Additional Health Plan Price Transparency Disclosures Coming Soon
By Brian Gilmore | Published August 31, 2022
Question: What are the remaining ACA and CAA price transparency provisions that are taking effect in the coming months and years?
Short Answer: Annual reporting on pharmacy benefits and drug costs will take effect at the end of 2022. In 2023, plans must make available the participant-level price comparison tool for the first 500 shoppable items/services. In 2024, plans must add all remaining shoppable items/service to the participant-level price comparison tool.
The health plan price transparency revolution may have been slow to build momentum, but it is now starting to pick up steam. It is an area that has always felt just over the horizon and missing certain crucial aspects to meet such lofty goals of promoting competition and bringing down overall health care costs.
However, with the addition of multiple recent ACA and CAA transparency measures already in effect, plus two significant new disclosure requirements coming on board shortly, we may finally be reaching an inflection point to overcome multiple areas where health care pricing has been clouded by proprietary restrictions as well as complex and varied provider approaches.
Upcoming New Transparency Measures:
CAA Prescription Drug Data Collection: First Report Due December 27, 2022
TiC Participant-Level Disclosures: Internet-Based Tool Beginning in 2023 (Expanded in 2024)
CAA Prescription Drug Data Collection: First Report Due December 27, 2022
All employer-sponsored medical plans, whether fully insured or self-insured, are subject to a new annual prescription drug and health care spending data submission requirements under Section 204 of the CAA. The new requirements are commonly referred to as the Prescription Drug Data Collection (RxDC) report. Grandfathered plans are also subject to these new RxDC requirements.
The RxDC data submission will include a number of items outlined below, including information on the most frequently dispensed and costliest drugs, as well as prescription drug rebate information. One of the key uses of this information will be for the government to compile biennial public reports (as required by the CAA) addressing prescription drug pricing trends on the impact of prescription drug costs on premiums and out-of-pocket expenses.
More broadly, CMS states that the RxDC reports “are expected to enhance transparency and shed light on how prescription drugs contribute to the growth of health care spending and the cost of health coverage.”
The Initial Data Submission Deadline Extensions to December 27, 2022
The CAA required plans to submit this RxDC report in a first initial filing for the 2020 calendar year by December 27, 2021, and to submit this information for each subsequent calendar year by June 1 of the following year. However, the regulations implementing the new RxDC reporting requirements delayed both the 2020 and 2021 calendar year reporting deadlines to December 27, 2022.
Absent additional extensions, the 2022 calendar year RxDC submission deadline will be June 1, 2023. Plans will continue to submit the RxDC report on the previous calendar year by each subsequent June 1 thereafter. The regulations clarify that all plans (including those with a non-calendar plan year) will use the calendar year as the “reference year” for reporting, regardless of plan year.
The Required Content of the Prescription Drug Reporting
The CAA annual RxDC report must include the following information:
General information regarding the plan or coverage;
Enrollment and premium information, including average monthly premiums paid by employees versus employers;
Total health care spending, broken down by type of cost (hospital care; primary care; specialty care; prescription drugs; and other medical costs, including wellness services), including prescription drug spending by enrollees versus employers and issuers;
The 50 most frequently dispensed brand prescription drugs;
The 50 costliest prescription drugs by total annual spending;
The 50 prescription drugs with the greatest increase in plan or coverage expenditures from the previous year;
Prescription drug rebates, fees, and other remuneration paid by drug manufacturers to the plan or issuer in each therapeutic class of drugs, as well as for each of the 25 drugs that yielded the highest amount of rebates; and
The impact of prescription drug rebates, fees, and other remuneration on premiums and out-of-pocket costs.
Employers Will Rely on Insurance Carrier or Third-Party Administrator to Process RxDC Submission
For employers with fully insured medical plans, the insurance carrier is directly responsible for submitting this RxDC report. While there is no clear employer action item in the process, employers should nonetheless confirm with their insurance carriers that they will be timely processing the reporting.
For employers with self-insured medical plans (including level funded plans), as with most compliance burdens the obligation technically lies with the employer. However, in nearly all situations employers will rely on their third-party administrator (TPA) or pharmacy benefit manager (PBM) to submit the RxDC report. This delegation is expressly permitted in the RxDC regulations.
The RxDC reporting instructions confirm this approach:
3.2 Can a vendor submit information on my behalf? Yes. Plans, issuers, and carriers can contract with issuers, third-party administrators (TPAs), Pharmacy Benefit Managers (PBMs), or other third-party vendors to submit data on their behalf. An entity that submits some or all required information is called a reporting entity.
Employers with self-insured plans should confirm that their TPA or PBM will be completing the RxDC report on behalf of the plan. These vendors have in many cases already begun to reach out to employers to compile some basic plan information needed in addition to the main content handled by the vendor. Employers should promptly respond to these questionnaires to ensure the TPA or PBM can timely submit the RxDC report on behalf of the plan.
TiC Participant-Level Disclosures: Internet-Based Tool Beginning in 2023
The ACA transparency in coverage (TiC) rules have already been implemented with respect to the public machine-readable files disclosure, as described in more detail below. However, the looming effective dates for participant-level disclosures promise to be of more interest and utility for the public.
The participant-level TiC disclosures will be in the form of an internet-based tool designed to inform individuals of their personalized out-of-pocket cost information based on the cost-sharing terms of their plan and underlying negotiated provider rates for items and services. In other words, this self-service tool will provide participant access to actual out-of-pocket cost information prior to receiving a service or purchasing an item covered by the plan.
For the first time, most consumers will be able to get real-time and accurate estimates of their cost-sharing liability for health care items and services from different providers in real time, allowing them to both understand how costs for covered health care items and services are determined by their plan, and also shop and compare health care costs before receiving care.
If the tool works as intended, employees and dependents will clearly have a much-improved ability to act as informed consumers when shopping for the best value health care services going forward.
Note that the CAA also included similar TiC rules. The Departments have stated that because the price comparison methods required by the CAA are largely duplicative of the internet-based self-service tool component of the TiC Final Rules, they intend to issue guidance addressing whether compliance with the TiC requirements will be sufficient to satisfy both the ACA and CAA rules.
Information to be Included in the Internet-Based Self-Service Tool
The tool is designed to convey an estimate of the participants cost-sharing liability for a requested covered item or service when furnished by a particular provider.
The TiC regulations outline several aspects of this disclosure needed to satisfy these requirements:
Cost-Sharing Information: Information related to any expenditure required by or on behalf of a participant or beneficiary with respect to health care benefits that are relevant to a determination of the participant's or beneficiary's cost-sharing liability for a particular covered item or service. This includes deductibles, coinsurance, and copayments.
Accumulated Amounts: The amount of financial responsibility a participant or beneficiary has incurred at the time a request for cost-sharing information is made, with respect to a deductible or out-of-pocket limit. This includes any expense that counts toward a deductible or out-of-pocket limit (such as a copayment or coinsurance).
In-Network Rate: The negotiated rate the plan has contractually agreed to pay for an in-network provider for the requested covered item or service, and the underlying fee schedule rate to the extent it is different from the negotiated rate. These must be reflected as dollar amounts.
Out-of-Network Allowed Amount: For any request for cost-sharing information for a covered item or service by an out-of-network provider, the maximum amount the plan will pay for the covered item or service furnished by an out-of-network provider, or any other rate that provides a more accurate estimate of the amount the plan will pay for the requested covered item or service, reflected as a dollar amount or percentage as set forth in the plan terms.
Also included is information relating to bundled payment arrangements, prerequisite coverage requirements (such as prior authorization) where applicable, and a notice to participants describing multiple required aspects the cost-sharing estimates in plain language.
Although the tool is primarily designed to be internet-based, participants have the right to request paper copies of certain aspects of the cost-sharing information without charge, to be sent via mail within two business days of a request.
First 500 Shoppable Items: Effective First Plan Year Beginning on or After January 1, 2023
These participant-level TiC disclosures via the internet-based tool must be available for the first plan year beginning on or after January 1, 2023. For calendar plan years, the requirements begin with the 2023 plan year.
For the first plan year the participant-level TiC rules are in effect, the plan is required only to disclose an initial list of 500 shoppable services. Table 1 in the TiC regulations lists the 500 items and services that must be included in this first phase of the internet-based self-service tool. CMS maintains a useful summary overview in its 500 Items and Services List for Price Comparison Tool.
Remaining Shoppable Items: Effective First Plan Year Beginning on or After January 1, 2024
The remaining covered items and services under the TiC rules must be disclosed via the internet-based tool for plan years beginning on or after January 1, 2024. For calendar plan years, the cost-sharing information will be fully available as of the 2024 plan year.
Employers Will Rely on Insurance Carrier or Third-Party Administrator for Internet-Based Tool
For employers with fully insured medical plans, the employer can enter into a written agreement with the insurance carrier that ensures the carrier is responsible (and liable) for compliance with the TiC requirements.
For employers with self-insured medical plans (including level funded plans), the regulations also provide that the employer can enter into a written agreement whereby the TPA or other third-party satisfies the TiC requirements. However, unlike with fully insured plans, the employer retains ultimate responsibility for compliance. Accordingly, because employers cannot realistically be expected to have any role in establishing, maintaining, or monitoring the internet-based tool, employers should consider contractual terms providing that the TPA assumes responsibility for the TiC rules in a manner that protects the employer from potential liability for any failures.
CMS has confirmed that it will be enforcing these TiC requirements. If plans do not comply, CMS may take several forms of enforcement actions, including requiring corrective actions and/or imposing a civil monetary penalty of up to $100/day for each violation and for each individual affected by the violation.
Health Plan Price Transparency: Where Did you Come From, Where Did You Go?
The two new transparency measures described above augment significant CAA and TiC features that have already recently taken effect:
The ACA Recent Transparency Additions: Machine-Readable Files
In late 2020, the Departments of Labor, Health and Human Services, and the Treasury (Departments) issued final Transparency in Coverage (TiC) rules under the ACA.
The TiC rules require employers sponsoring self-insured, non-grandfathered health plans to post machine-readable files on a public website for the group health plan:
In-Network File: Negotiated rates for covered items and services between the plan and in-network providers.Original Effective Date: First plan year beginning on or after January 1, 2022_Delayed Effective Date_: July 1, 2022_Note_: Plans with a non-calendar plan year beginning after July 1, 2022 are subject to the rule as of the first day of the 2022 plan year, consistent with the original effective date.
Out-of-Network File: Historical allowed amounts and billed charges for covered items and services provided by out-of-network providers.Original Effective Date: First plan year beginning on or after January 1, 2022_Delayed Effective Date_: July 1, 2022_Note_: Plans with a non-calendar plan year beginning after July 1, 2022 are subject to the rule as of the first day of the 2022 plan year, consistent with the original effective date.
Prescription Drugs File: Negotiated rates and historical net prices for covered prescription drugs.Original Effective Date: First plan year beginning on or after January 1, 2022_Delayed Effective Date_: Delayed indefinitely, pending further rulemaking and determination of whether the requirement is still needed in light of additional disclosures added by CAA 2021.
CMS recently posted additional Technical Clarifications guidance that confirms employers without a public website for the group health plan may satisfy these requirements by entering into a written agreement with the TPA to post the files on the TPA’s public website on behalf of the plan.
This guidance was further elaborated in new Tri-Agency ACA/CAA FAQ Part 55, which reiterated that a plan may satisfy the disclosure requirement by entering into a written agreement under which a service provider (such as a TPA) posts the machine-readable files on its public website on behalf of the plan.
For full details, see:
The CAA Recent Transparency Additions: No Surprises Act (and More!)
The Consolidated Appropriations Act, 2021 (the “CAA”) made multiple sweeping changes to employee benefits. Although the CAA may not have been intended as a health bill, it has proven to be the most significant set of health care reforms since the ACA.
The most prominent of these CAA provisions for health plans is the No Surprises Act, which prevents surprise emergency, non-emergency, and air ambulance bills, as well as providing for temporary continuity of care rights for certain patients who lose access to network providers.
Also included in the CAA are provisions requiring (with staggered effective dates) the mental health parity comparative analysis, medical ID card cost-sharing information, machine-readable rates, annual reporting on pharmacy benefits and drug costs, and price transparency, disclosure, and comparison tools.
For full details, see:
With these upcoming price transparency disclosure deadlines right around the corner, employers should start preparing with the practical concerns and action items on their end. As with most of the new ACA and CAA transparency rules, it is not realistic to expect employers to satisfy the detailed and technical disclosure requirements.
Therefore, employers should be looking to their insurance carriers, TPAs, and PBMs to ensure that they are prepared to address these upcoming requirements. As part of this vendor oversight and collaboration process, employers should also take steps to review contractual terms addressing the vendors’ obligations to perform these required transparency compliance measures, as well as potential indemnification provisions for any vendor failures that could cause liability for the employer.
Accordingly, the Departments are exercising discretion to defer enforcement in connection with the December 27, 2021 and the June 1, 2022 deadlines for the section 204 data submissions for the 2020 and 2021 reference years, respectively. More specifically, the Departments will not initiate enforcement action against a plan or issuer that does not report the required information by the first statutory deadline for reporting on December 27, 2021 or the second statutory deadline for reporting on June 1, 2022, and that instead submits the section 204 data submissions for the 2020 and 2021 reference years by December 27, 2022.
29 CFR §2590.715-2715A2(c)(1):
(1) The provisions of this section apply for plan years beginning on or after January 1, 2023 with respect to the 500 items and services to be posted on a publicly available website, and with respect to all covered items and services, for plan years beginning on or after January 1, 2024.
Lead Benefits Counsel, VP, Newfront
Brian Gilmore is the Lead Benefits Counsel at Newfront. He assists clients on a wide variety of employee benefits compliance issues. The primary areas of his practice include ERISA, ACA, COBRA, HIPAA, Section 125 Cafeteria Plans, and 401(k) plans. Brian also presents regularly at trade events and in webinars on current hot topics in employee benefits law.Connect on LinkedIn