Final “Transparency Rule” Issued for Group Health Plans and Insurers

On October 29, 2020, the Department of Health and Human Services (“HHS”), the Department of Labor (“DOL”), and Department of Treasury (“DOT”) collaborated to issue a final “transparency rule” aimed at providing greater information to consumers, thereby allowing them to explore different healthcare options and avoid surprise billing for services rendered.  Additionally, the rule requires the public disclosure of negotiated rates for in-network providers and amounts allowed for out-of-network providers.

Disclosure of Provider Rates

Under the rule, non-grandfathered health plans and insurers must publish their negotiated rates and allowable out-of-network charges on a public website, which is to be updated monthly through three machine-readable files.  The website must be publicly available, accessible without charge, and cannot require a user account, password, or other credentials, or submission of personally identifiable information to access the files.  Specifically, the files will reflect negotiated rates for in-network services, historical payments to and billed charges from out-of-network providers, and in-network negotiated rates.  The files must also show historical net prices for covered prescription drugs at the pharmacy level.

Plan sponsors have until January 1, 2022 to comply with these disclosure requirements.

Disclosure of Cost-Sharing Information

Additionally, non-grandfathered health plans and insurers must provide a notice to participants/beneficiaries containing information, similar to that found in an Explanation of Benefits (“EOB”) form, to enable them to better understand their healthcare costs before undergoing treatment.  Specifically, this notice must include the following: estimated cost-sharing liability; accumulated amounts; negotiated rates; out-of-network allowable amounts; terms and services subject to bundled payment arrangements; disclosure notice; information about balance billing and other disclaimers.

Again, this information is to be provided on a public website, at no expense to the participant.  If additional information is requested from the participant, a response must be provided by mail within two business days.

Plan sponsors have until January 1, 2023 to disclose information concerning an initial list of 500 items and services identified in the rule.  Information concerning the remaining items and services must be disclosed by January 1, 2024.

Credit for Shared-Savings Programs

Health insurance issuers that introduce new or different plans that include provisions encouraging consumers to shop for services from lower-cost, higher-value providers, and that share the resulting savings with consumers, are permitted to take credit for such “shared savings” payments in their medical loss ratio (MLR) calculations.  Under the MLR rules, insurers are required to pay rebates to groups when the MLR falls below specified thresholds (generally, 80 percent in the individual and small group markets and 85 percent in the large group market).

Enforcement and Liability

Civil monetary penalties may be imposed for plans that fail to comply with these requirements.  If the plan, however, acts out of error or omission, but in good faith and with reasonable diligence, it will not be found to violate the rule provided it acts quickly to correct any such error.

Plans with insurers, third-party administrators, or pharmacy benefit managers may allocate responsibility for noncompliance under the rule through written agreements.  Self-insured plans ultimately retain liability for compliance.

Plan Takeaways

Significant preparation will be required for both employers sponsoring self-funded group health plans and health insurance issuers to ensure compliance with the rule and/or to demonstrate good faith efforts and reasonable diligence to do so.  We will continue to monitor developments in this area and provide you with additional information as it becomes available.

Should you have any questions regarding this final rule or need assistance in developing a compliance plan, please contact our ERISA & Employee Benefits attorneys here at Lindabury, McCormick, Estabrook & Cooper, P.C.

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