New transparency requirements under the Affordable Care Act (ACA) and the Consolidated Appropriations Act -2021 (CAA-21) have ushered in a new era of health plan fee and pricing transparency.These rules place new obligations on group health plans and health insurance issuers, including public reporting of health plan prices for medical and prescription drug items and services, development of cost-sharing tools for plan participants, elimination of surprise billing, removal of gag clauses from health plan contracts and reporting pharmacy benefits and prescription drug costs to the federal government.  The CAA-21 also requires brokers and consultants providing services to ERISA group health plans to provide certain fee and commission disclosures to plan fiduciaries. 

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This article will focus on recent developments under the ACA’s final Transparency in Coverage Rule (TiC Rule) issued in late 2020 by the Departments of Labor, Health and Human Services and Treasury (collectively, the Departments).  The TiC Rule requires non-grandfathered plans and issuers offering non-grandfathered coverage in the group and individual markets to disclose, on a public website, information regarding in-network rates for covered items and services, out-of-network allowed amounts and billed charges for covered items and services and negotiated rates and historical net prices for covered prescription drugs in separate machine-readable files (MRFs).MRFs are digital representations of data or information in files that can be imported or read by a computer system for further processing without human intervention and must be made availablefree of charge, and without restrictions (e.g., passwords, credentials).

The declared purpose of the TiC Rule is to (i) provide necessary information for consumers to make more-informed health care spending decisions, (ii) strengthen stakeholders’ ability to support customers, (iii) reduce the potential for surprise billing, and (iv) increase competition and contain costs.The MRF requirement was originally effective beginning with plan or policy years on or after January 1, 2022; however, the effective date for posting medical pricing files was delayed to plan or policy years on or after July 1, 2022 and the effective date for posting prescription drug files has been delayed indefinitely until the Departments can engage in further rulemaking and coordination with similar rules under CAA-21.  

The second phase of the TiC Rule requires health insurance insurers and group health plans to make self-service cost-sharing tools available to plan participants, beneficiaries, and enrollees. This will be phased-in with respect to 500 specified items and services beginning with plan or policy years on or after January 1, 2023 and will be fully implemented beginning with plan or policy years on or after January 1, 2024, for all items and services.

Requirements for Public Disclosure

The TiC Rule requires plans and issuers to disclose to the public certain information regarding covered items and services, including in-network negotiated amounts, out-of-network allowed amounts, and,at a yet to be determined date, negotiated rates and historical net prices for prescription drugs.The Departments determined that public disclosure of this pricing information is important to uninsured consumers and insured consumers who need to access out-of-network benefits to make informed health care decisions, to allow consumers to evaluate their options for group or individual coverage, to increase competition among health care providers (with the hope that this could potentially lower health care costs), to allow employer plan sponsors access to data that could allow them to negotiate for lower prices for their participants, and to assist health care regulators in carrying out health insurer oversight responsibilities, and in designing and sustaining public health care programs.

Technical Guidance for creating the MRFs can be found here:

The Departments recently released helpful FAQs regarding the public posting of MRFs.  The guidance clarifies that if agroup health plan does not have its own website, itmay satisfy the requirements of the TiC Rule if the plan’s service provider posts the MRFs on its public website on behalf of the group health plan.  Specifically, the Departments note this guidance applies in instances where the plan sponsor (for example, the employer) maintains a public website, but the group health plan sponsored by the employer does not.  In order to take advantage of this relief, the plan must enter into a written agreement requiring the service provider (such as an issuer or TPA) to post the MRFs on its public website on behalf of the plan. However, if the plan maintains a public website, the plan must also post a link to the historical allowed amount file hosted by the service provider on the plan’s own website. While self-insured plans can contract with third party administrators (TPAs) to provide the information, the plans still must monitor TPAs because such plans ultimately remain liable for the disclosure requirements.

Requirements for Participant Disclosure

Under phase 2 of the TiC Rule, plans and issuers are required to make price comparison information available to participants, beneficiaries, and enrollees through an internet-based self-service tool and in paper form, upon request. This information must be available for plan years (in the individual market, policy years) beginning on or after January 1, 2023, with respect to the 500 items and services identified by the Departments in Table 1 in the preamble to the TiC Rule(and also available here, and with respect to all covered items and services, for plan or policy years beginning on or after January 1, 2024.

Specifically, the internet-based self-service tool (and paper form upon request), must include the following information: 

• The participant’s estimated cost-sharing liability (i.e., the amount a participant is responsible for paying, such as deductibles, coinsurance, and copayments) for a requested item or service covered under the terms of the plan or coverage. The estimate does not include premiums, balance billing amounts charged by out-of-network providers, the cost of non-covered items or services, or costs for any unanticipated items or services the participant may incur.

• Accumulated amounts (i.e., the amount of financial responsibility that a participant has incurred at the time the request for cost-sharing information is made, with respect to a deductible and/or an out-of-pocket limit). This includes accumulated amounts for a cumulative treatment limitation that reflects the status of the participant’s progress toward meeting the limitation but does not include any individual determination of medical necessity that may affect coverage for the item or service.

• The in-network rate with a contracted in-network provider applicable to the plan or insurer’s payment model. The in-network rate includes:

• The negotiated rate with the in-network provider for the requested item or service, which must be expressed as a dollar amount; and

• The underlying fee schedule rate used to determine the cost-sharing liability, but only if it is different from the negotiated rate.

• The out-of-network allowed amount and any cost-sharing liability, based on the allowed amount that the participant would be responsible for paying if the provider is an out-of-network provider.

• A list of the individual items and services covered, if the requested item or service is subject to a bundled payment arrangement.

• A notice of any prerequisites to coverage, which capture medical management techniques that apply to an item or service that require action by the participant before the plan or issuer will cover the item or service.

• A disclosure notice that communicates, in plain language, the following statements: (i) actual charges may be different from those described in a cost-sharing liability estimate; (ii) an out-of-network provider may bill the participant and that the cost-sharing information does not include such amounts (only required if state law permits balance billing); (iii) the estimated cost-sharing liability for a covered item or service is not a guarantee that coverage will be provided for such item or service; (iv) whether the plan counts copayment assistance or other third-party payments in the statement of cost-sharing liability or an out-of-pocket maximum; and (v) preventive items may not be subject to cost-sharing liability in certain specified instances.

Required Methods for Disclosing Information to Participants

The TiC Rule requires the cost-sharing information to be made available through an Internet website and other means for participants without access to the Internet through (1) a self-service tool that meets certain standards, and (2) in paper form:

• Internet-based self-service tool – The self-service tool must allow users to search for cost-sharing information by billing code, name of in-network provider, and other factors that affect cost-sharing liability, such as location of service, facility name, or dosage. The tool must also allow participants to search for an out-of-network allowed amount, by billing code, name of an item or service, the geographical location of the provider, or percentage of billed charges.

• Paper form – A plan or issuer must also furnish, at the request of the participant, and without a fee, all of the information required to be disclosed through the self-service tool in paper form. A plan or issuer may, however, limit any results for a paper request to 20 providers per request. The paper form must be mailed to the participant, within two business days after receipt of the request, unless the participant agrees that the disclosure be made by phone or email.

Similar to the MRF requirement, a group health plan may satisfy the participant disclosure requirements of the TiC Ruleif the plan requires the issuer offering the coverage, or vendor administering the coverage, to provide the information pursuant to a written agreement between the plan and issuer.

Next Steps

Group health plan sponsors and health insurance issuers will need to take steps to comply with these transparency and pricing rules.  For sponsors of self-funded group health plans, service agreements will have to be amended to require vendors to provide the disclosures and tools required under the TiC Rule. While many of these new transparency obligations can be delegated to third parties, group health plan sponsors remain responsible for monitoring delegations. Finally, because the TiC Rule is part of the ACA, plan sponsors and health insurance issuers could be subject to potential penalties and excise taxes under ERISA, the Internal Revenue Code, and the Public Health Services Act for failure to comply with these requirements.