Trump Administration Finalizes Transparency Rule For Health Insurers

“On October 29, 2020, the Departments of Health and Human Services (HHS), Treasury, and Labor issued the “transparency in coverage” final rule. The rule imposes new transparency requirements on group health plans and health insurers in the individual and group markets.

[..] plans and insurers must disclose cost-sharing estimates at the request of an enrollee and publicly release negotiated rates for in-network providers, historical out-of-network allowed amounts and billed charges, and drug pricing information. The rule’s goal is to enable enrollees to estimate their cost-sharing before receiving health care to encourage shopping and price competition amongst providers. HHS also amends its medical loss ratio (MLR) methodology to allow insurers to claim credit for “shared savings payments” made to an enrollee who selects a lower-cost, higher-value provider.

[..] The insurer transparency rule complements a similar hospital transparency rule issued earlier by HHS. That rule, which was also required under President Trump’s executive order, directed HHS to require hospitals to post standard charge information based on negotiated rates for common or shoppable items or services. HHS finalized the hospital transparency rule in November 2019. The rule was quickly challenged in court by the American Hospital Association and upheld by the district court. The hospitals appealed to the D.C. Circuit Court of Appeals; oral argument in that lawsuit was held earlier this month. If not set aside by the D.C. Circuit, the hospital transparency rule will go into effect on January 1, 2021.

[..] This rule complements the hospital transparency rule by extending to items and services provided by other health care providers, such as physicians.

[..] Overall, the final rule requires group health plans and health insurers in the individual and group markets to comply with new transparency requirements. First, they must provide cost-sharing information to enrolled individuals through an online tool on their website and in paper form (if necessary). This part of the rule will be phased in and in full effect beginning in 2024.

Second, they must disclose pricing information in three machine-readable files for 1) rates for in-network providers; 2) billed charges and allowed amounts for out-of-network providers during a specified period; and 3) prices for prescription drugs during a specified period. This part of the rule will go into effect beginning in 2022.

Third, insurers can claim credit towards their MLR for “shared savings” when an enrollee selects a lower-cost, higher-value provider. This provision applies beginning with the 2020 MLR reporting year.

While the Departments continue to expect savings of about $154 million per year due to lower medical costs for insurers and consumers, they dramatically increased their estimates of compliance costs. For both the online self-service tool and the machine-readable files, the Departments estimate the total three-year average annual burden of compliance costs and burdens to range from $5.7 billion to $7.9 billion. Prior estimates were in the millions, not billions. Further, consumers will receive $120 million less in MLR rebates each year, and the rule will lead to higher premiums in the individual market. Higher premiums will potentially harm unsubsidized consumers and increase federal premium tax credits by about $1 billion in 2022, $623 million in 2023, $216 million in 2024, and $218 million in 2025.

[..] The Departments acknowledge the potential for price transparency to impact network breadth and lead to higher costs in some markets. But they reject concerns about anti-competitive behavior, asserting that health care stakeholders will instead be driven to improve competition and lower prices. And they believe sunlight will help prevent arbitrary or unreasonable price increases, noting that providers that raise prices will damage their reputation and competitive position. Insurers and providers may need to remove gag clauses and other restrictions from their contracts going forward, but the Departments leave it to those parties to address contract language that complies with the final rules. The Departments also cite the potential for an increase in reference pricing and the use of network data to aid the review and approval of health insurance rates.

[..] The Departments estimate that about 2,000 entities will be responsible for implementing the final rule and opted to apply the rule broadly so insurers could not shift costs to other markets where transparency requirements did not apply. The rule does not apply to grandfathered health plans, excepted benefits (including limited scope dental or vision benefits), short-term limited duration insurance, health care sharing ministries, or health reimbursement arrangements or other account-based group health plans.

[..] Plans and insurers will be required to disclose real-time cost-sharing estimates in two ways: 1) through a “user-friendly” online self-service tool; and 2) on paper. Plans and insurers can provide a mobile application version in addition to an online tool but doing so is not required. These tools are only available to current enrollees (rather than prospective enrollees) or their authorized representative. Thus, the tool will not be available to those shopping for coverage or providers to, say, look up a patient’s owed cost-sharing (although a patient can appoint a provider as their authorized representative or share the information with their provider).

Plans and insurers have flexibility to create these tools, but the tool should enable users to search for cost-sharing information from a specific in-network provider or all in-network providers using a billing code (such as a CPT code) or a descriptive term (such as “rapid flu test”). The tool should be able to account for different cost-sharing based on multi-tier provider networks, dosages, and place-based settings (such as an outpatient facility versus a hospital setting). In-network providers should also be easily filtered based on geographic proximity and estimated cost-sharing liability. The tool should also enable searches for out-of-network services and providers.

The final rule outlines seven content elements that a plan or insurer must disclose, upon request, to an individual. Plans or insurers can disclose additional information, such as quality information or other metrics, and alert consumers searching for one service (e.g., surgery) to the potential need to search for another service (e.g., anesthesia or pathology). All information must be disclosed in “plain language,” meaning it can be understood by the average enrollee. The content elements are:

  • Estimated cost-sharing liability
  • Accumulated amounts
  • In-network rates
  • Out-of-network allowed amounts
  • Items and services content list for a bundled payment
  • Notice of prerequisites to coverage (limited to concurrent review, prior authorization and step-therapy or fail-first protocols) – medical necessity determinations and clinical coverage policies were excluded
  • Disclosure notice that includes
    • about the possibility of balance billing that is not reflected in the cost-sharing estimate if permitted under state law
    • that actual cost-sharing may differ from the estimate
    • that a cost-sharing estimate is not a coverage guarantee
    • whether copay assistance and other third-party payments count towards cost-sharing limits
    • that a recommended preventive service may be subject to cost-sharing if not billed as a preventive item or service”

Full post, Keith K. Health Affairs Blog, 2020.11.1