Health Plan Cost Transparency Provisions in the CAA (Benefit Minute)
Price transparency in health care has been a topic of interest for several years. The Consolidated Appropriations Act of 2021 (the CAA) continued this trend by adding numerous provisions that impact cost transparency for all group health plans. Some of these provisions are found in the No Surprises Act while others are found in a separate title on Transparency.
Requirements under No Surprises Act
For group health plan payers, including insurers and self-insured health plans, the requirements apply for plan years beginning on or after January 1, 2022. First, upon request, payers must provide an advance explanation of benefits for scheduled services at least three business days before the date of service. The EOB must include:
- the contracted rate for in-network services
- a description of how the individual can obtain in-network providers if the provider or facility is out-of-network
- a good faith estimate of the cost based on billing and diagnostic codes furnished by the provider
- the amount the group health plan is responsible for
- a good faith estimate of the cost-sharing amount the individual must pay
- a good faith estimate of the total amount the individual will have incurred toward meeting financial responsibility under the group health plan
- a disclaimer for any services that are subject to medical management
- a general disclaimer that the information is only an estimate and is subject to change
Second, group health plans must offer a price comparison tool that allows participants to compare the amount of cost-sharing that they would be responsible for paying with respect to a specific in-network service, factoring in plan year, geographic region and participating providers. This must be available by phone and on the plan’s website.
Next, group health plans must ensure that in-network directories are up-to-date by having a process to verify the accuracy of the information every 90 days and remove provider/facility information that cannot be verified. Access to the provider directory must be available both online and via phone. The plan must also establish a database on a public website that lists each provider/facility (name, address, specialty, phone number and digital contact information) that has a direct or indirect contractual relationship with plan.
Finally, health plan identification cards must be updated to disclose in-network and out-of-network deductibles and out-of-pocket maximums as well as a phone number and web address for participants to seek assistance.
Other Transparency Provisions
By December 27, 2021 (and each June 1 thereafter), group health plans must provide specific information on prescription drug benefits to the Departments of Treasury, Labor, and Health and Human Services. This information will be aggregated and posted on the HHS website every two years. The ten pieces of information that must be reported are:
- plan year beginning and ending dates
- number of participants and beneficiaries
- each state in which the plan is offered
- 50 brand name drugs most frequently dispensed, including the number of paid claims for each
- 50 most costly drugs by annual spend, including the amount of the annual spend for each
- 50 prescription drugs with greatest increase in plan expenditures and change in amount expended for each
- information about total spending on health care services
- average monthly premiums paid by employer and employees
- impact on premiums of rebates, coupons and other similar payments to the plan by drug manufacturers
- any reduction in premiums and out-of-pocket costs associated with rebates, fees and other payments from drug manufacturers
Effective February 10, 2021, group health plans and health insurance issuers that provide both medical/surgical benefits and mental health/substance use benefits must perform and document a detailed comparative analysis of nonquantitative treatment limitations to document that such treatment limitations for mental health/substance use services are comparable to and applied no more stringently than the ones used for medical/surgical benefits. Nonquantitative treatment limitations are any limitations on the scope and duration of benefits that are not expressed numerically, including medical management standards, formulary design for prescription drugs, network tier design, plan methods for determining usual, customary, and reasonable charges, and step therapy protocols. The CAA does not prescribe a specific format for the comparative analysis; however, templates are available with side-by-side comparisons documenting that processes, strategies, evidentiary standards and other factors used for nonquantitative treatment limitations in six separate classifications meet parity standards.
The CAA requires that group health plans provide the comparative analysis to the DOL or HHS upon request. Each agency is required to request at least 20 comparative analyses from plans or insurers annually as part of parity enforcement. The CAA outlines a specific process to follow when review of a plan’s comparative analysis indicates a parity violation has occurred.
Effective immediately, a group health plan cannot enter into any agreement with a health care provider, a provider network, or any entity that provides access to a provider network if the contract would prohibit the plan from:
- disclosing provider-specific cost or quality-of-care data, through a consumer engagement tool or similar means, to referring physicians, the plan sponsor, participants or eligible individuals
- electronically accessing de-identified claims information (in accordance with HIPAA, ADA and GINA)
- sharing this information with a HIPAA business associate
The group health plan must submit an annual attestation to the agencies stating compliance with these requirements.
The transparency requirements in the CAA are in addition to other health plan cost transparency regulations that are slated to become effective in 2022 and 2023. All of these items (particularly the prescription drug benefit reporting) impose additional administrative burdens on group health plans, health insurers and plan sponsors which will likely result in increased health plan costs. Plan sponsors should begin preparing for these new obligations now.