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On August 20, 2021, the Department of Labor, Department of Health and Human Services and the Treasury Department (collectively the “Departments”) issued FAQs regarding the Transparency in Coverage (TiC) rules under the Affordable Care Act (ACA) and the transparency requirements included in the Consolidated Appropriations Act (CAA). This guidance issued by the Departments includes delayed enforcement dates as well as some clarification regarding the interplay between similar requirements included in the two laws.

High-level overview of origin of TiC rules and requirements:

  • Transparency in Coverage (TiC) Rules: The TiC rules were promulgated according to the ACA transparency requirements. The rules require non-grandfathered group health plans and health insurance issuers (carriers) to disclose information regarding in-network rates for covered items and services, negotiated rates and historical net prices for covered prescription drugs in three separate machine-readable files on a public website. The machine-readable file requirements apply for plan years beginning on or after January 1, 2021.
  • Consolidated Appropriates Act (CAA)/”No Surprises Act”: The CAA was enacted after the TiC rules were finalized by the Departments. The CAA imposes transparency requirements on plans and issuers, including prescription drug requirements. Many of the requirements of the CAA were effective as of December 27, 2021.

The Federal FAQs provide guidance for the following:

TiC Rules regarding machine-readable files

Transparency in Coverage (TiC) rules require machine-readable files for in-network rates and out-of-network allowed amounts. This guidance delays enforcement of the machine-readable files for prescription drugs while the Departments consider the appropriateness of the requirements. 

  • New effective date: For plan years beginning on or after January 1, 2022, the requirement to make public the machine-readable files for in-network rates and out-of-network allowed amounts and billed charges will be deferred until July 1, 2022. For plan years beginning after July 1, 2022, plan or issuers should post the machine-readable files in the month in which the plan year begins.

Price Comparison Statements

Both pieces of legislation required that plans and issuers provide estimated cost sharing information through an on-line tool or in paper form upon request. Since the requirements are similar under both rules, the Departments will propose rules and seek public comment to ensure that TiC and CAA requirements can work together. 

  • Original effective date: The CAA requirements were effective January 1, 2022 and the TiC on January 1, 2023
  • New effective date: January 1, 2023

ID Cards and Transparency in Plan

The CAA required that all health plan identification (ID) cards must include applicable deductibles, out of pocket maximum limitations and a telephone number/website for individuals to seek assistance. The Departments expect to issue rules on this requirement, but in the meantime plans and issuers are expected to implement the requirement using a good faith, reasonable interpretation of the law.

  • Original effective date: The CAA requirements were effective as of January 1, 2022. 
  • New effective date: These requirements retain their original January 1, 2022 effective date.

Good Faith Estimates

Under the CAA, medical providers must inquire as to whether an individual has insurance and provide a good faith estimate of expected charges for furnishing the item or service. This includes any items or services reasonably expected to be provided in addition to the original items or services.

  • Original effective date: The CAA requirements were effective as of January 1, 2022.
  • New effective date: This rule been delayed pending the rulemaking process. 

Advanced Explanation of Benefits (EOB)

Health plans and issuers are required to send an advanced Explanation of Benefits (EOB) upon receiving a “good faith estimate”. This EOB must include:

  1. Network status of provider/facility
  2. Contracted rate for item or service and, if provided by a non-participating provider, how the individual can obtain information about in-network providers
  3. The good faith estimate from the provider
  4. A good faith estimate of the amount the plan is responsible for paying and the amount of any cost-sharing with the individual would be required to pay.
  5. Disclaimers indicating whether the coverage is subject to medical management.

For this requirement the following timeline is:

  • Original effective date: The CAA requirements were effective as of January 1, 2022.
  • New effective date: This rule been delayed pending the rulemaking process. 

Prohibition on Gag Clauses on Price/Quality Data

Health plans are prohibited from entering into an agreement with a provider, network or association of providers, third party administrator or other service provider offering access to a network of providers that would directly or indirectly restrict the plan or issuer from:

  1. Providing provider specific cost or quality of care information or date to referring providers, the plan sponsor, participants, beneficiaries, or enrollees or individuals eligible to become participants, beneficiaries or enrollees of the plan or coverage
  2. Electronically accessing de-identified claims and encounter date for each participant, beneficiary or enrollee and
  3. Sharing such information, consistent with privacy regulations.

Health plans and issuers must annually submit to the Departments an attestation of compliance with these requirements. Health plans and issuers should implement the requirements prohibiting gag clauses using a good faith, reasonable interpretation of the statute. The Departments intend to issue implementation guidance regarding submission of the attestations and anticipate collecting data in 2022.

For this requirement the following timeline is:

  • Original effective date: The CAA requirements were effective as of December 27, 2021.
  • New effective date: These requirements retain their original December 27, 2021 effective date.

Protecting Patients and Improving the Accuracy of Provider Directory Information

Health plans and issuers must establish a process to update and verify the accuracy of provider directory information and establish a protocol for responding to requests by telephone and electronic communication from a participant, beneficiary, or enrollee about a provider’s network participation status.

Health plans and issuers must also post patient protections on a public website or on each EOB.

Health plans and issuers should implement these provisions using a good faith, reasonable interpretation of the statute. Departments will not find a plan or issuer out of compliance with provider directory requirements as long as the plan or issuer imposes only a cost-sharing amount that is not greater than the cost-sharing amount that would be imposed for items or services furnished by a participating provider and count those cost-sharing amounts toward any deductible or out of pocket maximum in a case when a participant receives items or services from a nonparticipating provider and the individual was provided inaccurate information by the plan or issuer under a provider directory or response protocol that stated the provider or facility was participating.

A model disclosure notice was issued for balance billing protection requirements. Health plans or issuers use of the model notice will be indication of good faith compliance. 

  • Original effective date: The CAA requirements were effective as of January 1, 2022.
  • New effective date: These requirements retain their original January 1, 2022 effective date.

Continuity of Care

Health plans or issuers must ensure continuity of care in instances when terminations of certain contractual relationships result in change in provider or facility network status for an individual. 

Health plans, issuers, providers and facilities are expected to implement the requirements using a good faith, reasonable interpretation of the statute. There is no exception for grandfathered health plans.

  • Original effective date: The CAA requirements were effective as of January 1, 2022.
  • New effective date: This rule been delayed pending the rulemaking process. 

Reporting on Pharmacy and Drug Costs

The Departments require that health plans and issuers submit the following information: 

  • Beginning and end dates of plan year
  • Number of participants, beneficiaries, enrollees
  • Each state in which plan is offered
  • The top fifty (50) most frequently dispensed brand prescription drugs and total number of paid claims for each drug
  • The top fifty (50) most costly prescription drugs by total annual spending and the annual amount spent for each drug
  • The top fifty (50) prescription drugs with the greatest increase in plan expenditures over the plan year preceding the plan year that is the subject of the report and for each such drug the change in amounts expended by the plan or coverage in each such plan year.

Additionally health plans and issuers must report the following:

  • Total spending by the plan or coverage broken down by type of costs, including hospital costs and provide and clinical service costs – primary and specialty care separately
  • Spending on prescription drugs by the plan or coverage as well as by participants, beneficiaries and enrollees
  • Average monthly premiums paid by participants, beneficiaries and enrollees as well as by employers
  • Impact on premiums of rebates, fees and any other remuneration paid by drug manufacturers to the plan or coverage or its administrators or service providers with respect to prescription drugs prescribed to participants, beneficiaries or enrollees in the plan or coverage, including the amount paid with respect to each therapeutic class of drugs and for each of the 25 drugs that yielded the highest amount of rebates and other remuneration under the plan or coverage from drug manufacturers during the plan year
  • Any reduction in premiums and out of pocket costs associated with these rebates, fees or other remuneration.

Moving forward, the Departments will leverage this information to issue bi-annual reports on drug reimbursements under group health plans, prescription drug pricing trends and the impact of prescription costs on premium rates.

  • Original effective date: The first deadline to report was set for December 27, 2021, with the second deadline set for June 1, 2022.
  • New effective date: This requirement has been delayed pending the rulemaking process. The Departments strongly encourage health plans and issuers to begin work to ensure they are in a position to comply by December 27, 2022. 

Key Takeaway

There are a number of changes set to be implemented in the way of transparency within the new few years. These FAQs provide delayed enforcement dates for some requirements and initiate the rule making process for others. Employers would be well-served to work with their health insurance carriers, third party administrators and insurance advisors to ensure that they are apprised of the latest developments and prepared to comply with these new rules.

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