As reported in our January 7, 2022 SW Benefits Blog “The DOL Asks and Answers Questions About the New Welfare Plan Fee Disclosure Rules,” group health plans must now comply with the ERISA Section 408(b)(2) disclosure requirements. The CAA amended ERISA Section 408(b)(2) to extend the disclosure requirements, which have long applied to retirement plans, to group health plans. This comes at the same time that group health plans must comply with the No Surprises Act (“NSA”), as explained under the heading “Surprise Medical Bills” in our “2021 End of Year Plan Sponsor “To Do” List (Part 1) Health and Welfare.” Plan sponsors must understand the fees associated with their group health plans, including fees associated with NSA claims.
For 2022, many TPAs are subjecting NSA claims to their “shared savings” and similar programs, which could result in unexpectedly large fees. TPAs use savings programs to prevent participants from being balance billed when they go to an out-of-network provider. For example, assume a participant goes to an out-of-network provider, and after the group health plan pays the claim, the provider balance bills the participant for $50,000. The TPA would then negotiate with the provider and offer to pay the provider more if the provider agrees not to balance bill the participant. If the “savings” on the claim ends up being $40,000, the TPA’s fee is a portion of the savings, often as high as 35%. In this example, the TPA’s fee would be $14,000.
The NSA prevents balance billing for out-of-network emergency services, out-of-network air ambulance services, and certain out-of-network services received at in-network facilities. Accordingly, plan sponsors, brokers, and consultants should start asking whether applying savings programs to NSA claims is the right approach. It might be better to carve NSA claims out of savings programs or to pay a flat fee for NSA claims that is not related to the dollar amount of the claims. Of course most plans negotiated fees for 2022 in 2021, when NSA claims were not front and center. The timing of the new fee disclosure requirements might be helpful in negotiating more favorable fees on NSA claims in the future.
On February 23, 2022, the United States District Court for the Eastern District of Texas, in the case of Texas Medical Ass’n, et al. v. United States Department of Health and Human Services, et al., vacated a portion of the NSA regulations. Fortunately, the consumer protections of the NSA regulations are still in effect, as explained in the Department of Labor link below.
We will have to wait and see what the Departments do in response to the Texas case. In the meantime, interested parties can start thinking about how fees for NSA claims might be structured in future years and carefully monitor fees during 2022 to make sure they are reasonable.
See our CAA Compliance Chart for more information regarding the principal requirements under the CAA that apply to employer-sponsored group health plans, including the NSA.