Update on the No Surprises Act

On December 27, 2020, the Consolidated Appropriations Act (CAA) of 2021 was signed into law and included the No Surprises Act (the Act). With so much guidance already published addressing the Act, the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) created a webpage specifically to consolidate everything in one spot.

Guidance released so far includes interim final rules published July 13, 2021, titled “Requirements Related to Surprise Billing; Part 1” and interim final rules published October 7, 2021, titled “Requirements Related to Surprise Billing; Part II” and a Fact Sheet on Part II released September 30, 2021. Additional guidance will undoubtedly continue to be published in 2022 and will be available at the No Surprises Act webpage.

Over the course of the last several months, initial reporting timelines for requirements affecting plan sponsors, employers, and service providers have been revised, making it difficult for all to determine what needs to be completed.  This blog addresses four of these requirements including group ID cards, prescription drug reporting, continuity of care, and broker/consultant compensation.

ID Cards

All group health plans with plan years beginning on or after January 1, 2022, must issue physical or electronic ID cards that include the following in clear writing:

  • Any deductible applicable to the health plan
  • Any out-of-pocket (OOP) maximums
  • Telephone number and website address for consumer information assistance.

Good faith, reasonable interpretation of the rules is required for compliance.

Keep in mind:

  • Plans may design various, but reasonable, methods to comply with the law.
  • The Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the Departments), when determining good faith compliance, will consider each data element to be included on ID cards; whether any data element required, but not included on the face of an ID card, is made available through information that is provided on the ID card, as well as the mode by which any information absent from the card is made available.
    • For example, an ID card includes the applicable major medical deductible and OOP maximum, as well as a telephone number and website address for individuals to seek consumer assistance and access additional applicable deductibles and maximum out-of-pocket limits. The Departments consider this good faith compliance.
  • Plan sponsors may need to budget for new ID cards if the required information is not already printed on them. Every time the deductible or out-of-pocket maximum changes, new ID cards must be issued.

The Departments do not intend to issue additional guidance on the ID card requirement prior to the January 1, 2022 effective dates, thought they do plan on engaging in future rulemaking.

Prescription Drug Cost Reporting

In the interim final rules for Part II, group health plans including grandfathered plans, are required to submit an annual report to the Department of Labor’s (DOL) Office of Health Plan Standards and Compliance Assistance on specific prescription drug spending and costs of medical services, including:

  • General information of the plan including the number of covered participants and beneficiaries, beginning and ending dates of plan year, etc;
  • The 50 most frequently dispensed brand prescription drugs, the 50 costliest prescription drugs by total annual spending, and the 50 prescription drugs with the greatest increase in plan or coverage expenditures from the previous year;
  • Total annual health care spending, broken down by type of cost (hospital care; primary care; specialty care; prescription drugs; and other medical costs, including wellness services);
  • Average monthly premium paid by the employer and participants;
  • Prescription drug rebates, fees, and other remuneration paid by drug manufacturers to the plan in each therapeutic class of drugs, as well as for each of the 25 drugs that yielded the highest amount of rebates; and
  • The impact of prescription drug rebates, fees, and other remuneration on premiums and out-of-pocket costs.

Some of the above will be challenging for plan sponsors to know as they don’t always have access to this information. Although the plan sponsor is ultimately responsible for the reporting, most plans will rely on their service providers to assist with compiling the data:

  • Fully insured plans – the rule allows a plan to have a written agreement with their insurance company completing and submitting the report on their behalf.
  • Self-insured plans – the rule allows a plan to have a written agreement with their third-party administrator (TPA) and pharmacy benefit manager (PBM) completing and submitting the report on their behalf.

The initial date of reporting was December 27, 2021, however, this date was delayed pending further guidance.  Currently, the DOL “strongly encourages” plans to work on their reporting of 2020 and 2021 data to be due on December 27, 2022.  Typically, the reporting will run on a calendar year basis for the prior calendar year’s data, referred to as the reference year, and will be due on June 1 thereafter.

Continuity of Care

The Act established rules regarding continuity of care applicable to all group health plans. These rules state that the plan must notify participants when a provider or facility leaves the plan network while it is providing ongoing care to participants.

Plan sponsors must:

  • Inform each health plan participant who is a “continuing care” patient of the termination and their right to elect continued transitional care from the provider or facility
  • Give the participant an opportunity to notify the plan of their need for transitional care.
  • Allow the participant to elect to continue to receive care under the same terms and conditions as would have applied if the provider or facility was still in network and continue to be treated for up 90 days after the notice is provided, if the participant is still a “continuing care” patient.

A “continuing care patient” is a patient who is:

  • Undergoing treatment for a serious and complex condition.
  • Undergoing a course of institutional or inpatient care.
  • Scheduled to undergo nonelective surgery, including postoperative care.
  • Pregnant and undergoing a course of treatment for the pregnancy.
  • Terminally ill and is receiving treatment for such illness (i.e., hospice care).

Note: Some states have existing continuity of care rules. This means:

  • Fully insured plans – may be subject to more strict continuity of care requirements.
  • Self-insured plans – the plan sponsor or administrator must inform a “continuing care” patient if their provider or health care facility is no longer in network.

Continuity of care rules under the Act are already in effect and apply to plan years on or after January 1, 2022. Good faith, reasonable interpretation of the rules is required for compliance.

Broker and Service Provider Compensation

The CAA also includes new disclosure requirements for brokers and consultants providing services of at least $1,000 to ERISA plans, including group health plans, vision and dental plans, health reimbursement arrangements and flexible spending accounts, employee assistance plans, and certain wellness plans.  Disclosures are not required for welfare plans that do not provide healthcare, such as life or disability plans.

A disclosure is required when a plan includes either a commission agreement, or a contract that includes the commission agreement and standard terms governing the relationship between the group and broker or consultant. A covered service provider includes a broker, agent or consultant who must disclose the following to plan fiduciaries:

  • A description, either in the aggregate or by service, of all direct compensation (i.e. compensation received from the client directly) the service provider, affiliates, or subcontractors reasonably expect to receive;
  • A description of all indirect compensation (i.e. compensation received from any source other than the client or its plan sponsor) the service provider, affiliates, or subcontractors reasonably expects to receive;
  • The identity of any entity paying indirect compensation and description of the arrangement that exists between that entity and the service provider and the services for which the indirect compensation will be received;
  • A description of any compensation that will be paid among the service provider, an affiliate, or a subcontractor in certain instances if the compensation is determined on a transaction basis (e.g. commissions); and
  • A description of how such compensation will be received, such as whether the plan will be billed or the compensation will be deducted directly from the plan’s accounts.

These requirements are for contracted services executed, extended, or renewed on or after December 27, 2021.

What’s Next?

Employers and plan sponsors should expect additional guidance and clarifications to be published in 2022 and should review their responsibilities with advisors to ensure compliance with the reporting requirements.

Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.”

Amanda Wilke, CEBS
Information/Research Specialist at the International Foundation

Anne Newhouse, CEBS
Information/Research Specialist at the International Foundation of Employee Benefit Plans

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