Consolidated Appropriations Act Signed Into Law

Article | 5 January 2021

Consolidated Appropriations Act Signed Into Law, Includes Multiple Health Care-Related Provisions

On Dec. 27, 2020, President Trump signed into law a $1.4 trillion government funding package (the Consolidated Appropriations Act, 2021) and a $900 billion COVID-19 relief bill providing critical pandemic aid and an extension of government funding through Sept. 2021. The Consolidated Appropriations Act, 2021 includes a number of health care-related provisions. This update addresses two of those provisions: ending surprise billing for emergency and involuntary out-of-network services and requiring new health plan reporting on prescription drug spending.

No Surprises Act – Ending Surprise Medical Billing

For individual and group health plans, effective for plan years beginning on or after Jan. 1, 2022, the No Surprises Act ends surprise medical bills by holding the patient harmless for out-of-network (OON) care that meets certain criteria (emergency services or certain non-emergency situations where patients do not have the ability to choose an in-network provider) and air ambulance services. This means that patients will only be responsible for applicable in-network cost-sharing amounts for the OON services received.

The legislation requires health plans to make payments to OON providers after an applicable bill is submitted, but does not specify the amount of initial payment, nor any claims requirements.  If providers dispute the payment made, the plan and provider will enter into a 30-day open negotiation period to settle the claim. If the required negotiation proves unsuccessful, then either party may initiate a binding “baseball style” arbitration process (called an Independent Dispute Resolution), with the arbitrator selecting one of the final best offers submitted by each party. The arbitrator can consider a wide range of relevant information when determining a final provider reimbursement amount but is prohibited from considering billed charges of the provider, including usual and customary charges or rates, or those paid by public programs such as Medicare, Medicaid, TRICARE or any state benefit program.

Under limited circumstances, OON providers are still permitted to balance bill patients if they give patients notice of their network status, an estimate of charges 72 hours prior to providing services, and the patient gives consent.

Price and Provider Network Transparency

The No Surprises Act includes additional provisions intended to help patients understand their potential cost responsibilities for care, as well as network status of their providers. For plan years beginning on or after Jan. 1, 2022, individual and group health plans are required to:

  • Provide patients an Advanced Explanation of Benefits (EOB) for scheduled services or items at least three days prior to treatment.
    • The Advanced EOB must include: (1) provider and/or facility network status, (2) the contracted rate based on billing/diagnostic codes submitted by the provider (for in-network providers only), and (3) good faith estimates of patient cost-sharing.
  • Offer a price comparison tool for consumers and make the information available by phone.
  • Maintain up-to-date online provider network directories.

Reporting Requirements on Pharmacy Benefits and Drug Costs

The Consolidated Appropriations Act, 2021 also creates a new reporting requirement for individual and group health plans. Beginning no later than one year after the law’s enactment, and by June 1 each year thereafter, health plans are required to report information on plan medical costs and prescription drug spending to the Secretaries of the Departments of Health & Human Services (HHS), Labor, and Treasury.

Information to be submitted includes:

  • The 50 brand prescription drugs most frequently dispensed by pharmacies for claims paid by the plan and the total number of paid claims for each such drug.
  • The 50 most costly prescription drugs with respect to the plan by total annual spending and the annual amount spent by the plan for each such drug.
  • The 50 prescription drugs with the greatest increase in plan expenditures over the plan year preceding the plan year that is the subject of the report and, for each such drug, the change in amounts expended by the plan or coverage in each such plan year.
  • Total spending on health care services including: (1) hospital, health care provider, and clinical service costs, broken out for primary care and specialty care; (2) costs for prescription drugs; and (3) other medical costs, including wellness services.
  • Any impact on premiums by rebates, fees, or other compensation paid by drug manufacturers to the plan or its administrators or service providers, including the amounts paid for each therapeutic class of drugs, and the amounts paid for each of the 25 drugs that yielded the highest amount of rebates and other compensation during the plan year.
  • Any reduction in premiums and out-of-pocket costs associated with rebates, fees, or other compensation.
  • Average monthly premium paid by employers on behalf of enrollees, as applicable, and that paid by enrollees.

HHS is then required to publish a report of aggregate prescription drug pricing trends and the impact of such spending on premiums. The first report is expected to be published 18 months after the initial health plan reports are submitted. Subsequent reports will be published biannually.

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