Don’t Let Healthcare Compliance Issues Catch Your Business Off Guard

OCTOBER 3, 2023

Health and welfare plan compliance is often overlooked until there’s an urgent problem that needs to be resolved. Taking the time to address regulatory requirements before they become an issue can save your business a lot of time and frustration, and help you avoid costly penalties and fines. Following are several compliance concerns you should be paying attention to as the calendar year draws to an end.

Gag Clause Attestation Due December 31, 2023

Prior to the Consolidated Appropriations Act of 2021 (CAA), agreements between a plan or carrier and a healthcare provider, provider network, third-party administrator (TPA), or other service provider often contained a gag clause — contractual language that directly or indirectly restricts specific data and information that a plan or carrier can share with another party. For example, a TPA agreement that only allows access to provider-specific cost or quality information at the discretion of the TPA would be considered a gag clause.

The CAA prohibits group health plans and insurance carriers from entering into agreements containing a gag clause, and requires carriers and plan sponsors to submit information annually to the Centers for Medicare and Medicaid Services (CMS) attesting that their plans do not include such a clause. The first attestation is due December 31, 2023.

• Fully Insured: Both the carrier and the plan have an obligation to file the attestation. However, if the carrier submits the attestation on behalf of the fully insured plan, no further action should be required. Fully insured employers should confirm that the carrier will handle this on behalf of the plan.
• Self-funded (including level-funded): Plan sponsors are responsible for the attestation, though they may enter into a written agreement with the TPA to submit on behalf of the plan. Some TPAs, however, have indicated they will not submit the attestation, in which case the plan sponsor will need to act. Plan sponsors will need to obtain written confirmation from the TPA that the contracts satisfy the gag clause prohibition requirement and submit the attestation to the CMS. Contact your TPA to determine whether they will submit the attestation on behalf of your plan.

Medicare Secondary Payer Rules

Some individuals may have coverage through both Medicare and the employer-sponsored health plan due to their current employment status. Medicare Secondary Payer (MSP) rules determine whether Medicare or the group health plan pays first, up to the limits of coverage (“primary” payer). Costs not covered by the primary payer may then be picked up by the secondary payer.

These rules are complicated and it's important for employers to understand when their group health plan pays primary versus secondary to Medicare. For example, with respect to Medicare entitlement based on age (65+), the group health plan is the secondary payer (with Medicare as the primary) when the employer has fewer than 20 employees. However, when the employer has 20 or more employees, the group health plan is the primary payer (and Medicare is secondary).¹ 

For growing organizations that are used to being the secondary payer, this can create an administrative headache and possible fines. If Medicare — as the secondary payer — makes a primary payment, it will seek repayment from the plan or plan sponsor, carrier or TPA. Medicare typically sends a demand letter, giving the recipient 60 days to respond. For letters that go unanswered or unresolved, interest is applied. Debts outstanding for longer than 60 days may be forwarded to the Department of Treasury for collection or referred to the Department of Justice for legal action.

Annual Disclosures

Employers may be subject to Department of Labor (DOL) penalties and fines if they are missing plan documents and summary plan descriptions for Employee Retirement Income Security Act (ERISA) benefits, or if they fail to include appropriate disclosures within employee benefit guidebooks. For example, the DOL may impose penalties of up to $110/day per participant for failure to provide COBRA notices and $100/day for certain annual legal notices.

Small employers with a self-funded group health plan (including level-funded) must annually report coverage information to covered individuals and the IRS using Forms 1094-B and 1095-B. Beginning in 2024, employers filing at least 10 returns or statements in a calendar year with the IRS will be required to furnish this filing electronically. This includes filings for calendar year 2023, which are due to the IRS by March 31, 2024.