The Consolidated Appropriations Act (“CAA”) of 2021 mandated that health plans and issuers provide participants, beneficiaries, or enrollees with an Advanced Explanation of Benefits (“AEOB”). The AEOB requirement, initially slated for 2022, has been delayed until the Centers for Medicare & Medicaid Services (“CMS”) issued implementational guidance in the form of agency rulemaking. While rules for Good Faith Estimates (“GFEs”) for uninsured individuals are in effect, the complexities of developing the data exchange between providers, plans, and issuers have led to a phased approach.
CMS released a December 2024 update on the progress toward AEOB rulemaking and implementation, highlighting significant progress in consumer protection and transparency in healthcare costs. This mandate, as required under the No Surprises Act (“NSA”), empowers patients by requiring issuers to produce pre-treatment detailed cost information. It is anticipated these measures will help to reduce and/or eliminate unanticipated medical bills.
The consumer research section of the AEOB rulemaking update stresses the need for transparency and detailed cost information. By providing consumers with GFEs and personalized AEOBs, the initiative aims to eliminate surprise medical bills and encourage patients to make informed decisions about their care. Addressing the challenges and leveraging the opportunities will be key to the NSA as the implementation progresses.
Employer Action Items
- Stay Informed: The BRCC continues to monitor CMS updates and guidance on AEOB rulemaking and implementation timelines. As this issue develops, the BRCC will provide updates and additional information about any employer duties or mandates arising in connection with the AEOB requirements.
- Review the AEOB Guidance: In the interim, clients are encouraged to review the CMS observations and related information in the recently released agency guidance. A link to the updated AEOB is provided at the end of this article.
Summary
CMS released a December 2024 update on the progress toward AEOB rulemaking and implementation, highlighting significant progress in consumer protection and transparency as related to healthcare costs. This requirement, part of the NSA, empowers patients by providing them with detailed cost information prior to the receipt of care, with the expectation of working to eliminate unexpected medical bills.
The consumer research conducted as part of the AEOB rulemaking process reveals several critical insights:
- Demand for Transparency: Consumers have expressed a strong desire for transparency in healthcare costs. They want to know the expected out-of-pocket expenses for medical services before they receive care. This transparency allows them to make informed decisions and budget appropriately.
- Importance of GFEs: The research stresses the importance of providing GFEs to consumers. These estimates include expected costs for each item or service, including those from other providers involved in the care. GFEs help consumers understand the total cost of their care and to avoid surprise bills.
- Role of Health Plans: Health plans are essential in the AEOB process. After receiving a GFE from a provider, the health plan must create a personalized AEOB. This document includes the provider’s expected charges, the portion covered by the health plan, and the amount the consumer is expected to pay. This comprehensive estimate helps consumers understand their financial responsibility before receiving care.
- Consumer Empowerment: The AEOB initiative aimed to empower consumers by providing them with the information they need to make cost-conscious decisions about healthcare. By knowing the costs upfront, consumers can compare prices, seek alternative providers or facilities, and overall, to make better financial determinations respecting the receipt of healthcare.
- Challenges and Opportunities: While the AEOB rulemaking process has progressed, there are still challenges to address. Ensuring that all providers and health plans comply with the requirements and that the information provided is accurate and timely are ongoing concerns. However, the opportunities for improving consumer satisfaction and trust in the healthcare system are immense.
Additional Resources
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