Regulators Put A Spotlight On Transparency For Health Plans
Group health plans and related providers must not ignore the new price transparency rules set to take effect in 2021 and 2022. In addition to the final rules issued over the past couple years, the year-end Consolidated Appropriations Act, 2021 (or “CAA”) also includes new price transparency rules. These rules reflect the recent regulatory push to provide more information to health care consumers in order to encourage better health care spending decisions. This article explores the new transparency rules, and how they will impact your company’s group health plan and related service provider contracts.
Transparency in Coverage Final Rule
In an effort to require employer-sponsored group health plans to engage in transparency, the Transparency in Coverage final rule will require plans and health insurers to disclose more information about cost-sharing requirements and negotiated provider rates. While fully-insured plans may be able to seek compliance help from their providers, self-funded plans need to start analyzing and understanding their compliance obligations. The final rule goes into effect on January 1, 2022. The following provisions are included in the final rule:
- Disclosures to Participants, Beneficiaries, and Enrollees. Plans and insurers must disclose the following upon request of a participant, both through a self-service internet-based tool with specifically required search features, and in paper form:
- Cost-sharing liability for items and services covered under the plan (not including premiums, balance billing amounts, or non-covered items);
- Accumulated amounts as of the date of the request;
- In-network rates with contracted in-network providers (including negotiated rates in dollar amounts and the underlying fee schedule rate for determining cost-sharing);
- Out-of-network allowed amount and related cost-sharing liability;
- List of individual items and services covered, if subject to a bundled payment arrangement;
- Any prerequisites to coverage; and
- A plain language disclosure notice with specific disclaimers and content requirements (which can be found in the final rule).
- Disclosures to the Public. Plans and insurers must make public disclosures in machine-readable files containing information about in-network and out-of-network providers. For in-network providers, the disclosures must include negotiated rates for each covered item or services, including prescription drug prices. For out-of-network providers, the disclosure should include historically allowed amounts and billed charges for covered items or services. Finally, for prescription drug prices, the disclosures must include not only the negotiated rates, but also the historical net prices. These disclosures must be available free of charge on the internet in machine-readable files. Specific content requirements apply to these disclosures, such as including the name, HIOS identifier, billing codes, NPIs, TINs, Place of Service Codes, and the date the disclosure was last updated. Three separate machine-readable files must be available (one for in-network rates, one for allowed amounts and billed rates relating to out-of-network providers, and one for prescription drug information).
- Effective Dates. Plans and insurers must be in compliance with the public disclosure requirements for plan years beginning on or after January 1, 2022. However, the internet-based tool for participant requests/searches does not need to be available until plan years beginning on or after January 1, 2023, for an initial list of 500 shoppable services (as determined by the regulatory agencies). All remaining items and services will not be required to be available through the self-service tools until plan years beginning on or after January 1, 2024.
- Action Items. In order to comply with these new requirements, employers sponsoring group health plans should determine their ability to supply and calculate the information required to be in the disclosures. If employers cannot supply this information on their own, they will need to seek assistance from third party administrators and carriers. Employers should also review related services agreements to determine whether amendments are needed in order to access such information, to allow the plan’s service providers to assist the employer with compliance, or to ensure the confidentiality and limitation of liability provisions appropriately address price transparency compliance and concerns.
Consolidated Appropriations Act, 2021
Embedded within the CAA are a number of provisions that aim to increase transparency within employee group health plans, including the following:
- Price Transparency. The CAA implements price transparency requirements for health plans that go beyond those required under the Transparency in Coverage final rule. The CAA requires group health plans to mandate requirements for insurers and health care providers to adopt cost transparency guidelines, including for pharmacy benefits and drug costs. Group health plans and insurers must include applicable deductibles, out-of-pocket maximums, and contact information for consumer assistance on physical or electronic plan or ID cards. Plans must also ensure provider network directories are accurate, reviewed every 90 days, and maintained on a public website. Additionally, effective for plan years on or after January 1, 2022, plans must provide an advance explanation of benefits to providers, participants, or beneficiaries verifying whether the provider is an in-network or out-of-network provider and the applicable contracted rates (along with other content requirements specifically enumerated under the CAA). Finally, health plans must offer an online and telephonic price comparison tool that will allow participants to compare prices for items and services. Price comparison tools must be available for plan years beginning on or after January 1, 2022.
- Gag Clause Restrictions. Under the CAA, plans must ensure they have access to cost and quality of care information, as well as data for costs related to claims, and cannot agree to restrictions in provider network contracts that prevent them from obtaining such information. Plans cannot agree to service provider agreement provisions that restrict the plan from providing this information to referring providers, participants, beneficiaries, and HIPAA business associates, or from electronically accessing certain de-identified claims data. These rules are effective for plan years beginning on or after January 1, 2022, and plans will be required to file an annual attestation that they are compliant with these rules.
- Mental Health. Starting on February 10, 2021, group health plans must make compliance documentation available to federal regulators upon request which contains comprehensive comparative analyses (meeting certain specific requirements) and an evaluation of the plan’s compliance with the Mental Health Parity and Addiction Equity Act (“MHPAEA”). The comparative analyses specifically focus on nonquantitative treatment limitations. The regulatory agencies will be required to request at least 20 analyses per year.
- Annual Pharmacy Benefit and Drug Cost Reporting Requirement. The CAA implements a new annual reporting requirement for all group health plans and insurers, under which a report must be submitted to the Department of Health and Human Services containing specifically required information regarding pharmacy benefits and drug costs. The first report must be submitted within one year following the date the CAA was enacted (December 27, 2020), and all subsequent reports must be filed no later than June 1 of each year.
- Broker and Consultant Compensation. Group health plans must disclose the compensation paid to any broker or consultant receiving $1,000 or more in compensation. Additionally, brokers and consultants must make certain disclosures to plan fiduciaries regarding their service and compensation. These compensation disclosures go into effect one year following the date the CAA was enacted.
- Action Items. Employers should review service provider agreements, including business associate agreements, to determine whether any amendments are needed or prohibited gag clauses are included. Employers should also review their plans’ behavioral health policies and confirm compliance with MHPAEA, and begin working on the required comparative analyses in order to be compliant by February 10, 2021. Finally, employers should prepare for the new transparency requirements and annual reporting requirements.
If you have any questions on how to implement these changes, prepare for compliance, or review your service provider contracts, please contact a McGrath North Employee Benefits attorney.