January 15, 2021
Congress has passed and President Trump has signed an end of year package (“the Act”) that includes a wide range of provisions, including government spending through Oct. 1, 2021, COVID-19 stimulus spending, and a section on surprise medical bills.
The Act extends unemployment assistance provisions to March 14. It also includes a refundable tax credit in the amount of $600 per eligible family member. The credit is $600 per taxpayer ($1,200 for married filing jointly), in addition to $600 per qualifying child. The credit phases out starting at $75,000 of modified adjusted gross income ($112,500 for heads of household and $150,000 for married filing jointly) at a rate of $5 per $100 of additional income.
Paycheck Protection Program
The Act includes an extension of the Paycheck Protection Program (PPP), a COVID relief loan program run by the Small Business Administration that includes some loan forgiveness if the funds are used for specified purposes.
The Act updates some provisions, including expanding some of the approved uses of PPP loan funds. For example, it will permit loan funds to be used for software and computing needs, repair of property damage caused by public disturbances in 2020 not covered by insurance, and personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines.
The Act also creates a simplified application process for loans under $150,000, and establishes a second loan from the Paycheck Protection Program, called a “PPP second draw” loan for smaller and harder-hit businesses, with a maximum amount of $2 million.
It also clarifies that that gross income does not include any amount that would otherwise arise from the forgiveness of a PPP loan. This provision also clarifies that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven, and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness.
The Act includes temporary permissive relief for health and dependent care flexible spending arrangements (FSAs). The bill would allow (but not require) plans to permit participants to carryover unused FSA benefits up to the full annual amount from 2020 to 2021 and 2021 to 2022.
It allows plans to permit a 12-month grace period for unused benefits or contributions in health and dependent care FSAs for plan years ending in 2020 or 2021. It also allows plans to extend the maximum age of eligible dependents from 13 to 14 for dependent care FSAs for the 2020 plan year and unused amounts from the 2020 plan year carried over into the 2021 plan year. Finally, it allows plans to permit a prospective change in election amounts for health and dependent care FSAs for plan years ending in 2021.
A summary of the bill’s COVID-19 response provisions is available here: https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/Summary%20of%20H.R.%20133%20Coronavirus%20Relief%20Provisions.pdf
The bill includes the “No Surprises Act,” a bipartisan deal reached last week on surprise medical bills.
Hold Patients Harmless
The bill requires health plans to hold patients harmless from surprise medical bills. Patients are only required to pay the in-network cost-sharing amount for out-of-network emergency care, for certain ancillary services provided by out-of-network providers at in-network facilities, and for out-of-network care provided at in-network facilities without the patient’s informed consent.
Arbitration – No Benchmark
Unlike pervious surprise billing legislation, this bill does not include any benchmark payment structure. Instead, it relies on an arbitration-only approach, shifting significantly towards the provider groups’ policy preference.
The bill provides for a 30-day open negotiation period for providers and issuers to settle out-of-network claims. In the event that the parties are unable to reach a negotiated agreement, they may access a binding arbitration process – referred to as Independent Dispute Resolution (IDR) – in which one offer prevails. Providers may batch similar services in one proceeding when claims are from the same issuer.
The bill calls for an IDR process administered by independent, unbiased entities with no affiliation to providers or issuers. The IDR entity is required to consider the median in-network rate, alongside relevant information brought by either party, information requested by the reviewer, as well as factors such as the provider’s training and experience, patient acuity and the complexity of furnishing the item or service, in the case of a provider that is a facility, the teaching status, case mix and scope of services of such facility, demonstrations of good faith efforts (or lack of good faith efforts) to enter into a network agreement, prior contracted rates during the previous four plan years, and other items..
Following IDR, the party that initiated the IDR may not take the same party to IDR for the same item or service for 90 days following a determination by the IDR entity, in order to encourage settlement of similar claims, but all claims that occur during that 90-day period may still be eligible for IDR upon completion of the 90-day period.
Patients are held harmless from surprise air ambulance medical bills. Patients are only required to pay the in-network cost-sharing amount for out-of-network air ambulances (including attributing the bill to the in-network deductible). Air ambulances are barred from sending patients balance bills for more than the in-network cost-sharing amount.
Similar to other surprise medical bills, the bill provides for a 30-day open negotiation period for air ambulance providers and issuers to settle out-of-network claims. In the event that the parties are unable to reach a negotiated agreement, they may access a binding arbitration process.
If a bill goes to IDR, the IDR entity is required to consider the market-based median in-network rate, as well as information brought by the parties related to the training, experience, and quality of the provider, location where the patient was picked up and the population density of that location, the air ambulance vehicle type and medical capabilities, extenuating factors such as patient acuity and the complexity of furnishing the item or service, demonstrations of good faith efforts (or lack of good faith efforts) to enter into a network agreement, prior contracted rates during the previous four plan years, or other information submitted by the parties.
The bill also requires air ambulance providers to submit two years of cost data to the Secretaries of HHS and Transportation and insurers to submit two years of claims data related to air ambulance services to the Secretary of HHS. It requires the Secretaries to publish a comprehensive report on the cost and claims data submitted. It also establishes an advisory committee on air ambulance quality and patient safety.
Transparency Requirements for Plans
The bill will require group or individual health plans to include on their plan or insurance identification card issued to the enrollee the amount of the in-network and out-of-network deductibles and the in-network and out-of-network out-of-pocket maximum limitations.
It will also require health plans to provide an Advance Explanation of Benefits for scheduled services at least three days in advance to give patients transparency into which providers are expected to provide treatment, the expected cost, and the network status of the providers. Plans must also offer a price comparison tool for consumers.
A section by section summary of the No Surprises Act is available here: https://edlabor.house.gov/imo/media/doc/No%20Surprise%20Act%20Section-by-Section%2012-11-20.pdf
Disclosure of Compensation for Brokers and Consultants to Health Plans and Individual Market Enrollees
This section expands the ERISA Section 408(b)(2) service provider compensation disclosure rules to group health plans. It requires health benefit brokers and consultants to disclose to plan sponsors any direct or indirect compensation the brokers and consultants may receive for referral of services. The section requires health benefit brokers to disclose to enrollees in the individual market or enrollees purchasing short-term limited duration insurance any direct or indirect compensation the brokers may receive for referral of coverage. It also establishes a disclosure requirement for compensation that is not known at the time a contract is signed.
The rules will apply to contracts executed after the one year anniversary of the bill's enactment date.
Implementing Regulations on Provider Discrimination
The ACA included provisions that prohibit group health plans and health insurers that offer group or individual coverage from discriminating, with regard to participation under a plan or coverage, against any health care provider that acts within the scope of its license or certification under applicable state law.
This section requires the Secretaries of HHS, Labor, and Treasury to promulgate a rule no later than January 1, 2022 implementing protections against provider discrimination. SPBA will be tracking this rulemaking closely and will keep members apprised of any developments.
The text of the whole bill is available here: https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-116HR133SA-RCP-116-68.pdf