In 2020, the federal government finalized requirements for health insurance carriers and employer-sponsored health plans to provide greater transparency in medical claims costs.
Effective July 1st, 2022, insurance carriers and health plans will be required to provide a searchable database that allows members to proactively search and review the cost of certain procedures covered within their health plan. The hope of this new regulation is that increased transparency will eventually help decrease costs in the long run. Below are some quick facts about the Transparency in Coverage Rule:
What is the Transparency in Coverage Rule?
Originally finalized in November of 2020, the federal government will now require health insurers (as well as group health plans) to provide members with a price comparison tool. This tool must be publicly available for all participating employees to access and review. This requirement goes into effect on July 1st, 2022.
There will be additional requirements that will follow a phased approach going into effect from January 1, 2023, through January 1, 2024. For additional details about these requirements click here.
What are the key features of this new rule?
- Health insurance carriers must disclose their negotiated rates for in-network providers on a publicly available website or database.
- Carriers must also provide historical allowable charges for out-of-network providers. This way, consumers will know what has been paid to a hospital or health provider that did not fall within the insurance carrier network.
- Additionally, health insurance carriers must disclose the negotiated rates and pricing for pharmacy benefits (prescriptions).
To read about the final rule in more detail, click here.
Details about the Price Comparison Tool itself:
Health insurance carriers must build a price comparison tool for their members to access. The price comparison tool will:
- Update and reflect any price changes on a monthly bases
- Provide search capability based on billing codes
- Allow comparisons for in-network and out-of-network providers
- Provide access to variables such as service location or dosage amount that may impact pricing
- Disclose pricing information for 500 items outlined by the federal government effective July 1st, 2022 (reference list of items on pages 25-33)
- Disclose all covered items and services by January 1st, 2024
Employers will also have a responsibility to distribute or make the price comparison tool available to employees enrolled in company health insurance. However, many fully-insured carriers or Third-Party Administrators (for self-funded health plans) may do this on behalf of the employer.
What is your responsibility as a health plan sponsor?
- For fully-insured plans, insurance carriers are responsible for implementing these requirements.
- For self-funded plans, the responsibility varies. In many cases a third-party administrator will implement these requirements on behalf of the employer.
- It is ultimately the employer’s responsibility to ensure that the price comparison tool is made available to their employees.
You may reference United Healthcare’s Transparency in Coverage Guide that looks at Frequently Asked Questions around this new requirement. If you have any questions, please connect with your benefits team at email@example.com or (804) 285-5700.
Chris Sill – Principal, SIMA Benefits Consulting Group
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