Initially proposed in 2019, a final rule released on October 29, 2020, by the Department of Health and Human Services (HHS), the Department of Labor (DOL), and the Department of the Treasury delivered on President Trump’s executive order on Improving Price and Quality Transparency in American Healthcare to Put Patients First. These regulations are intended to improve price transparency, as required by the Affordable Care Act (ACA).
Transparency in coverage refers to an ACA provision that requires health plans and insurers to disclose certain cost-sharing information to participants, beneficiaries, enrollees, and, in some cases, the public through an internet-based self-service tool and, upon request, in paper form. These 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. The requirements apply to most fully insured and self-insured group health plans, and to insurers, but “Grandfathered” health plans, excepted benefits, and short-term limited duration insurance are exempt. HRAs, health FSAs are generally exempt as well. It is important to note that “Grandmothered” health plans are required to comply.
Here are some highlights:
- 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).
- Accumulated Amounts. The amount of financial responsibility that an individual has already incurred when the request for cost-sharing information is made (i.e., deductible or out-of-pocket limit) must also be disclosed.
- In-Network Negotiated Rates. Plans and insurers must also disclose the amount they or a third-party administrator 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 percent of the Medicare rate) as a dollar amount.
- Out-of-Network Allowed Amount. The maximum amount that would be paid for an item or service furnished by an out-of-network provider.
- 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.
- Notice of Prerequisites to Coverage. 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.
- Disclosure Notice. A notice with several specific disclosures, including a statement about balance billing and disclaimers about differences in actual and estimated charges.
- 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.
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