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Legislative Update

President Signs Year-End Spending Bill, Including COVID Relief, “Surprise” Billing Provisions and Other Healthcare Provision

On December 27, 2020, the President signed a more than 5,500 page year-end spending package into law. The $1.4 trillion bill funds the Federal government through September 30, 2021, provides over $900 billion in COVID-19 relief and includes a broad array of other healthcare provisions. Below is a high-level summary of the provisions. We continue to analyze the impacts of this significant new legislation, much of which will be further clarified by regulations proposed in 2021.

COVID Relief: The bill includes additional support for individuals, businesses and providers in response to the ongoing COVID-19 pandemic:

  • Individuals and Businesses: $166 billion for a second round of direct payments to individuals, $120 billion for enhanced weekly unemployment benefits and $325 billion to assist small businesses, including $285 billion for the Paycheck Protection Program.
  • Testing: $22.4 billion in funding for coronavirus testing, contact tracing, surveillance, containment and mitigation measures.
  • Vaccines: $19.7 billion for procurement of vaccines and therapeutics and $8.75 billion for vaccine distribution.
  • Providers: $3 billion for the Provider Relief Fund.
  • Flexible Spending Accounts (FSA): Allows employers to amend their cafeteria plans and health/dependent care FSAs to allow employees to carryover unused amounts from the 2020 plan year to the 2021 plan year (and from the 2021 plan year to the 2022 plan year) or to provide a 12-month grace period at the end of the 2020 and/or 2021 plan years. Also allows post-termination reimbursements from health FSAs in 2020/2021.
  • Tax Relief: Extends and the Employee Retention Tax Credit through July 1, 2022 and increases the maximum refundable payroll tax credit.

Surprise Billing: Effective January 1, 2022, patients will only be responsible for in-network cost-sharing amounts in emergency situations and certain non-emergency situations where patients do not have the ability to choose an in-network provider (including air ambulance). Providers will be prohibited from balance billing patients, except in limited circumstances with patient notice and consent. Provisions apply to individual and group health plans, but do not pre-empt state laws that are applicable to fully insured plans.

If payers and providers cannot reach an agreement on out-of-network claims within 30 days, a “baseball style” independent dispute resolution process would begin, administered by an independent arbiter who would determine the final amount of payment for the claim by choosing either the provider or payer’s offered amount. In making their decision, an arbiter would consider the median in-network rate and other factors but be prohibited from considering billed charges or public payer rates (such as Medicare and Medicaid).

Health Transparency: Adds several new requirements of individual and group health plans to provide increased consumer transparency into price and quality information, including the following:

  • Advance EOB: Effective January 1, 2022, requires plans to provide an Advance Explanation of Benefits (EOB) for scheduled services at least three days in advance to give patients transparency into which providers are expected to provide treatment, the expected cost and the network status of the providers.
  • Price Comparison Tool: Effective January 1, 2022, requires plans to maintain a “price comparison tool” available via phone or the web that allows enrolled individuals and participating providers to compare cost sharing for items and services.
  • Gag Clauses: Effective immediately, prohibits plans from entering provider contracts that prevent, directly or indirectly, the disclosure of provider-specific cost and quality information. Also prohibits contractual arrangements that prevent plans from accessing de-identified claims information.

Provider Directories: Effective January 1, 2022, requires individual and group health plans to verify and update provider directories at least every 90 days and establish a system to respond to individuals within one business day regarding the network status of a provider. Provider directories must also be available electronically and publicly. If a patient provides documentation that they received incorrect information from a plan about a provider’s network status prior to a visit, the patient will only be responsible for the in-network cost-sharing amount.

Pharmacy Benefits and Drug Cost Reporting: Requires group and individual health plans to report annual data to HHS, the Department of Labor and the Department of Treasury on drug utilization, spending and rebates, including total spending on healthcare services by type. This provision is effective immediately, with health plan reports due December 27, 2021, and every June 1 in subsequent years.

Broker/Consultant Compensation Disclosure: Effective one year after enactment, requires brokers and consultants to disclose to group health plan sponsors any direct or indirect compensation they receive for brokerage services or consulting.

Mental Health Parity: Effective February 10, 2021, requires group/individual health plans to perform, document and to provide upon request comparative analyses of the design and application of non-quantitative treatment limitations.


CareFirst does not provide legal advice and provides the above as general information. Discuss any legal issues or approaches with your counsel.