December 10, 2020
In final regulations released in November of 2020, the Department of Health and Human Services, Department of Labor, and Internal Revenue Service (Departments) detailed rules governing new transparency requirements, which require extensive disclosures—to plan participants and the public—of plan cost information. These rules apply to all employer-sponsored group health plans, insured and self-insured. Group health plans must comply over a 3-year period as follows:
- 1 | Year 1: Disclose to the public, free of charge, their negotiated rates in 3 machine-readable files, as follows:
- Payment rates negotiated between plans and providers for all covered items/services
- Unique amounts plan allowed (and associated billed charges) for covered item/services provided by out-of-network providers
- Pricing information for prescription drugs
- 2 | Year 2: Disclose to plan participants, free of charge and upon request, cost-sharing information for 500 specific items and services. Available information must include amounts accumulated toward deductibles and out-of-pocket limits and applicable prerequisites such as prior authorization.
- 3 | Year 3: Disclose to plan participants, free of charge and upon request, cost-sharing information for all covered items and services, with the same information as required in Year 2.
The regulations also provide that group health plans will not be considered in violation of the regulations if they comply in good faith and with reasonable diligence.
The Departments acknowledge that these new requirements likely will require modification or renegotiation of contracts with third-party administrators and other vendors. We recommend that employers begin discussions with their TPAs and vendors on steps necessary to comply.
- Public disclosure of negotiated rates and out-of-network allowed amounts is effective for plan years beginning on or after January 1, 2022.
- Disclosure of participant cost-sharing information, upon request, for 500 specified items and services is effective for plan years beginning on or after January 1, 2023.
- Disclosure of participant cost-sharing information, upon request, for all covered items and services is effective for plan years beginning on or after January 1, 2024.
We note that the Biden administration may modify these requirements in the coming months and will update our members if that occurs.
- Additional details and discussion of the interim final rule are available in our prior Regulatory & Compliance Update
- Transparency in Coverage Final Rule
- Transparency in Coverage Final Rule Fact Sheet
If you have questions, comments, or concerns about these or other regulatory and compliance issues, please contact us.
We provide this material for informational purposes only; it is not a substitute for legal advice.
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