected that use of the IDR system would be low and that the rulings would be reasonably even-handed.
Instead, the payers say, private-equity-owned providers have flooded the IDR system with disputes, and the IDR entities have ruled in favor of the providers more than 80% of the time.
A UnitedHealth Group executive told Wall Street securities analysts last week that, when the IDR entities rule in favor of providers, they award payment amounts that average about 11 times what Medicare would pay for the same services, and that awards are sometimes for amounts that are 30 times what Medicare would pay.
The IDR system reboot: Federal regulators announced in May that they would revamp the IDR system.
Regulators said little about employers’ and insurers’ frustration with the system, but they did say that they would move the IDR system to a new platform, require parties to provide more information when they take disputes to the IDR system and require the parties to spend 30 days making serious efforts to resolve disputes informally before the formal IDR process begins.
Some observers suggested that the process changes could help make the system fairer to payers.
Regulators raised payers’ hopes higher July 10, by announcing that any organization that wants to continue to serve as an IDR entity, and to continue to collect IDR fee revenue, will have to go through a re-application process when its current five-year certification expires.
The re-application process will include a five-day public comment period.
The comment period will give employers, insurers, plan administrators, data firms and trade groups a chance to tell IDR system managers if they think an IDR entity has been biased.
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