March 28, 2022

Compliance Update

Service provider compensation disclosures, the Federal IDR, No Surprises for COVID-19 Tests Act, and IRS Publication 502 / 503.

Pattern Overlay

Service Provider Compensation Disclosures as Outlined in the Consolidated Appropriations Act, 2021


What it is: The Consolidated Appropriations Act, 2021 (CAA), was signed into law on December 27, 2020 and includes provisions to increase transparency in employee health benefit plans. In this article, we’ll focus specifically on Division BB, Title II, Sec. 202 of the CAA: Disclosure of direct and indirect compensation for brokers and consultants to employer-sponsored health plans on the individual market.

Status: Field Assistance Bulletin No.  announces the Department of Labor’s temporary enforcement policy for group health plan service provider disclosures under ERISA section 408(b)(2)(B).

What you need to know:

According to Field Assistance Bulletin 2021-03:

– Section 202 of Title II of Division BB of the CAA amended section 408(b)(2) of ERISA to require certain service providers to group health plans, as defined in section 733(a) of ERISA, to disclose specified information to a responsible plan fiduciary about the direct and indirect compensation that the service provider expects to receive in connection with its services to the plan.

– The new disclosure requirements in ERISA section 408(b)(2)(B) apply to persons who provide broadly-defined “brokerage” or “consulting” services to ERISA-covered group health plans who reasonably expect to receive $1,000 or more in direct or indirect compensation in connection with providing those services.

– The information required to be disclosed under ERISA section 408(b)(2)(B), which includes both direct and indirect compensation that is expected to be received in connection with a contract or arrangement between a covered service provider and a covered plan, generally must be disclosed:

– reasonably in advance of the date on which the contract or arrangement is entered into, extended, and/or renewed;

– in the event of a change to the compensation information, as soon as practicable, but not later than sixty (60) days from the date on which Healthgram is informed of a change, unless disclosure is precluded due to extraordinary circumstances beyond Healthgram’s control, in which case as soon as practicable;

– in the event of an inadvertent error or omission, within thirty (30) days of discovery; and,

– upon written request by a covered plan, within ninety (90) days. If the covered service provider fails or refuses to respond to the written request within ninety (90) days, the covered plan must notify the Department of Labor within thirty (30) days.

– The Departments have indicated that no further guidance will be issued, so disclosures should be made in accordance with a good faith, reasonable interpretation while taking into account previously issued guidance of the obligation for disclosures relating to pension plans.


The Federal Independent Dispute Resolution Process Within the No Surprises Act


What it is: The No Surprises Act (NSA) established a new Federal Independent Dispute Resolution (IDR) process that is designed to resolve payment disputes relating to certain services that are offered by providers for certain out-of-network (OON) charges.

 Status: For plan years effective on or after January 1, 2022, patients will have new billing protections under the NSA when getting emergency care and non-emergency care from OON providers at in-network facilities. However, on February 23, 2022, the U.S. District Court for the Eastern District of Texas struck down part of the interagency interim final rule implementing the IDR procedures that were created by the NSA (Texas Medical Association v. U.S. Department of Health and Human Services). Then, on February 28, 2022, the Employee Benefits and Security Administration issued a memorandum in response to the ruling which withdrew certain prior guidance and states departments are “considering next steps.”

 What you need to know:

According to “The No Surprises rules creates new protections against out-of-network balance billing and establishes a new process, called the independent dispute resolution process, which providers (including air ambulance providers), emergency facilities and health plans can use to resolve payment disputes for certain out-of-network charges.”

– The IDR process:

– “Brings in a third-party known as a certified independent dispute resolution entity to decide the payment amount. The parties mutually select the certified independent dispute resolution entity, and everyone involved must attest to having no conflicts of interest;

– Requires the provider or facility and the health plan to submit payment offers to the certified independent dispute resolution entity and additional information supporting their payment offers; and

– Requires the certified independent dispute resolution entity to select from the payment offers. Both the provider or facility and the health plan must abide by the certified entity’s decision, and payment must be made within 30 calendar days.”

– For more information on the No Surprises Act and patients’ rights against surprise medical bills, view:

– the CMS Fact Sheet

– The memorandum regarding surprise billing protections for consumers

Requirements related to Surprise Billing, Part II

2022 Calendar year fee guidance for the federal IDR process under the NSA


The No Surprises for COVID-19 Tests Act


What it is: The No Surprises for COVID-19 Tests Act, if passed, would extend coverage of testing at zero-cost sharing beyond the Public Health Emergency (PHE) period until December 31, 2023.

Status: On February, 25, 2022, Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ) and Education and Labor Committee Chairman Robert C. “Bobby” Scott (D-VA) introduced the No Surprises for COVID-19 Tests Act to amend the Families Frist Coronavirus Response Act and CARES Act to establish new coverage and payment rules for certain diagnostic tests and related items and services.

What you need to know:

– This legislation would establish new coverage and payment rules for certain COVID-19 diagnostic tests and related items and services.

– Insurance companies would be required to continue to provide coverage for related items and services without imposing any cost-sharing, including for health provider office visits, urgent care visits, and emergency room visits that result in an order of or administration of a COVID-19 test.

– This act would also ensure that patients do not receive surprise medical bills for COVID-19 testing and applies the consumer protections included in the NSA.

– For more information on No Surprises for COVID-19 Tests Act, visit this resource


The IRS Releases Guidance on Medical and Dependent Care Expenses


What it is: The IRS released the 2021 editions of Publication 502 (“Pub. 502”) and Publication 503 (“Pub. 503”).

 Status: Publication 502 provides guidance on “Medical and Dental Expenses” and Publication 503 provides guidance on “Child and Dependent Care Expenses” for individual federal income tax returns.

What you need to know:


– Defines “medical expenses” and identifies which expenses may be reimbursed or paid by Health Flexible Spending Accounts, Health Savings Accounts, and Health Reimbursement Accounts.

– For individual federal income tax returns, Pub. 502 explains the itemized deduction for medical and dental expenses that is claimed on Schedule A (to IRS Form 1040), including:

– What expenses, and whose expenses, can be included in calculating the deduction.

– How to treat reimbursements and calculate the deduction.

– How to report the deduction on individual tax returns and what to do if an individual sells medical property or receives damages for a personal injury.

– Pub. 502’s 2021 edition is very similar to the 2020 edition. Applicable dollar amounts are revised to reflect inflation-adjusted values.

– For the latest information about developments related to Pub. 502, visit: gov/Pub502


Pub. 503:

– Outlines the requirements that taxpayers must satisfy to claim the dependent care tax credit available under Code Section 21.  Many of these requirements also apply to employer-sponsored dependent care flexible spending accounts.

– The 2021 edition of Pub. 503 was revised to include:

– The temporary provisions of the American Rescue Plan Act of 2021 and the Consolidated Appropriations Act of 2021 (collectively, the “Acts”).

– These Acts increased the amount of the credit for child and dependent care expenses.  The Acts also made this credit refundable for taxpayers who meet certain residency requirements, increased the percentage of employment-related expenses for qualifying care considered in calculating the credit, and modified the phaseout of the credit for higher earners.

– For the latest information about developments related to Pub. 503, visit: gov/Pub503