By: HUB’s EB Compliance Team

In recent years, there has been a movement toward requiring more transparency from hospitals, other providers, and health plans. Last November, federal agencies finalized a series of health plan transparency rules that were slated to phase in beginning in 2022, as we detailed here. However, Congress subsequently weighed in and added price transparency rules of their own in the Consolidated Appropriations Act, 2021 (“CAA”). Those rules appear to be effective January 1, 2022, so employers should consider working with their carriers or third-party administrators/administrative services only providers (“TPAs”) on their efforts to comply very soon.

Background

Under the CAA, if an individual schedules an appointment or medical service with a health care provider (e.g., physician office or facility), the provider must ask if the individual is enrolled in a health plan (most providers do this routinely already to understand whether there is an insurance payer too). If the individual is enrolled in a health plan, then the provider must then submit a good faith estimate of the cost, as well as expected procedure codes, and other relevant information to the health plan carrier or TPA.

Usually within one business day of receipt, the carrier or TPA must provide the covered individual with an “advance explanation of benefits” (advance EOB). The advance EOB is similar to the EOB most people receive today after they go to a doctor or facility, but of course, this advance EOB is an estimate rather than a true list of billed charges. (The carrier or TPA can have up to three business days, as opposed to one, to issue the advance EOB if the appointment or service was scheduled at least 10 business days in advance.)

Advance EOB Features

The advance EOB must include the following information:

  1. Whether or not the provider or facility is “in-network”.
    • If yes, then the advance EOB must include the contracted rate(s) for the services.
    • If not, then the advance EOB must state how the individual can find an in-network provider or facility.
  2. The estimate provided by the provider or facility.
  3. An estimate of the amount the plan will pay for the items or services.
  4. An estimate of any cost sharing the individual will owe (copays, coinsurance, etc.).
  5. An estimate of the individual’s progress toward the deductible or out-of-pocket maximum.
  6. If the item or service is subject to medical management (like prior authorization, step therapy, etc.), then the advance EOB must state that these medical management techniques apply.
  7. A disclaimer that this advance EOB is only an estimate.
  8. Any other information or disclaimer that the plan determines is appropriate.

The purpose of this requirement is to try and prevent individuals from being surprised by the cost of services, especially if they are going to an out-of-network provider (or if an out-of-network provider happens to provide them services, even though they are being treated within an in-network facility).

The federal regulatory agencies have authority to modify the timing of providing this advance EOB for services that have low utilization or significant variation in cost. However, absent that limited relief, this must be made available for all scheduled items and services.

There’s Transparency and then There’s Transparency

Notably, there is some (although not complete) overlap between these transparency requirements included by Congress in the CAA and those prepared by the federal agencies in the final transparency rules issued in November of last year. Perhaps the most significant change is timing. The advance EOBs under the federal agency rules were not required until 2023 for some services and 2024 for others. By contrast, the advance EOBs required by the CAA must be provided for plan years beginning on or after January 1, 2022.

What remains to be seen, however, is whether the federal agencies will attempt to harmonize these sets of rules in some way, or delay the application of other transparency requirements in the final transparency rules to give plans more time to comply with the requirements.

Takeaways

Given that this CAA transparency obligation ultimately falls on the group health plan, employers need to pay attention. For insured plans, this responsibility falls directly on the insurance carrier. For self-funded plans, it is likely that this is going to be handled by the plan’s TPA. The TPA has all the information necessary to produce the advance EOB as it already issues regular post treatment EOBs. Therefore, employers that sponsor self-funded plans should confirm with their TPAs that they will be handling this requirement. 

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

NOTICE OF DISCLAIMER

Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only, and is not intended to constitute legal or tax advice as to an organization’s specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your organization’s particular needs.