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Benefit News

New Proposed Transparency Rule Impacts Self-funded Plan Sponsors

December 9, 2019

In response to President Trump’s Executive Order on Improving Price and Quality Transparency issued earlier this year, the Department of Health and Human Services, together with the Departments of Labor (DOL) and the Treasury (collectively, the Departments) recently released the “Transparency in Coverage” proposed rule, available here, applicable to health insurers and non-grandfathered group health plans, together with a final rule that will require hospitals to disclose their standard charges, including negotiated rates with third-party payers. Together the rules are intended to bring greater transparency across the health care industry by requiring that pricing information be made publicly available.

The final rule is scheduled to go into effect January 2021. However, hospitals have wasted no time in pushing back on these new requirements, and to date there has been at least one court challenge initiated. The proposed rule is currently open for public comment, which may be submitted electronically or by mail to be received by January 14, 2020. Most of the provisions included in the proposed rule are proposed to apply for plan years (or, in the individual market, policy years) beginning on or after one year after the finalization of the rule.

This Legislative Update summaries key features of the proposed rule.

Proposed Transparency Rule

The proposed rule builds on actions required of hospitals by the final bill and would impose new transparency requirements on group health plans, including self-funded group health plans, and health insurers in the individual and group markets with respect to non-grandfathered coverage. Specifically, the proposed rule would require plans and issuers to disclose:

  • Cost-sharing estimates to participants, beneficiaries and enrollees upon request; and
  • In-network provider-negotiated rates and historical out-of-network allowed amounts on their website.

The rule includes two approaches intended to make health care price information more accessible to consumers and other stakeholders:

  • First, each non-grandfathered group health plan or health insurance issuer offering non-grandfathered health insurance coverage in the individual and group markets would be required to disclose personalized out-of-pocket cost information for all covered health care items and services through an internet-based self-service tool and in paper form available to participants, beneficiaries and enrollees (or their authorized representative) upon request. This includes estimates of the individual’s cost-sharing liability for health care for different providers.
  • Second, each non-grandfathered group health plan or health insurance issuer offering non-grandfathered health insurance coverage in the individual and group markets would be required to disclose to the public (including stakeholders such as consumers, researchers, employers and third-party developers) the in-network negotiated rates with their network providers and historical payments of allowed amounts to out-of-network providers through standardized, regularly updated machine-readable files.

In conjunction with the proposed rule, the DOL has posted three Appendices. In furtherance of the first approach above, Appendix 1 represents a proposed transparency in coverage model notice which can be used to provide an individual with an estimate of his or her cost sharing liability for a covered item or service, upon request. With respect to the second approach, the DOL has posted proposed “negotiated rate data elements” and “allowed amount data elements”, as Appendices 2 and 3 respectively, for required disclosure to the public via posting on the health plan or insurer’s internet website.

The proposed rule would also allow issuers that share savings with consumers that result from consumers shopping for lower-cost, higher-value services, to take credit for those “shared savings” payments in their medical loss ratio (MLR) calculations. This is intended to ensure that issuers would not be required to pay MLR rebates based on a plan design that would provide a benefit to consumers that is not currently captured in any existing MLR revenue or expense category. Note, while provisions included in the proposed rule are proposed to apply for plan years (or, in the individual market, policy years) beginning on or after one year after the finalization of the rule, the MLR provision would be applicable beginning with the 2020 MLR reporting year.

In addition, the proposed rule also solicits comments on whether group health plans and health insurance issuers should also be required to disclose cost-sharing information through other means, such as a standards-based application programming interface (API) and how health care quality information can be incorporated into the price transparency proposals included in the proposed rule.

For additional information, please contact your Burnham Benefits Consultant or Burnham Benefits at 949-833-2983 or inquiries@burnhambenefits.com.


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.

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