On November 12, 2020, three executive agencies – IRS, DOL, and DHS – jointly issued a final rule called “Transparency in Coverage” (TiC) that established requirements that group health plans and health insurance issuers disclose cost-sharing information upon request to plan members as well as to publicly disclose in- and out-of-network negotiated rates for healthcare services. Their aim was explicitly “[to allow] the public to have access to health coverage information that can be used to understand health care pricing and potentially dampen the rise in health care spending.”
Originally, this rule was set to take effect on January 11, 2022. However, after successful lobbying by the health insurance and pharmaceutical industry, the rule’s effective date was delayed to July 1, 2022.
Part of the reason why this Rule is so confusing is that regulators and policymakers often use the phrase “health plan” to refer to both insurance companies and employers. However, as time has gone on, compliance experts have weighed in and the executive agencies have issued FAQs addressing most of the confusion.
For fully insured health plans, the responsibility of publicly disclosing the information required under TiC falls onto the health insurance company. For self-funded health plans, the responsibility falls onto the self-funded employer – even though the employer is likely to outsource certain aspects of the disclosure to a third-party administrator (TPA).
What is Required
On July 1, 2022, the following information will need to be disclosed on a publicly and freely accessible website. The files must be separate and in a format that is machine-readable, meaning it is importable and searchable by a computer system:
- In-Network Rate File containing in-network healthcare provider negotiated rates for covered items and services.
- Allowed Amount File containing historical payments to and billed charges from out-of-network healthcare providers.
- Prescription Drug File containing in-network negotiated rates and historical net prices for covered prescription drugs. **Note that this requirement is delayed until further notice.
Action Steps for Fully Insured Clients
If your group health plan is fully insured, your health insurance company should have already reached out to you with plans to satisfy the TiC requirements on your company’s behalf. They will take care of the disclosure for you. The rule explicitly states,
“If a [fully insured group health] plan and a [health insurance] issuer enter into a written agreement under which the issuer agrees to provide full or timely information, then the issuer, but not the plan, has violated the transparency disclosure requirements.”
– IRS, DOL, and DHS in “Transparency in Coverage” Final Rule, at p. 72208 in the Federal Register
So, as long as you have entered into written agreement with your health insurer for them to provide the disclosure for you, your company is indemnified from non-disclosure liability in the event your health insurer fails to do so in a timely or proper manner. In effect, you transfer the legal liability to them.
Action Steps for Self-Funded Clients
If your group health plan is self-funded, meaning your company pays its own claims with the administrative assistance of a TPA, then the TiC disclosure is slightly more complicated.
Short Version: Self-funded employers may – and probably will – outsource the TiC disclosure to their TPA or another suitable service provider. However, self-funded employers still bear the responsibility for the timely and proper disclosure of that information, and will ultimately be accountable for compliance.
Longer Version: Self-funded employers may satisfy the TiC disclosure requirements by entering into written agreement with a TPA or other service provider (a healthcare claims clearinghouse, for example) to make the required information publicly and freely available in a machine-readable format.
However, it is still the self-funded health plan’s responsibility to verify and ensure the third-party entity is providing the required disclosures. This is what the 3 agencies had to say on this matter:
“Many commenters requested . . . that self-insured plan sponsors that contract in good faith with their TPAs to comply with the reporting requirements should be held harmless with respect to compliance obligations and liability under this regulation. [However,] Section 2715A of the PHS Act provides the authority for [IRS, DOL, and DHS] to require this information from plans and [health insurance] issuers, but not TPAs. Therefore, it is ultimately the responsibility of the plan or issuer to provide the information required by the final rules . . . [T]he plan must monitor other part[ies] to ensure the entity is providing the required disclosure.”
– IRS, DOL, and DHS in “Transparency in Coverage” Final Rule, at p. 72208 in the Federal Register
The TiC Final Rule suggests that self-funded employers may be required to post a link to the files on their own websites, but this is not clearly addressed in the Final Rule and additional guidance is needed by IRS, DOL, and DHS.
Specifics on Disclosure Implementation
IRS, DOL, and DHS issued an FAQ on April 19, 2022, clarifying a safe harbor around exact reporting requirements. In short, the TiC Final Rule will permit an estimation of the potential range of reimbursement rates in lieu of actual dollar amounts for plans and health insurance issuers using alternative reimbursement arrangements that do not allow the plan or insurer to derive specifics.
In these instances, the health plan or insurer can report a percent of billed charges, or a description of the formula, variables, methodology, etc. to understand the arrangement – whichever pertains.
The machine-readable files must satisfy the following requirements:
- Must be in non-proprietary file formats, such as JSON, XML, YAML, or CSV. PDF and XLS/XLSX are not suitable as these file formats are considered proprietary.
- Must have names and identifiers for each insurance coverage option.
- Must have billing codes, such as CPT, HCPCS, DRG, NDC codes or another common payer identifier. For the forthcoming prescription drug requirements, only the NDC code is permitted.
- Must have plain language descriptions of the billing codes.
- Must associate the pricing disclosure information with the provider’s NPI, TIN, or PoS Code. Provider name is not required to be included. Historical payments must have a minimum of 20 entries to protect consumer privacy.
- Must have the information updated monthly to ensure its continual usefulness and accuracy. Also, must clearly indicate the date the files were most recently updated.
For further technical guidance, view CMS price transparency guide on GitHub.
This compliance overview is just that – an overview. It does not claim to be exhaustive nor should it be misconstrued as legal advice. Great effort has been put forth in ensuring the accuracy of all content, but this is no guarantee of infallibility. For official clarification or final authority, readers should solicit legal counsel.
