IRS, EBSA and HHS Release Proposed Rules on Transparency in (Health Care) Coverage

Author: Cindy Niesen, Associate Director: Research & Compliance, Hays Companies

In response to an Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First issued June 24, 2019, proposed regulations were released by the Internal Revenue Service (IRS), Health and Human Services (HHS) and the Employee Benefits Security Administration (EBSA) on November 12, 2019. The proposed regulations were issued in a Notice of Proposed Rulemaking, as published in the November 27, 2019, Federal Register.

Intended to take effect January 1, 2021, the proposed regulations require non-grandfathered health plans (including self-insured health plans of non-governmental employers) and health insurance issuers to disclose information to consumers to enable them to assess their expected out-of-pocket costs better and shop for health care services. Note that the proposed rules are intended to address the disclosure of patient out-of-pocket costs but remain silent on quality of care measures.

The rules require that health plans and insurers develop “an internet-based online tool or non-internet disclosure method … of consumer-specific estimated cost-sharing liability for covered items or services from a particular provider.” Grandfathered health plans and account-based plans (such as Health Reimbursement Arrangements) are not subject to the proposed rules.

Required Cost-sharing Information

Health plans and issuers subject to the rules will be required to make available member-specific cost information, via an internet-based tool, each of the following items:

  • Accumulated amounts the participant or beneficiary has incurred to date;
  • Negotiated rates for in-network providers;
  • Out-of-network allowed amounts;
  • For bundled services, list of items and services for which cost-sharing information is being disclosed;
  • Notification of any prerequisite requirements for coverage of a specific item or service; and
  • Cumulative treatment limitations (items, days, visits, units or hours covered in a defined time period) on covered items or services.

The internet-based self-service tool must be “available in plain language, without subscription or other fees” and provide “real-time responses based on cost-sharing information that is accurate at the time of the request.” Using this tool, members will be able to search for covered items or services provided by a specific in-network provider or all in-network providers by billing code or description of the item, at the discretion of the user, and refine and reorder search results based on geographic proximity of providers and the amount of the participant’s or beneficiary’s cost-sharing liability, to the extent the search returns multiple results.

Alternately, individuals may request the cost-sharing information be made available on paper. Such disclosure must be made “available in plain language, without subscription or other fee, in paper form at the request of the participant or beneficiary (or his or her authorized representative).” The information must be mailed within two business days after a request is received.

Public Disclosure of Negotiated Rates and Out-of-Network Allowed Amounts

The proposed rules also require that plans publicly disclose negotiated rates for health care items and services from in-network providers and plan allowed amounts when care is received from out-of-network providers. 

Machine-readable files associated with the National Provider Identifier (NPI) for each provider-specific rate that applies to each covered item or service (individual items and bundled service arrangement) must be available to consumers.

  • In-network negotiated rate information must include:
    • The name and EIN or HIOS identifier for each plan option or coverage offered by the issuer or group health plan;
    • Billing or other codes used to identify covered items or services, with a plain-language description for each; and
    • Negotiated rates, reflected as dollar amounts.
  • Out-of-Network allowed amount information must include:
    • The name and EIN or HIOS identifier for each plan option or coverage offered by issuer or group health plan;
    • Billing or other codes used to identify covered items or services, with a plain-language description for each; and
    • Unique out-of-network allowed amounts (reflected as dollar amounts) for covered items or services from non-network providers during the 90-day time period beginning 180 days prior to publication of the machine-readable file.
  • The file must be updated monthly (clearly indicating the date the file was last updated), available publicly, and accessible free of charge and without conditions (no requirement to create a user ID, password, or submit personally identifiable information to access the file).

Group Health Plans May Obtain Assistance of Third Parties to Comply with the Rule

  • The group health plan or health issuer may contract with a third-party administrator or health care clearinghouse to provide the required information.
  • Fully-insured health plans are deemed to satisfy the disclosure requirements if the group health plan issuer provides the information by written agreement.

The Agencies are seeking public comments on various components of the proposed rules. Comments may be submitted at regulations.gov or by mail to the following address:

Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS-9915-P
P. O. Box 8010
Baltimore, MD 21244-8010

The comment period will close on January 14, 2020.  After consideration of public comments, final rules will be issued.

For more information on this topic, please refer to our Healthcare Bulletin: Proposed Rule on Health Care Transparency to Affect Some Employer Plans

This document is provided for general information purposes only and should not be considered legal or tax advice or legal or tax opinion on any specific facts or circumstances. Readers are urged to consult their legal counsel and tax advisor concerning any legal or tax questions that may arise.


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