Background
On June 24, 2019, President Trump signed Executive Order Improving Price and Quality Transparency in American Healthcare to Put Patients First directing the Departments of Health and Human Services, Treasury and Labor (Departments) to develop regulations to require hospitals, healthcare providers, health insurance issuers, and self-insured group health plans to provide or facilitate access to information about expected out-of-pocket
costs for items or services to patients before they receive care. Additionally, this Order includes provisions to direct rulemaking related to more eligible medical expenses and increased use of some account-based plans (e.g., FSA, HDHP, and HSA). While the Executive Order was light on content, focusing more on intent, the order did provide some information about what to expect in the following 60-180 days of rulemaking.
Approaches to Making Health Care Price Information Accessible
The Departments released a “transparency in coverage” proposed rule on November 15, 2019. The goal of this proposed rule is to enable consumers to make more informed decisions by providing them with more transparent health care cost information, which in turn would theoretically increase competition and lower costs. The proposed rule includes two approaches and a third section on MLR rebates. The first two are discussed in this article.
Allowed Amount Disclosure
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 make available to participants 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 upon request. Appendix 3 identifies those data elements which includes general information about the plan, services and historical information about the plan’s out-of-network costs, including actual amount the plan paid to the provider plus the participant’s share. Amounts would not be reported for services and providers with fewer than ten different claims for payment to protect privacy.
In-Network Negotiated Rate Disclosure
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 make available to the public the innetwork negotiated rates with their network providers and historical payments of allowed amounts to out-of-network providers through standardized, regularly updated machine-readable files. See Appendix 2.
Grandfathered health plans are health plans that were in existence as of March 23, 2010, the date of enactment of ACA, and are only subject to certain provisions of ACA, as long as they maintain grandfathered status under the applicable rules. The proposed rule relies on legal authority under specific sections of the ACA. Because those sections do not apply to grandfathered health plans, the proposed rules would not apply to grandfathered health plans (as defined in 26 CFR 54.9815-1251, 29 CFR 2590.715-1251, 45 CFR 147.140)
Model Notice
Self-funded plans and insurance carriers must provide an estimate of the individual’s cost-sharing, including information used to calculate the estimate, required prerequisites and an explanation of any limitations that apply to the estimate. The model notice may be used by the self-funded plan or carrier when the participant requests cost-sharing information in paper form or may use the language on its internet-based self-service tool. The model may be modified so long as pertinent information remains. While use of the model notice is encouraged, it is not mandatory.
To Make Comments
As with all proposed rules, those affected by the rule are permitted to submit comments that will be used when considering development of the final rules. Interested parties may comment by January 15 at http://www.regulations.gov.
Editorial Comments
Some states already have similar transparency laws although most do not extend to self-funded plans, making this new law significant for employers who choose to self-insure. Sponsors of self-funded plans should familiarize themselves with this new proposed rule to prepare for compliance as soon as 2021 (although the final rule has not been released yet so the effective date could be later). Additional guidance will be released following the comment period for the proposed rules. It is possible that the mandate to maintain a website to post the data elements listed in the proposed rules may be significantly watered down if found too burdensome. Hospitals and insurance carriers (the other entities subject to this new rule) are already subject to similar transparency and posting requirements, making this added requirement less burdensome for them. But for employers who sponsor self-funded plans this is new, and if they are unable to utilize the website and data
maintained by their Third-Party Administrator (TPA) or insurance carrier, they could be faced with considerable effort. This makes submitted comments by interested self-funded plan sponsors (yes, you employers sponsoring a level-funded or self-funded plan!) all the more important for shaping the final regulations.
For details on state transparency laws, see: https://www.ncsl.org/research/health/transparency-and-disclosure-health-costs.aspx
Resources
• The proposed rule can be found here: https://www.hhs.gov/sites/default/files/cms-9915-p.pdf.
• News Release at https://www.cms.gov/newsroom/fact-sheets/transparency-coverage-proposed-rule-cms9915-p.pdf.
• Appendix 1: Transparency in Coverage Model Notice
• Appendix 2: Negotiated Rate Machine-Readable File Data Elements
• Appendix 3: The Allowed Amount Machine-Readable File Data Elements
This document is not intended to be exhaustive, nor should any information be construed as tax or legal advice. Readers should contact a
tax professional or attorney if legal advice is needed. Although we have made every effort to provide complete, up-to-date, and accurate
information in this document, such information is meant to be used for reference only. If there is any inconsistency between the
information contained in this document and any applicable law, then such law will control.
