This morning, in response to President Trump’s executive order on price and quality transparency, the Department of Health and Human Services (HHS) and Centers for Medicare and Medicaid Services (CMS), in conjunction with the Department of the Treasury and the Department of Labor released a proposed rule entitled “Transparency in Coverage.” This proposed rule would require health insurers offering plans in the individual and group markets to make cost sharing information, in-network negotiated rates, and historical out-of-network allowed amounts publicly available.

The administration is citing this rule as part of their ongoing efforts to increase transparency in health care. CMS and the other agencies believe that publicly providing this information will allow for more informed, cost-conscious decisions by consumers and will promote competition and innovation among health insurers.

The rule has not yet been placed in the Federal Register. Once the rule is published in the Register, it will be subject to a 60-day comment period. Provisions of this proposed rule would become final a year after a final rule is adopted.

Insurers Could Have to Provide Cost-Sharing Liability to Enrollees

In this rule, HHS is proposing to require group health plans and health insurance issuers operating in the individual and group markets to disclose to enrollees, upon request, the cost-sharing information for a covered item or service from a particular provider(s). This information would have to be disclosed both through a self-service tool available online and in paper form. The self-service tool online must be searchable by billing code and by description and users must be able to include the name of a specific in-network provider in conjunction with the code or description. No fee could be charged for providing the cost-sharing liability information on paper.

Information must be disclosed in “plain language,” which the rule defines as “written and presented in a manner calculated to be understood by the average participant, beneficiary, or enrollee.” The agencies note that meeting this standard will require discretion and judgement on the part of the plan or issuer but do suggest this would likely require limited or no use of technical jargon and long, complex sentences.

The rule notes that the agencies modeled these requirements on existing notices plans and issuers provide to enrollees after an item or service has been provided, commonly referred to as an explanation of benefits (EOB) statement. HHS believes this is the most effective and reasonable way to share this information in a way that can be understood by enrollees and will allow enrollees to consider price when choosing a provider. In addition, the agencies believe that this new requirement does not pose any greater risk to plan or issuer proprietary information since the information being disclosed is the same as that in EOBs.

Seven Content Elements Proposed for Cost-Sharing Disclosure

The information that would have to be provided would include the specific price and benefit information on which an enrollee’s cost-sharing liability is based. Cost-sharing estimates must be based on accurate information including negotiated rates, out-of-network allowed amounts, and individual-specific accumulated amounts. Seven content elements are being proposed for the required information provided to enrollees:

• Estimated cost-sharing liability: this is the amount an enrollee is responsible for paying for a covered item or service under the terms of the plan or coverage. For qualified health plans (QHPs) on the exchanges, this estimate must reflect cost-sharing reductions, if applicable.
• Accumulated amounts: the amount of financial responsibility an enrollee has incurred, in relation to a deductible or out-of-pocket limit, at the time the request for cost-sharing information is made. This amount must also account for any cumulative treatment limitation on a particular item or service separate.
• Negotiated rate: the amount a plan, issuer, or third-party administrator (TPA) on behalf of a plan or issuer, has contractually agreed to pay an in-network provider for an item or service. This amount must be disclosed as a dollar amount, not a formula (e.g. $100, not 150% of the Medicare rate).
• Out-of-network allowed amount: the maximum amount a plan or issuer would pay for an item or service furnished by an out-of-network provider. The cost-sharing estimate would include this amount along with any cost-sharing liability for the enrollee.
• Items and services content list: this is a list of the covered items and services for which cost-sharing information is disclosed. This would only be shown when information is requested for an item or service subject to a bundled payment arrangement.
• Notice of prerequisites to coverage: a notice, when applicable, informing the enrollee that a specific covered item or service for which cost-sharing information is requested may be subject to a prerequisite for coverage. This includes medical management tools, such as concurrent review, prior authorization, step therapy, or fail-first protocols.
• Disclosure notice: this would be a notice with a series of disclosures, including three required disclosures and any additional information or disclaimers plans or insurers choose to include. These additional disclaimers cannot conflict with the required provided information.

For the negotiated rate, this amount does not need to be disclosed if the rate does not have an impact on an individual’s cost sharing liability. For example, the amount would not need to be disclosed if the copayment for an item is a flat amount, if the individual has met the deductible (and the service is 100% covered), or the deductible does not apply for that particular item or service.

The following disclosures would be included in the disclosure notice content element:

• A statement that out-of-network providers may bill enrollees for the differences between billed charges and the amount collected from the plan or issuer and the amount collected from the enrollee in cost sharing and that the estimates do not account for these potential additions;
• A disclosure notice conveying that actual charges for the covered items and services may be different from those described in the cost-sharing liability estimate, depending on the actual items and services received at the point of care; and
• A statement that the estimated cost-sharing liability is not a guarantee that coverage will be provided for those items and services.

Prescription Drugs Included in Disclosure Requirements

Prescription drugs are included in the items and services for which cost-sharing liability must be disclosed. Enrollees will be allowed to request cost-sharing information for a drug by its name or through a specific billing code associated with the drug. The rule notes that this will allow an enrollee to determine the estimated cost of a prescription drug obtained directly through a provider, including a pharmacy or mail order service. The proposed rule does note that providing the negotiated rate between a plan/insurer and a pharmacy benefit manager (PBM) could be misleading since the rate would reflect rebates and discounts and could be lower than what an enrollee might pay. However, the agencies believe that disclosing this rate will promote transparency in drug pricing.

The rule specifically seeks comments on whether a rate other than the negotiated rate, such as the undiscounted price, should be the required disclosure for prescription drugs for the negotiated rate element. Comments on whether and how to account for any rebates, discounts, and dispensing fees so that enrollees have access to “meaningful” cost-sharing liability estimates for drugs are also requested. Another topic for which comments are requested include whether there are situations where drug pricing information should not be included in a cost-sharing liability estimate, such as in a bundled payment arrangement and whether drug costs should be included in all cost-sharing liability estimates.

The disclosure requirements will also apply to bundled payment arrangements for a treatment or procedure. The rule defines bundled payment as a payment model under which a single payment for all covered items or services for a specific treatment or procedure is paid to a provider.

In-Network Negotiated Rates Proposed for Public Disclosure

This rule also proposed to require that plans and issuers make publicly available two machine readable files with price information. The first would include negotiated rates with in-network providers (the “Negotiated Rate File”) and the second would include historical data on the allowed amounts for covered items and services furnished by out-of-network providers (the “Allowed Amount File”). The agencies are proposing that the information be updated monthly. The Allowed Amount file can include data aggregated for more than one plan or policy.

The following content items would be required for each of the files:

• Name or identifier for each plan option or coverage: this would be for each plan option or coverage offered by a plan or issuer
• Billing codes used by the plan or issuer to identify items or services: plans will have to associate each negotiated rate or out-of-network allowed amount with a CPT, HCPCS, DRG, NDC, or other common payer identifier.
• Negotiated rates or out of network allowed amounts
  • For the Negotiated Rate File, this is the calculated dollar amount of the negotiated rate for each provider, associated with a National Provider Identifier (NPI).
  • For the Allowed Amount file, this would be the dollar amount, not formula, of each historical out-of-network allowed amount connected to a covered item or service furnished by an out-of-network provider. Enrollee cost-sharing must also be included.

This information would have to be available in a machine-readable format. Machine-readable means the file can be imported or read by a computer system for further processing without human intervention. Additionally, a plan or issuer would have to make the information accessible free of charge without requiring a user account, password, or other credentials. Individuals would also not have to submit any identifying information when accessing the information.

Finally, the rule proposes allowing plans and issuers to make this information available through an agreement with a health care claims clearinghouse or other HIPAA-compliant entity that discloses this information on the plan’s or issuer’s behalf. The agencies think this may reduce the burden associated with public disclosure since many companies use these entities to process claims.

The agencies believe that disclosure of this information will increase price transparency for both uninsured and insured individuals.