Transparency in Coverage Requirements for Employers
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Article Summary
Transparency in Coverage and CAA requirements continue to evolve, creating new complexity for employers across reporting, disclosures, and vendor coordination. This guide outlines key transparency requirements, implementation timelines, and what employers should be doing now to strengthen compliance efforts, improve oversight, and reduce potential regulatory and financial risk.
Both the final regulation on Transparency in Coverage (TiC) rule, issued October 29, 2020, and the transparency requirements provisions for plans and issuers within the Consolidated Appropriations Act of 2021 (CAA) require notice and disclosure of health plan costs. Reporting requirements have been in place for a few years, but there remains confusion about what needs to be reported and when those reporting requirements went into effect. Despite the law being passed in 2021, there are still parts that still do not have implementing regulations.
Why did Congress want greater transparency in health plans?
Consumer price transparency, and the lack thereof, has been under scrutiny for a long time. The removal of actual health care costs from a consumer’s line of sight at the time of purchase began with managed care plans in the 1990s. Among other things, experts claiming to “simplify” things for the consumers, began showing only the participant’s share of the cost rather than the actual cost of the medical good and service. (Example: individuals only see the copayment they owe the doctor at the time of service and do not see the actual cost of the service.)
This lack of transparency is thought, by many, to be a significant factor in the increasing cost of health care goods and services. Over time, the lack of knowledge of the cost of the product or service results in consumers unknowingly purchasing higher-cost services or using services more than they might otherwise. This lack of transparency also removes accountability and competition affording an environment ripe for entities to raise costs higher than demand or the consumer price index dictates.
Lawmakers and regulators clearly intend to improve transparency. On October 29, 2020, the Departments issued the TiC Final Rules requiring health plans and providers to publicly disclose certain health plan information and shopping tools for consumers. Subsequently, legislators passed the CAA, imposing similar and additional transparency requirements on employers.
The TiC Final Rules require group health plans and health insurance issuers to: 1) publicly disclose on a website in-network provider negotiated rates, historical out-of-network allowed amounts, and drug pricing data through machine-readable files; and 2) disclose, upon request, cost-sharing information including an estimate of a participant’s cost-sharing liability for covered items and services via an online tool. The CAA’s transparency efforts include requiring reporting on pharmacy benefits and prescription drug costs, removal of gag clauses on price and quality information, formal analyses of compliance with the Mental Health Parity Addiction and Equity Act, and disclosures of compensation paid to brokers or consultants.
When did transparency in coverage requirements go into effect?
The following chart provides the requirements for group health plans, health insurers, and individual policies (provisions of the CAA also apply to grandfathered plans):
| Notice or Disclosure Requirement | Provision | Applies to plan or policy years on or after: | Enforcement Date |
| Public website (TiC rule) | Public website disclosure of information related to in-network rates and out-of-network allowed amounts and billed charges (must also be provided in paper, if requested) Publication of machine-readable files related to prescription drugs | January 1, 2022 July 1, 2022 – December 31, 2022 Years 2020 and 2021 | July 1, 2022 As of the month the plan year begins Deferred (proposed regulations were issued in 2025, final regulations are expected in 2026) |
| Internet price comparison tool (TiC rule) | Self-service health care tool for 500 of the most shoppable items and services, as indicated by the TiC | January 1, 2023 | January 1, 2023 |
| Internet price comparison tool (TiC rule) | Self-service health care tool for all covered items and services | January 1, 2024 | January 1, 2024 |
| Comparison info via phone or website (CAA law) | Price comparison information via phone and on plan or issuer’s website allowing individual to compare their actual amount of cost-sharing responsibility under the plan | January 1, 2022 | January 1, 2023 |
| ID Card Information (CAA law) | Plans and issuers must include in clear writing, on any physical or electronic plan or insurance identification (ID) card issued to participants, beneficiaries, or enrollees, any applicable deductibles, any applicable out-of-pocket maximum limitations, and a telephone number and website address for individuals to seek consumer assistance | January 1, 2022 | January 1, 2022 |
| Good Faith Estimates (CAA law) | Good faith estimates of expected charges for furnishing the scheduled item or service and any items or services reasonably expected to be provided in conjunction with those items and services, including those provided by another provider or facility, with the expected billing and diagnostic codes for these items and services | January 1, 2022 | January 1, 2022 (Uninsureds only) (Estimates for uninsured pending future rulemaking) |
| Advanced Explanation of Benefits (EOB) (CAA law) | Require plans and issuers, upon receiving a “good faith estimate” regarding an item or service to send a participant, beneficiary, or enrollee (through mail or electronic means, as requested by the participant, beneficiary, or enrollee) an Advanced Explanation of Benefits notification in clear and understandable language | January 1, 2022 | Final regulations expected in 2026 |
| Prohibition on gag clauses (CAA law) |
Prohibits plans and issuers from entering into an agreement with a provider, network or association of providers, third-party administrator, or other service provider offering access to a network of providers that would directly or indirectly restrict the plan or issuer from:
providing provider-specific cost or quality of care information or data to referring providers, the plan sponsor, participants, beneficiaries, or enrollees, or individuals eligible to become participants, beneficiaries, or enrollees of the plan or coverage;
electronically accessing de-identified claims and encounter data for each participant, beneficiary, or enrollee; and
sharing such information, consistent with applicable privacy regulations | December 27, 2020 | December 27, 2020 |
| Provider Directories (CAA law) | Establish standards related to provider directories that will protect participants, beneficiaries, and enrollees with benefits under a plan or coverage from surprise billing, e.g., process for network updates and verification, inquiry responses, etc. Make a publicly available post on a public website of the plan or issuer and include on each Explanation of Benefits for an item or service | January 1, 2022 | January 1, 2022 |
| Continuity of Care (CAA law) | Establish continuity of care provisions that protect participants when terminations of certain contractual relationships result in changes in provider or facility network status | January 1, 2022 | January 1, 2022 |
| Reporting on pharmacy benefits and drug costs (CAA law) | Reporting of prescription drug plan expenditures, including information regarding plan or coverage, number of participants, the 50 most frequently dispensed brand drugs, total paid claims for said drugs, impact of rebates on premiums and fees, etc. | December 27, 2021 | December 27, 2022 |
When Will More Guidance Be Released?
The Departments commit to provide additional rules through the notice-and-comment rulemaking process, specifically around good faith estimates, advanced explanation of benefits, and pharmacy benefit and drug reporting requirements (CAA 26 was recently passed which, among other things, addresses PBM reporting).
What Employers Should Be Doing Now?
Employers with fully insured group health plans should monitor the progress with their carriers and communicate availability to employees upon implementation of information and tools.
Employers with self-funded group health plans should continue working with their third-party administrators or administrative service only (ASO) companies to understand what role they will take in helping to comply with these rules and how they can demonstrate good faith efforts where required. If using a third-party vendor, health plans will need to make sure written contracts lay out all responsibilities.
OneDigital Compliance Experts will provide further information and updates upon the release of additional guidance and information.
Employers should not assume vendors are fully aligned or that requirements are being met without oversight. Clear ownership, coordination, and validation are essential to ensuring compliance obligations are fulfilled accurately and on time.
Avoid Risk: Get Transparency Compliance Right
Transparency in Coverage and CAA requirements continue to evolve, creating complexity across reporting, disclosures, and vendor coordination. Gaps in compliance, unclear ownership, or incomplete execution can expose your organization to regulatory and financial risk.
Connect with a OneDigital Benefits Compliance Expert to assess your current approach, identify gaps across vendors and reporting processes, and ensure your compliance strategy is accurate, complete, and aligned with current and upcoming requirements.