When the Consolidated Appropriations Act (CAA) of 2021 was enacted on December 27, 2020, it included several provisions designed to increase health plan transparency relating to costs and coverage. With the issuance of the Transparency in Coverage final rule on January 11, 2021, additional price, transparency, and disclosure requirements went into effect. These new requirements impose added administrative and compliance burdens on plan sponsors and potentially, increased costs. To ensure compliance and avoid unnecessary expenses, plan sponsors are urged to work closely with their carriers, plan administrators and any other third parties involved in their health plans. One aspect of the new provisions which requires their detailed attention are “surprise” medical bills.
Surprise Medical Bills
One of the key elements of the CAA is The No Surprises Act, which mandates uniform protection applicable nationwide for the following medical services:
- Out-of-network emergency facility and professional services, including post-stabilization care at out-of-network facilities up to the point when the patient can be transferred to another facility,
- Out-of-network services provided by or ordered by an in-network facility with the exception of a provider following the requirements of the notice and consent provision in the CAA, and
- Air ambulance transports (both emergency and nonemergency), but not ground ambulance services.
Under the CAA, plan participants cannot pay more than the in-network cost-sharing amount for covered services in the aforementioned categories. Further, the amounts paid by the participant must be applied toward his/her in-network annual deductible and in-network annual out-of-pocket maximum. To calculate a plan participant’s cost-sharing amount, the “recognized amount” stated in the CAA legislation (i.e., the amount specified by state law when a law exists, the “qualifying payment amount” as defined by CAA, and the amount indicated in a state’s individual “All-Payer Model Agreement,” if one exists) must be used. There are other criteria relating to this surprise billing provision which also must be followed.
Cost Implications for Plan Sponsors
The No Surprises Act, which protects plan participants, increases costs for self-funded plans by requiring plan sponsors to cover amounts previously not covered by plan participants’ cost sharing. In the past, there was a cap on plan sponsor liability set at the defined out-of-network permitted amount minus a participant’s cost sharing for out-of-network benefits.
Plan sponsors can mitigate this new development by appealing to a healthcare provider/facility or using an independent dispute resolution process. This process can be initiated within 30 days of an initial payment or notice of a payment being declined, assuming that the out-of-network provider/facility and plan sponsor could not negotiate a payment amount. Given the potential ramifications for plan sponsors, it is important that they become familiar with the comprehensive requirements under the CAA (there are many more to understand) and The No Surprises Act to avoid incurring additional costs.
