A version of this article previously appeared in the February 2020 edition of Employee Benefit Plan Review.
On November 27, 2019, the U.S. Departments of Treasury, Labor, and Health and Human Services published proposed rules designed to foster increased transparency by insured and self-funded group health plans with respect to the expected cost of health coverage to participants and beneficiaries. The proposed rules are in response to an executive order issued by the president on June 24, 2019, directing the departments to require health insurance issuers and self-insured group health plans “to provide or facilitate access to information about expected out-of-pocket costs for items or services to patients before they receive care.” The proposed rules also apply to the health insurance issuers in the individual market.
Disclosure of cost-sharing information to participants and beneficiaries
The proposed rules require group health plans and insurance issuers to disclose cost-sharing information to participants or beneficiaries upon request. The information required to be disclosed falls into seven categories.
Estimated cost-sharing liability
The proposed rules require plans and insurers to provide an estimate of the cost-sharing liability for a covered item or service provided by a particular provider or providers. The term “cost-sharing liability is defined as the amount a participant or beneficiary is responsible for paying for a covered item or service, including deductibles, coinsurance and copayments. However, cost-sharing liability does not include premiums, balance billing, amounts charged by out-of-network providers or the cost of items or services not covered under the group health plan or health insurance. The term “items or services” is defined broadly to include both an individual item or service as well as a set of items or services associated with a treatment or procedure that is bundled by the plan or insurance issuer.
The proposed rules also require a plan or insurance issuer to disclose the amount of financial responsibility that the participant or beneficiary has already incurred when the request for cost-sharing information is made. This is referred to as the “accumulated amount” and includes amounts incurred towards a deductible, an annual limitation with respect to an item or service, or the maximum out-of-pocket under the plan. In the case of family coverage, this information would also include the accumulated amount for covered family members. The accumulated amount does not include expenses that do not count towards a deductible or out-of-pocket limit, for example, items or services not covered under the plan or insurance coverage.
The proposed rules require a plan or issuer to disclose negotiated rates with an in-network provider, that is, the amount the plan or issuer has agreed to pay the in-network provider for a covered item or service. Such disclosure is not required if the negotiated rate does not impact a participant’s or beneficiary’s estimated liability. Under this rule, a participant or beneficiary could request cost-sharing information for a prescription drug.
Out-of-network allowed amount
The proposed rules allow participants and beneficiaries to request the out-of-network allowed amount. This term is defined as the maximum amount a plan or insurance issuer would pay for a covered item or service provided by an out-of-network provider. However, the term does not include any amounts above the out-of-network allowed amount that an out-of-network provider might directly charge a participant or beneficiary, also known as “balance billing.” Thus, the proposed rules would not necessarily allow a participant or beneficiary to accurately determine his or her estimated out-of-pocket liability for items or services provided by an out-of-network provider.
Items and services content list
The proposed rules require that a plan or insurance issuer provide a list of the covered items and services for which cost-sharing information is disclosed. If a participant or beneficiary requests a cost-sharing estimate for an item or service that is bundled, the plans and issuers would be required to disclose a list of each covered item and service included in the bundled payment in addition to the cost-sharing liability for those covered items and services as a bundle. However, the plan or issuer would not be required to provide the estimated cost-sharing liability for each separate item or service in the bundle.
Notice of prerequisites to coverage
When a participant requests cost-sharing information about an item or service, the proposed rules also require a group health plan or insurance issuer to disclose any prerequisite for coverage of such item or service. A prerequisite is defined as a medical management technique that requires action by a participant or beneficiary before a plan or issuer will provide coverage for the item or service. Examples include provisions requiring concurrent review, prior authorization and step-therapy or fail-first protocols. However, the requirement that an item or service be medically necessary is not a prerequisite as defined in the proposed rules.
The proposed rules require that, upon a request for cost-sharing information, a group health plan or insurance issuer must provide a disclosure notice that includes the following information:
- An out-of-network provider may engage in balance billing and charge a participant or beneficiary for the portion the provider’s bill not paid by the plan or issuer, or by the participant via copayments or coinsurance.
- The amount actually charged for items and services may be different from that described in the cost-sharing liability estimate.
- The provision of an estimate of cost-sharing liability for an item or service is not a guarantee that such item or service will be covered by the group health plan or insurance issuer.
- Any additional information deemed appropriate by the plan or issuer provided it does not conflict with information required to be included in the estimate of cost-sharing liability. For example, the disclosure notice could include a statement that the participant may need to obtain a price estimate from out-of-network providers to supplement the cost-sharing liability estimate. The disclosure notice can also indicate how long the cost-sharing estimate will be valid.
Methods for disclosing cost-sharing liability
The proposed rules set forth two methods by which group health plans and health insurance issuers must provide the cost-sharing information described above. The first method is a self-service tool on an internet website which is available to a participant or beneficiary without cost or subscription. The internet tool must allow participants and beneficiaries to search for cost-sharing information for an item or service provided by a specified in-network provider or by all in-network providers. The internet tool must also permit a search for the amount that would be covered for an item or service if provided out-of-network. A participant or beneficiary must be able to search for cost-sharing information by billing code or by a descriptive term.
The proposed rules also require that the cost-sharing information be provided in paper form, at no additional cost, upon request of a participant or beneficiary. Such information must be mailed no later than two business days after the request.
Delegation of cost-sharing disclosure duties for insured plans
The proposed rules allow an employer sponsoring an insured group health plan to require the insurance issuer, via a written agreement, to provide cost-sharing information in compliance with the proposed rules. If the plan and issuer execute such an agreement and the issuer fails to provide accurate or timely information, the issuer will be accountable for the violations.
Public disclosure of negotiated rates and allowed amounts for out-of-network providers
The proposed rules require a group health plan or a health insurance issuer to disclose certain information to the general public, via an internet website that does not require a user account, password or identifying information (for example, name or email address) to access it. The required information includes (i) negotiated rates with in-network providers, and (ii) historical data regarding allowed amounts for covered items and services furnished by out-of-network providers. Such information must be updated monthly.
As with the required disclosures to participants and beneficiaries, the proposed rules allow an employer sponsoring an insured group health plan to require the insurance issuer, via a written agreement, to satisfy the public disclosure requirements and thereby transfer the liability for violation of the public disclosure rules to the insurance issuer. In all other cases, if a group health plan or insurance issuer enters into an agreement under which a third party is required to provide information in compliance with the public disclosure rules, and the third party fails to do so, the group health plan or insurance issuer remains responsible for the violation.
The tentative effective date set forth in the proposed rules is the first plan year beginning on or after one year after the issuance of the final rule.
The proposed rules drastically expand the disclosure obligations of group health plans and health insurance issuers. The departments have requested comments on numerous aspects of the proposed rules and changes to the proposed rules are likely. Employers should continue to monitor developments with respect to the proposed rules and the possible impact on plan design and plan operations.
Lori Jones is the chair of Thompson Coburn’s Employee Benefits practice.