Summary: For Health Plans, Machine-Readable Files, containing in-network provider charges and out-of-network allowed amounts and billed charges, must be posted on a public website by July 1, 2022.
The public disclosure requirement is required under final “transparency in coverage” rules (“TiC Rules”) published in November 2020 by the Internal Revenue Service, Department of Labor, and Department of Health and Human Services (“Agencies”). The TiC Rules are intended to implement cost transparency requirements imposed by the Affordable Care Act. The TiC Final Rules apply to non-grandfathered group health plans and insurers offering non-grandfathered coverage and require cost-sharing disclosures be made available by most health plans and insurers. Shortly after the TiC Final Rules were issued, the Internal Revenue Service, the Department of Labor, and the Department of Health and Human Services (the “Departments”) jointly issued regulations clarifying the transparency in coverage requirements, which will be enforced beginning July 1, 2022. This disclosure requirement does not apply to grandfathered plans under the Affordable Care Act, excepted benefits (standalone dental and vision plans and onsite medical clinics), separate “retiree-only” plans, healthcare-sharing ministries, short-term limited duration insurance (STLDI), and account-based plans like health reimbursement arrangements (HRAs) and health care flexible spending accounts (FSAs).
Pursuant to the regulations, most health plans and insurers in the individual and group markets are required to disclose in-network provider negotiated rates as well as historical out-of-network allowed amounts and billed charges for providers. Plans and insurers must also disclose in-network negotiated rates and historical net prices for all covered prescription drugs at the pharmacy-location level in a manner specified by the Departments. Specifically, the required information above must be posted on a public website and, upon request, individualized cost-sharing information must be disclosed to participants, beneficiaries or enrollees.
After the TiC Final Rules were finalized, the Consolidated Appropriations Act (CAA) was issued, which imposed new transparency requirements on plans and issuers, including prescription drug reporting. It has been noted that many of the CAA requirements contain duplicative and overlapping reporting requirements for prescription drugs. For example, under the TiC Final Rule and the CAA, plans and issuers must publicly post pricing information for all covered prescription drugs by January 1, 2022. To address the overlap, the Departments issued subsequent FAQ guidance.
Plan Sponsor Requirements Under the TiC Final Rule
The required disclosures must be made through three machine-readable files (MRFs) posted on a public website in a standardized format. Insurers can post the information for fully insured plans. For self-funded plans, third-party administrators can post the information along with the plan sponsor. The regulations require the MRFs to be updated monthly and indicate when last updated, thereby allowing the public to access health insurance coverage information that can be used to understand health care pricing. The MRFs cannot require registration or exist behind a firewall and must be available to the public free of charge.
The regulations required the MRFs to be made public for plan years that began on or after January 1, 2022. However, the Departments have deferred enforcement of the requirement until July 1, 2022. For plan years that begin between January 1, 2022 and July 1, 2022, the files must be posted by July 1, 2022. For plan years that begin after July 1, 2022, the files must be posted in the month in which the plan year begins. However, it is recommended that the MRFs be posted by July 1, 2022 for all plan years (calendar and non-calendar). The Departments have deferred enforcement of the MRF requirement for prescription drug pricing pending further rulemaking.
Good Faith Reliance
The TiC Final Rule provides some protection for good faith compliance. Under the final rule, a group health plan that is acting in “good faith” and with “reasonable diligence” will not fail to comply solely because it makes an error or omission in the disclosure requirement. As well, a plan or insurer will not fail to comply solely because, despite acting in good faith and with reasonable diligence, its internet website is temporarily inaccessible (e.g., for the public disclosure requirement). The final rule further states that to take advantage of these protections, the plan or issuer must make the information available as soon as practicable. Plans sponsors should prepare a deliberate, written compliance plan to demonstrate good faith efforts and reasonable diligence if unable to fully comply with disclosure requirements by July 1, 2022.
If the required disclosure is provided by a third party (e.g., a third-party administrator) and the third party is out of compliance, the plan will not be out of compliance unless it knew or reasonably should have known that the information provided is incomplete or inaccurate.
Next Steps for Plan Sponsors
To ensure compliance, plan sponsors should confirm in writing that the insurers and/or third parties obtain and post the information. Plan sponsors should confirm that any links provided by the insurer or TPA include the appropriate MRFs and that the content and accessibility requirements of the regulations are satisfied. Plan sponsors should determine if the MRF needs to be posted on the plan website for self-funded plans or the third-party administrator or both.