Final Transparency Rule Provides Clarity to Medical Pricing and Charges Through Online Pricing Tool

Over the past few months, two new compliance requirements have been created for group health plans. The new compliance requirements are: The No Surprises Act and the Transparency Rule. The Transparency Rule is discussed below. See our previous article in this compliance series here where we discussed the impact of the No Surprises Act.

Who does the Transparency Rule affect?

This rule affects:

• Non-grandfathered group health plans that are subject to federal health care reforms under ERISA, the Internal Revenue Code, and the Public Health Service Act. Non-grandfathered plans are plans that were not in existence on the day the Affordable Care Act (ACA) was enacted—March 23, 2010.

Exemptions:

• Retiree-only plans,
• Grandfathered plans,
• Excepted benefits (benefits not covered under traditional health insurance, such as disability, vision, dental, etc).

What is the Transparency Rule and when it is effective?

The Transparency Rule was published in early November 2020 by the Internal Revenue Service (IRS), the Employee Benefits Security Administration, and the Health and Human Serviced Department. The main objective of this rule is to help participants in navigating the complex and technical nature of the health care field and to make real time pricing information available to participants. The Rule requirements are expected to be effective as follows:

• For plan years beginning on or after January 1, 2022, affected health plans will be required to post machine readable files online that include an in-network rate file, and out-of-network allowed amount file, and a prescription drug file that are updated monthly.
• For plan years beginning on or after January 1, 2023, affected plans will be required to provide an online, real-time, searchable, self-service pricing tool for participants to use to search for cost-sharing information.
  • Initial rollout requires this information for 500 specific items and services until January 1, 2024, at which time health plans will be required to provide this information for all items and services.

This pricing tool is expected to provide the following information:

• Estimated cost-sharing (deductibles, copayments, coinsurance),
• Accumulated amounts,
• In-network negotiated rates,
• Out-of-network allowed amounts,
• Items and services in bundled arrangements, if applicable,
• Any coverage prerequisites (for example, preauthorization concurrent review, step therapy, fail first protocols, etc.), and
• Disclosure notice
  • This shouldn’t be confused with the disclosure requirements of this rule, which is essentially the pricing tool provided to participants. Upon receiving a request for cost-sharing information, a group health plan or third-party insurer must provide a disclosure notice that includes the following information:
    • An out-of-network provider may engage in charging a participant for the portion of the provider’s bill not paid by the plan or insurer,
    • The amount actually charged may be different from that described in the cost sharing estimate,
    • The provision of an estimate of cost sharing does not guarantee that such item or service will be covered by the group health plan,
    • And, any additional information deemed appropriate by the plan or insurer, as long as it does not conflict with the information required to be included in the estimate of cost sharing (information provided in bullets 1-6).

What should a Health Plan and Plan participants expect from the Transparency Rule?

Insured health plans will have the option to enter into agreements with their insurer or another third-party administrator (TPA) to meet these disclosure requirements. In doing so this shifts potential error or liability for any noncompliance to the insurer.

Self-funded health plans do not have this same option, however. Self-funded plans may enter into written agreements with service providers, but the liability remains with the self-funded plan sponsor to ensure compliance with the final rule. Implementing this pricing tool may seem daunting, but keep in mind that these tools are not new. Similar pricing tools, such as Fair Health and GoodRx, that have been available to the public for years can provide a basis for getting started; in addition, contracting a TPA or service provider to aid in compliance with providing your plan’s pricing tool is another option. According to the Rule, plans that act in good faith and with reasonable diligence will not be deemed out of compliance in the following circumstances:

• An error or omission is made in a disclosure, provided it is corrected as soon as practicable;
• It’s website is temporarily inaccessible provided the information is available as soon as practicable;
• Or the plan needs to obtain information from another entity to comply.

Also, the plan will not be out of compliance unless the plan knows or reasonably should have known that the information is incomplete or inaccurate.

Authors: Brittanee Ramos | [email protected] , Fabricia Edwards, CPA, Principal | [email protected]