On September 27, 2023, the Departments of Labor, Health and Human Services, and the Treasury (collectively, the “Departments”) issued FAQs (“Guidance”) regarding the Transparency in Coverage Final Rule (“Final Rule”). The Guidance indicates that the Departments will begin enforcing plan requirements that were previously delayed. Specifically, all covered plans will need to move ahead with publishing machine-readable files with prescription drug cost information, but future guidance will be issued on the implementation timeline for those plans that have relied on the enforcement delay. Also, plans that use alternative reimbursement arrangements for in-network providers will no longer be able to use the safe harbor that was previously available for reporting in-network rates.
Prescription Drug Reporting No Longer Delayed
As discussed in our Benefits Update dated December 28, 2020, the Final Rule requires extensive disclosures of cost-sharing information by group health plans and health insurance issuers and applies to insured and self-insured non-grandfathered plans. (It does not apply to grandfathered plans, excepted benefits or retiree-only plans.) The Final Rule required plans to make three separate machine-readable files of detailed pricing information available to the public on a publicly accessible website and make available to participants and beneficiaries certain personalized out-of-pocket cost information and the underlying negotiated rates for covered health care items and services.
As discussed in our Benefits Update dated September 7, 2021, in light of concerns over the overlapping provisions of the Final Rule and the Consolidated Appropriations Act, 2021 (“CAA”), which introduced similar cost reporting requirements for plans (including grandfathered plans, which is a notable difference to the Final Rule), the Departments delayed the requirement in the Final Rule to publish a prescription drug machine-readable file while they considered whether to modify the prescription drug machine-readable file requirement of the Final Rule. The Guidance advises that the Departments no longer intend to issue separate rules because, on further review, the prescription drug reporting requirements under the CAA do not conflict with the Final Rule. Accordingly, the Guidance also rescinds previous guidance that provided for deferred enforcement by the Departments. In lieu of the enforcement deferral, the Departments advise that they will enforce the Final Rule on a case-by-case basis, as the facts and circumstances warrant. To assist plans that have relied on the enforcement delay, the Departments announced they plan to develop technical requirements and an implementation timeline in future guidance.
End of Alternative Reimbursement Safe Harbor
In April 2022, the Departments also provided an enforcement safe harbor for plans that use alternative reimbursement arrangements and thus cannot report current and accurate dollar amounts for in-network items and services. The safe harbor allowed those plans to report a percentage number, in lieu of a dollar amount, along with a description of the alternative reimbursement arrangement. The Guidance rescinds this safe harbor and instead provides that the Departments intend to exercise enforcement discretion, on a fact-specific basis, when determining whether a plan is able to comply with the requirement to disclose certain rates as dollar amounts. The Departments further clarify that enforcement is unlikely to be pursued against a plan that is able to demonstrate that compliance with the Final Rule is extremely difficult or impossible and these plans should continue to follow the existing technical guidance for percentage-of-billed-charges arrangements.
Please contact Slevin & Hart for more information about how this Guidance may affect your plan.
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