After years of remaining buried beneath red tape, a federal mandate issued in late 2020 seeks to, at last, bring U.S. healthcare costs into the light of day. Published jointly by three federal agencies, the final Transparency in Coverage Rule aims to allow Americans to more accurately predict their healthcare costs by helping them find and filter care providers within their network and location and with respect to the amounts paid toward their deductible and out-of-pocket maximum.
The final Transparency in Coverage Rule requires group health plans and insurance issuers to make:
- Disclosures to the public. For plans with effective dates beginning on or after January 1, 2022, plans and issuers must publicly disclose healthcare pricing online and update it monthly. The pricing information must include in-network-provider-negotiated rates for covered items and services, historical data of billed and allowed amounts for covered items or services furnished by out-of-network providers and pharmacies, and negotiated rates and historical net prices for in-network prescription drugs.
- Disclosures to plan participants. Plans and issuers must provide certain personalized cost-sharing information to participants and beneficiaries in advance and upon request through an online self-service tool related to 500 of the most “shoppable” healthcare services and items (effective January 1, 2023), as well as all covered healthcare services, items, and prescription drugs (effective January 1, 2024).
The 500 Shoppable Services
For even the most empowered healthcare consumers, calculating their remaining deductible, double-checking their out-of-pocket max, and calling various providers take time and energy.
Given these barriers, regulators compiled a list of 500 “shoppable” healthcare services and items. In developing the list, researchers considered nonurgent (i.e., planned) procedures, the most frequently performed services and items, and services with the most significant cost variability. Examples include X-rays, mammography, endoscopy, cesarean delivery, colonoscopy, and hernia repair.
The Self-Service Tool
In helping employees make the most optimal healthcare decisions based on their unique circumstances, the second part of the rule—the disclosures to plan participants—represents the biggest employee engagement opportunity employers have had in decades.
According to the rule, group health plans and issuers must provide their employees with an online self-service tool that:
- Includes real-time cost accumulators (e.g., accruals toward participants’ deductible, out-of-pocket maximum, etc.);
- Allows plan participants to look at costs on a code-by-code and provider-by-provider basis;
- Distinguishes between in-network negotiated rates and out-of-network allowed amounts; and
- Makes these details available online whenever participants need them.
The No Surprises Act
The No Surprises Act is aimed at protecting patients from surprise medical bills in situations in which they have little or no control over who provides their care, as in the case of services provided by out-of-network providers at in-network facilities.
The No Surprises Act is critical to the Transparency in Coverage Rule’s success. Disclosing costs to plan participants by itself means little if they may still get surprise-billed for thousands more than they were expecting. With the two regulations combined, participants can be confident they won’t receive bills beyond those amounts, as long as they go to in-network facilities.
The implication for employers with self-funded plans is two-fold:
- Those who provide easy access to cost transparency information can better educate their employees and build confidence in their benefits selections before annual enrollment.
- Those who start educating their employees now about the transparency tools that will be available to them between 2022 and 2024 make a strong case for retention, financial security, and employer empathy.
6 Key Next Steps
Group health plans and issuers who fail to adhere to these disclosures can face a fine or an excise tax of $100 per person per day per violation.
Feeling anxious yet?
Well, sometimes a healthy amount of anxiety can be a strong motivator. But not with this regulation; the potential opportunities far outweigh the burden of the obligation—especially when you consider that nearly 1 in 5 inpatient admissions includes a claim from an out-of-network provider and nearly 45% of Americans have received a “surprise bill” for services they were unprepared for.
While compliance with the transparency rule may seem daunting, it helps for employers to break down the requirements and delegate compliance responsibilities among their various service providers. These six steps can help focus your efforts:
- Work the clock. The 2022 plan year is just around the corner, so get a compliance jump-start with these Labor Department resources.
- Take inventory. Determine which plans are subject to the new rule. For now, vision, dental, employee assistance programs (EAPs), flexible spending accounts (FSAs), fixed indemnity hospital, specified disease coverage, grandfathered, retiree medical, and certain account-based plans are exempt.
- Delegate. Assess which compliance aspects to assign to insurance issuers and which to contract to third parties.
- Document. Carefully outline which parties are responsible for compliance.
- Budget. Issuers and third-party administrators (TPAs) will undoubtedly pass along certain compliance costs.
- Show and tell. Ensure sufficient time for beta testing the online tools, as well as informing employees about their ability to maximize benefits decision-making and cost savings.
With effective dates staggered across a 3-year period, the new regulations methodically reveal the personal and macroeconomics of health care that have been obscured for decades. And for benefits professionals, there’s never been a better opportunity to increase employees’ engagement in their healthcare and pharmacy benefits.
Bruce Gillis is the Strategy Practice Leader for Health, Welfare, and Compliance at Businessolver.