PPI in the News Compliance Corner - January 20, 2022 Archive
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On January 3, 2022, HHS issued a fact sheet directed to patients to promote understanding of the No Surprises Act (the Act) that was part of the Consolidated Appropriations Act, 2021 passed by Congress in late 2020.

Beginning January 1, 2022, the Act prohibits surprise medical bills (i.e., balance billing) for most emergency services provided at both in- and out-of-network facilities and without prior authorization; out-of-network charges and balance bills for certain additional services such as anesthesiology or radiology, furnished by out-of-network providers as part of a patient’s visit to an in-network facility; as well as services provided from out-of-network air ambulance service providers. Further, the Act established an independent dispute resolution process for payment disputes between health plans and providers, as well as new dispute resolution opportunities for self-pay individuals. (For more information on the Act and the interim final rules, see the articles published in the July 8, 2021, and November 11, 2021, editions of Compliance Corner.)

Moreover, the fact sheet explains that the Act creates minimum consumer protection standards against surprise bills at the federal level; therefore, if a state’s surprise billing law provides at least the same level of consumer protection against surprise bills as does the Act, the state law generally will apply for fully insured plans and individual policies.

Fact Sheet. No Surprises: Understand Your Rights Against Surprise Medical Bills »
CMS No Surprises Act Main Site »

On December 30, 2022, CMS issued guidance related to the external review requirement under the No Surprises Act (NSA). The NSA requires insurers and group health plans to have an external review process for any adverse determination related to NSA compliance matters. Examples of such matters, as provided by HHS regulations, include:

• Patient cost-sharing and surprise billing for emergency services.
• Patient cost-sharing and surprise billing protections related to care provided by nonparticipating providers at participating facilities.
• Whether patients are in a condition to receive notice and provide informed consent to waive NSA protections.
• Whether a claim for care received is coded correctly and accurately reflects the treatments received and the associated NSA protections related to patient cost-sharing and surprise billing.

Rather than adopt new external review procedures for this purpose, the DOL, HHS and the Treasury Department (“the departments”) have expanded the existing ACA external review procedures to include NSA matters. The ACA requires insurers and group health plans to adopt external review procedures for participants to appeal adverse benefit determinations of any amount for any reason. The participant must first exhaust the plan’s internal review process. For a fully insured plan, the insurer must follow the state external review process. If the state does not have a process, the insurer would use the federal process administered by HHS. For a self-insured plan, the employer (or the third-party administrator, if so contracted) will utilize the Independent Review Organization (IRO) process. These programs would now also review adverse determinations related to the NSA. If a state program is unable to expand its review in this manner, the insurer may use the HHS or IRO programs.

An employer sponsoring a fully insured group health plan should be aware of these changes. An employer sponsoring a self-insured group health plan should work with its third-party administrator to determine which party is responsible for maintaining the external review process and update contracts accordingly.

CMS Guidance, NSA External Review Process »

On December 27, 2021, the Eighth Circuit Court of Appeals decided Roehr v. Sun Life Assurance Co. of Canada (“Sun Life”), a case involving Sun Life’s termination of long-term disability (“LTD”) benefits of Dr. Todd Roehr, an anesthesiologist who developed intermittent tremors in his hands and finger. Sun Life terminated Roehr’s ERISA LTD benefits as of January 27, 2017, after they paid him the benefits for nearly ten years on the grounds that Roehr had failed to provide proof of disability. Although Roehr lost his challenge with Sun Life’s internal appeal process as well as with the district court initially, the Eighth Circuit overturned the district court’s decision and directed the court to order the reinstatement of Roehr’s LTD benefits. The Eighth Circuit determined that Sun Life abused its discretion by terminating Roehr’s benefits based substantially on the same medical records as when Sun Life found him continuously disabled for ten years and without new significant evidence.

Roehr worked as a board-certified anesthesiologist in Iowa for twelve years before he began experiencing intermittent tremors in both of his hands and fingers. Because he has a strong family history of Parkinson’s disease, he was greatly concerned that his tremors could expose his patients to a risk of paralysis, serious injury or even death. As a result of his concern, Roehr stopped working as an anesthesiologist and applied for LTD benefits under the “own occupation” provision of his employer’s plan underwritten by Sun Life.

He consulted three separate neurologists regarding his condition, and all the neurologists ruled out Parkinson’s disease, though none of them could provide a definitive diagnosis. Nevertheless, Sun Life approved Roehr’s disability claim and paid him benefits of $10,000 per month for nearly ten years before deciding to terminate his benefits in late 2017 with the reason that he was fit to return to work.

In November 2017, Sun Life retained an independent neurologist to review Roehr’s file. The neurologist concluded that the medical evidence did not preclude Roehr from returning to his occupation as an anesthesiologist. Sun Life then terminated Roehr’s claim based on some of the reasons which had long existed with Roehr’s claim, although Sun Life never challenged these reasons previously.

The Eighth Circuit concluded that, while Roehr had a responsibility to provide the medical evidence necessary to substantiate his claim, “a plan administrator’s reliance on the same evidence to both find a disability and later discredit that disability does not amount to a reliance on ‘substantial evidence.’” The court found that Sun Life’s decision was “nothing more than a sudden change of heart on essentially the same record after almost a decade — and with no notice to Roehr prior to his benefits’ termination.” Consequently, Sun Life had left Dr. Roehr “without any meaningful opportunity to respond or seek other treatment.”

The key takeaway from the Roehr decision is that while an initial approval of benefits is not a guarantee of ongoing payment, disability insurers and plan administrators need to be cautious when they terminate benefits in the absence of new findings because it may require “substantial evidence” to terminate the disability benefit payments.

Plan administrators of disability benefits should be aware of this court’s decision.

Roehr v. Sun Life Assurance Co. of Canada »

On January 3, 2022, the IRS released Revenue Procedure (Rev. Proc.) 2022-4, which outlines the procedures for requesting determination letters and private letter rulings from the IRS for qualified retirement plans. Rev. Proc. 2022-4 is a general update of the information provided in Rev. Proc. 2021-4. Determination letters indicate whether the IRS finds an employer’s employee benefit plan to meet the requirements necessary for the plan to be a qualified plan. Private letter rulings interpret and apply the Internal Revenue Code to a set of facts presented by a taxpayer.

This update includes some minor non-substantive changes, including changes to dates, cross references and citations to other revenue procedures. There are also several changes from the guidance that was provided in Rev. Proc. 2021-4, including:

• The procedures for obtaining an opinion letter for Section 403(b) pre-approved plans with six-year remedial amendment cycles beginning July 1, 2021 are provided in Rev. Proc. 2021-37.
• Procedures have been updated for submitting Form 5300, Application for Determination for Employee Benefit Plan and Form 5310, Application for Determination for Terminating Plan , including payment of the user fee. Form 5300 can be submitted electronically beginning June 1, 2022, and must be submitted electronically beginning July 1, 2022.
• Trust documents are no longer a part of the list of documents that must be included as part of a determination letter submission.
• Form 5307, Application for Determination for Adopters of Modified Volume Submitter Plans , should be used for determination letter requests for standardized plans that are not multiple employer plans if the employer requests a determination solely on overriding plan language added to satisfy benefit and contribution limitations and the special rules for top-heavy plans.
• Employers adopting standardized plans do not have to file a Form 5300 to request a determination related to overriding language necessary to satisfy benefit and contribution limitations or the special rules for top-heavy plans, even if they maintain multiple plans.
• This guidance clarifies the scope of reliance for a determination letter issued for a multiple employer plan.
• Plan sponsors of dual-qualified plans must submit a restatement showing compliance with the Code and applicable lists when submitting a determination letter application.
• Appendix A of the Rev. Proc. has been amended to update the user fees relating to letter ruling requests and opinions on pre-approved plans.

Retirement plan sponsors who may need to apply for a determination letter or request a private letter ruling should familiarize themselves with this updated guidance and work with their service providers to comply with the IRS’ requests.

Rev. Proc. 2022-4 »

The IRS recently published the final version of the instructions for the 2021 Form 8955-SSA, Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits. Form 8955-SSA is used to report information about retirement plan participants who separated from service with the employer and are entitled to deferred vested benefits.

The instructions assist employers with the preparation of the 2021 Forms 8955-SSA filing. The instructions explain that the IRS does not permit form attachments. They also clarify which entry codes filers should use in Part III, line 9, column (a) for the following participant scenarios:

• Entry Code A: Separated from service covered by the plan, but vested retirement benefits are not paid and were not previously reported.
• Entry Code B: Were previously reported under the plan but whose information is being corrected.
• Entry Code C: Were previously reported as deferred vested participants on another plan's filing if their benefits were transferred (other than in a rollover) to the plan of a new employer during the covered period.
• Entry Code D: Were previously reported under the plan but have been paid out or no longer entitled to those deferred vested benefits.

Although many employers outsource the preparation and filing of Form 8955-SSA, employers should familiarize themselves with the form’s requirements and work closely with service providers to collect the applicable information.

2021 Form 8955-SSA »

On January 14, 2022, the Pension Benefit Guaranty Corporation published revised civil penalty amounts for failure to provide certain notices or other material information, as required by ERISA. The amounts apply to penalties assessed on or after the publication date. The adjusted maximum amounts are $2,400 (up from $2,259) for Section 4071 penalties and $320 (up from $301) for Section 4302 penalties, which are related to multiemployer plan notices.

PBGC Revised Penalties »

Answer: First, it is important to keep in mind that the employee’s HSA eligibility is based upon whether she meets the HSA eligibility criteria, regardless of whether her spouse or any other individual enrolled on the HDHP is also HSA eligible.

To review, to be eligible to make or receive HSA contributions, an individual must:

• Be covered by a qualified HDHP.
• Not have other “impermissible coverage” (i.e., coverage that provides medical benefits before the HDHP statutory minimum deductible is met, with certain exceptions - e.g., preventive care).
• Not enrolled in Medicare (It is actual enrollment in, and not simply eligibility for, Medicare that precludes HSA eligibility).
• Not be claimed as a dependent on someone else’s tax return.

Therefore, if the employee’s spouse enrolls in Medicare, the spouse would no longer be eligible to make HSA contributions. However, the employee’s HSA eligibility would not be impacted.

Second, the employee’s HSA contribution limit would be based upon the IRS annual maximum for the applicable HDHP coverage tier. For 2022, the annual HSA contribution limit is $3,650 for self-only coverage and $7,300 for family coverage; the additional catch-up contribution (for those ages 55 or older) is $1,000.

Accordingly, if the employee maintains the family HDHP coverage through 2022, the annual family limit of $7,300 would apply. (The family HSA contribution limit applies to an employee with family tier coverage, regardless of the HSA-eligibility status of the other covered individuals.) If the spouse did not make any HSA contributions in 2022 prior to Medicare enrollment, the employee could make or receive a total of $7,300 in contributions to her HSA plus, if applicable, the additional $1,000 catch-up contribution. (Note that if the spouse had remained HSA eligible, the couple could not collectively contribute more than the annual family coverage limit.)

Alternatively, if the employee switches to single-only coverage midyear following the spouse’s Medicare enrollment, the employee could only contribute the maximum based upon the single coverage tier for the remainder of the year. For example, assume the employee is HSA eligible for the entire 2022 tax year but switches from family to single HDHP coverage as of July 1, 2022. In such a case, the employee could contribute 6/12 (or 1/2) of the family contribution maximum of $7,300 or $3,650, plus 1/2 of the single contribution maximum of $3,650 or $1,825. So, her maximum permitted contribution would be $5,475 plus an additional $1,000 catch-up if she is eligible.

Finally, the employee can use her HSA funds to reimburse the qualified medical expenses of herself, her spouse and any tax dependents on a tax-free basis. Her spouse can be enrolled in Medicare (or other disqualifying coverage) at the time the distribution is made. The HSA funds can be used to reimburse the spouse’s Medicare deductibles, coinsurance and copays, unreimbursed dental and vision expenses, over-the-counter drugs, medicine, equipment and other qualifying expenses.

However, the spouse’s Medicare premiums could only be reimbursed when the employee turns 65 and then, only prospectively. But Medicare supplemental policies cannot be reimbursed from the HSA on a tax-advantaged basis even after the employee reaches age 65.

To summarize, the spouse’s Medicare enrollment does not impact the employee’s eligibility to contribute to an HSA based upon the applicable HDHP coverage tier(s). Additionally, the employee’s HSA funds can continue to be used to pay the spouse’s qualified medical expenses after the spouse’s Medicare enrollment.

The Department of Fair Employment and Housing (DFEH) updated the “Your Rights and Obligations as a Pregnant Employee” and “Family Care and Medical Leave and Pregnancy Disability Leave” posters. These publications inform employees of their rights under California’s Family Rights Act (CFRA) and Pregnancy Disability Leave (PDL). Employers with five or more employees must post the notices at their California worksites. If employees work remotely, the notice may be delivered electronically. If 10% or more of the company’s workforce speak a language other than English, the notice must be posted in that language, which is available from the DFEH publications webpage.

“Your Rights and Obligations as a Pregnant Employee” Poster, 2022 »

“Family Care and Medical Leave Pregnancy Disability Leave” Poster, 2022 »

DFEH Publications Webpage »

Revised CFRA Certification of Health Care Provider