On October 29, 2020, the Departments of HHS, Treasury and Labor (the “Departments”) released the Transparency in Coverage final rule. First proposed in November 2019 (as directed by Executive Order 13877), the final rule imposes new cost-sharing and pricing disclosure requirements upon group health plans and health insurers.
As background, the Trump administration has focused on promoting price transparency to provide individuals with necessary cost-sharing data to make informed healthcare decisions. Under rules set to take effect in 2021, hospitals will soon be required to disclose standard charges for products and services, including negotiated rates with insurers. The Transparency in Coverage final rule builds upon these regulatory initiatives and is applicable to non-grandfathered group health plans (including self-insured plans) and health insurance issuers. However, account-based plans such as HRAs and FSAs, and excepted benefits (e.g., dental and vision benefits offered under a separate policy), are not subject to these new requirements.
The final rule requires group health plans and health insurance issuers in the individual and group markets to provide increased access to pricing information through two approaches:
- 1. Disclosing cost-sharing information for all covered healthcare items and services (including prescription drugs) through an internet-based self-service tool and in paper form upon request
- 2. Making detailed pricing information publicly available (which includes negotiated rates for all covered items and services between the plan or issuer and in-network providers; historical payments to, and billed charges from, out-of-network providers; and in-network negotiated rates and historical net prices for all covered prescription drugs by plan or issuer at the pharmacy location level)
Under the first approach, when requested by a participant, beneficiary or enrollee, disclosures must be provided that include estimates of their cost-sharing liability with different providers (allowing them to better understand and compare healthcare costs prior to receiving care). The content will include estimated cost sharing, actual negotiated rates, out-of-network allowed amounts, real-time accumulated amounts towards deductibles and out-of-pocket maximums, and treatment limitations. Any prerequisites for coverage, such as prior authorization, would also need to be referenced. Where bundled payments are applied, disclosures must be provided if cost sharing is imposed separately for each item and service. Further, the rules do not require disclosure of balance billing amounts for out-of-network providers, but provide for a disclaimer to alert participants of a potential balance bill. This part of the rule will be phased in, with disclosures required for plan years beginning on or after January 1, 2023, for an initial list of 500 items and services, and all items and services to be disclosed for plan years that begin on or after January 1, 2024.
As for the second approach, group health plans and insurers are required to publicly disclose negotiated rates for in-network providers and historical out-of-network allowed amounts in standardized files on their website. These machine-readable files must be updated monthly (clearly indicating the date that the files were most recently updated), and are intended to encourage price comparison and innovation. This part of the rule is effective for plan years beginning on or after January 1, 2022.
The final rule also provides that beginning with the 2020 MLR reporting year, insurers can claim credit towards their MLR for “shared savings” if a participant selects a lower-cost, higher-value provider.
Employers should be aware of the final rule, its new requirements and its phased-in effective dates. Although a good faith safe harbor allows for certain mistakes (as long as the issue is corrected as soon as practicable), plans and insurers face increased compliance obligations to implement these new requirements. For fully insured plans, the insurer is responsible for these new requirements. For self-insured plans, the ultimate responsibility to comply with this rule rests on the plan sponsor; however, they can utilize TPAs to assist. That said, employers should discuss these new disclosure obligations with their insurance carriers and/or TPAs to confirm compliance as applicable.
Source: NFP BenefitsPartners