By Roberta Casper Watson and Barry Salkin
Last June, in Executive Order 13877, President Trump directed HHS, Treasury, and Labor (collectively, the “Agencies”) to solicit comments on how providers, insurers, and group health plans could be required to disclose information about expected out-of-pocket costs before a patient receives care. In response, the Agencies issued proposed regulations, with respect to which the comment period recently closed.
Pursuant to the proposed regulations, participants and beneficiaries would be entitled to receive the following information:
- An estimate of the cost-sharing liability for a covered item or service. Cost-sharing liabilities would include deductibles, coinsurance, and copayments, and would exclude premiums, balance billing amounts for out-of-network service providers, and the cost of items or services not covered under the plan.
- Accumulated amounts that the participant or beneficiary has paid to date toward any such amounts, such as any expense that counts towards a deductible or out-of-pocket limit. If an individual has elected coverage other than self-only coverage, any accumulated amount disclosed would reflect both the individual’s year-to-date amount and the corresponding amount for the group, including the individual’s spouse and other dependents. Accumulated amounts subject to disclosure under the proposed regulation also include limits on items or services, such as the limit on the number of chiropractic visits that will be covered. The remaining number of visits can be provided without making a determination as to whether all of those visits might be medically necessary.
- Any relevant negotiated rate (e., the rate that the group health plan or health plan insurer would be required to pay to an in-network provider), to the extent that the information is relevant. For example, if a participant or beneficiary would be required to pay a copay of a specified dollar amount, the negotiated rate would not be relevant and would not need to be disclosed. On the other hand, if the participant or beneficiary must pay a coinsurance percentage, the rate at which the in-network provider would be paid is highly relevant. In the preamble to the proposed regulations, the Agencies noted that there are a number of issues associated with prescription drugs in this connection, and requested comments on the manner in which these issues should be addressed, such as how to account for drug rebates, discounts, and dispensing fees.
- The maximum out-of-pocket allowed amount for an item or service provided by an out-of-network provider.
- If a participant or beneficiary requests information for an item or service subject to a bundled payment arrangement, the participant or beneficiary must receive a list of the items and services for which cost-sharing information is being disclosed.
- If applicable, notice must be provided that coverage of a specific item or service is subject to a prerequisite, which is a certain requirement relating to medical management techniques that must be satisfied before a group health plan or health insurance issuer will cover the item or service. Prerequisites include concurrent review, prior authorization, step-therapy, and fail-first protocols, but do not include medical necessity or other medical management techniques.
- The notice must include three statements written in plain language:
- A statement that the cost-sharing information provided does not account for the possibility of balance billing, and an explanation of what balance billing is;
- A statement that the actual charges for a covered item or service may be different from the estimate of the cost-sharing liability, depending on the actual items or services that the participant or beneficiary receives at the point of care; and
- A statement that the estimate for the cost-sharing liability for a guaranteed service is not a guarantee that it will be paid. The group health plan or health insurance issuer may include additional statements, including disclaimers, but those statements cannot be inconsistent with any of the three preceding required statements.
A model notice has been proposed in a separate piece of guidance to meet these requirements.
The proposed regulations provide two methods by which the cost-sharing information can be provided: either by an Internet-based self-service tool, or in a paper format. If an Internet-based self-service tool is the method requested, the information must be available in plain language, without a subscription or other fee, that provides a real-time response based on information that is accurate at the date of request. Different searching options are available for in-network and out-of-network providers. If a participant requests that the information be provided to him or her in paper format, the information must be mailed to him or her no later than 2 business days after an individual’s request is received.
To avoid duplication of effort, a plan and a health insurance issuer can enter into a contract under which the health insurance issuer agrees to provide participants and beneficiaries with the requested information. If the health insurance issuer breaches the contract and fails to provide the requested cost-sharing information, the health insurance issuer, rather than the plan, is in violation of the transparency disclosure requirements.
The regulations also provide for group health plan information to be provided to the public, subject to the caveat that no such disclosure can violate any health privacy law. The information must be provided in two machine-readable files. The first machine-readable file must include rates negotiated for in-service providers, and the second must include information related to the historical data showing allowed amounts for out-of-network providers. The machine readable files must be publicly available and accessible to any person free of charge. The group health plan or health insurance issuer cannot require a user account, password, other credentials, or submission of personally identifiable information in order to access the file. The machine-readable files must be updated monthly, and the plan or issuer must indicate the date that the files were most recently updated.
In this context as well, there are special rules to avoid duplication of effort. The first rule is the same as the special rule for disclosures to participants and beneficiaries, in which the health plan issuer will be in violation of the transparency disclosure rules if it enters into an agreement with the group health plan to provide the disclosures, but fails to do so. Additionally, either a group health plan or a health insurance issuer can enter into a written agreement with a third party to provide the required disclosure to the public. However, if the third party fails to provide the written disclosure, then the group health plan or health insurance issuer that entered into the agreement will be in violation of the proposed regulations.
Further, the proposed regulations provide three forms of compliance relief. First, a group health plan or issuer will not be in violation of the regulations if, solely because, in good faith and with reasonable diligence, it makes an error in disclosure, provided that the plan or issuer corrects the information as soon as practicable. Second, a group health plan or health insurance issuer will not violate the regulations solely because, despite acting in good faith and with reasonable due diligence, its Website is temporarily inaccessible, provided that the plan or issuer makes the information available as soon as practicable. Third, to the extent that compliance with the regulation requires a group health plan or health insurance issuer to obtain information from another party, the group health plan or health insurance issuer will not be in violation of the regulations unless the plan or issuer knows, or reasonably should know, that the information is incomplete or inaccurate.
The statutory basis for issuing these proposed regulations is the Affordable Care Act and the Public Health Services Act, so it is not clear if these regulations could be sustained if the Affordable Care Act is ultimately decided by the Supreme Court to be unconstitutional in its entirety but, in the interim, group health plans need to take these proposed regulations into account. These proposed rules would not apply to grandfathered plans, excepted benefits, short-term limited duration insurance, health reimbursement accounts, flexible spending accounts, or other account-based group health plans. The effective date of these proposed regulations is plan or policy years beginning 12 months or more after the effective date of the final rule.