Proposed Rule Would Require Health Plans to Disclose Out-of-Pocket Costs by Providers

Group plans would provide pricing data through an online self-service tool

Stephen Miller, CEBS By Stephen Miller, CEBS November 25, 2019
Proposed Rule Would Require Health Plans to Disclose Out-of-Pocket Costs by Providers

Update: Final Rule Issued

On Oct. 29, 2020, federal agencies released a final rule requiring employer-sponsored group health plans to provide an online self-service tool that gives enrollees estimates of their out-of-pocket expenses for services from different health care providers. See the SHRM Online article Final Rule Requires Health Plans to Disclose Prices for 'Shoppable' Care.

[Editor's note: The article below was updated on Dec. 30, 2019.]

In a proposed regulation published in the Federal Register on Nov. 27, 2019, federal agencies suggest a rule that would require employer-sponsored group health plans to provide plan enrollees with estimates of their out-of-pocket expenses for services from different health care providers. Plans would make this information available through an online self-service tool so enrollees could shop and compare costs for services before receiving care.

Comments were originally due by Jan. 14, 2020, on the Transparency in Coverage rule issued by the departments of Health and Human Services, Labor and the Treasury. The unpublished rule was released on Nov. 15, when the agencies also posted a fact sheet summarizing the proposal. [Update: the agencies subsequently extended the comment period to Jan. 31, 2020, in response to public feedback and in consideration of the holiday season.]

The rule, if finalized, "would be the most dramatic expansion of disclosure obligations for group health plans" since the Employer Retirement Income Securities Act (ERISA) was passed in 1974, said Carrie B. Cherveny, senior vice president of strategic client solutions for global insurance brokerage Hub International's risk services division.

The proposal is part of the Trump administration's attempt to create price competition in the health care marketplace. It follows the November release of a final rule requiring hospitals to publish their prices online for standard charges, including negotiated rates with providers. That rule, to take effect Jan. 1, 2021, is being challenged in court by hospital industry groups.

Key Requirements

The new proposal would apply to all health plans except those that are grandfathered under the Affordable Care Act. Among other obligations, group health plans and health insurance carriers would be required to do the following:

  • Make out-of-pocket costs for all covered health care items and services available to plan enrollees through a self-service website. The information would be available in paper form on request and presented in a format similar to an explanation of benefits notice (the agencies posted a proposed model disclosure notice under the regulations).
  • Make in-network rates negotiated with the plan's network providers, as well as past payments made to out-of-network providers, publicly available. This information would be updated monthly.

The proposed rule "would allow plans to delegate responsibility and liability for cost-sharing disclosures to third parties," such as a third-party administrator or an administrative-services-only provider, wrote Vanessa Scott and Ryan Sessions, attorneys with law firm Eversheds Sutherland in Washington, D.C. "While plans may also delegate responsibility for rate disclosures to a third party, the plan would still be responsible for any liability associated with noncompliance," they noted.

[SHRM members-only toolkit: Managing Health Care Costs]

A Step Further

Information about employees' out-of-pocket expenses is disclosed in benefit claim determinations and other documents. However, "the proposed rules would take these disclosure requirements a step further by requiring individually tailored cost estimates prior to the receipt of services," noted Susan Nash, a partner at law firm Winston & Strawn in Chicago.

While transparency in health care pricing is generally welcomed by employers, she observed, "employers may balk at the cost of preparing the online or mobile app-based cost-estimator tools, or purchasing such tools from vendors."

In addition, because much of the information required to be disclosed is specific to the participant and the benefit option in which the participant is enrolled, the disclosures "will require greater coordination among employers and third-party administrators, pharmacy benefit managers, [and] disease management, behavioral health, utilization review, and other specialty vendors and will require amendments to existing agreements," Nash explained.

According to Cherveny, "the rules around public disclosure will likely be opposed by health insurance carriers who view their price negotiation as confidential and part of the service that they provide as carriers," and insurers are likely to challenge them in court, as hospital systems are expected to do with the final rule on disclosing their prices.

What If?

"If health care providers, health insurers and group health plan third-party administrators can pay claims and issue explanations of benefits after we've incurred health care expenses, why couldn't they disclose those costs and covered benefit amounts before we incur the health care expenses?," asked Monique Warren, a principal at the White Plains, N.Y., office of law firm Jackson Lewis. "Many have no idea how much the physician’s visit will cost before going to the appointment, much less how much the blood test or MRI the doctor orders will cost."

She added, "Assuming the Hospital Cost Transparency rules survive the inevitable legal challenges and the Transparency in Coverage rule is finalized, will more information about the cost of health care result in better personal health decision-making? ... More information may not necessarily result in the decision-making changes the Trump administration expects, but there's always room for healthy optimism."

Related SHRM Article:

Is There a Future for Price Transparency in Health Care?, SHRM Online, November 2019



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