On October 29, 2020, the Departments of Health and Human Services, Labor and Treasury (the “Departments”) issued a final rule requiring that private sector health insurers and self-employed health insurance plans insureds disclose treatment prices and cost sharing information. with consumers. the Transparency in the coverage rule comes in response to President Trump Executive Decree aimed at increasing transparency in the health sector. It is expected to come into force on January 11, 2021.
The final rule contains three main parts: (1) requirements for plans and issuers to disclose estimated costs associated with covered items or services provided by a particular supplier; (2) requirements for plans and issuers to publicly disclose reimbursement rates; and (3) changes to the medical loss ratio program rules to allow issuers to receive credit for registrants’ savings. Each part is discussed below.
First, insurers and employer-sponsored health plans will be required to provide price estimates, including network negotiated and off-network rates, for health care items and services on request. The regulations require these estimates from 2023 for the 500 most “purchasable” items and services on a self-service tool on the Internet (and in paper form, if the participant, beneficiary or registrant requests it). Among the 500 “purchasable services” are mammograms, doctor’s visits, colonoscopies and various blood tests, biopsies and x-rays, and the full list is specified in the regulations. Then, starting in 2024, price estimates for all other items and services offered, including procedures, drugs and durable medical equipment, must be disclosed. Price transparency requirements include disclosure of the following:
- Responsibility for cost sharing. Cost-sharing liability is defined as the amount that a participant, beneficiary or registrant is responsible for paying for a covered item or service under the terms of the plan or coverage. This includes deductibles, coinsurance requirements, and co-payments, but excludes premiums, applicable balance billing amounts charged by non-network providers, or the cost of any items or services not covered. Departments stressed that the price estimates required under this rule are “not required to reflect the actual or final cost of a particular item or service,” noting that unforeseen factors during processing (potentially involve additional services or providers) may result in a higher actual cost-sharing liability after care is received than the estimate provided in advance.
- Accumulated amounts. The amount of financial liability that a participant, beneficiary or registrant has incurred at the time the request for cost sharing information is made, with respect to a deductible and / or limit on disbursements.
- Network tariffs. The negotiated rate and the underlying fee schedule rate, expressed in dollars, for one or more network providers for a requested covered item or service must be disclosed, along with cost-sharing responsibility estimates (even if it is not used to determine cost sharing).
- Off-grid amount. The off-grid authorized amount for the requested covered item or service, as well as any cost sharing responsibility, based on that authorized amount, which the participant, beneficiary or registrant would be responsible for payment.
- Content list of articles and services. A list of covered items and services for which cost sharing information is disclosed for items or services that are the subject of a group payment agreement.
- Notice of Prerequisites for Coverage. A notification, if any, informing the individual that a specific covered item or service for which the individual is requesting cost-sharing information may be subject to a condition precedent to coverage.
- Disclosure notice. A notice that communicates certain information in plain language, including several specific disclosures.
Disclosure of negotiated rates
Second, from 2022, insurers are required to disclose price information in three separate machine-readable files.
- Network rate file. The first, “Network Rate File”, must include all applicable rates (including negotiated rates, underlying fee schedules or derived amounts) with network providers for all items and services covered.
- Authorized amount file. The second, the “Authorized Amounts File,” should include charges billed and authorized amounts, including historical amounts, for covered items and services provided by off-grid providers. Plans and issuers are only required to include in this record those covered items and services provided by an off-grid provider for which the plan or issuer has settled claims and determined that it will pay an authorized amount. Plans and insurers are not required to disclose this data if it would violate health information privacy laws or if there are fewer than 20 different claims for a provider.
- Medication File. The third, the “Prescription Drug Register”, includes negotiated rates and historical net prices for prescription drugs supplied by network providers. This file can only use national drug codes to identify drugs. Historical net prescription drug prices should reflect any discounts, rebates, chargebacks, fees, or other price concessions. As with the authorized amount file, plans and insurers must include the historical net price over a 90-day period for service dates within 180 days of the file’s release and do not need to be disclosed if it would violate health information privacy laws. or if there are less than 20 different payment requests.
Savings shared via MLR calculations
Third, insurers who encourage consumers to purchase services from lower-cost, higher-value providers, and who share the resulting savings with consumers are eligible to take credit for these “savings” payments. shared ”when calculating their Medical Loss Ratios (“ MLR ”). According to the ministries, this will ensure that issuers are not required to pay MLR discounts based on a plan design that would provide a benefit to consumers that is not currently factored into any MLR income or expense category. existing. These changes are effective from the MLR 2020 reporting year (for returns filed before July 31, 2021).
* * *
Responses to the final rule have been mixed. Consumer groups praise government ministries’ efforts to increase price transparency and see the rule as a necessary step to enable consumers to make more price-conscious decisions, increase competition and prevent price increases. arbitrary or unreasonable prices. Insurer stakeholders, on the other hand, warn that disclosure of privately negotiated rates will reduce the incentives to offer lower rates, resulting in higher costs in some markets.
Departmental estimates for the immediate regulatory compliance costs of the rule far exceed estimates of the rule’s potential savings. Departments estimate that the final rule will result in savings of about $ 154 million per year due to lower medical costs for insurers and consumers, and estimate the total compliance costs over three years to be between $ 5. 7 and 7.9 billion dollars. Departments recognize that some of these costs to plans, plan issuers and administrators will be passed on to consumers in the form of higher premiums or changes in the cost-sharing structure of plans.
The final rule completes the hospital transparency rule that CMS enacted in November 2019 (the substance of which is discussed here), which requires hospitals to publish pricing information based on negotiated rates for standard items or services. The hospital transparency rule is currently under appeal to the DC Circuit Court of Appeals; Among the issues raised on appeal was whether the HHS ‘statutory interpretation of Section 2718 (e) of the Affordable Care Act, which it relied on for authority to finalize the rule, was reasonable, and whether the required disclosure of confidential price information under the rule violates the First Amendment. Pending an imminent decision, the rule is expected to enter into force on January 1, 2021.