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Congress Passes Appropriations Bill with COVID-19 Relief

On December 21, 2020, Congress passed the Consolidated Appropriations Act of 2021, which includes COVID-19 relief legislation. (As of the time of publication of Compliance Corner, President Trump had not signed the legislation, but is expected to.) In addition to approximately $1.4 trillion in stimulus spending, the legislation includes various benefits-related provisions, such as extensions for FFCRA leave tax credits, temporary extension of FSA and DCAP grace and carryover periods, a new federal prohibition against certain surprise billing practices and price transparency requirements which prohibit certain information from being withheld from third parties and require plans and issuers to file reports with the federal government. This article provides a preliminary summary of these provisions.

FFCRA

The new law allows employers covered by the FFCRA (those with fewer than 500 employees) to extend the time they can offer EPSL or EFMLA to employees to March 31, 2021. If they do, then they can apply for the tax credits available under the FFCRA for leave granted under the extension. The law does not provide any additional leave for employees, just additional time during which employers may grant that leave if any is still available to the employee.

FSAs and DCAPs

The law also permits additional flexibility for FSAs and DCAPs. DCAP sponsors are temporarily permitted to adopt carryover features, which are otherwise limited to FSAs. Furthermore, for plan years ending in 2020 and 2021, both FSAs and DCAPs appear to be permitted to carry over any unused funds to the following plan year. (There is no reference to the $550 carryover cap currently applicable to FSAs.) Similarly, the law allows for the extension of FSA and DCAP grace periods for a plan year ending in 2020 or 2021 to 12 months.

Employees who cease participating in an FSA during calendar year 2020 or 2021 can continue to receive reimbursements from unused benefits or contributions through the end of the plan year in which such participation ceased (including any grace period, such as one extended under this law). This provision resembles a DCAP spend-down and does not appear to require employees to elect COBRA coverage in order to take advantage of it.

In addition to these extensions, plans can allow employees to make elections to prospectively modify the amount (but not in excess of any applicable dollar limitation) of their contributions to an FSA or DCAP without a change in status.

These changes are optional for employers. Plan documents will need to be amended to make these changes; however, the amendments can be retroactive, if (1) such amendment is adopted not later than the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective (e.g., calendar 2020 plan amendments must be adopted on or before December 31, 2021) and (2) the plan or arrangement is operated consistent with the terms of such amendment during the period beginning on the effective date of the amendment and ending on the date the amendment is adopted.

The law also provides that expenses for an employee’s child continue to be eligible for reimbursement under a DCAP even when the child turns age 14 (the age a child normally ages out of eligibility for qualified expenses), provided that the regular enrollment period for the DCAP plan year at issue ended on or before January 31, 2020. This also goes for any unused balance rolling over to the next plan year.

Surprise Billing

Effective January 1, 2022, the relief legislation protects people from large unexpected medical bills they may incur when obtaining emergency medical care from out-of-network providers (including air ambulance services). The law requires health plans or insurers to pay out-of-network providers for emergency care services provided to their insureds, without imposing increased cost sharing or pre-authorization requirements upon the insureds. Any cost sharing imposed upon the insureds for these services will be treated the same way they are treated if applied towards services provided by in-network providers (such as counting towards out-of-pocket maximums or in-network deductibles).

Insurers and plans can negotiate with the out-of-network providers on the price they will pay for the emergency services. The out-of-network providers bill the plan or insured for the services and the plan or insured has 30 days to either make an initial payment or deny the payment. The initial payment (or “qualifying payment”) is an amount determined to be the median payment amount for the same or a similar item or service that is provided by a provider in the same or similar specialty and provided in the geographic region in which the item or service is furnished. HHS is charged with promulgating rules for determining qualifying payments by July 1, 2021. Regardless of whether a payment is made or denied, the parties have 30 days to negotiate the price that the plan or insurer will ultimately pay for the item or service and, if that fails, the parties may also arbitrate. Once an arbitrator is agreed upon, then the arbitrator has 30 days to determine the price. The arbitrator cannot consider benchmark or government reimbursement rates when determining a price.

The prohibition against balance billing will not apply to providers who provide services to patients (that are not considered “ancillary” services) if:

• the patient receives an oral and written notice 72 hours in advance of the appointment for the service that explicitly states that the provider is out-of-network;
• consent to receive the service out-of-network is optional and the same service can be obtained by an in-network provider;
• the provider provides a good faith estimate of the amount that the patient will be charged for the service if they consent;
• the facility provides a list of any in-network providers who can provide the same service (if the out-of-network provider in question works out of an in-network facility); and
• the patient consents to the notice in writing and receives a copy of the signed consent.

For purposes of this law, “ancillary services” include: emergency medicine, anesthesiology, pathology, radiology and neonatology; items and services provided by assistant surgeons, hospitalists and intensivists; diagnostic services that are not exempted by rule; and items and services provided by non-participating providers if there are no participating providers at the same facility who can furnish such items or services.

Among other items of note, the legislation also imposes a requirement that all insurance ID cards must include plan deductibles for both in- and out-of-network services, out-of-pocket maximums and plan telephone number and web address. It also requires plans to provide, upon request of a participant or provider, an explanation of whether a particular provider or facility is in- or out-of-network for the service to be provided, the contract rate for that service and whether that service can be obtained in-network.

States are charged with enforcing these provisions and they can additional obligations on out-of-network providers that go beyond those established by this law. If the states do not want to enforce these provisions, then HHS can do so.

Price Transparency

The law encourages price transparency by prohibiting health plans and insurers from entering into agreements with providers that prohibit the provision of provider-specific cost or quality of care information; electronic access to de-identified claims and encounter information for each enrollee in a plan; or sharing of the above information/data with business associates in accordance with HIPAA standards.

Beginning one year after the passing of the law and every June 1 thereafter, group health plans and issuers must submit a very detailed report to the DOL and Department of the Treasury that includes, among other things: the number of enrollees in the plan; the plan year; the states in which they offer coverage; the top 50 brand drugs dispensed by pharmacies for claims under the plan and the total claims paid for each drug; the top 50 by total annual spending and the annual amount spent for each of those drugs; and total spending by the plan (broken down by types of cost, such as hospital and primary care, specialty care, provider and clinical service costs, prescription drugs, wellness and plan and enrollee spending on prescription drugs).

We have highlighted some of the major benefits-related provisions in this article, but the law (when passed) will be brand new. In the next edition of Compliance Corner, we will provide additional details on the various provisions that impact employee benefit plan sponsors.