Reviewing the Welfare Plan Rules Under the Consolidated Appropriations Act, 2021
The Consolidated Appropriations Act, 2021, (CAA) and transparency regulations introduced major changes to health benefit plans. These changes continue to evolve with some requirements just now taking effect.
- Health plan sponsors need to comply with new requirements for reporting on prescription drug and other health care expenditures, although they have been given a very short reprieve.
- New requirements for maintaining an interactive tool for providing health plan participants with provider-specific information about the amount they will need to pay for services (and other useful information) apply, beginning in 2023.
- Health plan sponsors should be on the lookout for new guidance and enforcement efforts, including the issuance of forms for them to attest to their compliance with the anti-gag rules.
The Bottom Line
The CAA introduced requirements that affect how much plans must pay in certain surprise situations, how plans must document compliance with certain nondiscrimination requirements applicable to mental health and substance use disorder benefits, and the extent to which care must be continued when a provider leaves a network. The Act also introduced rules that make information more transparent not only to plan participants, but to plan sponsors themselves. Health plan sponsors need to work with plan vendors to ensure compliance with the new rules and to take full advantage of them.
Enacted more than two years ago, the Consolidated Appropriations Act, 2021 (CAA), may no longer seem like a giant obstacle that health plan sponsors must surmount to keep their plans in compliance with applicable law. But various rules are just now taking effect, new guidance continues to emerge, and plan sponsors still need to consider measures that they will need to take to comply with CAA requirements. As the new year begins, we offer this brief status check on the still-evolving changes introduced by the CAA.
Health Care Expenditure Reporting. With a December 27, 2022, enforcement deadline fast approaching, the U.S. Departments of Labor, Health and Human Services, and the Treasury offered a brief reprieve to health plan sponsors, many of which were racing to report information about prescription drugs and other health care expenditures for the 2020 and 2021 years. Under the new guidance, no enforcement action will be taken as long as plan sponsors report the required information, in line with a good faith interpretation of the complex rules, by January 31, 2023. At the same time, the departments relaxed some of the technical restrictions that prior guidance imposed on these reporting requirements. The reprieve comes at the last minute for many filers, but is, nonetheless, welcome news. Plan sponsors must now work with their vendors to meet the new deadline and to prepare reports for 2022, which are due by June 1, 2023.
No Surprise Billing Rules. Notwithstanding regulatory efforts to reach a compromise on the application of the no surprise billing requirements, controversy continues to swirl about the process for resolving disputes under the new rules. At the center of the controversy is the weight to be given to a plan’s determination of the qualified payment amount (QPA). The QPA is the median cost of services paid to network providers for a particular item or service in the relevant geographic area. Where the no surprises rules apply (generally, where out-of-network providers furnish care in emergencies, at in-network hospitals, or through air ambulance services), the QPA is used to determine the cost-sharing amount that an individual must pay and is a factor in determining what plans will pay if the provider disputes payment under regular plan terms. Originally, regulations set a clear presumption in favor of offers by a plan to pay an amount equal or close to the QPA. Provider groups succeeded in having those regulations enjoined by a court, which prompted the regulators to revise their rules. Dissatisfied with the regulatory compromise, health care provider groups now have mounted a judicial challenge to the revised rules. Notwithstanding this controversy, and a shortage in the number of independent reviewers qualified to settle disputes under the new procedures, health plans, and, in particular, their insurers and claims administrators, need to address no surprises disputes in accordance with the processes established under the no surprises rules.
Mental Health Parity and Addiction Equity Act. In compliance with CAA rules, all health plans should have in place a thorough written analysis that appropriately compares non-quantitative treatment limitations on benefits for mental health and substance use disorder expenses to benefits for medical and surgical care. There has been little guidance on these rules since a report to Congress last February revealed that the Department of Labor found that none of the plan sponsors that it had audited provided an initial satisfactory response. However, care and coverage for mental health and substance use disorders remain in sharp focus, and there is likely to be more enforcement guidance (and there may be more enforcement efforts) in 2023. Plan sponsors should make sure that they (or their insurers for insured plans) have appropriate documentation of compliance in place for applicable non-quantitative treatment limitations and also for the testing of quantitative treatment limitations.
Anti-gag Rules. No vendor agreements entered into on or after December 27, 2020, are allowed to contain restrictions on the disclosure and sharing of certain information pertaining to the cost and quality of services. It was expected that plan sponsors would be required to attest to their compliance with these new rules in 2022, but the enforcement agencies have yet to issue an attestation form. Plan sponsors should be on the lookout for this form in 2023 and should confirm that vendor contracts that they have entered into over the past two years (and all new vendor contracts going forward) comply with the new rules. Although the rules do not apply to older contracts, plan sponsors may seek to amend those contracts to conform to the new standards.
Broker/Consultant Disclosures. Fiduciaries of ERISA-covered health plans must obtain certain information from brokers and certain consultants before entering into or renewing a contract. This requirement to provide information about the services they provide and the revenue they receive from all sources took effect December 27, 2021. These disclosures give plan sponsors revealing insight into the reasonableness of the compensation that brokers and consultants receive and the vendors that contribute to that compensation. Although technically applicable only to new or renewed health benefit arrangements, plan sponsors may sensibly seek this information with regard to existing contracts and other types of coverage as part of their ongoing ERISA fiduciary obligations with respect to plan vendors.
Other CAA Requirements. No formal guidance has been issued under certain new CAA rules, including:,
- The rules governing the continuity of care.
- The standards for maintaining and updating provider directories and providing information about the network status of providers.
- The issuance of revised plan identification cards.
In all instances vendors should be acting in accordance with a good faith interpretation of the statutory rules. Plan sponsors that have questions about whether their vendors are complying with the rules should contact their vendors.
Transparency Regulations. Although not technically part of the CAA, the substance and timing of the transparency regulations often make them part of the CAA conversation. Beginning in July 2022 (and in ensuing months where the plan year begins after July 1), plans have been required to make monthly machine-readable postings on a public website that include specific financial information about the cost for in-network and out-of-network providers. For plan years beginning on or after January 1, 2023, health plans need to make an interactive tool available to plan participants that allows them to access provider-based information about participant costs (and other relevant information) for 500 medical items and services. In 2024, this requirement will expand to reach all items and services.
Compliance Measures. Compliance with the new rules depends heavily on the cooperation and diligence of plan vendors. Even insured plans should have in place commitments from vendors to comply with the new rules and, in particular, the transparency and health cost reporting requirements, where the regulations expressly address insurance (and other vendor) contracts. We expect that the new year will bring additional guidance and new enforcement efforts. Plan sponsors should be on the lookout for new developments and, as the new standards become embedded in the health plan legal landscape, consider how they can use the new rules to their advantage.
Ballard Spahr attorneys in the Employee Benefits and Executive Compensation and Health Care Practice Groups advise plan sponsors and plan administrators on how to navigate these ever-changing health care laws. Please contact us if you have questions.
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