The last few years have been a whirlwind of new compliance requirements on employers who provide health benefits to their workforce. The burden has become especially heavy on self-funded health plans, whose arms-length relationship with insurance carriers or independent third-party administrators (TPAs) leaves them exposed in terms of meeting obligations under the new transparency-related laws.
To help companies get their arms fully around these new compliance obligations, we’ve created a quick rundown of the takeaways for each major law/rule that’s been put on the books recently. Each section will overview what the law requires, brief context, action steps, and what brokers/consultants should be doing to assist you.
The Short Version: Each of these compliance areas is quite complex and most are still developing in terms of what precisely is expected, how compliance will be handled, and what enforcement will look like. Accordingly, it’s imperative that you work closely with your benefits broker/consultant to ensure they’ve got their finger on the pulse of these transparency laws.
Generally, the buck stops with employers on compliance liability. Employers should document their policies and procedures as they tackle these obligations. And employers should – in most cases – reach out to their TPAs, PBMs, and other vendors to be clear on who is doing what to assist the employer in complying. This could range from merely providing the required documentation/data all the way to plan vendors performing the analysis or disclosure on behalf of the employer client. Clarity on who’s responsible for what in each case is essential.
Major Compliance Areas
- Transparency in Coverage (TiC)
- 2021 Consolidated Appropriations Act (CAA), which has six major healthcare components:
- No Surprises Act (NSA)
- Member Identification Card Requirements
- Prohibition on Gag Clauses in health plan vendor contracts
- Broker/Consultant Compensation Disclosure
- Prescription Benefits & Drug Costs Disclosure
- Mental Health Parity NQTL analysis
Transparency in Coverage (TiC)
What it is: Requirement that group health plans and insurance companies disclose cost-sharing information upon request to plan members AND must publicly disclose in- and out-of-network actual historical prices paid for healthcare services. Requirements took effect on July 1, 2022.
Context: The government was concerned that patients and health plans did not (because they could not) know the price of healthcare services. TiC’s goal was to allow the public to have access to health coverage information that can be used to understand healthcare pricing and, thus, curtail its growth.
What employers must do:
- If you are fully insured, confirm in writing that your health insurer is complying with TiC’s requirements on your behalf.
- If you are self-funded, you will likely need to enter into a written agreement with your TPA to make the required information publicly and freely available in a machine-readable format (on a website). Also, to make sure cost-sharing information is available and furnished to members upon request.
What brokers/consultants should do: Assist clients in ensuring they are TiC-compliant. This may involve coordinating with the client’s TPA or health insurer to confirm they have made the disclosures.
* For a more in-depth informational briefing on Transparency in Coverage, see our blog post on it.
No Surprises Act (NSA)
What it is: A legal prohibition on healthcare providers sending patients a balance bill from out-of-network care in (1) Emergency situations, (2) An inpatient facility that is in-network, and (3) Air ambulance settings. Notably, ground ambulance services are exempt from this law. The NSA also requires healthcare providers to furnish an upfront, good faith estimate of their expected charges to the plan or the insurer. The plan or insurer, in turn, must then provide the plan member with an Advanced Explanation of Benefits (EoB) that includes cost-sharing and applicable deductible information. The law went into effect on January 1, 2022.
Context: Sustained coverage in the press media about patients being caught in the financial crossfire of healthcare providers and their health plans ultimately led to congressional action to suppress “Surprise Bills.” The NSA establishes a third-party arbitration-style dispute process, where the provider can officially seek a payment amount from the insurer or health plan – but the patient is left out of it.
What employers must do:
- If you are fully insured, confirm in writing that your health insurer is NSA compliant on all fronts. Make sure that your plan members are receiving their Advanced EoBs as they should.
- If you are self-funded, you will need to request information on what your insurance carrier and/or TPA is doing in regard to NSA. Confirm that the carrier/TPA will be receiving and then sharing NSA cost-sharing and deductible information with plan members. Ensure plan members are receiving the information and understand its implications for their particular circumstances.
What brokers/consultants should do: Assist clients in making sure that they are NSA-compliant. Understand how the NSA arbitration process works, generally, and how it is being handled practically. Facilitate Advanced EoBs for client plan members, especially for high-dollar elective surgeries.
Member Identification Cards
What it is: A requirement that member ID cards contain clear information regarding their plan’s deductibles and out-of-pocket maximums. Furthermore, it requires a telephone number and website address for members to contact to obtain additional information about their health plan’s coverage and whether certain providers are in- or out-of-network. This went into effect on January 1, 2022.
Context: Congress was concerned that plan members did not have clear access to information that would help them better understand their cost-sharing responsibility for healthcare services at different points in the plan year.
What employers must do:
- If you are fully insured, confirm in writing that your health insurer understands and is compliant with the CAA’s requirements for what information member ID cards must now include.
- If you are self-funded, you will need to reach out to your TPA to verify that the new member ID cards are, in fact, compliant with the CAA. Make sure all information is reasonably legible. If an electronic ID card is offered, ensure that it too is CAA-compliant.
What brokers/consultants should do: Work with client TPAs to produce CAA-compliant ID cards for plan members. Make sure that members understand the new information during Open Enrollment.
Prohibition on Gag Clauses
What it is: A prohibition on group health plans from entering into or renewing contracts with all health plan vendors that contain language preventing the plan from accessing information and data on healthcare cost and quality. This requirement went into effect the date of the CAA’s passage (December 27. 2020) – and health plans will be required to attest their compliance annually.
Context: Congress identified restrictive clauses in private contracts as an obstacle to employers and patients being able to make meaningful comparisons in the healthcare marketplace.
What employers must do:
- If you are fully insured, ask your health insurer what they have done specifically to amend contract language to remove gag clauses on healthcare cost and quality data for your health plan’s claims.
- If you are self-funded, you will need to audit all your health plan’s contracts with service providers and vendors – especially the health plan network and TPA – to ensure all gag clauses on access to healthcare cost and quality data have been eliminated.
What brokers/consultants should do: Assist clients in reviewing their contracts and comparing them to how others are (re)written in the market. It stands to reason that brokers/consultants will have far more experience with, say, PBM contracts than the average employer – and they will therefore look to you for expert advice. If you lack the needed expertise, hiring outside assistance may be necessary.
Broker/Consultant Compensation Disclosure
What it is: Requirements that those who provide “brokerage” or “consulting” services to employer group health plans disclose all direct and indirect compensation they reasonably expect to receive if the amount is to exceed $1,000. Also, requires the disclosure of non-monetary compensation above $250. These requirements apply to contracts entered into or renewed after December 27, 2021.
Context: Because the DOL lacks the statutory authority to regulate brokers and consultants directly, Congress instead made it unlawful for employers to enter into or renew contracts with a broker or consultant who does not transparently disclose all of their compensation. This is intended to generate meaningful discussion over the reasonableness of compensation in light of the services provided.
What employers must do:
- If you are a government health plan, ERISA does not govern your health plan. As such, these compensation disclosure rules do not apply and, hence, your broker will not be required to disclose compensation. It may still be a good idea for government health plan sponsors to ask and explore that aspect of the relationship, however, as it is useful information.
- If you are a private health plan, you will need to formally request a compensation disclosure from your broker or consultant if they did not already provide one to you. Upon receipt, you will need to review and assess it for reasonableness and determine whether your broker/consultant is unduly conflicted in how they are paid. If no disclosure is made to you, or the disclosure fails either of those tests, you will be required to terminate the relationship and notify the DOL.
What brokers/consultants should do: Disclose all compensation to your clients and include all necessary accompanying information under Section 202 (BB) of the 2021 CAA. This mostly involves identifying information about the nature and payer of any compensation as well as services to the plan.
* For a more in-depth informational briefing on this Compensation Disclosure, see our blog post on it.
Prescription Benefits & Drug Costs Disclosure
What it is: Requirements that group health plans and insurance companies annually disclose an array of information on their prescription drug benefit, historical drug costs paid by the plan, and the implications for insurance premiums (specifically employees’ share of that premium). Requirements to disclose 2020 and 2021 plan year information are due on December 27, 2022. Then, information is due on June 1 of every year thereafter.
Context: The government is interested in collecting comprehensive information from group health plans on pharmacy benefits and costs to better inform drug pricing legislation in the future. Also, Congress believed that by requiring the collection and disclosure of Rx information, health plans would become more informed about their own pharmacy spend – and might make different choices, accordingly.
What employers must do:
- If you are fully insured, confirm in writing that your health insurer is complying with the Rx disclosure required under the 2021 CAA.
- If you are self-funded, you will likely need to coordinate carefully with both your TPA and your PBM to obtain all the required information. Then, you will need to organize the various files and create a “narrative file” that contextualizes the information before submitting it. You may find that soliciting outside assistance in coordinating, reporting, and filing is helpful – but it will come at a cost.
What brokers/consultants should do: Assist clients in understanding their reporting obligations and executing on them. Solicit outside third-party assistance in complying with the disclosure requirements as needed. Minimize the expense to clients for such services. Ensure that clients – who are ultimately liable for accurate and timely submission – have access to and have seen their Rx data.
* For a more in-depth informational briefing on Rx Benefits & Drug Costs Disclosure, see our blog post on it.
Mental Health Parity NQTL Analysis
What it is: Requirement that group health plans prepare detailed, written comparative analysis of their mental health benefits to prove parity with other health benefits. “Parity” refers to both quantitative and non-quantitative treatment limits (NQTLs). Essentially, health plans are required to demonstrate annually that their mental health benefits are no more stringent or restrictive than the rest of their benefits in terms of plan members accessing mental and behavioral health services. This requirement went into effect on February 10, 2021.
Context: An upsurge in mental health issues in the wake of the COVID pandemic led Congress to renew their focus on ensuring mental health benefits were in line with physical health benefits from a non-quantitative perspective. This builds on the pre-existing Mental Health Parity and Addiction Equity Act, which is a federal law that has been in place since 2008.
What employers must do:
- If you are fully insured, confirm in writing that your health insurer is conducting the NQTL analysis and providing the annual reporting to the government per the 2021 CAA’s requirements.
- If you are self-funded, you will likely need to contract with your TPA or another third-party vendor to conduct the analysis and prepare the documentation of NQTL mental health parity. Like the Rx disclosure requirement, this will almost certainly come at a cost to the health plan.
What brokers/consultants should do: Assist clients in understanding their NQTL analysis obligations and executing on them. Solicit outside third-party assistance in complying with the disclosure requirements as needed. Minimize the expense to the client for such services.
This compliance overview is just that – an overview. It does not claim to be exhaustive nor should it be misconstrued as legal advice. Great effort has been put forth in ensuring the accuracy of all content, but this is no guarantee of infallibility. For official clarification or final authority, readers should solicit legal counsel.
