The Centers for Medicare & Medicaid Services’ Transparency in Coverage Final Rule took effect on July 1, following a six-month delay in implementation to allow payers to come into compliance.

The Final Rule requires group health plans and health insurance issuers offering non-grandfathered coverage in the group and individual markets to disclose online, in machine-readable files, their in-network provider rates and out-of-network allowed amounts and billed charges. The machine-readable file requirements are applicable for plan years beginning on or after January 1, 2022. While the Rule also intended that payers be required to disclose negotiated rates for covered prescription drugs, the U.S. Department of Health and Human Services, Labor, and Treasury (the “Departments”) previously announced that they would defer enforcement of the machine-readable file requirement while they consider whether the requirement is appropriate.

Under the Final Rule, health plans are required to publish all applicable rates, which may include negotiated rates, underlying fee schedule rates, or derived amounts for all covered items and services in the In-network Rate File. While the Final Rule requires that the rates contained in the In-network Rate File be reflected as dollar amounts, the Departments have provided an enforcement safe harbor for those plans that use alternative reimbursement arrangements for which reporting a current and accurate dollar amount in the In-network Rate File, before the item or service is provided or rendered, may not always be possible.  For example, with “percentage-of-billed charges” contract arrangements where a dollar amount can be determined only retrospectively because the in-network provider states that the plan will pay a fixed percentage of the billed charges, plans are permitted to estimate the potential range of rates in advance, but cannot determine accurate dollar amounts until a claim is made. The safe harbor will not apply if the particular arrangement can sufficiently disclose a dollar amount.

If the plan does not use negotiated rates for reimbursement, derived amounts must be reported to the extent that those amounts are calculated in the normal course of business. Plans that use underlying fee schedule rates for calculating cost sharing should include the underlying fee schedule rates in addition to negotiated rates or derived amounts.

As part of a continued effort to assist individuals to effectively shop for items and services, on or after January 1, 2023, payers will be required to make available a list of 500 services (as determined by the Departments) that will allow members to receive an estimate of their cost-sharing responsibility.

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