As phase two of the Healthcare Transparency Act is quickly approaching, we wanted to discuss what is in the plan, what it means, and how it will impact plan sponsors.
After six months of delays, the Transparency in Coverage Final Rule was issued by the Centers for Medicare and Medicaid Services (CMS) on July 1, 2022. It requires insurance companies to disclose both the allowed rates – the maximum insurers will pay for a specific service – and billed rates – the amount that providers actually charge. The goal is to give consumers a clearer idea of what their insurance plan pays for so they can make informed healthcare decisions. It will also give them a better idea of out-of-pocket expenses to expect so they can make medical decisions knowing their financial impact.
Pundits have mixed opinions on how this will impact the industry as a whole. Some expect this higher level of transparency to drive down prices since plan sponsors will have more information with which to negotiate with their insurance companies. Others expect some providers to raise their prices if they find they are charging lower than market rate. If both are true, what is most likely is a leveling of the playing field where prices stabilize to a mid-range for all.
However, much like the No Surprises Act, few hospitals are complying with the law and publicly posting their rates. Fines for non-compliance can quickly add up since insurers that do not post the required data will be required to pay $100 per day, per violation, for each member – fees that can quickly become unwieldy for large plans.
Starting on January 1, 2023, health plans must provide an internet tool where members can find costs for 500 specific services. An expansion of Phase 1, this tool must be specific to each member and give them the ability to find:
- How much they have accumulated toward their individual and family deductibles to date
- What their estimated cost-sharing is, including deductibles and co-payments
- How much they will pay for services provided by in-network and out-of-network providers
- If there are any prerequisites for a particular service or if balance billing applies
The tool must be formatted to work by entering descriptive terms, billing codes, location, and the names of in-network providers.
Where Phase 2 requires enrollees be able to find the above information for 500 of the most common services, Phase 3 extends that requirement to all services and must be in place by January 1, 2024.
What Plan Sponsors Need to Do
The information must be provided by the insurance companies but that doesn’t mean plan sponsors are off the hook. In fact, plan sponsors are encouraged to amend their written agreements with insurers and third-party administrators to include requirements that they comply with these rules. Additionally, you should add links to this information to your own websites to make access easier for your members.
If you haven’t already discussed the requirements and how your insurance providers and TPAs are meeting them, we recommend you do so right away. Creating a tool with this much complexity is not something that can happen overnight, and plan sponsors need to know if and when it will be available, so you are complying and prepared to do your part in sharing it with plan members. If you have questions or need assistance, feel free to reach out to us for help.