The Self Insurer December

D EC EMB E R 2 0 2 1

A S I P C P U B L I C AT I O N

SIPCONLINE.NET

FEDERAL AGENCIES CONTINUE TO ISSUE SURPRISE MEDICAL BILLING RULES, FOCUS ON ARBITRATION PROCESS

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TABLE OF CONTENTS

DECEMBER 2021 VOL 158

W W W. S I P C O N L I N E . N E T

FEATURES 4

FEDERAL AGENCIES CONTINUE TO ISSUE SURPRISE MEDICAL BILLING RULES, FOCUS ON ARBITRATION

PROCESS

By Karrie Hyatt

12

WHY WORKFORCE DEVELOPMENT MATTERS MORE

A GAME PLAN FOR FIELDING YOUR DREAM TEAM FOR 2022 AND BEYOND

THAN EVER

By Bruce Shutan

ARTICLES 18

ACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES THE AFFORDABLE CARE ACT (ACA), THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 (HIPAA) AND OTHER FEDERAL HEALTH BENEFIT MANDATES

34 INGREDIENTS FOR A SUCCESSFUL 2022:

A RECIPE FOR SELF-FUNDED PLAN SPONSORS

26

THE CYBER LIABILITY INSURANCE MARKETPLACE, CAPTIVES, AND THE GAO

42

NEWS FROM SIIA MEMBERS

The Self-Insurer (ISSN 10913815) is published monthly by Self-Insurers’ Publishing Corp. (SIPC).

Postmaster: Send address changes to The Self-Insurer Editorial and Advertising Office, P.O. Box 1237, Simpsonville, SC 29681,(888) 394-5688

Self-Insurer’s Publishing Corp.

PUBLISHING DIRECTOR Erica Massey, SENIOR EDITOR Gretchen Grote, CONTRIBUTING EDITOR Mike Ferguson, DIRECTOR OF OPERATIONS Justin Miller, DIRECTOR OF ADVERTISING Shane Byars, EDITORIAL ADVISORS Bruce Shutan and Karrie Hyatt, 2018 Self-Insurers’ Publishing Corp. Officers James A. Kinder, CEO/Chairman, Erica M. Massey, President, Lynne Bolduc, Esq. Secretary

DECEMBER 2021 3

F E AT U R E

FEDERAL AGENCIES CONTINUE TO ISSUE SURPRISE MEDICAL BILLING RULES, FOCUS ON ARBITRATION PROCESS Written By Karrie Hyatt

S

ince the first interim final rule (IFR) for the No Surprises Act on payment methodologies was released in July, the Departments of Health & Human Services, Labor, and Treasury, (the federal departments) have followed up with further guidance, issuing both a notice of proposed rulemaking (NPRM) focused on air ambulance provisions, and a second IFR on the arbitration process.

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THE SELF-INSURER

BACKGROUND

The No Surprises Act was passed by Congress last December as part of the Consolidated Appropriations Act of 2021 and goes into effect on January 1, 2022. The law is meant to protect consumers from the most pervasive types of surprise “balance” billing in certain out-of-network situations by limiting the amount of the bill to the cost-sharing they would have paid if the care had been from an in-network providers. The No Surprises Act seeks to protect patient consumers while prohibiting providers from surprise billing in situations where patients do not have the ability to choose an in-network provider.

Surprise Medical Billing Rules SIIA has been actively engaged on this policy during congressional consideration, and throughout the federal rulemaking process. Since the passage of the No Surprises Act, SIIA has taken steps to be at the forefront advocating for its self-insured members. Prior to the release of the first IFR, SIIA issued a comment letter outlining a number of policy recommendations surrounding arbitration, arbiter qualifications, and payment factors.

The first IFR was concerned primarily with qualifying payment amounts (QPA) and Employee Retirement Income Security Act (ERISA) preemption of state surprise billings laws. There was a sixty-day comment period on the first IFR release, which SIIA used to urge for further clarifications, especially regarding self-insurance plans.

AIR AMBULANCES AND MORE

In September, the federal departments released a NPRM, titled “Reporting Requirements Regarding Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement.” This release set-up data collection for these subjects for further research and clarification.

Protecting patients against surprise, and high cost, air ambulance charges is one of the key components of the No Surprises Act. When a patient requires an emergency airlift to a hospital, they don’t have the opportunity to find an in-network provider.

The No Surprises Act bans surprise bills for out-of-network patients using air ambulances and limits the amount patients pay out-of-pocket, but there is little data on the actual costs involved.

The NPRM outlines data collections requirements related to transportation and medical costs, payor data, and data on claims and claims denial. Under the NRPM, HHS and the Department of Transportation would be required to produce a comprehensive report on air ambulance services in the next year.

The NPRM would also require an insurance issuer, prior to finalizing an individual’s coverage, to disclose direct and indirect agent and broker compensation associated with enrollment, as well as reporting that information to HHS. This proposed rule also affects agents and brokers selling individual market plans and says little about self-insured plans. More information is expected to come.

Under the NPRM, States are the primary enforcers of the new requirements, as it pertains to issuers, providers, facilities, and air ambulances.

At this time, ground ambulances are not included in the No Surprises Act, but it is predicted that the legislature will look to amend the law in the future.

DECEMBER 2021

5

Surprise Medical Billing Rules INDEPENDENT DISPUTE

costs of the IDR process be minimized, and to some extent fees are limited.

RESOLUTION/ARBITRATION PROCESS

As expected, the Phase II IFR, released September 30, pertained to the independent dispute resolution (IDR) and arbitration process for the No Surprises Act. It describes in detail the dispute resolution process between provider and insurer. It also issued guidance for individuals that do not have an insurance plan or prefer not to be billed through their insurance plan.

Prior to the release of the Phase II IFR, SIIA submitted a comment letter on July 30 outlining industry recommendations to the federal departments. The letter was informed by nearly 32 member companies involved in the SIIA Price Transparency Working Group.

One key recommendation from SIIA was that the arbitration process be “predictable and consistent acrossthe-board.” Overall, the process laid out by the federal departments meets that requirement.

The SIIA letter also addressed concerns that the

SIIA’s letter emphasized the first IFR’s ruling about ERISA exemptions from individual state surprise billing law unless the insurer opts-in to the state’s process, and stressed that a federal arbiter should not be permitted to look at decisions from or precedents set by individual state’s surprise billing law. Arguing that ERISA precludes a federal arbiter from taking into consideration any decision produced through a state law.

While the first IFR addressed how the qualifying payment amount (QPA) would be determined, SIIA’s follow-up letter addressed how the QPA should be used in an arbitration process. SIIA argued that the QPA should be the primary factor when determining a final payout amount and that any additional circumstances should be considered secondary to the QPA. The IFR agreed, stating that “the presumption that the QPA is the appropriate … amount.” If the arbiter decides using the additional circumstances factor, they must clearly demonstrate the reasoning behind the decision.

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Surprise Medical Billing Rules Lastly, the letter requested that any federally designated arbiters should be thoroughly vetted, particularly concerning arbiter conflicts of interests and background expertise in the healthcare field. The CMS website has already listed requirements for federal arbiters and began accepting applications on November 1.

Applying organizations are required to demonstrate expertise in arbitration and claims administration, managed care, billing and coding, and healthcare law. Organizations must be accredited by a nationally recognized arbitration organization. Entities submitting applications must also supply a conflict of interested attestation, as well as policies concerning internal controls to hold fees, HIPAA-related confidentiality processes, internal controls for reporting compliance, and procedures to ensure subcontractor compliance.

Either party in a dispute, the insurance plan or the healthcare provider, can petition the federal departments to deny the application of a potential arbiter or can request that the certification of a federal arbiter be revoked.

STEP-BY-STEP GUIDE TO THE PROCESS

The IFR lays out a detailed plan for the IDR/arbitration process which includes direct party negotiations, for entering into the arbitration process, and for choosing an arbiter. Much of the process will be conducted through a federal website portal developed for the No Surprises Act.

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Surprise Medical Billing Rules

When a provider receives an initial payment or notification of denial of payment from the insurance plan, they have 30 days to open formal negotiations with the plan.

They begin the 30-day negotiation period by sending Open Negotiation Notice to the insurance plan, the date of issuance begins the 30-day period. When the open negotiation period ends without a resolution, either party can initiate the arbitration process and they have four business days to do it.

To begin the arbitration process, the initiating party needs to send a Notice of IDR Initiation to the other party, as well as submit notification to the federal website portal.

Date of receipt on the portal begins the process. A recognized federal arbitration organization must be chosen within three days of that date by both parties. If the parties can’t agree, an arbiter will be assigned within six days. At the time of the selection of the arbitration entity, each party must pay a $50 non-refundable fee.

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Within ten business days of the selection of an arbiter, both parties must submit a set of information to the IDR entity as well as the organization’s fee, which is listed on the federal website portal. The information that needs to be submitted by each party includes an “offer” for the out-of-network payment in both the dollar amount and as a percentage of the QPA, as well as a QPA for the applicable year. In addition, providers must submit information regarding the size of the practice by number of employees and whether the provider delivers specialty medical care. The insurance plan needs to submit information regarding their

Surprise Medical Billing Rules

coverage area, the QPA geographic area, and whether the plan is fully insured or self-insured.

The parties can continue to negotiate the payment after the IDR process has begun and if an agreement is reached then the IDR process will be discontinued. If no agreement is reached, the parties will be beholden to the arbiter’s decision.

The IDR decision must be based on the QPA. It is the primary factor on which the arbiter will base their decision. The arbiter must assume that the QPA represents a reasonable, market-based payment and must consider the “offer” closest to it to be the correct amount to pay. The arbiter’s role is not to determine if the QPA has been correctly calculated, but only to consider the information submitted by both parties.

The IDR decision must include a written statement submitted to the website portal that includes the underlying rationale for their decision, particularly if the decision sets the payment above the QPA. After the IDR decision is made, the successful party will have their service fee refunded. The losing party will not.

SIIA released a statement on the Phase II IFR that said about the IDR process,

“This new IFR on arbitration strikes the correct balance between providers and self-insured plan sponsors, while also following the directives from Congress. The federal agencies should be commended for their work on these rules, which will protect patients and their families for years to come.”

While the July 1 and September 30 IFRs addressed major issues in the No Surprises Act, there are still more policymaking and rules to clarify to come in the coming months and year.

Karrie Hyatt is a freelance writer who has been involved in the captive industry for more than ten years.

More information about her work can be found at: www.karriehyatt.com.

The arbiter is allowed to consider additional criteria that may lead to a higher payment than the QPA. Some of the criteria that can be considered is level of training and experience of the provider; quality and outcome measurements; complexity of service; market share held by the provider in the region; and contracted rates over the prior four years. The arbiter cannot use Medicare rates as a basis for their decision, and are not allowed to consider a provider’s usual or “billed” charges, or past arbitration decisions as precedent.

However, the arbiter can consider a QPA based on Medicare multiples if that is used as part of the plan payment.

DECEMBER 2021

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F E AT U R E

Why Workforce Development Matters More Than Ever

A GAME PLAN FOR FIELDING YOUR DREAM TEAM FOR 2022 AND BEYOND

A A

s a former athlete who played basketball and softball, active SIIA member Kari Niblack can’t help but make a sports analogy when explaining the growing importance of workforce development. In a business world that has undergone seismic change from Covid-19, the CEO of ACS Benefit Services says it’s now more important than ever to field the right team of employees, managers and executives.

This is especially true as organizations head into the 2022 season with uncertainty about when the pandemic and supply chain difficulties finally will end, as well as how the Great Resignation will affect their talent-management efforts.

Written By Bruce Shutan

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Companies in the self-insurance and alternative risk-transfer space aren’t immune to these challenges during an unprecedent time. There isn’t a playbook for dealing with fallout from the pandemic; rather, strategies are unfolding in real time. And those who win the talent war obviously will see that victory translate into lasting success.

Workforce Development

“You need to know who are your starting five are and have a great bench,” says Niblack, a point guard in her youth who learned how to see the entire floor of a basketball court and line up teammates in the right position before each play. She parlayed that skill into running her own company, a leading third-party administrator that she founded in 1982. “Those lessons as Kari Niblack an athlete very much parlay into my coaching and mentoring philosophy as a CEO. Great leadership requires action. It’s an opportunity to lead by example and commit to that dual partnership.”

Niblack presents on this hot topic at an early December gathering of industry leaders and innovators. Her talk is one in a series of informal discussions that SIIA produced for a unique crowdsourcing event where attendees are encouraged to share their ideas, commentary and potential solutions for top-of-mind challenges.

Apart from assembling the best possible mix of talent, she’s adamant about the need for versatile star players who not only understand the company playbook, but also can play multiple positions and avoid operating in silos. On a gridiron, she says it would translation into an ability to simultaneously run and throw a touchdown, as well as kick a field goal.

HOW TO MOTIVATE TEAMMATES Corporate leaders, however, will not taste success without finding a way to motivate their people on an individual basis and collectively as a team. To keep employees motivated, leaders must involve them in the company’s innovation. Niblack shares company wins early and often via a “Ring the Bell” forum where a momentum shift and heightened energy can be felt across the organization. Individual success is also shared.

“I passionately believe that culture drives workforce development,” she explains. “Those two are not mutually exclusive, especially with all of the things that are triggering worker burnout, employer resentment and career re-evaluation that we are seeing in real time across our industry.”

She likens culture to a contact sport that’s mission critical for attracting and retaining top-notch talent. When the culture conversation first started decades ago, it was about making healthy snacks and food choices available at work, setting up a game room or offering glitzy swag.

“That doesn’t cut it anymore,” she warns, noting that it should be visible at all levels, and openly shared with clients and partners. “There is so much more that we have to do to cultivate an environment that promotes employee engagement. It is a 24/7 commitment.”

Today, she notes that it’s about implementing much larger strategies.

They include anything from setting a theme and detailing how to win over clients, to sharing vision and passion and establishing key performance indices.

The effort trickles down from the top to bottom with a need for teaching employees the basic level of their business, and giving them an opportunity to learn, give back and have an open dialogue about what they’re needing.

But mentoring also can have a reciprocal effect. Athletes and coaches, for example, can make one another better by having an open dialogue, listening to constructive feedback and sharing expectations of what’s needed on a particular game day. And that makes the team more successful, Niblack says.

It’s the same for corporate leaders.

“There should be a give-andtake, where both people are expanding their knowledge of each other and whatever DECEMBER 2021 13

Workforce Development

the business topic is,” she notes, “whether that is a particular team-based issue that the mentoring is addressing, broader life skills or how to network.”

DIVERSITY’S DIVIDEND If done right, mentoring can be priceless and lead to new ideas, which she says is where the diversity element comes into play. When people from different backgrounds and career levels are brought together and empowered, she believes it will create a meaningful teaching environment that heightens and escalates innovation. Whether it’s in-person, remote, or hybrid, she says that type of setting within the workplace must feel like everyone has an equal stake.

At the same time, Niblack believes it’s imperative for leaders to protect the health and wellbeing of their employees both in and outside of the workplace. Another key ingredient to successful workforce development is developing a culture that places a premium on giving back to the local community.

For example, her firm sponsored during the pandemic a virtual Toys for Tots campaign with the United States Marine Corps. “It’s fun to get the Santa list from the kids,” she reports, adding that providing these opportunities fosters a sense of corporate pride.

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Niblack has made an effort to informally enhance her level of candor with employees in building a culture of caring, which sometimes includes showing vulnerability. This has enabled her to build on trust and strengthen workplace bonds, which ties into recruiting, mentoring and succession planning.

With regard to the last point, she says investing in youth will keep succession pathways clear and establish leadership pipelines.

“We have had to treat this as a business issue that needs a lot of attention and resolution, and love and care,” she explains.

MATCH-BASED RECRUITING Developing the best possible workforce pre-dates any hiring. Match-based recruiting that spells out in great detail what’s required in a specific position is essential for business success, according to Niblack. It’s also critical that leaders secure employee buy-in by learning what makes the workforce happy and drives motivation at both the individual and group level.

In addition, expectations for successful performance must be set – a conversation that should come easy for leaders who are committed to being more responsive to the needs of their employees.

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Workforce Development

“The more I share at the very beginning with a prospective candidate, the better they serve us,” she says, adding that connecting with employees on an emotional level allows for a more personal touch that will improve productivity and retention.

Niblack passionately believes that a diverse team with broader life experiences help companies seed new ideas, execute their strategy and better serve customers. Leaders who demonstrate compassion, empathy and equity will be the beneficiaries of a more inclusive and resilient workforce, she points out. More diverse input from an inclusive workforce also fosters crosscollaboration, drives communication and a higher level of product or service innovation. Another discovery of hers is that it drives operational efficiency, which may appear to be contrary to what people thought in the past.

Gathering together 10 people from different departments to solve a particular business issue never would have happened earlier in her career. And yet today she finds herself consistently pursing that approach, whether it’s in-person or remote, and the end results are dynamic.

“Technology allows us to do that anywhere in

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the country,” she says.

Noting how Corporate America has experienced a complete rebirth during the pandemic, Niblack says extreme flexibility and heightened responsiveness are required in an increasingly competitive marketplace as leaders strive to understand an evolving economy. She notes that strong connectivity across all stakeholders is necessary as organizations use data and evidence-based practices to gain efficiency and remove barriers to professional development.

With as many as 41% of employees nationwide seeking new employment opportunities, according to Microsoft’s 2021 Work Trend Index, Niblack believes that employee turnover has affected everyone in the self-insurance community.

“As the Great Resignation continues to impact the labor market, particularly the health care industry, it is imperative that leaders adapt to facilitate positive change within their organizations,” she suggests.

Ms. Niblack will be moderating the workforce development session at the SIIA Crowdsourcing Forum Dec 6-8th. Please visit www.siia.org for more information and registration.

Bruce Shutan is a Portland, Oregon-based freelance writer who has closely covered the employee benefits industry for more than 30 years.

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A QQ& A

ACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES:

PRACTICAL

T

&

he Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other federal health benefit mandates (e.g., the Mental Health Parity Act, the Newborns and Mothers Health Protection Act, and the Women’s Health and Cancer Rights Act) dramatically impact the administration of self-insured health plans. This monthly column provides practical answers to administration questions and current guidance on ACA, HIPAA and other federal benefit mandates.

Attorneys John R. Hickman, Ashley Gillihan, Carolyn Smith, Ken Johnson, Amy Heppner, Ellie Studdard, Laurie Kirkwood, and Earl Porter provide the answers in this column. Mr. Hickman is partner in charge of the Health Benefits Practice with Alston & Bird, LLP, an Atlanta, New York, Los Angeles, Charlotte, Dallas and Washington, D.C. law firm. Ashley, Carolyn, Ken and Amy are senior members and Earl Porter is an associate in the Health Benefits Practice. Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner’s situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. Readers are encouraged to send questions by E-MAIL to Mr. Hickman at john.hickman@alston.com.

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2021: A TUMULTUOUS YEAR IN REVIEW As we wind-down 2021 with an eye toward 2022 compliance we are faced with the most significant changes to employer health benefits since the Affordable Care Act. In addition to ongoing COVID relief provisions we are faced with new “surprise billing” and transparency requirements that will begin to kick-in as plans renew for the 2022 year.

Below we provide an overview of the most significant changes we face from 2021.

Reference is made to our prior articles for a more complete discussion on most issues.

Supreme Court Affordable Care Act Decision: In June, the Supreme Court ruled on a case (again) challenging the Constitutionality of the Affordable Care Act (ACA).

The Court quickly dispensed with the decision, holding that the plaintiffs did not have standing to challenge the law. Because the opinion turned on the threshold issue of standing, the Court did not address the merits of the challenge.

Thus, we may never know whether stripped of its tax provision, the “penalty-less coverage requirement” rises to the level of an unconstitutional “mandate”. So it’s business as usual with regard to ACA requirements including ACA reporting and the so-called employer “pay or play” requirement.

Outbreak Period Guidance: In 2020 plans were faced with the COVID Outbreak period requirement and a 1 year “tolling” of certain time deadlines. Agency guidance from February 2021, EBSA Disaster Notice 2021-01, clarified the application of the statutory 1-year limitation.

Notice 2021-01 provides that 1-year limit does not apply to the Outbreak Period itself, but rather applies to each individual’s specific time period. Thus, individuals and plans with timeframes that are subject to the “tolling period” relief will have the applicable periods disregarded until the earlier of (i) 1 year from the date they were first eligible for relief or (ii) 60 days after the announced end of the National Emergency (the end of the Outbreak Period). In no case will a disregarded period exceed 1 year.

Once the Outbreak Period ends for a particular action, plans may resume counting when determining the due date for that action. The IRS provided further clarification with regard to certain tolled COBRA premium requirements in Notice 2021-58.

COVID-19 Testing & Vaccination Coverage: The Centers for Medicare & Medicaid Services (CMS) issued new FAQs in early 2021 covering COVID-19 testing and vaccinations. Plans may not impose medical screening criteria to deny or impose cost sharing for individual diagnostic testing on asymptomatic individuals. Plans are required to cover testing provided through governmental administered testing sites as well as point-of-care tests, but are not required to cover testing for public health surveillance or employment purposes.

Plans are also required to cover, without cost sharing, all approved vaccines within 15 business days after their recommendation. This includes covering the vaccine administration fee, even where the government or another party pays for the vaccine itself.

Agencies will take no action concerning the 60-day advance notice requirement for changes to a summary of benefits and coverage (SBC) relating to the vaccine as long as notice is provided as soon as reasonably practicable.

Employers may offer vaccines through an employee assistance program (EAP) and it will not be considered to provide “significant benefits in the nature of medical care,” allowing the EAP to qualify as an excepted benefit under the ACA. Excepted benefit status also exists for vaccines provided through onsite clinics.

Health Plan COVID-19 Vaccine Incentives: The primary benefits concern in offering COVID-19 vaccination incentives (or surcharge) through an employer health plan arises under the HIPAA nondiscrimination rules for wellness programs. If the wellness program is considered to be health contingent, then limits on the “reward” and other requirements apply.

Health contingent wellness programs are those that provide rewards in exchange for either (i) achieving a specific heath outcome (“outcome-based”) or (ii) completing a health-related activity (“activity based”). Agency guidance has confirmed that a health plan reward/ surcharge based on vaccination status will be subject to the HIPAA requirements. See Agency Faqs 50.

Requirements for a HIPAA nondiscriminatory health contingent program include:

DECEMBER 2021 19

•

The total reward cannot exceed 30% of the total costs of single coverage (or family coverage if dependents are allowed to participate)

•

Participants must be permitted to re-qualify for the reward at least once per year

•

The program must be available to all similarly situated individuals

•

Participants must receive notice that a reasonable alternative will be provided (e.g., if they cannot achieve the standard due to a health condition); and

•

The program must be reasonably designed to promote health or prevent disease

Additional vaccine incentive guidance was published by the EEOC in May 2021, which clarified that providing incentives to employees for verifying that the employee or the employee’s family received a vaccination from a third party that has not been engaged by the employer to provide the vaccine does not constitute a disability related inquiry or a request for the employee’s genetic information that would otherwise be subject to the the American With Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA).

The guidance also covers incentives for employees and employee’s families receiving COVID-19 vaccinations from an employer or employer’s agent. For employees, a vaccine screening questionnaire is a disability related inquiry triggering the ADA. However, the questionnaire for employees does not trigger GINA since the medical screening questions do not inquire about genetic information of the employee.

Vaccination incentives can be offered, but under the guidance, incentives, including both rewards and penalties, cannot be “so substantial as to be coercive.” The guidance does not provide parameters for what size of an incentive would be so substantial as to be coercive.

For employee’s families receiving vaccines from an employer or employer’s agent, vaccine screening questions do seek genetic information in the form of family medical history of the employee, and thus incentives for vaccination of the employee’s family members are prohibited under GINA. Vaccinations may still be provided to family members without incentives if certain conditions are met.

HIPPA – HITECH Cybersecurity Amendment: H.R. 7898 was signed into law on January 5, 2021 and amends the HITECH Act. This amendment directs the Office for Civil Rights to consider “recognized security practices” implemented by covered entities to prevent cyber security threats when accessing fines for violations, conducting audits, and determining remedies for potential violations during settlement agreements.

Recognized security practices must be adequately demonstrated by the covered entity or business association and have been in place for at least the previous 12 months. Covered entities should ensure that a HIPAA Security Risk Assessment

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has been recently performed and documented, and they must determine that adopted recognized security practices are consistent with the HIPAA Security Rules.

AMERICAN RESCUE PLAN ACT OF 2021 (ARPA)

Temporary COBRA subsidy: ARPA provided a 100% COBRA premium assistance subsidy for the period April 1, 2021 to September 30, 2021. The subsidy applied to qualified beneficiaries, including qualified beneficiary spouse and dependents (referred to as “assistance eligible individuals” or AEIs), whose original COBRA qualifying event was an involuntary termination of employment or a reduction in hours of employment.

To be eligible for the COBRA subsidy, an AEI could not be eligible for other group health plan coverage or Medicare.

AEIs whose qualifying event occurred prior to April and that had yet to elect were offered a 2nd election opportunity if their COBRA period extended into the subsidy period ending September 30, 2021.

Generally, employers with plans subject to federal COBRA, whether fully insured or self-funded, advanced the subsidy and will recoup the advanced premium through tax credits against the employer’s Medicare payroll tax obligations, on Form 941 or Form 7200.

Retaining AEI attestation forms to verify an ARPA eligible event (involuntary termination of employment or reduction in hours) and that there is no other disqualifying coverage is a best practice for employers in the case of an audit.

Temporary Increase for DCAPs: For the 2021 taxable year, ARPA temporarily raised the amount that an employee can exclude from gross income for DCAP

benefits, increasing from $5,000 to $10,500. This increase is set to expire absent further Congressional action.

Thus, ARPA does not extend to 2022. At present, any unused DCFSA amount from 2021 that remains available for use in 2022 will be subject to the prior $5,000 limit.

Any expenses over the $5,000 limit become taxable in 2022. In Notice 2021-26, the IRS provided guidance as to how the ARPA increase integrated with the other DCAP carryover provisions allowed under CAA 2021 (see below).

CAA 2021 Temporary Relief for Cafeteria Plans, Health FSAs and DCAPs The 2021 Consolidated Appropriations Act (CAA) allows employers to amend cafeteria plans for plan years ending in 2021 to allow health plan election changes without a corresponding change in status event Health FSAs and DCAPs to carry over unused benefits from (i) a plan year ending in 2020 to a plan year ending in 2021, and (ii) a plan year ending in 2021 to a plan year ending in 2022. Alternatively, the CAA allows a health FSA or DCAP to extend its 2 ½ month grace period for a plan year ending in 2020 or 2021 to 12 months after the end of the plan year with respect to unused benefits.

The CAA also temporarily expanded eligible DCAP dependents to age 13 for unused DCAP grace period amounts from the 2020 plan year or carryover funds carried over into the 2021 plan year. The IRS provided guidance with regard to these temporary provisions in IRS Notice 2021-15.

CONSOLIDATED APPROPRIATIONS ACT OF 2021 No Surprises Act (NSA) – Surprise Billing: These provisions dramatically change the way that certain emergency and additional (e.g., ancillary) health benefits are administered and requires changes beginning with plan years on and after January 1, 2022. It is applicable to all plan sponsors, including grandfathered and nongrandfathered health plans, and TPAs. However, it does not apply to excepted benefits (e.g., most health FSAs) or retiree health plans.

Under the NSA, plan participants’ and beneficiaries’ financial obligations are limited to in-network (INN) cost sharing (deductibles, co-payments, and co-insurance) for services provided by an out-of-network (OON) provider in three instances:

(i)

Emergency services at a hospital’s Emergency Department (ED), including a hospital outpatient department, or at a freestanding ED;

(ii)

“Ancillary” services that are provided by an OON provider at an INN facility, including services provided by an OON provider because there is no INN provider who can furnish the service at the facility;

(iii)

Non-emergency services performed by an OON provider at an INN facility, unless the OON provider gives the patient notice and the patient consents to using the OON provider (consent is unavailable for emergency or ancillary services).

For emergency services, if a plan covers any benefits for services in an ED of a hospital or emergency services in a freestanding ED: (1) plans cannot impose prior authorization requirements on emergency services (whether INN or OON); (2) plans must cover emergency services even if the provider or facility is OON; (3) if the services are provided by an OON provider or facility, the plan cannot impose any requirement for prior authorization or any limitation on coverage that is more restrictive than the requirements that apply to in-network emergency services; and (4) plans must cover emergency services without regard to any other term of condition of coverage, other than an exclusion or coordination of benefits or a permitted affiliation or waiting period Additionally, plans must count participant cost-sharing for these OON services in the same manner as INN cost-sharing (e.g., counting the cost-sharing against any in-network deductible or out-ofpocket amount). In applying the plan’s INN cost-sharing provisions to these OON services, the “recognized amount” is generally the qualifying payment amount, as defined by the NSA or the billed charge if lower.

Finally, providers may not balance bill patients for the amount exceeding INN cost sharing for the OON services.

Health plans are required to make initial payment to the OON provider or issue initial denial of claims within 30 days.

The Act also creates an Independent Dispute Resolution (IDR) process for disputes arising between providers and plans. The IDR arbitration process applies where no existing state law providing equal or greater protection to patients is applicable.

DECEMBER 2021

21

The IDR process includes a 30-day cooling-off period after the initial payment/denial is received to allow the parties to negotiate. If no agreement is reached, either party may submit the dispute to the IDR process. IDR is a “baseball style” arbitration, where each side submits a payment offer and the arbitrator chooses between the two.

In general, the IDR arbitrator can consider any factors submitted by either party in making its decision, with some limited exceptions. For example, the arbitrator may not consider usual and customary charges, billed charges, or the governmental rate (e.g., Medicare). The losing side pays the costs of arbitration. Similar payment and dispute resolution rules apply to air ambulance services, but not ground ambulance.

No Surprises Act - Disclosure and Transparency Rules: A number of disclosure and transparency provisions are included in the NSA, imposing new requirements on health plans. The tri-agencies (CMS/DOL/Treasury) issued the Transparency in Coverage (TiC) Final Rules setting forth requirements for group health plans and health insurers under the ACA. The final rule applies to group health plans and group health insurance issuers who are otherwise subject to the ACA health insurance reforms. The final rule is not applicable to HRAs (Integrated HRA, ICHRA and QSEHRA) or grandfathered plans.

On August 20, 2021, the Agencies jointly released FAQs providing clarification for the various requirements of the TiC and the NSA, including extending certain effective dates. The new disclosure and transparency requirements include: •

Continuity of Care – When a provider leaves a plan’s network, the plan must provide participant notice of INN network provider’s termination. The plan must then allow coverage for certain services by the same provider as if the provider were still INN for a continuation period of up to 90 days. This continuation coverage applies where an individual is undergoing a course of treatment for serious and complex conditions, institutional or inpatient care, scheduled non-elective surgery, pregnancy, or care for a terminal illness.

(Effective for Plan Years on/ after 01/01/2022).

•

Price Comparison Tool – Maintain price comparison tools available online and over the phone. (Effective for Plan Years on/after 01/01/2023 for most common expenses, and 01/01/2024 for all covered expenses).

•

•

22

Advanced Explanation of Benefits (EOB) – Provide an advanced explanation of benefits before scheduled care, including information such as the estimates of cost-sharing and the amount the plan will pay for the service, how much the patient has already incurred toward financial limitations in the plan, and whether the provider is in-network or OON. (Originally effective 01/01/2022, but deferred enforcement until regulations implementing requirements are issued).

Provider Fee Disclosure and Notice – Providers must provide notice of scheduled services/treatments and good faith estimates of costs to plans/ insurers. (Originally effective 01/01/2022, but deferred enforcement until regulations implementing requirements are adopted).

THE SELF-INSURER

•

MHPAEA Parity Analysis – discussed in detail below.

•

Compensation Disclosure – discussed in detail below.

Other disclosure and transparency requirements include deductible disclosure requirements for identification cards, provider directory requirements, a prohibition on gag clauses in agreements between plans and a third party, prescription drug cost reporting, machine readable disclosure of rates.

MHPAEA Parity Analysis: The Mental Health Parity and Addiction Equality Act (MHPAEA) requires parity between certain aspects of medical/surgical (Med/Surg) benefits and mental health/ substance use disorder (MH/SUD) benefits. Generally, nonquantitative treatment limitations (NQTLs) cannot apply any more stringently to MH/SUD benefits than they apply to Med/Surg benefits. NQTLs are non-numerical/ non-dollar limits on the duration or scope of benefits, such as requiring medical necessity and prior authorization. Parity must not only be on the face of the plan but also in operation.

The CAA requires the performance and documentation of a comparative analysis of the plan’s or policy’s design and application of NQTLs showing MHPAEA compliance. The five-part NQTL analysis is required to include: •

Identification of the NQTLs

•

Factors considered in the design of the NQTL

•

Evidentiary standards and sources used to develop the factors

•

A comparative analysis of the NQTLs as written and in operation

•

Findings and conclusions establishing compliance with the MHPAEA requirements

The Agencies are required to provide further guidance on MHPAEA compliance through a “compliance program guidance document” issued within 18 months of enactment. With the regulatory guidance is still in the works, the DOL has issued several useful tools with regard to NQTLs, including a self-compliance tool and a list of MHPAEA NQTL warning signs.

Agencies, state regulators, and participants can all request this written analysis, and the written analysis must be available, upon request, within 45 days after enactment of the CAA on February 10, 2021. If an agency finds the plan is non-compliant then there is a 45 day “cure period.” If not cured in that period, the agency will notify all enrolled in the plan of the plan’s noncompliance.

The goal of this requirement appears to be one of better overall compliance.

Violations of MHPAEA under ERISA are limited to what is known as “equitable relief.”

That can include requiring a plan to reprocess claims if they were improperly denied or not fully reimbursed because of a noncompliant NQTL. There is currently, however, no civil monetary penalty for MHPAEA violations under ERISA. Pending legislation would amend ERISA to impose civil penalties for MHPAEA noncompliance.

Compensation Disclosure Requirement: Effective for contracts or arrangements entered into (or extended) after December 27, 2021, brokers and consultants will be required under an amendment to §408(b)(2) of ERISA to make disclosures if they receive $1,000 or more in total annual direct and indirect compensation.

This requirement covers group health plans, including excepted benefits like standalone dental and vision, Health FSAs, certain EAPs, on-site clinics (except those limited to rendering first aid to employees during working hours), as well as HRAs. The categories of required disclosures mirror regulatory requirements applicable to retirement plans since 2012.

Direct compensation is compensation from the plan itself. Indirect compensation is generally amounts received from anyone other than the covered plan, the plan sponsor, the service provider, or an affiliate of the service provider.

If the only compensation that a service provider receives derives directly from the employer, then disclosure is not required. Thus, careful analysis should be done as to whether plan assets are involved in the compensation amount.

Do you aspire to be a published author?

We would like to invite you to share your insight and submit an article to The Self-Insurer! SIIA’s official magazine is distributed in a digital and print format to reach 10,000 readers all over the world.

The Self-Insurer has been delivering information to top-level executives in the self-insurance industry since 1984.

Articles or guideline inquires can be submitted to Editor Gretchen Grote at ggrote@ sipconline.net The Self-Insurer also has advertising opportunties available. Please contact Shane Byars at sbyars@ sipconline.net for advertising information.

Disclosures must be made to the responsible plan fiduciary “reasonably in advance’ of the date of entering into, extending, or renewing any contractor arrangement. If disclosures are not provided, plan fiduciaries must take a series of actions including ultimately notifying DOL and terminating the service provider in order to avoid a prohibited transaction under ERISA section 406.

DECEMBER 2021

23

Updated Health Plan COLA Provisions Many of the 2021 benefit amounts have been updated for cost of living adjustment (COLA) changes. We include some of the more frequently inquired about amounts below.

BENEFIT HSA contribution max (including employee and employer contributions)

2021 $3,600 ($7,200 family)

2022 $3,650 ($7,300 family)

HSA additional catch-up contributions

(Rev. Proc. 2020-32) $1,000 (this is not indexed)

(Rev. Proc. 2021-25) Same

HDHP annual deductible minimum

$1,400 ($2,800 family)

Same

Limit on HDHP OOP expenses

(Rev. Proc. 2020-32) $7,000 ($14,000 family)

(Rev. Proc. 2021-25) $7,050 ($14,100 family)

ACA limit on OOP expenses

(Rev. Proc. 2020-32) $8,550 ($17,100 family)

(Rev. Proc. 2021-25) $8,700 ($17,400 family)

Health FSA salary reduction max

$2,750

2850

Health FSA carryover max

$550

570

Limit on amounts newly available under an Excepted Benefit HRA

$1,800

Same

QSEHRA max reimbursement

$5,300 ($10,700 family)

(Rev. Proc. 2021-25) 5450 (11,050)

Transit and parking benefits

$270 (monthly)

280

401(k) employee elective deferral max

$19,500 (Catch-up contributions $6,500) $130,000 (applies for 2022 plan year under look-back rule) $185,000

$20,500 (Catch-up contributions $6,500) $135,000 (applies for 2023 plan year under look-back rule) $200,000

Highly compensated employee Key employee

24

THE SELF-INSURER

What are clients saying about our EmCap® program?

“You have become a key partner in our company’s attempt to fix what’s broken in our healthcare system.”

- CFO, Commercial Construction Company

“Our clients have grown accustomed to Berkley’s high level of customer service.”

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“The most significant advancement regarding true cost containment we’ve seen in years.”

- President, Group Captive Member Company

“EmCap has allowed us to take far more control of our health insurance costs than can be done in the fully insured market.”

- President, Group Captive Member Company

“With EmCap, our company has been able to control pricing volatility that we would have faced with traditional Stop Loss.”

- HR Executive, Group Captive Member Company

People are talking about Medical Stop Loss Group Captive solutions from Berkley Accident and Health. Our innovative EmCap® program can help employers with self-funded employee health plans to enjoy greater transparency, control, and stability.

Let’s discuss how we can help your clients reach their goals.

This example is illustrative only and not indicative of actual past or future results. Stop Loss is underwritten by Berkley Life and Health Insurance Company, a member company of W. R. Berkley Corporation and rated A+ (Superior) by A.M. Best, and involves the formation of a group captive insurance program that involves other employers and requires other legal entities. Berkley and its affiliates do not provide tax, legal, or regulatory advice concerning EmCap. You should seek appropriate tax, legal, regulatory, or other counsel regarding the EmCap program, including, but not limited to, counsel in the areas of ERISA, multiple employer welfare arrangements (MEWAs), taxation, and captives. EmCap is not available to all employers or in all states.

Stop Loss | Group Captives | Managed Care | Specialty Accident ©2017 Berkley Accident and Health, Hamilton Square, NJ 08690. All rights reserved. BAH AD2017-09 7/17

www.BerkleyAH.com

THE CYBER LIABILITY INSURANCE MARKETPLACE, CAPTIVES, AND THE GAO Written By Karrie Hyatt

I I

t comes as no surprise that cybercrimes are increasing and becoming increasingly more expensive. In fact, these crimes are becoming more sophisticated with cyber criminals capitalizing on multi-pronged methods of gaining access to computer networks and data.

According to a recent report from Cisco, “Cyber security threat trends: Phishing, Crypto Top the List,” 86% of organizations surveyed had at least one user try to connect to a phishing site, 96% of organizations experienced some level of unsolicited crypto mining, and 50% experienced some type of ransomware activity.

The report showed that multi-staged attacks were becoming more prevalent as cyber criminals become more advanced in their capabilities.

26

THE SELF-INSURER

study claims are up 55% and premiums have increased 86% YTD in 2021. The Wallstreet Journal reported [in August that] the ransomware payments in 2021 have doubled to 600 million.”

In Verizon’s 2021 annual “Data Breach Investigations Report,” they similarly found that 85% of security breaches involved a human element. The report also found that phishing scams were present in 36% of security violations in 2020, up from 25% in

“correlates with our expectations given the initial rush in phishing and COVID-19-related phishing lures as the worldwide stay-at-home orders went into effect.”

2019. An increase that

According to A.M. Best, the cyber liability insurance market in the U.S. is now worth $2.7 billion. Cyber insurance premiums grew by 28% in 2020, but cyber insurance claims grew by 38% between 2017 and 2020.

Yet, the traditional insurance market is not keeping up the pace to the desires of its customers. “Not only have commercial markets hardened, prices are increasing drastically and coverage is being limited while carriers are increasing deductibles,” said John R. Capasso, president and CEO, Captive Planning Associates, LLC. “This is having a profound effect on our mid-sized clients.”

According to Les Boughner, chairman of Business Insurance at Advantage Insurance Inc., “Commercial coverage is very expensive with numerous restrictive exclusions.

Capacity is limited. Commercial underwriters are concerned with the significant increase in claims activity and respond accordingly. According to a recent Marsh

“Right now, our clients—who I characterize as “main street American businesses”—largely are depending upon the standard commercial insurance marketplace to insure their potential third-party liability as a result of a cyber incident,” said Harry Tipper, III, chief operating officer of insurance with CaptiveOne Advisors LLC. “Their bigger concern is the impact of such an event on their business operations and economics.

Few if any have seen the standard insurance market address the business interruption/economic loss fallout from a cyber incident, especially if they are not the direct target. Instead, they universally have concerns over the business interruption/economic loss fallout from a cyber incident.”

CAPTIVES INSURING CYBER RISK

Captives are helping to provide solutions for the gaps in cyber coverage offered by the commercial insurance marketplace.

Either by adding cyber liability to their existing captive or a “difference in condition” option which covers losses that are denied by the commercial carrier and can be used to shore up gaps that are found in traditional policies.

DECEMBER 2021

27

“Captives provide a responsive vehicle for their owners to manage this environment. They can insure retentions and broaden coverage for their owners. Sophisticated captives can access the reinsurance market which is often more competitive than admitted insurers,” said Boughner. “In the commercial market cyber has evolved from a free add-on used to differentiate underwriters to a vital coverage that is individually underwritten. We are asked to routinely include cyber coverage to captives. 75% of our captives under management have some form of cyber coverage.”

For Capasso, more than 60% of captives managed by Captive Planning Associates have some type of cyber liability insurance. “In many respects, captives can offer similar coverage as a commercial carrier. However, it's usually not economical to do so. For a business to self-insure for cyber liability, it would have to capitalize the captive with an enormous amount cash (or letter of credit) in order to cover the policy limits. With that said, we see many businesses, especially mid-sized businesses utilize their captive to cover large deductible policies issued by commercial carriers as well as policy limitations and exclusions,” said Capasso.

“Among those captives that do offer cyber liability insurance, the principal motivation has been the degree to the standard—cyber liability insurance marketplace is in flux vis-à-vis coverage terms (i.e., exclusions), pricing, and limits,” said Tipper. “[Businesses] ask their captives to provide “difference in conditions” insurance that is designed to plug the holes and fill-in the gaps in coverage that the conditions and exclusions create. They also will ask their captives to provide additional capacity when the standard insurance marketplace wants to restrict risk-transfer capacity through such tools as sub-limits within the policy.”

TRIP AND THE GAO

Currently, the Government Accountability Office (GAO) is conducting research into cyber liability insurance coverage in both the traditional marketplace and through captives. Part of the investigation is looking at how captives insure cyber liability and how the Terrorism Risk Insurance Program (TRIP) has benefited captives.

28

THE SELF-INSURER

TRIP is stop loss insurance provided by the federal government in the event of a terrorist event. After September 11, 2001, many insurers began excluding terrorism risk coverage from their regular policies. In 2002, seeing that the loss of coverage could have a heavy impact on businesses, Congress enabled the Terrorism Risk Insurance Act of 2002 (TRIA) which requires insurers to make available terrorism risk on certain lines of commercial property and casualty insurance, with a backstop provided by the federal government. The Act has been reauthorized four times and the most recent update, in 2019, extended TRIP to 2027.

As cybercrime events become more costly and have a larger impact on society, the federal government is looking into adding cybercrimes to TRIP or create a similar back stop of its own.

As part of the research, representatives from the GAO spoke with a group of SIIA members, including John Capasso, Harry Tipper, and Les Boughner, who were interviewed for this article.

“Based on SIIA’s meeting with them, the folks at the GAO are looking more broadly than the cyber liability insurance marketplace,” said Tipper. “Because the study that is being conducted is under the auspices of the reauthorization of TRIA, their focus is more broadly on the risk of cyber terrorism, the insurance industry’s response to that risk, and the impact of TRIA on all the actors within the insurance marketplace. The captive insurance ecosystem is just one segment of a broader study whose focus is TRIA.”

HCAA’s

EXECUTIVE FORUM ‘22

The GAO was focused on cyber terrorism and the use of TRIP to provide catastrophe capacity to the insurance industry.… In spite of there not having been any significant terrorism events the program has been renewed with increasing attachment thresholds.

While TRIP would be available for a significant terrorism event, the GAO is investigating if the need is there for TRIP to backstop cyber insurance without a terrorism event.”

According to Boughner, in the interview, “

He went on to cite the Colonial Pipeline cyber hack in June and how the knockon effect of the gas pipeline being shut down affected millions of people on the East Coast.

Both Tipper and Boughner said that cyber insurance requirements should not be legislated. Instead, the U.S. government should concentrate on intervention prior to cybercrime event and the mitigation and management of the risk of a devastating cyber-attack.

“The financial impact of cyber incidents is but one example of a catastrophic risk against which any individual insurance company, captive or otherwise, cannot assemble a large enough risk-sharing pool in order finance the potential monetary cost of an event in an economic manner. The risk of prediction error is just too great,” said Tipper.

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30

THE SELF-INSURER

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“The government should be focused on cyber intervention not unlike military intervention,” said Boughner. “Many cyber-attacks are initiated from countries such as Russia and North Korea who are unfriendly to the United States. The government and the military should treat this as a hostile act and respond accordingly. They should not legislate cyber coverage or force the insurance industry to provide coverage. TRIP could be broadened to include non-terrorism cyber events. TRIP could also be broadened for pandemic catastrophes although this was not an area that the GAO was investigating.”

According to Capasso, “I think that government providing a backstop (reinsurance option) to include captives in a TRIA-like program would be an immensely good thing.”

The SIIA members interviewed by the GAO were happy with the opportunity to talk about captives. “As an industry, we believe that any time a governmental agency takes the time to learn about how captive insurance companies provide an alternative risk management option for businesses as well as providing supplemental coverages, is a good thing,” continued Capasso. “I thought the GAO asked some very good questions. I also think those of us interviewed did a commendable job answering the GAO questions and providing further insight into how the alternative risk market helps businesses manage risk.”

According to Tipper, “The GAO interview presents SIIA with a great opportunity not only to showcase another instance where captives could provide solutions to American businesses’ problems but do so to a governmental agency that historically has taken a dim view of captive insurance. My impressions was that the members of GAO staff came out with a favorable view of what captives are doing vis-à-vis the cyber risk specifically.”

For Boughner, “It was a very encouraging experience. They were genuinely interested in learning about the role that captives could play for cyber and cyber terrorism events. Since purchasing terrorism insurance is voluntary, many companies elect to self-insure. Without a captive, the self-insurer has no recourse to the TRIP pool in the event of a major terrorism incident. Since TRIP is only available to insurance companies, a captive is necessary to access TRIP protection.”

Karrie Hyatt is a freelance writer who has been involved in the captive industry for more than ten years.

More information about her work can be found at: www.karriehyatt.com.

Protecting plans and patients across the U.S.

297

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No Guarantee of Results – Outcomes depend upon many factors and no attorney can guarantee a particular outcome or similar positive result in any particular case.

32

THE SELF-INSURER

WE ARE HERE FOR YOU Now, more than ever, it is important to do business with partners you can depend on. For more than 35 years, self-funded employers have trusted Sun Life to deliver flexible stop-loss options and seamless claim reimbursement. Helping you make the best decisions for your business is our business.

Our team of dedicated experts is ready to support you with innovative solutions, tools, and resources to help you manage your self-funded plan every step of the way. Ask your Sun Life Stop-Loss Specialist about what is new at Sun Life or click here to learn more!

STOP-LOSS

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DISABILITY

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ABSENCE

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DENTAL / VISION

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LIFE

For current financial ratings of underwriting companies by independent rating agencies, visit our corporate website at www.sunlife.com. For more information about Sun Life products, visit www.sunlife.com/us. Stop-Loss policies are underwritten by Sun Life Assurance Company of Canada (Wellesley Hills, MA) in all states except New York, under Policy Form Series 07-SL REV 7-12. In New York, Stop-Loss policies are underwritten by Sun Life and Health Insurance Company (U.S.) (Lansing, MI) under Policy Form Series 07-NYSL REV 7-12. Product offerings may not be available in all states and may vary depending on state laws and regulations. © 2021 Sun Life Assurance Company of Canada, Wellesley Hills, MA 02481. All rights reserved. Sun Life and the globe symbol are trademarks of Sun Life Assurance Company of Canada. Visit us at www.sunlife.com/us.

BRAD-6503-n

SLPC 29427 02/21 (exp. 02/23)

INGREDIENTS FOR A SUCCESSFUL 2022: A RECIPE FOR SELF-FUNDED PLAN SPONSORS

W W

ith 2022 rapidly approaching, employers and plan sponsors of selffunded plans must act quickly to make important health benefit plan implementation decisions.

Specifically, this upcoming plan year will create a puzzle for plans as they navigate compliance with the evolving regulatory landscape, complex COVID regulations, and the corresponding financial implications.

Not dissimilar to plan years past, employers should have already at least initiated the plan design discussions. These conversations are crucial as annual benefit modifications are needed to address the changing employee and participant population needs.

34

THE SELF-INSURER

Plan vitality is no less important, so these revisions should be balanced against the potential economic factors. Additionally, prior to instituting these updates the employer must carefully and thoughtfully address the many regulatory requirements to ensure the plan’s foundation is compliant.

Items an employer should compile include:

1) The past year’s claim data; The scope of this discussion is to highlight key plan document and design revisions for the plan year beginning on or after January 1, 2022.

GETTING STARTED

When contemplating plan document updates, the claims administrator and employer should approach renewal discussions mindful of pending risks and opportunities.

The goal is to implement a plan design which addresses these considerations. To maximize the plan’s success for an upcoming plan year, an employer should review relevant plan materials in advance of any renewal meetings.

2) A list of the plan sponsor and/or plan participant’s desired benefit changes and improvements;

3) Any relevant supplemental options to support the plan’s success;

4) An outline of the pending compliance requirements; and

5) All corresponding agreements and materials potentially needing modification.

DECEMBER 2021

35

A non-exhaustive list of documentation that must be reviewed includes the stop loss policy, Plan Document and Summary Plan Description (PD/SPD), plan amendments, relevant administrative services agreements, vendor contracts, employee handbook, and the Summary of Benefits and Coverage (SBC).

Once the documentation is compiled, the next step is developing an action plan to mitigate the identified risks and improvement opportunities. To simplify this process, the plan might consider analyzing modifications for the upcoming plan year as they would generally fall in one of three categories – must, may, and should. This approach will ensure that employers adopt the most attractive, yet compliant and cost-effective plan design for plan participants.

MUST

An annual review of the employer’s plan design is necessary. This step must not be skipped and to have the most impact, the review must address both compliance updates and cost containment issues.

COMPLIANCE

Over the course of 2021 the regulations created new baseline requirements and the plan provisions must be revised accordingly. This section is not intended to serve as a complete list, but to highlight significant compliance considerations for plan sponsors for the 2022 plan year.

On an annual basis, the US Department of Health and Human Services (HHS) adjusts the Affordable Care Act (ACA) in-network out of pocket maximum amounts.

For plan years in 2022 these limitations apply for essential health benefits under nongrandfathered group health plans.

The maximum for self-only coverage is $8,700 and the maximum for coverage other than self-only is $17,400. Note that certain qualified high deductible health plans have different limits as well. An employer must review and adjust the benefits to ensure compliance with the 2022 federally allowed out of pocket maximums.

In addition to potential modifications to the plan’s cost-sharing maximums, the employer must revise employee contributions if they do not coincide with the applicable ACA Employer Mandate affordability threshold for 2022. Pursuant to IRS

36

THE SELF-INSURER

Revenue Ruling Procedure 2021-36, for plan years beginning on or after January 1, 2022, employer sponsored self-only coverage may not exceed 9.61% of an employee’s household income.

This is significant as it represents a decrease from the 9.83% affordability threshold in 2021. An employer, subject to the Employer Mandate, offering coverage greater than the 9.61% threshold could be subject to penalties. Plan sponsors should continue to monitor this, however, as pending regulations may further decrease the affordability threshold in the future.

During the 2020 and 2021 plan years regulators issued urgent relief to assist individuals and employers through the COVID-19 pandemic. Much of this temporary relief, however, has either since changed or expired. As a result, many of these optional and required compliance provisions must now be removed from plan materials.

For example, employers must address the following with respect to previously issued amendments:

1) Did the plan adopt any optional, temporary relief with respect to the Health Flexible Savings Account or Dependent Care Assistance Plan benefits?

If so, have the changes been documented with the appropriate timeframes and expiration dates?

2) Did the plan adopt a COVID amendment to comply with the regulations? Was that COVID

Delaware’s Captive Bureau is business at the next level

In Delaware, our captive regulators are dedicated exclusively to our captive insurance clients’ needs, and work under the direction of our Captive Bureau leadership, directed by Steve Kinion.

There are 34 people working on Delaware’s Captive team.

Of this total 15 are financial analysts. Under Delaware’s regulatory organization, the financial analyst is the first-line regulator who communicates with the captive manager or owner.

As a result, all inquiries, business plan changes, dividend requests, and other related matters are first addressed by the analyst. The experience level of these analysts is unmatched.

STEVE KINION, DIRECTOR

Call us today to speak with a team member

Bureau of Captive & Financial Products Department of Insurance Steve.Kinion@delaware.gov

302-577-5280

Our team has 15 analysts 12 hold the Associate in Captive Insurance (ACI) designation 12 hold the Accredited Financial Examiner (AFE) designation 9 hold the Certified Financial Examiner (CFE) designation 2 are Certified Public Accountants (CPA)

BUREAU OF CAPTIVE & FINANCIAL INSURANCE PRODUCTS 1007 Orange Street, Suite 1010 Wilmington, DE 19801 302-577-5280  captive.delaware.gov

amendment revised as the regulations edited the extended timelines? Note that the national emergency and public health emergency will likely continue for the foreseeable future.

3) Did the plan issue an amendment to address COBRA premium relief assistance under the American Rescue Plan Act of 2021? If so, did the language appropriately address the relevant timing and interaction between other regulations?

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The Consolidated Appropriations Act of 2021 (CAA) mandates plan language changes as well for the 2022 plan year. The CAA enhanced existing mental health parity protections by mandating a written, documented comparative analysis to demonstrate compliance regarding the plan’s non-quantitative treatment limitations (NQTLs).

Plan sponsors must have, readily available, relevant information to demonstrate the NQTLs within the plan design imposed upon mental health and substance use disorder benefits are in parity with those imposed upon medical and surgical benefits.

For example, plan sponsors must review the NQTLs specific to the requirements for medical and prescription pre-authorization, the reimbursement strategy for out of network claims, the medical management and medical necessity standards, and any provider definitions containing unique licensure requirements.

The CAA also contains expansive surprise medical billing protections. Pursuant to the No Surprises Act (NSA), plans will need to add and revise certain plan provisions to protect plan participants. NSA presents new terms such as certified IDR entity, qualifying payment amount and recognized amount which should be defined for plan participants. Further, the NSA expands the scope of emergency services and as a result the existing plan definition will require revision to ensure compliance.

The required NSA revisions created new protections for plan participants covered under a grandfathered health plan. Prior to the NSA, retaining grandfathered status would have exempted the plan from certain ACA requirements.

For example, only non-grandfathered plans were required to comply with the revised ACA appeals process and emergency service protections. Significantly, the NSA expands the scope of claims subject to external review to include adverse benefit determinations involving consideration of the plan’s compliance with the NSA protections for both non-grandfathered and grandfathered plans. These expanded protections necessitate urgent plan revisions.

COST CONTAINMENT

With so many required compliance changes, the plan must not overlook implementation of cost containment strategies. Upon review of the available claims data the plan sponsor may identify exposures that can be mitigated by alternative benefits. Employers should consider whether any particular benefit revisions could create plan savings without decreasing available benefits.

For example, important questions should be discussed:

1) Did the plan encounter issues with any high-cost specialty drugs where a generic drug may have been appropriate?

MAY

Beyond compliance and cost containment updates employers may wish to consult their employees regarding plan design. The health plan is an important employee benefit and may be used as a recruitment tool. By taking the employee benefit desires into consideration it may help assure the package remains attractive and available as a retention tool.

While this step should be balanced against the financial implications of such changes, it is an important part of the renewal discussions. Every employee suggestion may not be implemented, but the feedback may help the employer understand the benefits their employees value the most.

For example, are employees inquiring about Lasik eye surgery, massage benefits, acupuncture benefits or chiropractic benefits? Could the addition of these benefits not only improve employee morale but potentially offset the need for other more expensive benefits? Are employees asking about expanded categories of eligible dependents? Could the additional classification generate increased employee satisfaction?

2) Does the plan have a program to ensure participants are properly guided, when requested and appropriate, to alternative drugs?

3) Does the plan encourage or mandate second opinions for any procedures?

4) Does the plan offer compliant mental health and substance use disorder benefits that will ensure the necessary support for plan participants?

Even if the employer does not intend to adopt a broader scope of benefits, listening to employee desires and needs can inspire conversations and a deeper understanding of the employer’s plan benefit design.

DECEMBER 2021

39

SHOULD

After contemplating the compliance, cost containment and other benefit changes the employer should devise a detailed implementation plan. Not only will materials need to be revised to reflect the updated benefits, but the employer should have a plan for communicating this information to plan participants.

As multiple documents will need to be updated a thorough gap review of the various plan materials should be performed to ensure that a change to one document will not create a conflict within another. As the regulations for 2022 outline process related changes, the employer and administrator must review processes, systems, and work flows to ensure they are up to date.

Importantly, since many of these changes are new requirements, they might not be neatly outlined within existing

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agreements. As a result, the documents governing the plan’s relationships should be reviewed to ensure the regulatory requirements are addressed and duties clearly outlined by the appropriate party.

NEXT STEPS

Plan year 2022 will present complexities for plan sponsors. To preempt these issues an employer must be prepared with the proper ingredients to make sure they have a recipe for success. The best preparation mandates an in-depth understanding of the regulatory requirements, strategies tailored to the plan population, and an action plan for implementation. This year will be crucial for plans to coordinate, collaborate, and communicate with relevant plan stakeholders to ensure the upcoming plan year will be a positive one.

Jennifer M. McCormick joined The Phia Group, LLC as corporate counsel in 2008. As the Senior Vice President of Phia Group Consulting, Attorney McCormick concentrates on a variety of healthcare and regulatory issues facing employee benefit plans and their administrators. As Senior Vice President of Phia Group Consulting she focuses on health benefit plan regulatory compliance services, including but not limited to self funded health plan consulting, health plan exclusions, health plan limitations, health plan revisions, defining key items such as usual and customary fees, and the entire health plan summary plan description and summary of benefits and coverage. She is a constant contributor to The Phia Group’s webinars and other educational media.

Attorney McCormick earned her J.D. from the Syracuse University College of Law, with certificates in Estate Planning and Family Law, and her B.A. in both Psychology and Criminal Justice from Indiana University, graduating with distinction as a National Dean’s List Scholar. While attending Syracuse, Attorney McCormick served as an Intercollegiate Director of the Moot Court Honor Society and as a Student Attorney in the Low Income Taxpayer Clinic where she counseled clients on state and federal tax matters and the US Tax Court appeals process.

Map your path to compliance with Vālenz® Streamlining compliance with No Surprises and Transparency in Coverage rules To navigate the transparency regulations of 2022, you need a partner who can deliver – right now – the agility, innovation, data and expertise necessary to streamline and optimize compliance. At Vālenz®, we are ready to help you succeed from day one.

Through our industry-leading ecosystem of solutions built in an agile and open architecture, we engage early and often to improve health plan performance, including compliance with the No Surprises and Transparency in Coverage Acts.

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NEWS

NEWS FROM SIIA MEMBERS 2021 DECEMBER MEMBER NEWS SIIA Diamond, Gold & Silver Member News SIIA Diamond, Gold, and Silver member companies are leaders in the self-insurance/captive insurance marketplace. Provided below are news highlights from these upgraded members.

News items should be submitted to membernews@siia.org.

All submissions are subject to editing for brevity. Information about upgraded memberships can be accessed online at www.siia.org.

If you would like to learn more about the benefits of SIIA’s premium memberships, please contact Jennifer Ivy at jivy@siia.org.

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NEWS

DIAMOND MEMBERS HM INSURANCE GROUP ANNOUNCES CLINT LIPTAC AS NEW SALES DIRECTOR FOR SEATTLE AND SAN FRANCISCO REGIONS

Clint Liptac has joined HM Insurance Group (HM) as director, Seattle and San Francisco Regional Sales. In this role, he will work to grow and maintain the HM Stop Loss book of business in the company’s Seattle Regional Sales territory, which serves Washington, Oregon, Idaho, Montana and Alaska, as well as its San Francisco Regional Sales territory, which serves northern California and Hawaii.

Liptac most recently served as a regional sales manager in Berkley Accident and Health’s Captive Division. Prior to that, he was a director of sales for Shasta Administrative Services, a third-party administrator in Oregon. Additionally, he has gained significant sales and underwriting experience at USI, The Guardian Life Insurance Company and others in the industry.

About HM Insurance Group HM Insurance Group is a national company that works to protect employers and health care entities from the financial risks associated with health care costs. With 35 years in the market, HM Insurance Group (HM) is among the top carriers nationally for Stop Loss insurance, protecting self-funded clients from financial loss associated with unexpected large or catastrophic claims. Visit hmig.com.

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RENALOGIC LAUNCHES ADVISORY BOARD

PHOENIX, AZ (October 28, 2021) – Renalogic, an industry leader in chronic kidney disease risk management and cost containment, today announced the formation of the company’s Advisory Board.

Tasked with helping the company advance its mission to manage the human and financial costs of chronic kidney disease, the Advisory Board includes leading figures from multiple segments of healthcare including employee benefit management, insurance, healthcare providers and academic research.

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QBE and the links logo are registered service marks of QBE Insurance Group Limited. ©2021 QBE Holdings, Inc. This literature is descriptive only. Actual coverage is subject to the terms, conditions, limitations and exclusions of the policy as issued.

NEWS was a management consultant with Accenture, and was part of the staff that produced the 1996 Olympics in Atlanta.

Rose Maljanian is currently CEO or HealthCAWS, a privately held health care services company focused on strategic advisory, M&A and platform tools that impact behaviors and outcomes.

Earlier in her career Rose held leadership roles with leading provider and payer institutions such as Hartford Hospital, Magellan Health Services, and Humana.

“When it was founded in 2002, Renalogic was the first company to focus on supporting employers whose employees were affected by chronic kidney diseases,” said Renalogic CEO Kevin Weinstein. “Now, as the company continues to accelerate and break new ground in the fight against kidney disease, we are excited to launch our Advisory Board which will help Renalogic better serve existing and prospective clients, develop new products, and help influence meaningful policy changes.”

Initial members of the Renalogic Advisory Board include (in alphabetical order): Jeb Dunkelberger started his career as a healthcare economist and then transitioned to leading innovation initiatives at McKesson and Highmark. Jeb applied his healthcare expertise for smaller companies before taking over as CEO at Sutter Health | Aetna.

Richard Jones has been a strategic advisor to hundreds of clients in the area of employee benefits for the better part of two decades. Earlier in his career, Richard

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Ryan McDevitt is an economics professor associated with both Duke University and the University of Chicago. Ryan is the leading academic doing research into the market dynamics of dialysis. His work has been featured in numerous economic journals and publications and has been mentioned in leading popular press outlets such as NPR, The Daily Show, and the LA Times.

“With the additional expertise and insights provided by the advisory board, Renalogic is now even better positioned to support our clients and partners,” Weinstein said.

HCC Life Insurance Company operating as Tokio Marine HCC - Stop Loss Group

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NEWS

NATIONAL SURVEY OF HEALTH PLAN BROKERS REVEALS

than 40-50% of members that might use a hospital-based service that is impacted by a general RBP plan.

BASED PRICING

The industry survey was conducted September 15 through October 10, 2021. Here are some more key findings:

GROWTH FOR REFERENCED

PHOENIX, AZ and CHICAGO, IL —November 9, 2021 – Renalogic, the industry leader in dialysis risk management and cost containment sponsored market research with the country’s top benefits consultants to gauge frontline perspective on the evolution of reference-based pricing (RBP) programs.

With survey respondents expecting 4-7x growth in utilization of RBP by their clients over the next three years, savvy brokers are adopting RBP for massive plan savings.

“The survey was completed by about 200 health plan brokers across the U.S.,” Scott Vold, Chief Commercial Officer at Renalogic said. “The respondents confirmed that the need for referenced based pricing and cost containment is growing.

Brokers are adopting cost-saving measures available to plans.”

The research survey clearly suggests that Dialysis may be a specific situation where RBP can be adopted aggressively.

Because dialysis is a relatively low incidence, high-cost situation, employee abrasion fears are largely mitigated, if not wholly eliminated.

It is much easier for an employer and vendor to support, work with and explain RBP to just a few dialysis patients on a health plan,

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Traction is growing particularly for high-cost patient management with specific diseases The survey asked how likely brokers are to recommend a RBP program to manage costs for: dialysis, diabetes, transplant, orthopedic, oncology, pharmacy, long-term acute care (hospital), surgery, cardiac, behavioral health and acute/inpatient claims.

Responses show a healthy interest in presenting the RBP option “some of the time” for all categories. Additionally, diabetes, dialysis and transplant showed on average close to 20 percent of brokers willing to recommend RBP for those conditions “all the time.” Employers are laser-focused on disease prevention, management, and cost avoidance as a top priority.

Kidney disease is the most preferred disease category for RBP While brokers believe that a minority of their clients are using RBP for dialysis claims today, brokers rank dialysis as the leading category that they are willing to recommend for RBP. Interestingly, the related categories of transplant and diabetes were next highest. Medical claims data can identify members at all stages

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NEWS

of diagnosed chronic kidney disease and kidney impairment, but typical large case management models do not have a program that focuses on the issue of kidney disease, end-to-end renal care, or renal cost management solutions.

Benefits consultants still learning about vendor partners When presented with a list of leading RBP vendors, 40-50 of brokers could provide a clear perception of any of the individual companies. While the survey sponsor, Renalogic, was the highest ranked in terms of perception, the overall lack of familiarity with vendors suggests that brokers would benefit from additional education around the performance and pros and cons of RBP vendors.

About Renalogic Renalogic has been the industry leader in dialysis cost containment for nearly 20 years and continues to innovate through the impact of the Kidney Dialysis Avoidance Program. We are revolutionizing the industry by delivering predictive analytics to identify the progression of the disease, simplifying the costs and clinical complexities of chronic kidney disease to make a positive impact and reduce the dialysis incidence rate in every population we touch. Nearly every chronic condition leading to End Stage Renal Disease is manageable and even preventable when identified early. For more information, please visit https:// renalogic.com/.

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ELMCRX SOLUTIONS

ANNOUNCES ADDITION BOB EISENDRATH AS MANAGING DIRECTOR

E. Norriton, PA - We are pleased to announce that Robert (Bob) Eisendrath has joined ELMCRx Solutions as Managing Director of the Pharmacy Consulting division. Bob joins ELMCRx from EPIC where he helped shape and grow the PBM services group as National Pharmacy Practice Leader.

Prior to EPIC, Bob served as Area Vice President for CVS’s Employer Coalitions Business Unit.

With more than twenty-five years as a leader at both CVS Caremark and Blue Cross Blue Shield Association, Bob brings a wealth of experience in PBM and prescription drug consulting to ELMCRx Solutions. Bob’s relationship management, quantitative skills and industry knowledge will enable ELMCRx to reach to grow successfully.

NEWS According to Richard Fleder, CEO of ELMCRx Solutions and President of ELMC Risk Solutions, “The addition of Bob to our practice allow us to build on the strong foundation created under John Adler. Bob’s wide-ranging experience, knowledge and success in the PBM business will tremendously benefit our clients.”

Bob will serve clients from his Chicago area office.

About ELMCRx Solutions Since its inception, ELMCRx Solutions has assisted employers, consulting firms, reinsurers, healthcare coalitions, health plans, insurance captives, TPAs and Taft Hartley Trust Funds in negotiating contracts, managing the risk associated with and helping contain the cost of pharmacy benefit plans. ELMCRx Solutions focuses solely on assisting plans sponsors in managing Prescription Drug Benefits programs. Contact Mary Ann Carlisle at mcarlisle@elmcgroup.com and visit elmcgroup.com/elmcrxsolutions.

SYMETRA APPOINTS MELISSA PEARCE, M.D., STOP LOSS MEDICAL DIRECTOR

Bellevue, WA —Symetra Life Insurance Company, a leading medical stop loss carrier for more than 45 years, announced the appointment of Melissa Pearce, M.D., as stop loss medical director.

In this new role, Dr. Pearce will provide clinical expertise across Symetra’s group benefits product lines, with emphasis on stop loss, where she will work closely with the team of registered nurses who support underwriting with the review of complex cases.

Dr. Pearce most recently served as medical director in utilization management for CareSource, a nonprofit, multi-state health plan recognized as a national leader in managed care. She was previously medical director with AmeriHealth Caritas, a Medicaid managed care and health solutions carrier.

Prior to that role, Dr. Pearce spent eight years in private practice and as a hospitalist in South Carolina, specializing in obstetrics and gynecology.

Dr. Pearce received her medical degree from University of Florida College of Medicine and completed her residency at Medical University of South Carolina.

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About Symetra Symetra Life Insurance Company is a subsidiary of Symetra Financial Corporation, a diversified financial services company based in Bellevue, Washington. In business since 1957, Symetra provides employee benefits, annuities and life insurance through a national network of benefit consultants, financial institutions, and independent financial professionals and insurance producers. For more information, visit www.symetra.com.

SELF INSURANCE INSTITUTE OF AMERICA, INC. 2021 BOARD OF DIRECTORS

CHAIRMAN OF THE BOARD* Robert Tierney President StarLine Osterville, MA

PRESIDENT/CEO

Mike Ferguson SIIA Simpsonville, SC

CHAIRMAN ELECT*

DIRECTORS Thomas R. Belding President Professional Reinsurance Mktg.

Svcs.

Edmond, OK John Capasso President & CEO Captive Planning Associates, LLC Marlton, NJ

Kari L. Niblack, JD, SPHR CEO ACS Benefit Services Winston Salem, NC

Laura Hirsch Co-CEO Aither Health Carrollton, TX

TREASURER AND CORPORATE SECRETARY*

Elizabeth Midtlien Vice President, Emerging Markets AmeriHealth Administrators, Inc. Bloomington, MN

Peter Robinson Managing Principal EPIC Reinsurance San Francisco, CA

SIEF BOARD OF DIRECTORS Nigel Wallbank, SIEF Chairman

Directors Freda H. Bacon Les Boughner Alex Giordano Virginia Johnson Dani Kimlinger, PhD, MHA, SPHR, SHRM-SCP

Lisa Moody President & CEO Renalogic Phoenix, AZ Shaun L. Peterson VP, Stop Loss Voya Financial Minneapolis, MN

*Also serves as Director

DECEMBER 2021 53

EMPLOYER CORPORATE

SIIA NEW MEMBERS DECEMBER 2021 REGULAR CORPORATE

Nathan Udy CEO Planstin Administration St. George, UT

MEMBERS

Armando Polanco CEO Apollo Vanguard LLC San Antonio, TX

Winston Ashurst, II Principle Trinity Marketing Services

Camin Turner VP, Operations Oswald, Inc. Fresno, CA

MEMBERS

Dustin Craik Assistant CFO Local Government Health Insurance Board Montgomery, AL

SILVER CORPORATE MEMBERS Jeff Malone CEO RxPreferred Benefits Mount Juliet, TN

Montgomery, AL James Haidet Senior VP of Sales VativoRx North Miami, FL

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Stability for those balancing risk and reward.

Those who self-fund a health plan seek autonomy and control over their benefits program and costs. It can be rewarding, but it does come with risk. Stop Loss protection from HM Insurance Group works to mitigate that risk for self-funded employers should high-dollar claims arise – delivering steadiness to the performance and confidence in the outcome. Find more on hmig.com.

CONNECT WITH ONE OF OUR EXPERTS ON OUR INSURANCE AND REINSURANCE OPTIONS: Employer Stop Loss: Traditional Protection • Small Group Solutions • Coverage Over Reference Based Pricing Managed Care Reinsurance: Provider Excess Loss • Health Plan Reinsurance

In all states except New York, coverage may be underwritten by HM Life Insurance Company, Pittsburgh, PA, or Highmark Casualty Insurance Company, Pittsburgh, PA. In New York, coverage is underwritten by HM Life Insurance Company of New York, New York, NY. The coverage or service requested may not be available in all states and is subject to individual state approval.

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