The Biden Administration this month significantly relaxed several compliance obligations related to price transparency and surprise billing that have been of intense concern to the health care industry—and had already prompted litigation. While these changes, which delay implementation of statutory requirements either indefinitely or for a period of at least six months, give health plans, health care providers and pharmaceutical manufacturers more flexibility, the new federal surprise billing and price transparency laws remain poised to reshape financial management of the health care industry.
The Health and Human Services (HHS), Labor, and Treasury Departments released guidance on August 20 that delays certain compliance deadlines in the No Surprises Act (which Congress enacted as part of the Consolidated Appropriations Act, 2021, in December 2020, and prohibits “surprise” billing of patients in excess of the plan’s cost-sharing, in many emergency and nonemergency situations) and the Transparency in Coverage final rules (which the Departments published in November 2020 and require public disclosure of the prices that health plans pay for all health care items and services). In doing so, the Departments acknowledged the massive burdens imposed by No Surprises Act and that the Departments would not be able to issue essential guidance on compliance with the statutory requirements in time for plans and providers to comply by the January 1, 2022, deadline.
The most significant change may be the announcement that the Departments would not enforce the requirement, which was to be effective on January 1, 2022, that commercial health plans publicly disclose the net prices they have paid for prescription drugs. This requirement was finalized late in the Trump Administration in the Transparency in Coverage rules. The prices that health plans pay for drugs, net of rebates and other discounts they receive from manufacturers, have long been closely guarded by manufacturers and health plans. The U.S. Chamber of Commerce and the Pharmaceutical Care Management Association sued separately recently to stop the Departments from requiring the disclosure of this information. Now, the Departments say the requirement will not be enforced while they consider proposing new rules that could potentially eliminate the requirement. The Chamber of Commerce has already dropped its lawsuit.
The Departments have delayed by six months, to July 1, 2022, the rules’ requirement for health plans to publicly disclose the contracted prices they pay their in-network health care providers and the allowed amounts they will pay out-of-network providers. At least for now, the Departments have not repealed this requirement. While the delay gives health plans longer to prepare to implement the rules, it may also be an opportunity for stakeholders to lobby for further modifications. The rules have the potential to be hugely burdensome—generating mammoth data files that contain every price for every procedure code for every networked provider and that could be very hard to use in any practical way. The Departments are likely to be under pressure to limit the disclosures that are required, as well as to provide more guidance about how alternative reimbursement and contracting arrangements are to be treated under the rules. (The American Hospital Association and others have challenged corresponding rules that require hospitals to publish a complete listing of their negotiated reimbursement rates with payers, but late last year the U.S. Court of Appeals, for the D.C. Circuit upheld those rules.)
The guidance also delays and modifies several other rules:
- The Transparency in Coverage rules require health plans to have an Internet self-service tool that allows patients to check the cost-sharing for particular services, which was to be effective beginning on January 1, 2023. The No Surprises Act has a similar requirement effective on January 1, 2022. The Departments say they will defer enforcement of the No Surprises Act requirement until 2023, so that the two overlapping requirements align better.
- The No Surprises Act requires health care providers and facilities to provide a good faith estimate of expected charges for scheduled services. This was to be effective on January 1, 2022, but the Department of Health and Human Services (HHS) does not expect to issue implementing regulations by then, at least for patients that have health coverage. As such, HHS says it will not enforce the requirement as applied to insured patients until it promulgates regulations and they are applicable. HHS says it expects to issue regulations that will apply this rule to uninsured patients prior to the statutory effective date.
- The No Surprises Act has a corresponding requirement on health plans to provide an “advanced explanation of benefits” (AEOB) that would provide patients an estimate of their out-of-pocket costs for future services. The AEOB was to be triggered by and include the provider good faith estimate. The Departments say they will not promulgate regulations prior to the January 1, 2022, effective date and will not enforce the requirement until the rules are in effect.
Even with these requirements delayed, there are significant operational hurdles for plans and providers to overcome in the next few months, chief among them: implementing an independent dispute resolution process for provider-plan out-of-network payment disputes in surprise billing situations. This is scheduled to go into effect January 2022, but the Departments have not yet issued regulations explaining this process.
The Departments say other complex provisions will go into effect, even though the Departments will not issue regulations by then. These include requirements for health plans to maintain up-to-date provider directories and hold patients harmless if the plan provides incorrect provider information, and requirements that plans treat out-of-network providers as in-network providers in certain situations to ensure patient continuity of care. For provisions that will become effective before the Departments issue implementing regulations, the Departments have said plans and providers should rely on their own “good faith, reasonable interpretation” of such laws.