As promised, this is a follow-up to our first blog post on the new federal transparency requirements. In our prior post, we summarized the Hospital Price Transparency rule which went into effect on January 1, 2021, and here we discuss the transparency rules contained in the Consolidated Appropriations Act, 2021 (the “Act”), which apply to both health plans and health care providers.

Beginning January 1, 2022, the Act requires providers (individual practitioners and facilities) to send the health plan a “good faith estimated amount” of scheduled services, including any expected ancillary services and the expected billing and diagnostic codes for all items and services to be provided. This notice then triggers the health plan’s obligation to send enrollees an “Advanced Explanations of Benefits” (“AEOB”) prior to scheduled care (or upon patient request). If the patient is uninsured, the provider must send the notice directly to the patient.

The health plan must provide the AEOB by mail or electronically (based on patient preference) either within three business days of receiving a request or a notice that a service has been scheduled if the service is scheduled at least 10 business days later, or within one business day of receiving the notice if the service is scheduled within 10 business days of receipt.

The AEOB provided by the health plan to the enrollee must contain:

  1. The network status of the provider. If the provider is in-network, the health plan will need to include the contracted rate for the item or service, based on the billing and diagnostic codes sent by the provider. If the provider is out-of-network, the health plan must include a description of how the patient can obtain information on in-network providers delivering that item or service.
  2. The “good faith estimate” of expected charges, including likely billing and diagnostic codes sent by the provider.
  3. A “good faith estimate” of the plan’s payment responsibility.
  4. A “good faith estimate” of the patient’s expected cost-sharing amount.
  5. A “good faith estimate” of the amount the patient has incurred toward meeting their financial responsibility limits, such as their deductible and out-of-pocket maximums.
  6. If applicable, a disclaimer that coverage for the item or service is subject to a certain medical management technique (g., prior authorization).
  7. A disclaimer that all information included in the notice is an estimate based on the information known at the time of scheduling (or requesting) and is subject to change.
  8. Any other information or disclaimers the health plans determine is appropriate for this notice.

 

In addition to the AOEB requirement, the Act also imposes additional transparency requirements on plans and providers:

  • Online Directory: Health plans must establish and maintain an online directory listing the names of contracted providers, addresses, specialties, telephone numbers, and digital contact information. The information must be verified and updated at least every 90 days, but must be updated within two business days of receiving new information from a provider. If the health plan is unable to verify the accuracy of a provider’s information, the health plan must have procedures for removing these providers. In order to do this, providers must have a practice in place to ensure timely provision of directory information to a plan. At a minimum, the provider must submit notice to the plan each time the provider (a) begins a network agreement with a plan with respect to certain coverage; (b) terminates an agreement; or (c) makes any material changes to the content of the provider directory information.
  • Price Comparison Tools: Health plans must also maintain online price comparison tools that will allow patients to compare expected out-of-pocket costs for items and services across multiple providers. Health plans also will need to provide price comparisons over the phone.

Regulations have not yet been issued, and will be controlled by the Biden administration, which will have substantial discretion in the implementation of that Act.

In sum, the requirements of the Act, assuming they are implemented by the new administration, will enhance transparency and the patient experience, but at substantial cost.  This process change for health insurance claims will likely be extremely expensive and disruptive, and payers and providers may find themselves faced with price expectations tied to the AEOB even when facts change and there is a disclaimer that notes the inherent limitation and uncertainty of the AEOB.

 

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Photo of Edward S. Kornreich Edward S. Kornreich

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is a recognized authority on the legal, regulatory and business issues related to health care services.

Ed works primarily on health care transactions, regulatory compliance, health care payment and governance issues for varied…

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is a recognized authority on the legal, regulatory and business issues related to health care services.

Ed works primarily on health care transactions, regulatory compliance, health care payment and governance issues for varied providers (both for-profit and not-for-profit), vendors, GPOs, distributors and entrepreneurs. His approach combines sensitivity to meeting regulatory business goals with a comprehensive and realistic assessment of the health care environment, and he is particularly experienced in dealing with the complex issues related to integrated health care systems.

After working for the Legal Aid Society, Ed entered private practice, where he helped represent a major public hospital corporation in a series of reimbursement disputes with the state and federal governments, and counseled New York area hospitals and nursing homes on reimbursement and operational issues. Thereafter, Ed served as General Counsel of St. Luke’s-Roosevelt Hospital Center, one of the largest teaching hospitals in New York. After leaving St. Luke’s-Roosevelt Hospital Center, Ed joined Proskauer as a Partner in 1990.

Ed frequently writes and lectures on Medicare and Medicaid reimbursement, health care integration, not-for-profit law and corporate governance issues, and the application of federal and state anti-kickback and “Stark” laws to health care transactions.

Photo of Elizabeth (Betsy) Rosen Siegel Elizabeth (Betsy) Rosen Siegel

Elizabeth (Betsy) Rosen Siegel is an associate in the Health Care Department. Her practice focuses on representing health care clients, including hospitals, hospital systems, academic medical centers, physician organizations and other care entities. Betsy provides legal advice on a wide range of regulatory…

Elizabeth (Betsy) Rosen Siegel is an associate in the Health Care Department. Her practice focuses on representing health care clients, including hospitals, hospital systems, academic medical centers, physician organizations and other care entities. Betsy provides legal advice on a wide range of regulatory, transactional and corporate matters, including Medicare/Medicaid reimbursement, fraud and abuse compliance, managed care contracting, HIPAA and data privacy, and general corporate and business planning.

In addition, Betsy maintains an active pro bono practice, which includes representing individuals in various immigration matters and representing not-for-profit organizations on a variety of matters. Betsy also serves on the Her Justice Junior Advisory Board.

Betsy earned her J.D. from The George Washington University Law School in 2013, while also earning her graduate certificate in health policy from The George Washington University School of Public Health and Health Services. While in law school, she worked as a health insurance counselor at the George Washington University Law Health Rights Law Clinic and was a member of the Public Contract Law Journal. Betsy also served as president of the Student Health Law Association and received the American Bar Association/Bureau of National Affairs Award given to the members of the graduating Juris Doctor class who have demonstrated excellence in the study of health law. Betsy received her B.S. in health care management and policy magna cum laude from Georgetown University in 2010.