Compliance FYI: Price Comparison Tool

Compliance, Employee Benefits

As discussed below, the price comparison tool requirements expand to cover all items and services rather than just 500 specified items and services that were required to be included in the tool since January 1, 2023. You may be well served to confirm with your health insurance carrier or TPA that they will be updating the price comparison tool come January 1, 2024.

The Consolidated Appropriations Act, 2021 (CAA) and the Transparency in Coverage (TiC) Rules require the creation of an online price comparison tool which allows plan participants, beneficiaries, and enrollees to compare the costs of various healthcare items and services before they purchase those items and services. The goal is to provide consumers with personalized cost estimates of care, services, and prescriptions prior to utilizing those resources.

While the rulemaking process continues to finalize the requirements of the two laws, employers, as group health plan sponsors, need to be aware that the implementation deadlines are fast approaching.

Starting January 1, 2023, an online price comparison tool with cost sharing information on 500 different items and services must be made available to plan participants, beneficiaries, and enrollees. On January 1, 2024, the tool expands to cover all items and services. Additionally, the information on the tool must be available in paper upon request and, per the CAA, over the phone.

How your group health insurance plan is funded will help guide your actions to achieve compliance. 

  • Fully insured health plans:  Plan sponsors of fully insured health plans would be well-served to work with their health insurance carrier to create and maintain the online price comparison tool. The regulations anticipate that insurance carriers will create and maintain this tool on behalf of plan sponsors who are fully insured. Plan sponsors with fully insured plans can enter into a written agreement with the carrier to provide and maintain the price comparison tool on the plan sponsor’s behalf. With a written agreement in place, any failure to provide the tool would be the insurance carrier’s liability, rather than the plan sponsor’s. 
  • Self-funded health plans:  Plan sponsors of a self-funded health plan should work with their third party administrator (TPA) to ensure the creation and maintenance of the price comparison tool. The regulations expect this arrangement and allow for plan sponsors to contract with another party, such as a TPA, to create and maintain the tool on behalf of the plan sponsor. Unlike fully insured plan sponsors, self-funded plan sponsors are unable to transfer the liability for failing to provide the tool to the third party who was supposed to create the tool. It is very important that plan sponsors with self-funded health plans understand who is creating and maintaining the tool on their behalf.

Federal agencies have not finalized regulatory details such as where plan sponsors will need to post the tool online. The TiC rules and the CAA requirements differ, so while final clarity is not yet available this is an opportunity for plan sponsors to ensure they have the right partners in place to deploy the pricing tool when the rules are finalized. 

Key Takeaways

As the federal government finalizes these new requirements, there is still time for employers who sponsor a group health plan to work with their partners to ensure they will be in compliance when the deadlines arrive. Here at M3 we will continue to monitor the rulemaking process and will provide updates as additional regulations are released.

The information provided is a summary of laws and regulations relating to employee benefit plan compliance. This information should not be construed as legal advice. In all cases, employers should consult with their own legal counsel.

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