Knowledge Base Article

CMS announced the release of the Transparency in Coverage Final Rule [CMS-9915-F] on October 28, 2020. According to a related CMS Fact Sheet, “This final rule is a historic step toward putting health care price information in the hands of consumers and other stakeholders, advancing the Administration’s goal to ensure consumers are empowered with the critical information they need to make informed health care decisions.”

Figuring out the plot to a mystery novel involves asking questions and looking for answers to basic questions asked when gathering information (who, what, when, where, and why). CMS Final Rules can at first glance seem like a mystery and require the same process of asking and answering these questions. This article asks key questions and provides you with answers to help you figure out what is included in the Transparency in Coverage Final Rule.

Who is required to Disclose Cost-Sharing Information? 

Group Health Plans and Health Insurance issuers in the Individual and Group Markets.

• Note, the term group health plan includes both insured and self-insured group health plans.

What Type of Cost-Sharing Information is required to be disclosed?

• An estimate of the individual’s cost-sharing liability for covered items or services furnished by a particular provider.
• In-network provider negotiated rates,
• Historical out-of-network allowed amounts, and
• Drug pricing information

What is the required format for Disclosure of Cost-Sharing Information?

• This information must be available on an internet website in machine-readable files, and
• If requested, in paper form.

How many and what type of machine-readable files are required?

Plans and issuers must disclose pricing information in three machine-readable files

• One file will disclosure of payment rates negotiated between plans or issuers and providers for all covered items and services,
• A second file will disclose unique amounts a plan or issuer allowed, as well as associated billed charges, for covered items or services furnished by out-of-network providers during a specific time period.
• A third file will include pricing information for prescription drugs.

How often will issuers be required to update the machine-readable files?

“The final rules adopt, as proposed, the requirement for a plan or issuer to update the information required to be included in each machine-readable file monthly. The final rules clarify that this requirement to update the machine-readable files monthly applies to all three machine-readable files being finalized through the final rules: the In-network Rate File, the Allowed Amount File, and the Prescription Drug File”

What are the benefits of Disclosing Cost-Sharing Information?

CMS indicates in the Final Rule that “by requiring the dissemination of price and benefit information directly to consumers and to the public, the transparency in coverage requirements will provide the following consumer benefits:

• enables consumers to evaluate health care options and to make cost-conscious decisions;
• strengthens the support consumers receive from stakeholders that help protect and engage consumers;
• reduces potential surprises in relation to individual consumers’ out-of-pocket costs for health care services;
• creates a competitive dynamic that may narrow price dispersion for the same items and services in the same health care markets; and
• Puts downward pressure on prices which, in turn, potentially lowers overall health care costs.”

Where can you find a list of the 500 Items and Services Identified by the Departments?

This information is included in the Final Rule in Table 1: 500 Items and Services List. The table includes the applicable HCPCS/CPT code with the code description and a plain language description. For example, the first item in the list is J0702: BETAMETHASONE ACET&SOD PHOS with the plain language description being “Injection to treat reaction to a drug.”

Where can you find definitions of key terms in the Final Rule?

There is a Transparency in coverage – Definitions section towards the end of the final rule. Here you will find definitions for the following key terms:

• Accumulated amounts,
• Beneficiary,
• Billed charge,
• Billing code,
• Bundled payment arrangement,
• Copayment assistance,
• Cost-sharing liability,
• Cost-sharing information,
• Covered items and services,
• Derived amount,
• Historical net price,
• In-network provider,
• Items or services,
• Machine-readable file,
• National Drug Code,
• Negotiated rate,
• Out-of-network allowed amount,
• Out-of-network provider,
• Out-of-pocket limit,
• Plain language,
• Prerequisite, and
• Underlying fee schedule rate.

What are the CMS Intended Outcomes from implementation of this Final Rule?

• Informed Consumers,
• Consumers may become more cost conscious,
• Timely payment of medical bills, and
• Increase competition among Providers

When will the regulations in this Final Rule go into effect?

“The final rules adopt a three-year, phased-in approach with respect to the scope of the requirement to disclose cost-sharing information. Plans and issuers must make cost-sharing information available for 500 items and services identified by the Departments for plan years (in the individual market, for policy years) beginning on or after January 1, 2023, and must make cost-sharing information available for all items and services for plan years (in the individual market, for policy years) beginning on or after January 1, 2024.”

How will Requirements in the Final Rule be enforced?

“States will generally be the primary enforcers of the requirements imposed upon health insurance issuers by the final rules. 233 The Departments expect to work closely with state regulators to design effective processes and partnerships for enforcing the final rules.”

Of note, this final rule also includes amendments to the Department of Health and Human Services (HHS) medical loss ratio (MLR) program “to allow issuers offering group or individual health insurance coverage to receive credit in their MLR calculations for savings they share with enrollees that result from the enrollees shopping for, and receiving care from, lower-cost, higher-value providers.”