Just before the end of 2020, Congress and President Donald Trump enacted a bipartisan agreement that included a $900 billion pandemic relief package, which has several provisions that will affect the benefits landscape for employers and employees in 2021 and beyond.
A key measure in the legislation addresses anti-competitive medical provider practices and improving health care cost transparency. The agreement bans so-called “gag clauses” in contracts between providers and health plans that prevent enrollees, plan sponsors, or referring providers from seeing cost and quality data on providers as well as certain de-identified claims data. It also bans gag clauses that prevent plan sponsors from sharing such information with third parties as part of Health Insurance Portability and Accountability Act (HIPAA) business associate agreements.
The agreement also effectively outlaws surprise medical billing. However, it does so by leaning heavily on arbitration to resolve billing disputes and veers away significantly from the market-based, local, median in-network rate, the American Benefits Council (ABC) noted. Instead of charging patients, health providers will now have to work with insurers to settle on a fair price.
The agreement does contain “guardrails” to the dispute resolution process by directing the arbitrator to consider the median in-network rate and prohibiting consideration of the providers’ billed charges. However, the final legislation also explicitly prohibits arbitrators from considering Medicare and Medicaid rates in deciding the appropriate reimbursement amount. The new changes will take effect in 2022, and will apply to doctors, hospitals and air ambulance, but not ground ambulances.
Surprise bills have been a sticking point for a while among consumers and health benefits advocacy groups. Surprise bills occur when an out-of-network provider is unexpectedly involved in a patient’s care. For example, a patient might go to a hospital that accepts their insurance, but get treated there by an emergency room physician who doesn’t. These doctors often bill those patients for large fees, which are much higher than what employer health plans typically pay.
“This is very good news for employees, who in the past may have been caught off guard with unexpected bills despite receiving in-network care,” said John Barkett, senior director of policy affairs at Willis Towers Watson. “It’s unclear whether the law will lower or raise employer costs and it will likely take a couple years before we know.”
Researchers have found that millions of Americans receive these types of surprise bills each year, with as many as one in five emergency room visits resulting in such a charge. The average surprise charge for an emergency room visit is just above $600, but patients have received bills that approach six figures from out-of-network providers they did not select.
Flexible Spending Arrangement Relief
The Consolidated Appropriations Act allows participants to roll over all unused amounts in their health and dependent care flexible spending accounts (FSA) from 2020 to 2021 and from 2021 to 2022. Employers can also allow employees to change their health FSA or dependent care FSA contribution rate during 2021 without requiring an election-change event such as the birth or adoption of a child, or a change in marital status.
“The agreement contains some much-awaited relief regarding FSAs for which the Council has strongly urged since the beginning of the pandemic,” ABC said. “Most significantly, the bill provides employers the option to amend their cafeteria plans and health and dependent care FSAs to allow employees to carryover unused amounts from the 2020 plan year to the 2021 plan year (and from the 2021 plan year to the 2022 plan year) or to provide a 12-month grace period at the end of the 2020 and/or 2021 plan years.”
The bill contains other temporary, special FSA rules as well, including allowing post-termination reimbursements from health FSAs. These changes are optional for employers and if employers adopt them, plan amendments must be made, but employers have time to do so. Amendments must be made by the end of the calendar year beginning after the end of the plan year in which the amendment is effective.
“The flexibility provided to employers in this provision is welcome news and the Council has been continuously advocating on these issues during the pandemic,” ABC said.
About the Author
Brett Christie is the managing editor of Workspan Daily.