By: HUB’s EB Compliance Team

A Congressional bill with lots of extra included items that go beyond its core purpose is referred to as a “Christmas Tree.” Appropriately enough given the time of year, Congress passed such a bill, called the Consolidated Appropriations Act, 2021 (the “Act”), right before Christmas and, after some uncertainty, the President signed it on December 27. While its primary purpose is to fund U.S. government operations through the end of its next fiscal year (September 30, 2021), the Act contained several provisions relevant to health plan sponsors.

FSA Flexibility

The most immediate change is significant additional flexibility for both health care flexible spending arrangements (“FSA”) and dependent care FSAs. Specifically:

  • Any unused funds from a plan year ending in 2020 or 2021 may be carried over and used at any time in the next plan year. The rules for these carryovers are similar to the carryover rules that apply to health FSAs generally (but without the dollar limit on carryovers).
  • Similarly, FSAs with grace periods may extend those grace periods to up to 12 months. Normally, grace periods have a maximum 2 ½-month period.
  • If an employee terminates participation during calendar year 2020 or 2021, FSAs may also reimburse for otherwise eligible expenses incurred through the end of that year (plus any grace period).
  • For dependent care FSAs, if a dependent became too old to have their care expenses reimbursed (age 13) due to the pandemic, any unused funds may be used for the remainder of the plan year in which they aged out (if the regular enrollment period was before January 31, 2020). If any funds remain unused at that time, they can be used until the child turns 14.
  • For plan years ending in 2021, employees may make any prospective changes in their FSA contributions without regard to a change in status.

These provisions are optional, not required. Employers will need to amend their plans to provide these new rights, if they choose to offer them. Fortunately, they have until the end of the first calendar year after the plan year in which the change is effective to amend retroactively (as long as the plan was operated as if it was amended). 

For health FSAs, while the grace period and carryover options may seem essentially identical, they can have different effects on an employee’s ability to contribute to a health savings account, as described here. For that reason, employers with high deductible health plans may want to choose the carryover option.

Surprise Inclusion

Beyond the FSA relief, the Act includes the “No Surprises Act” which is designed to address “surprise medical bills.” In short, these are bills from out-of-network providers requiring more money from the patient after the health plan has paid its part. This can happen in an emergency setting (where the patient does not realistically have a choice of providers) or where a patient goes into an in-network hospital, but is treated there by an out-of-network provider. It is also common with air ambulance providers. To deal with this problem, the Act makes several changes.

  1. For a patient that receives (a) emergency services from an out-of-network provider, (b) non-emergency services from an out-of-network provider at an in-network facility, or (c) out-of-network air ambulance services, the plan or carrier:
    1. must apply in-network rules for prior authorization and in-network cost-sharing;
    2. except for air ambulance services, base its reimbursement on either state law, an interstate compact (if the state is participating), or a formula specified in the Act; and
    3. must also count any cost-sharing amount the patient pays toward the in-network deductible and out-of-pocket maximum.
  2. The payment to the provider must be made within 30 days of the provider billing the plan.
  3. The out-of-network provider is prohibited from balance billing the patient for any emergency services or air ambulance services.
  4. For non-emergency services, the provider must send the patient an estimate of the amount the provider will charge and get the patient’s consent before performing any services. If the patient consents, they may be balanced billed. However, this special consent rule does not apply to certain “ancillary services” or if no in-network provider is available at the facility. Similarly, plans are required to provide an “advance EOB” estimating what the plan will cover and the patient’s responsibility. This advance EOB requirement is similar to, but not exactly the same as, the group health plan transparency requirements we discussed here. Notably, this advance EOB requirement is effective sooner than the similar requirement under the health price transparency rules.
  5. If the provider believes the plan payment is not sufficient, the Act provides two alternative routes for settling the dispute.
    1. If a state law or interstate compact determines how the provider will be paid, then those rules will govern.
    2. Where state law does not apply, the plan and the provider have to negotiate for at least 30 days. If the negotiation fails, the Act sets up an arbitration process. Certain groups of services may be dealt with together. The arbitrator must select the plan’s proposed reimbursement or the provider’s requested reimbursement; there is no picking a number in the middle. Additionally, the loser pays the arbitration expenses. These provisions are designed to encourage the parties to get close to the middle in proposing their reimbursement amounts. The decision will be made within 30 days after the arbitrator is appointed. The results of each arbitration will be published by the Secretary of Health and Human Services (“HHS”).

 

Additional details will be fleshed out in regulations. Some of the regulations are required to be issued by July 1, 2021, with the rest to come by December 31, 2021. These provisions become effective January 1, 2022.

These rules replace the current Affordable Care Act rules governing the payment of emergency services and apply to grandfathered and non-grandfathered plans.

Airing of Information

In addition, the Act requires both air ambulance service providers and group health plans and health insurance carriers to report certain information about air ambulance services. It then requires the HHS Secretary to work with the Secretary of Transportation to publish a report about those services.

Group health plans and health insurance issuers will also be required to provide, among other information, their 50 most frequently dispensed brand drugs, 50 costliest drugs, and the 50 drugs with the most year-over-year increase in expenditures. The HHS Secretary will also issue a report using this information.

Getting Carded

The Act also requires group health plans and health insurance carriers add information to health insurance cards. Specifically, the cards must include deductibles and out-of-pocket maximums (both in-network and out-of-network). They must also include a phone number and web address where individuals can obtain consumer assistance information, such as which providers are in-network.

Other Provisions

In its many pages, the Act covers a lot of other ground as well. For example:

  • Group health plans or carriers will be required to notify patients if they are receiving continuing care with a provider and the contract with that provider is terminated. It gives the individual the option to continue care with that provider or at that facility under certain circumstances and requires the provider to accept the in-network payment from the plan or carrier.
  • Plans and carriers will also be required to offer cost comparison tools starting with plan years beginning on or after January 1, 2022. Again, this is similar to the existing health price transparency rules, but is effective sooner.
  • So-called “gag clauses” are now prohibited. These prevent health plans from sharing provider-specific reimbursements and information. As a result, plans can now use this information as part of the cost comparison tools they are required to develop.
  • Plans and issuers will be required to keep their provider directories up to date.
  • Insurance brokers and consultants for group health plans will need to disclose their fees in advance.
  • Finally, plans will be required to analyze the nonquantitative treatment limitations (like prior authorization, etc.) that they apply to mental health and substance use disorder benefits to show that they are comparable to those that are used for medical/surgical benefits.

Employers, their insurance carriers, and third-party administrators/administrative services only providers will need to digest all of this information over the coming months. With most of the provisions becoming effective January 1, 2022, there will be little time to waste in implementing these provisions (and employers looking to utilize the FSA relief will want to move more quickly). HUB will continue to stay on top of the changes as the guidance develops.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.

NOTICE OF DISCLAIMER

The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.