News 1/8/2020 New And Proposed Transparency Rules: What employers need to know

Recently, the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury (the Departments) released the Transparency in Coverage proposed rule—a follow up to the final regulations requiring hospitals to make publicly available, “in a consumer-friendly manner,” their list price, cash price, payer-specific negotiated rates and lowest/highest negotiated rates for a federally defined list of 70 “shoppable services.” Hospitals must then supplement the list of 70 with at least 230 other shoppable services, for a total of 300 services. This final rule—and the proposed rule for employers and plan issuers—is designed to make the cost of health care more transparent for patients.

While multiple hospital associations and individual hospitals have already filed suit over the final regulations, claiming that their first amendment protections are being violated, the comment period for the proposed rule remains open until January 14, 2020. While the earliest likely effective date for these proposed rules is estimated to be January 1, 2022, there is much that employers can be doing now to prepare for its eventual implementation.

What Employers Need to Know

The proposed rule has two major components: cost-sharing disclosures and rate disclosures.


Plans will be required to provide individuals with a personalized estimate of their out-of-pocket costs for a requested procedure. Specifically, the estimate would be required to include:

  • The estimated out-of-pocket cost to the individual (e.g., deductible amount, coinsurance or a copayment).
  • How much the individual has already paid at the time the request for cost-sharing information is made, either with respect to a deductible or an out-of-pocket limit or any treatment limits (for example, the number of chiropractic visits used if the plan limits such visits).
  • The dollar amount that the plan has contractually agreed to pay an in-network provider. (For self-insured plans, this would be the amount negotiated through the TPA or ASO provider contract).
  • The most of the plan would pay for care received from an out-of-network provider. For example, if the Plan has an out-of-network allowed amount of $100 for an item or service from an out-of-network provider and the out-of-network coinsurance rate is 40% of the allowed amount ($40), the plan must share both the allowed amount ($100) and the employee’s out-of-pocket cost (430).
  • A list of each covered item and service included in any bundled payment arrangement, as well as how much the individual will be expected to pay for the bundle of covered items and services.
  • Whether there are requirements for coverage, such as concurrent review, prior authorization or step-therapy.
  • Notice that out-of-network providers may send a “balance bill,” that actual charges for covered items and services may differ from the estimate and that the estimated cost does not guarantee that the service or supply will be covered.
  • The Departments have created a model language that plans and issuers can use to accompany the cost effort.

Under the proposed rules, the cost-sharing information described above must be provided in one of two ways—either through a self-service, web-based tool or in paper form.

The web-based tool must be user-friendly and enable users to:

  • Search all in-network providers or input a specific in-network provider,
  • Search for cost-sharing information by billing code (e.g., CPT code) or by a descriptive term (for example, “knee MRI”), and
  • Search for the out-of-network allowed amount for a covered service by entering a billing code or descriptive term, as well as any information needed—such as zip code—to determine the allowed amount.

If the participant, dependent or enrollee requests the information in paper form, the plan administrator or insurer must deliver the information, free of charge, within two business days after the request is received.


The proposed rule would also require plans and issuers to publicly post on a website two machine-readable files containing in-network provider negotiated rates (negotiated rate file) and historical out-of-network allowed amounts (allowed amount file). These files would need to be updated monthly.

The negotiated rate file would include plan information, billing codes used to identify covered items or services (and a plain language description for each code), and the negotiated in-network rates for each item or service. The allowed amount file would provide the out-of-network allowed amount for covered items or services furnished by out-of-network providers during the past 90 days, as long as the disclosure would not violate health information privacy laws. Plans that contract with third parties to provide allowed amount information must ensure that the third party is HIPAA-compliant, and may report aggregate amounts that reflect data from more than one plan or contract. The files must use a non-proprietary open format (not a PDF file, for instance).

The proposed rule notes that the Departments are considering whether to also require plans and issuers to disclose both cost-sharing and rate information available to third-party technology innovators. Such innovators would be permitted to “compile, consolidate and present” data across employer-sponsored Plans in a usable format for consumers.


The proposed rule does not specifically provide for a penalty for noncompliance. However, the rule appears to fall under Internal Revenue Code section 4980D, which would apply a $100 per day, per individual, penalty.

The proposed rule does offer a good-faith safe harbor. If despite acting in good faith a plan or insurer makes an error or omission in a required disclosure, or its website becomes temporarily inaccessible, it would not be deemed noncompliant, as long as it makes the information available as soon as practicable. Additionally, if a plan or insurer relies in good faith on information obtained from another entity which subsequently is discovered to be incomplete or inaccurate, the plan or insurer would not be deemed noncompliant unless it knew, or reasonably should have known, the information was, in fact, incomplete or inaccurate.

Click here to read the final and proposed rules.

What Employers Can Do

  1. First and foremost, consider filing a comment letter with the DOL. In the past the Departments have dramatically underestimated the cost and time required to comply with its new regulations; it’s entirely possible that these regulations are no different. In addition to the technology investments and communications efforts required to roll out this information to employees/participants, there will doubtless be considerable consulting fees incurred as employers arrange to obtain the required data. Sharing expected costs and level of effort may well affect the structure and requirements of the final regulations.
  1. Start conversations with your partners—your broker, insurers, consultants and TPAs—about implications for existing contracts and renewals. Your ERISA attorney may have some suggestions about the HIPAA implications of the new rules. And your IT department certainly needs to get up to speed on what changes, if any, might be required to the corporate website.
  1. Lay the groundwork with your employees/participants. As the saying goes, you can lead a horse to water but you can’t make him drink. Merely making the cost-sharing and rate disclosures available does not translate into employee engagement. Participants must be educated about the fact that many health care services are shoppable, the reasons that they should (if not MUST) shop for care, the resources that are currently available (either through the employer, the plan, other vendors or outside partners), what information they need if they intend to shop (e.g., CPT codes, medication name and dosage, etc.) and exactly HOW to do it. If you start getting participants familiar with the concept and the process—and spell out clearly what’s in it for them—they’ll be better prepared to make use of the new data once it becomes available.
  1. Consider a transparency/advocacy service. Another tool to help participants prepare for the future of consumerism is a transparency service—in other words, someone to do the research for them. Employees will be hearing about the proposed regulations and will be either interested or intimidated—possibly both. Make it easy for them to get in the shopping habit by providing the equivalent of a “personal shopper” and they will soon see the value of comparing prices. If you already offer such a service, beef up your communications efforts to improve utilization of the program.

While it remains to be seen if—and when—the proposed rules are implemented and in what form, employers and their partners can certainly take steps now to prepare themselves—and their participants—for this new phase of transparency and consumerism.

Read the article here.

(Kim Buckey, vice president, client services, DirectPath)

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