In late 2020, the Departments of Health and Human Services, Labor, and Treasury (the Departments) released Coverage Transparency (TiC) rules that impose several new compliance burdens on group health plan sponsors. The next item for plan sponsors to address will be public disclosure of in-network and out-of-network rates starting July 1, 2022. To meet this deadline, plan sponsors must work with insurers and third-party administrators (TPAs) to ensure they have the necessary information in the correct format to comply with the new rules.
Pay attention to specifics
The TiC rules originally required certain employers to provide “machine-readable files” (MRFs) revealing in-network rates, out-of-network charges, and prescription drug coverage and cost information by January 1, 2022. In 2021, departments delayed enforcement of prescription drug disclosure indefinitely pending upcoming regulations. In contrast, the Departments only extended the other disclosure deadline by six months. So, plans should be well advanced to ensure they can publish the general in-network mandated negotiated rates and out-of-network allowed amounts by July 1.
The first MRF must disclose a plan’s negotiated rates for covered items and services for all network providers. The second MRF should show the history of payments and fees charged by out-of-network providers. This file should include at least 20 historical entries to help protect the privacy of individual participants.
Machine readable files
The MRF should include:
- For each group medical plan option, either the health insurance surveillance identifier (HIOS) from the insurer or, if there is none, the employer identification number (EIN ).
- A billing code (for example, Current Procedural Terminology (CPT) code, Healthcare Common Procedure Coding System (HCPCS) code, Diagnosis-related Group (DRG) code, National Drug Code (NDC) or other identifier of common payer, as well as a plain language description for each billing code.
Network tariffs
The MRF of the network tariff must indicate:
- Network rates for each item or service provided by network providers, including negotiated rates, fee schedule rates used to determine cost sharing, or derived amounts, depending on the rate applicable to the plan.
- If a rate is percentage-based, include the calculated dollar amount or the calculated dollar amount for each vendor identified by National Vendor Identifier (NPI), if rates differ between vendors or tiers. Bundled items and services must be identified by an appropriate code.
Authorized amounts
The MRF of the authorized amount must indicate:
- Authorized out-of-network amounts and charges billed for covered items or services provided by out-of-network providers during the 90-day period beginning 180 days prior to the date of publication of the MRF.
- The plan must omit data for a particular item or service and provider when the plan or insurer would report payment of out-of-network authorized amounts for less than 20 different claims under one plan or one coverage. These amounts must also be expressed in dollars and associated with the NPI, tax identification number and service location code for each network provider.
Content Orientation
On April 19, 2022, the Departments of Labor, Health, and Human Services (HHS) and the Treasury (collectively, the departments) issued FAQs guidance to clarify that where a plan or issuer agrees to pay a network provider a percentage of the billed fee and cannot assign a dollar amount until a bill is generated, plans and issuers may declare a percentage rather than a dollar amount.
The FAQs further provide that, where the TiC Final Rules reporting method does not support an alternate redemption method, or where a settlement method requires the submission of other information to describe the nature of the negotiated rate, plans and issuers may disclose in a open text field a description of the formula, variables, methodology or other information necessary to understand the arrangement.
Next steps
Plan sponsors must update MRFs at least once a month. Thus, they should establish processes to coordinate regularly with the carrier in an insured plan and with the TPA in a self-funded plan.
The departments will require the files to be posted on a public website that consumers can use without providing individually identifiable information. The website may not require passwords, account setup, login credentials or any other barriers to accessing required information.
The TiC rules allow plan sponsors to contract with an insurer, TPA or other third party to produce and host a plan’s information. However, plans should be aware that they could ultimately remain responsible for any failures.
A carrier will be liable for any failure of the MRF as long as it is required in writing to ensure plan compliance. Self-funded plans can also contract for a third party to provide and update the MRF, but the TiC rules do not transfer liability to a third party if the self-insured plan fails. Thus, self-funded schemes should carefully consider indemnification provisions in all service agreements with relevant providers.
Most carriers and TPAs have already contacted employer plan sponsors to offer assistance in preparing, updating and hosting the MRF. Employers should carefully review their service agreements and related contracts to ensure that they include specific provisions addressing all aspects of required disclosures.
