Health Care Reforms and the Consolidated Appropriations Act

Health Care Reforms

Health Care Transparency

Group health plans and health insurance issuers are subject to many new requirements designed to increase health care transparency and protect consumers against surprise medical bills.

These requirements come from final rules regarding Transparency in Coverage (TiC Final Rules), which were issued by the Departments of Labor, Health and Human Services and the Treasury (Departments) in November 2020, and the Consolidated Appropriations Act, 2021 (CAA), which was signed into law in December 2020.

The reforms broadly apply to group health plans (including fully insured plans, self-insured plans and level-funded plans) and health insurance issuers of individual and group coverage. In general, most employers will rely on their issuers, third-party administrators (TPAs) and other service providers to satisfy most of the new requirements, including the obligations to provide machine-readable files (MRFs) and a cost comparison tool and submit detailed reports on prescription drug spending. Employers should confirm that their written agreements with their issuers, TPAs or other service providers are updated to address this compliance responsibility.

Key Reforms

Key health care reforms related to transparency and surprise medical bills include:

  • MRFs with detailed price information
  • Self-service cost comparison tool
  • Reporting on prescription drug costs
  • Prohibition on gag clauses
  • Broker compensation disclosures
  • Ban on balance billing
  • Continuity of care requirements

Important Deadlines

The new requirements have various effective dates. Some key deadlines are as follows:

  • MRFs: Plan years beginning on or after Jan. 1, 2022 (or July 1, 2022, if later);
  • Self-service cost comparison tool: Plan years beginning on or after Jan. 1, 2023
  • Reporting on prescription drug costs: Dec. 27, 2022

Summary of Compliance Requirements

TiC Final Rules

Requirement Quick Summary Effective Date
Public posting of MRFs
Health plans and issuers must disclose detailed pricing information in three MRFs on a public website. The following MRFs are required: •In-network provider negotiated rates for covered items and services (In-network Rate File); •Historical payments to and billed charges from out-of-network providers (Allowed Amount File); and •In-network negotiated rates and historical net prices for covered prescription drugs (Prescription Drug File).
Plan years beginning on or after Jan. 1, 2022. However, enforcement of the In-network Rate and Allowed Amount Files is delayed until July 1, 2022. Enforcement of the Prescription Drug File is delayed until further notice.
Self-service price comparison tool
Health plans and issuers must make an internet-based self-service tool available to participants, beneficiaries and enrollees to disclose the personalized price and cost-sharing liability for covered items and services, including prescription drugs. Upon request, plans and issuers must provide this information in paper form. To comply with the CAA’s price comparison tool (described below), plans and issuers must also provide this comparison information over the telephone upon request.
For plan years beginning on or after Jan. 1, 2023, price comparison information must be available for 500 items and services identified in the TiC Final Rules. For plan years beginning on or after Jan. 1, 2024, price comparison information must be available for all covered items and services.

Consolidated Appropriations Act (CAA)

Requirement Quick Summary Effective Date
Reporting prescription drug costs
Health plans and issuers must report information about prescription drugs and health care spending to the Departments each year.
The report was initially required to be provided by Dec. 27, 2021, and by June 1 of each following year. However, the initial deadline was extended to Dec. 27, 2022.
Prohibition on gag clauses
Health plans and issuers cannot enter into contracts with providers, TPAs or other service providers that would restrict the plan or issuer from providing, accessing or sharing certain information about provider price and quality and deidentified claims. Plans and issuers must annually submit an attestation of compliance with these requirements.
Dec. 27, 2020. The Departments intend to issue guidance in the future explaining how plans and issuers submit their annual attestations of compliance.
Broker and service provider compensation
Brokers and consultants must disclose any direct or indirect compensation they may receive for their services to ERISA-covered group health plan sponsors.
Contracts entered into, extended or renewed on or after Dec. 27, 2021.
Ban on balance billing
Health plans and issuers must provide protections against balance billing and out-of-network cost sharing with respect to emergency services, air ambulance services furnished by nonparticipating providers and nonemergency services furnished by nonparticipating providers at participating facilities. In addition, plans and issuers must publicly post a notice of these protections and include the notice with any explanation of benefits (EOB) for an item or service to which the protections apply.
Plan years beginning on or after Jan. 1, 2022.
Continuity of care
Health plans and issuers must provide continuity of care to qualifying covered individuals when terminations of certain contractual relationships result in changes in provider or facility network status.
Plan years beginning on or after Jan. 1, 2022.
Transparency in identification (ID) cards
Health plans and issuers must include on any physical or electronic ID card, any applicable deductibles and out-of-pocket maximum limitations, and a telephone number and website address for individuals to seek consumer assistance.
Plan years beginning on or after Jan. 1, 2022.
Accuracy of provider directory information
Health plans and issuers must maintain participating provider directories on a public website; regularly verify and update the directory information; and have a process in place for responding to requests for information about participating providers. If inaccurate information is provided, a covered individual cannot be required to pay more than in-network cost sharing.
Plan years beginning on or after Jan. 1, 2022.
Price comparison tool
Similar to the TiC Final Rules, the CAA requires health plans and issuers to provide an internet-based cost comparison tool for covered individuals. The Departments have indicated that they will likely view compliance with the TiC Final Rules’ comparison tool to satisfy the CAA’s price comparison tool requirement. However, the CAA also requires plans and issuers to provide cost comparison information over the telephone upon request, which is an additional requirement that plans and issuers must comply with beginning in 2023.
Plan years beginning on or after Jan. 1, 2023.
Advanced EOBs
Health plans and issuers must provide an advanced EOB to covered individuals after receiving a good faith estimate of charges from a health care provider or facility.
Delayed until further notice.

Safeguard Your Success

The “No Surprises Act” creates important new federal protections against surprise medical bills – a leading cause of affordability for consumers, however the law is very complex. Oversight and enforcement will be conducted by various federal and state agencies, some of which have yet been determined.  Due to the complexity of the Act, multiple agencies, federal and state, could be involved in a single claim of noncompliance.

Monitoring of the law’s impact will be accomplished in various ways. To a large extent, oversight and enforcement will rely on consumer complaints.  In order to complain, though, consumers will need to be better educated about their individual benefits in order to understand when and how they have been overcharged for medical services.  Health care charges and financing remains one of the most misunderstood consumer commodities.  How public education will be conducted, and how public understanding of new rights will be monitored is yet to be determined. The responsiveness of new complaints systems and how they coordinate will also be important to watch.

Contact a member of the Sentinel Benefits Solutions team today to discuss your group health plan and the impacts of these new requirements.

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About The Author

As Managing Director of Healthcare Practice Solutions, Barry oversees the Sentinel Benefits Consulting team. This team focuses on the unique needs of healthcare clients for Group Medical, Dental, Disability, and Supplemental/Voluntary Benefits through both fully insured and self-funded programs.

With a proven track record and 30 years of experience in managing key clients and closing sales, Barry serves as the primary liaison for the North Carolina Medical Society (NCMS); tasked with the sales and marketing of the NCMS Employee Benefit Plan, making benefit plan recommendations and rate adjustments to the NCMS Employee Benefit Plan Board of Trustees.