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The “Transparency in Coverage” rule was finalized in November 2020. While the requirements take effect in January 2022, in August, the Biden Administration announced it would delay enforcement, as noted below.

The rule intends to improve price transparency in health care by requiring that employer-sponsored plans provide enrollees with cost-sharing information, including estimates of their out-of-pocket expenses.

In this post, we’ll discuss the rule, including why price transparency is important, what the rule includes, who’s affected, and how self-funded employers should prepare.

The Importance of Price Transparency to Health Care Consumers

The final rule lays out very specific reasons why price transparency in health care is important. The reasons include:

  • Consumers can make more informed decisions
  • Stakeholders are better able to help consumers
  • The risk of surprise billing is reduced
  • Competition increases and costs are better controlled
  • Gaps found in state regulations can be closed

Let’s take a quick look at each one.

More Informed Decisions on Health Care Spending

According to, “Reforming America’s Healthcare System Through Choice and Competition,” consumers play an important role in controlling costs. But they must have access to meaningful information to create market forces that will actually lower costs.

Traditionally, consumers haven’t known whether they’re receiving the most affordable care. They also haven’t had any incentives or means to seek lower-cost care. However, as health costs continue to rise, consumers have had to contribute more and more to their “share” of the care.

When consumers have access to price and benefit information, they’re better able to make cost-conscious decisions about their health care. They can also better manage their utilization of health care, identify the right health plans for them and their families, and choose the best providers and facilities available. By doing so, they can eventually increase competition and demand for lower prices.

Strengthen Stakeholder Ability to Help Consumers

Price transparency in health care strengthens the ability of health care stakeholders like researchers, patient advocates, and legislators to promote access to affordable care. When these stakeholders have access to cost and benefit information, they can better fulfill their roles in improving the health care system.

Reduce the Risk of Surprise Billing

While the No Surprises Act will eliminate billing surprises for some out-of-network cases, it won’t eliminate all surprise billing. Because consumers don’t often have access to pricing information, they’re still unaware of what they may pay in co-insurance. And with inpatient procedures, that amount could be high. With price transparency, consumers can determine what their health care costs will be and plan accordingly.

Additionally, if cost and benefit information were publicly known, then stakeholders could develop even more robust tools to help consumers avoid surprises while improving oversight of health plans and providers.

Grow Competition and Control Costs

Price transparency drives competition. If the information is available to consumers, they’ll shop for their health care and make decisions based on price and quality. Studies back this up.

The state of New Hampshire launched a website with health prices for private health insurance. As a result, patients saved almost $8 million and issuers saved $36 million on imaging services.

Close State Regulation Gaps

There’s no consistency of price transparency availability from state to state. For the most part, this information is not readily available to consumers, is insufficient to make thoughtful decisions, or it’s not easy to understand. While more than half of states have some sort of price transparency mandates, they’re generally not applicable to self-funded health plans.

Key Components of the Price Transparency in Health Care Rule

The Transparency in Coverage rule requires group health insurance carriers and self-insured plans to disclose rates and cost-sharing information for all covered items and services, including prescription drugs. There are two main components of the rule. One component pertains to the publishing of machine-readable files. The other is regarding price transparency tools.

Public Disclosures

Under the Act, insurers must publish negotiated rates paid to health care providers, historical information on out-of-network provider payments, and negotiated rates and historical pricing for prescription drugs. The information must be machine-readable and detailed. This will enable data analysis to encourage innovation that will improve consumer decision-making. This information must be updated monthly.

On July 1, 2022, the Departments intend to start enforcing the requirement that plans and issuers must publicly disclose information related to in-network rate, as well as out-of-network allowed amounts and billed charges for plan years (in the individual market, policy years) beginning on or after January 1, 2022.

Enforcement of prescription drug pricing information has been postponed indefinitely, pending further rulemaking.

Consumer Price Transparency Tool

The rule requires insurers to offer personalized out-of-pocket cost information, and the underlying negotiated rates, for all covered health care items, services, and prescription drugs through an internet-based self-service tool.

The Departments will require information on an initial list of 500 services to be made available via the internet-based self-service tool for plan years that begin on or after January 1, 2023. The rest of the items and services will be required for plan years that begin on or after January 1, 2024.

Insurers that “empower and incentivize consumers” by encouraging them to shop for lower-cost, high-value providers, and that share resulting savings with consumers, will take credit for these “shared savings” payments in their medical loss ratio (MLR) calculations.

How Self-Funded Groups Should Prepare

Enforcement of key components of the rule has been pushed back to July 2022. This is to allow self-funded groups to fully prepare for compliance. It’s important to be sure efforts are in motion now to ensure there are no hiccups come summer.

It’s important to work with your TPA to ensure that the required information is provided in a timely and accurate manner. Keep in mind that your organization, as the plan sponsor, will be held liable for non-compliance. Consider amending your contract to ensure compliance. This could include:

  • Addendum that your TPA will provide the public disclosures promptly and in the format required
  • Provision that your TPA will update the public disclosures monthly, as required by the rule
  • Identification of where the public disclosures will be posted
  • Agreement to comply with consumer price transparency tool guidelines, following the required timelines
  • Provision that your TPA will indemnify your organization if it fails to comply with regulations

Please note: The information provided in this blog post is a high-level summary of the Transparency in Coverage rule and is accurate as of the date of publishing. We will continue to update as new information is made available. Please speak with your benefits advisor, TPA, and/or legal counsel to learn how the Transparency in Coverage rule will affect your organization.

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