Deadline Approaching for Transparency in Coverage Public Disclosure Requirement

The July 1, 2022 deadline is approaching for employers that maintain group health plans to publicly disclose their plan’s in-network provider rates and out-of-network provider allowed amounts and billed charges.  This requirement applies to insured and self-insured group health plans.  It does not apply to plans structured as separate “retiree-only” plans, health reimbursement arrangements (“HRAs”), health care flexible spending accounts (“FSAs”), group health plans that constitute “excepted benefits” (such as standalone dental and vision plans and onsite medical clinics), or plans that are “grandfathered” plans under Affordable Care Act rules. 

Background

The public disclosure requirement described in this LEGALcurrents is required under final “transparency in coverage” rules (“TiC Rules”) published in November 2020 by the Internal Revenue Service, Department of Labor, and Department of Health and Human Services (“Agencies”).  The TiC Rules are intended to implement cost transparency requirements imposed by the Affordable Care Act. 

In addition to the public disclosure requirement, the TiC Rules will require group health plans to disclose more detailed cost information to plan participants and beneficiaries upon request, including providing an estimate of the individual’s cost-sharing liability for specific covered items or services.  This estimated cost-sharing information must be made available through an internet-based self-service tool and in paper form effective for plan years beginning on or after January 1, 2023.  We will cover the TiC Rules cost-sharing disclosure requirement in a future LEGALcurrents[1]

Basic Requirement

The public disclosure requirement under the TiC Rules requires that group health plans and health insurance issuers offering group health insurance make available on an internet website three separate “machine-readable files” providing detailed information for the following three categories: (1) in-network rates; (2) out-of-network allowed amounts; and (3) prescription drugs.  The TiC Rules specify the information that must be included in each file and define a “machine-readable file” as a file that can be imported or read by a computer system for further processing without human intervention[2].  Technical guidance regarding the format of the files is posted on the Department of Health and Human Services Centers for Medicare & Medicaid Services website (see https://github.com/CMSgov/price-transparency-guide/tree/master/schemas/in-network-rates#negotiated-price-object).  The Agencies have issued additional guidance regarding the manner in which difficult-to-quantify rates under certain in-network reimbursement arrangements may be disclosed.  This technical guidance will be of relevance to insurance carriers and claims administrators, who will in almost all cases develop the files. 

Posting Files

The files must be “publicly available” and accessible to any person free of charge and without conditions, such as establishment of a user account, password, or other credentials, or submission of personally identifiable information.  Plans and issuers must either host the files on their own publicly available websites or else post a link on their publicly available website to a third-party site (more on this concept below).  Many employers do not maintain a publicly available website for their benefit plans and instead post plan information on an intranet site that is not accessible to the general public.  Hosting the files or posting a link to the files on a closed intranet will not satisfy the “publicly available” requirement.  Thus, apparently, an employer must either host the files on some publicly available employer website or else post a link on their publicly available website to a third-party site that hosts the files.  This may be awkward if an employer does not have a publicly available website containing benefit plan information.  Some employers are planning to post the link on their careers/recruiting website, as that seems to be the most logical place (as opposed to posting the link on the employer’s commercial/business website).  

The TiC Rules contain provisions intended to prevent duplication.  One provision applies specifically to employers with insured group health plans.  The other applies with respect to insured and self-insured group health plans.  The provision applicable to insured plans should make compliance significantly easier for employers who have insured group health plans. 

If the group health plan is insured, the TiC Rules provide that the plan will satisfy the disclosure requirement if the plan requires the health insurance issuer to disclose the information pursuant to a written agreement.  We expect that most carriers will not have a problem entering into an agreement to do this, because, as noted, the TiC Rules directly impose the public disclosure requirement on health insurance issuers anyway, so they will have an independent obligation to post such information.  The TiC Rules do not specify any particular content or format for the written agreement with the carrier, so presumably a very simple agreement (possibly even an email exchange among authorized representatives of each party) could satisfy the requirement.  If a written agreement is in effect and the insurance carrier fails to satisfy the requirement, the TiC Rules provides that the carrier, and not the employer’s group health plan, is considered to violate the TiC Rules.  Employers with insured group health plans should contact their insurance carriers to discuss compliance.  If an employer contracts with the insurance carrier to satisfy this obligation, the employer has no obligation to host the files on the employer’s publicly available website and, apparently, is not even required to post a link on the employer’s website to the carrier’s website where the files are hosted.

In addition to the specific rule that applies to insured group health plans, the TiC Rules contain a more general provision that allows a group health plan (or health insurance issuer) to enter into a written agreement with a third party to satisfy the disclosure requirement.  This provision would permit an employer or carrier to contract with a third-party (for example, the claims administrator for the employer’s self-insured plan) to have the third-party host the files on the third-party’s publicly available website.  Unlike the rule specific to insured plans, in this situation, the TiC Rules provides that if the third-party fails to satisfy the requirement, the employer group health plan (or insurance carrier in the case of an insurance carrier that contracts with a third-party to satisfy the insurance carrier’s obligation) is considered to have violated the TiC Rules.  For this reason, an employer that uses a third-party to post the files should try to include indemnification rights against the third-party for such failures in its written agreement.  Because the files are (according to reports) very large, and because they must be updated monthly, it may be most practical for employers with self-insured group health plans to use the third-party approach and to have the claims administrator post and maintain the files. 

An employer with a self-insured group health plan that uses the third-party approach or an employer with an insured plan that does not contract with the carrier to post the files but rather contracts with another third-party to do so, must post a link on the employer’s public website to the third-party’s website where the files are posted[3].

Timing

The original effective date for public disclosure was plan years beginning on or after January 1, 2022, meaning that employers with group health plans that have a calendar year plan year would have been required to begin posting files on January 1, 2022.  On August 20, 2021, the Agencies published guidance deferring enforcement of the public disclosure requirement indefinitely for the prescription drug file and until July 1, 2022 for the in-network and out-of-network non-prescription drug files.  For the prescription drug file requirement, the Agencies are considering whether a new prescription drug reporting requirement imposed by the CAA will make the TiC disclosure requirement unnecessary. 

The Agency guidance specifies that on July 1, 2022, the Agencies will enforce the in-network and out-of-network disclosure requirement with respect to amounts for plan years beginning on or after January 1, 2022.  In other words, by July 1, 2022, group health plans will need to post information for the January – July 2022 time period and cannot just post July 2022 information.  Files must be updated monthly thereafter and must clearly indicate the date of the most recent update.

Next Steps

Employers with insured group health plans should contact their carrier(s) to confirm that the carrier will post the required information and ask the carrier to agree to do so in writing.  Employers with self-insured group health plans should contact their claims administrator(s) to determine the compliance assistance options being offered by the claims administrator.  Several national claims administrators are offering employers a choice between having the files posted on the claims administrator’s website or providing the files to the employer or a third-party for posting.  Some enrollment recordkeepers are offering posting services.

As always, please feel free to contact a member of the Employee Benefits & Executive Compensation group at 585.232.6500 or 716.853.1316 for more information about the items discussed in this LEGALcurrents, or for assistance in other matters.

 

[1] The Consolidated Appropriations Act, 2021 (“CAA”) added a price comparison tool requirement that is largely duplicative of the TiC Rules internet-based self-service tool requirement.  The CAA requirement would have been effective for plan years beginning on or after January 1, 2022, but the Agencies delayed enforcement of the CAA requirement until plan years beginning on or after January 1, 2023, to harmonize the CAA requirement with the TiC Rules requirement.  The Agencies announced that they intend to issue proposed regulations that address the overlap of the TiC and CAA requirements.

[2] In the preamble to the TiC Rules, the Agencies acknowledged that this raw data would be “likely to be difficult for the average consumer to understand and effectively use” but that they believe that making the detailed machine-readable files publicly available will “encourage innovation that could ultimately help consumers understand and effectively use price transparency information.”  In other words, these publicly available machine-readable files will likely be used by third parties to build price-comparison/consumer information tools that will be made available to the public (presumably at a cost to someone).

[3] Arguably, posting a link on the employer’s public website should not be required if the third-party posts the files on a publicly accessible website and clearly identifies the files as pertaining to the employer’s group health plan.  However, the TiC Rules do not expressly say that, and another provision in the regulation (which permits the use of aggregated out-of-network provider “allowed amount” data from more than one plan or insurance policy, rather than just allowed amount data with respect to the employer’s group health plan) specifies that if the out-of-network allowed amount file is posted on a third-party website, the employer/group health plan must post a link on its publicly accessible website to the third-party website.  It is not clear why the TiC Rules specify this requirement only for the out-of-network allowed amount file and not for the in-network rate file or prescription drug file.

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