Price Transparency: An Update on the Transparency in Coverage Legislation

Key takeaways

• The rule has two key components: machine-readable rate files (July 1, 2022) and a price comparison tool (January 1, 2023)
• Non-compliance penalty: up to $100 per member per day
• The In-Network Rate File publishes at the plan level (insurer); the Allowed Amount File at the plan-sponsor level (self-insured employer)
• Comparison tools must cover 500 shoppable services by January 2023 and all services by January 2024
• Both rate files must be updated monthly with data from a 90-day window starting 180 days before publication

Healthcare price transparency is at the core of our mission at Handl Health, and since our founding it has been a hot topic within the federal government.

Since 2020, we have seen quite a bit of legislation regarding price transparency coming out of the White House. The Trump Administration started these efforts, and Biden’s has continued the momentum. This issue has bipartisan favor, and while we aren’t here to talk about political parties and beliefs, we are here to be at the forefront of this topic and help provide tools and guidance along the way.

The Transparency in Coverage Final Rule was released in October 2020 by the Department of Health and Human Services (HHS), the Department of Labor and Department of the Treasury, and goes into effect July 2022. The regulation will directly impact health plans (insurance carriers and self-insured employers) and comes with a monetary penalty for failing to comply of up to $100 per member per day – yikes!

So, what does this mean exactly, and how do you avoid the fines? Read on to understand how this regulation will impact insurance carriers and self-insured employers, and what steps you can take to be compliant, keep members happy and avoid expensive penalties.

What does the Transparency in Coverage Rule require?

The Transparency in Coverage Final Rule has two key components:

• Provision of detailed pricing information on In-Network and Out-of-Network rates in machine readable files . This means that all pricing details for in- and out-of-network facilities must be published in a format that can be processed by a computer. This will be effective July 1, 2022.

• Providing an internet-based price comparison tool that members can use to get an estimate of the out-of-pocket costs for care they are seeking. This tool needs to provide access to prices of 500 specified items and services, and is effective January 1, 2023.

Providing rates for historical pricing for prescription drugs was also a part of the Transparency in Coverage conversation, but has been deferred indefinitely. For more details on the requirements and deferrals, click here.

Who is required to comply with Transparency in Coverage?

The Transparency in Coverage legislation applies to health insurers that offer coverage to individual and group health plans (employer-sponsored healthcare). The legislation doesn’t apply to grandfathered plans (i.e. individual health insurance that was purchased on or before March 23, 2010 – more info here), excepted benefit plans (i.e. HRA – Health Reimbursement Arrangements) and plans that are short term.

How do health plans comply with the rule?

There are two key components that need to be completed by July 1, 2022 and January 1, 2023, respectively, to ensure full compliance with the Transparency in Coverage Final Rule – machine readable rate files and an internet-based shopping tool.

Plans are required to publish machine-readable rate files:

• In-Network Rate File, which encompasses all rates for covered items and services that the plan insurer has with in-network providers. This should include negotiated rates for in-network providers and has to be published on the plan’s website. This is to be published at the plan level and not the sponsor level (i.e. insurer, not employer).

• Allowed Amount File, which is allowed amounts and billed charges for out-of-network providers. This file has to include historical allowed amounts and billed charges for out-of-network claims and must also be published on the plan’s website. This is to be published at the plan-sponsor level (i.e. self-insured employer).

Both machine-readable rate files (In-Network and Allowed Amount) are required to be updated monthly and include data for a 90-day period starting 180 days before the date it was published. It is important to note that publishing the Prescription Drug Rate File has been delayed indefinitely, but is likely to be a requirement in the future. Learn more about the specifics of the files here.

Plans are also required to create and publish an internet-based price comparison tool, or provide prices on paper as requested by members. The price comparison tool must allow members to see estimated out-of-pocket costs across facilities (if there is contract data), and is required to share certain info even if the provider chosen by the member is out-of-network. The price estimate has to be calculated per the member’s updated data, such as their deductible and out-of-pocket maximum. Plans must include prices for 500 shoppable services as delegated by the federal government in January 2023 and all other services in January 2024. Yup – that’s a lot of data.

What are the next steps to ensure compliance?

Much like previous price transparency-related legislation, the Transparency in Coverage Final Rule is historic and wonderful for consumers, but can be difficult for organizations to comply with due to lack of resources, information or tools. Here are some tips and resources to get you started:

Establish a task force within your organization and partners that administer your health plan(s) (i.e. Third Party Administrators, Benefits Brokers) to define the steps required to become compliant. Looking for an outside expert to join your force? Reach out to Handl Health.

For machine readable files, review the technical specifications of the files on the CMS github site. Bring your benefits contracting and IT experts together to identify key data sources and resource requirements to begin harmonizing the data. We’ve been there before – we’ve mined and harmonized the Hospital Price Transparency data across the nation and put it into our hospital cost comparison tool. So if you’re looking for data and tech experts, shoot us a note.

For the internet-based price comparison tool, the first decision you need to make is whether you will build it in-house or if you will buy/license a white-labeled solution. It’s important to note that the requirements for this tool go beyond many tools that are already in-market today, and it is required to have the ability to price and re-price services on-demand. But, you guessed it, we’ve also built a price comparison tool and understand the intricacies of the guidelines. Let us know if you need a hand.

We’re all about healthcare price transparency at Handl Health, and believe it is so important to maintain compliance with new legislation about this topic. If a health plan does not comply with the Transparency in Coverage Final Rule, it will be fined $100 per member per day, which is good motivation to get started on a compliance plan. While the hefty fines are one good reason to comply, it’s also important to give members a great experience and help them get the care that they need with prices upfront. You’ll both avoid higher medical costs, and members will be satisfied knowing they were able to make an informed choice. So, if you’re interested in jumping on the bandwagon (and avoiding big fines), let us know here.