On November 15th the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury (collectively the “Departments”’) released the “Transparency in Coverage” proposed rules outlining a new set of healthcare pricing transparency requirements targeted at giving patients access to pricing information directly through their health plans. These proposed rules follow on the heels of the release of the final rule specifying transparency requirements for hospitals beginning in 2021.

What Do the Proposed Regulations Require of Group Health Plans and Issuers?

The proposed rules would require non-grandfathered group health plans, including self-insured plans and health insurance issuers, to disclose to participants, beneficiaries and enrollees (or an authorized representative) personalized cost-sharing information for services in real-time. The following are the three major components of the proposed rule:

1.Cost-Sharing Disclosures – A Real-Time Estimate of Enrollee’s Potential Cost-Sharing Liability

Plans and issuers would be required to disclose personalized cost-sharing information to participants, beneficiaries, and enrollees through an internet-based self-service tool and in paper format (upon request). This will involve developing and rolling out an online self-service system capable of providing information to participants in real-time regarding their cost sharing liability.   This online tool will need to provide estimates of cost-sharing for all covered health care items and services with content similar to that found in a typical Explanation of Benefits (“EOB”). The departments have released model language that plans and issuers can use to satisfy these requirements. (see, Appendix 1: Transparency in Coverage Model Notice)

2. Rate Disclosures – Disclosure of Negotiated Rates and Historic Allowed Amounts on a Public Website

Plans and issuers will be required to disclose on a public website their negotiated rates for in-network providers and data outlining the different amounts a plan or issuer has historically allowed for covered items or services furnished by out-of-network providers.  This information will need to be updated monthly. The departments have released an outline of the specific content that a plan or issuer would be required to include in each negotiated rate disclosure posted on an internet website, see Appendix 2: Negotiated Rate Machine-Readable File Data Elements. An outline of required content a plan or issuer must disclose to the public, including the allowed amounts for out-of-network providers, has also been released (see Appendix 3: The Allowed Machine Readable File Data Elements).

Special Rules May Allow Plans and Issuers to Delegate Disclosure Requirements to Insurers but Not Third Parties.

The Departments have outlined special rules to streamline the provisions of the required disclosures in order to avoid duplication with respect to group health coverage by essentially allowing the opportunity to delegate responsibility by written agreement between the plan and issuer, but this may not apply to third parties. The proposed special rules are summarized below:

  • To the extent the plan consists of group health coverage, the plan would meet its Cost-Sharing disclosure requirement if it enters into a written agreement with the insurer that requires them to provide the information specified in the regulation. If the issuer violates the transparency disclosure requirements, then the issuer, not the plan would be liable for non-compliance.
  • Plans may contract with an issuer to take on responsibility for Rate Disclosures, however, liability for non-compliance differs depending on the following two categories:
  1. Insured group health plans where a health insurance issuer offering coverage in connection with the plan has agreed to provide the required information. If the issuer violates the transparency disclosure requirements, then the issuer, not the plan would be liable for non-compliance.
  2. Plans and issuers that contract with third parties to provide the information on their behalf. If the third party fails to comply, the plan or issuer would be liable for non-compliance.

Important note: the proposed rules include a good faith safe harbor that outlines special provisions to address circumstances in which a plan or issuer, acting in good faith, makes an error or omission in its disclosures, including a reliance on an error or omission by a third-party with regard to certain disclosures.

Specifically, the proposed rules outline the following safe harbor provisions:

  • A plan or issuer will not fail to comply with the requirements solely because it, acting in good faith and with reasonable diligence, makes an error or omission in a disclosure, provided that that plan or issuer corrects the information as soon as practicable;
  • To the extent such error or omission is due to good faith reliance on information from another entity, the plan or issuer will not fail to comply because it relied in good faith on information from the other entity, unless the plan or issuer knows, or reasonably should have known, that the information was incomplete or inaccurate;
  • A plan or issuer will not fail to comply with the requirements solely because, despite acting in good faith and with reasonable diligence, its internet website is temporarily inaccessible, provided that the plan or issuer makes the information available as soon as practicable.

3. Proposed Medical Loss Ratio Program Incentive

The Departments are also proposing changes to the Medical Loss Ratio (MLR) program calculation provisions to allow health insurance issuers to receive credit for savings they share with participants thereby possibly reducing the rebates they issue.

Comments on the proposed rule are due by January 29, 2020.

Comments on these proposed rules are due by January 14th, 2020, and Departments are proposing that the rule would be applicable for plan years beginning on or after one year after the rules are finalized (with the exception of the MLR incentive provision which would be applicable beginning with the 2020 MLR Reporting year).

Key Takeaways for Employers from the Proposed Transparency in Coverage Rules:

  • Required disclosures go beyond what is already available to participants.
  • Self-insured plans may incur costs in contracting with a third-party administrator or clearinghouse to provide the required disclosures under the proposed rules.
  • Plans and their vendors/carriers will likely face technological and practical challenges in making (and updating) cost and payment information made available online.
  • The proposed rule would allow plans to delegate responsibility and liability for non-compliance for the cost-sharing disclosure requirements to insurance issuers/carriers. However, while the plan may delegate responsibility for rate disclosures to third parties, liability for non-compliance will remain with the plan or insurer.



CMS Fact Sheet

Proposed Regulations

Appendix 1: Transparency in Coverage Model Notice

Appendix 2: Negotiated Rate Machine-Readable File Data Elements

Appendix 3: The Allowed Machine Readable File Data Elements


The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.


Lizet Ramirez – Lizet is a Client Compliance Manager for Sequoia One, where she works with our clients to optimize and streamline benefits compliance. In her free time, Lizet enjoys live music, travel, hiking and spa days.