From time to time, self-funded employers are required to comply with new Federal legislation related to the administration of employer-sponsor benefits. In December of 2020, the Consolidated Appropriations Act (CAA) 2021 was signed into law, including many provisions that impact employer-sponsored health plans. For some, flashbacks to the changes brought on by the Affordable Care Act may come rushing through your mind like a riptide — only this time, you’re navigating these changes in the era of a pandemic. 

We want to share our thoughts as we navigate this new legislative landscape, as healthcare data analytics experts, not as policy or legal experts. Here we’ll share our compiled learnings and opportunities that serve as our compass as we discuss CAA 2021 with our partners, including brokers, consultants, employers, and digital health solutions.

These legislative-imposed shifts may have you wondering how you’re going to fit one more thing onto your to-do list that’s as long as your receipt from your favorite drug store. And for a good reason — regulations often lead to many changes in a short period of time. Despite the inevitable changes to achieve compliance with regulations, potentially resulting in new procedures and administrative overhead, it’s important not to lose sight of the positive impact these changes can bring.

The CAA 2021 mandated a new set of requirements for pharmacy reporting, Mental Health Parity compliance, consumer price transparency, balance-billing practices, and requirements related to contracts between employers, their health plans, and broker/consultant partners. 

At first glance, seeking out this additional reporting information may feel daunting. However, there’s a silver lining: the insights from this data can give you direction on what you should do next. Once you’ve worked with your carriers to obtain the required data sets, you can use all these insights at your disposal to make data-driven decisions, sharpen strategies, and contain costs. Slowly but surely, you can forego the days of one-size-fits-all plans and provide plans that are as unique as your employees’ needs. 

As an industry, we’re trying to understand how to address the changes brought on by this legislation – and just like we believe there’s power in the direction your data can give you, we believe there’s power in all of us working through this together. Springbuk has been following the trends related to CAA 2021, researching the legislative impact, talking to our clients, and listening to industry experts. 

Throughout this briefing, we will focus on the following CAA 2021 provisions impacting group health plans and health insurers:

CAA ERISA Fiduciary Responsibility Explinagtion

Plan sponsors must rely  on their own legal counsel to drive decision-making and compliance with the legislation. Springbuk is only offering our perspective, not legal or policy advice. 

Fiduciary Responsibility First and foremost, the employer will be held accountable as a fiduciary under the Employee Retirement Income Security Act (ERISA) of 1974. As ERISA instructs, the primary responsibility of a fiduciary is to run the plan in the best interest of participants and beneficiaries and for the sole purpose of providing benefits and paying the benefit plan expenses. They must act prudently, secure against large financial losses, follow plan documents in accordance with ERISA and avoid conflicts of interest.

This is not new; this legislation has been the north star for plan sponsors for over 40 years. But now, the Federal government is holding plan sponsors accountable as the fiduciary through enforcement of new mandates under CAA 2021. 

Pharmacy Benefit and Drug Cost Reporting
CAA 2021 creates a new, complex pharmacy benefit and cost reporting requirement that applies to group health plans.

The CCA 2021 legislation denotes that the following will be required reporting

  • The plan year start and end dates
  • The number of enrollees
  • Each state in which the plan is offered
  • Top 50 reporting including: the 50 brand prescription drugs by utilization, the top 50 prescriptions by annual spending and the top 50 prescriptions by greatest cost increase compared to prior plan year
  • Total spending on health care services broken down by the type of costs
  • Monthly premium data for employer and employees
  • Impact on premiums by rebates, fees, and any other remuneration paid by drug manufacturers
  • Any other reduction in premiums and out-of-pocket costs associated with rebates, fees, or other remuneration

The original reporting deadline was Dec. 2021 and then was to occur annually on June 1. Plans are now encouraged to work on being in a position to report the 2020 and 2021 data by Dec. 27, 2022. The required reporting is submitted to Health and Human Services (HHS), Department of Labor (DOL), and Department of Treasury (DOT).

No Surprises Act
The No Surprises Act addresses consumer concerns regarding unexpected balanced billing from out-of-network (OON) providers. It is a set of federal standards to protect members from balance billing for defined services provided by specific providers on an OON basis. Beginning Jan. 1, 2022, the No Surprises Act applies to three types of services provided by healthcare providers and facilities: 

  • OON emergency covered services 
  • Certain covered medical services performed by an OON provider at an in-network facility
  • OON air ambulance services

The legislation sets member cost-sharing at in-network levels and requires providers to work with insurers (and self-funded plans) to negotiate remaining bills. When insurers and providers are unable to reach an agreement, an Independent Dispute Resolution (IDR) process is established to determine the final amount.

Compensation Disclosures
CAA 2021 contains regulations that mandate certain service organizations, such as brokers and consultants, disclose the fees they charge plan sponsors related to consultative services and recommendations when selecting certain TPAs, insurance carriers, benefit administrators, or other vendors. The requirement is for any service organization that charges over $1000 for their services. This part of the legislation ensures that the plan sponsor (employer) understands and can determine if the compensation is reasonable for the benefits the service organization is providing.

Transparency in Coverage Rules
Under the CAA 2021, the Transparency in Coverage rule requires insurers and plans to create online Consumer Transparency Tools, including a Price Comparison Tool, that includes personalized information regarding members’ cost-sharing responsibilities for covered medical services and prescription drugs. 

It also requires insurers and plans to post publicly available files that include in-network negotiated payment rates and historical out-of-network charges for covered medical services and prescription drugs. This data is referred to as “machine-readable files,” and they must be updated monthly.

Gap Rule
Under the CAA 2021 gag clause prohibition requirements, group health plan contracts or agreements will not be permitted with the provider, network, or association of providers, TPAs, or other service providers if they restrict access to specific cost and quality information.

Often, a health insurance carrier would have a gag clause in their contract that restricted the employer from taking their data with them if they left a carrier – significantly reducing the employer’s ability to maintain historical data files. These gag clauses now must be removed to support transparency in healthcare cost and quality information. This represents a significant opportunity for employers to access and maintain historical healthcare information. 

Mental Health Parity and Addiction Equity Act (MHPAEA) Comparative Analysis
MHPAEA requires group health plans to ensure that employee contributions, such as copays and deductibles, and treatment limitations, such as visit limits for mental health or substance use disorder benefits, are no more restrictive than the requirements or limitations applied to medical and surgical benefits. The MHPAEA regulations also require plans to ensure equity with respect to non-quantitative treatment limitations (NQTL), such as medical management programs.

A group health plan may not impose an NQTL for mental health and substance use disorder benefits that is more stringent than when used in applying the limitation to medical or surgical benefits. The mental health and substance abuse NQTL and medical and surgical NQLT must be comparable and in parity.

The CAA 2021 mandated that beginning in Feb. 2021, employers had to be prepared, upon request, to provide comparative analyses to demonstrate their compliance with MHPAEA. Beginning Feb. 10, 2021, group health plans were required to perform and document comparative analyses of the design and application of non-quantitative treatment limitations (NQTLs). 

The Department of Labor published a self-compliance tool to help group health plans evaluate their compliance using data here.

While the legislation is expansive, it offers many opportunities for plan sponsors to acquire and take control of more data.

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