Alphabet Soup of New Health Plan Rules: CAA, MHPAEA, Oh My! - John Barlament, Partner 414-277-5727

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Alphabet Soup of New Health Plan Rules: CAA, MHPAEA, Oh My! - John Barlament, Partner 414-277-5727
Alphabet Soup of New Health Plan Rules:
        CAA, MHPAEA, Oh My!
                  March 3, 2021

              John Barlament, Partner
• President Biden's immediate and expected actions
• New guidance on outbreak period and COVID
• Consolidated Appropriations Act ("CAA") changes
  • Largest number of health plan changes since Affordable
    Care Act ("ACA")
• Final transparency regulations
• HIPAA changes

President Biden's Immediate Actions
• President Biden pushing for a $1.9 trillion relief package
   • Text of bill released on February 19, 2021 by Democrats
• Provides for COBRA relief
   • "Assistance eligible individual" ("AEI") only needs to pay 15% of premium owed to
     maintain coverage
   • Through September 30, 2021
   • AEIs must be allowed to change benefit plan options in some situations
   • AEIs do not include individuals who "voluntarily terminat[ed]" employment or who had
     non-termination COBRA events (like divorce or death)
       • Odd because COBRA has never focused on whether termination was "voluntary". Not a
         COBRA concept / not necessarily "tracked" by employers or COBRA administrators in this

President Biden's Immediate Actions cont.
• Provides for COBRA relief cont.
   • If AEI previously declined COBRA or discontinued it, receives another chance to enroll.
   • If dispute about AEI status, Department of Labor ("DOL"), Internal Revenue Service
     ("IRS") or Health and Human Services ("HHS") – not the employer or insurer – makes
     the determination
       • And court must defer to its determination.
       • Brand-new eligibility determination process, unlike anything else in benefits law
   • Plan administrator, generally, must send additional notification of this to the AEI.
   • Other 85% seems to be "paid" by federal government through tax credits relating to
     employment taxes.
       • What if plan (e.g., multiemployer plan) has no employees and no employment taxes?

President Biden's Immediate Actions cont.
• Biden administration placed many pending regulations / other guidance on
   • E.g., Equal Employment Opportunity Commission ("EEOC") had proposed wellness
     regulations under Americans with Disabilities Act ("ADA") and Genetic Information
     Nondiscrimination Act ("GINA").
   • EEOC regulations never formally published, but now pulled from EEOC website, as of
     February 12
   • Not necessarily a bad thing for employers. New regulations somewhat employer-
       • Program generally must be "health-contingent" to obtain more-favorable provisions. Without
         that, reward typically limited to de minimis items like coffee mugs and t-shirts
       • But, will Biden administration provide a more employer-friendly version of the regulations
         than the Trump administration?

President Biden's Immediate Actions cont.
• Issued January 28 executive order on ACA / Medicaid
• New special enrollment for Exchanges
• President Trump's ACA-related 2017 executive orders revoked (EO 13765
  and 13813)
• EO 13765 was the basis for new, final regulations which made
  "grandfathered" plan regulations a bit more employer-friendly
• EO 13813 related to individual coverage HRAs; association health plans and
  short-term, limited duration insurance

CAA: Changes for FSAs and DCAPs
• Temporary, but important, changes for health flexible spending accounts
  ("Health FSAs") and dependent care assistance programs ("DCAPs")
   • COVID prevented use of these benefits in many situations
• All are optional – plan sponsors do NOT need to adopt them
   • Can adopt change for Health FSA and none for DCAP (or vice versa); if have multiple
     Health FSAs, can adopt for only one, not all (IRS Notice 2021-15, released Feb. 18, 2021)
• If do want to adopt them, plan amendment will be required (retroactive ok)
• Must adopt amendment by end of the first calendar year beginning after the
  end of the plan year in which the amendment is effective
   • Generally 12/31/2021 for calendar year plan; generally 12/31/2022 for non-calendar-
     year plan
   • And, plan must be operated consistent with terms of the amendment before it is

Change 1: Health FSA / DCAP Carryovers
• Before CAA, only Health FSAs could allow for carryover (limited to $500, as indexed;
  $550 is current amount)
   • So, there was no such thing as a "DCAP carryover."
• CAA allows unused Health FSA / DCAP amounts from a plan year ending in 2020 to be
  carried forward to 2021
   • Ok regardless of source of funds. E.g., if enrollee rolled over $500 from 2019 plan year to 2020, can
     continue to roll that over to 2021
• Similar for plan years ending in 2021 (can carry forward to 2022)
• No set dollar limit. So, $2,750 Health FSA "new money" contribution not limited by what
  is carried over
• DCAP: Can carry over amounts, so can have available in 2021 more than the typical
  $5,000 / $2,500 limit (e.g., could carry over $1,000 + contribute $5,000 in new money)
   • Per IRS official on ABA call 3/2/2021, it looks like ALL of that will be non-taxable
Change 1: Health FSA / DCAP Carryovers cont.
• HSAs: Amount carried over into general-purpose Health FSA WILL affect HSA
   • Suppose Awesome Inc. had a Health FSA with no grace period and no carryover as of
     12/31/2020. Paul the participant had $1 left in the Health FSA which would be forfeited
     as of 12/31/2020. Paul was ok with this, as he was joining a high-deductible health plan
     ("HDHP") on 1/1/2021. Paul was eager to contribute the maximum amount possible to
     his HSA, which he quickly established – and funded -- on January 1, 2021.
   • Awesome Inc. wants to be "nice" to its employees and decides on February 14, 2021
     that it will allow a carryover of the Health FSA amounts for all employees. Thus, Paul
     now has a Health FSA with $1 in it, effective January 1, 2021. That seems to make Paul
     ineligible to have established or funded his new HSA. But Paul did not know that
     Awesome Inc. would do that when Paul established his HSA. What happens?

Change 1: Health FSA / DCAP Carryovers cont.
• IRS Notice 2021-15 provides two forms of optional relief.
   • Employers can amend their plans to allow employees, on an employee-by-employee
     basis, to opt out of the carryover.
       • Would seem to require employee communication and tracking process (none specified in
         Notice 2021-15, e.g., how long employees must be given to provide opt out notice.)
   • Employer can establish an HSA-compatible Health FSA (e.g., only allow for
     reimbursements after deductible is satisfied.)
       • Then, allow employees to change, in middle of plan year, into the HSA-compatible Health FSA.
       • Again, will impose some administrative burdens on employer.
   • So, in the above example involving Paul, remember that HSA eligibility is determined on a
     month-by-month basis. If Awesome Inc. quickly allows Paul to NOT have the carryover (or
     moves Paul into an HSA-compatible Health FSA), it would seem like Paul could contribute
     fairly quickly to the HSA. Unclear if that is, e.g., March 2021 (or so) or if it can be
     retroactive to January 1, 2021. So it's possible Paul would need to establish a new HSA in
     March or April, etc. and that the January HSA is not really an HSA.

Change 2: Extension of Grace Periods
• Health FSA and / or DCAP may extend grace period for 12 months.
• Available for plan years ending in 2020 or 2021
• Typical grace period was only 2.5 months
• Similar concerns about HSA eligibility
   • Unless employee's Health FSA balance is $0 as of end of the plan year (e.g.,
     12/31/2020 for a calendar year plan), it will prevent HSA eligibility for all of
     next year (even if remaining amount is spent at some point during the year).

Change 3: Health FSA Reimbursements Continue
• Plan sponsor can allow individuals who ceased participating in 2020 / 2021 to continue
  to receive reimbursements from unused amounts through the end of the plan year in
  which participation ended
• Available for Health FSAs
• Can adopt shorter period than 12 months
• Do not need to have a carryover or grace period provision
• Will have same effect as noted before on HSA eligibility
   • And same options, as noted before, to "fix" the problem
• Does allowing this create a new plan? Create new, e.g., COBRA obligations?

Change 4: DCAP Special Age Limit
• DCAPs allowed to extend maximum age from 12 to 13 for dependents of certain
  "eligible employees."
• "Eligible employee" is someone who (1) is enrolled in a DCAP for the last plan year
  with respect to which the end of the regular enrollment period for the plan year
  was on or before 1/31/2020, and (2) has one or more dependents who attain the
  age of 13 either (a) during that plan year, or (b) in the case of an employee who
  has unused DCAP amounts for that plan year, during the subsequent plan year.
• Can likely modify DCAP by changing "under age 13" (typical language) to "under
  age 14"

Change 5: Election Changes
• Plan sponsors can modify Health FSAs and DCAPs to allow employees to
  make prospective mid-year changes for plan years ending in 2021.
   • No need for a "change in status" or "qualifying life event"
• Can also modify cafeteria plan to allow employees to:
   • Elect to join the employer's health plan, if employee initially declined
   • Revoke election to join one of the employer's health plans, so employee can join
     a different employer plan
   • Revoke election to join any of the employer's health plans, IF employee provides
     written attestation that employee is enrolled, or will immediately enroll, in other
     health coverage (not just dental or vision) not from the employer. Notice 2021-15
     provides an example of this attestation
   • TPAs may need to be aware of this flexibility (may have more mid-year
     enrollments / drops then is typical in the past)

Outbreak Period
• Per prior guidance from April / May 2020, IRS and DOL suspended various
  deadlines that plan enrollees would otherwise have had to follow.
   • E.g., HIPAA special enrollment; COBRA elections; COBRA payments, etc.
   • Note: Does not apply to governmental employers, but CMS encourages those plan sponsors
     to follow similar rules
• Statutory basis for it seems to say that plan enrollees receive only one year of
  this relief (or, if it had ended earlier, end of national emergency + 60 days)
• Relief began March 1, 2020 – so it would seem like it would have ended
  February 28, 2021
• On February 26, 2021 the IRS and DOL issued Disaster Relief Notice 2021-01
• Adopts novel interpretation – the maximum 1-year relief period applies on a
  per-enrollee, per-event basis
   • So, one enrollee could have multiple relief periods. And plan as a whole could have a lot!
Outbreak Period cont.
• Suppose Paul, a plan enrollee, terminated employment on 2/15/2020 and lost
  coverage immediately. Plan sent COBRA election notice. Paul would have
  normally had until 4/15/2020 to elect. But Outbreak Period relief suspended
  that requirement for Paul
• By when must Paul elect COBRA? And make first payment?
• We all thought the special relief would end 2/28/2021, for ALL enrollees and
  ALL events, so ALL enrollees would need to take action shortly after then
• Now, though, relief ends on the earlier of:
   • One year from the date "they were first eligible for relief" or
   • 60 days from the end of the national emergency (still running; unclear when it will end)

Outbreak Period
• So, for Paul, it appears that his COBRA election period will resume as of March 1, 2021.
  He is "on the clock" then. He still has the balance of his 45 days (out of 60; he "used up"
  15 days earlier). So Paul must elect COBRA, it seems, by April 14, 2021
• When must Paul make his initial payment, if he elects COBRA on that date? Normally it
  would be 45 days from April 14, 2021 (i.e., May 29, 2021)
• Notice 2021-1 seems to allow a separate, up-to-1-year period for each "individual
  action" which relates to the date "they were first eligible for relief". When was Paul "first
  eligible for relief" from making the initial payment?
   • Without COVID relief, Paul would have needed to make payment, at the latest, by May 29, 2020. So
     maybe the 1 year time period runs from then (i.e., make payment by May 29, 2021)?
   • But arguably the payment deadline did not really come into effect until Paul actually elected COBRA
     on April 15, 2021. So, Paul may receive 1-year delay + 45 days for that "individual action"
   • If so, Paul must make that first payment by May 29, 2022 – for COBRA coverage which began on
     February 15, 2020 and ended 18 months later, on August 15, 2021
Outbreak Period
• TPAs need to look at software system quickly. Do you have letters going out
  automatically that tell enrollees the time by when they must file an appeal, etc.? Or
  letters which deny appeals, etc. as being too late?
   • Notice 2021-1 is effective immediately, it seems
• Many COBRA notices sent in last year probably gave a specific time period (e.g., "You
  must elect by March XX, 20XX" and "Your first payment must be made by April XX,
  20XX"). Those are probably wrong now, based on Notice 2021-1
• Likely need to send new notice with new dates
   • Or, at least something which is generic and explains Notice 2021-1. Previous "generic" statements
     likely did not discuss this "rolling" Outbreak Period relief
• And, keep in mind that Paul, the enrollee in the example, may have had other events
  (e.g., divorce occurred before he terminated; copayment of $5 for a prescription drug;
  coinsurance of $100 on a medical procedure; birth of new child)
   • All have separate 1-year periods which must be tracked, specifically for Paul                       18
Outbreak Period
• Possible that Notice 2021-1 goes even further
• DOL said that, as a fiduciary matter, those who administer plans should (?) (must?) "act
  reasonably, prudently, and in the interest of the workers and their families"
• Thus, "plan fiduciaries should make reasonable accommodations to prevent the loss of
  or undue delay in payment of benefits"
• Also, that fiduciaries "should take steps to minimize the possibility of individuals losing
  benefits because of a failure to comply with pre-established time frames"

Outbreak Period
• For example, if plan administrator "knows, or should reasonably know" that end of relief
  period for an enrollee "is exposing" the enrollee "to a risk of losing protections, benefits
  or rights under the plan", fiduciary "should consider affirmatively sending a notice
  regarding the end of the relief period"
• These statements, taken at face value, appear unprecedented
• Arguably imposes an ill-defined, but substantially larger, communication requirement on
  plan fiduciaries, TPAs and PBMs – well beyond statutory communication requirements
• E.g., going back to Paul. TPA knows that Paul must file an appeal by, say, November 2021
  of his $5 copayment. Must the TPA "remind" Paul of that date? He seems "exposed" to a
  risk of losing ability to bring an appeal if deadline is pressing and he's done nothing
   • By when must the TPA send such a notice? What would it say? Would this apply to EVERY denial
     (even a "partial denial", like a $5 copayment)? Must there be "something more", like a phone call
     from Paul expressing confusion about the deadline? Should TPA just provide a generic notice to all
     current and new participants explaining this?
FAQs Part 44 (February 26, 2021)
• Address CARES Act and FFCRA issues
• Plans must pay for COVID testing for asymptomatic person with no known exposure
• But, plans need not pay for COVID testing for "public health surveillance or employment
• Cannot deny payment for vaccination simply because recipient is not in a recommended
  category for vaccination
• No violation of SBC "60-days-in-advance" rule if start covering coronavirus preventive
• Can provide COVID vaccinations under an employee assistance program and still have
  EAP be an "excepted benefit"
   • Can be useful in some situations (e.g., if an employer is trying to give entire workforce COVID
     vaccination, but only 80% of workforce is in the employer's group health plan)

No Surprises Act ("NSA")
• Big part of CAA (over 500 pages long, out of CAA's about 5,600 pages)
• Debate raging for past few years about how to handle out-of-network medical
  claims, especially where enrollee did nothing "wrong."
   • E.g., Plan member wants to go in-network for a surgery. Finds an in-network hospital and in-
     network surgeon. Has surgery done, but unexpectedly a specialist (anesthesiologist) is out-
     of-network. Should member be required to pay for out-of-network services? What should
     plan pay for the out-of-network provider, because plan has no contract in place with that
• NSA provides special rules for emergency services; non-participating providers at
  participating facilities; and air ambulance services
• Applies if a group health plan, or health insurance issuer offering group or
  individual coverage, covers services in an emergency department of a hospital or
  freestanding emergency department
No Surprises Act ("NSA") cont.
• Seems to apply to grandfathered health plans, but seems to exempt retiree-
  only plans and excepted benefit plans
• Plan / insurer generally must cover "emergency services" under these terms:
   • Without need for any prior authorization
   • Whether provider is a participating provider
   • With no more restrictive provisions that apply to emergency services from participating
     providers / emergency facilities
   • Cost-sharing requirement not greater than if service provided by participating provider /
     emergency facility (a "recognized amount")
   • Make initial payment or provide notice of denial within 30 days
   • Make payment to provider or facility equal to an "out-of-network rate", less the "cost-
     sharing amount" for the services
   • Any cost-sharing by enrollee counts towards in-network deductible and maximum out-of-
     pocket ("MOOP") as if service provided by a participating provider / emergency facility
• Participant should not be subject to balance billing from the provider                         23
• HHS / DOL / IRS required to establish an audit process of group health plans /
   • Audits begin in 2022; new requirement generally applies for plan years starting 1/1/2022.
• Regulations required by July 1, 2021 on how to define these key phrases, related
  items, but NSA does define some key terms.
• "Emergency medical condition" means a medical condition with acute symptoms of
  sufficient severity such that a "prudent layperson, who possesses an average
  knowledge of health and medicine, could reasonably expect the absence of
  immediate medical attention" to result in serious jeopardy to health, serious
  impairment to bodily function, serious dysfunction of a bodily organ or part.
   • This "prudent layperson" of "average knowledge" is a win for medical providers. Some plans /
     insurers had argued that there should be a more-rigorous standard. For example, if an enrollee
     went to the emergency room thinking he was having a heart attack, but it was just heartburn,
     was the heartburn diagnosis an "emergency service"? Now, probably "yes."
NSA cont.
• "Recognized amount" based on:
   • Amount specified under state law, if any
   • The "qualifying payment amount" (probably key term for ERISA-covered plans)
   • Amount approved by state in a different manner (All-Payer Model Agreement)

NSA: Non-Emergency Services
• Group health plan / issuer must cover non-emergency services by a
  nonparticipating provider per new NSA rules
• Cannot impose a cost-sharing requirement that is greater than the requirement
  that would apply under such plan or coverage had they been provided by a
  participating provider
• Must calculate cost-sharing requirement as if the total amount that would have
  been charged for such items and services by such participating provider were
  equal to the "recognized amount"
• Send to the provider an initial payment or notice of denial within 30 days after
  the bill is transmitted

NSA: Non-Emergency Services cont.
• Pay an amount equal to the "out-of-network rate"
• Count cost-sharing payments by enrollee towards in-network
  deductible / MOOP
• "Qualifying payment amount" generally median contracted rates,
  increased each year by CPI-U
   • Varies by market and geography; rates as of January 31, 2019.
• Starting in 2022, median contracted rates recognized by plan or
  issuer. Similar rule in 2023 and beyond.

NSA: Independent Dispute Resolution ("IDR")
• Suppose the provider disagrees with what the plan / insurer wishes to pay
• In the past, provider may have had less leverage
• Now, however, NSA requires an IDR process
• Either plan or provider can initiate a 30-day negotiation period to resolve what to pay
• At end of negotiation, either party has 4 days to start the IDR process through notice to
  other party and Secretary
• Each side submits to a "qualified IDR entity" what the "total payment" should be
   • Those entities don't really exist now; who will fill the void?

NSA: Independent Dispute Resolution ("IDR") cont.
• IDR must consider qualifying payment amount (which is based on the median
  in-network rate)
• If plan and provider agree on IDR entity, that one is used
   • If not, IRS / DOL / HHS will, in future guidance, determine how one is chosen
• IDR entity cannot consider certain information, like UCR, public payor
  (Medicare) or amounts that were billed
   • Big question: Will reliance on median in-network rate help plans? Help providers? Who will
     end up with additional leverage? If it's providers, less incentive to enter into network
     agreements. If it's plans, plans may save money (and out-of-network providers will have
     incentive to become in-network). Will IDR process be so time-consuming and costly that
     one side (or both) will dread it and try to avoid it?
• IDR entity picks one of the two offers; does not create its own

IDR Process
• IDR decision is "binding upon the parties involved" and "not subject to judicial
  review", except in limited situations
• Limits on ability to bring additional IDR requests – no new IDRs for 90 days
  between the two parties for those same services
• Loser pays the other side's costs
• If they settle prior to IDR making its determination, each pays half of all fees
  charged by IDR, unless parties otherwise agree
• IRS / DOL / HHS will release certain public information about what happens
  (seems to be aggregate, not individually identifiable; "confidential" info term)
• IRS / DOL / HHS will also charge an "administrative fee" based on its total
  estimated cost divided by number of expected IDRs
• Enrollee can also pursue external review for these types of claims
   • Not clear how it coordinates with IDR (e.g. what if they conflict?)             30
NSA: Air Ambulance Charges
• If enrollee in a group health plan / individual or group health insurance receives air
  ambulance services from a nonparticipating provider, and such services would be
  covered by a participating provider, special rules apply
• Cost-sharing requirement is same that would apply to a participating provider
• Cost-sharing counts towards in-network deductible and MOOPs
• Make payment within 30 days bill is received
• Provider and plan / issuer negotiate payment amount
• If cannot agree, follow similar IDR process as noted above
• New reporting rules for air ambulances due in 2023 and 2024 (e.g., whether services
  provided on "emergent or nonemergent basis"; whether transport originated in a rural
  or urban area; type of aircraft (such as rotor transport or fixed wing transport) used;
  whether air ambulance provider has a contract with the plan / issuer)
NSA: Identification Cards
• Plan / issuer must include "in clear writing" on any physical or electronic
  plan or insurance identification card following information:
   • Deductible for the plan or coverage
   • Any MOOP
   • Telephone number and Internet website address for individual to seek consumer
     assistance information
• Effective for plan years starting on or after 1/1/2022

NSA: Provider Discrimination
• ACA included a mysterious provision (Section 2706(a)) which prohibited
  discrimination against a provider "acting within the scope of that provider's
  license or certification under applicable state law"
• April 2013 FAQ stated that the provision was "self-implementing" and that
  IRS / DOL / HHS "do not expect to issue regulations in the near future" –
  which they stuck with (still no regulations or guidance on what it means)
• Maybe it means, e.g., that midwives who are licensed under state law
  cannot be discriminated against? That a plan cannot require that all births
  occur at a hospital (instead of at home with the help of a midwife)?
• No one really knows. But NSA states that HHS / DOL / IRS "shall issue a
  proposed rule" on it by 1/1/2022. Not clear when the rule will be finalized
  and effective

NSA: Continuing Care
• Effective for plan years starting 1/1/2022, if plan enrollee is receiving care at a
  health care provider or facility that "has a contractual relationship" with the plan
  (i.e., in-network) and enrollee is a "continuing care patient" and:
   • Contractual relationship between plan / issuer and provider terminates,
   • Benefits under the plan are terminated because of a change in the terms of the participation
     of the provider or facility in the plan, or
   • Contract between plan and issuer is terminating, resulting in loss of benefits provided under
     such plan for such provider or facility,
   • Then, special rules apply.
• Plan / issuer must notify enrollee of the termination and the enrollee's "right to
  elect continued transitional care" from the provider

NSA: Continuing Care cont.
• Allow enrollee to continue to have benefits provided under the plan, under
  same terms and conditions as would have applied if termination had not
  occurred, for that course of treatment.
• Enrollee must elect within 90 days of notice.
• "Continuing care patient" is enrollee:
   •   Undergoing course of treatment for a serious and complex condition,
   •   Undergoing institutional or inpatient care,
   •   Scheduled to undergo nonelective surgery,
   •   Pregnant and undergoing related course of treatment, or
   •   Terminally ill.
• What if plan specifically excludes out-of-network coverage? Is this a mandatory
  exception to that rule?

NSA: Advanced EOBs
• For plan years starting 1/1/2022, a group health plan and health insurance issuer
  offering group or individual coverage must provide an "advanced explanation of
  benefits" ("Advanced EOB")
• Timing depends on when service is scheduled: 1 business day is standard, unless
  the item or service is scheduled at least 10 business days away, in which case 3
  business days is the required time period
• Must include various information
• Whether provider or facility is a participating provider or facility
• If so, what the contracted rate under the plan is, based on the billing and
  diagnostic codes provided by the provider and facility

NSA: Advanced EOBs cont.
• If not participating, describe how such individual may obtain information of
  providers and facilities that are participating
• Good faith estimate of amount plan will pay, along with what enrollee will pay as
• Good faith estimate of enrollee's deductibles and MOOPs, as of date of notification
• If item or service is subject to "medical management techniques" (e.g., prior
  authorization, concurrent review, step-therapy or fail-first protocols), disclaimer
  that such techniques apply
• Disclaimer that information is only an estimate
• Other information plan determines to be appropriate

NSA: Advanced EOBs cont.
• Some of this may vary per future federal guidance for items or services
  that have "low utilization or significant variation in costs" – e.g., when
  provided as part of a complex treatment.
• Complex process will impose new obligations on TPAs, PBMs and insurers.
• Plan sponsors also need to understand it and make sure that someone
  (e.g., TPA) is coordinating.
   • Appears that this rule applies to both grandfathered and non-grandfathered plans.

NSA: Price Comparison Tool
• Effective plan years starting 1/1/2022, group health plans and health insurance
  issuers must offer "price comparison guidance" by telephone and on the Internet.
• Goal is, "to the extent practicable", to allow enrollee to compare cost-sharing that
  the individual must pay under the plan for a specific item or service for
  participating providers.
   • Does not seem to include out-of-network providers, which is a modest relief
• May raise concerns for TPAs, insurers and PBMs, as the rates negotiated with
  providers are often considered confidential and proprietary.
   • Can the rates on the Internet website be protected – e.g., enrollee must log into website, so
     rates are not-quite-so public? Could website terms limit the use of that information just for
     enrollee's benefit? (And do transparency regulations (later slides) make this moot?)
• Like many other changes here, plan sponsors will want to talk with vendors and
  make sure everyone knows who is doing what.
NSA: Provider Directories
• Effective for plan years starting 1/1/2022, group health plans and insurance issuers
  must provide enhanced directories of health care providers.
   • Information related to provider is name, address, specialty, telephone number, digital contact
     information (email?) for in-network providers
• At least every 90 days, plan / issuer must verify and update provider directory
   • Remove providers and facilities if plan has been unable to verify such information
   • Update plan's database within 2 business days of receiving notice from the provider of "material
     changes" to the provider directory information
• When enrollee seeks this information, plan / issuer must respond "as soon as
  practicable", but always within 1 business day, in "written electronic or print" form,
  as requested by enrollee.
   • Also, retain that communication for at least 2 years

NSA: Provider Directories cont.
• Database on public website of plan / issuer must contain list of each health
  care provider and facility for which it has a "direct or indirect contractual
  relationship" and provider directory information.
   • Nitpicky question: For a typical employer, does the "group health plan" really have a
     website? Would that be the TPA's / PBM's website? Intranet site of employer?
• Written provider directory must state that information in the directory "was
  accurate as of the date of publication" and that enrollee "should consult the
  database" to "obtain the most current provider directory information."
• If plan / issuer incorrectly tells the enrollee that provider was in-network, or
  that item or service was in-network, then plan / issuer limited to what cost-
  sharing would have applied at the in-network level
   • Ouch! Large incentive to get this correct – will existing contract cover this if it is wrong?
   • Will TPAs, PBMs, insurers be able to "track" what the enrollee saw? Should they try?
     How? Keep record of every single iteration of the webpage?
NSA: No Gag Clauses
• Group health plans and insurance issuers cannot enter into an agreement with a
  health care provider, network or association of providers, TPA or other service
  provider offering access to a network of providers that would directly or
  indirectly restrict plan / issuer from offering certain information
• Provider-specific cost or quality-of-care information or data, through a
  consumer engagement tool or any other means, to referring providers, plan
  sponsor, enrollees or individuals eligible to become enrollees
   • Does not seem to include general public

NSA: No Gag Clauses cont.
• Electronically accessing de-identified claims and encounter information or data
  for each enrollee in the plan or coverage, upon request and consistent with
  HIPAA Privacy Rule, GINA and ADA, including on a per claim basis:
   • Financial information, such as allowed amount, or any other claim-related financial
     obligations included in the provider contract,
   • Provider information, including name and clinical designation,
   • Service codes, or
   • Any other data element included in claim or encounter transactions.
• Sharing information or data and directing that such information be shared with a
  business associate
   • Appears to make it a lot easier for a plan sponsor to obtain claims information from, e.g.,
     TPA and share that with a consultant (e.g., insurance broker) to have the consultant analyze
     the data

NSA: No Gag Clause cont.
• Plans / issuers must annually submit to the Secretary an "attestation" that
  they are "in compliance" with these requirements
• No specified effective date – seems to mean it is currently effective
   • Is there an argument that it only applies to new contracts entered into after the CAA's
     effective date? What about renewals of those contracts?
• Presumably will, at some point, require many TPA / PBM contracts to be
   • And issuers, TPAs, PBMs may need to update contracts with providers (which may
     contain this type of clause too)

NSA: Compensation Disclosures
• Effective 12/27/2021, group health plans must disclose, for "brokerage
  services" and "consulting" services, certain information
• Only applies if the service provider reasonably expects to receive $1,000
  or more in direct or indirect compensation in connection with its services
• Various information must be in the disclosure
• Services to be provided
• If applicable, a statement that service provider will provide services as a
• Describe all direct compensation that is reasonably expected

NSA: Compensation Disclosures cont.
• Describe all indirect compensation that is reasonably expected and what
  services relate to that indirect compensation
• Describe arrangement between payer and the service provider
• Describe compensation that will be paid among the service provider, affiliate
  or subcontractor, if compensation is "set on a transaction basis" (like a
  commission or finder's fee)
• Manner in which compensation will be received
• Service provider must disclose information in advance of date of contract or
  renewal of contract
• If any change to compensation, service provider must disclose as soon as
  practicable, not later than 60 days from date on which service provider is
  informed of such change, unless "extraordinary circumstances" prevent that
NSA: Compensation Disclosures cont.
• If service provider makes an error, must correct it within 30 days
• If plan sponsor / fiduciary becomes aware of service provider's failure, it must
  "request[] in writing that the covered service provider furnish such information."
   • If service provider refuses, notify the Secretary (within 30 or 90 days, depending on the
• If service provide refuses to provide information, plan fiduciary "shall terminate
  the contract ... as expeditiously as possible, consistent with such duty of prudence"
• Only applies to brokerage or consulting services; probably not to PBMs or TPAs
• Does it only apply if ERISA plan assets are involved?
• Probably no contracts have these terms in place now; need to update them

NSA: MHPAEA Analysis
• Group health plans / insurers that provide mental health or substance use
  disorder benefits ("MH/SUD") must comply with Mental Health Parity and
  Addiction Equity Act ("MHPAEA")
• One requirement is that nonquantitative treatment limitations ("NQTLs")
  cannot, in general, apply more stringently to MH/SUD benefits compared
  to medical / surgical ("M/S") benefits
• Starting February 10, 2021, federal government can ask for a written
  "comparative analysis" of how NQTLs apply to those different types of

NSA: MHPAEA Analysis cont.
• "Specific plan or coverage terms" and a description of "all" MH/SUD benefits to
  which each such term applies in each "respective benefits classification"
   • Does this require a truly "specific" analysis? For example, suppose ABC TPA works with both
     Acme Co. and Balloons Inc. Both plans are very similar, but not identical. If ABC TPA
     undertakes this task, must it produce a written document specific to Acme Co.'s plan? And
     one specific to Balloons Inc.?
• Factors used to determine that the NQTLs will apply to MH/SUD and M/S benefits
• Evidentiary standards used for those factors
   • Every factor "shall be defined" – what does that mean?
   • Any source or evidence relied upon to design and apply the NQTLs to MH/SUD and M/S
       • This is information that a TPA, PBM or insurer would probably know, but a plan sponsor would not.
         Will require discussions among the parties. Also not information that, in our experience, TPAs have
         typically provided to plan sponsors (very "in the weeds" and some would argue is proprietary)

NSA: MHPAEA Analysis cont.
• Comparative analysis demonstrating that processes, strategies, evidentiary
  standards and other factors used to apply NQTLs, "as written and in
  operation" are not applied more stringently
   • The "and in operation" piece may be difficult because, almost by definition, it involves
     procedures which are not written (so plan sponsor cannot just ask for the plan, SPD,
     written policies, etc. – may need to go "beyond the documents")
• "Specific findings and conclusions" reached by the plan / issuer "including
  any results of the analyses ... that indicate that the plan or coverage is not
  in compliance with this section"
   • In essence, "confess your sins" if asked to do so
   • Is it possible to shield that through attorney-client privilege?
• Must provide to Secretary upon request
   • If Secretary thinks it is insufficient, must respond to Secretary

NSA: MHPAEA Analysis cont.
• If not in compliance, must act within 45 days of Secretary stating that
  there is noncompliance
• Notify plan enrollees within 7 days if still not in compliance
   • Is this an open invitation to a lawsuit?
• Secretary to issue regulations within 18 months
   • Does that make inquiries and enforcement unlikely before then?

NSA: Drug Price Reporting
• By 12/27/2021, then as of each June 1 thereafter, plan / issuer must submit
  certain information to HHS, DOL and IRS
• Beginning and end dates of plan year
• Number of enrollees
• Each state in which the plan or coverage is offered
   • Will this require an enrollee-by-enrollee determination? What about COBRA enrollees
     who, say, move to another state? What about children away at college?
• 50 brand prescription drugs most frequently dispensed by pharmacies for
  claims paid by the plan and total number of paid claims for each such drug
• 50 most costly prescription drugs by total annual spending and annual
  amount spent by plan for each such drug

NSA: Drug Price Reporting cont.
• 50 prescription drugs with greatest increase in plan expenditures over the plan
  year preceding plan year of report
   • And, for each drug, change in amounts expended by plan or coverage
• Total spending on health care services by plan / issuer
   • Broken down by type of costs, including hospital costs; provider and clinical service costs, for
     primary and specialty care; prescription drug costs; other medical costs "including wellness
   • Average monthly premium paid by employers and enrollees
• Impact on premiums by rebates, fees and other remuneration paid by drug
   • Amount paid for each therapeutic class of drugs and amounts paid for each of the 25 drugs
     that yielded highest amount of rebates and other remuneration from drug manufacturers
• Secretary will put together report (non-identifiable to a plan) within 18 months
Transparency Regulations
• Regulations published November 12, 2020 impose new "transparency"
   • Does the CAA overlap with these? Seems to. Perhaps because some of the CAA
     transparency rules were "copied and pasted" from a prior bill, without, it seems, much
     time spent trying to harmonize those CAA rules with these regulations
• Applies to self-funded group health plans and, unusually, fully-insured plans
   • "Safe harbor" for sponsors of fully-insured plans if issuer agrees in writing to comply
       • Issuers and employers should discuss this
   • Likely applies to non-grandfathered health plans, but not retiree-only plans or
     excepted benefit plans
• Goals of having providers compete more on price and improving
  information of plan enrollees (to make cost-conscious decisions)
• Effective for plan years starting 1/1/2022, public posting, in machine-
  readable files, of certain three types of information                                        54
Transparency Regulations cont.
• In-network file: All negotiated rates and fee schedules with in-network
• Out-of-network: Information on historical allowed amounts for covered
  items and services
• Prescription drug: Negotiated rates and historical net prices for prescription
  drugs with respect to in-network providers
   • Having all three be publicly available is extremely significant. Allows more comparison
     based on cost. But will data be less valuable without some way to compare quality or
     complexity? Will employers build in incentives for employees to go to certain hospitals
     for certain procedures (e.g., go to Hospital ABC and you will receive a $300 HSA
     contribution; go Hospital DEF and receive nothing)?
• Update files monthly

Transparency Regulations cont.
• For plan years starting 1/1/2023, disclose estimates of cost-sharing to an
  enrollee and 500 specified items and services
   • Goal is to provide it ahead of services – seems similar to CAA's "advanced EOB" rule
   • For plan years starting 1/1/2024, all covered items and services
• Must be through online tool and in paper, for current enrollees
• Tool should be specific to particular in-network providers or all in-network
• Tool should take into account different cost-sharing based on multi-tier
  networks and particular care settings (e.g., in-patient; outpatient; in a hospital;
  out of network)
• If bundled payment, need only include those with separate costs

Transparency Regulations cont.
• If it could be "preventive" but plan / issuer is not sure, provide the cost-sharing
• Accumulated amounts
• In-network rate, including:
   • Negotiated rate, reflected as a dollar amount, for the requested item or service
   • Underlying fee schedule rate, reflected as a dollar amount
• Out-of-network allowed amount "or any other rate that provides a more
  accurate estimate" of what the plan / issuer will pay
• If enrollee asks for an item or service subject to a bundled payment
  arrangement, list of items / services in the bundle

Transparency Regulations cont.
• Statement to enrollee that out-of-network provider may balance bill (if balance
  billing allowed in the state)
   • And that it's only an estimate
   • Whether copayment assistance or other third-party payments in deductible / MOOP
• Preventive at no charge; other relevant statements
• Accumulated amounts
• In-network rate, including:
   • Negotiated rate, reflected as a dollar amount, for the requested item or service
   • Underlying fee schedule rate, reflected as a dollar amount
• Out-of-network allowed amount "or any other rate that provides a more accurate
  estimate" of what the plan / issuer will pay
• ACA penalties apply here (i.e., $100 per day / affected individual)
Transparency Regulations
• "Good faith" exceptions to penalties if act with reasonable diligence
• Error / omission made (correct as soon as practicable)
• Website is temporarily not accessible
• If need information from another entity, ok unless knew or should have known
  information was inaccurate or incomplete

HIPAA Changes
• On January 5, 2021, President Trump signed into law the HIPAA Safe Harbor Bill
• HHS will take into account covered entity's or business associate's use or certain
  industry standards (e.g., NIST) "developed, recognized, or promulgated through
  regulations under other statutory authorities"
   • Should TPAs identify the "weakest" such authority and make sure they follow it?
• Some standards (e.g., NIST) may be very onerous, especially for employers, who
  typically hold little PHI
• Discuss with plan sponsor's IT department
   • Possibly update written HIPAA Security Rule policies and procedures to incorporate as many of
     those standards as possible
• On a different topic, 5th Circuit held that HHS's penalty against Texas medical
  provider not allowed under HIPAA
   • Seems like a good defense if you face a HIPAA breach and large HHS penalty
Group Legal Cooperative
• TPAs likely to face large number of similar issues under these rules
• Quarles & Brady LLP is offering a "group legal cooperative" for TPA clients
• Member could raise a question which they are interested in and which is likely to apply
  to other TPAs
• Members could "opt in" or "opt out"
• Cost is split equally for those who opt in
• Could apply to legal research, preparation of template agreements, etc.


© 2021 Quarles & Brady LLP - This document provides information of a general nature. None of the information contained herein is
intended as legal advice or opinion relative to specific matters, facts, situations or issues. Additional facts and information or future
developments may affect the subjects addressed in this document. You should consult with a lawyer about your particular                     62
circumstances before acting on any of this information because it may not be applicable to you or your situation.
Thank You

            John Barlament, Partner

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