On October 29, 2020, in response to President Trump’s executive order on Improving Price and Quality Transparency in American Healthcare, CMS Released its Transparency in Coverage Final Rules (“TiC Final Rules”) which require, among other things, non-grandfathered group health plans and health insurance issuers offering health insurance in the individual and group markets to make available to the public (including stakeholders such as consumers, researchers, employers and third-party developers) three separate machine-readable files including detailed pricing information related to (1) negotiated rates for all covered items and services between the plan or issuer and in-network providers, (2) historical payments to, and billed charges from, OON providers (a minimum of 20 entries must be available to ensure privacy) and (3) the in-network negotiated rates and historical net prices for all covered prescription drugs by plan or issuer at the pharmacy location level. 

The machine-readable files were intended to be made available effective January 1, 2022; however, on August 20, 2021, the DOL, IRS and CMS released FAQs which included an extension of the deadline to produce machine-readable files related to in-network negotiated rates and OON allowed amounts until July 1, 2022.  The deadline to make available machine-readable files for prescription drugs was extended indefinitely as the agencies were trying to study the interaction between this aspect of the TiC Final Rules and similar provisions under the Consolidated Appropriations Act, 2021 to determine the best way for plans and carriers to comply.

Per the extension, CMS intends to release further technical guidance on the machine-readable files; however, that guidance has not yet been issued as of the date of publication of this client alert.

Background

On July 24, 2019, President Trump issued his Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First, which, among other things, required the Secretary of Health and Human Services to propose a regulation (consistent with applicable law) requiring most non-grandfathered group health plans and health insurance issuers to (a) publicly post standard charge information and information based on negotiated rates for common shoppable items and services in an easy-to-understand, consumer-friendly, and machine-readable format, and (b) make personalized out-of-pocket cost information, and the underlying negotiated rates, for all covered health care items and services, including prescription drugs available to participants, beneficiaries, and enrollees through an internet-based self-service tool (and in paper form upon request). 

The Executive Order also required the agencies to implement rules for hospitals to post (and regularly update) standard charges information for services, supplies, or fees billed to patients or provided by hospital employees. The hospital requirements were effective in January 2021, while regulations for the transparency requirements for group health plans and health insurance issuers were required to roll out over a 3-year period beginning with making the machine-readable files available in January 2022.

On October 29, 2020, in response to President Trump’s executive order, CMS Released the TiC Final Rules.  This alert is focused solely on the requirements for most non-grandfathered group health plans and health insurance issuers to make available certain machine-readable files. 

Content of the Machine-Readable Files for In-Network Rates and Out-of-Network Allowed Amounts

On July 1, 2022, plans and carriers are supposed to make available machine-readable files for “each coverage option offered by a group health plan or health insurance issuer” for in-network rates and for OON rates, which include the following, respectively:

  • In-Network Rates
    • The name and 14-digit Health Insurance Oversight System (“HIOS”) identifier, the 5-digit HIOS identifier (if the 14-digit HIOS is not available), or the employer’s EIN (if neither the 14-digit nor the 5-digit HIOS is available)
    • A billing code (or NDC for prescription drugs), and a plain-language description for each billing code for each covered item or service under each coverage option offered by the plan
    • All applicable rates, which may include one or more of the following:
      • Negotiated rates,
      • Underlying fee schedule rates, or
      • Derived amounts

If a group health plan or health insurance issuer does not use negotiated rates for provider reimbursement, then the plan or issuer should disclose derived amounts to the extent these amounts are already calculated in the normal course of business. If the group health plan or health insurance issuer uses underlying fee schedule rates for calculating cost sharing, then the plan or issuer should include the underlying fee schedule rates in addition to the negotiated rate or derived amount.

The applicable rate for individual items and services and services in a bundled payment arrangement must be:

  • Reflected dollar amounts.  If the negotiated rate is subject to change based upon participant or beneficiary-specific characteristics, then the dollar amounts should be the based negotiated rate applicable to the item or service prior to adjustments for participant or beneficiary characteristics.
  • Associated with the late National Provider Identifier (“NPI”), TIN and Place of Service Code for each in-network provider
  • Associated with the last date of the contract term or expiration date for each provider-specific applicable rate that applies to each covered item or service
  • Notation where a reimbursement arrangement other than a standard fee-for-service model, such as capitation or bundled arrangement, applies
  • Out-of-Network Rates
    • The name and 14-digit Health Insurance Oversight System (“HIOS”) identifier, the 5-digit HIOS identifier (if the 14-digit HIOS is not available), or the employer’s EIN (if neither the 14-digit nor the 5-digit HIOS is available)
    • A billing code (or NDC for prescription drugs), and a plain-language description for each billing code for each covered item or service
    • Unique OON allowed amounts and billed charges furnished by OON providers during the 90-day time period beginning 180 days prior to the publication date of the machine-readable file where the particular OON item or service involves 20 or more different claims or payments under a single plan or coverage.  Each unique OON allowed amount reported must be:
      • Reflected dollar amounts with respect to each covered item or service provided by the OON provider
      • Associated with the late National Provider Identifier (“NPI”), TIN, and Place of Service Code for each OON provider.

Maintenance and Availability Requirements for Machine-Readable Files

The machine-readable files must be updated monthly (and clearly indicate the date the filed was last updated), must be available in a form and manner specified in any guidance issued by the IRS, DOL, or CMS, and must be publicly available and accessible to any person free of charge and without conditions, such as the establishment of a user account, password, or other credentials, or submission of personally identifiable information to access the file. In the FAQs released by the agencies on August 20, 2021, the agencies indicated that they would be releasing additional guidance related to the accessibility, form and manner of the machine-readable files; however, as of the date of this Client Alert, further guidance has not been released.

Hosting the Machine-Readable Files and Links to the File

According to the TiC Final Rules, fully insured plans may “require” a carrier to provide the information for the machine-readable files pursuant to a written agreement. Thus, the rules intimate that the obligation to provide the information is not necessarily optional on the part of the carrier. If there is a contract with the carrier to provide this information, then the carrier, not the plan, is responsible for ensuring all necessary information is included in the files, that the files meet any other form and accessibility requirements, and that the files are available to the public. Similar to fully insured plans, self-funded plans can contract with a third-party administrator (TPA) or other party to require the TPA to prepare and update the machine-readable files; however, the self-funded group health plan ultimately remains responsible for compliance and any compliance failures on the part of the TPA or other party. 

Further, the TiC Final Rules provide that an aggregated allowed amount for more than one plan or insurance policy or contract is permitted for out-of-network (“OON”) allowed amounts where the group health plan or issuer contracts with an issuer, service provider, or other party to provide the information. In such cases, the machine-readable files may be “hosted on a third-party website” and plan administrators and carriers may contract with third parties to post the file; however, “if a plan or issuer chooses not to also host the file separately on its own website, it must provide a link on its own public website to the location where the file is made publicly available.” 

This aggregation appears to be a process that would be handled on the carrier or TPA level, therefore, it seems unlikely the group health plan would have any responsibility to create a website for the plan and/or post a link on the company’s website. Instead, the carrier or TPA would be responsible for posting a link to a third-party website if the carrier or TPA contracts with the third party to aggregate OON allowed amount information.

Note, to date, we have not heard of any carriers or TPAs refusing to provide the machine-readable files, though we do encourage employers to ensure they have a written agreement with the carrier or TPA documenting who is obligated. 

Other Issues

Additionally, group health plans and health insurance issuers are required to comply with any state or federal privacy laws when complying with any of the above-described disclosure requirements. Plans and issuers will not be held responsible for relying in good faith on information provided by another party to comply with these requirements as long as the plan or issuer does not know, or have reason to know, the information is incomplete or inaccurate. Further, a plan or issuer will not be responsible if a website is temporarily down and information is not accessible, as long as the information is accessible as soon as practicable.

What’s Next for Employers?

The most important action for employers to take at this time is to ensure that any agreements they have with their carrier or TPA specify who will provide the information for, update, and host the machine-readable files, and ensure the carriers and TPAs are aware of any additional technical guidance released by the agencies regarding the machine-readable files. The anticipated release date of this additional, technical guidance is unknown at this time.

 

The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such. Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as ļ¬nancial, regulatory or legal advice. This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.