Final Federal Transparency Rules That Plan Sponsors, As Fiduciaries, Need to Be Aware of
A lot has happened since the White House issued an executive order in June of 2019, which led to the Hospital Price Transparency Act.
In November 2020, the Departments of Labor (DoL), Health and Human Services (HHS), and the Treasury released the Transparency in Coverage final rules applicable to employer health plans. Shortly after, Congress passed the omnibus Consolidated Appropriations Act of 2021 (CAA) with several provisions impacting both health plans and providers, including additional transparency requirements and the No Surprises Act.
While these new requirements will go into effect in phases, employer plans are to make every good faith effort to comply with the new requirements even if they are delegating certain responsibilities to their benefits partners. As fiduciaries, plan sponsors must intend to:
- Ensure regulatory awareness
- Minimize liability
- Improve their employees’ health plan
That said, let’s recap what new transparency rules are in place now and preview some additional requirements that are just around the corner.
Hospital Price Transparency Act for Plan Sponsors
In effect now, this rule requires hospitals to publish contracted rates by payer and provide tools patients can use to estimate their costs prior to receiving a service, presumably giving patients the ability to shop for that procedure. Unfortunately, the number of hospitals in full compliance is low, even after the penalties were raised for those out of compliance.
Consolidated Appropriations Act (CAA) for Plan Sponsors
The CAA is bipartisan legislation intended to provide clarity around cost accountability and to provide plan sponsors with access to their data in order to act in a fiduciary manner. It requires plan sponsors to ensure that health benefits are cost-effective and high-quality, similar to their pension and 401(k) plans’ fiduciary responsibility. There are five key transparency elements of the CAA that are important for plan sponsors to follow, and a sixth on the provider side to be aware of:
New Disclosure requirements
- Impacts information listed on ID cards and in provider directories. Future rules will require plans to provide enrollees with an “advanced explanation of benefits” before receiving services.
Prohibits gag clauses
- Service provider contracts must not prohibit you from using your data to benchmark providers or empower enrollees to shop for higher value services.
Requires the disclosure of all compensation from all service providers
- Plan Sponsors need to disclose direct compensation, finder’s fees, contracted fees, commissions, and all other indirect compensation in excess of a thousand dollars from brokers, TPAs, PBMs, stop-loss carriers, etc.
Required parity in substance abuse and mental health benefits
- Mandates that employers offering mental health and substance use disorder coverage provide analyses to the DoL upon request comparing these benefits to covered medical/surgical benefits to demonstrate compliance with parity requirements.
Prescription Drug Disclosure
- Plans must submit information to the tri-agencies, including information about the prescription drugs that are driving claims and costs and total health care expenditures for the applicable year, broken down in various ways.
Good Faith Estimates
- As of January 1, 2022, health care providers are required to provide good faith cost estimates to patients that are uninsured or that don’t plan to submit their claim to a health plan. In the future, this requirement will also apply to insured patients, whereby the estimate will be sent to their health plan for use in preparing the advanced EOB.
Transparency in Coverage (TiC) Rules for Plan Sponsors
The health plan TiC rules created a set of comprehensive requirements for plan sponsors to disclose estimated cost-sharing information to promote good consumerism by individuals. They would require a plan sponsor to provide meaningful cost-sharing information, upon request, for a covered item or service in connection with an in-network provider, or an out-of-network allowed amount for a covered item provided by an out-of-network provider.
These requirements would apply to all self-insured and fully-insured employer plans, which will be enforced beginning July 1, 2022 in three phases:
- Phase One requires health plans to disclose hospital pricing information by posting on a public website two machine-readable files:
- One containing rates for all covered items and services between the plan or issuer and all in-network providers
- One containing all allowed amounts for, and billed charges from, out-of-network providers.
- Phase Two, currently slated to go into effect in 2023, consists of an internet-based comparison tool allowing patients to receive estimates of their cost-sharing responsibilities for 500 shoppable items or services from specific providers.
- Phase Three, going into effect in 2024, will expand the internet-based tool to all items and services. All information must be provided, upon request, in paper form and requests by phone must be accommodated. The Department of Labor has published a set of FAQs on the TiC and CAA coverage transparency requirements.
The Alliance is Your Compliance Advocate
We understand new rules and requirements are not always clear cut, but we are your strongest advocate when it comes to price transparency. It’s our job to help your employees find the highest value care, and there are aspects of these rules that may aid us in these efforts if regulations are implemented correctly.
The Alliance also acknowledges its role in supporting our employer-members’ compliance with these federal transparency regulations. We have continued to educate and update all TPAs who administer our employer-member group health plans on the resources and tools we have developed. We’re actively looking to coordinate our efforts where possible to ensure our employer-members are compliant with these regulations.
As we approach the July 1, 2022, enforcement deadline for phase one, does your organization have a plan to support the Machine-readable file requirements of the transparency regulations? Have you connected with your TPA to ensure they are ready to support your compliance, or will you be using an entity other than your TPA to support this provision? Have you considered hiring an ERISA attorney to help you with compliance, similar to what you may do for your retirement plan process?
Let us know – our Transparency Team is willing and able to provide your TPA or designated partner the information they need to support your compliance.
More information about the Federal Transparency Regulations can be found here: CMS 9915-F
To learn more about self insured health plans, check out our Smarter Self-Funded Health Plans page.