New requirements for employer-sponsored health plans to report price information for in-network costs to plan participants are set to take effect shortly.
While much of the "heavy lifting" will be done by health insurance carriers for fully insured plans, by third-party administrators (TPAs) for self-funded plans, and by pharmacy benefit managers (PBMs) for carved-out prescription drug benefits, employers are ultimately responsible for ensuring that this information is ready and available, said Jay Kirschbaum, benefits compliance director and senior vice president at World Insurance Associates, based in Washington, D.C.
"We've spent the last 20 or 30 years teaching our participants to be bad consumers of medical care by shielding them from actual prices," said Kirschbaum, speaking March 30 at the Society for Human Resource Management's Employment Law & Compliance Conference in Washington, D.C.
"Medical costs have been too high for a long time," he observed. "One of the reasons is third-party payers—primarily, insurance companies interposed between health services providers and patients." Beginning in the 1970s, the rise of managed care, such as health maintenance organizations, "took us even further away from costs associated with care, so employees had no idea what the actual prices were."
He's hopeful that this situation may be set to change.
The new price transparency requirements stem from the Consolidated Appropriations Act, 2021, which included the No Surprises Act, and a series of implementing regulations issued jointly by the U.S. Departments of Labor (DOL), Health and Human Services and the Treasury.
While many of the price transparency disclosures were originally set to take effect at the start of 2022, the three agencies delayed enforcement until later this year.
The key requirement, Kirschbaum noted, is for employer plans to make medical costs paid under the plan available to participants and beneficiaries (excluding the small number of health plans that are still "grandfathered" under the Affordable Care Act). Pricing materials to be disclosed include the following:
- Advanced explanations of benefits (EOBs) providing good-faith estimates of the out-of-pocket costs for scheduled in-network medical services, to be transmitted electronically on request so participants can understand the costs they're going to incur ahead of time. "If insurers or TPAs can provide this information after the fact, they can provide it in advance," Kirschbaum said.
- An online price comparison tool to enable participants to compare cost-sharing amounts for specific in-network providers, on the following schedule: For plan years starting on or after Jan. 1, 2023, employers must post the prices for 500 commonly "shoppable" services listed in the regulations, such as office visits, cancer screenings, MRIs and joint-replacement surgeries. For plan years starting on or after Jan. 1, 2024, employers must post the prices for all other items and services covered by the plan.
- Extensive drug cost information derived from participant claims, to be reported in aggregate to federal regulators.
- Plan pricing disclosures on a publicly accessible website showing in-network rates, out-of-network allowed costs and prescription drug prices under the plan formulary. Because this information will be viewable by the public, job candidates and employees "can compare what your plan charges with other employers' plans," which could influence their choices about accepting job offers or staying with their employers, Kirschbaum said.
Overseeing Carriers, TPAs and PBMs
Kirschbaum pointed out that employers that sponsor group health plans are fiduciaries under the Employee Retirement Income Security Act (ERISA) with respect to these plans and participants enrolled in them, just as they are for the retirement plans they sponsor.
Regarding the new price transparency disclosures, "don't think you're off the hook because it will all be handled by insurance carriers or TPAs," he warned. "As fiduciaries, it's employers who are ultimately responsible under these laws and regulations."
While employers don't have the details of health procedure and plan costs, "you need to make sure your vendors are paying attention and complying with these rules," Kirschbaum said.
He advised employers to amend their administrative-services-only (ASO) agreements to clearly state that their insurance carriers or TPAs will take all necessary actions to comply with the transparency rules on the employer's behalf. He recommended using comprehensive language that refers to all pricing disclosure requirements—even though carriers or TPAs might prefer listing specific actions—to ensure that something isn't overlooked.
"Push your vendors to say that they're going to take care of this," Kirschbaum advised.
Related SHRM Articles:
July 1 Deadline Looming for Health Plan Transparency Disclosures, SHRM Online, June 2022
Safe Harbor Issued for Reporting Health Care Prices Under Transparency Rules, SHRM Online, April 2022