broker compensation disclosure compliance toolkit

Broker Compensation Disclosures

Consolidated Appropriations Act (CAA)

HR Service, Inc. is happy to provide our broker partners with a complementary tool to easily create and distribute their required Broker Compensation Disclosure to comply with the new Consolidated Appropriations Act (CAA) that is effective for all contracts executed on or after December 27, 2021.

Below are the instructions for new and current partners to access the Broker Compensation Disclosure tool and create your statements. 

New to HR Service

  1. To access the Broker Compensation Disclosure Generator, you must first register as a partner entering basic information about your firm.
  2. Once complete, you can now access the Broker Compensation Disclosure Tool under the Dashboard to generate your disclosures.

Existing HR Partner

  1. Login to www.compliancelogin.com with your partner login.
  2. See the new menu item titled “Compensation Disclosure” on the Dashboard or enter Clients List from the Dashboard in the Action section selecting “$” to generate statements for existing clients.

The New 2022 Fines & Penalties Chart is now Available to Dowload Below

Consolidated Appropriations Act

The protections for participants and their beneficiaries in the Patient Protection and Affordable Care Act (ACA) were expanded by the Consolidated Appropriations Act 2021 (CAA) for Group Health Plans (GHPs) and individual health insurance coverage. The No Surprises Act is included in the Consolidated Appropriations Act or CAA. These changes include additional reporting and disclosures requirements for employers sponsoring GHPs, insurers, and others (e.g., consultants, brokers, and agents) providing services to GHPs and individual health insurance. The Consolidated Appropriations Act (CAA) applies to grandfathered GHPs.

The law states that brokers and consultants who reasonably expect to receive at least $1,000 in direct and indirect compensation for the services supplied to the plan to disclose any direct, indirect and transaction-based compensation, including non-cash compensation, of $250 or more for those services, as well as a description of the services resulting in the payment must be included in your Broker Compensation Disclosure.

Most of these changes will not be applicable until 2022, some are scheduled to apply sooner, and others do not apply until 2023 or 2024. The Consolidated Appropriations Act (CAA) makes many changes to the Internal Revenue Code (IRC), the Employee Retirement Income Security Act (ERISA), and the Public Health Service Act (PHSA). In addition, in keeping with the theme of transparency, near the end of 2020 the Departments of Labor (DOL), Treasury, and Health and Human Services (HHS) issued the final “Transparency in Coverage” regulations, which include their own set of new disclosure requirements for GHPs and individual health insurance. It is critical that plan sponsors, participants, and other interested parties have a basic understanding of this Consolidated Appropriations Act (CAA) (including the No Surprises Act provisions) as well as the Transparency in Coverage regulations because they will require amendments to vendor contracts, plan documents, and Summary Plan Descriptions and are likely to increase plan expenses in the next several years. In addition, those covered under GHPs and individual health insurance will have access to much more information to make more informed decisions.

The Consolidated Appropriations Act (CAA) and the new Transparency in Coverage regulations present many significant compliance challenges to group health plans and individual health insurance coverage and their sponsors, insurers, third party administrators, consultants, brokers, agencies, and others who sponsor, issue, or provide services to group health plans and individual health insurance coverage. This comprehensive Compliance Toolkit serves as a reference and tool to guide the Consolidated Appropriations Act compliance process and help with Broker Compensation Disclosure terms.

compliance chart for caa

**** Find all mentioned exhibits and attachments to referenced articles by downloading them below.

Consolidated Appropriations Act Compliance

CAA Compliance

No Surprises Act
Prevention of Surprise Bills for Patients Seeking Care from an Emergency Room or Freestanding Emergency Care Facility

When an individual seeks treatment at an emergency department, he or she cannot control whether the health care provider providing treatment, or the related facility services and their health care providers providing treatments, are in his or her health plan network. To reduce the number of unexpected bills from out-of-network health care providers that individuals often receive after seeking emergency care, the new surprise billing provisions provide that the amounts paid for emergency care will now (i) be treated as in-network for calculating reimbursement, (ii) must be provided without prior authorization, and (iii) will be treated as in-network treatment provisions until the individual is stabilized, and if certain requirements are satisfied as discussed below.

These rules apply to group health plans, health insurers offering group or individual health insurance coverage (including grandfathered plans), and applicable healthcare facilities and providers. GHPs include both insured and self-insured plans, private employment based GHPs subject to Employee Retirement Income Security Act (ERISA), non-federal governmental plans (such as plans sponsored by states and local governments), church plans, and traditional indemnity plans. Individual health insurance coverage includes exchange and non-exchange plans and student health insurance coverage. It does not apply to health reimbursement arrangements, short-term limited-duration insurance or retiree-only plans and stand-alone dental and vision plans and employee assistance programs (EAPs).

Applicable healthcare facilities include hospitals, hospital outpatient departments, critical access hospitals and ambulatory surgical centers. The Department of Health and Human Services (HHS) sought comment on adding other types of facilities to include, such as urgent care centers.

GHPs, health insurers, health providers and health facilities are required to make publicly available, post on a public website of the plan or issuer, and include on each explanation of benefits for an item or service with respect to which the requirements under section 9816 of the Internal Revenue Code (the Code), section 716 of the Employee Retirement Income Security Act (ERISA), and section 2799A-1 of the Public Health Service Act (PHS Act) apply, information in plain language on:


(1) the restrictions on balance billing in certain circumstances,
(2) any applicable state law protections against balance billing,
(3) the requirements under Code section 9816, ERISA section 716, and PHS Act section 2799A-1, and (4) information on contacting appropriate state and federal agencies in the case that an individual believes that a provider or facility has violated the restrictions against balance billing.

A Model Notice, “Model Disclosure Notice Regarding Patient Protections Against Surprise Billing,” is included in the Toolkit as Attachment 2.


An out-of-network provider shall only be permitted to bill an individual more than the in-network cost-sharing amount for care provided after the participant is stabilized and certain conditions are met and if the provider gives the individual notice of the provider’s network status and delivers to the individual or their health plan an estimate of charges within certain specified timeframes and obtains individual written consent prior to the delivery of care. A Model Notice and Model Form “Standard Notice and Consent Documents Under the No Surprises Act” is also included as Attachment

3. A claim must now be initially paid in or denied by the GHP or insurer within 30 business days of submission by the health care provider or issue a notice of denial of payment. Claims administrators will need to monitor when the emergency claim was received, and when the initial and final payments are due according to the ERISA claim and appeal timing deadlines. Note: The above 30-day period does not commence until there is enough information to process the claim (i.e., the 30-day period applies only to a “clean claim”). For services and items furnished by out-of-network providers, the CAA limits the total amount paid to the provider or facility to (in order of priority) an amount: 

• Determined by an applicable All-Payer Model (APM)
Agreement, or
• Determined by specified state law, or
• Agreed upon by the plan/issuer and provider/facility,
or (if none apply)
• Determined by an Independent Dispute Resolution
(IDR) entity.

The final rule allows a GHP to determine the contracted rate for the qualified payment amount by choosing choose to use the rates of its TPA rather than relying only on the payment rates for participants of the plan. So, for example, if Anthem is the TPA for a GHP, the GHP use Anthem’s negotiated rates, rather than the rates that apply only for the network attached to the GHP. More guidance is likely needed on this.

This rule raises several potential questions. For example, can the GHP use the rates from its contracted network for one procedure, but one of the other rates administered by the TPA for another? This does not seem to necessarily be the intent, but the final rule doesn’t elaborate.

Similarly, can the GHP elect to change the basis from year to year? Note: This new process also applies to out-of-network providers of non-emergency Services at In-Network Facilities and air ambulance services.

The CAA requires HHS to make one-time grants to eligible States to: (1) establish a State All Payer Claims Database (APCD) and (2) to improve an existing State APCD. To be
eligible for a grant, a State must submit to the Secretary an application that includes information on how the State will ensure uniform data collection and the privacy and security of the database. The APCD may include medical claims, pharmacy claims, dental claims and eligibility and provider files, which are collected from private and public payers.
(New sections. 320B-(a), (b), (c) and (g) of the PHC Act as added by sec. 115 of the CAA).


Entities desiring authorization for access to an APCD supported by a grant must submit an application, which must include a description of the uses and methodologies
for evaluating health system performance using such data and documentation of approval by an institutional review board, if applicable. For entities such as an employer,
health insurance issuer, third-party administrator or health care provider requesting access for the purpose of quality improvement or cost containment, applications must include a description of the intended uses for the data. 

The Secretary may prioritize applications from States whose application demonstrates a willingness to work with other States to establish a single application for access to data by
authorized users across multiple States. The Secretary may also prioritize applications submitted by a State whose application demonstrates that the State will implement the
reporting format for self-insured group health plans.

Standardized Report Format. 

The CAA requires the Secretary of Labor, not later than one year after
enactment, to establish a standardized format for reporting by self-insured group health plans to State APCDs of medical claims, pharmacy claims, dental claims and
eligibility and provider files, and provide guidance to States on the process for collecting such data in the standardized reporting format. Not later than 90 days after enactment,
the Secretary must convene an Advisory Committee of 15 members to advise regarding the format and guidance. The CAA specifies the process for appointing members to the
Committee and provides for staggered 3-year terms. It requires the Committee to report to the Secretary, Senate Committee on HELP and the House Committees on Energy
and Commerce and Education and Labor with recommendations on the establishment of the format and guidance described above. The CAA authorizes $5 million for fiscal year 2021 to carry out these Department of Labor provisions and sunsets this section on the date the above report is submitted.

The restriction is effective for plan years beginning on or after January 1, 2022.
Out-of-Network Providers of Non-Emergency Services at In-Network Facilities
For non-emergency services provided by an out-of-network provider during a visit at an in-network facility, the non-emergency services provider is required to hold a covered individual harmless for amounts beyond the in-network cost-sharing requirement unless the out-of-network provider gives the covered individual notice and obtains the covered individual’s prior consent.

How to Comply – Prevention of Surprise Bills for Patients Seeking Care from an Emergency Room or Freestanding Emergency Care Facility

The Sample Language provided in Exhibits 3 through 5 may be used by an employer, an insurer, or a third-party administrator to amend its plan documents, insurance policies, Summary Plan Descriptions, and Administrative Services Agreements.
Sample Language – Plan Document Provisions (Exhibit 3)
Sample Language – Summary Plan Description Provisions (Exhibit 4)
Sample Language – Administrative Services Agreement Provisions (Exhibit 5)

Attachment 2, the Model Notice “Model Disclosure Notice Regarding Patient Protections Against Surprise Billing”, may be used by an employer, insurer, or third-party administrator to inform participants of its policy regarding balance billing. It should be provided to participants before the beginning of plan years beginning on or after January 1, 2022.

 Attachment 2 contains:

• Instructions for Providers and Facilities
• Instructions for Group Health Plans and Health Insurance Issuers
• Your Rights and Protections Against Surprise Medical Bills (the actual Model Notice)
Attachment 3 is to be used by a provider or facility to obtain approval from a participant for any charges for out-of- network services. The provider or facility should provide a plan, insurer, or third-party administrator a copy of the Model Consent Form that has been executed by the participant.

Attachment 2 contains:

• Instructions

• Model Standard Notice and Consent Form “Standard Notice and Consent Documents Under the No Surprises Act”

Exhibit 6 is a Sample Notice to be used by an GHP, insurer, or TPA to inform a provider or facility that it is denying payment for the amount contained in its bill and will apply the Qualified Payment Amount (QPA) to the billed item or service.

The Compliance Tool, Summary of State Laws Prohibiting Balance Billing (Exhibit 7), summarizes the state laws on balance billing applicable to insured GHPs and individual insurance (including student health insurance).

A GHP, insurer, or TPA should review these summaries before determining any payment in the indicated state. Another Compliance Tool, Summary Table of State Laws Prohibiting Balance Billing (Attachment 4), is attached as well to provide a quick reference for state balance billing laws.

Out-of-Network Providers of Non-Emergency Services at In-Network Facilities
For non-emergency services provided by an out-of-network provider during a visit at an in-network facility, the non-emergency services provider is required to hold a covered individual harmless for amounts beyond the in-network cost-sharing requirement unless the out-of-network provider gives the covered individual notice and obtains the covered individual’s prior consent.

To satisfy the notice and consent exception for out-of-network providers of non-emergency services to bill covered individuals an amount greater than the in-network cost-sharing amount (an exception that applies only to this category of out-of-network non-emergency services at in-network facilities), the out-of-network provider must give the covered individual (1) written or electronic notice of the provider’s out-of-network status, (2) a list of in-network providers that the covered individual could see instead, and (3) a good faith estimate of the covered individuals charges must be provided at least 72 hours prior to scheduled appointments, or if scheduled after, on the same day as the appointment no later than three hours prior to services being rendered. The covered individual must sign a consent to receive the services from the out-of-network provider and acknowledge that he or she received the written or electronic notice.

A Standard Notice and Consent Form has been released and included Attachment 6. There is a notice and consent exception for all ancillary services or items, or services furnished as a result of unforeseen, urgent medical needs that arise after the patient consented to the out-of-network non-emergency care at an in-network facility, which are always subject to the surprise and balance billing prohibitions applicable to emergency services provided by out-of-network health care providers. Furthermore, the notice and consent exception does not apply to any items and services provided by an out-of-network provider when there was no alternative in-network provider at the facility who could furnish the covered item or service. Such services are considered to be “ancillary services.” Other services considered to be “ancillary services,” and thus always subject to the billing prohibitions by out-of-network providers of amounts beyond the in-network cost-sharing requirement, include:

• Services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology (whether or not provided by a physician or non-physician practitioner);
• Items and services provided by assistant surgeons, hospitalists, and intensivists;
• Diagnostic services, including radiology and laboratory services; and
• Items and services provided by certain specialty practitioners (which will be specified through future rulemaking).

For services and items furnished by out-of-network providers, the Act limits the total amount paid to the provider or facility to (in order of priority) an amount:

• Determined by an applicable All-Payer Model (APM) Agreement,
• Determined by specified state law,
• Agreed upon by the plan/issuer and provider/facility, or (if none apply)
• Determined by an Independent Dispute Resolution (IDR) entity.

To satisfy the notice and consent exception for out-of-network providers of non-emergency services to bill covered individuals an amount greater than the in-network cost-sharing amount (an exception that applies only to this category of out-of-network non-emergency services at in-network facilities), the out-of-network provider must give the covered individual (1) written or electronic notice of the provider’s out-of-network status, (2) a list of in-network providers that the covered individual could see instead, and (3) a good faith estimate of the covered individuals charges must be provided at least 72 hours prior to scheduled appointments, or if scheduled after, on the same day as the appointment no later than three hours prior to services being rendered. The covered individual must sign a consent to receive the services from the out-of-network provider and acknowledge that he or she received the written or electronic notice.

A Standard Notice and Consent Form has been released and included Attachment 6. There is a notice and consent exception for all ancillary services or items, or services furnished as a result of unforeseen, urgent medical needs that arise after the patient consented to the out-of-network non-emergency care at an in-network facility, which are always subject to the surprise and balance billing prohibitions applicable to emergency services provided by out-of-network health care providers. Furthermore, the notice and consent exception does not apply to any items and services provided by an out-of-network provider when there was no alternative in-network provider at the facility who could furnish the covered item or service. Such services are considered to be “ancillary services.” Other services considered to be “ancillary services,” and thus always subject to the billing prohibitions by out-of-network providers of amounts beyond the in-network cost-sharing requirement, include:

• Services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology (whether or not provided by a physician or non-physician practitioner);
• Items and services provided by assistant surgeons, hospitalists, and intensivists;
• Diagnostic services, including radiology and laboratory services; and
• Items and services provided by certain specialty practitioners (which will be specified through future rulemaking).

For services and items furnished by out-of-network providers, the Act limits the total amount paid to the provider or facility to (in order of priority) an amount:
• Determined by an applicable All-Payer Model (APM) Agreement,
• Determined by specified state law,
• Agreed upon by the plan/issuer and provider/facility, or (if none apply)
• Determined by an Independent Dispute Resolution (IDR) entity.

The No Suprises Act

are applicable to group health plans are added to the Code, PHSA, and ERISA and will be subject to the same general enforcement structure as the ACA coverage mandates. States retain primary enforcement authority over fully insured plans, subject to federal enforcement by HHS if a state fails to substantially enforce a provision. HHS also has jurisdiction over self-funded governmental plans.

The DOL has enforcement authority over plans subject to ERISA. Under the Code, a $100 per day per affected person excise tax may apply in the case of noncompliance by private sector plans and church plans. Provisions applicable to providers are added to the PHSA and are subject to primary enforcement at the state level and potential federal enforcement. The DOL is specifically authorized to coordinate with states and HHS regarding violations of provider requirements for GHPs and conduct investigations as appropriate.

The Act also requires the DOL to establish a process to audit health plans for compliance with the various provisions of the Act. The agencies are also required to provide a system for receiving complaints from participants about noncompliance with the Act. In addition, the Act provides 500 million dollars to fund implementation of the Act, including enforcement and health plan audits.

A violation of the No Surprises Act may result in a state enforcement action or federal civil monetary penalties of up to $10,000 per violation.
The types of providers and payers that will be impacted by this transformation are more far-reaching than one may expect, including:

  • Emergency room physicians
  • Providers that a patient typically doesn’t select such as hospitalist, radiologist, anesthesiologist, pathologist, or neonatologist
  • Air ambulance companies
  • Most out-of-network providers
  • Group health plans and group and individual health insurance coverage offered by health insurance issuers, including insured and self-insured plans

Hospital price transparency helps Americans know what a hospital charges for the items and services they provide. CMS takes seriously concerns it has heard from consumers that hospitals are not making clear, accessible pricing information available online, as they have been required to do since January 1, 2021.

CMS proposes to increase the penalty for some hospitals that do not comply with Hospital Price Transparency final rule. Specifically, CMS is proposing to set a minimum civil monetary penalty of $300/day that would apply to smaller hospitals with a bed count of 30 or fewer and apply a penalty of $10/bed/day for hospitals with a bed count greater than 30, not to exceed a maximum daily dollar amount of $5,500.

Under this proposed approach, for a full calendar year of noncompliance, the minimum total penalty amount would be $109,500 per hospital, and the maximum total penalty amount would be $2,007,500 per hospital.

Apart from the potential penalties, the new law and regulations make new information available to covered individuals, the public, and attorneys. It is likely this will prompt litigation, and a good faith compliance effort will be extremely helpful to avoid excessive losses form litigation.

Additionally, several states are now beginning to require licensing for PBMs. The licensing requirements often contain disclosure requirements regarding compensation the PBMs pay to brokers, consultants, and other service providers.

If a Plan covers in-network air ambulance services, then participants can only be required to pay the in-network cost-sharing amount for an air ambulance, and those amounts paid will be applied to the participant’s deductible and OOPM under the Plan. Air ambulance providers will not be able to balance bill participants for the remaining amounts. Plans will be required to provide detailed reports on air ambulance claims to the federal government. Note: This provision does not apply to ground ambulance claims.
Claims from an out-of-network air ambulance claim must count against the in-network deductibles and cost-sharing limits for the participant. The claim must initially either be paid or denied within 30 days of receipt.

Note: The above 30-day period does not commence until there is enough information to process the claim (i.e., the 30-day period applies only to a “clean claim”).

After the initial payment or denial, the group or individual health plan and the air ambulance provider are to enter open negotiations regarding the out-of-network rate to be paid for the claim. If after the 30-day open negotiation period commences no agreement is reached, then either the plan or the health care provider can request that the claim be sent to the IDR process to resolve the difference. The IDR process is described below.
Claim administrators will need to monitor the date on which such emergency claim was received and when the initial and final payments.

Individuals receiving air ambulance services which are paid for by a group or individual health plan on or after January 1, 2022, should not be held liable for any amount in excess of their cost-sharing limits under their group or individual health plan (deductible, out-of-pocket maximum, co-insurance, or copayments) from an out-of-network air ambulance service provider.

Individuals receiving air ambulance services which are paid for by a group or individual health plan for plan or policy years beginning on or after January 1, 2022, should not be held liable for any amount in excess of their cost-sharing limits under their group or individual health plan (deductible, out-of-pocket maximum, co-insurance, or copayments) from an out-of-network air ambulance service provider.

The Act also requires plans to submit reports related to air ambulance services to HHS, jointly with the DOL and Treasury Department, by March 31, 2023. A second report will be due by March 30, 2024. The air ambulance data reporting rules apply for two years.

Under the proposed rules, the claims data about air ambulance services would include:
• Whether the services were provided on an emergent or non-emergent basis.
• Whether the provider of such services is part of:
a hospital-owned or sponsored program,
a municipality-sponsored program,
a hospital independent partnership (hybrid) program or independent program, or
a tribally operated program in Alaska.
• Whether the transport originated in a rural or urban area.
• The type of aircraft used for the transport (that is, a fixed-wing or rotary-wing air ambulance).
• Whether the air ambulance service provider has a contract with the plan or insurer to furnish air ambulance services.
• Other information regarding providers of air ambulance services as specified by the Departments.

Information also would be requested from providers of air ambulance services. For example, this information would include air ambulance base rates, patient-loaded mileage rates, average costs per trip, and reimbursement data for various types of payors (such as insured and self-funded employer health plans, Medicare, and Medicaid).

The proposed regulations would require plans and insurers to submit the required data about air ambulance services on a calendar-year basis. A calendar year would include data for:

• Air ambulance services furnished during the calendar year.
• Services for which payments were made within the calendar year (even if the services were furnished in a different calendar year).

How to Comply – Prevention of Surprise Bills for Air Ambulance Services
Exhibit 11, Exhibit 12, and Exhibit 13 contain Sample Language that may be modified as appropriate and used by a GHP, insurer, or TPA to amend its plan document, insurance policy, summary plan description, or administrative services agreement.
Exhibit 14 is a Sample Report that a GHP, insurer, or TPA must first file jointly with HHS, DOL, and Treasury by March 31, 2023.

Independent Dispute Resolution (IDR)

The open negotiation period then runs 30 business days from the date of the notice. Importantly, the IDR process cannot be started until the 30-business-day negotiation period is over. The written open negotiation period notice may be sent by mail. The notice may also be sent electronically if the following two conditions are met: 1) the initiating party has a good faith belief that the electronic method is readily accessible by the other party; and 2) the notice is provided in paper form free of charge, upon request.

Initiation of IDR Process
If the provider and health plan or insurer have not reached an agreement during the 30-day open negotiation period, then either party may initiate the IDR process within 4 business days. This 4-business-day period begins on the 31st business day after the start of the open negotiation period and is triggered by the initiating party sending a notice of IDR initiation to the other party. The initiating party must also furnish the notice of IDR initiation to the Departments on the same day the notice is sent through a Federal IDR portal available at https://www.nsa-idr.cms.gov

The notice of IDR initiation must include the Qualifying Payment Amount (QPA), the initiating party’s preferred certified IDR entity, and the items or services being disputed. This notice may be sent by mail. The notice may also be sent electronically if the following two conditions are met: 1) the initiating party has a good faith belief that the electronic method is readily accessible by the other party; and 2) the notice is provided in paper form free of charge, upon request. The IFR provided a Model Notice, “Notice of IDR Initiation” (Attachment 13), which the initiating party is required to use.
The party that initiates the IDR process is prohibited from taking the same party to arbitration for the same or similar item or service for 90 days following a decision. Also, a party make not initiate the IDR process if the party knows or should reasonably know that the notice and consent provisions were properly followed for an item or service.

Selection and Notice of IDR Entity
The parties can agree to the selection of a certified IDR entity (as specified in the Notice of IDR Initiation) within 3 business days of the initiation of the IDR process. If no party objects and there are no conflicts of interest, then that entity will serve as the IDR entity. If a party objects to the selection of the IDR entity, then the party must explain its objection and propose another certified IDR entity. A party can object to the alternative. This process can continue for 3 business days. The parties must notify the Departments through the IDR portal. The notice must include, among other things, the name and IDR entity number and an attestation that the IDR entity does not have a conflict of interest.

The IFR includes an appendix listing the data elements to be included in the Notice of IDR Entity. This appendix is included in the Toolkit as a Model Compliance Tool, “IFR Appendix 1 Selection of Certified IDR Entity Data Elements” (Attachment 14).

If the parties cannot agree upon the selection of a certified IDR entity, they must notify the Departments within 4 business days after IDR initiation through the IDR portal. The Departments will then select a certified IDR entity at random within 6 days of the IDR initiation.

Notice of Agreement
The parties may continue to negotiate and reach an agreement before a final determination is made by the IDR entity under the IDR process. If an agreement is reached, then the parties must notify the Departments through the IDR portal within 3 business days.

The notice must include the agreed out-of-network rate and the certified IDR entity fee and allocation if not split equally. The plan or insurer must then pay any balance to the out-of-network provider within 30 business days of the date of the agreement. If there is an agreement reached, the parties must submit a Notice of Agreement through the IDR portal. The IFR includes an appendix listing the data elements to be included in the Notice of Agreement. The appendix is included in the Toolkit as a Model Compliance Tool, “Notice of Agreement
Data Elements” (Attachment 15).

Notice of Offer
If there still is no agreement, then each party must submit an offer along with supporting documentation within 10 business days of selecting an IDR entity. The offer must list both a dollar amount and a percentage of the qualifying payment amount (QPA) and any additional information requested by the IDR entity. Providers and facilities must provide information relating to size and practice specialty. GHPs and insurers must disclose their coverage area, relevant geographic area and whether the plan is insured of self-funded. If batched items or services have different QPAs, the parties should provide these different QPAs.

The Notice of Offer and any information requested by the IDR
entity must be submitted through the IDR portal. There is an appendix listing the data element that should be included in the Notice of Offer. This appendix is included in the Toolkit as a Model Compliance Tool, “Notice of Offer Data Elements” (Attachment 16).
Determination of Payment The IDR entity must select one of the offers (and cannot compromise) within 30 business days and provide a written decision to the parties through the IDR portal. The decision is binding on all parties in the absence of fraud or intentional misrepresentation of material facts. The decision is generally not
subject to judicial review unless there is fraud.

In determining the out-of-network rate, the IDR entity must start with a presumption the QPA is the most appropriate amount to use and thus the offer closest to the QPA should be used. The presumption can only be rebutted if the parties submit credible information that clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate. QPA means the plan’s median contracted rate for the same or similar service in the same geographic region in the same insurance market. With
respect to additional factors such the provider’s level of experience and training or quality measurements, the information will have to clearly demonstrate that the QPA does not account for these factors in order to rebut the presumption. For example, the mere fact that a provider has 30 years of experience versus 10 years is not generally enough to rebut the presumption that the QPA is the
appropriate out-of-network rate. If the certified IDR entity does not choose the offer closest to the QPA, then the decision must include the underlying rationale for determining the out-of-network rate.

The IDR entity cannot consider billed charges, usual and customary charges or public payer rates including Medicare, Medicaid and Tricare or basing payment on a proportion of these amounts such as
150% of Medicare rates.

There is an appendix listing the data elements that should be included in the written decision from the IDR entity. This appendix is included in the Toolkit as a Model Compliance Tool, “IFR Appendix 6 Certified IDR Entity’s Written Decision of Payment Determination Data Elements (Attachment 21). Batching Multiple Claims Multiple claims may be batched together in a single IDR process, provided the claims are from a single 30-day period (or 90-day suspension period) and involve the same provider or facility, the same plan or insurer, and the same or similar items and services agreement. If there is an agreement reached, the parties must submit a Notice of Agreement through the IDR portal. The IFR includes an appendix listing the data elements to be included in the Notice of Agreement. The appendix is included in the Toolkit as a Model Compliance Tool, “Notice of Agreement Data Elements” (Attachment 15).

Notice of Offer
If there still is no agreement, then each party must submit an offer along with supporting documentation within 10 business days of selecting an IDR entity. The offer must list both a dollar amount and a percentage of the qualifying payment amount (QPA) and any additional information
requested by the IDR entity. Providers and facilities must provide information relating to size and practice specialty. GHPs and insurers must disclose their coverage area, relevant geographic area and whether the plan is insured of self-funded. If batched items or services have different QPAs, the parties should provide these different QPAs. The Notice of Offer and any information requested by the IDR entity must be submitted through the IDR portal. There is an appendix listing the data element that should be included in the Notice of Offer. This appendix is included in the Toolkit as a Model Compliance Tool, “Notice of Offer Data Elements” (Attachment 16).

Determination of Payment The IDR entity must select one of the offers (and cannot compromise) within 30 business days and provide a written decision to the parties through the IDR portal. The decision is binding on all parties in the absence of fraud or intentional misrepresentation of material facts. The decision is generally not subject to judicial review unless there is fraud.

In determining the out-of-network rate, the IDR entity must start with a presumption the QPA is the most appropriate amount to use and thus the offer closest to the QPA should be used. The presumption can only be rebutted if the parties submit credible information that clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate. QPA means the plan’s median contracted rate for the same or similar service in the same geographic region in the same insurance market.

With respect to additional factors such the provider’s level of experience and training or quality measurements, the information will have to clearly demonstrate that the QPA does not account for these factors in order to rebut the presumption. For example, the mere fact that a provider has 30 years of experience versus 10 years is not generally enough to rebut the presumption that the QPA is the appropriate out-of-network rate. If the certified IDR entity does not choose the offer closest to the QPA, then the decision must include the underlying rationale for determining the out-of-network rate.

The IDR entity cannot consider billed charges, usual and customary charges or public payer rates including Medicare, Medicaid and Tricare or basing payment on a proportion of these amounts such as 150% of Medicare rates. There is an appendix listing the data elements that should be included in the written decision from the IDR entity. This appendix is included in the Toolkit as a Model Compliance Tool, “IFR Appendix 6 Certified IDR Entity’s Written Decision of Payment Determination Data Elements (Attachment 21). Batching Multiple Claims Multiple claims may be batched together in a single IDR process, provided the claims are from a single 30-day period (or 90-day suspension period) and involve the same provider or facility, the same plan or insurer, and the same or similar items and services.

Under the CAA, the above notice must be provided not later than 1 business day after the provider or facility gives notice to the health plan or, if the item or service was scheduled in time, then at least 10 business days before the item or service is to be furnished. If the notification was made pursuant to an covered individual request, then the time is 3 business days after the date on which the plan receives the notification.

The Secretary may modify these timing requirements in the case of specified items and services (i.e., one that has low utilization or significant variation in costs such as when furnished as part of complex treatment) but any modification made by the Secretary may not result in the provision of the notification after the person has been furnished the items or services.

How to Comply – Advanced Explanation of Benefits (EOB) Requirements
Exhibit 29 is a Sample Form, “Advanced EOB,” that must be provided to a participant by a GHP, insurer, or TPA (beginning in 2022) before any services are rendered to a participant.

As noted above, there are various time frames that must be followed before and during the IDR process such as allowing 4 business days after the open negotiation period to initiate the IDR process.

The IFR provides that in the case of extenuating circumstances, the Departments may, on a case-by-case basis at their discretion, provide for an extension of time due to matters beyond the control of the parties or for good cause. The example in the IFR indicates an extension would be warranted where a natural disaster impedes efforts by plans, insurers, or providers to comply with the terms of the IFR.

The IFR provides a form to be used to request an extension of time. This form is included in the Toolkit as a Model Form, “Request for Extension of Federal IDR Process Time Periods Due to Extenuating Circumstances (Attachment 20).

If the provider and health plan or insurer have not reached an agreement during the 30-day open negotiation period, then either party may initiate the IDR process within 4 business days. This 4-business-day period begins on the 31st business day after the start of the open negotiation period and is triggered by the initiating party sending a notice of IDR initiation to the other party. The initiating party must also furnish the notice of IDR initiation to the Departments on the same day the notice is sent through a Federal IDR portal available at https://www.nsa-idr.cms.gov.
The notice of IDR initiation must include the Qualifying Payment Amount (QPA), the initiating party’s preferred certified IDR entity, and the items or services being disputed. This notice may be sent by mail. The notice may also be sent electronically if the following two conditions are met: 1) the initiating party has a good faith belief that the electronic method is readily accessible by the other party; and 2) the notice is provided in paper form free of charge, upon request. The IFR provided a Model Notice, “Notice of IDR Initiation” (Attachment 13), which the initiating party is required to use.
The party that initiates the IDR process is prohibited from taking the same party to arbitration for the same or similar item or service for 90 days following a decision. Also, a party make not initiate the IDR process if the party knows or should reasonably know that the notice and consent provisions were properly followed for an item or service.

Selection and Notice of IDR Entity
The parties can agree to the selection of a certified IDR entity (as specified in the Notice of IDR Initiation) within 3 business days of the initiation of the IDR process. If no party objects and there are no conflicts of interest, then that entity will serve as the IDR entity. If a party objects to the selection of the IDR entity, then the party must explain its objection and propose another certified IDR entity. A party can object to the alternative. This process can continue for 3 business days. The parties must notify the Departments through the IDR portal. The notice must include, among other things, the name and IDR entity number and an attestation that the IDR entity does not have a conflict of interest. The IFR includes an appendix listing the data elements to be included in the Notice of IDR Entity. This appendix is included in the Toolkit as a Model Compliance Tool, “IFR Appendix 1 Selection of Certified IDR Entity Data Elements” (Attachment 14).

If the parties cannot agree upon the selection of a certified IDR entity, they must notify the Departments within 4 business days after IDR initiation through the IDR portal. The Departments will then select a certified IDR entity at random within 6 days of the IDR initiation.

Notice of Agreement
The parties may continue to negotiate and reach an agreement before a final determination is made by the IDR entity under the IDR process. If an agreement is reached, then the parties must notify the Departments through the IDR portal within 3 business days. The notice must include the agreed out-of-network rate and the certified IDR entity fee and allocation if not split equally. The plan or insurer must then pay any balance to the out-of-network provider within 30 business days of the date of the agreement. If there is an agreement reached, the parties must submit a Notice of Agreement through the IDR portal. The IFR includes an appendix listing the data elements to be included in the Notice of Agreement. The appendix is included in the Toolkit as a Model Compliance Tool, “Notice of Agreement Data Elements” (Attachment 15).

Determination of Payment
The IDR entity must select one of the offers (and cannot compromise) within 30 business days and provide a written decision to the parties through the IDR portal. The decision is binding on all parties in the absence of fraud or intentional misrepresentation of material facts. The decision is generally not subject to judicial review unless there is fraud.
In determining the out-of-network rate, the IDR entity must start with a presumption the QPA is the most appropriate amount to use and thus the offer closest to the QPA should be used. The presumption can only be rebutted if the parties submit credible information that clearly demonstrates that the QPA is materially different from the appropriate out-of-network rate. QPA means the plan’s median contracted rate for the same or similar service in the same geographic region in the same insurance market. With respect to additional factors such the provider’s level of experience and training or quality measurements, the information will have to clearly demonstrate that the QPA does not account for these factors in order to rebut the presumption. For example, the mere fact that a provider has 30 years of experience versus 10 years is not generally enough to rebut the presumption that the QPA is the appropriate out-of-network rate. If the certified IDR entity does not choose the offer closest to the QPA, then the decision must include the underlying rationale for determining the out-of-network rate.

The IDR entity cannot consider billed charges, usual and customary charges or public payer rates including Medicare, Medicaid and Tricare or basing payment on a proportion of these amounts such as 150% of Medicare rates.
There is an appendix listing the data elements that should be included in the written decision from the IDR entity. This appendix is included in the Toolkit as a Model Compliance Tool, “IFR Appendix 6 Certified IDR Entity’s Written Decision of Payment Determination Data Elements (Attachment 21).

Batching Multiple Claims
Multiple claims may be batched together in a single IDR process, provided the claims are from a single 30-day period (or 90-day suspension period) and involve the same provider or facility, the same plan or insurer, and the same or similar items and services.

Cost of IDR
There are two fees for the parties under the IDR process. The first fee is an administrative fee intended to reimburse the Departments for their costs. For 2022, the administrative fee will be $50. Each party will pay this fee to the IDR entity which will then remit the fee to the government.

There is also a fee paid to the IDR entity. These fees are determined by the IDR entity but must generally be within a pre-determined range. For 2022, this range is $200 to $500 for a single determination and $268 to $670 for batched determinations. The IDR fee is submitted to the IDR entity which will then hold the fees in an escrow or trust account. At the end of the IDR process, the fee from the winning party will be refunded and the IDR entity retains the fee from the losing party. For batched determinations, if there are an equal number, the fee will be split evenly, otherwise the party with the fewest determinations is considered the losing party.

If the parties reach an agreement during the IDR process, the fees will be split evenly unless the parties otherwise agree.

Reporting of IDR Results
The Departments will publish information on IDR payment determinations quarterly. The IDR Entities must submit reports to the Departments monthly. This will enable plans, insurers, providers, and the public to follow and assess the results. The goal is to increase transparency and make the process more efficient and predictable.

The reports will include the following:
• Number of notices of IDR initiation
• Size of provider practices
• Number of final determinations
• Description of items and services subject to final determinations including billing codes
• Geographic region
• Offers submitted expressed as dollar amount and percentage of QPA
• Whether accepted offer was from provider or plan/insurer
• Rationale for selecting offer
• Addition information submitted by parties
• Number of days between IDR entity selection and selection of payment
• IDR entity fee

The IFR includes an appendix listing all the data elements for the reporting. This appendix is included in the Toolkit as a Model Compliance Tool, “IFR Appendix 5 Entity Reporting Data Elements” (Attachment 19).

Extension of Time

As noted above, there are various time frames that must be followed before and during the IDR process such as allowing 4 business days after the open negotiation period to initiate the IDR process. The IFR provides that in the case of extenuating circumstances, the Departments may, on a case-by-case basis at their discretion, provide for an extension of time due to matters beyond the control of the parties or for good cause. The example in the IFR indicates an extension would be warranted where a natural disaster impedes efforts by plans, insurers, or providers to comply with the terms of the IFR. The IFR provides a form to be used to request an extension of time. This form is included in the Toolkit as a Model Form, “Request for Extension of Federal IDR Process Time Periods Due to Extenuating Circumstances (Attachment 20).

The Departments are accepting applications to be a certified IDR entity until November 1, 2021 in order to be certified by January 1, 2022. The IFR provides an appendix which lists the data elements for this purpose. This appendix is included in the Toolkit as a Model Compliance Tool, “IFR Appendix 4 Entity Certification Data Elements” (Attachment 17). The Departments will certify IDR entities on a rolling basis.

An IDR entity will need to have personal with experience in managed care, claims processing, billing and coding, arbitration and health care law and must have sufficient staff to render timely decisions. The IFR includes detailed rules for determining whether an IDR entity has a conflict-of-interest. For example, certified IDR entities and their employees cannot be associated with health plans, insurers, providers or facilities or their affiliates.

The IDR entities must also meet various security and privacy requirements which have been modeled after the requirements under HIPAA.

Petition to Deny or Revoke IDR Certification
IDR entities will be certified for five years, and they must maintain compliance with the requirements during that time period. The IFR allows individuals and regulated entities to petition the Departments for a denial or revocation of certification. The IFR provides a form, included here as the Model Form “Petition to Deny or Revoke IDR Certification” (Attachment 18), which must be used for this purpose.
January 31, 2022 UPDATE: Revenue Procedure 2022-11

On December 28, 2021, the IRS released Revenue Procedure 2022-11 to provide the combined percentage increase to be used by group health plan and health insurer to calculate the “qualifying payment amount” for items and services provided during 2022.
The IRS issued guidance in a July 13, 2021 Interim Final Rule to implement provisions under the “No Surprises Act” and to set forth the method for calculating the qualifying payment amount defined generally as the plan’s median contracted rate for the same or similar item or service in effect on January 31, 2019, adjusted for inflation. The regulations also state that the IRS and Treasury Department will annually issue guidance with the percentage increase (rounded to 10 decimal places).

In Revenue Procedure 2022-11, the IRS provides that for items and services provided on or after January 1, 2022, and before January 1, 2023, the combined percentage increase to adjust the median contracted rate is 1.0648523983.

Group health plans and group and individual health insurers may round any resulting qualifying payment amount to the nearest dollar. The revenue procedure provides an example to illustrate application of this guidance

IDR Procedures by Group Health Plans

To settle disputes between providers and plans, the No Surprises Act uses an arbitration process known as Independent Dispute Resolution (IDR), for disputed emergency or non-emergency services that fall under the surprise billing prohibitions. This will apply except in cases where an applicable All-Payer Model Agreement or applicable state law determines the out-of-network rate for an insured plan. On September 30, 2021, the agencies issued interim final rules (IFR) regarding the IDR process and expanding the scope of the external review process for appeals related to the protections under the No Surprises Act.

As part of the IFR, the Departments released several documents to support compliance, which are included in this Compliance Toolkit as Model Notices, Model Forms, and Model Compliance Tools. The Departments may make modifications to the rules or issue further guidance after the 60- day period for public comments specified in the IFR.


Opening of Negotiations
After a provider receives a bill or a denial of payment, the provider has 30 business days to inform the health plan or insurer that the provider wishes to negotiate. The provider must send a written notice within this 30-business-day period. The notice must contain certain information sufficient to identify the item or service in dispute including the date the item or service was furnished, service codes, initial payment or denial, and contact information. The Departments have issued a Model Notice, Open Negotiation Notice (Attachment 12), as part of the IFR that must be used to satisfy the open negotiation notice requirement.

The open negotiation period then runs 30 business days from the date of the notice. Importantly, the IDR process cannot be started until the 30-business-day negotiation period is over. The written open negotiation period notice may be sent by mail. The notice may also be sent electronically if the following two conditions are met: 1) the initiating party has a good faith belief that the electronic method is readily accessible by the other party; and 2) the notice is provided in paper form free of charge, upon request.

Attachment 11 is a Model Compliance Tool, “Supporting Statement for Paperwork Reduction Act 1995: Independent Dispute Resolution Process.”
Attachment 12 is a Model Notice, “Open Negotiation Notice”, that must be used by a provider if the provider wishes to negotiate the amount paid for a service.
Attachment 13 is a Model Notice, “Notice of IDR Initiation”, that must be used by the GHP/insurer or the provider to initiate the ODR process if neither party has reached an agreement during the 30-day open negotiation process.
Attachment 14 is a Model Compliance Tool, “IFR Appendix 1 Selection of Certified IDR Entity Data Elements”, that includes the data elements required for IDR certification.
Attachment 15 is a Model Compliance Tool, “IFR Appendix 2 Notice of Agreement Data Elements”, that specifies the data elements that must be included in a Notice of Agreement if the parties reach an agreement before the conclusion of the IDR process.
Attachment 16 is a Model Compliance Tool, “IFR Appendix 3 Notice of Offer Data Elements” that includes the data elements that must be included in the required offer that each party must submit, if there is no agreement, within ten business days of selecting an IDR entity.
Attachment 17 is a Model Compliance Tool, “IFR Appendix 4 Entity Certification Data Elements” that contains the data elements that are require for IDR certification.
Attachment 18 is a Model Form, “Petition to Deny or Revoke IDR Certification” that must be used if an individual would like to have an IDR entity decertified.
Attachment 19 is a Model Compliance Tool, “IFR Appendix 5 Entity Reporting Data Elements” that includes the data elements required for the IDR entities quarterly report of payment determinations.
Attachment 20 is a Model Form, “Request for Extension of Federal IDR Process Time Periods Due to Extenuating Circumstances” that must be used to request an extension of time in the otherwise specified time periods of the IDR process.
Attachment 21 is a Model Compliance Tool, “IFR Appendix 6 Certified IDR Entity’s Written Decision of Payment Determination Data Elements”
Use the percentage increase rate increase provided in the Model Compliance Tool “Revenue Procedure 2022-11” (Attachment 22) to assure the TPA or Insurer is using the appropriate percentage increase to adjust the median contracted rate to determine the qualifying payment amount. All assure all contracts and agreements are updated as appropriate to reflect the requirement to use the inflation adjustment in calculating the qualifying payment amount.

You can download all attachments below in the exhibit section.

The CAA adds new provisions to protect access to pediatricians, obstetricians, and gynecologists as primary care providers. The CAA expands on similar existing provisions in the Affordable Care Act (ACA) as incorporated into the Public Health Service Act (PHS Act). Direct access to pediatricians, obstetricians,

How to Comply – Choice of Health Care Provider
Exhibit 17, Exhibit 18, and Exhibit 19 contain Sample Language that may be modified as appropriate and used by a GHP, insurer, or TPA to amend its plan document, insurance policy, summary plan description, or administrative services agreement. and gynecologists as an individual’s primary care provider is now part of ERISA and the Internal Revenue Code and is no longer part of the addition to the PHS Act holding the ACA provisions.

How to Comply – Choice of Health Care Provider
Exhibit 17, Exhibit 18, and Exhibit 19 contain Sample Language that may be modified as appropriate and used by a GHP, insurer, or TPA to amend its plan document, insurance policy, summary plan description, or administrative services agreement.

The Patient Protection and Affordable Care Act (ACA) contained a provision that prohibited discrimination against “any willing provider.” No federal agencies ever issued regulations implementing this provision, and instead stated that the statutory language was sufficiently clear. Congress apparently did not agree, as the CAA requires that the agencies propose regulations no later than January 1, 2022, and issue final regulations no later than six months after comments are received. Until guidance is issued, it is unclear what this means for GHPs and insurers.

How to Comply – Protections Against Provider Discrimination

The Compliance Toolkit will be updated once guidance is issued. Exhibit 20, Exhibit 21, and Exhibit 22 will likely contain Sample Language that may be modified as appropriate and used by a GHP, insurer, or TPA to amend its plan document, insurance policy, summary plan description, or administrative services agreement

For the first plan or policy year beginning on or after January 1, 2022, certain patients in the midst of a course of medical care will have new protections. These new protections will apply if a plan participant or beneficiary is a continuing care patient receiving care from a network provider for (1) a serious and complex condition, (2) a course of institutional or inpatient care from a provider or facility, (3) a nonelective surgery from the provider or facility, including receipt of post-operative care with respect to a surgery, (4) pregnancy and is undergoing a course of treatment for the pregnancy, or (5) a determined terminal illness and is receiving treatment for such illness from a provider or facility, and such provider or facility’s contract to be a network provider terminates or expires for any reason other than fraud by such provider or facility, then the following requirements must be met:

A participant who is a continuing care patient must receive notice that the provider or facility is leaving the network and he or she may be protected for continuing care at the time the provider or facility’s contract terminates and inform such enrolled individual of his or her right to elect continued transitional care from such provider or facility.

A participant must be provided with an opportunity to notify the plan or insurer of the individual’s need for transitional care.

A participant must be allowed to elect to continue to have the benefits provided under such plan or such coverage under the same terms and conditions as would have applied and with respect to such items and services as would have been covered under such plan had the provider or facility’s contract not terminated.

A participant shall continue to receive such transitional coverage beginning on the date he or she receives notice of the contract termination and continue until the earlier of 90 days after his or her receipt of such notice, or the date such individual is no longer qualified as a continuing care patient under the definition above with respect to that health care provider or facility. The health care provider caring for the continuing care patient is required to accept payment from such plan for services and items furnished to the continuing care patient as payment in full for such items and services and to maintaining compliance with all policies, procedures, and quality standards imposed by the plan.

How to Comply – Continuity of Care
Exhibit 23, Exhibit 24, and Exhibit 25 contain Sample Language that may be modified as appropriate and used by a GHP, insurer, or TPA to amend its plan document, insurance policy, summary plan description, or administrative services agreement.

Exhibit 26 is a Sample Notice, “Termination from the Network Notice,” that must be provided by the GHP, insurer, or TPA to the participant informing him or her that a provider or facility as left the network and explain the rights the participant has as a continuing care patient.

Exhibit 27 is a Sample Notice, “Notice for the Need for Transitional Care,” that a GHP, insurer, or TPA should provide to a participant. The participant must complete the notice and return it to the GHP, insurer, or TPA informing them that he or she qualifies as a continuing care patient and is requesting additional care.

Health Plan Identification Card Contents
Effective for plan or policy years beginning on or after January 1, 2022, group and individual health plan identification cards must include the coverage in-network and out-of-network deductibles, out-of-pocket maximums, a telephone number, and a website address through which the participants may seek consumer assistance information, including which hospitals and urgent care centers have a contractual relationship with the plan.

How to Comply – Health Plan Identification Card Contents
Exhibit 28 is a Sample Form that contains the information that must be included on the identification card provided to a participant by a GHP, insurer, or TPA for plan or policy years beginning on or after January 1, 2022.

Beginning with the first plan year beginning on or after January 1, 2022, when any health care provider notifies a group or individual health plan that a participant or beneficiary is scheduled to receive services, the plan must notify the participant no later than one business day after receiving such notice (the deadline varies depending on when the service is scheduled as compared to when the notice is received) in clear and understandable language whether or not the health care provider or facility is an in-network provider for the plan. In addition, the advanced explanation of benefits is required to be provided to the participant or beneficiary and must include all of the following information:

• Whether or not the provider or facility is in-network with respect to the health plan for the item or service and, if in network, the contracted rate or coverage (based on the billing and diagnostic codes provided by the provider or facility) and if it is out-of-network, then a description of how the individual may obtain information on providers and facilities that are in-network, if any.

• The good faith estimate included in the notification received from the provider or facility based on such codes. A good faith estimate of the amount the plan is responsible for and the amount of any covered individual cost sharing (including with respect to the deductible and any copayment or coinsurance obligation (as of the date of the notification).

• A good faith estimate of the amount that the covered individual has incurred toward meeting the limit of the financial responsibility (including with respect to deductibles and out-of-pocket maximums) under the plan (as of the date of such notification).

• If the item or service is subject to a medical management technique (including concurrent review, prior authorization, and step-therapy or fail-first protocols) for coverage, a disclaimer that the coverage is subject to that medical management technique.

• A disclaimer that the information provided in the notification is only an estimate based on the items and services reasonably expected, at the time of scheduling (or requesting) the item or service, to be furnished and is subject to change.

• Any other information or disclaimer the plan determines appropriate that is consistent with information and disclaimers required under this section of the Act.

For plan years beginning on or after January 1, 2022, a health plan is required to offer price comparison guidance by telephone and make available on its website a price comparison tool that (to the extent practicable) allows an covered individual, for the plan year, geographic region, and its participating providers, to compare the amount of cost sharing that the covered individual would be responsible for paying with respect to the furnishing of a specific item or service by any such provider.

How To Comply – Price Comparison Tool for In-Network Services Required
Exhibit 30 is a Compliance Tool that a GHP, insurer, or TPA can follow to create a Price Comparison tool according to the requirements of the CAA.

Effective for plan years beginning on or after January 1, 2022, each health plan must establish: (i) a verification process; (ii) a response protocol; and (iii) a provider database and include in any directory (other than the database) specified provider directory information. Under the verification process, the health plan—not less frequently than once every 90 days—must verify and update the provider directory information in a database. It must establish a procedure for the removal from the database of a provider or facility if the plan has been unable to verify the information during a period specified by the health plan. The database must be updated within 2 business days of the health plan receiving information that a provider or facility has changed its network status. Group health plans will need to enhance website information and other communication.

Health care providers and facilities are now required to put in place a business process to provide timely updates to provider directories at both the beginning and termination of a network relationship. If a health care provider or facility bills a patient greater than the in-network rate and the individual pays the bill, the health care provider is required to repay the individual the amount paid in excess of the in-network rate for the services or treatment with interest at the rate specified by the Secretary of HHS.

How to Comply – Provider Directory Information Improvement
Exhibit 31 is a Compliance Tool that a GHP, insurer, or TPA can use to address all aspects of the new requirements for preparing and maintaining provider directories.

Additional Transparency Requirements in the Consolidated Appropriations Act

Effective December 27, 2020, Plans cannot enter into any agreement with healthcare providers, networks of providers, TPAs, or others who offer access to a network of providers if that contract would, directly or indirectly, preclude the GHP or insurer from:

• Disclosing provider-specific cost or quality-of-care information or data, through a consumer engagement tool or other means, to referring providers, the plan sponsor, covered individuals, or individuals eligible to become covered individuals;
• Electronically accessing de-identified claims information (in accordance with HIPAA, GINA and the ADEA); and
• Sharing the above information with a business associate.

The agreement can allow the provider or network to include reasonable restrictions on public disclosure of the information. A GHP must submit an annual attestation to HHS that the plan is in compliance with these requirements.
Gag clauses are in many TPA agreements. For example, the TPA agreement may state that the Plan will pay at the “PPO Rates” but those rates and how they are determined are categorized as “proprietary information” or “confidential information.”

How to Comply – Removal of Gag Clauses
Exhibit 32 provides Sample Language that may be modified as appropriate and used by a GHP to amend its administrative services agreement.

Mental Health and Substance Abuse Disorder Benefits
The Secretaries of HHS, Labor, and Treasury are directed to issue a compliance program guidance document to help improve compliance with the mental health parity and substance abuse disorder protections under the Mental Health Parity and Addiction Equity Act (MHPAEA). The document shall provide de-identified examples of previous findings of compliance and noncompliance with nonquantitative treatment limitations and deficient information disclosures, and descriptions of violations discovered in investigations.

The CAA requires that group and individual health plans providing mental health or substance abuse disorder benefits and imposing any Non-Quantitative Treatment Limitations (NQTLs) on such benefits (i.e., restrictions not tied to dollar value or frequency) must perform and document a comparative analysis. The comparative analysis is required to contain the following information (copied directly from the legislation):

1. The specific plan or coverage terms or other relevant terms regarding the NQTLs and a description of all mental health or substance use disorder and medical or surgical benefits to which each such term applies in each respective benefit classification;
2. The factors used to determine that the NQTLs will apply to mental health or substance use disorder benefits and medical or surgical benefits;
3. The evidentiary standards used for the factors identified in clause (2), when applicable, provided that every factor shall be defined, and any other source or evidence relied upon to design and apply the NQTLs to mental health or substance use disorder benefits and medical or surgical benefits;
4. The comparative analyses demonstrating that the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to mental health or substance use disorder benefits, as written and in operation, are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to medical or surgical benefits in the benefits classification; and
5. The specific findings and conclusions reached by the group health plan or health insurer with respect to the health insurance coverage, including any results of the analyses described in this subparagraph that indicate that the plan or coverage is or is not in compliance with this section.

Beginning 45 days after the legislation goes into effect (in early February 2021), the comparative analysis must be made available to the applicable state or federal agency upon request. The analysis does not need to be sent anywhere, but it should be kept in a file for audit purposes in case it is ever requested. If an agency audit of the analysis determines that any NQTL does not comply with the parity requirements, the plan may be required to take corrective action to bring the plan into compliance. If the plan fails to do so in a timely manner, the agency will notify enrolled individuals of the non-compliance and may also include the plan in a public report along with other non-compliant plans.

For fully-insured plans, the carrier is primarily responsible for ensuring the plan design and claims processing comply with the MHPAEA, and the carrier should prepare this comparative analysis and handle any audit of such analysis if requested. Some carriers are already subject to such requirements and audits at the state level.

For self-funded plans, the Third-Party Administrator (TPA) will likely take responsibility for this new requirement, or at least assist with it. For self-funded plans, the employer is primarily responsible for compliance with MHPAEA requirements. The TPA may have some fiduciary responsibility depending upon the terms of the contract for services and the TPA’s role in plan design and claims processing, so it would make sense for the TPAs to assist with this comparative analysis, but employers cannot automatically assume that it will be handled by the TPA.

How to Comply – Mental Health and Substance Use Disorder Benefits
Attachment 5 is a Model Compliance Tool, “Self-compliance Tool for the Mental Health Parity and Addition Equity Act (MHPAEA)”, is a guide provided by the DOL to assist GHPs, insurers, state regulators, TPAs and others determine whether a GHP or health insurance issuer complies with the Mental Health Parity and Addiction Equity Act (MHPAEA) and additional related requirements. This tool was released by The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA).

Attachment 6 is another Model Compliance Tool, “Warning Signs: Plan or Policy Non-Quantitative Treatment Limitations (NQTLs) that Require Additional Analysis to Determine Mental Health Parity Compliance,” that focuses on NQTLs and how to identify provisions that will require inquiry beyond the plan/policy terms in order to determine compliance with mental health parity requirements.

Attachment 7 is a Model Compliance Tool, “FAQs About Mental Health and Substance Use Disorder Parity Implementation and the Consolidated Appropriations Act, 2021,” that provides additional guidance through FAQs to better understand the compliance requirements. It contains frequently asked questions and answers that the DOL, HHS, and the Treasury have jointly prepared to help stakeholders understand these amendments.

Attachment 8 is a Model Compliance Tool, “Fact Sheet FY 2020 MHPAEA Enforcement,” that summarizes EBSA’s and CMS’s investigations and public inquiries related to MHPAEA during FY 2020. This fact sheet does not report ongoing investigations that were open but not closed during FY 2020. These cases will be reported in a subsequent report for the FY in which these cases are closed. Multi-year investigations are not uncommon with respect to complex MHPAEA issues, especially for investigations that involve large service providers (such as issuers, third-party administrators, and managed behavioral health organizations).

Attachment 9 is a Compliance Tool, “MHPAEA Comparative and Fee Analysis Tool”, that contains the necessary information to inventory and record the comparative analysis required to comply. Once the spreadsheet is populated and the coverage provisions and limits have been evaluated it can be used to prepare any necessary reporting. The tool follows the requirements outlined in the Self-compliance tool (Attachment 4).

The CAA requires new disclosures for brokers and other consultants providing services to certain group health plans and individual health insurance plans. Under the CAA, “covered service providers” must disclose their “direct” and “indirect” compensation above $1,000 received during the term of the contract or arrangement to a responsible plan fiduciary of a “covered health plan.”

Previously, the Department of Labor regulations only required qualified retirement plans to disclose this information, specifically exempting group health and welfare plans. ERISA was amended to broaden the definition of “covered plan” to include “covered health plans”, and it requires the disclosure of direct and indirect compensation paid by “covered service providers” to such plans.

Fee Disclosure Related to Covered Group Health Plans
In attempting to comply with the new CAA requirements for group health plans, covered service providers may look to prior Departmental guidance developed for service providers of pension plans. Even though certain provisions in ERISA are not identical to the pension plan disclosure provisions in regulation 29 CFR § 2550.408b-2(c), DOL would view it as a good faith and reasonable step for a group health plan service provider to take into account the DOL’s guidance on its regulation for pension plans in connection with the similar disclosure requirements for group health plan service providers.

A “covered health plan” includes employee benefit welfare plans to the extent the plan provides medical care to employees or their dependents directly or through insurance, reimbursement, or other methods. The fee disclosure requirement applies to both insured and self-funded group health plans. There is no small plan exception. It also applies to grandfathered plans The disclosure requirements also apply to limited scope dental and vision plans. A “covered health plan” does not include a qualified small employer health reimbursement arrangement.

A “covered service provider” is defined to include entities that provide brokerage or consulting services for which the provider enters into a contract or arrangement with the covered plan and reasonably expects $1,000 or more in direct or indirect compensation. The brokerage and consulting services include the selection of insurance products, recordkeeping services, medical management vendors, benefits administration (including vision and dental), stop-loss insurance, pharmacy benefit management services, wellness design and management services, transparency tools, group purchasing organization agreements, participation in and services from preferred vendor panels, disease management, compliance services, employee assistance programs, or third party administration services.

“Direct compensation” includes all compensation paid directly from the plan. “Indirect compensation” is defined as compensation from any source other than the covered plan, the plan sponsor, the covered service provider, or an affiliate. It also includes compensation from a subcontractor unless it is received in connection with services performed under a contract or arrangement with a subcontractor.

The DOL takes the view that disclosure of compensation in ranges may be reasonable in circumstances when the occurrence of future events or other features of the service arrangement could result in the service provider’s compensation varying within a projected range. In that regard, the following language in the preamble to the DOL’s final regulation for covered service provider disclosures to pension plan fiduciaries is germane: “However, such ranges must be reasonable under the circumstances surrounding the service and compensation arrangement at issue. To ensure that covered service providers communicate meaningful and understandable compensation information to responsible plan fiduciaries whenever possible, the DOL cautions that more specific, rather than less specific, compensation information is preferred whenever it can be furnished without undue burden.
The adequacy of the disclosure should be measured against a principal objective of the statutory provision – which is to provide the responsible plan fiduciary with sufficient information about the reasonableness of the compensation, and the severity of any associated conflicts of interest. The duties of prudence and loyalty in ERISA apply to a responsible plan fiduciary’s decision to hire service providers and to ongoing monitoring of service provider arrangements. What constitutes adequate disclosure for a specific compensation arrangement will depend on the facts and circumstances of the service contract or arrangement.

The new law details specific items that must be disclosed by the service provider to the plan fiduciary, including a description of the services provided and a description of all covered direct and indirect compensation. The disclosure requirements will be effective December 27, 2021 for new contracts entered into or renewed after such date. The date on which a contract or arrangement is entered into between an agent or broker and a plan fiduciary will be considered the date the contract or arrangement was “executed.” For example, if a plan fiduciary enters into a new service contract with an agent on December 15, 2021, for the plan year beginning on January 1, 2022, the service contract will be treated as having been “executed” on December 15, 2021, which is prior to December 27, 2021, so that the contract will not be subject to the new compensation disclosure requirements, but the disclosure requirements would apply if the contract is renewed or extended, or a new contract is executed, on or after December 27, 2021.

Group health plans should begin working in coordination with covered service providers to determine whether these new disclosure requirements will apply to them and, if so, what indirect compensation must be disclosed. In preparing to comply with these new disclosure rules, affected parties may seek guidance in the disclosures practices that apply to qualified retirement plans.

The responsible fiduciary for a group health plan may want to begin by taking an inventory of the service providers required to provide disclosures. After the inventory is developed, the fiduciary should establish a process to review disclosures annually to ensure all of the required elements are contained. This process should also ensure that the responsible plan fiduciary receives all fee disclosures for the plan, and assesses vendor compliance, tracks follow-up requests for disclosures, and fulfills obligations to report omissions as required to the U.S. Department of Labor.

Fee Disclosure Related to Covered Individual Health Insurance Plans
Health insurers offering individual and short-term health insurance coverage are required to disclose to enrollees and to the HHS all direct and indirect compensation provided to agents and brokers associated with plan selection and enrollment.

For this purpose, direct and indirect compensation are defined to cover all forms of consideration that may be transferred between an insurer and its agent or broker, regardless of how that consideration is transferred. Direct compensation under the proposed regulations would include amounts that are:

• Paid by an insurer to an agent or broker for the sale, placement, or renewal of STLDI or an individual health insurance policy.
• Directly attributable to an insurance policy, certificate, or insurance contract (including sales and base commissions).
Examples of indirect compensation would include: Awards, prizes, and volume-based incentives.
• Non-monetary forms of compensation.
These required disclosures would include:
• The commission schedule for determining the compensation owed to an agent or broker as part of the appointment contract between the insurer and the agent or broker.
• The structure of compensation not captured on the commission schedule.
For new (initial) enrollments, the disclosures would need to:
• Be made before a potential policyholder finalizes plan selection.
• Include documentation confirming the initial enrollment, for example:
enrollment documentation required under federal or state law; or
an initial enrollment package.
Required disclosures include:
• To the enrollee – The insurer must disclose prior to the individual finalizing plan selection and include the disclosure on any documentation confirming enrollment.
• To the HHS – Health insurers that offer Short-Term Limited Duration Insurance (STLDI) or individual health insurance coverage must annually report to HHS. This is before the beginning of open enrollment any direct or indirect compensation provided to an agent or broker associated with enrolling individuals in the coverage. The data collected by HHS would be similar to that collected by the DOL regarding insurance compensation for group health plans that are subject to Form 5500 and Schedule A.
Insurers would be required to provide specified information for each payment recipient and intermediary organization in a specific month of the reporting year. This information would need to be provided in a single row of data using a comma-separated values (CSV) format. The required information would include the following fields/columns:
• A payor’s federal tax identification number (FTIN).
• The recipient’s identifier type (for example, the FTIN for payments made to intermediaries).
• The recipient identifier value (that is, the actual number).
• The date on which a payment was made to the payment’s recipient.
• Direct compensation, expressed as a dollar amount (the commission).
• Any indirect compensation, expressed as a dollar amount, and assuming indirect compensation was paid in a month (for example, if a bonus was paid out).
• The basis for indirect compensation, consisting of a text field allowing entry of what the grounds for the indirect compensation were (for example, a bonus or incentive).
• Other information specified by HHS, for example:
distinguishing between STLDI and individual health insurance coverage;
listing the appointment arrangement duration; and
stating the number of plans an agent sold.
• Service fees, consulting fees, and finders’ fees.
• Profitability and persistency bonuses.

To ensure that reported information reflects the full amount of compensation received by agents and brokers, an insurer would need to include compensation arrangements:

• Directly between the insurer and the writing agent or broker.

• From the insurer to the writing agent or broker involving any intermediary organizations in connection with the sale of STLDI or individual health insurance coverage.

Examples of intermediary organizations involved in the sale, placement, or renewal of relevant coverage include:
• General lines agencies.
• Marketing organizations.

The required reporting would need to be submitted to HHS each year by the last business day of July of the calendar year following the applicable reporting period. For non-calendar year policies, insurers would need to split the agent and broker compensation between the reports for two calendar years.
Under a statutory a transition rule, the reporting requirements would not apply to contracts executed between health insurers that offer STLDI and individual health insurance coverage before December 27, 2021. Under the proposed regulations, as a result, the reporting requirements would apply to contracts executed between an agent or broker and an insurer offering STLDI or individual health insurance coverage on or after December 27, 2021.

January 31, 2022 Update: DOL Field Assistance Bulletin No. 2021-03

On December 30, 2021, Department of Labor (“DOL”) released Field Assistance Bulletin No. 2021-03 which announces its temporary enforcement policy for group health plan service provider fee disclosures under ERISA.

Section 202 of Title II of Division BB of the Consolidated Appropriations Act, 2021 (CAA) amended section 408(b)(2) of ERISA to require certain service providers to group health plans, as defined in section 733(a) of ERISA, to disclose specified information to a responsible plan fiduciary about the direct and indirect compensation that the service provider expects to receive in connection with its services to the plan. The new disclosure requirements in ERISA section 408(b)(2)(B) apply to persons who provide “brokerage services” or “consulting” to ERISA-covered group health plans who reasonably expect to receive $1,000 or more in direct or indirect compensation in connection with providing those services.

The information required to be disclosed under ERISA section 408(b)(2)(B), which includes both direct and indirect compensation that is expected to be received in connection with a contract or arrangement between a covered service provider and a covered plan, generally must be disclosed reasonably in advance of the parties entering into such contract or arrangement. The required disclosures are intended to provide the responsible plan fiduciary with sufficient information to assess the reasonableness of the compensation to be received and potential conflicts of interest that may exist as a result of a covered service provider receiving indirect compensation from sources other than the plan or the plan sponsor.
The CAA provides that the ERISA section 408(b)(2)(B) amendments apply beginning one year after the date of the CAA’s December 27, 2020 enactment, i.e., December 27, 2021. The fee disclosure requirements apply, only contracts or arrangements for services which are entered into, extended, or renewed on or after December 27, 2021.

The date on which a contract or arrangement is entered into between an agent or broker and a plan fiduciary will be considered the date the contract or arrangement was “executed.” For example, if a plan fiduciary enters into a new service contract with an agent on December 15, 2021, for the plan year beginning on January 1, 2022, the service contract will be treated as having been “executed” on December 15, 2021, which is prior to December 27, 2021, so that the contract will not be subject to the new compensation disclosure requirements, but the disclosure requirements would apply if the contract is renewed or extended, or a new contract is executed, on or after December 27, 2021.
The purpose of the guidance:

DOL will not be issuing regulatory guidance at this time, but provided some guidance and temporary enforcement policy to address questions.

Use of prior guidance for Pension plans to comply:

In attempting to comply with the new CAA requirements for group health plans, covered service providers may look to prior Departmental guidance developed for service providers of pension plans. Even though certain provisions in ERISA are not identical to the pension plan disclosure provisions in regulation 29 CFR § 2550.408b-2(c), DOL would view it as a good faith and reasonable step for a group health plan service provider to take into account the DOL’s guidance on its regulation for pension plans in connection with the similar disclosure requirements for group health plan service providers.

Application of the fee disclosure requirements to insured and self-funded group health plans:
The fee disclosure requirement applies to both insured and self-funded group health plans. It also applies to grandfathered plans. Qualified small employer health reimbursement plans are excluded. Application of fee disclosure requirements to plan that provides only “excepted benefits”
The fee disclosure requirements apply to limited scope dental and vision plans.

Covered service providers that have to comply:
ERISA section 408(b)(2)(B) defines “covered service providers” to include providers of brokerage services and consulting to group health plans, but does not define these services. Is the definition is not limited to service providers who are licensed as, or who market themselves as, “brokers” or “consultants”. The nature of compensation received by a service provider also is not a basis for defining or differentiating brokerage services from consulting. Pending further guidance, the Department’s enforcement policy will apply to parties who reasonably and in good faith determine their status as a covered service provider for fee disclosure purposes.

Accordingly, in light of this goal and taking into account the prohibited transaction consequences of a disclosure failure, service providers who reasonably expect to receive indirect compensation from third parties in connection with advice, recommendations, or referrals regarding any of the listed sub-services under ERISA, should be prepared, if the DOL is auditing their compliance, to be able to explain how a conclusion that they are not covered service providers is consistent with a reasonable good faith interpretation of the statute.
Disclosing those fee amounts that cannot be known in advance.

The DOL takes the view that disclosure of compensation in ranges may be reasonable in circumstances when the occurrence of future events or other features of the service arrangement could result in the service provider’s compensation varying within a projected range. In that regard, the following language in the preamble to the DOL’s final regulation for covered service provider disclosures to pension plan fiduciaries is germane: “However, such ranges must be reasonable under the circumstances surrounding the service and compensation arrangement at issue. To ensure that covered service providers communicate meaningful and understandable compensation information to responsible plan fiduciaries whenever possible, the DOL cautions that more specific, rather than less specific, compensation information is preferred whenever it can be furnished without undue burden.

The adequacy of the disclosure should be measured against a principal objective of the statutory provision – which is to provide the responsible plan fiduciary with sufficient information about the compensation to be received by covered service providers to allow the fiduciary to evaluate the reasonableness of the compensation, and the severity of any associated conflicts of interest. The duties of prudence and loyalty in ERISA apply to a responsible plan fiduciary’s decision to hire service providers and to ongoing monitoring of service provider arrangements. What constitutes adequate disclosure for a specific compensation arrangement will depend on the facts and circumstances of the service contract or arrangement.

Application to both large and small group health plans. The fee disclosure requirement applies to group health plans regardless of size. There is no exception for small plans covering fewer than 100 participants. A small group health plan is subject to the fee disclosure requirements even if the plan is exempt from filing a Form 5500 annual report because it is fully insured, unfunded, or a combination of fully insured and unfunded.

No further Guidance is Expected
The DOL does not believe that comprehensive implementing regulations are needed and will does intend to continue to monitor feedback from stakeholders and from the DOL’s enforcement activities to assess whether, and if so what, additional guidance may be necessary to assist covered service providers and responsible plan fiduciaries in complying with the new disclosure requirements.

How to Comply – Brokers and Consultants Required to Disclose Direct and Indirect Compensation to Plan Brokers, consultants, TPAs, and other service providers need to determine if they are responsible for reporting.

Employers should review broker, consultant, TPA, and other service provider contracts and administrative services agreements to confirm responsibilities and timing for reporting.
Exhibit 33 is a Sample Form that that brokers, consultants or other service providers can use to report direct and indirect compensation related to GHPs. Exhibit 34 is a Sample Form that a broker, consultant, or other service providers can use to report direct and indirect compensation related to individual insurance coverage. Exhibit 35 is a Sample Report that an insurer can use to fulfill its reporting requirement to HHS.

  • Attachment 5 is a Model Compliance Tool, “Self-compliance Tool for the Mental Health Parity and Addition Equity Act (MHPAEA)”, is a guide provided by the DOL to assist GHPs, insurers, state regulators, TPAs and others determine whether a GHP or health insurance issuer complies with the Mental Health Parity and Addiction Equity Act (MHPAEA) and additional related requirements. This tool was released by The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA).
  • Attachment 6 is another Model Compliance Tool, “Warning Signs: Plan or Policy Non-Quantitative Treatment Limitations (NQTLs) that Require Additional Analysis to Determine Mental Health Parity Compliance,” that focuses on NQTLs and how to identify provisions that will require inquiry beyond the plan/policy terms in order to determine compliance with mental health parity requirements.
  • Attachment 7 is a Model Compliance Tool, “FAQs About Mental Health and Substance Use Disorder Parity Implementation and the Consolidated Appropriations Act, 2021,” that provides additional guidance through FAQs to better understand the compliance requirements. It contains frequently asked questions and answers that the DOL, HHS, and the Treasury have jointly prepared to help stakeholders understand these amendments.
  • Attachment 8 is a Model Compliance Tool, “Fact Sheet FY 2020 MHPAEA Enforcement,” that summarizes EBSA’s and CMS’s investigations and public inquiries related to MHPAEA during FY 2020. This fact sheet does not report ongoing investigations that were open but not closed during FY 2020. These cases will be reported in a subsequent report for the FY in which these cases are closed. Multi-year investigations are not uncommon with respect to complex MHPAEA issues, especially for investigations that involve large service providers (such as issuers, third-party administrators, and managed behavioral health organizations).
  • Attachment 9 is a Compliance Tool, “MHPAEA Comparative and Fee Analysis Tool”, that contains the necessary information to inventory and record the comparative analysis required to comply. Once the spreadsheet is populated and the coverage provisions and limits have been evaluated it can be used to prepare any necessary reporting. The tool follows the requirements outlined in the Self-compliance tool (Attachment 4).

The CAA updated the Employee Retirement Income Security Act, the Public Health Services Act and the Internal Revenue Code to require group health plans to report certain information related to prescription drugs to the secretaries of the departments of Health and Human Services, Labor, and the Treasury, including:

• The plan year, number of covered individuals and each state in which the plan is offered.
• The top 50 brand prescription drugs paid for by the plan, and the total number of paid claims for each drug.
• The top 50 most expensive prescription drugs paid for by the plan by total annual spending, and the annual amount spent by the plan for each drug.
• The 50 prescription drugs with the greatest increase in plan expenditures since the prior plan year, and the change in amounts spent for each drug.
• The total spending on health care services by plan, broken down into specific categories, including hospital costs, primary care costs, specialty care costs and prescription drug costs.

Average monthly premiums paid by employers and by participants.
• The effect on premiums by rebates and fees paid by drug manufacturers to the plan or its administrators or service providers, including any reduction in premiums and out-of-pocket costs associated with the rebates and fees.

The agencies, along with the Office of Personnel Management, will use the reported information to analyze trends in overall spending on prescription drugs and other health care services by employers that sponsor self-funded health plans and by insurers that provide fully insured health plans. The agencies said they will then publish the analysis in a format that will enable plans and issuers to negotiate fairer rates and ultimately lower costs for participants, beneficiaries, and covered individuals.

Under CAA, the first reporting would be due December 27, 2021, with reporting due each June thereafter. Enforcement of this requirement to report by December 27,2021 or the second deadline or reporting on June 2022 has been delayed pending the issuance of regulations or further guidance. The first report will be due December 27, 2022.

January 31, 2022 Update: Prescription Drug and Health Care Spending Interim Final Rules
On November 23, 2021, the Departments of Labor, Health and Human Services, and the IRS released Prescription Drug and Health Care Spending Interim Final Rules with request for comments. These rules implement Section 204, Title II, another phase of the transparency provisions of the Consolidated Appropriations Act (CAA) of 2021. This provision of the CAA requires group health plans and health insurers offering group health insurance coverage to annually submit to the Departments of Treasury, Labor, and Health and Human Services (the “Departments”) information about prescription drug and health care spending. The preamble to the interim final regulations indicates that the Agencies intend to build a data collection system that will allow multiple reporting entities to submit different subsets of the required information.

One portion of the information that must be reported is general information about the plan or coverage, including the beginning and end dates of the plan year, the number of participants, beneficiaries, or enrollees, as applicable, and each state in which the plan or coverage is issued.

Plans and insurers must also report the 50 most frequently dispensed brand prescription drugs by the number of claims, although initially the interim final regulations limit the reporting requirement to prescription drugs under a plan’s pharmacy benefit plan, and the total number of paid claims for each such drug. Also, the 50 most costly prescription drugs by total annual spending by dollars, and the total annual amount spent by dollars by the plan for coverage for each drug, must be reported, as well as the 50 prescription drugs with the greatest increase in plan or coverage expenditures by dollars from the plan year preceding the plan year that is the subject of the report.

In addition, plans and insurers must also report total spending on health care services by the plan or coverage, broken down by:

• The type of costs (including hospital costs; health plan provider and clinical service costs, for primary care and specialty care separately; costs for prescription drugs; and other medical costs, including wellness services),
• Spending on prescription drugs by the plan or coverage as well as by participants, beneficiaries, and enrollees, and

Premiums paid by employers on behalf of participants, beneficiaries, and enrollees. Plans and issuers must also report any impact on premiums of rebates, fees, and other remuneration paid by drug manufacturers, including the amount paid with respect to each therapeutic class of drugs and for each of the 25 drugs that yielded the highest number of rebates and other remuneration under the plan or coverage during the plan year.

Finally, plans and insurer must report any reduction in premiums and out of pocket costs associated with these rebates, fees, or other remuneration.

These requirements apply to grandfathered health plans as well as non-grandfathered plans, but do not apply to:
• Health reimbursement arrangements or other account-based group health plans, such as flexible spending accounts and health savings accounts;
• Short term limited duration insurance; or
• Other coverage that consists solely of excepted benefits.
The required information must be provided on an aggregate basis rather than a plan-by-plan basis, except for:
• Identifying information for the plans and insurers and other reporting entities;
• The beginning and end dates of the last plan year ending on or before the last day of the reference year (prior calendar year);
• The number of participants and beneficiaries covered on the last day of the reference year (prior calendar year); and
• Each state in which a plan or coverage is issued. Otherwise, reporting is done on a state and market segment basis, which would include a fully-insured large group segment; a fully-insured small group segment; self-funded small employer plans; and self-funded large employer plans.

The information for each self-funded plan must be included in the report for the state in which the plan sponsor has its principal place of business. In general, for a fully-insured plan, the experience is reported for the state in which the contract is issued, although for health coverage provided through a group trust or MEWA, the experience must be included in the report for the state where the employer or association (if it qualifies as an employer under Section 3(5) of ERISA) has its principal place of business. If a plan sponsor has contracts with both in-network and out-of-network providers, the out-of-network experience may be treated as if it related to the contract providing in-network services.

The Agencies understand that group health plans, although permitted to do so, will rarely report this information on their own, but rather will engage third parties, such as health insurers, third party administrators (“TPAs”), pharmacy benefit managers, or both TPAs and pharmacy benefit managers, to satisfy the required reporting obligations. It is understood that multiple parties will be submitted data. In many cases both a TPA and a PBM or an insurer and a PBM will be both submitting data, For fully insured group health plans, to the extent that coverage under a plan consists of group health insurance coverage, a plan may satisfy the data submission requirements if the plan, pursuant to a written agreement, requires the health insurer to provide the required information in compliance with the interim final rules. If the insurer fails to report the required information, it is then the issuer, rather than the plan, that is treated as violating the reporting requirements Additionally, for both fully insured and self-insured plans, the plan may satisfy its data submission requirements by entering into a written agreement with a third party such as a pharmacy benefit manager or a TPA requiring the third party to satisfy the interim final rules’ reporting requirements. However, in this instance, if the third party fails to satisfy the compliance obligation, the plan is the party that is treated as violating the regulatory requirements.

The initial reporting is required by December 27, 2021, and thereafter by June 1. In other words, the reporting for 2020 would be done by December 27, 2021, and the reporting requirement for 2021 would be due on June 1, 2022. However, the Agencies have now indicated that no enforcement action will be taken with respect to any of these filing requirements if the reports are filed by December 27, 2022.

While there will be no enforcement action for reports filed on or before December 27, 2022, group health plans will need to use this extra time to revise their service agreements with TPAs and PBMs so that they will be in a position to comply by the extended deadline. They will need to address liability for reporting amongst the parties, ways a plan can review a report prior to submission to confirm its accuracy, and the process for any editing, all to occur prior to extended reporting deadline (and in later years by June 1 of each year). Should you have questions regarding what service agreements you need to revisit to address these requirements, please contact one of the authors for assistance.

How to Comply – Pharmacy Benefit and Drug Cost Reporting and Other Reporting Requirements
Attachment 10 is a Compliance Tool that contains a sample of a report that an employer, insurer or third- party administrator must make to the Departments of Health and Human Services, Labor, and the Treasury.

Attachment 23 is a Model Compliance Tool, “CMS Fact Sheet – Prescription Drug and Health Care Spending Interim Final Rule,” that provides information about the reporting requirements.

For plan or policy years beginning on or after January 1, 2022, group health plans and insurers offering non-grandfathered group health plans and individual health policies are required to publicly disclose certain information on an internet website in three (3) machine-readable files. The three (3) machine-readable files are an in-network rate file, an out-of-network allowed amount file, and a prescription drug machine-readable file.
The requirements of each file are as follows:

In-Network Machine Readable File must include:
For each coverage option offered by a plan or insurer the name and 14-digit HIOS identifier (if one is available), the 5-digit HIOS identifier (if the 14-digit is not available), and the EIN if no HIOS identifier is available.

A billing code (the code used by the plan or insurer to identify items or services for purposes of billing, such as a CPT Code, HCPCS code, DRG, or NDC) and a plain language description for each billing code for each covered item or service.

All applicable rates, which may include one or more of: negotiated rates, underlying fee schedule rates (the rate from an in-network provider to determine cost-sharing liability), or derived amounts (the price assigned to an item or service for purpose of internal accounting, reconciliation with providers or submission of data). For items or services in a bundled payment, the applicable rate is to be a dollar amount for each covered item or service and other specified information.

Out-of-Network Allowed Amount Machine Readable File must include:
For each coverage option offered by a plan or insurer the name and 14-digit HIOS identifier (if one is available), the 5-digit HIOS identifier (if the 14-digit is not available), and the EIN if no HIOS identifier is available. A billing code (the code used by the plan or insurer to identify items or services for purposes of billing, such as a CPT Code, HCPCS code, DRG or NDC) and a plain language description for each billing code for each covered item or service.

Unique out-of-network allowed amounts and billed charges with respect to covered items or services of out-of-network providers during the 90-day period that begins 180 days prior to the publication date of the file (but the plan or insurer must omit such data in relation to a particular item or service and provider if out-of-network allowed amounts in connection with fewer than 20 different claims under a single plan or coverage).

The unique out-of-network allowed amount must be stated as a dollar amount with respect to the covered item or service furnished by an out-of-network provider, and associated with the NPI, TIN or Plan of Service Code for each out-of-network provider.

Prescription Drug Machine-Readable File must include:
• For each coverage option offered by a plan or insurer the name and 14-digit HIOS identifier (if one is available), the 5-digit HIOS identifier (if the 14-digit is not available), and the EIN if no HIOS identifier is available.

The NDC and the proprietary and non-proprietary name assigned to the NDC by the FDA for each prescription drug under a coverage option.
• The negotiated rates, which must be:

Reflected as a dollar amount with respect to each NDC that is furnished to an in-network provider or other prescription drug dispenser;
Associated with the NPI, TIN and Plan of Service Code for each in-network provider;
Associated with the last date of the contract term for each provider-specific negotiated rate that applies to each NDC; and
Historical net prices (the retrospective average amount a plan or insurer paid for a prescription drug (inclusive of discounts, rebates, etc.) associated with the 90-day time period beginning 180 days prior to publication of the file for each provider specific historical net price).
The machine-readable files must be in a form and format as specified by the Departments and they must be publicly available and accessible, free or charge and without conditions (e.g., passwords, etc.). The plan and insurer must update the files on a monthly basis.
The plan or insurer may satisfy the requirements for public disclosure by contracting with a third party such as a TPA or claims clearinghouse.

This requirement has been delayed for plan or policy years beginning on or after July 1, 2022.

Individualized Disclosure Requirement
Health plans will be required to provide a self-service tool to allow covered individuals to obtain out-of-pocket cost estimates for medical and drug costs. The self-service tool must make available to participants and beneficiaries (or their authorized representative) individualized cost-sharing information for covered medical items and procedures, including prescription drugs. The information must also be made available in paper form upon request.

Under the Transparency in Coverage Rule, the effective date is plan or policy years beginning on of after January 1, 2023, for 500 shoppable services identified by DOL and plan or policy years beginning on or after January 1, 2024 for any remaining items. The self-service tool is very similar to the price comparison tool under the No Surprises Act. The only significant difference is the requirement under the No Surprises Act that information also be made available over the phone upon request. Also, the effective date for the price comparison tool is one year earlier than the self-service tool. As a result, the agencies have delayed the effective date for the price comparison tool until the plan year beginning on or after January 1, 2023 to align with the transparency rule.

One caveat: Guidance released by the agencies encourages states to follow this approach on the delayed effective date with respect to insured plans. Insurers and plan sponsors of insured plans should monitor any guidance from state regulators on this issue.

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