November 2, 2020
On October 29, 2020, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) issued a final rule regarding transparency in coverage that imposes new transparency requirements on group health plans and health insurers in the individual and group markets. These provisions only apply to non-grandfathered coverage, including both insured and self-insured group health plan sponsors.
This final rule was issued in response to an executive order issued on June 24, 2019, aimed at improving price and quality transparency in health care. It will require plans and issuers to disclose personalized price and cost-sharing information to consumers.
The requirements in the final rule are intended to give consumers the tools needed to access pricing information through their health plans. Specifically, the final rule requires plans and issuers to disclose (1) price and cost-sharing information to participants, beneficiaries and enrollees upon request; and (2) in-network provider-negotiated rates and historical out-of-network allowed amounts on their website.
Required Disclosure of Price and Cost-Sharing Information
Personalized cost-sharing information must be made available to participants, beneficiaries, and enrollees through an internet-based self-service tool and in paper form upon request. An initial list of 500 shoppable services included in the final rule will be required for plan years beginning on or after January 1, 2023. The remainder of all items and services will be required for plan years beginning on or after January 1, 2024.
Required Website Disclosure of Provider Negotiated Rates
For plan years beginning on or after January 1, 2022, plans and issuers will also be required to disclose on a public website their in-network negotiated rates, billed charges and allowed amounts paid for out-of-network providers, and the negotiated rate and historical net price for prescription drugs.
Disclosure will be through three separate machine-readable files that include detailed pricing information. These files will be displayed in a standardized format and be updated monthly:
The final rule also allows issuers that pass on savings to consumers resulting from consumers shopping for lower-cost, higher-value services, to take credit for those “shared savings” payments in their medical loss ratio (MLR) calculations, beginning with the 2020 MLR reporting year.
The final rule presents an ambitious effort to achieve price transparency. Fortunately, for employers and insurers, the deadlines for implementing these new requirements are staggered over a few years, giving them extra time to comply. We anticipate further guidance in the coming months ahead. In the meantime, sponsors of both fully insured as well as self-funded non-grandfathered health plans should work closely with their health insurance issuers and their third-party administrators, respectively.
For More Information
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits consultant or Burnham Benefits at:
Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.