With the smoke of fireworks still lingering in the air the Departments of Labor, Treasury, and Health and Human Services (the Departments) issued guidance last week in the form of ACA Part 60 FAQs (opens a new window). The FAQs provide some clarification with regard to two transparency requirements: the Transparency in Coverage (TiC) Final Rules’ price comparison tool and cost-sharing under the No Surprises Act.

EXECUTIVE SUMMARY

• Facility fees should be included in the information provided through the price comparison tool.

• Advanced explanation of benefits likely to include facility fee estimates.

• Under the No Surprises Act, cost-sharing for services furnished by a nonparticipating provider, facility or provider of air ambulance services is considered cost-sharing for benefits provided outside of a plan’s network for purposes of applying to an individual’s maximum out-of-pocket limit under the Affordable Care Act (ACA).

• If a plan has a contractual relationship (whether direct or indirect) with a provider, facility, or provider of air ambulance services that sets forth the terms and conditions on which an item or service is provided, then such entity is considered participating for purposes the No Surprises Act and is also considered in-network for purposes of applying the maximum out-of-pocket limit under the ACA.

Facility Fees in Price Comparison Tool

The TiC Final Rules require group health plans to disclose cost-sharing information for healthcare services or items upon the request of an enrollee (or authorized representative, including a healthcare provider) through an internet-based, self-service tool and, upon request, in paper form. This information must be available for plan years beginning on or after Jan. 1, 2023, with respect to the 500 items and services identified by the Departments, and with respect to all covered items and services, for plan years beginning on or after Jan. 1, 2024. The disclosure must include the following elements and be accurate at the time of the request:

• Accumulated cost-sharing amounts incurred to date (e.g., deductible, out-of-pocket limits, etc.).

• The in-network rate for the relevant service or item.

• The out-of-network allowed amount or other rate that yields a more accurate estimate of the amount the plan will pay for the service or item.

• If the item or service is subject to a bundled arrangement, a list of the items or services for which cost-sharing information is being disclosed.

• Notice of any applicable prerequisite (e.g., concurrent review, prior authorization, step therapy, etc.)

• A notice to be articulated by regulators.

In the recent FAQs, the Departments express concern that individuals are increasingly being charged facility fees for health care received outside of hospital settings, thereby resulting in increased healthcare costs. This concern is somewhat mitigated where “essential health benefits” are involved because, if provided in-network, cost sharing for the facility fees is subject to the out-of-pocket (OOP) maximum limit. However, when facility fees are not covered by the plan in connection with the provision of essential health benefits, the Departments state the fees “expose patients to financial risk” and likely come as a surprise to the individual.

Lockton Comment: The Departments are monitoring this issue of facility fees and, in the FAQs, expressly encourage plans, insurers, providers and facilities to minimize the burden to enrollees resulting from the imposition of facility fees. The Departments also note that some states have already taken or are taking action to reduce or prohibit facility fees or increase transparency around such fees.

With that said the Departments reiterate that for purposes of the TiC requirements, "items and services" are explicitly defined to include facility fees. Therefore, the cost comparison internet-based self-service tool (and, upon request, the results in paper) should make information on covered facility fees available to enrollees.

Lockton Comment: Facility fees were already included in the regulatory definition of “items and services” so this news may not create as much noise as last week’s bottle rocket, but it does provide insight into the Departments’ disappointment with such fees, as costly, unexpected charges for individuals. Additionally, the Departments seem to be applauding those states that have taken action to eliminate or lower facility fees, or at least make them more transparent.

Finally, the Departments provided a notice that, although the advanced explanation of benefits (AEOB) requirement is on hold for plans while we await regulations, we can expect that those regulations will require the items and services on the AEOB to include a good faith estimate of facility fees as well.

Cost Sharing under the No Surprises Act

The Consolidated Appropriations Act, 2021 included a section called the “No Surprises Act” that provides federal protections against surprise billing under typical circumstances in which surprise bills arise most frequently by (1) limiting a healthcare plan enrollee’s OOP costs, and (2) prohibiting balance billing of the enrollee by out-of-network (OON) providers. Surprise billing occurs when an individual receives an unexpected balance bill from, typically, an OON provider where the individual doesn’t know the provider is an OON provider with respect to the individual’s coverage.

Lockton comment: A “balance bill” is an invoice to the plan enrollee for the remaining balance of charges assessed by the OON provider after the healthcare plan has paid its portion (if any) of those charges. Because the OON provider is not limited by a network contract on what it may charge, it has traditionally been allowed to levy large charges, only a small fraction of which might be paid by the plan. The provider then “balance bills” the enrollee for what the plan did not pay. These balance bills, in some cases, impose significant financial hardship on enrollees.

The No Surprises Act contains provisions requiring limits on the enrollee’s share of an OON claim for OON emergency services, nonemergency services furnished by OON providers at certain INN healthcare facilities, and OON air ambulance services. Regarding these services, regulations generally limit cost sharing for OON services to in-network levels, requiring such cost sharing to count toward any INN deductible and OOP maximums, and prohibiting the provider from “balance billing.” Further, INN deductibles or OOP maximums must be applied in the same manner as if the participant’s cost-sharing payments were made for services by a participating provider or facility. In other words, services must be covered without regard to whether the provider of services is a participating provider or a participating emergency facility.

Lockton Comment: The surprise billing rules apply to grandfathered and non-grandfathered healthcare plans but do not apply to account-based plans (like health reimbursement arrangements or HRAs) or “excepted benefits” (such as typical flexible spending accounts, dental, vision, and appropriately structured fixed indemnity plans, or retiree-only plans). They do apply to health insurance carriers and ERISA group health plans (whether fully insured or self-funded), governmental plans not offered by the federal government, and church plans.

With this in mind, FAQ#1 confirms that, under the No Surprises Act, cost sharing for services furnished by a “nonparticipating” provider, facility, or provider of air ambulance services is considered cost sharing for benefits provided outside of a plan’s network for purposes of applying to the ACA OOP maximum limit. Similarly, cost sharing for services provided by “participating” providers is INN cost sharing for purposes of the ACA maximum OOP limit.

Lockton Comment: Under the ACA, if a plan includes a network of providers, the plan may, but generally is not required to, count an individual's OOP spending for OON items and services toward the maximum OOP limit. However, under the No Surprise rules, regulations generally limit cost sharing for OON services to in-network levels, requiring such cost sharing to count toward any INN deductible and OOP maximums. Therefore, the application of cost-sharing to the OOP maximum is dependent on whether there is a contractual relationship between the plan (or insurer) and the provider or facility. If a contractual arrangement exists (whether direct or indirect) then the provider is considered INN and cost-sharing for services counts toward the OOP maximum.

In FAQ#2, the Departments warn that they are aware that some plans and insurers have contractual relationships with providers, facilities, or providers of air ambulance services that the plans and issuers do not consider to be part of their network. In these situations, the plans and insurers “cherry pick” by treating such entities as OON for purposes of applying costs to the OOP maximum, yet as participating providers for purposes of the NSA rules.

The Departments admonish that if a plan or insurer has a direct or indirect contractual relationship with a provider, facility, or provider of air ambulance services that sets forth the terms and conditions on which a relevant item or service is provided, then the provider, facility, or provider of air ambulance services is considered participating for purposes the No Surprises Act and is also considered INN for purposes of the OOP maximum limit under the ACA. Especially, the Departments add that under no circumstance can an emergency facility providing emergency services to an enrollee be OON for purposes of the ACA’s OOP maximum limit and simultaneously be a "participating" emergency facility for purposes of the balance billing and cost-sharing protections under the No Surprises Act. This stance would appear to close a loophole that has resulted in surprise bills in situations the Act was meant to cover.

Next Steps?

Employers will want to make sure that their plans’ price comparison tool will account for facility fees because (without a written agreement to comply with the transparency rules from an insurer or TPA) the plan is responsible for compliance. Similarly, while employers have little control on how an insurer or TPA enters into agreements with provider networks, employers should ensure that their plans are administered in accordance with the above guidance on applying ACA OOP maximums when the surprise billing rules come into play. Download article (opens a new window)