MedCost wants to share several important legislative and regulatory updates impacting self-funded plans as well as our plans for addressing these changes. We expect additional updates from regulators on all of these topics and will continue to communicate as those occur. In the interim, please do not hesitate to reach out to your MedCost Account Manager with any questions.
COVID-19 Deadline Extensions
You may recall that health plans were required to extend certain deadlines related to special enrollment periods, COBRA continuation coverage, claims filing, and appeals, for the duration of the COVID-19 National Emergency. Click here for our prior communication on this topic.
Regulators recently clarified that the maximum period of extension is one year, regardless of the duration of the COVID-19 National Emergency. Under the updated guidance, deadline extensions must be measured on an individual basis and extended for the lesser of (a) 1 year or (b) 60 days after the announced end of the National Emergency.
MedCost will automatically implement these changes as part of its administration of your plans. Employers administering COBRA internally or through another vendor should ensure these latest updates are implemented.
In addition, all employers should be mindful of these updates when handling special enrollment periods for qualifying events.
COVID Relief COBRA Premium Subsidies
On March 11, 2021, President Biden signed the third round of COVID relief legislation, the American Rescue Plan Act of 2021. Among other things, the Act includes federal subsidies for eligible employees to obtain COBRA coverage. The subsidy pays for the full amount of the enrollee’s COBRA premium (the House had earlier approved an 85% subsidy, which the Senate raised to 100%).
The subsidies apply to all employees who were involuntarily terminated or received a reduction in hours which resulted in their coverage terminating. The subsidy extends to enrollees who first became eligible for coverage in 2020. However, the subsidy will not apply retroactively. Accordingly, enrollees electing COBRA coverage retroactively will be responsible for paying their premiums out of pocket, and thereafter subsidies will apply to premiums for coverage months going forward. These new COBRA subsidies are available beginning the first day of the first calendar month after enactment, which is expected to be April 1, 2021.
Importantly, self-insured employers are required to “front” the money to pay the COBRA premiums on behalf of those individuals who elect COBRA coverage under the new subsidy provision. Those employers will then be reimbursed by the federal government by claiming an advance-refundable tax credit on their quarterly payroll tax returns.
The bill requires employers to send all involuntarily terminated former employees a notice explaining that they may now be eligible to receive COBRA subsidies within 60 days after the first day of the first month after enactment of the COVID relief legislation (i.e., within 60 days of April 1, 2021). Federal agencies have been directed to supply a model notice to simplify employers’ compliance obligations within 30 days. Additionally, employers must send an “expiration notice” to COBRA participants at least 15 days (and no more than 45 days) prior to expiration of the new subsidies, which are scheduled to end on September 30, 2021.
For plans utilizing MedCost’s COBRA Administration Services, MedCost is working closely with its software vendor to update its processes based on this legislation and will communicate further details soon. Employers administering COBRA internally or through another vendor should ensure these latest updates are implemented.
Dependent Care FSA Maximum
The American Rescue Plan Act of 2021 also included a provision temporarily increasing the Dependent Care FSA maximum from $5,000 to $10,500 (from $2,500 to $5,250 for taxpayers who are married filing separately) for taxable years beginning in 2021. Employers opting to make this change must amend their plan by the last day of the plan year in which the amendment is effective. As a practical matter, if you wish to make this change, it should be made as soon as possible for effective administration. Please contact your MedCost Account Manager if you are considering this change.
Mental Health Parity
The Consolidated Appropriations Act, 2021, included a new requirement for group health plans to perform and document a comparative analysis on nonquantitative treatment limitations (NQTL) for Mental Health or Substance Use Disorder (MHSUD) benefits. Regulators may also require plans to produce such comparative analyses and other information.
A NQTL is a non-numerical limit (i.e., not a visit or dollar limit) on the scope or duration of benefits for treatment. The most common NQTL category is utilization review (e.g., prior authorization), but NQTLs can come in many forms, including, prescription drug formularies, step therapy, medical necessity review, and exclusions of certain conditions.
Mental health parity generally requires group health plans that include coverage for Mental Health or Substance Use Disorder (MHSUD) to ensure that the MHSUD benefits are equal to (or better) than the medical and surgical benefits. A plan is not required to use the same NQTLs for MHSUD benefits as it does for medical and surgical benefits, but the processes, strategies, evidentiary standards and other factors used for MHSUD benefits must be comparable to (and not more stringent than) those for medical and surgical benefits.
MedCost is working with outside legal counsel to prepare such analyses for MedCost’s health management products that impose NQTLs on MHSUD, specifically the Behavioral Health Solution and inpatient review program, as well as pharmacy benefit management (PBM) services purchased through MedCost.
Employers should also consider whether their plans have engaged other service providers to administer NQTLs for MHSUD. The most common examples are PBM services (formularies, step therapy, and other programs) and managed behavioral health programs (utilization review, medical necessity review, provider network, etc.). Employers should contact those service providers for further details on their NQTLs and compliance with this new requirement.
Transparency Regulations
In late October 2020, the Trump administration finalized rules requiring that health plans, including self-funded plans, make certain public disclosures of health care pricing information and price transparency tools for their members. The rule includes two fundamental requirements for health plans.
First Requirement: Plans must publish pricing information for health care services accessed under the plan. This requirement is a monthly obligation that must come in three forms. First, plans must disclose all negotiated rates with in-network providers. In the fairly common scenario where plans access multiple networks, this will likely involve compiling and posting multiple files. Second, plans must disclose historical billed charges and payments with out-of-network providers. Third, plans must disclose drug pricing information for both in- and out-of-network pharmacies. MedCost is working to operationalize these requirements, first by marshalling data regarding MedCost network pricing and historical pricing for out-of-network claims adjudicated by MedCost. That information will need to be published along with similar data compiled by other third-party networks and pharmacy benefits administrators to round out compliance with this first requirement, which plans must begin meeting on January 1, 2022.
Second Requirement: Plans must provide a member-facing self-service shopping tool with personalized out-of-pocket cost information and underlying negotiated rates for all covered health care items and services. The tool must be internet-based (and made available in paper form upon request) and must include both medical and pharmacy services. The requirement has a staged implementation. Beginning January 1, 2023, the tool must provide information on 500 identified services and items. The tool must provide information on all services by January 1, 2024. MedCost is working to identify conforming transparency shopping tools that groups may utilize to meet this requirement in advance of the January 1, 2023 initial deadline. We will be providing additional information in the coming months.
No Surprises Act
The Consolidated Appropriations Act, 2021, also included the “No Surprises Act.” The No Surprises Act is designed to protect patients from surprise bills in two scenarios: (1) where out-of-network providers perform emergency services (including air ambulance services) and (2) where out-of-network providers perform work at in-network facilities. In both cases, providers may not “balance bill” members for the cost of services not covered by their health plans.
In return, plans (including self-funded plans) must cover those services without prior authorization at in-network rates with in-network cost-sharing levels (regulators have been tasked with issuing regulations to establish the methodology for calculating the in-network rates). The Act includes special “baseball arbitration” style dispute resolution procedures to resolve disputes between plans and out-of-network providers regarding the plan’s payment rate. In addition to these measures, the law contains additional transparency requirements for plans and providers. Notably, the Act requires that, if requested by a member, plans provide an advanced explanation of benefits (EOB) for scheduled services within three business days. The advanced EOB must include information about whether the provider participates in-network and include a good faith estimate of what the plan will pay and what the member’s cost liability may be. Plans must also include information about the plan's cost-sharing requirements (deductibles and out-of-pocket maximum limitations) on member ID cards.
Generally, the No Surprises Act becomes effective for plan years beginning January 1, 2022. MedCost’s teams will be monitoring anticipated regulatory activity over the course of the year that is expected to clarify many aspects of the law. MedCost will also be assessing plan language to ensure that plans are designed to meet the law’s requirements and is evaluating operational changes to ensure that applicable claims are appropriately adjudicated and functionality exists to meet the law’s advanced EOB requirements. We will be providing additional information in the coming months.