Understanding Transparency in Coverage Rule

The Departments of Health and Human Services, Labor and the Treasury previously finalized a Transparency in Coverage rule that requires health plans to create a patient-facing price comparison tool and post publicly available machine-readable files that include negotiated rates for covered services for in-network providers and historical payments to and charges from out-of-network providers for covered items and services.
The posting of the machine readable file information occurred on July 1, 2022. The price comparison tool is required to be delivered by January 1, 2023.
In 2020, the Federal Government finalized “Transparency in Coverage” Rule, which requires health insurers and group health plans, including self-funded clients, to provide cost-sharing data to consumers via:

  • Machine-readable files: Machine-readable files must be published on a publicly available site based on the enforcement date of July 1, 2022, for plan years beginning on or after Jan. 1, 2022. These files provide pricing data for covered items and services based on in-network negotiated payment rates and historical out-of-network allowed amounts. A third machine-readable file for prescription* drug rates and historical costs has been delayed pending further guidance. Information in these files must be updated and published monthly. Publicly available MRF.
  • Consumer price transparency tool: This online tool for members will include personalized, real-time, cost-share estimates for covered services and items, including pharmacy. Paper versions must be available upon request. For plan years beginning on or after Jan 1, 2023, the online tool must provide cost-share estimates for 500 shoppable services. For plan years beginning on or after Jan. 1, 2024, the online tool must provide cost-share estimates for all covered services.

Benefits of Transparency in Health Coverage and Past Efforts To Promote Transparency

PPACA’s transparency in coverage requirements can help ensure the accurate and timely disclosure of information appropriate to support an efficient and competitive health care market.

  • Enables consumers to evaluate health care options and to make cost-conscious decisions.
  • Strengthens the support consumers receive from stakeholders that help protect and engage consumers.
  • Reduces potential surprises in relation to individual consumers’ out-of-pocket costs for health care services.
  • Creates a competitive dynamic that may narrow price dispersion for the same items and services in the same health care markets.
  • Puts downward pressure on prices which, in turn, potentially lowers overall health care costs.

Transparency in Coverage Consumer Price Transparency Tool
Starting with plan years beginning on or after January 1, 2023, insurers and plans must make an online price transparency tool available for 500 shoppable items, services and drugs identified in the final rule. All covered items, services, and drugs are required to be included in the consumer price transparency tool for plan years that begin on or after January 1, 2024.
Consumers will be able to get real-time estimates of their cost-sharing liability for health care items and services from different providers. The tool requirements allow the members to understand how costs for covered health care items and services are determined by their plan.

Publicly Available Machine-Readable Files
The intent of this regulation is to provide health care pricing information that supports more informed decisions for receiving care.
The following machine-readable files, which are files where data is formatted in a way that can be processed by a computer, online can be found by visiting the machine-readable files website. Information available to the public is as follows:

  • In-network provider rates for covered services
  • Out-of-network allowed amounts and billed charges for covered services
  • A third requirement to publish machine readable files for certain prescription drug information has been delayed indefinitely by the federal government as it works to issue additional rules surrounding this requirement.

The final rule released by the Department of Health and Human Services (HHS), the Department of Labor, and the Department of the Treasury delivers on Improving Price and Quality Transparency in American Healthcare.
The rule requires most group health plans, and health insurance issuers to disclose price and cost-sharing information to participants, beneficiaries, and enrollees. Pricing to include negotiated rates, billed charges and allowed amounts paid for out-of-network providers, and the negotiated rate and historical net price for prescription drugs. The files will contain the following details:

  • In-Network: Negotiated rates for all covered items and services between the plan or issuer and in-network providers .
  • Out-of-Network: Allowed amount paid to, and billed charges from, out-of-network providers for all covered services within a 90-day period.

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