Explain the new CARC and RARC requirements, why accurate coding matters to the Federal IDR process, and what independent TPAs should be doing now to prepare their systems, workflows, vendors, and clients.

Part I: The New CARC and RARC Requirements Scott Bennett

1. Three examples of what can go wrong

• Timing defenses may be lost or weakened. If the remittance does not provide the required notice, a provider may argue that applicable timelines did not begin, that an extension is warranted, or that the plan cannot rely on an untimeliness objection.

• IDR eligibility arguments may be undermined. An incorrect RARC can conflict with a later position that the claim is ineligible for Federal IDR because state law applies, the service falls outside the NSA, or another procedural requirement was not satisfied.

• The TPA may face audits, complaints, and federal questions. Coding errors or inconsistent practices can lead to provider complaints and require the TPA to explain its claim determinations, system configuration, training, and compliance process.

1. Effective date and scope

• The requirement applies to items and services furnished on or after January 1, 2027.
• It covers paper and electronic remittance advice sent to an out-of-network provider or facility.
• The required RARC must identify, at the service-line level, whether the item or service is subject to the NSA and potentially eligible for Federal IDR.
• This is principally a provider-remittance requirement, not a general member EOB requirement.

1. CARCs versus RARCs

• CARCs explain why a claim or service line was paid differently from the billed amount.
• RARCs provide additional information about the payment and whether the item or service is subject to the NSA and Federal IDR.
• Plans generally retain discretion to select the appropriate CARC, but must use the prescribed NSA-specific RARC.

1. The required RARC categories

The nine codes address:

• Initial payments governed by state law or potentially subject to Federal IDR
• Covered services for which no plan payment is made
• Final payments resulting from state law, an All-Payer Model, open negotiation, or an IDR determination
• Items and services that are not subject to the NSA surprise-billing provisions

1. Why accurate selection matters

• The RARC communicates the TPA’s position on NSA applicability and IDR eligibility.
• Incorrect coding can direct a claim into the wrong negotiation or dispute process.
• A provider may challenge the code and initiate open negotiation or IDR.
• The certified IDR entity ultimately decides Federal IDR eligibility.
• Missing or incorrect notice may affect the ability to rely on procedural deadlines or eligibility defenses.

1. What should be done before January 1, 2027

• Map each NSA claim outcome to the appropriate RARC.
• Confirm how Federal law, state law, or another payment framework will be identified.
• Configure and test electronic and paper remittances at the service-line level.
• Test initial payments, zero-payment notices, settlements, and IDR determinations.
• Establish correction and escalation procedures for incorrectly coded claims.
• Train claims, Provider Relations, appeals, customer service, and NSA personnel.

Part II: Operational Impact on an Independent TPA Joanie Verinder

1. Why this is more than a coding change

• The TPA is responsible for converting the legal, coverage, and payment determination into the correct service-line code.
• The TPA must bring together information from the claims platform, network data, plan terms, state-law analysis, negotiation activity, and IDR outcomes.
• A coding error may reflect a larger breakdown in the TPA’s claim workflow.

1. TPA ownership and accountability

• The TPA must own the end-to-end process for selecting, applying, validating, and correcting the RARC.
• The TPA must coordinate with its claims platform, network, repricer, clearinghouse, and NSA vendors while remaining responsible for the final output.
• Vendor readiness should be independently validated and should address the specific NSA requirements, not merely a general 2027 system update.
• The TPA should establish a clear internal owner for implementation and ongoing compliance.

1. Systems and workflow impact

• Claims-system configuration and 835 generation
• Paper-remittance formatting
• Network and provider-contract data
• State-law and NSA applicability logic
• Open-negotiation and IDR case-management systems
• Supplemental and final-payment processing

1. Common TPA risk areas

• Applying one code to the entire claim when service lines require different results
• Using a Federal IDR code when specified state law applies
• Treating a covered service with no payment as an ordinary benefit denial
• Failing to update the remittance after settlement or an IDR determination
• Producing inconsistent paper and electronic remittances
• Failing to supervise vendor configuration and output
• Providing customer-service explanations that conflict with the remittance

1. TPA readiness checklist

• Designate an internal owner.
• Create a decision matrix for the nine RARCs.
• Document the complete claims and remittance workflow.
• Configure and test all systems and vendor connections.
• Validate both electronic and paper remittances.
• Document handoffs to open-negotiation and IDR teams.
• Train affected operational teams.
• Establish error-correction and escalation procedures.
• Review live claims and exceptions beginning in January 2027.

Closing discussion Scott Bennett and Joanie Verinder

• What must be ready by January 1, 2027
• What TPAs should be asking their platform, clearinghouse, and other vendors now
• How accurate coding can preserve procedural arguments and reduce avoidable IDR disputes
• Practical questions from independent TPAs and plan sponsors