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HHS Finalizes Coverage Transparency Rule

The Department of Health and Human Services, along with the departments of Labor and the Treasury, on Oct. 28 finalized the transparency in coverage rule requiring plans and issuers to publicly disclose rates, cost-sharing, and drug pricing information.

The Centers for Medicare & Medicaid Services previously finalized the Hospital Price Transparency rule, with requirements for hospitals to publicly display standard charges, including payer-specific negotiated charges, effective Jan. 1, 2021.

Transparency Provisions

The rule also sets forth seven content elements that a plan or issuer must disclose, upon request, to a participant, beneficiary, or enrollee for a covered item or service:

  • estimated cost-sharing liability;
  • accumulated amounts;
  • in-network rates;
  • out-of-network allowed amounts;
  • a list of items and services subject to bundled payment arrangements;
  • a notice of prerequisites, if applicable; and
  • a disclosure notice.

The departments adopt a three-year, phased-in approach with respect to the scope of the requirement to disclose cost-sharing information. Beginning Jan. 1, 2022, plans and issuers must disclose pricing information to the public through three machine-readable files:

  • payment rates negotiated between plans or issuers and providers for all covered items and services;
  • unique amounts a plan or issuer allowed, as well as associated billed charges, for covered items or services furnished by out-of-network providers; and
  • pricing information for prescription drugs.

The final rule adopts a modification to the three files, to require plans and issuers include the provider Tax Identification Number, in addition to the National Provider Number and the Place of Service code.

Plans and issuers also are required to make available an online self-service tool for participants, beneficiaries, or enrollees to use to search for cost-sharing information for covered items and services. This information must be disclosed in “plain language” understood by the average participant, beneficiary, or enrollee.

By Jan. 1, 2023, plans and issuers must make cost-sharing information available through the online tool for 500 items and services identified by the departments; information for all items and services must be available by Jan. 1, 2024.

The departments are developing technical implementation guidance for plans and issuers, which will be available online through GitHub (a website and cloud-based service). Plans and issuers also can collaborate with the departments in real-time through this platform to meet disclosure requirements and address unique plan concerns.

Medical Loss Ratio

The proportion of premium revenue spent on clinical services and quality improvement activities is called the medical loss ratio (MLR). The Affordable Care Act requires an issuer to provide annual rebates to enrollees if its MLR falls below specified standards (generally 80 percent for the individual and small-group markets, and 85 percent for the large-group market).

The rule finalizes changes to the MLR program rules to allow issuers offering group or individual health insurance coverage to receive credit in their MLR calculations for savings they share with enrollees that result from the enrollees shopping for, and receiving care from, lower-cost, higher-value providers.

The final rule does not include definitions of “shared savings” or “lower-cost, higher-value.” Rather, the departments defer to state legislators and regulators to work with issuers to develop standards and criteria for shared savings programs for their respective constituents.

Shared savings payments made by an issuer to an enrollee will be factored into an issuer’s MLR numerator, beginning with the 2020 MLR reporting year.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Maryellen Guinan is a principal policy analyst at America's Essential Hospitals.

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