Updated 8/24/21: On August 20, 2022, the Departments issued FAQs that addressed the Transparency in Coverage Rules and the Consolidated Appropriations Act (which includes the No Surprises Act). In the FAQs, the Departments acknowledge that some of the new transparency rules 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 further rulemaking by the Departments. As such, the Departments have delayed enforcement for many of the new transparency requirements, as outlined below.

Amended Article

Within the last year, Congress and the Departments of Treasury, Labor, and Health and Human Services (the Departments) have issued a bevy of new rules for group health plans that aim to encourage transparency in health care costs and compliance. In October 2020, the Departments released final rules on the transparency in coverage requirements that apply to group health plans (they previously released analogous rules that apply to hospitals). Subsequently, in December 2020, Congress passed a variety of additional plan transparency requirements under the Consolidated Appropriations Act of 2021 (CAA), some of which overlap with the Department’s rules.

Many of these new requirements have already taken effect or will soon go into effect for the 2022 plan year. As such, employers, as the sponsor of group health plans, have the responsibility to comply with these new requirements and should take the appropriate steps to prepare. This article reviews the following new rules:

  • Final Rule on Transparency in Coverage: The final rule on transparency in coverage (TIC) requires plans to disclose detailed pricing information to the public and cost-sharing estimates to plan participants before they receive care. The public disclosures are required for plan years beginning on or after January 1, 2022, whereas the plan participant disclosures are required for plan years beginning in 2023. For the public disclosures, plans must include specific content on 3 machine readable files with information on in-network rates, out-of-network rates, and prescription drugs. We previously reviewed how employers could prepare for the new health plan transparency rules in our prior blog. On August 20, 2021, the Departments announced delayed enforcement for the following provisions of the TIC:
    • Non-Enforcement of Pharmacy Drug Machine Readable File: The Departments will not enforce the requirement for plans to post machine readable files on prescription drugs pending further rulemaking. 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.
    • TIC Plan Participant Disclosures and the CAA: The Departments recognize that the price comparison tool required under the No Surprises Act (discussed below) 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 No Surprises Act. To align the requirements under the TIC and No Surprises Act, the Departments intend to propose the TIC rules also require disclosure via telephone, upon request.
  • Pharmacy Benefits and Drug Costs Reporting: The CAA amended the Public Health Service Act to require group health plans and carriers to submit certain demographic and spending information about the plan, primarily related to prescription drug expenditures. By December 27, 2021, and no later than June 1st annually thereafter, plans and carriers must submit the required information for the previous plan year. The Departments must use the data submitted to publish public reports on prescription drug reimbursements, pricing trends, and the impact of prescription drug costs on premium costs. The Departments requested comments from interested stakeholders but have not yet released guidance on the reporting requirement. On August 20, 2021, the Department announced delayed enforcement for the pharmacy and drug cost reporting requirement:
    • 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.
  • Comparative Analysis under the Mental Health Parity and Addition Equity Act (MHPAEA): The CAA amended the MHPAEA to require certain plans to perform and document an analysis that demonstrates compliance with the non-quantitative treatment limitations (NQTLs) requirements of the MHPAEA (i.e., the requirement that the application of NQTLs to mental health and substance use benefits are “in parity” with the application of NQTLs to medical/surgical benefits). As of February 10, 2021, employers must provide this comparative analysis to plan participants and state and federal government agencies, upon request. We reviewed the guidance released on the comparative analysis requirements in our prior blog.
  • 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 No Surprises Act our prior blog. On August 20, 2021, the Department announced delayed enforcement and provided compliance guidance for the following provisions of the NSA:
    • Deferred Enforcement of Price Comparison Tool: The Departments recognize that many plans have begun taking steps to comply with the TIC plan participant disclosure requirement, which applies to plan years beginning on or after January 1, 2023. Since the required disclosures under the TIC are similar to those under the NSA price comparison tool, 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 after January 1, 2022. Until the rulemaking is finalized, plans are expected to implement the requirements using a good faith interpretation of the rules.
    • Provider Directory: The Departments intend to initiate rulemaking on the provider directory requirements in 2022, but the deadline for compliance remains January 1, 2022. Until further rulemaking is established, plans and carriers are expected to implement the requirements using a good faith interpretation of the law. The Departments will not deem a plan or carrier to be out of compliance if, after January 1, 2022, in situations where a plan participant receives out-of-network services/items after being provided inaccurate information that the provider/facility was in-network via the provider directory or response protocol, the plan or carrier imposes a cost-sharing no greater than what would be required for the same in-network service/item and cost-sharing amounts are counted toward any deductible or out-of-pocket maximum.

Below, we provide a high-level roundup of the requirements that apply to group health plans. We have also highlighted the delays in enforcement for certain provisions in the “effective date” section.

Amendments to the MHPAEA

RequirementEffective DateApplies ToSummary
Perform and Document Comparative AnalysisOngoing
(as of 2/10/21)
Group health plans sponsored by employers with 50+ employees that offer mental health and substance use disorder benefits (MH/SUD) and impose non-quantitative treatment limitations (NQTL) on those benefitsPlans must perform and document an analysis to show that the plan’s application NQTLs to MH/SUD benefits are comparable and not applied more stringently than to medical/surgical benefits. Employers must provide this analysis if requested by plan participants, the Department of Labor, of state agencies.

Employer Action:

  • Fully insured employers: Reach out to carriers to ensure they will be able to produce a comparative analysis for the plan and request the latest comparative analysis performed (if any) and supporting documentation (which we outline in our blog).
  • Self-insured/level funded employers: Work with third party administrator (TPA) or a vendor to perform a comparative analysis and ensure any NQTLs on MH/SUD benefits comply with parity provisions.

Prescription Drug Cost Reporting

RequirementEffective DateApplies ToSummary
Prescription Drug Cost Reporting12/27/21 (and by June 1st annually thereafter)

Update: Until final rulemaking is established, plans should be ready to report 2020 and 2021 data by 12/27/22
Non-grandfathered group health plans and carriersPlans and carriers must annually report certain demographic and spending information during the previous plan year, with focus on the top 50 prescription drugs, in terms of aggregate spending and increase in cost under the plan.

Employer Action:

  • Fully insured employers: Ensure carrier performs reporting as required.
  • Self-insured/level funded employers: Ensure TPA is capable of collecting the requisite data to complete the reporting (a list of the required information is outlined under Section 204 of Title II of Division BB of the CAA). Work with TPA to submit reporting. Additional guidance will be forthcoming.

Final Rule on Health Plan Price Transparency

RequirementEffective DateApplies ToSummary
Disclosures to the PublicOriginal Deadline: Plan years beginning on or after 1/1/22

Update:
Prescription Drug Readable File: Non-enforcement until additional rulemaking is established

In-Network and Out-of-Network Readable Files: Delayed enforcement until 7/1/22
Non-grandfathered group health plans and carriersPlans are required to post free pricing information on a public website. Specific content must be provided on 3 “machine readable files”:
1. In-network negotiated rates;
2. Historical payments and billed charges of out-of-network providers during a specified period; and
3. In-network negotiated rates for prescription drugs during a specified period.
Plan Participant DisclosuresFor plan years on or after 1/1/23: Initial list of 500 items and services

For plan years on or after 1/1/24:
All items and services
Same as above.Plans must provide plan participants with real-time, personalized out-of-pocket cost estimates for requested covered items and services by a particular provider or providers. This disclosure must be made through a user-friendly online self-service tool or by paper, upon request.

Update: The Departments intend to propose rulemaking that would also require disclosure via the telephone, upon request.

Employer Action:

  • Fully insured employers: Contract with carrier to require carrier to provide the required disclosures. If a contract is entered into, the carrier (not the employer) will be held liable for any failure.
  • Self-insured/level funded employers: Contract with TPA to provide the required disclosures. Note: employers will be held liable for any failure, even if a contract is entered into.

No Surprises Act (NSA)

RequirementEffective DateApplies ToSummary
Cost Sharing RequirementsPlan years beginning on or after 1/1/22All group health plans (including grandfathered plans) and carriersGroup health plans and carriers must limit cost-sharing for services provided in emergency situations, by out-of-network providers at in-network facilities, and by out-of-network air ambulance services (“services covered under the NSA”) to no more than the cost-sharing required for the same in-network care. Cost-sharing must be calculated based on the “recognized amount for services” (discussed in our blog) and apply toward any in-network deductible or out-of-pocket maximum.
RequirementEffective DateApplies ToSummary
Advanced Explanation of Benefits (EOB)Original Deadline: Plan years beginning on or after 1/1/22

Update: Deferred enforcement until rulemaking is established
All group health plans (outlined above)Providers must ask patients whether they are enrolled in a group health plan and, if so, provide an estimate of the expected charges to the patient’s insurer. After receiving the estimate, plans must provide an advanced EOB to the plan participant that informs them whether the provider/facility is in-network, of what the plan will pay, and any cost-sharing requirement (among other information).
RequirementEffective DateApplies ToSummary
Notice RequirementPlan years beginning on or after 1/1/22All group health plans (outlined above)Plans and carriers must post on a public website and provide plan participants with information on state and federal surprise billing protections and contact information where complaints can be filed. This information must be included on EOBs for out-of-network claims covered under the NSA. Plans can, but are not required to, use the model notice.

Update: No additional rulemaking anticipated prior to 1/1/22. Until rulemaking is established, plans are expected to comply based on a good faith interpretation of the rules.
RequirementEffective DateApplies ToSummary
Continuity of CarePlan years beginning on or after 1/1/22All group health plans (outlined above)If a provider or facility is removed from a plan’s network, the plan or carrier must notify plan participants who are “continuing care patients” of the removal on a timely basis and, if elected by the plan participant, cover services by the terminating provider/facility under the same terms and conditions for up 90 days after the notice is provided.

Update: No additional rulemaking anticipated prior to 1/1/22. Until rulemaking is established, plans are expected to comply based on a good faith interpretation of the rules.
RequirementEffective DateApplies ToSummary
ID Card RequirementsPlan years beginning on or after 1/1/22All group health plans (outlined above)An ID card (paper or electronic) must be provided to plan participants with any deductible and out-of-pocket maximums applicable to their plan and a phone number and website where they can seek consumer assistance information.

Update: No additional rulemaking anticipated prior to 1/1/22. Until rulemaking is established, plans are expected to comply based on a good faith interpretation of the rules.
RequirementEffective DateApplies ToSummary
Price Comparison ToolPlan years beginning on or after 1/1/22

Update:
Deferred enforcement until 1/1/23
All group health plans (outlined above)Plans must offer price comparison by telephone and through a website. The tool must enable participants to compare the amount of cost-sharing for specific items and services by geographic region and in-network providers.
RequirementEffective DateApplies ToSummary
Provider DirectoryPlan years beginning on or after 1/1/22
All group health plans (outlined above)Plans and carriers must establish a process for updating and verifying the accuracy of provider directory information and a protocol for responding to requests by telephone and electronic communication from plan participants and beneficiaries about a provider or facility’s in-network status. If a plan participant is provided services by out-of-network provider/facility after they were provided inaccurate information that the provider/facility was in-network under the required provider directory or response protocol, the plan must honor any incorrect information provided.

Employer Action:

  • Fully insured employers: Generally, the carrier will be required to comply with the NSA; nonetheless, employers should discuss the new requirements with their carrier to ensure compliance. In addition, employers should:
    • Update communications to plan participants to reflect the new rights and protections under the NSA (e.g., cost-sharing and surprise billing limitations, right to advance EOB, continuity of care, and price comparison tool);
    • Provide the model notice, or an alternative notice, that informs plan participants of the state and federal protections against surprise billing (carriers may provide this notice in plan documents, employers may also want to notify plan participants); and
    • Ensure carrier plan documents and materials describing the coverage under the plan (e.g., Evidence of Coverage, Summary Plan Description) incorporate the new NSA requirements.
  • Self-insured/level funded employers: In addition to updating communications to plan participants, self-insured and level funded employers should discuss the NSA with their TPA to determine whether they are capable of complying with the new requirements. Employers may want to outline the TPA’s (and employer’s) responsibilities in a contractual agreement. If the TPA is unable to meet the new requirements, employers should contact other vendors to assist with compliance. Employers may want to ask their TPA/vendor whether they can assist with the following:
    • Determining the “recognized amount for services” for purposes of calculating cost-sharing for services covered under the NSA;
    • Coordination of payment to providers/facilities in accordance with the NSA;
    • Providing advanced EOBs;
    • Notifying plan participants when a provider/facility is removed from the network and coordinating continuing care; and
    • Providing the ID card requirements and price comparison tool.

Employer Next Steps

It is important to point out that regulations on these new transparency rules are still being promulgated by the relevant federal agencies, though additional rulemaking is not anticipated until after they go into effect. The Departments have deferred enforcement for many of the new requirements to provide plans/issuers additional time to comply and to issue additional rulemaking.

Nonetheless, it is important for employers to work with their carriers (if fully insured) or TPAs/vendors (if self-insured/level funded) to take the necessary steps to comply. In addition, employers may want include provisions in contracts with their carrier/TPA that would make them responsible for executing these transparency requirements and, in the case of any failure to do so, would require the carrier/TPA to indemnify the employer (where indemnification is permitted).

Additional Resources

Emerald Law – Emerald is a Client 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.