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Baldwin Bulletin

Navigating Healthcare Costs: Update on Advanced Explanation of Benefits (AEOB)

The Baldwin Group
Updated: June 7, 2024
1 minute read

On April 23, 2024, the Centers for Medicare & Medicaid Services (“CMS”) provided a status update on the implementation of the Advanced Explanation of Benefits (“AEOB”) requirement under the Consolidated Appropriations Act (“CAA”) of 2021.  The effective date of this requirement was originally set for 2022.  Due to the complexities of coordination between healthcare providers and the payers/health insurance carriers and third-party administrators TPAs the start date was postponed to a date yet decided.

Employer Action Items

There are no immediate action items for plan sponsors.  Keep an eye out for future developmentsfrom CMS and the BRCC regarding the official AEOB rollout and its implications for plan sponsors.


The AEOB requires healthcare providers, health insurance carriers and TPAs to give plan participants a detailed breakdown of the estimated costs of a service or procedure before it is performed. The AEOB must include:

  • A disclosure as to whether the provider or facility is in or out-of-network;
  • The good faith estimates of charges from the provider;
  • The amount the payer should expect to pay;
  • The plan participant’s likely out-of-pocket costs; and
  • A disclaimer advising whether the service is subject to any medical management provisions.

CMS is collaborating with the Departments of Health and Human Services, Labor and Treasury, and the Office of Personnel Management (“OPM”) to implement the good faith estimate and AEOB requirements in a phased matter.  This incremental approach will allow the Departments and OPM to enhance each stage with in-depth research, effective collaboration, and the development of suitable technical standards for data exchange between providers and payers.  The unified data exchange standard will be utilized for both receipt of the good faith estimates by payers and for transmission of AEOBs from payers to providers.  This latest guidance does not mention a specific timeline for the implementation process.

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