Happy New Year, friends! Personally, we love the blank slate this time of year brings. It’s probably a shock to no one that we get lots of joy from filling out new planners, setting goals and intentions, and making lots of lists. However, we also identify with a meme we saw this weekend. So, we are harnessing our heretofore little-known secret powers and putting 2022 on double-secret probation until a few months pass without major incident!
The good news is, there is a lot to keep us all busy while we’re waiting for 2022 to reveal its true character. As we’ve mentioned already, 2022 will bring the greatest number of group health plan compliance changes since 2014, when the bulk of the Affordable Care Act’s provisions went into effect. The Biden Administration delayed a few requirements that were slated to take effect this year, and a few more are now subject to “good-faith compliance” standards. Even with those caveats, there are a lot of compliance details on the horizon that group health plan sponsors, their advisors, and their vendors need to manage. We want to make sure our friends are both fully aware and fully prepared.
So, in the order in which they may impact you, here’s a little preview of new employer health plan responsibilities for 2022.
Among its many new requirements for employee benefit plans, the Consolidated Appropriations Act, 2021 (CAA) created new compensation disclosure requirements related to group health plans. The rule applies to brokers and consultants anticipated to earn $1,000 or more in direct or indirect compensation related to a group health plan offering benefits that could be subject to COBRA. These “covered service providers” must disclose that compensation to the plan sponsor reasonably in advance of entering into or renewing an agreement to provide that service. Employer plan sponsors have a fiduciary responsibility to report any service providers to the federal Department of Labor (DOL) who fail to disclose their compensation appropriately. The requirements apply to contracts or arrangements entered, extended, or renewed on or after December 27, 2021.
Brokers and consultants who may be subject to the disclosure requirements should refer to the DOL Field Assistance Bulletin No. 2021-03 issued on December 30, 2021, which provides guidance on enforcement policy related to these requirements.
Employer group health plan sponsors should keep an eye out for these compensation disclosures in 2022 and beyond. They should also keep track of any compensation disclosures that may be missing. A new best practice would be making compensation disclosure a part of any discussions and contracts you initiate with new group health plan vendors. Compensation should also be reviewed as part of the existing vendor renewal process. To meet ERISA fiduciary responsibility requirements, plan sponsors should also consider documenting when they request compensation disclosures from brokers and/or plan consultants and vendors. Finally, they should develop standard operating procedures for tracking and storing compensation disclosures and reporting potential non-compliant service providers based on forthcoming DOL guidance.
Effective for plan years starting on or after January 1, 2022, federal law prohibits providers from sending consumers “surprise” balance bills when an individual seeks emergency care out-of-network, or if a person receives medical care from an out-of-network provider at an in-network facility without giving their written consent. Instead, patients may only be charged the applicable in-network cost-sharing amount, and the health plans and providers will need to negotiate payment for the balance. If they cannot agree after 30 days, either the health plan or the provider can opt for an independent dispute resolution process whereby each side presents their best offer to be judged on objective criteria with a “winner-takes-all” style result.
From a group health plan perspective, employees will be shielded from MOST surprise bills. Health insurance issuers will automatically handle all back-end provider negotiations and potential arbitrations for their fully insured policyholders. However, employers who self-fund their coverage will need to contract with their TPA to ASO to handle it for them. Furthermore, both employer plan sponsors and health insurance issuers need to notify employees about their rights. This disclosure needs to include specific information about the federal balance billing restrictions and any applicable state laws. Fortunately, there is a model notice that employers can use, which will satisfy all of these requirements.
Beginning with plan years starting on or after January 1, 2022, health plan ID cards must show any deductible(s), out-of-pocket maximums, and the phone number and web address for consumers who need assistance finding in-network providers. However, the Biden Administration will apply a “good faith” compliance standard when enforcing this requirement until they are able to finalize implementation rules.
A recently published proposed IRS rule changed information reporting standards for applicable large employers (ALEs) and all health insurance issuers, including self-funded and level-funded employer group plan sponsors. The proposed rule affects 2021 calendar year reporting, which will occur during the first few months of 2022. However, if the rule is finalized, it will apply to all reporting cycles moving forward. The measure automatically extends the date by which health insurance issuers and employers need to give people their Form 1095-B and/or Form 1095-C information reporting statements by 30 days. So, for the 2021 calendar year, statements will not be considered late if they are distributed on or before Wednesday, March 2, 2022.
The proposed rule also ends the “good faith” compliance standard that has been in place since 2015. Moving forward, it will be much harder for ALEs to avoid significant employer shared responsibility payment (ESRP) penalties and information return penalties for completing their Forms 1094/1095 incorrectly. The IRS used to be fairly forgiving of minor and unintentional reporting errors (and to be honest, some not so minor errors as well), but now employers will need to get it right on the first try. Otherwise, they may be penalized for inaccurate/incomplete information returns, as well as any employer mandate penalties triggered by the erroneous filing. These penalties can be as much as $560 per Form.
All fully insured carriers and employer group plan sponsors must make three machine-readable data files of health care price information available online and maintain the data starting later this year. The requirement was originally slated to start with the beginning of each 2022 plan or policy year. Now, groups with plan or policy years beginning on or after January 1, 2022, until July 1, 2022, have until July 1, 2022, to publish the data. The three files must include: (1) all in-network provider negotiated rates; (2) historical out-of-network allowed amounts; and (3) all prescription drug pricing information. These files must then be updated monthly. For 2022 plan and policy years beginning after July 1, 2022, plans and issuers must post the machine-readable files in the month in which the plan or policy year begins. Health insurance issuers will publish and maintain the data for their fully insured policyholders. However, employers who self-fund their coverage will need to contract with their TPA to ASO to handle it for them or publish and maintain the data themselves.
Beginning on December 27, 2022, all group health plans and health insurance issuers will need to make sure the federal government gets detailed information on pharmacy and medical claims and costs annually. The reporting requirements, which apply to all employer-sponsored major medical plans, —regardless of size—are geared towards collecting as much price-related data as possible. Ultimately, this is intended to help the administration prepare a statutorily required report on prescription drug and medical spending nationally.
The information that needs to be disclosed to federal regulators includes employer-specific demographics and premium information, aggregated medical claims information broken down by type of cost, which carriers and third-party administrators may be able to provide, and aggregated prescription drug cost and claims information, which may be provided by the PBM.
Originally, the first of these annual reports was due by December 27, 2021. However, an interim final rule outlining some of the reporting detail established that groups will be responsible for reporting both 2020 and 2021 calendar year data by December 27, 2022. After that, reporting will be due by June 1 following the applicable reporting year. This means that reporting on the 2022 calendar year will be due on June 1, 2023. The reports themselves will be filed through an online portal that the Departments will launch. Specific instructions on how this system will work are forthcoming.
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What do you think friends? Is this enough to keep you busy? Hopefully, overall life in 2022 won’t give any of us nightmares (we still have PTSD about one we had this time last year featuring murder hornets in Viking helmets). Group health plan compliance in 2022 should not give any of us nightmares either. But if you are afraid, please opt to phone a friend. We’ll be at the ready with soothing words and nerdy expertise to help you or your clients through it!