CAA #2: Removing the Element of Surprise: the Consolidated Appropriations Act’s Guidelines for Group Health Plans
CAA NO SURPRISES BLOG
The Consolidated Appropriations Act of 2021 (CAA) contained many provisions that directly affect employer sponsored group health plans. In this blog, we will discuss the provisions of the CAA designed to prevent plan participants from incurring surprise medical bills.
The CAA addresses three separate situations:
- one involves payment for emergency services at an out-of-network hospital freestanding emergency clinic;
- the second involves payment for non-emergency services performed by out-of-network providers at certain in-network facilities; and
- the third applies to air ambulance services from an out-of-network provider.
EMERGENCY SERVICES
The CAA requires group health plans to pay for emergency services received at out-of-network facilities:
- Without imposing any preauthorization requirement or other limitation on coverage that is more restrictive than the plan’s requirements impose to such services at in-network facilities;
- By applying the in-network cost sharing formula to the out-of-network provider based on the “recognized amount”; and
- Crediting the participant’s share of the bill to his or her in-network deductible and out-of-pocket maximum.
For a self-insured health plan subject to ERISA, the “recognized amount” will be the “qualifying payment amount.” This is an amount the plan will determine based on a methodology established by regulations to be issued by the government (no later than July 1, 2021). It will take into account amounts the plan normally pays to similarly situated in-network providers in 2019 and other factors outlined in the CAA. There are special rules for plans that did not exist or have contracted rates in 2019 and for new services and supplies. These amounts are increased annually based on the CPI for all urban consumers.
The facility is prohibited from balance billing the patient for any amount other than the allowed in-network cost-sharing as applied to the recognized amount.
NON-EMERGENCY SERVICES PERFORMED BY OUT-OF-NETWORK PROVIDERS AT IN-NETWORK FACILILTES
This section of the law protects patients from having to pay out-of-network providers working at in-network facilities at out-of-network rates unless the provider gives the patient an appropriate notice of the provider’s status as out-of-network. The law includes detailed requirements for the timing and content of the notice as well as the obligation to obtain a consent from the patient to be treated by the out-of-network provider. Providers that render services without giving the notice and obtaining the consent must accept the recognized amount for those services from the plan, and cannot balance bill the patient for any amount other than the allowed in-network cost-sharing as applied to the recognized amount.
AIR AMBULANCE SERVICES
The rules for out-of-network air ambulance services are similar to those for emergency services, but apply regardless of whether the air transport is an emergency. Health plans are required to file an annual report with the Secretaries of Health and Human Services and Transportation providing claims information regarding those services.
PAYMENTS AND DISPUTES
The initial payment for emergency, non-emergency, and air ambulance services subject to the CAA must be made directly to the facility or provider within 30 days. If the payment plus cost-sharing does not cover the amount of the bill, the provider or facility may initiate a dispute resolution process within 30 days after receiving the plan’s initial payment (or claim denial). This sets up a 30-day period to negotiate a mutually acceptable payment amount. If those negotiations fail, either party may request a final determination of the payment through an independent dispute resolution (IDR) process.
The government will promulgate rules regarding the certification of entities to handle the IDR process.
Each party will submit an offer to the IDR entity; the IDR entity will select the offer that most closely reflects the entity’s judgement regarding the proper amount of payment. The statute sets out factors the IDR entity must consider in reaching its determination. The non-prevailing party must pay the IDR entity’s fee. If the parties negotiate a settlement during the course of the IDR process, the cost must be split equally unless the parties agree otherwise.
WHAT THIS MEANS FOR GROUP HEALTH PLANS
Self-insured group health plans will need to amend their plan documents to conform to the new rules for payment of out-of-network claims. Plans (or their TPAs) must be prepared to negotiate providers’ charges and, if necessary, participate in the IDR process.
One interesting implication: the claims negotiation and offer protocol, if handled by the TPA, could result in the TPA being “deemed” a fiduciary of the plan. If the TPA is unwilling to assume such duties, it would mean the plan itself must take an active role in resolving these claims.
The plan will must also aggregate air ambulance data and files reports as required by the government.
