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Health Benefit Transparency Rules Upcoming Requirements

Many of the requirements related to health plan price transparency including reporting, disclosures, and other patient protections in both the Transparency in Coverage Final Rule and the Consolidated Appropriations Act (CAA) were set to take effect either at the end of December 2021 or on January 1, 2022; however, some key provisions of the legislation were delayed.

Below is a summary of the provisions that recently went into effect or are upcoming:

Machine-Readable Files

The Act included provisions related to machine-readable files which went into effect on July 1, 2022. These files must include in-network negotiated payment rates and historical out-of-network charges for covered items and services, including prescription drugs. The data in these files are required to be updated monthly.

Of note, the provisions of the law do not require that these files be provided to plan participants, but they must be posted for accessibility by the public (i.e., researchers, regulators and application developers).

Price Comparison Tool

Under the Act, plans are required to offer online tools and phone support to enable participants to compare costs. The tool must include out-of-pocket cost comparisons for various services by an in-network provider or facility for a specific geographic region and plan year. Initially set to take effect on January 1, 2022, the effective date of this requirement was delayed and is to be implemented in two phases in 2023 and 2024.

Phase one will require an estimate of their cost-sharing responsibility for 500 items and services, and phase two will require an estimate of the cost-sharing responsibility on all items and services.

The Center for Medicare Services (CMS) is expected to provide additional guidance on this requirement as the effective dates draw closer.

Drug Cost Reporting

Employer plans are required to report detailed prescription drug cost information to the agencies, including the 50 most commonly covered drugs per plan, the 50 most expensive drugs per plan, and the total health spending for each plan broken out into specific categories. The first report (for the calendar year ending in 2020) was due December 27, 2021, and for subsequent calendar years, the report is due annually by June 1. However, the agencies have temporarily deferred enforcement noting that they will not initiate enforcement action against a plan or issuer that submits the required information for 2020 and 2021 by December 27, 2022.

Next Steps for Employers

CMS has begun enforcing applicable price transparency requirements, and plan sponsors will bear responsibly for complying with these provisions. Employers that fail to comply may be subject to several enforcement actions, including requiring corrective actions and/or imposing a civil money penalty up to $100 per day, adjusted annually.

It is important for employers to work with their carriers, third-party administrators (TPAs or vendors), or legal counsel on compliance efforts. It is critical for plan sponsors to confirm with their TPAs/vendors the extent of their contractual commitments for meeting these requirements.

Specific to machine-readable files, plan sponsors should ensure that their machine-readable files have been posted and made available to the public. For fully insured plans, the carrier may host the files, but it is recommended that employers confirm with their carrier that this information has been made available and where it is located. Self-funded employers may need to decide where they want to host the files. In doing so, they must ensure the files are accessible to the public which may require using the Company’s public website versus a location such as a Company Intranet which cannot be accessed by non-employees.

Plan sponsors should also be prepared for the administrative costs to develop and maintain a price comparison tool, but with the understanding that this information might help participants find the least costly provider, which could potentially reduce plan costs in the future.

Employers may also refer to CMS’ “Transparency in Coverage” webpage for additional details on certain price transparency requirements.

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