Agencies Provide Guidance on Transparency in Coverage Rule Implementation

Agencies Provide Guidance on Impending Transparency in Coverage Rule Implementation

Overview


On April 19, 2022, the US Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) released Frequently Asked Questions (FAQs) regarding the implementation of certain reporting provisions of the Affordable Care Act (ACA). The FAQs were released to provide clarity on the required drug price disclosures identified in the Transparency in Coverage final rule (the Rule) issued on October 29, 2020.

The Rule requires most non-grandfathered group health plans and health insurance issuers to: (1) upon request, disclose pricing information specific to participants, beneficiaries or enrollees (or their authorized representative) (collectively referred to herein as participants); and (2) provide public disclosures in machine-readable files regarding in-network, out-of-network and prescription drug prices. Please see our On the Subject here for an in-depth overview of the Rule.

The Departments reiterated that the enforcement of the requirements related to machine-readable files disclosing in-network and out-of-network data will begin July 1, 2022 (enforcement of this part of the Rule related to prescription drugs has been delayed), and clear up confusion regarding reporting for certain alternative reimbursement arrangements. This On the Subject summarizes the safe harbor issued for disclosing rates on specific arrangements for which a dollar amount may not be available before the item or service is provided or rendered.

In Depth


The Rules require plans and issuers to publish in the in-network machine-readable files all applicable rates (i.e., negotiated rates, underlying fee schedule rates or derived amounts), regardless of the type of payment model or models under which coverage is provided. The required rates must be reflected as dollar amounts. However, there are arrangements where a dollar amount can only be determined retrospectively because, for example, the agreement between the plan or issuer and the in-network provider states that the plan or issuer will pay a fixed percentage of the billed charges (i.e., such as “percentage-of-billed charges,” low-volume procedures or high-cost, outlier inpatient care), thus the dollar amount cannot be determined until a claim is made.

In the FAQs, the Departments have provided an enforcement safe harbor for arrangements where a specific dollar amount cannot be determined to satisfy the reporting requirement. The safe harbor will not apply if the Departments determine that the arrangement at issue can sufficiently disclose a dollar amount.

  1. For a “Percentage-of-billed-charges” arrangement where dollar amounts cannot be assigned to an item or service for an in-network provider prior to a bill being generated, the plan or issuer may report a percentage number, in lieu of a dollar amount. The Departments provided specific language to use for percentage-of-billed-charges arrangements here.
  2. Under an alternative reimbursement arrangement, if the reporting tool or schema does not support the arrangement, or if the contractual arrangement requires the submission of additional information to describe the nature of the negotiated rate, plans and issuers may disclose it in an open text field a description of the formula, variables, methodology or other information necessary to understand the arrangement. The Departments provided additional guidance on specific language to use in the open text field here.

This safe harbor will take effect simultaneously with the enforcement of the disclosure requirements on July 1, 2022.

PRACTICAL APPLICATION

Plans and issuers must post machine-readable files to disclose in-network and out-of-network data by July 1, 2022. This is a delay of the previous enforcement deadline of January 1, 2022. For the vast majority of self-insured group health plans, compliance with the Rule will require coordination with third-party administrators or other plan vendors. Plan sponsors should be well along the way to preparing to meet the Rule’s significant burden of complying with the disclosure obligation and, if not, should begin preparing as soon as possible. The added flexibility of the safe harbor should make this burden slightly easier to bear.

For more information on whether and how these changes apply to your group health plan, please contact your regular McDermott employee benefits lawyer or one of the authors.