Federal Agencies Announce Deferred Enforcement for Certain Transparency in Coverage Rules Set to Go into Effect on January 1, 2022

On August 20, 2022, and the Departments of Treasury, Labor, and Health and Human Services (the Departments) issued FAQs regarding the implementation of certain provisions of the Transparency in Coverage Final Rules, the No Surprises Act, and the Pharmacy Reporting Requirements under the Consolidated Appropriations Act (CAA).

In the FAQs, the Departments acknowledge that some of the new transparency requirements are duplicative and overlapping. Further, the Departments recognized that compliance with the new rules by the prescribed deadlines may not be feasible, especially in the absence of additional rulemaking by the Departments. As such, the Departments have delayed enforcement for many of the new transparency requirements, as outlined below.

Final Rule on Transparency in Coverage

For plan years beginning on or after January 1, 2022, the Final Rule on Transparency in Coverage (TIC) require non-grandfathered group health plans and health insurance issuers offering non-grandfathered coverage in the group and individual markets to disclose on a public website information regarding in-network provider rates for covered items and services, out-of-network allowed amounts and billed charges for covered items and services, and negotiated rates and historical net prices for covered prescription drugs in three separate machine-readable files (collectively referred to as “public disclosures”).

For plan years beginning on or after January 1, 2023, the TIC requires plans and issuers to make price comparison information available for 500 items and services to participants, beneficiaries, and enrollees through an internet-based self-service tool and in paper form, upon request (collectively referred to as “plan participant disclosures”). For plan years beginning January 1, 2024, plans and issuers must make the price comparison information for all items and services.

We previously reviewed how employers could prepare for the new health plan transparency rules in our prior blog. The FAQs outline delayed enforcement for the public disclosure requirement.

• Non-Enforcement of Pharmacy Drug Machine Readable File: Pending further rulemaking, the Departments will not enforce the requirement for plans to post machine readable files on prescription drugs. The Departments acknowledge that after the final rules on TIC were released, Congress passed the CAA, which requires plans to report some of the same pharmacy drug information (outlined below). The Departments will consider whether the pharmacy machine readable file requirement remains appropriate.
• Deferred Enforcement of In-Network and Out-of-Network Machine Readable Files: The Departments recognize the considerable time and effort that it will take for plans to comply with the other CAA provisions (outlined below) in addition to the requirements under the TIC Final Rule. Therefore, the Departments will not enforce the requirement to post the other machine-readable files (related to in-network and out-of-network rates) until July 1, 2022.

The No Surprises Act

The No Surprises Act (NSA), passed under the CAA, creates a robust statutory framework aimed at curtailing the practice of surprise billing. The NSA provides new protections for consumers and imposes new requirements on healthcare providers/facilities, group health plans, and insurers. Requirements that apply to group health plans go into effect for plan years beginning on or after January 1, 2022.

We reviewed how employers can prepare for the NSA in our prior blog. The FAQs outline delayed enforcement and provided compliance guidance for the following provisions of the NSA:

• Deferred Enforcement of Price Comparison Tool: The Departments recognize that the price comparison tool required under the NSA is largely duplicative of the plan participant disclosure requirements under the TIC, except that the TIC does not require disclosures via telephone. The Departments intend to propose rulemaking on whether compliance with the TIC plan participant disclosures will also satisfy the price comparison tool under the NSA. Accordingly, the Departments will delay enforcement of the NSA price comparison tool to plan years that begin on or after January 1, 2023.
• ID Card Requirements: The Departments do not intend to issue additional guidance on the ID card requirement prior to the January 1, 2022 effective date, though they do plan on engaging in future rulemaking. Pending future rulemaking, plans and issuers are expected to implement the ID card requirements using a good faith, reasonable interpretation of the law. In the meantime, the Departments will not deem a plan or issuer out of compliance if the ID card includes the applicable major medical deductible and out-of-pocket maximum, a telephone number and website address where individuals can seek consumer assistance, and access to additional applicable deductibles and maximum out-of-pocket limits (e.g., via a QR code or hyperlink on the ID card).
• Deferred Enforcement of Good Faith Estimate Requirement: Until further rulemaking is prescribed, the Departments will defer enforcement of the requirement for providers/facilities to provide a good faith estimate for individuals who are enrolled in a plan and are seeking to submit a claim.
• Deferred Enforcement of Advanced Explanation of Benefits (EOB) Requirement: The Departments recognize that compliance with the Advanced EOB requirement will likely not be feasible by January 1, 2022. Therefore, the Departments will delay enforcement of the Advanced EOB requirement until proper rulemaking is established.
• Disclosure Requirements: The Departments will not issue additional rulemaking prior to the January 1, 2022 effective date, though they do expect to issue additional rulemaking in the future. Plans and issuers are expected to comply using a good faith interpretation of the rules. Plans that use the model notice will be deemed to comply with this requirement.
• Continuity of Care: The Departments will not issue additional rulemaking before the January 1, 2022 effective date but do expect to do so at a later time. Until the rulemaking is finalized, plans are expected to implement the requirements using a good faith interpretation of the rules.

Pharmacy Benefits and Drug Costs Reporting

The CAA amended the Public Health Service Act to require group health plans and carriers to submit general information and spending information about the plan, primarily related to prescription drug expenditures. This report must include, among other things, information on the 50 most frequently dispensed brand prescription drugs, and the total number of paid claims for each such drug; the 50 most costly prescription drugs by total annual spending, and the annual amount spent by the plan or coverage for each such drug; and the 50 prescription drugs with the greatest increase in plan expenditures over the plan year preceding the plan year that is the subject of the report, and, for each such drug, the change in amounts expended by the plan or coverage in each such plan year.

Reporting was originally due by December 27, 2021 and no later than June 1st annually thereafter. However, the FAQs delay enforcement for the 2020 and 2021 reporting, as outlined below:

• Deferred Enforcement for 2020 and 2021 Reporting: The Departments anticipate that plans and issuers may need additional time to modify contractual agreements to enable compliance with the pharmacy reporting requirements, including the transfer of the required data between various entities, the development of internal processes and procedures, and the compilation of the required data. Accordingly, the Departments will defer enforcement of the reporting requirement by the first deadline for reporting on December 27, 2021 or the second deadline for reporting on June 1, 2022, pending the issuance of regulations or further guidance. Until regulations or further guidance are issued, the Departments strongly encourage plans and issuers to start working to ensure that they are in a position to be able to begin reporting the required information with respect to 2020 and 2021 data by December 27, 2022.

Comparison of Effective Date and Enforcement Deadline

 Additional Resources

• FAQs on the Transparency in Coverage Final Rule and the Consolidated Appropriations Act (No Surprises Act)
• Round Up of New Transparency in Coverage Rules
• Steps Employers Can Take to Comply with the New Transparency in Coverage Rules
• The No Surprises Act
  • Sequoia Forewords:
    • Regulations Released Implementing Consumer Protections under the “No Surprises Act” and How Employers Should Prepare, Congress Passed Ban on Surprise Bills and Other Patient Protections
    • Congress Passed Ban on Surprise Bills and Other Patient Protections
  • Interim Final Rule: Requirements Related to Surprise Billing; Part I
  • NSA Interim Final Rule Fact Sheet and Press Release
• Final Rule on Transparency in Coverage
  • Sequoia Foreword: Steps Employers Can Take to Prepare for the New “Transparency in Coverage” Rules
  • CMS Fact Sheet
• Pharmacy Benefits and Prescription Drug Costs Reporting
  • HHS Request for Information

Emerald Law – Emerald is a Senior Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music, and writing non-fiction.