Departments Delay Transparency in Coverage Health Plan Notice and Disclosure Requirements

On Friday, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury announced delays and clarifications to the upcoming notice and disclosure responsibilities for health plans and health insurers.

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 beginning either December 27, 2021, or January 1, 2022. Due to confusion, lack and availability of information, and conflicting information between the two documents, the joint Departments extended the compliance dates for certain provisions of these rules until they issue additional clarifications and guidance. Additional FAQs about Affordable Care Act and Consolidated Appropriations Act, 2021 Implementation Part 49 can be viewed here.

Background

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, under both the Trump and Biden Administrations, 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.
[Explanation of TiC requirements | Explanation of CAA provisions].

These complex regulations set forth new responsibilities for health plans, employers, and health insurers. Several elements include technology, reporting, and the public posting of information. While good for creating a transparent environment, these new mandates will require additional cost, infrastructure, and information not currently available in today’s marketplace. There is great concern by entities and groups that they will be unable to build these new solutions in time to meet the deadlines.

Enforcement Delay

In response to the many concerns and challenges, the Departments clarified their August 20 FAQs. According to the FAQs, the Departments will defer enforcement in the following areas:

1. TiC Final Rules requiring plans and issuers to publish machine-readable files relating to prescription drug pricing pending further rule making
2. TiC Final Rules’ requiring plans and issuers to publish the remaining machine-readable files until July 1, 2022
3. CAA provisions requiring providers and facilities to provide good faith estimate information for individuals enrolled in a health plan or coverage and seeking to submit a claim for scheduled items or services to their plan or coverage

New Deadlines and Future Enforcement

The following chart provides the requirements for group health plans, health insurers, and individual policies (provisions of the CAA also apply to grandfathered plans):

Future Rulemaking and Enforcement

The Departments commit to provide additional rules through the notice-and-comment rulemaking process, addressing the following areas:

• appropriateness of the prescription drug machine-readable file requirements
• whether compliance with the internet-based self-service tool requirements of the TiC Final Rules satisfies the analogous requirements under the CAA
• requirements that the same pricing information that is available through the online tool or in paper form be available telephonically
• how plans and issuers offering complex plan and coverage designs should represent information on an ID card (rules will not be issued prior to the effective date so plans and issuers are expected to use a good faith effort to comply)
• production of good faith estimates including appropriate data transfer standards
• implementation of provider directory requirements (rules will not be issued prior to the effective date so plans and issuers are expected to use a good faith effort to comply) NOTE: In the interim, plans and issuers who incorrectly communicate that an out-of-network provider is in the network can still avoid enforcement action if they impose a cost-sharing amount that is equal to or less than the in-network cost-sharing and counts cost-sharing amounts toward any deductible or out-of-pocket
• continuity of care requirements (rules will not be issued prior to the effective date so plans and issuers are expected to use a good faith effort to comply)
• pharmacy benefit and drug reporting requirements (Until regulations or further guidance is issued, the Departments strongly encourage plans and issuers to start working to ensure that they are in a position to be able to begin reporting the required information with respect to 2020 and 2021 data)
• implementation guidance on how plans and issuers can submit their attestations of compliance with the prohibition on gag clauses

Next steps

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 begin, or 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.

We will provide further information and updates upon the release of additional guidance and information. For more information on how to ensure your organization remains compliant, visit OneDigital's Compliance Confidence page.