By: HUB’s EB Compliance Team

Just before Halloween, the Departments of Treasury, Labor, and Health and Human Services (the “Departments”) released their final rule on health plan price transparency. The requirements phase in over three years with the first compliance requirements becoming effective January 1, 2022, and they present a dramatic expansion of price transparency for health plans. An accompanying fact sheet is here.

Releasing Payment Information

For plan years beginning on or after January 1, 2022, most group health plans or health insurance carriers will be required to make available to the public, three separate files that include detailed pricing information:

  • The first deals with payments to in-network providers. It will show negotiated rates for all covered items and services between the plan/carrier and in-network providers.
  • The second deals with out-of-network providers. It will show both the historical payments to, and billed charges from, out-of-network providers. However, historical payments must have a minimum of 20 entries to protect consumer privacy. Therefore, any historical payments with less than 20 entries will not be disclosed.
  • The third will be specific to prescription drugs. It will detail the in-network negotiated rates and historical net prices for all covered prescription drugs. The information will be organized by plan or carrier at the pharmacy location level.

Group health plans and health insurance carriers will be required to display these data files in a standardized format and will provide monthly updates. The goal is to have this data available for detailed research studies and data analysis. It will also offer third parties the ability to create cost-comparing solutions.

Cost Comparison Tools

However, the most direct and immediate impacts to group health plans will come from the required cost comparison tools. Under these rules, most group health plans and health insurance carriers will be required to make available to participants, beneficiaries and enrollees (or their authorized representative) essentially an “advance EOB.”  Most group health plans/carriers issue an “Explanation of Benefits” after services have been provided. These rules will require a version of an EOB to be issued in advance to show what items and services will cost through use of a real-time self-service search tool. 

The advance EOB must include seven data elements, which generally mirror the information that is disclosed on EOBs currently. It must be personalized to the individual requesting it so that it shows a true estimate of what s/he would actually pay, taking into account individual-specific accumulators such as deductibles and out-of-pocket limits as well as day or visit limits. It must be made available through both an internet-based self-service tool and in paper form upon request.

This advance EOB must be available for an initial list of 500 shoppable services listed in the regulations for plan years beginning on or after January 1, 2023. The remainder of all items and services will be required to be included in these self-service tools for plan years beginning on or after January 1, 2024.

Exceptions From these Rules

Not all plans are subject to these rules. The notable exceptions are:

  1. Grandfathered plans,
  2. Excepted benefits (including dental and/or vision coverage offered separately from the major medical plan), and
  3. Health reimbursement arrangements (including ICHRAs and QSEHRAs), health flexible spending arrangements, and similar account-based arrangements.

Medical Loss Ratio Adjustments

One other additional change is that health insurance carriers will get to include shared savings earned through these rules as part of their expenditure in their medical loss ratio calculation. In other words, they will not end up having to pay greater rebates if they pay less in claims as a result of participants and dependents shopping for less expensive services because of these rules. 

Conclusion

In 2021, employers should expect to see their third-party administrators (“TPA”) and health insurance carriers coming to them to discuss these rules. Note that if an employer with a self-funded plan enters into a contract with a TPA to have the TPA handle these disclosures, the employer, through its group health plan, is still ultimately responsible. By contrast, employers with insured plans may contract with their health insurance carrier to provide these disclosures and the carrier will ultimately be responsible. Therefore, contractual amendments will likely be coming in 2021.

Additionally, once the cost comparison tools become available, employers should encourage their employees to use them. The preamble to the regulations noted that existing cost transparency tools are not widely used. However, once these tools become almost universally available, there may be greater interest.

For the likely effect (if any) of a change in presidential administrations on these rules, see our post-election analysis here.

If you have any questions, please contact your HUB Advisor. You can also view more compliance articles in our Compliance Directory

NOTICE OF DISCLAIMER 

The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.