New Guidance On Transparency Requirements, Advanced Explanations Of Benefits, And More


On August 20, 2021, the Departments of Labor, Health and Human Services (HHS), and the Treasury issued new frequently asked questions (FAQs) on implementation of various transparency requirements under the Consolidated Appropriations Act (CAA). The CAA was signed into law in December 2020 and included the No Surprises Act and related health transparency measures, among many other provisions.

The FAQs provide additional guidance to insurers and group health plans on how (and when) various CAA requirements will be enforced by the federal government. The guidance addresses requirements regarding transparency in insurance ID cards; good faith estimates and advanced explanations of benefits (EOB); gag clauses; accurate information on provider networks; continuity of care; and pharmacy benefit and drug cost reporting.

Many of these provisions are, by statute, supposed to go into effect on January 1, 2022. In some cases, enforcement will be delayed until further rulemaking or guidance. In other cases, the agencies will not be able to complete rulemaking ahead of 2022 but plans and insurers are expected to comply using a good faith, reasonable interpretation of the CAA. Federal officials also encourage states—the primary enforcers of many of these requirements—to provide similar enforcement discretion. The tri-agencies also delayed enforcement of some regulatory requirements included in a Trump-era insurer transparency rule, parts of which were recently challenged in court.

The guidance was expected: in the first interim final rule on the No Surprises Act, federal regulators noted that the agencies would likely not be able to issue rules on these issues before 2022. The FAQs also confirm that the CAA applies to grandfathered health plans, including some provisions of the Affordable Care Act that were reenacted by the CAA (and thus newly extend to grandfathered plans).

Transparency In Insurance Cards

Beginning on January 1, 2022, insurers and plans must disclose, in clear writing, cost-sharing requirements by listing plan-specific deductibles and out-of-pocket maximums on insurance cards. This information must accompany a phone number and website where an individual can ask about network status. However, the tri-agencies will not be able to issue regulations on this requirement before 2022. As such, plans and insurers should implement the ID card requirements using a good faith, reasonable interpretation of the law.

While they are not mandating a standardized approach, the tri-agencies will look to whether an ID card is reasonably designed and implemented to include all the required information. Federal officials will consider what information is included on the ID card, whether any information is left off, how to find absent information, the date when updated ID cards are available, and whether ID cards comply with accessibility standards for people with disabilities and people with limited English proficiency. (The latter requirement applies only to marketplace plans and insurers.)

Plans and insurers will be in compliance if the ID card—whether physical or electronic—includes the accurate deductible, out-of-pocket maximum, and a telephone number and website for consumer assistance. Additional deductibles and out-of-pocket limits could be provided on a website accessible through a QR code or link on the ID card (although it is unclear how an enrollee without a smartphone would be able to access this information).

Good Faith Estimates And Advanced EOBs

The CAA entitles consumers to receive a good faith estimate of expected charges and an “advanced” EOB. The good faith estimate requirement is triggered when an individual schedules health care services (or requests the information). In response, providers and facilities must notify the patient and their plan or insurer of an estimate of expected charges for those services with expected billing and diagnostic codes. Uninsured patients are entitled to receive this disclosure from the provider. This requirement goes into effect on January 1, 2022.

HHS intends to issue rules on the good faith estimate by the 2022 effective date for uninsured patients. However, compliance by plans, insurers, and providers for insured patients is likely not possible by January 1, 2022. As such, HHS will defer enforcement of the requirement to provide good faith estimate information to insured patients until after future rulemaking is complete. HHS justifies this distinction between uninsured and insured patients by noting that an insured patient that receives an incorrect estimate of costs has some recourse under existing law because they can file an appeal.

The advanced EOB requirement is triggered when a provider or facility notifies the insurer or plan that an enrollee is scheduled to receive a health care service and provides the good faith estimate. In turn, plans and insurers must send the enrollee an advanced EOB. The advanced EOB must explain whether the provider is in-network (or not); disclose the contracted rate for the item or service (or explain how to find an in-network provider); include the provider’s good faith estimates of costs as well as cost-sharing and progress towards meeting the patient’s out-of-pocket maximum and deductible; identify any medical management techniques that apply to care; and make certain disclaimers. It must also be written in clear and understandable language. This requirement goes into effect on January 1, 2022.

The tri-agencies will not issue rules on the advanced EOBs ahead of the effective date and have received feedback about the challenges of developing the infrastructure to transmit this level of information between providers and plans or insurers. Given these technical challenges, the tri-agencies will delay the applicability date of the advanced EOB requirement until data transfer standards and other infrastructure are in place. Enforcement will simply be deferred until then, although HHS will consider whether nearer-term solutions are possible.

Gag Clauses

The CAA prohibits insurers and plans from entering into agreements with providers (including an association or network of providers) or third-party administrators that include a “gag clause.” Gag clauses directly or indirectly restrict or prevent insurers from making price or quality information available to patients or other third parties. Congress previously barred gag clauses in contracts between pharmacies and insurers or pharmacy benefit managers; those gag clauses had previously prevented pharmacists from disclosing cost information to patients.

Under the CAA, insurers and plans cannot enter into agreements with providers that restrict their ability to disclose provider-specific cost or quality information or data—whether to patients, employers, referring providers, or business associates. Plans and insurers offering group coverage also cannot contract away their right to electronically access de-identified claims and encounter information or data for enrollees. Providers can place “reasonable restrictions” on public disclosure of this information, but insurers and plans must retain access to this information. This requirement went into effect immediately on December 27, 2020—the day the CAA was enacted.

The tri-agencies confirm that they will not issue regulations to implement this ban on gag clauses. The statute is self-implementing and thus regulations are not needed, although federal officials instruct plans and insurers to implement the ban using a good faith, reasonable interpretation. Under the CAA, compliance with the ban on gag clauses is enforced through annual attestations submitted by insurers and plans. Future guidance will focus on the attestations that are due beginning in 2022.

Accurate Provider Directories

Insurers and plans must also improve the accuracy of provider network directories through a new verification process, a response protocol, and establishment of a new database. Under the verification process, insurers and plans must verify and update provider directory information at least every 90 days and remove any providers where information can no longer be verified. Insurers and plans must also respond to enrollees about a provider’s network status within one business day of a request and establish a database of in-network providers.

By the same token, providers must submit timely updates to insurers and plans regarding their provider directory information. Providers must do so at the beginning or end of an agreement with a payer, when there are material changes to the content of the provider directory information, and in other instances established by federal officials. Providers may, however, require—in their contracts with insurers and plans—that provider directory information must be removed when the contract is terminated. All of these requirements apply beginning on January 1, 2022.

Beyond requiring accurate directories, the CAA provides cost-sharing relief to enrollees who rely on inaccurate information in an insurer or plan’s database, provider directory, or response protocol. In these instances, the insurer or plan cannot impose cost-sharing that is higher than in-network cost-sharing. Any cost-sharing must also be applied towards the enrollee’s deductible and out-of-pocket maximum as if the services were provided by an in-network provider. If a provider charges higher cost-sharing to a patient (based on out-of-network cost-sharing instead of in-network cost-sharing) and the patient pays the bill, the provider must reimburse the enrollee for the excess amount plus interest.

Separately, the law requires plans and insurers to make certain disclosures regarding surprise medical bill protections. These disclosures are similar to those that apply to providers and facilities and have already been addressed under the first interim final rule on the No Surprises Act. In general, plans and insurers must publicly post information about federal and state surprise bill protections on their website and in each explanation of benefits. This must include ways that a patient can contact appropriate federal and state officials if they believe their provider has violated the ban on out-of-network surprise medical bills. These disclosure requirements also go into effect on January 1, 2022.

Per the FAQs, the tri-agencies will not be issuing further regulations to implement any of these requirements ahead of the January 1, 2022 effective date, although they intend to do so in the future. In the meantime, insurers and plans are expected to comply with these provisions using a good faith, reasonable interpretation. The tri-agencies note the model disclosure notice that was released alongside the first interim final rule; use of the model notice will constitute good faith compliance with the federal disclosure requirements.

Continuity Of Care

The CAA included a provision to govern patient care when there is a change in the contractual relationship between a health care provider and an insurer or plan (i.e., when a patient’s in-network provider suddenly becomes an out-of-network provider during a plan year). This could happen because the insurer or provider terminates or declines to renew their contract. In this case, some patients will be able to temporarily maintain access to their provider or facility as if they were still covered on an in-network basis.

Only certain “continuing care” patients qualify for these continuity of care protections. A patient must be undergoing a course of treatment for a serious and complex condition or for institutional or inpatient care—or be scheduled for non-elective surgery, pregnant, or terminally ill. In each instance, the patient must already be receiving care or treatment from the provider or facility.

If there is a change in a provider’s network status, the insurer or plan must notify the continuing care patient and inform them of their right to receive transitional care. The insurer or plan must also provide an opportunity to request transitional care and allow for continued benefits (under the same terms and conditions as would have applied for an in-network provider). The patient will be able to access these services for up to 90 days after the notice is provided or until the patient no longer qualifies as a continuing care patient, whichever is earlier. Providers cannot not send a balance bill to those patients; instead, providers must accept in-network payments from the insurer or plan (and cost-sharing amounts from the patient) as payment in full. This requirement goes into effect on January 1, 2022.

Consistent with the other requirements discussed here, the tri-agencies will not issue regulations on the continuity of care protections prior to 2022 but intend to do so in the future. In the meantime, plans, insurers, providers, and facilities should implement the requirements using a good faith, reasonable interpretation.

Delays To Parts Of The Insurer Transparency Rule

Though not directly related to the CAA, the agencies provide enforcement discretion on several related transparency measures. As noted above, these transparency requirements were put in place by the Trump administration through 2020 regulations and predated the CAA. Under the insurer transparency rule, plans and insurers were required to 1) disclose cost-sharing estimates at the request of an enrollee (beginning in 2023); and 2) publicly release negotiated rates for in-network providers, historical out-of-network allowed amounts and billed charges, and drug pricing information (beginning in 2022).

To meet the latter requirement, plans and insurers must disclose pricing information in three machine-readable files: one on all applicable rates (including negotiated rates, underlying fee schedules, or derived amounts) with in-network providers for all covered items and services; one on billed charges and allowed amounts for covered items and services provided by out-of-network providers; and one on negotiated rates and historical net prices for prescription drugs furnished by in-network providers. This information must be updated monthly and made publicly available on an insurer or plan’s website free of charge. These requirements were set to go into effect on January 1, 2022.

But the FAQs provide additional time for insurers and plans to come into compliance. First, insurers and plans will have an extra six months—until July 1, 2022—to release the machine-readable files for in-network rates and out-of-network billed charges and allowed amounts. Enforcement action will begin on July 1, and the tri-agencies expect plans and insurers to publicly post the machine-readable files in the month in which the new plan or policy year begins.

Second, insurers and plans do not have to release the machine-readable file for prescription drug data. This requirement is not delayed; rather, the tri-agencies will defer enforcement until after they complete additional rulemaking. Federal officials point to new provisions in the CAA that require plans and insurers to comply with separate prescription drug data reporting requirements; these provisions are noted below. Citing these new provisions and stakeholder concerns about overlapping requirements, federal officials will reconsider the current insurer transparency rule in future rulemaking.

(It is unclear if this flexibility in the FAQs is related to recent lawsuits filed by the U.S. Chamber of Commerce and the Pharmaceutical Care Management Association. Both lawsuits challenged the provisions that require the disclosure of machine-readable files and prescription drug pricing data, arguing that these requirements violate the Affordable Care Act and the Administrative Procedure Act. It also remains unclear whether the plaintiffs will want to continue the litigation. It likely does not make sense to proceed on the claims regarding machine-readable file for prescription drug data, but the plaintiffs may be unsatisfied by a 6-month enforcement delay for the other two machine-readable files.)

Third, plans and insurers must make price comparison information and cost-sharing estimates available through an internet-based self-service tool or in paper form, at the request of an enrollees. These requirements go into effect for 500 specific items and services beginning on January 1, 2023 and all covered items and services beginning on January 1, 2024. These requirements are also similar to some of the provisions in the CAA which require plans and insurers to develop a “price comparison tool” that allows enrollees to compare the level of cost-sharing that they will be responsible for. Under the CAA, that requirement goes into effect on January 1, 2022.

Given these overlapping requirements, the tri-agencies will not enforce the CAA requirements (that go into effect on January 1, 2022) until 2023 to align the effective date with the insurer transparency rule. Federal officials also intend to undertake rulemaking and solicit public comment on whether compliance with the insurer transparency rule satisfies the requirements of the CAA. (Here, the FAQs note that the CAA also requires price information to be made available by phone; a similar requirement is not in place under the insurer transparency rule).

Reporting On Pharmacy Benefits And Drug Costs

The FAQs separately address the prescription drug reporting requirements included in the CAA. Insurers and plans must submit data on pharmacy benefits and drug costs to federal regulators on an annual basis. This data includes, for instance, each plan’s 50 most costly drugs, the 50 drugs with the greatest increase in plan expenditures over the prior year, total spending on health care services (broken down into some detail), average monthly premiums, and any impact on premiums from rebates, fees, or other remuneration paid by drug manufacturers. This information will be compiled in a publicly available biannual report by each of the tri-agencies on prescription drug reimbursement, pricing trends, and the role of prescription drug costs in contributing to premium increases or decreases. These reports cannot include confidential or trade secret information.

The first report due is due one year from enactment of the CAA—on December 27, 2021. However, the tri-agencies will defer enforcement for this deadline (and a second reporting deadline of June 1, 2022) pending the release of regulations or further guidance. Plans and insurers should, however, prepare to submit information for both 2020 and 2021 to federal officials by December 27, 2022. The tri-agencies delayed this reporting requirement in light of operational challenges and the need for plans and insurers to modify contractual agreements, develop new processes, and compile the necessary data. Future rulemaking will be forthcoming.

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