The Consolidated Appropriations Act, 2021, provides the annual funding for the federal government and contains several important rules giving further COVID-19 relief. The Act includes significant healthcare provisions and represents the most comprehensive single piece of legislation to impact group health plans since the Affordable Care Act (ACA).
Summary of Healthcare Provisions in the Consolidated Appropriations Act
The Act contains healthcare provisions impacting employer-sponsored group health plans. These include flexible spending arrangements, surprise medical billing, mental health, and substance use disorder benefits, pharmacy benefits reporting, and disclosure of service provider compensation.
Flexible Spending Arrangements
The Consolidated Appropriations Act gives employers the option to allow participants to roll over all unused amounts in their health and dependent care flexible spending accounts (FSAs) from 2020 to 2021 and from 2021 to 2022. FSA plan sponsors are allowed, but not required, to amend their cafeteria plans to take advantage of the new healthcare provisions. These changes include the following:
- Mid-Year Election Changes
For plan years ending in 2021, a plan may allow participants to change the number of their contributions to healthcare or dependent care FSAs prospectively, without regard to any change in status.
- Carryover of Account Balances
A plan may allow participants to carry over any unused amounts or contributions remaining in a healthcare or dependent care FSA from the 2020 plan year to the 2021 plan year, or the 2021 plan year to the 2022 plan year.
- Grace Period Extension
Both healthcare and dependent care FSAs may extend their grace period to 12 months after the end of the plan year, for plan years ending in 2020 or 2021.
- Unused Healthcare FSA Account Balances
A plan may allow an employee who terminates their participation in a healthcare FSA during the 2020 or 2021 calendar year to continue to receive reimbursements from unused account balances through the end of the plan year in which such participation ended.
- Dependent Care FSA and Aging Out
For dependents who aged out of eligibility for the remainder of the plan year, plans may extend the maximum age from 13 to 14 to allow participants to receive reimbursement.
Surprise Medical Billing Provisions
One of the healthcare provisions included in the Appropriations Act is the No Surprises Act, which aims to protect patients from surprise medical bills in situations where they have little or no control over who provides their care. This includes non-emergency services provided by out-of-network providers at in-network facilities, emergency services provided by out-of-network providers and facilities, and air ambulance services. This issue of surprise medical bills is especially important during the public health emergency, as the COVID-19 pandemic has increased the occurrence of surprise bills in a time where people are less likely to be able to meet the unexpected costs.
- Guidelines for Out-of-Network Services Charges
The Act includes open negotiation and independent dispute resolution (IDR) procedures for use by plans or insurers and non-participating providers to determine the amount that will be paid for a provided service. Unless the state has a specified law that determines the price for an item or service that a health plan or issuer must pay, the plan will send either an initial payment or a notice of denial to the provider, and the parties have 30 days to initiate open negotiations. If the parties cannot reach an agreement within 30 days, either party has four days to notify the other and the Department of Health and Human Services (HHS) of intent to initiate the IDR process created by the Act.
- Health Plan Advance Estimates
Beginning in 2022, if a participant schedules a healthcare service to be performed by a provider with sufficient advance notice, the provider has to provide advance notice to the health plan. Group health plans and insurers that receive the provider’s notice regarding a participant’s scheduled service need to provide the participant with a notice that contains specified coverage information.
- External Review and Surprise Medical Billing
On or before January 1, 2022, health plans have to apply the external review procedures of the ACA to benefit denials relating to the Act’s surprise medical billing provisions.Find out how to develop and keep effective healthcare compliance while meeting industry standards and changing regulations with this detailed guide.
Mental Health and Substance Use Disorder Benefits
Plan sponsors that provide mental health or substance use disorder benefits and impose non-quantitative treatment limitations (NQTLs) on mental health or substance use disorder benefits need to perform and document comparative analyses of the design and application of NQTLs. Also, these analyses have to be available to the Department of Labor (DOL), HHS, or Internal Revenue Service (IRS) upon request.
Pharmacy Benefits Reporting
One of the healthcare provisions requires each group health plan to report certain information related to prescription drugs to the HHS, DOL, and Treasury, including:
- The plan year, number of enrollees, and each state in which the plan is offered,
- The 50 brand prescription drugs most frequently dispensed and the total number of paid claims for each drug,
- The top 50 most expensive prescription drugs paid for by the plan
- The 50 prescription drugs with the greatest increase in plan expenditures over the preceding plan year;
- The total spending on health care services by a plan, broken down into specific categories, including hospital costs, primary care costs, specialty care costs, and prescription drug costs, and
- Impact of rebates, fees, and other remuneration paid by drug manufacturers on premiums and out-of-pocket costs.
Disclosure of Service Provider Compensation
Service providers for welfare plans were temporarily exempt from the Employee Retirement Income Security Act (ERISA) requirement to provide fee disclosures to plan fiduciaries. However, one of the healthcare provisions within the Act extends the fee disclosure rules to group health plans. The fee disclosure requirement applies to any group health plan vendors that provide services to a group health plan funded with plan assets.
Application of Healthcare Provisions within the Act
The Consolidated Appropriations Act, 2021 (the Act) provides additional funding and guidance, but also imposes additional reporting and compliance obligations on group health plans and health insurance issuers. Therefore, plan sponsors need to take immediate action to comply with the Act and begin collecting appropriate data to meet reporting requirements. Also, plan sponsors should update plan documents and summary plan descriptions for a number of the Act’s provisions, as well as review their vendor agreements.
Apart from ensuring that health plans they sponsor are amended to include the updated healthcare provisions, healthcare providers can integrate exclusion screening solutions to save resources and reduce the risk of non-compliance. In addition to screening employees, vendors, and contractors through federal and state databases, employers stay up-to-date with changing regulations and requirements. Thus, they ensure compliance with different healthcare provisions, mitigate potential risks, and prevent any potential fines.