The Consolidated Appropriations Act (CAA) of 2021 included several new or revised health care provisions applicable to group health plans. Some have posited that the changes/revisions are the most comprehensive single piece of legislation to impact group health plans since the enactment of the Affordable Care Act (ACA). By way of background, the CAA was signed into law on December 27, 2020 and can be found at text – H.R.133 – 116th Congress (2019-2020): Consolidated Appropriations Act, 2021 | Congress.gov | Library of Congress. It includes 5 primary areas of compliance change. Each is briefly discussed below.
Flexible Spending Arrangements
The CAA allows employers the option to allow participants to roll over all unused amounts in their flexible spending accounts (FSAs) from 2020 to 2021 and 2021 to 2022. FSA plan sponsors may, but are not required, to amend their cafeteria plans to take advantage of these changes. Additional changes include allowing participants to change the number of their contributions to FSAs prospectively mid-year without regard to any change in status. Participants may extend their grace period to 12 months after the end of a plan year, for plan years ending in 2020 and 2021. And, participants who terminated their participation in an FSA during 2020 or 2021 calendar year may continue to receive reimbursement from unused FSA balances through the end of the plan year in which the participation ended.
Surprise Medical Bills
The CAA included the No Surprises Act, which sought to protect patients from surprise medical bills; these are situations where the patient has little to no control over the provider who provides the care. The types of providers typically contemplated by the law included out of network ER physicians, radiologists, and pathologists, typically providing care at an in-network facility, and out of network air ambulance providers. The CAA provides a framework for determining the payment level for these types of providers and the care they provide. [For more information on this topic, please see (can we put a link to the previous newsletter where my article covers this topic?)]
Mental Health and Substance Use Disorder Benefits
Plan sponsors that provide mental health and substance use disorder benefits and impose non-quantitative treatment limitations (NQTLs) need to perform and document a comparative analysis of the design and application of the NQTLs. In addition, plan sponsors must make the analysis available to the DOL, HHS and/or Treasury upon request. The 3 secretaries were charged with issuing final guidance with respect to the analysis required within 18 months of the bill’s enactment. Despite the delay in the issuance of final guidance, the CAA permits the 3 agencies to request plans’ analyses as soon as 45 days after enactment.
Pharmacy Benefits and Drug Costs
The CAA requires group health plans to provide new reporting to DOL, HHS and Treasury on a variety of transparency topics, including:
- The number of enrollees by state in which the plan is offered
- The 50 most often dispensed prescription drugs and the total paid claims for each drug
- The 50 most expensive prescription drugs paid for by the plan
- The 50 prescription drugs with the greatest increase of plan expenditure compared to the preceding year
- The total expenditure for health care services, segregated by hospital care, primary care, specialty care, and prescription drug
- The impact of rebates, fees and other remunerations paid by drug manufacturers on premiums and out-of-pocket costs
Disclosure of Service Provider Compensation
The final material provision of the CAA discussed herein is the change to certain disclosures required by health plans under ERISA. Section 408(b) of ERISA requires that any compensation paid to a plan service provider be “reasonable.” The DOL regulations for that provision, which were issued in 2012, were made only to apply to retirement plans, not health plans. The CAA has finally closed the loop and adds a new section to 408(b) which requires group health plans to disclose the compensation paid to vendors that provide services to group health plans that are funded with plan assets. For example, if a group health plan compensates a broker or consultant $1000 or more, the group health plan will be required to make a disclosure. Additionally, the broker or consultant must make certain disclosures to the plan fiduciary that describe the services provided and a description of all compensation (both direct and indirect). Failure of the broker/consultant to provide this information will deem the services to be “unreasonable” under ERISA.
In the event you have any questions about the CAA and its implications on your group health plan, please contact your Stall Legal attorney for additional information or direction.