The No Surprises Act of 2021 and the Employee Retirement Income Security Act of 1974 (“ERISA”) § 716(f) were enacted to protect patients from unexpected medical bills and to make healthcare pricing more transparent. To achieve this goal, healthcare providers must supply patients with good faith estimates (“GFEs”) of items or services to be received. Additionally, the patient’s group health plan (“GHP”) must use the GFE to create an advance explanation of benefits (“AEOB”) to send to the patient before services are received. Currently, these AEOB notice requirements are not being enforced as federal agencies complete necessary rulemaking and develop necessary notice standards. However, it’s important that plan professionals and fiduciaries are prepared for the expected changes.
ERISA § 716(f) specifically requires that a healthcare provider sends a notification to a GHP or individual health plan about a patient who is scheduled to receive medical services. Once received, the GHP or individual health plan must then send the patient a notification that includes important cost and coverage information. The notice must include whether the provider is a participating facility or a nonparticipating facility. If the provider is a participating provider, then the notice must include what the contracted rate is under the plan, based on the billing and diagnostic codes supplied by the provider. For non-participating providers, the notice must include information on how to obtain details about that provider and, whenever possible, a description of participating providers available under the plan.
In addition, the notification must include a GFE regarding the amount the GHP or individual health plan is responsible for paying. This notice must also include a GFE of the amount that the participant or beneficiary has incurred toward meeting the plan or coverage limit. It must also include a disclaimer of coverage for the item or service that is subject to medical management techniques (i.e., concurrent review, prior authorization, and step-therapy or fail-first protocols).
A further disclaimer must be made to participants that the notification is only an estimate based on the items and services reasonably expected at the time of scheduling or upon request and that it is subject to change. Any other information or disclaimer must be included that the plan determines is appropriate and consistent with the disclaimers required under this section. All notifications must be written in clear language that the average person can understand and must avoid confusing medical jargon or complex insurance terminology.
ERISA § 716(f) has created specific requirements regarding timing requirements for GHPs and individual health plans providing AEOBs to participants. If the medical service is scheduled at least 10 business days in advance, or if the patient themselves requests the information, the GHP or individual health plan has 3 business days from when they receive the provider’s notification to send the patient the required AEOB. If the medical service is scheduled to happen in less than 10 business days, the GHP or individual health plan must send the patient notification within 1 business day of receiving the provider’s notification. Patients can choose to receive their notification either by regular mail or electronically, such as through email.
The goal of providing AEOBs is to help patients understand their healthcare costs before they receive medical services. By receiving advance notice about their coverage and potential out-of-pocket costs, patients can make more informed decisions about their healthcare and avoid unexpected medical bills. The tight deadlines ensure that patients receive this important information quickly, giving them time to plan or seek alternatives if needed.
In conclusion, the good faith estimates (“GFEs”) and advanced explanation of benefits (“AEOBs”) requirements under the No Surprises Act and ERISA § 716(f) represent significant steps toward enhancing transparency in healthcare costs for patients. While the GFE provisions for insured patients are currently delayed, fiduciaries and plan professionals should be prepared for the expected guidance from the Departments of Health and Human Services, Labor, and the Treasury.