In October 2020, the Departments of Health and Human Services, Labor and Treasury (the “Departments”) released the Transparency in Coverage Final Rules (TIC) to require health plans to provide greater cost transparency. Two months later, the Consolidated Appropriations Act of 2021 (CAA) was signed into law, representing the most significant changes to the private insurance market since the Affordable Care Act. The CAA includes extensive transparency reforms, including some that overlap with TIC, but with more aggressive deadlines, and extends consumer healthcare provisions to grandfathered health plans.

The new regulations are generally considered good for consumers, requiring health plans and health care providers to furnish additional information to allow consumers to make good health care choices. The new compliance requirements, however, impose a substantial administrative burden for insurance carriers, multiple employer welfare arrangements (e.g., Western Growers Assurance Trust), third party administrators (e.g., Pinnacle Claims Management, Inc.) and employers who sponsor self-insured health plans.

Although employers who offer a self-insured plan typically contract with a third party administrator to manage their health plans, it is ultimately the self-insured employer—not the third party administrator—that is responsible for compliance with transparency requirements.

A brief description of the significant provisions of the TIC and CAA follow. Unless otherwise indicated, the changes are effective with plan years beginning on and after Jan. 1, 2022.

Machine-Readable Files

Effective July 1, 2022, health plans are required to disclose, on a public website, two machine-readable files showing (i) in-network provider rates for covered items and services, and (ii) out-of-network allowed amounts and billed charges for covered items and services. Implementation of a third file, showing negotiated rates and historical net prices for prescription drugs, has been postponed pending further regulatory guidance.

Price Comparison/Cost Transparency Tool

TIC requires health plans to make price comparison information available, giving consumers the ability to compare costs for various providers. The information must be available for 500 common items and services beginning on or after Jan. 1, 2023, and for all services effective Jan. 1, 2024. Information must be available through a web-based self-service tool, over the telephone or, upon request, by mail.

The CAA also contains a cost transparency requirement, but the Jan. 1, 2022, effective date has been delayed pending further guidance from the Departments.

Advanced Explanation of Benefits

Health plans must provide patients with an advanced explanation of benefits (EOB) for services for which the plan has received advanced notice, such as requests for pre-authorization. The advanced EOB must be provided no later than one business day following receipt of the advanced notice (three business days, if the notice was received at least 10 business days before the service is scheduled to be furnished), and must include:

•   Status of the provider or facility as in- or out-of-network. If the provider is within the plan’s network, the contracted rate for the service must be provided; if the provider is out-of-network, the plan must provide a description of how to obtain information about network providers.

•   The estimate included in the notice received from the provider or facility.

•   Good faith estimates of:

–   the amount the plan is responsible for paying,

–   any cost sharing for which the participant will be responsible; and

–   the amount the participant has incurred toward meeting the annual deductible or out-of-pocket maximum.

•   A disclaimer that the service is subject to medical management, if applicable.

•   A disclaimer that the information provide is only an estimate and is subject to change.

•   Any other information deemed appropriate by the plan.

Gag Clause Prohibition

Gag clauses (contract provisions that restrict or prevent insurers from disclosing price or quality information to members) are prohibited in all new or renewing contracts.

ID Card Requirements

Plans are required to provide the following information on their health plan identification cards:

•   The amount of in-network and out-of-network deductibles;

•   The in- and out-of-network out-of-pocket maximum limitations; and

•   A telephone number and website address for additional assistance.

Network Directory

Health plans are required to verify, maintain, and update directories of network providers at least every 90 days. Enrollees who rely on incorrect information included in an out-of-date network directory may be protected from higher cost-sharing amounts. For example, if an enrollee receives treatment from a provider who is listed in an out-of-date directory as a network provider but has since left the network, claims must be paid at the network cost sharing amount.

Continuity of Care

If a provider changes network status, individuals identified as “continuing care patients” may continue care with the provider for up to 90 days at network cost-sharing rates to allow for a transition of care to a network provider. A continuing care patient is one who is:

•   undergoing a course of treatment for a serious and complex condition;

•   undergoing a course of institutional or in-patient care;

•   scheduled to undergo nonelective surgery, including receipt of postoperative care with respect to the surgery;

•   pregnant and receiving care for the pregnancy; or

•   receiving treatment for a terminal illness.

Non-Quantitative Treatment Limitations (NQTL) Analysis

The Mental Health Parity and Addiction Act of 2008 prohibits a health plan from imposing a non-quantitative treatment limitation (NQTL) on mental health or substance use disorder benefits based on medical appropriateness. NQTLs include preauthorization requirements, step-therapy requirements, credentialing requirements, medical necessity policies, and usual customary and reasonable determinations.

Under the CAA, health plans must prepare—and provide to the Department of Labor upon request—a written analysis demonstrating that the plan’s NQTL requirements for mental health/substance abuse services are no more restrictive in design or operation than those for medical/surgical services.

Prescription Drug and Medical Reporting

Effective Dec. 27, 2022, and not later than June 1 of each year thereafter, plans must annually report detailed plan information, including:

•   The 50 most commonly prescribed brand drugs;

•   The 50 costliest prescription drugs;

•   The 50 prescription drugs with the greatest increase in plan expenditures;

•   Total spending on health care services by the plan;

•   The average monthly premium paid by employers on behalf of enrollees, and by the enrollees themselves;

•   The impact of drug manufacturer rebates, fees, and other remunerations health care premiums; and

•   Any reduction in premiums and out-of-pocket costs associated with rebates, fees, or other remuneration.

Air Ambulance Reporting

Insurers and self-funded plans will be required to report certain detailed claims information (including transport information, network status, and claim adjudication information) for air ambulance services. Reports for 2022 must be submitted by March 31, 2023.

No Surprises Act

The No Surprises Act (“NSA”) protects consumers against unexpected or “surprise” medical bills by prohibiting balance billing for certain services and requiring notice and consent for others and requiring that the prohibition language be provided to consumers on the plan’s public website and on each EOB.

The NSA prohibits facilities or providers from balance billing for more than the network cost-sharing amount for:

•   Emergency services received in a non-participating facility;

•   Certain ancillary services performed in a participating facility by out-of-network providers;

•   Services provided by a non-participating provider in a participating facility when there is no participating provider who can furnish such services; and

•   Services provided by a non-participating provider or facility without the patient’s informed consent.

The NSA also creates a negotiation/resolution process to resolve disputes between health plans and out-of-network providers for balance billing-prohibited services. A new federal Independent Dispute Resolution (IDR) process requires disputing parties to engage in a 30-business day negotiation period to attempt to reach an agreement regarding the total out-of-network rate (including cost sharing); if no agreement is reach, either party may initiate the IDR process within four days. The IDR process is administered by an arbitrator who will take into consideration payment amounts offered by each party, as well as median contracted rate, level of training and experience of the provider, and other relevant factors. The arbitrator’s decision is binding and the losing party is responsible for paying the arbitrator’s fees. Each party will pay a $50 administrative fee.

Expansion of External Review

The scope of external review has been expanded to allow reviews of adverse benefit determinations that involve a finding the surprise billing protections are not applicable to the claim.

What You Should Do Next

If your company is a participating employer in Western Growers Assurance Trust or uses Pinnacle Claims Management, Inc. as its third-party administrator, all these requirements have been implemented or are in development for timely compliance by the applicable effective dates.

If your company sponsors a self-insured plan and uses another third party administrator, work with your administrator to ensure that all these requirements are being addressed and your interests are protected. Remember, it is ultimately the employer’s responsibility to comply with these new requirements.

If you have any questions or would like to learn more about these requirements, please contact Jonathan Alexander at [email protected]