On November 15, the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury (collectively, the “Agencies”) issued a proposed "Transparency in Coverage" rule that would require most employer-sponsored group health plans to disclose price and cost-sharing information to participants, beneficiaries and enrollees(collectively, “Participants”) upon request, before services are provided. The proposed rule was issued alongside a new final rule that will require hospitals to provide patients with information about the hospital’s "standard charges" beginning in 2021.

This alert focuses primarily on the provisions of the proposed rule that impact large self-insured group health plans.¹ Comments on the proposed rule are due by January 14, 2020.

Background and Overview

The proposed rule stems from an executive order on health care transparency issued by the White House earlier this year, and is issued pursuant to sections 2715A and 1311(e)(3) of the Patient Protection and Affordable Care Act (the “ACA”). Section 1311(e)(3)(A) of the ACA provides that issuers offering health plans in the federal marketplace must make certain cost information available, and must make public certain data on claims payment policies, cost sharing and out-of-network coverage payments (among other information). Section 1311(e)(3)(D) extends similar disclosure requirements to non-grandfathered group health plans (Plans)² and insurance issuers in the group and individual market (Issuers). Accordingly, the proposed rule would require Plans and Issuers to provide Participants with two types of disclosures: (1) a Cost Sharing Disclosure, which would consist of a real-time estimate of the enrollee’s potential cost-sharing liability for certain requested items and services covered under the plan analogous to the information that generally appears in an Explanation of Benefits (EOB), and (2) a Rate Disclosure, which would consist of information regarding negotiated rates for in-network providers and historical out-of-network allowed amounts.

The proposed rule could effect a significant change in the relationship between self-insured plans, Participants, and Third-Party Administrators (TPAs) or Administrative Services Organization (ASO) providers. As consumer-driven health plan designs become more prevalent, Participants have lamented the lack of access to standardized cost data that would allow individuals to make informed decisions when selecting a health care provider for a particular item or service. The Cost Sharing Disclosure would mandate that Plans not only provide such data, but also provide Participants with a clear estimate of their cost-sharing liability for covered items or services. In addition, the public disclosure of provider rate data may allow self-insured plans to compare their network rates to those offered to similarly situated plans in the same network and across competing network providers. To date, network providers have declined to share such information, and have often prohibited plans from disclosing individual plan rates to other plans or employers.

Note that the proposed rule would allow Plans to delegate responsibility and liability for Cost Sharing Disclosures to third parties, such as the Plan’s TPA or ASO provider. While Plans may also delegate responsibility for Rate Disclosures to a third party, the Plan would still be responsible for any liability associated with non-compliance. The proposed rule includes a non-compliance safe harbor, under which Plans and Issuers acting in good faith would be held harmless for an error or omission by a third-party with regard to certain disclosures.

Cost Sharing Disclosure

Content requirements

The proposed rule would require that, upon request and before services are rendered, Plans provide an enrollee with an estimate of the amount that the individual would be expected to pay for a covered item or service.³ The estimate would contain the following seven items, which the Agencies state are “similar to the content elements of an EOB”:

• Estimated cost-sharing liability – the estimated amount the Participant is responsible for paying for a covered item or service under the terms of the plan or coverage as part of a deductible amount, coinsurance or a copayment.
• Accumulated amounts – the amount of financial responsibility that the Participant has already paid at the time the request for cost-sharing information is made, either with respect to a deductible or an out-of-pocket limit or any utilized treatment limits (for example, the number of physical therapy visits used if the Plan includes a limit on such visits).
• Negotiated rate – the amount (reflected as a dollar amount) that the Plan has contractually agreed to pay an in-network provider. In the case of a self-insured health plan, this would be the payment amount negotiated through its contract with the Plan’s TPA or ASO provider.
• Out-of-network allowed amount – the maximum amount a Plan would pay for a covered item or service furnished by an out-of-network provider. For example, if the Plan has established an out-of-network allowed amount of $100 for an item or service from a particular out-of-network provider and the Participant is responsible for paying 30% of the out-of-network allowed amount ($30), the Plan would be required to disclose both the allowed amount ($100) and the Participant’s cost-sharing liability ($30).
• Items and services content list (only for requests relating to bundled payment arrangements) – a list of each covered item and service included in any bundled payment arrangement, as well as the Participant’s cost-sharing liability for the covered items and services as a bundle.
• Notice of prerequisites to coverage – a notice informing the Participant that a specific covered item or service may be subject to a prerequisite for coverage, such as concurrent review, prior authorization or step-therapy. This does not include medical necessity determinations.
• Disclosure notice – an additional notice that includes a statement informing the Participant that: (1) out-of-network providers may “balance bill” the Participant, (2) charges for covered items and services may be different from those described in the estimate and (3) the estimated cost-sharing liability is not a guarantee that coverage will be provided.

Plans and Issuers would be permitted to include any additional information, including other disclaimers, as long as the additional information does not conflict with the information required to be provided. For example, Plans may choose to provide a disclaimer indicating how long a cost estimate will be valid based on the last date of the contract term for the negotiated rate. The proposed rule does not address potential liability for significant differences between the estimated amounts in the Cost Sharing Disclosure and the amount that the Participant is actually billed or charged once services are rendered.

The Agencies have developed model language that Plans and Issuers can use to satisfy the disclosure notice requirements described above.

Delivery methods

The Proposed rule would require that Plans and Issuers disclose the cost-sharing information described above either: (1) through a self-service tool that meets certain standards and is available on an internet website or (2) in paper form.

The web-based self-service tool must be “user friendly” and must allow users to search all in-network providers or input a specific in-network provider and search for cost-sharing information by billing code (for example, CPT Code 87804) or by a descriptive term (for example, “rapid flu test”). The tool would produce cost-sharing information and a cost-sharing liability estimate for the specified covered item or service provided by that in-network provider. In addition, the tool must also allow users to search for the out-of-network allowed amount for a covered item or service by inputting a billing code or descriptive term and the information necessary for the Plan or Issuer to produce the out-of-network allowed amount (such as the zip code for the location of the out-of-network provider).

For Participants without access to the internet, Plans and Issuers would be required to provide all of the content described above in paper form, upon request, and at no cost. The information must be mailed to the Participant no later than two business days after the Plan receives the request.

Rate Disclosure

In addition to the Cost Sharing Disclosure, the proposed rule would also require Plans and Issuers to disclose in-network provider negotiated rates and historical out-of-network allowed amounts through two machine-readable files posted on an internet website. This Rate Disclosure would be updated monthly and must be made available to the public (not just Participants).

The Rate Disclosure must include Plan information, billing codes used to identify covered items or services (and a plain language description for each code), and the negotiated in-network rates or out-of-network allowed amounts for covered items or services furnished by a particular provider during the past 90 days, provided the disclosure would not violate health information privacy laws. Plans that contract with third parties to provide allowed amount information must ensure that the third party is HIPAA-compliant, and may report aggregate amounts that reflect data from more than one plan or contract. The files must use a non-proprietary open format (not a PDF file, for instance).

The proposed rule notes that the Agencies are considering whether to also require Plans and Issuers to disclose both cost-sharing and rate information available to third-party technology innovators. Such innovators would be permitted to “compile, consolidate and present” data across employer-sponsored Plans in a usable format for consumers.

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¹The proposed rule would also allow insurance issuers to take credit for "shared savings" payments in their medical loss ratio (MLR) calculations.
²The proposed rule would not apply to excepted benefit plans, short-term limited duration coverage, or account-based plans, such as HRAs.
³Covered items or services would include provider visits, specific procedures, medical tests, drugs, facility fees, etc.

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