Transparency in Coverage Regulations Add Expansive Cost-Sharing Disclosures for Health Plans and Insurers

The IRS, DOL, and HHS have jointly issued final regulations that require most group health plans and insurers to make certain disclosures to participants, beneficiaries, enrollees, and, in some cases, the public. Initially proposed in 2019 (see our Checkpoint article), the regulations are intended to improve price transparency, as required by the Affordable Care Act (ACA), and apply generally to insured and self-insured group health plans. While they do not apply to grandfathered plans, HRAs, health FSAs, excepted benefits, or short-term limited-duration insurance, “grandmothered” plans must comply. Here are some highlights:

• Required Disclosures. Plans and insurers must make advance disclosures of the specified cost-sharing information to participants, beneficiaries, and enrollees through an internet-based self-service tool and, upon request, in paper form. Disclosures are required for an initial list of 500 items and services for plan years that begin on or after January 1, 2023, with all items and services to be disclosed for plan years that begin on or after January 1, 2024.

  • Estimated Cost-Sharing. Plans and insurers must disclose the estimated amount that the individual must pay for a covered item or service under the plan’s terms (including deductibles, coinsurance, and copayments). Separate disclosures must be made if cost-sharing is imposed separately for each unique item and service included in a bundled payment.
  • Accumulated Amounts. The amount of financial responsibility that an individual has incurred when the request for cost-sharing information is made (e.g., as a deductible or an out-of-pocket limit) must also be disclosed. These estimates do not include amounts available through separate account-based arrangements.
  • Negotiated Rates. Plans and insurers must also disclose the amount they or a TPA have contractually agreed to pay an in-network provider for a covered item or service, such as negotiated rates (including for prescription drugs) and underlying fee schedules that result from using a formula (e.g., 150% of the Medicare rate) as a dollar amount.
  • Out-of-Network Allowed Amount. This provision requires disclosure of the maximum amount that would be paid for an item or service furnished by an out-of-network provider. Plans and insurers must disclose the out-of-network allowed amount or any other calculation that provides a more accurate estimate (e.g., the usual, customary, and reasonable (UCR) amount).
  • Items and Services List. A list of the covered items and services must be disclosed when an item or service is subject to a bundled payment arrangement.
  • Coverage Prerequisites. Individuals must receive a notice informing them that a specific item or service may be subject to a “prerequisite,” which is defined as concurrent review, prior authorization, and step-therapy or fail-first protocols. The items listed in this definition are an exhaustive list (the term does not include medical necessity determinations generally or other medical management techniques).
  • Disclosure Notice. Individuals must also receive a notice with several specific disclosures, including a statement about balance billing and disclaimers about differences in actual and estimated charges. (Model language was proposed, along with the proposed regulations (see our Checkpoint article).) Plans and insurers must disclose whether co-payment assistance and other third-party payments are included in deductible and out-of-pocket maximum calculations.
• Public Disclosures. Plans and insurers must make extensive price transparency disclosures to the public in machine-readable files updated monthly. The disclosures must show negotiated rates for covered items and services between the plan or insurer and in-network providers, as well as historical payments to, and billed charges from, out-of-network providers. (In a change from the proposal, a separate machine-readable file must set forth prescription drug information.) These disclosures are required for plan years beginning on or after January 1, 2022.
• Third-Party Contracts. In general, an insured plan may satisfy the disclosure requirements through a written agreement with its insurer. However, plans and insurers remain ultimately responsible if they contract with other third parties to provide the disclosures. For example, plans and insurers that enter into a business associate agreement with a health care claims clearinghouse or other HIPAA-compliant entity to prepare the machine-readable files for public disclosures are ultimately responsible for compliance failures.

EBIA Comment: The regulations implement a trove of new disclosures for group health plans, and January 2022 will arrive sooner than we can imagine. Although a “good faith” safe harbor allows for errors and temporary website inaccessibility (so long as the issue is corrected as soon as practicable), plans and insurers face significant work to implement these new requirements. For more information, see EBIA’s Health Care Reform manual at Section XXXVI.F (“‘Transparency in Coverage’ Reporting and Cost-Sharing Disclosures”), EBIA’s Self-Insured Health Plans manual at Section XXVIII (“Participant Disclosure Requirements for Self-Insured Health Plans”), and EBIA’s Consumer-Driven Health Care manual at Section V.E (“Summary of Effects of Health Care Reform on Account-Based Plans”).

Contributing Editors: EBIA Staff.