What is the Transparency in Coverage Rule?
The Transparency in Coverage Rule is federal regulation issued by the Departments of Health and Human Services (HHS), Labor (DOL), and Treasury in November 2020. The rule will be enforced on July 1, 2022 and will impact employers that offer health insurance to employees.
The rule implements a section of the Affordable Care Act (ACA), requiring insurers and group health plans to:
- Offer an online price comparison tool for beneficiaries that includes personalized information about cost-sharing covered services and items, including prescriptions.
- Provide publicly available machine-readable files that include detailed information on in-network negotiated rates and historical data for out-of-network charges for covered services and items, including prescriptions.
What is the purpose of the Transparency in Coverage Rule?
Health plan price transparency helps consumers know the cost of a covered item or service before receiving care. Beginning July 1, 2022, most group health plans and issuers of group or individual health insurance will begin posting pricing information for covered items and services. This pricing information can be used by third parties, such as researchers and app developers to help consumers better understand the costs associated with their health care. More requirements will go into effect starting on January 1, 2023, and January 1, 2024 which will provide additional access to pricing information and enhance consumers’ ability to shop for the health care that best meet their needs.
What do employers need to address to stay compliant with the Transparency in Coverage Rule?
In three stages, most group health plans and issuers of group or individual health insurance are required to disclose pricing information. Stage 1 will need to be completed by July 1, 2022.
Stage 1
Obtain Machine-Readable Files containing the following sets of costs for items and services from carriers and make public online with the below information:
- In-Network Rate File: rates for all covered items and services between the plan or issuer and in-network providers.
- Allowed Amount File: allowed amounts for, and billed charges from, out-of-network providers
Stage 2
Internet-based price comparison tool (or disclosure on paper, upon request) allowing an individual to receive an estimate of their cost-sharing responsibility for a specific item or service from a specific provider or providers, for 500 items and services.
Stage 3
Internet-based price comparison tool (or disclosure on paper, upon request) allowing an individual to receive an estimate of their cost-sharing responsibility for a specific item or service from a specific provider or providers, for all items and services.
Stage 2 and Stage 3 go into effect in 2023 and 2024.
What does the Transparency in Coverage Rule mean for your employees?
For too long, Americans have been in the dark about the cost of their health care until after they obtain services and receive a bill. These requirements will empower consumers to shop and compare costs between specific providers before receiving care. Consumers have an important role to play in controlling costs, but consumers must have meaningful information in order to create the market forces necessary to achieve lower health care costs.
Why do employers need to make the machine-readable files public to everyone?
With the data contained in the machine-readable files from plans and issuers, third party developers will be able to create much more advanced and accurate price transparency tools. These tools will help inform consumers, as well as the broader public, about patterns in health care costs and will offer immense opportunities for innovation.
Making price transparency information publicly available strengthens the work of other health care stakeholders that help provide care or promote access to care to consumers, or otherwise aim to protect consumers and their interests in the health care system. These entities include researchers, regulators, lawmakers, patient and consumer advocates, and businesses that provide consumer support tools and services. A key aspect of Transparency in Coverage is to make health care pricing information more accessible and useful to consumers by making the information available to persons and entities with the requisite experience and expertise to assist individual consumers and other health care purchasers to make informed health care decisions.
With information on pricing, these other health care stakeholders can better fulfill each of the unique roles they play to improve America’s health care system for consumers. For instance, with pricing information, researchers could better assess the cost-effectiveness of various treatments; state regulators could better review issuers’ proposed rate increases; patient advocates could better help guide patients through care plans; employers could adopt incentives for consumers to choose more cost-effective care; and entrepreneurs could develop tools that help doctors better engage with patients.
