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The Stacks – 1st Quarter 2022

A Rose by Any Other Name…

By: Ron E. Peck

The year is 2009.  You are busy serving as a claims administrator for a self-funded health plan, on a lovely Monday morning in March.  On this day, a couple appeals roll into your office.  In one instance, a claim was denied due to a lack of medical necessity.  Nothing was paid; the claim was denied in full.  In the other instance, the appeal relates to an out-of-network provider’s bill.  The original claim that was submitted for payment exceeded $30,000.  At the time, the applicable benefit plan paid an amount it calculated to be “usual and customary” (or “U&C”); the process it applies when determining a maximum allowable payment when there is no pre-existing contractual rate. 

In the first case, the provider is filing an appeal, arguing that the treatment did meet the plan’s definition of medical necessity.  In the second case, the provider is filing an appeal arguing that the plan’s calculation of U&C is flawed. 

In both cases, less than 100% of billed charges was paid.  In both cases, the reduced payment (or no payment) constituted an adverse benefit determination.  In both cases, the provider – deeming itself to be a beneficiary of the plan (a completely separate discussion for another day) – has exercised its right to file an appeal.  In both cases, per the terms of the plan document and applicable law, the plan will have a fixed number of days to review the appeals and issue a decision… In both cases, they can uphold the original decision, or overturn the original decision and pay something additional.  In both cases, if the decision on appeal is to uphold the original decision, the beneficiary may then choose to appeal again (if a second appeal is available), and once the appeals are exhausted, seek to appeal the matter externally to a court of law.

A year later, the “Affordable Care Act” (or “ACA”) was enacted in two parts: The Patient Protection and Affordable Care Act (signed into law on March 23, 2010) and The Health Care and Education Reconciliation Act (of March 30, 2010).  With the passage of what we call ObamaCare, rights to appeal were greatly strengthened.  New rights were bestowed upon beneficiaries, while new obligations were simultaneously imposed upon plans and carriers.  Strict timelines were bolstered by law, and access to binding external appeals before independent review organizations (or “IROs”) were legislated.  As providers and patients became more aware of these added rights and opportunities to push back against adverse benefit determinations, the number and complexity of appeals grew.  Both in response to denials and reduced payments, plan sponsors and administrators soon came to appreciate how important a well organized and defensible appeals process truly is.  They also came to realize how risky it is to make claims payment decisions and handle appeals without outside analysis.  Indeed – any seemingly arbitrary decision could, upon review, result in the decision maker being slapped with penalties for having breached their fiduciary duty.  Thus it was that both external review of appeals and protection against fiduciary liability found new value in the eyes of payers.  So it was, for more than a decade…

On Dec. 27, 2020, The No Surprises Act (or “NSA”) was signed into law as part of the Consolidated Appropriations Act of 2021.  Amongst the many interesting rules and changes so introduced, the NSA seeks to prevent providers from balance billing patients in specific instances.  With that in mind, we are forced to wonder, when a patient can’t be held responsible for a balance, what – then – becomes of the balance?  Is the provider forced to waive it?  Is the applicable plan or carrier required to pay it?  Something in the middle?  Indeed, telling providers not to bill patients was the easy part; deciding who pays what to whom – less so.  The rule attempted to address this by stating that providers and payers would first be forced to negotiate.  Sadly, whomever devised this plan has apparently never negotiated before, since – any experienced negotiator knows – when entering a negotiation, you set a “cap” or maximum amount you are willing to pay (or accept).  That amount is in turn based on numerous factors.  Some important – if not the most important – factors are how likely you are to “win” if a matter can’t be resolved amicably, how much you’d win, and what it would cost to win.   The rule went on to explain that if a matter can’t be negotiated, it will proceed to arbitration.  The arbitrator – applying “baseball arbitration” rules – will need to pick between two offers; one made by the payer, and the other made by the provider.  There can be no “middle ground” selected by the arbitrator.  The issue, again, is that – until we know what rules or parameters the arbitrator will use to determine who “wins,” then no one knows who arbitration favors or how much to offer.  Without knowing what happens if a balance is NOT settled, we can’t enter negotiations with a plan; without knowing what happens in arbitration, we can’t engage in independent dispute resolution with a plan.   This left us clamoring for more information.

Recently, we received an answer.  On September 30, 2021, the Departments of Health and Human Services, Labor, and Treasury, along with the Office of Personnel Management, released an interim final rule with comment period, entitled “Requirements Related to Surprise Billing; Part II.”  Here, they made clearer their stance on the use of objective pricing metrics – such as Medicare rates – and gave us some additional information to help us calculate how much is likely to be deemed the proper payment by an arbitrator.  Rather than delve more deeply into that aspect of the rule, however, I seek not to address the rules and parameters likely to determine how pricing disputes will be resolved, and rather, I seek to highlight one glaring issue… What happens to appeals?

Recall, back on that sunny Monday in 2009 when you received those two appeals?  Recall how those appeals were handled in accordance with the terms of the plan document and law?  It was so simple, back then… Any reduced payment would be deemed an adverse benefit determination, and would be eligible for appeal.  Skip to 2021, and here we find ourselves dealing with a true issue – what is appealed, and what is not?  What adverse benefit determination must be appealed, and which triggers the NSA?

Certainly, some adverse benefit determinations clearly fall into the bucket of appeals.  If a claim is denied outright – regardless of network status – because the service was (for instance) cosmetic, not medically necessary, and thus excluded by the plan… the provider, if they believe the payer to be mistaken, should appeal the denial.

Likewise, looking at a situation that seems to fall cleanly under the NSA umbrella, an out-of-network specialist, providing services at an in-network facility, that treats a plan member… only to have their bill be paid based on a percent of Medicare rates (and leaving a balance behind)… is the type of scenario envisioned by the NSA.  If this provider believes that the plan didn’t misapply the terms of the plan document, and agrees that the amount paid by the plan matches the maximum allowable amount as defined by the plan document, then – we believe – this balance would not be eligible for appeal, and rather, would need to be disputed per the NSA.

Yet… not all claims fall so neatly into these buckets.  What if a claim, submitted by such an out-of-network specialist (at an in-network facility), is denied in part due to a plan exclusion (such as experimental and investigational), and the remainder is paid using a Medicare-based pricing methodology?  Is one part (the denied part) of the claim appealed, whilst the other part (the reduced payment) is disputed under the NSA?  Does this happen simultaneously?  What if the denied portion of the bill is overturned, and paid – using the aforementioned Medicare-based pricing methodology?  Must this be disputed anew, or added to the other disputed payment?  What if the provider is willing to accept a payment based on a percent of Medicare rates, is pleased to accept the percent of Medicare described in the applicable plan document, but believes the plan simply miscalculated the Medicare-based amount to which that provider is entitled?  Is that clerical error grounds for an appeal, or dispute?

This represents just the tip of the iceberg, when dissecting the breadth and scope of adverse benefit determinations.  The variety of reduced and denied payments we routinely handle in our office would shame Baskin Robbins and their mere 31 flavors.  With the creation of an alternative means to challenge a plan’s payment now being established by the NSA, in addition to the appeals process, we can expect an increase in appeal volume (as providers seek to trigger the NSA but mistakenly submit an appeal), complexity (as the players attempt to parse out what should be appealed, and what should trigger the NSA), and confusion (as matters go from an appeal of unpaid claims to a dispute over reduced payments of the same claim, following an overturned denial).

In addition to creating ambiguity and confusion regarding which disputed adverse benefit determinations trigger the NSA versus those that are eligible for appeal, so too does this also create more opportunity for conflict between benefit plans and their stop-loss carriers.  Once, stop-loss carriers only needed to suspend reimbursement while a matter proceeded through an appeals process.  Now, stop-loss carriers will struggle to keep an eye on the claims as they bounce back and forth between appeals and NSA disputes.  Furthermore, while most stop-loss carriers agree to reimburse payments their policyholders are forced to pay (following an appeals process and order issues by an IRO or court of law to overturn an adverse benefit determination), will those same carriers also agree to cover additional payments made during an NSA negotiation period?  Following independent dispute resolution and arbitration?

Adding to this quagmire, is the plan administrator’s fiduciary duty.  Plan administrators have learned over time to handle appeals in strict accordance with applicable law and the plan document.  The terms of the plan document regularly dictate what is payable, and how much is payable.  Now, are these plan administrators authorized to pay something additional during the NSA’s requisite “negotiation period,” without exceeding the authority granted to them by the plan document and Employee Retirement Security Act of 1974 (“ERISA”)?  Would an additional payment during negotiations constitute a payment in excess of the maximum allowable amount, and thus, constitute a breach of their fiduciary duty?

In summary, it is safe to say that these new regulations and laws will increase the number of entities that may file appeals and broaden the scope of issues about which appeals may be filed, as well as complicate the process applicable to handling adverse benefit determinations and appeals.  Additionally, the other “dispute resolution” procedures established by law – separate and distinct from formal appeals – will result in confusion regarding which conflicts are meant to be appealed, versus those that should now be handled via an alternative methodology.

As these rules and regulations continue to be released, we will continue to learn more.  Hopefully, which claims fall into which lane – appeals versus disputes – will further crystalize.  In the meantime, benefit plans and those that service them would be well advised to revisit their current appeals process.  Ensure the process clearly defines what can be appealed, when, and how.  Retain objective third parties to provide a de novo review of adverse benefit determinations, and share liability for complicated decisions.  Establish a process by which matters can be transferred to or from the appeals process if and when it is determined a matter should be appealed, or negotiated via the NSA.   Finally, stay abreast of the changing rules to ensure compliance.  Meanwhile, communicate with your stop-loss carrier to confirm what they need – before, during, and after both appeals and NSA based disputes – as well as define what is covered, when, and what documentation is required.  Together, we can overcome these new complexities, and hopefully emerge with a system that works.

Ingredients for a Successful 2022: A Recipe for Self-Funded Plan Sponsors

By: Jen McCormick, Esq.

With 2022 rapidly approaching, employers and plan sponsors of self-funded 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. 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.

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.

Items an employer should compile include:

  1. The past year’s claim data;
  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.

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.


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.


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 non-grandfathered 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 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 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?

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?
  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? 


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?

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.


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 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.