[co-author: Danny McDermott1, Summer Associate]
In October 2020, the Centers for Medicare and Medicaid Services (“CMS”) finalized the Transparency in Coverage Rule (“the Rule”), requiring most health insurance plans and issuers offering individual or group coverage to disclose price and cost-sharing information to plan participants and enrollees.2 The Rule builds on recent federal efforts to promote price transparency in health care, including CMS’ 2019 rule requiring hospitals to publicly disclose their standard charges and negotiated rates with payers. In the preamble to the Rule, CMS reasoned that requiring plans and issuers to disclose pricing information will help consumers make informed decisions when shopping for care, reduce the potential for surprises when consumers receive out-of-network care, and encourage greater price competition among providers.
To that end, the Rule sets forth two key requirements.3 First, by July 1, 2022, health plans and issuers were required to post machine-readable data files on their website containing detailed pricing information on covered services. These machine-readable files must include the plan’s negotiated rates for services and items with in-network providers. For out-of-network providers, the Rule requires plans to enable users to “[s]earch for an out-of-network allowed amount, percentage of billed charges, or other rate that provides a reasonably accurate estimate” of the amount the plan will pay for a service.4
Second, by January 1, 2023, plans and issuers were required to create an online price-comparison tool that allows consumers to see pricing information for 500 common health care services and items.5 These price-comparison tools must show consumers their personalized out-of-pocket costs for a given service (across in-network and out-of-network providers), as well as the underlying negotiated rates for the service. By January 1, 2024, the tools will be required to include this cost-sharing and pricing information for all covered services and items.
Roughly a year after the machine-readable file requirement went into effect, evidence indicates high rates of compliance among plans and issuers.6 The penalty for non compliance is steep — up to $100 per day per affected enrollee, which can result in substantial fines for even relatively small health plans. It is harder to ascertain compliance rates associated with the price-comparison tool requirement because insurers tend to make these tools available through online portals only accessible by their beneficiaries and enrollees.
The Rule has resulted in a massive amount of data being made public in what was possibly “the largest government-mandated release of data in history.”7 However, critics have argued that much of the data contained in the machine-readable files is inaccessible and unusable. According to researchers, there is no standardization in how plans structure the files, there is very little index information available, and many of the data files are too large to process on a normal computer.8 In March of this year, Senators Margaret Wood Hassan (D-NH) and Mike Braun (R-IN) wrote a letter to CMS expressing concerns about “technical loopholes” in the Rule that “ha[s] resulted in insurance companies publishing data that does not align with the intent of the CMS rule.”9 The Senators recommended that CMS create a standardized template for the machine-readable files, limit the file sizes, reduce the frequency of reporting, and increase enforcement efforts targeting plans that provide low-quality data.
Moving forward, health plans and issuers should anticipate changes in the Rule regarding how the machine-readable files should be prepared and laid out. Plans and issuers may want to consider making their machine-readable files as accessible and comprehensible as possible in anticipation of subsequent guidance from CMS. Additionally, because plans will need to expand their online price-comparison tools to include all covered services and items by January 1, 2024, they may want to consider taking preemptive steps to expand existing tools.
On the provider side, in-network and out-of-network providers may want to keep an eye on the plan-specific allowed amounts that plans publish to determine whether the payments they receive correspond to the published amounts. To do this, providers (or their billing companies) should consider using the latest tools to sift through the wealth of data created under the Rule.
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