CAA Provisions In Effect: How Is Your Health Plan Impacted?
OCTOBER 4, 2022
Although the Consolidated Appropriations Act, 2021 (CAA) was passed nearly two years ago, several requirements that impact health and welfare plans have largely gone unnoticed by many brokers and most employers. Though some implementation deadlines were initially delayed, several major requirements are already in effect and pose significant compliance challenges.
Here we address three of the major provisions included in the CAA, and how your organization could be impacted.
What was included in the CAA?
In addition to government funding, CAA also provided COVID-19-related relief, and included several provisions that affect health and welfare programs. Read CAA and Transparency in Coverage Provisions Impacting Health and Welfare Plans for a more detailed list.
1. No Surprises Act
The No Surprises Act was designed to protect consumers against unexpected charges related to out-of-network cost-sharing and “balance billing” for emergency services. Under the act, providers are generally barred from balance billing participants in certain circumstances. The law also established a pathway for resolving payment disputes between the payer (insurer) and the provider using negotiation and arbitration.
The act also established the Independent Dispute Resolution (IDR) process should parties be unable to come to an agreement, which requires an arbiter to select a final payment amount based on each party’s final payment offer. Read Final Rules Adopt Administrative Changes to the No Surprises Act for USI Insurance Services’ latest guidance.
A recent status update from the U.S. Department of Labor (DOL) noted that between April 15, 2022, and August 11, 2022, over 46,000 disputes were initiated through the federal IDR portal — substantially more than was initially estimated for the entire year. Nearly half are being challenged for eligibility, and more challenges are likely as the IDR process is smoothed out.
The DOL recently indicated that it will audit plans for compliance with the No Surprises Act. Carriers will generally handle the IDR requirement for fully insured plans. Self-funded plans will want written assurances that their third-party administrators (TPAs) are complying with the act and are handling the IDR process effectively. USI has seen some TPAs charging additional fees for this service.
So far, the rule does seem to protect members from unforeseen billing, but it’s too early to tell what impact the IDR will have on employer health plans. There is not yet sufficient data to understand where the payment rates are landing.
2. Brokerage Compensation Disclosures
Broker disclosures are intended to increase transparency related to the full cost of services provided by a benefits broker or consultant to an employer. Brokers and consultants (or “covered service providers”) of ERISA-covered group health plans, regardless of size, must disclose in writing to the group health plan fiduciary (e.g., an employer plan sponsor) information about the direct and indirect compensation that the service provider expects to receive in connection with its services to the plan. Read Guidance Issued on Broker Compensation Disclosure for more information.
Most larger brokers already have a commission disclosure process, but often did not include specific details and/or specifically excluded some payments, particularly from pharmacy plans. The new law requires explicit disclosure of all compensation related to medical and dental plans as well as pharmacy. Unfortunately, it does not require life- and long-term-disability-related payments to be included in the disclosure requirements.
Employers, in the capacity as a health plan fiduciary, will want to ensure the timely receipt of broker compensation disclosures when entering into or renewing group health plan coverage. The DOL may request a copy of this disclosure as part of any audit. Plan sponsors are ultimately responsible for collecting and evaluating broker disclosures.
3. Pharmacy Reporting
The CAA also created a prescription drug reporting requirement with the goal of increasing transparency around drug pricing and pharmacy spending. Most employer plans are required to report specific information related to prescription drug usage and costs to the Centers for Medicare and Medicaid Services (CMS). Refer to New Prescription Drug Reporting Requirements for more information on recent CMS guidance.
The first reporting deadline for calendar years 2020 and 2021 is December 27, 2022. Fully insured plans may transfer reporting responsibility and liability to the insurer via written agreement, which USI recommends. Self-funded plans may have the TPA, pharmacy benefit manager (PBM) or other vendor(s) fulfill the reporting function on behalf of the plan (again, via written agreement); however, the plan sponsor would still be liable for any failures to report. To confirm submission, plan sponsors should contact their TPA, PBM and/or other reporting entities directly.
While it’s likely the insurer will handle pharmacy reporting for fully insured plans, employers sponsoring self-funded plans may be asked to provide their TPA with certain information in order to complete reporting, or the employer may be asked to file these reports on behalf of the plan, particularly if the plan has carved out benefits (i.e., pharmacy). How each TPA and PBM is handling this requirement varies; employers should be on the lookout for additional information and/or requests from vendors around this new requirement.
While the intent of the provision may have been to provide health plan sponsors with more insight into prescription drug usage and costs, in practice, insurers are allowed to submit data in aggregate and are not likely to make individual usage reports per plan readily available. In some instances, the TPA or PBM is willing to provide individual reports, but will then exclude the employer from the aggregate, and transfer reporting responsibility back to the employer.
How USI Can Help
USI’s National Employee Benefits Compliance team will continue to monitor developments related to the CAA, and will release compliance updates, available to USI clients, as new guidance and/or regulations are issued. The team has also been developing tools and additional resources to support pharmacy transparency requirements and other compliance efforts.
Learn more about how we can help your organization stay in compliance with the latest rules and regulations. Contact your local USI benefits consultant or email firstname.lastname@example.org.
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