Woodruff Sawyer’s “Mission to More” series leads you through today’s Benefits news and serves as a guide for everything from competitive programs to compliance. In this third edition, Jennifer Chung elaborates on critical transparency requirements designed to protect individuals from incurring high costs for seeking care.
On our last visit to The Hill, we reported on the buzz surrounding the government’s efforts to end health care surprise billing and create more transparency in billing practices. Not long after that visit in 2020, the Biden Administration declared a national health emergency that shuffled around priorities and redirected resources, but the transparency bandwagon kept marching on in the background. After a one-year hiatus, we were able to visit The Hill again in February 2022, where the buzz is still focused on transparency with health care pricing.
Several transparency requirements went into effect in late December 2021 and January 2022 while many employers were operating at a heroic pace to keep their companies afloat and employees happy and healthy. In case anyone missed the memo, we will review the status of two key transparency rules that impact health plan operations and administration.
Transparency for Emergency Services Under the No Surprises Act
Beginning in 2022, individuals will have certain legal protections when receiving emergency services under the No Surprises Act (NSA). The Act prohibits full-rate “balance billing” surprises for individuals who receive emergency services or go to an in-network facility but unknowingly receive care or treatment from a provider, typically a doctor, who is not part of the network. In the past, this set of circumstances would often result in the patient receiving a much bigger bill than expected when the provider would charge the full, undiscounted service rate.
For insured individuals, the law provides three critical protections:
- No surprise billing for most emergency services without the patient’s prior approval, even if it’s at an out-of-network facility. Patients must give their voluntary consent, but providers can refuse to provide services if patients decline to pay out-of-network costs. This situation leads to the possibility that a patient may feel pressured to consent to out-of-network costs if the provider refuses care. This remains a flaw in the NSA since in some cases, the patient’s consent may not really be “voluntary.”
- Patients cannot be charged the out-of-network cost-sharing or copayment rates for most emergency services, and some non-emergency services. For example, air ambulances cannot send patients a surprise bill for more than their in-network rate.
- Certain additional services (e.g., anesthesiology or radiology) provided by an out-of-network doctor as part of a patient’s in-network visit cannot be charged at the out-network rate.
How Much Will Patients be Charged Under the NSA?
Note that NSA rules apply to those who have insurance coverage. For those who are not covered by insurance and would be self-paying the bill, the providers must provide a good faith estimate regarding the cost of the care/treatment prior to providing the services.
What happens if patients are uninsured? How much would they be charged for these specific out-of-network services? Under the law, the bill must be based on the median rate that plans pay in-network providers in a certain geographic area, referred to as the “qualifying payment amount” (QPA). Plans and providers can negotiate an acceptable rate or utilize the independent dispute resolution mechanism. Several lawsuits have been filed alleging that using the in-network median rate as a key factor unfairly favors the health plan to the detriment of providers and doctors who should be able to charge a greater rate based on experience and expertise in their field.
Whichever way the lawsuits settle out, it is a welcome change for insured individuals. Providers must now submit the bills directly to the health plan instead of how it’s been done in the past: sending the bill to the insured and leaving it up to them to work out the reimbursements and payments as best they can.
Price Transparency Under the Transparency in Coverage Final Rule
The Consolidated Appropriations Act of 2021 (CAA) rules require most employer-based group health plans and health insurance issuers to disclose up front their cost-sharing information, including deductibles, co-pays, co-insurance amounts, to individuals. The effective dates of these transparency rules will be phased in over the next three years.
|Insurance providers (i.e., carriers and/or self-funded health plans) will be required to comply with the following deadlines:|
Prescription Drug Pricing
One of the most closely watched transparency rules revolves around prescription drug pricing. Historically, the structure of drug pricing was surrounded by an opaque cloud of complexity that was unclear at best. Under the CAA, insurers and plans must submit data regarding the following pharmacy benefits and drug costs to federal regulators on an annual basis, including:
- Top 50 most prescribed drugs
- Top 50 most costly drugs
- Top 50 drugs with the greatest spending increase from the prior year
- Total spending on health care services
- Average monthly premiums
- Any impact on premiums from rebates, fees, or other remuneration paid by drug manufacturers, including (1) by therapeutic class, and (2) by top 25 drugs
The first report was technically due on December 27, 2021, and the second reporting deadline is right around the corner on June 1, 2022. However, nearly all employers have not been able to comply due to the lack of guidance and framework of how to provide the reporting. Furthermore, employers need to receive more support and cooperation from vendors, such as pharmacy benefit managers, to provide meaningful data. Thankfully, the tri-agencies (HHS, DOL, and Treasury) are deferring enforcement until the final rules and/or further guidance are issued.
New Compliance Risks Require Benefits Expertise
Employers should be aware that some components of the transparency requirements are already effective now and will become enforceable shortly after the tri-agencies issue the final rules. Note that the interim final rules have been issued but are in the comment phase. Therefore, employers can expect the final rules to be issued sometime in 2022. Self-funded plans will shoulder the brunt of the administrative work required to comply with these transparency rules.
A Woodruff Sawyer benefits advisor can help you understand where there might be gaps in your plan and implement measures to avoid future surprises. We can also help negotiate the delegation of most of these new administrative burdens to your plan’s service providers. We draw our expertise from all employee benefit disciplines, including compliance, underwriting, and plan design, to help you create a plan that identifies and mitigates new risks on the horizon.
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