Final Transparency Rules Mean More Disclosures for Plan Sponsors

Earlier this fall, the Departments of Health and Human Services, Treasury, and Labor (the “Departments”) issued the final rule for “transparency in coverage” requirements for health plans and insurers.  The final rule applies to most non-grandfathered group health plans and health insurance issuers will be required to comply with the final rule, as well as “grandmothered” plans.  This includes self-insured plans, level-funded arrangements, MEWAs, and plans with alternative payment models, such as an HMO.  The rule does not apply to grandfathered health plans, excepted benefits, short-term limited duration insurance, health care sharing ministries, or HRAs.

The Departments provide for two different methods for plans to disclose health care pricing information to individual consumers.  For plan years beginning January 1, 2022, health plans and insurers must disclose three separate files on their websites that include detailed pricing information for all covered items and services under the applicable plan.  The first file must show negotiated rates for all in-network covered items and services. The second file must show information regarding charges from, and payments to, out-of-network providers. The third file must provide historical information regarding in-network prescription drug pricing by pharmacy location.

For plan years beginning on or after January 1, 2023, health plans and insurers must make cost-sharing information available for 500 specified items and services on the health plan’s or insurer’s website.  Information regarding all other items and services available under the plan must be disclosed for plan years beginning on or after January 1, 2024.

The goal of the Departments in issuing the final rule is to allow participants to estimate their health care costs before they receive treatment. The Departments hope this will encourage educated price comparison and also price competition in providers.

The final transparency rule stems from an executive order on health care price and quality transparency that was issued by President Trump in June 2019 and supported by Section 1311(e)(3) of the ACA which imposes transparency, reporting, and disclosure requirements on qualified health plans. It is hoped that the final rule will help to partially address surprise bills by making participants more informed prior to their services.

Insured health plans may contract with the insurance company or another third-party to provide the required information.  In that case, the insurance company will become responsible for any compliance mistakes or failures.  Unfortunately, self-insured plans do not have the same protections.  While a self-insured plan may contract with their TPA or another third-party to provide the information, the plan sponsor remains ultimately liable for any compliance issues relating to the disclosures.

The Departments have announced that a good faith safe harbor will be available.  If a plan or insurer acts in good faith but makes a mistake, they may avoid any penalties provided they correction the information as soon as possible after discovering the mistake.  Plans using a third-party may be relieved of responsibility for any error unless the plan knew or should have known the information from the third party was incorrect.

As can be seen, this final rule will require a lot of previously unavailable or unknown information to be produced by plan sponsors and disclosed to participants.  Sponsors will need to work very closely with their insurance companies, TPAs, and brokers to ensure the information provided is accurate and complete.

If you have any questions about the new transparency rules or any of employee benefits related issue, please contact any of Graydon’s Employee Benefits team.

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