The U.S. Departments of Health and Human Services, Labor, and the Treasury have issued final rules under the No Surprises Act, largely addressing the Independent Dispute Resolution process and downcoding.

As we previously reported, the U.S. District Court for the Eastern District of Texas issued a ruling that certain Centers for Medicare & Medicaid Services interim rules conflict with the federal No Surprises Act and must be set aside under the Administrative Procedure Act. The Court took particular issue with the rule that an Independent Dispute Resolution (IDR) entity must ordinarily select the offer closest to “the qualifying payment amount” (QPA), typically the median rate the insurer would have paid for the service if provided by an in-network provider or facility.

Following that ruling, HHS published “Federal Independent Dispute Resolution (IDR) Process Guidance for IDR Entities” dated April 2022. That guidance required IDR entities to consider the QPA and information that providers and plans submit during the IDR process. It does not establish the QPA as the presumptive appropriate amount.

Recently, on August 19, 2022, the Departments issued “Requirements Related to Surprise Billing: Final Rules.” The rules finalize requirements related to information that group health plans and health insurance issuers offering group or individual health insurance coverage must share about the QPA, and in consideration of the emerging caselaw.

Independent Dispute Resolution

The final rules further clarify the October 2021 interim final rules requiring IDR entities to select the offer closest to the QPA, unless the IDR entity determined that any additional credible information submitted by the parties demonstrated that the QPA was materially different from the appropriate out-of-network rate. The final rules specify that IDR entities should select the offer that best represents the value of the item or service under dispute after considering the QPA and all permissible information submitted by the parties. In performing this review, IDR entities are to evaluate whether the information provided relates to the payment amount offer submitted by either party, and whether the additional information is credible. The IDR entity should also evaluate the information to avoid double counting information that is already accounted for by the QPA or by any of the other information submitted by the parties.

The final rules also finalize provisions of the October 2021 interim final rules requiring IDR entities to explain their payment determinations and underlying rationale in a written decision submitted to the parties and the Departments. The final rules require that the written decision include an explanation of the information that the IDR entity determined as demonstrating that the selected offer is the rate for out-of-network services that best represents the value of the item or service. This includes the weight given to the QPA and any additional credible information regarding the relevant factors.

If the IDR entity relies on additional information or circumstances when selecting an offer, the final rules state that its written decision must include an explanation of why the IDR entity concluded the information was not already reflected in the QPA.


The final rules also clarify requirements for “downcoded” claims, to include information necessary to engage in meaningful negotiations. Previous interim rules described the practice and explained that it was permissible under certain circumstances, but without defining the term. The final rules define downcoding to mean the alteration by a plan or issuer of the service code to another service code or the alteration, addition, or removal by a plan or issuer of a modifier, if the changed code or modifier is associated with a lower QPA than the service code or modifier billed by the provider. Payers are required to:

  • Notify providers when downcoding occurs, including notification that the service code or modifier was downcoded;
  • Explain why their claim was downcoded; and
  • Provide the amount that would have been the QPA had the downcoding or modifier not been downcoded.

With ongoing challenges to the No Surprises Act, providers should continue to monitor changes to this law as it continues to take shape through new rules and additional guidance. We will keep you advised accordingly.