Transparency in Coverage, 72158-72310 [2020-24591]
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Federal Register / Vol. 85, No. 219 / Thursday, November 12, 2020 / Rules and Regulations
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9929]
RIN 1545–BP47
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
29 CFR Part 2590
RIN 1210–AB93
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
45 CFR Parts 147 and 158
[CMS–9915–F]
RIN 0938–AU04
Transparency in Coverage
Internal Revenue Service,
Department of the Treasury; Employee
Benefits Security Administration,
Department of Labor; Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services.
ACTION: Final rule.
AGENCY:
The final rules set forth
requirements for group health plans and
health insurance issuers in the
individual and group markets to
disclose cost-sharing information upon
request to a participant, beneficiary, or
enrollee (or his or her authorized
representative), including an estimate of
the individual’s cost-sharing liability for
covered items or services furnished by
a particular provider. Under the final
rules, plans and issuers are required to
make this information available on an
internet website and, if requested, in
paper form, thereby allowing a
participant, beneficiary, or enrollee (or
his or her authorized representative) to
obtain an estimate and understanding of
the individual’s out-of-pocket expenses
and effectively shop for items and
services. The final rules also require
plans and issuers to disclose in-network
provider negotiated rates, historical outof-network allowed amounts, and drug
pricing information through three
machine-readable files posted on an
internet website, thereby allowing the
public to have access to health coverage
information that can be used to
understand health care pricing and
potentially dampen the rise in health
care spending. The Department of
Health and Human Services (HHS) also
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SUMMARY:
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finalizes amendments to its medical loss
ratio (MLR) program rules to allow
issuers offering group or individual
health insurance coverage to receive
credit in their MLR calculations for
savings they share with enrollees that
result from the enrollees shopping for,
and receiving care from, lower-cost,
higher-value providers.
DATES:
Effective date: The final rules are
effective on January 11, 2021.
Applicability date: See the
SUPPLEMENTARY INFORMATION section for
information on the applicability dates.
FOR FURTHER INFORMATION CONTACT:
Deborah Bryant, Centers for Medicare &
Medicaid Services, (301) 492–4293.
Christopher Dellana, Internal Revenue
Service, (202) 317–5500. Matthew Litton
or Frank Kolb, Employee Benefits
Security Administration, (202) 693–
8335.
Customer Service Information:
Individuals interested in obtaining
information from the Department of
Labor (DOL) concerning employmentbased health coverage laws may call the
Employee Benefits Security
Administration (EBSA) Toll-Free
Hotline at 1–866–444–EBSA (3272) or
visit DOL’s website (https://
www.dol.gov/ebsa). In addition,
information from HHS on private health
insurance for consumers can be found
on the Centers for Medicare & Medicaid
Services (CMS) website (www.cms.gov/
cciio) and information on health reform
can be found at https://
www.healthcare.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The final rules require group health
plans and health insurance issuers in
the individual and group markets to
disclose cost-sharing information upon
request, to a participant, beneficiary, or
enrollee, which, unless otherwise
indicated, for the purpose of the final
rules includes an authorized
representative, and require plans and
issuers to disclose in-network provider
rates, historical out-of-network allowed
amounts and the associated billed
charges, and negotiated rates for
prescription drugs in 26 CFR part 54, 29
CFR part 2590, and 45 CFR part 147.
HHS also finalizes amendments to its
MLR program rules in 45 CFR part 158.
A. Statutory Background and Enactment
of PPACA
The Patient Protection and Affordable
Care Act (Pub. L. 111–148) was enacted
on March 23, 2010, and the Health Care
and Education Reconciliation Act of
2010 (Pub. L. 111–152) was enacted on
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March 30, 2010 (collectively, PPACA).
As relevant here, PPACA reorganized,
amended, and added to the provisions
of part A of title XXVII of the Public
Health Service (PHS) Act relating to
health coverage requirements for group
health plans and health insurance
issuers in the group and individual
markets. The term group health plan
includes both insured and self-insured
group health plans.
PPACA also added section 715 to the
Employee Retirement Income Security
Act of 1974 (ERISA) and section 9815 to
the Internal Revenue Code (Code) to
incorporate the provisions of part A of
title XXVII of the PHS Act, PHS Act
sections 2701 through 2728, into ERISA
and the Code, making them applicable
to group health plans, and health
insurance issuers providing coverage in
connection with group health plans.
1. Transparency in Coverage
Section 2715A of the PHS Act
provides that group health plans and
health insurance issuers offering group
or individual health insurance coverage
must comply with section 1311(e)(3) of
PPACA, which addresses transparency
in health coverage and imposes certain
reporting and disclosure requirements
for health plans that are seeking
certification as qualified health plans
(QHPs) that may be offered on an
Exchange. A plan or coverage that is not
offered through an Exchange (as defined
by section 1311(b)(1) of PPACA) is
required to submit the information
required to the Secretary of HHS and the
relevant state’s insurance commissioner,
and to make that information available
to the public.
Paragraph (A) of section 1311(e)(3) of
PPACA requires a plan seeking
certification as a QHP to make the
following information available to the
public and submit it to state insurance
regulators, the Secretary of HHS, and
the Exchange:
• Claims payment policies and
practices,
• periodic financial disclosures,
• data on enrollment,
• data on disenrollment,
• data on the number of claims that are
denied,
• data on rating practices,
• information on cost-sharing and
payments with respect to any out-ofnetwork coverage, and
• information on enrollee and
participant rights under Title I of
PPACA.
Paragraph (A) also requires a plan
seeking certification as a QHP to submit
any ‘‘[o]ther information as determined
appropriate by the Secretary.’’
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Paragraph (C) of section 1311(e)(3) of
PPACA requires plans, as a requirement
of certification as a QHP, to permit
individuals to learn the amount of cost
sharing (including deductibles,
copayments, and coinsurance) under the
individual’s coverage that the
individual would be responsible for
paying with respect to the furnishing of
a specific item or service by an innetwork provider in a timely manner
upon the request of the individual.
Paragraph (C) specifies that, at a
minimum, such information must be
made available to the individual
through an internet website and through
other means for individuals without
access to the internet.
Together these statutory provisions
require the overriding majority of
private health plans 1 to disseminate a
substantial amount of information to
provide transparency in coverage. The
portions of the final rules that require
plans and issuers to disclose costsharing information upon request, to a
participant, beneficiary, or enrollee
implement paragraph (C) of section
1311(e)(3) of PPACA. The portions of
the final rules that require plans and
issuers to disclose in-network provider
rates, historical out-of-network allowed
amounts and the associated billed
charges, and negotiated rates for
prescription drugs implement paragraph
(A) of section 1311(e)(3) of PPACA. The
requirements to disclose out-of-network
allowed amounts specifically
implements the requirement in section
1311(e)(3)(A)(vii) to provide information
on ‘‘payments with respect to any outof-network coverage.’’ In addition to
payment information on out-of-network
charges, the Secretary of HHS
determined that payment information
on in-network rates and prescription
drugs is also appropriate information to
require plans and issuers to disclose to
provide transparency in coverage under
section 1311(e)(3)(A)(ix).
PPACA’s transparency in coverage
requirements were enacted in
coordination with a set of requirements
that transformed the regulation of
private market health plans and issuers.
These requirements for the first time
1 As of 2018, private, non-grandfathered health
plans that must comply with these statutory
provisions covered more than 92 percent of the
almost 177 million people covered by private health
coverage. The remaining 7.7 percent were covered
by grandfathered health plans or were enrolled in
short-term limited duration coverage or health care
sharing ministries. See Kaiser Family Foundation,
Health Insurance Coverage of the Total Population
in 2018, https://www.kff.org/other/state-indicator/
total-population/?dataView=1¤tTimeframe=
0&sortModel=%7B%22colId%22:%22Location
%22,%22sort%22:%22asc%22%7D, last accessed
October 5, 2020.
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apply a comprehensive framework for
regulating private health coverage
through Federal law.2 Prior to PPACA,
Federal law relied on states to be the
primary regulators of health insurance,
but applied only a limited set of Federal
requirements to govern private health
coverage. Where Federal law regulated
private health coverage, there was a
substantial variation in how these
regulations applied, depending on
whether private health coverage was
self-insured group coverage, large group
insurance coverage, small group
insurance coverage, or individual
insurance coverage. To establish a
comprehensive framework for regulating
private health coverage, PPACA first set
out a series of requirements on
‘‘Improving Coverage’’ that generally
apply to group health plans and health
insurance issuers offering group or
individual health insurance coverage.3
These requirements ranged from the
prohibition on lifetime or annual dollar
limits in section 2711 of the PHS Act to
the requirement to cover out-of-network
emergency services in section 2719A of
the PHS Act and include the
transparency in coverage requirements
in section 2715A of the PHS Act.4 By
including transparency in coverage in
this set of requirements that apply to
most private coverage, Congress
established transparency as a key
component to PPACA’s comprehensive
framework for regulating private health
coverage.5
2 See Jost, T.S. ‘‘Loopholes in the Affordable Care
Act: Regulatory gaps and border crossing
techniques and how to address them.’’ St. Louis
University Journal of Health Law and Policy,
Washington & Lee Legal Studies Paper No. 2011–
16. August 15, 2011 (explaining that ‘‘[t]he
Affordable Care Act was meant to regulate health
care plans comprehensively’’ and providing further
details on the scope of PPACA). Available at:
https://scholarlycommons.law.wlu.edu/wlufac/265/
.
3 Patient Protection and Affordable Care Act,
Public Law 111–148, 124 Stat. 119 (2010), section
1001.
4 In addition to these requirements, PPACA’s
‘‘Improving Coverage’’ requirements include,
among other things: The prohibition on rescissions
in section 2712 of the PHS Act; the requirement to
cover preventive health services without cost
sharing requirements in section 2713 of the PHS
Act; the extension of coverage to dependents up to
age 26 in section 2714 of the PHS Act; the
requirement to provide a summary of benefits and
coverage in section 2715 of the PHS Act; quality
reporting requirements in section 2717 of the PHS
Act; and appeals process requirements in section in
2719 of the PHS Act.
5 Transparency was included as an important and
transformative element in other leading
comprehensive health reform proposals. See Porter,
M. and Teisberg, E. Redefining Health Care.
Harvard Business School Press. Boston, MA. 2006.
(‘‘Perhaps the most fundamental role of government
in enabling value-based competition is to ensure
that universal, high-quality information on provider
outcomes and prices for every medical condition is
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On March 27, 2012, HHS issued the
Exchange Establishment final rule that
implemented sections 1311(e)(3)(A)
through (C) of PPACA at 45 CFR
155.1040(a) through (c) and 156.220.6
The Exchange Establishment final rule
created standards for QHP issuers to
submit specific information related to
transparency in coverage. QHPs are
required to post and make data related
to transparency in coverage available to
the public in plain language and submit
this same data to HHS, the Exchange,
and the relevant state insurance
commissioner. In the preamble to the
Exchange Establishment final rule, HHS
noted that ‘‘health plan standards set
forth under the final rules are, for the
most part, strictly related to QHPs
certified to be offered through the
Exchange and not the entire individual
and small group market. Such policies
for the entire individual and small and
large group markets have been, and will
continue to be, addressed in separate
rulemaking issued by HHS, and the
Departments of Labor and the
Treasury.’’
2. Medical Loss Ratio
Section 2718(a) of the PHS Act, as
added by PPACA, generally requires
health insurance issuers offering group
or individual health insurance coverage
(including a grandfathered health
insurance plan) to submit an annual
report to the Secretary of HHS that
details the percentage of premium
revenue (after certain adjustments)
expended on reimbursement for clinical
services provided to enrollees under
health coverage and on activities that
improve health care quality. The
proportion of premium revenue spent
on clinical services and quality
improvement activities is called the
MLR. Section 2718(b) of the PHS Act
requires an issuer to provide annual
rebates to enrollees if its MLR falls
below specified standards (generally 80
percent for the individual and small
group markets, and 85 percent for the
large group market). HHS published an
interim final rule to implement the MLR
program in the December 1, 2010
Federal Register (75 FR 74863). A final
rule was published in the December 7,
2011 Federal Register (76 FR 76573).
The MLR program requirements were
amended in final rules published in the
December 7, 2011 Federal Register (76
FR 76595), the May 16, 2012 Federal
Register (77 FR 28790), the March 11,
2014 Federal Register (79 FR 13743),
collected and disseminated. This single step will
have far-reaching and pervasive effects throughout
the system . . . .’’).
6 77 FR 18310 (Mar. 27, 2012).
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Federal Register / Vol. 85, No. 219 / Thursday, November 12, 2020 / Rules and Regulations
the May 27, 2014 Federal Register (79
FR 30339), the February 27, 2015
Federal Register (80 FR 10749), the
March 8, 2016 Federal Register (81 FR
12203), the December 22, 2016 Federal
Register (81 FR 94183), the April 17,
2018 Federal Register (83 FR 16930),
the April 25, 2019 Federal Register (84
FR 17454), and the February 6, 2020
Federal Register (85 FR 7088).
B. Benefits of Transparency in Health
Coverage and Past Efforts To Promote
Transparency
PPACA’s transparency in coverage
requirements can help ensure the
accurate and timely disclosure of
information appropriate to support an
efficient and competitive health care
market. A well-functioning, competitive
market depends on information being
available to buyers and sellers.7 As
President Trump’s ‘‘Executive Order on
Improving Price and Quality
Transparency in American Healthcare to
Put Patients First’’ explains: ‘‘To make
fully informed decisions about their
health care, patients must know the
price and quality of a good or service in
advance.’’ Yet, as the Executive order
then notes, ‘‘patients often lack both
access to useful price and quality
information and the incentives to find
low-cost, high-quality care.’’ The lack of
this information is widely understood to
be one of the root problems causing
dysfunction within America’s health
care system.
The Departments of Labor, HHS, and
the Treasury (Departments) are of the
view that transparency in health
coverage requirements will strengthen
America’s health care system by giving
health care consumers, researchers,
regulators, lawmakers, health
innovators, and other health care
stakeholders the information they need
to make, or assist others in making
informed decisions about health care
purchases. Health care consumers
include various persons and entities
that finance health care needs through
the purchase of insurance. Health care
consumers also include uninsured
persons without health coverage who
must pay out-of-pocket for health care
items and services and uninsured
persons who may be shopping for health
coverage. Employers that sponsor health
plans for their employees and
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7 Porter,
M. and Teisberg, E. Redefining Health
Care. Harvard Business School Press. Boston, MA.
2006, pg. 54. (‘‘Information is fundamental to
competition in any well-functioning market. It
enables buyers to shop for the best value and allows
sellers to compare themselves to rivals. Without
relevant information, doctors cannot compare their
results to best practice and to other providers. And
without appropriate information, patient choice has
little meaning.’’).
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government programs that provide
health care services and benefits to
consumers are also health care
consumers.
By requiring the dissemination of
price and benefit information directly to
consumers and to the public, the
transparency in coverage requirements
will provide the following consumer
benefits:
• Enables consumers to evaluate health
care options and to make costconscious decisions;
• strengthens the support consumers
receive from stakeholders that help
protect and engage consumers;
• reduces potential surprises in relation
to individual consumers’ out-ofpocket costs for health care services;
• creates a competitive dynamic that
may narrow price dispersion for the
same items and services in the same
health care markets; and
• puts downward pressure on prices
which, in turn, potentially lowers
overall health care costs.
The goal of the final rules is to deliver
these benefits to all consumers and
health care stakeholders through greater
transparency in coverage.
Comments received in response to the
proposed rules on transparency in
coverage (discussed in more detail later
in this preamble) have strengthened the
Departments’ view that this price
transparency effort will equip the public
with information to actively and
effectively participate in the health care
system as consumers.8 The majority of
commenters acknowledged the
importance of the availability of health
care pricing information and
appropriate tools to assist consumers in
health care decision-making and
managing health care costs. For these
reasons and those explained in more
detail below in this preamble, the
Departments continue to be of the view
that price transparency efforts are
crucial to providing consumers
(individual and institutional) with
meaningful and actionable pricing
information in an effort to contain the
growth of health care costs.
1. Transparency Provides Necessary
Information for Consumers To Make
More Informed Health Care Spending
Decisions
As explained in the report,
‘‘Reforming America’s Healthcare
System Through Choice and
Competition,’’ consumers have an
important role to play in controlling
costs, but consumers must have
meaningful information in order to
8 84
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create the market forces necessary to
achieve lower health care costs.9 When
consumers seek care, they do not
typically know whether they could have
received the same service from another
provider at lower prices. Third-party
payers negotiate prices on the
consumer’s behalf and reimburse costs
directly to health care providers,
concealing the actual price from the
consumer at the point of care. After
receiving care, consumers typically
receive an Explanation of Benefits
(EOB), which details the price charged
by the provider, contracted or
negotiated rate, and consumer cost
sharing. Often, only after services are
rendered is the cost of care disclosed to
the consumer.
Historically, there has been little to no
incentive for some consumers to
consider price and seek lower-cost
care.10 Rapidly rising health care
spending in the past 20 years, however,
has led to consumers shouldering a
greater portion of their health care costs
through increases in out-of-pocket
expenses.11
Since 1970, per capita out-of-pocket
expenditures have nearly doubled due
to a number of factors.12 These factors
include increased enrollment in high
deductible health plans (HDHPs) and
accompanying health savings accounts
(HSAs), and increased plan and issuer
reliance on payments towards
deductibles comprising the proportion
of total cost-sharing payments.13 As
explained in the preamble to the
proposed rules, these shifts in plan
design and enrollment are correlated
with consumers bearing a greater share
of their overall health care costs in the
private health insurance market than in
previous years.14 From 2002 to the
enactment of PPACA in 2010,
9 Azar, A.M., Mnuchin, S.T., and Acosta, A.
‘‘Reforming America’s Healthcare System Through
Choice and Competition.’’ United States,
Department of Health and Human Services.
December 3, 2018. Available at: https://
www.hhs.gov/sites/default/files/ReformingAmericas-Healthcare-System-Through-Choice-andCompetition.pdf.
10 Id.
11 Claxton, G., Levitt, L., Long M. ‘‘Payments for
cost sharing increasing rapidly over time.’’
Peterson-Kaiser Health System Tracker. April 2016.
Available at: https://www.healthsystemtracker.org/
brief/payments-for-cost-sharing-increasing-rapidlyover-time/.
12 ‘‘Out-of-pocket spending.’’ Peterson-KFF
Health System Tracker. May 2020. Available at:
https://www.healthsystemtracker.org/indicator/
access-affordability/out-of-pocket-spending/.
13 HDHP as defined in section 223(c)(2) of the
Code; see also Claxton, G., Levitt, L., Long, M.
‘‘Payments for cost sharing increasing rapidly over
time.’’ Peterson-KFF Health System Tracker. April
2016. Available at: https://
www.healthsystemtracker.org/brief/payments-forcost-sharing-increasing-rapidly-over-time/.
14 84 FR 65464, 65465 (Nov. 27, 2019).
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nationally, the percentage of private
sector employees enrolled in a health
plan with a deductible increased from
47.6 percent to 77.5 percent and
continued to increase to 86.6 percent in
2019.15 Average family deductibles for
private sector employees grew from
$958 in 2002 to $1,975 in 2010, and
then to $3,655 in 2019—an 85 percent
increase since the enactment of
PPACA.16 These changes represent a
substantial increase in the amount that
consumers must pay for health care
before insurance begins to cover items
or services.17 Deductibles made up 52
percent of cost-sharing spending in
2016, up from 30 percent in 2006, while
copays dropped from 43 percent to 17
percent of cost-sharing payments over
the same period.18 The gradual shift
away from copayments, which are
predictable to the consumer through
their set dollar amounts for each
covered item or service, to deductibles
and coinsurance, has increased the need
for consumers to know the negotiated
price in order to plan ahead and budget
for out-of-pocket costs. Over time, price
disclosure can improve consumers’
ability to better manage costs of utilized
health care for a variety of health care
plans. Increased enrollment in HDHPs
and the shift to coinsurance across plan
and benefit designs means that
consumers have a vested interest in
learning the costs of care prior to paying
for items or services, as they are
responsible for paying out-of-pocket
expenditures, which are directly
dependent on the negotiated or
contractual price.
These trends in designing health
plans have led to consumers bearing an
increased share of their health care
costs. The fact that more consumers are
bearing greater financial responsibility
for the cost of their health care provides
an opportunity to establish a more
consumer-directed and consumerdriven health care market. Eighty-eight
percent of consumers support
requirements for providers and issuers
15 See ‘‘Medical Expenditure Panel Survey.
Insurance Component National-Level Summary
Tables.’’ United States Department for Health and
Human Services Agency for Healthcare Research
and Quality. Available at: https://
www.meps.ahrq.gov/mepsweb/data_stats/quick_
tables_search.jsp?component=2&subcomponent=1.
16 Id.
17 McCarthy-Alfano, M., et al. ‘‘Measuring the
burden of health care costs for working families.’’
Health Affairs. April 2, 2019. Available at: https://
www.healthaffairs.org/do/10.1377/
hblog20190327.999531/full/.
18 Claxton, G. et al. ‘‘Increases in cost-sharing
payments continue to outpace wage growth.’’
Peterson-KFF Health System Tracker. June 15, 2018.
Available at: https://www.healthsystemtracker.org/
brief/increases-in-cost-sharing-payments-have-faroutpaced-wage-growth/.
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to disclose prices prior to care.19 If
consumers have better pricing
information and can shop for health
care items and services more efficiently,
they can increase competition and
demand for lower prices.20 However,
consumers generally have little
information regarding negotiated rates
or out-of-network costs until after
services are rendered. There is also wide
variability in health care prices for the
same service.21 As a result, it can be
difficult for consumers to estimate
potential out-of-pocket costs.
2. Transparency Strengthens
Stakeholders’ Ability To Support
Consumers
Making price transparency
information publicly available
strengthens the work of other health
care stakeholders that help provide care
or promote access to care to consumers,
or otherwise aim to protect consumers
and their interests in the health care
system. These entities include
researchers, regulators, lawmakers,
patient and consumer advocates, and
businesses that provide consumer
support tools and services. A key aspect
of transparency in coverage is to make
health care pricing information more
accessible and useful to consumers by
making the information available to
persons and entities with the requisite
experience and expertise to assist
individual consumers and other health
care purchasers to make informed
health care decisions.
With information on pricing, these
other health care stakeholders can better
fulfill each of the unique roles they play
to improve America’s health care system
for consumers. For instance, with
pricing information researchers could
better assess the cost-effectiveness of
various treatments; state regulators
could better review issuers’ proposed
rate increases; patient advocates could
19 ‘‘Harvard CAPS Harris Poll.’’ Harvard
University. May 2019. Available at: https://
harvardharrispoll.com/wp-content/uploads/2019/
06/HHP_May19_vF.pdf?utm_source=hs_
email&utm_medium=email&_hsenc=p2ANqtz-NgSdTYggGUP4tWyR2IEQ7i8TCg1s
3DcHuQyhErIgkX3KFUi3SFgl9OZKm4JUOOi9tmMQ.
20 Azar, A.M., Mnuchin, S.T., and Acosta, A.
‘‘Reforming America’s Healthcare System Through
Choice and Competition.’’ United States,
Department of Health and Human Services.
December 3, 2018. Available at: https://
www.hhs.gov/sites/default/files/ReformingAmericas-Healthcare-System-Through-Choice-andCompetition.pdf.
21 Cooper, Z., et al. ‘‘The Price Ain’t Right?
Hospital Prices and Health Spending on the
Privately Insured.’’ The Quarterly Journal of
Economics, Vol. 134. Issue 1. February 2019.
September 4, 2018. Available at: https://
academic.oup.com/qje/article/134/1/51/
5090426?searchresult=1.
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better help guide patients through care
plans; employers could adopt incentives
for consumers to choose more costeffective care; and entrepreneurs could
develop tools that help doctors better
engage with patients.
3. Transparency Reduces the Potential
for Surprise Billing
Making the price of care available to
consumers before they receive care can
reduce the potential for consumers to be
surprised by the price of a health care
item or service when they receive the
bill after receiving care. However,
accessible pricing information holds
special value for insured consumers.22
Surprise billing has become a
substantial concern for insured
consumers, in particular, consumers
who receive a bill from an out-ofnetwork provider when they thought an
in-network provider was treating them.
While price transparency alone is not a
complete solution to this problem, the
disclosure of pricing directly to
consumers could help mitigate some
unexpected health care costs. As just
noted, making pricing information
public can also strengthen other health
care stakeholders’ ability to protect
consumers. In the case of surprise
billing, public information on pricing
for in-network and out-of-network
services could allow stakeholders to
develop better tools to help patients
avoid surprises and improve oversight
of health insurance issuers, plans, and
providers.
4. Transparency Increases Competition
and Contains Costs
Without transparency in pricing,
market forces cannot drive competition.
This lack of competition in many health
care markets is demonstrated by
significant, unexplained variations in
prices for procedures, even within a
single region.23 For example, studies of
price variation within California and
nationally suggest that there is
substantial opportunity for increased
transparency to save money by shifting
patients from high to lower-cost
providers.24 The Departments are of the
22 See Office of the Assistant Secretary for
Planning and Evaluation, U.S. Department of Health
& Human Services. Secretary of Health and Human
Services’ Report on: Addressing Surprise Medical
Billing, at p. 3. July 2020. (recognizing that HHS
regulatory action to encourage price transparency
by insurers ‘‘can serve as the backbone for a more
comprehensive surprise billing solution’’).
Available at https://aspe.hhs.gov/system/files/pdf/
263871/Surprise-Medical-Billing.pdf.
23 Id.
24 Boynton, A., Robinson, J. ‘‘Appropriate Use of
Reference Pricing Can Increase Value.’’ Health
Affairs Blog. July 7, 2015. Available at: https://
www.healthaffairs.org/do/10.1377/
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view that consumers will take advantage
of increased transparency to shop for
their health care if price transparency is
put into place nationwide.25 Many
empirical studies have investigated the
impact of price transparency on nonhealth care markets, with most research
showing that ‘‘price transparency leads
to lower and more uniform prices, a
view consistent with predictions of
standard economic theory.’’ 26 Studies
suggest that consumers want and will
use actionable pricing information to
shop for more cost-effective care.27 For
example, when automobile prices were
presented transparently on the internet,
inclusive of the dealer invoice price, the
consumers who did not like the
traditional bargaining process were able
to reduce spending overall by 1.5
percent.28 Another study demonstrated
the public display of life insurance
prices for comparison led to a 5 percent
decrease in the consumer price.29 Price
transparency also reduced price
dispersion across other markets, such as
the airline industry, which saw a
reduction in price dispersion from 18
percent in 1997 narrowing to 0.3–2.2
percent in 2002 for fares available at
hblog20150707.049155/full/; see also Sinaiko, A.,
Rosenthal, M. ‘‘Examining a Health Care Price
Transparency Tool: Who Uses it, and How They
Shop for Care.’’ 35 Health Affairs 662. April 2016.
Available at: https://www.healthaffairs.org/doi/full/
10.1377/hlthaff.2015.0746.
25 See Gordon, D., et al. ‘‘Health Care Consumer
Shopping Behaviors and Sentiment: Qualitative
Study.’’ Journal of Participatory Medicine. Volume
12. No. 2. 2020. Available at: https://jopm.jmir.org/
2020/2/e13924/ (study demonstrating that
consumers already engage in ‘‘behaviors related to
seeking, comparing, or knowing the prices of care’’
regardless of the presence of price transparency
tools).
26 Austin, D.A., and Gravelle, J.G. ‘‘Does Price
Transparency Improve Market Efficiency?
Implications of Empirical Evidence in Other
Markets for the Health Sector.’’ United States
Congress Congressional Research Service. April 29,
2008. Available at: https://crsreports.congress.gov/
product/pdf/RL/RL34101; see also Grennan, M.,
Swanson, A. ‘‘Transparency and Negotiated Prices:
The Value of Information in Hospital-Supplier
Bargaining.’’ 128 Journal of Political Economy.
April 2020 (Citing research in consumer goods
showing that information can help decision making
when buyers have imperfect information on costs.).
Available at: https://www.nber.org/papers/w22039;
see also 84 FR 65464, 65466 (Nov. 27, 2019).
27 Semigran, H.L., et al. ‘‘Patients’ Views on Price
Shopping and Price Transparency.’’ The American
Journal of Managed Care. June 26, 2017. Available
at: https://www.ajmc.com/view/patients-views-onprice-shopping-and-price-transparency.
28 Zettlemeyer, F., Morton, F.S., and Silva-Risso,
J. ‘‘How the internet Lowers Prices: Evidence from
Matched Survey and Automobile Transaction
Data.’’ Journal of Marketing Research. May 2006.
Available at: https://doi.org/
10.1509%2Fjmkr.43.2.168.
29 Brown, J., and Goolsbee, A. ‘‘Does the internet
Make Markets More Competitive? Evidence from
the Life Insurance Industry.’’ Journal of Political
Economy, vol. 110, June 2002, pp. 481–507.
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multiple travel websites.30 These
lessons from other markets suggest that
more thoroughly implementing price
transparency across the health care
industry could increase competition to
provide lower costs and limit price
variation.31
Despite the general absence of price
transparency in the health care sector,
there is research showing how price
transparency leads to lower and more
uniform pricing in health care markets.
For instance, as noted in the preamble
to the proposed rule, research shows
patients saved $7.9 million and issuers
saved $36 million on imaging services
in New Hampshire after the state
launched a website publishing health
prices for most consumers with private
health insurance.32 One study found use
of a telephone- and email-based tool to
search for health care prices reduced the
price paid by 10 to 17 percent and
reduced the prices paid for care on
average by 1.6 percent.33 Another study
of a program that provided health plan
participants, beneficiaries, or enrollees
with price and quality information to
help select high-value imaging services
found an increase in the use of lowercost facilities.34 This consumer behavior
prompted higher-cost facilities to lower
their prices, which resulted in a 30
percent reduction in the price variation
between low- and high-cost facilities.35
These studies, as well the numerous
studies highlighted in subsequent
sections of this rule, offer substantial
evidence that price transparency in
health care markets will result in
consumer benefits similar to those that
result from transparency in other
markets.
5. The Final Rules Will Fill Gaps Left by
State and Private Transparency Efforts
Currently, the information that
consumers need to make informed
decisions based on the prices of health
care services is not readily available or
is presented in a manner that makes it
30 Clemons, E.K., Hann, I., and Hitt, L. ‘‘Price
Dispersion and Differentiation in Online Travel: An
Empirical Investigation,’’ Management Science, vol.
48, no. 4, 2001, pp. 521–39; see also ‘‘Occupational
Labor Statistics.’’ United States Bureau of Labor
Statistics. Available at: https://www.bls.gov/oes/
current/oes_stru.htm.
31 84 FR 65464, 65466 (Nov. 27, 2019).
32 Id.
33 Lieber, E. ‘‘Does It Pay to Know Prices in
Health Care?’’ American Economic Journal:
Economic Policy. February 2017. Available at
https://pubs.aeaweb.org/doi/pdfplus/10.1257/
pol.20150124.
34 Wu, S.J. et al. ‘‘Price transparency for MRIs
increased use of less costly providers and triggered
provider competition.’’ Health Affairs. August 2014.
Available at: https://www.healthaffairs.org/doi/full/
10.1377/hlthaff.2014.0168.
35 Id.
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challenging to understand. As noted in
the preamble to the proposed rules, the
2011 Government Accountability Office
(GAO) report, ‘‘Health Care Price
Transparency: Meaningful Price
Information is Difficult for Consumers
to Obtain Prior to Receiving Care,’’
found that the lack of transparency in
health care prices, coupled with the
wide pricing disparities for particular
procedures within the same market, can
make it difficult for consumers to
understand health care prices and to
shop effectively based on cost.36 The
report also explored various price
transparency initiatives, including tools
that consumers could use to generate
price estimates before receiving a health
care service. The report notes that
pricing information displayed by tools
varies across initiatives, in large part
due to limits reported by the initiatives
in their access or authority to collect
certain necessary price data. In
particular, the report notes the lack of
public disclosure of rates negotiated
between providers and third-party
payers. The GAO report, therefore,
recommended that HHS determine the
feasibility of, and the next steps for,
making estimates of out-of-pocket costs
for health care services available to
consumers.
States have been at the forefront of
transparency initiatives and have
adopted a variety of approaches to
improve price transparency.37 More
than half of the states have passed
legislation establishing price
transparency websites or mandating that
health plans, hospitals, or physicians
make pricing information available to
patients.38 For example, as of September
2020, thirty one states have enacted
laws that provide participants,
beneficiaries, and enrollees with at least
partial protection against the practice of
‘‘balance billing.’’ 39 At least eighteen
states have All-Payer Claims Databases.
However, state transparency
requirements are generally not
applicable to self-insured group health
plans, which cover approximately 58.7
36 84 FR 65464, 65466–65467 (Nov. 27, 2019); see
also GAO–11–791 at p. 28 (Sep. 2011).
37 De Brantes, F., et al. ‘‘Price Transparency &
Physician Quality Report Card 2017.’’ Catalyst for
Payment Reform. Available at: https://
www.catalyze.org/product/2017-price-transparencyphysician-quality-report-card/.
38 Frakt, A., and Mehrotra, A. ‘‘What Type of
Price Transparency Do We Need in Health Care?’’
Annals of Internal Medicine. April 16, 2019.
Available at: https://www.acpjournals.org/doi/
10.7326/M19.
39 Kona, M. ‘‘State Balance-Billing Protections.’’
The Commonwealth Fund. September 16, 2020.
Available at: https://www.commonwealthfund.org/
publications/maps-and-interactives/2020/sep/statebalance-billing-protections.
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percent of private-sector workers.40 As a
result, the data collected under state law
does not include data from self-insured
plans, and a significant portion of
consumers may not have access to
information on their plans.
In response to state action and
consumer demands for more
information on health care pricing, and
to align with increased price
transparency in other markets, health
insurance issuers and self-insured plans
have moved to increase price
transparency. For example, some plans
are using price transparency tools to
incentivize employees to make costconscious decisions when purchasing
health care services. Most large issuers
have comparative cost information,
which includes rates that plans and
issuers have negotiated with in-network
providers and suppliers.
However, many existing tools are
either insufficient in the amount of
detail they provide or the level of
accuracy available. In order to expand
price transparency to all consumers,
Federal action is therefore necessary to
establish standards and universal access
to this information. In preparation for
writing the proposed rules, the
Departments met with over 50
stakeholders including plans, issuers,
and third-party tool developers. Several
stakeholders provided demonstrations
of their tools to the Departments. The
Departments note that over 90 percent
of plans offer some version of a price
comparison tool.41 However, many of
the plans and issuers that the
Departments met with, who did not
have a tool serve large portions of
participants, beneficiaries, and
enrollees. It is therefore the
Departments’ understanding that there
are still millions of insured Americans
that do not have access to any type of
health care pricing tool. Also based on
these demonstrations, the Departments
are of the view that many price
transparency tools on the market only
offer wide-range estimates or average
estimates of pricing that use historical
claims data and do not always take into
40 ‘‘Report to Congress: Self-Insured Health
Benefit Plans 2019: Based on Filings through
Statistical Year 2016.’’ March, 2019. Available at:
https://www.dol.gov/sites/dolgov/files/EBSA/
researchers/statistics/retirement-bulletins/annualreport-on-self-insured-group-health-plans-2019.pdf;
see also Fronstin, P. ‘‘Self-Insured Health Plans:
Recent Trends by Firm Size 1996–2018.’’ Employee
Benefit Research Institute. No. 488. August 1, 2019.
Available at: https://www.ebri.org/docs/defaultsource/ebri-issue-brief/ebri_ib_488_selfinsur1aug19.pdf?sfvrsn=bd7e3c2f_6.
41 ‘‘Study: Health Plans Implement Price
Transparency Tools for Consumers.’’ ACA
International. April 2016. Available online at:
https://www.expressrecovery.com/file/86c228ef245f-45cb-abd7-a30edbdec1f3.
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account the accumulated amount a
participant, beneficiary, or enrollee has
paid toward their deductible or out-ofpocket limit (sometimes referred to as
an ‘‘accumulator’’). The Departments are
of the view that wide-range estimates
are of limited value to consumers, given
that they may not accurately reflect an
individual’s plan design and benefits,
and that ranges should be replaced by
actual estimated out-of-pocket costs, in
order to allow the consumer to
meaningfully predict costs. In addition,
the inclusion of negotiated rates in these
tools could help show the changes to a
participant’s, beneficiary’s, or enrollee’s
costs if they have a future need for the
same service, conditioned on the level
of fulfillment of any cost-sharing
responsibilities. This could help the
consumer better understand the full
value of the health care they are
considering and how the cost may be
different in the future when the
participant’s, beneficiary’s, or enrollee’s
accumulator resets in a new plan year.
Information on quality and results are
also important for assessing the value of
care.42 Through this increased
availability of information and
consumer comprehension, transparent
pricing can apply pressure on providers
to demonstrate and improve quality and
health care results. Providers may likely
then be in the position of having to
justify their costs relative to alternative
options.
The Departments are of the view that
existing price transparency tools often
function in a way that makes them
difficult for users to navigate. These
tools often display information that
makes it difficult to compare one plan
against another, understand the scope of
services covered and their costs, and
interpret the terminology plans and
issuers use. Consumers may be
discouraged by these difficult user
interfaces and may be less likely to
make fully informed decisions with
their healthcare choices. Research
demonstrates that poor or confusing
user interfaces will lead users to
abandon engagement with the hosting
website.43 The Departments are of the
view that it is important to establish a
minimum set of standards regarding
what is acceptable so that consumers
can fully utilize all relevant
information. Tools that provide
consistent information to every
consumer across all markets, and that
base cost estimates on accurate and
42 See additional discussion of quality
information in section II.C.1 of the preamble.
43 Georgiou, M. ‘‘User Experience Is the Most
Important Metric You Aren’t Measuring.’’
Entrepreneur. March 1, 2018. Available at: https://
www.entrepreneur.com/article/309161.
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recent information, will be a significant
improvement over all or most existing
options. Accuracy and consistency are
intended to give consumers confidence
that the information presented by these
tools will not change significantly from
the prices they are ultimately charged.
Reliability should assure consumers that
information in these tools accurately
reflects plans’ and issuers’ best
estimates of consumer out-of-pocket
costs. The availability of these tools
across most private markets will ensure
broad access for all participants,
beneficiaries, or enrollees to the
intended outcomes and potential
benefits of the final rules. The
Departments anticipate that
participants, beneficiaries, and enrollees
will become accustomed to having
access to this standardized information,
no matter what private market plan or
coverage they choose, which will make
them more comfortable with using this
information in health care purchasing
decisions. The Departments further
anticipate and encourage plans and
issuers to include additional
functionality and innovation in existing
price transparency tools, but a baseline
is necessary to give participants,
beneficiaries, and enrollees the
confidence that, regardless of the tool
they use, they can expect the same
standard information and functionality.
C. Stakeholder Feedback and Prior
Actions in Support of Transparency
In the HHS 2020 Notice of Benefit and
Payment Parameters (2020 Payment
Notice) proposed rule,44 HHS sought
input on ways to provide consumers
with greater transparency regarding
their own health care data, QHP
offerings on the Federally-facilitated
Exchanges (FFEs), and the cost of health
care services.45 Additionally, HHS
sought comment on ways to further
implement section 1311(e)(3) of PPACA,
as implemented by 45 CFR 156.220(d),
under which, upon the request of an
enrollee, a QHP issuer must make
available in a timely manner the amount
of enrollee cost sharing under the
enrollee’s coverage for a specific service
furnished by an in-network provider.
HHS was particularly interested in what
types of data would be most useful to
improving consumers’ abilities to make
informed health care decisions,
including decisions related to their
coverage specifications and ways to
44 84
FR 227 (Jan. 24, 2019).
term ‘‘Exchanges’’ means American Health
Benefit Exchanges established under section 1311
of PPACA. See section 2791(d)(21) of the PHS Act.
45 The
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improve consumer access to information
about health care costs.
Commenters on the 2020 Payment
Notice overwhelmingly supported the
idea of increased price transparency.
Many commenters provided suggestions
for defining the scope of price
transparency requirements, such as
providing costs for both in-network and
out-of-network health care, and
providing health care cost estimates that
include an accounting for consumerspecific benefit information, like
progress toward meeting deductibles
and annual limitations on cost sharing,
as well as remaining visits under visit
limits. Commenters expressed support
for implementing price transparency
requirements across all private markets
and for price transparency efforts to be
a part of a larger payment reform effort
and a provider empowerment and
patient engagement strategy. Some
commenters advised HHS to carefully
consider how such policies should be
implemented, warning against Federal
duplication of state efforts and
requirements that would result in plans
and issuers passing along increased
administrative costs to consumers and
cautioning that the proprietary and
competitive nature of payment data
should be protected.
In the summer and fall of 2018, HHS
hosted listening sessions related to the
goal of empowering consumers by
ensuring the availability of useable
pricing information. The listening
sessions included a wide representation
of stakeholders including providers,
issuers, researchers, and consumer and
patient advocacy groups. Attendees
noted that currently available pricing
tools are underutilized, in part because
consumers are often unaware that they
exist,46 and even when used, the tools
sometimes convey inconsistent and
inaccurate information.
Attendees also commented that tool
development could be expensive,
especially for smaller health plans,
which tend to invest less in technology
because of the limited return on
investment. Attendees further
commented that most tools developed to
date do not allow for comparison
shopping. Attendees stated that existing
tools usually use historical claims data,
which results in broad, sometimes
regional, estimates, rather than accurate
and individualized prices. In a national
study, there was alignment among
patients, employers, and providers in
wanting to know and discuss the cost of
46 Miller,
S. ‘‘Healthcare Shopping Tools Often
Go Unused.’’ Society for Human Resource
Management. May 19, 2016. Available at: https://
www.shrm.org/resourcesandtools/hr-topics/
benefits/pages/health-care-shopping.aspx.
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care at the point of service.47 However,
attendees noted pricing tools are rarely
available when and where consumers
are likely to make health care decisions,
for example, during interactions with
providers. Thus, patients are not able to
consider relevant cost issues when
discussing referral options or the
tradeoffs of various treatment options
with referring providers. With access to
patient-specific cost estimates for
services furnished by particular
providers, referring providers and their
patients could take pricing information
into account when considering
clinically appropriate treatment options.
Separately, CMS has met with members
from several state Departments of
Insurance to discuss the limits to state
authority to require price transparency
in a meaningful way and the benefits
and drawbacks of All Payer Claims
Databases (APCDs). During these
discussions, it became clear that APCDs’
reliance on historical claims data that is
not necessarily linked to a specific plan
or issuer limits the utility of such
databases for consumers. These
conversations helped clarify the types of
price transparency information
necessary to empower consumers.
CMS has pursued initiatives in
addition to the final rules to improve
access to the information necessary to
empower consumers to make more
informed decisions about their health
care costs, including a multi-step effort
to implement section 2718(e) of the PHS
Act. Section 2718(e) of the PHS Act
requires each hospital operating within
the United States, for each year, to
establish (and update) and make public
(in accordance with guidelines
developed by the Secretary of HHS) a
list of the hospital’s standard charges for
items and services provided by the
hospital, including for diagnosis-related
groups established under section
1886(d)(4) of the Social Security Act
(SSA). In the Fiscal Year (FY) 2015
Hospital Inpatient Prospective Payment
System and Long-Term Care Hospital
Prospective Payment System (IPPS/
LTCH PPS) proposed and final rules,
CMS reminded hospitals of their
obligation to comply with the
provisions of section 2718(e) of the PHS
Act and provided guidelines for its
implementation.48 At that time, CMS
required hospitals to either make public
a list of their standard charges or their
policies for allowing the public to view
a list of those charges in response to an
inquiry. In addition, CMS stated that it
expected hospitals to update the
information at least annually, or more
often as appropriate, to reflect current
charges. CMS also encouraged hospitals
to undertake efforts to engage in
consumer-friendly communication of
their charges to enable consumers to
compare charges for similar services
across hospitals and to help them
understand what their potential
financial liability might be for items and
services they obtain at the hospital.
In the FY 2019 IPPS/LTCH PPS
proposed and final rules, CMS again
reminded hospitals of their obligation to
comply with section 2718(e) of the PHS
Act and announced an update to its
guidelines.49 The updated guidelines,
which have been effective since January
1, 2019, require hospitals to make
available a list of their current standard
charges (whether in the form of a
‘‘chargemaster’’ or another form of the
hospital’s choice) via the internet in a
machine-readable format and to update
this information at least annually, or
more often as appropriate.
In response to stakeholder feedback
and in accordance with Executive Order
13877, issued on June 24, 2019,50 CMS
took another important step toward
improving health care value and
increasing competition in the Calendar
Year 2020 Hospital Outpatient Policy
Payment System (OPPS) Policy Changes
and Payment Rates and Ambulatory
Surgical Center Payment System Policy
Changes and Payment Rates: Price
Transparency Requirements for
Hospitals to Make Standard Charges
Public final rule (Hospital Price
Transparency final rule) by codifying
regulatory requirements that implement
section 2718(e) of the PHS Act, as well
as a regulatory scheme under section
2718(b)(3) of the PHS Act that enables
CMS to enforce those requirements.51
The price transparency disclosure
requirements that CMS finalized in the
Hospital Price Transparency final rule
will be effective on January 1, 2021, and
they require hospitals to make publicly
available, as applicable, their gross
charges (as found in the hospital’s
chargemaster), payer-specific negotiated
charges, discounted cash prices, and deidentified minimum and maximum
negotiated charges for all items and
services they provide through a single
online machine-readable file that is
updated at least once annually.
Additionally, the Hospital Price
47 ‘‘Let’s Talk About Money.’’ University of Utah
Health Home. Available at: https://
uofuhealth.utah.edu/value/lets-talk-aboutmoney.php.
48 79 FR 27978, 28169 (May 15, 2014) and 79 FR
49854, 50146 (Aug. 22, 2014), respectively.
49 83 FR 20164, 20548 (May 7, 2018) and 83 FR
41144, 41686 (Aug. 17, 2018), respectively.
50 84 FR 30849 (Jun. 27, 2019). The Executive
order was issued on June 24, 2019 and was
published in the Federal Register on June 27, 2019.
51 84 FR 65524 (Nov. 27, 2019).
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Transparency final rule requires
hospitals to display online in a
consumer-friendly format, as applicable,
the payer-specific negotiated charges,
discounted cash prices (or, to the extent
one does not exist for a shoppable
service, the undiscounted gross charge)
and de-identified minimum and
maximum negotiated charges for as
many of the 70 shoppable services
selected by CMS that the hospital
provides and as many additional
hospital-selected shoppable services as
are necessary for a combined total of at
least 300 shoppable services (or if the
hospital provides fewer than 300
shoppable services, then for as many as
the hospital provides). The rule defines
a shoppable service as a service that can
be scheduled by a health care consumer
in advance and further explains that a
shoppable service is typically one that
is routinely provided in non-urgent
situations that does not require
immediate action or attention to the
patient, thus allowing patients to price
shop and schedule such a service at a
time that is convenient for them.52
In addition to making pricing
information available for items and
services provided by hospitals, the
Administration has also been engaged in
increasing transparency of prescription
drug pricing and lowering the costs of
prescription drugs. Four Executive
orders direct CMS and other HHS
agencies to develop and issue tools,
models, and several regulations to
increase competition and lower
patients’ drug costs.53 The actions
directed in these Executive orders
supplement those CMS has already
taken to increase drug-pricing
transparency and lower drug costs.
Through the Drug Spending Dashboard,
CMS publishes data on Medicare and
Medicaid spending for prescription
drugs in an interactive web-based tool
so researchers and consumers can easily
sort the data to identify trends. Over the
past four years, CMS has expanded this
dashboard to include reporting on
payments for prescription drugs in their
first year on the market and information
on the drugs’ manufacturers.54 Through
52 84
FR 65524, 65564 (Nov. 27, 2019).
Administration Announces Historic
Action to Lower Drug Prices for Americans.’’
United States Department of Health and Human
Services. July 24, 2020. Available at: https://
www.hhs.gov/about/news/2020/07/24/trumpadministration-announces-historic-action-lowerdrug-prices-americans.html.
54 ‘‘CMS Releases Enhanced Drug Dashboards
Updated with Data for 2018.’’ Centers for Medicare
& Medicaid Services.’’ December 19, 2019.
Available at: https://www.cms.gov/newsroom/pressreleases/cms-releases-enhanced-drug-dashboardsupdated-data-2018; see also ‘‘CMS Updates Drug
Dashboards with Prescription Drug Pricing and
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53 ‘‘Trump
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the Part D Senior Savings model,
beginning January 1, 2021, CMS is
testing a change to the Manufacturer
Coverage Gap Discount Program (the
‘‘discount program’’) to allow Part D
sponsors to offer a Part D benefit design
that includes predictable copays in the
deductible, initial coverage, and
coverage gap phases for a broad range of
insulins included in the Model by
offering supplemental benefits that
apply after manufacturers provide a
discounted price.55
CMS issued regulations addressing
prescription drug transparency,56
including a regulation implementing the
statutory prohibition on pharmacist gag
clauses,57 helping to ensure patients
have information on lower cost
alternatives or that they can save money
by paying cash. As part of the Calendar
Year (CY) 2018 Medicare Physician Fee
Schedule, CMS adopted a policy that all
FDA-approved Part B biosimilars would
be assigned their own HCPCS codes.
Under this revised coding policy, CMS
pays for separately payable Part B
biosimilars based on its own Average
Sales Price (ASP) plus 6 percent of the
ASP of its reference product. This
policy change was made to promote a
stable and robust biosimilars market
that drives competition and lowers
prices.
In the CY 2019 Medicare Advantage
and Part D final rule, CMS adopted a
policy to allow for certain low-cost
generic drugs to be substituted onto
plan formularies at any point during the
year, so beneficiaries immediately
benefit and have lower cost sharing.58
The Modernizing Part D and Medicare
Spending Data.’’ Centers for Medicare & Medicaid
Services. March 14, 2019. Available at: https://
www.cms.gov/newsroom/press-releases/cmsupdates-drug-dashboards-prescription-drugpricing-and-spending-data.
55 ‘‘Part D Senior Savings Model.’’ Centers for
Medicare & Medicaid Services. Available online at:
https://innovation.cms.gov/innovation-models/partd-savings-model.
56 See 84 FR 23832 (May 23, 2019) (HHS final rule
finalizing policies that aimed to ‘‘increase
transparency of drug pricing and drug price
increases, giv[e] beneficiaries and prescribers tools
to help improve adherence, lower prescription drug
costs, and minimize beneficiary out-of-pocket
costs’’); see, for example, 42 CFR 423.128 (requiring
additional information in Part D explanations of
benefits to increase transparency); 42 CFR 423.160
(requiring adoption of e-prescribing standards to
increase transparency).
57 42 CFR 423.120(a)(8)(iii); see also Verma, S.
‘‘Memorandum to All Part D Plan Sponsors:
Unacceptable Pharmacy Gag Clauses.’’ Centers for
Medicare & Medicaid Services. May 17, 2018.
Available at: https://downloads.cms.gov/files/201805-17.pdf.
58 ‘‘CMS lowers the cost of prescription drugs for
Medicare beneficiaries.’’ Centers for Medicare &
Medicaid Services. April 2, 2018. Available at:
https://www.cms.gov/newsroom/press-releases/
cms-lowers-cost-prescription-drugs-medicarebeneficiaries.
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Advantage To Lower Drug Prices and
Reduce Out-of-Pocket Expenses rule 59
finalized in May 2019 requires Part D
plans to implement, no later than
January 1, 2021, a real-time benefit tool
that can be integrated into at least one
prescriber’s electronic prescribing or
EHR system to provide patient-specific
formulary and benefit information,
including cost sharing.60 The rule also
requires that beginning January 2021,
the Explanation of Benefits document
that Part D enrollees receive each month
must include information on drug price
increases and lower-cost therapeutic
alternatives. In June 2020, CMS
proposed 61 further policy changes that
would begin removing barriers to valuebased purchasing arrangements between
drug manufacturers and payers.62
Value-based payments for prescription
drugs has the potential to increase
patient access to new medicines by
holding prescription drug
manufacturers accountable for outcomes
their drug achieves, as well as creating
alternatives to traditional cost controls
that may impede patient access.63
As part of its effort to incentivize
states to pursue innovative responses to
rising drug prices, CMS approved nine
states’ (and the District of Columbia’s)
plan amendment proposals to negotiate
supplemental rebate agreements
involving value-based purchasing
arrangements with drug
manufacturers.64 These supplemental
rebate agreements allow states to link
payment for prescription drugs to the
value delivered to patients. Increasing
states’ flexibility empowers them to
develop policies that are effective and
responsive to local conditions and price
‘‘hot spots’’ that lower costs, increase
59 84
FR 23832 (May 23, 2019).
Takes Action to Lower Prescription Drug
Prices and Increase Transparency.’’ Centers for
Medicare & Medicaid Services. May 16, 2019.
Available at: https://www.cms.gov/newsroom/pressreleases/cms-takes-action-lower-prescription-drugprices-and-increase-transparency.
61 ‘‘Establishing Minimum Standards in Medicaid
State Drug Utilization Review (DUR) and
Supporting Value-Based Purchasing (VBP) for Drugs
Covered in Medicaid, Revising Medicaid Drug
Rebate and Third Party Liability (TPL)
Requirements (CMS 2482–P) Fact Sheet. Centers for
Medicare & Medicaid Services. June 17, 2020.
Available at: https://www.cms.gov/newsroom/factsheets/establishing-minimum-standards-medicaidstate-drug-utilization-review-dur-and-supportingvalue-based.
62 85 FR 37286 (Jun. 19, 2020).
63 Verma, S. ‘‘CMS’s Proposed Rule On ValueBased Purchasing For Prescription Drugs: New
Tools For Negotiating Price For The Next
Generation Of Therapies.’’ Health Affairs. June 17,
2020. Available at: https://www.healthaffairs.org/
do/10.1377/hblog20200617.728496/full/.
64 ‘‘Medicaid State Plan Amendments.’’ Centers
for Medicare & Medicaid Services. Available online
at: https://www.medicaid.gov/medicaid/medicaidstate-plan-amendments/.
60 ‘‘CMS
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the predictability of expenses, and
improve access for patients.
As it currently stands, and despite
ongoing Federal efforts to improve price
transparency, there continues to be a
lack of standardized pricing information
to assist consumers in the private
market when shopping for health care
items and services. While there are
several efforts across states, 33 still do
not have comprehensive statewide price
transparency initiatives,65 and as noted
earlier, sometimes cannot legally require
private market plans and issuers to
provide real-time, out-of-pocket cost
estimates to participants, beneficiaries,
and enrollees.
The Departments have concluded that
the Hospital Price Transparency final
rule and the other efforts described
earlier in this section cannot result in
enrollees receiving complete price
estimates for health care items and
services because, as the GAO
concluded, complete price estimates
require pricing information from both
providers and health insurance
issuers.66 In other words, this rule
complements existing State, Federal,
and private sector price transparency
efforts by ensuring that pricing
information is available from both
hospitals and payers in both the public
and private markets and by expanding
transparency to pricing information for
health care items and services provided
outside of a hospital setting. As a result
of these rules, regardless of where a
consumer seeks information, be it their
plan or issuer, or their hospital, they
will have guaranteed access to up to
date and accurate pricing information.
In addition, because section 2718(e) of
the PHS Act applies only to items and
services provided by hospitals the
Hospital Price Transparency final rule
does not address price transparency
with respect to items and services
provided by other health care providers.
Accordingly, the Departments have
concluded that additional price
transparency efforts are necessary and
required under the statute to empower
a more price-conscious and responsible
health care consumer, promote
competition in the health care industry,
and lower the overall rate of growth in
health care spending.67
The Departments are of the view that
the disclosures required under the final
rules are necessary and appropriate to
more fully implement section 2715A of
the PHS Act and section 1311(e)(3)(C) of
PPACA to ensure that consumers have
ready access to the information they
need to estimate their potential out-ofpocket costs for health care items and
services before that service is rendered
or that item is delivered. The final rules
are also intended to empower
consumers by incentivizing market
innovators to help consumers
understand how their plan or coverage
pays for health care and to shop for
health care items and services based on
price, which is a fundamental factor in
any purchasing decision.
65 LaPointe, J. ‘‘Few States Have Robust
Healthcare Transparency Laws.’’ RevCycle
Intelligence. May 11, 2020. Available at: https://
revcycleintelligence.com/news/few-states-haverobust-healthcare-price-transparency-laws.
66 GAO–11–791 (Sep. 2011).
67 This view is consistent with the legislative
history of PPACA. As initially introduced in the
Senate on November 19, 2009, PPACA included
only the requirement on hospitals to disclose
standard charges included in section 2718. On
December 1, 2009, in comments supporting the
hospital transparency requirement, Sen. Max
Baucus noted, ‘‘I think the same should also apply
to physicians so people have a better idea what they
will pay or their insurance company will pay for
these procedures.’’ https://www.congress.gov/111/
crec/2009/12/08/CREC-2009-12-08.pdf. Sections
2715A and 1311(e)(3)(C) were then amended to
PPACA on December 19 in the final managers
amendment before passage in the Senate. Available
at: https://www.congress.gov/111/crec/2009/12/19/
CREC-2009-12-19.pdf.
68 84 FR 65464 (Nov. 27, 2019).
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D. Executive Order
On June 24, 2019, President Trump
issued Executive Order 13877,
‘‘Executive Order on Improving Price
and Quality Transparency in American
Healthcare to Put Patients First.’’
Section 3(b) of Executive Order 13877
directed the Secretaries of the
Departments to issue an advance notice
of proposed rulemaking (ANPRM),
consistent with applicable law,
soliciting comment on a proposal to
require health care providers, health
insurance issuers, and self-insured
group health plans to provide or
facilitate access to information about
expected out-of-pocket costs for items or
services to patients before they receive
care. The Departments considered the
issue, including by consulting with
stakeholders, and determined that an
NPRM, rather than an ANPRM, would
allow for more specific and useful
feedback from commenters, who would
be able to respond to specific proposals.
E. Proposed Rules
In response to Executive Order 13877
and to also implement legislative
mandates under sections 1311(e)(3) of
PPACA and section 2715A of the PHS
Act, the Departments published an
NPRM entitled ‘‘Transparency in
Coverage’’ on November 27, 2019 (to be
codified at 26 CFR part 54, 29 CFR part
2590, and 45 CFR part 147) (the
proposed rules) with comments
requested by January 14, 2020.68 In
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response to requests from stakeholders,
the Departments extended the comment
period 15 days, to January 29, 2020.69
The proposed rules set forth proposed
requirements for group health plans and
health insurance issuers in the
individual and group markets to
disclose cost-sharing information upon
request to a participant, beneficiary, or
enrollee, including an estimate of an
individual’s cost-sharing liability for
covered items or services furnished by
a particular provider. The Departments
proposed that plans and issuers be
required to make such information
available on an internet website and, if
requested, through non-internet means,
thereby allowing a participant,
beneficiary, or enrollee to obtain an
estimate and understanding of the
individual’s out-of-pocket expenses and
effectively shop for items and services.
The proposed rules also included
proposals to require plans and issuers to
disclose in-network provider negotiated
rates, and historical out-of-network
allowed amounts through two machinereadable files posted on an internet
website, thereby allowing the public to
have access to health coverage
information that can be used to
understand health care pricing and
potentially dampen the rise in health
care spending.
The proposed rules also included
requests for information (RFIs) on topics
closely related to the rulemaking. Due to
the design and capability differences
among the information technology (IT)
systems of plans and issuers, as well as
difficulties consumers experience in
deciphering information relevant to
health care and health insurance, the
Departments sought comment on
additional price transparency
requirements that could supplement the
proposed requirements for disclosing
cost-sharing information to participants,
beneficiaries, or enrollees and the
proposed requirements for public
disclosure of negotiated rates and
historical allowed amount data for
covered items and services from out-ofnetwork providers. Specifically, the
Departments sought comment on
whether plans and issuers should be
required to disclose information
necessary to calculate a participant’s,
beneficiary’s, or enrollee’s cost-sharing
liability through a publicly-available,
standards-based application
programming interface (API).
Such a requirement would build off a
final rule, ‘‘Medicare and Medicaid
Programs; Patient Protection and
Affordable Care Act; Interoperability
and Patient Access for Medicare
69 85
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Advantage Organization and Medicaid
Managed Care Plans, State Medicaid
Agencies, Children’s Health Insurance
Program (CHIP) Agencies and Chip
Managed Care Entities, Issuers of
Qualified Health Plans in the FederallyFacilitated Exchanges and Health Care
Providers’’ (CMS Interoperability &
Patient Access final rule), that CMS
published on May 1, 2020.70 That rule
requires Medicare Advantage
organizations, Medicaid and CHIP Feefor-Service programs, Medicaid
managed care plans, CHIP managed care
entities, and QHP issuers in the FFEs to
provide enrollees with access to select
data, including claims data, through a
standards-based API that conforms to
the technical standards adopted in the
Office of the National Coordinator for
Health Information Technology (ONC)
21st Century Cures Act final rule at 45
CFR 170.215. The CMS Interoperability
& Patient Access final rule requires
certain entities, such as FFE QHP
issuers, to provide certain data through
a standards-based API. The Departments
appreciate the comments received in
response to the API RFI and will use the
comments to inform the need for future
rulemaking regarding whether plans and
issuers should be required to disclose
information necessary to calculate costsharing liability through a publiclyavailable, standards-based API. HHS
will also monitor the implementation of
the CMS Interoperability & Patient
Access final rule to inform any such
future rulemaking.
The proposed rule also included RFIs
on how provider quality measurements
and reporting in the private health
insurance market may be used to
complement cost-sharing information
for plans and issuers in the private
health insurance market. The
Departments sought comment on how
existing quality data on health care
provider items and services could be
leveraged to complement the proposals
in the proposed rules. The primary goal
of the proposed and final rules is
making information available to address
the absence of price transparency in the
health care market; the final rules do not
address health care quality at this time.
HHS also proposed to amend its MLR
program rules using the authority under
section 2718(c) of the PHS Act, under
which the standardized methodologies
for calculating measures of the activities
reported under section 2718(a) of the
PHS Act shall be designed to take into
account the special circumstances of
smaller plans, different types of plans,
and newer plans. Specifically, HHS
proposed to recognize the special
70 85
FR 25510 (May 1, 2020).
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circumstances of a different and newer
type of plan for purposes of MLR
reporting and calculations for plans that
share savings with consumers who
choose lower-cost, higher-value
providers. HHS proposed to amend 45
CFR 158.221 to add a new paragraph
(b)(9) to allow any such ‘‘shared
savings’’ payments made by an issuer to
an enrollee as a result of the enrollee
choosing to obtain health care from a
lower-cost, higher-value provider, to be
factored into an issuer’s MLR
numerator, beginning with the 2020
MLR reporting year (for reports filed by
July 31, 2021).
The Departments requested comments
on all aspects of the proposed rules, as
well as a number of specific issues. The
Departments received over 25,000
comments in response to the proposed
rules from a range of stakeholders,
including plans and issuers, health care
providers, prescription drug companies,
employers, state regulators, health IT
companies, health care policy
organizations and think tanks, and
individuals. No requests for a public
hearing were received. The Departments
received a number of comments and
suggestions that were outside the scope
of the proposed rules that are not
addressed in the final rules (for
example, regarding hospital prices,
other methods for reducing health care
and prescription drug costs, consumer
education and provider directories).
After careful consideration of the
comments, the Departments are
finalizing the proposed rules with
certain modifications made in response
to comments. These modifications are
discussed later in this preamble.
F. Legal Authority
Several commenters questioned the
Departments’ legal authority regarding
various aspects of the proposed rules.
The Departments are of the view that
the legal authorities identified earlier in
this preamble are sufficient to support
the final rules.
1. Statutory Authority Under Section
1311(e)(3) of PPACA
Several commenters contended that
section 1311(e)(3)(A)(ix) of PPACA does
not give the Departments statutory
authority to require that plans and
issuers make the rates they have
negotiated with providers and out-ofnetwork allowed amounts publicly
available. The commenters noted that
section 1311(e)(3)(A) of PPACA
enumerates eight specific categories of
information subject to the transparency
in coverage mandate followed by a
ninth ‘‘catchall’’ category consisting of
‘‘other information as determined
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appropriate by the Secretary.’’ 71 These
commenters maintained that the
Secretary of HHS’s authority under
section 1311(e)(3)(A)(ix) of PPACA is
insufficient to support a requirement to
publicize negotiated rates because they
are not sufficiently similar to the other
categories of information identified
under section 1311(e)(3)(A) of PPACA.
The Departments disagree with these
comments and are of the view that the
information required to be disclosed
under this rule fits squarely within the
scope of information that plans and
issuers may be required to disclose
under section 1311(e)(3)(A)(ix) of
PPACA and section 2715A of the PHS
Act. Section 1311(e)(3)(A)(i) to (viii) of
PPACA outlines specific information
and data that must be submitted to the
Exchange, the Secretary of HHS, the
relevant State insurance commissioner,
and the public on an accurate and
timely basis. In addition, section
1311(e)(3)(A)(ix) of PPACA requires
health plans to submit ‘‘other
information as determined appropriate
by the Secretary.’’ Under established
principles of statutory construction,
when a general term follows a list of
specific terms in a statute, the general
term is construed to encompass subjects
of a similar character to the specific
terms. The principle of ejusdem generis
guides courts in evaluating a catch-all at
the end of a list. Therefore, when a
statute allows an implementing agency
to exercise its discretion by adding
additional items to a list, the
implementing agency is empowered to
add additional items as long as those
items are of similar character to the
items enumerated in the statute.72 In
this case, the statutory list includes
information and data useful to evaluate
the coverage offered by plans and
issuers with an emphasis on business
practices, financial stability, and
consumer experience. The list also
includes information useful to
regulators and the public in general to
evaluate plans’ and issuers’ business
practices and activity in the market.
Given that the list includes some
disclosures that are more immediately
useful to individual consumers and
others that are more immediately useful
to regulators, the catchall provision is
reasonably and best read as Congress’
recognition that the Secretary of HHS
(and, therefore, the Departments, by
virtue of their joint authority under
section 2715A of the PHS Act) would
need broad flexibility to require the
71 See section 1311(e)(3)(A)(i) through (viii) of
PPACA.
72 See Norfolk & Western R. Co. v. Train
Dispatchers, 499 U.S. 117, 128–29 (1991).
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disclosure of information as appropriate
to deliver the transparency necessary for
consumers to understand their coverage
options and for regulators to hold plans
and issuers accountable.
It is important to note that Congress
considered one amendment that would
have only required public disclosure at
least annually of in-network allowed
charges and expected allowed charges
for out of network without allowing the
Secretary discretion to add to the
content of the required disclosure.73
Instead of adopting this prescriptive
approach, Congress required public
disclosure of a broader set of
information that similarly included
payments for out-of-network services, as
well as providing the Secretary
discretion to require disclosure of other
information. While Congress did not
specifically include in-network allowed
charges in the provision enacted, the
discretion they provided suggests they
understood that the Secretary might
later find that requiring the disclosure of
additional information, including
information considered by Congress,
might be useful and appropriate. That
Congress considered and rejected a
more prescriptive approach strongly
suggests Congress intended that the
Secretary have the ability to mandate
more particularized disclosures in the
future, including the disclosure of innetwork negotiated rates.74
A plan’s or issuer’s negotiated rates
provide important information to help
consumers both evaluate their options
before buying coverage and, after
choosing coverage, evaluate how to use
their coverage when they need care.
Those shopping for coverage will
benefit from knowing how effectively a
plan or issuer negotiates rates; for
example, by comparing the rates one
plan or issuer pays a provider for a
particular item or service that this
consumer knows they, or their family,
will need in the future, which can then
allow them to shop and compare which
plans and issuers offer the most value.
Once coverage is obtained, knowing
negotiated rates upfront will ensure
consumers covered under a variety of
plan designs and coverage options to, in
each case, have access to the
information they need to obtain health
care services in an efficient, costeffective manner, when considering
available options for a shoppable
service. As discussed earlier in this
preamble, making negotiated rates
public also strengthens other health care
stakeholders’ ability to support
consumers. Because negotiated rates
provide important information to help
people—including consumers,
regulators and the general public—
evaluate the coverage offered by a plan
or issuer, it clearly falls within the
scope of information already required
under section 1311(e)(3)(A) of PPACA.
As discussed in more detail later in this
section, out-of-network allowed
amounts likewise provide vital
information to help evaluate coverage.
Out-of-network allowed charges also
provide consumers with important
information. Consumers may opt for
out-of-network services for numerous
reasons, such as the unavailability of an
in-network provider who can meet
certain medical needs, an existing
relationship with an out-of-network
provider, the recommendation of
another provider, or personal
convenience. Disclosure of estimates of
out-of-network allowed amounts is
essential to the ability of consumers
considering out-of-network services to
form an estimate of their potential
liability. Limiting transparency in
pricing requirements to only providers
under contract with a carrier would
prevent transparency for all such
services, contrary to the plain language
of the statute.75 Indeed, the language of
the statute (for example, the
requirement of section 1311(e)(3)(B) of
PPACA that the intended audience,
including individuals with limited
English proficiency, can readily
understand and use because that
language is concise, well-organized, and
follows other best practices of plain
language writing) indicates an intention
to assist consumers by enhancing their
ability to make cost-conscious
decisions; this is an essential
component of establishing and
maintaining robust market competition
with costs that are reasonable and
plausibly tethered to standard market
discipline. As the preamble to the
proposed rules observed, there is
substantial evidence that increased
price transparency provides consumers
and the public at large with the
information that is necessary to improve
market efficiency.76 For these reasons,
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75 Section
73 Congressional
Record 155: 183 (December 8,
2009) p. S12716. Available at: https://
www.congress.gov/111/crec/2009/12/08/CREC2009-12-08-senate.pdf.
74 See, for example, Lehman v. Nakshian, 453
U.S. 156, 167–8 (1981) (citing a rejected amendment
to a Federal statute as evidence of Congressional
intent).
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1311(e)(3)(A)(vii) of PPACA.
FR 65464, 65489, 65495 (Nov. 27, 2019); see
also Austin, D.A., and Gravelle, J.G. ‘‘Does Price
Transparency Improve Market Efficiency?
Implications of Empirical Evidence in Other
Markets for the Healthcare Sector.’’ United States
Congress Congressional Research Service. July 24,
2007. Available at: https://fas.org/sgp/crs/secrecy/
RL34101.pdf; see also Brown, Z.Y. ‘‘Equilibrium
the Departments are of the view that
requiring disclosure of estimates of outof-network allowed amounts, which
reflect out-of-network benefits under a
plan, is well within both the text and
spirit of the statute and its aims to assist
consumers in selecting providers,
evaluating market options, increasing
competition, and reducing market
disparities. The Departments have
identified these requirements as
beneficial to the ongoing efforts of
employers and regulators to aid
consumers, and as consistent with the
goals of the statute; thus, the
Departments reject the assertion of
commenters that these purposes are
beyond the scope of the statute.
Several commenters asserted that the
specific justifications the Departments
cite as support for mandating the
disclosure of negotiated rates are
unrelated to the purposes authorized by
statute. They asserted that those
purposes—assisting consumers in
selecting health care providers, assisting
consumers in evaluating options in the
market, increasing competition and
reducing disparities in the market,
assisting employers, and assisting state
regulators—have no relationship to the
statutory purpose of providing
transparency in coverage for consumers.
Moreover, commenters stated that the
statute does not authorize the use of
price transparency mechanisms to affect
issuer and provider rate negotiations or
health care costs generally, to assist
employers in negotiations, or to aid state
regulators in their duties. The
Departments, however, find ample
support in PPACA evidencing the
relationship between the purposes
intended to be served by this final rule,
the overall purposes of PPACA, and the
PPACA’s price transparency measures,
including section 1311(e)(3).
The purposes underlying the final
rule’s requirement to disclose negotiated
rates are directly tied to providing
transparency in coverage to consumers.
The negotiated rate information that the
final rules require to be disclosed
pursuant to the Departments’ authority
under section 1311(e)(3)(A)(ix) of
PPACA, and section 2715A of the PHS
Act, is directly relevant to providing
consumers with transparent pricing
information sufficient to allow them to
assess, in advance of receiving services,
their liability under a health plan or
76 84
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Effects of Health Care Price Information.’’ 100 Rev.
Econ. & Stat. 1 (2018). Available at: https://wwwpersonal.umich.edu/∼zachb/zbrown_eqm_effects_
price_transparency.pdf; see also Enthoven, A.
Market Forces and Efficient Health Care Systems.
Health Affairs, Vol. 23, No. 2. Available at https://
www.healthaffairs.org/doi/full/10.1377/
hlthaff.23.2.25.
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health coverage in the numerous
instances in the course of any plan year
in which the negotiated rate will
determine all or a portion of a
consumer’s liability. This is important
information that helps consumers under
a wide variety of plan designs and costsharing arrangements in both choosing
and using coverage. The Departments
are requiring the disclosure of cost
information to further the goal of price
transparency and are doing so under the
authority of section 1311(e)(3) of
PPACA.
Two commenters suggested that the
proposal to require the release of
negotiated rates in machine-readable
format is not authorized under the
statute. The statute mandates that
transparency in coverage information
‘‘shall be provided in plain language
. . . that the intended audience,
including individuals with limited
English proficiency, can readily
understand and use because it is
concise, well-organized, and follows
best practices of plain writing.’’ 77 These
commenters contended that machinereadable information is not plain
language that is accessible or
understandable to the typical consumer,
and is therefore not within the scope of
information authorized for public
disclosure under section 1311(e)(3)(B) of
PPACA.
The Departments disagree with this
assertion. Consistent with the statute,
the final rules require the machinereadable files to include a plain
language description for each billing
code. The proposed requirement that
two data files be provided in ‘‘machinereadable format’’—one containing
negotiated rates and the other
containing out-of-network allowed
amounts—is a purely operational
consideration intended to ensure that
the file data can be imported or read by
a computer system directly, without
altering the data, and without reliance
on proprietary software.78 Under section
1311(e)(3)(B) of PPACA, the ‘‘plain
language’’ requirement concerns
information to be made available to the
public, the ‘‘intended audience,’’ per the
statute. The Departments require the
publication of data in machine-readable
files so that the required information
may be presented to all members of the
intended audience in a concise, wellorganized manner that follows best
practices of plain writing relevant to the
intended audience.
The Departments explain elsewhere
in the preamble that the intended
audience for the information required to
77 Section
78 84
1311(e)(3)(B) of PPACA.
FR 65464, 65481 (Nov 27. 2019).
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be published under the final rules
includes all consumers and purchasers
of health care items and services,
including individual consumers,
employers, and government health care
programs. The intended audience also
includes health care stakeholders such
as researchers, legislators, and
regulators, as well as application
developers who could make the
information usable and easily
understood by laypersons. Accordingly,
application developers will be able to
access the data in a format that is easily
used and understood using skills
common to application developers. This
same expertise allows such innovators
to incorporate large data sets into easyto-use internet-based tools and mobile
applications that will present
information to laypersons in easy-tounderstand, plain language that is
sufficiently concise and well-organized.
The Departments are of the view that
providing the files in machine-readable
format is an effective and necessary
mechanism to ensure that price
transparency information be made
available to all members of the intended
audience in a consistent,
understandable, plain language format,
as the statute requires.
One commenter suggested that the
disclosures to the public required under
section 1311(e)(3)(A) of PPACA consist
of aggregated data only and do not
contemplate or allow public disclosure
of specific rate and price information.
The Departments disagree. While it is
true that several of the data elements
listed under section 1311(e)(3)(A) of
PPACA are general in nature, such as
financial disclosures and enrollment
data, this fact does not compel the
conclusion that all elements listed must
be construed as requiring aggregated
information. As noted above, the list
encompasses information and data
useful to the evaluation of plans and
issuers by all varieties of health care
consumer, including individuals,
employers, and government programs.
Certain elements provide information
specific to the benefits and protections
a plan or issuer’s coverage provides to
an individual, including claims
payment policies and information on
enrollee rights under the law. In
particular, the data element listed at
section 1311(e)(3)(A)(vii) of PPACA
encompasses ‘‘information on cost
sharing and payments with respect to
any out-of-network coverage,’’ which,
by its plain terms, does not contemplate
general or cumulative information.
The final rules specify the nature of
the information that must be made
available pursuant to sections
1311(e)(3)(A)(vii) and (ix) of PPACA,
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and the manner in which it is to be
made available to fully implement the
goals and purposes of the statute.
Section 1311(e)(3)(C) of PPACA
concerns disclosures to participants,
beneficiaries, and enrollees receiving
services from participating providers
only, whereas section 1311(e)(3)(A) of
PPACA concerns disclosures to the
public generally and incorporates outof-network payment information as
well. Taken together, and as
implemented under the final rules, the
statute and regulatory schemes cover all
persons seeking health pricing
information in a given market, and
advance the purposes of enhancing
competition, reducing price disparities,
and ultimately lowering costs through
transparency in coverage.
Ultimately, by adding section 2715A
of the PHS Act and section 1311(e)(3) of
PPACA through the manager’s
amendment prior to passing PPACA in
the Senate, Congress made transparency
a key component of the PPACA’s
comprehensive framework for regulating
private health coverage through Federal
law. Notably, in contrast to the
amendment rejected by Congress
discussed earlier in this preamble, the
transparency in coverage provisions
signed into law provide a far more
comprehensive and expansive approach
toward providing transparency. The law
covers nearly all private health plans,
requires disclosure by plans through an
internet website, requires disclosures to
more entities, requires a broader set of
information disclosures, and provides
additional discretion to expand
information disclosures. By taking this
approach, Congress recognized both the
importance and the complexity of
requiring transparency. The discretion
provided under the statute ensures that
the Departments can accommodate
changes in technology and health care
markets, as well as build on the
information disclosures specifically
itemized in the statute.
A commenter also contended that the
proposal to require issuers to make
estimates of out-of-network allowed
amounts available through the internetbased self-service tool is not authorized
by the statute. This commenter asserted
that section 1311(e)(3)(C) of PPACA
only authorizes a requirement that
payers make available information
concerning cost-sharing obligations with
respect to items or services furnished by
a participating provider, not by out-ofnetwork providers.
The Departments disagree and are of
the view that the statute fully supports
a requirement that plans and issuers
make available information concerning
cost-sharing obligations with respect to
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items or services furnished by out-ofnetwork providers. The information to
be made available under section
1311(e)(3) specifically includes
‘‘[i]nformation on cost sharing and
payments with respect to any out-ofnetwork coverage,’’ as well as ‘‘[o]ther
information as determined appropriate
by the Secretary.’’ 79 While section
1311(e)(3)(C) of PPACA focuses
primarily on providing information to
enrollees, section 1311(e)(3)(A) of
PPACA authorizes the Departments to
make certain out-of-network
information available to the public,
which includes participants,
beneficiaries, and enrollees. Thus the
Departments reasonably determined that
section 1311(e)(3)(A) and (C), together,
authorize the requirement that plans
and issuers provide cost estimates for
covered items and services provided by
out-of-network providers.
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2. Constitutional Concerns
Several commenters asserted that
requiring issuers to make rates they
have negotiated with providers available
to the public constitutes compelled
commercial speech in violation of the
First Amendment to the Constitution,
and an unlawful taking of trade secrets
without just compensation in violation
of the Fifth Amendment. Commenters
cited various reasons for their belief that
the requirement in the proposed rules to
disclose negotiated rates to the public
could not survive constitutional
scrutiny.
Several commenters contended that
the proposed requirement constituted
compelled commercial speech, and that
the rationale the Departments
articulated to justify the proposed
requirement failed to meet the legal
standard necessary to justify such
action. One commenter asserted that a
standard of constitutional scrutiny
higher than that relevant to compelled
commercial speech applies to the
requirement to publish negotiated rates
because, the commenter contended, the
disclosure of negotiated rates does not
propose a future commercial
transaction. Some commenters
challenged the proposed rules on the
basis that negotiated rates have little or
no relevance or value to consumers
attempting to ascertain their potential
liability for a particular service at a
given point in time in the future because
negotiated rates do not reflect the terms
of different plan designs or the status of
the individual consumer at a given
point in time in relation to cost-sharing
79 Section 1311(e)(3)(A) of PPACA; see also
Section 1311(e)(3)(A)(vii) and (ix) of PPACA.
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obligations, in particular any annual
deductible.
Two commenters asserted that the
requirement to publicly disclose
negotiated rates would go well beyond
the stated goal of providing notice to
participants, beneficiaries, and enrollees
of cost-sharing liability for covered
services because it calls for negotiated
rates to be available to the public
generally, not just to enrolled
consumers inquiring about their
coverage. They also claimed that
disclosure of negotiated rates would be
extremely burdensome because
fulfilling the mandate would require the
disclosure of millions, or even billions,
of data points. One commenter asserted
that because the requirement to publish
negotiated rates would not be useful to
consumers in all situations, the
requirements in the proposed rules were
not narrowly tailored enough to survive
constitutional scrutiny.
Some commenters also contended
that the Departments’ other stated
interests in mandating the publication
of negotiated rates, including lowering
prices, increasing competition, and
informing decision-making in the
market generally, are not authorized
under relevant statute; therefore, the
breadth of these requirements is overly
burdensome and inclusive of
information not necessary to advance
the goals of the statute. These
commenters concluded that, to the
extent the mandated publication of
negotiated rates is calculated to advance
those purposes, they are not sufficiently
tailored to statutory goals to survive
constitutional scrutiny.
a. First Amendment Compelled Speech
The Departments disagree that the
proposed rules and the final rules run
afoul of the First Amendment and
would not survive constitutional
scrutiny. As the United States Supreme
Court recognized in Zauderer v. Office
of Disciplinary Counsel, 471 U.S. 626
(1985) and recently confirmed in
National Institute of Family and Life
Advocates v. Becerra, 138 S. Ct. 2361,
2372, 2376 (2018) (‘‘NIFLA’’), required
disclosures of factual, uncontroversial
information in commercial speech are
subject to more deferential First
Amendment scrutiny. Under the
approach articulated in Zauderer, courts
have upheld required disclosures of
factual information in the realm of
commercial speech where the disclosure
requirement reasonably relates to a
government interest and is not
unjustified or unduly burdensome such
that it would chill protected speech.
See, e.g., Am. Meat Inst. v. U.S. Dept. of
Agric., 760 F.3d 18, 27 (D.C. Cir. 2014);
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Mass. Ass’n of Private Career Sch. v.
Healey, 159 F. Supp. 3d 173, 201 (D.
Mass. 2016).
The Departments articulated
substantial governmental interests in
proposing these requirements: Assisting
consumers of health care services in
understanding the costs for which they
will be liable for covered services prior
to the delivery of the services; assisting
other consumers of health care, such as
employers and government health
benefits programs, in evaluating and
negotiating coverage options and
obtaining the most value for health care
dollars; and supporting a market-driven
health care economy that is sustainable.
The preamble to the proposed rules also
explained how the information required
to be disclosed under the proposed rules
is of substantial value to consumers,
including health plan participants,
beneficiaries, and enrollees who have
and have not satisfied their annual
deductible or reached their maximum
out-of-pocket limit, and that remains
true under the final rules. For such
consumers who have not met their
deductibles, knowledge of negotiated
rates is necessary for estimating their
out-of-pocket costs because these
consumers generally will be responsible
for paying the full negotiated rate for
health care items and services until they
reach their deductible (or the maximum
annual limit on cost sharing).
As the Departments noted earlier in
the preamble, between the enactment of
PPACA and 2019, average family
deductibles for private sector employees
increased by 85 percent, up to $3,655 in
2019.80 Consumers in the private health
insurance market are increasingly
responsible for a greater share of their
health care costs through higher
deductibles and shifts from copayments
to coinsurance.81 The final rules will
give health care consumers and
stakeholders information vital to their
roles in creating and supporting a
sustainable market-driven health care
economy.
80 See ‘‘Medical Expenditure Panel Survey.
Insurance Component National-Level Summary
Tables.’’ United States Department for Health and
Human Services Agency for Healthcare Research
and Quality. Available at: https://
www.meps.ahrq.gov/mepsweb/data_stats/quick_
tables_search.jsp?component=2&subcomponent=1.
81 The preamble to the proposed rules contains a
detailed discussion regarding increases in
deductibles. See 84 FR 65464, 65465 (Nov. 27,
2019) (citing Ray, M., Copeland, R., Cox, C.
‘‘Tracking the rise in premium contributions and
cost-sharing for families with large employer
coverage,’’ Peterson-Kaiser Health System Tracker.
August 14, 2019. Available at: https://
www.healthsystemtracker.org/brief/tracking-therise-in-premium-contributionsand-cost-sharing-forfamilies-with-large-employercoverage/.).
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The final rules also will provide
critical information to consumers who
have satisfied their deductibles or
reached their out-of-pocket limit. These
consumers may wish to base their
health care spending decisions on
underlying prices to avoid excess
spending by their issuer or employer
that could lead to premium increases,
increased out-of-pocket obligations, or
lower employer contributions toward
employer-sponsored coverage. Knowing
the rates negotiated by other issuers in
their geographic market will assist
consumers during open enrollment, as
they search for a plan that may lower
their out-of-pocket costs in the coming
year.
The government also has a substantial
interest in assisting other health care
spenders, such as employers and
government benefits programs, to make
coverage choices that drive value for the
public. Given the size and scope of the
country’s health care market and the
fact that choices made by employers and
benefits programs operate at scale to
direct health care spending, the
government can increase the value of
health care expenditures by ensuring
those entities have access to accurate
information. Providing employers and
government benefit programs with
actionable data may also help drive
down total health care spending, as
issuers compete to offer higher-value
programs.
The government’s interest in
promoting a sustainable health care
economy driven by market forces is
substantial, as reflected in section
1311(e) of PPACA. As of 2018, U.S.
health care spending had reached $3.6
trillion, or $11,172 per person and
accounted for 17.7 percent of the
nation’s Gross Domestic Product.82
Given the scope of the market and the
earlier-discussed data suggesting that
price transparency and market forces
can drive down health care costs, the
government’s interest in increasing
price transparency is substantial.
Each of the three interests identified
above is furthered by the final rules. For
individuals, the data provided will
permit them to compare prices for
health care items and services and
allocate their funds accordingly. For
benefit plans and employers, the
information provided will guide
decision-making about which coverage
options to offer, and which providers or
third parties, like pharmacy benefit
82 ‘‘Historical National Health Expenditure Data.’’
Centers for Medicare and Medicare Services.
Available at: https://www.cms.gov/ResearchStatistics-Data-and-Systems/Statistics-Trends-andReports/NationalHealthExpendData/
NationalHealthAccountsHistorical.
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managers (PBMs), to contract with. For
the health care economy as a whole, the
Departments are of the view (based on
available data) that transparency and
market forces will drive savings and
reduce expenditures. Accordingly, the
Departments continue to hold the view
that the final rules serve substantial
government interests.
Furthermore, the requirement to
provide these disclosures does not
unduly burden plan or issuer speech
because nothing in the final rules would
‘‘drown out [a plans’ or issuers’] own
message’’ or ‘‘effectively rule out’’ any
mode of communication. See NIFLA,
138 S. Ct. at 2378. Plans and issuers
remain free to communicate with
consumers using methods and media
they have always used or may choose to
use in the future.
The Departments further disagree that
the final rules would be subject to a
standard of constitutional scrutiny
higher than that applied to compelled
commercial speech. For First
Amendment purposes, commercial
speech is speech ‘‘related solely to the
economic interests of the speaker and its
audience.’’ Cent. Hudson Gas & Electric
Corp. v. Pub. Serv. Comm’n of N.Y., 447
U.S. 557, 561 (1980). Price information
concerning the cost of health services is
related solely to the economic interests
of providers and the consumers who
seek their services. The speech in
question here, therefore, is commercial
speech.
Furthermore, the disclosure of
negotiated rates is one concerning
‘‘purely factual and uncontroversial
information about the terms [i.e., the
price] under which services are
available.’’ See Zauderer, 471 U.S. at
651; see also Am. Meat Inst. v. U.S.
Dept. of Agric., 760 F.3d 18, 27 (D.C.
Cir. 2014). Therefore, the imposition on
commercial speech by the final rules
need only be ‘‘reasonably related’’ to the
government’s stated interest. For the
reasons discussed above, the
Departments are of the view that making
available negotiated rates to consumers
is reasonably related to the
government’s stated interests in
providing greater cost information to
consumers and benefit plans, as well as
increasing price transparency in the
health care market more broadly. While
the Departments disagree that the
stricter constitutional scrutiny under
Central Hudson would apply to the final
rules for the reasons discussed above,
the Departments also are of the view
that the government interests described
above are ‘‘substantial,’’ and the
regulations, for the reasons described
above, directly advance that
governmental interest and are not more
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extensive than necessary to serve that
interest. None of the alternatives
considered by the Departments would
provide the full panoply of information
necessary to achieve the identified
interests. Specifically, the only way to
provide information concerning a
consumer’s personal liability for health
care services when the negotiated rate is
all or any portion of that liability is by
disclosing those rates.
The Departments disagree that the
rules are excessively burdensome and
are invalid because they purportedly
exceed the statute’s goal of providing
notice of cost-sharing liability. The
Departments are of the view that, in
addition to providing participants,
beneficiaries, and enrollees with notice
of cost-sharing liability, the final rules
are intended to advance a number of
concurrent goals, as described earlier in
this preamble. These goals are
consistent with the full text of section
1311(e)(3) of PPACA and section 2715A
of the PHS Act. They include the
overarching goal of facilitating a marketdriven heath care system by giving
consumers of health care services data
that will enable consumers to make
fully informed, cost-conscious decisions
when choosing health care. These
transparency requirements will support
the creation of a competitive dynamic in
health care markets that leads to
narrower price differentials for the same
services, fosters innovation, and
potentially lowers overall health care
costs over time.83 These goals are
consistent with the statutory mandate to
promote transparency in coverage by
making available to the public accurate
and timely health care information,
including cost-sharing information, and
other information as deemed
appropriate by the Departments.
The Departments also disagree with
any notion that, because published
negotiated rates would not be useful to
all consumers in all situations, the final
rules are not sufficiently tailored to
survive constitutional scrutiny.
Consumers seeking in-network items or
services must have access to negotiated
rate information to calculate out-ofpocket costs under the majority of
health care payment models. These
negotiated rates determine the price
they will be obliged to pay, up to the
applicable out-of-pocket limit. Thus,
disclosing the negotiated rate is
important to the consumer’s ability to
reasonably estimate his or her personal
financial liability in advance of
receiving services. In particular, and as
explained earlier in this preamble,
annual deductibles for plans and issuers
83 84
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now routinely obligate consumers to
pay several thousand dollars before the
plan or issuer pays any benefits. The
requirement to disclose negotiated rates
to consumers is, therefore, crucial to
providing meaningful transparency in
health care markets.
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b. Fifth Amendment Taking
The Departments also disagree that
the requirement to disclose negotiated
rates in the final rules constitutes an
unlawful taking without just
compensation under the Fifth
Amendment. As an initial matter, the
subject of any ‘‘taking’’ is a cognizable
property interest. Commenters asserted
that their negotiated rates constitute
property because they are trade secrets.
The Departments disagree. In order for
a piece of information to qualify as a
trade secret, it must be the subject of
efforts to maintain its secrecy that are
reasonable under the circumstances.
Under most circumstances, if a piece of
information is disclosed to third parties
who have no obligation to keep it a
secret, it does not qualify for trade
secrets protection. Negotiated rates for
health care items and services are
routinely disclosed in EOBs provided to
participants, beneficiaries, and
enrollees. Participants, beneficiaries,
and enrollees have no obligation to keep
the information contained in their EOBs
secret; some patients provide them to
journalists or upload them to crowdsourcing websites.84 The Departments
are of the view that this routine
disclosure of negotiated rate information
is sufficient to defeat any asserted tradesecret protection, and, therefore, the
issuers have no proprietary interest in
the negotiated rates that could be the
subject of a constitutional ‘‘taking.’’
Moreover, plans’ and issuers’
expectations of confidentiality in
information provided as a condition of
participation in a highly regulated
industry (for example, health insurance)
are substantially diminished by the
highly regulated nature of the industry.
See, e.g., Ruckelshaus v. Monsanto Co.,
467 U.S. 986, 1007 (1984) (noting that
expectations are necessarily adjusted in
areas that ‘‘ha[ve] long been the source
of public concern and the subject of
government regulation’’); Me. Educ.
Ass’n Benefits Trust v. Cioppa, 695 F.3d
145 (1st Cir. 2012) (discussing a Maine
law requiring health issuers to disclose
84 Kliff, S. ‘‘Why I’m Obsessed With Patients’
Medical Bills, New York Times. August 7, 2020.
Available at https://www.nytimes.com/2020/08/07/
insider/coronavirus-medical-bills.html; see also
Cerullo, M. ‘‘As medical costs soar, more Americans
turn to crowdfunding.’’ CBS News. February 21,
2020. Available at: https://www.cbsnews.com/news/
health-care-costs-crowdfunding-medical-bills/.
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loss information); Franklin Mem’l Hosp.
v. Harvey, 575 F.3d 121, 128 (1st Cir.
2009) (holding that a claimant’s
investment-backed expectations were
‘‘tempered by the fact that it operate[d]
in the highly regulated hospital
industry’’).85 Plans and issuers are
already subject to extensive regulation
under Federal and state law. As noted
by the 1st Circuit in Pharmacy Care v.
Rowe:
If [regulated parties] truly assumed that
they would be free from disclosure
requirements . . . this would be more
wishful thinking than reasonable
expectation. Whether or not the law strikes
the right economic balance between
competing producer and consumer interests,
it is no more a taking than the requirement
that public corporations disclose private
corporate information about financial
prospects to the public through regular SEC
filings.
Pharm. Care Mgmt. Ass’n v. Rowe, 429
F.3d 294, 316 (1st Cir. 2005) (joint
concurring opinion representing the
opinion of the court). The Court further
stated: ‘‘Given the absence of a full-scale
taking and the presence of a traditional
regulatory interest, it is enough to defeat
the takings claim that no reasonable
investment-backed expectation is
present at all.’’ Id. at 315; see also Good
v. United States, 189 F.3d 1355, 1363
(Fed. Cir. 1999) (‘‘We have previously
held that the government is entitled to
summary judgment on a regulatory
takings claim where the plaintiffs lacked
reasonable, investment-backed
expectations. . . .’’).
Even if there were some property
interest in negotiated rates, the
Departments are of the view that this
regulation is not a taking. The Supreme
Court ‘‘has identified several factors that
should be taken into account when
determining whether a governmental
action has gone beyond ‘regulation’ and
effects a ‘taking.’ ’’ Monsanto, 467 U.S.
at 1005. Among those factors are ‘‘the
character of the governmental action, its
economic impact, and its interference
with reasonable investment-backed
expectations.’’ Id. (citing PruneYard
Shopping Ctr. v. Robins, 447 U.S. 74, 83
(1980)); see also Kaiser Aetna v. United
States, 444 U.S. 164, 175 (1979); Penn
85 PBMs serve as intermediaries between
pharmacies and health benefit plans, including
plans covered by ERISA. PBMs contract with
pharmacies to establish pharmacy networks and
contract with health benefit plans to provide access
to those pharmacy networks. When a participant in
a health benefit plan fills a drug prescription at a
network pharmacy, the PBM pays the pharmacy at
the rate negotiated in the contract between the PBM
and the pharmacy (less any copayment by the
participant), and the health benefit plan then
reimburses the PBM at the rate negotiated in the
contract between the PBM and the health benefit
plan.
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Cent. Transp. Co. v. City of N.Y., 438
U.S. 104, 124 (1978).
In requiring disclosure under the final
rules, the government does not do so
with the intention that the information
is primarily and explicitly for the
government’s own use, or that any such
potential impact is the purpose for
requiring the disclosure. Instead, the
final rules are intended to, and will,
enable consumers to access information
needed to make informed decisions on
health care services. Under Penn
Central, ‘‘[a] ‘taking’ may more readily
be found when the interference with
property can be characterized as a
physical invasion by government than
when interference arises from some
public program adjusting the benefits
and burdens of economic life to promote
the common good.’’ Penn Central, 438
U.S. at 124 (citation omitted). The final
rules clearly fall on the other end of the
spectrum, arising from statutory
provisions, section 1311(e)(3) of PPACA
and section 2175A of the PHS Act, that
‘‘adjust[t] the benefits and burdens of
economic life to promote the common
good.’’ Connolly v. Pension Benefit
Guar. Corp., 475 U.S. 211, 212 (1986).
3. Protections for Proprietary,
Confidential Business Information, and
Trade Secrets
Several commenters objected to the
proposed rules on grounds that the
requirement that issuers make public
negotiated rates with providers would
require the disclosure of allegedly
confidential, proprietary business
information, and trade secrets that are
expressly protected from disclosure by a
variety of Federal and state laws, and
the statute does not in any way purport
to abrogate those protections. Several
commenters pointed to the Defend
Trade Secrets Act (DTSA), which
protects the property rights of trade
secret holders,86 and the Freedom of
Information Act (FOIA),87 which
protects confidential, proprietary
business information, and trade secrets
from public disclosure, as examples of
Congress’ intent that such information
be protected.
The Departments disagree. As
discussed above, the Departments are of
the view that the routine disclosure of
negotiated rate information to third
parties via EOBs means that the rate
information is not a trade secret, and the
DTSA, therefore, does not apply. Even
if it did, there can be no meaningful
sense in which the disclosure of this
information pursuant to the final rules
would constitute a misappropriation by
86 18
87 5
U.S.C. 1836(b).
U.S.C. 552.
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improper means prohibited by the
DTSA. The disclosures in question
would be made pursuant to a regulatory
mandate authorized by law, to effectuate
policy priorities enacted by Congress:
Namely, transparency in health care.
These disclosures cannot reasonably be
construed as ‘‘theft, bribery, or
misrepresentation.’’ 88
The disclosures required under the
final rules would also not constitute a
breach or inducement of a breach of a
duty to maintain secrecy, as the final
rules apply prospectively in a regulatory
environment in which all parties to
provider agreements, and all affected
plans and issuers, are being placed on
notice and should be aware in advance
of the requirements of the final rules.
All parties to these contracts are
therefore positioned to modify
contractual arrangements, or similar
policies, practices, or expectations
relating to privacy or trade secrets to
conform to the final rules. Otherwise,
the final rules will supersede these
arrangements to the extent necessary to
implement these rules.
FOIA is also not relevant to the
disclosure that would be required by the
final rules.89 FOIA is a public
information law that applies to Federal
agencies, and generally enables the
public to obtain records in possession of
an agency.90 Under the final rules, by
contrast, negotiated rate information
and out-of-network allowed amount
information would be made available
for the express purpose of making the
information broadly available to the
public, consistent with the authority
Congress vested in the Departments.
FOIA does not apply to disclosures by
private entities such as the plans and
issuers that would be subject to the
disclosure requirements in the final
rules. The exemptions found in the
FOIA statute apply to disclosures by the
government; that a piece of information
might be subject to a FOIA exemption
does not mean it is entitled to a
heightened protection from disclosure
when held by a private party.
Neither does FOIA apply to
information maintained by private
entities and not by an agency or
government contractor, as that
information would not constitute an
agency record. To be an agency record
subject to FOIA, an agency must have
created or obtained the materials and
must be in control of the materials. U.S.
Dep’t of Justice v. Tax Analysts, 492
U.S. 136, 145 (1989). Regardless of
whether the negotiated rates and
allowed amounts would constitute trade
secrets or commercial information
under FOIA, a requirement that private
entities make certain information public
does not implicate FOIA.
One commenter contended that the
proposed disclosure of negotiated rates
does not concern trade secrets, and is
therefore not prohibited for that reason.
The commenter asserted that the
proposed disclosures concern end
prices, which are comparable to the
‘‘sticker price’’ of a medical service or
device. The commenter stated that those
prices are not themselves trade secrets,
which the commenter contended consist
of negotiating tactics which the
proposed rules would not require
issuers to make available to the public.
As indicated above in relation to the
DTSA, the Departments agree that the
final rules do not implicate trade
secrets.
In support of the proposition that
Congress could not have intended to
undermine existing protections for
confidential or proprietary business
information and trade secrets when it
enacted section 1311(e)(3) of PPACA,
one commenter noted that elsewhere in
PPACA, where Congress mandated
pricing-related disclosures, it included
language or arrangements that protected
individual negotiated rates and pricing
information from disclosure. A
provision relating to the disclosure of
drug cost information mandates release
of only aggregated information and
includes a specific designation of the
information as confidential and
protected from publication except in
specific formats and for limited
purposes that protect the identity of the
parties to particular pricing
arrangements.91 Another provision
mandates that hospitals make public a
list of standard charges for items and
services, not negotiated rates, on an
annual basis only.92 Both of these
provisions, the commenter suggested,
indicate Congressional intent to protect
proprietary business information that is
contrary to the requirements of the
proposed rule.
The Departments are aware that
Congress included provisions
preventing or limiting disclosures of
health care information in other sections
of PPACA but note that Congress did
not include such provisions in section
1311(e)(3)(A) of PPACA, indicating no
intention that such restrictions apply in
this context.93
91 42
U.S.C. 1320b–23(c).
U.S.C. 300gg(18)(e).
93 See, for example, Keene Corp. v. United States,
508 U.S. 200, 208 (1993) (‘‘[W]here Congress
includes particular language in one section of a
92 42
88 18
U.S.C. 1839(5)–(6).
U.S.C. 552.
90 5 U.S.C. 552(b)(4).
89 5
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Several commenters also pointed to
the Sherman Antitrust Act, and specific
applications of antitrust principles
relating to the disclosure of trade
secrets, including negotiated rates
between issuers and providers in the
health care context. They contend that
Congress could not have intended to
indirectly undermine these longstanding standards and policies when it
enacted section 1311(e)(3) of PPACA.
Several commenters also cited
interpretive communications and
similar guidance from the Federal Trade
Commission (FTC) and the Antitrust
Division of the Department of Justice for
the proposition that public disclosure of
negotiated prices can have
anticompetitive effects and harm
consumers, contrary to long standing
principles of antitrust law. One
commenter recommended that any plan
to make public privately negotiated
rates should include requirements to
aggregate information to ensure that
arrangements of specific market
participants remain confidential, and
that a time lag also should be applied to
any released data to ensure current
information is not compromised.
The Departments disagree with the
notion that the final rules will lead to
anticompetitive behavior by plans,
issuers, and providers. The Sherman
Antitrust Act prohibits any contract,
combination, or conspiracy in restraint
of trade or commerce.94 Specifically, the
law prohibits any ‘‘person’’ from
entering into any such contract, trust, or
similar arrangement.95 ‘‘The primary
purpose of the antitrust laws is to
protect interbrand competition.’’ State
Oil Co. v. Khan, 522 U.S. 3, 15 (1997)
(citing Bus. Elec. Corp. v. Sharp Elec.
Corp., 485 U.S. 717, 726 (1988)). The
Departments are not of the view that
publication of plans’ and issuers’
negotiated rates with providers is likely
to spur plans and issuers (‘‘persons’’) to
violate the law by colluding to fix their
prices in a manner that restrains trade.
Rather, while the publication of price
information sometimes facilitates tacit
collusion, based on public comments
and the many empirical studies that
have investigated the impact of price
transparency on other, non-health care
markets, the Departments are of the
statute but omits it in another . . . it is generally
presumed that Congress acts intentionally and
purposely in the disparate inclusion or
exclusion.’’).
94 15 U.S.C. 1.
95 Id. ‘‘Person’’ or ‘‘persons’’ are defined at 15
U.S.C. 12(a) (‘‘[P]erson’’ or ‘‘persons’’ wherever
used in this Act shall be deemed to include
corporations and associations existing under or
authorized by the laws of either the United States,
the laws of any of the Territories, the laws of any
State, or the laws of any foreign country’’).
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view that transparency of negotiated
rates will likely motivate plans, issuers,
and providers to reassess the
competitiveness of their prices in order
to continue to successfully compete
with lower premiums, deductibles, and
other cost-sharing responsibilities, and
lower priced health care items and
services. As stated in the preamble of
the Hospital Price Transparency Final
Rule, many empirical studies have
investigated the impact of price
transparency on markets, with most
research, consistent with predictions of
standard economic theory, showing that
price transparency leads to lower and
more uniform prices.96 Traditional
economic analysis suggests that if
consumers were to have better pricing
information for health care services,
providers would face pressure to lower
prices and provide better quality care.
Falling prices may, in turn, expand
consumers’ access to health care.97
By disclosing negotiated rates, the
Departments are of the view that the
public (including patients, employers,
clinicians, and other third parties) will
have the information necessary to make
more informed decisions about their
care. The Departments expect that the
impact of more expansive transparency
in pricing information will increase
market competition and may ultimately
drive down the cost of health care
services, making care more affordable
for all consumers.
Although the Departments appreciate
that regulated entities could seek to
engage in unlawful behavior in restraint
of trade, antitrust law does not proscribe
or limit action by the Federal
Government to address chronic issues in
the nation’s health care markets. Such
actions include new, innovative
measures that, based on evidence and
research, are likely to improve
competition and lower costs to
consumers. The Departments also are of
the view that the statute and the final
rules do not constitute an abrogation of
antitrust law. Nothing under the final
rules creates, compels, or endorses
agreements or conspiracies between or
among persons to form illegal
arrangements or trusts in restraint of
trade or commerce. To the contrary,
antitrust law enforcement remains an
important tool to protect these markets
from anticompetitive behavior.
96 84
FR 65464, 65524 (Nov. 27, 2019).
A. D., and Gravelle, J. G.
‘‘Congressional Research Service Report for
Congress: Does Price Transparency Improve Market
Efficiency? Implications of Empirical Evidence in
Other Markets for the Healthcare Sector’’. April 29,
2008. Available at: https://crsreports.congress.gov/
product/pdf/RL/RL34101.
97 Austin,
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The Departments are of the view that
the disclosure of negotiated rates would
serve a greater public interest and that
‘‘concealing negotiated price
information serves little purpose other
than protecting dominant providers’
ability to charge above-market
prices. . . .’’ 98 For example, in Maine,
one state official indicated that ‘‘to date,
there is no evidence that the release of
[Maine Health Data Organization]
claims data has resulted in an
anticompetitive market. Similarly,
disclosure of claims data in New
Hampshire has resulted increased
competition and reduced prices for
health care.99
For the reasons set forth in this
preamble, the Departments are of the
view that the final rules will enhance
competition, improve markets, and
benefit all consumers of health care,
including individuals, employers, and
government health care programs.
Under the final rules, disclosure of the
negotiated rate is critical to the ability
of consumers, including those who have
not met their annual deductible
obligation, to be able to reasonably
estimate in advance their personal
liability for covered services from
participating providers. It is also critical
in estimating coinsurance liabilities that
are calculated as a percentage of
provider charges. In addition, the
Departments are of the view that
accessible pricing information improves
market efficiency.100
4. Administrative Procedure Act (APA)
and Arbitrary and Capricious Agency
Action
Some commenters asserted that the
proposed rules were arbitrary and
capricious and thus violate the APA.
Two commenters contended that the
Departments’ rationale is entirely
speculative. They also contended that
the Departments have not quantified in
a reliable way the costs or anticipated
benefits of the proposed rules, examined
relevant data, or articulated a
satisfactory explanation for the
proposed rules. One commenter held
the opposite position and asserted that
the proposed rules were fully consonant
with APA requirements. The commenter
believed the Departments are
implementing PPACA appropriately,
and that the interpretation of the
authorities underlying the proposed
rules was reasonable and rationally
explained by the Departments.
The Departments are also of the view
that the final rules are consistent with
the APA. Section 1311(e)(3) of PPACA
and section 2715A of the PHS Act are
designed to assist consumers by
enhancing their ability to make costconscious decisions, which is essential
to establish and maintain the level of
market competition necessary to ensure
that health care costs are rational,
reasonable, and governed by standard
market discipline. As the preamble to
the proposed rules observed, there is
substantial evidence that increased
price transparency improves market
efficiency.101 For these reasons, it is
within the scope of the statute to assist
consumers with selecting providers,
evaluating market options, increasing
competition, and reducing market
disparities. The carefully targeted
information is essential to the goals of
price transparency, and there is no other
means of making cost-sharing liability
information available to consumers
whose personal liability is determined
in whole or in part by reference to
negotiated rates or allowed amounts.
The Departments further hold the view
that the Departments have made
reasonable efforts to quantify all aspects
of the final rules, and their potential
effects, for which data is available. The
Departments also note that efforts have
been made to qualitatively address those
areas where the Departments are unable
to adequately derive quantitative
assessments. Responses to additional
comments are discussed later in the
Regulatory Impact Analysis (RIA) and
Regulatory Alternatives Considered
sections of this preamble.
This preamble (as well as the
preamble to the proposed rules) cites
substantial research indicating that
increased price transparency increases
competition and lowers costs, leads to
98 Catalyst for Payment Reform. ‘‘Report Card on
State Price Transparency Laws.’’ July 2015.
Available at: https://www.catalyze.org/wp-content/
uploads/woocommerce_uploads/2017/04/2015Report-Card-on-State-Price-Transparency-Laws.pdf.
99 Brown Z.Y. ‘‘Equilibrium Effects of Health Care
Price Information.’’ 101 Rev. of Econ. & Stat. 699
(2019). Available at: https://wwwpersonal.umich.edu/∼zachb/zbrown_eqm_effects_
price_transparency.pdf.
100 Austin, D.A., and Gravelle, J.G. ‘‘CRS Report
for Congress: Does Price Transparency Improve
Market Efficiency? Implications of Empirical
Evidence in Other Markets for the Healthcare
Sector.’’ July 24, 2007. Available at: https://fas.org/
sgp/crs/secrecy/RL34101.pdf.
101 84 FR 65464, 65489; 65495 (Nov. 27, 2019);
see also Austin, A.D., and Gravelle, J.G.
‘‘Congressional Research Service Report to
Congress: Does Price Transparency Improve Market
Efficiency? Implications of Empirical Evidence in
Other Markets for the Healthcare Sector.’’ July 24,
2007. Available at: https://fas.org/sgp/crs/secrecy/
RL34101.pdf; see also Brown, Z.Y. ‘‘Equilibrium
Effects of Health Care Price Information.’’ 100 Rev.
Econ. & Stat. 1. Available at: https://wwwpersonal.umich.edu/∼zachb/zbrown_eqm_effects_
price_transparency.pdf; see also Enthoven, A.
‘‘Market Forces and Efficient Health Care Systems.’’
Health Affairs, Vol. 23, No. 2. Available at https://
www.healthaffairs.org/doi/full/10.1377/
hlthaff.23.2.25.
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more uniform pricing within markets,
and increases overall market
efficiency.102 This preamble also cites
an abundance of evidence indicating
that industry and other stakeholders
believe that increased price
transparency will enhance competition
and benefit consumers. As stated earlier
in this preamble in relation to
comments regarding the First
Amendment, the information the final
rules require to be disclosed is clearly
identified and has a direct nexus to the
government’s legitimate and substantial
interest in ensuring that consumers have
sufficient information to calculate out of
pocket costs for health care items and
services and ultimately assess whether
the payment terms of plans and
coverages are fair, reasonable, or
advantageous to the consumer.
Furthermore, in the Impact Estimates of
the Transparency in Coverage
Provisions and Accounting Table
section later in this preamble, the
Departments identify ranges of relevant
factors and categories of information
that the Departments have attempted to
quantify, as well as those factors and
categories that the Departments cannot
quantify at this time. Nevertheless, the
Departments are of the view that those
determinations are reasonable and
sufficiently thorough, and that the
Departments’ expectations regarding the
impacts of the final rules are not
speculative.
5. Other Legal Concerns
Several commenters asserted that
requiring issuers to make negotiated
prices public could violate various state
laws, principles of common law, and
tort laws concerned with the protection
of trade secrets and proprietary business
information. Several commenters
specifically stated that the proposal
would violate the Uniform Trade
Secrets Act (UTSA) 103 as adopted by
several states.
The Departments understand these
concerns and appreciate that States have
passed laws and regulations that may
address the same or similar information
the final rules require to be publicly
disclosed, or disclosed to participants,
102 84
FR 65464, 65466–67 (Nov. 27, 2019).
Uniform Trade Secrets Act is a model
statute that a majority of states have adopted in
some form. The UTSA is promulgated by the
Uniform Law Commission. See generally, Uniform
Trade Secrets Act with 1985 Amendments, Nat’l
Conference of Commissioners on Uniform State
Laws, August 1985. UTSA has been adopted in
some form by 48 states. New York and North
Carolina are the exceptions. See ‘‘Trade Secrets
Act.’’ Uniform Laws Commission. Available at:
https://www.uniformlaws.org/committees/
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beneficiaries, or enrollees. The final
rules will preempt these laws, to the
extent they conflict with Federal law
and would prevent application of
Federal requirements, as required under
section 1321(d) of PPACA and section
2724(a) of the PHS Act. The
Departments discuss this issue in more
detail later in this preamble in the
context of addressing federalism
considerations.
Moreover, the Departments are also of
the view that negotiated rates do not
constitute trade secrets as defined under
the UTSA and under principles of tort
law. A trade secret under the UTSA is
‘‘information, including a formula,
pattern, compilation, program, device,
method, technique, or process’’ that
‘‘derives independent economic
value. . . from not being generally
known [or] readily ascertainable by
proper means by . . . other persons who
can obtain economic value from its
disclosure [and] is the subject of efforts
to . . . maintain its secrecy.’’ 104
Critically, and as discussed earlier,
negotiated rates are routinely disclosed
to beneficiaries in EOBs.
To the extent the final rules require
disclosure of trade secrets, the activity
that supports a cause of action under
tort law includes obtaining the
information by improper means or a
breach of confidence.105 No such
scenario is implicated where the
disclosure is made pursuant to a
regulatory mandate authorized by
statute. In this context, the disclosure is
a legal obligation, and so the disclosure
is by definition proper and made in the
absence of any duty of confidence.
Finally, even if negotiated rates could
constitute trade secrets under a state’s
law, state law cannot invalidate the
authority Congress granted to the
Departments under section 1311(e)(3) of
PPACA to require disclosure of
negotiated rates and other information
that the Departments determine
appropriate to create a level of
transparency in coverage sufficient to
104 See Uniform Trade Secrets Act with 1985
Amendments, Nat’l Conference of Commissioners
on Uniform State Laws, August, 1985; Restatement
(First) of Torts section 757 (1939).
105 Restatement (First) of Torts section 757 (1939)
(‘‘GENERAL PRINCIPLE. One who discloses or uses
another’s trade secret, without a privilege to do so,
is liable to the other if (a) he discovered the secret
by improper means, or (b) his disclosure or use
constitutes a breach of confidence reposed in him
by the other in disclosing the secret to him, or (c)
he learned the secret from a third person with
notice of the facts that it was a secret and that the
third person discovered it by improper means or
that the third person’s disclosure of it was
otherwise a breach of his duty to the other, or (d)
he learned the secret with notice of the facts that
it was a secret and that its disclosure was made to
him by mistake.’’).
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address chronic issues in American
health care markets, including rising
health care prices.
Several commenters asserted that
making negotiated rates public would
violate contractual arrangements
between virtually all issuers and
providers, in particular contractual
provisions that prohibit disclosure of
negotiated rates. One commenter noted
that this would, at a minimum, require
a considerable effort to amend many
existing contracts.
The Departments understand that
changes in applicable laws and
regulations may necessitate changes to
certain business and contractual
relationships over time. The
Departments are of the view, however,
that the final rules are necessary to
advance the interests of consumers and
to fulfill the goals of the relevant
statutes. The Departments also
anticipate that in most cases, affected
contracts include clauses that
specifically anticipate the possibility of
future changes to applicable law or
regulations. Additionally, even if a
contract between a provider and a payer
includes a provision prohibiting the
public disclosure of its terms, it is the
Departments’ understanding that such
contracts typically include exceptions if
a particular disclosure is required by
Federal law. Finally, as the Supreme
Court has found, ‘‘[c]ontracts, however
express, cannot fetter the constitutional
authority of Congress. Contracts may
create rights of property, but when
contracts deal with a subject matter
which lies within the control of
Congress, they have a congenital
infirmity. Parties cannot remove their
transactions from the reach of dominant
constitutional power by making
contracts about them.’’ Norman v. Balt.
& Ohio R.R. Co., 294 U.S. 240, 307–08
(1935) (‘‘If the regulatory statute is
otherwise within the powers of
Congress . . . its application may not be
defeated by private contractual
provisions.’’); see also Connolly, 475
U.S. at 224.
Several commenters contended that
the proposed rules would be
inconsistent with certain Executive
orders. One commenter contended that
Executive Order 13877, which the
Departments cited as the impetus for the
proposed rules, directs the agencies to
‘‘require . . . health insurance issuers
. . . to provide or facilitate access to
information about expected out-ofpocket costs for items or services to
patients before they receive care.’’ The
commenter asserted that this directive
does not rationally encompass a
requirement that issuers make public all
negotiated rates and allowed amounts.
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The commenter also asserted that the
proposed rules are incompatible with
section 3(b) of Executive Order 13877,
which provides that any rulemaking be
‘‘consistent with applicable law,’’ in
that the proposed rules run contrary to
antitrust law as well as prohibitions
against disclosing trade secrets.
The Departments disagree with these
comments. First, Executive Order 13877
clearly states that it is ‘‘not intended to,
and does not, create any right or benefit,
substantive or procedural, enforceable at
law or in equity by any party against the
United States, its departments, agencies,
or entities, its officers, employees, or
agents, or any other person.’’ Executive
Order 13877, Sec. 8(c). Thus, an
Executive order cannot form the basis of
a challenge to a rulemaking. Second, for
all the reasons detailed earlier in this
preamble, the Departments are of the
view that the final rules are necessary
and appropriate measures that are
sufficiently narrowly tailored to meet
the stated goals of the Executive order.
Making public the negotiated rates and
out-of-network allowed amounts is
essential for consumers to obtain useful
information about out-of-pocket costs
they are likely to incur before receiving
services. Due to the prevalence of high
deductibles throughout markets
nationwide, this information will be
crucial for a significant cohort of
persons enrolled in health plans to be
able to anticipate costs in advance of
each plan year. For the public, access to
information concerning allowed
amounts is essential to obtain reliable
advance estimates of personal liability
to facilitate cost-conscious choices that
enhance competition and lower overall
costs. Finally, as described later in this
preamble, the Departments considered
many alternatives to the proposed and
final rules. The Departments are of the
view that the final rules are a
straightforward implementation of the
mandate of section 1311(e)(3) of
PPACA, and that the choices taken in
particular instances are well calculated
to effectively and fully implement the
goals of the authorizing statutes.
Moreover, the regulations provide tools
and information to consumers that are
critical to their ability to access
meaningful price information, including
the personal liability associated with a
substantial portion of health care
services. This directly facilitates the
meaningful engagement of consumers
with their own health care and protects
patients from the likelihood of
unanticipated health care costs. As
such, the regulations fulfill the mandate
of Executive Order 13877.
For the foregoing reasons, the final
rules adopt the majority of the
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provisions in the proposed rules, with
certain modifications, as described in
detail in the following sections of this
preamble.
II. Overview of the Final Rules
Regarding Transparency—the
Departments of the Treasury, Labor,
and Health and Human Services
The Departments are finalizing price
transparency requirements set forth in
the final rules in 26 CFR 54.9815–
2715A1, 54.9815–2715A2, and 54.9815–
2715A3, 29 CFR 2590.715–2715A1,
2590.715–2715A2, and 2590.715–
2715A3, and 45 CFR 147.210, 147.211,
and 147.212. The final rules separate the
proposed regulations all contained in 26
CFR 54.9815–2715A, 29 CFR 2590.715–
2715A, and 45 CFR 147.210, into three
separate regulations for each of the
Departments. The regulations set forth
the scope and relevant definitions in 26
CFR 54.9815–2715A1, 29 CFR
2590.715–2715A1, and 45 CFR 147.210
(which correspond with paragraph (a) of
the proposed regulations). The
regulations at 26 CFR 54.9815–2715A2,
29 CFR 2590.715–2715A2, and, 45 CFR
147.211 (which correspond with
paragraph (b) of the proposed
regulations) include: (1) A requirement
that group health plans and health
insurance issuers in the individual and
group markets disclose to participants,
beneficiaries, or enrollees upon request,
through a self-service tool made
available by the plan or issuer on an
internet website, cost-sharing
information for a covered item or
service from a particular provider or
providers, and (2) a requirement that
plans and issuers make such
information available in paper form,
upon request. As explained in more
detail later in this preamble, the final
rules adopt a three-year, phased-in
approach with respect to the scope of
the requirement to disclose cost-sharing
information. Plans and issuers must
make cost-sharing information available
for 500 items and services identified by
the Departments for plan years (in the
individual market, for policy years)
beginning on or after January 1, 2023,
and must make cost-sharing information
available for all items and services for
plan years (in the individual market, for
policy years) beginning on or after
January 1, 2024.
The regulations at 26 CFR 54.9815–
2715A3, 29 CFR 2590.715–2715A3, and
45 CFR 147.212 (at paragraph (c) of the
proposed regulations) require that plans
and issuers disclose pricing information
to the public through three machinereadable files. One file requires
disclosure of payment rates negotiated
between plans or issuers and providers
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for all covered items and services. The
second file will disclose the unique
amounts a plan or issuer allowed, as
well as associated billed charges, for
covered items or services furnished by
out-of-network providers during a
specified time period. To reduce the
complexity and burden of including
prescription drug information in the
negotiated rate machine-readable file,
the final rules require a third file that
will include pricing information for
prescription drugs. The final rules
modify the applicability date for these
provisions to plan years (in the
individual market, policy years)
beginning on or after January 1, 2022.
The provisions proposed at paragraph
(d) of the proposed regulations are
finalized in 26 CFR 54.9815–2715A2
and 54.9815–2715A3, 29 CFR 2590.715–
2715A2 and 2590.715–2715A3, and 45
CFR 147.211 and 147.212 with nonsubstantive editorial changes for
increased readability, and with effective
dates reflecting the phased approach to
implementation mentioned earlier and
discussed in more detail later in this
preamble.
In addition to splitting the final rules
into three separate regulations for each
Department, the Departments have
added severability clauses to the final
rules to emphasize the Departments’
intent that, to the extent a reviewing
court holds that any provision of the
final rules is unlawful, the remaining
rules should take effect and be given the
maximum effect permitted by law. The
final rules provide that any provision
held to be invalid or unenforceable by
its terms, or as applied to any person or
circumstance, or stayed pending further
agency action, shall be severable from
the relevant section and shall not affect
the remainder thereof or the application
of the provision to persons not similarly
situated or to dissimilar circumstances.
To streamline the final rules, the
Departments have removed definitions
of terms that are defined in the
applicable statute or elsewhere in such
statutes’ implementing regulations and
have revised certain definitions to
provide more clarity. Finally, based on
comments received, the Departments
have reassessed the associated burden
estimates in the Economic Impact
Analysis and Paperwork Burden section
of this preamble.
A. Definitions
The final regulations at 26 CFR
54.9815–2715A1(a), 29 CFR 2590.715–
2715A1(a), and 45 CFR 147.210(a)
(paragraph (a) of the proposed
regulations) set forth definitions that are
applicable to the regulations at 26 CFR
54.9815–2715A2, 29 CFR 2590.715–
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2715A2, and 45 CFR 147.211 (paragraph
(b) of the proposed regulations) and 26
CFR 54.9815–2715A3, 29 CFR
2590.715–2715A3, 45 CFR 147.212
(paragraph (c) of the proposed
regulations). The Departments have
revised the proposed definitions of
some terms and included new defined
terms in order to clarify the final
requirements of 26 CFR 54.9815–
2715A2, 29 CFR 2590.715–2715A2, and
45 CFR 147.211, and 26 CFR 54.9815–
2715A3, 29 CFR 2590.715–2715A3, and
45 CFR 147.212. Comments on the
definitions in the proposed rule focused
on concerns regarding consistency of
definitions across related government
programs, the general need for increased
clarity in relation to some proposed
definitions, and the need for resolution
of perceived ambiguities in the
proposed definitions. In response to
these comments, the Departments are
not finalizing certain proposed
definitions that are already defined in
existing, pertinent regulations. The
Departments are finalizing revised
versions of other proposed definitions to
clarify their meaning, as well as the
policies and requirements adopted in
the final rules.
Commenters recommended aligning
definitions in the proposed regulations
with those in other existing regulations
to avoid conflicts. In light of these
recommendations, the Departments are
not finalizing the proposed definition of
‘‘participant’’ under 26 CFR 54.9815–
2715A1, 29 CFR 2590.715–2715A1, or
45 CFR 147.210 because the term is
already defined in the Departments’
regulations at 26 CFR 54.9801–2, 29
CFR 2590.701–2, and 45 CFR 144.103.
Likewise, the Departments are not
finalizing the proposed definition of
‘‘beneficiary’’ under proposed 45 CFR
145.210 and 29 CFR 2590.715–2715A1,
because the term is already defined
under HHS regulation at 45 CFR
144.103 and in statute at ERISA section
3(8). The Departments, however, are
finalizing the definition of ‘‘beneficiary’’
proposed under 26 CFR 54.9815–
2715A(a) (now at 26 CFR 54.9815–
2715A1), because the term is not
otherwise defined in Treasury
Regulations or the Code. Finally, the
Departments are not finalizing the
proposed definition for ‘‘qualified
health plan’’ at 45 CFR 145.210 since
the term is not used in the regulation
text.
Some commenters requested
clarification of the terms ‘‘participants’’
and ‘‘beneficiaries’’ because the
proposed rules’ definitions of these
terms included individuals who may
become eligible for a plan or coverage,
and as the proposed rules envisioned
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personalized feedback to ‘‘participants’’
and ‘‘enrollees’’ it would be impossible
to provide such information to an
individual not currently enrolled in a
plan or coverage. The Departments
agree. However, instead of modifying
existing, applicable definitions for
‘‘participants’’ and ‘‘beneficiaries,’’ the
final rules, at 26 CFR 54.9815–2715A2,
29 CFR 2590.715–2715A2, and 45 CFR
147.211, and this preamble below
clarify to whom these disclosures are
required.
One commenter recommended the
Departments define the term ‘‘innetwork provider’’ in the final rules to
clearly exclude device suppliers and
manufacturers that, the commenter
suggested, have not traditionally been
considered in-network providers and
whose price information is of limited
value to consumers. The Departments
do not agree that device suppliers and
manufacturers should be excluded.
Based on the numerous public
comments from individuals who
support broad price transparency for all
covered items and services, the
Departments are of the view that pricing
information for all covered items and
services should be available, including
pricing for durable medical equipment
(DME) or other medical devices that are
supplied to a participant, beneficiary, or
enrollee by a provider under a contract
with a plan or issuer. To clarify, the
final rules define in-network provider to
mean any provider of items and services
with which the plan or issuer, or a
third-party for a plan or issuer, has a
contract setting forth the terms under
which a covered item or service may be
provided to a participant, beneficiary, or
enrollee. The Departments broadened
this definition to clarify that even where
a provider and a plan or issuer have a
limited rate agreement of some kind, or
a rate agreement covering DME, those
providers should be considered innetwork providers for purposes of the
final rules. Additionally, if a plan or
issuer enters into a contract or has such
payment arrangements, then the pricing
information for the specific covered
items or services subject to that contract
or payment arrangement are required to
be disclosed as part of the internet selfservice tool and machine-readable files.
The proposed regulations included a
definition for ‘‘negotiated rate’’ to mean
the amount a group health plan or
health insurance issuer, or a third party
on behalf of a plan or issuer, has
contractually agreed to pay an innetwork provider for covered items and
services, pursuant to the terms of an
agreement between the provider and the
plan or issuer, or a third-party on behalf
of a plan or issuer. Consistent with the
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proposed and final definitions of ‘‘items
and services,’’ plans and issuers are
required to disclose ‘‘negotiated rates’’
for encounters, procedures, medical
tests, supplies, prescription drugs,
durable medical equipment, and fees
(including facility fees) to participants,
beneficiaries, and enrollees through the
internet-based self-service tool (and in
paper form) as well as to the public
through a machine-readable file. One
commenter requested the Departments
clarify the meaning of ‘‘negotiated rate’’
for prescription drugs, noting that they
assumed the Departments expected
plans and issuers to provide the drug
price negotiated by a PBM on behalf of
the plan. Another commenter asserted
that the ‘‘negotiated rate’’ of
prescription drugs for disclosure should
be the price patients will see at the
point-of-sale, meaning the undiscounted
price of the drug, plus dispensing fees.
Conversely, another commenter stated
that dispensing fees are not paid by
enrollees or used in determining costsharing liability. Other commenters
suggested that the Departments grant
plans and issuers flexibility in
determining the appropriate rate for
disclosure, as plans and issuers use a
variety of different benchmarks, such as
the Average Wholesale Price (AWP), or
Wholesale Acquisition Cost (WAC)
which may be considered as the
‘‘negotiated rate’’ for the purpose of
determining cost-sharing liability under
the plan or coverage.
In the final rules, the Departments
have revised the definition of
‘‘negotiated rate’’ to mean the amount a
plan or issuer has contractually agreed
to pay for a covered item or service,
whether directly or indirectly through a
third party administrator (TPA) or PBM,
to an in-network provider, including an
in-network pharmacy or other
prescription drug dispenser, for covered
items or services. The final rules adopt
the proposed definition with two key
modifications. First, the term ‘‘third
party’’ from the proposed definition is
expanded in the final rules to explicitly
refer to ‘‘third-party administrator or
pharmacy benefit manager.’’ Second, the
final definition of ‘‘negotiated rate’’
specifically notes that the term innetwork provider includes an innetwork pharmacy or other prescription
drug dispenser. The purpose of these
modifications is to confirm the
commenter’s inference that in the case
of prescription drugs, the plan or issuer
should include the price negotiated for
that plan or issuer by a PBM.
Furthermore, the ‘‘negotiated rate’’ in
the final rules is intended to be broad
enough to account for different plan
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designs and benchmarks for
determining negotiated rates.
The final rules also add definitions for
the following terms that were not
included in the proposed regulations:
‘‘billed charge,’’ ‘‘copayment
assistance,’’ ‘‘derived amount,’’
‘‘historic net price,’’ ‘‘national drug
code,’’ and ‘‘underlying fee schedule.’’
The addition of these definitions is
discussed later in this preamble.
One commenter noted that the
Departments have proposed definitions
for ‘‘accumulated amounts,’’ ‘‘costsharing liability,’’ and ‘‘cost-sharing
information’’ that are unique to the
proposed rules and, in some cases,
differ from definitions of similar terms
used in other related regulations. In
particular, this commenter
recommended that all definitions
should explicitly recognize that cost
sharing can be paid by or on behalf of
an enrollee, participant, or beneficiary,
since that is how cost sharing is defined
by HHS regulation. The commenter also
requested that the Departments clarify
the proposed definition of
‘‘accumulated amounts’’ and suggested
revising the definition to state clearly
that accumulated amounts are the
‘‘amount of financial responsibility a
participant, beneficiary, or enrollee has
incurred, whether satisfied by or on
behalf of the participant, beneficiary, or
enrollee. . . .’’
The Departments recognize that cost
sharing may be paid by a third-party on
behalf of an enrollee, participant, or
beneficiary. However, the Departments
are of the view that some plans and
issuers do not count cost-sharing
liability payments made by a third-party
towards a participant’s, beneficiary’s, or
enrollee’s accumulated amounts, and
modifying the definitions as suggested
by the commenter could cause
confusion in the context of the final
rules.
The Departments have added
disclosure requirements that are
discussed in detail elsewhere in this
preamble to address this concern. The
definitions being finalized also include
non-substantive editorial changes from
the proposed regulations for readability
to the following terms; ‘‘accumulated
amounts,’’ ‘‘billing code,’’ ‘‘bundled
payment arrangement,’’ ‘‘cost-sharing
liability,’’ ‘‘cost-sharing information,’’
‘‘covered items or services,’’ ‘‘item or
services,’’ and ‘‘out-of-network allowed
amount.’’
The definitions identified as new or
substantively modified in this section,
as well as those that are being finalized
as proposed, are discussed further in
relation to the requirements of 26 CFR
54.9815–2715A2, 29 CFR 2590.715–
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2715A2, and 45 CFR 147.211 and 26
CFR 54.9815–2715A3, 29 CFR
2590.715–2715A3, and 45 CFR 147.212
throughout this preamble.
B. Requirements for Disclosing CostSharing Information to Participants,
Beneficiaries, and Enrollees
The final rules are intended to enable
participants, beneficiaries, and enrollees
to obtain an estimate of their potential
cost-sharing liability for covered items
and services they might receive from a
particular health care provider,
consistent with the requirements of
section 2715A of the PHS Act and
section 1311(e)(3)(C) of PPACA.
Accordingly, the Departments proposed
in paragraph (b) of the proposed
regulations to require group health
plans and health insurance issuers to
disclose certain information relevant to
a determination of a consumer’s out-ofpocket costs for a particular health care
item or service in accordance with
specific method and format
requirements, upon the request of a
participant, beneficiary, or enrollee.
A majority of commenters supported
the Departments’ proposal and urged
the Departments to finalize this section
of the proposed rules. Many
commenters were supportive of being
able to know their costs before receiving
care in order to make informed
shopping decisions. Some commenters
agreed that consumers should have
access to cost information in advance of
receiving care, but suggested
modifications to the proposed
requirements. The final rules adopt the
requirement that plans and issuers
disclose certain cost-sharing
information for a particular health care
item or service, generally as set forth in
the proposed rules, but with certain
modifications and clarifications
explained later in this section of this
preamble.
1. Information Required To Be Disclosed
to Participants, Beneficiaries, or
Enrollees
Based on significant research and
review of public comments, the
Departments concluded that requiring
group health plans and health insurance
issuers to disclose to participants,
beneficiaries, or enrollees cost-sharing
information in the manner most familiar
to them is the best means to empower
individuals to understand their
potential cost-sharing liability for
covered items and services furnished by
particular providers. The Departments,
therefore, modeled the proposed price
transparency requirements on existing
notice requirements.
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Specifically, section 2719 of the PHS
Act (incorporated into the Code by
section 9815 of the Code and into ERISA
by section 715 of ERISA) requires nongrandfathered plans and issuers offering
non-grandfathered coverage in the
individual or group markets to provide
a notice of adverse benefit
determination (typically satisfied by the
EOB) to participants, beneficiaries, or
enrollees after health care items or
services are furnished and claims for
benefits are adjudicated. EOBs typically
include the amount billed by a provider
for items and services, negotiated rates
or underlying fee schedules with innetwork providers or allowed amounts
for out-of-network providers, the
amount the plan paid to the provider,
and the individual’s obligation for
deductibles, copayments, coinsurance,
and any other balance under the
provider’s bill. Consumers are
accustomed to seeing cost-sharing
information as it is presented in an EOB.
The proposed rules were intended to
similarly require plans and issuers to
provide the specific price and benefit
information on which an individual’s
cost-sharing liability is based. Based on
comments, the Departments are of the
view that participants, beneficiaries,
and enrollees would also benefit from
understanding the price of items and
services, even in circumstances when
their cost-sharing liability is not based
upon a negotiated rate or underlying fee
schedule rate. Given this primary goal of
overall price transparency, the
Departments are requiring disclosure of
the negotiated rate, even if it is not the
amount used as the basis for costsharing liability.
The proposed rules set forth seven
content elements that a plan or issuer
must disclose, upon request, to a
participant, beneficiary, or enrollee for a
covered item or service: estimated costsharing liability, accumulated amounts,
negotiated rates, out-of-network allowed
amounts, a list of items and services
subject to bundled payment
arrangements, a notice of prerequisites,
if applicable, and a disclosure notice.
These seven content elements generally
reflect the same information that is
included in an EOB after health care
services are provided. The Departments
determined that each of the seven
content elements, as well as two
additional content elements, are
necessary and appropriate to implement
the mandates of section 2715A of the
PHS Act and section 1311(e)(3)(C) of
PPACA by permitting individuals to
learn the amount of their cost-sharing
liability and understand the price for
specific items or services under a plan
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or coverage from a particular provider.
The final rules adopt the requirement
that plans and issuers must satisfy these
elements through disclosure of actual
data relevant to an individual’s costsharing liability that is accurate at the
time the request is made. The
Departments acknowledge that plans
and issuers may not have processed all
of an individual’s outstanding claims
when the individual requests the
information; therefore, plans and issuers
would not be required to account for
outstanding claims that have not yet
been fully processed. As set forth in 26
CFR 54.9815–2715A2, 29 CFR
2590.715–2715A2, and 45 CFR 147.211
this cost-sharing information must be
disclosed upon request in two ways: (1)
Through a self-service tool that meets
certain standards and is available on an
internet website, and (2) in paper form,
if requested by the participant,
beneficiary, or enrollee.
Furthermore, under the final rules,
the cost-sharing information must be
disclosed to the participant, beneficiary,
or enrollee in plain language. The final
rules define ‘‘plain language’’ to mean
written and presented in a manner
calculated to be understood by the
average participant, beneficiary, or
enrollee. Determining whether this
standard has been satisfied requires an
exercise of considered judgment and
discretion, taking into account such
factors as the level of comprehension
and education of typical participants,
beneficiaries, or enrollees in the plan or
coverage and the complexity of the
terms of the plan or coverage.
Accounting for these factors would
likely require limiting or eliminating the
use of technical jargon and long,
complex sentences, so that the
information provided will not have the
effect of misleading, misinforming, or
failing to inform participants,
beneficiaries, or enrollees.
Several commenters agreed that the
information found in an EOB is a good
basis for informing individuals of their
cost-sharing liability and will effectively
further coverage transparency efforts.
One commenter stated that information
found in an advance EOB is neither a
trade secret, nor proprietary, as it is
routinely disclosed following care.
Other commenters expressed concern
about this concept of an advance EOB,
stating that most plans and issuers do
not have access to all the information
necessary to provide beneficiaries with
an upfront adjudication of the
beneficiary’s claim, and that the vast
majority of data provided via online
tools now rely on estimated costs drawn
from publicly available sources rather
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than personal information and
circumstances.
Many commenters expressed
concerns that the elements and methods
of disclosure proposed by the
Departments are overly prescriptive,
hindering health plan innovation and
requiring potentially significant
reworking of existing transparency
tools, as well as requiring massive IT
and resource investments by all
commercial plans and issuers to
develop, build or modify, test, and
implement tools that meet the new
standards. Several commenters
recommended providing plans and
issuers with flexibility to build upon
current systems. Another commenter
urged the Departments to evaluate the
individualized tools currently available,
and that if requirements for costestimator tools are adopted, they should
give carriers and TPAs maximum
flexibility in designing their tools. One
commenter felt a better approach would
be to educate consumers about the
online tools that are currently available
and assist employers to encourage their
use. Several commenters opposed the
requirement to provide the tool and
suggested the Departments remove this
requirement from the final rules
altogether. These commenters stated
that price estimator tools should not be
required, citing studies showing low
tool utilization by consumers and plan
participants, beneficiaries, or enrollees.
These commenters stated that the
administration should instead focus on
educating consumers about the online
tools that are currently available and
assisting employers and plans in
encouraging their use.
The Departments are of the view that
modeling the pricing disclosures on the
elements provided within an EOB is
both reasonable and appropriate. The
Departments acknowledge the potential
burden of updating existing tools to
comply with the final rules, but the
Departments think that the potential
burden is outweighed by the importance
of all enrollees, beneficiaries, and
participants having access to self-service
tools that provide a baseline of accurate
pricing elements. The Departments also
acknowledge that, historically, there has
been low utilization of existing tools;
however, the Departments are of the
view that by creating minimum uniform
standards, consumers will have access
to more reliable, personalized estimates
and will be more likely to use the tools.
As described earlier in this preamble,
through independent examination and
engagement with stakeholders, the
Departments are of the view that
existing tools vary widely in usability
and reliability due to the lack of
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minimum standards.106 The
Departments received thousands of
supportive comments from individuals
eager for access to transparent pricing
information, indicating that the current
tools available are inadequate in
practice. Furthermore, as discussed in
great detail throughout this preamble, as
consumers increasingly become
financially responsible for a greater
proportion of the cost of their care
(through deductible and coinsurance
requirements, for example) they have a
vested interest in comparing prices of
potential providers and such items as
prescription drugs. As such, it is likely
in the best interest of plans, issuers, and
providers to promote and educate their
consumers on the benefits of these
shopping tools, and the Departments
encourage them to do so. The
Departments do not agree with the
commenter who stated that educating
consumers regarding existing tools and
encouraging their use would be a better
approach than requiring the self-service
tool as proposed. While the
Departments agree that educating
consumers on existing self-service tools
is important, it does not replace the
benefits of making reliable self-service
tools available to most participants,
beneficiaries, and enrollees in private
market plans and coverages. The
Departments are of the view that
minimum consistent requirements for
all plans and issuers may lead to an
increase in health literacy and drive
consumerism as participants,
beneficiaries, and enrollees become
more familiar with how plans and
issuers calculate cost-sharing liability.
Furthermore, the final rules adopt a
phased implementation approach to
these requirements as a mechanism to
help mitigate the associated
implementation burdens.
Some commenters requested that the
Departments confirm that the intent of
the proposed rules is that only
participants and beneficiaries enrolled
in the plan would have access to the
tool, noting that the proposed
regulations used the ERISA definitions
of ‘‘participant’’ and ‘‘beneficiary,’’
106 ‘‘Are healthcare’s cost estimate tools making
matters worse for patients?’’ Becker’s Hospital CFO
Report, November 2015. Available at: https://
www.beckershospitalreview.com/finance/arehealthcare-s-cost-estimate-tools-making-mattersworse-for-patients.html. Citing Gordon, E. ‘‘Patients
Want to Price-Shop For Care, But Online Tools
Unreliable.’’ NPR. November 30, 2015, Available at
https://www.npr.org/sections/health-shots/2015/11/
30/453087857/patients-want-to-price-shop-for-carebut-online-tools-unreliable. (‘‘Some estimators
reflect a combined range of possible costs, while
others are based off historical pricing or claims data
from various sources. Many online estimate tools
are restricted in the types of procedures they
include. . .’’).
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which include individuals who may
become eligible for the plan. Many
commenters encouraged the
Departments to also require that plans
and issuers make cost-sharing
information easily accessible to
authorized representatives—which may
include health care providers—so that
they can better respond to patient
inquiries. These commenters suggested
that patients reasonably turn to
providers for this information when
contemplating or scheduling health care
services, but providers often face
barriers in accessing the necessary
details from issuers to provide a timely,
accurate estimate. Commenters
suggested that plans and issuers should
be required to give providers access to
their patients’ specific benefit
information via a secure website, subject
to patient consent. One commenter
recommended that the tool be made
applicable for the public while they are
in the shopping and plan selection
phase, not just after someone is enrolled
in a plan. This commenter suggested
that true cost transparency would not be
possible if this information was not
made available in advance.
The final rules clarify that disclosures
of cost-sharing information are only
required to individuals who are enrolled
in the plan or coverage; no disclosures
are required to be made to a
‘‘participant’’ or ‘‘beneficiary’’ solely
because they might become eligible for
the plan in the future. This is reflected
by a revision to the proposed language
being finalized at 26 CFR 54.9815–
2715A2(b), 29 CFR 2590.715–
2715A2(b), and 45 CFR 147.211(b) to
refer to plans and issuers providing
cost-sharing information to a
participant, beneficiary, or enrollee who
is enrolled in a plan or coverage. The
Departments understand the value in
provider access to cost-sharing
information required under the final
rules. However, this rulemaking focuses
on implementing the statutory
obligation for plans to make this
information available to participants,
beneficiaries, and enrollees. A
participant, beneficiary, or enrollee may
choose to share information regarding
their personal cost-sharing liability with
a provider for the purposes of making
health care decisions. The final rules
also require that this information must
be provided to a participant’s,
beneficiary’s, or enrollee’s authorized
representative. Under other applicable
regulations, participants, beneficiaries,
or enrollees may appoint a health care
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provider as their authorized
representative.107
Regarding whether other types of
information should be required to be
disclosed in the self-service tool, several
commenters expressed concern that
information regarding cost without
accompanying provider quality
information could have a detrimental
effect on overall health care cost and
delivery of value-based care. One
commenter stated that shifting care to a
lower-cost provider could have
unintended consequences of higher
costs associated with unnecessary or
improper care. Commenters
recommended that a quality metric be
included and that quality information
be allowed to be included alongside
price.
As discussed in the background
section of this preamble and later in this
preamble, the Departments acknowledge
that quality information could be a
valuable addition to a self-service tool.
However, the Departments did not
propose to require disclosure of quality
information. Rather, the Departments
sought comments regarding quality
information in the proposed rules and
plan to take those comments into
consideration for future action. The
Departments encourage plans and
issuers to further innovate around the
baseline standards outlined above and
include quality information and other
metrics not required by the final rules
that would assist in consumer decisionmaking.
Several commenters suggested that
plans and issuers should be required to
disclose information not directly related
to cost sharing. One commenter urged
the Departments to include an
additional requirement in the final rules
for plans and issuers to provide
consumers with information they need
to fully understand their cost-sharing
obligations for emergency services at the
time they obtain their coverage, and
recommended plans and issuers also
update this information on an annual
basis or when major changes occur that
would impact their access to, and
overall cost of, emergency care, such as
changes to their provider. Another
commenter recommended that when
consumers enter a search for a primary
service or treatment, that they also be
provided with an ‘‘alert’’ that additional
services, such as anesthesia, pathology,
or laboratory tests, likely will be
involved and will entail additional
costs, which should also be disclosed.
Another commenter requested that the
107 29 CFR 2560.503–1(b)(4); see also 26 CFR
54.9815–2719(b)(2)(i), 29 CFR 2590.715–
2719(b)(2)(ii), and 45 CFR 147.136(b)(2)(ii).
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Departments add the ‘‘type of plan’’ (for
example, ERISA-covered group health
plan, a QHP, a Medicare Advantage
plan, a Medicaid MCO plan, an
individual health plan, or a plan that is
grandfathered from PPACA
requirements) and in what state the plan
is providing coverage as disclosure
content elements that health plans
would be required to post on the
proposed internet-based self-service
tool, so that the information is readily
available.
The Departments recognize the
benefit of providing information for
emergency services at the time
consumers obtain their coverage. The
Departments are of the view, however,
that existing rules governing summaries
of benefits and coverage are designed to
provide such information to consumers
at the time they obtain coverage. As
such, the Departments are not inclined
to duplicate existing requirements in the
final rules. The Departments also
acknowledge that alerting consumers to
additional services associated with a
service or treatment for which they
searched could be beneficial. For this
reason, the final rules provide plans and
issuers flexibility to give disclaimers
that can address the likelihood that
services in addition to the one for which
a consumer searched will be necessary.
The final rules also require that plans
and issuers outline individual services
when a consumer requests an estimate
for a service that, per the agreement
between a payer and a provider, will be
provided and billed as a bundle. Plans
and issuers are also free to provide such
information in any way they so choose,
including through an alert. The
Departments are also of the view that
participants, beneficiaries, and enrollees
are generally aware of the type of plan
they are enrolled in or can reasonably
access this information by contacting
their plan or issuer and therefore
decline to require this information as
part of the final rules.
Scope of Items and Services
Many commenters stated that the
requirement to disclose the price of all
covered items and services was overly
broad and overly burdensome, and
instead suggested the Departments limit
disclosure to a core set of ‘‘shoppable
services’’ that are commonly searched
for in existing cost-estimator tools.
Many commenters referenced the
recently finalized definition of a
shoppable service that was included in
the Hospital Price Transparency final
rule as ‘‘a service that can be scheduled
by a health care consumer in
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72181
advance.’’108 Two commenters
recommended no more than 300
shoppable items and services, while
another suggested a limit of 200. As a
way to reduce the cost burden, one
commenter suggested that the
requirements under the rules be limited
to services that are priced above a
certain threshold and provided $5,000
as an example. One commenter said the
Departments should permit health plans
and issuers to tailor their tools to best
meet their enrollees’ and providers’
demonstrated needs and priorities,
including selection of the items and
services for which estimates are most
useful and meaningful for participants,
beneficiaries, and enrollees. Another
commenter recommended that the costsharing requirement be limited to items
and services where the estimated out-ofpocket price is frequently the same as
the final price. Another recommended
the tool not require data on those items/
services with volatile prices or low
volume.
One commenter, representing many
plans and issuers, provided a list of 421
items and services that they
recommended including under this
disclosure requirement. The
recommended list of 421 items and
services are a result of an analysis the
commenter performed which compared
member feedback, claims frequency,
operational feasibility, and state
mandates and regulations, as well as
variability of cost and search frequency.
All 421 items and services were
included by, at the minimum, a subset
of issuers, indicating confidence that the
covered items and services were
shoppable. This commenter also noted
that their survey of existing tools found
a median of 526 services available to
consumers enrolled in commercial
coverage.
A few commenters recommended that
the Departments limit the list of items
and services to only major medical
services. One commenter recommended
the Departments not include cost
sharing for DME. Several commenters
suggested that a Technical Expert Panel
(TEP) was needed to review data and
input from stakeholders, advise on
research the Departments should
undertake, and determine which items
and services and functional
requirements would be suitable to
include in the future.
Many individual commenters
expressed their desire for dental, vision,
and other excepted benefits to be
included under the requirements of the
final rules or in the near future. Further,
a majority of individual commenters
encouraged the Departments to require
the inclusion of all items and services,
stating that consumers have a right to
know this information for all items and
services in advance. Several
commenters recommended that the
rules be implemented in a more gradual
phased-in timeline, by requiring the tool
to cover a narrower data set of the most
common shoppable services first and
then broadened to eventually include all
items and services. Another commenter
stated that to the extent that the services
include non-medical estimates like
pharmacy and dental costs, those costs
could likely only be included by
allowing third parties that fulfill those
benefits to provide separate
transparency tools that integrate with a
plan’s tool.
The Departments agree with
commenters who stated that consumers
should be given price estimates in
advance, and the Departments
understand that what is considered
useful and meaningful pricing
information is likely to be unique to an
individual’s circumstances. For these
reasons, and the rationale for this
rulemaking described throughout this
preamble, the Departments decline to
accept suggestions related to limiting
the number or types of items and
services included under this
requirement. However, the Departments
acknowledge the potential burden of
incorporating all items and services into
a self-service tool immediately and are
therefore finalizing a phased-in
implementation timeline. Under the
final rules, plans and issuers are
required to provide estimates for the 500
items and services identified in Table 1
for plan years (in the individual market,
for policy years) beginning on or after
January 1, 2023. However, plans and
issuers will be required to disclose
pricing information with respect to all
items and services for plan years (in the
individual market, for policy years)
beginning on or after January 1, 2024.
Given that pricing estimates for all items
and services will ultimately be required,
the Departments do not find it necessary
to convene a TEP to determine which
items and services and functional
requirements would be suitable to
include in the future.
Further, in finalizing the provision
that plans and issuers disclose costsharing liability information for all
covered items and services, the
Departments are clarifying that costsharing information must also be
provided for covered prescription drugs
and DME. As discussed later in this
preamble, a plan or issuer will be
considered compliant with this
requirement if it offers its participants,
beneficiaries, or enrollees access to the
pricing information that is required
under 26 CFR 54.9815–2715A2, 29 CFR
2590.715–2715A2, and 45 CFR 147.211,
through a third-party tool, such as a
PBM tool. As discussed elsewhere in
this preamble, the Departments clarify
that excepted benefits, such as limitedscope dental benefits offered under a
separate policy, certificate, or contract
of insurance that are not an integral part
of a group health plan or health
insurance coverage, are not subject to
the requirements established under the
final rules.
In developing the list of 500 items and
services that are required to be included
in the self-service tool during the first
year of implementation, the
Departments considered the
recommendations made by the
commenters to include shoppable items
and services that are commonly used in
existing tools. As mentioned above, in a
survey of existing price transparency
tools currently in use, one commenter
found that the median number of items
and services in existing tools is 526.
Table 1 lists 500 items and services that
will be required to be included in the
first phase of implementation of the
internet-based self-service tool. The
Departments will publish a copy of this
list on a publicly available website. The
majority of these items and services
(416) are based on the recommendation
of several stakeholders. The
Departments have determined not to
include five of the recommended codes
because they have since been retired.
The Departments augmented the list
with 84 additional services. These 84
services reflect some of the most
frequently found services in External
Data Gathering Environment (EDGE) 109
data, which are representative of
services commonly provided in the
individual and small group (or merged)
markets. The Departments also
examined the aggregate claims costs
associated with these services nationally
and concluded that these services could
108 84 FR 65524 (Nov. 27, 2019) (codified at 45
CFR 180.20).
109 CMS began collecting enrollee-level data from
issuers’ EDGE servers beginning with the 2016
benefit year. See the HHS Notice of Benefit and
Payment Parameters for 2018; Final Rule, 81 FR
94058, 94101–94103 (Dec. 22, 2016). The enrolleelevel EDGE data collected by CMS includes an
enrollment file, a medical claims file, a pharmacy
claims file, and a supplemental diagnosis file for
risk adjustment-covered plans in the states where
HHS operates the risk adjustment program. CMS
does not collect enrollee-identifiable elements to
safeguard enrollee privacy and issuers’ proprietary
information. See, for example, 45 CFR 153.720.
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have significant cost variability, ranging
from the 25th percentile to the 75th
percentile of costs, depending on
service.
TABLE 1—500 ITEMS AND SERVICES LIST
Code
Description
J0702 ....
J1745 ....
G0102 ...
G0103 ...
BETAMETHASONE ACET&SOD PHOSP ......................
INFLIXIMAB NOT BIOSIMIL 10MG ................................
Prostate cancer screening; digital rectal examination .....
Prostate cancer screening; prostate specific antigen test
(psa).
Qualified non physician healthcare professional online
assessment; 5–10 minutes.
G2061 ...
G2062 ...
Qualified non physician healthcare professional online
assessment service; 11–20 minutes.
G2063 ...
Qualified non physician qualified healthcare professional assessment service; 21+ minutes.
G0206 ...
G0121 ...
Diagnostic mammography, including computer-aided
detection (cad) when performed; unilateral.
Diagnostic mammography, including computer-aided
detection (cad) when performed; bilateral.
Colon ca scrn; not hi risk ind ...........................................
G0105 ...
S0285 ....
Colorectal ca scrn; hi risk ind ..........................................
Cnslt before screen colonosc ..........................................
G0289 ...
Arthro, loose body + chondro ..........................................
G0120 ...
Colon ca scrn; barium enema .........................................
460 ........
470 ........
473 ........
743 ........
1960 ......
1961 ......
1967 ......
1968 ......
10005 ....
10021 ....
10040 ....
SPINAL FUSION (POSTERIOR) .....................................
KNEE REPLACEMENT ...................................................
SPINAL FUSION (ANTERIOR) .......................................
HYSTERECTOMY ...........................................................
Anesthesia for vaginal delivery ........................................
Anesthesia for cesarean delivery ....................................
Anesthesia for labor during planned vaginal delivery .....
Anesthesia for cesarean delivery following labor ............
FNA W IMAGE ................................................................
FNA W/O IMAGE .............................................................
ACNE SURGERY ............................................................
10060 ....
DRAINAGE OF SKIN ABSCESS ....................................
10140
10160
11000
11056
11102
....
....
....
....
....
DRAINAGE OF HEMATOMA/FLUID ...............................
PUNCTURE DRAINAGE OF LESION ............................
DEBRIDE INFECTED SKIN ............................................
TRIM SKIN LESIONS 2 TO 4 .........................................
BIOPSY SKIN LESION ....................................................
11103 ....
BIOPSY SKIN ADD–ON ..................................................
11200
11401
11422
11602
11721
11730
11900
12001
....
....
....
....
....
....
....
....
REMOVAL OF SKIN TAGS <W/15 .................................
EXC TR–EXT B9+MARG 0.6–1 CM ...............................
EXC H–F–NK–SP B9+MARG 1.1–2 ...............................
EXC TR–EXT MAL+MARG 1.1–2 CM ............................
DEBRIDE NAIL 6 OR MORE ..........................................
REMOVAL OF NAIL PLATE ...........................................
INJECT SKIN LESIONS </W7 ........................................
RPR S/N/AX/GEN/TRNK 2.5CM/< ..................................
12011 ....
RPR F/E/E/N/L/M 2.5 CM/< ............................................
17000
17003
17110
17111
17250
DESTRUCT PREMALG LESION ....................................
DESTRUCT PREMALG LES 2–14 .................................
DESTRUCT B9 LESION 1–14 ........................................
DESTRUCT LESION 15 OR MORE ...............................
CHEM CAUT OF GRANLTJ TISSUE .............................
G0204 ...
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....
....
....
....
....
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Injection to treat reaction to a drug.
A biologic medication.
Qualified non physician healthcare professional online assessment, for an
established patient, for up to seven days, cumulative time during the 7
days; 5–10 minutes.
Qualified non physician healthcare professional online assessment service, for an established patient, for up to seven days, cumulative time
during the 7 days; 11–20 minutes.
Qualified non physician qualified healthcare professional assessment service, for an established patient, for up to seven days, cumulative time
during the 7 days; 21 or more minutes.
Colorectal cancer screening; colonoscopy on individual not meeting criteria
for high risk.
Colorectal cancer screening; colonoscopy on individual at high risk.
Colonoscopy consultation performed prior to a screening colonoscopy procedure.
Arthroscopy, knee, surgical, for removal of loose body, foreign body,
debridement/shaving of articular cartilage (chondroplasty) at the time of
other surgical knee arthroscopy in a different compartment of the same
knee.
Colorectal cancer screening; alternative to g0105, screening colonoscopy,
barium enema.
Spinal fusion except cervical.
Major joint replacement or reattachment of lower extremity.
Cervical spinal fusion.
Uterine and adnexa procedures for non-malignancy.
Fine needle aspiration biopsy, including ultrasound guidance; first lesion.
Fine Needle Aspiration Biopsy without imaging.
Incision and Drainage Procedures on the Skin, Subcutaneous and Accessory Structures.
Incision and drainage of abscess; simple or single and complex or multiple.
Incision and drainage of hematoma, seroma or fluid collection.
Puncture aspiration of abscess, hematoma, bulla, or cyst.
Removal of infected skin.
Paring or cutting of benign hyperkeratotic lesion.
Tangential biopsy of skin (for example, shave, scoop, saucerize, curette);
single lesion.
Tangential biopsy of skin (for example, shave, scoop, saucerize, curette);
each separate/additional lesion.
Removal of skin tags, multiple fibrocutaneous tags, any area.
Under Excision-Benign Lesions Procedures on the Skin 0.6–1 CM.
Under Excision-Benign Lesions Procedures on the Skin 1.1–2 CM.
Excision-Malignant Lesions.
Removal of 6 or more nails.
Separation and removal of the entire nail plate or a portion of nail plate.
Injections to remove up to 7 lesions on the skin.
Simple repair of superficial wounds of scalp, neck, axillae, external genitalia, trunk and/or extremities.
Simple repair of superficial wounds of face, ears, eyelids, nose, lips and/or
mucous membranes.
Destruction of pre-cancerous lesion.
Destruction of 2–14 pre-cancerous lesions.
Destruction of 1–14 common or plantar warts.
Destruction of >15 common or plantar warts.
Chemical destruction of pre-cancerous lesions of the skin.
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TABLE 1—500 ITEMS AND SERVICES LIST—Continued
Code
Description
Plain language description
17311 ....
MOHS 1 STAGE H/N/HF/G .............................................
Micrographic technique, including removal of all gross tumor, surgical excision of tissue specimens, mapping, color coding of specimens, microscopic examination of specimens.
19120
20550
20551
20553
20600
20605
20610
20612
27440
27441
27442
27443
27445
27446
28296
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
REMOVAL OF BREAST LESION ...................................
INJ TENDON SHEATH/LIGAMENT ................................
INJ TENDON ORIGIN/INSERTION .................................
INJECT TRIGGER POINTS 3/> ......................................
DRAIN/INJ JOINT/BURSA W/O US ................................
DRAIN/INJ JOINT/BURSA W/O US ................................
DRAIN/INJ JOINT/BURSA W/O US ................................
ASPIRATE/INJ GANGLION CYST ..................................
Revision of knee joint ......................................................
Revision of knee joint ......................................................
Revision of knee joint ......................................................
Revision of knee joint ......................................................
Revision of knee joint ......................................................
Revision of knee joint ......................................................
CORRECTION HALLUX VALGUS ..................................
29826 ....
29848 ....
29880 ....
Subacromial Decompression ...........................................
WRIST ENDOSCOPY/SURGERY ..................................
KNEE ARTHROSCOPY/SURGERY ...............................
29881
29888
30520
31231
31237
31575
36415
36471
36475
36478
42820
42826
42830
43235
....
....
....
....
....
....
....
....
....
....
....
....
....
....
KNEE ARTHROSCOPY/SURGERY ...............................
KNEE ARTHROSCOPY/SURGERY ...............................
REPAIR OF NASAL SEPTUM ........................................
NASAL ENDOSCOPY DX ...............................................
NASAL/SINUS ENDOSCOPY SURG .............................
DIAGNOSTIC LARYNGOSCOPY ...................................
ROUTINE VENIPUNCTURE ...........................................
NJX SCLRSNT MLT INCMPTNT VN ..............................
ENDOVENOUS RF 1ST VEIN ........................................
ENDOVENOUS LASER 1ST VEIN .................................
REMOVE TONSILS AND ADENOIDS ............................
REMOVAL OF TONSILS .................................................
REMOVAL OF ADENOIDS .............................................
EGD DIAGNOSTIC BRUSH WASH ................................
43239 ....
EGD BIOPSY SINGLE/MULTIPLE ..................................
43846 ....
44388 ....
Gastric restrictive procedure, with gastric bypass for
morbid obesity; with small intestine reconstruction to
limit absorption.
Colonoscopy thru stoma spx ...........................................
44389 ....
Colonoscopy with biopsy .................................................
44394
45378
45379
45380
45381
45382
45384
45385
45386
45388
45390
45391
45392
....
....
....
....
....
....
....
....
....
....
....
....
....
Colonoscopy w/snare ......................................................
DIAGNOSTIC COLONOSCOPY .....................................
Colonoscopy w/fb removal ..............................................
COLONOSCOPY AND BIOPSY .....................................
Colonoscopy submucous njx ...........................................
Colonoscopy w/control bleed ...........................................
Colonoscopy w/lesion removal ........................................
COLONOSCOPY W/LESION REMOVAL .......................
Colonoscopy w/balloon dilat ............................................
Colonoscopy w/ablation ...................................................
Colonoscopy w/resection .................................................
Colonoscopy w/endoscope us .........................................
Colonoscopy w/endoscopic fnb .......................................
45398
47562
47563
49505
49585
49650
50590
51741
51798
52000
52310
....
....
....
....
....
....
....
....
....
....
....
Colonoscopy w/band ligation ...........................................
LAPAROSCOPIC CHOLECYSTECTOMY ......................
LAPARO CHOLECYSTECTOMY/GRAPH ......................
PRP I/HERN INIT REDUC >5 YR ...................................
RPR UMBIL HERN REDUC > 5 YR ...............................
LAP ING HERNIA REPAIR INIT .....................................
FRAGMENTING OF KIDNEY STONE ............................
ELECTRO–UROFLOWMETRY FIRST ...........................
US URINE CAPACITY MEASURE .................................
CYSTOSCOPY ................................................................
CYSTOSCOPY AND TREATMENT ................................
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Injection of medication into a tendon or ligament.
Injection of medication into the tendon/ligament origin.
Injection of medication into an area that triggers pain.
Draining or injecting medication into a small joint/bursa without ultrasound.
Draining or injecting medication into a large joint/bursa without ultrasound.
Draining or injecting medication into a major joint/bursa without ultrasound.
Removal of fluid or injection of medication into a ganglion cyst.
Repair of knee joint.
Repair of knee joint.
Repair of knee joint.
Repair of knee joint.
Repair of knee joint with hinged prosthesis.
Repair of knee joint.
Under Repair, Revision, and/or Reconstruction Procedures on the Foot
and Toes.
Shaving of shoulder bone using an endoscope.
Carpal tunnel release.
Surgery to remove of all or part of a torn meniscus in both medial and lateral compartments.
Surgery to remove of all or part of a torn meniscus in one compartment.
ACL reconstruction.
Repair procedures of the nose.
Nasal endoscopy, diagnostic, unilateral or bilateral.
Surgical nasal/sinus endoscopy with biopsy, polypectomy or debridement.
Flexible, fiberoptic diagnostic laryngoscopy.
Collection of venous blood by venipuncture.
Injections to remove spider veins on the limbs or trunk.
Ablation of incompetent vein.
Laser removal of incompetent vein.
Removal of tonsils and adenoid glands patient younger than age 12.
Primary or secondary removal of tonsils.
Primary removal of the adenoids.
Diagnostic examination of esophagus, stomach, and/or upper small bowel
using an endoscope.
Biopsy of the esophagus, stomach, and/or upper small bowel using an endoscope.
Surgical procedure used for weight loss resulting in a partial removal of
stomach.
Diagnostic examination of large bowel using an endoscope which is inserted through abdominal opening.
Biopsies of large bowel using an endoscope which is inserted through abdominal opening.
Removal of large bowel polyps or growths using an endoscope.
Diagnostic examination of large bowel using an endoscope.
Removal of foreign bodies in large bowel using an endoscope.
Biopsy of large bowel using an endoscope.
Injections of large bowel using an endoscope.
Control of bleeding in large bowel using an endoscope.
Removal of polyps or growths in large bowel using an endoscope.
Removal of polyps or growths of large bowel using an endoscope.
Balloon dilation of large bowel using an endoscope.
Destruction of large bowel growths using an endoscope.
Removal of large bowel tissue using an endoscope.
Ultrasound examination of lower large bowel using an endoscope.
Ultrasound guided needle aspiration or biopsy of lower large bowel using
an endoscope.
Tying of large bowel using an endoscope.
Removal of gallbladder using an endoscope.
Gallbladder removal with use of an x-ray exam of the bile ducts.
Repair of groin hernia patient age 5 years or older.
Repair of umbilical hernia in patients over 5 years old.
Inguinal hernia repair done by laparoscope.
Surgical procedures on the kidney to break up and remove kidney stones.
A diagnostic test used to measure the flow of urine.
Ultrasound of bladder to measure urine capacity.
Procedure on the bladder.
Removing an indwelling ureteral stent by cystoscopy.
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TABLE 1—500 ITEMS AND SERVICES LIST—Continued
Code
Description
Plain language description
52332 ....
CYSTOSCOPY AND TREATMENT ................................
55250 ....
55700 ....
55866 ....
EXCISION PROCEDURES ON THE VAS DEFERENS
Prostate biopsy ................................................................
Surgical Procedures on the Prostate ..............................
Ureteral stents inserted internally between the bladder and the kidney and
will remain within the patient for a defined period of time.
Removal of sperm duct(s).
Biopsy of prostate gland.
Surgical removal of prostate and surrounding lymph nodes using an endoscope.
57022 ....
....
....
....
....
....
Incision and drainage of vaginal blood accumulation following delivery.
REPAIR BLADDER DEFECT ..........................................
BX/CURETT OF CERVIX W/SCOPE ..............................
EXCISION PROCEDURES ON THE CORPUS UTERI ..
HYSTEROSCOPY BIOPSY ............................................
HYSTEROSCOPY ABLATION ........................................
58565 ....
58571 ....
58661 ....
HYSTEROSCOPY STERILIZATION ...............................
TLH W/T/O 250 G OR LESS ..........................................
LAPAROSCOPY REMOVE ADNEXA .............................
58662 ....
58671 ....
LAPAROSCOPY EXCISE LESIONS ...............................
LAPAROSCOPY TUBAL BLOCK ....................................
59000
59025
59400
59409
59410
59414
59425
59426
59510
59514
59515
59610
59612
59614
AMNIOCENTESIS DIAGNOSTIC ....................................
FETAL NON–STRESS TEST ..........................................
OBSTETRICAL CARE .....................................................
Vaginal delivery ...............................................................
Vaginal delivery with post-delivery care ..........................
Vaginal delivery of placenta ............................................
Pre-delivery care 4–6 visits .............................................
Pre-delivery care 7 or more visits ...................................
CESAREAN DELIVERY ..................................................
Cesarean delivery ............................................................
Cesarean delivery with post-delivery care ......................
VBAC DELIVERY ............................................................
Vaginal delivery after prior cesarean delivery .................
Vaginal delivery after prior cesarean delivery with postdelivery care.
SPINAL INJECTION FOR PAIN MANAGEMENT ...........
57288
57454
58100
58558
58563
....
....
....
....
....
....
....
....
....
....
....
....
....
....
62322 ....
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62323 ....
63030 ....
64483 ....
Injection of substance into spinal canal of lower back or
sacrum using imaging guidance.
LOW BACK DISK SURGERY .........................................
Transforaminal Epidural Injection ....................................
64493
64721
66821
66984
67028
69210
69436
70450
70486
70491
70551
70553
71045
71046
71047
71048
71101
71250
71260
71275
72040
72050
72070
72072
72100
72110
72131
72141
72146
INJ PARAVERT F JNT L/S 1 LEV ..................................
CARPAL TUNNEL SURGERY ........................................
YAG capusulotomy surgery .............................................
CATARACT SURG W/IOL 1 STAGE ..............................
INJECTION EYE DRUG ..................................................
REMOVE IMPACTED EAR WAX ....................................
CREATE EARDRUM OPENING .....................................
CT HEAD/BRAIN W/O DYE ............................................
CT MAXILLOFACIAL W/O DYE ......................................
CT SOFT TISSUE NECK W/DYE ...................................
MRI BRAIN STEM W/O DYE ..........................................
MRI BRAIN STEM W/O & W/DYE ..................................
CHEST X–RAY ................................................................
CHEST X–RAY ................................................................
CHEST X–RAY ................................................................
CHEST X–RAY ................................................................
X–RAY EXAM UNILAT RIBS/CHEST .............................
CT THORAX W/O DYE ...................................................
CT THORAX W/DYE .......................................................
CT ANGIOGRAPHY CHEST ...........................................
X–RAY EXAM NECK SPINE 2–3 VW ............................
X–RAY EXAM NECK SPINE 4/5VWS ............................
X–RAY EXAM THORAC SPINE 2VWS ..........................
X–RAY EXAM THORAC SPINE 3VWS ..........................
X–RAY EXAM L–S SPINE 2/3 VWS ...............................
X–RAY EXAM L–2 SPINE 4/>VWS ................................
CT LUMBAR SPINE W/O DYE .......................................
MRI NECK SPINE W/O DYE ..........................................
MRI CHEST SPINE W/O DYE ........................................
....
....
....
....
....
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Replacement of sling to support the bladder.
Biopsy of cervix or uterus.
Biopsy of the lining of the uterus.
Surgical hysteroscopy with biopsy.
Surgical procedure used to treat premenopausal abnormal uterine bleeding.
Laparoscopic/Hysteroscopic Procedures on the uterus.
Laparoscopic hysterectomy.
Removal of either benign or malignant tissue from the uterus, ovaries, fallopian tubes, or any of the surrounding tissues using a laparoscope.
Removal of lesions of the ovary, pelvic viscera, or peritoneal surface.
Laparoscopic tubal sterilization is surgery to block the fallopian tubes to
prevent pregnancy.
Removal of amniotic fluid from the uterus for diagnostic purposes.
A common prenatal test used to check on a baby’s health.
Obstetrical pre- and postpartum care and vaginal delivery.
Cesarean delivery with pre- and post-delivery care.
Vaginal delivery after prior cesarean delivery.
Injection of substance into spinal canal of lower back or sacrum using imaging guidance.
Surgical procedure to decompress a herniated vertebra.
Injections of anesthetic and/or steroid drug into lower or sacral spine nerve
root using imaging guidance.
Injection into lower back of nerve block using imaging guidance.
Release of the transverse carpal ligament.
Removal of recurring cataract in lens capsule using laser.
Removal of cataract with insertion of lens.
Injection of a pharmaceutical agent into the eye.
Removal of ear wax from one or both ears.
Insertion of tubes into one or both ears.
CT scan head or brain without dye.
CT Scan of the face and jaw without dye.
CT scan of neck with dye.
MRI of brain stem without dye.
MRI scan of brain before and after contrast.
Single view.
2 views, front and back.
3 views.
4 or more views.
Radiologic examination of one side of the chest/ribs.
CT scan of the thorax without dye.
CT scan of the thorax with dye.
Diagnostic Radiology (Diagnostic Imaging) Procedures of the Chest.
Radiologic examination of the neck/spine, 2–3 views.
Radiologic examination of the neck/spine, 4–5 views.
Radiologic examination of the middle spine, 2 views.
Radiologic examination of the middle spine, 3 views.
X-ray of the lower spine 2–3 views.
X-ray of lower and sacral spine, minimum of 4 views.
CT scan of lower spine without dye.
MRI of the neck or spine without dye.
MRI of chest and spine without dye.
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Description
Plain language description
MRI scan of lower spinal canal.
MRI of neck/spine with and without dye.
MRI of chest and spine with and without dye.
MRI of lower back with and without dye.
Radiologic examination of the pelvis.
CT of pelvis without dye.
CT scan, pelvis, with contrast.
MRI of pelvis without dye.
MRI of pelvis before and after dye.
Radiologic examination of the collar bone.
Radiologic examination of the shoulder.
Radiologic examination, elbow; 2 views.
Radiologic examination, elbow; 3 or more views.
Radiologic examination of the forearm.
3 or more views.
Up to 3 views.
X-ray of the hand with 2 views.
X-ray of the hand with 3 or more views.
Radiologic examination of the finger(s).
MRI of upper extremity without dye.
Radiologic examination of the knee with 1 or 2 views.
Radiologic examination of the knee with 3 views.
Radiologic examination of the knee with 4 or more views.
Radiologic examination of both knees.
Radiologic examination of the lower leg.
Radiologic examination of the ankle with 2 views.
Radiologic examination of the ankle with 3 views.
Radiologic examination, foot; 2 views.
Radiologic examination of the foot with 3 or more views.
Radiologic examination of the heel.
Radiologic examination of the toe(s).
CT scan of leg without dye.
MRI of leg without dye.
MRI of lower extremity joint (knee/ankle) without dye.
MRI of lower extremity joint (knee/ankle) with dye.
MRI of lower extremity joint (knee/ankle) with and without dye.
Serial radiologic examination of the abdomen.
CT of abdomen without dye.
CT of abdomen with dye.
CT of abdomen with and without dye.
CT of abdomen and pelvis without dye.
CT scan of abdomen and pelvis with contrast.
Computed tomography, abdomen and pelvis; without contrast material in
one or both body regions, followed by contrast material(s) and further
sections in one or both body regions.
MRI of abdomen without dye.
MRI of abdomen without and with dye.
Flouroscopy, or x-ray ‘‘movie’’ that takes less than an hour.
Flouroscopy, or x-ray ‘‘movie’’ that takes more than an hour.
Ultrasound of the eye.
A diagnostic procedure that allows a provider to see the organs and other
structures in the abdomen.
Ultrasound of head and neck.
Limited ultrasound of the breast.
Ultrasound of abdomen with all areas scanned.
A diagnostic procedure that allows a provider to see the organs and other
structures in the abdomen.
Ultrasound of back wall of the abdomen with all areas viewed.
Ultrasound of back wall of the abdomen with limited areas viewed.
Abdominal ultrasound of pregnant uterus (less than 14 weeks) single or
first fetus.
Abdominal ultrasound of pregnant uterus (greater or equal to 14 weeks 0
days) single or first fetus.
Ultrasound of single fetus.
Evaluation through measurement of fetal nuchal translucency.
Ultrasound of fetus with limited views.
Transvaginal ultrasound of uterus.
Fetal biophysical profile with non-stress test.
Fetal biophysical profile without non-stress test.
Ultrasound of the pelvis through vagina.
A diagnostic procedure that allows a provider to see the uterus.
Complete ultrasound of the pelvis.
72148
72156
72157
72158
72170
72192
72193
72195
72197
73000
73030
73070
73080
73090
73100
73110
73120
73130
73140
73221
73560
73562
73564
73565
73590
73600
73610
73620
73630
73650
73660
73700
73718
73721
73722
73723
74022
74150
74160
74170
74176
74177
74178
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....
....
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....
....
MRI LUMBAR SPINE W/O DYE .....................................
MRI NECK SPINE W/O & W/DYE ..................................
MRI CHEST SPINE W/O & W/DYE ................................
MRI LUMBAR SPINE W/O & W/DYE .............................
X–RAY EXAM OF PELVIS ..............................................
CT PELVIS W/O DYE .....................................................
CT PELVIS W/DYE .........................................................
MRI PELVIS W/O DYE ....................................................
MRI PELVIS W/O & W/DYE ............................................
X–RAY EXAM OF COLLAR BONE .................................
X–RAY EXAM OF SHOULDER ......................................
X–RAY EXAM OF ELBOW .............................................
X–RAY EXAM OF ELBOW .............................................
X–RAY EXAM OF FOREARM ........................................
X–RAY EXAM OF WRIST ...............................................
X–RAY EXAM OF WRIST ...............................................
X–RAY EXAM OF HAND ................................................
X–RAY EXAM OF HAND ................................................
X–RAY EXAM OF FINGER(S) ........................................
MRI JOINT UPR EXTREM W/O DYE .............................
X–RAY EXAM OF KNEE 1 OR 2 ....................................
X–RAY EXAM OF KNEE 3 .............................................
X–RAY EXAM KNEE 4 OR MORE .................................
X–RAY EXAM OF KNEES ..............................................
X–RAY EXAM OF LOWER LEG .....................................
X–RAY EXAM OF ANKLE ...............................................
X–RAY EXAM OF ANKLE ...............................................
X–RAY EXAM OF FOOT ................................................
X–RAY EXAM OF FOOT ................................................
X–RAY EXAM OF HEEL .................................................
X–RAY EXAM OF TOE(S) ..............................................
CT LOWER EXTREMITY W/O DYE ...............................
MRI LOWER EXTREMITY W/O DYE .............................
MRI JNT OF LWR EXTRE W/O DYE .............................
MRI JOINT OF LWR EXTR W/DYE ................................
MRI JOINT LWR EXTR W/O&W/DYE ............................
X–RAY EXAM SERIES ABDOMEN ................................
CT ABDOMEN W/O DYE ................................................
CT ABDOMEN W/DYE ....................................................
CT ABDOMEN W/O & W/DYE ........................................
CT ABD & PELVIS W/O CONTRAST .............................
CT ABD & PELV W/CONTRAST ....................................
CT ABD & PELV 1/> REGNS .........................................
74181
74183
76000
76001
76512
76514
....
....
....
....
....
....
MRI ABDOMEN W/O DYE ..............................................
MRI ABDOMEN W/O & W/DYE ......................................
CHEST X–RAY ................................................................
CHEST X–RAY ................................................................
OPHTH US B W/NON–QUANT A ...................................
ECHO EXAM OF EYE THICKNESS ...............................
76536
76642
76700
76705
....
....
....
....
US EXAM OF HEAD AND NECK ...................................
ULTRASOUND BREAST LIMITED .................................
US EXAM ABDOM COMPLETE .....................................
ECHO EXAM OF ABDOMEN ..........................................
76770 ....
76775 ....
76801 ....
US EXAM ABDO BACK WALL COMP ...........................
US EXAM ABDO BACK WALL LIM ................................
OB US < 14 WKS SINGLE FETUS ................................
76805 ....
OB US >/= 14 WKS SNGL FETUS .................................
76811
76813
76815
76817
76818
76819
76830
76831
76856
OB US DETAILED SNGL FETUS ...................................
OB US NUCHAL MEAS 1 GEST ....................................
OB US LIMITED FETUS(S) ............................................
TRANSVAGINAL US OBSTETRIC .................................
FETAL BIOPHYS PROFILE W/NST ...............................
FETAL BIOPHYS PROFIL W/O NST ..............................
TRANSVAGINAL US NON–OB .......................................
ECHO EXAM UTERUS ...................................................
US EXAM PELVIC COMPLETE ......................................
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76857
76870
76872
76882
....
....
....
....
US
US
US
US
77047
77065
77066
77067
77080
77385
77386
77387
77412
78014
....
....
....
....
....
....
....
....
....
....
MRI BOTH BREASTS .....................................................
DX MAMMO INCL CAD UNI ...........................................
DX MAMMO INCL CAD BI ..............................................
SCR MAMMO BI INCL CAD ...........................................
BONE DENSITY STUDY OF SPINE OR PELVIS ..........
Ntsty modul rad tx dlvr smpl ............................................
Ntsty modul rad tx dlvr cplx .............................................
Guidance for radia tx dlvr ................................................
Radiation treatment delivery ............................................
THYROID IMAGING W/BLOOD FLOW ..........................
78306 ....
BONE IMAGING WHOLE BODY ....................................
78452 ....
78815 ....
HT MUSCLE IMAGE SPECT MULT ...............................
PET IMAGE W/CT SKULL–THIGH .................................
80048 ....
80050 ....
80051 ....
METABOLIC PANEL TOTAL CA ....................................
GENERAL HEALTH PANEL ...........................................
Blood test panel for electrolytes (sodium potassium,
chloride, carbon dioxide).
COMPREHEN METABOLIC PANEL ...............................
OBSTETRIC PANEL .......................................................
LIPID PANEL ...................................................................
RENAL FUNCTION PANEL ............................................
ACUTE HEPATITIS PANEL ............................................
HEPATIC FUNCTION PANEL .........................................
Blood test panel for obstetrics (cbc, differential wbc
count, hepatitis b, hiv, rubella, syphilis, antibody
screening, rbc, blood typing).
ASSAY OF TACROLIMUS ..............................................
80053
80055
80061
80069
80074
80076
80081
....
....
....
....
....
....
....
80197 ....
80307 ....
81000 ....
81001 ....
EXAM PELVIC LIMITED ...........................................
EXAM SCROTUM .....................................................
TRANSRECTAL ........................................................
LMTD JT/NONVASC XTR STRUX ...........................
81025
82043
82044
82248
82306
82553
82570
82607
82627
82670
82728
82784
82803
82947
82950
82951
83001
83002
83013
83036
83516
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
Drug test prsmv chem anlyzr ..........................................
URINALYSIS NONAUTO W/SCOPE ..............................
URINALYSIS; MANUAL OR AUTO WITH OR WITHOUT MICROSCOPY.
URINALYSIS NONAUTO W/O SCOPE ..........................
URINALYSIS; MANUAL OR AUTO WITH OR WITHOUT MICROSCOPY.
URINE PREGNANCY TEST ...........................................
UR ALBUMIN QUANTITATIVE .......................................
UR ALBUMIN SEMIQUANTITATIVE ..............................
BILIRUBIN DIRECT .........................................................
VITAMIN D 25 HYDROXY ..............................................
CREATINE MB FRACTION .............................................
ASSAY OF URINE CREATININE ...................................
VITAMIN B–12 .................................................................
DEHYDROEPIANDROSTERONE ...................................
ASSAY OF ESTRADIOL .................................................
ASSAY OF FERRITIN .....................................................
ASSAY IGA/IGD/IGG/IGM EACH ....................................
BLOOD GASES ANY COMBINATION ............................
ASSAY GLUCOSE BLOOD QUANT ...............................
GLUCOSE TEST .............................................................
GLUCOSE TOLERANCE TEST ......................................
ASSAY OF GONADOTROPIN (FSH) .............................
ASSAY OF GONADOTROPIN (LH) ................................
H PYLORI (C–13) BREATH ............................................
GLYCOSYLATED HEMOGLOBIN TEST ........................
IMMUNOASSAY NONANTIBODY ..................................
83540
83550
83655
83718
83880
....
....
....
....
....
ASSAY OF IRON .............................................................
IRON BINDING TEST .....................................................
ASSAY OF LEAD ............................................................
ASSAY OF LIPOPROTEIN .............................................
ASSAY OF NATRIURETIC PEPTIDE .............................
81002 ....
81003 ....
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Limited ultrasound of the pelvis.
Ultrasound of the scrotum.
Transrectal ultrasound.
Diagnostic ultrasound of an extremity excluding the bone, joints or vessels.
Magnetic resonance imaging, breasts, without contrast material; bilateral.
Mammography of one breast.
Mammography of both breasts.
Mammography of both breasts-2 or more views.
Scan to measure bone mineral density (BMD) at the spine and hip.
Radiation therapy delivery.
Radiation therapy delivery.
Guidance for localization of target delivery of radiation treatment delivery.
Radiation treatment delivery.
Scan using a radioactive medication (radiopharmaceutical) to take pictures
or images of the thyroid gland.
A procedure most commonly ordered to detect areas of abnormal bone
growth due to fractures, tumors, infection, or other bone issues.
Image of the heart to assess perfusion.
Tumor imaging, positron emission tomography (PET) with concurrently acquired computed tomography (CT) for attenuation correction and anatomical localization.
Basic metabolic panel.
General health panel.
.
Blood test, comprehensive group of blood chemicals.
Obstetric blood test panel.
Blood test, lipids (cholesterol and triglycerides).
Kidney function panel test.
Acute hepatitis panel.
Liver function blood test panel.
.
Test is used to measure the amount of the drug in the blood to determine
whether the concentration has reached a therapeutic level and is below
the toxic level.
Testing for presence of drug.
Manual urinalysis test with examination using microscope.
Manual urinalysis test with examination with or without using microscope.
Manual urinalysis test with examination without using microscope.
Automated urinalysis test.
Urine pregnancy test.
Urine test to measure albumin.
Urine test to measure albumin-semiquantitative.
Measurement of direct bilirubin.
Blood test to monitor vitamin D levels.
Blood test to detect heart enzymes.
Test to measure creatinine in the urine.
Blood test to measure B–12.
Blood test to measure an enzyme in the blood.
Blood test to measure a type of estrogen in the blood.
Test to determine level of iron in the blood.
Test to determine levels of immunoglobulins in the blood.
Test to measure arterial blood gases.
Quantitative measure of glucose build up in the blood over time.
Test of glucose level in the blood.
Test to predict likelihood of gestational diabetes.
Test of hormone in the blood.
Test of hormone in the blood.
Test of breath for a stomach bacterium.
Blood test to measure average blood glucose levels for past 2–3 months.
Chemical test of the blood to measure presence or concentration of a substance in the blood.
Blood test to measure the amount of iron that is in transit in the body.
Blood test that measures the amount of iron carried in the blood.
Blood test to determine the concentration of lead in the blood.
Blood test to measure the level of lipoproteins in the blood.
Blood test used to diagnose heart failure.
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Description
Plain language description
Blood test to measure level of prealbumin.
PSA (prostate specific antigen).
.
Blood test to measure a type of thyroid hormone.
Blood test to evaluate thyroid function.
Blood test, thyroid stimulating hormone (TSH).
Blood test to evaluate liver function.
Blood test to evaluate thyroid function.
Blood test to measure a certain protein in the blood to determine heart
muscle damage.
Blood test to assess for pregnancy.
Blood test to assess for infection.
Blood test to measure levels of hemoglobin.
Complete blood cell count, with differential white blood cells, automated.
Complete blood count, automated.
Blood test, clotting time.
Coagulation assessment blood test.
Blood test to determine autoimmune disorders.
Blood test to determine cause of inappropriate blood clot formation.
Blood test to diagnose rheumatoid arthritis.
Blood test to monitor breast cancer.
Blood test to monitor for cancer.
Blood test to monitor for cancer in the ovaries or testis.
Blood test to screen for syphilis.
Blood test to monitor for cytomegalovirus.
Blood test to diagnose mononucleosis.
Blood test to if peptic ulcers are caused by a certain bacterium.
Blood test to diagnose HIV.
Blood test indicating infection with Hepatitis B.
Blood test indicating infection with Hepatitis A.
Blood test to determine if antibodies exist for rubella.
Blood test to determine if antibodies exist for measles.
Blood test to determine existence of certain bacterium that causes syphilis.
Blood test to determine infection with Hepatitis C.
Blood test to screen for antibodies that could harm red blood cells.
Blood test to screen for bacteria in the blood.
Blood test to identify bacteria that may be contributing to symptoms in the
gastrointestinal tract.
Test of body fluid other than blood to assess for bacteria.
Test of a wound for type of bacterial infection.
Medical test to find an infection.
Culture of the urine to determine number of bacteria.
Culture of the urine to determine bacterial infection.
A procedure used to determine if fungi are present in an area of the body.
A test used to determine which medications work on bacteria for fungi.
A lab test used to detect bacteria or fungi in a sample taken from the site
of a suspected infection.
A lab test to screen for evidence of vaginal infection.
A test of the stool to diagnose Clostridium difficile (C. diff) infection.
Test for HIV.
Test that detects Chlamydia.
Blood test for vaginitis.
Blood test for an STD.
Detection test for human papillomavirus (hpv).
Blood test for strep infection.
Blood test for an STD.
Blood test to determine genetic material of certain infectious agents.
Flu test.
Test for RSV.
Test for strep A.
Urine test.
Cervical cancer screening test with interpretation.
PAP smear.
Cervical cancer screening test done manually.
PAP smear.
Test of tissues for diagnosis of abnormalities.
Blood test to assist with diagnosis.
Blood test to assist with diagnosis.
Pathology test.
Immunization administration in children <18.
Immunization administration by a medical assistant or nurse.
84134
84153
84154
84436
84439
84443
84460
84480
84484
....
....
....
....
....
....
....
....
....
ASSAY OF PREALBUMIN ..............................................
ASSAY OF PSA TOTAL ..................................................
PSA (prostate specific antigen) measurement ................
ASSAY OF TOTAL THYROXINE ....................................
ASSAY OF FREE THYROXINE ......................................
ASSAY THYROID STIM HORMONE ..............................
ALANINE AMINO (ALT) (SGPT) .....................................
ASSAY TRIIODOTHYRONINE (T3) ................................
ASSAY OF TROPONIN QUANT .....................................
84703
85007
85018
85025
85027
85610
85730
86039
86147
86200
86300
86304
86336
86592
86644
86665
86677
86703
86704
86708
86762
86765
86780
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
CHORIONIC GONADOTROPIN ASSAY ........................
BL SMEAR W/DIFF WBC COUNT .................................
HEMOGLOBIN .................................................................
COMPLETE CBC W/AUTO DIFF WBC ..........................
COMPLETE CBC AUTOMATED .....................................
PROTHROMBIN TIME ....................................................
THROMBOPLASTIN TIME PARTIAL ..............................
ANTINUCLEAR ANTIBODIES (ANA) ..............................
CARDIOLIPIN ANTIBODY EA IG ...................................
CCP ANTIBODY ..............................................................
IMMUNOASSAY TUMOR CA 15–3 ................................
IMMUNOASSAY TUMOR CA 125 ..................................
INHIBIN A ........................................................................
SYPHILIS TEST NON–TREP QUAL ...............................
CMV ANTIBODY .............................................................
EPSTEIN–BARR CAPSID VCA ......................................
HELICOBACTER PYLORI ANTIBODY ...........................
HIV–1/HIV–2 1 RESULT ANTBDY ..................................
HEP B CORE ANTIBODY TOTAL ..................................
HEPATITIS A ANTIBODY ...............................................
RUBELLA ANTIBODY .....................................................
RUBEOLA ANTIBODY ....................................................
TREPONEMA PALLIDUM ...............................................
86803
86850
87040
87046
....
....
....
....
HEPATITIS C AB TEST ..................................................
RBC ANTIBODY SCREEN ..............................................
BLOOD CULTURE FOR BACTERIA ..............................
STOOL CULTR AEROBIC BACT EA .............................
87070
87077
87081
87086
87088
87101
87186
87205
....
....
....
....
....
....
....
....
CULTURE OTHR SPECIMN AEROBIC ..........................
CULTURE AEROBIC IDENTIFY .....................................
CULTURE SCREEN ONLY .............................................
URINE CULTURE/COLONY COUNT .............................
URINE BACTERIA CULTURE ........................................
SKIN FUNGI CULTURE ..................................................
MICROBE SUSCEPTIBLE MIC ......................................
SMEAR GRAM STAIN ....................................................
87210
87324
87389
87491
87510
87591
87624
87653
87661
87801
87804
87807
87880
88112
88141
88142
88150
88175
88305
88312
88313
88342
90460
90471
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....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
SMEAR WET MOUNT SALINE/INK ................................
CLOSTRIDIUM AG IA .....................................................
HIV–1 AG W/HIV–1 & HIV–2 AB ....................................
CHYLMD TRACH DNA AMP PROBE .............................
GARDNER VAG DNA DIR PROBE ................................
N.GONORRHOEAE DNA AMP PROB ...........................
Hpv high-risk types ..........................................................
STREP B DNA AMP PROBE ..........................................
TRICHOMONAS VAGINALIS AMPLIF ............................
DETECT AGNT MULT DNA AMPLI ................................
INFLUENZA ASSAY W/OPTIC .......................................
RSV ASSAY W/OPTIC ....................................................
STREP A ASSAY W/OPTIC ............................................
CYTOPATH CELL ENHANCE TECH .............................
CYTOPATH C/V INTERPRET .........................................
CYTOPATH C/V THIN LAYER ........................................
CYTOPATH C/V MANUAL ..............................................
CYTOPATH C/V AUTO FLUID REDO ............................
TISSUE EXAM BY PATHOLOGIST ................................
SPECIAL STAINS GROUP 1 ..........................................
SPECIAL STAINS GROUP 2 ..........................................
IMMUNOHISTO ANTB 1ST STAIN .................................
IM ADMIN 1ST/ONLY COMPONENT .............................
IMMUNIZATION ADMIN ..................................................
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Description
Plain language description
Immunization administered orally or nasally.
Hepatitis A vaccination for adults.
Hepatitis A vaccination for adolescents and children.
3-dose HPV vaccination.
Flu shot-high dose for 2019–2020 flu season given by injection.
Preservative free flu vaccine.
Nasal flu vaccine.
Rotavirus vaccination.
Flu shot-high dose for 2019–2020 flu season given by injection for people
>65.
Measles, mumps, and rubella vaccine.
Measles, mumps, rubella, and varicella vaccine.
Diphtheria, tetanus acellular, and pertussis vaccine for adults.
Varicella vaccine.
pneumococcal vaccine.
meningococcal conjugate vaccine.
Shingles vaccine.
Hepatitis B vaccine.
A diagnostic tool employed by a psychiatrist to diagnose problems with
memory, thought processes, and behaviors.
A diagnostic tool employed by a psychiatrist to determine if medications
are needed.
Psychotherapy, 30 min.
Psychotherapy, 30 minutes with patient when performed with an evaluation and management service.
Psychotherapy, 45 min.
Psychotherapy, 45 minutes with patient when performed with an evaluation and management service.
Psychotherapy, 60 min.
90474
90632
90633
90649
90656
90658
90672
90681
90686
....
....
....
....
....
....
....
....
....
IMMUNE ADMIN ORAL/NASAL ADDL ...........................
HEPA VACCINE ADULT IM ............................................
HEPA VACC PED/ADOL 2 DOSE IM .............................
4VHPV VACCINE 3 DOSE IM ........................................
IIV3 VACC NO PRSV 0.5 ML IM ....................................
IIV3 VACCINE SPLT 0.5 ML IM ......................................
LAIV4 VACCINE INTRANASAL ......................................
RV1 VACC 2 DOSE LIVE ORAL ....................................
IIV4 VACC NO PRSV 0.5 ML IM ....................................
90707
90710
90715
90716
90732
90734
90736
90746
90791
....
....
....
....
....
....
....
....
....
MMR VACCINE SC .........................................................
MMRV VACCINE SC .......................................................
TDAP VACCINE 7 YRS/> IM ..........................................
VAR VACCINE LIVE SUBQ ............................................
PPSV23 VACC 2 YRS+ SUBQ/IM ..................................
MENACWYD/MENACWYCRM VACC IM .......................
HZV VACCINE LIVE SUBQ ............................................
HEPB VACCINE 3 DOSE ADULT IM .............................
PSYCH DIAGNOSTIC EVALUATION .............................
90792 ....
PSYCH DIAG EVAL W/MED SRVCS .............................
90832 ....
90833 ....
PSYTX W PT 30 MINUTES ............................................
PSYTX W PT W E/M 30 MIN ..........................................
90834 ....
90836 ....
PSYTX W PT 45 MINUTES ............................................
PSYTX W PT W E/M 45 MIN ..........................................
90837
90838
90839
90840
90846
90847
90853
92002
92004
92012
92014
92083
....
....
....
....
....
....
....
....
....
....
....
....
PSYTX W PT 60 MINUTES ............................................
Psychotherapy, 60 minutes .............................................
Psychotherapy for crisis, first 60 minutes .......................
Psychotherapy for crisis ..................................................
Family psychotherapy, 50 minutes ..................................
FAMILY PSYTX W/PT 50 MIN ........................................
GROUP PSYCHOTHERAPY ..........................................
EYE EXAM NEW PATIENT ............................................
EYE EXAM NEW PATIENT ............................................
EYE EXAM ESTABLISH PATIENT .................................
EYE EXAM&TX ESTAB PT 1/>VST ...............................
VISUAL FIELD EXAMINATION(S) ..................................
92133 ....
92507 ....
92523 ....
CMPTR OPHTH IMG OPTIC NERVE .............................
SPEECH/HEARING THERAPY .......................................
SPEECH SOUND LANG COMPREHEN ........................
92552
93000
93015
93303
93306
....
....
....
....
....
PURE TONE AUDIOMETRY AIR ...................................
ELECTROCARDIOGRAM COMPLETE ..........................
CARDIOVASCULAR STRESS TEST ..............................
ECHO TRANSTHORACIC ..............................................
Tte w/doppler complete ...................................................
93307
93320
93350
93452
93798
93880
93922
....
....
....
....
....
....
....
TTE W/O DOPPLER COMPLETE ..................................
DOPPLER ECHO EXAM HEART ...................................
STRESS TTE ONLY ........................................................
Cardiac Catheterization ...................................................
CARDIAC REHAB/MONITOR .........................................
EXTRACRANIAL BILAT STUDY .....................................
UPR/L XTREMITY ART 2 LEVELS .................................
93970 ....
93971 ....
94010 ....
EXTREMITY STUDY .......................................................
EXTREMITY STUDY .......................................................
BREATHING CAPACITY TEST ......................................
94060
94375
94726
94727
94729
95004
95115
95117
95810
EVALUATION OF WHEEZING .......................................
RESPIRATORY FLOW VOLUME LOOP ........................
PULM FUNCT TST PLETHYSMOGRAP ........................
PULM FUNCTION TEST BY GAS ..................................
CO/MEMBANE DIFFUSE CAPACITY .............................
PERCUT ALLERGY SKIN TESTS ..................................
IMMUNOTHERAPY ONE INJECTION ............................
IMMUNOTHERAPY INJECTIONS ..................................
POLYSOM 6/> YRS 4/> PARAM ....................................
....
....
....
....
....
....
....
....
....
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Family psychotherapy, not including patient, 50 min.
Family psychotherapy, including patient, 50 min.
Group psychotherapy.
Intermediate exam.
Complete exam.
Eye exam on an established patient.
Eye exam and treatment for established patient.
An eye examination that can detect dysfunction in central and peripheral
vision.
Optic nerve imaging.
Therapy for speech or hearing.
Evaluation of speech sound production with evaluation of language comprehension.
Type of hearing test.
Routine EKG using at least 12 leads including interpretation and report.
Test to determine heart abnormalities.
Test to screen the heart for abnormalities.
Ultrasound examination of heart including color-depicted blood flow rate,
direction, and valve function.
Echo without doppler study.
Echo with doppler.
Stress test with echocardiogram.
Insertion of catheter into left heart for diagnosis.
Use of EKG to monitor cardiac rehabilitation.
Study of vessels on both sides of the head and neck.
Limited bilateral noninvasive physiologic studies of upper or lower extremity arteries.
Complete bilateral study of the extremities.
One sided or limited bilateral study.
Test to determine how well oxygen moves from the lungs to the blood
stream.
Test to determine if wheezing is present.
Graphical representation of inspiration and expiration.
Measures how much air is in the lungs after taking a deep breath.
Measure of lung function and gas exchange.
Test to measure how well gases diffuse across lung surfaces.
Allergy test.
Allergy shot-1 shot.
Multiple allergy shots.
Sleep monitoring of patient (6 years or older) in sleep lab.
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TABLE 1—500 ITEMS AND SERVICES LIST—Continued
Code
Description
Plain language description
....
....
....
....
....
....
....
POLYSOM 6/>YRS CPAP 4/> PARM .............................
MUSCLE TEST ONE LIMB .............................................
MUSCLE TEST 2 LIMBS ................................................
MUSC TEST DONE W/N TEST COMP ..........................
DEVELOPMENTAL SCREEN W/SCORE .......................
THER/PROPH/DIAG IV INF INIT ....................................
THER/PROPH/DIAG IV INF ADDON ..............................
96374 ....
96375 ....
THER/PROPH/DIAG INJ IV PUSH .................................
TX/PRO/DX INJ NEW DRUG ADDON ...........................
96376 ....
TX/PRO/DX INJ SAME DRUG ADON ............................
96415
96417
97010
97012
97014
97016
....
....
....
....
....
....
CHEMO IV INFUSION ADDL HR ...................................
CHEMO IV INFUS EACH ADDL SEQ ............................
HOT OR COLD PACKS THERAPY ................................
MECHANICAL TRACTION THERAPY ............................
ELECTRIC STIMULATION THERAPY ............................
VASOPNEUMATIC DEVICE THERAPY .........................
97026 ....
97032 ....
97033 ....
INFRARED THERAPY ....................................................
ELECTRICAL STIMULATION .........................................
ELECTRIC CURRENT THERAPY ..................................
97035 ....
ULTRASOUND THERAPY ..............................................
97110 ....
THERAPEUTIC EXERCISES ..........................................
97112 ....
NEUROMUSCULAR REEDUCATION ............................
97113
97116
97124
97140
97530
....
....
....
....
....
AQUATIC THERAPY/EXERCISES .................................
GAIT TRAINING THERAPY ............................................
MASSAGE THERAPY .....................................................
MANUAL THERAPY 1/> REGIONS ................................
THERAPEUTIC ACTIVITIES ...........................................
97535 ....
97597 ....
SELF CARE MNGMENT TRAINING ...............................
RMVL DEVITAL TIS 20 CM/< .........................................
97811
97813
98940
98941
98943
98966
....
....
....
....
....
....
ACUPUNCT W/O STIMUL ADDL 15M ...........................
ACUPUNCT W/STIMUL 15 MIN .....................................
CHIROPRACT MANJ 1–2 REGIONS .............................
CHIROPRACT MANJ 3–4 REGIONS .............................
CHIROPRACT MANJ XTRSPINL 1/> .............................
Hc pro phone call 5–10 min ............................................
98967 ....
Hc pro phone call 11–20 min ..........................................
98968 ....
Hc pro phone call 21–30 min ..........................................
98970 ....
Qualified non physician health care professional online
digital assessment and management est. patient 5–
10 minutes.
Qualified non physician health care professional online
digital assessment and management est. patient 11–
20 minutes.
Qualified non physician health care professional online
digital assessment and management for est. patients
21+ minutes.
MED SERV EVE/WKEND/HOLIDAY ..............................
VISUAL ACUITY SCREEN ..............................................
OFFICE/OUTPATIENT VISIT NEW ................................
OFFICE/OUTPATIENT VISIT NEW ................................
OFFICE/OUTPATIENT VISIT NEW ................................
OFFICE/OUTPATIENT VISIT NEW ................................
OFFICE/OUTPATIENT VISIT NEW ................................
OFFICE/OUTPATIENT VISIT EST ..................................
OFFICE/OUTPATIENT VISIT EST ..................................
OFFICE/OUTPATIENT VISIT EST ..................................
OFFICE/OUTPATIENT VISIT EST ..................................
OFFICE/OUTPATIENT VISIT EST ..................................
OFFICE CONSULTATION ..............................................
Sleep monitoring of patient (6 years or older) in sleep lab using CPAP.
Test to measure electrical activity of muscles or nerves in 1 limb.
Test to measure electrical activity of muscles or nerves in 2 limb.
Test to assess for nerve damage.
Childhood test to screen for developmental disabilities.
Intravenous infusion, for therapy, prophylaxis, or diagnosis-initial infusion.
Intravenous infusion, for therapy, prophylaxis, or diagnosis-additional infusions.
Intravenous infusion, for therapy, prophylaxis, or diagnosis-IV push.
Intravenous infusion, for treatment, prophylaxis, or diagnosis-new drug add
on.
Intravenous infusion, for treatment, prophylaxis, or diagnosis-same drug
add on.
Chemotherapy infusion-each additional hour.
Chemotherapy infusion-additional IV pushes of the same medication.
Use of external hot or cold packs.
Form of decompression therapy of the spine.
One time use unattended.
Machines designed to pump cold water into an inflatable wrap or brace,
compressing the enveloped area of the body.
Light-based method to treat pain and inflammation.
Repeated application to one or more parts of the body.
Psychiatric treatment in which seizures are electrically induced in patients
to provide relief from mental disorders.
Use of sound waves to treat medical problems, especially musculoskeletal
problems like inflammation from injuries.
Therapeutic exercise to develop strength, endurance, range of motion, and
flexibility, each 15 minutes.
A technique used by physical therapists to restore normal body movement
patterns.
Use of water for therapy/exercises.
A type of physical therapy.
Use of massage.
Manipulation of 1 or more regions of the body.
Incorporates the use of multiple parameters, such as balance, strength,
and range of motion, for a functional activity.
Occupational therapy.
Debridement (for example, high pressure waterjet with/without suction,
sharp selective debridement with scissors, scalpel, and forceps).
Acupuncture without stimulation.
Acupuncture with stimulation.
Chiropractic manipulation in 1–2 regions.
Chiropractic manipulation in 3–4 regions.
Chiropractic manipulation not of the spine.
Telephone assessment and management service, 5–10 minutes of medical discussion.
Telephone assessment and management service, 11–20 minutes of medical discussion.
Telephone assessment and management service, 21–30 minutes of medical discussion.
Qualified non physician health care professional online digital assessment
and management, for an established patient, for up to 7 days, cumulative time during the 7 days; 5–10 minutes.
Qualified non physician health care professional online digital assessment
and management, for an established patient, for up to 7 days, cumulative time during the 7 days; 11–20 minutes.
Qualified non physician health care professional online digital assessment
and management, for an established patient, for up to 7 days, cumulative time during the 7 days; 21 or more minutes.
Medical service during off-hours.
Eye test.
New patient office or other outpatient visit, typically 10 minutes.
New patient office or other outpatient visit, typically 20 minutes.
New patient office or other outpatient visit, typically 30 min.
New patient office of other outpatient visit, typically 45 min.
New patient office of other outpatient visit, typically 60 min.
Outpatient visit of established patient not requiring a physician.
Outpatient visit of established patient requiring a physician.
Established patient office or other outpatient visit, typically 15 minutes.
Established patient office or other outpatient visit, typically 25 minutes.
Established patient office or other outpatient, visit typically 40 minutes.
Patient office consultation, typically 40 min.
95811
95860
95861
95886
96110
96365
96366
98971 ....
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98972 ....
99051
99173
99201
99202
99203
99204
99205
99211
99212
99213
99214
99215
99243
....
....
....
....
....
....
....
....
....
....
....
....
....
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TABLE 1—500 ITEMS AND SERVICES LIST—Continued
Code
Description
Plain language description
Patient office consultation, typically 60 min.
Emergency department visit, moderately severe problem.
Emergency department visit, problem of high severity.
Emergency department visit, problem with significant threat to life or function.
Initial visit for an infant.
Initial visit for new patients 1–4 years old.
New preventative visit in new patients 5–11 years old.
New preventative visit in new patients 12–17 years old.
Initial new patient preventive medicine evaluation (18–39 years).
Initial new patient preventive medicine evaluation (40–64 years).
Initial visit for new patients 65 and older years old.
Periodic primary re-evaluation for an established infant patient.
Initial visit for new patients 1–4 years old.
New preventative visit in new patients 5–11 years old.
New preventative visit in new patients 12–17 years old.
Established patient periodic preventive medicine examination age 18–39
years.
Established patient periodic preventive medicine examination age 40–64
years.
Periodic primary re-evaluation for an established patient 65 and older.
Online digital evaluation and management service, for an established patient, for up to 7 days, cumulative time during the 7 days; 5–10 minutes.
Online digital evaluation and management service, for an established patient, for up to 7 days, cumulative time during the 7 days; 11–20 minutes.
Physician telephone patient service, 5–10 minutes of medical discussion.
Physician telephone patient service, 11–20 minutes of medical discussion.
Physician telephone patient service, 21–30 minutes of medical discussion.
99244
99283
99284
99285
....
....
....
....
OFFICE CONSULTATION ..............................................
Emergency dept visit .......................................................
Emergency dept visit .......................................................
Emergency dept visit .......................................................
99381
99382
99383
99384
99385
99386
99387
99391
99392
99393
99394
99395
....
....
....
....
....
....
....
....
....
....
....
....
INIT PM E/M NEW PAT INFANT ....................................
INIT PM E/M NEW PAT 1–4 YRS ..................................
PREV VISIT NEW AGE 5–11 .........................................
PREV VISIT NEW AGE 12–17 .......................................
PREV VISIT NEW AGE 18–39 .......................................
PREV VISIT NEW AGE 40–64 .......................................
INIT PM E/M NEW PAT 65+ YRS ..................................
PER PM REEVAL EST PAT INFANT .............................
PREV VISIT EST AGE 1–4 .............................................
PREV VISIT EST AGE 5–11 ...........................................
PREV VISIT EST AGE 12–17 .........................................
PREV VISIT EST AGE 18–39 .........................................
99396 ....
PREV VISIT EST AGE 40–64 .........................................
99397 ....
99421 ....
PER PM REEVAL EST PAT 65+ YR ..............................
ONLINE DIGITAL EVALUATION AND MANAGEMENT
SERVICE; 5–10 MINUTES.
Online digital evaluation and management service; 11–
20 minutes.
99422 ....
99441 ....
99442 ....
99443 ....
Phone e/m phys/qhp 5–10 min .......................................
Phone e/m phys/qhp 11–20 min .....................................
Phone e/m phys/qhp 21–30 min .....................................
As outlined above, below are the five
codes that appear on the commenter list
of recommended items and services that
are not being required for the initial list
of 500 items and services.
Commenter codes not used
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10022 .....................................
11100 .....................................
11101 .....................................
77059 .....................................
A288 .......................................
Reason for
removal
Code
Code
Code
Code
Code
Retired.
Retired.
Retired.
Retired.
Retired.
The Departments understand that
plans and issuers may use different
billing codes (for example, MS–DRGs
vs. APR DRGs). Therefore, in the first
year of the implementation of the selfservice tool, when plans and issuers are
required to provide cost estimates for
the 500 items and services identified by
the Departments, plans and issuers are
permitted to make appropriate code
substitutions as necessary to allow them
to disclose cost-sharing information for
the 500 items and services through the
self-service tool. If necessary, the
Departments will issue future guidance
regarding standards for code
substitutions.
a. First Content Element: Estimated
Cost-Sharing Liability
The first content element that plans
and issuers are required to disclose
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under the final rules is an estimate of
the cost-sharing liability for the
furnishing of a covered item or service
by a particular provider or providers.
The calculation of the cost-sharing
liability estimate is required to be
computed based on the other relevant
cost-sharing information that plans and
issuers are required to disclose, as
described later in this section of this
preamble.
The proposed rules defined ‘‘costsharing liability’’ as the amount a
participant, beneficiary, or enrollee is
responsible for paying for a covered
item or service under the terms of the
plan or coverage. The disclosure must
include all applicable forms of cost
sharing, including deductibles,
coinsurance requirements, and
copayments. The term cost-sharing
liability does not include premiums,
any applicable balance billing amounts
charged by out-of-network providers, or
the cost of non-covered items or
services. For QHPs offered through
Exchanges, an estimate of cost-sharing
liability for a requested covered item or
service provided must reflect any costsharing reductions the individual would
receive under the coverage.
Many commenters supported the
disclosure of cost-sharing liability for a
particular item or service. One stated
that providing cost-sharing amounts to
consumers in advance of receiving a
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service would likely make it easier for
providers to collect consumers’ costsharing amounts. However, some
commenters were concerned that
information provided in advance of care
would not provide an accurate estimate
of actual participant, beneficiary, or
enrollee liability, which would lead to
consumer confusion and frustration. A
few commenters requested that the tool
include additional information, such as
all providers expected to be involved in
providing an item or service, and the
price of items and services historically
provided along with that particular item
or service by the provider. Some
commenters urged the Departments to
ensure appropriate educational
information is provided to patients to
help them better understand and
navigate the information being
displayed. Others recommended a
federally funded and coordinated
outreach and education campaign to
encourage the use of price transparency
tools and help patients understand the
complexities of health care prices. One
commenter urged the Departments to
clarify that, to the extent that the actual
services provided are consistent with
those provided under the estimate,
plans would not be permitted to hold an
enrollee responsible for more than what
was provided under the estimate.
The Departments underscore that the
estimates required by the final rules are
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not required to reflect the actual or final
cost of a particular item or service.
Unforeseen factors during the course of
treatment (which may involve
additional services or providers) can
result in higher actual cost-sharing
liability following receipt of care than
the estimate provided in advance.
Nonetheless, the Departments are
finalizing the requirement that costsharing liability estimates be built upon
accurate information, including the
relevant cost-sharing information
described in 26 CFR 54.9815–
2715A2(b)(1)(ii)–(iv), 29 CFR 2590.715–
2715A2(b)(1)(ii)–(iv), and 45 CFR
147.211(b)(1)(ii)–(iv). However, this
requirement does not mean that the
estimates must reflect the amount
ultimately charged to a participant,
beneficiary, or enrollee. Instead, the
estimate should reflect the amount a
participant, beneficiary, or enrollee
would be expected to pay for the
covered item or service for which costsharing information is sought. Thus, the
final rules do not require the costsharing liability estimate to include
costs for unanticipated items or services
the individual could incur due to the
severity of his or her illness or injury,
provider treatment decisions, or other
unforeseen events. Attendant notice
requirements in 26 CFR 54.9815–
2715A2(b)(1)(vii), 29 CFR 2590.715–
2715A2(b)(1)(vii), and 45 CFR
147.211(b)(1)(vii) also require inclusion
of a statement that actual charges for the
participant’s, beneficiary’s, or enrollee’s
covered items and services may be
different from those described in a costsharing liability estimate, depending on
the actual items and services received at
the point of care.
Additionally, while the Departments
acknowledge the value of not allowing
group health plans and health insurance
issuers to impose higher cost sharing
than estimated, to the extent that the
actual services provided were consistent
with those provided under the estimate,
the Departments are of the view that it
would not be prudent to hold plans and
issuers liable to the exact estimate that
is provided through the tool, as costsharing obligations may ultimately vary
from the estimates provided in advance.
Additionally, the Departments are
concerned that such a requirement
could incentivize plans and issuers to
provide high estimates, rather than the
most accurate estimates.
Commenters recommended the final
rules provide plans and issuers with the
flexibility to apply a reasonable
methodology for estimating reliable outof-pocket costs for a specific network
provider, and recommended that this
methodology could include, but should
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19:27 Nov 10, 2020
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not be limited to, using current year
negotiated rates, historical negotiated
rates, historical claims, or a combination
of these data points. One commenter
urged the Departments to remove the
proposed requirement that cost-sharing
liability information be calculated based
on negotiated rates, stating that this is
not the methodology used by most
existing cost-estimate tools.
The Departments understand that
plans and issuers with existing costestimate tools may use advanced
analytics in calculating cost-sharing
liability estimates. However, the
Departments are of the view that the
most accurate estimates of cost-sharing
liability should be provided using the
actual rates and fees upon which
liability is determined. It is the
Departments’ understanding that, while
provider reimbursement may be based
on negotiated rates, plans and issuers do
not always calculate a consumer’s
liability using the negotiated rate as
defined in paragraph (a) of the proposed
rules, such as in capitation
arrangements where the provider is
reimbursed retrospectively. Rather,
some plans and issuers may determine
a participant’s, beneficiary’s, or
enrollee’s cost-sharing liability on a
contractually agreed upon underlying
fee schedule between the provider and
the plan or issuer.
Therefore, the final rules require that
cost-sharing liability for a particular
item or service be calculated based on
in-network rates, out-of-network
allowed amounts, and individualspecific accumulators, such as
deductibles and out-of-pocket limits.
However, the Departments clarify that
plans and issuers may incorporate
additional metrics and analytics beyond
this minimum standard: For example,
by using complex historical analytics to
predict total costs of items and services
available through a bundled payment
arrangement. The Departments will
assess how additional useful
information can be provided to
consumers in this area going forward.
Under the proposed rules, plans and
issuers would be required to provide
participants, beneficiaries, and enrollees
with cost-sharing information for either
a discrete item or service or for items or
services for a treatment or procedure for
which the plan uses a bundled payment
arrangement, according to how the plan
or issuer structures payment for the item
or service. Several commenters pointed
out that providing cost-sharing liability
estimates for bundled payment
arrangements might introduce confusion
as consumers may not realize that
billing and payment rates are different
when items and services are rendered
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72191
individually versus as part of a bundled
item or service. Commenters stated that
ultimately, patients would very likely
receive inaccurate or misleading
estimates in a significant proportion of
self-service estimate requests. Similarly,
several commenters sought clarification
regarding how plans and issuers that
incorporate innovative and cost-saving
methods like reference-based pricing,
value-based insurance design, and
direct primary care as part of their
services and plan designs would comply
with the requirements of the proposed
rules.
The Departments recognize the
variability in pricing structures and plan
designs for many plans and issuers. The
Departments understand that developers
have demonstrated that formulas for
unique pricing models are already being
incorporated into existing estimator
tools. The Departments further
understand that while providing cost
estimates in advance for a plan or issuer
that incorporates reference-based
reimbursement may be complex, it is
still feasible to estimate such costs. For
example, plans or issuers could develop
a method for analyzing past claims of
specific providers to look for patterns in
their payment rates from which to
derive an accurate predictive estimate in
advance. In response to the Hospital
Price Transparency final rule, one
hospital claims to have developed a tool
that provides cost estimates with 95
percent to 99 percent accuracy.110 While
some factors associated with the course
of care are incorporated after services
are rendered, others, like gender or
location, are known in advance.
Therefore, the Departments expect plans
and issuers to provide a reasonable
estimate using information the plan or
issuer knows about the participant,
beneficiary, or enrollee or the average
participant, beneficiary, or enrollee.
The Departments again acknowledge
that how a provider is reimbursed does
not necessarily indicate how a
participant, beneficiary, or enrollee will
be billed. Specifically, as commenters
explained, the bundled payment
arrangement as defined in the proposed
rules may not reflect the cost-sharing
liability for which the consumer is
liable. For instance, if a provider is
reimbursed in a bundled payment
arrangement for a surgical procedure
that includes the surgery and pre- and
post-surgery office visits, but the
110 Meyer, H. ‘‘Hospitals roll out online price
estimators as CMS presses for transparency.’’
Modern Healthcare. June 23, 2018. Available at
https://www.modernhealthcare.com/article/
20180623/NEWS/180629994/hospitals-roll-outonline-price-estimators-as-cms-presses-fortransparency.
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enrollee is billed a copayment for each
office visit and coinsurance for the
surgical procedure, the enrollee should
be able to obtain the separate copayment
liabilities for each of the office visits
and the surgical procedures, not one
bundled charge. However, under this
example, if the individual is only
responsible for one copayment that
includes all office visits and the surgical
procedures, the plan or issuer could
provide the cost-sharing liability
estimate for that bundled payment
arrangement.
Therefore, the final rules clarify that
plans and issuers should provide one
overall cost-sharing liability estimate for
a bundled payment arrangement if that
is the only cost sharing for which the
participant, beneficiary, or enrollee
would be liable. However, if a plan or
issuer reimburses a provider under a
bundled payment arrangement for all
covered items and services provided for
a specific treatment or procedure, but
cost sharing is imposed separately for
each unique item and service included
in the bundled payment, plans and
issuers should disclose the cost-sharing
liability for those distinct items and
services to the participant, beneficiary,
or enrollee. The Departments also
recognize that providing one estimate
that includes all items and services that
are typically provided within an
episode of care may be consumerfriendly in some situations, even where
the items and services are not subject to
a bundled payment arrangement.
Therefore, the final rules clarify that
while plans and issuers are not required
to provide bundled estimates where the
provider is not reimbursed through a
bundled payment arrangement, nothing
prohibits plans or issuers from
providing bundled estimates in
situations where such estimates could
be relevant to participants, beneficiaries,
or enrollees, as long as the plan or issuer
also discloses information about the
relevant items or services individually,
as required by the final rules.
Plans and issuers should take a
similar approach for plan designs that
incorporate alternative payment
structures such as direct primary care or
other bundled or capitated payment
arrangements. The Departments
understand that there are many unique
plan designs and may issue additional
guidance to address specific questions
from plans, issuers, and enforcement
entities regarding the requirements of
the final rules.
The Departments appreciate
comments requesting education and
outreach to help ensure that
participants, beneficiaries, and enrollees
know that these consumer tools exist
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and can understand the information
displayed. The Departments recognize
that more than 94 percent of plans and
issuers recently surveyed already have
some variation of an internet self-service
tool,111 yet another study noted that
only 12 percent of participants,
beneficiaries, or enrollees currently use
the tools available to them,112 which
might suggest that there is an
opportunity for improved awareness
and understanding of these tools.
However, the Departments are also of
the view that plans and issuers have
their own incentives to provide quality
customer service and know what types
of outreach and messaging would be
most helpful to their participants,
beneficiaries, and enrollees. Therefore,
the Departments have decided not to
institute specific outreach and
education requirements, but rather
strongly encourage plans and issuers to
develop educational and outreach
materials to promote awareness that
self-service tools exist, where to find
them on the plan’s or issuer’s website,
how to use the tool, what, if any, further
innovations above the baseline
standards that differentiates their tool
from competitors, and what additional
information may be available. In
addition, the Departments are of the
view that employers may want to
conduct outreach and education to
encourage their employees to shop for
lower-priced services that may slow
increases in employer-sponsored
coverage premiums.
One commenter stated that the final
rules should provide the flexibility for
health plans to display cost-sharing
information either as dollars or using
some proxy variable that either conveys
costs relative to other providers or the
cost-effectiveness of the providers for a
given items or service relative to their
peers. Another commenter
recommended that cost estimates
include both an average price and a
reasonable range of the possible prices
that the treatment could cost. Other
commenters recommended the
Departments allow cost estimates to be
provided as a range.
The Departments are of the view that
cost-sharing averages and ranges would
not provide personalized and specific
cost-sharing information and therefore
111 Sharma A., Manning, R., and Mozenter, Z.
‘‘Estimating the Burden of the Proposed
Transparency in Coverage Rule.’’ Bates White
Economic Consulting. January 27, 2020. Available
at: https://www.bateswhite.com/newsroom-insightTransparency-in-Coverage-Rule.html.
112 See Mehrotra, A., Chernew, M., and Sinaiko,
A. ‘‘Promises and Reality of Price Transparency.’’
April 5, 2018. 14 N. Eng. J. Med. 378. Available at:
https://www.nejm.org/doi/full/10.1056/
NEJMhpr1715229.
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the final rules adopt, as proposed, the
provision that estimated cost-sharing
liability be reflected as a dollar amount.
However, the Departments understand
that providing an estimated range could
help consumers understand how their
costs may vary depending on the
complexity of a procedure. In addition
to providing a cost-sharing estimate that
is specific to the participant,
beneficiary, or enrollee, plans and
issuers may also choose to provide low
and high ranges of what the consumer
may expect to pay to reflect other
needed services, complications, and
other factors.
Several commenters expressed
concerns about the ability of plans and
issuers to provide these cost-sharing
estimates, noting that few, if any,
currently provide this level of
disclosure to participants, beneficiaries,
or enrollees before the incurrence of a
claim. Commenters stated that most
major issuers have treatment cost
estimators available, but these tools are
rudimentary and are not necessarily
available for all plan designs.
Commenters also stated that few
regional issuers currently make any
cost-estimation data available and the
vast majority of data provided via online
tools currently relies on estimated costs
drawn from publicly available sources
rather than personal information and
circumstances.
Another commenter stated that most
self-insured group health plans do not
have easy access to all the data
necessary to provide beneficiaries with
what they described as upfront
adjudication of the beneficiary’s claim,
like an EOB. One commenter expressed
concern, stating that plans could be
subject to significant penalties for
failure to comply and highlighted that
self-insured plans typically do not
establish their own networks, but rather
contract with an issuer, TPA or other
entity for the use of their network.
Another commenter stated that issuers,
preferred provider networks, and TPAs
continue to maintain network pricing
information as confidential and
proprietary, even with respect to their
own plan clients. Some commenters
stated that while the preamble to the
proposed rules suggests that plans could
renegotiate their contracts in order to
gain access to this proprietary
information, this ignores the realities of
the market. These commenters opined
that, in the absence of clearer guidance
applicable to issuers and TPAs, plans
and issuers will be burdened with trying
to force disclosure of this information.
The Departments are of the view that
the ability to access cost-sharing
liability information in advance of
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seeking care should not be limited by
the participant’s, beneficiary’s, or
enrollee’s plan or issuer type. The
Departments are aware of several issuers
that provide advance cost estimates that
are based on an individual’s specific
information, such as out-of-pocket
amount accumulators. The intent of the
final rules is to make this information
available to a larger number of
participants, beneficiaries, and
enrollees, empowering them to shop for
care that best meets their needs.
Additionally, while the Departments
recognize that some self-insured group
health plans (or TPAs acting on their
behalf) may not currently have access to
the information that would be required
to calculate a participant’s or
beneficiary’s cost liability, the
Departments do not foresee any barriers
that would prohibit the plan or TPA
from obtaining this information. As
discussed in the preamble to the
proposed rules, plans may have to
amend existing contracts with issuers,
TPAs, or providers. Consistent with the
discussion of legal authority elsewhere
in this preamble, even if a contract
between a self-insured plan and a TPA
contains a provision prohibiting the
public disclosure of its terms, it is the
Departments’ understanding that such
contracts typically include exceptions
where a particular disclosure is required
by Federal law, and Federal law would
control over contractual terms in any
case.
In response to whether other types of
information are necessary to provide an
estimate of cost-sharing liability prior to
an individual’s receipt of items or
services from a provider(s), one
commenter suggested—in order to
enhance the usability and accuracy of
these data—that CMS and payers utilize
the open-source episode grouper
maintained by the not-for-profit PatientCentered Episode System (PACES)
Center, to create a single industry
standard for defining clinical episodes
of care using current medical record and
payment systems and based on
consensus across multiple stakeholders
including providers, payers, purchasers,
and consumers.
While the Departments generally
support standardization across the
complex health care ecosystem, there is
no current required standardization of
items and services provided for certain
common episodes of care. Because of
the lack of this particular standard,
requiring plans and issuers to use
PACES or similar services to determine
costs will not accurately reflect what
different plans and issuers actually
reimburse for different episodes of care.
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The Departments acknowledge that
section 2713 of the PHS Act requires
non-grandfathered group health plans
and issuers offering non-grandfathered
coverage in the individual or group
markets to provide coverage without the
imposition of any cost-sharing
requirements for select preventive items
and services. However, if the same items
or services are furnished for nonpreventive purposes, the participant,
beneficiary, or enrollee may be subject
to the cost-sharing terms of his or her
plan. The Departments are of the view
that if an item or service will be
furnished at no cost to the participant,
beneficiary, or enrollee, the participant,
beneficiary, or enrollee should know
this information. One commenter
expressed a desire that price
transparency not serve as a disincentive
for individuals seeking preventive and
maintenance therapy services. The
Departments are of the view that clearly
indicating when items and services have
a $0 cost-sharing liability may have the
opposite effect—it may actually
encourage consumers to seek preventive
care. The Departments understand that
determining whether an item or service
is preventive or not for an individual
may be complex, and, indeed, may be
impossible prior to service. Therefore, to
the extent an item or service is a
recommended preventive service under
section 2713 of the PHS Act, and the
plan or issuer cannot determine whether
the request is for preventive or nonpreventive purposes, the plan or issuer
must display the non-preventive costsharing liability in the internet-based
self-service tool, along with a statement
that the item or service may not be
subject to cost sharing if it is billed as
a preventive service. For example, if an
individual requests cost-sharing
information for an in-network
colonoscopy, the plan should display
the applicable cost-sharing information
for a diagnostic colonoscopy and a
statement that the service may not be
subject to cost sharing if it is billed as
a preventive service from an in-network
provider. As an alternative, a plan or
issuer may allow an individual to
request cost-sharing information for the
specific preventive or non-preventive
item or service by including the
appropriate terms such as ‘‘preventive,’’
‘‘non-preventive,’’ or ‘‘diagnostic’’ as a
means to request the most accurate costsharing information.
as the amount of financial responsibility
that a participant, beneficiary, or
enrollee has incurred at the time the
request for cost-sharing information is
made, with respect to a deductible and/
or an out-of-pocket limit. If an
individual is enrolled in other than selfonly coverage, these accumulated
amounts would include the financial
responsibility a participant, beneficiary,
or enrollee has incurred toward meeting
his or her individual deductible and/or
out-of-pocket limit, as well as the
amount of financial responsibility that
the individuals enrolled under the plan
or coverage have incurred toward
meeting the other than self-only
coverage deductible and/or out-ofpocket limit, as applicable. The
Departments interpret section 2707(b) of
the PHS Act as requiring nongrandfathered group health plans to
comply with the maximum out-ofpocket limit promulgated under section
1302(c)(1) of PPACA, including the HHS
clarification that the self-only maximum
out-of-pocket limit applies to each
individual, regardless of whether the
individual is enrolled in self-only
coverage or in other than self-only
coverage. Accordingly, the self-only
maximum out-of-pocket limit applies to
an individual who is enrolled in family
coverage or other coverage that is not
self-only coverage under a group health
plan.113 For this purpose, the
Departments proposed that accumulated
amounts would include any expense
that counts toward the deductible or
out-of-pocket limit (such as copayments
and coinsurance), but would exclude
expenses that would not count toward
a deductible or out-of-pocket limit (such
as premium payments, out-of-pocket
expenses for out-of-network services, or
amounts for items or services not
covered under a plan or coverage).
Furthermore, to the extent a plan or
issuer imposes a cumulative treatment
limitation on a particular covered item
or service (such as a limit on the
number of items, days, units, visits, or
hours covered in a defined time period)
independent of individual medical
necessity determinations, the
accumulated amounts would also
include the amount that has accrued
toward the limit on the item or service
(such as the number of items, days,
units, visits, or hours the participant,
beneficiary, or enrollee has used).
b. Second Content Element:
Accumulated Amounts
The second content element is a
participant’s, beneficiary’s, or enrollee’s
accumulated amounts. The proposed
rules defined ‘‘accumulated amounts’’
113 80 FR 10750, 10824–10825 (Feb. 27, 2015); see
also FAQs About Affordable Care Act
Implementation (Part XXVII), Q1. Available at
https://www.cms.gov/CCIIO/Resources/Fact-Sheetsand-FAQs/Downloads/ACA/-FAQs-Part-XXVII/MOOP/-2706/-FINAL.pdf and https://www.dol.gov/
sites/dolgov/files/EBSA/about-ebsa/our-activities/
resource-center/faqs/aca-part-xxvii.pdf.
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As discussed in the proposed rules,
the Departments understand that
independent of cumulative treatment
limitations, cost-sharing liability may
vary by individual based on a
determination of medical necessity and
that it may not be reasonable for a plan
or issuer to account for this variance as
part of the accumulated amounts.
Therefore, under the final rules, plans
and issuers are required to provide costsharing information with respect to an
accumulated amount for a cumulative
treatment limitation that reflects the
status of the individual’s progress
toward meeting the limitation, and this
information does not include any
individual determination of medical
necessity that may affect coverage for
the item or service. For example, if the
terms of an individual’s plan or
coverage limit coverage of physical
therapy to 10 visits per plan or policy
year, subject to a medical necessity
determination, and at the time the
request for cost-sharing information is
made the individual has had claims
paid for three physical therapy visits,
the plan or coverage would make costsharing information disclosures based
on the fact that the individual could be
covered for seven more physical therapy
visits in that plan or policy year,
regardless of whether or not a
determination of medical necessity for
future visits has been made at that time.
Several commenters supported the
inclusion of the accumulated amounts
as one of the content elements. One
commenter agreed with the proposed
requirement that the accumulated
amounts include the financial
responsibility incurred toward both an
individual deductible and/or out-ofpocket limit and toward the other than
self-only coverage deductible and/or
out-of-pocket limit. One commenter
recommended that plans be required to
disclose to prospective enrollees
whether an enrollee’s accumulated
amounts are reduced through a plan’s
accumulator adjustment program
because, the commenter noted, having
this information prior to enrollment in
a plan is crucial because of the impact
such programs have on participant,
beneficiary, and enrollee access,
adherence, and outcomes.
The Departments agree that an
essential part of providing accurate costsharing estimates is disclosing
individuals’ progress toward their
accumulated amounts. However, the
intent of the self-service tool is to
provide current participants,
beneficiaries, and enrollees with
information about their plan or issuer,
and, therefore, the Departments are not
finalizing any provisions related to
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disclosures to potential enrollees. The
final rules adopt this provision as
proposed.
One commenter recommended the
Departments confirm amounts made
available in account-based arrangements
that can or must be used toward costsharing expenses under a separate plan
need not be reflected in the
accumulated amounts or cost-sharing
estimate under the tool. The commenter
stated that there is an array of these
types of arrangements of varying types
and structures and to incorporate them
into the cost-sharing estimate could be
administratively challenging and would
impose a significant burden.
The Departments clarify that the
estimates do not include amounts made
available through separate accountbased arrangements. In addition, the
Departments encourage, but are not
requiring, plans and issuers to issue a
disclaimer regarding such arrangements,
as necessary.
Certain commenters stated that the
proposed requirement to display
accumulated amounts toward a
cumulative treatment limitation on a
particular item or service would be
difficult to implement and requested
elimination or delay of this requirement.
Commenters expressed that in some
cases, this information may be tracked
by third-party vendors and not
integrated into claims systems; for
example, plans and issuers often
contract with third parties that provide
medical benefits management for certain
services (physical therapy, for example).
Commenters stated that building the
connectivity necessary to exchange
information on accumulated amounts in
real time would take significant time.
Other commenters recommended this
requirement be optional.
The Departments acknowledge that
disclosure of accumulated amounts may
present challenges for plans and issuers.
However, an accurate estimate of costsharing liability cannot be achieved
without taking into account a
participant’s, beneficiary’s, or enrollee’s
accumulated amounts, including
cumulative treatment limitations.
Nonetheless, to give plans and issuers
additional time to prepare, the
disclosure requirements related to costsharing liability estimates in the final
rules are not applicable until plan years
(or in the individual market, policy
years) beginning on or after January 1,
2023, providing two years for
implementation, which should give
plans and issuers sufficient time to
ensure that they are able to comply.
One commenter urged the
Departments to include a requirement
for plans to provide the cost for the
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beneficiary to purchase a non-covered
prescription drug and to indicate
whether and, if so, to what extent, that
cost will be applied against the
deductible. The commenter stated that
knowing to what extent a non-covered
drug expense will count towards
meeting a deductible and the annual
limitation on cost sharing, if at all,
especially with regard to specialty
drugs, is critical because there are
significant coverage gaps.
While the Departments appreciate the
suggestions related to non-covered
prescription drugs, this rulemaking is
focused on covered items and services.
The Departments are not inclined to
increase the burden imposed by the
final rules by adding requirements to
disclose information regarding noncovered services, given that plans and
issuers may not have access to the costs
of drugs they do not cover and include
in their formulary. The Departments
will take this suggestion into
consideration for future rulemaking.
c. Third Content Element: In-Network
Rates
Negotiated Rates
In the proposed rules, the
Departments proposed to require group
health plans and health insurance
issuers to disclose the negotiated rate,
reflected as a dollar amount, for an innetwork provider or providers for a
requested covered item or service, to the
extent necessary to determine the
participant’s, beneficiary’s, or enrollee’s
cost-sharing liability. Many commenters
did not support the disclosure of
negotiated rates, stating that publishing
negotiated rates would not meet the
Departments’ purported goal of helping
consumers understand costs and would
possibly make purchasing more
confusing and difficult for consumers.
Additionally, some commenters
expressed concerns that publication of
negotiated rates would force plans and
issuers to violate non-disclosure
contracts with providers. Conversely,
many other commenters did support the
disclosure of negotiated rates and
offered support for their disclosure to
participants, beneficiaries, and
enrollees. These commenters stated that
consumers should be engaged and
educated about health care spending,
and as discussed in more detail below,
several commenters supported the
disclosure of negotiated rates even when
it is not relevant to a consumer’s costsharing liability.
The Departments maintain that the
disclosure of the negotiated rates is a
key element of overall price
transparency. Participants, beneficiaries,
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and enrollees are often responsible for a
percentage of the negotiated rate
through coinsurance or the entire
negotiated rate if they have not yet met
their deductible. Consistent with
discussions elsewhere in this preamble,
the Departments are of the view that
such contracts typically include
exceptions where a particular disclosure
is required by Federal law.
In the preamble to the proposed rules,
the Departments acknowledged that
some provider contracts express
negotiated rates as a formula (for
example, 150 percent of the Medicare
rate), but disclosure of formulas is not
likely to be helpful or understandable
for many participants, beneficiaries, and
enrollees viewing this information. For
this reason, the final rules require plans
and issuers to disclose the negotiated
rates and underlying fee schedules that
result from using such a formula, as a
dollar amount.
A few commenters recommended
disclosing negotiated rate ranges or
benchmarks to help consumers compare
prices among providers. One commenter
stated it would be useful if plans
disclosed their range of in-network rates
(or their average or median rate) for each
service. This commenter stated that, for
certain services such as complex
surgeries, for which fees may be
bundled and may vary widely
depending on the severity of a
participant’s, beneficiary’s or enrollee’s
condition, providing the range of innetwork fees may be particularly
appropriate. This type of disclosure
could alert participants, beneficiaries,
and enrollees to consider, and prompt
them to consult providers about, the full
range of potential expenses for their
care. Another commenter recommended
that, regardless of the participant’s,
beneficiary’s, or enrollee’s out-of-pocket
liability, the participant, beneficiary, or
enrollee should always be provided the
full in-network amount, as well as a
comparison of that amount to a
benchmark such as the Fair Price or
median in-network price. This
commenter stated that the in-network
price for a service can vary by as much
as 200 to 1,000 percent, depending on
the provider selected. In order to
achieve the goals of transparency,
consumers need to know the full price
of a service prior to care so they are able
to effectively compare providers’ prices.
In the Departments’ view, disclosure
of formulas or ranges are not likely to
be helpful or understandable for many
participants, beneficiaries, and enrollees
viewing this information. The purpose
of the internet-based self-service tool is
to provide personalized costs based on
the participant’s, beneficiary’s, or
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enrollee’s specific plan or coverage, and
ranges and formulas do not achieve this
goal. For this reason, the final rules
retain the proposed requirement to
disclose the rate that results from using
such a formula, which is required to be
expressed as a dollar amount.
Underlying Fee Schedule Rate
Given the unique nature of certain
plan designs, in the proposed rules, the
Departments requested comment on
whether there were certain
reimbursement or payment models that
should be exempt from all or certain
aspects of the proposed rules. A few
commenters urged the Departments to
clarify how capitation arrangements and
value-based reimbursement designs,
including bundled payment
arrangements and reference-based
pricing, would be regulated under the
proposed rules. Commenters stated that
provider payment amounts are not
knowable under these types of
arrangements until after care is provided
and that they cannot be attributed to a
particular item or service provided to a
particular participant, beneficiary, or
enrollee. Other commenters stated that
participants, beneficiaries, and enrollees
should have access to cost-sharing
liability data for items and services that
might be rendered in the course of their
care, but that the Departments’ proposed
approach downplayed the complexity of
payer-provider contracts in a way that
could inadvertently lead to participants,
beneficiaries, and enrollees receiving
misleading estimates of their costsharing liability. The commenter stated
that only the consumer’s cost sharing
and the fee-for-service component of
reimbursement should be required to be
disclosed under these requirements.
Another commenter stated that the vast
majority of bundled payment
arrangements use a retrospective
settlement, in which the payer and
provider determine a final settlement
after all care in the relevant episode has
been delivered, suggesting that a
negotiated rate under these
arrangements could not be provided in
advance.
The Departments are of the view that,
for transparency in coverage to be truly
effective, consumers should have access
to all pricing information related to their
care so they can make meaningful
decisions about their health care
spending. Further, the Departments do
not agree that the disclosure of
negotiated rates will be misleading to
participants, beneficiaries, or enrollees.
Negotiated rates are already an element
of an EOB that participants,
beneficiaries, and enrollees are
accustomed to receiving after receiving
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72195
health care items or services. As stated
elsewhere in this preamble, providing
this information in advance equips a
more cost-conscious participant,
beneficiary, and enrollee with the
necessary information to make a more
informed decision about their health
care. Furthermore, the Departments are
of the view that it is in the best interest
of plans and issuers to indicate, when
disclosing these rates, what each rate is
and how it is applicable to the
participant’s, beneficiary’s, or enrollee’s
plan or coverage.
To more fully understand the
complexity of payer-provider contracts
and, in an effort to clarify how the
proposed rules would apply to
capitated, bundled, and other
alternative reimbursement designs, the
Departments considered these public
comments and conducted additional
research to understand different
contracting models and the inputs that
would be necessary for determining a
participant’s, beneficiary’s, or enrollee’s
cost-sharing liability under these
models.
Under some capitation arrangements,
payers reimburse a provider a set
amount per participant, beneficiary, or
enrollee for a pre-defined amount of
time, regardless of whether the
participant, beneficiary, or enrollee uses
the provider’s services. Capitation
payments are generally guided by
actuarial principles and may be
determined by different factors, such as
a participant’s, beneficiary’s, or
enrollee’s age and gender. For instance,
under some capitated models, plans and
issuers pay a provider or a collective
panel of providers a per-member-permonth (PMPM) capitation amount,
which is the negotiated rate. It is the
Departments’ understanding that under
certain capitated and bundled payment
arrangements, providers’ payments may
be reconciled retrospectively to account
for utilization, value adjustments, or
other weighting factors that can affect
the final payment to a provider. The
Departments understand that capitation
arrangements also may include at least
one underlying fee schedule rate upon
which a participant’s, beneficiary’s, or
enrollee’s cost-sharing liability is
determined.
As the Departments acknowledged
earlier in this preamble, negotiated
rates, as defined in the final rules, do
not always affect a participant’s,
beneficiary’s, or enrollee’s cost-sharing
liability. To account for alternative
reimbursement arrangements such as
capitated and bundled payment
arrangements, the Departments are
renaming the third content element as
‘‘in-network rates,’’ comprised of the
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following elements, as applicable to the
plan’s or issuer’s payment model:
negotiated rate and underlying fee
schedule rate, reflected as dollar
amounts. Plans and issuers must
disclose the underlying fee schedule
rate used to determine participant,
beneficiary, or enrollee cost-sharing
liability only where that rate is different
from the negotiated rate. As discussed
earlier in this preamble, the final rules
require that the cost-sharing liability
estimate for a requested covered item or
service be calculated using the current
underlying fee schedule rate if the plan
or issuer uses such a fee schedule. The
Departments are of the view that
disclosing underlying fee schedule rates
will provide the most relevant data on
which cost sharing is based, if cost
sharing is not based on the negotiated
rate, as originally proposed.
Disclosing the Negotiated Rate and
Underlying Fee Schedule Rate
In the proposed rules, the
Departments acknowledged that if the
negotiated rate does not impact an
individual’s cost-sharing liability under
a plan or coverage for a covered item or
service (for example, if the copayment
for the item or service is a flat dollar
amount or zero dollars and the
individual has met a deductible, or a
deductible does not apply to that
particular item or service), disclosure of
the negotiated rate may be unnecessary
to calculate cost-sharing liability for that
item or service. Therefore, the
Departments proposed that disclosure of
a negotiated rate would not be required
if it is not relevant for calculating an
individual’s cost-sharing liability for a
particular item or service. The
Departments sought comment on
whether there are any reasons
disclosure of negotiated rates should
nonetheless be required under these
circumstances.
Many commenters agreed that
negotiated rates should only be
disclosed to the extent they are used for
determining cost-sharing liability.
Commenters further expressed that only
information meaningful to consumers’
cost-sharing liability should be required
to be disclosed. One commenter stated
that this interpretation should be
extended to payments tied to value,
such as ‘‘shared savings,’’ bonuses, and
other performance-based
reimbursements.
Conversely, as stated earlier, many
commenters supported the disclosure of
negotiated rates in all circumstances.
One commenter stated that disclosing
the amount of the negotiated rate is
extremely valuable regardless of
whether the disclosure of this
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information impacts a participant’s costsharing liability, because it will
illuminate the costs of these particular
items and services—reflecting the
benefit consumers receive from their
enrollment in the plan or coverage, as
well as helping them to be conscious of
the costs incurred by the plan overall.
This commenter pointed out that if the
plan or issuer has different negotiated
in-network rates with different
providers furnishing the same item or
service, participants, beneficiaries, and
enrollees will have the opportunity to
compare the different rates among the
different providers.
Another commenter suggested a
number of benefits that could come
from the disclosure of negotiated rates
through the cost-sharing tool, even in
cases in which that information is not
relevant to the specific cost-sharing
inquiry. The commenter pointed out
that even if the participant’s,
beneficiary’s, or enrollee’s cost is not
affected, the plan’s or issuer’s cost could
be significantly affected and that
allowing participants, beneficiaries, and
enrollees awareness and visibility of
negotiated rates could provide
consumers with a greater understanding
of health care costs and enable
participants, beneficiaries, and enrollees
to seek out lower cost providers. The
commenter further stated that although
participants, beneficiaries, and enrollees
will use the tool to look up estimated
cost-sharing for specific items and
services, often they will also expect to
seek services from the same provider
repeatedly (for example, for ongoing
treatment and follow-up care).
The Departments agree with those
commenters who favored requiring
disclosure of negotiated rates even when
the negotiated rate is not relevant to
determining cost sharing, because it
may promote awareness and
understanding of health care prices and
promotes transparency in coverage.
Accordingly, the phrase ‘‘to the extent
relevant to the participant’s or
beneficiary’s cost-sharing liability’’ that
appeared in paragraph (b)(1) of the
proposed regulations has been removed
from the final rules. The final rules
modify the third content element to
require that the negotiated rate always
be disclosed with cost-sharing liability
estimates, even if it is not used to
determine cost sharing, and that the
underlying fee schedule rate also be
disclosed, to the extent that it is
different from the negotiated rate, as
applicable to the plan’s payment model.
With regard to plans and issuers using
an alternative reimbursement model,
such as a capitated or bundled payment
arrangement that does not have
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negotiated rates or an underlying fee
schedule, one commenter stated that
issuers do not always have access to the
negotiated rates or internal payment
methodologies utilized by capitated
medical groups or other providers and
would not be able to reliably provide
cost transparency based on a negotiated
rate at the service level. In contrast,
another commenter stated there is no
justification for excluding plans that
reimburse their providers based on
capitation from the internet-based selfservice tool requirements as this would
result in an incomplete data set, and
these plans already assign values to
services to administer benefits with
deductibles and coinsurance, as well as
for risk adjustment and internal
reporting purposes. Another commenter
stated that the Departments should
include Accountable Care Organizations
(ACOs) and other capitated
arrangements within the ambit of the
final rules and should require
transparency and full disclosure of
financial incentive arrangements that
underlie capitated arrangements under a
specific plan or contract, not just a
consumer’s anticipated liability. This
commenter stated that any exemptions
may actually be incentives for plans and
issuers to move toward opaque pricing
models.
The Departments acknowledge that it
is possible that some plans and issuers
using alternative reimbursement models
may not have negotiated rates or
underlying fee schedule rates to disclose
in the internet-based self-service tool.
However, the numbers of plans and
issuers without negotiated rates or
underlying fee schedule rates is limited
and the Departments are of the view that
an exemption for such arrangements is
not necessary. Additionally, the
Departments are of the view that
providing an exemption for such
arrangements will result in incomplete
data sets. As stated in the final rules, the
in-network rate must be disclosed, as
applicable to the plan’s or issuer’s
payment model. If the plan or issuer
does not have negotiated rates or
underlying fee schedule rates, the third
content element does not apply.
Prescription Drugs
The final rules adopt the requirement
that group health plans and health
insurance issuers disclose to
participants, beneficiaries, or enrollees
an estimate of cost-sharing liability for
each item or service, including
prescription drugs. As discussed in the
preamble to the proposed rules, this
would allow participants, beneficiaries,
and enrollees to request cost-sharing
information for a specific billing code
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(as described later in this preamble)
associated with a prescription drug or
by descriptive terms (such as the name
of the prescription drug), which would
permit participants, beneficiaries, and
enrollees to learn the estimated cost of
a prescription drug obtained directly
through a provider, such as a pharmacy
or mail order service. In addition to
allowing participants, beneficiaries, and
enrollees to obtain cost-sharing
information by using a billing code or
descriptive term, the proposed rules
would also have permitted participants,
beneficiaries, and enrollees to learn the
cost of a set of items or services that
include a prescription drug or drugs that
is subject to a bundled payment
arrangement for a treatment or
procedure. In the proposed rules, the
Departments acknowledged that outside
of a bundled payment arrangement,
plans and issuers often base cost-sharing
liability for prescription drugs on the
undiscounted list price, such as the
AWP or WAC, which frequently differs
from the price the plan or issuer has
negotiated for the prescription drug.114
In these instances, providing the
participant, beneficiary, or enrollee with
a rate that has been negotiated between
the issuer or plan and its PBM could be
misleading, as this rate would reflect
rebates and other discounts, and could
be lower than what the individual
would pay—particularly if the
participant, beneficiary, or enrollee has
not met his or her deductible.
The Departments sought comment as
to whether a rate other than the
negotiated rate, such as the
undiscounted price, should be required
to be disclosed for prescription drugs,
and whether and how to account for any
and all rebates, discounts, and
dispensing fees to ensure participants,
beneficiaries, and enrollees have access
to meaningful cost-sharing liability
estimates for prescription drugs.
Several commenters supported
disclosure of rebates, discounts, and
other price concessions for drugs. One
commenter referred to drug price
concessions as one of the ‘‘most
confounding black boxes of health care’’
and stated that data suggests these
concessions are actually increasing outof-pocket costs for participants,
beneficiaries, and enrollees. This
commenter urged the Departments to
require plans and issuers to disclose the
list price, the negotiated rate, a single
dollar value reflecting the total amount
of price concessions, and the price used
to calculate the participant’s,
114 ‘‘Follow the Dollar.’’ PhRMA. November 30,
2017. Available at: https://www.phrma.org/report/
follow-the-dollar-report.
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beneficiary’s, and enrollee’s coinsurance
along with, if different from the
negotiated rate, an explanation as to
why the price is different from the
negotiated rate. Another commenter
opined that participants, beneficiaries,
and enrollees have the right to know a
drug’s undiscounted price, discounted
or negotiated price, and the total sum of
all price concessions for that drug,
including fees, rebates, and discounts.
This commenter stated that providing a
beneficiary with these three data points
strikes the appropriate balance between
improving transparency without
misleading or overwhelming the
participant, beneficiary, or enrollee.
Many commenters suggested that
plans and issuers be required to disclose
when the participant’s, beneficiary’s, or
enrollee’s cost-sharing requirement
exceeds the price paid by the plan or
issuer. One commenter stated that in
cases where plans pass through some or
all rebates and other price concessions
to participants, beneficiaries, and
enrollees, the prices disclosed to
participants, beneficiaries, and enrollees
should be the price net of those rebates
and concessions. The commenter
emphasized the importance of plans and
issuers also disclosing to participants,
beneficiaries, and enrollees when
manufacturer rebates and discounts are
not passed through to them at the pointof-sale or factored into cost-sharing. One
commenter noted that negotiated prices
for prescriptions or cash price
alternatives may sometimes appear less
expensive, but that such alternative
rates (for example, cash price options)
may increase overall costs if such rates
offset the ability to reach a plan’s
deductible or out-of-pocket maximum
thresholds. Therefore, this commenter
requested that the Departments provide
clarity as to whether plans and issuers
would be responsible for notifying
participants, beneficiaries, and enrollees
of such considerations and/or making
such calculations. Similarly, two
commenters urged the Departments to
require disclosure of the negotiated rate
for drugs in all situations, even where
the beneficiary owes a fixed-amount
copayment, and cited reports of cases
when, for inexpensive generics, the
beneficiary’s fixed-amount copay
actually exceeded the negotiated rate.
Three commenters recommended that
the Departments provide plans the
flexibility to display the most
meaningful price to an enrollee for
drugs. One commenter stated that if the
participant, beneficiary, or enrollee’s
cost sharing is based upon a specified
benchmark, the plan should be allowed
to specify the benchmark used in the
tool’s documentation. This commenter
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suggested that requiring plans to
conform to a single standard is not
possible, and in effect may be unhelpful
to consumers, given the multitude of
contracts (and different contract terms)
that each plan’s PBM may have with
pharmacies. Another commenter stated
providing this flexibility will allow for
issuer innovation in developing costestimator functionality that provides
real-time, accurate, and useful
prescription drug estimates to
participants, beneficiaries, or enrollees.
One commenter recommended the
Departments consider using ‘‘net price’’
rather than the ‘‘negotiated rate’’ for
estimating cost-sharing liability for
prescription drugs. The commenter
explained that direct and indirect
remuneration (DIR) fees under Medicare
Part D and similar PBM practices in the
private market were originally designed
to capture rebates and other
mechanisms not included at the pointof-sale. However, the commenter stated
that DIR fees and other retroactive fees
utilized by PBMs are now being used
beyond their original purpose to
retroactively adjust pharmacies’
payment months after the sale,
sometimes below the price paid by the
pharmacy.
Some commenters stated that the
Departments should not require display
of negotiated drug prices, rebates, or
other discounts or fees. Two
commenters expressed that, rather than
increasing transparency or providing
actionable or meaningful information to
participants, beneficiaries, or enrollees,
estimated rebate information would
simply confound and frustrate
participants, beneficiaries, or enrollees,
given its lack of direct relevance to the
amount the participant, beneficiary, or
enrollee is required to pay for the drug
at a pharmacy. Another commenter
stated that disclosing highly
confidential dispensing fees would
benefit only those parties being paid
dispensing fees, by giving them a
window into the dispensing fees paid to
their competitors, and advised that the
Departments should avoid requiring any
disclosure of drug prices, rebates,
discounts, or fees that would undermine
plans’ and issuers’ ability to negotiate
lower drug costs.
The Departments also solicited
comment as to whether there are
scenarios in which including drug
pricing information in cost estimates
would be problematic. One commenter
recommended that the final rules
require disclosure of an estimate of the
cost-sharing liability associated with a
drug only when there is an out-ofpocket cost to the participant,
beneficiary, or enrollee that is directly
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attributable to the drug. Another
recommended that when the price of a
drug is not the basis of the enrollee’s
cost-sharing liability, plans should be
given the option to publish the
benchmark price or omit a price
altogether, displaying only the
enrollee’s cost-sharing liability.
The Departments also sought
comment on whether the relationships
between plans or issuers and PBMs
allow plans and issuers to disclose rate
information for drugs, or if contracts
between plans and issuers and PBMs
would need to be amended to allow
plans and issuers to provide a sufficient
level of transparency. If those contracts
would need to be amended, the
Departments sought comment on the
time that would be needed to make
those changes. While some commenters
stated that the rates negotiated between
PBMs and pharmacies are considered
confidential, other commenters stated
that existing contracts would not
prevent PBMs or issuers from disclosing
the required information. One
commenter stated that it is common that
contracts be modified in response to
changes in a statute or regulation, and
that Federal public policy imperatives
override existing contractual provisions.
This commenter stated the public
interest in complete disclosure to
reduce costs for consumers
unquestionably outweighs any
confidentiality provisions in current
contracts that might otherwise protect
disclosure of relevant information to the
Federal Government.
The Departments agree that
participants, beneficiaries, and
enrollees, as well as health care payers
such as employers, should have access
to meaningful pricing information
related to drug pricing in order to
meaningfully evaluate plan and issuer
offerings and gain transparency into
potential out-of-pocket costs.
The Departments also acknowledge
that contract terms may need to be
amended based on the final rules. The
Departments agree that disclosure of
rebates, discounts, and other price
concessions would further the goals of
price transparency, but also
acknowledge other commenters’
concerns that disclosing all these
elements might cause consumer
confusion. The Departments also
acknowledge that there could be value
in using ‘‘net price’’ rather than
‘‘negotiated rate’’ and in disclosing
when a participant’s, beneficiary’s, or
enrollee’s cost-sharing liability exceeds
the price paid by the plan or issuer. As
described by commenters, there are
numerous pricing inputs throughout the
drug supply chain that affect the final
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price for the consumer—making
complete transparency on drug pricing
more complex than that of other items
and services. The Departments aim to
strike a balance between illuminating
some of the factors that drive drug costs
and not overwhelming consumers with
information that is not directly relevant
to their cost-sharing liability. To that
end, the final rules require plans and
issuers to disclose in element (i), an
individual’s out-of-pocket cost liability
for prescription drugs, and in element
(iii), the negotiated rate of the drug. As
discussed elsewhere in this preamble,
the Departments recognize that the
negotiated rate might be different for
branded and generic drugs. For
instance, the negotiated rate might be
the WAC for branded drugs and the
Maximum Allowed Cost (MAC) for
generic drugs. The Departments also
acknowledge that this price might be
established differently for different
plans and issuers. The Departments
anticipate this disclosure generally will
not necessitate the disclosure of
information on discounts, rebates, or
price concessions for a drug.
The Departments recognize there may
be circumstances in which a drug
carries no cost-sharing liability for a
participant, beneficiary, or enrollee. If
there is no cost sharing associated with
a prescription drug, under the final
rules, the tool should reflect a costsharing value of $0 for clarity, but the
negotiated rate must be displayed.
The proposed rules sought comment
on the possibility of requiring access to
the APIs used by pharmacies in
accessing drug prices. One commenter
stated that drug prices frequently differ
from period to period over the course of
the year, as well as across pharmacy
locations even within the same national
pharmacy chain. The commenter
recommended that the Departments
consider requiring PBMs to provide
payers, group plans, and third parties
with access to the same price APIs
accessed by pharmacies, stating that,
with access to an open API, the plan or
third party could request the estimated
price for the same prescription at
multiple retail pharmacies and receive
real-time retail pricing based upon the
participant’s, beneficiary’s, or enrollee’s
plan. The Departments recognize the
value in requiring cost-sharing
information be made available through
an API and will use the comments
received to inform future rulemaking.
Commenters requested that the
Departments confirm that issuers may
provide a link to prescription drug cost
tools offered through PBMs or vendors
to satisfy the requirement to provide
pricing information for prescription
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drugs. One commenter also urged the
Departments to prohibit the internetbased, self-service tool from being used
by prescribers’ e-prescribing and
electronic medical record systems or by
plans to steer patients to pharmacies
other than a patient’s pharmacy of
choice, such as those owned wholly or
partially by health plans or PBMs.
The Departments agree that plans and
issuers who provide participants’,
beneficiaries’, or enrollees’ cost-sharing
liability estimates and negotiated rates
through a standalone tool provided by a
PBM or third-party vendor satisfy the
requirements under the final rules. The
Departments also clarify that if the PBM
or other third-party vendor fails to
provide full or timely information, then
the plan or issuer, not the PBM or thirdparty vendor, violates these
transparency disclosure requirements.
Regarding a prohibition on steering
patients to certain pharmacies by plans
or prescribers, the Departments are not
finalizing any prohibitions at this time
and will monitor the implementation of
these disclosure requirements.
d. Fourth Content Element: Out-ofNetwork Allowed Amount
The fourth content element is the outof-network allowed amount for the
requested covered item or service. In the
proposed rules, the Departments
proposed to define ‘‘out-of-network
allowed amount’’ to mean the maximum
amount a group health plan or health
insurance issuer would pay for a
covered item or service furnished by an
out-of-network provider. Under the
proposed rules, plans and issuers would
be required to disclose an estimate of
cost-sharing liability for a participant,
beneficiary, or enrollee. Therefore, the
Departments proposed that, when
disclosing an estimate of cost-sharing
liability for a covered item or service
from an out-of-network provider, a plan
or issuer would disclose the out-ofnetwork allowed amount and any costsharing liability the participant,
beneficiary, or enrollee would be
responsible for paying. For example, if
a plan has established an out-of-network
allowed amount of $100 for an item or
service from a particular out-of-network
provider and the participant,
beneficiary, or enrollee is responsible
for paying 30 percent of the out-ofnetwork allowed amount ($30), the plan
would disclose both the allowed
amount ($100) and the individual’s costsharing liability ($30), indicating that
the individual is responsible for 30
percent of the out-of-network allowed
amount. Under the proposed rules, this
element would only be relevant when a
participant, beneficiary, or enrollee
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requests cost-sharing information for a
covered item or service furnished by an
out-of-network provider.
In the proposed rules, the
Departments explained that the
definition of cost-sharing liability does
not include amounts charged by out-ofnetwork providers that exceed the outof-network allowed amount, which
participants, beneficiaries, or enrollees
must pay (sometimes referred to as
balance bills). Therefore, it may be
difficult for participants, beneficiaries,
or enrollees to determine their likely
out-of-pocket costs for covered items
and services furnished by an out-ofnetwork provider. The Departments also
explained that the statutory language of
section 1311(e)(3)(A)(vii) of PPACA and
section 2715A of the PHS Act indicates
that Congress intended that participants,
beneficiaries, enrollees, and other
members of the public have access to
accurate and timely information
regarding cost sharing and payments
with respect to any out-of-network
coverage. In the Departments’ view,
requiring plans and issuers to disclose
out-of-network allowed amounts and a
participant’s, beneficiary’s, or enrollee’s
cost-sharing obligation for covered items
and services is necessary and
appropriate to fulfill this statutory
mandate, and would give individuals
information necessary to estimate their
out-of-pocket costs, assuming they
request additional information from an
out-of-network provider about how
much the provider would charge for a
particular item or service.
One commenter encouraged the
Departments to eliminate the proposed
‘‘maximum amount’’ standard and to
instead incorporate usual, customary,
and reasonable (UCR) amounts as the
required plan disclosure for out-ofnetwork cost estimates under any final
rulemaking. The commenter stated that
the ‘‘maximum amount’’ a plan may be
willing to pay a given provider for a
service is not necessarily
predetermined. This commenter stated
that while some out-of-network
providers and plans may participate in
super-regional or national ‘‘discount’’
arrangements through third parties, in
many cases payments to out-of-network
providers are individually negotiated.
Further, while a plan might generally
start with payment that is consistent
with UCR calculations (with every
intention of paying no more than this
amount), other circumstances may
result in negotiated increases to that
reimbursement. As such, prospectively
reporting an accurate ‘‘maximum
amount’’ is impossible in some cases.
Additionally, this commenter stated that
because many out-of-network
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reimbursements, and in particular highcost claims, are individually negotiated,
initial disclosure of a plan’s true
maximum reimbursement, insofar as
this can be calculated or even estimated
in advance, would materially reduce a
plan’s bargaining power by notifying
non-contracted providers in advance of
the amount they are likely to secure
from a plan if they assert all available
leverage in a negotiation. To the extent
participant, beneficiary, or enrollee costsharing liability is ultimately derived
from out-of-network payment amounts,
this requirement is likely to increase
out-of-pocket costs for consumers when
seeking care from out-of-network
providers.
Conversely, one commenter stated
that while larger, for-profit, national
health plans can afford to utilize the
UCR, smaller, regional health plans are
at a market disadvantage if they are
compelled to base allowed amounts on
the UCR, rather than negotiating on a
case-by-case basis in a constrained
market. As a result, some health plans
will struggle to determine and provide
information about maximum out-ofnetwork allowed amounts—a range of
possible ‘‘allowed amounts’’ may be the
most information some health plans
have available.
The Departments agree with
commenters that the UCR may be a
more accurate estimate of the amount a
plan or issuer will pay an out-ofnetwork provider for covered items or
services, if the plan relies on UCR to
determine out-of-network rates.
However, the Departments acknowledge
that basing allowed amounts on the
UCR may disadvantage smaller plans.
The Departments also acknowledge that
a plan or issuer may be able to provide
a participant, enrollee, or beneficiary
with a more accurate estimate of an outof-network allowed amount by using
calculations based on historical claims
data, because the plan or issuer does not
have a pre-determined negotiated rate
with out-of-network providers. The
Departments acknowledge the concern
that plans may lose bargaining power by
disclosing out-of-network allowed
amount to consumers; however, the
Departments are of the view that the
out-of-network allowed amount is a
critical element of price transparency
and its disclosure is essential to
enabling consumers to estimate their
out-of-network costs in advance. To this
end, the Departments are modifying this
provision to require plans and issuers to
disclose the out-of-network allowed
amount or any other calculation that
provides a more accurate estimate of the
amount a plan will pay for the requested
covered item or service, such as a UCR.
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Allowing plans and issuers to provide
an amount other than the out-ofnetwork allowed amount could better
serve consumers with a more accurate
estimate of what a plan or issuer may
reimburse an out-of-network provider.
The Departments clarify that if a plan or
issuer chooses to use another metric that
provides a reasonably accurate estimate
of what a plan or issuer will pay for a
covered item or service from an out-ofnetwork provider, the plan or issuer
must still provide a participant,
beneficiary, or enrollee with
information regarding any cost sharing
the participant, beneficiary, or enrollee
would be responsible for paying.
Some commenters recommended the
Departments not require plans and
issuers to provide allowed amount and
cost-sharing information for covered
services furnished by an out-of-network
provider. One commenter stated it is not
possible for issuers to include allowed
amounts for out-of-network providers
because, without a provider contract,
issuers do not have the necessary
information, including provider names,
National Provider Identifier (NPI),
address, specialty, or other demographic
information to include these providers
in a price transparency tool. One
commenter stated that providing realtime disclosures of allowed amounts
could be challenging to the extent that
plans and issuers determine the allowed
amount for certain out-of-network items
and services based on a percentage of
billed charges, as billed charges are
unknown by the plan or issuer prior to
a claim for health care services.
The Departments acknowledge the
challenges plans and issuers may face
disclosing this element, but the
Departments are of the view that
information regarding out-of-network
coverage is essential to the goal of price
transparency. With regard to plans and
issuers lacking the necessary
information for providers with whom
they do not contract, the Departments
are of the view that plans and issuers
should know what they are willing to
pay for certain items and services,
irrespective of provider. The final rules
provide flexibility for plans and issuers
to provide an estimate of what the plan
will pay by allowing plans and issuers
to disclose either the out-of-network
allowed amount or another amount that
would provide a reasonably accurate
estimate of what a plan would
reimburse an out-of-network provider
for a covered item or service. Given that
some plans and issuers determine the
allowed amount for certain out-ofnetwork items and services based on a
percentage of billed charges, the final
rules provide that a percentage can be
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disclosed instead of a dollar amount, if
plans and issuers reimburse out-ofnetwork providers a percentage of the
billed charges for a covered item or
service.
One commenter sought clarification
that the tool is meant to provide costsharing information for out-of-network
providers and not just the allowed
amounts.
As discussed earlier in this preamble
under the first content element, under
the final rules, the plan or issuer is
required to disclose both the out-ofnetwork allowed amount, as described
earlier in this preamble, and any costsharing liability, based on that allowed
amount, that the participant,
beneficiary, or enrollee would be
responsible for paying.
One commenter stated that the
Departments should not require Health
Maintenance Organizations’ (HMOs’)
out-of-pocket calculators to provide outof-network data. The commenter noted
that the proposed rules limited the tool
to covered services, and HMOs
generally do not cover benefits provided
by out-of-network and, therefore, should
not be required to estimate out-ofnetwork costs.
The Departments understand that
some plans and issuers may not provide
any reimbursement to an out-of-network
provider for an otherwise covered item
or service. Nonetheless, it is the
Departments’ understanding that some
HMOs reimburse an out-of-network
provider for covered items and services
in certain circumstances and, therefore,
the Departments expect HMOs to
provide cost-sharing information with
regard to out-of-network coverage. The
Departments recognize that in many
cases, an HMO’s maximum allowed
amount for an out-of-network service
will be $0. However, the Departments
are of the view that it is important for
a participant, enrollee, or beneficiary to
understand what the plan or issuer will
or will not pay for out-of-network costs.
Therefore, if the plan or issuer,
including an HMO, does not provide
any reimbursement for an item or
service provided by an out of network
provider, the Departments expect the
plan or issuer to disclose $0 as the
allowed amount.
e. Fifth Content Element: Items and
Services Content List
The fifth content element is a list of
those covered items and services for
which cost-sharing information is being
disclosed for items or services subject to
a bundled payment arrangement. The
Departments proposed that this
requirement would apply only when a
participant, beneficiary, or enrollee
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requests cost-sharing information for an
item or service that is subject to a
bundled payment arrangement that
includes multiple items or services. The
Departments proposed that, in cases in
which an individual requests a costsharing liability estimate for a covered
item or service that is subject to a
bundled payment arrangement, plans
and issuers would be required to
disclose a list of each covered item and
service included in the bundled
payment arrangement and the
individual’s cost-sharing liability for
those covered items and services as a
bundle, but not a cost-sharing liability
estimate separately associated with each
covered item or service included in the
bundle.
While some commenters supported
the inclusion of cost-sharing
information for bundled payment
arrangements, others did not support
requiring the disclosure of bundled
payment arrangements and the items
and services included in the
arrangement. These commenters stated
disclosure of this information would
likely be unhelpful to the participant,
beneficiary, or enrollee and might cause
confusion. One commenter encouraged
the Departments to clarify that
disclosure for diagnostic imaging
procedures in particular should be
presented to consumers in a method
that is inclusive of the combined
professional and technical rates, or the
globally billed rate.
The Departments are of the view that
understanding which items and services
are included in a bundled payment
arrangement will provide helpful
information for participants,
beneficiaries, and enrollees, so that they
understand what items and services are
accounted for in calculating their costsharing liability. The Departments are of
the view that this list is unlikely to
cause confusion. Instead, it will reduce
confusion by clearly identifying what
individual items and services would be
covered under their estimated costsharing liability. If the plan or issuer
reimburses a procedure, such as
imaging, at a global rate that includes
both professional and technical charges,
then that global rate is a rate for a
bundled payment arrangement for
which the applicable content elements
must be disclosed, just as for all other
items and services. The final rules adopt
the provision that plans and issuers
provide a list of items or services for
items and services subject to bundled
payment arrangements for which a costsharing liability estimate is being
disclosed, with non-substantive edits for
improved readability.
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f. Sixth Content Element: Notice of
Prerequisites to Coverage
The sixth content element is a
notification, whenever applicable,
informing the individual that a specific
covered item or service for which the
individual requests cost-sharing
information may be subject to a
prerequisite for coverage. The proposed
rules defined the term prerequisite to
mean certain requirements relating to
medical management techniques for
covered items and services that must be
satisfied before a plan or issuer will
cover the item or service. Specifically,
the proposed rules provided that
prerequisites include such techniques as
concurrent review, prior authorization,
and step-therapy or fail-first protocols.
In the proposed rules, the Departments
intended for the definition of
prerequisite to capture medical
management techniques that apply to an
item or service that require action by the
participant, beneficiary, or enrollee
before the group health plan or health
insurance issuer will cover the item or
service. Accordingly, the proposed
definition of prerequisite did not
include medical necessity
determinations generally, or other forms
of medical management techniques that
do not require action by the participant,
beneficiary, or enrollee. While the
prerequisites enumerated in the
proposed rules were provided as an
illustrative list, the Departments
solicited comment on whether there are
any additional medical management
techniques that should be explicitly
included as prerequisites in the final
rules.
Several commenters supported the
inclusion of this element. One
commenter stated that helping patients
understand any coverage prerequisites
prior to care, such as prior
authorization, may help to eliminate
some of the confusion and unnecessary
administrative burden following care.
Another stated that requiring a plan to
disclose prerequisites in an easily
understandable format may help
patients complete required protocols
and thus would improve adherence.
A few commenters recommended
additional disclosures or offered
suggestions to strengthen these
requirements. One commenter
encouraged the Departments to include
clinical coverage policies for services
that are more specific than general
medical necessity criteria. For example,
some plans and issuers utilize coverage
policies that require specific diagnoses
or documented symptoms before an
item or service may be covered. The
commenter explained that while these
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policies may not technically require an
action by the beneficiary, they are
important in determining whether the
specific item or service is covered.
Another commenter recommended that
plans and issuers clearly disclose every
utilization control that stands between
the participant, beneficiary, or enrollee
and a prescription, suggesting that this
type of disclosure would help patients
meet utilization control standards.
Another commenter urged the
Departments to strengthen this
requirement by requiring plans and
issuers to provide a description of the
actual required prerequisites. The
commenter stated that the proposed
regulation requires only notification of
the existence of a prerequisite, but not
any detail about what the prerequisite is
and how it can be satisfied. Two
commenters encouraged the
Departments to standardize this type of
notification language to ensure that all
consumers receive a consistent message
regarding the provision of health care
services.
One commenter requested that the
Departments provide that the
prerequisites listed in proposed rules
(that is, concurrent review, prior
authorization, step-therapy, and fail-first
protocols) are an exclusive list. Another
commenter stated that prerequisite
notification should be limited to simple
notifications that prerequisites apply to
a service, and communication of
specific prerequisites should not be
required until a Fast Healthcare
Interoperability Resources (FHIR)
standard for transmission of this
information is established and
operationalized.
As discussed in the proposed rules,
the Departments intended for the
definition of prerequisite to capture
medical management techniques that
apply to an item or service that require
action by the participant, beneficiary, or
enrollee before the plan or issuer will
cover the item or service. The
Departments consider plan or policy
provisions that require a diagnosis or
documented symptoms before a service
or item would be covered to be medical
necessity determination requirements
that do not require action on behalf of
the participant, beneficiary, or enrollee.
Therefore, the Departments did not
include such terms in the proposed
prerequisite requirement. The
Departments are finalizing regulation
text to reflect that concurrent review,
prior authorization, and step-therapy or
fail-first protocols are the exhaustive list
of prerequisites about which plans and
issuers would need to provide notice.
Furthermore, while the Departments
acknowledge that providing a complete
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description of prerequisites might be
helpful to consumers, the Departments
are not of the view that requiring plans
or issuers to provide such descriptions
is necessary. The Departments
determined that requiring a complete
description of the prerequisite would
create unnecessary complexity and
impose significant burdens on plans and
issuers regarding information that is
already available in plan documents.
Additionally, while the Departments
recognize the importance of FHIR in the
push towards greater interoperability, it
is not necessary to delay finalizing these
rules until the FHIR standards are
finalized as the final rules do not
require any APIs to be built nor exposed
for public consumption. The final rules
adopt this content element requirement,
with the modifications discussed in this
section.
g. Seventh Content Element: Disclosure
Notice
The seventh and final content element
proposed is a notice that communicates
certain information in plain language,
including several specific disclosures.
First, the Departments proposed that
this notice would include a statement
that out-of-network providers may bill
participants, beneficiaries, or enrollees
for the difference between providers’
billed charges and the sum of the
amount collected from the group health
plan or health insurance issuer and the
amount collected from the participant,
beneficiary, or enrollee in the form of
cost-sharing (the difference often
referred to as balance billing) and that
these estimates do not account for those
potential additional amounts. In the
proposed rules, the Departments
acknowledged that there are numerous
state laws that address balance-billing
practices such that the notice described
in the proposed content element
regarding balance bills may be
misleading or inaccurate for
beneficiaries, participants, or enrollees
enrolled in a plan or coverage in certain
states. The Departments requested
comment on whether any modifications
to this content element would be
appropriate to allow plans and issuers
to accurately advise participants,
beneficiaries, or enrollees of their
potential exposure to or protection from
any balance bills.
Second, the Departments proposed
that the notice be required to convey
that actual charges for the participant’s,
beneficiary’s, or enrollee’s covered
items and services may be different from
those described in a cost-sharing
liability estimate, depending on the
actual items and services received at the
point of care.
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Third, the Departments proposed that
the notice be required to include a
statement that the estimated costsharing liability for a covered item or
service is not a guarantee that coverage
will be provided for those items and
services.
Finally, the Departments proposed
that plans and issuers be permitted to
include any additional information,
including other disclaimers that the
plan or issuer determines appropriate,
so long as the additional information
does not conflict with the information
they are required to provide. For
example, plans and issuers would have
been permitted to include additional
language so long as the language could
not reasonably be read to disclaim the
plan’s or issuer’s responsibility for
providing a participant, beneficiary, or
enrollee with accurate cost-sharing
information, or plans and issuers could
choose to provide a disclaimer that
informs consumers who are seeking
estimates of cost-sharing liability for
out-of-network allowed amounts that
they may have to obtain a price estimate
from the out-of-network provider in
order to fully understand their out-ofpocket cost liability. Plans and issuers
would also have been permitted to
provide a disclaimer indicating how
long the price estimate will be valid,
based on the last date of the contract
term for the negotiated rate or rates (if
multiple providers with different
contract terms are involved). The
Departments are of the view that this
type of disclaimer could provide
participants, beneficiaries, and enrollees
with a better understanding of how their
cost estimate may change over time. The
Departments sought comment on
whether a specific disclaimer indicating
the expiration of the cost estimate
should be required. Furthermore, the
Departments explained in the proposed
rules that plans and issuers may also
include disclaimer information
regarding prescription drug cost
estimates and whether rebates,
discounts, and dispensing fees may
impact the actual cost to the participant,
beneficiary, or enrollee.
The Departments developed model
language that plans and issuers could
use, but would not be required to use,
to satisfy the disclosure notice
requirements described above. This
model language was proposed
contemporaneously with, but separate
from, the proposed rules.115 The
115 ‘‘Transparency in Coverage. Model Notice.’’
United States Department of Labor. Available at:
https://www.dol.gov/sites/dolgov/files/ebsa/lawsand-regulations/laws/affordable-care-act/for-
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Departments sought comment on the
proposed model language and any
additional information that stakeholders
believed should be included in the
model notice or any information that
should be omitted from the model
notice.
The proposed rules clarified that this
disclosure notice would be in addition
to the information that QHP issuers are
currently required to publish on their
websites pursuant to 45 CFR
156.220(a)(7) regarding cost-sharing and
payments with respect to out-of-network
coverage. In addition, some portions of
this disclosure may overlap with
network adequacy disclosure standards
under 45 CFR 156.230(e). That section
requires QHP issuers to count the costsharing paid by an enrollee for an outof-network essential health benefit
(EHB) provided by an out-of-network
ancillary provider in an in-network
setting toward the enrollee’s out-ofpocket limit or provide a notice to the
enrollee that additional costs may be
incurred for an EHB, including balance
billing charges, if applicable.
The Departments requested comment
on the proposed notice disclaimers and
whether any additional disclaimers
would be necessary or beneficial to
participants, beneficiaries, and enrollees
in learning about their potential costsharing liability for covered items and
services. For example, the Departments
inquired whether the Departments
should require a notice that explains
that the cost-sharing information
provided may not account for claims a
participant, beneficiary, or enrollee has
submitted that the plan or issuer has not
yet processed. The Departments also
considered whether to require plans and
issuers to provide a participant,
beneficiary, or enrollee information
regarding non-covered items or services
for which the individual requests costsharing information. For example, there
could be a requirement that a plan or
issuer provide a statement, as
applicable, indicating that the item or
service for which the participants,
beneficiaries, and enrollees has
requested cost-sharing information is
not a covered benefit under the terms of
the plan or coverage, and expenses
charged for that item or service will not
be reimbursed by the plan or coverage.
Several commenters agreed with the
proposed disclosure notice
requirements. Specifically, many
commenters supported the disclosure
that estimates may not reflect the
amount ultimately charged to the
participant, beneficiary, or enrollee. One
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commenter recommended the
disclosure include examples of
circumstances under which a
participant’s, beneficiary’s, or enrollee’s
actual cost-sharing liability may differ
from the estimate provided by their plan
or issuer (for example, comorbidities or
unanticipated complications). The
commenter stated that a more
comprehensive explanation of how
participant, beneficiary, or enrollee
characteristics might affect charges for
covered items and services would help
them better understand their potential
exposure to higher cost-sharing
amounts. One commenter suggested that
the notice include stronger wording to
educate the plan participant about the
strong likelihood of a surprise amount
due that differs greatly from the
estimate. One commenter recommended
that the notice include information that
DIR Fees charged to pharmacies inflate
participants’, beneficiaries’, and
enrollees’ cost sharing and that plans
and issuers may claw back that inflated
cost sharing from the pharmacy.
One commenter recommended that
plans and issuers be required to disclose
additional information to help
participants, beneficiaries, and enrollees
understand the appropriate point of
contact for questions and complaints.
This commenter recommended that the
final rules require issuers to provide
participants, beneficiaries, and enrollees
with contact information for their state
departments of insurance when covered
by insurance that is primarily stateregulated. For group health plans that
are not fully insured, the commenter
recommended that the plan provide
contact information for the appropriate
Federal regulator.
One commenter requested flexibility
with disclaimer language regarding a
notice provided in paper form to reflect
that the estimate may not be reflective
of services received or claims
processing, or to direct the participant,
beneficiary, or enrollee to call their plan
or issuer or use the internet for more upto-date information. Similarly, one
commenter recommended that a
timestamp be required for notices
provided in paper form to account for
potential price changes. Several
commenters supported requiring plans
and issuers to add to the notice a date
on which the estimate will expire, while
other commenters did not.
One commenter expressed concern
regarding the statement in the preamble
to the proposed rules that the required
disclosure notice regarding balancebilling information ‘‘may be misleading
or inaccurate for beneficiaries,
participants, or enrollees enrolled in a
plan or coverage in certain states,’’ given
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the multi-state nature of most employersponsored plans. Another commenter
stated that state regulators should be
able to direct issuers to include
information in the disclosure that
accurately describes the state’s balance
billing laws, and that any notice
provided to consumers in advance of
receiving services should have
information as to whether the
participant, beneficiary, or enrollee is
likely to be protected from liability
under state or Federal balance billing
laws. The commenter further stated that
some states already have state laws
related to disclosure of costs to
consumers and the final rules should be
clear that this requirement does not
preempt these state requirements. Two
commenters urged the Departments to
make clear that participants,
beneficiaries, and enrollees are not
protected from out-of-network provider
and facility balance billing, except
where balance billing would be barred
by state law.
The final rules are not intended to
preempt state laws regarding balance
billing. In the final rules, the
Departments have modified this
requirement to clarify that the balance
billing statement is only required if
balance billing is permitted under state
law. Plans and issuers have flexibility to
use the model notice language or create
their own notices with greater
specificity regarding their state’s laws.
One commenter expressed concern
that allowing plans to include a
statement that the estimated costsharing liability is not a guarantee of
coverage negates the intent of the
proposed rules, given that consumers
who receive a notice from their health
plan regarding estimated out-of-pocket
costs would naturally assume coverage
of those services.
The Departments acknowledge this
concern; however, there are many
reasons estimated cost-sharing
information may not be accurate when
items and services are ultimately
furnished. For example, it is possible for
coverage to end (for example, due to
non-payment of premiums) between the
time an estimate is provided and an
item or service is furnished.
Additionally, an estimate may show the
cost for an item or service as a treatment
for a certain condition, but the item or
service may not be covered for the
condition that is ultimately diagnosed at
the point of care. Therefore, the final
rules adopt the provision as proposed.
Several commenters recommended
that the Departments issue guidelines as
to what is considered ‘‘plain language.’’
The commenters recommended that the
Departments provide examples of
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typical disclosure language compared to
its ‘‘plain language’’ equivalent. They
further recommended that these
examples be tested through various
focus groups to ensure consumer
comprehension.
The final rules define ‘‘plain
language’’ to mean language written and
presented in a manner calculated to be
understood by the average participant,
beneficiary, or enrollee.116 Determining
whether this standard has been satisfied
requires taking into account such factors
as the level of comprehension and
education of typical participants,
beneficiaries, or enrollees in the plan or
coverage and the complexity of the
terms of the plan. Accounting for these
factors would require limiting the use of
technical jargon and long, complex
sentences, so that the information
provided will not have the effect of
misleading, misinforming, or failing to
inform participants, beneficiaries, or
enrollees. The Departments are of the
view that the final rules and this
preamble provide sufficient detail
regarding the meaning of plain
language.
Some commenters recommended that
plans and issuers should disclose
whether they count copayment
assistance and other third-party
payments in the calculation of the
beneficiary’s deductible and out-ofpocket maximum. The commenter noted
that as more plans implement copay
accumulators that do not count these
payments, issuers should be required to
disclose these policies to their
beneficiaries.
The Departments are of the view that
knowing whether these payments apply
to accumulators is germane to price
transparency and should be required in
the final rules. To that end, the final
rules adopt a fifth notice content
requirement (codified at 26 CFR
54.9815–2715A2(b)(1)(vii)(D), 29 CFR
2590.715–2715A2(b)(1)(vii)(D), and 45
CFR 147.211(b)(1)(vii)(D)) that plans
and issuers must provide a statement
disclosing whether copayment
assistance and other third-party
payments are included in the
calculation of the participant’s,
beneficiary’s, or enrollee’s deductible
and out-of-pocket maximum.
As discussed under the first content
element, some items or services may not
be subject to cost sharing if they are
furnished as preventive items or
services, while the same item or service
could be subject to cost sharing if it is
furnished for non-preventive purposes
or provided by an out-of-network
provider. Therefore, the final rules
116 29
CFR 2520.102–2(a).
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adopt an additional notice requirement
(codified at 26 CFR 54.9815–
2715A2(b)(1)(vii)(E), 29 CFR 2590.715–
2715A2(b)(1)(vii)(E), and 45 CFR
147.211(b)(1)(vii)(E)) stating that, for an
item or service that is a recommended
preventive service under section 2713 of
the PHS Act where the plan or issuer
cannot determine whether the request is
for a preventive or non-preventive item
or service, the plan or issuer must
provide a statement that the item or
service may not be subject to costsharing if it is billed as a preventive
service.
One commenter recommended
information be included to help
participants, beneficiaries, and enrollees
understand the appropriate point of
contact for questions and complaints.
This commenter recommended issuers
provide consumers with contact
information for the appropriate
regulator—either the State Department
of Insurance or the appropriate Federal
office.
The Departments appreciate this
recommendation, but are declining to
finalize this additional requirement
because the Departments are of the view
that plans and issuers already have
avenues in place to address
participants’, beneficiaries’, and
enrollees’ complaints.
Several commenters recommended
that additional notice disclaimers be
provided. One commenter suggested
that the final rules require a statement
that cost-sharing liability estimates may
differ from actual costs, depending on
changes after claims are processed.
Another commenter recommended that
the Departments develop model
disclaimers stating that quoted amounts
for drugs may be time-limited and
subject to manufacturer pricing
practices. Another commenter
recommended the addition of consumer
disclaimers indicating that ‘‘services
subject to the cost estimate may be
provided and billed by providers
associated with multiple payer contracts
which will result in multiple EOBs.’’
Another commenter recommended the
Departments permit plans to require
participants, beneficiaries, and enrollees
to review and acknowledge a disclaimer
prior to viewing or searching for any
pricing information, which would help
ensure that consumers understand that
what they are receiving may not be an
accurate estimate of their total out-ofpocket costs. Another commenter
recommended that the presentation of
the out-of-network information make
clear that the issuer is unable to provide
an estimate for the full cost of the
service. The commenter suggested that
this disclosure should be presented on
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the same screen as the maximum
allowed amount and the participant,
beneficiary, or enrollee’s cost liability
because it may be unclear that the
maximum allowed amount is not the
total cost of care. Another commenter
requested that the Departments add a
requirement that plans or issuers
provide participants, beneficiaries, or
enrollees with meaningful and simple
explanations regarding emergency care,
including informing them of the
prudent layperson standard.117 Another
commenter that recommended plans
and issuers be required to provide
explanatory information about the
operation of their plans, including
glossaries of relevant terms and
explanations of insurance plan features
and health care services, including innetwork and out-of-network costs,
limited plan designs, deductibles,
telehealth, and additional features in
consumer-friendly language.
The Departments decline to adopt
these commenters’ suggestions for
additional notice disclaimers. The
Departments are of the view that
adopting these additional requirements
would add to the burden imposed on
plans and issuers without creating
corresponding benefits for participants,
beneficiaries, or enrollees that would
outweigh the burden, and would be
unhelpfully prescriptive regarding the
information plans and issuers are
required to convey to these individuals.
Existing plan and issuer resources for
this information, such as the uniform
glossary required under the Summary of
Benefits and Coverage (SBC) final
regulation 118 provide consumerfriendly language definitions of
insurance terms. Additionally, in
response to comment, the Departments
are providing flexibility to plans and
issuers to design their internet-based
tools and disclosures so that they meet
the needs of their participants,
beneficiaries, and enrollees. However,
the Departments encourage plans and
issuers to provide additional
information at their discretion, if
appropriate. The final rules adopt these
provisions as proposed, with one
correction of a typographical error
(‘‘bill’’ rather than ‘‘billed’’) in 26 CFR
54.9815–2715A2(b)(1)(vii)(A), 29 CFR
2590.715–2715A2(b)(1)(vii)(A), and 45
CFR 147.211(b)(1)(vii)(A) and a
clarification that this statement element
is only required if balance billing is
permitted under state law, with
paragraph (b)(1)(vii)(D) redesignated as
paragraph (b)(1)(vii)(F), and with new
paragraphs (b)(1)(vii)(D) and (E) added,
117 42
118 80
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as described earlier in this section of
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2. Required Methods for Disclosing
Information to Participants,
Beneficiaries, or Enrollees
Section 1311(e)(3)(C) of PPACA
requires that cost-sharing information be
made available through an internet
website and other means for individuals
without access to the internet.
Therefore, in the proposed rules, the
Departments proposed to require that
group health plans and health insurance
issuers disclose to participants,
beneficiaries, or enrollees the costsharing information described earlier in
this preamble in two ways: (1) Through
a self-service tool that meets certain
standards and is available on an internet
website, and (2) in paper form.
a. First Delivery Method: Internet-Based
Self-Service Tool
Under the proposed rules, plans and
issuers would be required to make
available a self-service tool on an
internet website for their participants,
beneficiaries, or enrollees to use,
without a subscription or other fee, to
search for cost-sharing information for
covered items and services. The tool
would be required to allow users to
search for cost-sharing information for a
covered item or service provided by a
specific in-network provider, or by all
in-network providers. The tool also
would be required to allow users to
search for the out-of-network allowed
amount for a covered item or service
provided by out-of-network providers.
The tool would be required to provide
users real-time responses that are based
on cost-sharing information that is
accurate at the time of the request.
Many commenters supported the
Departments’ proposal to require plans
and issuers to make available
personalized out-of-pocket cost
information for all covered health care
items and services through an internetbased self-service tool and urged the
Departments to finalize this section of
the regulation as proposed. Some
commenters recommended the
Departments identify a core set of
functional requirements that must be
included in all price transparency tools.
Commenters suggested that these
functional requirements should ensure
all people enrolled in commercial
products have access to the same
baseline functionality, while providing
enough flexibility for issuers to develop,
and iterate on, innovative existing
internet-based self-service tools.
Examples of functional requirements
include providing tailored information
to participants, beneficiaries, or
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enrollees on their benefit summary
(plan coverage, copayments,
deductibles); being able to browse by
service category (for example, medical
specialty, procedures, drugs, imaging,
labs) or diagnosis; or being able to select
from an A–Z list of popular searches or
episodes of care. One commenter
recommended the following functional
requirements: (1) Provide individuals
with their personal health plan details,
a digital ID card, deductible and copay
information, the ability to download
and view claims, and information on
provider network status and quality
performance; (2) display cost and
quality information in clear, userfriendly language to facilitate and
inform health care decisions; (3) allow
consumers to compare facilities and
clinicians based on curated cost
estimates, common quality measures,
value metrics, and patient ratings; (4)
offer personalized out-of-pocket cost
estimates for episodes of care, services,
and prescriptions, calculated using their
specific health plan design before they
receive care; (5) comply with all state
and Federal health care data privacy
and security laws, including the Health
Insurance Portability and
Accountability Act (HIPAA) privacy and
security rules and the Health
Information Trust (HITRUST) Common
Security Framework.
The Departments agree that the selfservice tool requirements should ensure
all people enrolled in group health
plans and health insurance coverage
have access to the same baseline
functionality, while providing enough
flexibility for plans and issuers to
develop and iterate on innovative
internet-based self-service tools. It is the
Departments’ intent that the required
elements be broad enough to avoid
being overly prescriptive for plans and
issuers. The Departments agree that
certain additional content elements
could be beneficial to participants,
beneficiaries, and enrollees, including
general benefit summary information
and quality metrics. However, the
primary initial goal of the self-service
tool is to provide personalized out-ofpocket cost estimates for episodes of
care, services, and prescriptions, and to
provide transparency around the pricing
elements that determine out-of-pocket
costs. Therefore, the Departments are
not inclined to require additional
elements unrelated to this primary goal
at this time. The Departments note that
the intent of the final rules is to provide
a minimum standard for the disclosure
of pricing information to lay a
foundation for transparency in coverage
and the Departments may consider
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additional disclosure requirements to
build upon the final rules in the future.
To that end, the Departments are
finalizing the required content elements
for the self-service tool as described
earlier in this preamble to the final
rules. The final rules include a change
regarding the search function related to
out-of-network allowed amounts.
Specifically, that element is modified to
include the other metrics that a plan or
issuer is permitted to use in place of
out-of-network allowed amounts, as
discussed earlier in this preamble in
connection with the fourth content
element that must be disclosed to
participants, beneficiaries, and
enrollees. Additionally, the
Departments encourage plans and
issuers to add additional elements to
their tools according to the needs of the
populations they serve.
In order for plans and issuers to
provide accurate cost-sharing
information, the Departments noted that
the participant, beneficiary, or enrollee
will have to input certain data elements
into the tool. Therefore, under the
proposed rules, plans and issuers would
be required to make available a tool that
allows users to search for cost-sharing
information: (1) By billing code (for
example, Current Procedural
Terminology (CPT) Code 87804) or, (2)
by a descriptive term (for example,
‘‘rapid flu test’’), at the option of the
user. The tool also would be required to
allow users to input the name of a
specific in-network provider in
conjunction with a billing code or
descriptive term, to produce costsharing information, and a cost-sharing
liability estimate for a covered item or
service provided by that in-network
provider. Regarding a request for costsharing information for all in-network
providers, under the proposed rules, if
a plan or issuer utilizes a multi-tiered
network, the tool would be required to
produce the relevant cost-sharing
information for the covered item or
service for individual providers within
each tier. In the proposed rules, the
Departments explained that to the
extent that cost-sharing information for
a covered item or service under a plan
or coverage varies based on factors other
than the provider, the tool would also
be required to allow users to input
sufficient information for the plan or
issuer to disclose meaningful costsharing information. For example, if the
cost-sharing liability estimate for a
prescription drug depends on the
quantity and dosage of the drug, the tool
would be required to allow the user to
input a quantity and dosage for the drug
for which he or she is seeking cost-
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sharing information. Similarly, to the
extent that the cost-sharing liability
estimate varies based on the facility at
which an in-network provider furnishes
a service (for example, at an outpatient
facility versus in a hospital setting), the
tool would be required to either permit
a user to select a facility, or display in
the results cost-sharing liability
information for every in-network facility
at which the in-network provider
furnishes the specified item or service.
It remains the Departments’
understanding that a plan or issuer may
require certain information, in addition
to the identification of a covered item or
service, before it can provide an out-ofnetwork allowed amount for a covered
item or service, and that plans and
issuers may have different ways of
establishing an allowed amount for
covered items or services from an outof-network provider (such as by zip
code or state). Therefore, under the final
rules, plans and issuers are required to
allow users to search for the out-ofnetwork allowed amount or other metric
as discussed in the fourth content
element, for a covered item or service
provided by out-of-network providers,
by inputting a billing code or
descriptive term and the information
that is necessary for the plan or issuer
to produce the out-of-network allowed
amount (such as the zip code for the
location of the out-of-network provider).
To the extent a user’s search returns
multiple results, the tool would be
required to have functionalities that
would allow users to refine and reorder
results (also referred to as sort and filter
functionalities) by geographic proximity
of providers and the amount of
estimated cost-sharing liability. The
Departments solicited comment on
whether the tool should be required to
have additional refining and reordering
functionality, including whether it
would be helpful or feasible to refine
and reorder by provider subspecialty
(such as providers who specialize in
pediatric psychiatry), or by the quality
rating of the provider, if the plan or
issuer has available data on provider
quality.
Some commenters stated that it is
unrealistic to expect consumers to know
and understand CPT/Diagnosis Related
Group (DRG)/International
Classification of Disease-10 (ICD–10)
codes and supported the inclusion of
descriptive terms. One commenter
stated that search capability by standard
medical terms will be crucial, and that,
to be successful, this type of search
system will need to be broad and userfriendly, accommodating an extensive
range of consumer inputs and terms.
Another commenter recommended the
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tool also contain a layperson-friendly
descriptor of the service to improve
understanding. Other commenters
lauded the requirement that issuers
must use plain language when
disclosing price information, which
would ensure that patients can
understand their expected costs without
expert knowledge of insurance language
and practices. Some commenters
recommended that the Departments
follow industry standards and use the
CMS-approved National Correct Coding
Initiative (CCI) for consumer searches,
as well as for any information relating
to standards for services that fall into
bundled payment arrangements.
One commenter expressed concern
that the conversion of thousands of CPT
codes into plain English by thousands of
health plans, carriers, and TPAs is
inefficient, and will result in
inconsistencies across the country. For
example, there are multiple CPT codes
for procedures in a hospital that differ
in price depending upon severity,
which is often unknown when a
procedure is first recommended.
The Departments agree that it is
essential for tools to support descriptive
terms because consumers may not be
familiar with specific procedure codes.
The Departments acknowledge the
challenge of converting CPT code
descriptions to plain language but are of
the view that the benefit to consumers
outweighs the burden to plans and
issuers. The Departments also
acknowledge the potential value in
requiring the use of CCI standards but
are of the view that their use should be
voluntary, not required, in order to
avoid placing additional burdens on
plans and issuers in the absence of clear
benefits to consumers. As noted earlier
in this preamble, the intent of the final
rules is to provide foundational
requirements and to allow plans and
issuers maximum flexibility to build
upon existing tools while providing
consumers with reliable cost estimates.
The Departments also highlight that the
phased implementation of the final
rules affords plans and issuers
additional time to address
administrative challenges. Accordingly,
the final rules adopt this provision as
proposed.
One commenter sought clarification
that the tool is not required to support
searches with multiple parameters at the
same time (for example, by provider
name and medical code at once).
Another commenter suggested that the
Departments allow that, as one
permissible method, the tool may
provide for geographic proximity based
on a zip code entered by the participant,
beneficiary, or enrollee to enable the
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consumer to choose whether to search
based on the proximity to home or work
or some other location.
The self-service tool must allow users
to search for cost-sharing information
for a covered item or service by
inputting the name of a specific innetwork provider in conjunction with a
billing code or descriptive term, as well
as other relevant factors like location of
service, facility name, or dosage. For
covered items and services provided by
out-of-network providers, the tool
should provide the out-of-network
allowed amount, percentage of billed
charges, or other rate that provides a
reasonably accurate estimate of the
amount a plan or issuer will pay by
allowing consumers to input a billing
code, descriptive code, or other relevant
factor, such as location. In addition, the
final rules adopt the requirement that
the tool must allow the user to refine
and reorder search results based on
geographic proximity of in-network
providers. The final rules require
refining and reordering search results
only for in-network providers, as the
Departments are of the view that doing
so for out-of-network providers would
be too burdensome at this stage. The
Departments expect that in order for
beneficiaries, participants, and enrollees
to search for out-of-network providers,
they would have to input, at minimum,
the billing code or name of an item or
service and the geographical location of
the provider. In addition, in order to
align with revisions to the fourth
content element allowing flexibility to
provide another rate instead of the outof-network allowed amount, the final
rules have been revised to reflect that
participants, beneficiaries, and enrollees
can search for the out-of-network
allowed amount, the percentage of
billed charges, or other rate that
provides a reasonably accurate estimate
of the amount a plan or issuer will pay
for a covered item or service provided
by out-of-network providers. This
‘‘other rate’’ is also included in
paragraph (b)(2)(i)(B)(2) of the final
regulations for consistency.
Regarding refining and reordering
features, one commenter suggested that
the tools include an ability to display
only in-network providers and an ability
to filter or sort by provider quality if a
quality metric is made available. Three
commenters requested that
requirements not limit plans to
developing provider and service filters
that only account for price and
geographic proximity: they suggested
that the tools should also have
functionality filters based on subspecialty and a measure of value.
Another commenter requested that any
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additional functionality relating to
refining and reordering search results be
optional for plans and issuers at this
time.
One commenter stated that, to
enhance the accuracy of the tool and
better account for fluctuations in costsharing amounts, the Departments
should require that it be configured to
allow users to self-select health
characteristics (for example, chronic
conditions, body mass index) in order to
further personalize its outputs for
consumers. The commenter
recommended that payers be given
flexibility to dictate the specific health
characteristics to be included in their
tools based on their participant,
beneficiary, and enrollee populations,
the types of products that they offer, and
other elements that might cause costsharing estimates to fluctuate.
The Departments agree that plans and
issuers should have flexibility to design
tools that can maximize consumer
utility and acknowledge that the
suggested additions to search
functionality could be beneficial to
consumers. However, the Departments
decline to require the adoption of these
suggestions to preserve plans and
issuers’ discretion regarding the most
effective way to provide search results
and to avoid being overly burdensome
or prescriptive.
The Departments intend that plans
and issuers create user-friendly internetbased self-service tools, but the
proposed rules did not include a
definition for ‘‘user-friendly’’ because
there are a variety of ways a tool can be
designed to be user-friendly. The
Departments wish to preserve plan and
issuer flexibility to create tools that are
best for their participants, beneficiaries,
or enrollees, including by soliciting user
feedback and consumer testing in the
development of their tools. However, it
is the Departments’ view that a userfriendly tool would mean a tool that
allows intended users to search for the
cost-sharing information outlined in the
final regulations efficiently and
effectively, without unnecessary steps
or effort. The Departments are of the
view that plans and issuers can look to
Federal plain language guidelines,
ERISA requirements for a Summary
Plan Description’s method of
presentation at 29 CFR 2520.102–2(a),
and general industry standards for
guidance when designing and
developing their internet-based selfservice tools.119
119 ‘‘Federal plain language guidelines.’’ United
States General Services Administration. Available
at: https://www.plainlanguage.gov/guidelines/.
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The Departments also received
comments on whether the self-service
tool should be made available through
an internet website, through a mobile
application, or both. The proposed rules
provided that the self-service tool be
made available on an internet website to
be consistent with section 1311(e)(3)(C)
of PPACA, which provides that ‘‘at a
minimum,’’ cost-sharing information be
made available through an ‘‘internet
website.’’ However, the Departments
sought feedback on whether this term
should be interpreted to include other
comparable methods of accessing
internet-based content. The statute was
enacted in 2010, when the primary
mode of accessing internet-based
content was through a personal
computer. Since that time, ownership of
mobile devices with internet access and
use of internet-based mobile
applications has become much more
common. The Departments
acknowledged that there may be
technical differences between a website
and other methods of viewing internetbased content, such as mobile
applications. However, as stated in the
proposed rules, the Departments also
understand that technology evolves over
time, and it is the Departments’ view
that Congress did not intend to limit the
ability to access information via
alternative methods of viewing internetbased content that may be available now
or in the future.
The Departments acknowledged that
mobile applications may provide
benefits beyond those of traditional
websites. Due to the portability of
mobile devices, a self-service tool that is
made available through a mobile
application might provide participants,
beneficiaries, enrollees, and their health
care providers greater opportunities to
use the tool together at the point of care
to evaluate treatment options based on
price. The Departments further
acknowledged that mobile applications,
as a general matter, may offer greater
privacy and security protections than an
internet website, accessed either from a
mobile device or a computer.120
Accordingly, the Departments sought
120 Kassner, M. ‘‘Apps vs. mobile websites: Which
option offers users more privacy?’’ Tech Republic.
September 30, 2016. Available at https://
www.techrepublic.com/article/apps-vs-mobilewebsites-which-option-offers-users-more-privacy/;
see also Colburn, K. ‘‘Is using a banking app safer
for managing your account online?’’ AZcentral.
September 17, 2018. Available at https://
www.azcentral.com/story/money/business/tech/
2018/09/17/online-banking-app-safety-securitysmartphone-tech-tips/1212736002/; see also Ogata,
M., et al. ‘‘Vetting the Security of Mobile
Applications.’’ National Institute of Standards and
Technology, United States Department of
Commerce. April 2019. Available at: https://doi.org/
10.6028/NIST.SP.800–163r1.
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comment on whether the final rules
should permit the proposed disclosure
requirements to be satisfied with a selfservice tool that is made available
through a website or comparable means
of accessing the internet, such as a
mobile application, or whether multiple
means, such as websites and mobile
applications, should be required. The
Departments also sought comment on
the relative resources required for
building an internet website versus an
internet-based mobile application.
Some commenters recommended that
the Departments finalize the proposed
rules with the self-service tool
requirement satisfied by being made
available through a website or
comparable means of accessing the
internet. Others believed that plans and
issuers should be free to determine
whether to offer a mobile app, an
internet website, or both. One
commenter stated the resources
necessary for building and supporting a
mobile application are significantly
greater than building a website and did
not support a proposal to require
multiple applications, while other
commenters supported a mobile
application to enable patients to make
cost-effective decisions in the doctor’s
office. Another commenter
recommended both a mobile application
and an internet-based platform with
fully responsive internet-based design.
Two commenters recommended that the
requirements not preclude a plan,
issuer, or TPA from developing other
means of electronic delivery beyond
internet disclosure.
The Departments have considered
these comments and are of the view that
requiring an internet website, as
opposed to a comparable means of
accessing the internet, such as a mobile
application or both, ensures access to a
broader set of consumers while limiting
the burden on plans and issuers to
produce both an internet site and a
mobile application. Internet websites
can be accessed on mobile devices and
people without access to the internet or
mobile devices can access tools through
resources where internet access may be
available, such as a local library.
Conversely, if the tool were available
only through a mobile device, people
without a capable mobile device would
not have access to the tool. The final
rules, therefore, adopt the requirement
that the self-service tool be provided via
internet website; however, the
Departments encourage plans and
issuers to also provide a mobile
application version in addition to an
internet website.
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b. Second Delivery Method: Paper Form
Paragraph (e)(3)(C) of section 1311 of
PPACA specifies that at a minimum,
cost-sharing information be made
available to an individual through an
internet website and such other means
for individuals without access to the
internet. Therefore, the proposed rules
included a proposal that group health
plans and health insurance issuers
would have to furnish, at the request of
the participant, beneficiary, or enrollee,
without a fee, all of the information
required to be disclosed under
paragraph (b)(1) of the proposed
regulations, as outlined earlier in this
preamble, in paper form. Further, the
proposed rules included a proposal that
a plan or issuer would be required to
provide the information in accordance
with the requirements under paragraph
(b)(2)(i) of the proposed regulations and
as described earlier in this preamble.
That is, the plan or issuer would be
required to allow an individual to
request cost-sharing information for a
discrete covered item or service by
billing code or descriptive term,
according to the participant’s,
beneficiary’s, or enrollee’s request.
Further, the plan or issuer would be
required to provide cost-sharing
information for a covered item or
service in connection with an innetwork provider or providers, or an
out-of-network allowed amount for a
covered item or service provided by an
out-of-network provider, according to
the participant’s, beneficiary’s, or
enrollee’s request, permitting the
individual to specify the information
necessary for the plan or issuer to
provide meaningful cost-sharing
liability information (such as dosage for
a prescription drug or zip code for an
out-of-network allowed amount). To the
extent the information the individual
requests returns more than one result,
the individual would also be permitted
to request that the plan or issuer refine
and reorder the information disclosed
by geographic proximity and the
amount of the cost-sharing liability
estimates.
The Departments proposed that this
information would be required to be
mailed to a participant, beneficiary, or
enrollee via the U.S. Postal Service or
other delivery system no later than 2
business days after a participant’s,
beneficiary’s, or enrollee’s request is
received.
Two commenters supported the
Departments’ proposal to allow
individuals the ability to access their
information through electronic means or
via paper form, given that many
Americans lack access to high-speed
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internet services. Some commenters
opposed the requirement to deliver the
cost-sharing information to participants
in paper form due to administrative
burden, while others recommend
limiting the requirements. Several
recommended the timeframe to respond
be expanded, including a range of 5
days to 10 days. One commenter
requested that the compliance time for
producing paper copies of personalized
information be consistent with current
Federal requirements for furnishing
paper copies of the SBC, Summary Plan
Description, or Consolidated Omnibus
Budget Reconciliation Act (COBRA)
notices. Other commenters expressed
concern about volume, given that a
participant, beneficiary, or enrollee
could request cost estimates for all innetwork providers of a given service,
which could be tens of thousands of
providers, resulting in thousands of
pages of results. Some recommended a
reasonable limit to the volume of
information that would be provided in
response to any single request for a
covered item or service—for, example,
no more than 20 or 25 providers per
request.
Several commenters recommended
that the Departments reconsider
mandating paper responses ‘‘without a
fee.’’ While these commenters did not
support charging participants,
beneficiaries, or enrollees for access to
cost-sharing information in general, they
asserted that it is unreasonable to expect
health plans to provide what could
easily be boxes worth of information in
response to multiple requests per
enrollee.
Nothing in the proposed rules would
have prohibited a plan or issuer from
providing participants, beneficiaries, or
enrollees with the option to request
disclosure of the information required
under paragraph (b)(1) of the proposed
regulations through other methods (such
as, over the phone, through face-to-face
encounters, by facsimile, or by email).
The Departments requested comment on
these proposed disclosure methods,
including whether additional methods
of providing information should be
required, rather than permitted. The
Departments were particularly
interested in feedback on whether plans
and issuers should be required to
provide the information over the phone,
or by email, at the request of a
participant, beneficiary, or enrollee.
Several commenters requested
alternatives to the paper disclosure,
particularly a phone option. One
commenter recommended the final rules
require that plans or issuers set up a
designated toll-free number that
participants, beneficiaries, or enrollees
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can call to receive pricing information,
in addition to offering that as an option
on their main consumer information
phone line. Two commenters urged the
Departments to consider making the
second form of disclosure one of the
plan or issuer’s choice (that is, paper or
phone service). Conversely, one
commenter stated that the volume and
complexity of information that a given
request could produce would preclude
providing this information over the
phone or in-person. Another commenter
recommended the alternative format to
include telephone, in-person, or fax.
One commenter recommended emailing
digital versions of the paper requests to
a participant’s, beneficiary’s, or
enrollee’s inbox at the participant’s,
beneficiary’s, or enrollee’s request, and
another requested that if results were
emailed, the same information should
not also need to be provided via paper
form.
The Departments acknowledge
commenters’ concerns that the volume
of paper requests could be unwieldy. To
that end, the final rules adopt the
requirement that cost-sharing
information be provided in paper form,
but a plan or issuer may limit any
results for a paper request to 20
providers per request, as suggested by
some commenters. The Departments are
of the view that the commenters’
suggestion of limiting paper request to
20 providers per request is a reasonable
approach to balancing the burdens on
plans and issuers with the benefits of
providing consumers with enough
information to be able to compare cost
and provider options. The final rules
provide an additional flexibility that, to
the extent participants, beneficiaries, or
enrollees request disclosure by another
means (for example, by phone or email),
plans and issuers may provide the
disclosure through the means requested
by the participant, beneficiary, or
enrollee, provided the participant,
beneficiary, or enrollee agrees that
disclosure through such means is
sufficient to satisfy the request and the
request is fulfilled at least as rapidly as
required for the paper method. The
Departments further acknowledge that
requiring plans and issuers to set up a
designated toll-free number for pricing
information could be beneficial to
participants, beneficiaries, and
enrollees, but are not requiring this step
given the Departments’ view that its
burden outweighs its benefit in light of
the other available disclosure methods,
including the flexibility to provide this
information via the preferred disclosure
method of the participant, beneficiary,
or enrollee.
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a. Insured Group Health Plans
The proposed rules included a special
rule to streamline the provision of the
required disclosures and to avoid
unnecessary duplication of the
disclosures with respect to group health
insurance coverage. The Departments
are finalizing this special rule, which
provides that, to the extent coverage
under a plan consists of fully-insured
group health insurance coverage, the
plan satisfies the requirements of the
final rules if the plan requires the issuer
offering the coverage to provide the
information pursuant to a written
agreement between the plan and issuer.
For example, if a plan and an issuer
enter into a written agreement under
which the issuer agrees to provide the
information required under the final
rules, and the issuer fails to provide full
or timely information, then the issuer,
but not the plan, has violated the
transparency disclosure
requirements.121
Many commenters requested that the
Departments extend the special rule to
self-insured group health plans that are
administered by an administrative
service organization or other TPA.
These commenters stated that selfinsured plan sponsors that contract in
good faith with their TPAs to comply
with the reporting requirements should
be held harmless with respect to
compliance obligations and liability
under this regulation because in many
instances a provider network is merely
rented from a TPA, necessary
information may not be held by the plan
itself, and because liability could be
contractually assigned to the TPA.
Section 2715A of the PHS Act
provides the authority for the
Departments to require this information
from plans and issuers, but not TPAs.
Therefore, it is ultimately the
responsibility of the plan or issuer to
provide the information required by the
final rules. Nonetheless, the
Departments note that nothing in the
final rules prevents a self-insured plan
from contracting with another party to
provide the required disclosure,
including, to the extent permitted under
other Federal or state law, entering into
an agreement for the other party to
indemnify the plan in the event the
121 Under section 4980D(d)(1) of the Code, the
excise tax for group health plans failing to satisfy
the final rules is not imposed on a small employer
(generally fewer than 50 employees) which
provides health insurance coverage solely through
a contract with an issuer on any failure which is
solely because of the health insurance coverage
offered by the issuer.
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other party fails to make the full or
timely disclosure required by the final
rules. However, the plan must monitor
the other party to ensure that the entity
is providing the required disclosure.
Moreover, the Departments are of the
view that the special rules providing
certain safe harbors for actions taken in
good faith as further described later in
this preamble provide adequate
protections for self-insured plans. The
final rules also include the addition of
the phrase ‘‘insured group health plans’’
to clarify that this special rule applies
to insured group plans.
b. Other Contractual Arrangements
The Departments also received
requests for clarification about the
responsibility of employer plan
sponsors that offer benefits under a
level-funded arrangement. In general,
under a level-funded arrangement, a
plan sponsor self-insures expected
claims and purchases stop-loss
insurance for claims that exceed a
specified threshold. Group health plans
that are offered through a level-funded
arrangement are subject to the final
rules. Just like self-insured plans that
are not level-funded, nothing in the
final rules prevents a level-funded plan
from contracting with another party to
provide the required disclosures, but the
level-funded plan remains liable for
compliance with the final rules, and
must monitor the other party to ensure
that the entity is providing the required
disclosure.
In several of the comments that
addressed the special rule to prevent
unnecessary duplication, commenters
requested that the Departments permit
plans and issuers to fulfill pricing
disclosure requirements for prescription
drugs through a third-party tool, such as
a PBM tool. The Departments agree that
this approach is permissible under the
final rules. The Departments recognize
that self-insured plans may rely on
written agreements with other parties,
such as PBMs, to obtain the necessary
data to comply with the disclosure
requirements. A plan or health
insurance issuer may satisfy the
requirements for prescription drug items
and services under paragraph (b) by
entering into a written agreement under
which another party (such as a PBM or
other third-party) provides the
information required by paragraph (b)
related to prescription drugs in
compliance with this section.
Nonetheless, if a plan or issuer chooses
to enter into such an agreement and the
party with which it contracts fails to
provide the information in compliance
with the final rules, the plan or issuer
may be held responsible for violating
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the transparency disclosure
requirements of the final rules for the
same reasons explained above in
connection with self-insured plans
entering into agreements with TPAs.
c. Application to Account-Based
Arrangements
Another commenter sought
clarification about the responsibility of
employer plan sponsors that offer the
following types of coverage to
employees: (1) Individual coverage
health reimbursement arrangements
(HRAs); (2) qualified small employer
HRAs (QSEHRAs); and (3) flexible
spending arrangements (FSAs) that are
not fully integrated with group major
medical coverage, stating that these
types of plans were not explicitly
addressed in the exemptions and the
anti-duplication provisions outlined in
the proposed rules.
The final rules do not apply to
account-based group health plans, such
as HRAs, including individual coverage
HRAs, or health FSAs. QSEHRAs are
not group health plans and are, thus, not
subject to the requirements of section
2715A of the PHS Act.122 Therefore,
these types of arrangements are not
required to comply with the final rules.
4. Privacy, Security, and Accessibility
The requirements for group health
plans and health insurance issuers to
provide cost-sharing liability estimates
and related cost-sharing information
will operate in tandem with existing
state and Federal laws governing the
privacy, security, and accessibility of
the information that will be disclosed
under these disclosure requirements.
For example, the Departments are aware
that the content to be disclosed by plans
and issuers may be subject to the
privacy, security, and breach
notification rules under HIPAA or
similar state laws. Nothing in the final
rules is intended to alter or otherwise
affect plans’, issuers’, and other entities’
data privacy and security
responsibilities under the HIPAA rules
or other applicable state or Federal laws.
The Departments also expect that
plans and issuers will follow applicable
state and Federal laws regarding persons
who may or must be allowed to access
and receive the information that is
required to be disclosed under the final
rules. The final rules refer to such
persons as ‘‘authorized representatives’’
and do not establish any new class of
persons or entities who are authorized
122 Section 9831(d)(1) of the Code; section
733(a)(1) of ERISA; and section 2791(a)(1) of the
PHS Act.
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to access the information specified by
the final rules.
One commenter expressed concerns
about potential privacy violations
related to implementation and
compliance with the proposed measure.
This commenter stated that all entities
need to be made aware of their existing
privacy and data-security
responsibilities and that states and
Federal regulators need to be diligent
about compliance and enforcement.
This commenter further stated it is
important to note that employers, TPAs,
and carriers may incur increased costs
related to complying with the proposed
rules regarding potential data breaches,
increased liability, and cyber-coverage
costs that could impact plan premiums.
The Departments agree that it is
important that entities subject to the
final rules be aware of their privacy and
data-security responsibilities.
Accordingly, the Departments are
finalizing, as proposed, a provision that
reminds plans and issuers of their duty
to comply with requirements under
other applicable state or Federal laws,
including requirements governing the
accessibility, privacy, or security of
information, or those governing the
ability of properly authorized
representatives to access participant,
beneficiary, or enrollee information held
by plans and issuers.
The Departments further appreciate
the concern that employers, TPAs, and
issuers may incur cybersecurity costs
related to providing an online tool that
provides some access to participant,
beneficiary, and enrollee protected
health information (PHI). However,
given the Departments’ understanding
that as many as 94.4 percent of surveyed
plans and issuers already maintain and
operate an internet-based self-service
tool,123 the Departments anticipate any
additional costs associated with
cybersecurity will not be substantial.124
The Departments have otherwise
evaluated the burden of operating an
internet-based self-service tool in
section VI, later in this preamble.
One commenter expressed concern
that certain requests for cost-sharing
information could include items and
services that may reveal particularly
sensitive health information (for
example, information related to
substance abuse, mental health, or HIV).
This commenter recommended the
Departments provide carve-outs so that
plans and issuers are not required to
124 Sharma A., Manning, R., and Mozenter, Z.
‘‘Estimating the Burden of the Proposed
Transparency in Coverage Rule.’’ Bates White
Economic Consulting. January 27, 2020. Available
at: https://www.bateswhite.com/newsroom-insightTransparency-in-Coverage-Rule.html.
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disclose such information through
unsecured methods of communication
(for example, email or phone).
Alternatively, they recommended that
the Departments provide more clarity or
examples of when plans and issuers are
not required to disclose certain
information to comply with HIPAA and
other Federal and state privacy laws.
The Departments remind stakeholders
that current privacy and security
requirements applicable under HIPAA
rules and other applicable Federal
requirements continue to apply under
these rules. As noted earlier in this
section of the preamble, the final rules
are not intended to alter or otherwise
affect plans’, issuers’, or other entities’
responsibilities under HIPAA or other
applicable Federal privacy laws.
Furthermore, to the extent that state
laws are more stringent regarding the
disclosure of information subject to the
final rules, plans and issuers are
required to comply with the relevant
state laws. The Departments
acknowledge that there have been
several recent security breaches
affecting plans, issuers, and third-party
vendors that may have compromised the
PII and PHI of participants,
beneficiaries, and enrollees. As
acknowledged elsewhere in this
preamble, privacy and security are
important to the Departments and,
while outside the scope of this rule,
these are issues the Departments will
continue to monitor. In light of existing
risks and new risks that may arise as a
result of increased innovation in the
health care space, the Departments
encourage plans and issuers to continue
to educate their participants,
beneficiaries, and enrollees about these
risks and about ways to minimize or
prevent unintended usage or sharing of
their health data and encourage
consumers to pay close attention to any
new internet-based tools or applications
they may choose to use.
C. Requirements for Public Disclosure of
In-Network Rates, Historical Allowed
Amount Data, and Prescription Drug
Pricing Information for Covered Items
and Services From In- and Out-ofNetwork Providers
As explained earlier in this preamble
and in the proposed rules, the
Departments proposed to exercise
specific authority under section
1311(e)(3)(A)(vii) and (ix) of PPACA (as
applied to group health plans and
health insurance issuers in the
individual and group markets through
section 2715A of the PHS Act), which
requires plans and issuers to publicly
disclose information on cost-sharing
and payments with respect to any out-
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72209
of-network coverage and any other
information the Secretary of HHS
determines to be appropriate to enhance
transparency in health coverage.
Consistent with this authority, the
Departments proposed for plans and
issuers to make public negotiated rates
with in-network providers and data
outlining the different amounts a plan
or issuer has paid for covered items or
services, including prescription drugs,
furnished by out-of-network providers.
The Departments proposed to require
plans and issuers to make this
information available in machinereadable files that would include
information regarding negotiated rates
with in-network providers, allowed
amounts for all covered items or
services furnished by particular out-ofnetwork providers, and other relevant
information in accordance with specific
method and format requirements. The
Departments proposed to require plans
and issuers to update this information
on a monthly basis to ensure it remains
accurate. The Departments are finalizing
these policies and requirements with
modifications to clarify the proposed
requirements and underlying policies,
and to respond to commenter
suggestions and concerns.
The preamble to the proposed rules
outlined several reasons why the public
disclosure of negotiated rates and
historical out-of-network allowed
amounts is both appropriate and
necessary for transparency in coverage.
First, the Departments asserted that the
public availability of negotiated rates
and historical out-of-network allowed
amounts would empower the nation’s
26.1 million uninsured consumers to
make more informed health care
decisions.125 Uninsured consumers
generally must pay a provider’s full
charges for health care items and
services. Though negotiated rates will
not apply to the uninsured, it will offer
a baseline when negotiating with
providers. Pricing information is critical
to their ability to evaluate their service
options and control their health care
spending. Uninsured consumers could
also use publicly available pricing
information to find which providers
offer the lowest price, depending on the
consumer’s personal needs and
priorities. The Departments noted in the
preamble to the proposed rules that
provider lists of standard charges often
do not reflect the true cost of particular
125 Income, Poverty and Health Insurance
Coverage in the United States: 2019.’’ United States
Census Bureau. September 15, 2020. Available at:
https://www.census.gov/newsroom/press-releases/
2020/income-poverty.html.
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items and services.126 Again, although a
provider’s negotiated rates with plans
and issuers do not necessarily reflect the
prices providers charge to uninsured
patients, uninsured consumers could
use this information to gain an
understanding of the payment amounts
a particular provider accepts for a
service. Uninsured patients or
participants, beneficiaries, or enrollees
seeking care from an out-of-network
provider also may use this data to
negotiate a price prior to receiving an
item or service or negotiate down a bill
after receiving a service.127
Second, the Departments stated in the
proposed rules that information
regarding negotiated rates and historical
out-of-network allowed amounts is
critical for any consumer, insured, or
uninsured, who wishes to evaluate
available options for group or individual
market coverage. Specifically,
negotiated rate information for different
plans or coverage and their in-network
providers is key to consumers’ ability to
effectively shop for coverage that best
meets their needs at prices they can
afford, whether the consumer wishes to
purchase new coverage or change
existing coverage. Publicly-available
negotiated rate data will assist all
consumers in choosing the coverage that
best meets their needs in terms of
deductible requirements, coinsurance
requirements, and out-of-pocket limits—
all factors frequently determined by
plan’s or issuer’s in-network rates,
including negotiated rates, or out-ofnetwork allowed amounts. This
information, added to plan premium
information and benefit design (for
example coinsurance percentages), will
give consumers an understanding of
how affordable a particular coverage
option will be.
In the preamble to the proposed rules,
the Departments noted that publicly
available historical allowed amount data
for covered items and services provided
by out-of-network providers would
enable consumers who require
specialized services to find the best
coverage for their circumstances. For
instance, plans and issuers often place
limitations on benefits for specialized
126 Arora, V., Moriates, C., and Shah, N. ‘‘The
Challenge of Understanding Health Care Costs and
Charges.’’ 17 AMA J. Ethics 1046 (2015). Available
at: https://journalofethics.ama-assn.org/article/
challenge-understanding-health-care-costs-andcharges/2015-11.
127 ‘‘How to Research Health Care Prices.’’ Wall
Street Journal. Dec. 4, 2009. Available at: https://
guides.wsj.com/health/health-costs/how-toresearch-health-care-prices/ (‘‘Researching healthcare pricing online can also help after you’ve
already had a medical procedure, if you want to
dispute a bill, negotiate it down, or figure out if
you’ve been overcharged.’’).
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services, which causes many specialists
to reject insurance; this can make it
difficult, if not impossible, for
consumers in need of certain services to
find in-network providers in their area
who are accepting new patients or who
have sufficient availability or expertise
to meet their needs. The Departments
understand, for example, that many
speech therapists and pathologists do
not accept insurance because of the
limitations plans and issuers place on
coverage for their services, such as
annual visit limits on speech therapy
services. Accordingly, consumers who
have a need for such specialized
services may base their coverage choices
primarily, if not solely, on a plan’s or
issuer’s out-of-network benefits.
Historical data outlining different
amounts paid to out-of-network
providers will enable consumers who
rely on out-of-network providers to
ascertain potential out-of-network
benefits among different plans and
issuers.
Third, the Departments stated in the
preamble to the proposed rules that
public disclosure of pricing information
is necessary to enable consumers to use
and understand price transparency data
in a manner that will increase
competition, potentially reduce
disparities in health care prices, and
potentially lower health care costs. One
of the recognized impediments to
increased competition for health care
items and services is the widespread
lack of knowledge many consumers
have regarding health care pricing. In
the preamble to the proposed rules, the
Departments noted that many
consumers do not fully comprehend the
basics of health coverage, much less the
more complex facets of the health care
system that can affect an individual’s
out-of-pocket cost for items and
services, including: Its specialized
billing codes and payment processes;
the various specialized terms used in
plan and coverage contracts and related
documents (such as copayment and
coinsurance); and the various billing
and payment structures plans and
issuers use to compensate providers and
assign cost-sharing liability to
individuals (for example, bundled
payment arrangements).128 Pricing
128 Satter, M. ‘‘Survey: Most workers don’t
understand health insurance.’’ BenefitsPRO.
September 30, 2016. Available at: https://
www.benefitspro.com/2016/09/30/survey-mostworkers-dont-understand-health-insuran/
?slreturn=20190803010341 (a UnitedHealthcare
Consumer Sentiment Survey found that even
though 32 percent of respondents were using
websites and mobile apps to comparison shop for
health care, only 7 percent had a full understanding
of all four basic insurance concepts: Plan premium,
deductible, coinsurance, and out-of-pocket
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information is necessary to spur
innovation that will help educate
consumers on how to get the most value
out of their plan or coverage. Making the
required pricing information public
could facilitate and incentivize the
design, development, and offering of
internet-based self-service tools and
support services that are necessary to
address the general inability of
consumers to use or otherwise
understand the available health care
pricing information.
In developing the proposed rules, the
Departments considered that, due to the
complexity of the health care system
and the data that drives plan and issuer
payments for health care items and
services, such raw data is likely to be
difficult for the average consumer to
understand and effectively use. As a
result, the Departments determined that
proposing to make public negotiated
rates with in-network providers and
historical payment data outlining out-ofnetwork allowed amounts would be
appropriate because it would encourage
innovation that could ultimately help
consumers understand and effectively
use price transparency information.
The Departments stated that the
proposed requirement to make pricing
information publicly available could
allow health care software application
developers and other innovators to
compile, consolidate, and present this
information to consumers in a manner
that allows consumers to consider price
as a factor when making meaningful
comparisons between different coverage
options and providers.129 For instance,
third-party developers could develop
mobile applications that operate as lookup tools and permit comparison of
prices for specific services across plans.
The tools could also allow consumers to
access their medical records or other
information about their health care
utilization and create estimates based
upon patient-specific information.
Ultimately, the Departments are of the
view that improved access and usability
of this information has the potential to
increase health insurance literacy,
consumerism, and competition,
resulting in more reasonable costs for
health care items and services.
Fourth, in the proposed rules the
Departments noted that, along with
maximum; although 60 percent of respondents were
able to successfully define plan premium and
deductible, respondents were not as successful in
defining out-of-pocket maximum (36 percent) and
coinsurance (32 percent)).
129 The Departments recognize that
implementation of the API discussed in section III,
Request for Information, could go even further
toward the goal of empowering application
developers and other innovators to support price
transparency in the health care market.
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consumers, sponsors of self-insured and
fully-insured group health plans are also
disadvantaged by the lack of price
transparency.130 Absent action taken
such as through the final rules, health
care cost trends are expected to
continue to outpace inflation, with
employer-sponsored large group plans’
annual per employee costs expected to
increase between 5.5 to 9.0 percent over
the next decade.131 Without information
related to what other plans or issuers are
actually paying for particular items and
services, employer plans currently lack
the pricing information necessary to
shop or effectively negotiate for the best
coverage for their participants and
beneficiaries. In the proposed rules, the
Departments stated that public
availability of pricing information is
appropriate to empower plans to make
meaningful comparisons between offers
from issuers and evaluate the prices
offered by providers who wish to be
included in their pool of in-network
providers. The Departments noted that
the pricing information would also
assist employer plans that contract with
TPAs or issuers to provide a network of
physicians. That information would
provide valuable data an employer plan
could use to assess the reasonableness
of network access prices offered by
TPAs and issuers by evaluating the
specific price providers in a TPA’s or
issuer’s network are accepting for their
services.
Armed with transparency data,
employers could also use their leverage
to negotiate for lower prices for their
participants and beneficiaries and,
potentially, if enough employers take
action, it could help lower health care
prices.132 For instance, employers could
employ network and benefit design
tools to move participants and
beneficiaries toward lower-priced
providers and shift from less favorable
provider contracting models (such as a
discounted-charge contact, which can
130 Whaley, C., et al. ‘‘Nationwide Evaluation of
Health Care Prices Paid by Private Health Plans:
Findings from Round 3 of an Employer-Led
Transparency Initiative.’’ RAND Corporation. 2020.
Available at: https://www.rand.org/pubs/research_
reports/RR4394.html.
131 Congressional Budget Office, ‘‘The Budget and
Economic Outlook: 2019 to 2029.’’ Congress of the
United States Congressional Budget Office. January
2019. Available at: https://www.cbo.gov/system/
files/2019-03/54918-Outlook-3.pdf; see also
‘‘Medical cost trend: Behind the numbers 2020.’’
PwC Health Research Institute. June 2019. Available
at: https://heatinformatics.com/sites/default/files/
images-videosFileContent/pwc-hri-behind-thenumbers-2020.pdf.
132 Whaley, C., et al. ‘‘Nationwide Evaluation of
Health Care Prices Paid by Private Health Plans:
Findings from Round 3 of an Employer-Led
Transparency Initiative.’’ RAND Corporation. 2020.
Available at: https://www.rand.org/pubs/research_
reports/RR4394.html.
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be vulnerable to list-price inflation) to
more favorable, alternative value-based
contracting models (such as referencebased pricing and bundled payment
arrangements).133 As stated elsewhere in
this preamble, based on 2019 Census
data, there are 183 million Americans
enrolled in employer-sponsored health
coverage through a household member’s
employer at some point during the
year.134 Based on estimates of the
United States population in 2019, this
would mean that more than 56 percent
of the nation’s insured population has
employer-sponsored coverage.
Therefore, the ability of employer plans
to effectively negotiate pricing for
coverage and services could be a boon
to competition in the health care
market.
Fifth, the Departments stated in the
proposed rules that public disclosure of
price transparency information is also
appropriate because it could assist
health care regulators in carrying out
their duties to oversee issuers in their
states, as well as in designing and
maintaining sustainable health care
programs. Regulators may be able to
independently access, aggregate, and
analyze the data to support oversight of
plans and issuers. For example, because
the machine-readable files must be
updated regularly, regulators could use
the pricing information to identify
trends in rates of items and services
over time or identify potentially
collusive practices or substantial price
variations within a geographic area that
may be in need of additional monitoring
or future regulatory action. It may also
become possible for regulators to use the
pricing information related to items and
services to assist in better understanding
and monitoring premium rate
fluctuations and increases in their
respective markets; further allowing
them to assess whether the trend rates
issuers use in their rate filings are
reasonable in order to assess whether
proposed rates should be approved.
Because the in-network applicable rate
data will be reasonably current,
regulators may be able to address
potential concerns more quickly than at
present.
Local, state, and Federal agencies
responsible for implementing health
care programs that rely on issuers to
provide access to care would be privy to
actual pricing information that could
inform their price negotiations with
issuers. Insights gained from research
133 Id.
134 ‘‘Income, Poverty and Health Insurance
Coverage in the United States: 2019.’’ United States
Census Bureau. September 15, 2020. Available at:
https://www.census.gov/newsroom/press-releases/
2020/income-poverty.html.
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using the pricing information could
support regulators in their oversight of
plans and issuers and could also help
identify new ideas for market reforms to
enhance the performance and efficiency
of health insurance markets.
The public availability of health care
pricing information offers researchers
the ability to better understand the
impact of specific plan, issuer, and
provider characteristics on negotiated
rates and out-of-network payments,
evaluate and supplement existing
models and predictions, and formulate
new policies and regulatory
improvements to improve competition
and lower health care spending.
Researchers have already utilized
localized and state-wide data to review
trends in issuer market share, issuer
location, and covered services and their
corollary effects on consumer pricing
and experience in the market.135 They
have also examined these similar effects
on consumers by provider market
shares, structures, and offered similar
data. Expanding the availability of this
data could allow for the expansion and
validation of these and other models
and hypotheses. With larger and more
complete datasets, researchers could
refine their policy and regulatory
suggestions regarding payment and
delivery models, including those that
are most likely to mitigate upwards
pricing pressure from issuer, provider,
consumer, and geographic factors. The
release of this data could also
supplement ongoing efforts to help
control health care costs.
The Departments acknowledge that
these stakeholders, notably researchers,
may have access to some pricing data
through existing sources, such as the
Health Care Cost Institute (HCCI) and
databases established through state
health care price transparency efforts.
However, it is the Departments’
understanding that these health care
pricing datasets are often costly to
purchase, only contain older, historical
data, and generally only include deidentified plan data for a limited
number of plans and issuers who
voluntarily participate in the data
collection.136
135 See Brown, Z.Y. ‘‘Equilibrium Effects of
Health Care Price Information.’’ The Review of
Economics and Statistics. Volume. 101. No. 4.
September 30, 2019. Available at: https://
www.mitpressjournals.org/doi/full/10.1162/rest_a_
00765; see also Wu, S. et al ‘‘Price Transparency For
MRIs Increased Use Of Less Costly Providers And
Triggered Provider Competition.’’ Health Affairs.
August 2014. Available at: https://
www.healthaffairs.org/doi/10.1377/
hlthaff.2014.0168.
136 For example, HCCI is expected to release their
‘‘2.0’’ dataset in December 2020. The ‘‘2.0’’ dataset
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By contrast, the pricing information
required through the final rules would
generally be current data for all plans
and issuers and will be available to the
public free of charge. This data, where
it is related to in-network coverage, can
also be tied back to specific plans and
issuers and the geographic regions in
which they provide plans or coverage.
With access to the pricing data required
through the final rules, researchers may
be able to design new studies that
develop novel insights into the health
insurance markets. Stakeholders,
including employers, may be able to
gain insights, inform oversight efforts,
negotiate improved terms for items and
services, or make improvements to
insurance products, such as plans and
issuers moving toward value-based plan
designs or broadening or narrowing
networks based on customer shopping
habits. The pricing information could
also support market innovation and
improvements by plans and issuers. For
example, researchers and industry
experts could use pricing information to
establish baseline data to assist in
identifying, designing, and testing new
or existing health care delivery and
coverage models.
While all of these stakeholders stand
to benefit from access to the pricing
information required through the final
rules, the Departments continue to be of
the view that the ultimate beneficiaries
of access to pricing information are
consumers. Indeed, public access to
health care pricing information could
lead to more targeted oversight, better
regulations, market reforms to ensure
healthy competition, improved benefit
designs, and more consumer-friendly
price negotiations.
The Departments expressed the view
that effective downward pressure on
health care pricing cannot be fully
achieved without public disclosure of
pricing information. Standard economic
theory holds that markets work best
includes over one billion commercial claims and 60
million covered lives per year from Aetna, Humana,
Kaiser Permanente, and the Blue Cross Blue Shield
(BCBS) companies from 2012 through 2018. The
data is nearly three years old and will cost $45,000
annually on a per-project basis and does not
include other ‘‘standard add-ons,’’ such as data
mergers. Institutional membership prices will be
customized for each organization. Taken from
‘‘Power Up Your Analytics on the Privately
Insured.’’ Health Care Cost Institute. Available at:
https://healthcostinstitute.org/images/pdfs/Health_
Care_Cost_Institute_-_Power_Up_Your_
Analytics.pdf. In addition to the HCCI dataset,
BCBS companies also sell their data through their
analytics and consulting platform, Blue Health
Intelligence, with 20.3 billion claims from 203
unique member organizations. The access price is
not listed on their website. More information is
available at: https://
www.bluehealthintelligence.com/.
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when there is price competition.137
When consumers shop for services and
items based on price, providers and
suppliers typically compete to lower
prices and improve quality.138 Based on
this understanding of standard
economic principles and past
experience, the Departments are
persuaded that innovators and other
entities in the health care market will be
incentivized to innovate in the price
transparency and health care
consumerism space once access to
pricing information that allows for
meaningful evaluation of different
options for delivering health care items
or services, coverage options, and
provider options becomes available.
1. Information Required To Be Disclosed
to the Public
The Departments are finalizing
requirements, under 26 CFR 54.9815–
2715A3(b), 29 CFR 2590.715–
2715A3(b), and 45 CFR 147.212(b), for
plans and issuers to make public
applicable rates, including negotiated
rates, with in-network providers; data
outlining the different billed charges
and allowed amounts a plan or issuer
has paid for covered items or services,
including prescription drugs, furnished
by out-of-network providers; and
negotiated rates and historical net prices
for prescription drugs furnished by innetwork providers.139 The Departments
are of the view that public availability
of in-network applicable rates,
including negotiated rates, billed
charges and historical out-of-network
allowed amounts, and in-network
negotiated rates and historical net prices
for prescription drugs is appropriate and
necessary to provide comprehensive
effective transparency in coverage,
which may, in turn, empower
consumers to make informed decisions
about their health care, spur
competition in health care markets, and
slow or potentially reverse the rising
cost of health care items and services.
The vast majority of the commenters
agreed with the Departments’ objectives
of price transparency under the
proposed rule. Many commenters
137 ‘‘FTC Fact Sheet: How Competition Works.’’
United States, Federal Trade Commission.
Available at: https://www.consumer.ftc.gov/sites/
default/files/games/off-site/youarehere/pages/pdf/
FTC-Competition_How-Comp-Works.pdf.
138 Kessler, D., and McClellan, M. ‘‘Is Hospital
Competition Socially Wasteful?’’ 115 Q. J. of Econ.
577. May 2, 2000. Available at: https://
www.nber.org/papers/w7266.
139 As discussed in section II.B of this preamble,
the Departments are also finalizing requirements
under 26 CFR 54.9815–2715A2(b)(1)(iii)–(iv), 29
CFR 2590.715–2715A2(b)(1)(iii)–(iv), and 45 CFR
147.211(b)(1)(iii)–(iv) that plans and issuers include
negotiated rates and out-of-network allowed
amounts within the internet-based self-service tool.
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offered general support (in whole or in
part) of the proposed requirements for
public disclosure of in-network
negotiated rates and out-of-network
allowed amounts. One commenter
supported the public disclosure of outof-network allowed amounts but
expressed concerns about disclosure of
in-network negotiated rates.
Disclosure of Pricing Information
Generally
Some commenters who offered
support stated that the requirements
will help create more efficient and
value-based health care systems by, for
example, encouraging plans and issuers
to adopt innovative benefit designs that
push patients toward lower-cost care.
Another commenter who offered
support stated that requiring plans and
issuers to share publicly the negotiated
rates for in-network providers and
allowed amounts for out-of-network
providers has the potential to increase
competition among issuers. One
commenter stated that public disclosure
of negotiated rates is needed to address
the provider consolidation that is
driving up health care costs and leading
to more favorable reimbursements to
large hospitals with bargaining power.
Another commenter recommended the
Departments reject arguments against
transparency that payment data should
be protected as proprietary, and adopt a
presumption in favor of transparency.
The Departments received comments
from state and local government
regulators who were supportive of the
rules generally and provided
suggestions for improving the proposals.
Regulators recognized that greater
transparency holds promise in
improving pricing of health care items
and services in ways that improve
consumer comprehension and
policymakers’ ability to manage the
health care system. One local
government commenter supported the
goal of price transparency, but voiced
concern that the proposed rules might
unintentionally drive up the cost of
health care. Individual consumers who
submitted comments offered general
support and emphasized the importance
of obtaining pricing information in
advance of receiving health care for
their personal health care decisionmaking. Some individual commenters
noted that consumers seek the price of
a product or service in every other
sector prior to making a spending
decision and should be able to do so
when purchasing health care. Other
individual commenters stated their
support for policies that will help
consumers choose whether to seek care
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from an in-network or out-of-network
provider.
Many other commenters, comprised
largely of health insurance issuers and
health care providers, offered support
for the objective of price transparency,
but did not support the requirements for
public disclosure of in-network provider
rates and out-of-network allowed
amounts, expressing particular concerns
about the in-network provider rate
disclosure requirements
Commenters stated that, as proposed,
the disclosure of payer-specific
negotiated rates could distort the
markets, creating an unbalanced focus
on costs at the expense of other factors
influencing market dynamics, such as
quality, efficiency, and effectiveness.
Some commenters stated that negotiated
rates reflect factors other than price
such as experience, previous volumes/
market power, anticipated growth,
strategic initiatives, and select
concessions.
The Departments do not agree that
publication of negotiated rates for items
and services will have negative
distortive effects on health care markets.
Rather, the Departments are of the view
that the final rules will help to
counteract the recognized price
distortions that result from the
unavailability of pricing information to
health care consumers.140 As discussed
elsewhere in this preamble, the current
unavailability of pricing information for
health care items and services prohibits
the health care markets from achieving
a meaningful level of competition based
on price because it ensures that health
care consumers typically are not able to
include price in their health care
purchasing decisions. The Departments
are of the view that making pricing
information available could begin to
ameliorate price distortions in health
care by encouraging consumer decisionmaking that takes cost into account.
Another commenter stated that the
release of negotiated rates would
inappropriately result in the steering of
consumers to particular providers based
on contractual prices. The commenter
stated that informed decision-making is
not solely based on price, but is multifactorial, involving looking at a
provider’s clinical expertise, ability to
coordinate care, quality, effectiveness of
utilization management, and guidance
from a referring physician. The
Departments agree that informed
decision-making is not solely based
upon price. The final rules are only one
part of the solution to address issues
contributing to the lack of competition
in the health care market and resulting
increases in health care costs. While the
Departments address the problem of
price transparency through this
rulemaking, other government and
industry stakeholders are working to
address other issues highlighted by
commenters, such as the availability of
reliable quality data.
The Departments, in shaping the
proposed and final rules, considered
that there is quality data available to
individual consumers and other
consumers of health care like employers
and government programs. Various
government and industry stakeholders
sponsor programs that aim to provide
reliable health care quality information
to health care purchasers. For instance,
HHS engages in continual efforts to
develop quality measures that are
meaningful and accurately reflect
hospital quality. CMS’s Hospital
Inpatient Quality Reporting Program
collects quality data from certain
hospitals with the goal of driving
quality improvement through
measurement and transparency.141 CMS
publicly displays this quality data to
help consumers make more informed
decisions about their health care.142
HHS’s Agency for Healthcare Research
and Quality (AHRQ) publishes
comparative information on health
plans that include reports sponsored by
Federal and state agencies, private
organizations, and purchasing
coalitions.143 The Departments
appreciate comments received through
the RFI in the proposed rule and are
also evaluating future actions to help
ensure quality information is more
readily available.
The Departments are also of the view
that it is worth noting that private sector
entities have been working to provide
useful quality information to
140 Under ideal market conditions, consumers
have sufficient information to make good choices.
When consumers do not have information on price,
standard market forces cannot operate, and prices
for health care are distorted resulting in price
discrimination (charging consumers different prices
for the same product) and other problems that
currently plague the health care markets. See
generally Mwachofi, Ari, and Assaf F. Al-Assaf.
‘‘Health care market deviations from the ideal
market.’’ Sultan Qaboos University Medical Journal
vol. 11, 3 (2011): 328–37. Available at https://
www.ncbi.nlm.nih.gov/pmc/articles/PMC3210041/.
141 See CMS Hospital inpatient Quality Reporting
Program web page at https://www.cms.gov/
Medicare/Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/
HospitalRHQDAPU, last accessed Sep. 21, 2020.
142 CMS Hospital Compare website at https://
www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/HospitalQualityInits/
HospitalRHQDAPU, last accessed Sept. 21, 2020.
143 AHRQ Comparative Reports on Health Plans,
https://www.ahrq.gov/talkingquality/resources/
comparative-reports/health-plans.html, last
accessed Sept. 21, 2020.
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consumers.144 For example, the
National Quality Forum (NQF) is a
private standard-setting organization
focused on the evaluation and
endorsement of standardized
performance measurements that makes
available on its website all NQF work
products, reports, and quality
measures.145 As another example, the
Joint Commission is a not-for-profit
organization that develops and applies
standards that focus on patient safety
and quality of care.146 Finally, the
National Committee for Quality
Assurance (NCQA) measures and
accredits health plans as well as the
quality of medical providers and
practices. For example, more than 191
million people are enrolled in health
plans that report quality results using
NCQA’s Healthcare Effectiveness Data
and Information Set (HEDIS),147 which
includes more than 90 measures across
six ‘‘domains of care,’’ including
effectiveness of care, access/availability
of care, and experience of care.148
Once pricing data is available through
the final rules, existing quality data can
be considered with pricing data to
produce a more complete and accurate
picture of total value. The same thirdparty developers who will have access
to the information published pursuant
to these final rules could develop
platforms capable of presenting
available quality data alongside pricing
information. The Departments,
therefore, anticipate that making health
care prices transparent may spur
consumers to seek and consider
available quality and price information
to determine whether a particular item
or service is worth a higher or lower
price. There is evidence from retail
sector studies showing that consumers
want high-quality, low-priced goods and
will seek the lower price among
144 See, for example, Ranard, B.L., Werner, R.M.,
Antanavicius, T., Schwartz, H.A., Smith, R.J.,
Meisel, Z.F., Asch, D.A., Ungar, L.H., & Merchant,
R.M. (2016). ‘‘Yelp Reviews Of Hospital Care Can
Supplement And Inform Traditional Surveys Of
The Patient Experience Of Care. Health Affairs’’
(Project Hope), 35(4), 697–705. Available at: https://
doi.org/10.1377/hlthaff.2015.1030 (‘‘Online
consumer-review platforms such as Yelp can
supplement information provided by more
traditional patient experience surveys and
contribute to our understanding and assessment of
hospital quality.’’).
145 See the National Quality Forum website,
https://www.qualityforum.org/how_we_do_it.aspx,
last accessed Oct. 8, 2020.
146 See The Joint Commission website, https://
www.jointcommission.org/about-us/facts-about-thejoint-commission/joint-commission-faqs/, last
accessed Oct. 8, 2020.
147 See NCQA website, https://www.ncqa.org/
hedis/, last accessed Oct. 8, 2020.
148 Id.
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products of the same quality.149 Given
the high cost of health care, the
Departments are of the view that the
same trend toward seeking lower prices
will more likely than not hold true in
the health care market when prices
become transparent.150
The Departments received many
comments stating that publishing
negotiated rates is unlikely to meet the
Departments’ goal of helping consumers
understand their health coverage and
reasonably predict their out-of-pocket
costs. Many of these commenters stated
that negotiated rates information would
not provide consumers with
meaningful, actionable pricing
information, and could possibly make
purchasing decisions more confusing
and difficult for consumers. One
commenter noted that the public
disclosure of negotiated rate information
could distract from relevant participant,
beneficiary, or enrollee-specific costsharing information such as
accumulated amounts. One commenter
stated that confusing and unhelpful
pricing information would erode
consumer trust and present long-term
challenges for the health care system.
The Departments disagree that public
knowledge of the price of health care
items and services will increase
individual consumers’ confusion
regarding health coverage or distract
them from other information relevant to
their out-of-pocket costs, such as the
status of their accumulated amounts and
note that commenters who raised this
point cited no empirical or anecdotal
evidence supporting these concerns. On
the contrary, as explained throughout
this preamble, the Departments are of
the view that standard economic theory,
experience from several states, and
evidence from other markets
demonstrate that increased transparency
leads to better-informed purchasing
149 Shirai, M. ‘‘Impact of ‘High Quality, Low
Price’ Appeal on Consumer Evaluations.’’ Journal of
Promotion Management. December 2015. Available
at https://www.tandfonline.com/doi/full/10.1080/
10496491.2015.1088922.
150 Recent research evaluating the impact of New
Hampshire’s price transparency efforts shows that
providing insured patients with information about
prices can have an impact on the out-of-pocket
costs consumers pay for medical imaging
procedures, not only by helping users of New
Hampshire’s website choose lower cost options, but
also by leading to lower prices that benefited all
patients, including consumers in New Hampshire
that did not use the website. See Brown, Z.Y.
‘‘Equilibrium Effects of Health Care Price
Information.’’ The Review of Economics and
Statistics. Volume. 101. No. 4. Available at: https://
www.mitpressjournals.org/doi/full/10.1162/rest_a_
00765; see also Brown, Z.Y. ‘‘An Empirical Model
of Price Transparency and Markups in Health
Care.’’ August 2019. Available at: https://wwwpersonal.umich.edu/∼zachb/zbrown_empirical_
model_price_transparency.pdf.
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decisions, generally lower prices, and
quality improvements. Moreover, the
Departments expect that third-party
developers will compete to make
pricing information available to the
public in formats that are user-friendly,
so disclosure of detailed pricing
information is unlikely to lead to
significant consumer confusion.
As noted earlier in this preamble, the
Departments expect the public
disclosure of pricing information related
to health care items and services to help
both uninsured and insured individuals
in their health care and health coverage
purchasing decisions. Furthermore,
research suggests that having access to
pricing information can increase
consumers overall satisfaction and
provide opportunities for education and
engagement on health care pricing.151
For instance, when the Children’s
Hospital of Philadelphia incorporated a
Patient Cost Estimate Department, they
found that cost estimates resulted in
‘‘fewer billing-related complaints,
decreased revenue losses, and increased
overall patient satisfaction.’’ 152 A
targeted study in the American Surgeon
journal found five out of six medical
centers that adopted price transparency
reported increases in patient satisfaction
and patient engagement after price
transparency.153
One commenter stated that public
disclosure of pricing information
through the machine-readable files is
unlikely to benefit uninsured
consumers, in particular, as it will be
difficult for them to make the necessary
comparisons or negotiate with providers
as providers are not incentivized to
negotiate with uninsured consumers.
Another commenter stated that the
machine-readable files would not be
very helpful for current beneficiaries,
participants, or enrollees, but
acknowledged they could benefit
uninsured individuals and enrollees
considering alternative coverage.
By contrast, other commenters,
including many individual commenters,
stated that access to negotiated rate
information would empower both
insured and uninsured consumers by
151 Revere, F.L., et al. ‘‘A consumer-based
evaluation of Healthcare Price and Quality
Transparency.’’ Journal of Health Care Finance.
Summer 2016. Available at: https://
www.healthfinancejournal.com/index.php/johcf/
article/download/72/74.
152 Otero, H., et al. ‘‘The Cost-Estimation
Department: A Step Toward Cost Transparency in
Radiation.’’ Journal of the American College of
Radiology. Vol 16. Issue 2. February 2019. Available
at: https://doi.org/10.1016/j.jacr.2018.07.033.
153 Mehta, A., et al. ‘‘The Impact of Price
Transparency for Surgical Services.’’ The American
Surgeon. April 2018. Available at: https://
pubmed.ncbi.nlm.nih.gov/29712614/.
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helping to correct the lack of consumer
choice and information and help
support efforts by other market actors.
In particular, one commenter stated that
consumers would likely use the pricing
information, especially if their costsharing liability is in the form of
coinsurance that is tied to the negotiated
rates. One commenter stated that release
of information on negotiated rates
would help consumers by spurring
innovation by third-party application
developers to create tools to help
consumers and payers, especially selfinsured group health plans. Finally, one
commenter did not support the
requirements for public disclosure of innetwork provider rates but did
acknowledge that public disclosure of
de-identified aggregated data for both
in-network and out-of-network
providers could empower consumer
decision-making.
The Departments agree that
transparency would help provide more
consumer information and support
consumer choice for both insured and
uninsured consumers. The Departments
continue to be of the view that market
actors, including IT developers,
researchers, industry experts, and plans
and issuers would be incentivized to
innovate in the price transparency and
health care consumerism space once
access to the pricing information
required to be disclosed through the
final rules becomes available. In the
proposed rule, the Departments
emphasized that individual consumers
need easy to use tools and resources to
help them better understand their
current health care coverage, health
coverage they consider purchasing, and
their out-of-pocket exposure under
those plans. Health care stakeholders
and other industry participants,
including web and mobile application
developers, are already attempting to
meet this need, despite the incomplete
pricing information available to them.
Given actionable data that can improve
such tools and resources, industry
actors will likely be incentivized to
design innovations to deliver the help
and information consumers need to
make informed health care decisions
based, at least in part, on the important
factor of price. The final rules will
support current and future efforts to
help guide consumers to the lowest cost
items and services that meet their
specific needs and qualifications. To
spur this innovation, the pricing
information must allow for meaningful
evaluation of different options for
delivering health care items or services,
coverage options, and provider options.
One of the main avenues through which
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the Departments assumed this
innovation would materialize is through
IT developers who could be
incentivized to design and make
available internet-based tools and
mobile applications that could guide
consumers in accessing available price
information; as well as researchers who
would have the ability to analyze health
care pricing at local and national levels
and provide the public with their
findings. Industry experts and plans and
issuers would also have the ability to
use pricing information to develop
innovative plan benefit designs that
could result increased competition and
cost savings. Based on comments
received from interested IT developers
and other innovators, the Departments
continue to believe many innovators are
interested in utilizing this pricing
information, once available, to spur
innovation in the health care space, as
intended. The Departments expect
internet-based tools and mobile
applications will increase the likelihood
that both insured and uninsured
consumers will be able to use the
information to make informed health
care purchasing decisions. And, as
stated by a commenter, the information
required to be made public through the
proposed rules would help reduce
wasteful spending because it would
support efforts by employers, state
regulators, and other purchases of
health care to evaluate prices and
identify unwarranted spending
variation. Therefore, the Departments
did not intend or expect that behavioral
changes emanating from public
disclosure of this information will be
limited to consumers but will benefit a
variety of stakeholders.
The goals the Departments seek to
achieve through these requirements for
public disclosure are not mutually
exclusive. The Departments expressed a
desire to bring about an outcome where
innovators, including researchers,
would enter or expand in the health
care purchasing space to develop tools,
applications, and public information
that would support consumer decisionmaking. Thus, the Departments disagree
with commenters who argued that
public disclosure of negotiated rates
would not support consumer decisionmaking.
The Departments disagree with
commenters who suggested that pricing
information presented through the
public disclosures would be confusing
and misleading to consumers and could
erode consumer trust and present longterm challenges for the health care
system. Based on the review of the over
25,000 comments received on the
proposed rules, the vast majority of
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which were submitted by individuals,
consumer trust in the health care system
is already quite low, due in substantial
part to the opacity of health care
pricing.154 In one study of a nationally
representative sample, researchers
found that participants often believed
that providers and issuers set prices that
do not reflect either the quality or the
cost of goods and services, contributing
to the study’s conclusion that most
Americans do not perceive the price and
quality of health care to be associated.
Study participants described prices as
both too high and irrational, noting that
prices varied within their regions for
unknown reasons.155 The Departments’
transparency efforts are meant to
increase transparency of health care
pricing information. The Departments
do not agree that this information would
further frustrate consumers compared to
the status quo, even if it is difficult to
navigate for the average consumer
without the use of internet-based tools
or applications.
One commenter stated that disclosure
of negotiated rates could harm the
ability of health issuers to reward high
performing providers with higher
reimbursements. Additionally, some
commenters noted that focus on price
could particularly harm small health
plans and TPAs who may have been
able to negotiate discounted rates by
offering health plans in a limited service
area.
The Departments understand that
requiring release of this pricing
information may impact commercial
arrangements and result in certain onetime and ongoing administrative costs,
which could disproportionately affect
small group plans, TPAs, and issuers
offering coverage in the small group
market. However, the Departments view
making this information available to
consumers and the public as beneficial
to the public’s long-term interests in
facilitating a consumer-oriented,
information-driven, and more
competitive market. In addition, as
discussed below, the Departments are
establishing several special rules for
streamlining the provision of public
disclosures required through the final
rules. These special rules will help
mitigate the concerns of small group
plans and issuers by allowing them to
leverage a contractual relationship
through an issuer or clearinghouse to
154 See, for example, Phillips, K.A., Schleifer, D.,
and Hagelskamp, C. ‘‘Most Americans Do Not
Believe That There Is An Association Between
Health Care Prices And Quality Of Care.’’ Health
Affairs. 2016. Available at https://
www.healthaffairs.org/doi/pdf/10.1377/
hlthaff.2015.1334.
155 Id.
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satisfy the public disclosure
requirements of the final rules.
Several commenters submitted
feedback on how disclosures in the
proposed rules could affect contractual
arrangements. One commenter
expressed the view that the requirement
to release negotiated rates threatens
contracts negotiated between two
private entities. Several commenters
submitted comments related to gag
clauses or non-disclosure agreements
contained in provider contracts as well
as other contract terms that are often
included in contracts between providers
and payers (such as anti-steering and
anti-tiering provisions) that may limit
the ability of third parties to use the
data. Gag clauses, which also may be
referred to as non-disclosure
agreements, are terms that are often
included in provider-payer contracts,
which prohibit one or both parties from
making public the negotiated rates
therein.156 Anti-steering and anti-tiering
provisions are terms that may be
included in provider-payer contracts
(usually between issuers and hospital
systems), which prohibit the plan or
issuer from directing participants,
beneficiaries, or enrollees toward
higher-quality or lower-cost providers,
and require that all providers associated
with the contracting provider (for
example, for a hospital system this
could include hospitals, other affiliated
facilities, and physicians) to be placed
in the most favorable tier of
providers.157
One commenter stated that if the
Departments do not fully address the
implications of non-disclosure
agreements in provider and payer
contracts, legal complications could
arise from payers attempting to meet the
requirements to disclose negotiated
rates and violating these agreements in
the process. Another commenter
strongly supported revisions to the
proposed rules to address the barriers
associated with gag clauses. To address
this issue, another commenter
recommended the Departments provide
that the final rules supersede any
provider contract gag clause to the
extent the final rules conflict with
current or future contractual language.
The Departments understand that this
requirement may require alterations to
some existing contracts. For example,
payers and providers may need to
remove contract terms that conflict with
the requirement to disclose negotiated
156 ‘‘Provider Contracts.’’ The Source on
Healthcare & Price Competition, UC Hastings
College of Law. Available at: https://
sourceonhealthcare.org/provider-contracts/.
157 Id.
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rates such as gag clauses or nondisclosure agreements.158 It is not
uncommon for new or modified
regulatory requirements or new
statutory provisions to alter private
contractual arrangements such as those
between a health insurance payer and
health care provider. Because changes
in law or statute that may need to be
reflected in payer-provider contracts is
not uncommon, the Departments expect
that providers and payers have
processes in place address to these
requirements of the final rules. Often,
the possibility that that new or modified
regulatory requirements or new
statutory provisions could alter such
contracts is contemplated by the
contracts themselves; for example,
drafters may include contract language
that indicates terms may be altered by
changes in law or regulation. Such
language would obviate the need for
updates outsides of the regular
contracting schedule.
As a general matter, the onus for
ensuring a contract provision does not
violate applicable law rests with the
parties to the contract. Nothing in the
final rules prevents providers and
payers from implementing contract
revisions to ensure terms are not in
conflict with the requirements of the
final rules. Because the Departments are
of the view that prescription or
prohibition of specific contract terms or
language in payer-provider contracting
is not necessary, the Departments leave
it to plans, issuers, and providers to
avoid contract terms that would prohibit
or frustrate either party’s compliance
with the final rules.
Many commenters who did not
support the requirements for public
disclosure of in-network provider rates
and out-of-network allowed amounts
requested that the Departments
withdraw the proposed rules or
otherwise work with stakeholders to
develop policy solutions that meet
consumer needs with less burden and
guard against potential unintended
consequences. Some commenters
suggested the Departments collect more
data about the potential impacts of
public disclosure of negotiated rates to
ensure the policy is modified, if needed,
to protect against the risk of unintended
consequences, noted earlier. One
commenter suggested the Departments
158 The Departments note that gag clauses that
would prohibit a pharmacy from informing a
participant, beneficiary, or enrollee of any
differential between that individual’s out-of-pocket
cost under the coverage option offered by his or her
plan or issuer regarding acquisition of the drug and
the amount that individual would pay without
using any health plan or health coverage are already
prohibited. See Sec. 2729 of the PHS Act.
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pilot the requirement for public
disclosure of negotiated rates. Another
commenter recommended the
Departments pilot the release of
negotiated rates in a state where there
are a few small carriers to gain a clearer
understanding of potential
consequences of the public disclosure
requirements. Another commenter
recommended the Departments pilot
full price transparency in several
markets and conduct longitudinal
studies on the impacts.
Some commenters suggested the
Departments refocus transparency
efforts to already existing solutions or
different initiatives. Some commenters
recommended that the final rules
require plans and issuers to send claims
data to the HCCI to ensure that health
care cost data reaches the public domain
through researchers without disclosing
confidential information or distorting
the market. A few commenters
suggested the Departments leverage
existing data sources such as all-payer
claims databases to promote
transparency goals. One commenter
stated the Administration should
support congressional and states’ efforts
to pursue and expand upon
transparency efforts, including through
all-payer claims databases.
The Departments appreciate both
private and public transparency efforts
already underway. In the development
of the proposed and final rules, the
Departments sought feedback from
industry and other stakeholders. While
the Departments agree that expanding
data sent to HCCI will help researchers
gain a better understanding of market
dynamics, the Departments are of the
view that health care pricing data
should be coupled with plan and issuer
information. If the information were to
be decoupled, as through HCCI or in an
all-payer claims database, it would not
provide the degree of transparency in
prices needed to effectuate the
objectives the Departments seek to
achieve through the final rules. For
example, pricing data, decoupled from
plan and issuer data, would not provide
actionable information to consumers
that seek to evaluate health coverage
options, as they would not be able to
connect pricing to specific plans.
The Departments view the disclosure
requirements set forth in the final rules
as complementary to and supportive of
state-level efforts. States act as
incubators for transparency efforts.
Nothing in the final rules precludes
states from continuing to establish and
run state-level transparency efforts.
Indeed, the Departments intend for state
regulators to be able to use the
disclosures required to be made public
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through the machine-readable files to
support their oversight of health
insurance markets, including supporting
their own state-level transparency
efforts such as all-payer claims
databases. However, the Departments
are also aware that there are limits to the
pricing information that states can
obtain through state-level transparency
efforts. For instance, states are not able
to obtain pricing information from selfinsured group health plans; the final
rules will help states obtain this
information.
The Departments further maintain
that the final rules are significantly
more likely to achieve positive results
for consumers and health care markets
than they are likely to result in the
potential negative consequences
outlined by certain commenters. The
Departments are of the view that
traditional market forces that affect
prices in any market, including
competition between providers; the
threat of new market entrants that offer
quality, lower cost services; and the
increased bargaining power of
consumers will be supported by the
final rules. The Departments also are of
the view that providers who choose to
arbitrarily or unreasonably increase
their prices based on publicly-available
negotiated rate data are more likely to
damage their own competitive positions
and reputation than they are to cause
widespread health care cost increases in
their particular markets. For these
reasons, the Departments remain
confident that the final rules’
requirements for disclosure of
negotiated rate information will benefit
health care consumers by giving them
information necessary to effectively
shop for and choose the health care
coverage and providers that fit their
needs and budgets. As consumers make
more informed choices, based on
available price data, market forces will
have a chance to operate and potentially
correct the current course of
unsustainable increases in health care
costs.
In light of the Departments’
commitment to health care price
transparency and the importance of
addressing the distortive effects of the
absence of pricing information, the
Departments are not convinced there is
a need to change the policies in the final
rules to mitigate the risk of unintended
consequences or violations of law such
as price fixing and collusion among
providers. As discussed elsewhere in
this preamble, research, academic
literature, and the experience of various
state efforts have provided support for
the Departments’ conclusion that the
public availability of in-network rate
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information is substantially more likely
than not to lead to more informed health
care choices, increased competition, and
lower prices.
The Departments note that price
transparency is not a novel concept,
even in health care pricing. Several
states, including New Hampshire and
Maine, have implemented state-level
price transparency efforts. While the
Departments acknowledge that these
state efforts differ in material ways from
the disclosure requirements of the final
rules, the same underlying principle of
price transparency that undergirds state
efforts also undergirds the final rules.
These state efforts provide evidence that
transparency at a more localized
geographic level does not result in the
extreme unintended consequences
postulated by some commenters. The
Departments acknowledge that other
national health policy initiatives are
sometimes tested through pilots;
however, the Departments are of the
view that such an approach is not
necessary for price transparency, in
part, because there is already evidence
through state initiatives that price
transparency is achievable.
The proposed and final rules reflect
the Departments’ conclusion that an
expansive implementation of these
requirements will be the most effective
manner in which to reasonably ensure
that the impact will be spread across all
markets, rather than isolated to
particular geographic areas, markets, or
groups of consumers. The goal of the
final rules is to expand access to price
transparency information among the
public, which will not be realized
without an expansive implementation.
The Departments are concerned that if
pricing information for group health
plans and insurance in the individual
and group markets is not made available
to the public or is made public in a
piecemeal fashion, there will be little
incentive for health care researchers,
third-party application developers, or
other industry actors to invest scarce
resources into a tool that will only offer
regional or otherwise limited pricing
data. Other stakeholders, such as
researchers and regulators, would also
find incomplete pricing information less
useful to their efforts to better
understand, better oversee, and develop
innovations in the health care markets.
Finally, the Departments are concerned
that limiting the implementation of this
rule, by scope or by geographic market
area, will limit the impact for the
millions of consumers (both individuals
and employers) who are expected to
benefit from the public disclosures
required through the final rules.
Consumers located in a geographic
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market where data would not be made
available under a more limited
requirement would not experience any
benefit from the availability of
actionable pricing information in other
markets. Even those consumers located
in geographic markets where pricing
information would be made available
under a more limited requirement
would likely experience more limited
benefits than with a market-wide
requirement to release pricing
information because these consumers
would likely not have access to tools
developed by third-party application
developers. These consumers would
also be less likely to experience
downstream benefits from contributions
expected from other stakeholders, such
as researchers and regulators.
In addition to establishing a
preference for establishing market-wide
rules, in the preamble to the proposed
rules, the Departments explained the
importance of timely action to increase
transparency.159 The Departments
observed that continuously rising health
care costs and increases in out-of-pocket
liability, without transparent,
meaningful information about health
care pricing, have left consumers poorly
equipped to make cost-conscious
decisions when purchasing health care
items and services. In addition,
consumers across all markets should
come to expect and receive the same
access to standardized pricing
information and estimates. This broader
applicability also has the greatest
potential to reform health care markets.
The Departments recognized the need
for a faster and nimbler approach to
addressing the pressing issue of rising
health care prices. For these reasons, the
Departments are of the view that a pilot
approach in a specific geographic area
or an otherwise phased-in approach for
the requirement to publicly disclose
negotiated rates through the machinereadable files would not be sufficient to
meet the requirement for transparency
in coverage.
Because the Departments have
determined a need for an expansive
implementation of transparency in
coverage requirements, and for the
reasons discussed at length in response
to public comments, the final rules
adopt the requirement to publicly
disclose negotiated rates for all group
health plans and individual and group
market issuers, regardless of geographic
market.
159 84
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Scope of Pricing Information To Be
Made Publicly Available
Several commenters explicitly
supported public disclosure of
negotiated rates and out-of-network
allowed amounts for all items and
services. However, other commenters
recommended the Departments limit the
items and services to only the most
common items and services or a narrow
set of shoppable services in order to
make the machine-readable files more
meaningful to consumers. Another
commenter did not support the
negotiated rate disclosure proposals, but
acknowledged that disclosure of rates
for a subset of shoppable services would
be manageable, could allow issuers to
account for innovative payment
arrangements, and could be used to
gather empirical evidence on the impact
of transparency on the health care
markets.
The Departments understand that
requiring plans and issuers to include
all items and services in the machinereadable files could produce large data
sets that could be cumbersome and may
be costlier to maintain than a more
limited file of shoppable services.
However, the Departments are of the
view that release of this information for
all items and services, as proposed, is
crucial for advancing the key objectives
of the final rules to spur innovation,
increase competition, and empower
consumer activities in the health
insurance markets. The Departments are
of the view that limiting the data in the
machine-readable files would
undermine efforts to achieve these
objectives. In particular, the
Departments are concerned that if the
requirement were to be modified to
apply to only a shoppable subset of
items and services, then third-party
application developers may not be as
interested in innovating in this area.
Furthermore, the Departments are of
the view that efficiencies will be gained
after initial development of these files.
Although the initial implementation
burden for some plans and issuers may
be sizeable, future releases of data could
be automated, greatly reducing the
burden in subsequent years.
One commenter stated the type of
data being required to be disclosed is
prohibited from disclosure by CMS for
laboratory services under section 1834A
of the SSA, which requires CMS to keep
confidential payer rates reported by
applicable laboratories. The commenter
stated section 1834A of the SSA should
also apply to disclosure of similar
information by health plans.
Section 1834A of the SSA is
applicable to reporting of private sector
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payment rates for the limited purpose of
establishing Medicare reimbursement
rates for laboratory services. Section
1834A protects the confidentiality of
information disclosed to HHS by a
laboratory and prohibits the Secretary of
HHS or a Medicare contractor from
disclosing the information in a manner
that identifies the particular payer or
laboratory, identifies the prices charged,
or identifies the payments made to any
such laboratory notwithstanding any
other provision of law. The
confidentiality protections of the data
required to be disclosed to HHS under
section 1834A protects laboratories and
payers from re-disclosure by HHS and
Medicare contracts. These protections
are not applicable to the public
disclosures required under the final
rules. First, the final rules require plans
and issuers to publicly disclose innetwork providers’ negotiated rates and
out-of-network providers’ allowed
amounts for all covered items and
services. These disclosures must be
made through machine-readable files
posted in a public location on a plan or
issuer’s website. HHS or contractors of
HHS will have no active role in
publicizing the information required to
be public through the final rules.
Second, the confidentiality
requirements in section 1834A are
applicable ‘‘notwithstanding any other
provision of law.’’ The public disclosure
requirements in the final rules are being
finalized through an exercise of specific
authority under section
1311(e)(3)(A)(vii) and (ix) of PPACA (as
applied to plans and issuers in the
individual and group markets through
section 2715A of the PHS Act). Even if
the public disclosures were to be subject
to section 1834A of the SSA, the
confidentiality provision of section
1834A would not be applicable because
the public disclosure requirements
established under the final rules are
required by an exercise of authority
under a separate provision of law. For
these reasons, and because laboratory
services fall within the scope of all
covered items and services, the final
rules clarify that disclosure by plans
and issuers of pricing information for
laboratory services is required under the
final rules.
As discussed earlier in this preamble,
the Departments are modifying the
proposed requirements relating to
inclusion of all items and services in the
internet-based self-service tool. For the
internet-based self-service tool, 26 CFR
54.9815–2715A2, 29 CFR 2590.715–
2715A2, and 45 CFR 147.211 adopt a
phased-in approach under which plans
and issuers are required to include only
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include a subset of items and services
during the initial year of
implementation. However, plans and
issuers will still eventually be required
to include all covered items and
services in their internet-based selfservice tools in order to meet the
requirements of the final rules. The
Departments are of the view that a
similar phased-in approach for the
machine-readable files is not necessary
and would not support the achievement
of the goals of the final rules.
For these reasons, the final rules
adopt, as proposed, the requirement to
include all covered items and services,
including prescription drugs, in the
public disclosures required to be made
through the machine-readable files.
One commenter made the point that
in order to provide meaningful
transparency to consumers, as well as to
address the issues of inconsistent
pricing among hospitals in particular,
the Departments should require public
disclosure of data related to pricing in
addition to the negotiated rate. The
commenter stated the data elements
should include the following: Number
of procedures performed by the provider
in the reported period, number of bed
days, total billed charges in the
reporting period, total amount received/
paid for services in the reporting period,
mean billed charged amount, mean
accepted amount, median billed charged
amount, mean accepted amount, median
billed charged amount, median accepted
payment, minimum billed charged
amount, maximum billed charged
amount, minimum accepted payment,
and maximum accepted payment.
A goal of the final rules is to provide
transparency for all covered health care
items and services. To this end, the final
rules’ public disclosures are tailored to
require only certain critical pricing
information that the Departments view
as most likely to achieve this goal, while
minimizing the burdens for plans and
issuers of producing and maintaining
the information. Requiring additional
data elements, such as those listed by
the commenter, would introduce an
increased level of complexity to the
machine-readable files and increase the
burden of making the public
disclosures.
Additionally, the Departments are of
the view that it would be unnecessarily
burdensome to isolate hospital pricing
information for additional disclosure
when hospitals already have separate
price transparency disclosure
obligations. As discussed elsewhere in
this preamble, the Hospital Price
Transparency final rule requires
hospitals to make public their standard
charges for items or services they
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provide.160 The Hospital Price
Transparency final rule requires
disclosure of five types of standard
charges:
• The gross charge (the charge for an
individual item or service that is
reflected on a hospital’s chargemaster
absent any discounts);
• the discounted cash price (the
charge that applies to an individual who
pays cash, or cash equivalent, for a
hospital item or service);
• the payer-specific negotiated charge
(the charge that a hospital has
negotiated with a third-party payer for
an item or service);
• the de-identified minimum
negotiated charge (the lowest charge
that a hospital has negotiated with all
third-party payers for an item or
service); and
• the de-identified maximum
negotiated charge (the highest charge
that a hospital has negotiated with all
third-party payers for an item or
service).
The Departments are of the view that
the public disclosure requirements for
hospitals under the Hospital Price
Transparency final rule, in combination
with the public disclosure requirements
of the final rules, will address the
concern raised by one commenter
regarding inconsistent pricing among
hospitals. The disclosure required for
hospitals under the Hospital Price
Transparency final rule will help
provide local and more specific pricing
information through the availability of
information on five types of standard
charges, but the information will only
be made publicly available for the items
and services that hospitals provide. The
final rules supplement this information
by providing information related to
negotiated rates or derived amounts and
allowed amounts for all covered items
and services. Thus, the final rules will
provide a window into pricing for all
items and services, while the Hospital
Price Transparency final rule requires
disclosure of more specific pricing
information for the items and services
provided by hospitals. Finally, the final
rules also supplement the Hospital Price
Transparency final rule because the
final rules make the information for all
contracted network hospitals available
from one plan or issuer in a single,
centralized file. Therefore, the final
rules permit consumers—especially
when using third-party web-based
tools—to more readily compare hospital
rates within and across plans and
issuers.
Several commenters expressed
concerns about participant, beneficiary,
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and enrollee privacy related to the
proposed disclosures of negotiated rates
and allowed amounts. Some
commenters expressed concerns about
how third-party developers or other
downstream entities would use and
protect participant, beneficiary, and
enrollee data. They noted that even
though the Departments’ disclosure
requirements do not include PHI,
patients could be enticed to share
personal data with third-party
developers and other secondary entities
who could potentially use the
information to re-identify consumers.
Some commenters stated that parties not
subject to HIPAA could seek to
commercialize consumers’ information.
One commenter suggested the
Departments look to HCCI as an
example of how de-identified data can
advance the goals of transparency,
which could mitigate concerns about
proprietary information while
maintaining meaningful, granular
information that illuminates price
variation in the health care system.
One commenter stated that the
Departments should consider the
proposed rules in the context of other
HHS rules related to the interoperability
of data and delay the implementation of
all such rules until HHS develops
consumer privacy and protection
requirements for third-party
applications developed by non-HIPAAcovered entities. Another commenter
recommended that, if the rules are
finalized without additional privacy
protections, the Departments should
conduct an educational campaign to
inform consumers of the consequences
of providing information to third-party
application developers. A commenter
also expressed national security
concerns regarding the machinereadable files, noting that the health
status of Americans is a valuable
commodity for foreign intelligence
services.
The Departments acknowledge
commenters’ concerns about third-party
application developers and other
entities gaining access to personally
identifiable information (PII) and PHI
through consumer use of online
applications. The Departments further
acknowledge comments that consumers
may not always fully understand how
their information, including sensitive
medical information, will be used or
stored by such third parties. However,
the Departments also acknowledge that
consumers have a right to access, use,
and share their own health information,
both generally and under HIPAA. The
Departments are also of the view that
there is ample evidence that consumers
require help to understand their health
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coverage, their out-of-pocket costs for
health care items and services, and how
their health care choices affect the
overall costs of their health coverage
and health care items and services.161
The final rules will allow access to data,
supplementary resources, and other
assistance consumers need to make
informed choices by fostering
innovation and offering access to tools
that consumers may use to make
informed health care choices.
The Departments likewise considered
evidence of significant consumer
reliance on the internet for all kinds of
information, but especially for health
information. In a study conducted by
the Pew internet & American Life
Project and published in July 2003,
researchers found that 80 percent of
internet users, or about 93 million
Americans, have searched for a healthrelated topic online, a 62 percent
increase since 2001.162 Popular search
topics included health insurance (25
percent); a particular doctor or hospital
(21 percent); and alternative treatments
(28 percent).163 By 2013, the number of
Americans searching for health
information online had nearly doubled
from 2003, to about 182 million
people.164 A 2018 study found a
significant correlation between the use
of online resources to obtain health
information and the decisions
consumers take concerning health care
services.165
The Departments are of the view that
many American consumers have some
experience with dealing with the
disclosure of sensitive health
information on the internet 166 and that
161 Arora, V., Moriates, C., and Shah, N. ‘‘The
Challenge of Understanding Health Care Costs and
Charges.’’ The American Medical Association
Journal of Ethics. November 2015. Available at:
https://journalofethics.ama-assn.org/article/
challenge-understanding-health-care-costs-andcharges/2015-11.
162 ‘‘Health Searches and email Have Become
More Commonplace, But There is Room for
Improvement in Searches and overall internet
access.’’ internet Health Resources. Pew Research
Center. July 16, 2003. Available at: https://
www.pewresearch.org/internet/2003/07/16/internethealth-resources/.
163 Id.
164 Fox, S., and Duggan, M. ‘‘Health Online
2013.’’ Pew Research Center. January 15, 2013.
Available at: https://www.pewresearch.org/internet/
2013/01/15/health-online-2013/.
165 Chen, Y. et al. ‘‘Health Information Obtained
From the internet and Changes in Medical Decision
Making: Questionnaire Development and CrossSectional Survey.’’ Journal of Medical internet
Research. Volume 20. No. 2. February 2017.
Available at: https://www.jmir.org/2018/2/e47/pdf.
166 Zhu, P., Shen, J., and Xu, M. ‘‘Patients’
Willingness to Share Information in Online Patient
Communities’’ Questionnaire Study.’’ Journal of
Medical internet Research. Volume 22. No. 4. April
2020. Available at: https://
pubmed.ncbi.nlm.nih.gov/32234698/.
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consumer reliance on the internet for
health care information will only
increase despite inherent privacy risks.
The Departments considered that
websites and internet applications that
collect consumer information provide
information through privacy policies
and terms of service that are available to
users of how their information may be
used and shared. Federal laws and
enforcement mechanisms are in place to
help protect consumers from unfair and
deceptive practices, including deceptive
data collection and the sale of data
collected without adequate consumer
notice.167 Given existing measures to
protect consumer privacy on the
internet, the Departments are of the
view that common internet privacy risks
should not operate to deprive
consumers of the information, tools, and
support they need to make informed
choices related to health care coverage,
providers, items, and services.
Even though the Departments are not
persuaded that privacy risks common to
the use of internet applications
outweigh the benefits of the disclosures
under these the final rules or the general
need for price transparency, ensuring
the privacy and security of consumer PII
and PHI is a top priority for the
Departments. The Departments will
work with plans and issuers to provide
information they can use to educate
participants, beneficiaries, and enrollees
about sharing their health information
with third party applications. This will
include information on about the roles
of Federal agencies such as the Office
for Civil Rights (OCR), the FTC, and
ONC, which already focus on ensuring
that consumer privacy rights and
interests are appropriately protected.
The Departments will encourage plans
167 ‘‘Privacy & Data Security Update: 2019.’’
United States Federal Trade Commission. Available
online at: https://www.ftc.gov/system/files/
documents/reports/privacy-data-security-update2019/2019-privacy-data-security-report-508.pdf; see
also ‘‘Privacy and Security Enforcement.’’ United
States Federal Trade Commission. Available at:
https://www.ftc.gov/news-events/media-resources/
protecting-consumer-privacy/privacy-securityenforcement (‘‘the FTC can and does take law
enforcement action to make sure that companies
live up to [the] promises’’ regarding how consumer
information will be safeguarded); see also
Complaint in United States v. Facebook, Case No.
19–cv–2184, U.S. District Court for the District of
Columbia. Available at: https://www.ftc.gov/system/
files/documents/cases/182_3109_facebook_
complaint_filed_7-24-19.pdf (FTC complaint
leading to a historic $5 billion fine for, among other
things, deceptive practices in violation of section
5(a) of the FTC Act where the social media
company failed to effectively disclose that
consumer information would also be used for
advertising). The referenced fine can be found at:
https://www.ftc.gov/news-events/press-releases/
2019/07/ftc-imposes-5-billion-penalty-sweepingnew-privacy-restrictions, last accessed Sep. 11, 2020
(press release announcing fine).
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and issuers to share this information
with their participants, beneficiaries,
and enrollees who might elect to share
health information with third-party
applications.
In finalizing the rules, the
Departments considered the large
number of consumers who have decided
to share personal information because
they have determined that the benefits
offered by an internet website or mobile
application outweigh potential risks to
their privacy. The Departments are of
the view that consumers will be able to
make similar determinations with
regard to applications that make use of
data to be disclosed through the
machine-readable files required by the
final rules.
As discussed earlier in the preamble
to the final rules, the Departments also
are not persuaded by the argument that
the disclosures required under the final
rules, or disclosures consumers may
make to applications that leverage the
data required, could introduce national
security concerns. First, the information
the Departments are requiring to be
disclosed through the machine-readable
files does not include PHI or PII.
Additionally, as discussed in more
detail later in this preamble, in an effort
to ensure that the disclosures balance
price transparency with the need to
protect privacy, the Departments have
modified the proposed rules to increase
the minimum disclosure threshold from
10 to 20 unique payment amounts,
where any historical payment amounts
connected to less than 20 claims for
payment would be omitted from the
machine-readable file containing out-ofnetwork allowed amounts and historical
billed charges (the Allowed Amount
File). The increase will further limit the
possibility that individual participants,
beneficiaries, and enrollees may be
identified through historical allowed
amount data. Second, the information a
consumer could share with applications
incorporating data required to be
disclosed through the final rules is not
significantly different from data
consumers already actively share
through similar applications. Therefore,
the Departments are not convinced there
are unique national security concerns
flowing from the disclosures required by
the final rules.
One commenter was concerned about
allowing third parties to use plan and
issuer information to provide cost and
pricing information to consumers
without those third parties being
obligated to provide accurate and
relevant information to consumers. The
accuracy of third-party internet-based
tools and applications will be important
to achieving the goals of transparency in
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coverage. However, the cost and pricing
information included in third-party
internet-based tools, and tools
developed by other secondary entities,
would only be as accurate as the public
disclosures made by plans and issuers.
Therefore, the Departments are of the
view that it is in the best interest of
plans and issuers to ensure data
accuracy through a robust quality
assurance process if they have concerns
about the accuracy of cost and pricing
information being provided to
consumers through third-party internetbased tools. Furthermore, nothing in the
final rules prohibits plans and issuers
from including comprehensive data
dictionaries and other supplementary
documentation along with the machinereadable files. Plans and issuers are also
free to provide plan-specific disclaimers
or clarifications regarding the
information they are required to
produce. Finally, the Departments
expect that consumers, plans, issuers,
and other health care stakeholders will
monitor third-party internet-based tools
for accuracy and will and report
concerns to the developer, the public,
and appropriate state and Federal
agencies, including the Departments, for
evaluation and potential action.
The Departments further expect that
market forces will act to weed out
applications that do not provide reliable
information. Consumers who use a
third-party application or other online
tools for health care decision support
and later conclude that the tool misled
or misinformed them will, at minimum,
cease use of the tool. Such consumers
are also likely to rate the application
poorly or leave unfavorable reviews,
reducing the likelihood that other
consumers who see the rating or review
will rely on the tool. Over time,
consumers and other stakeholders may
collectively identify the most accurate
and highest quality tools, while
reducing use of less accurate, unreliable
tools. The Departments also expect that
third-party tools will inform users of
limitations on the accuracy of their
information and will present relevant
disclaimers informing consumers that
any estimates of out-of-pocket liability
are not guarantees regarding consumer
liability for services. Tool users also will
have the opportunity to evaluate and
could attempt to confirm any cost
estimates provided by online tools by
contacting the plan, issuer, or health
care provider they ultimately choose
based on information provided by the
tool. Such measures will address the
risk that consumers will be led to
unreasonably rely on any cost estimate
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provided by a third-party tool to their
financial detriment.
The Departments are of the view that
it is in plans’, issuers’, and developers’
best interests to provide accurate
information. However, the Departments
will monitor the accuracy of the
information provided through thirdparty developers and secondary entities
and will take information obtained
through this monitoring into account for
future regulatory action or guidance, as
appropriate.
One commenter recommended that
any information made available to the
public should provide an explanation of
why the cost of care is variable among
hospitals. The commenter further
suggested the explanation reference
unique challenges faced by essential
hospitals that care for a larger
proportion of vulnerable patients.
Being mindful of the goal to provide
sufficient technical flexibility in the
formatting of the machine-readable files,
the Departments decline to require
plans and issuers to include specific
supplementary information beyond
reporting the data specified for the
machine-readable file formats. As noted
above, nothing in the final rules
prevents a plan or issuer from providing
supplementary materials, including
footnotes, disclaimers, data dictionaries,
and other explanatory language, as
accompaniments with the machinereadable files. The Departments are of
the view that any additional context
around the machine-readable files that
can be provided through supplementary
materials are likely to be a benefit to
consumers and others who seek to
understand and use the data contained
in the machine-readable files. The
Departments recommend plans and
issuers work closely with providers,
consumers, developers, community
leaders, and other stakeholders to
ensure that all perspectives are taken
into account when developing materials
supplemental to the machine-readable
files. While declining to require plans
and issuers to include a specific
explanation for why the cost of care
could vary among hospitals, the
Departments acknowledge that this
information is an example of
appropriate explanatory language that
could accompany the machine-readable
files.
The final rules adopt, with
modifications, the requirements that
plans and issuers publicly disclose
applicable in-network rates (including
negotiated rates, derived amounts, and
underlying fee schedule rates), out-ofnetwork allowed amounts for covered
items and services, including
prescription drugs, through machine-
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readable files. The final rules also adopt
the requirement that plans and issuers
publicly disclose in-network historical
net prices for covered prescription drugs
through a machine-readable file. In
recognition of the unique pricing
attributes of prescription drugs, the final
rules require the reporting of
information on prescription drugs that
would have been included in the Innetwork Rate File (referred to as the
Negotiated Rate File in the proposed
rules) in a separate machine-readable
file, as described later in this preamble.
The Departments continue to be of the
view that the release of this information
is appropriate and necessary to
empower consumers to make informed
decisions about their health care, spur
competition in health care markets, and
to slow or potentially reverse the rising
cost of health care items and services.
The Departments stated the intention
in the proposed rules to make available
non-substantive technical
implementation guidance through the
collaborative GitHub platform (an
online hosting platform for development
and source code management that
permits version control), which will
facilitate further technical assistance in
addressing how unique plan designs can
comply with the requirements of the
final rules, as needed. The Departments
received comments that supported the
Departments’ development of specific
technical standards for the files to
which plans and issuers must adhere.
One commenter recommended the
Departments provide guidance to plan
sponsors who are able to provide some,
but not all, of the file data elements.
Another commenter stated that the
proposed rules do not make clear how
to report items and services provided
through capitated and bundled payment
arrangements in the files; noting that
this information is necessary for
consumers to measure provider value.
One commenter supported the
Departments’ statement that it would
provide technical implementation
guidance for the files but requested a
robust public comment solicitation far
in advance of the applicability date for
the rules.
The Departments are of the view that
providing specific technical direction in
separate technical implementation
guidance, rather than in the final rules,
will better enable the Departments to
update the file technical requirements to
keep pace with and respond to
technological developments. The
Departments note that the technical
implementation guidance is intended to
facilitate a collaborative effort between
the Departments and plans and issuers
in order for plans and issuers to meet
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the public disclosure requirements of
the final rules, while providing
flexibility to account for unique IT
systems, and issuer and plan attributes.
To the extent a plan’s or issuer’s unique
attributes (such as use of an alternative
contracting model) are not addressed
sufficiently through the technical
implementation guidance, the
Departments intend to provide targeted
technical assistance to help ensure all
plans and issuers are able to meet the
public disclosure requirements under
the final rules. Therefore, the
Departments are developing technical
implementation guidance for plans and
issuers, which will be available on
GitHub, to assist them in developing the
machine-readable files.
In the proposed rules, the
Departments indicated that minimum
requirements for standardized data
elements would be necessary to ensure
users would have access to accurate and
useful pricing information. Without
such baseline requirements, the
negotiated rate and allowed amount
data for out-of-network services made
available by each group health plan and
health insurance issuer could vary
dramatically. This would further create
a disincentive to health care innovators
developing tools and resources to enable
consumers to accurately and
meaningfully use, understand, and
compare pricing information for covered
items and services across providers,
plans, and issuers. Accordingly, under
the proposed rules, a plan or issuer
would be required to publish two
machine-readable files. The first file
would include information regarding
rates negotiated with in-network
providers. The second file would
include historical data showing allowed
amounts for covered items and services
furnished by out-of-network providers.
The preamble to the proposed rules
referred to these files as the Negotiated
Rate File and the Allowed Amount File,
respectively. For the final rules, the file
referred to as the Negotiated Rate File in
the proposed rules has been renamed
the In-network Rate File to reflect
modifications made in the final rules to
ensure the file accommodates plans and
issuers operating under payment models
other than the fee-for-service (FFS)
model. The final rules adopt the
requirement to produce both the Innetwork Rate File and Allowed Amount
File with the modifications discussed
elsewhere in this preamble. As
previously discussed, the final rules
also adopt the requirement to produce
an additional file, referred to in this
preamble as the Prescription Drug File
through which plans and issuers are
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required to publicly disclose negotiated
rates and historical net prices connected
to prescription drugs.
As noted, the final rules modify the
In-network Rate File requirements to
clarify the expectations for reporting
negotiated rates (or comparable derived
amounts, which are explained in detail
later in this section) for plans and
issuers using alternative reimbursement
models. The final rules also clarify that
plans and issuers must include an
underlying fee schedule rate when one
is used to determine cost-sharing
liability, where that amount differs from
the negotiated rate (or comparable
derived amount) used to determine
provider reimbursement.
The final rules modify the Allowed
Amount File to clarify that it must also
include information related to billed
charges in addition to allowed amounts.
The final rules also finalize additional
requirements for the In-network Rate
File, Allowed Amount File, and
Prescription Drug File to require plans
and issuers to include a Place of Service
Code and a provider tax identification
number (TIN) in addition to the
provider NPI. These modifications are
discussed in more detail later in this
section of this preamble.
Specific Content Elements
In the proposed rule, the Departments
indicated that the Negotiated Rate File
and the Allowed Amount File would be
required to include content elements
discussed in this section of this
preamble. In the final rules, these
content elements continue to apply to
the In-network Rate File and the
Allowed Amount File, as well as to the
Prescription Drug File, except where
otherwise indicated.
a. First Content Element: Name and
Identifier for Each Coverage Option
The first content element that plans
and issuers will be required to include
in the machine-readable files is the
name and identifier for each coverage
option offered by a group health plan or
health insurance issuer. For the
identifier, the Departments proposed
that plans and issuers use their
Employer Identification Number (EIN)
or Health Insurance Oversight System
(HIOS) IDs, as applicable. The
Departments sought comment on
whether EINs and HIOS IDs are the
appropriate identifiers for this purpose.
The Departments also sought comment
on whether there are other plan or
issuer identifiers that should be
considered and adopted.
The Departments did not receive any
comments on this content element, and
the final rules adopt this provision with
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modifications to ensure clarity of the
expectations for reporting. As reflected
in the updated regulatory text, the
Departments are clarifying whether an
EIN or HIOS ID is applicable for this
element. Plans and issuers must include
their HIOS ID at the 14-digit product
level unless the plan or issuer does not
have a HIOS ID at the plan or product
level, in which case the plan or issuer
must use the HIOS ID at the 5-digit
issuer level. If a plan or issuer does not
have a HIOS ID, it must use its EIN.
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b. Second Content Element: Billing
Codes
The second content element that
plans and issuers will be required to
include in the machine-readable files is
any billing code consistent with the
definition of billing code provided in
the final rules, including:
• A CPT code,
• a Healthcare Common Procedure
Coding System (HCPCS) code,
• a DRG,
• a National Drug Code (NDC) (The
final rules define the NDC code as a
unique 10-digit or 11-digit 3-segment
number assigned by the Food and Drug
Administration (FDA), which provides a
universal product identifier for drugs in
the United States),168 or
• another common payer identifier
used by a plan or issuer, such as a
hospital revenue code, as applicable,
and a plain language description for
each billing code.
The Departments proposed to require
that plans and issuers associate each
negotiated rate or out-of-network
allowed amount with a CPT, HCPCS
code, DRG, NDC, or other common
payer identifier, as applicable, because
plans, issuers, and providers uniformly
understand these codes and commonly
use them for billing and paying claims
(including for both individual items and
services and items and services
provided under a bundled payment
arrangement). The Departments also
proposed that plans and issuers must
include plain language descriptions for
each billing code. In the case of items
and services that are associated with
common billing codes (such as the
HCPCS codes), the Departments
specified that the plan or issuer could
168 In the preamble to the HIPAA regulations,
HHS stated that it was adopting a uniform 11-digit
format to conform with customary practice used in
computer systems (65 FR 50314, 50329). (Aug. 17,
2000). The HIPAA 11-digit NDC format is
standardized such that the labeler code is always
5 digits, the product code is always 4 digits, and
the package code always 2 digits. To convert a 10digit NDC to an 11-digit HIPAA standard NDC, a
leading zero is added to the appropriate segment to
create the 11-digit configuration as defined above.
See 83 FR 38666 (Aug. 7, 2018).
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use the codes’ associated short text
description.
In order to ensure that the machinereadable files provide meaningful
information to consumers, as well as
other stakeholders, the final rules adopt
this content element as proposed, with
the following modifications. For clarity,
the regulation text is amended to
remove language that merely restated
the definition for the term ‘‘billing
code’’ for each machine-readable file.169
This modification has been made purely
to streamline the regulatory language,
and it does not substantively alter the
requirement to include a billing code,
except as otherwise noted in this
preamble. Additionally, along with
separating prescription drugs into a
separate machine-readable file, the final
rules include a modification that
clarifies that, in the case of prescription
drugs, plans and issuers may only use
the NDC as the billing code type
because, as discussed later in this
preamble, the accuracy of pricing
information for prescription drugs
requires precise and specific product
information, including package size and
manufacturer, which can only be
achieved through the use of the NDC
billing code. However, the Departments
recognize that prescription drug
products may be included in the Innetwork Rate File to the extent a plan
or issuer uses an alternative payment
arrangement, such as a bundled
payment arrangement that includes
prescription drugs. Therefore the final
rules clarify that the In-network Rate file
must include the required information
under paragraph (b)(1)(i) of the final
rules for all covered items and services,
except for prescription drugs that are
subject to a fee-for-service
reimbursement arrangement, which
would be reported in the prescription
drug machine-readable file pursuant to
paragraph (b)(1)(iii) of the final rules.
The final rules require plans and
issuers to include in the machinereadable files a billing code or other
code used to identify covered items or
services for purposes of claims
adjudication, payment, and cost-sharing
liability when making public the
disclosure required under 26 CFR
54.9815–2715A3, 29 CFR 2590.715–
2715A3, and 45 CFR 147.212. The final
rules adopt the requirement that plans
and issuers associate each amount
required to be reported with a CPT,
169 Specifically, the Departments have removed
the following language from billing code
requirements for the machine-readable files: ‘‘. . .
or other code used by the group health plan or
health insurance issuer to identify covered items or
services for purposes of claims adjudication and
payment.’’
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HCPCS, DRG, NDC, or other common
payer code identifier, as applicable,
because plans, issuers, and providers
uniformly understand these codes and
commonly use them for billing and
paying claims (including for both
individual items and services and for
bundled payment arrangement). As
provided by the definition of billing
code in the final rules, the Departments
intend to provide flexibility to plans
and issuers to make the data available
through the codes that they use for
billing services. While the final rules do
not require plans and issuers to use a
specific billing code (for example, CPT
codes) for making public the disclosures
required through the final rules,
definition of billing code states that it is
the code used by the plan or issuer ‘‘for
purposes of billing, adjudicating, and
paying claims for a covered item or
service.’’ Therefore, where a plan or
issuer uses a CPT code to identify a
covered item or service for purposes of
billing, adjudicating, and paying claims
for that covered item or service, then
they would need to use the CPT code in
order to make public the disclosure
required through the final rules for that
item or service.
One commenter recommended that
the negotiated rates should be clearly
stated in plain language that should be
easy to understand rather than provided
by billing codes through the machinereadable files. As an alternative, the
Departments received some comments
stating that the Departments should
require hospitals and health insurance
issuers to disclose all negotiated
reimbursements by International
Classification of Disease (ICD) code.
The preamble to the proposed rules
identified several common billing
codes, noting that the list provided was
not exhaustive. Further, the
Departments did not explicitly prohibit
including ICD–10 codes on the file. The
Departments note that nothing in the
final rules would constrain plans or
issuers from including ICD codes in the
machine-readable files when these
codes are used by the plan or issuer in
a manner that meets the definition of a
billing code in the final rules. In other
words, where the plan or issuer uses an
ICD code to identify health care items or
services for the purpose of billing,
adjudicating, and paying claims for a
covered item or service, the plan or
issuer may use the ICD code in the
machine-readable files. As discussed
earlier in this preamble, the
Departments intend to issue technical
implementation guidance; this guidance
will include sample file schemas for the
machine-readable files. To facilitate
identification of the billing code type,
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there will be an indicator in the file
schemas that will allow plans and
issuers to specify the particular type of
billing code entered for each data entry
in the machine-readable files.
The Departments are aware that some
covered items and services may not
have a corresponding HCPCS, ICD, DRG,
NDC or CPT code. The Departments
clarify that plans and issuers are still
required to include these covered items
and services in their machine-readable
files regardless of whether all
corresponding data elements are
available. When a covered item or
service does not have a corresponding
HCPCS, ICD, DRG, or CPT code
associated with an item or service, a
plan or issuer is permitted to choose its
own indicator or other method to
communicate to the public that there is
no corresponding code. In the
alternative, a plan or issuer is permitted
to use the code to be defined by the
Departments in technical
implementation guidance issued along
with the final rules that indicates that
an item or service is not defined.
At this time, the Departments have
concluded that the common data
requirements adopted by the final rules,
which include a requirement to include
a plain language description for each
billing code, provides consumers with
sufficient information to meaningfully
inform health care purchasing
decisions.
Regarding information about
prescription drug pricing, a commenter
also suggested that, in lieu of NDC or
HCPCS codes, a useful unit for reporting
for drugs would be the RxNorm concept
unique identifier (RxCUI).170 The
commenter suggested use of RxCUIs
because it would minimize burden by
reducing the list of entries (3,000 to
4,000 RxCUIs down from 100,000 active
NDCs) and because existing prescription
drug machine-readable file requirement
for Medicare Part D (Part D) and QHPs
use RxCUIs.
The Departments appreciate the
commenter’s alternative suggestion for
including prescription drug information
in the machine-readable files. The
Departments considered requiring
prescription drug pricing information
through an alternative identifier. The
Departments understand that an RxCUI
could minimize the burden on plans
and issuers by reducing the number of
codes required to be included in the
170 The
Departments note that the comments used
the term ‘‘Rx Common Unit Identifier’’ to identify
the full phrase for the RxCUI. The Departments
assume that this is a misnomer and that the
commenter was referring to RxNorm concept
unique identifier, which is the generally accepted
term for the acronym RxCUI.
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Prescription Drug File. RxCUI is a drug
naming system that is produced by the
National Library of Medicine (NLM),
and RxCUIs are unique identifiers,
which can represent multiple NDCs for
similar drug products with the same
brand name, active ingredient, strength
and dose form (for example, multiple
package sizes and/or manufacturers can
be represented by a single RxCUI). The
NDC, in contrast, is a unique 10-digit or
11-digit 3-segment number, which
provides a universal product identifier
for drugs in the United States. The three
segments of the NDC identify: The
labeler (any firm that manufactures the
drug); the product (specific strength,
dosage form, and formulation of a drug);
and the commercial package size and
types. As noted above, multiple NDCs
can be encompassed by one RxCUI,
which is why there are many fewer
RxCUI codes than NDCs. However, the
accuracy of pricing information requires
precise and specific product
information, including package size and
manufacturer. The Departments are
concerned that permitting drug pricing
information disclosures to be made
through RxCUIs would potentially lead
to inaccurate or misleading information
being provided to the consumer. If drug
pricing information is provided in the
machine-readable files in the form of
RxCUIs, then plans and issuers may not
be able to provide the manufacturer
negotiated rate, especially for those
RxCUIs that include NDCs from several
manufacturers.
Some commenters noted that, because
RxCUI is used by the Part D program
and in the QHP program, the
Departments should also require RxCUI
in the machine-readable file for
consistency across programs. While the
Departments acknowledge that RxCUI is
used in some contexts in both the Part
D and QHP programs, namely formulary
development, these programs do not
exclusively use RxCUI. Indeed, both the
Part D and QHP programs use NDC in
addition to RxCUI, and NDCs are more
generally used when information is
required to be submitted to CMS for
payment programs. For example, the
Part D program receives the NDC on
claims submitted by Part D plan
sponsors through Prescription Drug
Events (PDEs) and issuers in the
individual and small group market
include NDCs on claims data submitted
to issuers’ EDGE servers for HHS risk
adjustment purposes. In short, other
programs cited by commenters actually
use NDCs for prescription drugs data
submissions, particularly for payment
that is similar to the pricing data
required by the final rules. The
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Departments therefore conclude that
requiring use of NDCs for the
prescriptions drug pricing information
included in the machine-readable files
is consistent with the practices CMS
follows in other programs. Therefore, as
stated earlier, the Departments are
requiring that the only allowable billing
code for prescription drugs in the
machine-readable files is the NDC. The
Departments determined that the NDC
should be the required billing code for
the reasons stated above and because
the NDC is a standard billing code
required for prescription drug
transactions.
c. Third Content Element: In-Network
Applicable Amounts (Negotiated Rates,
Amounts in Underlying Fee Schedules,
and Derived Amounts); Out-of-Network
Allowed Amounts; or Negotiated Rates
and Historical Net Prices for
Prescription Drugs
The third-content element in the
machine-readable files depends on the
type of file: in-network amounts for the
In-network Rate File, allowed amounts
and historical billed charges for the
Allowed Amount File, or negotiated
rates and historical net prices for the
Prescription Drug File.
All Machine-Readable Files
The proposed rules specified that the
specific pricing information within each
file would have to be associated with a
provider identifier, specifically the
provider’s NPI. Some commenters
suggested additional data elements to
support accurately identifying the
provider through the machine-readable
files. One commenter recommended
that the Departments include the Place
of Service Code in the machine-readable
files. The commenter explained that this
data element would clarify prices when
provider entities associated with the
same NPI have multiple sites of service.
Place of Service Codes are CMSmaintained two-digit codes that are
placed on professional claims, including
Medicare, Medicaid, and private
insurance, to indicate the setting in
which a service was provided.171 The
Place of Service code set is required for
use in the implementation guide
adopted as the national standard for
electronic transmission of professional
health care claims under HIPAA.172
171 ‘‘Place of Service Code Set.’’ Centers for
Medicare & Medicaid Services. Available at: https://
www.cms.gov/Medicare/Coding/place-of-servicecodes/Place_of_Service_Code_Set.
172 ‘‘Place of Service Codes.’’ Centers for Medicare
& Medicaid Services. Available at: https://
www.cms.gov/Medicare/Coding/place-of-servicecodes.
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The Departments have considered this
comment and agree that, in addition to
NPI, including a Place of Service Code
is important where a provider could be
using the same NPI for multiple places
of service. For instance, the same
procedure from the same provider NPI
received at an ambulatory surgery center
(Place of Service Code 24) could have a
significantly different price if received
at an on-campus outpatient hospital
(Place of Service Code 22). The
Departments are of the view that being
able to identify the place of service
would be beneficial to consumers
seeking to rely on the machine-readable
files or third-party applications
developed using the information
publicly disclosed through the machinereadable files, in order to make health
care purchasing decisions. The
Departments are also of the view that
this data element will help provide
valuable insights regarding market
dynamics for researchers, employers,
regulators, and other files users. Because
the Place of Service Code is information
that must be included on a professional
medical claim, the Departments do not
foresee any issue with plans and issuers
including this data element in the
machine-readable files in addition to the
NPI. For these reasons, the Departments
are finalizing a requirement to include
the Place of Service Code in all three
machine-readable files.
In addition to the NPI and the Place
of Service Code, the Departments have
also become aware, through
independent research, that a provider’s
TIN can be relevant to communication
of accurate negotiated rates and allowed
amounts information. It is the
Departments’ understanding that
negotiated rates for items and services
are based on the unique combination of
a provider (NPI), service or item
location (Place of Service code), and the
TIN under which the provider is
furnishing the item or service. If the TIN
is not required in the file, the
Departments are concerned that plans
and issuers could report multiple
negotiated rates for the same NPI for the
same item or service without context to
identify the underlying source of the
difference. For example, if a provider
NPI has a relationship with two
different entities that have negotiated
rates and bills under both of these
entities, the same item or service for that
provider NPI could appear in the report
with two different negotiated rates.
Without the TIN, consumers of the file
would not be able to discern the reason
for the difference in the two distinct
negotiated rates. With the TIN,
consumers of the file could see that the
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provider is billing for the same services
under two separate entities. Therefore, if
this unique combination of NPI, Place of
Service Code, and TIN is not required,
the pricing information represented in
the machine-readable files might not
present a complete and accurate picture
of the market or provide consumers
with reliable data upon which to base
health care purchasing decisions. The
Departments are of the view that this
information is crucial to ensure that
consumers are ultimately receiving
location-specific pricing information
upon which they can rely to help make
informed health care purchasing
decisions. In order for the machinereadable files to provide meaningful and
actionable information, the final rules
adopt a modification to all three
machine-readable files, to require plans
and issuers to provide the provider TIN
in the file in addition to provider NPI
and the Place of Service Code.
The Departments have updated the
technical implementation guidance and
schemas for all three machine-readable
files, so that location-specific pricing
information can be provided in the
machine-readable files. This guidance
will also provide more details on how
the Place of Service Code, TIN, and NPI
should be reported in order to represent
the information for which public
disclosure is required through the
machine-readable files. The
Departments are aware that this
modification to the machine-readable
files will increase the complexity and
size of the machine-readable files and
have considered this additional burden
in the Information Collection Requests
(ICR) section of the of the final rules.
The benefits of including the Place of
Service Code and TIN outweigh the
costs, as the Departments are of the view
that location-specific pricing
information is critical to the
meaningfulness of these files for the
public.
Another commenter noted that using
NPIs to identify providers would make
it difficult for consumers to use the
machine-readable files because
consumers do not usually have NPI
information. The commenter stated that
it would also be useful for consumers
using the In-network Rate Files
(including the uninsured and those
shopping for alternative coverage) to
have access to public information that
lists the providers who participate in
local plan and issuer networks.
The Departments agree that including
provider names in the machine-readable
files in addition to NPIs would help
consumers and other stakeholders
review and use the machine-readable
files. However, the Departments have
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some concerns about requiring
inclusion of provider names in the files.
From a technical perspective, the
Departments are concerned that
inclusion of provider names, which do
not have a consistent character length
and can be quite long, will increase the
size of the machine-readable files and,
therefore, increase the burden of the
files for plans and issuers. Additionally,
provider names may include nonalphanumeric or other non-standard
character encoding types that could
interfere with the coding of the
machine-readable files and cause
defects. The Departments are concerned
that the additional quality assurance
procedures that plans and issuers would
need to implement in order to address
these issues could add even more
burden with limited benefit.
In addition, because the Departments
expect the greatest benefits of these
machine-readable files will be through
the innovative tools developed by third
parties, the Departments are of the view
that the lack of availability of provider
names in the machine-readable files is
not a significant concern. The
Departments anticipate that third-party
internet-based developers and other
secondary entities will be able to link
the NPIs in the machine-readable files to
publicly available provider information.
The Departments note that there are
several internet-based NPI lookup tools
available online, including CMS’s
National Plan & Provider Enumeration
System (NPPES) NPI registry.173
Nothing in the final rules prevents a
plan or issuer from linking to an NPI
lookup tool or providing more
information for consumers and other
stakeholders on its website through
supplementary materials supporting the
machine-readable files.
For these reasons, the final rules do
not require plans and issuers to include
provider names in addition to NPI,
TINs, and Place of Service Codes in the
three machine-readable files.
In-Network Rate File
The Departments finalize with
modifications the proposed requirement
that group health plans and health
insurance issuers publish as the third
content element negotiated rates in a
machine-readable file for all covered
items and services—except that the
Negotiated Rate File in the proposed
rules has been re-named the In-network
Rate File. With the exception of
information relevant to prescription
drug products that are included as part
173 CMS’s NPPES registry is available online at
the following website address: https://
npiregistry.cms.hhs.gov/.
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of an alternative payment arrangement
(such as a bundled payment
arrangement), the In-network Rate File
will exclude information relevant to
prescription drugs, as that information
will be provided in the third machinereadable file. Based on comments and
technical expertise within the agencies,
the Departments have made
modifications to clarify the expectations
for reporting negotiated rates (or
comparable derived amounts as
explained elsewhere in this section) for
plans and issuers using alternative
reimbursement models for health care
items and services. These modifications
also clarify that plans and issuers must
include an underlying fee schedule rate
when one is used to determine costsharing liability, where that amount
differs from the negotiated rate (or
comparable derived amount) used to
determine provider reimbursement. The
Departments also finalize this change to
reflect other modifications to the
proposed rules meant to ensure the
required In-network Rate File
accommodates plans and issuers
operating under payment models other
than a standard fee-for-service (FFS)
model.
In the proposed rules, the third
content element was negotiated rates
under a plan or coverage regarding each
covered item or service, including
prescription drugs furnished by innetwork providers. To the extent a plan
or issuer reimburses providers for an
item or service based on a formula or
reference based-pricing (such as a
percentage of a Medicare reimbursement
rate), the proposed rules would have
required the plan or issuer to provide
the calculated dollar amount of the
negotiated rate for each provider.
In the proposed rules, the
Departments expressed the
understanding that some plans and
issuers do not vary negotiated rates
across in-network providers. For
instance, some plans and issuers have a
negotiated rate that applies to every
provider in a certain network tier. In
such a case, the Departments proposed
to require the plan or issuer to provide
the negotiated rate for a covered item or
service separately for every provider
that participates in that tier of the
network. If the plan or issuer reimburses
for certain items and services (for
example, maternity care and childbirth)
through a bundled payment
arrangement, the Departments proposed
to require the plan or issuer to identify
the bundle of items and services by the
relevant billing code.
The Departments also proposed to
require plans and issuers to include the
last date of the contract term for each
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provider-specific negotiated rate that
applies to each item or service
(including rates for both individual and
bundled items and services).
Several commenters suggested
modifications to the requirement for
public disclosure of negotiated rates,
which they claimed would help mitigate
the risk of unintended consequences,
such as anticompetitive practices and
increased health care prices.
Commenters suggested that the final
rules require plans and issuers to
disclose the median rate or lowest
negotiated rate instead of negotiated
rates. Other commenters also expressed
the opinion that information presented
as summary or aggregated data would be
more helpful for consumers. One of
these comments noted that this could be
achieved through plans identifying a
range of in-network rates for common
services.
The Departments considered
modifying the requirement to require
plans and issuers to report the median
negotiated rate, the lowest negotiated
rate, or some other aggregated
negotiated rate. The Departments noted
in the proposed rules that consumers,
researchers, and regulators gaining
access to pricing information, including
information on the variation in prices,
could place downward pressure on
health care prices and reduce overall
health care spending, which is one of
the goals of the final rules. The
Departments are concerned that using
an aggregated or otherwise summarized
rate would not sufficiently address
issues of pricing variation and could
undermine other goals of price
transparency efforts. A median or
summarized rate would not be as
reliable for insured or uninsured
consumers to use when making health
care purchasing decisions as it is
individual prices upon which these
consumers must rely to make health
care purchasing decisions. Under
standard economic theory, it is
individual prices, and consumers’
responses to those prices, that drive
market forces. If the public disclosures
do not include specific individual
prices for in-network items and services,
consumers may not have actionable
information upon which to rely to make
specific decisions.174 A median or
summarized rate would not address the
issue of price variation or dispersion, as
it would mask the variation in a given
geographic area.175 Additionally, a
174 Stigler, G. ‘‘The Economics of Information.’’
The Journal of Political Economy. Volume 69. Issue
3. June 1961. Available at https://
home.uchicago.edu/∼vlima/courses/econ200/
spring01/stigler.pdf.
175 Id.
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median or summarized rate could mask
the differences between plans and
coverages in a manner incompatible
with drawing comparisons between
coverage options. Therefore, the
Departments are of the view that release
of alternative data points, such as
aggregated negotiated rates, or other
summarized forms of negotiated rates,
would not sufficiently advance the price
transparency efforts and could
undermine the intended impacts of the
In-network Rate File.
Commenters suggested the
Departments limit the requirement for
public disclosure of negotiated rate
information in a way that protects plans
and issuers from reverse engineering
specific rates. For example, a
commenter suggested the Departments
limit the disclosure to plans and
employer plan sponsors, while another
commenter suggested that the final rules
require plans and issuers to provide
limited information to the public, such
as statistical ranges, or rates
distributions and require the provision
of more detailed information to other
stakeholders.
The Departments considered limiting
these disclosures by stakeholder type
such that the disclosure of the most
detailed information to the widespread
public would be more limited. The
Departments’ determined that these
limitations would conflict with the
statute, which requires public
disclosure, and the goals of the final
rules. The Departments’ goal is to
empower consumers through the
disclosure of actionable pricing
information through the In-network Rate
Files, as translated into consumerfriendly tools by third-party application
developers.
Some commenters expressed the view
that public disclosure of rates by plans
and issuers with alternative
reimbursement models should be
required and suggested the Departments
work with stakeholders to establish
requirements that are consistent with
innovative payment models. One
commenter stated that the Departments
should not exclude from the negotiated
file requirements plans with
reimbursement arrangements different
from FFS arrangements, such as plans
with reimbursements based on a
capitated amount or a value-based
agreement. Some commenters noted that
the release of negotiated rates places
emphasis on FFS provider contracting
and may hinder innovation in
alternative payment contracting models,
such as value-based contracting.
The Departments received some
comments on how the Departments
could require plans and issuers to report
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capitated and bundled payment
arrangements through the In-network
Rate File. One commenter noted that
plans with a capitated arrangement
should be able to assign a price to items
and services based on an internal
methodology. The commenter observed
that plans with capitated payment
arrangements must assign prices for
purposes of submission of claims in
support of the HHS risk adjustment
program under 45 CFR 153.710(c). Some
commenters, however, argued that
implementing some aspects of the
proposed rules would not be feasible,
such as listing prices for qualityadjusted and risk-adjusted contracts,
which can only be calculated after the
fact.
By contrast, other commenters did not
support a requirement for plans and
issuers with alternative reimbursement
arrangements to make public the
disclosures required through the Innetwork Rate File. Commenters stated
that releasing negotiated rate
information for bundled or capitation
arrangements would be a significant
operational burden and could lead to
inaccuracies and misinformed
consumers. For example, several
commenters noted that the entire suite
of services that a consumer might need
to look up for an episode of care is not
known to patients or providers prior to
the receipt of care. Another commenter
noted that the information could be
misleading to consumers because prices
may not include the services provided
by all providers that are involved in a
patient’s hospital care such as surgeons
and anesthesiologists.
The Departments agree that plans and
issuers that use alternative
reimbursement arrangements should
still be subject to requirements to
disclose rates through the In-network
Rate File. Nowhere in the proposed
rules did the Departments indicate that
only plans and issuers that reimburse on
a standard FFS model would be
required to make public the disclosure
of negotiated rates. As evidenced by the
discussion of reporting of bundled
payment arrangements and plans and
issuers using alternative reimbursement
models such as formula-based or
reference-based pricing in the proposed
rules, the Departments intended the
disclosures required through the final
rules to apply to all plans and issuers,
regardless of reimbursement model. The
Departments clarify that plans and
issuers that reimburse providers on a
basis that is different from a standard
FFS model would still be required to
make public the disclosures of innetwork negotiated rates, out-of-network
allowed amounts and prices for
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prescription drugs as required by the
final rules.
Later in this preamble, the
Departments have summarized the
general reporting expectations for
several alternative reimbursement
models, including bundled payment
arrangements and capitation
arrangements (including sole capitation
arrangements and partial capitation
arrangements), reference-based pricing
without a defined network, referencebased pricing with a defined network,
and value-based purchasing. This
summary is not meant to be exhaustive,
as the Departments are aware that other
alternative reimbursement or
contracting models exist. However,
before clarifying how these payment
arrangements would work under the
final rules, the Departments note
modifications to the requirements for
the pricing information that must be
publicly disclosed through the Innetwork Rate File.
Some commenters stated that the
proposed rules did not acknowledge
that negotiated rates alone provide an
inaccurate or incomplete picture of
health care item and service pricing. In
response, the Departments conducted
additional research to understand how
the final rules could require the
appropriate level of detail in the Innetwork Rate File and provide a more
complete and transparent picture of
prices of health care items and services.
In response to comments, and as a result
of this additional research, the
Departments are modifying the language
describing the requirement for the
pricing information that must be
publicly disclosed through the file.
Specifically, the Departments are
clarifying that the In-network Rate File
should include all applicable rates, even
where not referred to as negotiated rates.
As described in the final rules, this
could include negotiated rates, an
underlying fee schedule rate or, derived
amounts, as applicable. These
modifications are intended to clarify
disclosure requirements for plans and
issuers that use alternative
reimbursement arrangements and to
ensure that the rates upon which
consumer cost-sharing liability is
determined as well as negotiated rates
are publicly disclosed through the Innetwork Rate File. The Departments are
of the view that this approach is
consistent with the goals of
transparency as outlined in the
proposed rules because it ensures that
the In-network Rate File will be both
meaningful for consumers and requires
transparency in price disclosures that
will promote increased competition in
health care markets. Without this
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clarification, the In-network Rate File
could have potentially excluded rates
that are used to determine cost-sharing
liability, which is essential information
upon which consumers would need to
rely to make health care purchasing
decisions. Further, retaining as
proposed the requirement to include the
negotiated rates that plans and issuers
use to determine provider
reimbursement is crucial to price
transparency efforts, which will help
foster competition and lower prices.
Public disclosure of negotiated rates and
derived amounts will also support
research and regulatory oversight. For
example, this information will help
researchers evaluate alternative
payment models in relation to the
traditional FFS payment model, which
could help spur more innovation in
health care markets. State regulators
will also be able to gain further insight
into the various payment models, which
would support general oversight of
plans and issuers using different
payment models, and could support
market reform efforts.
One commenter noted that plans and
issuers that use capitated
reimbursement arrangements may
assign prices to items and services as a
normal course of business. Thus, they
should be able to disclose those prices
as part of the In-network Rate File. The
Departments agree. The final rules
require a plan or issuer that does not
have a negotiated rate to disclose a
‘‘derived amount,’’ which is defined as
the price that a plan or issuer assigns an
item or service for the purpose of
internal accounting, reconciliation with
providers, or for the purpose of
submitting data in accordance with the
requirements of 45 CFR 153.710(c).
Title 45 CFR 153.710(c) sets forth a
process through which capitated plans
that do not generate individual enrollee
claims in the normal course of business
must submit data for the purpose of the
HHS-operated risk adjustment
program.176 As stated in the preamble to
the HHS Notice of Benefit and Payment
Parameters for 2014 final rule, many
capitated plans currently use some form
of encounter data pricing methodology
to derive claims’ prices, often by
imputing an amount based upon the
Medicare fee-for-service equivalent
price or the usual, customary, and
reasonable equivalent that would have
been paid for the service in the
applicable state market risk pool.177 For
176 HHS has operated the risk adjustment program
for the individual and small group markets under
section 1343 of PPACA on behalf of all states and
the District of Columbia since the 2017 benefit year.
177 78 FR 15410, 15499–15500 (Mar. 11, 2013).
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the purposes of 45 CFR 153.710(c), an
issuer offering a capitated plan is
required to use its principal internal
methodology for pricing those
encounters for purposes of submitting
risk adjustment data, such as the
methodology in use for other State or
Federal programs (for example, a
methodology used for the Medicare
Advantage market).178 If an issuer,
including an issuer of a capitated risk
adjustment covered plan, has no such
methodology, or has an incomplete
methodology, it must supplement the
methodology in a manner that yields
derived claims that are reasonable in
light of the specific market that the plan
is serving. Given these requirements
under 45 CFR 153.710(c), the
Departments are of the view that most
issuers offering capitated plans that do
not process claims on an individual
basis, and therefore do not have
negotiated rates, will have a derived
amount.
The Departments acknowledge that 45
CFR 153.710(c)does not apply to group
health plans or all health insurance
issuers subject to these rules and so they
may not calculate derived amounts for
this purpose. The final rules do not
require plans or issuers to develop a
new methodology for providing derived
amounts if the plan or issuer does not
have an existing methodology used in
the normal course of business.
Therefore, the final rules require plans
and issuers that do not have a
negotiated rate to provide a derived
amount, to the extent these amounts are
already calculated in the normal course
of business. Where a plan or issuer does
not have a derived amount calculated in
the normal course of business, they are
not required to provide a derived
amount.
The Departments also note that under
the final rules, where a plan or issuer
includes in the In-network Rate File a
comparable derived amount in lieu of
the negotiated rate (for example, under
a capitation arrangement where a
specific negotiated rate is not available
for a particular item or service), they
will be required to add a notation to the
machine-readable files indicating that
the rate is subject to an alternative
payment arrangement. The Departments
are also aware that some plan and issuer
contracting models use a mixture of
approaches and note that plans and
issuers should follow the general
guidelines (to be provided by the
Departments in the technical
implementation guidance) based on
how a particular covered item or service
178 Id., see also 78 FR 15410, 15470–71 (Mar. 11,
2013).
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is reimbursed where a mixture of
approaches is used in the same plan or
coverage.
The final rules clarify that, where
plans and issuers use negotiated rates or
a comparable derived amount and an
underlying fee schedule rate as defined
in the final rules, they are required to
report both the negotiated rate or
comparable derived amount and the
underlying fee schedule rate used for
that item or service. Therefore, the
Departments are also modifying the Innetwork Rate File to require public
disclosure of an underlying fee schedule
rate, when applicable. The Departments
are aware that under some
reimbursement models, one set of
negotiated rates is used for provider
reimbursement (or comparable derived
amounts are used for internal
accounting purposes) and another set of
rates, referred to in the final rules as an
underlying fee schedule rate, is used for
determining consumer cost-sharing
liability. The Departments view the
modification to the In-network Rate File
to require public disclosure of an
underlying fee schedule rate important
to ensuring the public disclosures
required through the rules include
transparency in the prices used by all
plans and issuers in making
determinations of consumer costsharing liability. The final rules define
the underlying fee schedule rates as the
rate for an item or service that a plan or
issuer uses to determine a participant’s,
beneficiary’s, or enrollee’s cost-sharing
liability from a particular provider or
providers, when that rate is different
from the negotiated rate. For instance,
under certain capitation payments
which reimburse a provider a PMPM
rate, the PMPM rate would be the
negotiated rate. However, the plan or
issuer would also have assigned a price
for an item or service from that provider
for the purpose determining costsharing liability; that amount is the
underlying fee schedule rate. Therefore,
in this example, in the In-network Rate
File, the plan or issuer would be
required to report the negotiated rate,
which in this case is the PMPM rate,
and the underlying fee schedule rate
used to determine cost-sharing liability.
In the final rules, plans and issuers
are required to disclose only those rates
that are applicable to their particular
reimbursement arrangement model. If a
plan or issuer only uses one rate for
determining both provider
reimbursement and consumer costsharing liability, then only that rate
would be applicable to the plan or
issuer, and therefore required to be
disclosed through the In-network Rate
File. Where a plan or issuer uses an
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alternative reimbursement arrangement
and does not have a negotiated rate, as
defined in the final rules, the plan or
issuer would be required to publicly
disclose through the In-network Rate
File the derived amount, to the extent
the plan or issuer generates such an
amount in the normal course of
business. If a plan or issuer has a
negotiated rate or a derived amount but
does not also use that applicable rate to
make determinations of consumer costsharing liability, then the plan or issuer
would be required to publicly disclose
both the negotiated rate or derived
amount and the underlying fee schedule
rate used to determine consumer costsharing liability.
The Departments note that, while a
scenario where a plan or issuer uses
both negotiated rates or a comparable
derived amount and an underlying fee
schedule rate in their operations is more
likely to occur under an alternative
reimbursement model, it is possible to
have both a negotiated rate and an
underlying fee schedule rate in an FFS
reimbursement arrangement. Such a
scenario is possible where a plan that
uses a traditional negotiated rate to
reimburse a provider for a particular
covered item or service and bases
participant, beneficiary, or enrollee costsharing liability upon a different rate for
the same item or service.
Under bundled payment
arrangements, plans and issuers may
reimburse a provider for multiple
services and items under a single billing
code. Under these arrangements, plans
and issuers should provide a negotiated
rate (or comparable derived amount) for
that single billing code and list the
items and services, including
prescription drugs, that are included in
that bundle. If a negotiated rate (or
comparable derived amount) exists for
each item and service, including
prescription drugs, within the bundle,
the plan or issuer should include the
negotiated rate for the total bundle and
also include in the In-network Rate File
the respective negotiated rates (or
comparable derived amount) for all
covered items or services included in
the bundle.
It is the Departments’ understanding
that, if the bundled payment
arrangement exists to the exclusion of
any reimbursement arrangement for the
underlying services and items, payers
and providers often continue to track,
for purposes of informing renegotiation
of the bundle, reimbursement at the
level of the individual item or service
using a derived amount. For the Innetwork Rate File, plans and issuers
with this type of model are required to
disclose the negotiated rate for the total
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bundle and the derived amounts for
individual items or services in the
bundled payment arrangement. If a
derived amount for these purposes does
not exist, then plans and issuers would
not be required to report a derived
amount. Where a plan or issuer uses a
derived amount or reasonable estimate
in lieu of the negotiated rate, they will
be required to add a notation to the
machine-readable files indicating that
the rate is subject to an alternative
payment arrangement.
The Departments acknowledge that
there are many different types of
capitation models. As stated in the
example earlier, for capitation
arrangements that reimburse a provider
a capitated amount, such as a PMPM, or
a similar direct primary care
arrangement, the plan or issuer would
report the negotiated rate, which in this
case is the PMPM amount, and the
underlying fee schedule, as applicable.
Under certain other capitation models,
the provider’s capitation amount may be
weighted dependent upon certain
characteristics of the participant,
beneficiary, or enrollee, such as age,
gender, or co-morbidities. Plans and
issuers with this type of capitation
arrangement should provide the base
negotiated rate, which is the negotiated
rate before adjustments have been made
for certain participant, beneficiary, or
enrollee characteristics. Plans and
issuers using capitation arrangements
should notate any entry that represents
a capitated amount and list all items
and services, including prescription
drugs that are covered under a
particular capitation amount in the Innetwork Rate File.
In some cases, a sole capitation
arrangement exists, such as staff model
HMOs under which services are
provided by in-network salaried
providers and there are neither
negotiated rates nor an underlying fee
schedule rate. In this case, plans and
issuers are required to include a derived
amount in the In-network Rate File. If
an applicable rate (a negotiated rate,
derived amount, or underlying fee
schedule rate) does not exist for an item
or service, then plans and issuers are
not be required to report pricing
information for that particular item or
service.
The Departments are aware that some
plans and issuers use a partial
capitation model where the plan or
issuer reimburses providers under a
variable FFS amount in addition to a flat
capitation amount. The Departments
expect plans and issuers using a partial
capitation model to make public the
FFS negotiated rate as well as the
capitation amount. Plan and issuers
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must also add a notation to the file
indicating that a capitation arrangement
(or a partially capitated arrangement)
exists. For specific items and services
where plans and issuers using this
model do not have an FFS negotiated
rate in addition to a capitation amount
(that is, for items and services where
they do follow a full capitation model),
plans and issuers are required to follow
the reporting requirements described for
sole capitation arrangements.
Reference-based pricing without a
defined network is an arrangement
where payers reimburse providers based
on a percentage (usually 120 percent to
200 percent) of the Medicare rate, but do
not have contractual agreements with
providers. The Departments expect
there will be no In-network Rate File for
this type of arrangement because the
plan or issuer does not have in-network
providers as defined in the final rules.
By contrast, under a reference-based
pricing model with a defined network,
payers have contractual agreements to
reimburse providers based on a
percentage of a different rate that is
known or determinable by the parties
(usually 120 percent to 200 percent of
the Medicare rate), which is subject to
change based upon adjustments that can
be specific to the participant,
beneficiary, or enrollee, such as age,
gender, and severity of illness. To
represent this type of arrangement, and
other provider reimbursement models
that are based upon participant,
beneficiary, or enrollee-specific
adjustments, the final rules clarify that
plans and issuers are required to
include for each item or service in the
In-network Rate File, the base
negotiated rate that applies before
adjusting for participant, beneficiary, or
enrollee -specific characteristics. The
negotiated rate in the referenced-based
pricing model must be represented as a
dollar value that is the result of the
calculation of the referenced amount
and the applicable reference-based
percentage. For example, a plan
calculates provider reimbursement
using a reference-based pricing model
that sets reimbursement to Provider X at
120 percent of the Medicare rate for
covered Item A. The reference-based
percentage used to determine the base
negotiated rate would be 120 percent. In
the general course of business, the plan
determines the Medicare rate for Item A
using participant, beneficiary, or
enrollee-specific characteristics, but,
because there is no specific participant,
beneficiary, or enrollee for purposes of
populating the In-network Rate File, the
plan or issuer must report the base
negotiated rate that would apply prior to
application of any participant,
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beneficiary, or enrollee-specific
characteristics. In this example, the
Medicare rate for Item A is $150, before
applying adjusters for participant,
beneficiary, or enrollee-specific
characteristics. Therefore, the plan
would report a negotiated rate for Item
A when received from Provider X of
$180 ($150 multiplied by 120 percent)
and must include this rate in the Innetwork Rate File.
Finally, under a reimbursement
arrangement that adjusts payments or
reconciles provider payments after
providing care, such as in many valuebased purchasing models, the plan or
issuer must also provide the base
negotiated rate for the specific provider
in the In-network File. For instance, in
a value-based purchasing model, payers
may adjust negotiated rates for a
particular provider if the provider meets
certain contractual goals, which may be
related to quality, volume, and
efficiency of care. The Departments
clarify that quality or value dependent
weighting factors or adjusters are not
required to be included in the
negotiated rate made public under the
final rules.
As noted earlier in this preamble,
nothing in the final rules prevents a
plan or issuer from providing
supplementary materials, including
footnotes, disclaimers, data dictionaries,
and other explanatory language, as
accompaniments with the machinereadable files. For example, a plan or
issuer may choose to provide clarifying
information related to how the
negotiated rate, if reported as a base
negotiated rate, may change depending
on quality or value-dependent
weighting factors, or participant,
beneficiary, or enrollee-specific factors
such as the severity of illness, age, or
gender. Because base rates unadjusted
for participant, beneficiary, or enrolleespecific factors are required to be
reported for reference-based pricing
arrangements, the Departments note that
it is a best practice to include a
disclaimer noting that the rate could
change subject to participant,
beneficiary, or enrollee-specific
characteristics.
Some commenters noted that simply
listing the negotiated rates without
context regarding overall cost would not
help consumers make informed
decisions. The commenter further noted
that consumer decision-making could be
harmed if relying on negotiated rate
information without context regarding
provider billing practices. Other
commenters stated that non-negotiated
billed charges would be useful as an
additional category of pricing
information for the public, especially for
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the uninsured and those seeking out-ofnetwork care. Another commenter
agreed that information on providerbilled charges is important for
transparency, but this commenter
suggested that providers, not issuers,
would be the appropriate source of this
information.
As discussed later in this preamble,
the Departments are of the view that
inclusion of billed charges in the Innetwork Rate File is unnecessary to
achieve the goals of the final rules
because in-network providers are not
permitted to balance bill participants,
beneficiaries, or enrollees as in-network
providers have agreed to accept the
negotiated rate as payment in full (less
any participant, beneficiary, or enrollee
cost-sharing liability) for the item or
service. However, inclusion of billed
charges in the Allowed Amount File
will provide meaningful information
when coupled with allowed amount
information because it will allow
consumers to estimate their potential
balance billing liability when receiving
items and services furnished by out-ofnetwork providers if balance billing is
allowed in their state. Therefore,
inclusion of billed charges in the Innetwork Rate File would not provide
additional value for consumers.
Moreover, the Departments are of the
view that inclusion of the billed charge
could be more misleading in the Innetwork Rate File because the billed
charge is very rarely what the consumer
or the payer ends up paying for a
particular claim and may not have a
clear relationship with the negotiated
rate or underlying fee schedule. While
the Departments agree that inclusion of
billed charges in the In-network Rate
File would provide another data point
for developers in developing the tools,
adding billed charges would also
increase both the size and complexity of
the In-network Rate File. Because it
appears that inclusion of this data
element could obscure other pricing
information and would not increase
transparency of actual prices paid by
participants, beneficiaries, enrollees, or
payers, the Departments decline to add
a billed charge data element
requirement to the In-network Rate File
at this time.
As discussed earlier in this preamble,
the final rules finalize a requirement for
plans and issuers to associate the
pricing information disclosed on each of
the three machine-readable files with
three data elements that identify the
provider and the location where the
service was provided: NPI, TIN, and
Place of Service Code. For the Innetwork Rate File, the Departments
proposed that the negotiated rate should
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be the rate that applies to each item or
service that is associated with the last
date of contract term for each provider
NPI. The final rules modify this
requirement to clarify that the
applicable rates publicly disclosed in
the In-network Rate File should be the
rates that apply to each item or service
that is associated with the last date of
the contract term or the contract
expiration date for each provider as
identified by NPI, TIN, and Place of
Service Code.
Allowed Amount File
For the Allowed Amount File, the
third content element is historical outof-network allowed amounts for covered
items and services. The proposed rules
would require plans and issuers to
include in the Allowed Amount File
each unique out-of-network allowed
amount in connection with covered
items or services furnished by a
particular out-of-network provider
during the 90-day time period that
begins 180 days prior to the publication
date of the Allowed Amount File. As
with the In-network Rate File, where a
plan or issuer reimburses providers for
an item or service based on a formula or
reference based-pricing (such as a
percentage of a Medicare reimbursement
rate), the plan or issuer would be
required to provide the calculated dollar
amount of the allowed amount for each
provider. Allowed amounts would have
to be associated with the provider’s NPI,
TIN, and Place of Service code.
The Departments designed this
reporting requirement to elicit payment
data that reflects recent out-of-network
allowed amounts in connection with
claims for out-of-network covered
services. The Departments assumed
these amounts would provide payment
data that is useful to consumers because
it is reflective of the most recent
reimbursements. Specifically, the
Departments proposed to require
reporting based on dates of service
within 180 days of the Allowed Amount
File publication date to ensure that data
is composed of recent claims (rather
than older claims from multiple time
periods) and to avoid the reporting of
payments from inconsistent periods of
time. The Departments took the view
that payment data from defined periods
of time would enable users to make
meaningful comparisons across plans
and coverage options.
When disclosing an out-of-network
allowed amount under this requirement,
the Departments proposed to require a
plan or issuer to disclose the actual
amount the plan or issuer paid to the
out-of-network provider, plus the
participant’s, beneficiary’s, or enrollee’s
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share of the cost. For instance, if the
out-of-network allowed amount for a
covered service was $100, and the plan
or issuer paid 80 percent of the out-ofnetwork allowed amount ($80) per the
terms of the plan or coverage, so that the
participant, beneficiary, or enrollee was
responsible for paying twenty percent of
the out-of-network allowed amount
($20), the plan or issuer would report an
out-of-network allowed amount of $100.
This unique payment amount would be
associated with the particular covered
item or service (identified by billing
code) and the particular out-of-network
provider who furnished the item or
service (identified by NPI, TIN, and
Place of Service Code).
The Departments clarify that, in
contrast to the In-network Rate File, no
special considerations for reporting
alternative payment arrangements are
necessary for the Allowed Amount File
because plans and issuers are required
to disclose actual amounts paid in the
Allowed Amount File and can therefore
account for retrospective reconciliations
and weighting factors that require
special considerations. For the Allowed
Amounts File, the Departments expect
plans and issuers that reimburse innetwork providers using alternative
payment methodologies to adhere to the
standard requirement of providing
allowed amounts on historical claims
paid to out-of-network providers for
each covered item or service during the
applicable reference period. Plans and
issuers generally do not reimburse outof-network providers, with whom they
do not maintain a contractual
relationship, under an alternative
payment arrangement. However, to the
extent a plan or issuer uses an
alternative payment arrangement to
reimburse out-of-network providers, the
plan or issuer would still be required to
report the allowed amount paid to the
out-of-network provider. The
Departments will address, through the
technical implementation guidance,
how a plan or issuer will be able to
represent data in the Allowed Amount
File, as necessary. The Departments
anticipate that plans and issuers that
reimburse providers using referencebased pricing without a network will
have larger than average Allowed
Amount Files, as all of the payments
would be made to out-of-network
providers and would therefore be
subject to this requirement.
Some commenters supported
disclosure of the ‘‘historical’’ payments
made by plans and issuers to out-ofnetwork providers. One commenter
acknowledged that bulk de-identified
data that informs a consumer of
historical out-of-network allowed
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amounts may be relevant to consumer
decision-making regarding a particular
provider or procedure. One commenter
pointed out that if the Departments
failed to adopt this requirement in
tandem with the In-network Rate File
requirement, providers could withdraw
from networks to avoid transparency
requirements.
By contrast, other comments were less
supportive of the Allowed Amount File
proposal. Several commenters stated
that publishing historical out-ofnetwork allowed amounts would not
meet the Departments’ purported goal of
helping consumers understand costs
and would possibly lead to consumer
confusion. Commenters expressed
concern that the Allowed Amount File
could result in consumers receiving
misleading information, which would
lead to negative financial consequences
for consumers because the file would
not provide all information about
potential out-of-network costs, such as
those that could be incurred through
balance billing, if allowed in their state.
One commenter stated that inclusion of
billed charges would allow the
development of open source charge
schedules. One commenter pointed out
that the information in the machinereadable files would not address
scenarios where a participant,
beneficiary, or enrollee receives out-ofnetwork care in an in-network facility.
Still other commenters expressed
concerns about the reliability of the data
as historical allowed amounts with outof-network providers may not provide
an accurate portrait of future cost
information because issuers do not have
contracts with out-of-network providers.
Similarly, another commenter stated
that health plans should not be
responsible for publishing rates for
providers with whom they do not
maintain a relationship.
One commenter recommended the
Departments withdraw the proposal,
making the argument that small health
plans are unlikely to have a sufficient
number of claims billed for any one
procedure from a particular provider to
make the file meaningful. In lieu of
requiring the Allowed Amount File,
another commenter suggested the
Departments instead place the onus on
out-of-network providers or suppliers to
provide consumers with information
about the costs of their services.
The Departments continue to be of the
view that release of this information is
appropriate and necessary to empower
consumers to make informed decisions
about their health care, spur
competition in health care markets, and
to slow or potentially reverse the rising
cost of health care items and services.
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As noted earlier in this preamble and in
the preamble to the proposed rules,
limiting access to data to a subset of
consumers would not promote the
transparency goals of PPACA and the
final rules, and would reduce the
potential for the final rules to drive
down health care costs by increasing
competition. If the Departments were to
eliminate the Allowed Amount File
requirement or reduce its scope, it
would significantly reduce the benefits
of the final rules for uninsured
consumers and insured consumers
evaluating out-of-network treatment
options.
The information in the Allowed
Amount File, especially as filtered
through innovative platforms and tools,
will help consumers make more
informed decisions regarding changes to
their health coverage (for example, the
purchase of new coverage or switching
to a new plan). Furthermore, this
information may help insured
consumers make more informed health
care decisions when seeking out-ofnetwork treatment; and may help
uninsured consumers make health care
decisions and potentially allow them to
negotiate more effectively with
providers. Finally, the creation of
Allowed Amount Files may help
researchers and regulators monitor plan
benefit design and help spur innovation.
While there is some potential for
some consumers to be confused by the
information in the Allowed Amount
Files, the Departments do not agree that
the files will provide misleading
information to consumers. The
Departments expect most consumers to
access this information through tools
created by third-party application
developers and other stakeholders,
which will be able to provide additional
context for the average consumer.
The Departments proposed to require
plans and issuers to report out-ofnetwork allowed amounts for services
furnished at least 90 days in the past to
help ensure the availability of
reasonable volumes of out-of-network
allowed amount data in the Allowed
Amount File. The Departments
expressed the view that a 90-day lag
between the end of a reporting period
and the publication of required out-ofnetwork allowed amount data will allow
plans and issuers sufficient time to
adjudicate and pay claims from out-ofnetwork providers for the relevant
reporting period. Claims processing
times may vary between plans and
issuers, and external factors may
increase processing timelines. For
example, the Departments noted in the
proposed rules that many out-ofnetwork providers do not send claims
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directly to plans and issuers but instead
require participant, beneficiary, or
enrollee to file out-of-network claims.
This could mean that an out-of-network
claim may not reach a plan or issuer for
6 to 12 months after a service is
rendered. Such delays could negatively
affect the volume of out-of-network
allowed amount data and the ultimate
usefulness of this data. For this reason,
the Departments sought comment
regarding whether requiring plans and
issuers to report out-of-network allowed
amounts for items and services
furnished at least 90 days in the past is
sufficient to ensure the proposed
disclosures will yield sufficient volumes
of historical data to be useful to
consumers who wish to shop for
services based on price. The
Departments requested comment on
whether there should be more time
between the end of the reporting period
and publication of the data, such as 120
days, 180 days, or longer, which would
increase the likelihood that out-ofnetwork claims from the relevant
reporting period have been adjudicated
and paid by the time of publication.
The Departments did not receive
comments directly in response to this
comment solicitation and are finalizing
the Allowed Amount File historical
lookback period as proposed. The final
rules, therefore, adopt a requirement for
the Allowed Amount Files to include
data for the 90-day period beginning 180
days before the file publication date. For
example, a file published on June 30,
2021, should include data for a 90-day
period beginning on January 1, 2021.
The Departments will monitor the
implementation of this requirement for
the Allowed Amount Files and may
revisit the lookback period if the 90-day
reporting period beginning 180 days
before file publication fails to yield
sufficient out-of-network data on
allowed amounts.
The Departments specifically sought
comment on whether the required
disclosures of historical out-of-network
allowed amounts would provide useful
information that can assist consumers in
locating services at an affordable cost, or
whether there could be additional
information that would be both useful to
anticipated users and practical for plans
and issuers to disclose for this purpose.
For instance, the Departments stated in
the preamble to the proposed rules that
the Departments considered requiring
plans and issuers to disclose amounts
out-of-network providers have charged
participants, beneficiaries, and enrollees
for covered services in the Allowed
Amount File. The Departments noted
they understood that such charged
amounts would be included in any
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claim for out-of-network benefits and
could be helpful to consumers shopping
for services based on price. The
Departments sought comment on this
data element.
As summarized earlier in this
preamble regarding the In-network Rate
File, some commenters who supported
the inclusion of non-negotiated billed
charges in the In-network Rate File also
supported inclusion of billed charges in
the Allowed Amount File. These
commenters noted that billed charge
information would be especially useful
for the uninsured or those seeking outof-network care. Another commenter
agreed that information on providerbilled charges is important for
transparency, but this commenter stated
that providers, not issuers, would be the
appropriate source for this information.
Regarding these comments, the
Departments agree that that a billed
charges data element is important to
ensure that the public disclosures
required through the out-of-network
Allowed Amount File are as useful to
consumers as possible, including in the
scenario where an insured consumer
receives items or services from an outof-network provider. Although the
Departments are aware that the amount
an out-of-network provider will
ultimately balance bill (if allowed in
their state) a consumer for an item or
service does not always equal the
difference between the billed charge and
the allowed amount, the Departments
are of the view that this information
would aid consumers in understanding
their potential out-of-pocket liability. In
the jurisdictions that do not prohibit or
limit balance billing, information on
billed charges could aide consumers in
their health care decision-making as it is
possible that consumers may choose to
receive or forgo a particular item or
service from a particular provider based
on the additional out-of-pocket liability
they could be expected to pay through
a balance billing charge from a provider.
Consumers may be able to shop for a
particular out-of-network provider
based on total cost of an item or service.
For example, in a state that allows
providers to balance bill, a consumer
has a coinsurance of 40 percent for
Service X when Service X is furnished
by an out-of-network provider. Out of
network Provider A’s billed charge for
Service X is $200, and the consumer’s
plan allows an amount of $100 to be
paid to the provider. Therefore, the
consumer is responsible for a
coinsurance amount of $40 ($100
allowed amount multiplied by the
consumer’s 40 percent coinsurance) and
the consumer may be balance billed an
additional $100 ($200 billed charge
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minus the $100 allowed amount). In
comparison, out-of-network Provider B’s
billed charge for Service X is $120 and
the consumer’s plan allows the same
amount of $100 to be paid to the
provider. If the consumer receives
Service X from Provider B, they will be
responsible for the same coinsurance
amount of $40 ($100 allowed amount
multiplied by the consumer’s 40 percent
coinsurance). However, if the consumer
receives Service X from Provider B, the
consumer may only be balance billed
$20 ($120 billed charge minus $100
allowed amount), which would be an
$80 savings to the consumer compared
with receiving the Service X from
Provider A. Note that this example
assumes that both Provider A and
Provider B will balance bill consumers,
which is not always true even in states
that allow balance billing. Consumers
should also contact providers to inquire
whether they will balance bill before
making health care purchasing
decisions using this information.
Therefore, with information on both
allowed amounts and billed charges, the
consumer may choose to receive Service
X from Provider B because their total
out-of-pocket costs will likely be lower.
The Departments note that it is
possible that plans and issuers will
populate the Allowed Amount File with
multiple billed charges for the same
item or service furnished by the same
out-of-network provider. If this is the
case, the billed charge in the Allowed
Amount File will present an expected
range and give consumers access to a
reasonably accurate estimate of how
much they can expect to be balance
billed by an out-of-network provider,
but the billed charge cannot provide to
the consumer the exact amount they can
expect to be balance billed when
receiving items and services furnished
by the out-of-network provider.
For these reasons, the Departments
are of the view that inclusion of the
billed charges in the Allowed Amounts
File will help provide a more complete
picture of the full amount a provider
could receive for a particular item or
service, either from plans and issuers or
directly from a participant, beneficiary,
or enrollee. Furthermore, the
Departments are of the view that
requiring this information is consistent
with the goal of providing consumers an
understanding of their potential out-ofpocket liability in advance, similar to an
EOB provided in advance, as billed
charges are included on a participant’s,
beneficiary’s, or enrollee’s EOB and are
often the first data available for
understanding a participants,
beneficiary’s, or enrollee’s out-of-pocket
liability.
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The Departments are aware that plans
and issuers have information regarding
providers’ billed charges, even if they
do not necessarily have information
regarding specific balance billing
amounts. The Departments are therefore
of the view that the inclusion of billed
charges in the Allowed Amount File
will not substantially increase the
burdens of the final rules. Nonetheless,
the Departments are aware that adding
billed charges will also increase both
the size and complexity of the Allowed
Amounts File. The Departments do not
intend to increase the burden of
developing and maintaining these files
unless the inclusion of the additional
data element is essential for providing
meaningful pricing information to
consumers. Because it is the
Departments’ view that this data
element will increase transparency of
actual prices paid by participants,
beneficiaries, enrollees, and payers, the
Departments are finalizing the Allowed
Amounts File with the modification to
add billed charges as an additional data
point required to be disclosed through
the file.
The final rules define billed charges
as total charges for an item or service
billed to a plan or issuer by a provider.
Plans and issuers are required to
publicly disclose billed charges
associated with each unique allowed
amount that would be required under
the final rules. The final rules further
clarify that plans and issuers must
report each unique combination of
allowed amounts and billed charges for
each out-of-network provider, and their
associated Place of Service Code,
provider NPI, and provider TIN. For
example, an out-of-network provider
(under a single NPI, TIN, and Place of
Service Code) submits 25 claims (or any
other number of claims to meet the 20
unique claim threshold requirement
discussed in more detail later in this
preamble) to a plan or issuer for the
service Y. The 25 claims have three 179
different billed charges ($100, $150 and
$200) and two different allowed
amounts ($50 and $150) for item Y. The
plan or issuer should have one entry
that represents each unique
combination of billed charges and
allowed amounts submitted by the outof-network provider. Therefore, in this
example, the Departments would expect
179 The Departments note that it is possible for a
provider to have different allowed amounts for the
same item or service covered by the same out-ofnetwork provider because the plan or issuer does
not have a contractual relationship with that outof-network provider, by definition. For similar
reasons, it is also possible for the billed charged
submitted by the same out-of-network provider to
for the same item or service to be variable.
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the plan or issuer to represent in the
Allowed Amounts File no fewer than
three unique entries, and no more than
six unique entries for item Y from this
out-of-network provider. For example:
• Entry A has a billed charge of $100
and an associated allowed amount of
$50;
• Entry B has a billed charge of $150
and an associated allowed amount of
$50;
• Entry C has a billed charge of $200
and an associated allowed amount of
$50;
• Entry D has a billed charge of $100
and an associated allowed amount of
$150;
• Entry E has a billed charge of $150
and an associate allowed amount of
$150;
• Entry F has a billed charge of $200
and an associated allowed amount of
$150.
The Departments do not expect to see
25 different entries, unless they
represented 25 distinct combinations of
billed charges and associated allowed
amounts from the out-out network
provider for Item Y.
In the Allowed Amount File, the file
structure is envisioned as a parent/child
data relationship, where certain data
elements are included under or belong
to other data elements, as a child to a
parent. In the Allowed Amount File, the
billed charge data element would serve
as a child to the parent allowed amount
element. Therefore, under each unique
allowed amount for a particular item or
service from a particular provider, the
amount of each provider-billed charge is
listed as a unique dollar amount.
One commenter requested the
Departments clarify what is meant by
‘‘allowed amounts for covered items or
services furnished by particular out-ofnetwork providers,’’ questioning
whether through inclusion of the word
‘‘particular’’ the Departments intended
to reference specialized out-of-network
providers upon which plans and issuers
might place coverage limitations. The
Departments clarify that inclusion of the
word ‘‘particular’’ as a modifier of ‘‘outof-network providers’’ was not intended
to be a reference to specialized out-ofnetwork providers upon which plans
and issuers might place coverage
limitations. Rather, use of the word
‘‘particular’’ indicates that Allowed
Amount Files must include the
historical allowed amounts for covered
items and services furnished to each
out-of-network provider to whom such
payments were made during the
reference period. The Departments
clarify that under the final rules, and as
contemplated in the proposed rules,
plans and issuers are expected to
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include historical allowed amounts for
every covered item or service furnished
by each out-of-network provider so long
as the unique claims threshold for the
out-of-network provider is met.
The Departments further clarify that
plans and issuers are only required to
include in the Allowed Amount File
those covered items and services
furnished by an out-of-network provider
for which the plan or issuer has
adjudicated claims and determined it
will pay an allowed amount. If the plan
or issuer has not adjudicated claims and
determined it will pay an allowed
amount for items or services furnished
by an out-of-network provider, the plan
or issuer is not required to include those
allowed amounts or billed charges in
the Allowed Amount File.
In response to the comment that the
information in the files would not
address the scenario where a
participant, beneficiary, or enrollee
receives out-of-network care in an innetwork facility, the Departments clarify
that the expectation is that this
information would be captured in the
Allowed Amounts File. If a participant,
beneficiary, or enrollee receives out-ofnetwork care, even if the facility is in
the participant’s, beneficiary’s, or
enrollee’s network, the provider will
generate a claim and send a billed
charge to the payer that will establish an
allowed amount for the claim; the
Departments expect this allowed
amount to appear in the Allowed
Amounts File in this scenario. As noted
elsewhere in this preamble, the
Departments will provide technical
implementation guidance (as well as
individualized technical assistance, as
needed) to ensure that plans and issuers
are able to make public the disclosures
required through the final rules.
The Departments do not agree with
the commenter who asserted that,
because some small health plans will
not have a sufficient number of any one
procedure from a particular provider to
make the file meaningful, the Allowed
Amount File requirement should be
withdrawn. The relevant commenter did
not provide a number of claims that it
believed would make the file
meaningful. In contrast, the
Departments are of the view that the
files will be meaningful to the public
regarding all covered items and services
from a particular provider regardless of
the specific numbers of claims at issue,
even if a particular provider bills
relatively few claims to a particular plan
or issuer. As discussed elsewhere in this
preamble, for privacy and security
reasons, the Departments are requiring
disclosure for all covered items and
services from a particular provider that
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meets the unique claims threshold
established by the final rules. If a small
health plan does not have sufficient
claims for a covered item or service to
meet the unique claims threshold for a
particular provider, then that health
plan is not permitted to publicly
disclose information for that particular
item or service paid to the particular
provider. The Departments are of the
view that most health plans and issuers
will meet the unique claims threshold
for a large proportion of items, services,
and providers to make the files
sufficiently meaningful to justify this
requirement.
In the preamble to the proposed rules,
the Departments noted that providing
this information could raise health
privacy concerns. The Departments are
committed to protecting PHI and other
sensitive information. To address these
privacy concerns, as discussed in this
preamble, the Departments proposed
that plans and issuers would not be
required to provide out-of-network
allowed amount data in relation to a
particular provider and a particular item
or service when compliance would
require a plan or issuer to report out-ofnetwork allowed amounts to a particular
provider in connection with fewer than
10 different claims for payment. The
Departments also noted that disclosure
of such information would not be
required if compliance would violate
applicable health information privacy
laws. In addition to proposing this
exemption, the Departments proposed
to require plans and issuers to include
only unique out-of-network allowed
amounts to mask the total episodes of
care for a particular provider and item
or service. In the proposed rules, the
Departments expressed the view that
these mitigation strategies, in addition
to flexibilities proposed to allow the
aggregation of reported data (as
described later in this preamble), were
sufficient to protect patients from
identification based on information in
the Allowed Amount File. The
Departments solicited comment on
whether additional privacy protections
would be required.
The Departments specifically
requested comment on whether a higher
minimum claims threshold, such as a
threshold of 20 claims, would better
mitigate privacy concerns and minimize
complexity in complying with Federal
or state privacy laws without
compromising the integrity of the
compiled information. The Departments
also sought comment on additional
approaches that could decrease the
potential for aggregated health
information that would be disclosed
under the proposed rules to be
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identified, especially with respect to
smaller group health plans.
In response, some commenters
expressed concerns about maintaining
HIPAA protections on the Allowed
Amount File due to the small number of
claims associated with specific services
for out-of-network providers. Several
commenters stated the threshold of 10
unique claims to require public
disclosure of unique historical allowed
amounts would be too low to protect
consumers’ PHI. One commenter
requested that the Departments clarify
how they arrived at the 10 claims
threshold. Some commenters
recommended different minimum
thresholds. Some commenters
recommended a minimum threshold of
50 claims. On the other hand, other
commenters did not support increasing
the threshold, noting that the files do
not contain identifiable data and so
would not pose a risk. One commenter
stated that the files should be released
including the lowest number of claims
necessary to achieve the goal of
protecting participant, beneficiary, and
enrollee privacy and recommended
keeping the proposed threshold of 10
claims. Another commenter requested
that the Departments not make the
threshold any higher, and even consider
lowering the cutoff to five claims, to
maintain access to price transparency
data for rural Americans.
Based upon comments received the
final rules adopt a 20 unique claim
threshold. The Departments are of the
view that the 20 unique claim threshold
balances the concerns expressed by
commenters who suggested the
Departments increase the threshold to
50 claims with the concerns of
commenters who expressed the opinion
that the proposed 10 claim threshold (or
an even lower threshold) would be
sufficient to ensure the files include a
meaningful amount of data. The
Departments are of the view that 20
unique claims are sufficient to balance
the privacy concerns against the needs
for transparency through the Allowed
Amounts File. This 20 unique claim
threshold is more stringent than CMS’
cell size suppression policy, which
requires cells containing values of 1
through 10 to be suppressed in CMS
data sets.180 Increasing the unique claim
threshold from 10 to 20 claims will not
significantly reduce the amount of data
that are required to be made public
through the Allowed Amount File.
However, if the Departments were to
180 The CMS Cell Size Suppression Policy is
outlined on the CMS website at the following
location: https://www.cms.gov/Research-StatisticsData-and-Systems/Files-for-Order/Data-DisclosuresData-Agreements/DUA_-_NewLDS.
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increase the unique claim threshold to
50 claims, as suggested by some
commenters, the Departments are
concerned that this could significantly
reduce the amount of data that are
required to be made public through the
Allowed Amount File, which could
undermine the goal of price
transparency.
The Departments are of the view that
increasing the unique claim threshold
from 10 to 20 claims will better balance
the policy goal of maximum
transparency with the need to protect
participants, beneficiaries, and enrollees
from the possibility of being reidentified through the data included in
the Allowed Amount File. In addition to
this strategy, the Departments expect
that the flexibility discussed later in this
preamble under the special rule to
permit aggregation of reported data will
help protect participants, beneficiaries,
and enrollees from identification based
on information in the Allowed Amount
File. Finally, the Departments reiterate
that the disclosure of the information is
not required if disclosure would violate
applicable health information privacy
laws. The Departments note that this
exception does not mean that these
disclosures are not required where a law
that would otherwise prohibit the
disclosure permits disclosure if required
by law.
Prescription Drug File
The Departments finalize negotiated
rates for prescription drugs as the third
content element in the Prescription
Drug File. The Departments received
several comments related to whether
negotiated rates for prescription drugs
should be disclosed through the
machine-readable files, and if so, which
price or prices related to prescription
drugs should be required to be included.
Many commenters provided general
support for the public release of
negotiated rates for prescription drugs.
One commenter asserted that releasing
negotiated rates for prescription drugs
would result in lower costs for health
plans and consumers, which could lead
to a reduction in manufacturer
discounts of upwards of three percent.
Several commenters did not support
disclosure of negotiated rates for
prescription drug prices through the
machine-readable files. Commenters
recommended that the In-network Rate
File should not include prescription
drugs for several reasons. These reasons
include: The complexity of prescription
drug pricing (prices are determined by
a formula that is determined at the
point-of-sale and can change on a daily
basis; the information would not be
relevant to consumer decision-making;
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and the existence of established drug
pricing tools that provide support for
consumer decision-making. Some
commenters stated that the unique
nature of prescription drug pricing
would make the release of negotiated
rates difficult and further noted that the
rates negotiated between PBMs and
pharmacies are considered confidential.
Another commenter stated that the
Departments should only require
disclosure of prescription drug prices
when the information disclosed is
directly related to the cost a plan
participant, beneficiary, or enrollee
would need to pay out of pocket so as
not to undermine group health plans’
and health insurance issuers’ ability to
negotiate lower drug costs. Some
commenters claimed that plans and
issuers have no control over
prescription drug costs and may not be
able to provide this information.
Instead, commenters asserted that
information related to prescription drug
costs should come from PBMs or
prescription drug manufacturers.
In 2018, retail prescription drug
spending represented approximately
nine percent ($335 billion) of overall
health spending.181 In 2017 large group
health plans and issuers accounted for
the largest share of prescription drug
spending amongst other payers, despite
generally having a younger and
healthier population than public
payers.182 The Departments maintain
that plans and issuers have an essential
role,183 and vested interest in
controlling prescription drug spending.
Moreover, as prescription spending
continues to rise,184 so does the trend of
prescription rebates.185 According to
181 ‘‘National Health Expenditures 2018
Highlights.’’ Centers for Medicare & Medicaid
Services. Available at: https://www.cms.gov/files/
document/highlights.pdf.
182 Cubanski, J., and Rae, M. ‘‘How Does
Prescription Drug Spending and Use Compare
Across Large Employer Plans, Medicare Part D, and
Medicaid?’’ Kaiser Family Foundation. May 20,
2019. Available at: https://www.kff.org/medicare/
issue-brief/how-does-prescription-drug-spendingand-use-compare-across-large-employer-plansmedicare-part-d-and-medicaid/.
183 ‘‘How are prescription drug prices
determined?’’ American Medical Association. April
9, 2019. Available at: https://www.ama-assn.org/
delivering-care/public-health/how-are-prescriptiondrug-prices-determined.
184 ‘‘National Health Expenditure Projections
2019–28.’’ Office of the Actuary. Centers for
Medicare & Medicaid Services. March 24, 2020.
Available at: https://www.cms.gov/files/document/
national-health-expenditure-projections-201928.pdf.
185 According to the Academy of Managed Care
Pharmacy, a prescription drug rebate is a monetary
amount returned to a payer from a prescription drug
manufacturer based on pharmaceutical use by a
covered person or purchases by a provider. ‘‘AMCP
Guide to Pharmaceutical Payment Methods, 2013
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surveyed health plan and PBM
personnel, PBMs passed through 78
percent of manufacturer rebates to
health plans in 2012 and 91 percent in
2016.186 And while some plans and
issuers may use these rebates to dampen
premium increases,187 there remains an
unclear prescription drug supply chain
that masks the true costs of prescription
drugs. The Departments are of the view
that it would not advance the goals of
the final rules to exclude a category of
items and services that comprises such
a significant proportion of health care
spending.
The Departments agree that
prescription drug pricing is complex but
are of the view that complexity is not a
valid reason for inaction. There are
many different players in the
prescription drug supply chain that may
have some control over costs, including
plans and issuers, manufacturers,
wholesalers, pharmacies, and PBMs.188
As commenters stated, it is often the
case that PBMs negotiate the price of a
prescription drug for a plan or issuer
based on a contract the plan or issuer
maintains with the PBM; however, it is
ultimately the plan or issuer who is
responsible for deciding how the costs
of prescription drugs are passed along to
a participant, beneficiary, or enrollee.
The Departments, therefore, are of the
view that plans and issuers are aware of
the negotiated rate for a prescription
drug for which their participants,
beneficiaries, or enrollees may have
cost-sharing liability, or can be informed
of this negotiated rate by their
contracted PBM.
The Departments do not agree that
prescription drug pricing information,
such as negotiated rates, will confuse
consumers. As discussed elsewhere in
this preamble, the Departments
recognize that the information included
in the machine-readable files may not be
easy for an average consumer to
navigate and expect that third-party
developers will use this information to
make tools available that make this
information more useful for the average
consumer.
The Departments agree with
commenters who acknowledged the
existence of many tools that provide
Update.’’ Available at: https://www.amcp.org/sites/
default/files/2019-03/Full-Pharmaceutical-Guide%283.0%29.pdf; see also ‘‘The Prescription Drug
Landscape, Explore.’’ PEW Charitable Trusts. March
8, 2019. Available at: https://www.pewtrusts.org/en/
research-and-analysis/reports/2019/03/08/theprescription-drug-landscape-explored.
186 Id.
187 Id.
188 ‘‘How are prescription drug costs really
determined?’’ Biotechnology Innovation
Organization. Available at: https://
www.drugcostfacts.org/prescription-drug-costs.
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prescription drug prices. However, the
Departments are of the view that
existing prescription drug pricing tools
are insufficient as they lack competitive
pricing information across all PBMs,
and health plans and issuers.189 Once
prescription drug pricing is made more
fully available, health care providers
will have greater opportunity to factor
pricing information into their
prescribing decisions. Many health care
providers benefit financially when they
can reduce costs and improve their
patients’ medication adherence.190 This
benefit to providers can also have a
significant impact on overall health care
spending.
For these reasons, and those
discussed more fully below, the
Departments are finalizing, with
modifications from the proposed rules,
requirements to disclose pricing
information for prescription drugs
through a machine-readable file.
However, reflecting the unique
attributes of prescription drug pricing,
the final rules respond to comments by
adopting requirements that are more
detailed than what was included in the
proposed rules, including the inclusion
of a third machine-readable file for
prescription drug pricing information.
The final rules require plans and
issuers to produce a third machinereadable file for reporting prescription
drug pricing information, the
Prescription Drug File, whereas the
proposed rules would have required
plans and issuers to include negotiated
rates for covered prescription drugs in
the In-network Rate File. The
Departments have made this change to
ensure that prescription drug pricing
information is produced in a manner
that is most useful to the public. As
noted earlier in this preamble, there are
upwards of 100,000 NDCs for
prescription drugs. Divorcing negotiated
rates for prescription drugs from
negotiated rates for other items and
services allows the pricing information
for medical items and services to be
discernible from pricing information for
prescription drugs. Further, a PBM may
administer pharmacy benefits for a plan
or issuer in addition to any other
services it may provide to a plan or
issuer. Therefore, keeping prescription
drugs pricing data separate from pricing
data for other items and services is
generally better aligned with plan and
issuer operations and will reduce the
189 Galewitz, P. ‘‘Doctors Slow To Adopt Tech
Tools That Might Save Patients Money On Drugs.’’
NPR. July 5, 2019. Available at: https://
www.npr.org/sections/health-shots/2019/07/05/
738283044/doctors-slow-to-adopt-tech-tools-thatmight-save-patients-money-on-drugs.
190 Id.
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burden associated with combining data
from different sources. As discussed in
the Information Collection Requests
(ICR) section of this preamble, the
Departments estimate that the
Prescription Drugs File requirement will
not add significantly to the development
and maintenance costs of the machinereadable files because the cost and
burdens related to prescription drugs
will largely be transferred from the Innetwork Rate File to the Prescription
Drug File. Additionally, the
Departments anticipate that removal of
prescription drugs from the In-network
Rate Files will significantly reduce the
size of those files, which could reduce
the costs associated with maintenance
and storage of each individual file. The
Departments are of the view that
removing prescription drugs from the
In-network Rate File and requiring this
information to be included in a separate
Prescription Drug File is consistent with
the Departments’ goal of separating
fundamentally different types of data
into distinct files. Because, as many
commenters observed, prescription drug
prices are unique, the Departments are
of the view that this information would
be more appropriately represented
through a third machine-readable file.
Furthermore, the updated machinereadable file structure will support
consumers, researchers, and third-party
developers in reviewing, ingesting,
aggregating, and analyzing the data.
The Disclosure of Prescription Drugs
Pricing Information
Under the proposed rules, group
health plans and health insurance
issuers would be required to publicly
disclose negotiated rates in the Innetwork Rate file. The Departments
defined negotiated rates in the proposed
rule as the amount a group health plan
or health insurance issuer, or a third
party on behalf of a group health plan
or health insurance issuer, has
contractually agreed to pay an innetwork provider for covered items and
services, pursuant to the terms of an
agreement between the provider and the
group health plan or health insurance
issuer, or a third party on behalf of a
group health plan or health insurance
issuer. As discussed in the Definitions
section of this preamble, the final rules
adopt this definition as proposed, with
modifications to provide additional
clarity.
In the preamble to the proposed rules,
the Departments acknowledged that
cost-sharing liability for prescription
drugs is often based on an amount other
than the negotiated rate, such as
manufacturer list prices or
undiscounted list prices such as AWP or
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WAC. The Departments further
acknowledged that, because of the
application of rebates and other
discounts, the inclusion of just the
negotiated rate for prescription drugs
could mislead consumers because the
rate paid by the plan could ultimately
be lower than the price paid by the
consumer at the point-of-sale, as it is the
Departments’ understanding that these
rebates and other discounts typically are
not passed on to the consumers at the
point of sale. The Departments
expressed the concern that including
only the negotiated rate for prescription
drugs used to determine cost-sharing
liability could perpetuate the lack of
transparency surrounding prescription
drug pricing. To this end, the
Departments solicited comment on
which pricing information related to
prescription drugs should be
disclosed.191
Despite the Departments’ concerns
regarding negotiated rates for
prescription drugs outlined in the
preamble to the proposed rules,
commenters responded that negotiated
rates, in addition to other information,
are an important data point necessary to
achieving useful transparency into
coverage and out-of-pocket costs for
prescription drugs. Several commenters
recommended that the machinereadable file include both the negotiated
price and the undiscounted ‘‘list’’ price,
upon which coinsurance and
deductibles are often based, in order to
promote competition. Other
commenters suggested that plans and
issuers should disclose to enrollees
when they do not pass through
manufacturer rebates and discounts at
the point-of-sale or factor these amounts
191 The Departments note that this discussion in
the preamble to the proposed rules occurred in the
context of the third content element (negotiated
rates) for the internet-based self-service tool.
However, as negotiated rates were a proposed
content element for the machine-readable files, the
Departments are of the view that the comments
received regarding negotiated rates in the context of
the internet-based self-service tool are equally
applicable to the prescription drug disclosures
plans and issuers are being required to make
through the machine-readable files. The definition
of ‘‘negotiated rate’’ for prescription drugs applies
to both the internet-based self-service tool and
machine-readable file provisions. Regarding the
machine-readable files, the Departments proposed
that plans and issuers be required to include innetwork negotiated rates and out-of-network
allowed amounts for all covered items and services.
In the Departments’ view, the use of the same term
regarding both requirements underscores the
relevance of these comments to all disclosure
requirements applicable to items and services,
including those applicable to prescription drugs.
Furthermore, several commenters did not clearly
separate their comments regarding the internetbased self-service tool and the machine-readable
files and provided broad comments that applied to
all relevant sections of the proposed rules.
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into enrollee cost sharing. Another
commenter recommended the
Departments consider requiring a ‘‘net
price’’ for prescription drugs rather than
the negotiated rates. This commenter
stated that, it is vital that this
‘‘negotiated rate’’ also include the ‘‘net
price’’ (which accounts for all price
concessions, including direct and
indirect remuneration fees (DIR) and/or
similar policies/terminology, such as
‘‘true up’’ practices under employersponsored and private plans to
accurately estimate participant,
beneficiary, and enrollee cost-sharing
liability for prescription drugs). One
commenter noted that if the public
disclosure did not include information
related to rebates, the file could be
misleading and could lead to a
continuing overemphasis on
prescription drug list prices without
recognition of the role played by
rebates.
Another commenter recommended
that the Departments allow plans and
issuers to report the most appropriate
available price type based on the plan’s
benefit design. This commenter
suggested that plans should also be
required to identify the price reported,
such as AWP or WAC or the contracted
pharmacy reimbursement amount (for
example, the Part D negotiated price).
The Departments have closely
reviewed the comments to determine
the prescription drug pricing
information plans and issuers should
provide in the Prescription Drug File in
order to achieve the goals of
transparency. Based on this review, the
final rules are adopting as content
element three for the Prescription Drug
File a requirement for plans and issuers
to publicly disclose two amounts for
prescription drugs in the Prescription
Drug File: The negotiated rate and the
historical net price.
Prescription Drug Negotiated Rate
Disclosure
As evidenced by the comments and
the Departments’ independent research,
there is wide variability in how
negotiated rates are assigned for
prescription drugs. For instance, some
commenters noted that negotiated rates
for prescription drugs include rebates,
price concessions, and other ‘‘true-ups,
while others likened the negotiated rates
to the undiscounted list price used for
determining cost-sharing liability.
Therefore, plans and issuers may use
varying types of prices when
reimbursing providers for prescription
drugs. For example, it is the
Departments’ understanding that for
generic prescription drugs, the
Maximum Allowable Cost (MAC)—an
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72235
amount the plan or issuer uses as the
maximum amount they will pay for a
particular prescription drug product—
may be the amount that plans and
issuers use to pay providers for a
prescription drug. Plans and issuers
may reimburse providers for other
prescription drugs using a UCR amount
or an amount based on the
undiscounted list price, such as AWP or
WAC. It is the Departments’
understanding that contracts negotiated
between plans and issuers (or their
contracted PBM) and providers
generally do not include specific
negotiated rates for prescription drugs,
but instead include formulas that
determine the type of price that will be
used to reimburse providers for a
particular prescription drug product.
The negotiated rate may differ by drug
or class of drug in the contract as the
lesser of several types of prices based on
one of the benchmarks described
above—that is, WAC, AWP, MAC, or
UCR. Because prices for prescription
drugs can fluctuate on a daily basis, the
price that is used to reimburse the
provider can also fluctuate based on
application of the contract terms.
In addition to better appreciating the
wide variability in how negotiated rates
are assigned, the Departments also now
understand based on comments and
independent research, that, contrary to
the Departments’ understanding as
explained in the preamble to the
proposed rule, no matter what
benchmark or formula is used to
determine the negotiated rate, the
negotiated rate is frequently also the rate
upon which cost-sharing liability is
based for prescription drugs.
Based on the circumstances described
above, the Departments therefore agree
with commenters that a certain amount
of flexibility is required for plans and
issuers as it relates to the benchmarks
and inputs required for the disclosure of
negotiated rates for prescription drugs.
To allow for flexibility, as proposed, the
final rules do not assign a benchmark or
necessary inputs to the definition of
negotiated rates. The final rules include
a broad definition for negotiated rates to
mean the amount a group health plan or
health insurance issuer has
contractually agreed to pay an innetwork provider, including an innetwork pharmacy or other prescription
drug dispenser, for covered items and
services, whether directly or indirectly,
including through a TPA or PBM.
As noted above, the negotiated rate
can be one of several different rates and
can fluctuate on a daily basis depending
on the terms of the contract between
plans or issuers (or the PBM for the plan
or issuer) and the provider, which
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includes pharmacies and other
prescription drug dispensers. Therefore,
the Departments clarify that, where a
plan or issuer uses a formula as
described above to determine the rate
that will be used to reimburse providers
for a prescription drug, the negotiated
rate that should be included in the
Prescription Drug File should be the rate
that would be used by the plan or issuer
to reimburse providers on the date that
the file is extracted.
Notably, the final rules do not finalize
a requirement to include the
manufacturer list price, as contemplated
in the proposed rules. The manufacturer
list price is a manufacturer-specified
metric for drug prices that is commonly
used by both Federal and commercial
health care programs as a benchmark for
negotiated rates. The manufacturer list
price in this context is often the WAC,
which is defined in statute as, the
manufacturer’s list price for the drug or
biological to wholesalers or direct
purchasers in the United States, not
including prompt pay or other
discounts, rebates or reductions in
price, for the most recent month for
which the information is available, as
reported in wholesale price guides or
other publications of pricing data with
respect to a drug or biological.192
Like negotiated rates, the list price
does not include discounts, dispensing
fees, rebates, or other retrospective
pricing adjustments. The manufacturer
list price is not plan- or issuer-specific.
If the Departments were to require plans
and issuers to include the manufacturer
list price in the Prescription Drug File,
the information included in the files
would be the same or similar across all
plans and issuers. Further, manufacturer
list price information is already
aggregated, available through several
companies, and could be incorporated
into third party applications to be made
accessible to consumers. WAC prices for
drugs and biologics are collected and
published by several companies,
including First Databank and MediSpan. Additionally, CMS publishes a
monthly National Average Drug
Acquisition Cost (NADAC), which
provides a national benchmark for the
prescription drug prices paid by retail
pharmacies.193 Because information on
manufacturer list prices would be
largely redundant across plans and
issuers, and because this information is
publicly available through other existing
192 42
U.S.C. 1395w–3a(c)(6).
Average Drug Acquisition Cost.’’
Centers for Medicare & Medicaid Services.
September 15, 2020. Available at: https://
data.medicaid.gov/Drug-Pricing-and-Payment/
NADAC-National-Average-Drug-Acquisition-Cost-/
a4y5-998d.
193 ‘‘National
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resources, the Departments concluded
this information would be of limited
value for the public.
The Departments do not intend to
increase the burden of developing and
maintaining the machine-readable files
unless the inclusion of the additional
data element is essential to provide
meaningful, transparent pricing
information to the public. Inclusion of
the manufacturer list price would not
significantly advance transparency as
this information is already available
publicly, and it would increase the
burden of developing the Prescription
Drug File. The Departments expect that
third-party developers will access and
incorporate publicly available
databases, such as those including
manufacturer list pricing information,
where that information is relevant to
providing meaningful information to
consumers.
The Departments are of the view that
it is important for transparency for
negotiated rates to be included in the
Prescription Drug File. Consumers, both
insured and uninsured, can use this
information to better understand the
cost of prescription drugs and to
advocate for less expensive alternatives.
The Departments are also of the view
that making the negotiated rate public in
a manner that is highly visible to
consumers, researchers, innovators and
regulators could potentially place
pressure on manufacturers to lower
their list prices, which could, in turn,
lower negotiated rates upon which
consumer cost-sharing liability is based.
Nonetheless, as stated in this
preamble and in the preamble to the
proposed rules, requiring disclosure of
only the negotiated rate for prescription
drugs could perpetuate the lack of
transparency surrounding prescription
drug pricing. As commenters noted, the
negotiated rate is not generally tied to
the amount a plan or issuer will
ultimately pay for the prescription drug
or prescription drug service due to the
use of post-point-of-sale rebates,
discounts, and other price concessions
that reduce the price that plans and
issuers pay for prescription drugs. To
address this issue and to introduce
greater transparency surrounding
prescription drug pricing, in response to
comments, the Departments are also
finalizing a requirement that plans and
issuers must publicly disclose historical
net prices, as discussed in detail below.
Prescription Drug Historical Net Price
Disclosure
For purposes of the final rules,
historical net price means the
retrospective average amount a plan or
issuer paid for a prescription drug,
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inclusive of any reasonably allocated
rebates, discounts, chargebacks, fees,
and any additional price concessions
received by the plan or issuer with
respect to the prescription drug. Net
price is the price for a prescription drug
after discounts are deducted, and is paid
at different points in the prescription
drug distribution chain (for example,
the plan or issuer to the pharmacy, the
pharmacy to a wholesaler, and the
wholesaler to the manufacturer).194 For
the purposes of the final rules, the
Departments are concerned with the
price ultimately paid by a plan or issuer
to a drug manufacturer.195 Essentially,
rebates, discounts, chargebacks, fees,
and other additional price concessions
are adjustments made after the point-ofsale that affect the total price paid by
the plan or issuer (or through a contract
with the PBM) to the manufacturer for
a prescription drug product. As a
general matter, a price concession is a
discount or rebate available to a
purchaser of a product or service,
wherein the discount or rebate is
conditioned upon the purchaser
complying with the contractual terms of
the rebate or discount offer.196 More
specifically, a rebate is an amount that
the prescription drug manufacturer
returns to a payer based on utilization
by consumers enrolled through a plan or
issuer or based on purchases by a
provider.197 A chargeback is a type of
discount process through a prescription
drug wholesaler where manufactures
reimburse wholesalers who offer drugs
to purchasers at discounted prices, and
the discount negotiation occurs between
the manufacturer and the purchaser.198
Finally, fees include any payment
adjustments, incentives, or other
discounts that are not included in the
negotiated price for a drug (for example,
prompt pay discounts, pharmacy
network fees, performance-based fees,
and incentive fees).199 The Departments
194 ‘‘AMCP Guide to Pharmaceutical Payment
Methods, 2013 Update’’ Academy of Managed Care
Pharmacy. 2013. Available at: https://
www.amcp.org/sites/default/files/2019-03/FullPharmaceutical-Guide-%283.0%29.pdf.
195 The Departments note that each plan or issuer
(or the PBM acting under contract with the plan or
issuer) may utilize a different combination of price
concessions.
196 ‘‘AMCP Guide to Pharmaceutical Payment
Methods, 2013 Update. Academy of Managed Care
Pharmacy. 2013. Available at: https://
www.amcp.org/sites/default/files/2019-03/FullPharmaceutical-Guide-%283.0%29.pdf.
197 Id.
198 Id.
199 ‘‘Final Medicare Part D DIR Reporting
Requirements for 2017.’’ Centers for Medicare &
Medicaid Services. Available at: https://
www.cms.gov/Research-Statistics-Data-andSystems/Computer-Data-and-Systems/HPMS/
HPMS-Memos-Archive-Weekly-Items/SysHPMSMemo-2018-May-30th.
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note that manufacturers also may offer
additional price concessions to certain
providers or directly to consumers in
the form of coupons. The final rules
only require disclosure of reasonably
allocated rebates, discounts,
chargebacks, fees, and any additional
price concessions received by the plan
or issuer (or the PBM under contract
with the plan or issuer).
As noted earlier, several commenters
commented on the nature of the
prescription drug pricing information
that should be captured to achieve the
goals of price transparency. Some
commenters noted the net price would
be important to price transparency
efforts because it would put consumers
on notice when the net price is less than
their cost-sharing amount and it would
capture the actual prices of prescription
drugs after the application of price
concessions, which would provide
transparency regarding actual
prescription drug costs. The
Departments agree with these
commenters that disclosure of
information about the net price for
prescription drugs (and therefore rebates
and other price concessions that are
included in the net price) is necessary
to achieve the goals of the final rules.
Therefore, the final rules adopt a
requirement to make public a historical
net price, as defined by the final rules.
Furthermore, rather than require
disclosure of the actual net price, the
final rules establish and adopt a
definition of historical net price that
balances the need for transparency
against concerns expressed by other
commenters that release of net prices
could affect issuers and PBMs’ ability to
negotiate drug prices, including rebates
and other price concessions.
Specifically, the final rules define
historical net price as the retrospective
average amount a plan or issuer paid an
in-network provider, including any innetwork pharmacy or other prescription
drug dispenser, for a prescription drug,
inclusive of any reasonably allocated
rebates, discounts, chargebacks, fees,
and any additional price concessions
received by the plan or issuer with
respect to the prescription drug or
prescription drug service. The
Departments note that for the purposes
of the final rules, the definition of
historical net price only includes those
price concessions received by the plan
or issuer (or under the contract between
the PBM and the plan or issuer).
Because of timing delays related to
application of rebates, discounts,
chargebacks, fees, and other price
concessions, plans and issuers are
required to provide historical or
retrospective data, rather than
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prospective or current pricing data
regarding the net price of prescription
drugs. In the case prescription drug net
prices, historical data will provide
valuable information for stakeholders,
as the actual prices plans and issuers
ultimately pay for prescription drugs
cannot be known until after the
application of time-delayed rebates,
discounts, chargebacks, fees, and other
price concessions. As discussed later in
this section, plans and issuers will be
required to include historical net prices
for a 90-day period beginning 180 days
before the date a particular Prescription
Drug File is published. The final rules
also require the historical net price, as
defined earlier in this section, to be
disclosed through the Prescription Drug
File.
As discussed earlier in this preamble,
the Departments are aware that an
estimated allocation of rebates,
discounts, chargebacks, fees, and any
other additional price concessions may
be necessary to represent the historical
net price. Product-specific and nonproduct specific rebates, discounts,
chargebacks, fees, and other price
concessions must be allocated by dollar
value if the total amount of the price
concession is known to the plan or
issuer at the time of file publication. It
is the Departments’ understanding that
most discounts, such as those related to
market sharing and rebates based on
volume, are calculated within time
periods as short as one to three months.
Therefore, the Departments expect the
total amounts for these types of
discounts, rebates, and other price
concessions will be known at the time
of file publication. Where the total
amount of a price concession is known
at the time of file publication, plans and
issuers must allocate the price
concession by the total dollar amount.
The Departments also understand that
some product-specific and non-product
specific price concessions are based
upon outcomes- or value-based payment
arrangements that calculate rebates over
a longer period of time—usually six
months to more than three years.
Because these price concessions will not
be known at the time of file publication,
the Departments are requiring plans and
issuers to estimate the historical net
price using a reasonable allocation and
good faith estimate of the total
concession amount. Therefore, if the
total amount of the price concession is
not known to the plan or issuer at the
time of file publication, then rebates,
discounts, chargebacks, fees, and other
price concessions should be reasonably
allocated using an estimate of the
average price concessions based on the
rebates, discounts, chargebacks, fees,
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and other price concessions received
over a time period prior to the current
reporting period and of equal duration
to the current reporting period.
Rebates may reflect discounts
negotiated with drug manufacturers that
lower drug prices for the plan or issuer.
Rebates may not directly benefit
participants, beneficiaries, or enrollees,
however, as the decision of whether and
how to share savings from rebates is at
the discretion of the plan or issuer.
Nonetheless, there is evidence that
rebates are positively correlated with
increased manufacturer list prices for
prescription drugs, which is typically
the basis for a consumer’s cost-sharing
liability.200 A recent analysis found that,
on average, from 2015 to 2018, a $1
increase in rebates was associated with
a $1.17 increase in manufacturer list
prices.201 Therefore, due to the positive
correlation between rebates and
manufacturer list prices, a policy that
results in a reduction to rebates may
result in a reduction in the
manufacturer list price (and also overall
prescription drug prices). A policy that
requires plans and issuers to make
public historical net prices could expose
the extent of rebates and other price
concessions, and this transparency in
historical net price could cause a
reduction in the use of rebates and other
price concessions, and, therefore, a
reduction in the manufacturer list
price.202 The resulting reductions in
manufacturer list price could lead to
lowered out-of-pocket costs for both
uninsured consumers who must pay the
manufacturer list price and insured
consumers with deductibles and
coinsurance. Because negotiated rates
for prescription drugs are largely based
upon the manufacturer list price, the
reduction in the manufacturer list price
will likely be reflected in the negotiated
rate. Further, because negotiated rates
are used to determine cost-sharing
liability for prescription drugs, a
reduction in such rates will likely result
in lower consumer costs through a
reduction to deductibles and
coinsurance.
The Departments are of the view that
requiring both the negotiated rate and
the historical net price, as defined by
the final rules, will produce sufficient
transparency regarding prescription
drug pricing information to support
consumer health care purchasing
200 Sood, N., et al. ‘‘The Association Between
Drug Rebates and List Prices.’’ U.S.C. Schaeffer
Center for Health Policy and Economics. February
11, 2020. Available at: https://healthpolicy.usc.edu/
research/the-association-between-drug-rebates-andlist-prices/.
201 Id.
202 Id.
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Federal Register / Vol. 85, No. 219 / Thursday, November 12, 2020 / Rules and Regulations
decisions and provide other
stakeholders insight into actual
prescription drug pricing. Inclusion of
both the negotiated rate and historical
net price addresses the Departments’
concern, expressed in the preamble to
the proposed rules, that merely
requiring disclosure of the rate that is
used to determine an individual’s costsharing liability (that is, as clarified in
the final rules, the negotiated rate) could
perpetuate the lack of transparency in
prescription drug pricing.
Additionally, in the preamble to the
proposed rules, the Departments
specifically solicited comment on
whether and how the public disclosure
requirements should account for
rebates, discounts, and dispensing fees
to ensure individuals have access to
meaningful cost-sharing liability
estimates for prescription drugs.203
Upon review of the comments, the
Departments are of the view that public
disclosure of the historical net price,
which takes into account rebates,
discounts, dispensing fees, and other
price concessions, in addition to the
negotiated rate, upon which cost sharing
is based, provides the appropriate
combination of pricing information to
achieve the goals of transparency and
ensure that individuals have access to
meaningful prescription drug pricing
information. First, the negotiated rate
will help support consumer health care
purchasing decisions. Second, the
historical net price will support the
public in gaining enhanced knowledge
of actual drug prices. Enhanced
knowledge of actual drug historical net
prices could also support consumer
health care purchasing decisions, as
consumers could use the information to
determine whether their out-of-pocket
costs are commensurate with the
rebates, discounts, and other price
concessions received by their plan or
issuer. The historical net price will also
make consumers and other stakeholders
aware of situations where cost-sharing
liability for a prescription drug exceeds
the amount their plan or issuer
ultimately paid for the prescription
drug. In these situations, participants,
beneficiaries, and enrollees will be able
to make an informed decision regarding
whether to utilize their plan or coverage
when purchasing the prescription drug.
Furthermore, plans and issuers could be
incentivized to pass through a larger or
more significant share of the rebates and
other discounts that they receive from
drug manufacturers if those discounts
are effectively disclosed via historical
net price information.
203 84
FR 65464, 65472 (Nov. 27, 2019).
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The Departments acknowledge that
there are potential adverse
consequences of requiring plans and
issuers to make public rebates and other
price concessions, directly or indirectly,
through the historical net price. For
instance, stakeholders such as PBMs
and prescription drug manufacturers
could attempt to find ways to obscure
rebates and other price concessions
such that they would not be required to
be publicly disclosed under the final
rules. However, the Departments are of
the view that such attempts would
likely be discouraged by the nature of
the disclosures themselves and would
otherwise be unsuccessful if attempted.
A benefit of requiring the widespread
public disclosure of pricing information
for prescription drugs is that the
transparency data itself can be used to
identify where plans and issuers (or
third parties acting on their behalf) may
be attempting to circumnavigate
disclosure requirements. Researchers
and other entities who aggregate and
analyze the data will be able to compare
pricing data across plans and issuers.
This can help identify plans and issuers
whose data is an outlier and identify
them for further scrutiny by regulators.
The current lack of transparency in
prescription drug pricing does not allow
this type of oversight and monitoring.
While it is possible that stakeholders
will act in ways that conflict with the
intent of the public disclosures, it is also
very likely that transparency itself will
help state and local regulators to
identify these anti-competitive
practices. Indeed, it is possible that the
public disclosures could help to
uncover other unknown anticompetitive business practices that exist
today. For these reasons, the
Departments are of the view that the
benefits of public disclosure of
prescription drug pricing information
outweigh the potential risk that certain
stakeholders may seek to take advantage
of the disclosure requirements in ways
that would increase prescription drug
costs.
A commenter observed that if the
Departments were to include the net
price, it would be important to clarify
that that the information is not
necessarily predictive of future
transactions because information about
rebates is not known with certainty
before a drug is dispensed. The
Departments recognize that prospective
net prices for prescription drugs could
be complicated to estimate accurately
due to the nature of prescription drug
pricing. Nonetheless, the Departments
are of the view that the historical net
price will be a sufficiently accurate
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guide for potential prescription drug
prices and will fulfill the objectives of
the final rules.
The final rules adopt a requirement to
include in the Prescription Drug File the
historical net price over a 90-day
reporting period for each NDC for dates
of service within 180 days of the
Prescription Drug File publication date.
This approach will ensure that data is
composed of the historical net price for
relatively recent claims (rather than
older claims from multiple time
periods) and will avoid the conflation of
payments from different periods of time.
The Departments are of the view that
historical net prices from defined
periods of time will enable users to
make meaningful comparisons across
plans and coverages. Additionally, the
Departments chose this reporting
reference period to be consistent with
the period proposed and being finalized
through the final rules for reporting of
allowed amounts through the Allowed
Amounts File. The Departments are of
the view that consistency across
machine-readable file requirements,
where applicable, will reduce potential
confusion among file users as well as
reduce burdens for plans and issuers.
The Departments are of the view that
the 180-day lookback period (which is
expected to capture many of the marketshare and volume rebates and other
price concessions) and requirement to
make a reasonable allocation will
balance the need to be transparent in
current prices with the delayed timing
of the application of certain rebates and
other price concessions.
To reasonably allocate any particular
non-product specific or product-specific
rebate, discount, chargeback, fee, or
other additional price concession by
dollar value of the drug where the totals
amount is fully known at the time of file
publication, plans and issuers should
divide the rebate or discount amount by
the total dollar value of drugs on which
the rebate is calculated, and then apply
that percentage to all applicable drugs.
For example, if a rebate amount of
$20,000 is received during the 3-month
file reference period in connection with
$100,000 in sales on two drugs during
the same period, the rebate is allocated
as a 20 percent discount to the prices of
those two drugs. Sales for Drug A
totaled $60,000 and sales for Drug B
totaled $40,000. A rebate of $12,000
($60,000 multiple by 20 percent) is
allocated to Drug A, resulting in a
historical net price populated in the
Prescription Drug File of $48,000.
Similarly, a rebate of $8,000 is allocated
to Drug B, resulting in a historical net
price populated in the Prescription drug
file of $32,000. The Departments are
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aware that this allocation methodology
will not always perfectly allocate the
rebate amounts because of the
complexities of rebate calculation, or
because of timing issues. However, the
Departments are of the view that this
simplified approach balances the goal of
providing actionable drug pricing
information to the public while limiting
the burdens on plans and issuers in
producing the information.
To reasonably allocate any particular
non-product specific or product-specific
rebate, discount, chargeback, fee, or
other additional price concession where
the total amounts are not fully known at
the time of file publication, plans and
issuers must make a good faith,
reasonable estimate of the price
concession using an historical
adjustment amount. To make this
estimate, plans and issuers shall
determine the average value of price
concessions for the relevant product
over a time period prior to the current
reporting period and of equal duration
to the current reporting period and use
that amount to apply an estimated
adjustment amount in the current
reporting period. For example, Plan X
has $100,000 in total sales for 20,000
units—averaging $5 per unit—of Drug A
during the current reporting period,
which is January 1, 2020, through
March 31, 2020. However, Plan X will
not know the total amount of productspecific rebate to expect for sales of
Drug A for at least another six months.
To address this timing issue, Plan X can
apply a reasonable estimate to allocate
an adjustment to the current reporting
period. For instance, Plan X can look
back to the total rebates received for the
product during a comparable time
period. In this example, Plan X reviews
its historical data and determines the
rebates received for Drug A, from the
period between January 1, 2019, and
March 31, 2019, totaled $10,000 for
sales of 30,000 units totaling $160,000.
The average price per unit was $5.33
and the average discount per unit was
$0.33 resulting in an average final net
price of $5 for Drug A. Plan X then
applies this historical rebate percentage
to the current reporting period for Drug
A. Plan X subtracts $6,250 ($100,000
total sales for the current reporting
period multiplied by the estimated 6.25
percent historical rebate percentage)
from the $100,000 total sales for a total
net price of $93,750 and an average net
price for Drug A, rounded to the nearest
hundredth, of $4.69. Plan X reports in
the Prescription Drug File an average
historical net price for Drug A of $4.69
for the current reporting period.
In the discussion of the Allowed
Amounts File in the preamble to the
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proposed rules, the Departments noted
that providing the Allowed Amounts
information could raise health privacy
concerns. The Departments are of the
view that similar concerns could be
raised regarding the historical net price
information in the Prescription Drug
File. For example, there may be
instances—such as in a small group
plan or with respect to an NDC for a rare
chronic condition—where, through
deduction, disclosure of historical net
price information may enable users to
identify the participant, beneficiary, or
enrollee who received a particular
prescription drug because a very small
number of claims are used to derive the
historical net price of a particular NDC
at a particular pharmacy or other
prescription drug dispenser.
Additionally, as noted in relation to the
Allowed Amount File, there may also be
instances when the historical net price
public disclosure requirement would be
inconsistent with Federal or state laws
governing health information that are
more stringent than HIPAA regarding
the use, disclosure, and security of
health data that was produced pursuant
to a legal requirement, such that plans
and issuers would be required to further
de-identify data. For example, some of
the claims for payment used to derive
the historical net price could relate to
services provided for substance use
disorders, which could implicate
disclosure limitations under 42 CFR
part 2 governing the confidentiality of
patient records related to treating a
substance use disorder. The
Departments are committed to
protecting PHI. To address privacy
concerns, the final rules adopt an
approach consistent with the out-ofnetwork Allowed Amount File. The
final rules do not require plans and
issuers to provide historical net price
data in relation to a particular pharmacy
or other prescription drug dispenser and
a particular NDC when compliance
would require a plan or issuer to report
an historical net price for a particular
pharmacy or other prescription drug
dispenser calculated with fewer than 20
different claims for payment.
Furthermore, the Departments note that
disclosure of historical net prices will
not be required if compliance would
violate applicable health information
privacy laws. The Departments are of
the view that these mitigation strategies,
in addition to the historical net price
being an average of amounts paid to a
particular provider for a particular NDC
during the reference period, are
sufficient to protect patients from
identification based on information in
the Prescription Drug File. The
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Departments note that the low volume
exemption applies only to the
requirement to include the historical net
price and does not affect the
requirement to include the negotiated
rates in the Prescription Drug File.
Regarding prescription drugs, the
Departments received a comment that
requested discounts under section 340B
of the PHS Act be included in the
applicable machine-readable file, noting
that providing this information is
important to ensure consumers can
access those savings. However, this
commenter acknowledged that health
plans often do not have access to
information about when a section 340B
discount is paid and so recommended
the Departments develop and
implement a process to help health
plans identify this information.
Discounts under the section 340B
Drug Pricing Program are only available
to eligible providers (known as covered
entities as outlined in section 340B of
the PHS Act) and regulations under
section 340B of the PHS Act are outside
of the scope of the final rules.
2. Required Method and Format for
Disclosing Information to the Public
As explained in section II.C.1.c of this
preamble, the final rules adopt the
requirement that plans and issuers
produce the In-network Rate File, the
Allowed Amount File, and the
Prescription Drug File. The Departments
are finalizing a requirement that the Innetwork Rates, Allowed Amounts, and
Prescription Drug Files must be
disclosed as machine-readable files. The
final rules define ‘‘machine-readable
file’’ to mean a digital representation of
data or information in a file that can be
imported or read by a computer system
for further processing without human
intervention, while ensuring no
semantic meaning is lost. The
requirement ensures that the machinereadable file can be imported or read by
a computer system without those
processes resulting in alterations to the
ways data and commands are presented
in the machine-readable file. The
Departments proposed to require each
machine-readable file to use a nonproprietary, open format to be identified
by the Departments in technical
implementation guidance (for example,
JavaScript Object Notation (JSON),
Extensible Markup Language (XML), or
Comma Separate Value(s) (CSV)). A
portable document format (PDF) file, for
example, would not meet this definition
due to its proprietary nature.
Contemporaneous with the proposed
rules, the Departments published a PRA
package (OMB control number: 0938–
1372 (Transparency in Coverage (CMS–
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10715)) that further described the
specific data elements that would be
disclosed in the proposed machinereadable files. Updated cost and burden
estimates related to the collection
requirements are discussed in the ICR
section of this preamble and are
included in in the corresponding PRA
package, including changes to costs and
burdens and additional collection
instruments as a result of modifications
to the proposed rule made through the
final rules.
The Departments proposed requiring
group health plans and health insurance
issuers to publish their negotiated rates
and historical allowed amount data in
two machine-readable files, one
including required negotiated rate data
with in-network providers, and a second
including required out-of-network
allowed amount data. The Departments
proposed requiring plans and issuers to
publish the data in two separate
machine-readable files to account for
the dissimilarity between the negotiated
rates paid to in-network providers under
contract and the more variable allowed
amounts paid to out-of-network
providers. The Departments solicited
comment on whether building and
updating one file could be less
burdensome for plans and issuers than
maintaining multiple files, and whether
having the data in a single file could
facilitate use by third-party developers.
The Departments were particularly
interested in comments regarding
whether a single file for disclosure of all
the required information would likely
be extremely large, making it less than
optimal for anticipated users, such as
software application developers and
health care researchers.
Some commenters supported keeping
the In-network Rates File and out-ofnetwork Allowed Amount File separate.
One commenter noted the structure
would allow quick development of data
aggregation efforts and consumerfriendly tools. Additionally, the
commenter stated that keeping the files
separate would support file ingestion.
Another commenter stated that each file
would contain fundamentally different
data, and the costs associated with
storing and maintaining a large
combined file would be very large.
The Departments agree that the
information being required to be
publicly disclosed through the machinereadable files related to negotiated rates
and allowed amounts is sufficiently
distinct to justify separating the
information into separate files. In
particular, the out-of-network allowed
amounts information must be derived
from historical claims data, which is
fundamentally different in kind from
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simply listing applicable rates for each
service. Furthermore, the Departments
also agree with comments indicating
that splitting the files would help
reduce the maintenance and storage
burdens of the files. Throughout this
preamble, the Departments have
stressed the importance of ensuring the
public disclosures required through the
final rules are accessible, especially to
internet-based and mobile application
developers, to support development of
innovative consumer-facing tools, as
well as to other entities, such as
researchers, and regulators, to support
efforts to better understand and support
the competitiveness of health care
markets.
The requirement to publish more than
one machine-readable file which will
facilitate the disclosure of data that is
different in character, scope, and other
factors, which will help facilitate data
ingestion for users of the machinereadable files, including third-party
developers, researchers, regulators, and
other interested parties. This approach
will also help facilitate file ingestion,
data aggregation, and data analysis by
researchers whose projects could lead to
important market insights that could
inform efforts to further address the
wide variation in health pricing, and by
regulators who would be able to
leverage the data in their oversight
activities.
As discussed earlier in this preamble,
the final rules adopt a third Prescription
Drug File in recognition of the unique
pricing attributes of prescription drug
products. Prices related to prescription
drug products that plans and issuers
would have been required to include in
the In-network Rate File under the
proposed rules will now be required to
be publicly disclosed through the third
Prescription Drug File. As discussed
earlier in this preamble, the
Departments estimate that requiring a
third file for prescription drugs will not
add significantly to the burdens and
costs of developing and maintaining the
machine-readable files calculated in
relation to the final rules because costs
and burdens calculated for prescription
drugs as included in the In-network
Rate File will be transferred to the
Prescription Drug File. Additionally, the
Departments anticipate that removal of
prescription drugs from the In-network
Rate File will significantly reduce the
size of that file, which could reduce the
costs associated with maintenance and
storage for the In-network Rate File. The
Departments clarify that not all
prescription drug pricing information
required to be disclosed through the
final rules is required to be included in
the Prescription Drug File. Rather, the
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Prescription Drug File is required to
include prescription drug pricing
information for in-network providers,
including pharmacies and other
prescription drug dispensers, while the
Allowed Amount File is required to
include prescription drug pricing
information for out-of-network
providers, including pharmacies and
other prescription drug dispensers. The
Departments also clarify that the Innetwork Rate file may also contain
prescription drug information to the
extent the prescription drug is a part of
a bundled payment arrangement.
Some commenters argued that the
method and format for providing
information to the public is not feasible.
One commenter did not support the
policy that the machine-readable files
should be provided in a public use file
format, claiming the files would be
millions of rows long and very difficult
to review. Another commenter
expressed concern that the volume of
data would make it impossible to post
all of the information in two files and
further stated that there is no single set
of codes that describe every item or
service, so it would be impossible to
post this data without very specific,
standard definitions. Given the lack of
standard definitions, this commenter
argued that there is no systematic way
to compile and display the information
requested, so claim compilation would
have to be done manually. The
commenter further stated that, even if
there were standard definitions, it
would be impossible to provide them in
‘‘plain language.’’
Based on consultations with industry
and IT development professionals, the
Departments do not agree with
commenters who stated that
development of the machine-readable
files would not be feasible as envisioned
by the proposed rules. The Departments
are aware that these files could be very
large and could be difficult for
laypersons to navigate. However, the
Departments are of the view that the
files’ primary benefit to health care
consumers will be the availability of
web-based tools and mobile
applications developed for consumer
use by third-party developers,
aggregation and analysis conducted by
researchers, and oversight efforts by
regulators. The required machinereadable files will be optimal for
ingestion, data aggregation, and data
analysis, all of which are functions
performed by third-party internet-based
developers, researchers, and regulators
who use large data sets in a manner that
will lead to benefits for consumers.
Additionally, notwithstanding that the
Departments have designed these
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transparency requirements so that it is
not necessary that individual consumers
use or ingest the data in the machinereadable files, the Departments are of
the view that many individual health
care consumers do possess the
necessary expertise to access and
navigate the files. The final rules also
impose a requirement to include plain
language to identify each item and
service included in each file. This
requirement will help ensure
consumers, third party application
developers, researchers, regulators, and
other interested parties are able to easily
understand the information.
The Departments have determined
that the potential benefits for consumers
of requiring the disclosure of required
data through machine-readable files
outweigh the potential for consumer
confusion at the individual consumer
level. Additionally, the Departments
expect that third party application
developers, researchers, regulators, and
other file users will have the expertise
to aggregate, standardize, and interpret
the pricing information included in the
file and translate the pricing
information into products, research, and
market oversight and reforms that will
ultimately benefit consumers.
The Departments also do not agree
that the volume of data would make the
machine-readable files too large to post
publicly, regardless of whether the data
is posted in two or three files. The
Departments’ rough estimate of file size,
based, in part, upon numbers provided
by commenters, suggests a file size of
approximately 5 gigabytes.204 CMS
currently makes available for download
on its website some large public use file
(PUF) data sets that are several
gigabytes. For example, the Part D
Prescriber PUF, 205 available on the
CMS website, is over three gigabytes in
size. The Departments acknowledge that
because of the large file size, file users
will likely need to use database or
statistical software to download the
machine-readable files as importing into
Microsoft Excel would result in
incomplete loading of data. However,
this approach is similar to that used for
some of the larger PUF data sets
available on the CMS website, including
204 As a reference point, a typical commercial
two-hour Blu-ray film is approximately 15–25
gigabytes. ‘‘White Paper Blue-ray Disc Format
General.’’ Blue-ray Disc Association. 2018.
Available at https://www.blu-raydisc.com/Assets/
Downloadablefile/White_Paper_General_5th_
20180216.pdf.
205 The Part D Prescriber Public Use File (PUF) is
available on the CMS website at the following
location: https://www.cms.gov/Research-StatisticsData-and-Systems/Statistics-Trends-and-Reports/
Medicare-Provider-Charge-Data/PartD2017.
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the Part D Prescriber PUF, which must
be opened using specialty software.
Assuming that plans’ and issuers’
negotiated rates are in a digitized
format, even if the negotiated rates are
not stored in a single database, this
information can be systematically
compiled and maintained by the plan or
issuer. In recognition that there is no
single set of billing codes for nonprescription drug services, the
Departments are providing flexibility in
the final rules by not prescribing which
code or set of codes plans and issuers
must use to publicly disclose their data.
Rather, the Departments are requiring
that plans and issuers associate each innetwork applicable rate or out-ofnetwork allowed amount with a CPT,
HCPCS code, DRG, or other common
payer identifier. In the case of
prescription drugs, the Departments are
requiring plans and issuers to associate
each negotiated rate and historical net
price with an NDC. The Departments’
expectation is that the type of billing
code plans and issuers use to populate
the machine-readable files will be
consistent with the billing codes that
plans and issuers use in their operations
when actually determining provider
reimbursement and cost-sharing
liability.
The Departments further note that
nothing prevents plans and issuers from
including in the files a mixture of
billing code types so long as the billing
codes included in the file are reflective
of the plan’s or issuer’s operations. To
facilitate identification of the billing
code type, there will be an indicator in
the file format described by the
technical implementation guidance that
will allow plans and issuers to specify
the particular type of billing code
entered for each data entry in the
machine-readable files. The final rules
also require that plans and issuers
include plain language descriptions for
each billing code. The Departments note
that in the case of items and services
that are associated with common billing
codes (such as the HCPCS codes), plans
and issuers are permitted to use the
codes’ associated short text description.
The final rules further clarify that, in
the case of NDCs for prescription drugs,
the plain language description must be
the proprietary and nonproprietary
name assigned to the NDC by the FDA.
The Departments have made this change
to align with the change to require only
the NDC billing code to be used for
prescription drugs. Requiring the
proprietary and nonproprietary name
assigned to the NDC by the FDA further
standardized the product identifiers for
prescription drugs and will facilitate
comparisons across prescription drug
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pricing information for plans and
issuers.
For all other items and services, as the
Departments explicitly stated in the
proposed rules and elsewhere in this
preamble, plans and issuers can meet
the ‘‘plain language’’ description
requirements by using their chosen
code’s short text description. However,
the Departments note that including the
short text description for each code is a
minimum requirement and nothing in
the final rules prevents plans and
issuers from providing a more
consumer-friendly plain language
description for each covered item or
service. Plans and issuers may be
incentivized to provide more consumerfriendly information in machinereadable files because it may permit
them to include disclaimer or clarifying
language in the files, where applicable.
Furthermore, if a plan or issuer uses
plain language descriptions for billing
codes in its operations that are more
consumer-friendly than the established
short text descriptions, the Departments
expect plans and issuers to include in
the machine-readable files the plain
language descriptions they use in their
operations.
The Departments received comments
that supported the Departments’
development of specific technical
standards for the files to which plans
and issuers must adhere. One
commenter recommended the
Departments provide guidance to plan
sponsors who are able to provide some,
but not all, of the file data elements.
Another commenter stated that the
proposed rules do not make clear how
to report items and serviced provided
through capitated and bundled payment
arrangements in the files; noting that
this information is necessary for
consumers to measure provider value.
One commenter responded positively to
the Departments’ provision of technical
implementation guidance for the files,
but requested a robust public comment
solicitation far in advance of the
applicability date for the rules.
The Departments are of the view that
providing specific technical direction in
separate technical implementation
guidance, rather than in the final rules,
will better enable the Departments to
respond to technical issues and
developments, as well as compliance
questions related to novel or rare
payment arrangements. Therefore, as
proposed, the Departments are
developing technical implementation
guidance for plans and issuers to assist
them in developing the machinereadable files.
The technical implementation
guidance will be available online
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through GitHub, a website and cloudbased service that helps developers
store and manage their code, as well as
to track and control changes to their
code. The GitHub space offers the
Departments the opportunity to
collaborate with industry, including
regulated entities, and third-party
developers to ensure the file format is
adapted for reporting of the required
public disclosure data for various plan
and contracting models. For example,
the Departments have updated the
schematics of the file formats in
response to comments received about
and bundled payments and capitated
payment arrangements, as well as other
alternative contracting models. Plans
and issuers will be able to access the
GitHub schemas at any time and
collaborate with the Departments in
real-time.
The Departments’ goal in using
GitHub is to facilitate this collaborative
effort all allow plans and issuers to meet
the public disclosure requirements of
the final rules while addressing their
unique IT system, issuer, and plan
attributes. To the extent a plan or
issuer’s unique attributes (for example,
IT system, plan benefit design, or
reimbursement model) are not
addressed sufficiently through the
technical implementation guidance, the
Departments intend to provide targeted
technical assistance to ensure all plans
and issuers are able to meet the public
disclosure requirements under the final
rules. The technical implementation
guidance will provide instructions on
how to obtain this technical assistance
should the need arise.
The technical implementation
guidance hosted on GitHub will include
a repository set of schemas describing
the data formats (encoded as JSON,
XML, and CSV) for all three machinereadable files: The In-network Rate File,
the Allowed Amount File, and the
Prescription Drug File. The technical
implementation guidance will be
available as part of the PRA package
developed for the ICRs included in the
final rules. As part of the PRA process,
stakeholders have an additional
opportunity to submit comments related
to the PRA for 30 days following the
publication of the final rules.
In the proposed rules, the
Departments requested comment on
whether the final rules should adopt a
single non-proprietary format for the
machine-readable files, specifically
JSON files. The Departments understand
that this format generally is easily
downloadable, and it could simplify the
ability of file users to access the data.
The Departments received one
comment in support of requiring JSON
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as the standardized file format for the
required machine-readable files.
However, the Departments’ internal
technical experts agreed that the speed
of technology developments weighs
heavily in favor of maintaining
flexibility to adopt a suitable file format
as a non-substantive, operational
requirement that will be identified in
the relevant implementation guidance
for the required machine-readable files.
Additionally, this flexibility will allow
the Departments to adapt the file
technical specifications for new and
emerging technologies. Therefore, the
Departments decline to require in
regulation a more specific file format for
the machine-readable files.
The Departments reiterate that, as
finalized, all machine-readable files
must conform to a non-proprietary,
open-standards format that is platformindependent and made available to the
public without restrictions that would
impede the re-use of the information.
Therefore, because a PDF file format is
proprietary, it would not be an
acceptable file format in which to
produce the files. A plan or issuer’s file
will be acceptable so long as it includes
all required data elements required for
the respective file (that is, all applicable
rates in the In-network Rate File,
allowed amounts and billed charges in
the Allowed Amounts File, and
negotiated rates and historical net
process in the Prescription Drug File)
and is formatted in a manner consistent
with the technical implementation
guidance the Departments are
developing.
The final rules therefore adopt, with
modification, the required method and
format for disclosure of information
through the machine-readable files. The
Departments note several nonsubstantive modifications to the
regulatory text, which are being adopted
in the final rules to clarify and
streamline the text. To further highlight
the file technical implementation
guidance, the regulation text of the final
rules has been modified nonsubstantively to specify that the
machine-readable files must be made
available in a form and manner
specified in guidance issued by the
Departments. In the proposed rules, the
regulation text stated more broadly that
the machine-readable files must be
made available in a form and manner
determined by the Departments.
Additionally, the proposed rule
included two sentences that simply
restated what must be publicly
disclosed through the two proposed
machine-readable files.206 The
206 See
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Departments have removed these
sentences from this this section of the
regulatory text because they duplicate
language contained in the previous
sections of the regulatory text, do not
add any additional value to this section
of the regulatory text, and could cause
confusion.
3. Required Accessibility Standards for
Disclosure of Information to the Public
The Departments proposed to require
a plan or issuer to make available on an
internet website the required machinereadable files, and that the files must be
accessible free of charge, without having
to establish a user account, password, or
other credentials, and without having to
submit any personal identifying
information such as a name, email
address, or telephone number. The
Departments also proposed to allow
plans and issuers flexibility to publish
the files in the locations of their
choosing based upon their superior
knowledge of their website traffic and
the places on their website where the
machine-readable files would be readily
accessible by the intended users. The
Departments are finalizing these
requirements as proposed. The
Departments also considered requiring
plans and issuers to submit the internet
addresses for the machine-readable files
to CMS, and having CMS make the
information available to the public. A
central location could allow the public
to access the information in one
centralized location, reducing confusion
and increasing accessibility. However,
the Departments opted to propose
flexible rules allowing plans and issuers
to publish the files in the locations they
have chosen based upon their
determinations regarding where the files
will be most easily accessible by the
intended users. The Departments also
considered that requiring plans and
issuers to notify CMS of the internet
address for their machine-readable files
would increase the burdens on plans
and issuers. The Departments requested
comment on whether the proposed
requirement to allow issuers to display
the files in the location of their choice
is superior to requiring plans and
issuers to report the internet-based
addresses of their files to CMS for
public display. The Departments were
specifically interested in whether the
burden associated with reporting file
locations to CMS would be outweighed
by the risk that members of the public
would be unable to easily locate plans’
and issuers’ machine-readable files.
Several commenters supported the
Departments’ proposal to make the
machine-readable files easily and
publicly available. One commenter
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supported making the files available free
of charge and stated that individuals
should not be required to register a user
account, password, or enter other
credentials, or to submit PII to access
the files. Several commenters suggested
alternative methods or more stringent
requirements for making public the
information required to be disclosed
through the machine-readable files. One
commenter expressed a preference for
CMS to maintain a centralized location
on the CMS website from which the
public can access links to the files. The
commenter noted that if the
Departments elected not to maintain a
centralized database, the Departments
should require plans and issuers to
prominently display a link to the files
in the main menu of the homepage on
their respective websites. Similarly,
another commenter asserted that the
final rules should require issuers to
report the location of their files and
provide a data dictionary to facilitate
oversight and enforcement of plans and
issuers.
Other commenters suggested the
Departments create a centralized
database to house the data required to
be disclosed through the machinereadable files. One commenter
recommended the information required
to be disclosed through the files be
loaded into a publicly available
searchable database that anyone can
access prior to receiving a medical
service. Similarly, another commenter
recommended that HHS aggregate the
data to create a centralized database. By
contrast, another commenter
recommended the Departments should
not create a central location for
negotiated rate information and
historical data, making the argument
that the private sector is best suited to
deliver this information to consumers.
As proposed, the machine-readable
files must be made publicly available
and accessible to any person free of
charge and without conditions, such as
establishment of a user account,
password, or other credentials, or
submission of PII to access the file.
Additionally, the proposed rules
specified that the files must be made
available in the form and manner
specified by the Departments. While the
Departments considered comments
related to the manner of the public file
disclosures (such as prominent display
on a plan or issuer’s homepage), the
Departments are also mindful of the
need to provide flexibility to plans and
issuers so that they are able to house the
files in a location that meets their
unique technical specifications. At this
time, the Departments are of the view
that reporting of the links to the file
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locations is not necessary to achieve the
goals of the final rules. However, the
Departments note that nothing in the
final rules prevents a Federal or state
regulatory body, such as a state
Department of Insurance (DOI), from
collecting this information from issuers
subject to their jurisdiction.
The Departments are aware and
understand commenters’ interest in
HHS aggregating and centralizing all of
the data required to be publicly
disclosed through the machine-readable
files. However, the Departments are of
the view that HHS is not best suited for
this role. As noted throughout this
preamble, the Departments expect
making negotiated rate and allowed
amount information available through
the machine-readable files will spur
third-party internet-based developers to
innovate, resulting in consumer-facing
tools. The Departments anticipate that
these consumer-facing tools developed
by third parties could act as centralized
databases, aggregating the pricing
information for many plans and issuers.
The Departments are of the view that
the private sector is better suited to
developing internet-based tools using
this information than the Departments,
and further, that the competition
spurred by several different third parties
operating in this space could benefit
consumers seeking to find the thirdparty tool that is best suited to their
individual consumer needs.
The final rules adopt, as proposed, the
accessibility requirements for the
machine-readable files. The final rules
clarify that the accessibility
requirements apply to all three
machine-readable files finalized within
the final rules: The In-network Rate File
(referred to in the proposed rules as the
Negotiated Rate File), the Allowed
Amount File, and the Prescription Drug
File.
4. Required Timing of Updates of
Information To Be Disclosed to the
Public
The proposed rules would have
required group health plans and health
insurance issuers to update the
information required to be included in
each machine-readable file monthly.
The Departments also proposed to
require plans and issuers to clearly
indicate the date of the last update made
to the In-network Rate Files and
Allowed Amount Files in accordance
with guidance issued by the
Departments.
The Departments recognized in the
proposed rules that information in Innetwork Rate Files (referred to in the
proposed rules as the Negotiated Rate
Files) could change frequently and
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considered whether to require plans and
issuers to update their In-network Rate
Files more often than monthly to ensure
that consumers have access to the most
up-to-date negotiated rate information.
Accordingly, the Departments sought
comment on whether the final rules
should require plans’ and issuers’ Innetwork Rate Files to be updated more
frequently. The Departments also sought
comment on an alternate proposal that
would require plans and issuers to
update negotiated rate information
within 10 calendar days after the
effective date of new rates with any innetwork provider, and on whether the
update timelines for negotiated rate
information and historical out-ofnetwork payment data should be the
same.
For the reasons discussed elsewhere
in this section of this preamble, the final
rules adopt, as proposed, the
requirement for a plan or issuer to
update the information required to be
included in each machine-readable file
monthly. The final rules clarify that this
requirement to update the machinereadable files monthly applies to all
three machine-readable files being
finalized through the final rules: The Innetwork Rate File, the Allowed Amount
File, and the Prescription Drug File.
Several commenters stated that the
requirement to update the In-network
Rate Files and Allowed Amount Files
monthly is operationally burdensome
and the benefits of this requirement are
limited because the information will not
change significantly on a monthly basis.
Some commenters recommended the
Departments change the required
frequency of updates to every six
months, while others suggested that the
final rules require updates to the Innetwork Rate File less frequently than
monthly (for example, quarterly or semiannually), but recommended that the
Allowed Amount File should be
updated monthly. Another commenter
recommended a phased-in approach
where the files would be updated twice
a year in the first year of
implementation and quarterly
thereafter. In contrast, one commenter
recommended the files be updated in
real-time as soon as updates to rates are
made.
Based on consultation with
government-affiliated IT experts and the
design of the file schemas, the
Departments are of the view that
building the first machine-readable file
will facilitate the automation of the
process to build future files. In other
words, the ability to produce
subsequent files should be streamlined
after completing initial development.
Therefore, the Departments do not find
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persuasive the contention that requiring
file updates monthly will significantly
increase the overall costs and burdens
related to producing the files. The
Departments, however, do not agree that
the files should be updated in real-time
as soon as updates are made. With the
monthly update requirement, the
Departments are seeking to balance the
need to ensure the data is current and
accurate for consumers with minimizing
burdens on plans and issuers.
As noted in the proposed rules, the
Departments acknowledge there will be
some costs with making updates to the
files, including costs to ensure the
quality of data and costs associated with
posting the information on a public
website. The Departments are of the
view that requiring plans and issuers to
update the files on a monthly basis will
sufficiently limit the burden while
ensuring that the most current data
generally available. However, requiring
updates to the files more or less
frequently would not adequately
balance these interests. Requiring
updates to the files more frequently
(such as on a daily basis), would add
potentially unnecessary burdens for
plans and issuers. Requiring updates to
the files less frequently would
potentially result in consumers relying
on outdated information for health care
purchasing decisions. While negotiated
rates, in particular, may not change
frequently for any one contract with a
provider or group of providers, the
Departments understand that payerprovider contracts are updated on a
rolling basis and throughout the year.
Therefore, updates throughout the year
are needed in order to ensure that the
information disclosed remains up-todate.
The final rules also require that the
Prescription Drug File be updated on a
monthly basis. The Departments
understand the complexities of
prescription drug pricing and are aware
that drug prices can fluctuate as
frequently as daily. However, the
Departments have determined that
aligning the frequency of updates of all
machine-readable files will mitigate the
burden associated with maintaining the
files for plans and issuers, and will best
balance the need for disclosing current
and accurate information against that
burden. The Departments are aware that
the number of pricing updates in the
monthly Prescription Drug File will
likely be more than the number of
monthly pricing updates for medical
services in the In-network Rate File.
However, the Departments are of the
view that if plans and issuers can
update their pharmacy claims
processing systems in real-time to
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account for fluctuating prices and
adjudicate claims for prescription drugs,
then the burden to pull current pricing
information into the Prescription Drug
File should be manageable.
The Departments will monitor the
implementation of the machine-readable
file requirements and consider updates
in future rulemaking if it is determined
that monthly updates are not adequately
balancing the need for accurate and
current information against the burdens
for plans and issuers.
5. Special Rules To Prevent
Unnecessary Duplication and Allow for
Aggregation
Similar to the proposed cost-sharing
information disclosure requirements for
participants, beneficiaries, and
enrollees, the Departments proposed a
special rule to streamline the
publication of data that would be
included in the proposed machinereadable files. This special rule has
three components: One for insured
group health plans where a health
insurance issuer offering coverage in
connection with the plan has agreed to
provide the required information,
another for plans and issuers that
contract with third parties to provide
the information on their behalf, and a
special rule allowing aggregation of outof-network allowed amount data.
a. Insured Group Health Plans
The Departments proposed that, to the
extent coverage under a group health
plan consists of group health insurance
coverage, the plan would satisfy the
proposed machine-readable file
requirements if the issuer offering the
coverage were required to provide the
information pursuant to a written
agreement between the plan and issuer.
Accordingly, if a plan sponsor and an
issuer enter into a written agreement
under which the issuer agrees to
provide the information required under
the proposed rules, and the issuer fails
to provide full or timely information,
then the issuer, but not the plan, has
violated the final rule’s disclosure
requirements. This special rule would
only apply, however, to insured group
health arrangements where the
contractually-obligated issuer is
independently subject to the final rules.
The Departments received comments
expressing strong support of the special
rule to streamline public disclosure and
avoid unnecessary duplication of
disclosures for insured group health
insurance coverage. These commenters
recommended the policy be retained in
the final rules. Accordingly, the final
rules retain this special rule as
proposed.
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b. Use of Third Parties To Satisfy Public
Disclosure Requirements
The Departments recognize that selfinsured group health plans may rely on
written agreements with other parties,
such as service providers, to obtain the
necessary data to comply with the final
rules’ disclosure requirements.
Furthermore, it is the Departments’
understanding that most health care
coverage claims in the U.S. are
processed through health care
clearinghouses and that these entities
maintain and standardize health care
information, including information
regarding negotiated rates and out-ofnetwork allowed amounts.207 As a
result, the Departments noted in the
proposed rules that a plan or issuer may
reduce the burden associated with
making negotiated rates and out-ofnetwork allowed amounts available in
machine-readable files by entering a
business associate agreement and
contracting with a health care claims
clearinghouse or other HIPAAcompliant entity to disclose this data on
its behalf.208 Accordingly, the
Departments proposed to permit a plan
or issuer to satisfy the public disclosure
requirement of the proposed rules by
entering into a written agreement under
which another party (such as a TPA or
health care claims clearinghouse) will
make public the required information in
compliance with this section. However,
if a plan or issuer chooses to enter into
such an agreement and the party with
which it contracts fails to provide full
or timely information, the plan or issuer
will have violated the final rules’
disclosure requirements.
Generally, commenters supported the
use of clearinghouses or TPAs to store
all of the information that must be
disclosed under the proposed rules. One
commenter suggested that all HIPAAcompliant third parties, not just
clearinghouses, be allowed to satisfy the
public disclosure requirements. Some
commenters raised concerns related to
using clearinghouses noting that the
feasibility of using clearinghouses is
dependent on the clearinghouse
receiving all of the necessary data from
health insurance issuers and providers
who possess the data. The commenter
strongly recommended the final rules
require entities that possess the data to
207 The Departments are adopting the definition
of health care clearinghouse under 45 CFR 160.103
for purposes of these rules. Under that definition,
health care clearinghouse means a public or private
entity that performs one of two functions that
involve the receiving and processing of health
information data from a non-standard format to a
standard format or non-standard data elements to
standard data elements and vice versa.
208 45 CFR 164.502(a)(3) and 164.504(e)(2).
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share the information in a timely
manner with the relevant
clearinghouses. The commenter also
noted the costs charged by
clearinghouses associated with data
storage and noted that the prices must
be reasonable and not discriminatory
(for example, against smaller plans).
Several commenters recommended
the Departments’ special rule include
protection for plan sponsors if they fail
to meet the public disclosure
requirements due to an inability, while
acting in good faith, to obtain the data
from a third-party service provider or
when a contracted third-party withholds
information or fails to submit
information in a timely manner. One of
these commenters also requested the
Departments establish a policy that
liability for failure to comply rests with
a contracted third party in the event a
plan sponsor can show that, acting in
good faith, it is unable to comply with
the disclosure requirements due to
withholding of information by the third
party.
This special rule, as finalized,
continues to permit a plan or issuer to
satisfy the public disclosure
requirements of 26 CFR 54.9815–
2715A3(b), 29 CFR 2590.715–
2715A3(b), and, 45 CFR 147.212(b) of
the final rules by entering into a written
agreement under which another party
(such as a TPA or health care claims
clearinghouse) will make public the
required information in compliance
with this section. The final rules
identify TPAs and health care claims
clearinghouses as examples of the types
of parties a plan or issuer may contract
with, but these are not the only types of
entities that may enter into such
arrangements and the Departments
expect that they will comply with any
applicable privacy protection
requirements, including applicable
privacy protections under HIPAA.
Plans and issuers are not required to
enter into such agreements in order to
comply with the public disclosure
requirements of the final rules. As the
Departments noted in the preamble to
the proposed rules, if a plan or issuer
chooses to enter into such an agreement
it is ultimately the responsibility of the
plan or issuer to ensure that the third
party provides the information required
by the final rules. As noted earlier in
this section, the special rule for insured
plans is only available to plans that
contract with an entity that is an issuer
separately subject to final rules. This
requirement ensures that the
Departments retain a mechanism to
enforce the final rules. Accordingly, this
special rule relating to the use of third
parties to satisfy these requirements
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continues to provide that the plan or
issuer would violate the requirements of
the final rules if the third party fails to
provide full or timely information.
Another commenter recommended
the Departments create a special rule or
‘‘safe harbor’’ for plans that are unable
to disclose negotiated rate information
due to antitrust laws, which prevent the
plan from accessing information about
its partners’ contracts when engaged in
a partnership alliance agreement. The
commenter described a partnership
alliance as shared partner networks in
other geographic areas in order to meet
the needs of multi-state employer
groups.
As discussed earlier in this preamble,
the Departments acknowledge that the
Sherman Antitrust Act prohibits any
contract, combination, or conspiracy in
restraint of trade or commerce.209
Specifically, the law prohibits any
‘‘person’’ from entering into any such
contract, trust, or similar
arrangement.210 Nothing under the
proposed or final rules creates, compels,
or endorses agreements or conspiracies
between or among persons to form
illegal arrangements or trusts in restraint
of trade or commerce. Antitrust law
does not proscribe or limit action by the
Federal Government, to improve
competition and lower costs to
consumers, even if these actions may
involve disclosures that, if made by
private parties under a collusive
agreement, might invite antitrust
scrutiny.211 Because the Departments
are of the view that antitrust law will
not prevent plans and issuers from
making the public disclosures required
under the final rules, there is no need
for the Departments to create a special
rule for plans that are unable to disclose
negotiated rate information due to
antitrust laws.
One commenter expressed a concern
that multiemployer plans generally do
not have access to the rate information
needed to provide the cost-sharing
disclosures required under the proposed
rules, yet plans could be subject to
significant penalties for failure to
comply. The Departments note that
insured multiemployer plans would
qualify for the special rule for insured
plans under which an issuer providing
coverage for a plan enters into an
agreement to provide the required
information, which is being finalized
through the final rules. If a
multiemployer plan sponsor enters into
a written agreement with an issuer
209 15
U.S.C. 1.
210 Id.
211 For example, see 84 FR 65464, 65464–65 (Nov.
27, 2019).
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72245
under which the issuer agrees to
provide the information required under
the final rules, and the issuer fails to
provide full or timely information, then
the issuer, but not the plan, has violated
the transparency disclosure
requirements and may be subject to
enforcement mechanisms applicable to
plans under the PHS Act.212 Therefore,
insured multiemployer plans that
contract with an issuer to provide the
information required under the final
rules would not be subject to
enforcement actions under this
mechanism; rather, the issuers with
whom they have contracted will be
subject to enforcement action under the
final rules for failure to meet the
transparency disclosure requirements.
Under the second special rule,
multiemployer plans may also contract
with a TPA or other third party (for
example, a clearinghouse) to meet the
transparency disclosure requirements
under the final rules. However, this
commenter is correct that if a plan or
issuer chooses to enter into such an
agreement, and the party with which it
contracts fails to provide full or timely
information, the plan or issuer would
violate the transparency disclosure
requirements.
The notion that accountability for
compliance rests with a plan or issuer
when the issuer or plan enlists a
contractor or vendor for a business
function is not inconsistent with other
applicable regulations.213 While claims
processing is the main function for
which an issuer or plan has contracted
in this example, other responsibilities,
such as responding to Federal audits
and report requirements, may fall
within the scope of the duties required
by contract. The Departments clarify
that nothing in the final rules prevents
an issuer or plan from ensuring
contracts with TPAs or other third
parties include clear terms specifying
functions required to meet the
disclosure requirements of the final
rules, as well as establish service level
agreements and performance metrics to
hold the entities with whom the issuer
or plan decides to contract accountable.
Because multiemployer plans may be
able to take advantage of the special
rules established under the proposed
rules, the Departments do not view
additional special considerations
necessary to address the ability of such
212 Section
2723 of the PHS Act.
example, plans remain liable for violations
of claims regulations under 26 CFR 54.9815–2719
and 29 CFR 2590.715–2719; and QHPs issuers who
contract with downstream or delegated entities
must maintain compliance with all applicable
standards under 45 CFR 156.340(a).
213 For
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plans to comply with the transparency
requirements of the final rules.
c. Aggregation for Allowed Amount
Files
In order to further mitigate privacy
concerns and to eliminate unnecessary
duplication, the Departments proposed
to permit plans and issuers to satisfy the
public disclosure requirements of the
proposed rules by making available outof-network allowed amount data that
has been aggregated to include
information from more than one plan or
policy. As previously discussed, a plan
or issuer may satisfy the disclosure
requirement by disclosing out-ofnetwork allowed amounts. Accordingly,
under such circumstances, the proposed
rules would have permitted plans and
issuers to aggregate out-of-network
allowed amounts for more than one plan
or insurance policy or contract.
To the extent a plan or issuer
provided aggregated out-of-network
allowed amount information, the
Departments proposed to apply the
minimum claims threshold to the
aggregated claims data set, but not at the
plan or issuer level. Based on
commenters’ requests for clarification,
the Departments have determined that
the proposed approach to apply the
minimum claims threshold to the full
aggregated claims data set could
undermine the goal of the minimum
claims threshold. The out-of-network
Allowed Amount File must include a
unique plan identifier for each plan or
coverage included in the file under 26
CFR 54.9815–2715A3(b)(1)(ii)(A), 29
CFR 2590.715–2715A3(b)(1)(ii)(A), and
42 CFR 147.212(b)(1)(ii)(A). Therefore,
even if the data for each plan or
coverage were to be aggregated for
purposes of determining whether the
minimum claims threshold applies to a
particular covered item or service, the
data in the Allowed Amounts File
would be distinguishable at the level of
the plan identifier. The Departments are
of the view that this could be
problematic if all plans or coverage
included in an aggregated Allowed
Amount File meet the minimum claim
threshold for an item or service when
combined, but some or all individual
plans do not independently meet the
minimum claim threshold of 20 claims.
For instance, data for two plans are
aggregated in the same Allowed Amount
File under this rule. Plan A has 20
claims for Service X, while Plan B only
has six claims for Service X. In
aggregate, the plans meet the 20-claim
threshold with 26 total claims for
Service X. However, individually, only
Plan A has met the minimum claim
threshold. Under the proposal, data for
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Service X would be required to be
included for both Plan A and Plan B,
along with both the plan identifiers. The
outcome of this requirement would be
that Plan B would include data
identifiable at the plan level for Service
X. The Departments are of the view that
allowing Plan B data to be included in
the file for Service X would undermine
the minimum claim threshold,
increasing risk that individual patients’
claims histories could be identified. To
prevent this outcome, data for each plan
or coverage included in an aggregated
Allowed Amount File must
independently meet the minimum
claims threshold for each item or service
and for each plan or coverage included
in the aggregated Allowed Amount File.
To highlight this requirement, the
Departments are finalizing this
provision of the proposed rules with a
minor modification clarifying that the
flexibility to aggregate out-of-network
allowed amounts for more than one plan
or coverage in a single machine-readable
file is still subject to the minimum
claims threshold applicable to
individual plans or coverage as
described under paragraph (b)(1)(ii)(C)
of the same section.
One commenter requested
clarification of a plan’s obligation if a
third party aggregates the Allowed
Amount File. The commenter
specifically requested clarification
regarding whether the plan or third
party would be responsible for posting
the file, and whether there will be any
special labeling requirements for an
aggregated file, including if the file will
need to include a disclosure that it
includes aggregated data.
Nothing in the final rules prevents the
Allowed Amount File from being hosted
on a third-party website or prevents a
plan administrator from contracting
with a third party to post the file. The
Departments have added text to the final
rules to make clear that this flexibility
exists and to provide that if a plan
chooses not to also host the file
separately on its own public website, it
must provide a link on its website to the
location where the file is publicly
available. The Departments will provide
additional information on the form and
manner, including labeling, through the
file technical implementation guidance.
III. Overview of the Final Rule
Regarding Issuer Use of Premium
Revenue Under the Medical Loss Ratio
Program: Reporting and Rebate
Requirements—The Department of
Health and Human Services
As stated in the preamble to the
proposed rules, consumers with health
insurance often lack incentives to seek
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care from lower-cost providers, for
example when consumers’ out-of-pocket
costs are limited to a set copayment
amount regardless of the costs incurred
by the issuer. Innovative benefit designs
can be used to increase consumer
engagement in health care purchasing
decisions. HHS proposed to allow
issuers that empower and incentivize
consumers through the introduction of
new or different plans that include
provisions encouraging consumers to
shop for services from lower-cost,
higher-value providers, and that share
the resulting savings with consumers, to
take credit for such ‘‘shared savings’’
payments in their MLR calculations.
HHS believes this approach preserves
the statutorily-required value consumers
receive for coverage under the MLR
program, while encouraging issuers to
offer new or different plan designs that
support competition and consumer
engagement in health care.
Formula for Calculating an Issuer’s
Medical Loss Ratio (45 CFR 158.221)
Section 2718(b) of the PHS Act
requires a health insurance issuer
offering group or individual health
insurance coverage (including
grandfathered health insurance plans) to
provide rebates to enrollees if the
issuer’s MLR falls below specified
thresholds (generally, 80 percent in the
individual and small group markets and
85 percent in the large group market).
Section 2718(b) of the PHS Act
generally defines MLR as the percentage
of premium revenue (after certain
adjustments) an issuer expended on
reimbursement for clinical services
provided to enrollees and on activities
that improve health care quality.
Consistent with section 2718(c) of the
PHS Act, the standardized
methodologies for calculating an
issuer’s MLR must be designed to take
into account the special circumstances
of smaller plans, different types of
plans, and newer plans.
Several states have considered or
adopted legislation over the last few
years to promote health care cost
transparency and encourage issuers to
design and make available plans that
‘‘share’’ savings with enrollees who
shop for health care services and choose
to obtain care from lower-cost, highervalue providers.214 In addition, at least
five states and a number of self-insured
group health plans have incorporated
such ‘‘shared savings’’ provisions into
214 24–A Maine Rev. Stat. Ann. Sec. 4318–A
(adopted Jun. 19, 2017); Neb. Rev. Stat. Sec. 44–
1401 et seq. (adopted Apr. 23, 2018); Utah Code
Ann. Sec. 31A–22–647 (adopted Mar. 19, 2018); AZ
SB 1471 (2018); N.H. HB 1784–FN (2018); MA
H2184 (2017).
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all or some of their health plans.215
Under some plan designs, the savings
are calculated as a percentage of the
difference between the rate charged by
the provider chosen by the consumer for
a medical procedure and the average
negotiated rate for that procedure across
all providers in the issuer’s network.
Under other plan designs, the ‘‘shared
savings’’ are provided as a flat dollar
amount according to a schedule that
places providers in one or more tiers
based on the rate charged by each
provider for a specified medical
procedure. Under various plan designs,
the ‘‘shared savings’’ may be provided
in form of a gift card, a reduction in cost
sharing, or a premium credit. HHS is of
the view that such unique plan designs
would motivate consumers to make
more informed choices by providing
consumers with tangible incentives to
shop for care at the best price. As
explained elsewhere in the preamble to
the proposed rules, there is ample
evidence that increased transparency in
health care costs would lead to
increased competition among
providers.216 HHS is of the view that
allowing flexibility for issuers to
include savings they share with
enrollees in the numerator of the MLR
would increase issuers’ willingness to
undertake the investment necessary to
develop and administer plan features
that may have the effect of increasing
health care cost transparency, which in
turn could lead to reduced health care
costs.
HHS has in the past exercised its
authority under section 2718(c) of the
PHS Act to take into account the special
215 See the State of Kansas’ SmartShopper
program for state employees enrolled with BCBSKS,
available at: https://healthbenefitsprogram.ks.gov/
docs/default-source/site-documents/sehp/vendordocuments/bcbs/smartshopper_state_of_kansas_
steps.pdf?sfvrsn=cfa4e44_8; the state of Kentucky
employee member handbook for Livingwell CDHP’s
SmartShopper program, available at: https://
personnel.ky.gov/KEHP/
2020%20LivingWell%20CDHP%2
0Medical%20Benefit%20Booklet.pdf and https://
www.smartshopper.com/legacy?utm_expid=.WJ_
v45PuTXuo1k6ioPp4tA.1&utm; the State of
Massachusetts employee member handbook for
Fallon Health Select Care’s SmartShopper program,
available at: https://www.mass.gov/doc/fallonselect-care-handbook-fy21/download; the State of
New Hampshire employee medical benefit, the Site
of Service and Vitals SmartShopper Programs,
available at: https://das.nh.gov/riskmanagement/
active/medical-benefits/cost-savingsprograms.aspx#vitals-smartshopper; Utah Public
Employees Health Program Cost Tools, available at:
https://www.pehp.org/save.
216 Austin, D. A., and Gravelle, J. G.
‘‘Congressional Research Service Report for
Congress: Does Price Transparency Improve Market
Efficiency? Implications of Empirical Evidence in
Other Markets for the Healthcare Sector.’’
Congressional Research Service. July 24,
2007.’’Available at: https://fas.org/sgp/crs/secrecy/
RL34101.pdf.
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circumstances of different types of plans
by providing adjustments to increase the
MLR numerator for ‘‘mini-med’’ and
‘‘expatriate’’ plans,217 student health
insurance plans,218 as well as for QHPs
that incurred Exchange implementation
costs 219 and certain non-grandfathered
plans (that is, ‘‘grandmothered’’
plans).220 This authority has also been
exercised to recognize the special
circumstances of new plans 221 and
smaller plans.222 Consistent with this
approach, HHS proposed to exercise its
authority to account for the special
circumstances of new and different
types of plans that provide ‘‘shared
savings’’ to consumers who choose
lower-cost, higher-value providers by
adding a new paragraph 45 CFR
158.221(b)(9) to allow such ‘‘shared
savings’’ payments to be included in the
MLR numerator. HHS made this
proposal so that issuers would not be
required to pay MLR rebates based on a
plan design that would provide a benefit
to consumers that is not currently
captured in any existing MLR revenue
or expense category. HHS proposed that
the amendment to 45 CFR 158.221
would become effective beginning with
the 2020 MLR reporting year (for reports
217 See 45 CFR 158.221(b)(3) for ‘‘mini-med’’
plans and 45 CFR 158.221(b)(4) for ‘‘expatriate’’
plans; see also the Health Insurance Issuers
Implementing Medical Loss Ratio (MLR)
Requirements Under the Patient Protections and
Affordable Care Act; Interim Final Rule; 75 FR
74864, 74872 (Dec. 1, 2010).
218 See 45 CFR 158.221(b)(5); see also the Student
Health Insurance Coverage; Final Rule, 77 FR
16453, 16458–16459 (Mar. 21, 2012).
219 See 45 CFR 158.221(b)(7); see also the
Exchange and Insurance Market Standards for 2015
and Beyond; Final Rule; 79 FR 30240, 30320 (May
27, 2014).
220 See 45 CFR 158.221(b)(6); see also 79 FR
30240, 30320 (May 27, 2014). See 45 CFR
158.221(b)(6); see also 79 FR 30240, 30320 (May 27,
2014); see also 45 CFR 158.221(b)(6); see also 79 FR
30240, 30320 (May 27, 2014). ‘‘Grandmothered’’
plans is a term for certain non-grandfathered
coverage in the small group and individual health
insurance markets. Since 2014, CMS has permitted,
subject to applicable State authorities, health
insurance issuers to continue certain coverage that
could not otherwise remain in place without
significant changes to comply with PPACA. Such
health insurance coverage would not be treated as
out of compliance with sections 2701–2707 and
2709 of the PHS Act and section 1312(c) of PPACA
(group health plans must still comply with section
2704 and 270505 of the PHS Act). See Extended
Non-Enforcement of Affordable Care ActCompliance With Respect to Certain Policies,
available at https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/LimitedNon-Enforcement-Policy-Extension-ThroughCY2020.pdf and https://www.cms.gov/files/
document/extension-limited-non-enforcementpolicy-through-calendar-year-2021.pdf.
221 See 45 CFR 158.121; see also 75 FR 74864,
74872–74873 (Dec. 01, 2010) and the HHS Notice
of Benefit and Payment Parameters for 2018 Final
Rule; 81 FR 94058, 94153–94154 (Dec. 22, 2016).
222 See 45 CFR 158.230 and 158.232; see also 75
FR 74864, 74880 (Dec. 01, 2010).
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filed by July 31, 2021). HHS invited
comments on this proposal.
After considering the public
comments, HHS is finalizing the
amendment to 45 CFR 158.221(b) as
proposed.
The majority of comments on the
proposed amendments to the MLR
program rules supported the proposal to
add a new paragraph to 45 CFR
158.221(b). Supporters noted that
allowing issuers to include ‘‘shared
savings’’ payments in their MLR
calculation aligns issuer and enrollee
incentives, aligns with MLR’s purposes,
is innovative, provides enrollees with
value, increases consumer engagement
and empowerment, and will promote
better enrollee decision-making and
reduce total health care costs. Several
supportive commenters also noted that
the proposal may encourage more
issuers to offer such ‘‘shared savings’’
programs, as allowing ‘‘shared savings’’
payments to be included in the MLR
numerator will remove any existing
barriers to such programs and facilitate
the use of innovative benefit designs
that increase consumer engagement in
health care purchasing decisions, while
disallowing this approach punishes
issuers that offer innovative ‘‘shared
savings’’ programs and disincentivizes
issuers from adopting such programs.
Several commenters stated that there is
evidence that patients are more likely to
shop for care when information on
prices is coupled with incentives, and
that such shopping can generate
significant savings for issuers and lead
health care providers to lower their
prices in order to remain competitive in
the marketplace.223
HHS agrees with the comments in
support of the proposal and is finalizing
this amendment as proposed to provide
additional flexibility to states and
issuers and encourage the economic
effects the commenters highlighted.
Some commenters requested
clarification regarding certain aspects of
the ‘‘shared savings’’ plans. Several
commenters requested that HHS
develop uniform standards and a
definition for ‘‘shared savings,’’ which
according to commenters would, among
other things, help prevent fraud and
abuse; and that HHS clarify the criteria
for low-cost, high-value providers. One
commenter asked HHS to provide subregulatory guidance to specify in what
form the savings can be shared, how
issuers will report their ‘‘shared
223 For example, one commenter shared that since
2015, its ‘‘shared savings’’ program issued over
149,000 incentive reward payments, generating over
$85 million in savings. See https://
beta.regulations.gov/document/CMS-2019-016314320.
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savings,’’ how double-counting can be
prevented, and whether ‘‘shared
savings’’ payments are taxable income.
Other commenters suggested that HHS
provide maximum flexibility for issuers
and states to innovate and develop
‘‘shared savings’’ programs they
determine are best suited for their
populations.
While HHS appreciates these
suggestions and is also concerned with
preventing fraud and abuse, HHS is of
the view that state legislators and
regulators are currently in a better
position than HHS to work with the
issuers in their states to define the
‘‘shared savings’’ programs that they
support, issue standards and criteria for
the programs for their respective
constituents, and decide in what form
the savings can be made. These
considerations include the operational
details of any ‘‘shared savings’’ program,
such as creating standards and
definitions, developing acceptable
payment methods, and addressing fraud
concerns. HHS notes that several issuers
have already developed and
implemented such programs and that a
few states have done the same. The
amendment being finalized in this
rulemaking is specific to the recognition
of ‘‘shared savings’’ payments in issuer
MLR calculations and is intended to
encourage more state and issuer
innovation with these types of
programs. Accordingly, HHS will
provide technical guidance in the MLR
Annual Reporting Form Instructions to
clarify the reporting of ‘‘shared savings’’
payments specifically for MLR
purposes. With respect to the comment
regarding how double-counting can be
prevented, HHS notes that 45 CFR
158.170 prevents double-counting by
requiring each expense to be reported in
only one category or to be pro-rated
between categories for MLR purposes.
Finally, whether ‘‘shared savings’’
payments to enrollees are taxable will
vary based on certain specific facts and
circumstances. Some forms of ‘‘shared
savings’’ may be taxable; however, HHS
defers to the Department of the Treasury
to address the taxability of such
payments as necessary.
Opponents of the proposal stated that
it fails to ensure that the savings are
actually used for health care or quality
improvement activities (QIA), that HHS
is subverting the statutory scheme by
allowing issuers to spend less on
enrollees’ care and quality initiatives
without returning the premium dollars
saved to all enrollees, and that the
proposal would allow issuers to further
boost profits and diminish the MLR
standards and issuer accountability.
Some opponents of the proposal argued
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that since any plan type can offer
‘‘shared savings,’’ adding a ‘‘shared
savings’’ payment component to a
policy does not make it a ‘‘different’’
type of plan and it should not be treated
as such. Others were concerned that the
proposal would incentivize issuers to
artificially drive down negotiated rates
with providers and that these savings
may not make their way back to
enrollees. One commenter opposed
extending ‘‘shared savings’’ programs to
self-insured ERISA plans. Another
commenter pointed out that the
National Association of Insurance
Commissioners (NAIC) did not mention
the proposal in its comments and the
MLR statute provides that the NAIC
shall establish the definitions and
methodologies for MLRs.
HHS agrees that ‘‘shared savings’’ are
neither an incurred claim nor a QIA.
Instead, in support of this amendment
to 45 CFR 158.221(b), HHS is relying on
the statutory directive under section
2718(c) of the PHS Act that the MLR
standardized methodologies shall be
designed to take into account the special
circumstances of different types of plans
and newer plans, such as plans that
offer ‘‘shared savings’’ payments to
enrollees that seek care from lower-cost,
higher-value providers. HHS believes
that any issuer that includes in its plan
design(s) a ‘‘shared savings’’ component
is offering a ‘‘different’’ type of plan and
a ‘‘newer’’ plan, as a ‘‘shared savings’’
program is a new and unique feature.
HHS notes that the amendment
finalized in these rules helps provide
policyholders with value for their
premium dollars, as intended by section
2718 of the PHS Act. HHS disagrees that
the amendment somehow subverts the
statutory scheme as issuers that
implement these programs are sharing
the savings and returning dollars to
enrollees who participate in these
programs, and issuers must still
otherwise meet the applicable MLR
threshold or provide a rebate to
enrollees. For the same reasons, HHS
does not share certain commenters’
view that the amendment weakens the
MLR standards and enables issuers to
improperly boost profits, as the
amendment simply allows issuers to
account for the portion of the ‘‘shared
savings’’ that is passed to participating
enrollees and that consequently does
not increase issuers’ profits. With
respect to comments regarding the
impact on provider negotiated rates and
enrollee access to savings, HHS is
unsure how the amendment would
incentivize issuers to artificially drive
down negotiated rates with providers.
However, if as a result of this
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amendment, provider rates decrease,
such a result would in fact benefit
enrollees. In addition, because only
actual payments made to enrollees can
be included in an issuer’s MLR
calculation under the amendment,
issuers will benefit for MLR calculation
and reporting purposes only if the
savings are actually shared with
enrollees. With respect to the comment
regarding self-insured ERISA plans,
HHS notes that this amendment does
not apply to or impact, either selffunded ERISA plans, or self-funded
non-ERISA plans, as these plans are not
subject to the MLR reporting and rebate
requirements under section 2718 of the
PHS Act. Last, with respect to
comments regarding the NAIC
recommendations to HHS, section
2718(c) of the PHS Act directed the
NAIC, subject to certification by the
Secretary, to establish uniform
definitions and standardized
methodologies to guide MLR reporting
and calculations. The NAIC met its
statutory obligation when it provided
recommendations to HHS in 2010 in the
form of a model regulation.224 The
NAIC’s recommendations informed the
Secretary’s decisions about the Federal
definitions and methodologies for
calculating MLRs.225 In this rulemaking,
HHS is taking further action to
recognize the special circumstances of
the different and newer plans that
include ‘‘shared savings’’ programs with
the addition of new paragraph (b)(9) to
45 CFR 158.221.
Some commenters expressed concerns
that ‘‘shared savings’’ programs in
general could actually compromise the
quality of care by driving consumer
choices based on cost without regard for
quality, and that these programs could
encumber and curtail medically
necessary clinical services in serving the
financial interest of the payer. Some
commenters requested that HHS only
allow ‘‘shared savings’’ where there is
evidence that the participating enrollees
actually receive better care at reduced
costs. One commenter stated that the
proposal fails to define higher-value,
which varies based on each enrollee’s
circumstances. One commenter
questioned the feasibility of measuring
whether reward systems generate actual
savings.
224 ‘‘Regulation for Uniform Definitions and
Standardized Methodologies for Calculation of the
Medical Loss Ratio for Plan Years 2011, 2012, and
2013 per section 2718(b) of the Public Health
Service Act,’’ MDL–190. Available at: https://
www.naic.org/store/free/MDL-190.pdf?4.
225 See the Health Insurance Issuers
Implementing Medical Loss Ratio (MLR)
Requirements Under the Patient Protection and
Affordable Care Act; Interim Final Rule, 75 FR
74864 (Dec. 1, 2010); see also 45 CFR part 158.
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HHS disagrees that programs that
reward enrollees for critically
examining their options and pursuing
cost-effective care interfere with the
provision of medically necessary
clinical services. However, HHS agrees
that quality as well as cost should be
determinants of what qualifies for
inclusion in any given issuer’s ‘‘shared
savings’’ program. That is why the
amendment to 45 CFR 158.221 includes
both a cost and quality component; it
permits issuers to include in the MLR
numerator ‘‘shared savings’’ payment
made to enrollees choosing to obtain
care from a lower-cost and higher-value
provider. However, HHS did not
propose and is not finalizing elements
or criteria issuers must address or
otherwise include in their respective
‘‘shared savings’’ programs. The
amendment finalized in this rulemaking
is specific to recognizing ‘‘shared
savings’’ payments in issuer MLR
calculations. As detailed above, HHS
believes state legislators and regulators
are currently in the best position to
work with issuers in their states to
develop standards and criteria for
‘‘shared savings’’ programs for their
respective constituents. HHS further
believes that issuers are in the best
position to perform the necessary
provider credentialing activities that
will ensure that network providers that
are included in their ‘‘shared savings’’
programs are high-value, high-quality
providers. Since higher-value can vary
by enrollee demographics and provider
type, issuers must determine what this
means for their enrollees and providers
and maintain all documents and other
evidence necessary to support that
determination consistent with the
maintenance of records requirements
contained in 45 CFR 158.502. Issuers are
sophisticated entities that understand
that if their enrollees obtain lowerquality care, their costs over the longterm will increase rather than decrease
as their enrollees will likely need
additional and possibly corrective
medical care. HHS therefore believes
that issuers’ incentives are aligned with
those of their enrollees when it comes
to designing ‘‘shared savings’’ programs.
HHS received a few comments urging
that issuers be allowed to include some
or all of the costs of implementing the
requirements of these price
transparency rules as a QIA in the
numerator of the MLR calculation. A
few commenters urged HHS to allow
issuers to include some or all of the
costs of creating the cost estimator tool
required by the price transparency
aspects of the proposed rules.
Price transparency implementation
costs do not constitute an improvement
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to the quality of health care and thus do
not qualify as QIA and cannot be
included in the numerator of the MLR
calculation.
Lastly, several commenters expressed
support for or opposition to the MLR
reporting and rebate requirements in
general. HHS appreciates these
comments but notes that they are
outside the scope of the amendments to
the MLR program rules contained in the
proposed rule.
IV. Applicability
A. In General
1. Entities Subject to the Final Rules
The Departments proposed requiring
group health plans, including selfinsured plans, and health insurance
issuers of individual and group health
insurance coverage to disclose pricing
information, with certain exceptions as
discussed in more detail in this
preamble. The Departments are of the
view that consumers across the private
health insurance market will benefit
from the availability of pricing
information that is sufficient to support
informed health care decisions.
Although the Departments considered
making the requirements applicable to a
more limited segment of the private
health insurance market, the
Departments are of the view that
consumers across the market should
receive and benefit from the same access
to standardized, meaningful pricing
information and estimates. Moreover,
applied broadly, these changes have a
greater potential to reform health care
markets.
Additionally, the preamble to the
proposed rules discussed how pricing
information related to items and
services that are subject to capitation
arrangements under a specific plan or
contract could meet transparency
standards by disclosing only the
consumer’s anticipated liability. The
Departments sought comment on
whether there are certain
reimbursement or payment models
(such as ACOs or staff model HMOs)
that should be partially or fully exempt
from these requirements or should
otherwise be treated differently. Further,
the Departments sought comment on
how consumers may become better
informed about their cost-sharing
requirements under these
reimbursement or payment models.
The Departments also considered
limiting applicability to issuers of
individual health insurance coverage
and insured group health insurance
coverage, but concluded that limiting
applicability would be inconsistent with
section 2715A of the PHS Act. The
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Departments are concerned that a more
limited approach might encourage plans
and issuers to simply shift costs to
sectors of the market where the final
rules would not apply and where
consumers have diminished access to
pricing information. Additionally, the
Departments are concerned that a more
limited approach may distort the health
care market by creating perverse
incentives for plans and issuers to avoid
participating in certain markets that
require compliance with these
requirements.
The Departments are aware that
certain plans and health coverage are
not subject to the transparency
provisions under section 2715A of the
PHS Act and, therefore, are not be
subject to the final rules. This includes
grandfathered health plans, excepted
benefits, health care sharing ministries,
and short-term, limited-duration
insurance (STLDI).
Grandfathered health plans are health
plans that were in existence as of March
23, 2010, the date of enactment of
PPACA, and that are only subject to
certain provisions of PPACA, as long as
they maintain their status as
grandfathered health plans under the
applicable rules.226 Under section 1251
of PPACA, section 2715A of the PHS
Act does not apply to grandfathered
health plans. Therefore, the proposed
rules would not have applied to
grandfathered health plans (as defined
in 26 CFR 54.9815–1251, 29 CFR
2590.715–1251, and 45 CFR 147.140).
In accordance with sections 2722 and
2763 of the PHS Act, section 732 of
ERISA, and section 9831 of the Code,
the requirements of title XXVII of the
PHS Act, part 7 of ERISA, and chapter
100 of the Code do not apply to any
group health plan (or group health
insurance coverage offered in
connection with a group health plan) or
individual health insurance coverage in
relation to its provision of excepted
benefits. Excepted benefits are described
in section 2791 of the PHS Act, section
733 of ERISA, and section 9832 of the
Code. Section 2715A of the PHS Act is
contained in title XXVII of the PHS Act,
and, therefore, the proposed rules
would not have applied to a plan or
coverage consisting solely of excepted
benefits.
The Departments also proposed that
the rules would not apply to STLDI.
Under section 2791(b)(5) of the PHS
Act, STLDI is excluded from the
definition of individual health
insurance coverage and is therefore
exempt from section 2715A of the PHS
226 26 CFR 54.9815–1251, 29 CFR 2590.715–1251,
and 45 CFR 147.140.
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Act.227 Therefore, the proposed rules
would not have applied to STLDI
coverage.
The Departments also proposed that
the rules would not apply to health
reimbursement arrangements, or other
account-based plans, as defined in 26
CFR 54.9815–2711(d)(6)(i), 29 CFR
2590.715–2711(d)(6)(i), and 45
CFR 147.126(d)(6)(i), that simply make
reimbursements subject to a maximum
fixed dollar amount for a period, with
the result that cost-sharing concepts are
not applicable to those arrangements.
In contrast, the Departments proposed
that the final rules would apply to
grandmothered plans, meaning certain
non-grandfathered health insurance
coverage in the individual and small
group markets with respect to which
CMS has announced it will not take
enforcement action even though the
coverage is out of compliance with
certain specified market
requirements.228 The Departments
sought comment on whether
grandmothered plans may face special
challenges in complying with these
transparency reporting provisions and
whether the proposed rules should
apply to grandmothered plans.
The final rules adopt these provisions
as proposed. The final rules apply these
requirements to group health plans, and
health insurance issuers offering nongrandfathered group or individual
health insurance coverage, with certain
exceptions. Thus, the final rules apply
to grandmothered plans. The
Departments are finalizing, as proposed,
that these requirements will not apply
to certain plans and coverages that are
not subject to the transparency
provisions under section 2715A of the
PHS Act, including grandfathered
health plans, excepted benefits, and
STLDI. Additionally, the final rules will
not apply to health reimbursement
arrangements, or other account-based
plans, as defined in 26 CFR 54.9815–
2711(d)(6)(i), 29 CFR 2590.715–
2711(d)(6)(i), and 45
CFR 147.126(d)(6)(i), as these accountbased arrangements simply make certain
dollar amounts available, with the result
that cost-sharing and price setting
concepts are not applicable to those
arrangements.
The majority of commenters
supported applying these requirements
to issuers of individual health insurance
coverage and group health insurance
227 See 26 CFR 54.9801–2, 29 CFR 2590.701–2,
and 45 CFR 144.103.
228 Pate, R. ‘‘Insurance Standards Bulletin Series.’’
Centers for Medicare & Medicaid Services. January
31, 2020. Available at: https://www.cms.gov/files/
document/extension-limited-non-enforcementpolicy-through-calendar-year-2021.pdf.
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coverage, as well as group health plans.
Commenters supported allowing
consumers across the market to access
important pricing information. Some
commenters suggested additional plans
and coverages that should be required to
comply with these requirements, as
discussed later in this preamble. The
Departments did not receive comments
regarding application of the final rules
to grandmothered plans.
One commenter stated that the
proposed rules would create an uneven
playing field that would unfairly
advantage plans and issuers offering
stand-alone dental or vision coverage
over plans that incorporate such
benefits into major medical coverage.
For example, the commenter stated that
a plan offering essential health benefits
would have to include in a machinereadable file negotiated rates for
pediatric dental services. However, a
plan offering stand-alone dental
coverage would not have to publish
pricing information. For these reasons,
the commenter recommended that
vision, dental, and hearing benefits, if
offered as part of a plan or coverage
subject to the transparency
requirements, should be excluded from
information disclosed through the
internet-based self-service tool and
machine-readable files.
In response to this comment, the
Departments note that section 2721(b),
(c)(1) through (3) of the PHS Act
provides an exemption from title XXVII
of the PHS Act for ‘‘any individual
coverage or any group health plan (and
group health insurance coverage offered
in connection with a group health plan)
in relation to its provision of excepted
benefits.’’ (See also section 732 (b), (c)
of ERISA, and section 9831(b), (c) of the
Code) (emphasis added).229 To the
extent that a plan or issuer provides a
participant, beneficiary, or enrollee with
the opportunity to opt out of limited
scope dental or vision benefits, those
benefits are considered as not an
integral part of the plan and,
accordingly, are considered excepted
benefits.230 Therefore, under the final
rules, plans and issuers that offer
excepted benefits, such as limited scope
dental or vision benefits, along with
their major medical coverage are not
required to disclose the information
required by the final rules regarding
their provision of those excepted
benefits. Accordingly, the final rules do
not create an uneven playing field that
would unfairly advantage plans and
issuers offering stand-alone dental or
229 See
also section 2763 of the PHS Act.
CFR 54.9831–1(c)(3)(ii), 29 CFR
2590.732(c)(3)(ii), and 45 CFR 146.145(b)(3)(ii).
230 26
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vision coverage over plans that
incorporate such benefits into major
medical coverage.
The Departments received a mix of
comments regarding whether the final
rules should apply to alternative
contracting and alternative payment
model structures, such as ACOs or
HMOs. One commenter recommended a
narrower scope for ACOs and other
capitated payment arrangements,
including only requiring transparency
tools to display amounts that are not
service dependent (for example, flat
copayments), as well as accumulator
information about deductibles and outof-pocket maximums. As discussed
elsewhere in this preamble, some
commenters expressed concern
regarding how the final rules would
apply to reference-based pricing models,
direct primary care, bundled or
capitated payment arrangements, and
value-based insurance design.
Additionally, some commenters
expressed concern regarding how the
final rules would apply to plans with
rental networks and quality-adjusted
and risk-adjusted contracts (under
which prices can only be calculated
after the fact). These commenters
recommended that these kinds of
arrangements be exempt from the final
rules’ requirements.
On the other hand, other commenters
suggested that there is no justification
for excluding plans that reimburse their
providers based on capitation from the
requirements of the final rules as this
would result in an incomplete data set,
and issuers of risk adjustment-covered
plans already assign values to services
to administer benefits with deductibles
and co-insurance, for risk adjustment
purposes under 45 CFR 153.710(c), and
for internal reporting. One commenter
recommended that the final rules
should apply to ACOs and other
capitated arrangements and that these
arrangements should be required to
disclose their underlying financial
incentive arrangements, not just
consumer’s anticipated liability. The
commenter also noted that any
exemptions may incentivize plans to
move to these pricing models, which the
commenter characterized as opaque and
potentially consumer-unfriendly.
Several commenters agreed that pricing
information related to items and
services subject to capitation
arrangements could meet transparency
standards only through the disclosure of
the consumer’s anticipated liability.
Some commenters raised the concern
that the proposed rules would have a
particularly negative impact on smaller
entities that are less likely to have the
financial reserves and technological
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resources to build and maintain systems
to operationalize disclosure
requirements. Some commenters
requested that the final rules be optional
or that smaller plans and TPAs be
exempted from the requirements. For
example, a few commenters
recommended providing an exception to
the price transparency requirement for
small issuers, TPAs, and plans with
revenue below the $41.5 million small
entity threshold or with 100,000
commercial participants, beneficiaries,
and enrollees or fewer. They suggested
that an exception to the final rules
would allow small issuers to adopt
elements of the requirements of most
relevance to their participants,
beneficiaries, and enrollees while not
forcing them to create a much more
expensive option that may be of limited
appeal.
In considering these concerns, the
Departments weighed the competing
goals of ensuring that consumers have
access to pricing information, the
burden on plans, including self-insured
plans, and issuers of individual health
insurance coverage and group health
insurance coverage, and encouraging
innovative plan design. As finalized, all
issuers of non-grandfathered individual
and group health insurance coverage
and self-insured plans (that are not
account-based plans), are required to
comply with the final rules. Finalizing
these rules to be applicable to plans as
proposed is the most straightforward
approach as it is impossible to define
and predict all possible modifications,
plans, or models. Furthermore, doing so
mitigates creating incentives to adopt
certain plan designs over others. The
Departments believe that this is not
likely to stifle innovation. Rather, the
Departments are of the view that this
approach creates a level playing field for
non-grandfathered individual and group
health insurance coverage and selfinsured plans (that are not accountbased plans) to create innovative plan
designs and increase consumers’ access
to pricing information that is sufficient
to support informed health care
decisions. The Departments are of the
view that exempting plan designs, such
as alternative contracting and
alternative payment model structures,
would create an opportunity for plans
and issuers to avoid sharing important
pricing information with consumers.
The Departments maintain the view that
consumers across the market should
come to expect and receive the same
access to standardized, meaningful
pricing information and estimates for all
plans affected by the final rules. In
addition, as detailed earlier in this
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preamble, issuers of risk adjustmentcovered plans that include capitation
arrangements are required under the
final rules to submit a derived amount,
potentially using the same internal
methodology the issuer uses to assign a
price value to the item or service for
purposes of submitting risk adjustment
data under 45 CFR 153.710(c).
A few commenters supported
exempting grandfathered health plans,
HRAs or other account-based plans,
excepted benefits, and STLDI from the
proposed rules. However, a majority of
commenters were concerned that the
final rules, as proposed, would not
apply to plans or arrangements that may
have the highest potential cost-sharing
obligations, such as STLDI and health
care sharing ministries. These
commenters were concerned that STLDI
plans often have dollar limits on
covered benefits, limits on prescription
drug coverage and covered doctor visits,
and excluded benefits, which often
means consumers enrolled in these
plans can face higher cost-sharing
liability when seeking medical care than
patients covered by individual health
insurance coverage, as defined under
section 2791(b)(5) of the PHS Act. They
stated that it is even more important for
these patients to have access to their
cost-sharing liability under the final
rules before receiving care or even
signing up for a STLDI plan, so they are
aware of their coverage limits and are
prepared to receive bills from the
hospital and other health care providers
for amounts that exceed their coverage.
One commenter stated that whether
such plans are considered ‘‘individual
health insurance’’ is not relevant for
such a determination, as the proposed
rules would not apply to just individual
health insurance, but would also apply
to group coverage and grandmothered
plans.
The Departments appreciate the
concerns raised by commenters
regarding these plans. However, the
final rules adopt these policies as
proposed. As noted earlier in this
section of this preamble, certain types of
coverage and arrangements such as
STLDI, excepted benefits and health
care sharing ministries, are not subject
to the transparency provisions under
section 2715A of the PHS Act and,
therefore, are not subject to the final
rules. However, the Departments
encourage all plans that are not subject
to the final rules to work to increase the
transparency and availability of pricing
information, to enable consumers to
make informed health care decisions.
One commenter sought clarification of
the liability of individual employers
concerning Multiple Employer Welfare
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Arrangements (MEWAs) and TaftHartley plans. Section 715 of ERISA
incorporates section 2715A of the PHS
Act into part 7 of ERISA. Generally,
employers are only responsible for
ensuring compliance with the
requirements of ERISA for a Taft-Hartley
plan (also known as a multi-employer
plan), if they are a member of the
association, committee, joint board of
trustees, or other similar group of
representatives of the parties who
establish or maintain the plan, or are
otherwise a fiduciary of the plan. For
MEWAs that are employee welfare
benefit plans, the bona fide group or
association that sponsors the MEWA
assumes and retains responsibility for
operating and administering the MEWA,
including ensuring compliance with
Part 7 of ERISA. In cases where the
MEWA itself is not a plan, each
employer that provides benefits through
a MEWA and, therefore, maintains its
own plan, is separately responsible for
compliance with ERISA requirements,
and thus with the requirements of the
final rules.
Some commenters recommended
adding additional plans and coverages
to the list of health coverage not subject
to these transparency requirements. One
commenter recommended adding
expatriate health plans because the
Expatriate Health Coverage Clarification
Act of 2014 exempts expatriate health
plans from most of the provisions of
PPACA, including sections 1311(e)(3) of
PPACA and section 2715A of the PHS
Act, both of which the Departments cite
in asserting statutory authority to
propose these transparency
requirements. Another commenter
recommended that Denominational
Health Plans be specifically exempted
from the final rules. This commenter
noted that Denominational Health Plans
can only offer coverage to a limited
segment of the population—eligible
employees in the denomination—based
on church requirements, beliefs, and
polity. Therefore, most of the
individuals to which this information
would be disclosed would not be
eligible to enroll in these plans even if
they wished to do so. Other commenters
recommended extending the final rules
to health coverage to which 2715A of
the PHS Act does not apply. For
example, a commenter recommended
that the Departments add Medicaid
Managed Care Organization plans and
Medicare-Medicaid Plans to the list of
health plans not subject to the
transparency requirements. The
commenter noted that the combination
of Medicaid payment rates and low costsharing requirements limit the
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usefulness of this information in the
Medicaid context.
The Departments are finalizing the
final rules as proposed and, therefore,
all plans subject to section 2715A of the
PHS Act must comply with these
requirements. The Departments agree
with commenters that sections
1311(e)(3) of PPACA and 2715A of the
PHS Act do not apply to expatriate
health plans 231 and, therefore, such
plans are not subject to the requirements
in the final rules. Furthermore, the
Departments’ authority for the final
rules derive from section 2715A of the
PHS Act, which only applies to group
health plans and health insurance
issuers offering group or individual
health insurance coverage, and not
Medicaid Managed Care Organization
plans, Medicare-Medicaid Plans, and
Denominational Health Plans.
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Interaction of Final Rules With 45 CFR
156.220
The Departments recognize that
health insurance issuers offering group
or individual health insurance coverage
as QHPs through an Exchange are
already subject to reporting
requirements under 45 CFR 156.220 that
implement the transparency in coverage
requirements of section 1311(e)(3) of
PPACA. Pursuant to 45 CFR 156.220,
issuers of QHPs offered through an
individual market Exchange or a Small
Business Health Options (SHOP)
Exchange, including stand-alone dental
plans, must submit specific information
about their plans’ coverage to the
appropriate Exchange, HHS, and the
state insurance commissioner, as well as
make the information available to the
public in plain language.
The Departments acknowledge the
similar purposes served by 45 CFR
156.220 and the final rules. The
Departments, however, note the final
rules do not alter requirements under 45
CFR 156.220. Accordingly, QHP issuers
must comply with both rules’
requirements. If necessary and to the
extent appropriate, HHS may issue
future guidance to address QHP issuers’
compliance with both 45 CFR 156.220
and the final rules.
2. Applicability Dates
Except as otherwise provided for in
the proposed MLR requirements,232 the
Departments proposed that all the
proposed requirements would become
applicable for plan years (or in the
individual market, policy years)
231 42
U.S.C. 18014.
noted above, HHS proposed and finalized
that the amendment to the MLR regulation will
become effective beginning with the 2020 MLR
reporting year (for reports filed by July 31, 2021).
232 As
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beginning on or after one year after the
finalization of the final rules. The
Departments requested feedback about
this proposed timing. In particular, the
Departments were interested in
information regarding the time
necessary to develop cost estimation
tools and machine-readable files. The
Departments are finalizing a modified
applicability timeline for the machinereadable files at 26 CFR 54.9815–
2715A3, 29 CFR 2590.715–54.9815–
2715A3, and 45 CFR 147.212. The
requirements to publish the machinereadable files will become effective for
plan years (or in the individual market,
for policy years) beginning on or after
January 1, 2022. The Departments, in
response to comments, are finalizing an
applicability date that is generally oneyear later than the proposed
applicability date for complying with
the internet-based self-service tool
requirements. Specifically, plans and
issuers will be allowed to phase in the
requirements at 26 CFR 54.9815–
22715A2, 29 CFR 2590.715–2715A2,
and 45 CFR 147.211 regarding the items
and services included in the internetbased self-service tool. Plans and issuers
will be required to provide pricing
information for a minimum of 500 items
and services identified by the
Departments beginning with plan years
(or in the individual market, policy
years) on or after January 1, 2023. Plans
and issuers will be required to provide
the pricing information through the
internet-based self-service tool for all
items and services by plan years (or in
the individual market, policy years)
beginning on or after January 1, 2024.
The Departments are finalizing
applicability dates that do not tie
applicability timelines to the beginning
of plan years (or in the individual
market policy years) that begin one year
after the effective date of the rules, as
proposed. Because most plan and policy
years begin on January 1st, the
Departments are of the view that this
change in the applicability date likely
will not shorten the amount of time
plans and issuers have to comply with
the machine-readable file requirements,
as it has been the Departments’ intent,
including under the proposed rules, to
require calendar year plans and policies
to come into compliance with the final
rules by January 1, 2022. The changed
timeline is therefore unlikely to lead to
increased burdens or costs. The
Departments are finalizing a 3-year
applicability timeline for the internetbased self-service tool requirements.
Under the proposed rules, plans and
issuers would have had to comply with
all relevant proposed requirements
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beginning with plan or policy years
beginning on or after January 1, 2023.
Under the final rules, full compliance
with all requirements associated with
the internet-based self-service tool will
not be required until plan or policy
years beginning on or after January 1,
2024. For these reasons, the final rule’s
applicability dates for the self-service
tool requirements are also unlikely to
lead to increased burdens or costs.
Many commenters submitted
comments regarding the proposed
applicability date of the proposed rules.
The majority of commenters strongly
recommended delaying the proposed
applicability date for the internet-based
self-service tool and machine-readable
file requirements of the rules for at least
one year and up to five years from
publication of the final rules.
Commenters recommended delaying
the applicability date of the final rules
because complying with the
requirements will require negotiations
with administrative service providers,
and the design, building, and testing of
websites. Other commenters cited the
challenges in accessing some of the
required information from third parties
and the technical challenges plans will
likely face as additional reasons to delay
the applicability dates of these
requirements. Additionally, commenters
noted that the proposed rules would
require disclosure of large volumes of
data, which will have to be coordinated
among various parties and for which
systems will need to be put into place
to ensure timely, accurate disclosure.
Some commenters noted that a delay
would be needed due to complex
operational and compliance issues
related to contracting with TPAs,
ownership of data, and building and
operating new IT systems.
Commenters also cited vendor
supply/demand challenges; extensive
technology design, development, and
deployment work; amending agreements
with third parties; financing required to
meet the requirements of the final rules;
and time needed to test the tools for
consumer use as reasons to delay the
applicability date. One commenter
noted that their current price estimator
tools took considerable time and
resources to develop, and large portions
of a tool’s underlying logic or feature set
may not be compatible with the
approach envisioned in the proposed
rules. Moreover, testing, evaluating, and
resolving these types of issues will
require significant investment in IT
development, numerous iterations of
quality assurance and consumer testing,
extensive education and training for
plan staff, and development of new
consumer-facing materials, among other
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challenges. Another commenter
recommended that employers/plan
sponsors should not have to comply
with the final rules until the first day of
the first plan year that is two years after
the date on which the rules are
published. Similarly, commenters
requested a lengthy phase-in period to
give employers, third parties, issuers,
and health care providers time to
modify their contractual agreements to
provide all of the data the proposed
rules would require to be disclosed.
A few commenters stated the
Departments severely underestimated
the time needed to implement the
machine-readable files. The commenter
noted that the timeline to implement the
machine-readable files is very short,
which could compromise the integrity
of the files and lead to unintended
consequences for consumers. Another
commenter noted that, if not eliminated,
the requirement to make machinereadable files available should be
applicable no earlier than plan or policy
years beginning three years after the
date the rules are finalized.
As discussed in the economic impact
analysis, the Departments are of the
view that developing the machinereadable files should be straightforward
for most plans and issuers and that
plans and issuers will incur limited
additional administrative burdens or
costs after the one-time initial file
development. The development
activities needed to establish the
machine-readable files involve
gathering, formatting, and making
publicly available already existing data
that plans and issuers use in their
everyday operations. Plans and issuers
need to keep this information current
for operational purposes, and the
additional costs and burdens of
ensuring that the machine-readable files
are updated monthly is expected to
decrease in subsequent years and
ultimately become minimal, as the
Departments expect plans and issuers to
automate the updating and verification
processes in the years following initial
development.
The Departments are of the view that
providing for a phased-in approach with
regard to the number of items and
services required for the internet-based
self-service tool will provide more time
for plans and issuers to plan for any
increased costs, work with various
vendors, perform user testing, and build
appropriate technology to handle the
disclosure of data through the internetbased self-service tool. Therefore, the
final rules require plans and issuers to
include in the internet-based selfservice tool (and by request, through the
paper method) 500 items and services
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identified by the Departments for plan
years (in the individual market, for
policy years) beginning on or after
January 1, 2023, and all items and
services for plan years (in the individual
market, for policy years) beginning on or
after January 1, 2024. The Departments
are of the view that providing more time
to implement the internet-based selfservice tool while generally maintaining
the timeline for the machine-readable
files, strikes the appropriate balance
between minimizing burdens for issuers
and maximizing price transparency for
the public. Providing information to the
public through the machine-readable
files sooner will also accelerate
researchers’ and third-party developers’
access to pricing information and
potentially provide additional resources
and incentives for plans to build out
their own consumer-tools.
Many commenters also encouraged
the Departments to allow for a phasedin approach for the internet-based selfservice tool and machine-readable files.
Some commenters suggested finalizing a
rule that allows for a phased-in
approach for different group health
plans and health insurance issuers of
individual and group health insurance
coverage to come into compliance with
the final rules. Some commenters
recommended finalizing a rule that
allows for a phased-in approach by
allowing smaller entities an extended
implementation timeframe (that is, an
additional 3 to 5 years) due to the
disproportionate IT burden that will be
placed on these smaller entities.
Additionally, commenters were
concerned that the rules may create a
competitive advantage for larger issuers
and TPAs.
A few commenters recommended that
the rules be implemented in a more
gradual fashion by requiring a price
transparency tool that covers a narrower
data set initially, for example, one that
includes only the most common
shoppable services. These commenters
asserted that, over time, this scope
could be broadened to be fully
inclusive, but an initial narrow focus
could increase the chance that patients
have critical, actionable information as
soon as possible.
Other commenters recommended a
phased approach that would focus first
on the functionality providing the most
value to consumers to establish a
baseline standard of price transparency
across plans, while allowing time for the
industry to solve more difficult
technical challenges. Another
commenter recommended allowing
employers that have highly customized
benefit structures additional time to
implement the internet-based self-
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72253
service tool. One commenter
recommended allowing for a transition
period for issuers and plans to use their
current tools to meet the requirements.
A few commenters recommended
including quality metrics. These
commenters noted that requiring quality
information in the disclosures would
take additional time. In particular, one
commenter was concerned that in the
absence of quality data, price
transparency could actually increase
spending. The commenter therefore
recommended delaying the
implementation of the final rules until
quality information, such as information
related to patient satisfaction and
experience, adherence to clinical
standards and evidence-based medicine,
and patient safety and clinical
outcomes, could be incorporated.
Another commenter stated that, if
pharmacy quality information could be
included, the Departments would need
to provide for several years to transform
existing consensus-based processes to
identify appropriate quality metrics to
include health plans serving different
populations. Another commenter urged
the Departments to perform a study on
the effects of price transparency and the
potential consequences on consumers
seeking care to better understand how
best to integrate quality information
alongside prices to allow consumers to
evaluate the services that best respond
to their individual needs.
As the Departments explain in section
II.C.1 of this preamble, government and
private sector actors are working to
develop and implement reliable and
reasonable quality measures that can be
applied to produce quality rating
information that consumers may access
and consider alongside pricing. As
commenters acknowledged, delaying
the final rules for the purpose of
requiring the integration of quality
information with price information
would require several additional years.
While the Departments appreciate the
value of quality information to informed
health care decision-making, the
Departments are of the view that price
transparency in health coverage must
not be delayed for years when some
quality information is already available
or under development. Indeed, the
Departments expect that the ready
availability of pricing information will
create greater consumer interest in
quality information and other data
relevant to health care decision-making,
and that the market will respond to
provide such information through
innovative resources such as online
tools and mobile applications. The
Departments anticipate that innovators
will seek ways to best present and
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integrate pricing and quality data.
However, the Departments also will
consider what next steps are appropriate
and feasible within the Departments’
current authorities, including the
possibility of conducting a study to
evaluate how to best integrate quality
information alongside prices. For these
reasons and those noted earlier in this
preamble, the Departments decline to
require plans and issuers to include
quality information in the disclosures
required by the final rules.
The Departments are finalizing the
applicability dates of the final rules as
described earlier in this preamble. The
Departments are of the view that the
additional time and flexibility regarding
the internet-based self-service tool will
help address the concerns commenters
raised regarding smaller entities’ ability
to comply with these requirements.
B. Enforcement and Good Faith Special
Applicability
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The preamble to the proposed rules
did not discuss how the proposed rules
would be enforced. State regulators, in
their comments to the proposed rules,
sought greater clarity on how the
proposed rules’ requirements would be
enforced as specifically applied to
health issuers in the individual and
group markets. Section 1311(e)(3) is
located in title I of PPACA and, under
section 1321(c)(2) of PPACA is subject
to the enforcement scheme set forth in
section 2723 of the PHS Act. Similarly,
section 2715A of the PHS Act is subject
to the enforcement scheme set forth in
section 2723 of the PHS Act. Therefore,
states will generally be the primary
enforcers of the requirements imposed
upon health insurance issuers by the
final rules.233 The Departments expect
to work closely with state regulators to
design effective processes and
partnerships for enforcing the final
rules.
The proposed rules included a special
applicability provision to address
circumstances in which a group health
plan or health insurance issuer, acting
in good faith, makes an error or
omission in its disclosures. Specifically,
a plan or issuer would not fail to
comply with the proposed rules solely
because it, acting in good faith and with
reasonable diligence, made an error or
omission in a disclosure, provided that
233 DOL has jurisdiction to enforce the final rules
as they apply to group health plans subject to
ERISA. Treasury has jurisdiction over certain
church plans. HHS has jurisdiction over nonFederal governmental plans and over health
insurance issuers where the HHS Secretary
determines that a state has failed to substantially
enforce the requirements. OPM has jurisdiction
over the Federal Employees Health Benefits Plans.
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the plan or issuer corrects the
information as soon as practicable.
Additionally, to the extent such an error
or omission was due to good faith
reliance on information from another
entity, the proposed rules included a
special applicability provision under
which, to the extent compliance would
require a plan or issuer to obtain
information from any other entity, the
plan or issuer would not fail to comply
with this section because it relied in
good faith on information from the other
entity, unless the plan or issuer knew,
or reasonably should have known, that
the information was incomplete or
inaccurate. Under the proposed rules, if
a plan or issuer had knowledge that
such information was incomplete or
inaccurate, the plan or issuer would be
required to correct the information as
soon as practicable.
Furthermore, the proposed rules also
included a special applicability
provision to account for circumstances
in which a plan or issuer fails to make
the required disclosures available due to
its internet website being temporarily
inaccessible. Accordingly, the proposed
rules provided that a plan or issuer
would not fail to comply with this
section solely because, despite acting in
good faith and with reasonable
diligence, its internet website is
temporarily inaccessible, provided that
the plan or issuer makes the information
available as soon as practicable.
The Departments solicited comments
regarding whether, in addition to these
special applicability provisions,
additional measures should be taken to
ensure that plans and issuers that have
taken reasonable steps to ensure the
accuracy of required information
disclosures are not exposed to liability
by virtue of providing such information
as required by the proposed rules.
In general, commenters supported the
good faith special applicability
provisions (also referred to as ‘‘safe
harbors’’) and recommended certain
clarifications. One commenter requested
clarification regarding how the
Departments would determine whether
a plan or issuer acted in ‘‘good faith’’
and with ‘‘reasonable diligence.’’
Another commenter requested
additional guidance on what it would
mean to ‘‘correct’’ information, and
specifically whether this requirement
would apply on a prospective or
retrospective basis. Another commenter
recommended the Departments allow
health plans 30 days to update
accumulated amounts in the internetbased self-service tool.
The Departments are finalizing the
‘‘good faith’’ safe harbor as proposed.
While ‘‘good faith’’ is not explicitly
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defined in the final rules, it is an
established legal and business term that
is generally understood to involve
honesty in fact and the observance of
reasonable commercial standards of fair
dealing, according to the Uniform
Commercial Code.234 Efforts to correct
omitted or erroneous information
should proceed promptly after the plan
or issuer is informed of the error. At a
minimum, correcting information
should include replacing the incorrect
information, and may include notifying
those affected of the error and the
correction, using digital or written
communications to notify affected
participants, beneficiaries, and
enrollees, and posting a notice on the
internet website of the expected time
before the error will be corrected.
The Departments received few
comments on the good faith special
applicability provision to account for
circumstances in which a plan or issuer
fails to make the required disclosures
available due to its internet website
being temporarily inaccessible. One
commenter recommended that the
website inaccessibility safe harbor be
expanded to cover situations in which
the internet-based self-service tool or
machine-readable files are temporarily
inaccessible, including because the
internet website is inaccessible. This
clarification would cover other
technical issues, for example, that may
affect only these resources, even though
the remainder of the issuer’s or plan’s
website is accessible.
Several commenters recommended
that the Departments expand the ‘‘safe
harbor’’ to account for additional
circumstances. Commenters
recommended that a safe harbor be
created for plans that do not have direct
access to negotiated in-network rates
and allowed amounts, or information
regarding reference based re-pricing in
real time, and that may be unable to
obtain some of the required information
despite good faith efforts. For example,
commenters recommended exempting
employers, plan sponsors, and selfinsured plans that rely on TPAs from
liability if they have made good faith
efforts to obtain the required data but
have failed to do so. Commenters also
recommended exempting plan sponsors
that have been unable to procure thirdparty vendors from liability if these
plans sponsors have acted in good faith.
One commenter recommended that the
Departments finalize a good faith
special applicability provision to protect
234 ‘‘Uniform Commercial Code. General
Definitions.’’ Cornell Law School Legal Information
Institute. Available at: https://www.law.cornell.edu/
ucc/1/1-201#Goodfaith.
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health plans and issuers that provide
cost estimates that meet the
requirements of the final rules if the
estimates do not match the amounts
actually paid by participants,
beneficiaries, or enrollees. This
commenter also requested that this safe
harbor be extended to the cost-sharing
estimate requirements.
Commenters also recommended that
the Departments consider a safe harbor
provision for covered entities that
clearly provides that issuers and plans
are not responsible for the downstream
privacy and security of PHI shared by a
participant, beneficiary, or enrollee with
a third-party application consistent with
the recent guidance issued by the HHS
OCR.235 Another commenter
recommended the creation of additional
safe harbor provisions to allow and
encourage health care organizations to
share threat information about security
risks and incidents linked to third-party
applications.
One commenter noted that disclosure
of pricing information through the
machine-readable files and cost-sharing
tool raises concerns for plan sponsors
about the potential for increased
litigation under ERISA based on the
release of payer-specific negotiated
rates. The commenter encouraged DOL
to effectively and expressly address this
issue so that any disclosure requirement
is crafted in a way that does not increase
fiduciary liability for employer plan
sponsors. The commenter recommended
that DOL consider proposing a ‘‘safe
harbor’’ to protect employers from
downstream litigation risk related to the
public disclosure of negotiated rates and
disclosure of negotiated rates through
the cost-sharing tool. Such a ‘‘safe
harbor’’ could provide that so long as an
employer can demonstrate it
‘‘considered’’ negotiated rates as part of
its decision-making process in selecting
an administrative service organization
(ASO) for its plan, so that it would not
be deemed to have acted imprudently as
a fiduciary for purposes of ERISA with
respect to the selection of the ASO by
virtue of the negotiated rates. While the
Departments appreciate this comment
regarding increased litigation under
ERISA, this request is beyond the scope
of this rulemaking.
Finally, several commenters requested
a deemed compliance standard for
employers or plans that already offer
transparency tools designed to assist
participants with cost estimates and
obtaining up-to-date cost-sharing
235 ‘‘HHS FAQ.’’ United States Department of
Health and Human Services. Available at: https://
www.hhs.gov/hipaa/for-professionals/faq/3009/
does-a-hipaa-covered-entity-bear-liability.html.
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information or for plans and issuers that
voluntarily submit their data to multipayer claims databases. Other
commenters noted that some existing
state laws require plans to provide the
ability for enrollees to look up their outof-pocket costs for several hundred
procedures online or by phone. These
commenters recommended—to reduce
burden on issuer implementation and
avoid duplication of effort—that health
plans that comply with existing state
laws requiring treatment cost-estimator
functionality be deemed in compliance
with any similar Federal requirements.
Another commenter recommended this
safe harbor be extended to the machinereadable files.
The Departments understand that
states have been at the forefront of
transparency initiatives and some have
required disclosure of pricing
information for years. However, it is
important to note that states do not have
authority to require such disclosures by
plans subject to ERISA, which compose
a significant portion of the private
market.236 As a result, a significant
portion of consumers do not have access
to information on their plans, even in
states that have implemented
transparency requirements. The
Departments are also aware that many
plans and issuers have moved in the
direction of increased price
transparency. Despite these price
transparency efforts, the Departments
understand that there continues to be a
lack of easily accessible pricing
information for consumers to use when
shopping for health care services. The
final rules are meant, in part, to address
this lack of easily accessible pricing
information, and represent a critical part
of the ‘Departments’ overall strategy for
reforming health care markets by
promoting transparency, competition,
and choice.
The Departments will take these
additional safe harbor recommendations
into consideration for future
rulemaking. The Departments are not
including in the final rules any safe
harbor rule that would substitute the
offering of existing tools or compliance
with existing state transparency laws.
The Departments have concluded that
additional price transparency efforts are
necessary to empower consumers,
promote competition in the health care
industry, and reduce the overall rate of
growth in health care spending. The
additional safe harbors recommended
by commenters would not allow for the
consistent baselines and standards that
the Departments seek to establish with
the final rules. As noted above, one of
the goals of the final rules is to empower
plans and issuers in the commercial
health care market to innovate and
compete in an industry where
innovation and competition currently
appear to be limited. By requiring
public disclosure of pricing data a year
after the effective date of the rules, the
final rules will encourage issuers, TPAs,
and third-party developers and
innovators to create or enhance their
shopping tools, including the selfservice tools also required by these final
rules. The development of these tools in
turn will create additional
consumerism, which will lead to lower
prices throughout the health care
market. This impact is only achievable,
however if all applicable plans and
issuers are held to the same standards
and timelines. Furthermore, limiting the
applicability of the final rules would
undermine the Departments’ overall
strategy for reforming health care
markets by promoting transparency,
competition, and choice across the
health care industry.
The Departments are of the view that,
ultimately, plans and issuers are
responsible for complying with the
requirements outlined in the final rules.
The Departments understand that plans
may have to make adjustments to their
contracts and as such, the Departments
have factored that into the burden
estimates and timing requirements for
implementation explained elsewhere in
the final rules. As plans and issuers are
responsible for complying with the
requirements outlined in the final rules,
they should carefully examine the
capacity of any partners they may
contract with to provide the required
information. Finally, as discussed
earlier in this preamble, the
Departments recognize the privacy
concerns raised by commenters, but are
of the view that the final rules, which
include an exemption for providers with
fewer than 20 different claims for
payment and do not require any
disclosure of PII or PHI through an API,
and the continuing obligation of plans
and issuers to comply with applicable
privacy requirements, do not raise
sufficient privacy concerns to require an
additional privacy-related safe harbor.
236 Panis, C. W. A., and Brien, M. J. ‘‘Self-Insured
Health Benefit Plans 2019: Based on Filings through
Statistical Year 2016.’’ Deloitte. January 7, 2019.
Available at: https://www.dol.gov/sites/dolgov/files/
EBSA/researchers/statistics/retirement-bulletins/
annual-report-on-self-insured-group-health-plans2019-appendix-b.pdf.
V. Economic Impact Analysis and
Paperwork Burden
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A. Summary/Statement of Need
This regulatory action is taken, in
part, in light of Executive Order 13877
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directing the Departments to issue an
ANPRM, soliciting comments consistent
with applicable law, requiring
providers, health insurance issuers, and
self-insured group health plans to
provide or facilitate access to
information about expected out-ofpocket costs for items or services to
patients before they receive care. As
discussed previously in this preamble,
in response to Executive Order 13877,
the Departments published the
proposed rules entitled ‘‘Transparency
in Coverage.’’ Despite the growing
number of initiatives and the growing
consumer demand for, and awareness
of, the need for pricing information,
there continues to be a gap in easily
accessible pricing information for
consumers to use to shop for health care
items and services. The final rules add
new requirements to 26 CFR part 54, 29
CFR part 2590, and 45 CFR part 147
aimed at addressing this gap, and are a
critical part of the Administration’s
overall strategy for reforming health care
markets by promoting transparency and
competition, creating choice in the
health care industry, and enabling
consumers to make informed choices
about their health care. As discussed
later in the RIA, the Departments
acknowledge that more than 90 percent
of plans, issuers, and TPAs currently
provide some form of internet-based
self-service tool to their consumers.
However, as stated in section I.B of the
final rules, the Departments understand
that utility and accuracy among existing
issuer cost estimator tools varies widely.
Based on issuer demonstrations of their
tools given to the Departments, some
estimators reflect a combined range of
possible costs; others give estimates
based off historical pricing or claims
data from various sources, while others
are restricted in the types of procedures
they include. Moreover, some existing
issuer tools do not take into account a
participant’s, beneficiary’s, or enrollee’s
accumulators.237 The Departments are
of the view that it is important to
establish a minimum set of standards of
what is acceptable so that consumers
can take advantage of the information
237 See also ‘‘Are healthcare’s cost estimate tools
making matters worse for patients?’’ Becker’s
Hospital CFO Report. Available at https://
www.beckershospitalreview.com/finance/arehealthcare-s-cost-estimate-tools-making-mattersworse-for-patients.html (citing Gordon, E. ‘‘Patients
Want To Price-Shop For Care, But Online Tools
Unreliable.’’ NPR. November 30, 2015. Available at
https://www.npr.org/sections/health-shots/2015/11/
30/453087857/patients-want-to-price-shop-for-carebut-online-tools-unreliable) (‘‘Some estimators
reflect a combined range of possible costs, while
others are based off historical pricing or claims data
from various sources. Many online estimate tools
are restricted in the types of procedures they
include. . . .’’).
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market-wide. Consistency will give
consumers confidence that the
information presented by these tools
will not change arbitrarily. Reliability
assures consumers that information in
these tools accurately reflects plans’ and
issuers’ best estimates of costs. The
availability of these tools across all
markets will ensure that no participant,
beneficiary, or enrollee is denied access
to the benefits of this rule and the
Departments are of the view that this
consistency is vital for success and
utilization. As discussed previously in
section I.B, state transparency
requirements are generally not
applicable to self-insured group health
plans, and as a result, a significant
portion of consumers may not have
access to information on their plans and
their health care costs. The Departments
encourage additional functionality and
innovation to be built around the
requirements of the final rules, but
believe a baseline is required to give the
participant, beneficiary, or enrollee
some confidence that no matter which
plans tool they used, it would at least
offer the same basic information. By
requiring group health plans and health
insurance issuers to disclose to
participants, beneficiaries, or enrollees
such individual’s cost-sharing
information for covered items or
services furnished by a particular
provider, the final rules provide them
sufficient information to determine their
potential out-of-pocket costs related to
needed care and encourages them to
consider price when making decisions
about their health care.
B. Overall Impact
The Departments have examined the
impact of the final rules as required by
Executive Order 12866 on Regulatory
Planning and Review (September 30,
1993), Executive Order 13563 on
Improving Regulation and Regulatory
Review (January 18, 2011), the
Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96–354),
section 202 of the Unfunded Mandates
Reform Act of 1995 (March 22, 1995,
Pub. L. 104–4), Executive Order 13132
on Federalism (August 4, 1999), the
Congressional Review Act (5 U.S.C.
804(2)), and Executive Order 13771 on
Reducing Regulation and Controlling
Regulatory Costs (January 30, 2017).
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
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equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits,
reducing costs, harmonizing rules, and
promoting flexibility. A regulatory
impact analysis (RIA) must be prepared
for rules with economically significant
effects ($100 million or more in any 1
year).
Section 3(f) of Executive Order 12866
defines a ‘‘significant regulatory action’’
as an action that is likely to result in a
rule: (1) Having an annual effect on the
economy of $100 million or more in any
1 year, or adversely and materially
affecting a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
state, local or tribal governments or
communities (also referred to as
‘‘economically significant’’); (2) creating
a serious inconsistency or otherwise
interfering with an action taken or
planned by another agency; (3)
materially altering the budgetary
impacts of entitlement grants, user fees,
or loan programs or the rights and
obligations of recipients thereof; or (4)
raising novel legal or policy issues
arising out of legal mandates, the
President’s priorities, or the principles
set forth in the Executive order. An RIA
must be prepared for major rules with
economically significant effects ($100
million or more in any 1 year), and a
‘‘significant’’ regulatory action is subject
to review by the Office of Management
and Budget (OMB). The Departments
have concluded that the final rules are
likely to have economic impacts of $100
million or more in at least 1 year, and,
therefore, meet the definition of
‘‘economically significant rule’’ under
Executive Order 12866. Therefore, the
Departments have provided an
assessment of the potential costs,
benefits, and transfers associated with
the final rules. OMB reviewed this
regulation in accordance with the
provisions of Executive Order 12866.
Two commenters suggested that the
proposed rules failed to comply with
Executive Order 12866. Executive Order
12866 defines rules likely to have an
economic impact in excess of $100
million as ‘‘significant’’ and requires
that the agencies conduct an assessment
of potential costs. The commenters
suggested that the economic impact
analysis and cost assessment the
agencies provided for the proposed
rules were short of the concrete, wellfounded analysis required of the
economic analysis directed by Executive
Order 12866 that must accompany a
proposed rulemaking as far-reaching,
and potentially costly, as the proposed
rules. One commenter suggested that the
proposed rules were inconsistent with
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both Executive Order 12866 and
Executive Order 13563, both of which
direct agencies to carefully consider
alternatives to regulations an agency has
deemed necessary, and to select the
least burdensome approach available.
The commenter maintained that the
agencies did not adequately consider
alternatives and are proposing an
unnecessarily and excessively
burdensome approach.
After consideration and discussion of
the comments related to proposed cost
estimates received in response to the
proposed rules, the Departments chose
to reevaluate the cost estimates
associated with the provisions in the
final rules. The Departments also
consulted with internal and external IT
professionals to gain a better insight into
what individuals and tasks would be
needed to design, develop, and deploy
the internet-based self-service tool and
the three machine-readable files
required by the final rules. Based on this
consultation and additional research,
the Departments have chosen to
increase the cost estimates to account
for the updated understanding of the
costs posed by the final rules, as well as
the additional requirements included in
the final rules. The Departments further
discuss changes to the final cost
estimates later in this preamble and in
the associated ICR sections.
The final rules will enable
participants, beneficiaries, and enrollees
to obtain information about their
potential cost-sharing liability for
covered items and services that they
might receive from a particular provider
by requiring plans and issuers to
disclose cost-sharing information as
described at 26 CFR 54.9815–2715A2,
29 CFR 2590.715–2715A2, and 45 CFR
147.211. As discussed earlier in section
I.B. of the final rules, there has been a
shift in the health care market from
copayments to coinsurance. Coupled
with increases in plans and coverages
with high deductibles, generally
requiring sizeable out-of-pocket
expenditures prior to receiving coverage
under the terms of the plan or policy,
participants, beneficiaries, and enrollees
are now shouldering a greater portion of
their health care costs than before. For
example, over the period from 2008 to
2018, the average health care costs
incurred by families covered by large
employers—including premium
contributions and out-of-pocket
spending on health care services—have
increased 67 percent from $4,617 to
$7,726 annually. Over the same period,
the average out-of-pocket costs alone
have increased from $1,779 to $3,020
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annually.238 The Departments are of the
view that disclosure of pricing
information is crucial for participants,
beneficiaries, or enrollees to engage in
informed health care decision-making
and believe that with greater price
transparency and access to more
accurate and actionable pricing
information, participants, beneficiaries,
and enrollees will be able to consider
the value of an item or service when
making decisions related to their health
care.
In addition, as described at 26 CFR
54.9815–2715A1, 54.9815–2715A2, and
54.9815–2715A3, 29 CFR 2590.715–
2715A1, 2590.715–2715A2, and
2590.715–2715A3, and 45 CFR 147.210,
147.211 and 147.212, the final rules
require group health plans and health
insurance issuers to make public innetwork rates, including amounts in
underlying fee schedules, negotiated
rates, and derived amounts for innetwork providers; historical allowed
amounts paid to out-of-network
providers and billed charges for all
covered items and services; and
negotiated rates and historical net prices
for prescription drugs. The Departments
are of the view that these requirements,
through providing greater transparency
and access to pricing information, will
provide consistency and confidence
across all internet-based self-service
tools. Access to data provided by the
three machine-readable files will ensure
that all consumers have the pricing
information they need in a readily
accessible format, which could inform
their choices, in addition to potentially
impacting cost disparities and
improvements to the overall functioning
of the health care market. The
Departments are of the view that greater
price transparency and the availability
of price information to the public will
empower the 26.1 million uninsured
consumers 239 to make more informed
health care decisions and allow
consumers who wish to shop among
238 Rae, M., Copeland, R., and Cox, C. ‘‘Tracking
the rise in premium contributions and cost-sharing
for families with large employer coverage.’’
Peterson-KFF. August 14, 2019. Available at:
https://www.healthsystemtracker.org/brief/trackingthe-rise-in-premium-contributions-and-costsharing-for-families-with-large-employer-coverage/
?utm_campaign=KFF-2019-HealthCosts&amp;utm_medium=email&amp;_
hsenc=p2ANqtz-_72_RHB9Twe8BpbqOg28rdlGqxq_
SBgV6rB-kbC4PuYMItIOSxHQLmh_
D3OH4GOnUKZXa8&amp;utm_source=hs_
email&amp;hsCtaTracking=04848753-3235436e-a0de-ae8238ad00ad%7Cc1097ae0-0521-4e9a8e45-e5a87f67af4a.
239 ‘‘Income, Poverty and Health Insurance
Coverage in the United States: 2019.’’ United States
Census Bureau. September 15, 2020. Available at:
https://www.census.gov/newsroom/press-releases/
2020/income-poverty.html.
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72257
plans and coverage options to better
understand the potential cost of their
care. Public availability of this
information will also allow third-party
IT developers to provide consumers
with more accurate information on
provider, plan, and issuer value, as well
as prescription drug pricing
information, ensuring that such
information is available to consumers
where and when it is needed.
Furthermore, providing the in-network
rates along with out-of-pocket costs will
also show what future costs could be for
a participant, beneficiary, or enrollee for
the same service, depending on the
progress of his or her deductible. This
information will help consumers make
informed decisions related to their
health care needs now and in the future.
The Departments received many
comments regarding the underlying
economic principles of the proposed
rules. Many commenters were
concerned the rules as proposed could
disrupt contract negotiations between
providers and health plans and result in
providers acting in anticompetitive
ways (such as collusion, consolidation,
or price fixing), resulting in increased
rates (a so-called ‘‘race to the top’’).
Some of these commenters were
particularly concerned with the
potential of the Departments’ proposals
to spur anticompetitive behavior in
highly concentrated markets. Several of
these commenters cited the FTC’s
concerns about the potential negative
impacts of price transparency on
competition in the health insurance
markets, including the possibility that
providers (or sellers) will coordinate
their behavior or bid less aggressively,
leading to higher prices. Commenters
also cited similar concerns expressed by
the Department of Justice (DOJ) and the
Congressional Budget Office (CBO)
about the unintended consequences of
releasing competitive proprietary
information such as the in-network rates
of plans and issuers. Commenters
further stated increased costs would
negatively impact consumer choice and
reduce the affordability of health
insurance coverage of low- and middleincome consumers. One commenter
expressed concern that plans and
issuers could also coordinate to reduce
provider payment levels below market
competitive rates, which could
negatively impact patient access to
quality care. In contrast, one commenter
suggested that concerns about potential
collusion among providers are
unfounded as local markets are
currently populated by a limited
number of providers who tend to have
knowledge of each other’s rates and
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consumers currently receive pricing
information through EOBs. The
commenter also expressed the opinion
that the argument put forth by issuers
that in-network rates are trade secrets is
self-serving and benefits them at the
expense of consumers and the public.
One issuer stated that its experience
in state markets where health care price
transparency was implemented
(Massachusetts, New Hampshire, and
Maine) do not provide evidence that
transparency efforts produce reduced
health care prices and that state price
transparency efforts negatively affected
issuers’ ability to negotiate lower rates.
However, another commenter cited a
study of the New Hampshire
transparency initiative that found ‘‘a
significant reduction in negotiated
prices.’’ 240
Some commenters suggested that the
Departments should ensure that strong
protections are in place to prevent price
fixing or unsustainably low
reimbursement for care before requiring
public disclosure of in-network and outof-network rates. For example, to
address concerns about price fixing, one
commenter suggested working closely
with the FTC and other appropriate
Federal and state authorities to monitor
health care provider markets for any
incidence of collusion, potentially
leading to the prosecution of entities for
violations that raise costs for patients
and plan sponsors.
By contrast, several commenters
expressed the view that the public
disclosure of payer-specific in-network
rates and transparency would promote
competition in the health insurance
markets and will drive down costs,
which could result in lower, more
reasonable health care prices. One
commenter cited a paper that reviewed
outcomes after the implementation of
price transparency efforts and found
evidence for behavioral changes that
could place pressure on providers to
lower rates.241 Specifically, the paper
found evidence of shopping activity
among consumers, especially younger
consumers, evidence of development
activity by third-party application
developers using this information, and
evidence that employers will use the
data to negotiate better rates. Another
commenter noted that employers and
240 Brown Z. Y. ‘‘Equilibrium Effects of Health
Care Price Information.’’ 101 Review of Economics
& Stat. 699 (2019). Available at: https://wwwpersonal.umich.edu/∼zachb/zbrown_eqm_effects_
price_transparency.pdf.
241 Blase, B. ‘‘Transparent Prices Will Help
Consumers and Employers Reduce Health
Spending.’’ Texas Public Policy Foundation.
September 27, 2019. Available at: https://galen.org/
assets/Blase_Transparency_Paper_092719.pdf.
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health plans would be able to leverage
the information to negotiate rates that
are more reasonable and encourage
patients to access higher-value
providers.
As noted previously in sections I.B
and I.C of this preamble, the
Departments are of the view that greater
price transparency and the public
disclosure of pricing information is
necessary to enable consumers to use
and understand pricing data in a
manner that will increase competition,
improve markets, reduce disparities in
health care prices, and potentially lower
health care costs. The Departments
continue to be of the view that effective
downward pressure on health care
pricing cannot be fully achieved
without increased price transparency
and the public disclosure of pricing
information. As discussed in section E.3
of this preamble, the Federal
Government maintains laws and
processes to investigate reports of
collusive or other anticompetitive
practices.
Section 1311(e)(3) of PPACA and
section 2715A of the PHS Act, as well
the authority vested in the Departments,
grant participants, beneficiaries,
enrollees, and the public the right to
know the prices of health care items and
services, which will enable them make
informed health care purchasing
decisions. Without access to price
information, consumers are unable to
accurately assess and choose the least
costly care and coverage options among
all available options, and choice cannot
be meaningful without adequate
information about those choices.
Currently, insured participants,
beneficiaries, or enrollees, as well as
uninsured consumers, do not have
access to adequate and accessible
pricing information related to care and
coverage. The potential benefit of
consumer access to this information is
enormous. Furthermore, the
Departments are aware of consumer
demand for this information. According
to a May 2019 poll conducted by the
Harvard Center for American Political
Studies, 88 percent of U.S. registered
voters (out of a sample of 1,295) stated
they would support an initiative by the
government to mandate issuers,
hospitals, doctors and other providers to
disclose the cost of their services and
discounted or negotiated rates between
these groups.242 Furthermore, 65
242 ‘‘The CAPS Harris Poll.’’ Harvard Center for
American Political Studies, 45. May 2019. Available
at: https://harvardharrispoll.com/wp-content/
uploads/2019/06/HHP_May19_vF.pdf?utm_
source=hs_email&utm_medium=email&_
hsenc=p2ANqtz--NgSdTYgg
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percent of these individuals would favor
these initiatives even if in the short term
they lead to an increase in prices by
some providers.243 The vast majority of
comments the Departments received in
response to the proposed rules were
from individuals who expressed general
support for the transparency proposals
and expressed frustration at the lack of
information available about health care
pricing and a desire to have access to
this information.
As noted in the preamble to the
proposed rules and earlier in this
preamble, the belief that greater price
transparency will reduce health care
costs by encouraging providers to offer
more competitive rates is consistent
with the predictions of standard
economic theory and a number of
empirical studies regarding price
transparency in other markets. The
Departments agree, however, that the
health care market presents unique
challenges. The Departments reviewed a
study that notes certain special
characteristics of the health care market,
including that: (1) Diseases and
treatments affect each patient
differently, making health care difficult
to standardize and making price
dispersion difficult to monitor; (2)
patients cannot always know what they
want or need, and physicians effectively
must serve as their agents (for example,
by recommending specialists and
determining whether a patient is
admitted to a hospital); and (3) patients
are typically in a poor position to
choose a hospital because they do not
have sufficient information about
hospital quality and costs.244 This study
suggests that these special
characteristics of the health care market,
among other relevant factors, make it
difficult to draw conclusions based on
empirical evidence gathered from other
markets. Nevertheless, the same study
concluded that despite these
complications, greater price
transparency, such as access to posted
prices, might lead to more efficient
outcomes and lower prices.
Another study evaluated hospital
discharge information following the
publication of prices.245 Hospital
GUP4tWyR2IEQ7i8TCg1s3DcHuQyhErIgkX3KFUi3S
Fgl9OZKm4-JUOOi9tmMQ.
243 Id.at 46.
244 Austin, A. D., and Gravelle, J. G.
‘‘Congressional Research Service Report to
Congress: Does Price Transparency Improve Market
Efficiency? Implications of Empirical Evidence in
Other Markets for the Healthcare Sector.’’
Congressional Research Service. July 24, 2007.
Available at: https://fas.org/sgp/crs/secrecy/
RL34101.pdf.
245 Kim, M. ‘‘The effect of hospital price
transparency in health care markets.’’ University of
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utilization increased for hospitals that
priced below the mean market price,
while hospital utilization decreased for
hospitals that priced above the mean
market price.
In a recent study of the New
Hampshire price transparency tool,
researchers found that health care price
transparency could shift care to lowercost providers and save consumers and
payers money.246 The study specifically
focused on X-rays, CT scans, and MRI
scans; it determined that the
transparency tool reduced the costs of
medical imaging procedures by five
percent for patients and four percent for
issuers; and estimated savings of $7.9
million for patients and $36 million for
issuers over a 5-year period.
In another example, in Kentucky,
public employees were provided with a
price transparency tool that allowed
them to shop for health care services
and share in any cost-savings realized
by seeking lower-cost care.247 Over a 3year period, 42 percent of eligible
employees used the program to research
information about prices and
rewards.248 The study found that 57
percent of those that used the
transparency tool chose at least one
cost-effective provider, saving state
taxpayers $13.2 million and resulting in
$1.9 million in cash benefits paid to
public employees for seeking lower cost
care.249
The Departments recognize the
transparency efforts in New Hampshire
and Kentucky are not necessarily
generalizable nationwide and provide
only some empirical data to support the
overarching goal of these final rules that
transparency in health care can lead to
savings for consumers and issuers by
putting downward pressure on prices.
The Departments are of the view that
consumers equipped with information
about the cost of their medical options
prior to receiving care will allow them
to be able to make more informed
decisions that will put additional
downward pressure on health care
costs. While the often-unequal
relationship between patients and
providers can sometimes mean that
patients are not always best equipped to
determine their care, there are many
health care purchasing decisions that
could and should take into account a
patient’s financial concerns. For
instance, physician providers may also
be able to provide health care
transparency information when
referring patients to specialists for in- or
out-of-network care, such as for elective
procedures. The pricing information,
combined with the physician’s advice,
could help health care consumers
evaluate options along the cost and
quality spectrums and help guide them
to high-value options. The Departments
are of the view that health care pricing
transparency may increase the impact of
economic market forces on the health
care markets, despite the health care
market’s unique characteristics. The
Departments anticipate that once
issuers, plans, and providers are aware
that consumers can engage with the
markets in an informed manner, they
may adjust their costs to potentially be
72259
more competitive in their pricing of
items and services.
1. Impact Estimates of the Transparency
in Coverage Provisions and Accounting
Table
The final rules set forth requirements
for group health plans and health
insurance issuers to disclose to a
participant, beneficiary, or enrollee, his
or her cost-sharing information for
covered items or services from a
particular provider or providers. The
final rules also include requirements for
plans and issuers to disclose in-network
rates (including negotiated rates,
amounts in underlying fee schedules
and derived amounts) for in-network
providers, historical allowed amounts
and billed charges for covered items and
services provided by out-of-network
providers, and negotiated rates and
historical net prices for prescription
drugs through machine-readable files
posted on a public internet website. In
accordance with OMB Circular A–4,
Table 2 depicts an accounting statement
summarizing the Departments’
assessment of the benefits, costs, and
transfers associated with this regulatory
action.
The Departments are unable to
quantify all benefits and costs of the
final rules. The effects in Table 2 reflect
non-quantified impacts and estimated
direct monetary costs and transfers
resulting from the provisions of the final
rules for plans, issuers, beneficiaries,
participants, enrollees, and state and the
Federal Governments.
TABLE 2—ACCOUNTING TABLE
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Intended Outcomes:
• Provides consumers with a tool to determine their estimated out-of-pocket costs, potentially becoming more informed on the cost of their
health care, which could result in lower overall costs if consumers choose lower-cost providers or items and services.
• Potential increase in timely payments by consumers of medical bills as a result of knowing their estimated overall costs prior to receiving
services and having the ability to budget for expected health care needs.
• Potential profit gains by third-party mobile application developers by selling and exchanging consumer health data and potential benefits
to consumers through the development of mobile applications that may be more user-friendly and improve consumer access to cost information, potentially resulting in reductions in out-of-pocket costs.
• Potentially enable consumers shopping for coverage to understand the in-network rates for providers and the negotiated rates and historical net prices for prescription drugs in different group and individual health plans available to them and choose a plan that could minimize their out-of-pocket costs.
• States could potentially use the In-network Rate and Prescription Drugs Files to determine if premium rates are set appropriately.
• Potential reduction in cross-subsidization, which could result in lower prices as prices become more transparent.
• Public posting of in-network rates (including negotiated rates, amounts in underlying fee schedules, and derived amounts), negotiated
rates, and historical net prices for prescription drugs could facilitate the review of anti-trust violations and potential collusion.
• Potential for the disclosure of in-network rates to apply pressure on providers to bill less aggressively.
• Strengthening of stakeholders’ ability to support consumers.
Benefits:
• Potential societal resource savings (non-quantified efficiency portion of any overall reduction in consumer health care expenditures).
• Potential to reduce the cost of surprise billing to consumers.
Pennsylvania. 2011. Available at: https://
repository.upenn.edu/dissertations/AAI3475926.
246 Brown, Z.Y. ‘‘Equilibrium Effects of Health
Care Price Information.’’ 100 Rev. Econ. & Stat. 1.
(2018). Available at: https://www-
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personal.umich.edu/∼zachb/zbrown_eqm_effects_
price_transparency.pdf.
247 Rhoads, J. ‘‘Right to Shop For Public
Employees: How health care incentives are saving
money in Kentucky.’’ The Dartmouth Institute for
Health Policy and Clinical Practice. March 8, 2019.
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Available at: https://thefga.org/wp-content/
uploads/2019/03/RTS-KentuckyHealthCareIncentivesSavingMoney-DRAFT8.pdf.
248 Id.
249 Id.
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Low estimate
(million)
Costs:
Annualized Monetized ($/year) ..................................
$4,080.2
4,047.7
High estimate
(million)
$5,472.4
5,392.9
Discount rate
(percent)
Year dollar
2020
2020
Period covered
7
3
2021–2025
2021–2025
Quantitative:
• Cost to plans, issuers and TPAs to plan, develop, and build the required internet-based self-service tool and machine-readable files, to
provide in-network rates for in-network providers and out-of-network allowed amounts, and negotiated rates and historical net prices for
prescription drugs, maintain appropriate security standards and update and maintain the machine-readable files per the final rules.
• Increase operating costs to plans and issuers as a result of training staff to use the internet-based self-service tool, responding to consumer inquiries, and delivering consumer’s cost-sharing information and required notices.
• Cost to plans and issuers to review all the requirements in the final rules.
Non-Quantified:
• Potential cost incurred by plans and issuers that wish to develop a mobile accessible version of their internet-based self-service tool.
• Potential exposure of consumers to identity theft as a result of breaches and theft of PII.
• Potential increase in cyber security costs by plans and issuers to prevent data breaches and potential loss of PII.
• Potential increase in out-of-pocket costs for consumers if providers or prescription drug manufacturers increase prices for items and services or plans and issuers shift those costs to consumers in the form of increased cost sharing other than increased deductibles.
• Potential costs to states to review and enforce provisions of the final rules.
• Potential increase in consumer costs if reductions in cross-subsidization are for uncompensated care, as this could require providers finding a new way to pay for those uncompensated care costs.
• Potential increase in health care costs if consumers confuse cost with quality and value of service.
• Potential costs to inform and educate consumers on the availability and functionality of an internet-based self-service tool.
• Potential consumer confusion related to low health care literacy and the potential complexity of internet-based self-service tools.
• Potential cost to plans and issuers to conduct quality control reviews of the information in the in-network rate, out-of-network allowed
amounts, and prescription drug machine-readable files.
• Potential costs to plans, issuers, and TPAs if they are required to renegotiate contracts in order to remove gag clauses in order to meet
the requirements of the final rules.
• Potential costs to plans, issuers, and TPAs if they incur use cases per user CPT licensure charges.
• Potential increase in costs to consumers and issuers if providers or prescription drug manufacturers engage in anticompetitive behaviors.
• Potential state and Federal costs associated with any changes in prescription drug prices resulting from the prescription drug machinereadable file release that may impact state Medicaid, CHIP, and Basic Health Plan programs and Federal health care programs.
Estimate
(million)
Transfers:
Federal Annualized Monetized ($/year) ..................................................
$425.2
423.0
274
274
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Other Annualized Monetized ($/year) ......................................................
Discount rate
(percent)
Year dollar
2020
2020
2020
2020
Period covered
7
3
7
3
2021–2025
2021–2025
2021–2025
2021–2025
Quantitative:
• Transfers from the Federal Government to consumers in the form of increased premium tax credits by approximately $1,047 million in
2022, $623 million in 2023, $216 million in 2024, and $218 million in 2025 as a result of estimated premium increases by issuers in the
individual market to comply with the final rules.
• Transfer from consumers to issuers in the form of reduced MLR rebate payments in the individual and group markets by approximately
$120 million per year by allowing issuers to take credit for ‘‘shared savings’’ payments in issuers’ MLR calculations.
• Transfers from providers to consumers and issuers of approximately $154 million per year as a result of lower medical costs for issuers
and consumers by allowing issuers to share with consumers the savings that result from consumers shopping for care from lower-cost
providers.
Non-Quantified:
• Potential transfer from providers to consumers facing collections to reduce the overall amounts owed to providers if they are able to use
competitor pricing as a negotiating tool.
• Potential transfer from providers to consumers if there is an overall decrease in health care costs due to providers reducing prices to
compete for customers.
• Potential transfer from issuers to consumers if there is an overall decrease in prescription drug costs due to potential reductions in prescription drug prices.
• Potential transfer from consumers to issuers or prescription drug manufacturers if drug manufacturers increase prescription drug prices.
• Potential transfer from consumers to providers if there is an increase in health care costs if providers and services increase their in-network rates to match those of competitors.
• Potential transfer from issuers to consumers if premiums decrease and potential transfer from consumers to issuers if premiums increase.
• Potential transfer from issuers to consumers and the Federal Government in the form of decreased premiums and premium tax credits
as a result of issuers adopting provisions encouraging consumers to shop for services from lower-cost providers and sharing the resulting
savings with consumers.
• Potential Transfers from the Federal Government to drug manufacturers, PBMs, and retail pharmacies for any change in prescription
drug costs, which could impact prices paid by Federal health care programs should prescription drug costs increase.
• Potential Transfers from drug manufacturers, PBMs, and retail pharmacies to the Federal Government to for any change in prescription
drug costs, which could impact prices paid by Federal health care programs should prescription drug costs decrease.
Table 2 provides the anticipated
benefits and costs (quantitative and nonquantified) to plans and issuers to
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disclose cost-sharing information as
described at 26 CFR 54.9815–2715A2,
29 CFR 2590.715–2715A2, 45 CFR
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147.211, and at 26 CFR 54.9815–
2715A3, 29 CFR 2590.715–2715A3, 45
CFR 147.212, and make public in-
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network rates, amounts in underlying
fee schedules, or derived amounts of innetwork providers, out-of-network
allowed amounts paid for covered items
and services, and negotiated rates and
historical net prices for prescription
drugs. The following information
describes the benefits and costs—
qualitative and non-quantified—to plans
and issuers separately for these three
requirements. Some commenters stated
that the Departments attempted analysis
of the economic impact of the proposed
rules was wholly inadequate and
demonstrated that the Departments had
not performed the basic fact-gathering
and analysis that agencies are expected
to undertake before undertaking noticeand-comment rulemaking. These
comments stated that the material the
Departments presented under section
VII, ‘‘Economic Impact Analysis and
Paperwork Burden’’ was a patchwork of
speculation and assumptions without
any grounding in empirical data or
analysis. The commenters further stated:
The Departments listed 10 specific cost
elements that they did not attempt to
quantify; failed to include any
consideration of regulatory
familiarization costs; omitted
consideration of training costs for both
government employees who will be
charged with enforcing the regulation
and for the staff of regulated issuers and
plan sponsors who will be responsible
for compliance; and failed to account for
the impact of the litigation burden on
regulated issuers, plan sponsors, and the
public judicial system. Another
commenter suggested that the
Departments failed to conduct an
adequate cost-benefit analysis because
they failed to consider and quantify
regulatory alternatives, failed to
quantify potentially knowable costs, and
failed to quantify benefits or offer
additional evidence supporting such
benefits. Similarly, another commenter
stated that the Departments’ analysis
was lacking in any quantitative
assessment of benefits and did not
credibly demonstrate that quantification
of benefits might be difficult.
The Departments consulted with
various stakeholders in an effort to
develop the economic analysis
associated with the final rules,
including the estimated costs.
Additionally, the Departments
requested comment on the estimates
presented in the proposed rules to
obtain more information and input with
respect to the unquantified costs and
benefits. The Departments received a
number of comments related to the cost
estimates, which are discussed later in
the RIA and ICR sections. However, the
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Departments did not receive any
comments providing actionable
information as it relates to a number of
the unquantifiable aspects of the
proposed rules.
As previously discussed in sections
II.B.2.C and V.B.1 in this preamble, the
Departments received comments related
to the lack of estimated costs associated
with the renegotiation of provider
contracts, litigation expenses, and the
removal of gag clauses. However, none
of the comments received provided any
information that would aid the
Departments in estimating such costs.
The Departments recognize that there
are numerous aspects associated with
the final rules that they are unable to
estimate due to an overall lack of
knowledge and information with regard
to the actions that issuers, providers, or
TPAs may be required to take to meet
the requirements of the final rules. As
discussed in sections V.C and D, the
Departments have sought to provide
estimates to account for the regulatory
familiarization costs and other estimates
related to the alternatives considered in
the development of the final rules. For
the final rules, the Departments have
updated the regulatory review costs to
include familiarization costs for each
state DOI (including the District of
Columbia), issuers, and TPAs.
2. Requirements for Disclosing CostSharing Information to Participant,
Beneficiaries, or Enrollees Under 26
CFR 54.9815–2715A2, 29 CFR
2590.715–2715A2, and 45 CFR 147.211
Costs
Under 26 CFR 54.9815–2715A2(b), 29
CFR 2590.715–2715A2(b), and 45 CFR
147.211(b) of the final rules group
health plans and health insurance
issuers must disclose required costsharing information in accordance with
prescribed method and format
requirements upon the request of a
participant, beneficiary, or enrollee. The
required cost-sharing information
includes seven content elements, which
are described in paragraph (b)(1) of the
regulations and discussed earlier in
section II.B.1 in this preamble. The
quantitative costs associated with this
requirement are detailed in the section
VI.A.2—of the ICR later in this
preamble.
In addition to the costs described later
in the corresponding ICR, the
Departments recognize there may be
other costs associated with this
requirement that are difficult to quantify
given the lack of information and data.
For example, while the Departments are
of the view that the overall effect of the
final rules will lower health care costs,
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the Departments recognize that price
transparency may have the opposite
effect because in some markets where
pricing is very transparent, price ranges
can narrow in response to greater
transparency, and costs can increase.250
In section II.B.2.C in this preamble, the
Departments addressed comments
related to the potential for unintended
consequences related to the public
disclosures required through the Innetwork Rate. The Departments note
that the current lack of pricing
information means that health care
consumers are generally not able to
include price in their health care
purchasing decisions. The Departments
are of the view that making pricing
information available will begin to
ameliorate distortions resulting from
consumer decision-making not taking
costs sufficiently into account.
Additionally, the Departments recognize
that states may incur additional costs to
enforce the requirements in the final
rules.
As described in section VI, the
Departments assume most self-insured
group health plans will work with a
TPA to meet the requirements of the
final rules. The Departments estimated
costs in the high-range estimate by
assuming that all issuers and TPAs (for
self-insured group health plans) will
need to develop and build their
internet-based self-service tool.
As described in section VI.A.1 of the
ICR, the Departments assume most selfinsured group health plans will work
with a TPA to meet the requirements of
the final rules. The Departments
estimated cost in the high-end estimate
by assuming that all issuers and TPAs
(for self-insured group health plans) will
need to develop and build their
internet-based self-service tools from
scratch. However, the Departments also
provide a low-end estimate by assuming
that over 90 percent of plans, issuers, or
TPAs currently provide an internetbased self-service tool and will only be
required to modify an existing internetbased self-service tool which may
already meet some (if not all) the
requirements in the final rules.251 The
250 Kutscher, B. ‘‘Report: Consumers demand
price transparency, but at what cost?’’ Modern
Healthcare. June 2015. Available at: https://
www.modernhealthcare.com/article/20150623/
NEWS/150629957/consumers-demand-pricetransparency-but-at-what-cost.
251 Sharma, A., Manning, R., and Mozenter, Z.
‘‘Estimating the Burden of the Proposed
Transparency in Coverage Rule.’’ Bates White
Economic Consulting. January 22, 2020. Available
at: https://www.bateswhite.com/media/publication/
183_Estimating%20Burden
%20of%20Proposed%20TCR.pdf. In order to
determine our estimates in determining the low-
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Departments recognize that some plans,
issuers, or TPAs might also voluntarily
elect to develop or enhance a mobile
application, if one is already available
or in some stage of planning and
implementation, which will result in
additional costs. Additionally, TPAs
generally work with multiple selfinsured group health plans, and as a
result, the costs for each TPA and selfinsured group health plan may be lower
to the extent they are able to coordinate
their efforts and leverage any resulting
economies of scale.
Moreover, health care data breach
statistics show there has been an
upward trend in data breaches over the
past 10 years, with 2019 having more
reported data breaches than any other
year since records first started being
published. Between 2009 and 2019
there have been 3,054 health care data
breaches involving more than 500
records; resulting in the loss, theft,
exposure, or impermissible disclosure of
230,954,151 health care records,
equating to more than 69.78 percent of
the United States population. Health
care data breaches are now being
reported at a rate of more than one per
day.252 Based on this information, the
Departments recognize the requirements
of the final rules provide additional
opportunities for health care data
breaches. Although privacy and security
costs have been imbedded into the
development and implementation cost
estimates discussed in the section
VI.A.1 and further discussed in section
II.B.4 of this preamble, the Departments
expect that plans and issuers will follow
existing applicable state and Federal
laws regarding persons who may or
must be allowed to access and receive
the information. The Departments
recognize that some plans and issuers
may incur additional expenses to ensure
a consumers’ PHI and PII are secure and
protected. Additionally, as consumers
accessing the internet-based self-service
tool may be required to input personal
data to access the consumer-specific
pricing information, consumers may be
exposed to increased risk and
experience identity theft as a result of
breaches and theft of PII. As noted
previously in section II.B.4 of this
preamble, the Departments are
finalizing a provision that reminds
plans and issuers of their duty to
range cost estimate, the Departments estimated that
only 90 percent of plans, issuers, and TPAs
provided an online tool that would meet the
assumptions used in developing the estimated
costs.
252 ‘‘Healthcare Data Breach Statistics.’’ HIPAA
Journal. Available at: https://
www.hipaajournal.com/healthcare-data-breachstatistics/.
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comply with requirements under other
applicable state or Federal laws,
including requirements governing the
accessibility, privacy, or security of
information, or those governing the
ability of properly authorized
representatives to access participant,
beneficiary, or enrollee information held
by plans and issuers.
One commenter stated that since
multiemployer plans do not directly
control the process of negotiations or
the resulting information, these plans do
not have access to the information
necessary to satisfy the final rules and
plans could be subject to significant
penalties for failure to comply. Another
commenter, that surveyed employers
who sponsor self-insured ERISAcovered plans, noted that respondents
would likely contract with a TPA to
comply with the final rules because
employers do not have all the necessary
data nor the capability to collect that
data. Employers indicated that
contracting with a TPA for these
requirements would come at a
significant compliance cost to them.
Commenters noted that they rent
networks from issuers and contract with
those issuers as TPAs to administer plan
benefits. It is the issuer that holds the
pricing information for medical
services, facilities, and providers, not
the self-insured employer. Another
commenter stated that the burden
incurred by plans, issuers, and TPAs
would be crippling for smaller TPAs
and health plans, and that burden
would ultimately be passed along to
employers, and, therefore, to consumers.
Another commenter expressed concern
that all of the data aggregation and
collection required under the
regulations—along with the need to
contract with a third-party developer to
create an on-line cost-sharing liability
service tool that is capable of providing
customized cost-sharing information to
a particular participant, beneficiary, or
enrollee—may be overly costly to plans.
The commenter further suggested that
there may also be significant costs
associated with data storage.
The Departments appreciate the
comments received in response to the
proposed rules and recognize that not
all plans will be the source of the
material information required to meet
the requirements of the final rules, and
that many plans will ultimately seek out
third-party assistance in the
development of their internet-based selfservice tool and machine-readable files,
thus avoiding any potential penalties for
noncompliance. As noted in section
II.B.5 of this preamble, multiemployer
plans may contract with a TPA or other
third party (for example, a
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clearinghouse) to meet the requirements
under the final rules. The Departments
note that it is possible that obtaining
third-party assistance to meet the
requirements of the final rules could
result in additional costs. The
Departments expect, however, that TPA,
or other third party, assistance will help
alleviate some of the cost concerns
expressed by commenters as a result of
economies of scale. As noted above,
commenters noted that many selfinsured ERISA plans rent networks from
issuers and contract with issuers as
TPAs to administer plan benefits. By
leveraging their relationships with their
issuer-TPA, self-funded plans may be
able to reduce their overall costs by
using any tools developed by those
issuers. The Departments also recognize
that in order to meet the requirements
of the final rules, some smaller TPAs
and issuers could face disproportionate
increases in costs. However, the
Departments anticipate that a number of
TPAs and issuer-TPAs will seek to
coordinate their efforts and take
advantage of any resulting economies of
scale to reduce their overall costs, and
that this approach can be leveraged in
order to reduce concerns related to the
development of both the internet-based
self-service tool as well as the required
machine-readable files. The
Departments recognize that issuers and
TPAs will incur potential costs
associated with data storage and
providing access to the internet-based
self-service tool. These costs can be
generally broken down into two
sections: Bandwidth pricing and disc
space. Bandwidth Pricing accounts for
the amount of traffic going to a site, the
size of the information that is
transferred from the server to the user’s
browser, and the speed in which that
happens. Provided that 99 percent of
websites do not exceed 5 gigabytes of
bandwidth per month,253 this means if
an issuer’s or TPA’s self-service tool,
hosted on Microsoft’s cloud product,
would be free or minimal if beyond five
gigabytes.254 Disk Space Pricing
accounts for the size of the hard drives
necessary to host a website. Assuming
that each issuer or TPA would need an
estimated 351 gigabytes of storage this
would translate to approximately $8 per
month. Thus, assuming that each issuer
or TPA will not require five gigabytes of
bandwidth for their internet-based selfservice tool, the Departments are of the
253 ‘‘How Much Bandwidth and Disk Space Do I
Really Need?’’ Hosting Manual. Available at:
https://www.hostingmanual.net/bandwidth-diskspace-need/.
254 ‘‘Bandwidth Pricing Details.’’ Microsoft Azure.
Available at: https://azure.microsoft.com/en-us/
pricing/details/bandwidth/.
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view that the overall costs to store and
provide data through the internet-based
self-service tool will be minimal. The
Departments recognize that the final
rules will impose significant costs on
plans, issuers, and TPAs, and that some
of these costs may be transferred to
consumers in the form of higher
premiums or changes in the cost-sharing
structure of plans.
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Intended Outcomes
Informed Consumers. Through
increased price transparency,
consumers armed with pricing
information will have greater control
over their own health care spending,
which can foster competition among
providers, resulting in less disparity in
health care prices or an overall
reduction in health care prices.
Consumers who use the internet-based
self-service tool will be able to access
their cost-sharing amount paid to date;
their progress toward meeting their
accumulators, such as deductibles and
out-of-pocket limits; their estimated
cost-sharing liability for an identified
item or service; negotiated rates for innetwork providers for covered items and
services, and the out-of-network
allowed amounts for covered items and
services. Additionally, consumers will
know how much health care services
will cost for a particular treatment-, and,
and if applicable, whether coverage of a
specific item or service is subject to a
prerequisite. As discussed previously in
section II.B.1.a of this preamble, section
2713 of PPACA requires group health
plans and health insurance issuers to
provide certain recommended
preventive items and services without
cost-sharing. However, if the same items
or services are furnished as nonpreventive actions or by an out-ofnetwork provider, the participant,
beneficiary, or enrollee may be subject
to the cost-sharing terms of his or her
plan. If a plan or issuer cannot
determine whether the request is for a
preventive item or service, the plan or
issuer must display the non-preventive
cost-sharing liability, along with a note
that the item or service may not be
subject to cost-sharing if it is billed as
a preventive service. Pricing
information also gives consumers the
ability to plan ahead for any known
items and services they may require in
the near future. The Departments are of
the view that access to this information
is essential to enable consumers to make
informed decisions regarding specific
services or treatments, budget
appropriately to pay any out-of-pocket
expenses, and determine what impact
any change in providers, items, or
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services will have on the cost of a
particular service or treatment.
Several consumers stated that they
want the opportunity to shop for the
best price when seeking out medical
care and expressed that this information
is critical when deciding whether to
proceed with a test or procedure. Other
consumers expressed the desire to shop
for items and services and stated that
shopping for health care would give
them more control over their personal
health care decisions and spending.
Some consumers felt strongly that they
should be able to compare prices to find
the best deal for non-life-threatening
care. Some other consumers also
expressed frustration when describing
their own experiences of trying and
failing to obtain pricing information
before receiving a particular service.
The Departments agree that providing
the information required in the final
rules will provide consumers with tools
and information they can use to
determine and evaluate the potential
costs associated with their particular
health care needs, thus providing them
the opportunity to obtain the care they
need at a cost they find acceptable.
Consumers may become more cost
conscious. The Departments are of the
view that with increased price
transparency consumers may begin to
focus more carefully on the costs of
services. Currently, consumers may be
aware they have a coinsurance of 20
percent for an item or service, but they
may be unaware of what dollar amount
they will ultimately be responsible for
paying. Knowing that dollar amount
may motivate consumers to seek lowercost providers and services or seek
needed care they did not obtain because
of uncertainty or concerns about the
costs. As discussed in sections I.E.3,
II.C, and V.B.2–4 in this preamble, there
has been recent evidence in New
Hampshire and Kentucky that supports
the Departments’ view that having
access to pricing information, along
with currently available information on
provider quality and incentives to shop
for lower prices, can result in
consumers choosing providers with
lower costs for items and services, thus
potentially lowering overall health care
costs.255 The Departments acknowledge
255 Brown, Z.Y. ‘‘Equilibrium Effects of Health
Care Price Information.’’ 100 Rev. of Econ. and Stat.
1. July 16, 2018. Available at: https://wwwpersonal.umich.edu/∼zachb/zbrown_eqm_effects_
price_transparency.pdf; see also Rhoads, J. ‘‘Right
to Shop for Public Employees: How health care
incentives are saving money in Kentucky.’’ The
Dartmouth Institute for Health Policy and Clinical
Practice. March 8, 2019. Available at: https://
thefga.org/wp-content/uploads/2019/03/RTSKentucky-HealthCareIncentivesSavingMoneyDRAFT8.pdf.
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that this may only hold true if cost and
cost sharing varies between services and
providers. Depending on the degree of
cost variation between specific items
and services, there could be large
variations in the degree to which prices
change per item or service resulting in
wide variations in health care costs and
associated out-of-pocket costs.256 Cost
sharing in some alternative contracting
models, such as HMOs and Exclusive
Provider Organizations (EPO), generally
occurs through fixed copayment
amounts regardless which provider
furnishes a covered item or service and,
therefore, the internet-based self-service
tool will provide little incentive for
consumers to choose less costly
providers in this context.
Timely Payment of Medical Bills. The
Departments anticipate that consumers
with access to the information provided
in response to the final rules will be
more likely to pay their medical bills on
time. A recent Transunion survey found
that 79 percent of respondents said they
would be more likely to pay their bills
in a timely manner if they had price
estimates before obtaining care.257 In
addition, a non-profit hospital network
found that the more information they
shared with patients, the better prepared
those patients were for meeting their
responsibilities. The hospital network
reported that providing price estimates
to patients resulted in increased point of
service cash collections from $3 million
in 2010 to $6 million in 2011.258
However, the Departments recognize
that consumers may not be aware of any
potential balance billing charges, where
not prohibited by state law, and other
potential costs associated with their
256 The evidence cited in this RIA yields percapita annual savings estimates ranging from
between $3 and $5 (=$2.8 million + $1.3 million +
$7.0 million + $2.3 million two-year savings, across
1.3 million California public employees and their
family members, per Boynton and Robinson (2015)),
to $6.50 (=$7.9 million + $36 million five-year
savings found by Brown (2018), divided across the
1.36 million residents of New Hampshire), to $17
(=$13.2 million three-year savings across 0.26
million beneficiaries, per Rhoads (2019)). If these
results were extrapolated to the entire U.S.
population, the estimate of rule-induced reductions
in annual consumer expenditures could range from
$0.98 billion to $5.5 billion, with the median result
across the three studies at $2.1 billion. This range
has a tendency toward overestimation, in that
effects of the Hospital Price Transparency final rule
and existing non-Federal transparency programs
have not been subtracted off.
257 Kutscher, B. ‘‘Report: Consumers demand
price transparency, but at what cost?’’ Modern
Healthcare. June 2015. Available at: https://
www.modernhealthcare.com/article/20150623/
NEWS/150629957/consumers-demand-pricetransparency-but-at-what-cost.
258 ‘‘Reimagining Patient Access.’’
Insurancenewsnet. December 29, 2015. Available at:
https://insurancenewsnet.com/oarticle/reimaginingpatient-access#.
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health care such as facility fees etc.
While these consumers will have a
better idea of the costs they will incur
when obtaining health care, they will
likely be unaware of any additional
charges they could incur as a result of
obtaining care resulting in higher than
expected out-of-pocket costs.
Additionally, consumers may not fully
be aware of their costs due to potential
medical complications that might arise
during the course of treatment or while
obtaining a specific service.
Increased Competition Among
Providers. Studies have found that state
price transparency regulations have
resulted in hospitals decreasing their
charges and a decrease in mean price
and price variability for queried
procedures. One study found the
publication of chargemaster data
resulted in a decrease in mean price and
price variability for queried
procedures.259 However, another study
attributed the reduction in charges to
the ‘‘reputational costs of perceived
overcharging,’’ yet also noted that
reductions in charges were associated
with decreases in discounts leading to
no consumer savings.260 Another issuerinitiated price transparency program,
designed to encourage the selection of
high-value providers, provided
consumers with price differences among
MRI facilities.261 Those patients
provided pricing information saw an
18.7 percent reduction in the cost per
test and a decrease in the use of
hospital-based facilities.262 The study
also found that price variations between
hospital and non-hospital facilities were
reduced by 30 percent.263 As discussed
in sections I.B in this preamble, the
Departments recognize that requiring
hospitals to display payer-specific
negotiated charges, discounted cash
prices, and de-identified minimum and
maximum negotiated charges for as
many of the 70 CMS selected shoppable
services and additional hospitalselected shoppable services for a
combined total of at least 300 shoppable
services may play a role in decreasing
259 Ward, C., and Reeder, T. ‘‘The Evolution and
Impact of Hospital Price Transparency in North
Carolina.’’ North Carolina Medical Journal. Volume
81. Issue 2. April 2020. Available at: https://
www.ncmedicaljournal.com/content/81/2/95.short.
260 Christensen, H.B., Floyd, E., and Maffett, M.
‘‘The Only Prescription is Price Transparency: The
Effect of Charge-Price-Transparency Regulation on
Healthcare Prices.’’ Management Science. February
21, 2019. Available at: https://papers.ssrn.com/
sol3/papers.cfm?abstract_id=2343367.
261 Wu, S.J., et al. ‘‘Price transparency for MRIs
increased use of less costly providers and triggered
provider competition.’’ Health Affairs. August 2014.
Available at: https://www.healthaffairs.org/doi/full/
10.1377/hlthaff.2014.0168.
262 Id.
263 Id.
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mean prices and price variability.264
However, the Departments are of the
view that the Hospital Price
Transparency final rule does not, in
itself, result in reduced prices and price
variability as the rule does not result in
consumers receiving complete price
estimates for health care items and
services from both hospitals and issuers.
Further, the Hospital Price
Transparency final rule does not
provide price transparency with respect
to items and services provided by other
health care providers. Therefore, the
Departments are of the view that the
requirements of the final rules will
provide the additional price
transparency necessary to empower a
more price-conscious and responsible
health care consumer and lead to
increased competition among providers
as consumers will be aware of and have
the ability to compare the out-of-pocket
cost of a covered item or service prior
to receiving an item or service, which
could force higher-cost providers to
lower their prices in order to compete
for the price sensitive consumer.
3. Requirements for Public Disclosure of
In-Network Provider Rates for Covered
Items and Services, Out-of-Network
Allowed Amounts and Prescription
Drug Pricing Information Through
Machine-Readable Files Under 26 CFR
54.9815–2715A3, 29 CFR 2590.715–
2715A3, and 45 CFR 147.212
Costs
Under 26 CFR 54.9815–2715A3(b), 29
CFR 2590.715–2715A3(b), and 45 CFR
147.212(b) of the final rules, group
health plans and health insurance
issuers are required to make available to
the public, on an internet website, three
digital files in a machine-readable
format. The first file (the In-network
Rate File) must include information
regarding all applicable rates, which
may include negotiated rates,
underlying fee schedules, or derived
amounts, to the extent they may be used
for purposes of determining provider
reimbursement or cost-sharing for innetwork providers. The Departments
note that prescription drug products
may be included in the In-network Rate
File only to the extent they are included
as part of an alternative payment
arrangement, such as a bundled
payment arrangement. The second file
(the Allowed Amount File) must
provide data showing the allowed
amounts and billed charges with respect
to covered items and services, including
prescription drugs, furnished by out-ofnetwork providers over a 90-day period
264 84
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beginning 180 days prior to the
publication date of the machinereadable file. The third file (the
Prescription Drug File) must include
information for negotiated rates and
historical net prices for prescription
drugs, organized by NDC. Plans and
issuers are required to make the
information available in accordance
with certain method and format
requirements described at paragraph
(b)(2) and update these files monthly as
required under paragraph (b)(3). The
quantitative costs associated with
meeting these requirements are detailed
in section VI.2 of the ICR section.
Some commenters stated that the
requirement to use billing codes would
be very costly and potentially costprohibitive. One commenter indicated
this is because use of CPT codes, the
most commonly used billing codes,
requires licensure by the American
Medical Association (AMA). According
to the commenter, the AMA charges
licensing fees based on use cases per
user. Another commenter noted that
some self-funded plans rent networks
and do not have real-time access to
network pricing, and there are fees
charged to plans to access the negotiated
discounts with the provider network the
plan has rented. As a result, the
commenter suggested that plans will
have to pay the network access fees
twice—once the information required
under the final rules and a second time
when the actual claim is received and
processed through an intermediary—to
meet the requirements of the final rules.
The Departments understand that the
use of CPT codes may represent an
additional cost for some plans and
issuers. Generally, the Departments
anticipate that if a plan or issuer
currently has the capability or licensure
to record CPT codes on EOBs mailed to
consumers, the plans or issuers should
also be able to use that CPT code to
make the public disclosures required
through the final rules without, or with
minimal, additional costs. The
Departments also have concluded that,
as plans and issuers would already
include licensing costs for using CPT
codes in the cost of doing business, they
would not incur additional costs to use
the CPT codes to populate the machinereadable files. The Departments
acknowledge that some plans and
issuers could face instances where they
could incur additional costs in order to
access the required CPT or network
information based on the structure of
licensing agreements to which they are
currently parties. However, due to an
overall lack of specific information and
knowledge associated with the number
of plans and issuers that currently have
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such licensing agreements, the structure
of those agreements, and the alternatives
available to those plans and issuers, the
Departments are unable to accurately
estimate any associated costs that might
be incurred under these circumstances.
One commenter stated that for many
employer-sponsored health plans, innetwork rates usually belong to a
network administrator, not the health
plan, and, in the event network
administrators were to update their
contractual agreements to permit plans
to receive and share pricing
information, it is likely they will charge
fees or request financial concessions
from plans, which will increase
administrative burdens on group health
plans.
The Departments understand that
requiring release of this pricing
information will affect certain
commercial arrangements and
expectations that prevail in parts of the
health care industry today, which could
result in certain one-time and ongoing
administrative costs. However, the
Departments are of the view that making
this information available to consumers
and the public will serve consumers’
long-term interests in facilitating a
consumer-oriented, information-driven,
more competitive market. Additionally,
as discussed previously in section II.C
in this preamble, the Departments are
finalizing several special rules to
streamline the provision of the public
disclosures required through the final
rules. These special rules were designed
to reduce the overall compliance costs
of the disclosures required by the final
rules and to support smaller issuers and
plans in meeting the requirements of the
final rules by permitting certain
contractual arrangements and the
aggregation of allowed amount data in
some circumstances.
The Departments also recognize that a
certain amount of data storage will be
required to post the machine-readable
files on a publicly available internet
website. Through the efficiencies of
cloud computing and data storage, the
cost to host large files dramatically
decreased in price in the past several
years. Popular services such as Simple
Storage Service from Amazon Web
Services and Standard Storage from the
Google Cloud Platform can host files for
roughly $0.026 per gigabyte. The
Departments’ size estimates of roughly 5
gigabytes for each machine-readable file
would incur a monthly data storage cost
of approximately $0.39 for all of the
machine-readable files.
Non-Quantified Costs for Public
Disclosure of In-Network Rates. In
addition to the costs described in
section VI.A.2, the Departments
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recognize there may be other costs
associated with the requirement to make
in-network rates publicly available that
are difficult to quantify given the
current lack of information and data.
While the Departments are of the view
that the overall effect of the final rules
will be to provide greater price
transparency and potentially lower
health care prices, there are instances in
very transparent markets where price
ranges can narrow and average costs can
increase as a result of price
transparency.265 The Departments also
recognize that plans and issuers may
experience ongoing additional costs (for
example, the cost of quality control
reviews) to ensure they comply with the
requirements of the final rules. In
addition, the Departments are aware
that information disclosures allowing
competitors to determine the rates their
competitors are charging may dampen
each competitor’s incentive to offer a
lower price or result in a higher price
equilibrium.266 While plans and issuers
with the highest in-network rates may
see a decrease in their in-network rates,
as their providers respond to consumer
and smaller issuers’ concerns regarding
paying more for the same item and
service, plans and issuers with the
lowest in-network rates may see their
lower cost providers adjust their rates
upward. However, most research
suggests that when better price
information is available, prices for
goods sold to consumers fall. For
example, in an advertising-related
study, researchers found that the act of
advertising the price of a good or service
is associated with lower prices.267
A potential additional non-quantified
cost could be the cost to remove gag
clauses from contracts between plans,
issuers, and providers. Contracts
between plans, issuers, and providers
often include a gag clause, which
prevents plans and issuers from
disclosing in-network rates. The
Departments recognize that plans,
issuers and providers may incur a onetime expense for their attorneys to
review and update their provider
265 Kutscher, B. ‘‘Report: Consumers demand
price transparency, but at what cost?’’ Modern
Healthcare. June 2015. Available at: https://
www.modernhealthcare.com/article/20150623/
NEWS/150629957/consumers-demand-pricetransparency-but-at-what-cost.
266 Koslov, T., and Jex, E. ‘‘Price transparency or
TMI?’’ United States, Federal Trade Commission.
Available at: https://www.ftc.gov/news-events/
blogs/competition-matters/2015/07/pricetransparency-or-tmi.
267 Austin, D. A, and Gravelle, J. G. ‘‘Does Price
Transparency Improve Market Efficiency?
Implications of Empirical Evidence in Other
Markets for the Health Sector.’’ Congressional
Research Service. June 2007. Available at: https://
fas.org/sgp/crs/secrecy/RL34101.pdf.
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contracts to remove any relevant gag
clauses. Comments received regarding
gag clauses and contract negotiations are
further discussed in section VI.A.2 later
in this preamble.
Another potential cost concerns the
final rules’ impact on a plan’s or issuer’s
ability or incentive to establish a robust
network of providers. A health
insurance provider network is a group
of providers that have contracted with a
plan or issuer to provide care at a
specified price the provider must accept
as payment in full. Many times, plans
and issuers want consumers to use the
providers in their network because these
providers have met the plan’s or issuer’s
quality standards and agreed to accept
an in-network rate for their services in
exchange for the patient volume they
will receive by being part of the plan’s
or issuer’s network.268 Some plans and
issuers offer a narrow network: These
networks operate with a smaller number
of providers, meaning a consumer will
have fewer choices when it comes to innetwork providers, but often offer lower
monthly premiums and out-of-pocket
costs.269 The Departments recognize
that making in-network rates public may
create a disincentive for plans and
issuers to establish a contractual
relationship with a provider (including
in narrow networks) because providers
may be unwilling to give a discount to
plans and issuers when that discount
will be made public. As addressed
further in section VI.C later in this
preamble, the requirements of the final
rules could result in a reduction in
revenue for those smaller plans and
issuers that are unable to pay higher
rates to providers and may require them
to narrow their provider networks,
which could affect access to care for
some consumers. Due to smaller plans’
and issuers’ potential inability to pay
providers with higher rates, smaller
plans and issuers may further narrow
their networks to include only providers
with lower rates, possibly making it
more difficult for smaller plans and
issuers to fully comply with network
adequacy standards described at 45 CFR
156.230 or other applicable state
network adequacy requirements.
Some commenters stated that public
disclosure of in-network rates could
affect the sustainability and affordability
268 Davis, E. ‘‘Health Insurance Provider Network
Overview.’’ Verywell Health. August 2019.
Available at: https://www.verywellhealth.com/
health-insurance-provider-network-1738750.
269 Anderman, T. ‘‘What to Know About Narrow
Network Health Insurance Plans.’’ Consumer
Reports. November 23, 2018. Available at: https://
www.consumerreports.org/health-insurance/whatto-know-about-narrow-network-health-insuranceplans/.
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of QHPs offered through the Exchanges
by placing upward pressure on rates and
by placing provider participation in
networks at risk. One commenter stated
that the potential negative effects on
QHPs would especially harm
unsubsidized consumers and consumers
in rural areas where provider
consolidation is most common and
could impact overall marketplace
stability and the risk pool. Furthermore,
commenters asserted that increased
premiums for QHPs could result in
increased Federal spending in the form
of higher premium tax credit (PTC)
payments, which could substantially
increase the Federal deficit over 10
years. One commenter stated that the
Departments should not finalize the
release of in-network rates until they
fully evaluate the impact on affordable
plan options on the Exchanges and the
effects on Federal spending.
As discussed later in section V.B.5 of
this preamble, the Departments estimate
premiums for the fully-insured markets
will be $471 billion for 2022, including
the individual, small group, and large
group markets. The Departments
estimate that the cost for 2022
represents approximately 2.4 percent of
projected commercial insured premiums
for the fully-insured market, 1.4 percent
in 2023, 0.5 percent in 2024, and 0.5
percent in 2025. Assuming this level of
premium increase in the individual
market, PTC outlays are estimated to
increase by about $1,047 million in
2022, $623 million in 2023, $216
million in 2024, and $218 million in
2025. Given that the 2021 President’s
Budget estimates that PTC outlays are
expected to be $43.8 billion in 2022,
$44.8 billion in 2023, $45.875 billion in
2024, and $48.2 billion in 2025,270 the
Departments expect the estimated
increase of $1,047 million in 2022, $623
million in 2023, $216 million in 2024,
and $218 million in 2025 to have
minimal impacts on anticipated
enrollment and are not of the view that
this increase will result in any
widespread negative effects on market
stability. Additionally, the Departments
have determined that enrollment
impacts will be minimal, as estimated
premium impacts are relatively small,
and rate increases for subsidized
enrollees in the individual market will
be largely mitigated. Additionally,
participants, beneficiaries, and enrollees
currently make health insurance
coverage decisions based on their
particular health and financial
situations, and it is not predictable how
270 OMB 2021 President’s Budget. Available at:
https://www.whitehouse.gov/wp-content/uploads/
2020/02/budget_fy21.pdf.
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information provided as a result of the
final rules will significantly impact
those health insurance coverage
decisions. Thus, the Departments do not
expect the final rules to significantly
increase the selection risk beyond the
levels that currently exist. The
Departments do acknowledge that the
estimated increases in premiums could
result in minor harm to unsubsidized
consumers as they could be faced with
increased premiums that would not be
negated by any increases in PTC and
this could impact those consumers’
decisions related to obtaining health
insurance coverage.
The Departments received several
comments from issuers, providers, and
employers stating that the requirement
to publicly disclose in-network rates
would threaten the viability of their
business models or business models
upon which they rely. One commenter
stated that the proposal to release innetwork rates could affect the viability
of individual and small group market
health plans sold by small issuers. The
commenter further suggested that
‘‘safety net’’ health plans (which serve
individuals and families that do not
have access to other sources of coverage
in markets that other issuers find
unprofitable) currently may be able to
access more favorable contract terms
with providers, and these types of
arrangements would be at risk if the innetwork rate information were required
to be made public. The commenter
expressed particular concern that
exposure of the rates of safety net
hospitals may uniquely disadvantage
them in negotiations with plans and
issuers because they may have to raise
rates on certain services to support
safety net activities. Similarly, a
hospital system stated that publishing
in-network rates would negatively
impact its ability to contain costs and
threaten its current participation in the
networks of nearly all area health plans.
Another commenter indicated that
providers would leave plans’ and
issuers’ networks if plans’ and issuers’
attempts to achieve more favorable rates
using public in-network rate
information proved unsuccessful.
Another commenter argued that the
policy requiring disclosure of innetwork rates could also result in the
collapse of the network administrator
business model, which would result in
significantly increased administrative
costs for health plans that would need
to contract separately with each
participating provider.
The Departments understand that
requiring the release of this pricing
information will upset certain
commercial arrangements and
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expectations that prevail in parts of the
health care industry today, which could
result in certain one-time and ongoing
administrative costs. However, the
Departments have concluded that
providing increased price transparency
and making this information available to
the public will serve the public’s longterm interests in facilitating a consumeroriented, information-driven, more
competitive market potentially leading
to reduced overall health care costs.
Some commenters suggested that, by
using publicized in-network rate
information, plans and issuers could
also coordinate to reduce provider
payment levels below market
competitive rates, a so-called ‘‘race to
the bottom.’’ Some of these commenters
stated that this ‘‘race to the bottom’’
could also potentially hurt access to,
and quality of, care. For example, one
commenter stated that if provider
reimbursement rates were set too low,
patient access to care would be
negatively impacted because providers
will not have the resources to invest in
technology, training, and equipment.
One commenter suggested that plans
and issuers would likely want to renegotiate rates once they learn local
prices and that dominant issuers could
use payer specific in-network rate
information to deter and punish
hospitals that lower their rates or enter
into value-based arrangements with the
dominant issuer’s competitors.
Several commenters stated that
required disclosure of in-network rates
could result in an increase in health
care prices. Others specifically
expressed concerns that making payerspecific in-network rates available
would disrupt contract negotiations
between providers and health plans and
result in providers changing their rates
in anticompetitive ways (‘‘race to the
top’’) and could promote an
environment that could support
collusion between providers, resulting
in increased prices. Other commenters
suggested that required disclosures
would lead to the consolidation of
providers and even greater
consolidation in the commercial health
insurance industry, and expressed
concerns that disclosures could
particularly harm small health plans
and TPAs who may have been able to
get discounted rates by offering health
plans in a limited service area.
One commenter noted that other
states’ transparency systems used
several distinguishable features to
mitigate the risks of publicizing rates,
but noted that, despite these efforts, the
data was still used in contract
negotiations.
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The Departments recognize that there
is the potential for adverse market
outcomes as a result of the final rules.
As noted previously, the Departments
are aware of the potential that plans and
issuers could seek to use the public
availability of in-network rates or
underlying fee schedules in attempts to
lower prices in what certain
commenters called a ‘‘race to the
bottom.’’ As noted previously in this
section, the Departments recognize the
potential for anticompetitive behaviors
and increased consolidation that may
occur should providers use the innetwork rate or fee schedule data to
increase their rates or should smaller
plans and issuers struggle to comply.
The Departments recognize that
provider collusion could result in
increased prices, and also recognize that
this sort of behavior could result in
distinct coverage areas or agreements
where providers choose not to compete
for consumers. As discussed previously
in this preamble, the Departments
nonetheless have concluded that
providing increased price transparency
and making this information available to
the public will serve the public’s longterm interests in facilitating a consumeroriented, information-driven, more
competitive health care market.271
Should the market become more
competitive, as the Departments
anticipate, the reduction in prices may
provide more options for those
providers that function as ‘‘safety-net
providers’’ to expand their networks or
enhance the services they currently
provide by organizing and delivering a
significant level of health care and other
related services to uninsured, Medicaid,
and other vulnerable populations. The
Departments also reason that the
likelihood of price and other forms of
collusion will be mitigated to some
extent by the actions of state and
Federal regulatory and antitrust
enforcement authorities and the
enforcement of current market laws and
regulations. The Departments are of the
view that enforcement actions taken to
reduce the likelihood of price collusion
will further reduce the chances that
issuers will seek to reduce the size of
their networks.
Although consumer education is not a
requirement of the final rules, plans,
issuers and TPAs may face additional
costs if they chose to inform and
educate their consumers about the
options available to them, how to use
271 Gudiksen K.L., Chang, S.M., and King, J.S.
‘‘The Secret of Health Care Prices: Why
Transparency Is in the Public Interest.’’ California
Health Care Foundation. July 2019. Available at:
https://www.chcf.org/wp-content/uploads/2019/06/
SecretHealthCarePrices.pdf.
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these tools, increase their general health
care knowledge. Providing educational
opportunities to participants,
beneficiaries, or enrollees could
encourage those participants,
beneficiaries, or enrollees to seek lower
cost services, providing plans, issuers
and TPAs the potential to realize a
return on the investments incurred to
comply with the final rules.
Non-Quantified Cost for Public
Disclosure of out-of-network allowed
amounts. In addition to the costs
described in section VI.A.2 and the
previous analysis related to the public
disclosure of in-network rates, the
Departments recognize that there may
be other costs associated with the
requirement to make historical
payments of out-of-network allowed
amounts and billed charges publicly
available that are difficult to quantify,
given the current lack of information
and data.
Furthermore, while plans and issuers
must de-identify data (such as claim
payment information for a single
provider) and ensure certain sensitive
data are adequately protected,
unauthorized disclosures of PHI and PII
may increase as a result of manual
preparation and manipulation of the
required data. The potential disclosures
of PHI and PII may require plans,
issuers, and TPAs to obtain additional
cyber-security insurance that could lead
to additional costs.
Non-Quantified Cost for Public
Disclosure of Prescription Drug Pricing
Information. In addition to the costs
described in section VI.A.2 and the
previous analysis related to the public
disclosure of in-network rates and
allowed amounts, the Departments
recognize that there are other costs
associated with the requirement to make
negotiated rates and historical net prices
for prescription drugs publicly available
that are difficult to quantify, given the
current lack of information and data.
For example, as a result of the
availability of consolidated negotiated
rates and historical net prices, drug
manufacturers may seek to restructure
their rebate and discount programs and
could potentially cease providing
rebates to plans and issuers, PBMs, or
pharmacies, which could then result in
less savings being passed on to
consumers.
Intended Outcomes
The Departments are of the view that
providing greater price transparency by
requiring group health plans and health
insurance issuers to make information
regarding all applicable rates publicly
available, which may include negotiated
rates, amounts in underlying fee
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schedules, or derived amounts for innetwork provider rates; 90-days of
historical allowed amount and billed
charges data for out-of-network
providers; and prescription drug
negotiated rates and historical net prices
will ultimately benefit plans and
issuers, regulatory authorities,
consumers, and the overall health care
market.
Group Health Plans and Health
Insurance Issuers. Plans and issuers
may benefit from these requirements
because under the final rules a plan or
issuer would have a better
understanding of other plans’ or issuers’
in-network rates. This may allow plans
and issuers paying higher rates for the
same items or services to negotiate with
certain providers to lower their rates,
thereby lowering provider
reimbursement rates, reducing price
variation, and potentially resulting in an
overall decrease in health care costs.
The Departments acknowledge,
however, as noted in the ‘‘costs’’ section
(V.B.3) earlier in this preamble, that
knowledge of other providers’ innetwork rates could also drive up rates
if a provider discovers they are
currently being paid less than other
providers by a plan or issuer and,
therefore, seek to negotiates higher rates.
In addition, the final rules may result
in more plans and issuers using a
reference pricing structure. Under this
structure, participants, beneficiaries, or
enrollees who select a provider charging
above the reference price (or
contribution limit) must pay the entire
difference and these differences do not
typically count toward that individual’s
deductible or out-of-pocket limit. Plans
and issuers may want to use a reference
pricing structure to pass on any
potential additional costs associated
with what they can identify as highercost providers to the participant,
beneficiary, or enrollee. The
Departments recognize that reference
pricing might not impact every
consumer. For example, the California
Public Employees’ Retirement System
(CalPERS) provides exceptions from
reference pricing when a member lives
more than 50 miles from a facility that
offers the service below the price limit.
It also exempts the patient if the
patient’s physician gives a clinical
justification for using a high-priced
facility or hospital setting. Another
example is a business with a selfinsured group health plan that exempts
laboratory tests for patients with a
diagnosis of cancer from its reference
pricing program. However, reference
pricing has generally been shown to
result in price reductions, as opposed to
mere slowdowns in the rate of price
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growth. For example, in the first two
years after implementation, reference
pricing saved CalPERS $2.8 million for
joint replacement surgery, $1.3 million
for cataract surgery, $7.0 million for
colonoscopy, and $2.3 million for
arthroscopy.272
Regulatory Authorities. In many
states, issuers must obtain prior
approval for rate changes from the
state’s DOI. Regulatory authorities such
as state DOIs might benefit from the
final rules because knowledge of
provider in-network rates and out-ofnetwork allowed amounts paid to outof-network providers could support
determinations of whether premium
rates, including requests for premium
rate increases, are reasonable and
justifiable.
Consumers. Access to the in-network
rates between plans and issuers and innetwork providers, the amount plans
and issuers have paid to out-of-network
providers, and prescription drug pricing
information will allow consumers to
understand the impact of their choice of
health insurance coverage option and
their choices of providers on the cost of
a particular service, item, or treatment.
Giving consumers access to this
information as part of their health care
decision-making process may facilitate a
greater degree of control over their own
health care costs. Furthermore, having
access to publicly available out-ofnetwork allowed amounts will provide
consumers who are shopping for health
insurance coverage the ability to
compare the different rates plans and
issuers ultimately pay for items and
services, including items and services
from providers that might be out-ofnetwork. While the Departments are of
the view that consumers will benefit
from the final rules, the Departments
recognize that utilizing the required
information will not be practical or
reasonable in an emergency situation.
Similarly, some consumers may need
assistance in understanding complex
terms or other associated mechanisms in
order to utilize this information.
The Departments recognize that
beneficiaries and enrollees in state and
Federal health care programs (including
Medicare, Medicaid, CHIP, Basic Health
Program and coverage provided by the
Department of Defense and Veterans
Administration) will be impacted by
spillover effects related to any
reductions or increase in prices for
individual items and services and
prescription drugs as a result of the final
272 Boynton, A., and Robinson, J. ‘‘Appropriate
Use of Reference Pricing Can Increase Value.’’
Health Affairs Blog. July 7, 2015. Available at:
https://www.healthaffairs.org/do/10.1377/
hblog20150707.049155/full/.
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rules. For example, Medicare Part B has
historically reimbursed physicians for
physician-administered drugs using a
formula that is based off the average
sales price (ASP). To the extent the final
rules drive changes in prescription drug
prices, that will change the Federal
reimbursement rates under Medicare
Part B and may impact Medicare
beneficiaries’ out-of-pocket costs for
their prescriptions. In addition, by law,
Medicaid programs in every state
receive the lowest negotiated rate for
prescription drugs. To the extent the
final rules drive changes in prescription
drug prices, this will impact the amount
all states, the Federal Government, and
some beneficiaries pay for prescription
drugs. Similarly, if providers start
increasing (or decreasing) their innetwork rates, there could also be
spillover effects for Medicare Advantage
or Medicaid Managed Care
Organizations (MCO), particularly for
issuers and plans that use the same
network for both private plans,
Medicare Advantage Plans and
Medicaid MCOs. These changes will
impact the amount the Federal
Government, states, and beneficiaries
will need to pay for their Medicare and/
or Medicaid.
Overall Health Insurance Market. The
price transparency required by the final
rules may also induce an uninsured
person to obtain health insurance
coverage. Depending on premium rates,
an uninsured individual might select
health insurance coverage after learning
the actual dollar difference between the
usual and customary rates that he or she
pays for items and services and the innetwork rates and out-of-network
allowed amounts under the terms of a
plan or issuer’s policy. In addition, the
final rules might force providers to
lower their rates for certain items and
services in order to compete for the
price sensitive consumer, plan, or
issuer. Although the immediate
payment impact would be categorized
as a transfer, any accompanying health
and longevity improvements would be
considered benefits (and any
accompanying increases in utilization
would, thus, be considered additional
costs). As discussed in section V.B in
this preamble, a study of New
Hampshire’s HealthCost initiative found
that the availability of pricing
information resulted in a five percent
reduction in costs for medical imaging
procedures. The study further found
that patients saved approximately $7.5
million dollars on X-Ray, CT, and MRI
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scans over the five-year study period
(dollars are stated in 2010 dollars).273
Some commenters suggested that the
biggest impact on health care spending
and costs would come from self-insured
employers who would now be able to
access and use in-network rate data to
negotiate lower rates on behalf of plan
participants; improve their provider
networks; make more informed
decisions about plan offerings; help
steer enrollees to higher-quality, lowercost providers; and more meaningfully
implement value-based payment
designs. Other commenters stated that
the proposed rules would help create
more efficient and value-based health
care systems by encouraging issuers to
design innovative benefit designs that
push patients toward lower-cost care.
Another commenter stated that
requiring plans and issuers to share
publicly their in-network rates and the
allowed amounts paid to out-of-network
providers had the potential to increase
competition among plans and issuers.
The Departments are of the view that
the requirements in the final rules will
provide providers, plans, and issuers
the ability to provide quality health care
services at lower costs to participants,
beneficiaries, or enrollees through
enhanced provider and payer
competition.
4. Medical Loss Ratio (45 CFR 158.221)
‘‘Shared savings’’ programs allow
issuers to share with enrollees any
savings that result from enrollees
shopping for, and receiving care from,
lower-cost, higher-value providers. In
the final rules, HHS is amending 45 CFR
158.221(b) to allow health insurance
issuers that elect to offer ‘‘shared
savings’’ programs to take credit for
such ‘‘shared savings’’ payments in their
MLR calculations. For this impact
estimate, HHS is assuming that only
relatively large issuers (with at least
28,000 enrollees) that have consistently
reported investment costs in health IT
on the MLR Annual Reporting Form of
at least $10.50 per enrollee, which
represents issuers with 70 percent of
total reported commercial market health
IT investment or issuers that operate in
states that currently or may soon
support ‘‘shared savings’’ plan
designs,274 will initially choose to offer
plan designs with a ‘‘shared savings’’
273 Brown, Z.Y. ‘‘Equilibrium Effects of Health
Care Price Information.’’ 100 Rev. Econ. & Stat. 1.
(2018). Available at: https://wwwpersonal.umich.edu/∼zachb/zbrown_eqm_effects_
price_transparency.pdf.
274 The states that supported ‘‘shared savings’’
plan designs at the time the estimate was developed
and therefore were included in the estimate are
Maine, Massachusetts, New Hampshire, and Utah.
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component. HHS assumes that such
issuers will share, on average, 50
percent of the savings with enrollees
(which will increase the MLR numerator
under the final rules), and that issuers
whose MLRs were previously below the
applicable MLR standards will use their
retained portion of the savings to lower
enrollees’ premiums in future years
(which will reduce the MLR
denominator). Based on 2017–2019
MLR data, HHS estimates that this will
reduce MLR rebate payments from
issuers to enrollees by approximately
$120 million per year, while facilitating
savings that will result from lower
medical costs of approximately $154
million per year for issuers and
enrollees (some of which will be
retained by issuers, shared directly with
enrollees, or used by issuers to reduce
future premium rates).
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5. Summary of Estimated Transfers
The Departments are assuming that
because 2021 premium rates are nearly
finalized, health insurance issuers will
not be able to charge for the expenses
incurred to implement the requirements
of the final rules in their 2021 rates.
Because issuers will not have the
opportunity to reflect the 2021
development costs in the 2021 premium
rates, some issuers may apply margin to
the ongoing expenses as they develop
premium rates for 2022 and after. The
Departments estimate premiums for the
fully-insured markets will be $471
billion for 2022, $494 billion in 2023,
$516 billion in 2024, and $539 billion
in 2025, which includes the individual,
small group, and large group markets.275
The Departments estimate that the
ongoing expense represents
approximately 2.4 percent of projected
commercial insured premiums for the
fully-insured market in 2022, 1.4
percent in 2023, and 0.5 percent in 2024
and 2025 (an average of 1.2 percent per
year). Assuming this level of premium
increase in the individual market, PTC
outlays are estimated to increase by
about $1,047 million in 2022, $623
million in 2023, $216 million in 2024,
and $218 million in 2025. Given that
2022 PTC outlays are expected to be $44
billion,276 the Departments expect that
the estimated premium impacts will be
relatively small, and rate increases for
subsidized enrollees in the individual
market will largely be mitigated.
Therefore, the Departments expect
275 2017 earned premium data was taken from
amounts reported for MLR, and trended forward
using overall Private Health Insurance trend rates
from the NHE projections.
276 OMB 2021 President’s Budget. Available at:
https://www.whitehouse.gov/wp-content/uploads/
2020/02/budget_fy21.pdf.
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enrollment impacts to be minimal. The
Departments note that any impact of the
final rules on provider prices has not
been estimated as limited evidence has
generally shown no predictable impact
on provider prices. As a result, the
Departments are assuming that the
overall impact will be minimal.
However, there is a large degree of
uncertainty regarding the effect on
prices, so actual experience could differ.
The Departments received comments
stating that the broader impact to
premiums was not considered in the
proposed rules. Several commenters
stated that increased health care prices
could be passed along to consumers,
patients, and taxpayers in the form of
higher premiums. Some commenters
specifically observed that the cost of
developing and maintaining the
required machine-readable files on a
monthly basis would likely be passed
on to consumers in the form of higher
premiums. Another commenter noted
that employers, TPAs, and issuers might
incur increased costs relative to the
rules regarding potential data breaches,
increased liability, and cyber-coverage
costs (liability insurance designed to
cover financial losses that result from
data breaches and other cyber events)
that could also impact plan premiums.
Other commenters suggested that use
of information in the In-network Rate
File could be used by consumers to
engage in practices that would lead to
adverse selection and potentially higher
premiums. One commenter asserted that
the proposed rules would allow
individuals to enter the insurance pool
for specific costly treatments or
procedures and then drop coverage or
switch coverage at the end of the
contract year for a plan with lower
premiums, which would result in higher
premiums for all consumers because
there is no ability for health plans to
spread the risk across a reliable and
long-term customer base.
By contrast, one commenter observed
that premium increases could be
mitigated if low-deductible participants,
beneficiaries, or enrollees were given
information about the cost of the health
care they utilize, and that over time
price transparency could create lower
health care costs.
The Departments recognize that many
issuers and TPAs will likely transfer the
costs associated with meeting the
requirements in the final rules to
consumers in the form of increased
premiums. However, the Departments
do not currently have enough
information or evidence to determine
the overall effects the final rules will
have on premiums and therefore have
not estimated how the final rules will
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impact an individual’s premium. The
Departments also note that adverse
selection risk currently exists in the
individual market; individuals already
make health care coverage decisions
based on their particular health and
financial situations. It is not clear how
the price information contained in the
In-network Rate, Allowed Amount, and
Prescription Drug Files will
significantly impact an individual’s
health care coverage decisions. The
Departments do not expect the final
rules to significantly increase the
selection risk beyond the levels that
currently exist.
Also, it is questionable how much the
final rules will lower health care costs
for low deductible participants,
beneficiaries, or enrollees because costsharing amounts are usually much less
than the cost of the services, so that the
participants, beneficiaries, or enrollee
have no economic incentive to seek
lower cost services. Additionally,
evidence is limited but generally does
not show significant differences in
insured participant, beneficiary, or
enrollee behavior as a result of price
transparency.
C. Regulatory Review Costs
Affected entities will need to
understand the requirements of the final
rules before they can comply. Group
health plans and health insurance
issuers are responsible for ensuring
compliance with the final rules.
However, as assumed elsewhere, it is
expected that issuers and TPAs (for selfinsured group health plans) will incur
this cost and burden for most group
health plans, and only the largest selfinsured plans may incur this cost and
burden directly. Thus, issuers and TPAs
(and possibly some of the largest selfinsured plans) will be responsible for
providing plans with compliant
services. The Departments are currently
not aware of any specific number of
large self-insured plans that will seek to
meet the requirements of the final rules
without third-party assistance and are
thus unable to accurately account for
those plans, however, those plans will
incur similar costs and burdens as TPAs
and issuers in order to develop the
required tools and to review and
understand the final rules. Therefore,
the cost and burden for the regulatory
review is estimated to be incurred by
the 1,959 issuers and TPAs. The
Departments also are of the view that
each state DOI, 50 states plus the
District of Columbia, will need to
review and understand the final rules in
order to be able to provide the
appropriate level of oversight and
enforcement.
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If regulations impose administrative
costs on private entities, such as the
time needed to read and interpret the
final rules, the Departments should
estimate the cost associated with
regulatory review. Due to the
uncertainty involved with accurately
quantifying the number of entities that
will review and interpret the final rules,
the Departments are assuming that the
total number of issuers, TPAs, and state
DOIs will be required to comply with
the final rules.
Nonetheless, the Departments
acknowledge that this assumption may
understate or overstate the costs of
reviewing the final rules. It is possible
that not all affected entities will review
the final rules in detail, and some
entities may seek the assistance of
outside counsel to read and interpret
them. For these reasons, the
Departments are of the view that the
number of issuers, TPAs, and DOIs
would be a fair estimate of the number
of reviewers of the final rules.
Using the wage information from the
Bureau of Labor Statistics (BLS) 277 for
a Computer and Information Systems
Manager (Code 11–3021), a Lawyer
(Code 23–1011) and a state Compliance
Officer (Code 13–1041).278 The
Departments estimate that the cost for
each issuer or TPA to review the final
rules will be $285.66 per hour,
including overhead and fringe benefits,
and each state DOI will incur a cost of
approximately $55.58 per hour.279
Assuming an average reading speed, the
Departments estimate that it will take
approximately two hours for each staff
member to review and interpret the final
rules; therefore, the Departments
estimate that the cost of reviewing and
interpreting the final rules for each
issuer and TPA will be approximately
$571.32 and $111.16 for each state DOI,
including the District of Columbia.
Thus, the Departments estimate that the
overall cost for the estimated 1,959
issuers and TPAs and each state DOI
will be $1,124,885.04 (($571.32 × 1,959
(total number of estimated issuers and
TPAs)) + ($111.16 × 51 (total number of
DOIs))).
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D. Regulatory Alternatives Considered
In developing the policies contained
in the final rules, the Departments
considered alternatives to the final
rules. In the following paragraphs, the
277 Wage information available at https://
www.bls.gov/oes/current/oes_nat.htm.
278 Wages obtained for State Government,
excluding schools and hospitals at https://
www.bls.gov/oes/current/naics4_999200.htm.
279 Adjusted hourly wages are determined by
multiplying the mean hourly rate by 100 percent to
account for fringe benefits and overhead costs.
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Departments discuss the key regulatory
alternatives the Departments
considered.
1. Limiting Cost-Sharing Disclosures to
Certain Covered Items and Services, and
Certain Types of Group Health Plans
and Health Insurance Issuers
The final rules require group health
plans and health insurance issuers to
disclose cost-sharing information for
any requested covered item or service.
The Departments considered limiting
the number of items or services for
which plans and issuers would be
required to provide cost-sharing
information to lessen the costs on these
entities. However, limiting disclosures
to a specified set of items and services
reduces the breadth and availability of
useful cost estimates to determine
anticipated cost-sharing liability and
limits the impact of price transparency
efforts by reducing the incentives to
lower prices and provide higher-quality
care. The Departments assumed that
plans (or TPAs on their behalf) and
issuers, whether for a limited set of
covered items and services or for all
covered items and services, would be
deriving these data from the same data
source. Because the data source would
be the same, the Departments assumed
that any additional costs to produce the
information required for all covered
items and services, as opposed to a
limited set of covered items and
services, would be minimal. The
Departments are of the view that this
limited additional cost is outweighed by
the potentially large benefit to
consumers of having access to the
required pricing information for the full
scope of items and services covered by
their plan or issuer. For these reasons,
in order to allow consumers to estimate
their out-of-pocket costs for all services
and items covered under their plan or
coverage, and to achieve lower health
care costs and reduce spending through
increased price transparency, the final
rules are requiring cost-sharing
information be disclosed for all covered
items and services. However, in
recognition of commenters’ concerns
regarding the implementation timetable
for the internet-based self-service tool,
the final rules include a staggered
implementation schedule for the
disclosure of cost-sharing information
through the internet-based self-service
tool.
The Departments also considered
implementing a more limited approach
by imposing requirements only on
individual market plans and fullyinsured group coverage. However, the
Departments are concerned that this
limited approach might encourage plans
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to simply shift costs to sectors of the
market where these requirements would
not apply and where consumers would
have less access to pricing information.
The Departments are of the view that all
consumers should be able to access the
benefits of greater price transparency
and that a broader approach will have
the greatest likelihood of controlling the
cost of health care industry-wide.
Indeed, if the requirements of the final
rules were limited to only individual
market plans, the Departments estimate
only 9,716,000 individuals would
receive the intended benefits of the final
rules. In contrast, under the final rules,
a total of 212,314,000 participants,
beneficiaries, and enrollees may receive
the intended benefits.280 The
Departments acknowledge that limiting
applicability of the requirements of the
final rules to the individual market
would likely reduce the overall cost
estimates identified in section V.B.2, but
the overall cost estimates per covered
life would likely increase. Further, there
is a great deal of overlap in issuers that
offer coverage in both the individual
and group markets. Issuers offering
coverage in both markets would be
required to comply with the
requirements of the final rules even if
the Department limited the applicability
to only the individual market. Because
TPAs provide administrative
functionality for self-insured group
health insurance coverage, those nonissuer TPA entities would not incur any
costs because they do not have any
overlap between the individual and
group markets. The Departments are of
the view that the benefits of providing
consumer pricing information to an
estimated total 212,314,000 participants,
beneficiaries, and enrollees outweigh
the increased costs that a subset of
plans, issuers, and TPAs, that are not
active participants in the individual
market, would incur. The Departments
have determined that the benefits of the
final rules being widely applicable will
not only provide access to health care
pricing information to a greater number
of individuals, but that any developed
economies of scale will have a much
280 ‘‘Health Insurance Coverage in the United
States: 2019’’ (Appendix A). United States Census
Bureau/September 15, 2020. Available at: https://
www2.census.gov/programs-surveys/demo/tables/
p60/271/table1.pdf. The number of covered
individuals in the individual market and the total
number of covered individuals have been updated
from those estimated in the proposed rule. The
numbers provided in this final rule are based on
more recent data and more accurately reflect the
number of covered individuals in the private
market (excluding those enrolled in Tricare
coverage). The data provided is for 2019, whereas
the data presented in the proposed rule was derived
from multiple sources for multiple years (2016 and
2019).
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greater likelihood of achieving the goal
of controlling the cost of health care
industry-wide.
As noted in section I.B of this
preamble, in the summer and fall of
2018, HHS hosted listening sessions in
which attendees stated that existing
tools usually use historical claims data,
which results in broad, sometimes
regional, estimates, rather than accurate
and individualized prices. The
Departments considered allowing plans
and issuers to use rate information from
historical claims data to calculate price
estimates. The Departments recognize
that many plans and issuers use
historical claims data to inform and
determine cost-sharing estimates, but
the Departments are of the view that
using pricing information such as
negotiated rates will provide for a more
accurate and reliable estimate.
Providing more accurate estimates of
consumer prices will provide more
benefit to consumers, allowing them to
better estimate their potential out-ofpocket costs and search for items and
services they feel are more affordable.
2. Requirement To Make Available
Machine-Readable Files of In-Network
Rates, Historical Data for Out-ofNetwork Allowed Amount Payments
Made to Out-of-Network Providers, and
Prescription Drug Pricing Information
on a Public Website
In proposing the requirement that
group health plans and health insurance
issuers post in-network rates, historical
data for out-of-network allowed amount
payments made to out-of-network
providers, and negotiated rates and
historical net prices for each
prescription drug on a publicly
accessible website, the Departments
considered requiring plans and issuers
to submit the internet addresses for the
machine-readable files to CMS. CMS
would then make the information
available to the public from CMS’s
website. A central location could allow
the public to access in-network rate
information, out-of-network allowed
amounts, and prescription drug
information for all plans and issuers in
one place, potentially reducing
confusion and increasing accessibility.
Posting in-network rates, out-of-network
allowed amounts, and prescription drug
information in a central location might
also make it easier to post available
quality information alongside price
information. However, to provide
flexibility and reduce costs, the
Departments are of the view that plans
and issuers should determine where to
post the in-network rate, out-of-network
allowed amount, and prescription drug
information rather than prescribing the
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location where the information is to be
disclosed. Further, requiring plans and
issuers to submit internet addresses for
their machine-readable files to CMS
would result in additional costs to the
extent plans and issuers already post
this information in a different location.
3. Frequency of Updates to MachineReadable Files
In developing 26 CFR 54.9815–
2715A3(b)(3), 29 CFR 2590.715–
2715A3(b)(3), and 45 CFR 147.212(b)(3)
of the final rules, the Departments
considered requiring more frequent
updates (i.e., within 10 calendar days of
new rate finalization) to the in-network
rates, out-of-network allowed amounts,
and prescription drug information. More
frequent updates would provide a
number of benefits for patients,
providers, and the public at large.
Specifically, such a process would
ensure that the public has access to the
most up-to-date rate information so that
consumers can make the most
meaningful, informed decisions about
their health care utilization. Requiring
group health plans, health insurance
issuers, and TPAs (or other entity acting
on a plan or issuers behalf) to update
the machine-readable files more
frequently would result in increased
costs for those affected entities,
however. With respect to the In-network
Rate File, the Departments estimate that
requiring updates within 10 calendar
days of rate finalization would result in
each plan, issuer, or TPA incurring a
burden of 4,428 hours, with an
associated equivalent cost of $635,112
in the second year after implementation
of the final rules and an annual burden
of 1,116 hours, with an associated
equivalent cost of $162,828 in
subsequent years. Based on recent data
the Departments estimate a total 1,959
entities—1,754 issuers 281 and 205
TPAs 282—will be responsible for
implementing the final rules. For all
1,959 issuers and TPAs, the total
burden, in the second year of
implementation of the final rules, would
be 8,674,452 hours, with an associated
equivalent cost of $1,244,184,408 and
an annual ongoing burden of 2,186,244
hours, with an associated ongoing
annual costs of $318,980,052 in
subsequent years. As discussed in
section VI.A.2, requiring a less frequent
30 calendar day update will reduce the
burden, in year two, for each entity to
1,476 hours with an associated
equivalent cost of $211,704. The burden
281 2018
MLR Data Trends.
TPAs based on data derived from
the 2016 Benefit Year reinsurance program
contributions.
282 Non-issuer
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72271
and associated costs, in subsequent
years, will be reduced to 372 hours,
with an associated cost of $54,276. For
all 1,959 issuers and TPAs, the total
burden, in year two, is reduced to
2,891,484 hours, with and associated
equivalent cost of $414,728,136. For
subsequent years, the total burden is
reduced to 728,748 hours, with an
associated equivalent cost of
$106,326,684. With respect to the
Allowed Amount File, the Departments
estimate that requiring updates within
10 calendar days of rate finalization
would result in each plan, issuer, or
TPA incurring a burden of 1,908 hours,
with an associated equivalent cost of
$290,628 in the second year and an
annual ongoing burden of 468 hours,
with an associated equivalent cost of
$61,452 in subsequent years. For all
1,959 issuers and TPAs, the total
burden, in year two, would be 3,737,772
hours with and associated equivalent
cost of $569,340,252. For subsequent
years, the total ongoing burden would
be 916,812 hours, with an associated
equivalent cost of $120,384,468. As
further discussed in section VI.A.2,
requiring a less frequent update will
reduce the year two burden for each
issuer and TPA to 636 hours, with an
associated equivalent cost of $96,876.
For subsequent years, the total ongoing
burden will be reduced to 156 hours,
with an associated equivalent cost of
$20,848. For all 1,959 issuers and TPAs,
the total burden for year two is reduced
to 1,245,924 hours, with an associated
equivalent cost of $189,780,084. For
subsequent years, the total ongoing
burden will be reduced to 305,604
hours, with an associated equivalent
cost of $40,128,156. With respect to the
Prescription Drug File, the Departments
estimate that requiring updates within
10 calendar days of rate finalization
would result in each plan, issuer, or
TPA incurring a burden of 2,700 hours,
with an associated equivalent cost of
$416,664 in the second year and an
annual ongoing burden of 1,116 hours,
with an associated equivalent cost of
$162,828 in subsequent years. For all
1,959 issuers and TPAs, the total
burden, in year two, would be 5,289,300
hours with and associated equivalent
cost of $816,244,776. For subsequent
years, the total ongoing burden would
2,186,244 hours, with an associated
equivalent cost of $318,980,052. As
discussed in section VI.A.2, requiring a
less frequent update will reduce the
year two burden for each issuer and
TPA to 900 hours, with an associated
equivalent cost of $138,888. For
subsequent years, the total ongoing
burden will be reduced to 372 hours,
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with an associated equivalent cost of
$54,276. For all 1,959 issuers and TPAs,
the total burden for year two is reduced
to 1,763,100 hours, with an associated
equivalent cost of $272,081,592. For
subsequent years, the total ongoing
annual burden will be reduced to
728,748 hours, with an associated
equivalent cost of $106,326,684. By
requiring monthly updates to the
machine-readable files, rather than
updates every 10 calendar days, the
Departments have chosen to strike a
balance between placing a significant
burden on issuers (and their service
providers) and assuring the availability
of accurate information.
4. File Format Requirements
In 26 CFR 54.9815–2715A3(b)(2), 29
CFR 2590.715–2715A3(b)(2), and 45
CFR 147.212(b)(2), the final rules
require group health plans and health
insurance issuers to post information in
three machine-readable files. A
machine-readable file is defined as a
digital representation of data or
information in a file that can be
imported or read by a computer system
for further processing without human
intervention, while ensuring no
semantic meaning is lost. The final rules
require each machine-readable file to
use a non-proprietary, open format. The
Departments considered requiring
issuers and TPAs to post in-network
rates, allowed amounts paid for out-ofnetwork services, and prescription drug
information using a specific file format,
namely JSON. However, the
Departments are of the view that being
overly prescriptive regarding the file
type will impose an unnecessary costs
on issuers and TPAs despite the
advantages of JSON, namely that JSON
files are downloadable and readable for
many health care consumers, and the
potential for JSON to simplify the ability
of price transparency tool developers to
access the data. Therefore, the
Departments are requiring that issuers
and TPAs post the in-network rate,
allowed amount, and prescription drug
pricing information in three distinct
machine-readable files using a nonproprietary, open format. The
Departments will provide additional
guidance regarding the file format in
future technical implementation
guidance.
In addition, the Departments
considered requiring plans and issuers
to provide the specific out-of-network
allowed amount methodology needed
for consumers to determine out-ofpocket liability for services by providers
not considered in-network by the plan
or issuer, rather than historical data on
paid out-of-network claims. However,
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the Departments understand providing a
formula or methodology for calculating
a provider’s out-of-network allowed
amount does not provide the data users
need in an easy-to-use machine-readable
format. The Departments determined
that providing monthly data files on
allowed amounts by plans and issuers
over a 90-day period for items and
services provided by out-of-network
providers will enable users to more
readily determine what costs a plan or
issuer may pay toward items or services
obtained out-of-network. Because a plan
or issuer does not have a contract with
an out-of-network provider that
establishes negotiated rates, the plan or
issuer cannot anticipate what that
provider’s charges will be for any given
item or service; therefore, the
Departments, as discussed previously in
this preamble, are requiring the
inclusion of billed charges in the
Allowed Amounts File.
Providing data on the billed charge in
connection with each unique allowed
amount on the out-of-network Allowed
Amount File will provide consumer
with information related to what their
plan or issuer will likely contribute to
the costs of items or services obtained
from out-of-network providers and the
billed charges associated with those
item or services. This information will
provide the consumer with a reasonably
accurate estimate of the amount of
additional liability a consumer could be
required to pay for a particular item or
service received from an out-of-network
provider. Out-of-network allowed
amount and billed charges data will
provide increased price transparency for
consumers, and the costs related to
producing these data are not considered
to be significantly higher than that
associated with producing the
methodology for determining allowed
amounts for payments to out-of-network
providers. Given these circumstances,
the final rules are requiring that payers
provide allowed amount data for out-ofnetwork covered items or services
furnished by a particular out-of-network
provider during the 90-day time period
that begins 180 days prior to the
publication date of the Allowed Amount
File, and billed charges rather than
requiring plans and issuers to report
their methodology or formula for
calculating the allowed amounts for outof-network items and services.
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5. Requiring Disclosure of Cost-Sharing
Information to Participants,
Beneficiaries, and Enrollees and
Publicly-Posted Machine-Readable Files
With In-Network Rates, Out-of-Network
Allowed Amounts, and Prescription
Drug Pricing Information
The Departments considered whether
it would be duplicative to require group
health plans and health insurance
issuers to disclose cost-sharing
information through an internet-based
self-service tool or in paper form to
participants, beneficiaries, or enrollees
so that they may obtain an estimate of
their cost-sharing liability for covered
items and services and publicly-posted
machine-readable files containing data
on in-network rates, out-of-network
allowed amounts, and prescription drug
pricing information. The requirement to
disclose cost-sharing information to
participants, beneficiaries, or enrollees
in the final rules require plans and
issuers to provide consumer-specific
information on potential cost-sharing
liability to enrolled consumers,
complete with information about their
deductibles, copays, and coinsurance.
However, cost-sharing information for
these plans and coverage would not be
available or applicable to consumers
who are uninsured or shopping for
plans pre-enrollment. Data disclosed to
participants, beneficiaries, or enrollees
would also not be available to third
parties who are interested in creating
internet-based self-service tools to assist
both uninsured and insured consumers
with shopping for the most affordable
items or services. Limiting access to
data to a subset of consumers would not
promote the transparency goals of the
final rules and would reduce the
potential for the final rules to drive
down health care costs by increasing
competition.
As discussed in more detail in section
VI.A.1 in this preamble, the
Departments have estimated the highend three-year average annual cost to
develop only the internet-based selfservice tool, including the initial tool
build and maintenance, customer
service training, customer assistance,
and mailing costs. The Departments
estimate the three-year average total
burden per issuer, or TPA will be
approximately 23,338 hours, with an
associated equivalent average annual
cost of approximately $3,262,262. For
all 1,959 issuers and TPAs, the
Departments estimate the total threeyear average annual burden will be
45,718,171 hours with an associated
equivalent total average annual cost of
approximately $6,390,770,952.
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Additionally, the Departments
estimated that for implementation of the
required internet-based self-service tool
in conjunction with the out-of-network
allowed amount, in-network and
prescription drug machine-readable
files, the Departments estimate that the
annual high-end three-year average
annual costs and burden for each issuer
or TPA will be approximately 28,958
hours, with an associated equivalent
cost of approximately $4,040,142. For
all 1,959 issuers and TPAs, the
Departments estimate the total threeyear average annual burden and cost to
be 56,727,751 hours with an associated
equivalent total average annual cost of
approximately $7,914,635,260.
In contrast, and as discussed in more
detail in section VI.A.1, the
Departments estimate that the low-end
three-year average burden and cost to
develop and maintain only the internetbased self-service tool, including the
initial tool build and maintenance,
customer service training, customer
assistance, and mailing costs. The
Departments estimate the total threeyear average cost and burden per issuer
or TPA will be approximately 15,475
hours, with an associated equivalent
average annual cost of approximately
$2,150,169. For all 1,959 issuers and
TPAs, the Departments estimate the
total three-year average annual burden
to be 30,315,730 hours with an
associated equivalent total average
annual cost of approximately
$4,212,181,157.
Finally, the Departments estimated
that for implementation of the required
internet-based self-service tool in
conjunction with the out-of-network
allowed amount, in-network rate, and
prescription drug machine-readable
files, the Departments estimate that the
three-year average annual low-end cost
and burden for each issuer or TPA will
be approximately 21,095 hours, with an
associated equivalent average annual
cost of approximately $2,928,048. For
all 1,959 issuers and TPAs, the
Departments estimate the total threeyear average annual low-end burden
and cost will be 41,325,310 hours with
an associated equivalent total average
annual cost of approximately
$5,736,045,465. While the Departments
recognize that requiring disclosures
through all mechanisms will increase
the costs for issuers and TPAs required
to comply with the final rules, the
Departments are of the view that the
additional costs associated with greater
price transparency are outweighed by
the benefits that will accrue to the
broader group of consumers (such as the
uninsured and individuals shopping for
coverage) and other individuals who
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would benefit directly from the
additional information provided
through the machine-readable files.
Additionally, the Departments are of the
view that the final rules have the
potential to reduce the cost of surprise
billing to consumers. The Departments
further believe that the final rules will,
with the disclosure of in-network rates,
potentially apply pressure on providers
to bill less aggressively. Consumer
advocacy groups could also use the
wide price dispersion of the same CPT
level service or NDC level drug by the
same providers with different negotiated
rates, depending upon issuer or TPA
contract, to further place downward
pressure on health care costs. In
addition, as noted earlier in section
II.C.1–2 of this preamble, researchers
and third-party developers will also be
able to use the data included in the
machine-readable files in a way that
could create even more benefits to
consumers, including those consumers
not currently enrolled in a particular
plan or coverage. For these reasons, the
Departments have concluded that, in
addition to requiring plans and issuers
to disclose cost-sharing information to
participants, beneficiaries, or enrollees
through an internet-based self-service
tool, requiring plans and issuers to
publicly disclose information regarding
in-network rates, out-of-network
allowed amounts, and prescription drug
pricing will further the goals of price
transparency and create benefits for all
potentially affected stakeholders.
6. Requiring an Internet-Based SelfService Tool and Machine-Readable
Files in Lieu of an API
The Departments considered whether
to require group health plans and health
insurance issuers to make the
information required by the final rules
available through a standards-based
API, instead of through the proposed
internet-based self-service tool and
machine-readable files. Access to
pricing information through an API
could have a number of benefits for
consumers, providers, and the public at
large. This information could ensure the
public has access to the most up-to-date
rate information. Providing real-time
access to pricing information through a
standards-based API could allow thirdparty innovators to incorporate the
information into applications used by
consumers or combined with electronic
medical records for point-of-care
decision-making and referral
opportunities by clinicians for their
patients. Additionally, being able to
access this data through a standardsbased API would allow consumers to
use the application of their choice to
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obtain personalized, actionable health
care price estimates, rather than being
required to use one developed by their
plan or issuer (or a service provider),
although those consumers may be
required to pay for access to those
applications.
While there are many benefits to a
standards-based API, it is the
Departments’ view that both an internetbased tool and machine-readable files
are the first iterative steps towards
developing price transparency
standards-based APIs. It is the
Departments’ view that standards-based
API would be a natural next
technological step. The Departments
also recognize that the majority of
issuers have an existing internet-based
tool that could be enhanced to meet the
disclosure requirements in the final
rules. The burden associated with
updating existing tools to standardize
data attributes is going to be less than
building a standards-based API. Looking
at the average cost over a 3-year period
for the API for all 1,959 issuers and
TPAs, the Departments estimate an
average annual cost that would
significantly exceed the estimated
annual cost of implementing the
internet-based self-service tool and
machine-readable files. The
Departments recognize that the
development of an API may be
streamlined by leveraging existing APIs
currently used by plans, issuers, or
TPAs for their own applications.
Additionally, any requirements for an
API would build on the requirements
finalized in CMS’s Interoperability &
Patient Access final rule 283 requiring
certain entities, such as Federallyfacilitated Exchange QHP issuers and
companies that participate in both
Medicare and the individual or group
market, to provide certain data through
a standards-based API. Building on the
Interoperability & Patient Access final
rule could result in significantly lower
costs for issuers and TPAs as it relates
to the development and implementation
of a standards-based API. Nonetheless,
while the Interoperability & Patient
Access final rule focuses on the
disclosure of information regarding post
care and clinical data, the rules
finalized here require plans and issuers
to provide information related to a
participant’s, beneficiary’s, or enrollee’s
individual’s cost-sharing, allowed
amounts for covered items and services
from out-of-network providers, and
negotiated rates and historical net prices
for each prescription drug prior to
seeking or obtaining care. The
Departments are therefore of the view
283 85
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that plans, issuers, and TPAs would
incur significant and distinct costs if
required to us a standards-based API to
comply with the final rules.
Although not estimated here, the
Departments expect any associated
maintenance costs would also decline in
succeeding years as plans, issuers, and
TPAs gain additional efficiencies or
undertake similar procedures to
maintain any currently used internal
APIs. Nonetheless, weighing the costs of
providing the required information
using an internet-based self-service tool
and machine-readable files against the
potential costs of using a standardsbased API, particularly given the
timeframes required by the final rules,
the Departments are of the view that, at
least in the short-term, requiring an
internet-based self-service tool and
machine-readable files is the more
sensible approach.
Even though the Departments are of
the view that an internet-based selfservice tool and machine-readable files
are appropriate in the short-term, as
discussed earlier in this preamble, the
Departments recognize that a standardsbased API format in the long-term may
be more beneficial to the public, as it
would provide access to the most up-todate rate information; would allow
health care consumers to use the
application of their choice to obtain
personalized, actionable health care
service price estimates; and would
allow third-party developers to use the
collected data to develop internet-based
self-service tools. Therefore, the
Departments are considering future
rulemaking to further expand access to
pricing information through standardsbased APIs, including individuals’
access to estimates about their own costsharing liability and information about
in-network rates, historical payment
data for out-of-network allowed
amounts, and negotiated rates and
historical net prices for prescription
drugs.
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VI. Collection of Information
Requirements
The final rules contain ICRs that are
subject to review by OMB. A description
of these provisions is given in the
following paragraphs with an estimate
of the annual burden, summarized in
Table 24.
To fairly evaluate whether an
information collection should be
approved by OMB, section 3506(c)(2)(A)
of the PRA requires that the
Departments solicit comment on the
following issues:
• The need for the information
collection and its usefulness in carrying
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out the proper functions of each of the
Departments.
• the accuracy of the Departments’
estimate of the information collection
burden.
• the quality, utility, and clarity of
the information to be collected.
• recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
The Departments solicited comment
on each of the required issues under
section 3506(c)(2)(A) of the PRA for the
following information collection
requirements.
A. Wage Estimates
To derive wage estimates, the
Departments generally use data from the
BLS to derive average labor costs
(including a 100 percent increase for
fringe benefits and overhead) for
estimating the burden associated with
ICRs.284 One commenter noted that the
markup rates for labor, fringe benefits,
and overhead are underestimated at 100
percent, while the conventional
standard is 200 percent to 300 percent.
The commenter further stated that if the
Departments were to update the burden
estimates with the conventional
standard for overhead markup, the total
of annual quantified costs would
increase to over $500 million per year.
The Departments acknowledge that
there are various methodologies used to
determine and estimate fringe benefits
and other overhead costs; however, the
commenter did not provide any source
recognizing or supporting their assertion
that the conventional standard is to use
200 percent to 300 percent increases.
The Departments agree that if a higher
percentage were used to estimate hourly
wages and overhead, then the estimated
costs for the final rules could potentially
be significantly higher. However, the
Departments note that the use of 100
percent is necessarily a rough
adjustment, both because fringe benefits
and overhead costs vary significantly
across employers, and because methods
of estimating these costs vary widely
across studies. The Departments are of
the view that doubling the hourly wage
to estimate total cost is a reasonably
acceptable estimation method.
The Departments recognize that the
maturity of technology will vary from
organization to organization. An
independent study by Bates White
Economic Consulting (Bates White),
commissioned by one commenter,
284 May 2018 Bureau of Labor Statistics,
Occupational Employment Statistics, National
Occupational Employment and Wage Estimates.
Available at: https://www.bls.gov/oes/current/oes_
stru.htm.
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developed an assessment of the costs of
the proposed rules by interviewing a
mix of 18 large and small health
insurance issuers covering about 78
million lives. They reported various
degrees of existing tools’ compliance
with the requirements of the proposed
rules. The Departments reevaluated its
initial burden estimates developed for
the proposed rules based on feedback
from commenters and the Bates Whites
study. Because the Departments could
not make an estimate for any specific
issuer, an independent government cost
estimate (IGCE) was conducted for each
of the machine-readable files and the
internet-based self-service tool to aid the
Departments in conducting the burden
and cost estimates for the final rules.
The goals of an IGCE are to aid the
government acquisition process in
determining a project’s cost estimates
based on project requirements or
objectives that are typically found in a
performance work statement or
statement of work. IGCEs are developed
by the government without contractor
influence and are based on market
research. The estimated skill sets
required to build both the internet based
self-service tool and machine-readable
files can be found in TABLE 3 below.
The Departments based the IGCE cost
estimates on the rule’s requirements and
each IGCE has baseline assumptions
that are built into the final estimate.
The IGCE assumptions for the
internet-based self-service tool included
things such as research, engineering
development, and design and were not
based on any existing tools. There was
an assumption that product
development would be done in the
cloud to take advantage of economies of
scale or with on-premise infrastructure
that allows for the development of
‘‘infrastructure as code.’’ The IGCE
assumptions for the machine-readable
files included that all items and services
for a specific plan have a negotiated
price, that all price numbers are
digitized, that pricing information is
stored in many locations (not in a single
database), that pricing information is
accessible through internal systems, that
building the first machine-readable file
will facilitate automation for building
future machine-readable files, and that
there is an ability to run queries against
claims data.
Based on comments discussed later
sections VI.A.1–2, the Departments have
chosen to use the Contract Awarded
Labor Category (CALC) 285 database tool,
managed by the General Services
Administration (GSA), to derive the
285 CALC information and wage rates are available
at: https://calc.gsa.gov/about/.
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hourly rates for the burden and cost
estimates in the final rules. The CALC
tool was built to assist acquisition
professionals with market research and
price analysis for labor categories on
multiple U.S. GSA & Veterans
Administration (VA) contracts. Wages
obtained from the CALC database are
fully burdened to account for fringe
benefits and overhead costs. The
Departments chose to use wages derived
from the CALC database because, even
though the BLS data set is valuable to
economists, researchers, and others that
would be interested in larger, more
macro-trends in parts of the economy,
the CALC data set is meant to help
market research based on existing
government contracts in determining
how much a project/product will cost
based on the required skill sets needed.
The CALC data set also factors in the
fully-burdened hourly rates (base pay +
benefits) into wages whereas BLS rates
do not. CALC occupations and wages
provide the Departments with data that
aligns more with, and provides more
detail related to, the occupations
required for the implementation of the
requirements in the final rules. As
discussed earlier, after consideration
and discussion of comments, the
Departments chose to further reevaluate
the cost and burden estimates. Based on
the Departments consultation with
internal and external IT professionals
and additional research, the
Departments have chosen to increase
our overall costs and burden estimates
to account for our updated
understanding of the burdens associated
with the final rules and the additional
requirements included in the final rules.
The Departments further discuss
changes to the final cost and burden
estimates in the corresponding ICR
sections.
While the following estimates for the
internet-based self-service tool assume
that entities are either iterating on an
existing tool or building a brand new
tool from the ground up, the
Departments are of the view that it is
highly likely that third-party developers
will take this opportunity to build
white-label products that meet the
requirements of the final rules and that
they will reduce costs through
economies of scale by doing so. As such,
the Departments’ cost estimates may
have some tendency towards overestimation.
Table 3 presents the fully burdened
hourly wage and job descriptions used
in the Departments’ estimates.
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TABLE 3—HOURLY WAGES USED IN
BURDEN ESTIMATES
CALC occupation title
Project Manager/Team Lead ........
Scrum Master ...............................
Technical Architect/Sr. Developer
Application Developer, Senior ......
Business Analyst ..........................
UX Researcher/Service Designer
Designer .......................................
DevOps Engineer .........................
Customer Service Representative
Web Database/Application Developer IV ......................................
Service Designer/Researcher .......
Mean
hourly
wage
($/hour)
$153.00
105.00
149.00
143.00
120.00
154.00
116.00
181.00
40.00
152.00
114.00
1. ICR Regarding Requirements for
Disclosures to Participants,
Beneficiaries, or Enrollees (26 CFR
54.9815–2715A2, 29 CFR 2590.715–
2715A2, and 45 CFR 147.211)
The Departments add 26 CFR
54.9815–2715A2(b), 29 CFR 2590.715–
2715A2(b), and 45 CFR 147.211(b),
requiring group health plans and health
insurance issuers of individual and
group health insurance coverage to
disclose, upon request, to a participant,
beneficiary, or enrollee, such
individual’s cost-sharing information for
items; negotiated rates and underlying
fee schedule rates for in-network
providers; and allowed amounts for
covered items and services from out-ofnetwork providers. As discussed
previously in section II.B.1 of this
preamble, in paragraphs 26 CFR
54.9815–2715A2(b)(1)(i), 29 CFR
2590.715–2715A2(b)(1)(i), and 45 CFR
147.211(b)(1)(i) through (vii) the final
rules require plans and issuers to make
this information available through an
internet-based self-service tool on an
internet website and, if requested, in
paper form or other format agreed upon
between the plan, issuer, or TPA and
participant, beneficiary, or enrollee.
The final rules require plans and
issuers to disclose, upon request, certain
information relevant to a determination
of a participant’s, beneficiary’s, or
enrollee’s cost-sharing liability for a
particular health care item or service
from a particular provider, to the extent
relevant to the individual’s cost-sharing
liability for the item or service, in
accordance with seven content
elements: The individual-specific
estimated cost-sharing liability; the
individual-specific accumulated
amounts; the in-network rate; the out-ofnetwork allowed amount for a covered
item or service, if applicable; the items
and services content list when the
information is for items and services
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subject to a bundled payment
arrangement; a notice of prerequisites to
coverage (such as prior authorization);
and a disclosure notice. However, as
discussed earlier in this section II.B.1 of
this preamble, in instances where items
or services, generally considered
preventive, are furnished as nonpreventive items or services, the
participant, beneficiary, or enrollee may
be subject to the cost-sharing terms of
his or her plan. If a plan or issuer cannot
determine whether the request is for a
preventive item or service, the plan or
issuer must display the non-preventive
cost-sharing liability, along with a note
that the item or service may not be
subject to cost-sharing if it is billed as
a preventive service. The final rules also
require the disclosure notice to include
several statements, written in plain
language, which include disclaimers
relevant to the limitations of the costsharing information disclosed,
including: A statement that out-ofnetwork providers may balance bill
participants, beneficiaries, or enrollees,
a statement that the actual charges may
differ from those for which a costsharing liability estimate is given, and a
statement that the estimated costsharing liability for a covered item is not
a guarantee that coverage will be
provided for those items and services. In
addition, plans and issuers will be
permitted to add other disclaimers they
determine appropriate so long as such
information is not in conflict with the
disclosure requirements of the final
rules. The Departments have developed
model language that plans and issuers
will be able to use to satisfy the
requirement to provide the notice
statements described earlier in section
II.B.1 of this preamble.
As discussed in section II.B.1 of this
preamble, the final rules require plans
and issuers to make available the
information described in 26 CFR
54.9815–2715A2(b), 29 CFR 2590.715–
2715A2(b), and 45 CFR 147.211(b) of the
final rules through an internet-based
self-service tool. The information is
required to be provided in plainlanguage through real-time responses.
Plans and issuers will be required to
allow participants, beneficiaries, or
enrollees to search for cost-sharing
information for covered items and
services by billing code, or by
descriptive term, per the user’s request,
in connection with a specific in-network
provider, or for all in-network
providers. In addition, the internetbased self-service tool must allow users
to input information necessary to
determine the out-of-network allowed
amount for a covered item or service
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provided by an out-of-network provider
(such as zip code). The internet-based
self-service tool is required to have the
capability to refine and reorder results
by the geographic proximity of innetwork providers, and the estimated
amount of cost-sharing liability to the
beneficiary, participant, or enrollee.
As discussed in sections II.B.1 and 2
earlier in this preamble, the final rules
require plans and issuers to furnish
upon request, in paper form, the
information required to be disclosed
under 26 CFR 54.9815–2715A2(b)(1), 29
CFR 2590.715–2715A2(b)(1), and 45
CFR 147.211(b)(1) of the final rules to a
participant, beneficiary, or enrollee. As
discussed in sections II.B.1 and 2 in this
preamble, a paper disclosure is required
to be furnished according to the
consumer’s filtering and sorting
preferences and mailed to the
participant, beneficiary, or enrollee
within two business days of receiving
the request. Plans or issuers may, upon
request, provide the required
information through other methods,
such as over the phone, through face-toface encounters, by facsimile, or by
email.
The Departments assume fullyinsured group health plans will rely on
issuers to develop and maintain the
internet-based self-service tool and
provide any requested disclosures in
paper form. While the Departments
recognize that some self-insured plans
might independently develop and
maintain the internet-based self-service
tool, at this time the Departments
assume that self-insured plans will rely
on TPAs (including issuers providing
administrative services and non-issuer
TPAs) to develop the required internetbased self-service tool. The Departments
make this assumption because the
Departments understand that most selfinsured group health plans rely on TPAs
for performing most administrative
duties, such as enrollment and claims
processing. For those self-insured plans
that choose to develop their own
internet-based self-service tools, the
Departments assume that they will incur
a similar cost and burden as estimated
for issuers and TPAs, as discussed in
section VI.A.1 later in this preamble. In
addition, 26 CFR 54.9815–2715A2(b)(3),
29 CFR 2590.715–2715A2(b)(3), and 45
CFR 147.211(b)(3) of the final rules
provide for a special rule to prevent
unnecessary duplication of the
disclosures with respect to health
insurance coverage, which provides that
a plan may satisfy the disclosure
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requirements if the issuer offering the
coverage is required to provide the
information pursuant to a written
agreement between the plan and issuer.
Thus, the Departments have used
issuers and TPAs as the unit of analysis
for the purposes of estimating required
changes to IT infrastructure and
administrative costs and burdens. The
Departments estimate approximately
1,754 issuers and 205 TPAs will be
affected by the final rules.
The Departments acknowledge that
the costs described in these ICRs may
vary depending on the number of lives
covered, the number of providers and
items and services for which costsharing information must be disclosed,
and the fact that some plans and issuers
already have robust tools that can be
easily adapted to meet the requirements
of the final rules. In addition, plans and
issuers may be able to license existing
cost estimator tools offered by thirdparty vendors, obviating the need to
establish and maintain their own
internet-based self-service tools. The
Departments assume that any related
vendor licensing fees would be
dependent upon complexity, volume,
and frequency of use, but assume that
such fees would be lower than an
overall initial build and associated
maintenance costs. Nonetheless, for
purposes of the estimates in these ICRs,
the Departments assume all 1,959
issuers and TPAs will be affected by the
final rules. The Departments also
developed the following estimates based
on the mean average size, by covered
lives, of issuers or TPAs. As noted later
in this section, the Departments sought
comment on the inputs and
assumptions that were used to develop
these cost and burden estimates,
particularly regarding existing
efficiencies that would reduce the cost
and burden estimates.
High Range Estimate for Internet-Based
Self-Service Tool From Start-Up to
Operational Functionality
The Departments estimate that the
one-time costs and burden each issuer
or TPA will incur to complete the onetime technical build; including
activities such as planning, assessment,
budgeting, contracting, building and
systems testing, incorporating any
necessary security measures,
incorporating disclaimer and model
notice language, or development of the
model and disclaimer notice materials
for those that choose to make
alterations. The Departments assume
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that this one-time cost and burden will
be incurred in 2022 to develop and
build the internet-based self-service tool
and provide information for the 500
required items and services, and
additional one-time costs will be
incurred in 2023 in order to fully meet
the requirements of the final rules. As
mentioned earlier in section V.A.2 of
this preamble, the Departments
acknowledge that a number of issuers
and TPAs have previously developed
some level of internet-based self-service
tool similar to, and containing some
functionality related to, the
requirements in the final rules. The
Departments thus seek to estimate a
burden and cost range (high-end and
low-end) associated with the final rules
for those issuers and TPAs. In order to
develop the high-end hourly burden and
cost estimates, the Departments assume
that all issuers and TPAs will need to
develop and build their internet-based
self-service tool from start-up to
operational functionality. The
Departments estimate that for each
issuer or TPA it will take a Project
Manager/Team Lead 4,160 hours (at
$153 per hour), a Scrum Master 4,160
hours (at $105 per hour), a Technical
Architect/Sr. Developer 4,160 hours (at
$149 per hour), an Application
Developer, Senior 4,160 hours (at $143
per hour), a Business Analyst 4,160
hours (at $120 per hour), a UX
Researcher/Service Designer 4,160
hours (at $154 per hour), a Designer
4,160 hours (at $116 per hour), a
DevOps Engineer 4,160 hours (at $181
per hour), and a Web Database/
Application Developer IV 4,160 hours to
complete this task. The Departments
estimate the total burden per issuer or
TPA will be approximately 37,440
hours, with an equivalent cost of
approximately $5,295,680. For all 1,959
issuers and TPAs, the total first year
one-time total burden is estimated to be
73,344,960 hours, with an equivalent
total cost of approximately
$10,374,237,120. The Departments’
estimates are higher-bound estimates
that do not consider potential cost
savings that could be realized should
issuers and TPAs buy or lease an
internet-based self-service tool from a
third-party vendor or other issuer.
However, the Departments are of the
view that issuers or TPAs that choose to
buy or rent an internet-based selfservice tool from another entity could
incur significantly less costs and
burdens.
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TABLE 4A—TOTAL HIGH-END FIRST YEAR ESTIMATED ONE-TIME COST AND HOUR BURDEN FOR INTERNET-BASED SELFSERVICE TOOL FOR EACH ISSUER OR TPA
Burden hours
per respondent
CALC occupation
Labor cost
per hour
Total cost per
respondent
Project Manager/Team Lead ...................................................................................................
Scrum Master ..........................................................................................................................
Technical Architect/Sr. Developer ...........................................................................................
Application Developer, Senior .................................................................................................
Business Analyst .....................................................................................................................
UX Researcher/Service Designer ............................................................................................
Designer ...................................................................................................................................
DevOps Engineer ....................................................................................................................
Web Database/Application Developer IV ................................................................................
4,160
4,160
4,160
4,160
4,160
4,160
4,160
4,160
4,160
$153.00
105.00
149.00
143.00
120.00
154.00
116.00
181.00
152.00
$636,480.00
436,800.00
619,840.00
594,880.00
499,200.00
640,640.00
482,560.00
752,960.00
632,320.00
Total per respondent ...............................................................................................................
37,440
........................
5,295,680.00
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TABLE 4B—TOTAL HIGH-END FIRST YEAR ESTIMATED ONE-TIME COST AND HOUR BURDEN FOR INTERNET-BASED SELFSERVICE TOOL FOR ALL ISSUERS AND TPAS
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
1,959
37,440.0
73,344,960
$10,374,237,120
Several commenters stated that the
Departments grossly underestimated the
cost burden of implementation on plans
and issuers. One commenter stated that
surveyed issuers estimated an average
cost of $6.2 million to build, develop or
modify, implement, test, and launch an
internet-based self-service tool. This is
28 times greater than the Departments’
proposed estimate for an issuer that
needs to build a new tool and 112 times
greater than the Departments’ estimate
for an issuer that has an existing tool.
Furthermore, this commenter noted that
surveyed issuers estimated average
annual maintenance costs of $1.4
million per issuer—over 100 times
greater than those anticipated by the
Departments. Surveyed issuers also
estimated set-up costs that averaged
about $5.53 million (ranging from
$1,000,000 to $15,000,000) compared to
the Departments’ proposed estimate of
$221,029. This is more than 25 times
what the Departments estimated as the
cost for a full build of the internet-based
self-service tool. Although most of the
issuers surveyed had an existing
internet-based self-service tool meeting
many of the required elements of the
final rules, several issuers expressed
significant concern about the cost and
feasibility of complying with the
requirements of the proposed rules.
Specifically, the issuers surveyed
expressed concerns noting that the
requirements may necessitate a
complete rebuild of their consumer tool.
The surveyed issuers further indicated
that the proposed rules would be
costlier than implementing real-time
claims adjudication, in which the claim
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for the medical service is adjudicated at
the time the service is provided. They
stated that they would need to
effectively adjudicate the claim before it
actually happens—to provide estimates
for every conceivable type of medical
item or service while integrating this
information with various benefits. The
surveyed issuers also noted that
condensing all of the detail required in
the final rules into a user-friendly
format for use by enrollees would be a
considerable and possibly even
infeasible challenge. They further stated
that the Departments’ assumption that
issuers with an existing internet-based
self-service tool would face a lower hour
burdens and costs to comply with the
proposed rules was incorrect.
The Departments have considered the
comments submitted in response to the
cost and burden estimates related to the
internet-based self-service tool. In
response, the Departments have
adjusted the costs and burden estimates
to better reflect and align with the
values submitted by commenters. In
addition, the Departments have
developed the estimates above, and in
other ICR sections, using CALC wage
rates as discussed in section VI.A of this
preamble.
TPAs may currently provide
participants, beneficiaries, or enrollees
with the ability to obtain some
estimated out-of-pocket costs.286 For
those issuers and TPAs that currently
have some level of functional internetbased self-service tool that would meet
some (or all) of the requirements of the
final rules, the Departments recognize
that these entities may incur lower
burdens and costs overall, as the
Departments are of the view that these
entities may require an overall lower
level of effort and capital expenditure to
meet the requirements of the final rules.
Thus, the Departments have estimated a
low-end burden and cost to comply
with the final rules. Assuming that over
90 percent of issuers and TPAs
currently provide an internet-based selfservice tool and will only be required to
make changes to their current system in
order to meet the requirements in the
final rules, the Departments estimate
that 175 issuers and 21 TPAs will be
required to develop an internet-based
self-service tool from start-up to
operational functionality. The
Departments also estimate that each of
those 196 entities will incur a first-year
one-time cost and burden of
approximately 37,440 hours, with an
Low Range Estimate for Internet-Based
Self-Service Tool Requiring Partial
Build
286 See AHIP release dated August 2, 2019. ‘‘AHIP
Issues Statement on Proposed Rule Requiring
Disclosure of Negotiated Prices.’’ America’s Health
Insurance Providers. August 2, 2019. Available at:
https://www.ahip.org/ahip-issues-statement-onproposed-rule-requiring-disclosure-of-negotiatedprices/; see also Higgins, A., Brainard, N., and
Veselovskiy, G. ‘‘Characterizing Health Plan Price
Estimator Tools: Findings from a National Survey.’’
22 Am. J. Managed Care 126. 2016. Available at:
https://ajmc.s3.amazonaws.com/_media/_pdf/
AJMC_02_2016_Higgins%20(final).pdf.
The Departments recognize that a
significant number of issuers and TPAs
may already have some form of internetbased self-service tool that allows for
comparison shopping of different plans
and that a large number of issuers and
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equivalent cost of approximately
$5,295,680 (as discussed previously in
this ICR). For those 196 entities, the
total first year one-time burden is
estimated to be 7,334,496 hours with an
equivalent total cost of approximately
$1,037,423,712.
TABLE 5A—LOW-RANGE FIRST YEAR ONE-TIME COST AND HOUR BURDEN FOR INTERNET-BASED SELF-SERVICE TOOL
FOR ISSUERS AND TPAS REQUIRING A COMPLETE BUILD
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
196
196
37,440
7,334,496
$1,037,423,712.00
The Departments estimate that those
issuers and TPAs that will only be
required to make changes to their
existing systems will already have
operational capabilities that meet
approximately 70 percent of the
requirements in the final rules and will
only incur costs and burdens related to
changes needed to fully meet the
requirements of the final rules. Based on
this assumption, the Departments
estimate that 1,579 issuers and 184
TPAs will incur a first-year one-time
hour burden of 11,232 hours, with an
associated cost of $1,588,704.00 to fully
satisfy the initial requirements of the
final rules. For all 1,763 issuers and
TPAs, the Departments estimates the
total first year one-time burden will be
19,803,139 hours, with an equivalent
total cost of approximately
$2,801,044,022.40. The Departments
recognize that issuers and TPAs may
currently have some form of internetbased self-service tool that may provide
greater functionality that could meet a
greater proportion of the requirements
in the final rules. In those cases, issuers
and TPAs could see lower costs and
burdens. The Departments also
recognize that there are likely a number
of issuers and TPAs that currently
provide some form of internet-based
self-service tool that would require more
development to meet the requirements
of the final rules. In those instances,
those issuers and TPAs could incur
greater costs and burdens. The
Departments’ estimates are higherbound estimates that do not consider
potential cost savings that could be
realized should issuers and TPAs buy or
lease an internet-based self-service tool
from a third-party vendor or other
issuer. However, the Departments are of
the view that issuers or TPAs that
choose to buy or rent an internet-based
self-service tool from another entity
could incur significantly less costs and
burdens.
TABLE 5B—LOW-END FIRST YEAR ONE-TIME COST AND HOUR BURDEN FOR INTERNET-BASED SELF-SERVICE TOOL FOR
ISSUERS AND TPAS REQUIRING ONLY A PARTIAL BUILD
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,763
1,763
11,232
19,803,139
$2,801,044,022.40
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TABLE 5C—TOTAL LOW-END FIRST YEAR ONE-TIME COST AND HOUR BURDEN FOR INTERNET-BASED SELF-SERVICE
TOOL FOR ALL ISSUERS AND TPAS
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
1,959
13,853
27,137,635
$3,838,467,734.40
In addition to the range of one-time
costs and burdens estimated in Tables
4B, 5B, 5C, 6A, and 6B, issuers and
TPAs will incur annual costs such as
those related to ensuring cost estimation
accuracy, providing quality assurance,
conducting website maintenance and
making updates, and enhancing or
updating any needed security measures.
The Departments estimate that for each
issuer and TPA, it will take a Project
Manager/Team Lead 1,040 hours (at
$153 per hour), a Scrum Master 1,300
hours (at $105 per hour), an Application
Developer, Senior 1,560 hours (at $143
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per hour), a Business Analyst (at
$120.00 per hour) 520 hours, a Designer
(at $116.00 per hour) 1,040 hours, a
DevOps Engineer (at $181.00 per hour)
520 hours, a Web Database/Application
Developer IV (at $152.00 per hour) 1,560
hours, and a UX Researcher/Service
Designer 520 hours (at $154 per hour) to
perform these tasks. The total annual
burden for each issuer or TPA will be
8,060 hours, with an equivalent cost of
approximately $1,113,060. For all 1,959
issuers and TPAs, the total annual
maintenance burden is estimated to be
15,789,540 hours, with an equivalent
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associated total cost of approximately
$2,180,484,540.00. The Departments
recognize that issuers and TPAs will
likely have varying levels of IT
capabilities and experience in
maintaining and internet-based tool and
could incur higher or lower costs and
burdens depending on those
capabilities. The Departments expect
maintenance costs to decline in
succeeding years as issuers and TPAs
gain efficiencies and experience in
updating and managing their internetbased self-service tool.
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TABLE 6A—ESTIMATED YEAR TWO IMPLEMENTATION COST AND HOUR BURDEN FOR INTERNET-BASED SELF-SERVICE
TOOL FOR EACH ISSUER OR TPA
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
Project Manager/Team Lead .................................................................................................
Scrum Master ........................................................................................................................
Technical Architect/Sr. Developer .........................................................................................
Application Developer, Senior ...............................................................................................
Business Analyst ...................................................................................................................
UX Researcher/Service Designer ..........................................................................................
Designer .................................................................................................................................
DevOps Engineer ..................................................................................................................
Web Database/Application Developer IV ..............................................................................
3,120
3,120
3,120
4,160
2,080
2,080
1,560
2,080
3,120
$153.00
105.00
149.00
143.00
120.00
154.00
116.00
181.00
152.00
$477.360.00
327,600.00
464,880.00
594,880.00
249,600.00
320,320.00
180,960.00
376,480.00
Total per Respondent .....................................................................................................
24,440
..........................
3,446,320.00
TABLE 6B—ESTIMATED YEAR TWO IMPLEMENATION COST AND HOUR BURDEN FOR INTERNET-BASED SELF-SERVICE TOOL
FOR ALL ISSUERS AND TPAS
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
1,959
24,440.0
47,877,960
$6,611,791,830.97
In addition to the range of one-time
costs and burdens estimated in Tables
4B, 5B, 5C, 6A, and 6B, issuers and
TPAs will incur annual costs such as
those related to ensuring cost estimation
accuracy, providing quality assurance,
conducting website maintenance and
making updates, and enhancing or
updating any needed security measures.
The Departments estimate that for each
issuer and TPA, it will take a Project
Manager/Team Lead 1,040 hours (at
$153 per hour), a Scrum Master 1,300
hours (at $105 per hour), an Application
Developer, Senior 1,560 hours (at $143
per hour), a Business Analyst (at
$120.00 per hour) 520 hours, a Designer
(at $116.00 per hour) 1,040 hours, a
DevOps Engineer (at $181.00 per hour)
520 hours, a Web Database/Application
Developer IV (at $152.00 per hour) 1,560
hours, and a UX Researcher/Service
Designer 520 hours (at $154 per hour) to
perform these tasks. The total annual
burden for each issuer or TPA will be
8,060 hours, with an equivalent cost of
approximately $1,113,060. For all 1,959
issuers and TPAs, the total annual
maintenance burden is estimated to be
15,789,540 hours, with an equivalent
associated total cost of approximately
$2,180,484,540.00. The Departments
recognize that issuers and TPAs will
likely have varying levels of IT
capabilities and experience in
maintaining and internet-based tool and
could incur higher or lower costs and
burdens depending on those
capabilities. The Departments expect
maintenance costs to decline in
succeeding years as issuers and TPAs
gain efficiencies and experience in
updating and managing their internetbased self-service tool.
TABLE 7A—ESTIMATED ANNUAL COST AND HOUR BURDEN FOR MAINTENANCE OF INTERNET-BASED SELF-SERVICE TOOL
FOR EACH ISSUER OR TPA
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
Project Manager/Team Lead .................................................................................................
Scrum Master ........................................................................................................................
Application Developer, Senior ...............................................................................................
Business Analyst ...................................................................................................................
Designer .................................................................................................................................
DevOps Engineer ..................................................................................................................
Web Database/Application Developer IV ..............................................................................
UX Researcher/Service Designer ..........................................................................................
1,040
1,300
1,560
520
1,040
520
1,560
520
$153.00
105.00
143.00
120.00
116.00
181.00
152.00
154.00
$159,120.00
136,500.00
223,080.00
62,400.00
120,640.00
94,120.00
237,120.00
80,080.00
Total per Respondent .....................................................................................................
8,060
..........................
1,113,060.00
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TABLE 7B—ESTIMATED ANNUAL COST AND HOUR BURDEN FOR MAINTENANCE OF INTERNET-BASED SELF-SERVICE TOOL
FOR ALL ISSUERS AND TPAS
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
1,959
8,060.0
15,789,540
$2,180,484,540.00
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As noted previously in this ICR
section, commenters stated that the
Departments grossly underestimated the
cost burden of implementation on plans
and issuers. Additionally, commenters
stated that the Departments had
underestimated the maintenance costs
associated with the internet-based selfservice tool. Issuers estimated the
annual maintenance costs to be on
average, about $3.78 million per issuer
or TPA (ranging from $375,000 to
$10,000,000). As noted previously in
this ICR section, based on comments
received, the Departments have adjusted
the costs and burden estimates to better
reflect and align with the values
submitted by commenters. The
Departments estimate the high-end
three-year average total hour burden, for
all issuers and TPAs to develop, build,
and maintain an internet-based selfservice tool will be 45,670,820 hours
annually, with an average annual total
equivalent cost of $6,388,837,830.
The Departments acknowledge that
the costs described earlier in this
section may vary depending on the
number of covered lives and the number
of providers and items and services
incorporated into the internet-based
self-service tool. Recognizing that many
issuers and TPAs currently have some
form of internet-based self-service tool
in operation that meets some aspects of
the requirements of the final rules, the
Departments estimate the low-end
average three-year annual total burden,
for all issuers and TPAs to develop,
build, and maintain an internet-based
self-service tool will be 30,268,378
hours annually, with an average annual
total equivalent cost of $4,210,248,035.
The Departments recognize that plans,
issuers, and TPAs may be able to license
existing internet-based self-service tools
offered by vendors, obviating the need
to establish, upgrade, and maintain their
own internet-based self-service tools,
and that vendor licensing fees,
dependent upon complexity, volume,
and frequency of use, could be lower
than the burden and costs estimated
here.
TABLE 8—ESTIMATED HIGH-END THREE YEAR AVERAGE ANNUAL HOUR BURDEN AND COSTS FOR ALL ISSUERS AND
TPAS TO DEVELOP AND MAINTAIN THE INTERNET-BASED SELF-SERVICE TOOL
Estimated
number of health
insurance issuers
and TPAs
Year
2022 ...........................................................
2023 ...........................................................
2024 ...........................................................
3 year Average ..........................................
Responses
1,959
1,959
1,959
1,959
Burden per
respondent
(hours)
1,959
1,959
1,959
1,959
Total annual
burden
(hours)
37,440.0
24,440.0
8,060.0
23,313
Total estimated labor
cost
73,344,960
47,877,960
15,789,540
45,670,820
$10,374,237,120
6,611,791,830.97
2,180,484,540.00
6,388,837,830.32
TABLE 9—ESTIMATED LOW-END THREE YEAR AVERAGE ANNUAL HOUR BURDEN AND COSTS FOR ALL ISSUERS AND TPAS
TO DEVELOP AND MAINTAIN THE INTERNET-BASED SELF-SERVICE TOOL
Estimated
number of health
insurance issuers
and TPAs
Year
2022 ...........................................................
2023 ...........................................................
2024 ...........................................................
3 year Average ..........................................
Responses
1,959
1,959
1,959
1,959
In addition to the one-time and
annual maintenance costs estimated in
Table 8 and Table 9, issuers and TPAs
will also incur an annual burden and
costs associated with customer service
representative training, consumer
assistance and education, and
administrative and distribution costs
related to the disclosures required in the
final rules. The Departments estimate
that, to understand and navigate the
internet-based self-service tool and
provide the appropriate assistance to
Burden per
respondent
(hours)
1,959
1,959
1,959
1,959
Total annual
burden
(hours)
13,853
24,440
8,060
15,451
consumers, each customer service
representative will require
approximately two hours (at $40 per
hour) of annual consumer assistance
training at an associated cost of $80 per
hour. The Departments estimate that
each issuer and TPA will train, on
average, 10 customer service
representatives annually, resulting in a
total annual burden of 20 hours, with an
associated total cost of $800. For all
1,959 issuers and TPAs, the total annual
burden is estimated to be 39,180 hours,
Total estimated labor
cost
27,137,635
47,877,960
15,789,540
30,268,378
$3,838,467,734.40
6,611,791,830.97
2,180,484,540.00
4,210,248,035.12
with an equivalent total annual cost of
approximately $1,567,200. The
Departments recognize that some issuers
or TPAs may require varying levels of
training to acquaint their customer
service representatives with the
functionalities of their internet-based
self-service tool depending on the
degree of changes required to comply
with the final rules, in which case some
issuers could incur higher costs and
burdens to appropriately train
personnel.
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TABLE 10A—ESTIMATED ANNUAL COST AND HOUR BURDEN PER ISSUER OR TPA TO TRAIN CUSTOMER SERVICE
REPRESENTATIVES TO PROVIDE ASSISTANCE TO CONSUMERS RELATED TO THE INTERNET-BASED SELF-SERVICE TOOL
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
Customer Service Representatives .......................................................................................
2
$40.00
$80.00
Total per Respondent .....................................................................................................
2
..........................
80.00
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72281
TABLE 10B—ESTIMATED ANNUAL COST AND HOUR BURDEN FOR ALL ISSUERS AND TPAS TO TRAIN CUSTOMER SERVICE
REPRESENTATIVES TO PROVIDE ASSISTANCE TO CONSUMERS RELATED TO THE INTERNET-BASED SELF-SERVICE TOOL
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
1,959
20
39,180
$1,567,200.00
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The Departments assume that the
greatest proportion of beneficiaries,
participants, or enrollees that will
request disclosure of cost-sharing
information in paper form will do so
because they do not have access to the
internet. However, the Departments
acknowledge that some consumers with
access to the internet will contact a plan
or issuer for assistance with using the
internet-based self-service tool and may
request to receive cost-sharing
information in paper form.
Recent studies have found that
approximately 20 million households
do not have an internet subscription.287
Further, approximately 19 million
Americans (6 percent of the population)
lack access to fixed broadband services
that meet threshold levels.288
Additionally, a recent Pew Research
Center analysis found that 10 percent of
U.S. adults do not use the internet,
citing the following major factors:
difficulty of use, age, cost of internet
services, and lack of computer
ownership.289 Additional research
indicates that an increasing number, 17
percent, of individuals and households
are now considered ‘‘smartphone only’’
and that 37 percent of U.S. adults
mostly use smartphones to access the
internet and that many adults are
forgoing the use of traditional
broadband services.290 Further research
287 ‘‘2017 American Community Survey SingleYear Estimates.’’ United States Census Bureau.
September 13, 2018. Available at: https://
www.census.gov/newsroom/press-kits/2018/acs1year.html.
288 ‘‘Eight Broadband Progress Report.’’ United
States Federal Communications Commission.
December 14, 2018. Available at: https://
www.fcc.gov/reports-research/reports/broadbandprogress-reports/eighth-broadband-progress-report.
In addition to the estimated 19 million Americans
that lack access, they further estimate that ‘‘in areas
where broadband is available, approximately 100
million Americans still do not subscribe.’’
289 Anderson, M. et al. ‘‘10% of Americans don’t
use the internet. Who are they?’’ Pew Research
Center. April 22, 2019. Available at: https://
www.pewresearch.org/fact-tank/2019/04/22/someamericans-dont-use-the-internet-who-are-they/.
290 Anderson, M. ‘‘Mobile Technology and Home
Broadband 2019.’’ Pew Research Center. June 13,
2019. Available at: https://www.pewinternet.org/
2019/06/13/mobile-technology-and-homebroadband-2019/ (finding that overall 17 percent of
Americans are now ‘‘smartphone only’’ internet
users, up from 8 percent in 2013. They study also
shows that 45 percent of non-broadband users cite
their smartphones as a reason for not subscribing
to high-speed internet).
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indicates that younger individuals and
households, including approximately 93
percent of households with
householders aged 15 to 34, are more
likely to have smartphones compared to
those aged over 65.291 The Departments
are of the view that the population most
likely to use the internet-based selfservice tool would generally consist of
younger individuals, who are more
comfortable using technology and are
more likely to have internet access via
broadband or smartphone technologies.
The Departments note that there are
212.3 million beneficiaries, participants,
or enrollees enrolled in group health
plans or with health insurance issuers
required to comply with the
requirements of the final rules for at
least part of the year.292 On average, it
is estimated that each issuer or TPA
would annually administer the benefits
for 108,379 beneficiaries, participants,
or enrollees.
A recent study noted that only one to
12 percent of consumers that have been
offered internet-based or mobile
application-based price transparency
tools use them.293 Taking that into
account, and assuming that six percent
of covered individuals lack access to
fixed broadband services, the
Departments estimate that on average
six percent of participants, beneficiaries,
or enrollees will seek customer support
(a mid-range percentage of individuals
that currently use available cost
estimator tools) and that an estimated
one percent of those participants,
beneficiaries, or enrollees will request
any pertinent information be disclosed
to them in in a non-internet manner—
resulting in an estimated 0.06 percent of
participants, beneficiaries, or enrollees
requesting information. As discussed in
section V.D.1 of this preamble, the
Departments have adjusted the
estimates related to customer service
and mailed requests in order to account
for more recent data related to the
291 Ryan, C. ‘‘Computer and internet Use in the
United States: 2016.’’ American Community Survey
Reports: United States Census Bureau. August 2018.
Available at: https://www.census.gov/content/dam/
Census/library/publications/2018/acs/ACS-39.pdf.
292 Id. at 283.
293 Mehrotra, A., Chernew, M., and Sinaiko, A.
‘‘Health Policy Report: Promises and Reality of
Price Transparency.’’ April 5, 2018. 14 N. Eng. J.
Med. 378. Available at: https://www.nejm.org/doi/
full/10.1056/NEJMhpr1715229.
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number of participants, beneficiaries,
and enrollees. The Departments
estimate that each issuer or TPA, on
average, will require a customer service
representative to interact with a
beneficiary, participant, or enrollee
approximately 65 times per year on
matters related to cost-sharing
information disclosures required by the
final rules. The Departments estimate
that each customer service
representative will spend, on average,
15 minutes (at $40 per hour) for each
interaction, resulting in a cost of
approximately $10 per interaction. The
Departments estimate that each issuer or
TPA will incur an annual burden of 16
hours, with an associated equivalent
cost of approximately $650; resulting in
a total annual burden of 31,847 hours,
with an associated cost of
approximately $1,273,884 for all issuers
and TPAs.
The Departments assume that all
beneficiaries, participants, or enrollees
that contact a customer service
representative will request non-internet
disclosure of the internet-based selfservice tool information. Of these, the
Departments estimate that 54 percent of
the requested information would be
transmitted via email or facsimile at
negligible cost to the issuer or TPA and
that 46 percent will request the
information be provided by mail. The
Departments estimate that, on average,
each issuer or TPA will send
approximately 30 disclosures by mail
annually. Based on these assumptions,
the Departments estimate that the total
number of annual disclosures sent by
mail for all issuers and TPAs will be
58,599. The Departments recognize that
the numbers of per issuer and TPA
mailings may represent a low-end
estimate and the number of requests
may vary amongst each issuer or TPA
depending on the demographics of their
beneficiaries, participants, or enrollees.
The Departments are of the view that
although more individuals will contact
customer support for cost information
the vast majority of those individuals
will likely obtain this information over
the phone or have it emailed rather than
have it mailed to them.
The Departments assume, on average,
the length of the printed disclosure will
be approximately nine single-sided
pages in length, assuming two pages of
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Departments estimate that each issuer or
TPA will incur a material and printing
costs of approximately $1.00 ($0.45
printing plus $0.55 postage costs) per
mailed request. Based on these
assumptions, the Departments estimate
that each issuer or TPA will incur an
information (similar to that provided in
an EOB) for three providers (for a total
of six pages) and an additional three
pages related to the required notice
statements, with a printing cost of $0.05
per page. Therefore, including postage
costs of $0.55 per mailing, the
annual printing and mailing cost of
approximately $30, resulting in a total
annual printing and mailing cost of
approximately $58,599 for all issuers
and TPAs.
TABLE 11A—ESTIMATED ANNUAL COST AND HOUR BURDEN PER RESPONSE PER ISSUER OR TPA TO ACCEPT AND
FULFILL REQUESTS FOR A MAILED DISCLOSURES
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
Customer Service Representatives .......................................................................................
0.25
$40.00
$10
Total per Respondent ............................................................................................................
0.25
..........................
10
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TABLE 11B—ESTIMATED ANNUAL COST AND HOUR BURDEN FOR ALL ISSUERS AND TPAS TO ACCEPT AND FULFILL
REQUESTS FOR MAILED DISCLOSURES
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total labor cost
of reporting
Printing and
materials cost
Total cost
1,959
1132,509
16
31,847
$1,273,884.00
$58,598.66
$1,332,482.66
The Departments solicited comment
on the overall estimated costs and
burdens related to this collection of
information request. The Departments
also sought comment on the technical
and labor requirements or costs that
may be required to meet the
requirements of the proposed rules: For
example, what costs may be associated
with any potential consolidation of
information needed for the internetbased self-service tool functionality. The
Departments sought comment on the
estimated number of issuers and TPAs
currently in the group and individual
markets and the number of self-insured
group health plans that might seek to
independently develop an internetbased self-service tool, the percentage of
consumers who might use the internetbased self-service tool, and the
percentage of consumers who might
contact their plan, issuer, or TPA
requesting information via a noninternet disclosure method. The
Departments sought comment on any
other existing efficiencies that could be
leveraged to minimize the burden on
plans, issuers, and TPAs, as well as how
many or what percentage of plans,
issuers, and TPAs might leverage such
efficiencies. The Departments sought
comment on the proposed model notice
and any additional information that
stakeholders thought should be
included, removed, or expanded upon
and its overall adaptability.
All comments received with regard
the topics above have been noted and
addressed in their corresponding ICR
sections.
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In conjunction with the final rules,
CMS is seeking approval for this
information collection (OMB control
number: 0938–1372 (Transparency in
Coverage (CMS–10715)). CMS is
requiring the following information
collections to include the following
burden. DOL and the Department of the
Treasury will submit their burden
estimates upon approval.
2. ICRs Regarding Requirements for
Public Disclosure of In-network Rates,
Historical Allowed Amount Data for
Covered Items and Services from Out-ofNetwork Providers and Prescription
Drug Pricing Information under 26 CFR
54.9815–2715A3, 29 CFR 2590.715–
2715A3, and 45 CFR 147.212.
The Departments are adding 26 CFR
54.9815–2715A3(b), 29 CFR 2590.715–
2715A3(b), and 45 CFR 147.212(b) to the
final rules requiring group health plans
and health insurance issuers to make
public in-network rates for covered
items and services, out-of-network
allowed amounts for covered items or
services, and negotiated rates and
historical net prices for each
prescription drug NDC through three
machine-readable files that must
conform to guidance issued by the
Departments. The list of required data
elements that must be included for each
file for each covered item or service are
discussed in section II.C previously in
this preamble and enumerated under
paragraph (b)(1)(i) for the In-network
Rate File, paragraph (b)(1)(ii) for the
Allowed Amount File, and paragraph
(b)(1)(iii) for the Prescription Drug File
of the final rules. Under paragraphs
(b)(2) and (3) of the final rules, the
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machine-readable files must be posted
on a public internet site accessible to
any person free of charge and without
conditions and must be updated
monthly.
For the In-network Rate File, the final
rules require the negotiated rates,
underlying fee schedules, or derived
amounts under a plan or coverage
regarding each covered item or service
be furnished for in-network providers.
As discussed in section II.C earlier in
this preamble, the Departments expect
plans and issuers to make public the
negotiated rate, fee schedule, or derived
amount that is used to adjudicate claims
for the purpose of reconciling a
provider’s payment to determine a
participant’s, beneficiary’s, or enrollee’s
cost-sharing liability. As discussed in
the previous ICR section, the
Departments assume fully-insured
group health plans will rely on issuers
and most self-insured group health
plans will rely on issuers or TPAs to
develop and update the machinereadable files. The Departments
recognize that there may be some selfinsured plans that wish to individually
comply with the final rules and will
thus incur a similar burden and cost as
described in the following paragraphs.
Many commenters stated the costs
associated with the technical build and
maintenance of the machine-readable
files will be significant, and many
commenters strongly suggested that the
costs and burden of implementing the
files would be significantly higher than
those estimated in the proposed rules.
Some commenters stated that the final
rules would unreasonably burden
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issuers with administrative costs and
could be especially burdensome for
small issuers and self-insured plans.
One commenter noted that a significant
amount of burden would be placed on
out-of-network providers to provide
information regarding costs to plans and
issuers. Another commenter, a hospital
association, stated that the proposed
rules would be an administrative
burden for hospitals as they would
require a massive investment by
hospitals to provide data to comply and
that these resources would be diverted
from patient care support.
The Departments recognize that the
requirements in the final rules could
result in instances where small issuers
and self-insured plans face a
disproportionate burden due to their
size; however, as noted earlier in this
preamble, the Departments expect that
small issuers, plans, and TPAs will
combine their efforts and seek to take
advantage of any resulting economies of
scale.
An independent study by Bates White
Economic Consulting (Bates White),
commissioned by one commenter,
developed an assessment of the costs of
the proposed rules by interviewing a
mix of 18 large and small health
insurance issuers covering about 78
million lives; Bates White assessed the
average issuer cost to implement the Innetwork Rate File as $2,139,167 with a
range from $85,000 to $10,000,000.
Bates White reported that commercial
issuers estimated an average cost of $2.1
million per issuer to develop and
implement the In-network Rates File.
Per the study, issuers view the Innetwork Rate File as about 20 times
costlier to implement than the
Departments’ proposed estimate. In
addition, Bates White assessed the
average annual issuer cost to maintain
the In-network Rate Files would be
$467,000 with a range from $15,000 to
$1,000,000. Another commenter noted
that commercial issuers estimated
annual costs of $600,000 per issuer to
maintain the In-network Rate File.
Issuers viewed the In-network Rate File
as about 13 times costlier to maintain
than the Departments’ proposed
estimate.
In another attempt to quantify this
burden, one commenter emphasized
that the potential universe of prices that
would need to be disclosed on the files
is enormous and could be in the
hundreds of billions (more than 94,000
codes multiplied by the number of
unique practitioners, which in the large
issuer’s system alone could exceed 2
million).
One commenter noted that the effort
to comply would involve an immense
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amount of data aggregation, deidentification, and application
development work, and these tasks
would be especially difficult for small
issuers and self-insured plans who are
more likely to rely on ‘‘rented’’
networks. The commenter stated that to
comply with the final rules, issuers
would need a team with data expertise
and knowledge of plan design and
medical service billing to aggregate data,
build re-pricing engines, and assure
accuracy.
Due to the belief that the burden
estimate in the proposed rules and
related PRA grossly underestimated the
burden of implementation on plans and
issuers, one commenter suggested the
Departments should retract the PRA and
work with stakeholders to develop a less
burdensome transparency solution.
Other commenters stated the burden
estimates included in the proposed
rules violate the spirit and express
provision of the PRA.
The Departments recognize the
concerns and issues noted by
commenters. As noted in section VI.A in
this preamble, the Departments have
reviewed comments related to the costs
and burdens associated with the
requirements of the final rules and
devised updated estimates using CALC
derived wage rates. The Departments
note that the conclusions of the Bates
White study referenced earlier in this
preamble were based on interviews with
issuers in which issuers described the
steps they viewed as necessary to
establish the required internet-based
self-service tool and the machinereadable files, and provided related
costs estimates associated with the
estimated initial set-up of the internetbased self-service tool and machinereadable files. These estimates,
however, did not provide the level of
detail necessary for the Departments to
assess how those initial cost estimates
differ from the Departments’ estimates.
The Bates White study also
recognized the difficulty associated with
assessing issuer estimates reported from
issuer study participants. The study
recognized that issuers interviewed
varied widely in size, had different
levels of experience, and had engaged in
different levels of analysis of the
impacts in the proposed rules. The
study further noted the differences in
the extent to which issuers evaluated
the costs and feasibility of complying
with the proposed rules. The study also
recognized that issuers interviewed
made different assumptions about the
degree of support from vendors or trade
associations that may have affected
issuers’ perception of the administrative
and operational costs of
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72283
implementation, and that issuers did
not provide details of the varied
operational and implementation costs
and activities underlying their stated
estimates for complying with the
proposed rules. Specifically, the study
provided no insight regarding the labor
categories, wages, or hourly burdens
that were considered to produce these
cost estimates. Accordingly, the Bates
White study did not provide details
sufficient to allow those estimates to be
compared to the Departments’ estimates
in the proposed rules.
Given the limited utility of
information offered by the Bates White
study, the Departments took additional
steps to ensure the reasonableness and
accuracy of the cost estimates associated
with compliance with the final rules. In
developing the updated estimates, the
Departments took into account the
potential aggregation of data and the
potential likelihood that the data
required to meet the requirements of the
final rules would need to be obtained
from multiple sources. The Departments
recognize that the size and complexity
of the machine-readable files will result
in data files that are large. However, the
Departments do not anticipate that data
storage would impose a significant
burden for issuers or TPAs due to the
relatively inexpensive costs associated
with storage methods such as cloud
storage.
The Departments estimate a one-time
first year burden and cost to issuers and
TPAs to make appropriate changes to IT
systems and processes, to develop,
implement and operate the In-network
Rate File in order to meet the
requirements of the final rules. The
Departments estimate that each health
or TPA will require a Project Manager/
Team Lead 364 hours (at $153 per hour),
a Scrum Master 1,404 hours (at $105 per
hour), a Technical Architect/Sr.
Developer 2,080 hours (at $149 per
hour), an Application Developer, Senior
1,716 hours (at $143 per hour), a
Business Analyst 1,404 hours (at $120
per hour), a Service Designer/Researcher
520 hours (at $114 per hour) and a
DevOps Engineer 260 hours (at $181 per
hour) to complete this task. The total
one-time first year burden for each
issuer or TPA is estimated to be
approximately 7,748 hours, with an
equivalent associated cost of
approximately $1,033,240. For all 1,959
issuers and TPAs, the Departments
estimate the total one-time first year
burden will be 15,178,332 hours with an
associated cost of approximately
$2,024,117,160. The Departments
emphasize that these are upper bound
estimates that are meant to be sufficient
to cover substantial, complex activities
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that may be necessary for some plans,
issuers, or TPAs to comply with the
final rules due to the manner in which
their current systems are designed. Such
activities may include such significant
activities as the design and
implementation of databases that will
support the production of the Innetwork Rate Files.
TABLE 12A—ESTIMATED ONE-TIME YEAR ONE COST AND HOUR BURDEN PER ISSUER OR TPA FOR THE IN-NETWORK
RATE FILE
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
Project Manager/Team Lead .................................................................................................
Scrum Master ........................................................................................................................
Technical Architect/Sr. Developer .........................................................................................
Application Developer, Senior ...............................................................................................
Business Analyst ...................................................................................................................
Service Designer/Researcher ................................................................................................
DevOps Engineer ..................................................................................................................
364
1,404
2,080
1,716
1,404
520
260
$153.00
105.00
149.00
143.00
120.00
114.00
181.00
$55,692.00
147,420.00
309,920.00
245,388.00
168,480.00
59,280.00
47,060.00
Total per Respondent .....................................................................................................
7,748
..........................
1,033,240.00
TABLE 12B—ESTIMATED ONE-TIME YEAR ONE COST AND HOUR BURDEN FOR ALL ISSUERS AND TPAS FOR THE INNETWORK RATE FILE
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
1,959
7,748
15,178,332
$2,024,117,160.00
In addition to the one-time year one
costs estimated in Tables 12A and 12B,
issuers or TPAs will incur an additional
year two burden and cost to update the
In-network Rate File monthly as
required in the final rules. The
Departments estimate that for each
month each issuer or TPA it will require
a Project Manager/Team Lead 22 hours
(at $153 per hour), a Scrum Master 22
hours (at $105 per hour), a Technical
Architect/Sr. Developer 22 hours (at
$149 per hour), an Application
Developer, Senior 22 hours (at $143 per
hour), a Business Analyst 13 hours (at
$120 per hour) and a DevOps Engineer
22 hours (at $181 per hour) to make the
required updates and needed
adjustments to the In-network Rate File.
The Departments estimate that each
issuer or TPA will incur a monthly year
two burden of 123 hours, with an
associated monthly cost of
approximately $17,642 to adjust and
update the In-network Rate File. Each
issuer or TPA will need to update the
In-network Rate File 12 times during a
given year, resulting in a year two
burden of 1,476 hours, with an
associated equivalent cost of
approximately $211,704. The
Departments estimate the total year two
burden for all 1,959 issuers and TPAs
will be 2,891,484 hours, with an
associated equivalent cost of
approximately $414,728,136. The
Departments consider this estimate to be
an upper-bound estimate and expect
ongoing update costs to decline in
succeeding years as issuers and TPAs
gain efficiencies and experience in
updating and managing the In-network
Rate File.
TABLE 13A—ESTIMATED MONTHLY YEAR TWO COST AND HOUR BURDEN PER ISSUER OR TPA FOR THE IN-NETWORK
RATE FILE
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
Project Manager/Team Lead .................................................................................................
Scrum Master ........................................................................................................................
Technical Architect/Sr. Developer .........................................................................................
Application Developer, Senior ...............................................................................................
Business Analyst ...................................................................................................................
DevOps Engineer ..................................................................................................................
22
22
22
22
13
22
$153.00
105.00
149.00
143.00
120.00
181.00
$3,366.00
2,310.00
3,278.00
3,146.00
1,560.00
3,982.00
Total per Respondent .....................................................................................................
123
..........................
17,642.00
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TABLE 13B—ESTIMATED YEAR TWO COST AND HOUR BURDEN FOR ALL ISSUERS AND TPAS FOR THE IN-NETWORK RATE
FILE
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
23,508
1,476
2,891,484
$414,728,136.00
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In addition to the one-time year one
and monthly year two costs estimated
Tables 12A, 12B, 13A, and 13B, in
subsequent years, issuers and TPAs will
incur an ongoing monthly burden and
cost to update and maintain the Innetwork Rate File on a monthly basis as
required by the final rules. The
Departments estimate that for each
issuer or TPA it will require a Project
Manager/Team Lead 9 hours (at $153
per hour) and an Application Developer,
Senior 22 hours (at $143 per hour) to
make the required updates to the Innetwork Rate File. The Departments
estimate that each issuer or TPA will
incur a monthly burden of 31 hours,
with an associated cost of
approximately $4,523 to update the Innetwork Rate File. Each issuer or TPA
will need to update the In-network Rate
File 12 times during a given year,
resulting in an ongoing annual hour
burden of 372 hours, with an associated
equivalent cost of approximately
$54,276. The Departments estimate the
72285
total annual burden for all 1,959 issuers
and TPAs will be 728,748 hours, with
an associated equivalent cost of
approximately $106,326,684. The
Departments consider this estimate to be
an upper-bound estimate and expect
ongoing update costs to decline in
succeeding years as issuers and TPAs
gain efficiencies and experience in
updating and managing the In-network
Rate File.
TABLE 14A—ESTIMATED MONTHLY ONGOING COST AND HOUR BURDEN PER ISSUER OR TPA FOR THE IN-NETWORK RATE
FILE
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
Project Manager/Team Lead .................................................................................................
Application Developer, Senior ...............................................................................................
9
22
$153.00
143.00
$1,377.00
3,146.00
Total per Respondent .....................................................................................................
31
..........................
4,523.00
TABLE 14B—ESTIMATED ANNUAL ONGOING COST AND HOUR BURDEN FOR ALL ISSUERS AND TPAS FOR THE INNETWORK RATE FILE
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
23,508
372
728,748
$106,326,684.00
The Departments estimate the total
one-time year one burden for all issuers
and TPAs will be 15,178,332 hours,
with an associated equivalent cost of
approximately $2,024,117,160 to
develop and build the In-network Rate
File in a machine-readable format. In
year two, the Departments estimate the
burden and costs to update and
maintain the In-network Rate file for all
issuers and TPAs will be 2,891,484
hours, with an associated equivalent
cost of approximately $414,728,136. In
subsequent years, the Departments
estimate the total annual burden to
maintain and update the In-network
Rate File will be 728,748 hours, with an
annual associated equivalent cost of
approximately $106,326,684. The
Departments estimate the three-year
average annual total burden, for all
issuers and TPAs, will be 6,266,188
hours, with an average annual
associated equivalent total cost of
$848,390,660.
TABLE 15—ESTIMATED THREE YEAR AVERAGE ANNUAL HOUR BURDEN AND COSTS FOR ALL ISSUERS AND TPAS TO
DEVELOP AND MAINTAIN THE IN-NETWORK RATE FILE
Estimated
number of health
insurance issuers
and TPAs
Year
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2021 ...........................................................
2022 ...........................................................
2023 ...........................................................
3 year Average ..........................................
1,959
1,959
1,959
1,959
As mentioned in sections V.B in this
preamble, the Departments understand
that plans and issuers may include gag
clauses in their provider contracting
agreements, which prevent disclosure of
in-network rates. The Departments
sought comment on whether such
agreements would need to be
renegotiated to remove such clauses,
and, if so, sought comment regarding
any costs and burden associated with
this action.
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Responses
Burden per
respondent
(hours)
1,959
23,508
23,508
16,325
7,748
1,476
372
3,199
One commenter stated the
Departments have not sufficiently
accounted for costs associated with
updating legal agreements (with
physicians, hospitals, drug
manufacturers, and device
manufacturers, for example), updating
and integrating data from multiple
systems, and establishing processes for
making updates to files in the ordinary
course of business. Another commenter
observed the Departments have not
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Total annual
burden
(hours)
15,178,332
2,891,484
728,748
6,266,188
Total estimated
labor cost
$2,024,117,160.00
414,728,136.00
106,326,684.00
848,390,660.00
adequately accounted for the time,
resources, and cost burdens of
renegotiating contracts to remove gag
clauses or confidentiality clauses, which
prevent disclosure of in-network rates.
One commenter provided examples of
these costs: Printing and paper, mailing,
attorney drafting initial amendments
and review of non-standard language
requests, costs for employees charged
with negotiation and administration,
and costs paid to vendors.
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Due to the potential complexities and
time involved in contract negotiations,
the Departments recognize that should
contracts require renegotiation, all
associated parties will face additional
costs and burdens. However, the
Departments do not have insight into
these complexities or knowledge of how
these contracts are structured, and they
are thus not able to quantify the costs
and burdens associated with these tasks.
Also, as addressed earlier in this
preamble, it is not uncommon for new
or modified regulatory requirements or
new statutory provisions to alter private
contract arrangements. The Departments
note that the possibility of new or
modified regulatory requirements or
new statutory provisions altering such
contracts often is contemplated in the
contracts themselves; for example,
drafters may include contract language
indicating that terms may be altered by
changes in law or regulation. Such
language would obviate the need for
updates outsides of the regular
contracting schedule and any associated
costs and burden.
For the Allowed Amount File, the
final rules require plans and issuers to
make available a machine-readable file
showing the unique out-of-network
allowed amounts and billed charges for
covered items or services furnished by
out-of-network providers during the 90day time period that begins 180 days
before the publication date of the file.
As discussed earlier in this preamble, to
the extent that a group health plan or
health insurance issuer has paid
multiple bills for an item or service to
a particular out-of-network provider at
the same allowed amount, the final
rules will only require a plan or issuer
to list the allowed amount once.
Additionally, if the plan or issuer would
only display allowed amounts in
connection with 20 or fewer claims for
a covered item or service for payment to
a provider during any relevant 90-day
period, the plan or issuer will not be
required to report those unique allowed
amounts.
As previously noted, an independent
study by Bates White, commissioned by
one commenter, assessed the average
issuer cost to implement the Allowed
Amount File as $1,071,167 with a range
from $42,000 to $5,000,000 and
estimated the cost to implement the
Allowed Amount File as about 9 times
costlier to implement than the
Departments’ proposed estimate. This
commenter also argued that the average
annual issuer cost to maintain the
Allowed Amount File would be
$643,000 with a range from $12,000 to
$1,500,000. Another commenter argued
that the cost to maintain the Allowed
Amount File would be about 44 times
costlier than the Departments’ proposed
estimate.
As noted above regarding the Innetwork Rate File cost and burdens, the
Departments have devised updated
estimates for the Allowed Amounts File
using CALC derived wage rates. In
developing the updated estimates, the
Departments took into account the
potential aggregation of data and the
potential likelihood that the data
required to meet the requirements of the
final rules would need to be obtained
from multiple sources.
The Departments estimate a one-time
year one burden and cost to issuers and
TPAs to make appropriate changes to IT
systems and processes, to develop,
implement, and operate the Allowed
Amount File in order to meet the
requirements of the final rules. The
Departments estimate that each issuer or
TPA will require a Scrum Master 520
hours (at $105 per hour), a Technical
Architect/Sr. Developer 780 hours (at
$149 per hour), an Application
Developer, Senior 2,080 hours (at $143
per hour), a Business Analyst 520 hours
(at $120 per hour), and a DevOps
Engineer 260 hours (at $181 per hour)
to complete this task. The Departments
estimate the total one-time first year
burden for each issuer or TPA will be
approximately 4,160 hours, with an
equivalent associated cost of
approximately $577,720. For all 1,959
issuers and TPAs, the Departments
estimate the total one-time year one
burden will be 8,149,440 hours, with an
equivalent associated cost of
approximately $1,131,753,480.
TABLE 16A—ESTIMATED ONE-TIME YEAR ONE COST AND HOUR BURDEN PER ISSUER OR TPA FOR THE ALLOWED
AMOUNT FILE
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
Scrum Master ........................................................................................................................
Technical Architect/Sr. Developer .........................................................................................
Application Developer, Senior ...............................................................................................
Business Analyst ...................................................................................................................
DevOps Engineer ..................................................................................................................
520
780
2,080
520
260
$105.00
149.00
143.00
120.00
181.00
$54,600.00
116,220.00
297,440.00
62,400.00
47,060.00
Total per Respondent .....................................................................................................
4,160
..........................
577,720.00
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TABLE 16B—ESTIMATED ONE-TIME YEAR ONE COST AND HOUR BURDEN FOR ALL ISSUERS AND TPAS FOR THE
ALLOWED AMOUNT FILE
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
1,959
4,160
8,149,440
$1,131,753,480.00
In addition to the one-time year one
costs estimated in Tables 16A and 16B,
issuers and TPAs will incur additional
monthly burdens and costs in year two
to update the Allowed Amount File.
The Departments estimate that, in year
two, each issuer or TPA will require a
Scrum Master 9 hours (at $105 per
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hour), an Application Developer, Senior
22 hours (at $143 per hour), and a
DevOps Engineer 22 hour (at $181) to
make the required monthly Allowed
Amount File updates. The Departments
estimate that each issuer or TPA will
incur a monthly burden of 53 hours,
with an equivalent associated cost of
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approximately $8,073 to update the
Allowed Amount File. The Departments
estimate that each issuer or TPA will
need to update the Allowed Amount
File 12 times during a given year,
resulting in a year two annual burden of
approximately 636 hours, with an
equivalent associated cost of
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approximately $96,876. The
Departments estimate the total year two
burden for all 1,959 issuers and TPAs
will be 1,245,924 hours, with an
equivalent associated cost of
approximately $189,780,084. The
Departments consider this estimate to be
an upper-bound estimate and expect
ongoing Allowed Amount File update
costs to decline in succeeding years as
72287
issuers and TPAs gain efficiencies and
experience in updating and managing
the Allowed Amount File.
TABLE 17A—ESTIMATED YEAR TWO MONTHLY COST AND HOUR BURDEN PER ISSUER OR TPA FOR THE ALLOWED
AMOUNT FILE
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
Scrum Master ........................................................................................................................
Application Developer, Senior ...............................................................................................
DevOps Engineer ..................................................................................................................
9
22
22
$105.00
143.00
181.00
$945.00
3,146.00
3,982.00
Total per Respondent .....................................................................................................
53
..........................
8,073.00
TABLE 17B—ESTIMATED YEAR TWO COST AND HOUR BURDEN FOR ALL ISSUERS AND TPAS FOR THE ALLOWED AMOUNT
FILE
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
23,508
636
1,245,924
$189,780,084.00
In addition to the one-time year one,
monthly and total year two costs
estimated in Tables 16A, 16B, 17A and
17B, in subsequent years, issuers and
TPAs will incur additional ongoing
monthly burdens and costs to update
the required Allowed Amount File. The
Departments estimate that for each
issuer or TPA it will require a Scrum
Master 4 hours (at $105 per hour), and
an Application Developer, Senior 9
hours (at $143 per hour) to make the
required monthly Allowed Amount File
updates. The Departments estimate that
each issuer or TPA will incur a monthly
burden of 13 hours, with an equivalent
associated cost of approximately $1,707
to update the Allowed Amount File.
The Departments estimate that each
issuer or TPA will need to update the
Allowed Amount File 12 times during a
given year, resulting in an ongoing
annual burden of approximately 156
hours, with an equivalent associated
cost of approximately $20,484. The
Departments estimate the total burden
for all 1,959 issuers and TPAs will be
305,604 hours, with an equivalent
associated cost of approximately
$40,128,156. The Departments consider
this estimate to be an upper-bound
estimate and expect ongoing Allowed
Amount File update costs to decline in
succeeding years as issuers and TPAs
gain efficiencies and experience in
updating and managing the Allowed
Amount File.
TABLE 18A—ESTIMATED MONTHLY ONGOING COST AND HOUR BURDEN PER ISSUER OR TPA FOR THE ALLOWED AMOUNT
FILE
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
Scrum Master ........................................................................................................................
Application Developer, Senior ...............................................................................................
4
9
$105.00
143.00
$420.00
1,287.00
Total per Respondent .....................................................................................................
13
..........................
1,707.00
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TABLE 18B—ESTIMATED ANNUAL ONGOING COST AND HOUR BURDEN FOR ALL ISSUERS AND TPAS FOR THE ALLOWED
AMOUNT FILE
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
23,508
156
305,604
$40,128,156.00
The Departments estimate the onetime year one burden for all issuers and
TPAs will be 8,149,440 hours, with an
equivalent associated cost of
approximately $1,131,753,480 to
develop and build the Allowed Amount
File to meet the requirements of the
final rules. In year two, the Departments
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estimate the total annual burden of
1,245,924 hours to maintain and update
the Allowed Amount File, with an
equivalent associated cost of
approximately $189,780,084. In
subsequent years, the Departments
estimate the total annual burden to
maintain and update the Allowed
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Sfmt 4700
Amount File will be 305,604 hours,
with an annual equivalent associated
cost of approximately $40,128,156. The
Departments estimate the three-year
average annual total burden for all
issuers and TPAs will be 3,233,656
hours, with an average annual total
E:\FR\FM\12NOR3.SGM
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Federal Register / Vol. 85, No. 219 / Thursday, November 12, 2020 / Rules and Regulations
equivalent associated cost of
approximately $453,887,240.
TABLE 19—ESTIMATED THREE YEAR AVERAGE ANNUAL HOUR BURDEN AND COSTS FOR ALL ISSUERS AND TPAS TO
DEVELOP AND MAINTAIN THE ALLOWED AMOUNT FILE
Estimated
number of
issuers and
TPAs
Year
2021 ...........................................................
2022 ...........................................................
2023 ...........................................................
3 year Average ..........................................
Responses
1,959
1,959
1,959
1,959
The Departments sought comment for
this collection of information request
related to all aspects of the estimated
burdens and costs. Specifically, the
Departments sought comments related
to any technical or operational
difficulties associated with maintaining
current and up-to-date provider network
information or any out-of-network
allowed amounts for covered items and
services. The Departments also sought
comments related to the technical and
labor requirements or costs that may be
required to meet the requirements in the
final rules; specifically, any factors that
could minimize the frequency of
updates that issuers or TPAs would be
required to make to the Allowed
Amount File.
The Departments also solicited
comments for this collection of
information request related to all
aspects of the estimated burdens and
costs. Specifically, the Departments
sought comments related to any
technical or operational difficulties
associated with collecting data and
maintaining any out-of-network allowed
amounts for covered items and services,
including, any difficulties associated
with the adjudication of paid claims and
incorporating covered items or services
furnished by a particular out-of-network
provider during the 90-day time period
that begins 180 days prior to the
publication date of the Allowed Amount
File. The Departments also sought
comments related to the technical and
labor requirements or costs that may be
required to meet the requirements in the
proposed rules: Specifically, any factors
that could minimize the burdens and
Burden per
respondent
(hours)
1,959
23,508
23,508
16,325
Total annual
burden
(hours)
4,160
636
156
1,651
costs associated with updates that
issuers or TPAs would be required to
make to the Allowed Amount File.
As addressed in section II.C in this
preamble, the use of a HIPAA-compliant
clearinghouse is permitted, but not
required, in order to make the required
information public. Plans and issuers
are permitted to use HIPAA-compliant
clearinghouses to meet the disclosure
requirements and the Departments
anticipate they may do so if this method
is more efficient and cost-effective.
The Departments acknowledge that as
many as 95 percent of group health
plans and health insurance issuers may
already contract with claims
clearinghouses that currently collect
some or all of the information required
to be disclosed under the final rules and
might be able to meet the requirements
in the final rules easily, potentially
obviating the need for the plan, issuer,
or TPA to invest in IT system
development. The Departments assume
that these plans, issuers, and TPAs will
still incur burdens and costs, albeit
reduced, related to oversight and quality
assurance regarding any associated
clearinghouse activities. The
Departments sought comments on
existing efficiencies, such as the use of
clearinghouses that could be leveraged
by plans, issuers, and TPAs related to
the development and updating of the
required machine-readable files and
how many issuers, TPAs, or self-insured
plans may already contract with
clearinghouses that collect the
information required. Comments
received are discussed earlier in the Use
of Third Parties to Satisfy Public
8,149,440
1,245,924
305,604
3,233,656
Total estimated
labor cost
$1,131,753,480.00
189,780,084.00
40,128,156.00
453,887,240.00
Disclosure Requirements section of this
preamble.
For the Prescription Drug File, the
Departments estimate one-time first-year
burdens and costs to issuers and TPAs
to make appropriate changes to IT
systems and processes to develop,
implement, and operate the Prescription
Drug File in order to meet the
requirements in the final rules. The
Departments estimate that each issuer or
TPA will require a Project Manager/
Team Lead 260 hours (at $153 per hour),
a Scrum Master 260 hours (at $105 per
hour), an Application Developer, Senior
520 hours (at $143 per hour), a Business
Analyst 520 hours (at $120 per hour),
and a DevOps Engineer 260 hours (at
$181 per hour) to complete this task.
The total one-time first year burden for
each issuer or TPA is estimated to be
approximately 1,820 hours, with an
equivalent associated cost of
approximately $250,900. For all 1,959
issuers and TPAs, the Departments
estimate the total one-time first year
burden will be 3,565,380 hours, with an
associated estimated cost of
approximately $491,513,100. The
Departments emphasize that these are
upper bound estimates that are meant to
be sufficient to cover substantial,
complex activities that may be
necessary for some plans and issuers to
comply with the final rules due to the
manner in which their current systems
are designed. Such activities may
include such significant activity as the
design and implementation of databases
that will support the production of the
Prescription Drug File.
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TABLE 20A—ESTIMATED ONE-TIME YEAR ONE COST AND HOUR BURDEN PER ISSUER OR TPA FOR THE PRESCRIPTION
DRUG FILE
Burden hours
per respondent
Occupation
Project Manager/Team Lead .................................................................................................
Scrum Master ........................................................................................................................
Application Developer, Senior ...............................................................................................
Business Analyst ...................................................................................................................
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E:\FR\FM\12NOR3.SGM
Labor cost
per hour
260
260
520
520
12NOR3
$153.00
105.00
143.00
120.00
Total cost per
respondent
$39,780.00
27,300.00
74,360.00
62,400.00
Federal Register / Vol. 85, No. 219 / Thursday, November 12, 2020 / Rules and Regulations
72289
TABLE 20A—ESTIMATED ONE-TIME YEAR ONE COST AND HOUR BURDEN PER ISSUER OR TPA FOR THE PRESCRIPTION
DRUG FILE—Continued
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
DevOps Engineer ..................................................................................................................
260
181.00
47,060.00
Total per Respondent .....................................................................................................
1,820
..........................
250,900.00
TABLE 20B—ESTIMATED ONE-TIME YEAR ONE COST AND HOUR BURDEN FOR ALL ISSUERS AND TPAS FOR THE
PRESCRIPTION DRUG FILE
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
1,959
1,820
3,565,380
$491,513,100.00
In addition to the one-time year one
costs estimated in Tables 20A and 20B,
issuers and TPAs will incur additional
year two burdens and costs to update
the required Prescription Drug File
monthly. The Departments estimate that
for each month, each issuer or TPA will
require a Project Manager/Team Lead 22
hours (at $153 per hour), an Application
Developer, Senior 22 hours (at $143 per
hour), a Business Analyst 9 hours (at
$120 per hour) and a DevOps Engineer
22 hours (at $181 per hour) to make the
required updates and needed
adjustments to the Prescription Drug
File. The Departments estimate that
each issuer or TPA will incur a
monthly, year two, burden of 75 hours,
with an associated monthly cost of
approximately $11,574 to update the
Prescription Drug File. Each issuer or
TPA will need to update the
Prescription Drug File 12 times during
a given year, resulting in a year two
burden of 900 hours, with an associated
equivalent cost of approximately
$138,888. The Departments estimate the
total year two burden for all 1,959
issuers and TPAs will be 1,763,100
hours, with an associated equivalent
cost of approximately $272,081,592. The
Departments consider this estimate to be
an upper-bound estimate and expect
ongoing update costs to decline in
succeeding years as issuers and TPAs
gain efficiencies and experience in
updating and managing the Prescription
Drug File.
TABLE 21A—ESTIMATED MONTHLY YEAR TWO COST AND HOUR BURDEN PER ISSUER OR TPA FOR THE PRESCRIPTION
DRUG FILE
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
Project Manager/Team Lead .................................................................................................
Application Developer, Senior ...............................................................................................
Business Analyst ...................................................................................................................
DevOps Engineer ..................................................................................................................
22
22
9
22
$153.00
143.00
120.00
181.00
$3,366.00
3,146.00
1,080.00
3,982.00
Total per Respondent .....................................................................................................
75
..........................
11,574.00
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TABLE 21B—ESTIMATED YEAR TWO COST AND HOUR BURDEN FOR ALL ISSUERS AND TPAS FOR THE PRESCRIPTION
DRUG FILE
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
23,508
900
1,763,100
$272,081,592.00
In addition to the one-time year one
and monthly year two costs estimated in
Tables 20A, 20B, 21A and 21B, in
subsequent years, issuers and TPAs will
incur ongoing monthly burdens and
costs to update and maintain the
Prescription Drug File on a monthly
basis. The Departments estimate that
each issuer or TPA will require a Scrum
Master 9 hours (at $153 per hour) and
an Application Developer, Senior 22
hours (at $143 per hour) to make the
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required updates to the Prescription
Drug File. The Departments estimate
that each issuer or TPA will incur a
monthly burden of 31 hours, with an
associated cost of approximately $4,523,
to update the Prescription Drug File. An
issuer or TPA will need to update the
Prescription Drug File 12 times during
a given year, resulting in an ongoing
annual burden of 372 hours, with an
associated equivalent cost of
approximately $54,276. The
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Departments estimate the total annual
burden for all 1,959 issuers and TPAs
will be 728,748 hours, with an
associated equivalent cost of
approximately $106,326,680. The
Departments consider this estimate to be
an upper-bound estimate and expect
ongoing update costs to decline in
succeeding years as issuers and TPAs
gain efficiencies and experience in
updating and managing Prescription
Drug File.
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TABLE 22A—ESTIMATED MONTHLY ONGOING COST AND HOUR BURDEN PER ISSUER OR TPA FOR THE PRESCRIPTION
DRUG FILE
Burden hours
per respondent
Occupation
Labor cost
per hour
Total cost per
respondent
Scrum Master ........................................................................................................................
Application Developer, Senior ...............................................................................................
9
22
$153.00
143.00
$1,377.00
3,146.00
Total per Respondent .....................................................................................................
31
..........................
4,523.00
TABLE 22B—ESTIMATED ANNUAL ONGOING COST AND HOUR BURDEN FOR ALL ISSUERS AND TPAS FOR THE
PRESCRIPTION DRUG FILE
Number of
respondents
Number of
responses
Burden hours
per respondent
Total burden
hours
Total cost
1,959
23,508
372
728,748
$106,326,684.00
The Departments estimate the total
one-time year one burden for all issuers
and TPAs will be 3,565,380 hours, with
an associated equivalent cost of
approximately $491,513,100 to develop
and build the Prescription Drug File in
a machine-readable format. In year two,
the Departments estimate the burden
and costs to update and maintain the
Prescription Drug File, on a monthly
basis, for all issuers and TPAs to be
1,763,100 hours, with an associated
equivalent cost of approximately
$272,081,592. In subsequent years, the
Departments estimate the total annual
burden of 728,748 hours to maintain
and update the Prescription Drug File,
with an annual associated equivalent
cost of approximately $106,326,684. The
Departments estimate the three-year
average annual total burden, for all
issuers and TPAs, will be 2,019,076
hours with an average annual associated
equivalent total cost of $289,973,792.
TABLE 23—ESTIMATED THREE YEAR AVERAGE ANNUAL HOUR BURDEN AND COSTS FOR ALL ISSUERS AND TPAS TO
DEVELOP AND MAINTAIN THE PRESCRIPTION DRUG FILE
Estimated
number of
issuers and
TPAs
Year
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2021 .....................................................
2022 .....................................................
2023 .....................................................
3 year Average ....................................
1,959
1,959
1,959
1,959
Due to comments received in
response to the proposed rules, the
Departments have made changes to the
final rules and the ICR sections
discussed above. The Departments seek
comment regarding the changes
associated with these ICR sections. The
Departments also seek comment on the
use of the CALC database, as discussed
in section VI.A, to determine
occupational descriptions and hourly
wage rates. The Departments seek
comment on the revised costs and
burdens discussed in section VI.A.1 as
they relate to the required internetbased self-service tool. The Departments
also seek comment on model language
developed by the Departments, as
discussed in section II.B.1.g of this
preamble, to meet the requirements of
the final rule. The Departments also
seek comment on the revised costs and
burdens, as discussed in section VI.A.2,
related to the requirements for the
public disclosure of In-network Rate,
Allowed Amount, and Prescription Drug
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Responses
1,959
23,508
23,508
16,325
Burden per
respondent
(hours)
1,820
900
372
1,031
Files. Additionally, the Departments
seek comment on the data element
changes associated with those collection
instruments. For the In-network Rate
File, the Departments seek comment
regarding the data elements added to the
collection instrument; specifically,
addition of data elements including the
TIN, Place of service code, derived
amount, underlying fee schedule rates,
payment arrangement indicator, the use
of base negotiated rates (for certain
reimbursement models), and other data
elements discussed in section C.1.c of
this preamble. The Departments also
seek comment on the Allowed Amount
File regarding the addition of data
elements including the TIN, NPI, and
billed charges associated with allowed
amounts. The Departments seek
comment on all data elements discussed
in section C.1.c of this preamble as they
relate to the Prescription Drug File, as
well as the estimated costs and burdens
estimated above.
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Total annual
burden
(hours)
3,565,380
1,763,100
728,748
2,019,076
Total estimated
labor cost
$491,513,100.00
272,081,592.00
106,326,684.00
289,973,792.00
In association with amendments made
to the final rules, CMS is seeking OMB
approval for the information collection
requirements associated with OMB
control number 0938–1372 (CMS–
10715—Transparency in Coverage).
Comments will be solicited through a
60-day Federal Register notice, in
accordance with Section 3506(c)(2)(A)
of the Paperwork Reduction Act. Data
collection requirements associated with
the internet-based self-service tool, Innetwork Rate, Allowed Amount, and
Prescription Drug Files will not be
effective until OMB approval is sought.
The Department of Labor and the
Department of the Treasury will submit
their burden estimates upon approval.
2. ICRs Regarding Medical Loss Ratio
(45 CFR 158.221)
HHS is finalizing its proposal to
amend 45 CFR 158.221(b) to allow
health insurance issuers offering group
or individual health insurance coverage
to include in the MLR numerator
‘‘shared savings’’ payments made to
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Federal Register / Vol. 85, No. 219 / Thursday, November 12, 2020 / Rules and Regulations
enrollees as a result of the enrollee
choosing to obtain health care from a
lower-cost, higher-value provider. HHS
does not anticipate that implementing
this provision will require significant
changes to the MLR Annual Reporting
Form or will significantly change the
associated burden. The burden related
to this collection is currently approved
under OMB Control Number 0938–1164
(Exp. 10/31/2020); Medical Loss Ratio
Annual Reports, MLR Notices, and
Recordkeeping Requirements (CMS–
10418).
3. Summary of Annual Burden
Estimates for Requirements
TABLE 24—ESTIMATED THREE YEAR AVERAGE PROPOSED ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS
OMB
control
number
Regulation section(s)
§§ 54.9815–2715A2(b)(2)(i);
2590.715–2715A2(b)(2)(i); and
147.211(b)(2)(i).
§§ 54.9815–2715A2(b)(2)(ii);
2590.715–2715A2(b)(2)(ii); and
147.211(b)(2)(ii).
§§ 54.9815–2715A3(b)(i);
2590.715–2715A3(b)(i); and
147.212(b)(1)(i).
§§ 54.9815–2715A3(b)(1)(ii);
2590.715–2715A3(b)(1)(ii); and
147.212(b)(1)(ii).
§§ 54.9815–2715A3(b)(1)(iii);
2590.715–2715A3(b)(1)(iii); and
147.212(b)(1)(iii).
Total .......................................
Number of
respondents
Number of
responses
Burden per
response
(hours)
Total annual
burden
(hours)
Labor cost of
reporting
($)
Mailing cost
($)
Total cost
($)
0938–1372*
1,959
1,959
23,313
45,670,820
$6,388,837,830.32
$0
$6,388,837,830.32
0938–1372
1,306
84,926
11
21,231
849,256.00
39,065.78
888,321.78
0938–1372
1,959
16,325
3,199
6,266,188
848,390,660.00
0
848,390,660.00
0938–1372
1,959
16,325
1,651
3,233,656
453,887,240.00
0
453,887,240.00
0938–1372
1,959
16,325
1,031
2,019,076
289,973,792.00
0
289,973,792.00
....................
135,860
29,204
57,210,971
7,981,938,778.32
39,065.78
7,981,977,844.10
* High-end three year estimated values are represented in the table and used to determine the overall estimated 3-year average.
For PRA purposes, the Departments
are splitting the burden: CMS will
account for 50 percent of the associated
costs and burdens and the Departments
of Labor and the Department of the
Treasury will each account for 25
percent of the associated costs and
burdens. The burden for CMS will be
28,605,486 hours, with an equivalent
associated cost of approximately
$3,990,969,389 and a cost burden of
$19,533. For the Departments of Labor
and the Treasury, each Department will
account for a burden of 14,302,743
hours with an equivalent associated cost
of approximately $1,995,484,695 and a
cost burden of $9,766.
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B. Regulatory Flexibility Act
The Regulatory Flexibility Act, (5
U.S.C. 601, et seq.), requires agencies to
prepare a final regulatory flexibility
analysis to describe the impact of
proposed rules on small entities, unless
the head of the agency can certify that
the rule would not have a significant
economic impact on a substantial
number of small entities. The RFA
generally defines a ‘‘small entity’’ as (1)
a proprietary firm meeting the size
standards of the Small Business
Administration (SBA), (2) a not-forprofit organization that is not dominant
in its field, or (3) a small government
jurisdiction with a population of less
than 50,000. States and individuals are
not included in the definition of ‘‘small
entity.’’
HHS uses a change in revenues of
more than three to five percent as its
measure of significant economic impact
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on a substantial number of small
entities.
The final rules require that group
health plans and health insurance
issuers disclose to a participant,
beneficiary, or enrollee such
individual’s cost-sharing information for
covered items or services from a
particular provider or providers; to
make public in-network rates, including
amounts in underlying fee schedules,
negotiated rates, and derived amounts
for in-network providers; historical
allowed amounts paid to out-of-network
providers and billed charges for all
covered items and services; and
negotiated rates and historical net prices
for prescription drugs. The Departments
are of the view issuers generally exceed
the size thresholds for ‘‘small entities’’
established by the SBA, so the
Departments are not of the view that an
initial regulatory flexibility analysis is
required for such firms. ERISA-covered
plans are often small entities, however.
While the Departments are of the view
that these plans would rely on the larger
issuers or TPAs to comply with the final
rules, they would still experience
increased costs because the costs of
complying with these requirements will
likely be passed on to them. However,
as discussed in more detail later in this
section of this preamble, the
Departments are not of the view that the
additional costs meet the significant
impact requirement. In addition, while
the requirements of the final rules do
not apply to providers, providers may
experience a loss in revenue as a result
of the demands of price sensitive
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consumers and plans, and because
smaller issuers may be unwilling to
continue paying higher rates than larger
issuers for the same items and services.
The Departments are of the view that
issuers would be classified under the
North American Industry Classification
System code 524114 (Direct Health and
Medical Insurance Carriers). According
to SBA size standards, entities with
average annual receipts of $41.5 million
or less would be considered small
entities under North American Industry
Classification System codes. Issuers
could possibly be classified under code
621491 (HMO Medical Centers) and, if
this is the case, the SBA size standard
would be $35 million or less.294 The
Departments are of the view that few, if
any, insurance companies underwriting
comprehensive health insurance
policies (in contrast, for example, to
travel insurance policies or dental
discount policies) fall below these size
thresholds. Based on data from MLR
annual report submissions for the 2017
MLR reporting year, approximately 90
out of 500 issuers of health insurance
coverage nationwide had total premium
revenue of $41.5 million or less. 295 This
estimate likely overstates the actual
294 ‘‘Table of Small Business Size Standards
Matched to North American Industry Classification
System Codes.’’ United States Small Business
Administration. Available at: https://www.sba.gov/
sites/default/files/2019-08/SBA%20Table%20
of%20Size%20Standards_Effective
%20Aug%2019%2C%202019_Rev.pdf.
295 ‘‘Medical Loss Ratio Data and System
Resources.’’ CCIIO. Available at https://
www.cms.gov/CCIIO/Resources/Data-Resources/
mlr.
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Federal Register / Vol. 85, No. 219 / Thursday, November 12, 2020 / Rules and Regulations
number of small health insurance
issuers that may be affected, since over
72 percent of these small issuers belong
to larger holding groups, and most, if
not all, of these small issuers are likely
to have non-health lines of business that
will result in their revenues exceeding
$41.5 million. The Departments are of
the view that these same assumptions
also apply to the TPAs that would be
affected by the final rules. The
Departments do not expect any of these
90 potentially small entities to
experience a change in rebates under
the amendments to the MLR provisions
of the final rules in 45 CFR part 158.
The Departments acknowledge that it
may be likely that a number of small
entities might enter into contracts with
other entities in order to meet the
requirements in the final rules, perhaps
allowing for the development of
economies of scale. Due to the lack of
knowledge regarding what small entities
may decide to do in order to meet these
requirements and any costs they might
incur related to contracts, the
Departments sought comment on ways
that the final rules will impose
additional costs and burdens on small
entities and how many would be likely
to engage in contracts to meet the
requirements.
The Departments received a number
of comments related to the potential
additional costs, burdens, and other
effects the final rules could have on
small entities. These comments have
been noted and addressed in the RIA
and ICR sections titled Regarding
Requirements for Public Disclosure of
In-network Rates, Historical Allowed
Amount Data for Covered Items and
Services from Out-of-Network Providers
and Prescription Drug Pricing
Information; Requirements for
Disclosing Cost-sharing information to
Participant, Beneficiaries, or Enrollees;
and the Applicability Date section of
this preamble.
For purposes of the RFA, the DOL
continues to consider a small entity to
be an employee benefit plan with fewer
than 100 participants.296 Furthermore,
while some large employers may have
small plans, most small plans are
maintained by small employers.
Thus, the Departments are of the view
that assessing the impact of the final
rules on small plans is an appropriate
substitute for evaluating the effect on
small entities. The definition of small
entity considered appropriate for this
purpose differs, however, from a
296 The basis for this definition is found in section
104(a)(2) of ERISA, which permits the Secretary of
Labor to prescribe simplified annual reports for
pension plans that cover fewer than 100
participants.
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definition of small business that is
based on size standards promulgated by
the SBA (13 CFR 121.201) pursuant to
the Small Business Act (15 U.S.C. 631,
et seq.). Therefore, EBSA requested
comments on the appropriateness of the
size standard used in evaluating the
impact of the final rules on small
entities. Using the DOL definition of
small, about 2,160,743 of the
approximately 2,327,339 plans are small
entities. Using a threshold approach, if
the total costs of the final rules are
spread evenly across all 1,754 issuers,
205 TPAs, and 2,327,339 ERISA health
plans, without considering size, using
the three-year average costs, the perentity costs could be $3,426.77
($7,981,977,844.10/2,329,298). If those
costs are spread evenly across the
estimated 212.3 million beneficiaries,
participants, or enrollees 297 enrolled in
plans or issuers required to comply with
the requirements then the average cost
per covered individual would be $37.60
($7,981,977,844.102/212.3 million).
Neither the cost per entity nor the cost
per covered individual is a significant
impact. Further, the costs estimated in
section VI in this preamble may be
overstated as it is assumed that all of
issuers and TPAs will build the
internet-based self-service tool and the
machine-readable files, compile the
appropriate data, and perform the
required updates themselves rather than
using common third parties such as
clearinghouses, as discussed in section
II.C in this preamble. If private health
insurance transactions are processed
through clearinghouses, with at least the
fields required in the machine-readable
files, there could be an unaccounted for
source of savings, as clearinghouses may
already process much of the data that
issuers and TPAs would be required to
collect under the final rules.
In addition, section 1102(b) of the
SSA (42 U.S.C. 1302) requires the
Departments to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 604 of the
RFA. For purposes of section 1102(b) of
the SSA, the Departments define a small
rural hospital as a hospital that is
located outside of a metropolitan
statistical area and has fewer than 100
beds.
As noted and addressed in section
II.B.2.C in this preamble, commenters
expressed concerns that exposure of innetwork rates could have various
unintended consequences on the health
care industry, group health plans and
297 Id.
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health insurance issuers, and providers.
Also as discussed in the sections VI.A.2,
one commenter stated that the proposed
rules would create administrative
burdens for hospitals as hospitals would
be required to make massive
investments to provide the data required
under the final rules. The Departments
note that the final rules do not explicitly
apply to hospitals and do not agree that
hospitals will require massive
investments to comply with the final
rules, as opposed to the potential costs
they could incur in order to comply
with the Hospital Price Transparency
final rule. Furthermore, the Departments
recognize that while the requirements of
the final rules do not apply to providers,
including hospitals, some providers
may experience a loss in revenue as a
result of the demands of price sensitive
consumers. The Departments also
recognize that while the requirements in
the final rules may result in instances
where small rural hospitals face
additional costs and burdens due to
their size and the market dynamics in
their areas, the generally reduced
competition amongst rural hospitals,
due to the overall lower number of
hospitals in these areas, will provide
them more leverage when negotiating
with issuers. Nonetheless, some rural
hospitals may see their costs increase if
the lack of competition results in these
hospitals being unable to negotiate more
favorable terms with plans and issuers.
This dynamic could result in some
small rural hospitals seeing their
revenue decrease as reimbursement
rates decline and overall costs increase,
though rural hospitals could also see
reduced costs and burdens if they are
able to successfully negotiate more
favorable network contracts. Due to a
lack of information and overall
knowledge, the Departments are not
able to confidently estimate the effects
the final rules will have on small rural
hospitals; however, the Departments are
of the view that the final rules will not
have a significant impact on the
operations of a substantial number of
small rural hospitals.
Impact of Regulations on Small
Business—Department of the Treasury
Pursuant to section 7805(f) of the
Code, the proposed rules that preceded
the final rules were submitted to the
Chief Counsel for Advocacy of the SBA
for comment on their impact on small
businesses, and no comments were
received.
C. Unfunded Mandates
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated
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costs and benefits and take certain
actions before issuing a final rule that
includes any Federal mandate that may
result in expenditures in any one year
by a state, local, or tribal governments,
in the aggregate, or by the private sector,
of $100 million in 1995 dollars, updated
annually for inflation. In 2020, that
threshold is approximately $156
million.
State, local, or tribal governments may
incur costs to enforce some of the
requirements of the final rules. The final
rules include instructions for
disclosures that would affect private
sector firms (for example, issuers
offering health insurance coverage in
the individual and group markets, and
TPAs providing administrative services
to group health plans). The Departments
acknowledge that state governments
could incur costs associated with
enforcement of sections within the final
rules and, although the Departments
have not been able to quantify all costs,
the Departments expect the combined
impact on state, local, and tribal
governments to be below the threshold.
The costs incurred by the private sector
have been previously discussed in
Collection of Information Requirements
sections.
One commenter contended that due to
the requirement to make the machinereadable files publicly available, issuers
would also be required to post files with
complete negotiated payment amount
information, and that these files would
be very complex, with thousands of
procedure codes and many different
plans and networks offered by issuers.
The commenter further contended that
due to the complexity and size of the
files significant state resources would be
required to review these files in order to
ensure their accuracy, completeness,
and timeliness. They contended that
without funding states will be
challenged in maintaining effective
enforcement and urged the Departments
to consider providing grants to states to
cover the cost of enforcing any final
rules.
The Departments recognize that due
to size and complexity of the machinereadable files required some states will
incur increased burdens and costs to
review and ensure compliance with the
requirements in the final rules.
However, at this time, the Departments
do not have available funding to provide
grants to assist states in their efforts.
The Departments will take it under
consideration and evaluate the potential
necessity to provide grants to assist
states in their efforts should a
significant need arise. The Departments
expect that a number of states with the
requisite authority to enforce the
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provisions of the final rules may defer
enforcement to Federal regulators
because of lack of funds.
D. Federalism
Executive Order 13132 establishes
certain requirements that an agency
must meet when it issues a final rule
that imposes substantial direct costs on
state and local governments, preempts
state law, or otherwise has federalism
implications. Federal agencies
promulgating regulations that have
federalism implications must consult
with state and local officials and
describe the extent of their consultation
and the nature of the concerns of state
and local officials in this preamble to
the regulation.
In the Departments’ view, the final
rules may have federalism implications,
because they would have direct effects
on the states, the relationship between
national governments and states, and on
the distribution of power and
responsibilities among various levels of
government relating to the disclosure of
health insurance coverage information
to the public.
Under the final rules, all group health
plans and health insurance issuers,
including self-insured, non-Federal
governmental group health plans as
defined in section 2791 of the PHS Act,
will be required to develop an internetbased self-service tool to disclose to a
participant, beneficiary, or enrollee, the
consumer-specific estimated costsharing liability for covered items or
services from a particular provider and
also to provide this information by mail
upon request. The final rules also
require plans and issuers to disclose
provider in-network rates, historical
data on out-of-network allowed
amounts, and negotiated rates and
historical net prices for prescription
drugs through digital files in a machinereadable format posted publicly on an
internet website. Such Federal
standards developed under section
2715A of the PHS Act preempt any
related state standards that require
pricing information to be disclosed to
the participant, beneficiary, or enrollee,
or otherwise publicly disclosed, to the
extent the state disclosure requirements
would provide less information to the
consumer or the public than what is
required under the final rules.
The Departments are of the view that
the final rules may have federalism
implications based on the required
disclosure of pricing information, as the
Departments are aware of at least 28
states that have passed some form of
price-transparency legislation, such as
all-payer claims databases, consumerfacing price comparison tools, and the
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72293
right to shop programs.298 Under these
state provisions, state requirements vary
broadly in terms of the level of
disclosure required.299 Some states list
the price for each individual service,
whereas some states list the aggregate
costs across providers and over time to
measure the price associated with an
episode of illness. States also differ in
terms of the dissemination of the
information. For example, California
mandates that uninsured patients
receive estimated prices upon request.
In contrast, other states use websites or
software applications that allow
consumers to compare prices across
providers. Only seven states have
published the pricing information of
issuers on consumer-facing public
websites.300 Therefore, the final rules
may require a higher level of disclosure
by plans and issuers than some state
laws.
One commenter asked that the
Departments clarify their intentions
regarding Federal preemption with
respect to state laws that conflict with
the final rules. Congress passed PPACA
to improve the health insurance markets
on a nationwide basis. King. v. Burwell,
135 S. Ct. 2480, 2496 (2015). Under
section 1321(d) of PPACA and section
2724(a) of the PHS Act, nothing in these
regulations would preempt state law
unless such state law prevents the
application of the applicable Federal
requirement. Based on this legal
context, the Departments intend the
implementation of the rules to preempt
state law to the extent enforcement of
state law would prevent the application
of PPACA.301 To the extent the final
rules preempt state law, they do so
under well-settled law.
In general, through section 514,
ERISA supersedes state laws to the
extent that they relate to any covered
employee benefit plan, and preserves
state laws that regulate insurance,
banking, or securities. Furthermore, the
preemption provisions of section 731 of
ERISA and section 2724 of the PHS Act
298 ‘‘Transparency of Health Costs; State Actions.’’
National Conference of State Legislatures. March
2017. Available at: https://www.ncsl.org/research/
health/transparency-and-disclosure-healthcosts.aspx.
299 Mehrotra, A., Chernew, M., and Sinaiko, A.
‘‘Promise and Reality of Price Transparency.’’ 14 N.
Engl. J. Med. 378. April 5, 2018. Available at:
https://www.nejm.org/doi/full/10.1056/
NEJMhpr1715229.
300 Evans, M. ‘‘One State’s Effort to Publicize
Hospital Prices Brings Mixed Results.’’ Wall Street
Journal. June 26, 2019. Available at: https://
www.wsj.com/articles/one-states-effort-to-publicizehospital-prices-brings-mixed-results-11561555562.
301 See section 1321(d) of PPACA (‘‘Nothing in
this title shall be construed to preempt any State
law that does not prevent the application of the
provisions of this title.)
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Federal Register / Vol. 85, No. 219 / Thursday, November 12, 2020 / Rules and Regulations
(implemented in 29 CFR 2590.731(a)
and 45 CFR 146.143(a)) apply so that the
HIPAA requirements (including those of
PPACA) are not to be ‘‘construed to
supersede any provision of state law
which establishes, implements, or
continues in effect any standard or
requirement solely relating to issuers in
connection with group health insurance
coverage except to the extent that such
standard or requirement prevents the
application of a ‘requirement’ of a
federal standard.’’ The conference report
accompanying HIPAA indicates that
this preemption is intended to be the
‘‘narrowest’’ preemption of states laws
(See House Conf. Rep. No. 104–736, at
205, reprinted in 1996 U.S. Code Cong.
& Admin. News 2018). States may
therefore continue to apply state law
requirements to issuers except to the
extent that such requirements prevent
the application of PPACA requirements
that are the subject of this rulemaking.
Accordingly, states have significant
latitude to impose requirements on
issuers that are more restrictive than the
Federal law.
In compliance with the requirement
of Executive Order 13132 that agencies
examine closely any policies that may
have federalism implications or limit
the policy making discretion of the
states, the Departments have engaged in
efforts to consult with and work
cooperatively with affected states,
including participating in conference
calls with and attending conferences of
NAIC, and consulting with state
insurance officials on an individual
basis. The Departments intend to act in
a similar fashion in enforcing PPACA,
including the provisions of section
2715A of the PHS Act. While
developing the final rules, the
Departments attempted to balance the
states’ interests in regulating issuers
with Congress’ intent to provide an
improved level of price transparency to
the public in every state. By doing so,
it is the Departments’ view that they
have complied with the requirements of
Executive Order 13132.
Pursuant to the requirements set forth
in section 8(a) of Executive Order
13132, and by the signatures affixed to
the final rules, the Departments certify
that the Department of the Treasury,
Employee Benefits Security
Administration, and the CMS have
complied with the requirements of
Executive Order 13132 for the final
rules in a meaningful and timely
manner.
E. Congressional Review Act
The final rules are subject to the
Congressional Review Act provisions of
the Small Business Regulatory
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Enforcement Fairness Act of 1996 (5
U.S.C. 801, et seq.), which specifies that
before a rule can take effect, the Federal
agency promulgating the rule shall
submit to each House of the Congress
and to the Comptroller General a report
containing a copy of the rule along with
other specified information. Therefore,
the final rules have been transmitted to
the Congress and the Comptroller
General. Pursuant to the Congressional
Review Act, the Office of Information
and Regulatory Affairs designated the
final rules as ‘‘major rules’’ as that term
is defined in 5 U.S.C. 804(2), because it
is likely to result in an annual effect on
the economy of $100 million or more. In
accordance with the provisions of
Executive Order 12866, this regulation
was reviewed by the Office of
Management and Budget.
F. Reducing Regulation and Controlling
Regulatory Costs
Executive Order 13771, titled
Reducing Regulation and Controlling
Regulatory Costs, was issued on January
30, 2017. Section 2(a) of Executive
Order 13771 requires an agency, unless
prohibited by law, to identify at least
two existing regulations to be repealed
when the agency publicly proposes for
notice and comment, or otherwise
issues, a new regulation. In furtherance
of this requirement, section 2(c) of
Executive Order 13771 requires that the
new incremental costs associated with
new regulations shall, to the extent
permitted by law, be offset by the
elimination of existing costs associated
with at least two prior regulations.
The final rules are considered an
Executive Order 13771 regulatory
action. The Departments estimate that
these rules will generate $3,489.71
million in costs in 2021, $10,761.15
million in 2022, $6,569 million in 2023,
and annual costs of approximately
$2,330 million thereafter. Discounted at
7 percent relative to year 2016, over a
perpetual time horizon the annualized
value of these costs is $2,413.54 million.
Details on the estimated costs of the
final rules can be found in the preceding
analyses.
VII. Statutory Authority
The Department of the Treasury
regulations are adopted pursuant to the
authority contained in sections 7805
and 9833 of the Code.
The Department of Labor regulations
are adopted pursuant to the authority
contained in 29 U.S.C. 1135, 1185d, and
1191c; and Secretary of Labor’s Order 1–
2011, 77 FR 1088 (Jan. 9, 2012).
The Department of Health and Human
Services regulations are adopted
pursuant to the authority contained in
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sections 1311 of PPACA, 2701 through
2763, 2791, 2792, and 2794 of the PHS
Act (42 U.S.C. 300gg through 300gg–63,
300gg–91, 300gg–92, and 300gg–94), as
amended.
List of Subjects
26 CFR Part 54
Excise taxes, Health care, Health
insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 2590
Continuation coverage, Disclosure,
Employee benefit plans, Group health
plans, Health care, Health insurance,
Medical child support, Reporting and
recordkeeping requirements.
45 CFR Part 147
Health care, Health insurance,
Reporting and recordkeeping
requirements, State regulation of health
insurance.
45 CFR Part 158
Administrative practice and
procedure, Claims, Health care, Health
insurance, Penalties, Reporting and
recordkeeping requirements.
Sunita Lough,
Deputy Commissioner for Services and
Enforcement, Internal Revenue Service.
Approved: October 28, 2020.
David J. Kautter,
Assistant Secretary of the Treasury (Tax
Policy).
Signed at Washington DC, this 30th day of
October, 2020.
Jeanne Klinefelter Wilson,
Acting Assistant Secretary, Employee Benefits
Security Administration, Department of
Labor.
Dated: October 8, 2020.
Seema Verma,
Administrator, Centers for Medicare &
Medicaid Services.
Dated: October 20, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human
Services.
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Amendments to the Regulations
For the reasons set forth in this
preamble, the Department of the
Treasury amends 26 CFR part 54 as set
forth below:
PART 54—PENSION EXCISE TAXES
Par. 1. The authority citation for part
54 is amended by adding an entry for
§§ 54.9815–2715A1, 54.9815–2715A2,
and 54.9815–2715A3 in numerical order
to read in part as follows:
■
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Authority: 26 U.S.C. 7805, unless
otherwise noted.
*
*
*
*
*
Sections 54.9815–2715A1, 54.9815–
2715A2, and 54.9815–2715A3 are also issued
under 26 U.S.C. 9833;
*
*
*
*
*
Par. 2. Sections 54.9815–2715A1,
54.9815–2715A2, and 54.9815–2715A3
are added to read as follows:
■
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§ 54.9815–2715A1 Transparency in
coverage—definitions.
(a) Scope and definitions—(1) Scope.
This section sets forth definitions for the
price transparency requirements for
group health plans and health insurance
issuers offering group health insurance
coverage established in this section and
§§ 54.9815–2715A2 and 54.9815–
2715A3.
(2) Definitions. For purposes of this
section and §§ 54.9815–2715A2 and
54.9815–2715A3, the following
definitions apply:
(i) Accumulated amounts means:
(A) The amount of financial
responsibility a participant or
beneficiary has incurred at the time a
request for cost-sharing information is
made, with respect to a deductible or
out-of-pocket limit. If an individual is
enrolled in other than self-only
coverage, these accumulated amounts
shall include the financial responsibility
a participant or beneficiary has incurred
toward meeting his or her individual
deductible or out-of-pocket limit, as
well as the amount of financial
responsibility that all the individuals
enrolled under the plan or coverage
have incurred, in aggregate, toward
meeting the other than self-only
deductible or out-of-pocket limit, as
applicable. Accumulated amounts
include any expense that counts toward
a deductible or out-of-pocket limit (such
as a copayment or coinsurance), but
exclude any expense that does not count
toward a deductible or out-of-pocket
limit (such as any premium payment,
out-of-pocket expense for out-ofnetwork services, or amount for items or
services not covered under the group
health plan or health insurance
coverage); and
(B) To the extent a group health plan
or health insurance issuer imposes a
cumulative treatment limitation on a
particular covered item or service (such
as a limit on the number of items, days,
units, visits, or hours covered in a
defined time period) independent of
individual medical necessity
determinations, the amount that has
accrued toward the limit on the item or
service (such as the number of items,
days, units, visits, or hours the
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participant or beneficiary, has used
within that time period).
(ii) Beneficiary has the meaning given
the term under section 3(8) of the
Employee Retirement Income Security
Act of 1974 (ERISA).
(iii) Billed charge means the total
charges for an item or service billed to
a group health plan or health insurance
issuer by a provider.
(iv) Billing code means the code used
by a group health plan or health
insurance issuer or provider to identify
health care items or services for
purposes of billing, adjudicating, and
paying claims for a covered item or
service, including the Current
Procedural Terminology (CPT) code,
Healthcare Common Procedure Coding
System (HCPCS) code, DiagnosisRelated Group (DRG) code, National
Drug Code (NDC), or other common
payer identifier.
(v) Bundled payment arrangement
means a payment model under which a
provider is paid a single payment for all
covered items and services provided to
a participant or beneficiary for a specific
treatment or procedure.
(vi) Copayment assistance means the
financial assistance a participant or
beneficiary receives from a prescription
drug or medical supply manufacturer
towards the purchase of a covered item
or service.
(vii) Cost-sharing liability means the
amount a participant or beneficiary is
responsible for paying for a covered
item or service under the terms of the
group health plan or health insurance
coverage. Cost-sharing liability generally
includes deductibles, coinsurance, and
copayments, but does not include
premiums, balance billing amounts by
out-of-network providers, or the cost of
items or services that are not covered
under a group health plan or health
insurance coverage.
(viii) Cost-sharing information means
information related to any expenditure
required by or on behalf of a participant
or beneficiary with respect to health
care benefits that are relevant to a
determination of the participant’s or
beneficiary’s cost-sharing liability for a
particular covered item or service.
(ix) Covered items or services means
those items or services, including
prescription drugs, the costs for which
are payable, in whole or in part, under
the terms of a group health plan or
health insurance coverage.
(x) Derived amount means the price
that a group health plan or health
insurance issuer assigns to an item or
service for the purpose of internal
accounting, reconciliation with
providers, or submitting data in
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72295
accordance with the requirements of 45
CFR 153.710(c).
(xi) Historical net price means the
retrospective average amount a group
health plan or health insurance issuer
paid for a prescription drug, inclusive of
any reasonably allocated rebates,
discounts, chargebacks, fees, and any
additional price concessions received by
the plan or issuer with respect to the
prescription drug. The allocation shall
be determined by dollar value for nonproduct specific and product-specific
rebates, discounts, chargebacks, fees,
and other price concessions to the
extent that the total amount of any such
price concession is known to the group
health plan or health insurance issuer at
the time of publication of the historical
net price in a machine-readable file in
accordance with § 54.9815–2715A3.
However, to the extent that the total
amount of any non-product specific and
product-specific rebates, discounts,
chargebacks, fees, or other price
concessions is not known to the group
health plan or health insurance issuer at
the time of file publication, then the
plan or issuer shall allocate such
rebates, discounts, chargebacks, fees,
and other price concessions by using a
good faith, reasonable estimate of the
average price concessions based on the
rebates, discounts, chargebacks, fees,
and other price concessions received
over a time period prior to the current
reporting period and of equal duration
to the current reporting period, as
determined under § 54.9815–
2715A3(b)(1)(iii)(D)(3).
(xii) In-network provider means any
provider of any item or service with
which a group health plan or health
insurance issuer, or a third party for the
plan or issuer, has a contract setting
forth the terms and conditions on which
a relevant item or service is provided to
a participant or beneficiary.
(xiii) Items or services means all
encounters, procedures, medical tests,
supplies, prescription drugs, durable
medical equipment, and fees (including
facility fees), provided or assessed in
connection with the provision of health
care.
(xiv) Machine-readable file means a
digital representation of data or
information in a file that can be
imported or read by a computer system
for further processing without human
intervention, while ensuring no
semantic meaning is lost.
(xv) National Drug Code means the
unique 10- or 11-digit 3-segment
number assigned by the Food and Drug
Administration, which provides a
universal product identifier for drugs in
the United States.
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Federal Register / Vol. 85, No. 219 / Thursday, November 12, 2020 / Rules and Regulations
(xvi) Negotiated rate means the
amount a group health plan or health
insurance issuer has contractually
agreed to pay an in-network provider,
including an in-network pharmacy or
other prescription drug dispenser, for
covered items and services, whether
directly or indirectly, including through
a third-party administrator or pharmacy
benefit manager.
(xvii) Out-of-network allowed amount
means the maximum amount a group
health plan or health insurance issuer
will pay for a covered item or service
furnished by an out-of-network
provider.
(xviii) Out-of-network provider means
a provider of any item or service that
does not have a contract under a
participant’s or beneficiary’s group
health plan or health insurance coverage
to provide items or services.
(xix) Out-of-pocket limit means the
maximum amount that a participant or
beneficiary is required to pay during a
coverage period for his or her share of
the costs of covered items and services
under his or her group health plan or
health insurance coverage, including for
self-only and other than self-only
coverage, as applicable.
(xx) Plain language means written
and presented in a manner calculated to
be understood by the average
participant or beneficiary.
(xxi) Prerequisite means concurrent
review, prior authorization, and steptherapy or fail-first protocols related to
covered items and services that must be
satisfied before a group health plan or
health insurance issuer will cover the
item or service. The term prerequisite
does not include medical necessity
determinations generally or other forms
of medical management techniques.
(xxii) Underlying fee schedule rate
means the rate for a covered item or
service from a particular in-network
provider, or providers that a group
health plan or health insurance issuer
uses to determine a participant’s or
beneficiary’s cost-sharing liability for
the item or service, when that rate is
different from the negotiated rate or
derived amount.
(b) [Reserved]
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§ 54.9815–2715A2 Transparency in
coverage—required disclosures to
participants and beneficiaries.
(a) Scope and definitions—(1) Scope.
This section establishes price
transparency requirements for group
health plans and health insurance
issuers offering group health insurance
coverage for the timely disclosure of
information about costs related to
covered items and services under a
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group plan or health insurance
coverage.
(2) Definitions. For purposes of this
section, the definitions in § 54.9815–
2715A1 apply.
(b) Required disclosures to
participants and beneficiaries. At the
request of a participant or beneficiary
who is enrolled in a group health plan,
the plan must provide to the participant
or beneficiary the information required
under paragraph (b)(1) of this section, in
accordance with the method and format
requirements set forth in paragraph
(b)(2) of this section.
(1) Required cost-sharing information.
The information required under this
paragraph (b)(1) is the following costsharing information, which is accurate
at the time the request is made, with
respect to a participant’s or beneficiary’s
cost-sharing liability for covered items
and services:
(i) An estimate of the participant’s or
beneficiary’s cost-sharing liability for a
requested covered item or service
furnished by a provider or providers
that is calculated based on the
information described in paragraphs
(b)(1)(ii) through (iv) of this section.
(A) If the request for cost-sharing
information relates to items and services
that are provided within a bundled
payment arrangement, and the bundled
payment arrangement includes items or
services that have a separate costsharing liability, the group health plan
or health insurance issuer must provide
estimates of the cost-sharing liability for
the requested covered item or service, as
well as an estimate of the cost-sharing
liability for each of the items and
services in the bundled payment
arrangement that have separate costsharing liabilities. While group health
plans and health insurance issuers are
not required to provide estimates of
cost-sharing liability for a bundled
payment arrangement where the costsharing is imposed separately for each
item and service included in the
bundled payment arrangement, nothing
prohibits plans or issuers from
providing estimates for multiple items
and services in situations where such
estimates could be relevant to
participants or beneficiaries, as long as
the plan or issuer also discloses
information about the relevant items or
services individually, as required in
paragraph (b)(1)(v) of this section.
(B) For requested items and services
that are recommended preventive
services under section 2713 of the
Public Health Service Act (PHS Act), if
the group health plan or health
insurance issuer cannot determine
whether the request is for preventive or
non-preventive purposes, the plan or
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issuer must display the cost-sharing
liability that applies for non-preventive
purposes. As an alternative, a group
health plan or health insurance issuer
may allow a participant or beneficiary to
request cost-sharing information for the
specific preventive or non-preventive
item or service by including terms such
as ‘‘preventive’’, ‘‘non-preventive’’ or
‘‘diagnostic’’ as a means to request the
most accurate cost-sharing information.
(ii) Accumulated amounts.
(iii) In-network rate, comprised of the
following elements, as applicable to the
group health plan’s or health insurance
issuer’s payment model:
(A) Negotiated rate, reflected as a
dollar amount, for an in-network
provider or providers for the requested
covered item or service; this rate must
be disclosed even if it is not the rate the
plan or issuer uses to calculate costsharing liability; and
(B) Underlying fee schedule rate,
reflected as a dollar amount, for the
requested covered item or service, to the
extent that it is different from the
negotiated rate.
(iv) Out-of-network allowed amount
or any other rate that provides a more
accurate estimate of an amount a group
health plan or health insurance issuer
will pay for the requested covered item
or service, reflected as a dollar amount,
if the request for cost-sharing
information is for a covered item or
service furnished by an out-of-network
provider; provided, however, that in
circumstances in which a plan or issuer
reimburses an out-of-network provider a
percentage of the billed charge for a
covered item or service, the out-ofnetwork allowed amount will be that
percentage.
(v) If a participant or beneficiary
requests information for an item or
service subject to a bundled payment
arrangement, a list of the items and
services included in the bundled
payment arrangement for which costsharing information is being disclosed.
(vi) If applicable, notification that
coverage of a specific item or service is
subject to a prerequisite.
(vii) A notice that includes the
following information in plain language:
(A) A statement that out-of-network
providers may bill participants or
beneficiaries for the difference between
a provider’s billed charges and the sum
of the amount collected from the group
health plan or health insurance issuer
and from the participant or beneficiary
in the form of a copayment or
coinsurance amount (the difference
referred to as balance billing), and that
the cost-sharing information provided
pursuant to this paragraph (b)(1) does
not account for these potential
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additional amounts. This statement is
only required if balance billing is
permitted under state law;
(B) A statement that the actual charges
for a participant’s or beneficiary’s
covered item or service may be different
from an estimate of cost-sharing liability
provided pursuant to paragraph (b)(1)(i)
of this section, depending on the actual
items or services the participant or
beneficiary receives at the point of care;
(C) A statement that the estimate of
cost-sharing liability for a covered item
or service is not a guarantee that
benefits will be provided for that item
or service;
(D) A statement disclosing whether
the plan counts copayment assistance
and other third-party payments in the
calculation of the participant’s or
beneficiary’s deductible and out-ofpocket maximum;
(E) For items and services that are
recommended preventive services under
section 2713 of the PHS Act, a statement
that an in-network item or service may
not be subject to cost-sharing if it is
billed as a preventive service if the
group health plan or health insurance
issuer cannot determine whether the
request is for a preventive or nonpreventive item or service; and
(F) Any additional information,
including other disclaimers, that the
group health plan or health insurance
issuer determines is appropriate,
provided the additional information
does not conflict with the information
required to be provided by this
paragraph (b)(1).
(2) Required methods and formats for
disclosing information to participants
and beneficiaries. The methods and
formats for the disclosure required
under this paragraph (b) are as follows:
(i) Internet-based self-service tool.
Information provided under this
paragraph (b) must be made available in
plain language, without subscription or
other fee, through a self-service tool on
an internet website that provides realtime responses based on cost-sharing
information that is accurate at the time
of the request. Group health plans and
health insurance issuers must ensure
that the self-service tool allows users to:
(A) Search for cost-sharing
information for a covered item or
service provided by a specific innetwork provider or by all in-network
providers by inputting:
(1) A billing code (such as CPT code
87804) or a descriptive term (such as
‘‘rapid flu test’’), at the option of the
user;
(2) The name of the in-network
provider, if the user seeks cost-sharing
information with respect to a specific
in-network provider; and
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(3) Other factors utilized by the plan
or issuer that are relevant for
determining the applicable cost-sharing
information (such as location of service,
facility name, or dosage).
(B) Search for an out-of-network
allowed amount, percentage of billed
charges, or other rate that provides a
reasonably accurate estimate of the
amount a group health plan or health
insurance issuer will pay for a covered
item or service provided by out-ofnetwork providers by inputting:
(1) A billing code or descriptive term,
at the option of the user; and
(2) Other factors utilized by the plan
or issuer that are relevant for
determining the applicable out-ofnetwork allowed amount or other rate
(such as the location in which the
covered item or service will be sought
or provided).
(C) Refine and reorder search results
based on geographic proximity of innetwork providers, and the amount of
the participant’s or beneficiary’s
estimated cost-sharing liability for the
covered item or service, to the extent the
search for cost-sharing information for
covered items or services returns
multiple results.
(ii) Paper method. Information
provided under this paragraph (b) must
be made available in plain language,
without a fee, in paper form at the
request of the participant or beneficiary.
In responding to such a request, the
group health plan or health insurance
issuer may limit the number of
providers with respect to which costsharing information for covered items
and services is provided to no fewer
than 20 providers per request. The
group health plan or health insurance
issuer is required to:
(A) Disclose the applicable providerper-request limit to the participant or
beneficiary;
(B) Provide the cost-sharing
information in paper form pursuant to
the individual’s request, in accordance
with the requirements in paragraphs
(b)(2)(i)(A) through (C) of this section;
and
(C) Mail the cost-sharing information
in paper form no later than 2 business
days after an individual’s request is
received.
(D) To the extent participants or
beneficiaries request disclosure other
than by paper (for example, by phone or
email), plans and issuers may provide
the disclosure through another means,
provided the participant or beneficiary
agrees that disclosure through such
means is sufficient to satisfy the request
and the request is fulfilled at least as
rapidly as required for the paper
method.
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72297
(3) Special rule to prevent
unnecessary duplication—(i) Special
rule for insured group health plans. To
the extent coverage under a group
health plan consists of group health
insurance coverage, the plan satisfies
the requirements of this paragraph (b) if
the plan requires the health insurance
issuer offering the coverage to provide
the information required by this
paragraph (b) in compliance with this
section pursuant to a written agreement.
Accordingly, if a health insurance issuer
and a plan sponsor enter into a written
agreement under which the issuer
agrees to provide the information
required under this paragraph (b) in
compliance with this section, and the
issuer fails to do so, then the issuer, but
not the plan, violates the transparency
disclosure requirements of this
paragraph (b).
(ii) Other contractual arrangements. A
group health plan or health insurance
issuer may satisfy the requirements
under this paragraph (b) by entering into
a written agreement under which
another party (such as a pharmacy
benefit manager or other third-party)
provides the information required by
this paragraph (b) in compliance with
this section. Notwithstanding the
preceding sentence, if a group health
plan or health insurance issuer chooses
to enter into such an agreement and the
party with which it contracts fails to
provide the information in compliance
with this paragraph (b), the plan or
issuer violates the transparency
disclosure requirements of this
paragraph (b).
(c) Applicability. (1) The provisions of
this section apply for plan years
beginning on or after January 1, 2023
with respect to the 500 items and
services to be posted on a publicly
available website, and with respect to
all covered items and services, for plan
years beginning on or after January 1,
2024.
(2) As provided under § 54.9815–
1251, this section does not apply to
grandfathered health plans. This section
also does not apply to health
reimbursement arrangements or other
account-based group health plans as
defined in § 54.9815–2711(d)(6) or
short-term, limited-duration insurance
as defined in § 54.9801–2.
(3) Nothing in this section alters or
otherwise affects a group health plan’s
or health insurance issuer’s duty to
comply with requirements under other
applicable state or Federal laws,
including those governing the
accessibility, privacy, or security of
information required to be disclosed
under this section, or those governing
the ability of properly authorized
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representatives to access participant or
beneficiary information held by plans
and issuers.
(4) A group health plan or health
insurance issuer will not fail to comply
with this section solely because it,
acting in good faith and with reasonable
diligence, makes an error or omission in
a disclosure required under paragraph
(b) of this section, provided that the
plan or issuer corrects the information
as soon as practicable.
(5) A group health plan or health
insurance issuer will not fail to comply
with this section solely because, despite
acting in good faith and with reasonable
diligence, its internet website is
temporarily inaccessible, provided that
the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this
section requires a group health plan or
health insurance issuer to obtain
information from any other entity, the
plan or issuer will not fail to comply
with this section because it relied in
good faith on information from the other
entity, unless the plan or issuer knows,
or reasonably should have known, that
the information is incomplete or
inaccurate.
(d) Severability. Any provision of this
section held to be invalid or
unenforceable by its terms, or as applied
to any person or circumstance, or stayed
pending further agency action, shall be
severable from this section and shall not
affect the remainder thereof or the
application of the provision to persons
not similarly situated or to dissimilar
circumstances.
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§ 54.9815–2715A3 Transparency in
coverage—requirements for public
disclosure.
(a) Scope and definitions—(1) Scope.
This section establishes price
transparency requirements for group
health plans and health insurance
issuers offering group health insurance
coverage for the timely disclosure of
information about costs related to
covered items and services under a
group plan or health insurance
coverage.
(2) Definitions. For purposes of this
section, the definitions in § 54.9815–
2715A1 apply.
(b) Requirements for public disclosure
of in-network provider rates for covered
items and services, out-of-network
allowed amounts and billed charges for
covered items and services, and
negotiated rates and historical net
prices for covered prescription drugs. A
group health plan or health insurance
issuer must make available on an
internet website the information
required under paragraph (b)(1) of this
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section in three machine-readable files,
in accordance with the method and
format requirements described in
paragraph (b)(2) of this section, and that
are updated as required under
paragraph (b)(3) of this section.
(1) Required information. Machinereadable files required under this
paragraph (b) that are made available to
the public by a group health plan or
health insurance issuer must include:
(i) An in-network rate machinereadable file that includes the required
information under this paragraph
(b)(1)(i) for all covered items and
services, except for prescription drugs
that are subject to a fee-for-service
reimbursement arrangement, which
must be reported in the prescription
drug machine-readable file pursuant to
paragraph (b)(1)(iii) of this section. The
in-network rate machine-readable file
must include:
(A) For each coverage option offered
by a group health plan or health
insurance issuer, the name and the 14digit Health Insurance Oversight System
(HIOS) identifier, or, if the 14-digit
HIOS identifier is not available, the 5digit HIOS identifier, or if no HIOS
identifier is available, the Employer
Identification Number (EIN);
(B) A billing code, which in the case
of prescription drugs must be an NDC,
and a plain language description for
each billing code for each covered item
or service under each coverage option
offered by a plan or issuer; and
(C) All applicable rates, which may
include one or more of the following:
negotiated rates, underlying fee
schedule rates, or derived amounts. If a
group health plan or health insurance
issuer does not use negotiated rates for
provider reimbursement, then the plan
or issuer should disclose derived
amounts to the extent these amounts are
already calculated in the normal course
of business. If the group health plan or
health insurance issuer uses underlying
fee schedule rates for calculating cost
sharing, then the plan or issuer should
include the underlying fee schedule
rates in addition to the negotiated rate
or derived amount. Applicable rates,
including for both individual items and
services and items and services in a
bundled payment arrangement, must be:
(1) Reflected as dollar amounts, with
respect to each covered item or service
that is furnished by an in-network
provider. If the negotiated rate is subject
to change based upon participant or
beneficiary-specific characteristics,
these dollar amounts should be reflected
as the base negotiated rate applicable to
the item or service prior to adjustments
for participant or beneficiary-specific
characteristics;
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(2) Associated with the National
Provider Identifier (NPI), Tax
Identification Number (TIN), and Place
of Service Code for each in-network
provider;
(3) Associated with the last date of the
contract term or expiration date for each
provider-specific applicable rate that
applies to each covered item or service;
and
(4) Indicated with a notation where a
reimbursement arrangement other than
a standard fee-for-service model (such
as capitation or a bundled payment
arrangement) applies.
(ii) An out-of-network allowed
amount machine-readable file,
including:
(A) For each coverage option offered
by a group health plan or health
insurance issuer, the name and the 14digit HIOS identifier, or, if the 14-digit
HIOS identifier is not available, the 5digit HIOS identifier, or, if no HIOS
identifier is available, the EIN;
(B) A billing code, which in the case
of prescription drugs must be an NDC,
and a plain language description for
each billing code for each covered item
or service under each coverage option
offered by a plan or issuer; and
(C) Unique out-of-network allowed
amounts and billed charges with respect
to covered items or services, furnished
by out-of-network providers during the
90-day time period that begins 180 days
prior to the publication date of the
machine-readable file (except that a
group health plan or health insurance
issuer must omit such data in relation
to a particular item or service and
provider when compliance with this
paragraph (b)(1)(ii)(C) would require the
plan or issuer to report payment of outof-network allowed amounts in
connection with fewer than 20 different
claims for payments under a single plan
or coverage). Consistent with paragraph
(c)(3) of this section, nothing in this
paragraph (b)(1)(ii)(C) requires the
disclosure of information that would
violate any applicable health
information privacy law. Each unique
out-of-network allowed amount must
be:
(1) Reflected as a dollar amount, with
respect to each covered item or service
that is furnished by an out-of-network
provider; and
(2) Associated with the NPI, TIN, and
Place of Service Code for each out-ofnetwork provider.
(iii) A prescription drug machinereadable file, including:
(A) For each coverage option offered
by a group health plan or health
insurance issuer, the name and the 14digit HIOS identifier, or, if the 14-digit
HIOS identifier is not available, the 5-
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digit HIOS identifier, or, if no HIOS
identifier is available, the EIN;
(B) The NDC and the proprietary and
nonproprietary name assigned to the
NDC by the Food and Drug
Administration (FDA) for each covered
item or service that is a prescription
drug under each coverage option offered
by a plan or issuer;
(C) The negotiated rates which must
be:
(1) Reflected as a dollar amount, with
respect to each NDC that is furnished by
an in-network provider, including an innetwork pharmacy or other prescription
drug dispenser;
(2) Associated with the NPI, TIN, and
Place of Service Code for each innetwork provider, including each innetwork pharmacy or other prescription
drug dispenser; and
(3) Associated with the last date of the
contract term for each provider-specific
negotiated rate that applies to each
NDC; and
(D) Historical net prices that are:
(1) Reflected as a dollar amount, with
respect to each NDC that is furnished by
an in-network provider, including an innetwork pharmacy or other prescription
drug dispenser;
(2) Associated with the NPI, TIN, and
Place of Service Code for each innetwork provider, including each innetwork pharmacy or other prescription
drug dispenser; and
(3) Associated with the 90-day time
period that begins 180 days prior to the
publication date of the machinereadable file for each provider-specific
historical net price that applies to each
NDC (except that a group health plan or
health insurance issuer must omit such
data in relation to a particular NDC and
provider when compliance with this
paragraph (b)(1)(iii)(D) would require
the plan or issuer to report payment of
historical net prices calculated using
fewer than 20 different claims for
payment). Consistent with paragraph
(c)(3) of this section, nothing in this
paragraph (b)(1)(iii)(D) requires the
disclosure of information that would
violate any applicable health
information privacy law.
(2) Required method and format for
disclosing information to the public.
The machine-readable files described in
this paragraph (b) must be available in
a form and manner as specified in
guidance issued by the Department of
the Treasury, the Department of Labor,
and the Department of Health and
Human Services. The machine-readable
files must be publicly available and
accessible to any person free of charge
and without conditions, such as
establishment of a user account,
password, or other credentials, or
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submission of personally identifiable
information to access the file.
(3) Timing. A group health plan or
health insurance issuer must update the
machine-readable files and information
required by this paragraph (b) monthly.
The group health plan or health
insurance issuer must clearly indicate
the date that the files were most recently
updated.
(4) Special rules to prevent
unnecessary duplication—(i) Special
rule for insured group health plans. To
the extent coverage under a group
health plan consists of group health
insurance coverage, the plan satisfies
the requirements of this paragraph (b) if
the plan requires the health insurance
issuer offering the coverage to provide
the information pursuant to a written
agreement. Accordingly, if a health
insurance issuer and a group health
plan sponsor enter into a written
agreement under which the issuer
agrees to provide the information
required under this paragraph (b) in
compliance with this section, and the
issuer fails to do so, then the issuer, but
not the plan, violates the transparency
disclosure requirements of this
paragraph (b).
(ii) Other contractual arrangements. A
group health plan or health insurance
issuer may satisfy the requirements
under this paragraph (b) by entering into
a written agreement under which
another party (such as a third-party
administrator or health care claims
clearinghouse) will provide the
information required by this paragraph
(b) in compliance with this section.
Notwithstanding the preceding
sentence, if a group health plan or
health insurance issuer chooses to enter
into such an agreement and the party
with which it contracts fails to provide
the information in compliance with this
paragraph (b), the plan or issuer violates
the transparency disclosure
requirements of this paragraph (b).
(iii) Aggregation permitted for out-ofnetwork allowed amounts. Nothing in
this section prohibits a group health
plan or health insurance issuer from
satisfying the disclosure requirement
described in paragraph (b)(1)(ii) of this
section by disclosing out-of-network
allowed amounts made available by, or
otherwise obtained from, an issuer, a
service provider, or other party with
which the plan or issuer has entered
into a written agreement to provide the
information, provided the minimum
claim threshold described in paragraph
(b)(1)(ii)(C) of this section is
independently met for each item or
service and for each plan or coverage
included in an aggregated Allowed
Amount File. Under such
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72299
circumstances, health insurance issuers,
service providers, or other parties with
which the group health plan or issuer
has contracted may aggregate out-ofnetwork allowed amounts for more than
one plan or insurance policy or contract.
Additionally, nothing in this section
prevents the Allowed Amount File from
being hosted on a third-party website or
prevents a plan administrator or issuer
from contracting with a third party to
post the file. However, if a plan or issuer
chooses not to also host the file
separately on its own website, it must
provide a link on its own public website
to the location where the file is made
publicly available.
(c) Applicability. (1) The provisions of
this section apply for plan years
beginning on or after January 1, 2022.
(2) As provided under § 54.9815–
1251, this section does not apply to
grandfathered health plans. This section
also does not apply to health
reimbursement arrangements or other
account-based group health plans as
defined in § 54.9815–2711(d)(6) or short
term limited duration insurance as
defined in § 54.9801–2.
(3) Nothing in this section alters or
otherwise affects a group health plan’s
or health insurance issuer’s duty to
comply with requirements under other
applicable state or Federal laws,
including those governing the
accessibility, privacy, or security of
information required to be disclosed
under this section, or those governing
the ability of properly authorized
representatives to access participant, or
beneficiary information held by plans
and issuers.
(4) A group health plan or health
insurance issuer will not fail to comply
with this section solely because it,
acting in good faith and with reasonable
diligence, makes an error or omission in
a disclosure required under paragraph
(b) of this section, provided that the
plan or issuer corrects the information
as soon as practicable.
(5) A group health plan or health
insurance issuer will not fail to comply
with this section solely because, despite
acting in good faith and with reasonable
diligence, its internet website is
temporarily inaccessible, provided that
the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this
section requires a group health plan or
health insurance issuer to obtain
information from any other entity, the
plan or issuer will not fail to comply
with this section because it relied in
good faith on information from the other
entity, unless the plan or issuer knows,
or reasonably should have known, that
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the information is incomplete or
inaccurate.
(d) Severability. Any provision of this
section held to be invalid or
unenforceable by its terms, or as applied
to any person or circumstance, or stayed
pending further agency action, shall be
severable from this section and shall not
affect the remainder thereof or the
application of the provision to persons
not similarly situated or to dissimilar
circumstances.
DEPARTMENT OF LABOR
For the reasons set forth in this
preamble, the Department of Labor
amends 29 CFR part 2590 as set forth
below:
PART 2590—RULES AND
REGULATIONS FOR GROUP HEALTH
PLANS
3. The authority citation for part 2590
continues to read as follows:
■
Authority: 29 U.S.C. 1027, 1059, 1135,
1161–1168, 1169, 1181–1183, 1181 note,
1185, 1185a, 1185b, 1191, 1191a, 1191b, and
1191c; sec. 101(g), Pub. L. 104–191, 110 Stat.
1936; sec. 401(b), Pub. L. 105–200, 112 Stat.
645 (42 U.S.C. 651 note); sec. 512(d), Pub. L.
110–343, 122 Stat. 3881; sec. 1001, 1201, and
1562(e), Pub. L. 111–148, 124 Stat. 119, as
amended by Pub. L. 111–152, 124 Stat. 1029;
Division M, Pub. L. 113–235, 128 Stat. 2130;
Secretary of Labor’s Order 1–2011, 77 FR
1088 (Jan. 9, 2012).
4. Sections 2590.715–2715A1,
2590.715–2715A2, and 2590.715–
2715A3 are added to read as follows:
■
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§ 2590.715–2715A1 Transparency in
coverage—definitions.
(a) Scope and definitions—(1) Scope.
This section sets forth definitions for the
price transparency requirements for
group health plans and health insurance
issuers offering group health insurance
coverage established in this section and
§§ 2590.715–2715A2 and 2590.715–
2715A3.
(2) Definitions. For purposes of this
section and §§ 2590.715–2715A2 and
2590.715–2715A3, the following
definitions apply:
(i) Accumulated amounts means:
(A) The amount of financial
responsibility a participant or
beneficiary has incurred at the time a
request for cost-sharing information is
made, with respect to a deductible or
out-of-pocket limit. If an individual is
enrolled in other than self-only
coverage, these accumulated amounts
shall include the financial responsibility
a participant or beneficiary has incurred
toward meeting his or her individual
deductible or out-of-pocket limit, as
well as the amount of financial
responsibility that all the individuals
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enrolled under the plan or coverage
have incurred, in aggregate, toward
meeting the other than self-only
deductible or out-of-pocket limit, as
applicable. Accumulated amounts
include any expense that counts toward
a deductible or out-of-pocket limit (such
as a copayment or coinsurance), but
exclude any expense that does not count
toward a deductible or out-of-pocket
limit (such as any premium payment,
out-of-pocket expense for out-ofnetwork services, or amount for items or
services not covered under the group
health plan or health insurance
coverage); and
(B) To the extent a group health plan
or health insurance issuer imposes a
cumulative treatment limitation on a
particular covered item or service (such
as a limit on the number of items, days,
units, visits, or hours covered in a
defined time period) independent of
individual medical necessity
determinations, the amount that has
accrued toward the limit on the item or
service (such as the number of items,
days, units, visits, or hours the
participant or beneficiary, has used
within that time period).
(ii) Billed charge means the total
charges for an item or service billed to
a group health plan or health insurance
issuer by a provider.
(iii) Billing code means the code used
by a group health plan or health
insurance issuer or provider to identify
health care items or services for
purposes of billing, adjudicating, and
paying claims for a covered item or
service, including the Current
Procedural Terminology (CPT) code,
Healthcare Common Procedure Coding
System (HCPCS) code, DiagnosisRelated Group (DRG) code, National
Drug Code (NDC), or other common
payer identifier.
(iv) Bundled payment arrangement
means a payment model under which a
provider is paid a single payment for all
covered items and services provided to
a participant or beneficiary for a specific
treatment or procedure.
(v) Copayment assistance means the
financial assistance a participant or
beneficiary receives from a prescription
drug or medical supply manufacturer
towards the purchase of a covered item
or service.
(vi) Cost-sharing liability means the
amount a participant or beneficiary is
responsible for paying for a covered
item or service under the terms of the
group health plan or health insurance
coverage. Cost-sharing liability generally
includes deductibles, coinsurance, and
copayments, but does not include
premiums, balance billing amounts by
out-of-network providers, or the cost of
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items or services that are not covered
under a group health plan or health
insurance coverage.
(vii) Cost-sharing information means
information related to any expenditure
required by or on behalf of a participant
or beneficiary with respect to health
care benefits that are relevant to a
determination of the participant’s or
beneficiary’s cost-sharing liability for a
particular covered item or service.
(viii) Covered items or services means
those items or services, including
prescription drugs, the costs for which
are payable, in whole or in part, under
the terms of a group health plan or
health insurance coverage.
(ix) Derived amount means the price
that a group health plan or health
insurance issuer assigns to an item or
service for the purpose of internal
accounting, reconciliation with
providers, or submitting data in
accordance with the requirements of 45
CFR 153.710(c).
(x) Historical net price means the
retrospective average amount a group
health plan or health insurance issuer
paid for a prescription drug, inclusive of
any reasonably allocated rebates,
discounts, chargebacks, fees, and any
additional price concessions received by
the plan or issuer with respect to the
prescription drug. The allocation shall
be determined by dollar value for nonproduct specific and product-specific
rebates, discounts, chargebacks, fees,
and other price concessions to the
extent that the total amount of any such
price concession is known to the group
health plan or health insurance issuer at
the time of publication of the historical
net price in a machine-readable file in
accordance with § 2590.715–2715A3.
However, to the extent that the total
amount of any non-product specific and
product-specific rebates, discounts,
chargebacks, fees, or other price
concessions is not known to the group
health plan or health insurance issuer at
the time of file publication, then the
plan or issuer shall allocate such
rebates, discounts, chargebacks, fees,
and other price concessions by using a
good faith, reasonable estimate of the
average price concessions based on the
rebates, discounts, chargebacks, fees,
and other price concessions received
over a time period prior to the current
reporting period and of equal duration
to the current reporting period, as
determined under § 2590.715–
2715A3(b)(1)(iii)(D)(3).
(xi) In-network provider means any
provider of any item or service with
which a group health plan or health
insurance issuer, or a third party for the
plan or issuer, has a contract setting
forth the terms and conditions on which
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a relevant item or service is provided to
a participant or beneficiary.
(xii) Items or services means all
encounters, procedures, medical tests,
supplies, prescription drugs, durable
medical equipment, and fees (including
facility fees), provided or assessed in
connection with the provision of health
care.
(xiii) Machine-readable file means a
digital representation of data or
information in a file that can be
imported or read by a computer system
for further processing without human
intervention, while ensuring no
semantic meaning is lost.
(xiv) National Drug Code means the
unique 10- or 11-digit 3-segment
number assigned by the Food and Drug
Administration, which provides a
universal product identifier for drugs in
the United States.
(xv) Negotiated rate means the
amount a group health plan or health
insurance issuer has contractually
agreed to pay an in-network provider,
including an in-network pharmacy or
other prescription drug dispenser, for
covered items and services, whether
directly or indirectly, including through
a third-party administrator or pharmacy
benefit manager.
(xvi) Out-of-network allowed amount
means the maximum amount a group
health plan or health insurance issuer
will pay for a covered item or service
furnished by an out-of-network
provider.
(xvii) Out-of-network provider means
a provider of any item or service that
does not have a contract under a
participant’s or beneficiary’s group
health plan or health insurance coverage
to provide items or services.
(xviii) Out-of-pocket limit means the
maximum amount that a participant or
beneficiary is required to pay during a
coverage period for his or her share of
the costs of covered items and services
under his or her group health plan or
health insurance coverage, including for
self-only and other than self-only
coverage, as applicable.
(xix) Plain language means written
and presented in a manner calculated to
be understood by the average
participant or beneficiary.
(xx) Prerequisite means concurrent
review, prior authorization, and steptherapy or fail-first protocols related to
covered items and services that must be
satisfied before a group health plan or
health insurance issuer will cover the
item or service. The term prerequisite
does not include medical necessity
determinations generally or other forms
of medical management techniques.
(xxi) Underlying fee schedule rate
means the rate for a covered item or
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service from a particular in-network
provider, or providers that a group
health plan or health insurance issuer
uses to determine a participant’s or
beneficiary’s cost-sharing liability for
the item or service, when that rate is
different from the negotiated rate or
derived amount.
(b) [Reserved]
§ 2590.715–2715A2 Transparency in
coverage—required disclosures to
participants and beneficiaries.
(a) Scope and definitions—(1) Scope.
This section establishes price
transparency requirements for group
health plans and health insurance
issuers offering group health insurance
coverage for the timely disclosure of
information about costs related to
covered items and services under a
group plan or health insurance
coverage.
(2) Definitions. For purposes of this
section, the definitions in § 2590.715–
2715A1 apply.
(b) Required disclosures to
participants and beneficiaries. At the
request of a participant or beneficiary
who is enrolled in a group health plan,
the plan must provide to the participant
or beneficiary the information required
under paragraph (b)(1) of this section, in
accordance with the method and format
requirements set forth in paragraph
(b)(2) of this section.
(1) Required cost-sharing information.
The information required under this
paragraph (b)(1) is the following costsharing information, which is accurate
at the time the request is made, with
respect to a participant’s or beneficiary’s
cost-sharing liability for covered items
and services:
(i) An estimate of the participant’s or
beneficiary’s cost-sharing liability for a
requested covered item or service
furnished by a provider or providers
that is calculated based on the
information described in paragraphs
(b)(1)(ii) through (iv) of this section.
(A) If the request for cost-sharing
information relates to items and services
that are provided within a bundled
payment arrangement, and the bundled
payment arrangement includes items or
services that have a separate costsharing liability, the group health plan
or health insurance issuer must provide
estimates of the cost-sharing liability for
the requested covered item or service, as
well as an estimate of the cost-sharing
liability for each of the items and
services in the bundled payment
arrangement that have separate costsharing liabilities. While group health
plans and health insurance issuers are
not required to provide estimates of
cost-sharing liability for a bundled
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72301
payment arrangement where the costsharing is imposed separately for each
item and service included in the
bundled payment arrangement, nothing
prohibits plans or issuers from
providing estimates for multiple items
and services in situations where such
estimates could be relevant to
participants or beneficiaries, as long as
the plan or issuer also discloses
information about the relevant items or
services individually, as required in
paragraph (b)(1)(v) of this section.
(B) For requested items and services
that are recommended preventive
services under section 2713 of the
Public Health Service Act (PHS Act), if
the group health plan or health
insurance issuer cannot determine
whether the request is for preventive or
non-preventive purposes, the plan or
issuer must display the cost-sharing
liability that applies for non-preventive
purposes. As an alternative, a group
health plan or health insurance issuer
may allow a participant or beneficiary to
request cost-sharing information for the
specific preventive or non-preventive
item or service by including terms such
as ‘‘preventive’’, ‘‘non-preventive’’ or
‘‘diagnostic’’ as a means to request the
most accurate cost-sharing information.
(ii) Accumulated amounts.
(iii) In-network rate, comprised of the
following elements, as applicable to the
group health plan’s or health insurance
issuer’s payment model:
(A) Negotiated rate, reflected as a
dollar amount, for an in-network
provider or providers for the requested
covered item or service; this rate must
be disclosed even if it is not the rate the
plan or issuer uses to calculate costsharing liability; and
(B) Underlying fee schedule rate,
reflected as a dollar amount, for the
requested covered item or service, to the
extent that it is different from the
negotiated rate.
(iv) Out-of-network allowed amount
or any other rate that provides a more
accurate estimate of an amount a group
health plan or health insurance issuer
will pay for the requested covered item
or service, reflected as a dollar amount,
if the request for cost-sharing
information is for a covered item or
service furnished by an out-of-network
provider; provided, however, that in
circumstances in which a plan or issuer
reimburses an out-of-network provider a
percentage of the billed charge for a
covered item or service, the out-ofnetwork allowed amount will be that
percentage.
(v) If a participant or beneficiary
requests information for an item or
service subject to a bundled payment
arrangement, a list of the items and
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services included in the bundled
payment arrangement for which costsharing information is being disclosed.
(vi) If applicable, notification that
coverage of a specific item or service is
subject to a prerequisite.
(vii) A notice that includes the
following information in plain language:
(A) A statement that out-of-network
providers may bill participants or
beneficiaries for the difference between
a provider’s billed charges and the sum
of the amount collected from the group
health plan or health insurance issuer
and from the participant or beneficiary
in the form of a copayment or
coinsurance amount (the difference
referred to as balance billing), and that
the cost-sharing information provided
pursuant to this paragraph (b)(1) does
not account for these potential
additional amounts. This statement is
only required if balance billing is
permitted under state law;
(B) A statement that the actual charges
for a participant’s or beneficiary’s
covered item or service may be different
from an estimate of cost-sharing liability
provided pursuant to paragraph (b)(1)(i)
of this section, depending on the actual
items or services the participant or
beneficiary receives at the point of care;
(C) A statement that the estimate of
cost-sharing liability for a covered item
or service is not a guarantee that
benefits will be provided for that item
or service;
(D) A statement disclosing whether
the plan counts copayment assistance
and other third-party payments in the
calculation of the participant’s or
beneficiary’s deductible and out-ofpocket maximum;
(E) For items and services that are
recommended preventive services under
section 2713 of the PHS Act, a statement
that an in-network item or service may
not be subject to cost-sharing if it is
billed as a preventive service if the
group health plan or health insurance
issuer cannot determine whether the
request is for a preventive or nonpreventive item or service; and
(F) Any additional information,
including other disclaimers, that the
group health plan or health insurance
issuer determines is appropriate,
provided the additional information
does not conflict with the information
required to be provided by this
paragraph (b)(1).
(2) Required methods and formats for
disclosing information to participants
and beneficiaries. The methods and
formats for the disclosure required
under this paragraph (b) are as follows:
(i) Internet-based self-service tool.
Information provided under this
paragraph (b) must be made available in
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plain language, without subscription or
other fee, through a self-service tool on
an internet website that provides realtime responses based on cost-sharing
information that is accurate at the time
of the request. Group health plans and
health insurance issuers must ensure
that the self-service tool allows users to:
(A) Search for cost-sharing
information for a covered item or
service provided by a specific innetwork provider or by all in-network
providers by inputting:
(1) A billing code (such as CPT code
87804) or a descriptive term (such as
‘‘rapid flu test’’), at the option of the
user;
(2) The name of the in-network
provider, if the user seeks cost-sharing
information with respect to a specific
in-network provider; and
(3) Other factors utilized by the plan
or issuer that are relevant for
determining the applicable cost-sharing
information (such as location of service,
facility name, or dosage).
(B) Search for an out-of-network
allowed amount, percentage of billed
charges, or other rate that provides a
reasonably accurate estimate of the
amount a group health plan or health
insurance issuer will pay for a covered
item or service provided by out-ofnetwork providers by inputting:
(1) A billing code or descriptive term,
at the option of the user; and
(2) Other factors utilized by the plan
or issuer that are relevant for
determining the applicable out-ofnetwork allowed amount or other rate
(such as the location in which the
covered item or service will be sought
or provided).
(C) Refine and reorder search results
based on geographic proximity of innetwork providers, and the amount of
the participant’s or beneficiary’s
estimated cost-sharing liability for the
covered item or service, to the extent the
search for cost-sharing information for
covered items or services returns
multiple results.
(ii) Paper method. Information
provided under this paragraph (b) must
be made available in plain language,
without a fee, in paper form at the
request of the participant or beneficiary.
In responding to such a request, the
group health plan or health insurance
issuer may limit the number of
providers with respect to which costsharing information for covered items
and services is provided to no fewer
than 20 providers per request. The
group health plan or health insurance
issuer is required to:
(A) Disclose the applicable providerper-request limit to the participant or
beneficiary;
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(B) Provide the cost-sharing
information in paper form pursuant to
the individual’s request, in accordance
with the requirements in paragraphs
(b)(2)(i)(A) through (C) of this section;
and
(C) Mail the cost-sharing information
in paper form no later than 2 business
days after an individual’s request is
received.
(D) To the extent participants or
beneficiaries request disclosure other
than by paper (for example, by phone or
email), plans and issuers may provide
the disclosure through another means,
provided the participant or beneficiary
agrees that disclosure through such
means is sufficient to satisfy the request
and the request is fulfilled at least as
rapidly as required for the paper
method.
(3) Special rule to prevent
unnecessary duplication—(i) Special
rule for insured group health plans. To
the extent coverage under a group
health plan consists of group health
insurance coverage, the plan satisfies
the requirements of this paragraph (b) if
the plan requires the health insurance
issuer offering the coverage to provide
the information required by this
paragraph (b) in compliance with this
section pursuant to a written agreement.
Accordingly, if a health insurance issuer
and a plan sponsor enter into a written
agreement under which the issuer
agrees to provide the information
required under this paragraph (b) in
compliance with this section, and the
issuer fails to do so, then the issuer, but
not the plan, violates the transparency
disclosure requirements of this
paragraph (b).
(ii) Other contractual arrangements. A
group health plan or health insurance
issuer may satisfy the requirements
under this paragraph (b) by entering into
a written agreement under which
another party (such as a pharmacy
benefit manager or other third-party)
provides the information required by
this paragraph (b) in compliance with
this section. Notwithstanding the
preceding sentence, if a group health
plan or health insurance issuer chooses
to enter into such an agreement and the
party with which it contracts fails to
provide the information in compliance
with this paragraph (b), the plan or
issuer violates the transparency
disclosure requirements of this
paragraph (b).
(c) Applicability. (1) The provisions of
this section apply for plan years
beginning on or after January 1, 2023
with respect to the 500 items and
services to be posted on a publicly
available website, and with respect to
all covered items and services, for plan
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years beginning on or after January 1,
2024.
(2) As provided under § 2590.715–
1251, this section does not apply to
grandfathered health plans. This section
also does not apply to health
reimbursement arrangements or other
account-based group health plans as
defined in § 2590.715–2711(d)(6) or
short term limited duration insurance as
defined in § 2590.701–2.
(3) Nothing in this section alters or
otherwise affects a group health plan’s
or health insurance issuer’s duty to
comply with requirements under other
applicable state or Federal laws,
including those governing the
accessibility, privacy, or security of
information required to be disclosed
under this section, or those governing
the ability of properly authorized
representatives to access participant or
beneficiary information held by plans
and issuers.
(4) A group health plan or health
insurance issuer will not fail to comply
with this section solely because it,
acting in good faith and with reasonable
diligence, makes an error or omission in
a disclosure required under paragraph
(b) of this section, provided that the
plan or issuer corrects the information
as soon as practicable.
(5) A group health plan or health
insurance issuer will not fail to comply
with this section solely because, despite
acting in good faith and with reasonable
diligence, its internet website is
temporarily inaccessible, provided that
the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this
section requires a group health plan or
health insurance issuer to obtain
information from any other entity, the
plan or issuer will not fail to comply
with this section because it relied in
good faith on information from the other
entity, unless the plan or issuer knows,
or reasonably should have known, that
the information is incomplete or
inaccurate.
(d) Severability. Any provision of this
section held to be invalid or
unenforceable by its terms, or as applied
to any person or circumstance, or stayed
pending further agency action, shall be
severable from this section and shall not
affect the remainder thereof or the
application of the provision to persons
not similarly situated or to dissimilar
circumstances.
§ 2590.715–2715A3 Transparency in
coverage—requirements for public
disclosure.
(a) Scope and definitions—(1) Scope.
This section establishes price
transparency requirements for group
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health plans and health insurance
issuers offering group health insurance
coverage for the timely disclosure of
information about costs related to
covered items and services under a
group plan or health insurance
coverage.
(2) Definitions. For purposes of this
section, the definitions in § 2590.715–
2715A1 apply.
(b) Requirements for public disclosure
of in-network provider rates for covered
items and services, out-of-network
allowed amounts and billed charges for
covered items and services, and
negotiated rates and historical net
prices for covered prescription drugs. A
group health plan or health insurance
issuer must make available on an
internet website the information
required under paragraph (b)(1) of this
section in three machine-readable files,
in accordance with the method and
format requirements described in
paragraph (b)(2) of this section, and that
are updated as required under
paragraph (b)(3) of this section.
(1) Required information. Machinereadable files required under this
paragraph (b) that are made available to
the public by a group health plan or
health insurance issuer must include:
(i) An in-network rate machinereadable file that includes the required
information under this paragraph
(b)(1)(i) for all covered items and
services, except for prescription drugs
that are subject to a fee-for-service
reimbursement arrangement, which
must be reported in the prescription
drug machine-readable file pursuant to
paragraph (b)(1)(iii) of this section. The
in-network rate machine-readable file
must include:
(A) For each coverage option offered
by a group health plan or health
insurance issuer, the name and the 14digit Health Insurance Oversight System
(HIOS) identifier, or, if the 14-digit
HIOS identifier is not available, the 5digit HIOS identifier, or if no HIOS
identifier is available, the Employer
Identification Number (EIN);
(B) A billing code, which in the case
of prescription drugs must be an NDC,
and a plain language description for
each billing code for each covered item
or service under each coverage option
offered by a plan or issuer; and
(C) All applicable rates, which may
include one or more of the following:
Negotiated rates, underlying fee
schedule rates, or derived amounts. If a
group health plan or health insurance
issuer does not use negotiated rates for
provider reimbursement, then the plan
or issuer should disclose derived
amounts to the extent these amounts are
already calculated in the normal course
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of business. If the group health plan or
health insurance issuer uses underlying
fee schedule rates for calculating cost
sharing, then the plan or issuer should
include the underlying fee schedule
rates in addition to the negotiated rate
or derived amount. Applicable rates,
including for both individual items and
services and items and services in a
bundled payment arrangement, must be:
(1) Reflected as dollar amounts, with
respect to each covered item or service
that is furnished by an in-network
provider. If the negotiated rate is subject
to change based upon participant or
beneficiary-specific characteristics,
these dollar amounts should be reflected
as the base negotiated rate applicable to
the item or service prior to adjustments
for participant or beneficiary-specific
characteristics;
(2) Associated with the National
Provider Identifier (NPI), Tax
Identification Number (TIN), and Place
of Service Code for each in-network
provider;
(3) Associated with the last date of the
contract term or expiration date for each
provider-specific applicable rate that
applies to each covered item or service;
and
(4) Indicated with a notation where a
reimbursement arrangement other than
a standard fee-for-service model (such
as capitation or a bundled payment
arrangement) applies.
(ii) An out-of-network allowed
amount machine-readable file,
including:
(A) For each coverage option offered
by a group health plan or health
insurance issuer, the name and the 14digit HIOS identifier, or, if the 14-digit
HIOS identifier is not available, the 5digit HIOS identifier, or, if no HIOS
identifier is available, the EIN;
(B) A billing code, which in the case
of prescription drugs must be an NDC,
and a plain language description for
each billing code for each covered item
or service under each coverage option
offered by a plan or issuer; and
(C) Unique out-of-network allowed
amounts and billed charges with respect
to covered items or services furnished
by out-of-network providers during the
90-day time period that begins 180 days
prior to the publication date of the
machine-readable file (except that a
group health plan or health insurance
issuer must omit such data in relation
to a particular item or service and
provider when compliance with this
paragraph (b)(1)(ii)(C) would require the
plan or issuer to report payment of outof-network allowed amounts in
connection with fewer than 20 different
claims for payments under a single plan
or coverage). Consistent with paragraph
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(c)(3) of this section, nothing in this
paragraph (b)(1)(ii)(C) requires the
disclosure of information that would
violate any applicable health
information privacy law. Each unique
out-of-network allowed amount must
be:
(1) Reflected as a dollar amount, with
respect to each covered item or service
that is furnished by an out-of-network
provider; and
(2) Associated with the NPI, TIN, and
Place of Service Code for each out-ofnetwork provider.
(iii) A prescription drug machinereadable file, including:
(A) For each coverage option offered
by a group health plan or health
insurance issuer, the name and the 14digit HIOS identifier, or, if the 14-digit
HIOS identifier is not available, the 5digit HIOS identifier, or, if no HIOS
identifier is available, the EIN;
(B) The NDC, and the proprietary and
nonproprietary name assigned to the
NDC by the Food and Drug
Administration (FDA), for each covered
item or service under each coverage
option offered by a plan or issuer that
is a prescription drug;
(C) The negotiated rates which must
be:
(1) Reflected as a dollar amount, with
respect to each NDC that is furnished by
an in-network provider, including an innetwork pharmacy or other prescription
drug dispenser;
(2) Associated with the NPI, TIN, and
Place of Service Code for each innetwork provider, including each innetwork pharmacy or other prescription
drug dispenser; and
(3) Associated with the last date of the
contract term for each provider-specific
negotiated rate that applies to each
NDC; and
(D) Historical net prices that are:
(1) Reflected as a dollar amount, with
respect to each NDC that is furnished by
an in-network provider, including an innetwork pharmacy or other prescription
drug dispenser;
(2) Associated with the NPI, TIN, and
Place of Service Code for each innetwork provider, including each innetwork pharmacy or other prescription
drug dispenser; and
(3) Associated with the 90-day time
period that begins 180 days prior to the
publication date of the machinereadable file for each provider-specific
historical net price that applies to each
NDC (except that a group health plan or
health insurance issuer must omit such
data in relation to a particular NDC and
provider when compliance with this
paragraph (b)(1)(iii)(D) would require
the plan or issuer to report payment of
historical net prices calculated using
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fewer than 20 different claims for
payment). Consistent with paragraph
(c)(3) of this section, nothing in this
paragraph (b)(1)(iii)(D) requires the
disclosure of information that would
violate any applicable health
information privacy law.
(2) Required method and format for
disclosing information to the public.
The machine-readable files described in
this paragraph (b) must be available in
a form and manner as specified in
guidance issued by the Department of
the Treasury, the Department of Labor,
and the Department of Health and
Human Services. The machine-readable
files must be publicly available and
accessible to any person free of charge
and without conditions, such as
establishment of a user account,
password, or other credentials, or
submission of personally identifiable
information to access the file.
(3) Timing. A group health plan or
health insurance issuer must update the
machine-readable files and information
required by this paragraph (b) monthly.
The group health plan or health
insurance issuer must clearly indicate
the date that the files were most recently
updated.
(4) Special rules to prevent
unnecessary duplication—(i) Special
rule for insured group health plans. To
the extent coverage under a group
health plan consists of group health
insurance coverage, the plan satisfies
the requirements of this paragraph (b) if
the plan requires the health insurance
issuer offering the coverage to provide
the information pursuant to a written
agreement. Accordingly, if a health
insurance issuer and a group health
plan sponsor enter into a written
agreement under which the issuer
agrees to provide the information
required under this paragraph (b) in
compliance with this section, and the
issuer fails to do so, then the issuer, but
not the plan, violates the transparency
disclosure requirements of this
paragraph (b).
(ii) Other contractual arrangements. A
group health plan or health insurance
issuer may satisfy the requirements
under this paragraph (b) by entering into
a written agreement under which
another party (such as a third-party
administrator or health care claims
clearinghouse) will provide the
information required by this paragraph
(b) in compliance with this section.
Notwithstanding the preceding
sentence, if a group health plan or
health insurance issuer chooses to enter
into such an agreement and the party
with which it contracts fails to provide
the information in compliance with this
paragraph (b), the plan or issuer violates
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the transparency disclosure
requirements of this paragraph (b).
(iii) Aggregation permitted for out-ofnetwork allowed amounts. Nothing in
this section prohibits a group health
plan or health insurance issuer from
satisfying the disclosure requirement
described in paragraph (b)(1)(ii) of this
section by disclosing out-of-network
allowed amounts made available by, or
otherwise obtained from, an issuer, a
service provider, or other party with
which the plan or issuer has entered
into a written agreement to provide the
information, provided the minimum
claim threshold described in paragraph
(b)(1)(ii)(C) of this section is
independently met for each item or
service and for each plan or coverage
included in an aggregated Allowed
Amount File. Under such
circumstances, health insurance issuers,
service providers, or other parties with
which the group health plan or issuer
has contracted may aggregate out-ofnetwork allowed amounts for more than
one plan or insurance policy or contract.
Additionally, nothing in this section
prevents the Allowed Amount File from
being hosted on a third-party website or
prevents a plan administrator or issuer
from contracting with a third party to
post the file. However, if a plan or issuer
chooses not to also host the file
separately on its own website, it must
provide a link on its own public website
to the location where the file is made
publicly available.
(c) Applicability. (1) The provisions of
this section apply for plan years
beginning on or after January 1, 2022.
(2) As provided under § 2590.715–
1251, this section does not apply to
grandfathered health plans. This section
also does not apply to health
reimbursement arrangements or other
account-based group health plans as
defined in § 2590.715–2711(d)(6) or
short term limited duration insurance as
defined in § 2590.701–2.
(3) Nothing in this section alters or
otherwise affects a group health plan’s
or health insurance issuer’s duty to
comply with requirements under other
applicable state or Federal laws,
including those governing the
accessibility, privacy, or security of
information required to be disclosed
under this section, or those governing
the ability of properly authorized
representatives to access participant, or
beneficiary information held by plans
and issuers.
(4) A group health plan or health
insurance issuer will not fail to comply
with this section solely because it,
acting in good faith and with reasonable
diligence, makes an error or omission in
a disclosure required under paragraph
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(b) of this section, provided that the
plan or issuer corrects the information
as soon as practicable.
(5) A group health plan or health
insurance issuer will not fail to comply
with this section solely because, despite
acting in good faith and with reasonable
diligence, its internet website is
temporarily inaccessible, provided that
the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this
section requires a group health plan or
health insurance issuer to obtain
information from any other entity, the
plan or issuer will not fail to comply
with this section because it relied in
good faith on information from the other
entity, unless the plan or issuer knows,
or reasonably should have known, that
the information is incomplete or
inaccurate.
(d) Severability. Any provision of this
section held to be invalid or
unenforceable by its terms, or as applied
to any person or circumstance, or stayed
pending further agency action, shall be
severable from this section and shall not
affect the remainder thereof or the
application of the provision to persons
not similarly situated or to dissimilar
circumstances.
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
For the reasons set forth in this
preamble, the Department of Health and
Human Services amends 45 CFR parts
147 and 158 as set forth below:
PART 147—HEALTH INSURANCE
REFORM REQUIREMENTS FOR THE
GROUP AND INDIVIDUAL HEALTH
INSURANCE MARKETS
5. The authority citation for part 147
continues to read as follows:
■
Authority: 42 U.S.C. 300gg through 300gg–
63, 300gg–91, and 300gg–92, as amended.
6. Sections 147.210, 147.211 and
147.212 are added to read as follows:
■
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§ 147.210 Transparency in coverage—
definitions.
(a) Scope and definitions—(1) Scope.
This section sets forth definitions for the
price transparency requirements for
group health plans and health insurance
issuers in the individual and group
markets established in this section and
§§ 147.211 and 147.212.
(2) Definitions. For purposes of this
section and §§ 147.211 and 147.212, the
following definitions apply:
(i) Accumulated amounts means:
(A) The amount of financial
responsibility a participant, beneficiary,
or enrollee has incurred at the time a
request for cost-sharing information is
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made, with respect to a deductible or
out-of-pocket limit. If an individual is
enrolled in other than self-only
coverage, these accumulated amounts
shall include the financial responsibility
a participant, beneficiary, or enrollee
has incurred toward meeting his or her
individual deductible or out-of-pocket
limit, as well as the amount of financial
responsibility that all the individuals
enrolled under the plan or coverage
have incurred, in aggregate, toward
meeting the other than self-only
deductible or out-of-pocket limit, as
applicable. Accumulated amounts
include any expense that counts toward
a deductible or out-of-pocket limit (such
as a copayment or coinsurance), but
exclude any expense that does not count
toward a deductible or out-of-pocket
limit (such as any premium payment,
out-of-pocket expense for out-ofnetwork services, or amount for items or
services not covered under the group
health plan or health insurance
coverage); and
(B) To the extent a group health plan
or health insurance issuer imposes a
cumulative treatment limitation on a
particular covered item or service (such
as a limit on the number of items, days,
units, visits, or hours covered in a
defined time period) independent of
individual medical necessity
determinations, the amount that has
accrued toward the limit on the item or
service (such as the number of items,
days, units, visits, or hours the
participant, beneficiary, or enrollee has
used within that time period).
(ii) Billed charge means the total
charges for an item or service billed to
a group health plan or health insurance
issuer by a provider.
(iii) Billing code means the code used
by a group health plan or health
insurance issuer or provider to identify
health care items or services for
purposes of billing, adjudicating, and
paying claims for a covered item or
service, including the Current
Procedural Terminology (CPT) code,
Healthcare Common Procedure Coding
System (HCPCS) code, DiagnosisRelated Group (DRG) code, National
Drug Code (NDC), or other common
payer identifier.
(iv) Bundled payment arrangement
means a payment model under which a
provider is paid a single payment for all
covered items and services provided to
a participant, beneficiary, or enrollee for
a specific treatment or procedure.
(v) Copayment assistance means the
financial assistance a participant,
beneficiary, or enrollee receives from a
prescription drug or medical supply
manufacturer towards the purchase of a
covered item or service.
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(vi) Cost-sharing liability means the
amount a participant, beneficiary, or
enrollee is responsible for paying for a
covered item or service under the terms
of the group health plan or health
insurance coverage. Cost-sharing
liability generally includes deductibles,
coinsurance, and copayments, but does
not include premiums, balance billing
amounts by out-of-network providers, or
the cost of items or services that are not
covered under a group health plan or
health insurance coverage.
(vii) Cost-sharing information means
information related to any expenditure
required by or on behalf of a participant,
beneficiary, or enrollee with respect to
health care benefits that are relevant to
a determination of the participant’s,
beneficiary’s, or enrollee’s cost-sharing
liability for a particular covered item or
service.
(viii) Covered items or services means
those items or services, including
prescription drugs, the costs for which
are payable, in whole or in part, under
the terms of a group health plan or
health insurance coverage.
(ix) Derived amount means the price
that a group health plan or health
insurance issuer assigns to an item or
service for the purpose of internal
accounting, reconciliation with
providers or submitting data in
accordance with the requirements of
§ 153.710(c) of this subchapter.
(x) Enrollee means an individual who
is covered under an individual health
insurance policy as defined under
section 2791(b)(5) of the Public Health
Service (PHS) Act.
(xi) Historical net price means the
retrospective average amount a group
health plan or health insurance issuer
paid for a prescription drug, inclusive of
any reasonably allocated rebates,
discounts, chargebacks, fees, and any
additional price concessions received by
the plan or issuer with respect to the
prescription drug. The allocation shall
be determined by dollar value for nonproduct specific and product-specific
rebates, discounts, chargebacks, fees,
and other price concessions to the
extent that the total amount of any such
price concession is known to the group
health plan or health insurance issuer at
the time of publication of the historical
net price in a machine-readable file in
accordance with § 147.212. However, to
the extent that the total amount of any
non-product specific and productspecific rebates, discounts, chargebacks,
fees, or other price concessions is not
known to the group health plan or
health insurance issuer at the time of
file publication, then the plan or issuer
shall allocate such rebates, discounts,
chargebacks, fees, and other price
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concessions by using a good faith,
reasonable estimate of the average price
concessions based on the rebates,
discounts, chargebacks, fees, and other
price concessions received over a time
period prior to the current reporting
period and of equal duration to the
current reporting period, as determined
under § 147.212(b)(1)(iii)(D)(3).
(xii) In-network provider means any
provider of any item or service with
which a group health plan or health
insurance issuer, or a third party for the
plan or issuer, has a contract setting
forth the terms and conditions on which
a relevant item or service is provided to
a participant, beneficiary, or enrollee.
(xiii) Items or services means all
encounters, procedures, medical tests,
supplies, prescription drugs, durable
medical equipment, and fees (including
facility fees), provided or assessed in
connection with the provision of health
care.
(xiv) Machine-readable file means a
digital representation of data or
information in a file that can be
imported or read by a computer system
for further processing without human
intervention, while ensuring no
semantic meaning is lost.
(xv) National Drug Code means the
unique 10- or 11-digit 3-segment
number assigned by the Food and Drug
Administration, which provides a
universal product identifier for drugs in
the United States.
(xvi) Negotiated rate means the
amount a group health plan or health
insurance issuer has contractually
agreed to pay an in-network provider,
including an in-network pharmacy or
other prescription drug dispenser, for
covered items and services, whether
directly or indirectly, including through
a third-party administrator or pharmacy
benefit manager.
(xvii) Out-of-network allowed amount
means the maximum amount a group
health plan or health insurance issuer
will pay for a covered item or service
furnished by an out-of-network
provider.
(xviii) Out-of-network provider means
a provider of any item or service that
does not have a contract under a
participant’s, beneficiary’s, or enrollee’s
group health plan or health insurance
coverage to provide items or services.
(xix) Out-of-pocket limit means the
maximum amount that a participant,
beneficiary, or enrollee is required to
pay during a coverage period for his or
her share of the costs of covered items
and services under his or her group
health plan or health insurance
coverage, including for self-only and
other than self-only coverage, as
applicable.
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(xx) Plain language means written
and presented in a manner calculated to
be understood by the average
participant, beneficiary, or enrollee.
(xxi) Prerequisite means concurrent
review, prior authorization, and steptherapy or fail-first protocols related to
covered items and services that must be
satisfied before a group health plan or
health insurance issuer will cover the
item or service. The term prerequisite
does not include medical necessity
determinations generally or other forms
of medical management techniques.
(xxii) Underlying fee schedule rate
means the rate for a covered item or
service from a particular in-network
provider, or providers that a group
health plan or health insurance issuer
uses to determine a participant’s,
beneficiary’s, or enrollee’s cost-sharing
liability for the item or service, when
that rate is different from the negotiated
rate or derived amount.
(b) [Reserved]
§ 147.211 Transparency in coverage—
required disclosures to participants,
beneficiaries, or enrollees.
(a) Scope and definitions—(1) Scope.
This section establishes price
transparency requirements for group
health plans and health insurance
issuers in the individual and group
markets for the timely disclosure of
information about costs related to
covered items and services under a plan
or health insurance coverage.
(2) Definitions. For purposes of this
section, the definitions in § 147.210
apply.
(b) Required disclosures to
participants, beneficiaries, or enrollees.
At the request of a participant,
beneficiary, or enrollee who is enrolled
in a group health plan or health
insurance issuer offering group or
individual health insurance coverage,
the plan or issuer must provide to the
participant, beneficiary, or enrollee the
information required under paragraph
(b)(1) of this section, in accordance with
the method and format requirements set
forth in paragraph (b)(2) of this section.
(1) Required cost-sharing information.
The information required under this
paragraph (b)(1) is the following costsharing information, which is accurate
at the time the request is made, with
respect to a participant’s, beneficiary’s,
or enrollee’s cost-sharing liability for
covered items and services:
(i) An estimate of the participant’s,
beneficiary’s, or enrollee’s cost-sharing
liability for a requested covered item or
service furnished by a provider or
providers, which must reflect any costsharing reductions the enrollee would
receive, that is calculated based on the
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information described in paragraphs
(b)(1)(ii) through (iv) of this section.
(A) If the request for cost-sharing
information relates to items and services
that are provided within a bundled
payment arrangement, and the bundled
payment arrangement includes items or
services that have a separate costsharing liability, the group health plan
or health insurance issuer must provide
estimates of the cost-sharing liability for
the requested covered item or service, as
well as an estimate of the cost-sharing
liability for each of the items and
services in the bundled payment
arrangement that have separate costsharing liabilities. While group health
plans and health insurance issuers are
not required to provide estimates of
cost-sharing liability for a bundled
payment arrangement where the costsharing is imposed separately for each
item and service included in the
bundled payment arrangement, nothing
prohibits plans or issuers from
providing estimates for multiple items
and services in situations where such
estimates could be relevant to
participants or beneficiaries, as long as
the plan or issuer also discloses
information about the relevant items or
services individually, as required in
paragraph (b)(1)(v) of this section.
(B) For requested items and services
that are recommended preventive
services under section 2713 of the
Public Health Service Act (PHS Act), if
the group health plan or health
insurance issuer cannot determine
whether the request is for preventive or
non-preventive purposes, the plan or
issuer must display the cost-sharing
liability that applies for non-preventive
purposes. As an alternative, a group
health plan or health insurance issuer
may allow a participant, beneficiary, or
enrollee to request cost-sharing
information for the specific preventive
or non-preventive item or service by
including terms such as ‘‘preventive’’,
‘‘non-preventive’’ or ‘‘diagnostic’’ as a
means to request the most accurate costsharing information.
(ii) Accumulated amounts.
(iii) In-network rate, comprised of the
following elements, as applicable to the
group health plan’s or health insurance
issuer’s payment model:
(A) Negotiated rate, reflected as a
dollar amount, for an in-network
provider or providers for the requested
covered item or service; this rate must
be disclosed even if it is not the rate the
plan or issuer uses to calculate costsharing liability; and
(B) Underlying fee schedule rate,
reflected as a dollar amount, for the
requested covered item or service, to the
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extent that it is different from the
negotiated rate.
(iv) Out-of-network allowed amount
or any other rate that provides a more
accurate estimate of an amount a group
health plan or health insurance issuer
will pay for the requested covered item
or service, reflected as a dollar amount,
if the request for cost-sharing
information is for a covered item or
service furnished by an out-of-network
provider; provided, however, that in
circumstances in which a plan or issuer
reimburses an out-of-network provider a
percentage of the billed charge for a
covered item or service, the out-ofnetwork allowed amount will be that
percentage.
(v) If a participant, beneficiary, or
enrollee requests information for an
item or service subject to a bundled
payment arrangement, a list of the items
and services included in the bundled
payment arrangement for which costsharing information is being disclosed.
(vi) If applicable, notification that
coverage of a specific item or service is
subject to a prerequisite.
(vii) A notice that includes the
following information in plain language:
(A) A statement that out-of-network
providers may bill participants,
beneficiaries, or enrollees for the
difference between a provider’s billed
charges and the sum of the amount
collected from the group health plan or
health insurance issuer and from the
participant, beneficiary, or enrollee in
the form of a copayment or coinsurance
amount (the difference referred to as
balance billing), and that the costsharing information provided pursuant
to this paragraph (b)(1) does not account
for these potential additional amounts.
This statement is only required if
balance billing is permitted under state
law;
(B) A statement that the actual charges
for a participant’s, beneficiary’s, or
enrollee’s covered item or service may
be different from an estimate of costsharing liability provided pursuant to
paragraph (b)(1)(i) of this section,
depending on the actual items or
services the participant, beneficiary, or
enrollee receives at the point of care;
(C) A statement that the estimate of
cost-sharing liability for a covered item
or service is not a guarantee that
benefits will be provided for that item
or service;
(D) A statement disclosing whether
the plan counts copayment assistance
and other third-party payments in the
calculation of the participant’s,
beneficiary’s, or enrollee’s deductible
and out-of-pocket maximum;
(E) For items and services that are
recommended preventive services under
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section 2713 of the PHS Act, a statement
that an in-network item or service may
not be subject to cost-sharing if it is
billed as a preventive service if the
group health plan or health insurance
issuer cannot determine whether the
request is for a preventive or nonpreventive item or service; and
(F) Any additional information,
including other disclaimers, that the
group health plan or health insurance
issuer determines is appropriate,
provided the additional information
does not conflict with the information
required to be provided by this
paragraph (b)(1).
(2) Required methods and formats for
disclosing information to participants,
beneficiaries, or enrollees. The methods
and formats for the disclosure required
under this paragraph (b) are as follows:
(i) Internet-based self-service tool.
Information provided under this
paragraph (b) must be made available in
plain language, without subscription or
other fee, through a self-service tool on
an internet website that provides realtime responses based on cost-sharing
information that is accurate at the time
of the request. Group health plans and
health insurance issuers must ensure
that the self-service tool allows users to:
(A) Search for cost-sharing
information for a covered item or
service provided by a specific innetwork provider or by all in-network
providers by inputting:
(1) A billing code (such as CPT code
87804) or a descriptive term (such as
‘‘rapid flu test’’), at the option of the
user;
(2) The name of the in-network
provider, if the user seeks cost-sharing
information with respect to a specific
in-network provider; and
(3) Other factors utilized by the plan
or issuer that are relevant for
determining the applicable cost-sharing
information (such as location of service,
facility name, or dosage).
(B) Search for an out-of-network
allowed amount, percentage of billed
charges, or other rate that provides a
reasonably accurate estimate of the
amount a group health plan or health
insurance issuer will pay for a covered
item or service provided by out-ofnetwork providers by inputting:
(1) A billing code or descriptive term,
at the option of the user; and
(2) Other factors utilized by the plan
or issuer that are relevant for
determining the applicable out-ofnetwork allowed amount or other rate
(such as the location in which the
covered item or service will be sought
or provided).
(C) Refine and reorder search results
based on geographic proximity of in-
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72307
network providers, and the amount of
the participant’s, beneficiary’s, or
enrollee’s estimated cost-sharing
liability for the covered item or service,
to the extent the search for cost-sharing
information for covered items or
services returns multiple results.
(ii) Paper method. Information
provided under this paragraph (b) must
be made available in plain language,
without a fee, in paper form at the
request of the participant, beneficiary,
or enrollee. In responding to such a
request, the group health plan or health
insurance issuer may limit the number
of providers with respect to which costsharing information for covered items
and services is provided to no fewer
than 20 providers per request. The
group health plan or health insurance
issuer is required to:
(A) Disclose the applicable providerper-request limit to the participant,
beneficiary, or enrollee;
(B) Provide the cost-sharing
information in paper form pursuant to
the individual’s request, in accordance
with the requirements in paragraphs
(b)(2)(i)(A) through (C) of this section;
and
(C) Mail the cost-sharing information
in paper form no later than 2 business
days after an individual’s request is
received.
(D) To the extent participants,
beneficiaries, and enrollees request
disclosure other than by paper (for
example, by phone or email), plans and
issuers may provide the disclosure
through another means, provided the
participant, beneficiary, or enrollee
agrees that disclosure through such
means is sufficient to satisfy the request
and the request is fulfilled at least as
rapidly as required for the paper
method.
(3) Special rule to prevent
unnecessary duplication—(i) Special
rule for insured group health plans. To
the extent coverage under a group
health plan consists of group health
insurance coverage, the plan satisfies
the requirements of this paragraph (b) if
the plan requires the health insurance
issuer offering the coverage to provide
the information required by this
paragraph (b) in compliance with this
section pursuant to a written agreement.
Accordingly, if a health insurance issuer
and a plan sponsor enter into a written
agreement under which the issuer
agrees to provide the information
required under this paragraph (b) in
compliance with this section, and the
issuer fails to do so, then the issuer, but
not the plan, violates the transparency
disclosure requirements of this
paragraph (b).
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(ii) Other contractual arrangements. A
group health plan or health insurance
issuer may satisfy the requirements
under this paragraph (b) by entering into
a written agreement under which
another party (such as a pharmacy
benefit manager or other third-party)
provides the information required by
this paragraph (b) in compliance with
this section. Notwithstanding the
preceding sentence, if a group health
plan or health insurance issuer chooses
to enter into such an agreement and the
party with which it contracts fails to
provide the information in compliance
with this paragraph (b), the plan or
issuer violates the transparency
disclosure requirements of this
paragraph (b).
(c) Applicability. (1) The provisions of
this section apply for plan years (in the
individual market, for policy years)
beginning on or after January 1, 2023
with respect to the 500 items and
services to be posted on a publicly
available website, and with respect to
all covered items and services, for plan
years (in the individual market, for
policy years) beginning on or after
January 1, 2024.
(2) As provided under § 147.140, this
section does not apply to grandfathered
health plans. This section also does not
apply to health reimbursement
arrangements or other account-based
group health plans as defined in
§ 147.126(d)(6) or short term limited
duration insurance as defined in 45 CFR
144.103.
(3) Nothing in this section alters or
otherwise affects a group health plan’s
or health insurance issuer’s duty to
comply with requirements under other
applicable state or Federal laws,
including those governing the
accessibility, privacy, or security of
information required to be disclosed
under this section, or those governing
the ability of properly authorized
representatives to access participant,
beneficiary, or enrollee information held
by plans and issuers.
(4) A group health plan or health
insurance issuer will not fail to comply
with this section solely because it,
acting in good faith and with reasonable
diligence, makes an error or omission in
a disclosure required under paragraph
(b) of this section, provided that the
plan or issuer corrects the information
as soon as practicable.
(5) A group health plan or health
insurance issuer will not fail to comply
with this section solely because, despite
acting in good faith and with reasonable
diligence, its internet website is
temporarily inaccessible, provided that
the plan or issuer makes the information
available as soon as practicable.
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(6) To the extent compliance with this
section requires a group health plan or
health insurance issuer to obtain
information from any other entity, the
plan or issuer will not fail to comply
with this section because it relied in
good faith on information from the other
entity, unless the plan or issuer knows,
or reasonably should have known, that
the information is incomplete or
inaccurate.
(d) Severability. Any provision of this
section held to be invalid or
unenforceable by its terms, or as applied
to any person or circumstance, or stayed
pending further agency action, shall be
severable from this section and shall not
affect the remainder thereof or the
application of the provision to persons
not similarly situated or to dissimilar
circumstances.
§ 147.212 Transparency in coverage—
requirements for public disclosure.
(a) Scope and definitions—(1) Scope.
This section establishes price
transparency requirements for group
health plans and health insurance
issuers in the individual and group
markets for the timely disclosure of
information about costs related to
covered items and services under a plan
or health insurance coverage.
(2) Definitions. For purposes of this
section, the definitions in § 147.210
apply.
(b) Requirements for public disclosure
of in-network provider rates for covered
items and services, out-of-network
allowed amounts and billed charges for
covered items and services, and
negotiated rates and historical net
prices for covered prescription drugs. A
group health plan or health insurance
issuer must make available on an
internet website the information
required under paragraph (b)(1) of this
section in three machine-readable files,
in accordance with the method and
format requirements described in
paragraph (b)(2) of this section, and that
are updated as required under
paragraph (b)(3) of this section.
(1) Required information. Machinereadable files required under this
paragraph (b) that are made available to
the public by a group health plan or
health insurance issuer must include:
(i) An in-network rate machinereadable file that includes the required
information under this paragraph
(b)(1)(i) for all covered items and
services, except for prescription drugs
that are subject to a fee-for-service
reimbursement arrangement, which
must be reported in the prescription
drug machine-readable file pursuant to
paragraph (b)(1)(iii) of this section. The
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in-network rate machine-readable file
must include:
(A) For each coverage option offered
by a group health plan or health
insurance issuer, the name and the 14digit Health Insurance Oversight System
(HIOS) identifier, or, if the 14-digit
HIOS identifier is not available, the 5digit HIOS identifier, or if no HIOS
identifier is available, the Employer
Identification Number (EIN);
(B) A billing code, which in the case
of prescription drugs must be an NDC,
and a plain language description for
each billing code for each covered item
or service under each coverage option
offered by a plan or issuer; and
(C) All applicable rates, which may
include one or more of the following:
Negotiated rates, underlying fee
schedule rates, or derived amounts. If a
group health plan or health insurance
issuer does not use negotiated rates for
provider reimbursement, then the plan
or issuer should disclose derived
amounts to the extent these amounts are
already calculated in the normal course
of business. If the group health plan or
health insurance issuer uses underlying
fee schedule rates for calculating cost
sharing, then the plan or issuer should
include the underlying fee schedule
rates in addition to the negotiated rate
or derived amount. Applicable rates,
including for both individual items and
services and items and services in a
bundled payment arrangement, must be:
(1) Reflected as dollar amounts, with
respect to each covered item or service
that is furnished by an in-network
provider. If the negotiated rate is subject
to change based upon participant,
beneficiary, or enrollee-specific
characteristics, these dollar amounts
should be reflected as the base
negotiated rate applicable to the item or
service prior to adjustments for
participant, beneficiary, or enrolleespecific characteristics;
(2) Associated with the National
Provider Identifier (NPI), Tax
Identification Number (TIN), and Place
of Service Code for each in-network
provider;
(3) Associated with the last date of the
contract term or expiration date for each
provider-specific applicable rate that
applies to each covered item or service;
and
(4) Indicated with a notation where a
reimbursement arrangement other than
a standard fee-for-service model (such
as capitation or a bundled payment
arrangement) applies.
(ii) An out-of-network allowed
amount machine-readable file,
including:
(A) For each coverage option offered
by a group health plan or health
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insurance issuer, the name and the 14digit HIOS identifier, or, if the 14-digit
HIOS identifier is not available, the 5digit HIOS identifier, or, if no HIOS
identifier is available, the EIN;
(B) A billing code, which in the case
of prescription drugs must be an NDC,
and a plain language description for
each billing code for each covered item
or service under each coverage option
offered by a plan or issuer; and
(C) Unique out-of-network allowed
amounts and billed charges with respect
to covered items or services furnished
by out-of-network providers during the
90-day time period that begins 180 days
prior to the publication date of the
machine-readable file (except that a
group health plan or health insurance
issuer must omit such data in relation
to a particular item or service and
provider when compliance with this
paragraph (b)(1)(ii)(C) would require the
plan or issuer to report payment of outof-network allowed amounts in
connection with fewer than 20 different
claims for payments under a single plan
or coverage). Consistent with paragraph
(c)(3) of this section, nothing in this
paragraph (b)(1)(ii)(C) requires the
disclosure of information that would
violate any applicable health
information privacy law. Each unique
out-of-network allowed amount must
be:
(1) Reflected as a dollar amount, with
respect to each covered item or service
that is furnished by an out-of-network
provider; and
(2) Associated with the NPI, TIN, and
Place of Service Code for each out-ofnetwork provider.
(iii) A prescription drug machinereadable file, including:
(A) For each coverage option offered
by a group health plan or health
insurance issuer, the name and the 14digit HIOS identifier, or, if the 14-digit
HIOS identifier is not available, the 5digit HIOS identifier, or, if no HIOS
identifier is available, the EIN;
(B) The NDC, and the proprietary and
nonproprietary name assigned to the
NDC by the Food and Drug
Administration (FDA), for each covered
item or service that is a prescription
drug under each coverage option offered
by a plan or issuer;
(C) The negotiated rates which must
be:
(1) Reflected as a dollar amount, with
respect to each NDC that is furnished by
an in-network provider, including an innetwork pharmacy or other prescription
drug dispenser;
(2) Associated with the NPI, TIN, and
Place of Service Code for each innetwork provider, including each in-
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network pharmacy or other prescription
drug dispenser; and
(3) Associated with the last date of the
contract term for each provider-specific
negotiated rate that applies to each
NDC; and
(D) Historical net prices that are:
(1) Reflected as a dollar amount, with
respect to each NDC that is furnished by
an in-network provider, including an innetwork pharmacy or other prescription
drug dispenser;
(2) Associated with the NPI, TIN, and
Place of Service Code for each innetwork provider, including each innetwork pharmacy or other prescription
drug dispenser; and
(3) Associated with the 90-day time
period that begins 180 days prior to the
publication date of the machinereadable file for each provider-specific
historical net price that applies to each
NDC (except that a group health plan or
health insurance issuer must omit such
data in relation to a particular NDC and
provider when compliance with this
paragraph (b)(1)(iii)(D) would require
the plan or issuer to report payment of
historical net prices calculated using
fewer than 20 different claims for
payment). Consistent with paragraph
(b)(3) of this section, nothing in this
paragraph (b)(1)(iii)(D) requires the
disclosure of information that would
violate any applicable health
information privacy law.
(2) Required method and format for
disclosing information to the public.
The machine-readable files described in
this paragraph (b) must be available in
a form and manner as specified in
guidance issued by the Department of
the Treasury, the Department of Labor,
and the Department of Health and
Human Services. The machine-readable
files must be publicly available and
accessible to any person free of charge
and without conditions, such as
establishment of a user account,
password, or other credentials, or
submission of personally identifiable
information to access the file.
(3) Timing. A group health plan or
health insurance issuer must update the
machine-readable files and information
required by this paragraph (b) monthly.
The group health plan or health
insurance issuer must clearly indicate
the date that the files were most recently
updated.
(4) Special rules to prevent
unnecessary duplication—(i) Special
rule for insured group health plans. To
the extent coverage under a group
health plan consists of group health
insurance coverage, the plan satisfies
the requirements of this paragraph (b) if
the plan requires the health insurance
issuer offering the coverage to provide
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72309
the information pursuant to a written
agreement. Accordingly, if a health
insurance issuer and a group health
plan sponsor enter into a written
agreement under which the issuer
agrees to provide the information
required under this paragraph (b) in
compliance with this section, and the
issuer fails to do so, then the issuer, but
not the plan, violates the transparency
disclosure requirements of this
paragraph (b).
(ii) Other contractual arrangements. A
group health plan or health insurance
issuer may satisfy the requirements
under this paragraph (b) by entering into
a written agreement under which
another party (such as a third-party
administrator or health care claims
clearinghouse) will provide the
information required by this paragraph
(b) in compliance with this section.
Notwithstanding the preceding
sentence, if a group health plan or
health insurance issuer chooses to enter
into such an agreement and the party
with which it contracts fails to provide
the information in compliance with this
paragraph (b), the plan or issuer violates
the transparency disclosure
requirements of this paragraph (b).
(iii) Aggregation permitted for out-ofnetwork allowed amounts. Nothing in
this section prohibits a group health
plan or health insurance issuer from
satisfying the disclosure requirement
described in paragraph (b)(1)(ii) of this
section by disclosing out-of-network
allowed amounts made available by, or
otherwise obtained from, an issuer, a
service provider, or other party with
which the plan or issuer has entered
into a written agreement to provide the
information, provided the minimum
claim threshold described in paragraph
(b)(1)(ii)(C) of this section is
independently met for each item or
service and for each plan or coverage
included in an aggregated Allowed
Amount File. Under such
circumstances, health insurance issuers,
service providers, or other parties with
which the group health plan or issuer
has contracted may aggregate out-ofnetwork allowed amounts for more than
one plan or insurance policy or contract.
Additionally, nothing in this section
prevents the Allowed Amount File from
being hosted on a third-party website or
prevents a plan administrator or issuer
from contracting with a third party to
post the file. However, if a plan or issuer
chooses not to also host the file
separately on its own website, it must
provide a link on its own public website
to the location where the file is made
publicly available.
(c) Applicability. (1) The provisions of
this section apply for plan years (in the
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individual market, for policy years)
beginning on or after January 1, 2022.
(2) As provided under § 147.140, this
section does not apply to grandfathered
health plans. This section also does not
apply to health reimbursement
arrangements or other account-based
group health plans as defined in
§ 147.126(d)(6) or short term limited
duration insurance as defined in
§ 144.103 of this subchapter.
(3) Nothing in this section alters or
otherwise affects a group health plan’s
or health insurance issuer’s duty to
comply with requirements under other
applicable state or Federal laws,
including those governing the
accessibility, privacy, or security of
information required to be disclosed
under this section, or those governing
the ability of properly authorized
representatives to access participant, or
beneficiary information held by plans
and issuers.
(4) A group health plan or health
insurance issuer will not fail to comply
with this section solely because it,
acting in good faith and with reasonable
diligence, makes an error or omission in
a disclosure required under paragraph
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(b) of this section, provided that the
plan or issuer corrects the information
as soon as practicable.
(5) A group health plan or health
insurance issuer will not fail to comply
with this section solely because, despite
acting in good faith and with reasonable
diligence, its internet website is
temporarily inaccessible, provided that
the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this
section requires a group health plan or
health insurance issuer to obtain
information from any other entity, the
plan or issuer will not fail to comply
with this section because it relied in
good faith on information from the other
entity, unless the plan or issuer knows,
or reasonably should have known, that
the information is incomplete or
inaccurate.
(d) Severability. Any provision of this
section held to be invalid or
unenforceable by its terms, or as applied
to any person or circumstance, or stayed
pending further agency action, shall be
severable from this section and shall not
affect the remainder thereof or the
application of the provision to persons
PO 00000
Frm 00154
Fmt 4701
Sfmt 9990
not similarly situated or to dissimilar
circumstances.
PART 158—ISSUER USE OF PREMIUM
REVENUE: REPORTING AND REBATE
REQUIREMENTS
7. The authority citation for part 158
continues to read as follows:
■
Authority: 42 U.S.C. 300gg–18.
8. Section 158.221 is amended by
adding paragraph (b)(9) to read as
follows:
■
§ 158.221 Formula for calculating an
issuer’s medical loss ratio.
*
*
*
*
*
(b) * * *
(9) Beginning with the 2020 MLR
reporting year, an issuer may include in
the numerator of the MLR any shared
savings payments the issuer has made to
an enrollee as a result of the enrollee
choosing to obtain health care from a
lower-cost, higher-value provider.
*
*
*
*
*
[FR Doc. 2020–24591 Filed 11–3–20; 4:15 pm]
BILLING CODE 4830–01–P; 4510–29–P; 4120–01–P
E:\FR\FM\12NOR3.SGM
12NOR3
]]>Agencies
[Federal Register Volume 85, Number 219 (Thursday, November 12, 2020)]
[Rules and Regulations]
[Pages 72158-72310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24591]
[[Page 72157]]
Vol. 85
Thursday,
No. 219
November 12, 2020
Part IV
Department of the Treasury
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Internal Revenue Service
Department of Labor
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Employee Benefits Security Administration
Department of Health and Human Services
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26 CFR Part 54
29 CFR Part 2590
45 CFR Parts 147 and 158
Transparency in Coverage; Final Rule
Federal Register / Vol. 85 , No. 219 / Thursday, November 12, 2020 /
Rules and Regulations
[[Page 72158]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9929]
RIN 1545-BP47
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AB93
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 147 and 158
[CMS-9915-F]
RIN 0938-AU04
Transparency in Coverage
AGENCY: Internal Revenue Service, Department of the Treasury; Employee
Benefits Security Administration, Department of Labor; Centers for
Medicare & Medicaid Services, Department of Health and Human Services.
ACTION: Final rule.
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SUMMARY: The final rules set forth requirements for group health plans
and health insurance issuers in the individual and group markets to
disclose cost-sharing information upon request to a participant,
beneficiary, or enrollee (or his or her authorized representative),
including an estimate of the individual's cost-sharing liability for
covered items or services furnished by a particular provider. Under the
final rules, plans and issuers are required to make this information
available on an internet website and, if requested, in paper form,
thereby allowing a participant, beneficiary, or enrollee (or his or her
authorized representative) to obtain an estimate and understanding of
the individual's out-of-pocket expenses and effectively shop for items
and services. The final rules also require plans and issuers to
disclose in-network provider negotiated rates, historical out-of-
network allowed amounts, and drug pricing information through three
machine-readable files posted on an internet website, thereby allowing
the public to have access to health coverage information that can be
used to understand health care pricing and potentially dampen the rise
in health care spending. The Department of Health and Human Services
(HHS) also finalizes amendments to its medical loss ratio (MLR) program
rules to allow issuers offering group or individual health insurance
coverage to receive credit in their MLR calculations for savings they
share with enrollees that result from the enrollees shopping for, and
receiving care from, lower-cost, higher-value providers.
DATES:
Effective date: The final rules are effective on January 11, 2021.
Applicability date: See the SUPPLEMENTARY INFORMATION section for
information on the applicability dates.
FOR FURTHER INFORMATION CONTACT: Deborah Bryant, Centers for Medicare &
Medicaid Services, (301) 492-4293. Christopher Dellana, Internal
Revenue Service, (202) 317-5500. Matthew Litton or Frank Kolb, Employee
Benefits Security Administration, (202) 693-8335.
Customer Service Information: Individuals interested in obtaining
information from the Department of Labor (DOL) concerning employment-
based health coverage laws may call the Employee Benefits Security
Administration (EBSA) Toll-Free Hotline at 1-866-444-EBSA (3272) or
visit DOL's website (https://www.dol.gov/ebsa). In addition, information
from HHS on private health insurance for consumers can be found on the
Centers for Medicare & Medicaid Services (CMS) website (www.cms.gov/cciio) and information on health reform can be found at https://www.healthcare.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The final rules require group health plans and health insurance
issuers in the individual and group markets to disclose cost-sharing
information upon request, to a participant, beneficiary, or enrollee,
which, unless otherwise indicated, for the purpose of the final rules
includes an authorized representative, and require plans and issuers to
disclose in-network provider rates, historical out-of-network allowed
amounts and the associated billed charges, and negotiated rates for
prescription drugs in 26 CFR part 54, 29 CFR part 2590, and 45 CFR part
147. HHS also finalizes amendments to its MLR program rules in 45 CFR
part 158.
A. Statutory Background and Enactment of PPACA
The Patient Protection and Affordable Care Act (Pub. L. 111-148)
was enacted on March 23, 2010, and the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152) was enacted on March 30,
2010 (collectively, PPACA). As relevant here, PPACA reorganized,
amended, and added to the provisions of part A of title XXVII of the
Public Health Service (PHS) Act relating to health coverage
requirements for group health plans and health insurance issuers in the
group and individual markets. The term group health plan includes both
insured and self-insured group health plans.
PPACA also added section 715 to the Employee Retirement Income
Security Act of 1974 (ERISA) and section 9815 to the Internal Revenue
Code (Code) to incorporate the provisions of part A of title XXVII of
the PHS Act, PHS Act sections 2701 through 2728, into ERISA and the
Code, making them applicable to group health plans, and health
insurance issuers providing coverage in connection with group health
plans.
1. Transparency in Coverage
Section 2715A of the PHS Act provides that group health plans and
health insurance issuers offering group or individual health insurance
coverage must comply with section 1311(e)(3) of PPACA, which addresses
transparency in health coverage and imposes certain reporting and
disclosure requirements for health plans that are seeking certification
as qualified health plans (QHPs) that may be offered on an Exchange. A
plan or coverage that is not offered through an Exchange (as defined by
section 1311(b)(1) of PPACA) is required to submit the information
required to the Secretary of HHS and the relevant state's insurance
commissioner, and to make that information available to the public.
Paragraph (A) of section 1311(e)(3) of PPACA requires a plan
seeking certification as a QHP to make the following information
available to the public and submit it to state insurance regulators,
the Secretary of HHS, and the Exchange:
Claims payment policies and practices,
periodic financial disclosures,
data on enrollment,
data on disenrollment,
data on the number of claims that are denied,
data on rating practices,
information on cost-sharing and payments with respect to any
out-of-network coverage, and
information on enrollee and participant rights under Title I
of PPACA.
Paragraph (A) also requires a plan seeking certification as a QHP to
submit any ``[o]ther information as determined appropriate by the
Secretary.''
[[Page 72159]]
Paragraph (C) of section 1311(e)(3) of PPACA requires plans, as a
requirement of certification as a QHP, to permit individuals to learn
the amount of cost sharing (including deductibles, copayments, and
coinsurance) under the individual's coverage that the individual would
be responsible for paying with respect to the furnishing of a specific
item or service by an in-network provider in a timely manner upon the
request of the individual. Paragraph (C) specifies that, at a minimum,
such information must be made available to the individual through an
internet website and through other means for individuals without access
to the internet.
Together these statutory provisions require the overriding majority
of private health plans \1\ to disseminate a substantial amount of
information to provide transparency in coverage. The portions of the
final rules that require plans and issuers to disclose cost-sharing
information upon request, to a participant, beneficiary, or enrollee
implement paragraph (C) of section 1311(e)(3) of PPACA. The portions of
the final rules that require plans and issuers to disclose in-network
provider rates, historical out-of-network allowed amounts and the
associated billed charges, and negotiated rates for prescription drugs
implement paragraph (A) of section 1311(e)(3) of PPACA. The
requirements to disclose out-of-network allowed amounts specifically
implements the requirement in section 1311(e)(3)(A)(vii) to provide
information on ``payments with respect to any out-of-network
coverage.'' In addition to payment information on out-of-network
charges, the Secretary of HHS determined that payment information on
in-network rates and prescription drugs is also appropriate information
to require plans and issuers to disclose to provide transparency in
coverage under section 1311(e)(3)(A)(ix).
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\1\ As of 2018, private, non-grandfathered health plans that
must comply with these statutory provisions covered more than 92
percent of the almost 177 million people covered by private health
coverage. The remaining 7.7 percent were covered by grandfathered
health plans or were enrolled in short-term limited duration
coverage or health care sharing ministries. See Kaiser Family
Foundation, Health Insurance Coverage of the Total Population in
2018, https://www.kff.org/other/state-indicator/total-population/?dataView=1¤tTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D, last accessed October 5, 2020.
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PPACA's transparency in coverage requirements were enacted in
coordination with a set of requirements that transformed the regulation
of private market health plans and issuers. These requirements for the
first time apply a comprehensive framework for regulating private
health coverage through Federal law.\2\ Prior to PPACA, Federal law
relied on states to be the primary regulators of health insurance, but
applied only a limited set of Federal requirements to govern private
health coverage. Where Federal law regulated private health coverage,
there was a substantial variation in how these regulations applied,
depending on whether private health coverage was self-insured group
coverage, large group insurance coverage, small group insurance
coverage, or individual insurance coverage. To establish a
comprehensive framework for regulating private health coverage, PPACA
first set out a series of requirements on ``Improving Coverage'' that
generally apply to group health plans and health insurance issuers
offering group or individual health insurance coverage.\3\ These
requirements ranged from the prohibition on lifetime or annual dollar
limits in section 2711 of the PHS Act to the requirement to cover out-
of-network emergency services in section 2719A of the PHS Act and
include the transparency in coverage requirements in section 2715A of
the PHS Act.\4\ By including transparency in coverage in this set of
requirements that apply to most private coverage, Congress established
transparency as a key component to PPACA's comprehensive framework for
regulating private health coverage.\5\
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\2\ See Jost, T.S. ``Loopholes in the Affordable Care Act:
Regulatory gaps and border crossing techniques and how to address
them.'' St. Louis University Journal of Health Law and Policy,
Washington & Lee Legal Studies Paper No. 2011-16. August 15, 2011
(explaining that ``[t]he Affordable Care Act was meant to regulate
health care plans comprehensively'' and providing further details on
the scope of PPACA). Available at: https://scholarlycommons.law.wlu.edu/wlufac/265/.
\3\ Patient Protection and Affordable Care Act, Public Law 111-
148, 124 Stat. 119 (2010), section 1001.
\4\ In addition to these requirements, PPACA's ``Improving
Coverage'' requirements include, among other things: The prohibition
on rescissions in section 2712 of the PHS Act; the requirement to
cover preventive health services without cost sharing requirements
in section 2713 of the PHS Act; the extension of coverage to
dependents up to age 26 in section 2714 of the PHS Act; the
requirement to provide a summary of benefits and coverage in section
2715 of the PHS Act; quality reporting requirements in section 2717
of the PHS Act; and appeals process requirements in section in 2719
of the PHS Act.
\5\ Transparency was included as an important and transformative
element in other leading comprehensive health reform proposals. See
Porter, M. and Teisberg, E. Redefining Health Care. Harvard Business
School Press. Boston, MA. 2006. (``Perhaps the most fundamental role
of government in enabling value-based competition is to ensure that
universal, high-quality information on provider outcomes and prices
for every medical condition is collected and disseminated. This
single step will have far-reaching and pervasive effects throughout
the system . . . .'').
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On March 27, 2012, HHS issued the Exchange Establishment final rule
that implemented sections 1311(e)(3)(A) through (C) of PPACA at 45 CFR
155.1040(a) through (c) and 156.220.\6\ The Exchange Establishment
final rule created standards for QHP issuers to submit specific
information related to transparency in coverage. QHPs are required to
post and make data related to transparency in coverage available to the
public in plain language and submit this same data to HHS, the
Exchange, and the relevant state insurance commissioner. In the
preamble to the Exchange Establishment final rule, HHS noted that
``health plan standards set forth under the final rules are, for the
most part, strictly related to QHPs certified to be offered through the
Exchange and not the entire individual and small group market. Such
policies for the entire individual and small and large group markets
have been, and will continue to be, addressed in separate rulemaking
issued by HHS, and the Departments of Labor and the Treasury.''
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\6\ 77 FR 18310 (Mar. 27, 2012).
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2. Medical Loss Ratio
Section 2718(a) of the PHS Act, as added by PPACA, generally
requires health insurance issuers offering group or individual health
insurance coverage (including a grandfathered health insurance plan) to
submit an annual report to the Secretary of HHS that details the
percentage of premium revenue (after certain adjustments) expended on
reimbursement for clinical services provided to enrollees under health
coverage and on activities that improve health care quality. The
proportion of premium revenue spent on clinical services and quality
improvement activities is called the MLR. Section 2718(b) of the PHS
Act requires an issuer to provide annual rebates to enrollees if its
MLR falls below specified standards (generally 80 percent for the
individual and small group markets, and 85 percent for the large group
market). HHS published an interim final rule to implement the MLR
program in the December 1, 2010 Federal Register (75 FR 74863). A final
rule was published in the December 7, 2011 Federal Register (76 FR
76573). The MLR program requirements were amended in final rules
published in the December 7, 2011 Federal Register (76 FR 76595), the
May 16, 2012 Federal Register (77 FR 28790), the March 11, 2014 Federal
Register (79 FR 13743),
[[Page 72160]]
the May 27, 2014 Federal Register (79 FR 30339), the February 27, 2015
Federal Register (80 FR 10749), the March 8, 2016 Federal Register (81
FR 12203), the December 22, 2016 Federal Register (81 FR 94183), the
April 17, 2018 Federal Register (83 FR 16930), the April 25, 2019
Federal Register (84 FR 17454), and the February 6, 2020 Federal
Register (85 FR 7088).
B. Benefits of Transparency in Health Coverage and Past Efforts To
Promote Transparency
PPACA's transparency in coverage requirements can help ensure the
accurate and timely disclosure of information appropriate to support an
efficient and competitive health care market. A well-functioning,
competitive market depends on information being available to buyers and
sellers.\7\ As President Trump's ``Executive Order on Improving Price
and Quality Transparency in American Healthcare to Put Patients First''
explains: ``To make fully informed decisions about their health care,
patients must know the price and quality of a good or service in
advance.'' Yet, as the Executive order then notes, ``patients often
lack both access to useful price and quality information and the
incentives to find low-cost, high-quality care.'' The lack of this
information is widely understood to be one of the root problems causing
dysfunction within America's health care system.
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\7\ Porter, M. and Teisberg, E. Redefining Health Care. Harvard
Business School Press. Boston, MA. 2006, pg. 54. (``Information is
fundamental to competition in any well-functioning market. It
enables buyers to shop for the best value and allows sellers to
compare themselves to rivals. Without relevant information, doctors
cannot compare their results to best practice and to other
providers. And without appropriate information, patient choice has
little meaning.'').
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The Departments of Labor, HHS, and the Treasury (Departments) are
of the view that transparency in health coverage requirements will
strengthen America's health care system by giving health care
consumers, researchers, regulators, lawmakers, health innovators, and
other health care stakeholders the information they need to make, or
assist others in making informed decisions about health care purchases.
Health care consumers include various persons and entities that finance
health care needs through the purchase of insurance. Health care
consumers also include uninsured persons without health coverage who
must pay out-of-pocket for health care items and services and uninsured
persons who may be shopping for health coverage. Employers that sponsor
health plans for their employees and government programs that provide
health care services and benefits to consumers are also health care
consumers.
By requiring the dissemination of price and benefit information
directly to consumers and to the public, the transparency in coverage
requirements will provide the following consumer benefits:
Enables consumers to evaluate health care options and to make
cost-conscious decisions;
strengthens the support consumers receive from stakeholders
that help protect and engage consumers;
reduces potential surprises in relation to individual
consumers' out-of-pocket costs for health care services;
creates a competitive dynamic that may narrow price dispersion
for the same items and services in the same health care markets; and
puts downward pressure on prices which, in turn, potentially
lowers overall health care costs.
The goal of the final rules is to deliver these benefits to all
consumers and health care stakeholders through greater transparency in
coverage.
Comments received in response to the proposed rules on transparency
in coverage (discussed in more detail later in this preamble) have
strengthened the Departments' view that this price transparency effort
will equip the public with information to actively and effectively
participate in the health care system as consumers.\8\ The majority of
commenters acknowledged the importance of the availability of health
care pricing information and appropriate tools to assist consumers in
health care decision-making and managing health care costs. For these
reasons and those explained in more detail below in this preamble, the
Departments continue to be of the view that price transparency efforts
are crucial to providing consumers (individual and institutional) with
meaningful and actionable pricing information in an effort to contain
the growth of health care costs.
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\8\ 84 FR 65464 (Nov. 27, 2019).
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1. Transparency Provides Necessary Information for Consumers To Make
More Informed Health Care Spending Decisions
As explained in the report, ``Reforming America's Healthcare System
Through Choice and Competition,'' consumers have an important role to
play in controlling costs, but consumers must have meaningful
information in order to create the market forces necessary to achieve
lower health care costs.\9\ When consumers seek care, they do not
typically know whether they could have received the same service from
another provider at lower prices. Third-party payers negotiate prices
on the consumer's behalf and reimburse costs directly to health care
providers, concealing the actual price from the consumer at the point
of care. After receiving care, consumers typically receive an
Explanation of Benefits (EOB), which details the price charged by the
provider, contracted or negotiated rate, and consumer cost sharing.
Often, only after services are rendered is the cost of care disclosed
to the consumer.
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\9\ Azar, A.M., Mnuchin, S.T., and Acosta, A. ``Reforming
America's Healthcare System Through Choice and Competition.'' United
States, Department of Health and Human Services. December 3, 2018.
Available at: https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf.
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Historically, there has been little to no incentive for some
consumers to consider price and seek lower-cost care.\10\ Rapidly
rising health care spending in the past 20 years, however, has led to
consumers shouldering a greater portion of their health care costs
through increases in out-of-pocket expenses.\11\
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\10\ Id.
\11\ Claxton, G., Levitt, L., Long M. ``Payments for cost
sharing increasing rapidly over time.'' Peterson-Kaiser Health
System Tracker. April 2016. Available at: https://www.healthsystemtracker.org/brief/payments-for-cost-sharing-increasing-rapidly-over-time/.
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Since 1970, per capita out-of-pocket expenditures have nearly
doubled due to a number of factors.\12\ These factors include increased
enrollment in high deductible health plans (HDHPs) and accompanying
health savings accounts (HSAs), and increased plan and issuer reliance
on payments towards deductibles comprising the proportion of total
cost-sharing payments.\13\ As explained in the preamble to the proposed
rules, these shifts in plan design and enrollment are correlated with
consumers bearing a greater share of their overall health care costs in
the private health insurance market than in previous years.\14\ From
2002 to the enactment of PPACA in 2010,
[[Page 72161]]
nationally, the percentage of private sector employees enrolled in a
health plan with a deductible increased from 47.6 percent to 77.5
percent and continued to increase to 86.6 percent in 2019.\15\ Average
family deductibles for private sector employees grew from $958 in 2002
to $1,975 in 2010, and then to $3,655 in 2019--an 85 percent increase
since the enactment of PPACA.\16\ These changes represent a substantial
increase in the amount that consumers must pay for health care before
insurance begins to cover items or services.\17\ Deductibles made up 52
percent of cost-sharing spending in 2016, up from 30 percent in 2006,
while copays dropped from 43 percent to 17 percent of cost-sharing
payments over the same period.\18\ The gradual shift away from
copayments, which are predictable to the consumer through their set
dollar amounts for each covered item or service, to deductibles and
coinsurance, has increased the need for consumers to know the
negotiated price in order to plan ahead and budget for out-of-pocket
costs. Over time, price disclosure can improve consumers' ability to
better manage costs of utilized health care for a variety of health
care plans. Increased enrollment in HDHPs and the shift to coinsurance
across plan and benefit designs means that consumers have a vested
interest in learning the costs of care prior to paying for items or
services, as they are responsible for paying out-of-pocket
expenditures, which are directly dependent on the negotiated or
contractual price.
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\12\ ``Out-of-pocket spending.'' Peterson-KFF Health System
Tracker. May 2020. Available at: https://www.healthsystemtracker.org/indicator/access-affordability/out-of-pocket-spending/.
\13\ HDHP as defined in section 223(c)(2) of the Code; see also
Claxton, G., Levitt, L., Long, M. ``Payments for cost sharing
increasing rapidly over time.'' Peterson-KFF Health System Tracker.
April 2016. Available at: https://www.healthsystemtracker.org/brief/payments-for-cost-sharing-increasing-rapidly-over-time/.
\14\ 84 FR 65464, 65465 (Nov. 27, 2019).
\15\ See ``Medical Expenditure Panel Survey. Insurance Component
National-Level Summary Tables.'' United States Department for Health
and Human Services Agency for Healthcare Research and Quality.
Available at: https://www.meps.ahrq.gov/mepsweb/data_stats/quick_tables_search.jsp?component=2&subcomponent=1.
\16\ Id.
\17\ McCarthy-Alfano, M., et al. ``Measuring the burden of
health care costs for working families.'' Health Affairs. April 2,
2019. Available at: https://www.healthaffairs.org/do/10.1377/hblog20190327.999531/full/.
\18\ Claxton, G. et al. ``Increases in cost-sharing payments
continue to outpace wage growth.'' Peterson-KFF Health System
Tracker. June 15, 2018. Available at: https://www.healthsystemtracker.org/brief/increases-in-cost-sharing-payments-have-far-outpaced-wage-growth/.
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These trends in designing health plans have led to consumers
bearing an increased share of their health care costs. The fact that
more consumers are bearing greater financial responsibility for the
cost of their health care provides an opportunity to establish a more
consumer-directed and consumer-driven health care market. Eighty-eight
percent of consumers support requirements for providers and issuers to
disclose prices prior to care.\19\ If consumers have better pricing
information and can shop for health care items and services more
efficiently, they can increase competition and demand for lower
prices.\20\ However, consumers generally have little information
regarding negotiated rates or out-of-network costs until after services
are rendered. There is also wide variability in health care prices for
the same service.\21\ As a result, it can be difficult for consumers to
estimate potential out-of-pocket costs.
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\19\ ``Harvard CAPS Harris Poll.'' Harvard University. May 2019.
Available at: https://harvardharrispoll.com/wp-content/uploads/2019/06/HHP_May19_vF.pdf?utm_source=hs_email&utm_medium=email&_hsenc=p2ANqtz--NgSdTYggGUP4tWyR2IEQ7i8TCg1s3DcHuQyhErIgkX3KFUi3SFgl9OZKm4-JUOOi9tmMQ.
\20\ Azar, A.M., Mnuchin, S.T., and Acosta, A. ``Reforming
America's Healthcare System Through Choice and Competition.'' United
States, Department of Health and Human Services. December 3, 2018.
Available at: https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf.
\21\ Cooper, Z., et al. ``The Price Ain't Right? Hospital Prices
and Health Spending on the Privately Insured.'' The Quarterly
Journal of Economics, Vol. 134. Issue 1. February 2019. September 4,
2018. Available at: https://academic.oup.com/qje/article/134/1/51/5090426?searchresult=1.
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2. Transparency Strengthens Stakeholders' Ability To Support Consumers
Making price transparency information publicly available
strengthens the work of other health care stakeholders that help
provide care or promote access to care to consumers, or otherwise aim
to protect consumers and their interests in the health care system.
These entities include researchers, regulators, lawmakers, patient and
consumer advocates, and businesses that provide consumer support tools
and services. A key aspect of transparency in coverage is to make
health care pricing information more accessible and useful to consumers
by making the information available to persons and entities with the
requisite experience and expertise to assist individual consumers and
other health care purchasers to make informed health care decisions.
With information on pricing, these other health care stakeholders
can better fulfill each of the unique roles they play to improve
America's health care system for consumers. For instance, with pricing
information researchers could better assess the cost-effectiveness of
various treatments; state regulators could better review issuers'
proposed rate increases; patient advocates could better help guide
patients through care plans; employers could adopt incentives for
consumers to choose more cost-effective care; and entrepreneurs could
develop tools that help doctors better engage with patients.
3. Transparency Reduces the Potential for Surprise Billing
Making the price of care available to consumers before they receive
care can reduce the potential for consumers to be surprised by the
price of a health care item or service when they receive the bill after
receiving care. However, accessible pricing information holds special
value for insured consumers.\22\ Surprise billing has become a
substantial concern for insured consumers, in particular, consumers who
receive a bill from an out-of-network provider when they thought an in-
network provider was treating them. While price transparency alone is
not a complete solution to this problem, the disclosure of pricing
directly to consumers could help mitigate some unexpected health care
costs. As just noted, making pricing information public can also
strengthen other health care stakeholders' ability to protect
consumers. In the case of surprise billing, public information on
pricing for in-network and out-of-network services could allow
stakeholders to develop better tools to help patients avoid surprises
and improve oversight of health insurance issuers, plans, and
providers.
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\22\ See Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health & Human Services. Secretary of
Health and Human Services' Report on: Addressing Surprise Medical
Billing, at p. 3. July 2020. (recognizing that HHS regulatory action
to encourage price transparency by insurers ``can serve as the
backbone for a more comprehensive surprise billing solution'').
Available at https://aspe.hhs.gov/system/files/pdf/263871/Surprise-Medical-Billing.pdf.
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4. Transparency Increases Competition and Contains Costs
Without transparency in pricing, market forces cannot drive
competition. This lack of competition in many health care markets is
demonstrated by significant, unexplained variations in prices for
procedures, even within a single region.\23\ For example, studies of
price variation within California and nationally suggest that there is
substantial opportunity for increased transparency to save money by
shifting patients from high to lower-cost providers.\24\ The
Departments are of the
[[Page 72162]]
view that consumers will take advantage of increased transparency to
shop for their health care if price transparency is put into place
nationwide.\25\ Many empirical studies have investigated the impact of
price transparency on non-health care markets, with most research
showing that ``price transparency leads to lower and more uniform
prices, a view consistent with predictions of standard economic
theory.'' \26\ Studies suggest that consumers want and will use
actionable pricing information to shop for more cost-effective
care.\27\ For example, when automobile prices were presented
transparently on the internet, inclusive of the dealer invoice price,
the consumers who did not like the traditional bargaining process were
able to reduce spending overall by 1.5 percent.\28\ Another study
demonstrated the public display of life insurance prices for comparison
led to a 5 percent decrease in the consumer price.\29\ Price
transparency also reduced price dispersion across other markets, such
as the airline industry, which saw a reduction in price dispersion from
18 percent in 1997 narrowing to 0.3-2.2 percent in 2002 for fares
available at multiple travel websites.\30\ These lessons from other
markets suggest that more thoroughly implementing price transparency
across the health care industry could increase competition to provide
lower costs and limit price variation.\31\
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\23\ Id.
\24\ Boynton, A., Robinson, J. ``Appropriate Use of Reference
Pricing Can Increase Value.'' Health Affairs Blog. July 7, 2015.
Available at: https://www.healthaffairs.org/do/10.1377/hblog20150707.049155/full/; see also Sinaiko, A., Rosenthal, M.
``Examining a Health Care Price Transparency Tool: Who Uses it, and
How They Shop for Care.'' 35 Health Affairs 662. April 2016.
Available at: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2015.0746.
\25\ See Gordon, D., et al. ``Health Care Consumer Shopping
Behaviors and Sentiment: Qualitative Study.'' Journal of
Participatory Medicine. Volume 12. No. 2. 2020. Available at:
https://jopm.jmir.org/2020/2/e13924/ (study demonstrating that
consumers already engage in ``behaviors related to seeking,
comparing, or knowing the prices of care'' regardless of the
presence of price transparency tools).
\26\ Austin, D.A., and Gravelle, J.G. ``Does Price Transparency
Improve Market Efficiency? Implications of Empirical Evidence in
Other Markets for the Health Sector.'' United States Congress
Congressional Research Service. April 29, 2008. Available at:
https://crsreports.congress.gov/product/pdf/RL/RL34101; see also
Grennan, M., Swanson, A. ``Transparency and Negotiated Prices: The
Value of Information in Hospital-Supplier Bargaining.'' 128 Journal
of Political Economy. April 2020 (Citing research in consumer goods
showing that information can help decision making when buyers have
imperfect information on costs.). Available at: https://www.nber.org/papers/w22039; see also 84 FR 65464, 65466 (Nov. 27,
2019).
\27\ Semigran, H.L., et al. ``Patients' Views on Price Shopping
and Price Transparency.'' The American Journal of Managed Care. June
26, 2017. Available at: https://www.ajmc.com/view/patients-views-on-price-shopping-and-price-transparency.
\28\ Zettlemeyer, F., Morton, F.S., and Silva-Risso, J. ``How
the internet Lowers Prices: Evidence from Matched Survey and
Automobile Transaction Data.'' Journal of Marketing Research. May
2006. Available at: https://doi.org/10.1509%2Fjmkr.43.2.168.
\29\ Brown, J., and Goolsbee, A. ``Does the internet Make
Markets More Competitive? Evidence from the Life Insurance
Industry.'' Journal of Political Economy, vol. 110, June 2002, pp.
481-507.
\30\ Clemons, E.K., Hann, I., and Hitt, L. ``Price Dispersion
and Differentiation in Online Travel: An Empirical Investigation,''
Management Science, vol. 48, no. 4, 2001, pp. 521-39; see also
``Occupational Labor Statistics.'' United States Bureau of Labor
Statistics. Available at: https://www.bls.gov/oes/current/oes_stru.htm.
\31\ 84 FR 65464, 65466 (Nov. 27, 2019).
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Despite the general absence of price transparency in the health
care sector, there is research showing how price transparency leads to
lower and more uniform pricing in health care markets. For instance, as
noted in the preamble to the proposed rule, research shows patients
saved $7.9 million and issuers saved $36 million on imaging services in
New Hampshire after the state launched a website publishing health
prices for most consumers with private health insurance.\32\ One study
found use of a telephone- and email-based tool to search for health
care prices reduced the price paid by 10 to 17 percent and reduced the
prices paid for care on average by 1.6 percent.\33\ Another study of a
program that provided health plan participants, beneficiaries, or
enrollees with price and quality information to help select high-value
imaging services found an increase in the use of lower-cost
facilities.\34\ This consumer behavior prompted higher-cost facilities
to lower their prices, which resulted in a 30 percent reduction in the
price variation between low- and high-cost facilities.\35\ These
studies, as well the numerous studies highlighted in subsequent
sections of this rule, offer substantial evidence that price
transparency in health care markets will result in consumer benefits
similar to those that result from transparency in other markets.
---------------------------------------------------------------------------
\32\ Id.
\33\ Lieber, E. ``Does It Pay to Know Prices in Health Care?''
American Economic Journal: Economic Policy. February 2017. Available
at https://pubs.aeaweb.org/doi/pdfplus/10.1257/pol.20150124.
\34\ Wu, S.J. et al. ``Price transparency for MRIs increased use
of less costly providers and triggered provider competition.''
Health Affairs. August 2014. Available at: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2014.0168.
\35\ Id.
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5. The Final Rules Will Fill Gaps Left by State and Private
Transparency Efforts
Currently, the information that consumers need to make informed
decisions based on the prices of health care services is not readily
available or is presented in a manner that makes it challenging to
understand. As noted in the preamble to the proposed rules, the 2011
Government Accountability Office (GAO) report, ``Health Care Price
Transparency: Meaningful Price Information is Difficult for Consumers
to Obtain Prior to Receiving Care,'' found that the lack of
transparency in health care prices, coupled with the wide pricing
disparities for particular procedures within the same market, can make
it difficult for consumers to understand health care prices and to shop
effectively based on cost.\36\ The report also explored various price
transparency initiatives, including tools that consumers could use to
generate price estimates before receiving a health care service. The
report notes that pricing information displayed by tools varies across
initiatives, in large part due to limits reported by the initiatives in
their access or authority to collect certain necessary price data. In
particular, the report notes the lack of public disclosure of rates
negotiated between providers and third-party payers. The GAO report,
therefore, recommended that HHS determine the feasibility of, and the
next steps for, making estimates of out-of-pocket costs for health care
services available to consumers.
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\36\ 84 FR 65464, 65466-65467 (Nov. 27, 2019); see also GAO-11-
791 at p. 28 (Sep. 2011).
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States have been at the forefront of transparency initiatives and
have adopted a variety of approaches to improve price transparency.\37\
More than half of the states have passed legislation establishing price
transparency websites or mandating that health plans, hospitals, or
physicians make pricing information available to patients.\38\ For
example, as of September 2020, thirty one states have enacted laws that
provide participants, beneficiaries, and enrollees with at least
partial protection against the practice of ``balance billing.'' \39\ At
least eighteen states have All-Payer Claims Databases. However, state
transparency requirements are generally not applicable to self-insured
group health plans, which cover approximately 58.7
[[Page 72163]]
percent of private-sector workers.\40\ As a result, the data collected
under state law does not include data from self-insured plans, and a
significant portion of consumers may not have access to information on
their plans.
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\37\ De Brantes, F., et al. ``Price Transparency & Physician
Quality Report Card 2017.'' Catalyst for Payment Reform. Available
at: https://www.catalyze.org/product/2017-price-transparency-physician-quality-report-card/.
\38\ Frakt, A., and Mehrotra, A. ``What Type of Price
Transparency Do We Need in Health Care?'' Annals of Internal
Medicine. April 16, 2019. Available at: https://www.acpjournals.org/doi/10.7326/M19.
\39\ Kona, M. ``State Balance-Billing Protections.'' The
Commonwealth Fund. September 16, 2020. Available at: https://www.commonwealthfund.org/publications/maps-and-interactives/2020/sep/state-balance-billing-protections.
\40\ ``Report to Congress: Self-Insured Health Benefit Plans
2019: Based on Filings through Statistical Year 2016.'' March, 2019.
Available at: https://www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/annual-report-on-self-insured-group-health-plans-2019.pdf; see also Fronstin, P. ``Self-
Insured Health Plans: Recent Trends by Firm Size 1996-2018.''
Employee Benefit Research Institute. No. 488. August 1, 2019.
Available at: https://www.ebri.org/docs/default-source/ebri-issue-brief/ebri_ib_488_selfinsur-1aug19.pdf?sfvrsn=bd7e3c2f_6.
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In response to state action and consumer demands for more
information on health care pricing, and to align with increased price
transparency in other markets, health insurance issuers and self-
insured plans have moved to increase price transparency. For example,
some plans are using price transparency tools to incentivize employees
to make cost-conscious decisions when purchasing health care services.
Most large issuers have comparative cost information, which includes
rates that plans and issuers have negotiated with in-network providers
and suppliers.
However, many existing tools are either insufficient in the amount
of detail they provide or the level of accuracy available. In order to
expand price transparency to all consumers, Federal action is therefore
necessary to establish standards and universal access to this
information. In preparation for writing the proposed rules, the
Departments met with over 50 stakeholders including plans, issuers, and
third-party tool developers. Several stakeholders provided
demonstrations of their tools to the Departments. The Departments note
that over 90 percent of plans offer some version of a price comparison
tool.\41\ However, many of the plans and issuers that the Departments
met with, who did not have a tool serve large portions of participants,
beneficiaries, and enrollees. It is therefore the Departments'
understanding that there are still millions of insured Americans that
do not have access to any type of health care pricing tool. Also based
on these demonstrations, the Departments are of the view that many
price transparency tools on the market only offer wide-range estimates
or average estimates of pricing that use historical claims data and do
not always take into account the accumulated amount a participant,
beneficiary, or enrollee has paid toward their deductible or out-of-
pocket limit (sometimes referred to as an ``accumulator''). The
Departments are of the view that wide-range estimates are of limited
value to consumers, given that they may not accurately reflect an
individual's plan design and benefits, and that ranges should be
replaced by actual estimated out-of-pocket costs, in order to allow the
consumer to meaningfully predict costs. In addition, the inclusion of
negotiated rates in these tools could help show the changes to a
participant's, beneficiary's, or enrollee's costs if they have a future
need for the same service, conditioned on the level of fulfillment of
any cost-sharing responsibilities. This could help the consumer better
understand the full value of the health care they are considering and
how the cost may be different in the future when the participant's,
beneficiary's, or enrollee's accumulator resets in a new plan year.
Information on quality and results are also important for assessing the
value of care.\42\ Through this increased availability of information
and consumer comprehension, transparent pricing can apply pressure on
providers to demonstrate and improve quality and health care results.
Providers may likely then be in the position of having to justify their
costs relative to alternative options.
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\41\ ``Study: Health Plans Implement Price Transparency Tools
for Consumers.'' ACA International. April 2016. Available online at:
https://www.expressrecovery.com/file/86c228ef-245f-45cb-abd7-a30edbdec1f3.
\42\ See additional discussion of quality information in section
II.C.1 of the preamble.
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The Departments are of the view that existing price transparency
tools often function in a way that makes them difficult for users to
navigate. These tools often display information that makes it difficult
to compare one plan against another, understand the scope of services
covered and their costs, and interpret the terminology plans and
issuers use. Consumers may be discouraged by these difficult user
interfaces and may be less likely to make fully informed decisions with
their healthcare choices. Research demonstrates that poor or confusing
user interfaces will lead users to abandon engagement with the hosting
website.\43\ The Departments are of the view that it is important to
establish a minimum set of standards regarding what is acceptable so
that consumers can fully utilize all relevant information. Tools that
provide consistent information to every consumer across all markets,
and that base cost estimates on accurate and recent information, will
be a significant improvement over all or most existing options.
Accuracy and consistency are intended to give consumers confidence that
the information presented by these tools will not change significantly
from the prices they are ultimately charged. Reliability should assure
consumers that information in these tools accurately reflects plans'
and issuers' best estimates of consumer out-of-pocket costs. The
availability of these tools across most private markets will ensure
broad access for all participants, beneficiaries, or enrollees to the
intended outcomes and potential benefits of the final rules. The
Departments anticipate that participants, beneficiaries, and enrollees
will become accustomed to having access to this standardized
information, no matter what private market plan or coverage they
choose, which will make them more comfortable with using this
information in health care purchasing decisions. The Departments
further anticipate and encourage plans and issuers to include
additional functionality and innovation in existing price transparency
tools, but a baseline is necessary to give participants, beneficiaries,
and enrollees the confidence that, regardless of the tool they use,
they can expect the same standard information and functionality.
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\43\ Georgiou, M. ``User Experience Is the Most Important Metric
You Aren't Measuring.'' Entrepreneur. March 1, 2018. Available at:
https://www.entrepreneur.com/article/309161.
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C. Stakeholder Feedback and Prior Actions in Support of Transparency
In the HHS 2020 Notice of Benefit and Payment Parameters (2020
Payment Notice) proposed rule,\44\ HHS sought input on ways to provide
consumers with greater transparency regarding their own health care
data, QHP offerings on the Federally-facilitated Exchanges (FFEs), and
the cost of health care services.\45\ Additionally, HHS sought comment
on ways to further implement section 1311(e)(3) of PPACA, as
implemented by 45 CFR 156.220(d), under which, upon the request of an
enrollee, a QHP issuer must make available in a timely manner the
amount of enrollee cost sharing under the enrollee's coverage for a
specific service furnished by an in-network provider. HHS was
particularly interested in what types of data would be most useful to
improving consumers' abilities to make informed health care decisions,
including decisions related to their coverage specifications and ways
to
[[Page 72164]]
improve consumer access to information about health care costs.
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\44\ 84 FR 227 (Jan. 24, 2019).
\45\ The term ``Exchanges'' means American Health Benefit
Exchanges established under section 1311 of PPACA. See section
2791(d)(21) of the PHS Act.
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Commenters on the 2020 Payment Notice overwhelmingly supported the
idea of increased price transparency. Many commenters provided
suggestions for defining the scope of price transparency requirements,
such as providing costs for both in-network and out-of-network health
care, and providing health care cost estimates that include an
accounting for consumer-specific benefit information, like progress
toward meeting deductibles and annual limitations on cost sharing, as
well as remaining visits under visit limits. Commenters expressed
support for implementing price transparency requirements across all
private markets and for price transparency efforts to be a part of a
larger payment reform effort and a provider empowerment and patient
engagement strategy. Some commenters advised HHS to carefully consider
how such policies should be implemented, warning against Federal
duplication of state efforts and requirements that would result in
plans and issuers passing along increased administrative costs to
consumers and cautioning that the proprietary and competitive nature of
payment data should be protected.
In the summer and fall of 2018, HHS hosted listening sessions
related to the goal of empowering consumers by ensuring the
availability of useable pricing information. The listening sessions
included a wide representation of stakeholders including providers,
issuers, researchers, and consumer and patient advocacy groups.
Attendees noted that currently available pricing tools are
underutilized, in part because consumers are often unaware that they
exist,\46\ and even when used, the tools sometimes convey inconsistent
and inaccurate information.
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\46\ Miller, S. ``Healthcare Shopping Tools Often Go Unused.''
Society for Human Resource Management. May 19, 2016. Available at:
https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/health-care-shopping.aspx.
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Attendees also commented that tool development could be expensive,
especially for smaller health plans, which tend to invest less in
technology because of the limited return on investment. Attendees
further commented that most tools developed to date do not allow for
comparison shopping. Attendees stated that existing tools usually use
historical claims data, which results in broad, sometimes regional,
estimates, rather than accurate and individualized prices. In a
national study, there was alignment among patients, employers, and
providers in wanting to know and discuss the cost of care at the point
of service.\47\ However, attendees noted pricing tools are rarely
available when and where consumers are likely to make health care
decisions, for example, during interactions with providers. Thus,
patients are not able to consider relevant cost issues when discussing
referral options or the tradeoffs of various treatment options with
referring providers. With access to patient-specific cost estimates for
services furnished by particular providers, referring providers and
their patients could take pricing information into account when
considering clinically appropriate treatment options. Separately, CMS
has met with members from several state Departments of Insurance to
discuss the limits to state authority to require price transparency in
a meaningful way and the benefits and drawbacks of All Payer Claims
Databases (APCDs). During these discussions, it became clear that
APCDs' reliance on historical claims data that is not necessarily
linked to a specific plan or issuer limits the utility of such
databases for consumers. These conversations helped clarify the types
of price transparency information necessary to empower consumers.
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\47\ ``Let's Talk About Money.'' University of Utah Health Home.
Available at: https://uofuhealth.utah.edu/value/lets-talk-about-money.php.
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CMS has pursued initiatives in addition to the final rules to
improve access to the information necessary to empower consumers to
make more informed decisions about their health care costs, including a
multi-step effort to implement section 2718(e) of the PHS Act. Section
2718(e) of the PHS Act requires each hospital operating within the
United States, for each year, to establish (and update) and make public
(in accordance with guidelines developed by the Secretary of HHS) a
list of the hospital's standard charges for items and services provided
by the hospital, including for diagnosis-related groups established
under section 1886(d)(4) of the Social Security Act (SSA). In the
Fiscal Year (FY) 2015 Hospital Inpatient Prospective Payment System and
Long-Term Care Hospital Prospective Payment System (IPPS/LTCH PPS)
proposed and final rules, CMS reminded hospitals of their obligation to
comply with the provisions of section 2718(e) of the PHS Act and
provided guidelines for its implementation.\48\ At that time, CMS
required hospitals to either make public a list of their standard
charges or their policies for allowing the public to view a list of
those charges in response to an inquiry. In addition, CMS stated that
it expected hospitals to update the information at least annually, or
more often as appropriate, to reflect current charges. CMS also
encouraged hospitals to undertake efforts to engage in consumer-
friendly communication of their charges to enable consumers to compare
charges for similar services across hospitals and to help them
understand what their potential financial liability might be for items
and services they obtain at the hospital.
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\48\ 79 FR 27978, 28169 (May 15, 2014) and 79 FR 49854, 50146
(Aug. 22, 2014), respectively.
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In the FY 2019 IPPS/LTCH PPS proposed and final rules, CMS again
reminded hospitals of their obligation to comply with section 2718(e)
of the PHS Act and announced an update to its guidelines.\49\ The
updated guidelines, which have been effective since January 1, 2019,
require hospitals to make available a list of their current standard
charges (whether in the form of a ``chargemaster'' or another form of
the hospital's choice) via the internet in a machine-readable format
and to update this information at least annually, or more often as
appropriate.
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\49\ 83 FR 20164, 20548 (May 7, 2018) and 83 FR 41144, 41686
(Aug. 17, 2018), respectively.
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In response to stakeholder feedback and in accordance with
Executive Order 13877, issued on June 24, 2019,\50\ CMS took another
important step toward improving health care value and increasing
competition in the Calendar Year 2020 Hospital Outpatient Policy
Payment System (OPPS) Policy Changes and Payment Rates and Ambulatory
Surgical Center Payment System Policy Changes and Payment Rates: Price
Transparency Requirements for Hospitals to Make Standard Charges Public
final rule (Hospital Price Transparency final rule) by codifying
regulatory requirements that implement section 2718(e) of the PHS Act,
as well as a regulatory scheme under section 2718(b)(3) of the PHS Act
that enables CMS to enforce those requirements.\51\ The price
transparency disclosure requirements that CMS finalized in the Hospital
Price Transparency final rule will be effective on January 1, 2021, and
they require hospitals to make publicly available, as applicable, their
gross charges (as found in the hospital's chargemaster), payer-specific
negotiated charges, discounted cash prices, and de-identified minimum
and maximum negotiated charges for all items and services they provide
through a single online machine-readable file that is updated at least
once annually. Additionally, the Hospital Price
[[Page 72165]]
Transparency final rule requires hospitals to display online in a
consumer-friendly format, as applicable, the payer-specific negotiated
charges, discounted cash prices (or, to the extent one does not exist
for a shoppable service, the undiscounted gross charge) and de-
identified minimum and maximum negotiated charges for as many of the 70
shoppable services selected by CMS that the hospital provides and as
many additional hospital-selected shoppable services as are necessary
for a combined total of at least 300 shoppable services (or if the
hospital provides fewer than 300 shoppable services, then for as many
as the hospital provides). The rule defines a shoppable service as a
service that can be scheduled by a health care consumer in advance and
further explains that a shoppable service is typically one that is
routinely provided in non-urgent situations that does not require
immediate action or attention to the patient, thus allowing patients to
price shop and schedule such a service at a time that is convenient for
them.\52\
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\50\ 84 FR 30849 (Jun. 27, 2019). The Executive order was issued
on June 24, 2019 and was published in the Federal Register on June
27, 2019.
\51\ 84 FR 65524 (Nov. 27, 2019).
\52\ 84 FR 65524, 65564 (Nov. 27, 2019).
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In addition to making pricing information available for items and
services provided by hospitals, the Administration has also been
engaged in increasing transparency of prescription drug pricing and
lowering the costs of prescription drugs. Four Executive orders direct
CMS and other HHS agencies to develop and issue tools, models, and
several regulations to increase competition and lower patients' drug
costs.\53\ The actions directed in these Executive orders supplement
those CMS has already taken to increase drug-pricing transparency and
lower drug costs. Through the Drug Spending Dashboard, CMS publishes
data on Medicare and Medicaid spending for prescription drugs in an
interactive web-based tool so researchers and consumers can easily sort
the data to identify trends. Over the past four years, CMS has expanded
this dashboard to include reporting on payments for prescription drugs
in their first year on the market and information on the drugs'
manufacturers.\54\ Through the Part D Senior Savings model, beginning
January 1, 2021, CMS is testing a change to the Manufacturer Coverage
Gap Discount Program (the ``discount program'') to allow Part D
sponsors to offer a Part D benefit design that includes predictable
copays in the deductible, initial coverage, and coverage gap phases for
a broad range of insulins included in the Model by offering
supplemental benefits that apply after manufacturers provide a
discounted price.\55\
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\53\ ``Trump Administration Announces Historic Action to Lower
Drug Prices for Americans.'' United States Department of Health and
Human Services. July 24, 2020. Available at: https://www.hhs.gov/about/news/2020/07/24/trump-administration-announces-historic-action-lower-drug-prices-americans.html.
\54\ ``CMS Releases Enhanced Drug Dashboards Updated with Data
for 2018.'' Centers for Medicare & Medicaid Services.'' December 19,
2019. Available at: https://www.cms.gov/newsroom/press-releases/cms-releases-enhanced-drug-dashboards-updated-data-2018; see also ``CMS
Updates Drug Dashboards with Prescription Drug Pricing and Spending
Data.'' Centers for Medicare & Medicaid Services. March 14, 2019.
Available at: https://www.cms.gov/newsroom/press-releases/cms-updates-drug-dashboards-prescription-drug-pricing-and-spending-data.
\55\ ``Part D Senior Savings Model.'' Centers for Medicare &
Medicaid Services. Available online at: https://innovation.cms.gov/innovation-models/part-d-savings-model.
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CMS issued regulations addressing prescription drug
transparency,\56\ including a regulation implementing the statutory
prohibition on pharmacist gag clauses,\57\ helping to ensure patients
have information on lower cost alternatives or that they can save money
by paying cash. As part of the Calendar Year (CY) 2018 Medicare
Physician Fee Schedule, CMS adopted a policy that all FDA-approved Part
B biosimilars would be assigned their own HCPCS codes. Under this
revised coding policy, CMS pays for separately payable Part B
biosimilars based on its own Average Sales Price (ASP) plus 6 percent
of the ASP of its reference product. This policy change was made to
promote a stable and robust biosimilars market that drives competition
and lowers prices.
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\56\ See 84 FR 23832 (May 23, 2019) (HHS final rule finalizing
policies that aimed to ``increase transparency of drug pricing and
drug price increases, giv[e] beneficiaries and prescribers tools to
help improve adherence, lower prescription drug costs, and minimize
beneficiary out-of-pocket costs''); see, for example, 42 CFR 423.128
(requiring additional information in Part D explanations of benefits
to increase transparency); 42 CFR 423.160 (requiring adoption of e-
prescribing standards to increase transparency).
\57\ 42 CFR 423.120(a)(8)(iii); see also Verma, S. ``Memorandum
to All Part D Plan Sponsors: Unacceptable Pharmacy Gag Clauses.''
Centers for Medicare & Medicaid Services. May 17, 2018. Available
at: https://downloads.cms.gov/files/2018-05-17.pdf.
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In the CY 2019 Medicare Advantage and Part D final rule, CMS
adopted a policy to allow for certain low-cost generic drugs to be
substituted onto plan formularies at any point during the year, so
beneficiaries immediately benefit and have lower cost sharing.\58\ The
Modernizing Part D and Medicare Advantage To Lower Drug Prices and
Reduce Out-of-Pocket Expenses rule \59\ finalized in May 2019 requires
Part D plans to implement, no later than January 1, 2021, a real-time
benefit tool that can be integrated into at least one prescriber's
electronic prescribing or EHR system to provide patient-specific
formulary and benefit information, including cost sharing.\60\ The rule
also requires that beginning January 2021, the Explanation of Benefits
document that Part D enrollees receive each month must include
information on drug price increases and lower-cost therapeutic
alternatives. In June 2020, CMS proposed \61\ further policy changes
that would begin removing barriers to value-based purchasing
arrangements between drug manufacturers and payers.\62\ Value-based
payments for prescription drugs has the potential to increase patient
access to new medicines by holding prescription drug manufacturers
accountable for outcomes their drug achieves, as well as creating
alternatives to traditional cost controls that may impede patient
access.\63\
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\58\ ``CMS lowers the cost of prescription drugs for Medicare
beneficiaries.'' Centers for Medicare & Medicaid Services. April 2,
2018. Available at: https://www.cms.gov/newsroom/press-releases/cms-lowers-cost-prescription-drugs-medicare-beneficiaries.
\59\ 84 FR 23832 (May 23, 2019).
\60\ ``CMS Takes Action to Lower Prescription Drug Prices and
Increase Transparency.'' Centers for Medicare & Medicaid Services.
May 16, 2019. Available at: https://www.cms.gov/newsroom/press-releases/cms-takes-action-lower-prescription-drug-prices-and-increase-transparency.
\61\ ``Establishing Minimum Standards in Medicaid State Drug
Utilization Review (DUR) and Supporting Value-Based Purchasing (VBP)
for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and
Third Party Liability (TPL) Requirements (CMS 2482-P) Fact Sheet.
Centers for Medicare & Medicaid Services. June 17, 2020. Available
at: https://www.cms.gov/newsroom/fact-sheets/establishing-minimum-standards-medicaid-state-drug-utilization-review-dur-and-supporting-value-based.
\62\ 85 FR 37286 (Jun. 19, 2020).
\63\ Verma, S. ``CMS's Proposed Rule On Value-Based Purchasing
For Prescription Drugs: New Tools For Negotiating Price For The Next
Generation Of Therapies.'' Health Affairs. June 17, 2020. Available
at: https://www.healthaffairs.org/do/10.1377/hblog20200617.728496/full/.
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As part of its effort to incentivize states to pursue innovative
responses to rising drug prices, CMS approved nine states' (and the
District of Columbia's) plan amendment proposals to negotiate
supplemental rebate agreements involving value-based purchasing
arrangements with drug manufacturers.\64\ These supplemental rebate
agreements allow states to link payment for prescription drugs to the
value delivered to patients. Increasing states' flexibility empowers
them to develop policies that are effective and responsive to local
conditions and price ``hot spots'' that lower costs, increase
[[Page 72166]]
the predictability of expenses, and improve access for patients.
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\64\ ``Medicaid State Plan Amendments.'' Centers for Medicare &
Medicaid Services. Available online at: https://www.medicaid.gov/medicaid/medicaid-state-plan-amendments/.
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As it currently stands, and despite ongoing Federal efforts to
improve price transparency, there continues to be a lack of
standardized pricing information to assist consumers in the private
market when shopping for health care items and services. While there
are several efforts across states, 33 still do not have comprehensive
statewide price transparency initiatives,\65\ and as noted earlier,
sometimes cannot legally require private market plans and issuers to
provide real-time, out-of-pocket cost estimates to participants,
beneficiaries, and enrollees.
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\65\ LaPointe, J. ``Few States Have Robust Healthcare
Transparency Laws.'' RevCycle Intelligence. May 11, 2020. Available
at: https://revcycleintelligence.com/news/few-states-have-robust-healthcare-price-transparency-laws.
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The Departments have concluded that the Hospital Price Transparency
final rule and the other efforts described earlier in this section
cannot result in enrollees receiving complete price estimates for
health care items and services because, as the GAO concluded, complete
price estimates require pricing information from both providers and
health insurance issuers.\66\ In other words, this rule complements
existing State, Federal, and private sector price transparency efforts
by ensuring that pricing information is available from both hospitals
and payers in both the public and private markets and by expanding
transparency to pricing information for health care items and services
provided outside of a hospital setting. As a result of these rules,
regardless of where a consumer seeks information, be it their plan or
issuer, or their hospital, they will have guaranteed access to up to
date and accurate pricing information. In addition, because section
2718(e) of the PHS Act applies only to items and services provided by
hospitals the Hospital Price Transparency final rule does not address
price transparency with respect to items and services provided by other
health care providers. Accordingly, the Departments have concluded that
additional price transparency efforts are necessary and required under
the statute to empower a more price-conscious and responsible health
care consumer, promote competition in the health care industry, and
lower the overall rate of growth in health care spending.\67\
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\66\ GAO-11-791 (Sep. 2011).
\67\ This view is consistent with the legislative history of
PPACA. As initially introduced in the Senate on November 19, 2009,
PPACA included only the requirement on hospitals to disclose
standard charges included in section 2718. On December 1, 2009, in
comments supporting the hospital transparency requirement, Sen. Max
Baucus noted, ``I think the same should also apply to physicians so
people have a better idea what they will pay or their insurance
company will pay for these procedures.'' https://www.congress.gov/111/crec/2009/12/08/CREC-2009-12-08.pdf. Sections 2715A and
1311(e)(3)(C) were then amended to PPACA on December 19 in the final
managers amendment before passage in the Senate. Available at:
https://www.congress.gov/111/crec/2009/12/19/CREC-2009-12-19.pdf.
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The Departments are of the view that the disclosures required under
the final rules are necessary and appropriate to more fully implement
section 2715A of the PHS Act and section 1311(e)(3)(C) of PPACA to
ensure that consumers have ready access to the information they need to
estimate their potential out-of-pocket costs for health care items and
services before that service is rendered or that item is delivered. The
final rules are also intended to empower consumers by incentivizing
market innovators to help consumers understand how their plan or
coverage pays for health care and to shop for health care items and
services based on price, which is a fundamental factor in any
purchasing decision.
D. Executive Order
On June 24, 2019, President Trump issued Executive Order 13877,
``Executive Order on Improving Price and Quality Transparency in
American Healthcare to Put Patients First.'' Section 3(b) of Executive
Order 13877 directed the Secretaries of the Departments to issue an
advance notice of proposed rulemaking (ANPRM), consistent with
applicable law, soliciting comment on a proposal to require health care
providers, health insurance issuers, and self-insured group health
plans to provide or facilitate access to information about expected
out-of-pocket costs for items or services to patients before they
receive care. The Departments considered the issue, including by
consulting with stakeholders, and determined that an NPRM, rather than
an ANPRM, would allow for more specific and useful feedback from
commenters, who would be able to respond to specific proposals.
E. Proposed Rules
In response to Executive Order 13877 and to also implement
legislative mandates under sections 1311(e)(3) of PPACA and section
2715A of the PHS Act, the Departments published an NPRM entitled
``Transparency in Coverage'' on November 27, 2019 (to be codified at 26
CFR part 54, 29 CFR part 2590, and 45 CFR part 147) (the proposed
rules) with comments requested by January 14, 2020.\68\ In response to
requests from stakeholders, the Departments extended the comment period
15 days, to January 29, 2020.\69\ The proposed rules set forth proposed
requirements for group health plans and health insurance issuers in the
individual and group markets to disclose cost-sharing information upon
request to a participant, beneficiary, or enrollee, including an
estimate of an individual's cost-sharing liability for covered items or
services furnished by a particular provider. The Departments proposed
that plans and issuers be required to make such information available
on an internet website and, if requested, through non-internet means,
thereby allowing a participant, beneficiary, or enrollee to obtain an
estimate and understanding of the individual's out-of-pocket expenses
and effectively shop for items and services. The proposed rules also
included proposals to require plans and issuers to disclose in-network
provider negotiated rates, and historical out-of-network allowed
amounts through two machine-readable files posted on an internet
website, thereby allowing the public to have access to health coverage
information that can be used to understand health care pricing and
potentially dampen the rise in health care spending.
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\68\ 84 FR 65464 (Nov. 27, 2019).
\69\ 85 FR 276 (Jan. 3, 2020).
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The proposed rules also included requests for information (RFIs) on
topics closely related to the rulemaking. Due to the design and
capability differences among the information technology (IT) systems of
plans and issuers, as well as difficulties consumers experience in
deciphering information relevant to health care and health insurance,
the Departments sought comment on additional price transparency
requirements that could supplement the proposed requirements for
disclosing cost-sharing information to participants, beneficiaries, or
enrollees and the proposed requirements for public disclosure of
negotiated rates and historical allowed amount data for covered items
and services from out-of-network providers. Specifically, the
Departments sought comment on whether plans and issuers should be
required to disclose information necessary to calculate a
participant's, beneficiary's, or enrollee's cost-sharing liability
through a publicly-available, standards-based application programming
interface (API).
Such a requirement would build off a final rule, ``Medicare and
Medicaid Programs; Patient Protection and Affordable Care Act;
Interoperability and Patient Access for Medicare
[[Page 72167]]
Advantage Organization and Medicaid Managed Care Plans, State Medicaid
Agencies, Children's Health Insurance Program (CHIP) Agencies and Chip
Managed Care Entities, Issuers of Qualified Health Plans in the
Federally-Facilitated Exchanges and Health Care Providers'' (CMS
Interoperability & Patient Access final rule), that CMS published on
May 1, 2020.\70\ That rule requires Medicare Advantage organizations,
Medicaid and CHIP Fee-for-Service programs, Medicaid managed care
plans, CHIP managed care entities, and QHP issuers in the FFEs to
provide enrollees with access to select data, including claims data,
through a standards-based API that conforms to the technical standards
adopted in the Office of the National Coordinator for Health
Information Technology (ONC) 21st Century Cures Act final rule at 45
CFR 170.215. The CMS Interoperability & Patient Access final rule
requires certain entities, such as FFE QHP issuers, to provide certain
data through a standards-based API. The Departments appreciate the
comments received in response to the API RFI and will use the comments
to inform the need for future rulemaking regarding whether plans and
issuers should be required to disclose information necessary to
calculate cost-sharing liability through a publicly-available,
standards-based API. HHS will also monitor the implementation of the
CMS Interoperability & Patient Access final rule to inform any such
future rulemaking.
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\70\ 85 FR 25510 (May 1, 2020).
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The proposed rule also included RFIs on how provider quality
measurements and reporting in the private health insurance market may
be used to complement cost-sharing information for plans and issuers in
the private health insurance market. The Departments sought comment on
how existing quality data on health care provider items and services
could be leveraged to complement the proposals in the proposed rules.
The primary goal of the proposed and final rules is making information
available to address the absence of price transparency in the health
care market; the final rules do not address health care quality at this
time.
HHS also proposed to amend its MLR program rules using the
authority under section 2718(c) of the PHS Act, under which the
standardized methodologies for calculating measures of the activities
reported under section 2718(a) of the PHS Act shall be designed to take
into account the special circumstances of smaller plans, different
types of plans, and newer plans. Specifically, HHS proposed to
recognize the special circumstances of a different and newer type of
plan for purposes of MLR reporting and calculations for plans that
share savings with consumers who choose lower-cost, higher-value
providers. HHS proposed to amend 45 CFR 158.221 to add a new paragraph
(b)(9) to allow any such ``shared savings'' payments made by an issuer
to an enrollee as a result of the enrollee choosing to obtain health
care from a lower-cost, higher-value provider, to be factored into an
issuer's MLR numerator, beginning with the 2020 MLR reporting year (for
reports filed by July 31, 2021).
The Departments requested comments on all aspects of the proposed
rules, as well as a number of specific issues. The Departments received
over 25,000 comments in response to the proposed rules from a range of
stakeholders, including plans and issuers, health care providers,
prescription drug companies, employers, state regulators, health IT
companies, health care policy organizations and think tanks, and
individuals. No requests for a public hearing were received. The
Departments received a number of comments and suggestions that were
outside the scope of the proposed rules that are not addressed in the
final rules (for example, regarding hospital prices, other methods for
reducing health care and prescription drug costs, consumer education
and provider directories). After careful consideration of the comments,
the Departments are finalizing the proposed rules with certain
modifications made in response to comments. These modifications are
discussed later in this preamble.
F. Legal Authority
Several commenters questioned the Departments' legal authority
regarding various aspects of the proposed rules. The Departments are of
the view that the legal authorities identified earlier in this preamble
are sufficient to support the final rules.
1. Statutory Authority Under Section 1311(e)(3) of PPACA
Several commenters contended that section 1311(e)(3)(A)(ix) of
PPACA does not give the Departments statutory authority to require that
plans and issuers make the rates they have negotiated with providers
and out-of-network allowed amounts publicly available. The commenters
noted that section 1311(e)(3)(A) of PPACA enumerates eight specific
categories of information subject to the transparency in coverage
mandate followed by a ninth ``catchall'' category consisting of ``other
information as determined appropriate by the Secretary.'' \71\ These
commenters maintained that the Secretary of HHS's authority under
section 1311(e)(3)(A)(ix) of PPACA is insufficient to support a
requirement to publicize negotiated rates because they are not
sufficiently similar to the other categories of information identified
under section 1311(e)(3)(A) of PPACA.
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\71\ See section 1311(e)(3)(A)(i) through (viii) of PPACA.
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The Departments disagree with these comments and are of the view
that the information required to be disclosed under this rule fits
squarely within the scope of information that plans and issuers may be
required to disclose under section 1311(e)(3)(A)(ix) of PPACA and
section 2715A of the PHS Act. Section 1311(e)(3)(A)(i) to (viii) of
PPACA outlines specific information and data that must be submitted to
the Exchange, the Secretary of HHS, the relevant State insurance
commissioner, and the public on an accurate and timely basis. In
addition, section 1311(e)(3)(A)(ix) of PPACA requires health plans to
submit ``other information as determined appropriate by the
Secretary.'' Under established principles of statutory construction,
when a general term follows a list of specific terms in a statute, the
general term is construed to encompass subjects of a similar character
to the specific terms. The principle of ejusdem generis guides courts
in evaluating a catch-all at the end of a list. Therefore, when a
statute allows an implementing agency to exercise its discretion by
adding additional items to a list, the implementing agency is empowered
to add additional items as long as those items are of similar character
to the items enumerated in the statute.\72\ In this case, the statutory
list includes information and data useful to evaluate the coverage
offered by plans and issuers with an emphasis on business practices,
financial stability, and consumer experience. The list also includes
information useful to regulators and the public in general to evaluate
plans' and issuers' business practices and activity in the market.
Given that the list includes some disclosures that are more immediately
useful to individual consumers and others that are more immediately
useful to regulators, the catchall provision is reasonably and best
read as Congress' recognition that the Secretary of HHS (and,
therefore, the Departments, by virtue of their joint authority under
section 2715A of the PHS Act) would need broad flexibility to require
the
[[Page 72168]]
disclosure of information as appropriate to deliver the transparency
necessary for consumers to understand their coverage options and for
regulators to hold plans and issuers accountable.
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\72\ See Norfolk & Western R. Co. v. Train Dispatchers, 499 U.S.
117, 128-29 (1991).
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It is important to note that Congress considered one amendment that
would have only required public disclosure at least annually of in-
network allowed charges and expected allowed charges for out of network
without allowing the Secretary discretion to add to the content of the
required disclosure.\73\ Instead of adopting this prescriptive
approach, Congress required public disclosure of a broader set of
information that similarly included payments for out-of-network
services, as well as providing the Secretary discretion to require
disclosure of other information. While Congress did not specifically
include in-network allowed charges in the provision enacted, the
discretion they provided suggests they understood that the Secretary
might later find that requiring the disclosure of additional
information, including information considered by Congress, might be
useful and appropriate. That Congress considered and rejected a more
prescriptive approach strongly suggests Congress intended that the
Secretary have the ability to mandate more particularized disclosures
in the future, including the disclosure of in-network negotiated
rates.\74\
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\73\ Congressional Record 155: 183 (December 8, 2009) p. S12716.
Available at: https://www.congress.gov/111/crec/2009/12/08/CREC-2009-12-08-senate.pdf.
\74\ See, for example, Lehman v. Nakshian, 453 U.S. 156, 167-8
(1981) (citing a rejected amendment to a Federal statute as evidence
of Congressional intent).
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A plan's or issuer's negotiated rates provide important information
to help consumers both evaluate their options before buying coverage
and, after choosing coverage, evaluate how to use their coverage when
they need care. Those shopping for coverage will benefit from knowing
how effectively a plan or issuer negotiates rates; for example, by
comparing the rates one plan or issuer pays a provider for a particular
item or service that this consumer knows they, or their family, will
need in the future, which can then allow them to shop and compare which
plans and issuers offer the most value. Once coverage is obtained,
knowing negotiated rates upfront will ensure consumers covered under a
variety of plan designs and coverage options to, in each case, have
access to the information they need to obtain health care services in
an efficient, cost-effective manner, when considering available options
for a shoppable service. As discussed earlier in this preamble, making
negotiated rates public also strengthens other health care
stakeholders' ability to support consumers. Because negotiated rates
provide important information to help people--including consumers,
regulators and the general public--evaluate the coverage offered by a
plan or issuer, it clearly falls within the scope of information
already required under section 1311(e)(3)(A) of PPACA. As discussed in
more detail later in this section, out-of-network allowed amounts
likewise provide vital information to help evaluate coverage.
Out-of-network allowed charges also provide consumers with
important information. Consumers may opt for out-of-network services
for numerous reasons, such as the unavailability of an in-network
provider who can meet certain medical needs, an existing relationship
with an out-of-network provider, the recommendation of another
provider, or personal convenience. Disclosure of estimates of out-of-
network allowed amounts is essential to the ability of consumers
considering out-of-network services to form an estimate of their
potential liability. Limiting transparency in pricing requirements to
only providers under contract with a carrier would prevent transparency
for all such services, contrary to the plain language of the
statute.\75\ Indeed, the language of the statute (for example, the
requirement of section 1311(e)(3)(B) of PPACA that the intended
audience, including individuals with limited English proficiency, can
readily understand and use because that language is concise, well-
organized, and follows other best practices of plain language writing)
indicates an intention to assist consumers by enhancing their ability
to make cost-conscious decisions; this is an essential component of
establishing and maintaining robust market competition with costs that
are reasonable and plausibly tethered to standard market discipline. As
the preamble to the proposed rules observed, there is substantial
evidence that increased price transparency provides consumers and the
public at large with the information that is necessary to improve
market efficiency.\76\ For these reasons, the Departments are of the
view that requiring disclosure of estimates of out-of-network allowed
amounts, which reflect out-of-network benefits under a plan, is well
within both the text and spirit of the statute and its aims to assist
consumers in selecting providers, evaluating market options, increasing
competition, and reducing market disparities. The Departments have
identified these requirements as beneficial to the ongoing efforts of
employers and regulators to aid consumers, and as consistent with the
goals of the statute; thus, the Departments reject the assertion of
commenters that these purposes are beyond the scope of the statute.
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\75\ Section 1311(e)(3)(A)(vii) of PPACA.
\76\ 84 FR 65464, 65489, 65495 (Nov. 27, 2019); see also Austin,
D.A., and Gravelle, J.G. ``Does Price Transparency Improve Market
Efficiency? Implications of Empirical Evidence in Other Markets for
the Healthcare Sector.'' United States Congress Congressional
Research Service. July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf; see also Brown, Z.Y. ``Equilibrium Effects
of Health Care Price Information.'' 100 Rev. Econ. & Stat. 1 (2018).
Available at: https://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf; see also Enthoven, A.
Market Forces and Efficient Health Care Systems. Health Affairs,
Vol. 23, No. 2. Available at https://www.healthaffairs.org/doi/full/10.1377/hlthaff.23.2.25.
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Several commenters asserted that the specific justifications the
Departments cite as support for mandating the disclosure of negotiated
rates are unrelated to the purposes authorized by statute. They
asserted that those purposes--assisting consumers in selecting health
care providers, assisting consumers in evaluating options in the
market, increasing competition and reducing disparities in the market,
assisting employers, and assisting state regulators--have no
relationship to the statutory purpose of providing transparency in
coverage for consumers. Moreover, commenters stated that the statute
does not authorize the use of price transparency mechanisms to affect
issuer and provider rate negotiations or health care costs generally,
to assist employers in negotiations, or to aid state regulators in
their duties. The Departments, however, find ample support in PPACA
evidencing the relationship between the purposes intended to be served
by this final rule, the overall purposes of PPACA, and the PPACA's
price transparency measures, including section 1311(e)(3).
The purposes underlying the final rule's requirement to disclose
negotiated rates are directly tied to providing transparency in
coverage to consumers. The negotiated rate information that the final
rules require to be disclosed pursuant to the Departments' authority
under section 1311(e)(3)(A)(ix) of PPACA, and section 2715A of the PHS
Act, is directly relevant to providing consumers with transparent
pricing information sufficient to allow them to assess, in advance of
receiving services, their liability under a health plan or
[[Page 72169]]
health coverage in the numerous instances in the course of any plan
year in which the negotiated rate will determine all or a portion of a
consumer's liability. This is important information that helps
consumers under a wide variety of plan designs and cost-sharing
arrangements in both choosing and using coverage. The Departments are
requiring the disclosure of cost information to further the goal of
price transparency and are doing so under the authority of section
1311(e)(3) of PPACA.
Two commenters suggested that the proposal to require the release
of negotiated rates in machine-readable format is not authorized under
the statute. The statute mandates that transparency in coverage
information ``shall be provided in plain language . . . that the
intended audience, including individuals with limited English
proficiency, can readily understand and use because it is concise,
well-organized, and follows best practices of plain writing.'' \77\
These commenters contended that machine-readable information is not
plain language that is accessible or understandable to the typical
consumer, and is therefore not within the scope of information
authorized for public disclosure under section 1311(e)(3)(B) of PPACA.
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\77\ Section 1311(e)(3)(B) of PPACA.
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The Departments disagree with this assertion. Consistent with the
statute, the final rules require the machine-readable files to include
a plain language description for each billing code. The proposed
requirement that two data files be provided in ``machine-readable
format''--one containing negotiated rates and the other containing out-
of-network allowed amounts--is a purely operational consideration
intended to ensure that the file data can be imported or read by a
computer system directly, without altering the data, and without
reliance on proprietary software.\78\ Under section 1311(e)(3)(B) of
PPACA, the ``plain language'' requirement concerns information to be
made available to the public, the ``intended audience,'' per the
statute. The Departments require the publication of data in machine-
readable files so that the required information may be presented to all
members of the intended audience in a concise, well-organized manner
that follows best practices of plain writing relevant to the intended
audience.
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\78\ 84 FR 65464, 65481 (Nov 27. 2019).
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The Departments explain elsewhere in the preamble that the intended
audience for the information required to be published under the final
rules includes all consumers and purchasers of health care items and
services, including individual consumers, employers, and government
health care programs. The intended audience also includes health care
stakeholders such as researchers, legislators, and regulators, as well
as application developers who could make the information usable and
easily understood by laypersons. Accordingly, application developers
will be able to access the data in a format that is easily used and
understood using skills common to application developers. This same
expertise allows such innovators to incorporate large data sets into
easy-to-use internet-based tools and mobile applications that will
present information to laypersons in easy-to-understand, plain language
that is sufficiently concise and well-organized. The Departments are of
the view that providing the files in machine-readable format is an
effective and necessary mechanism to ensure that price transparency
information be made available to all members of the intended audience
in a consistent, understandable, plain language format, as the statute
requires.
One commenter suggested that the disclosures to the public required
under section 1311(e)(3)(A) of PPACA consist of aggregated data only
and do not contemplate or allow public disclosure of specific rate and
price information. The Departments disagree. While it is true that
several of the data elements listed under section 1311(e)(3)(A) of
PPACA are general in nature, such as financial disclosures and
enrollment data, this fact does not compel the conclusion that all
elements listed must be construed as requiring aggregated information.
As noted above, the list encompasses information and data useful to the
evaluation of plans and issuers by all varieties of health care
consumer, including individuals, employers, and government programs.
Certain elements provide information specific to the benefits and
protections a plan or issuer's coverage provides to an individual,
including claims payment policies and information on enrollee rights
under the law. In particular, the data element listed at section
1311(e)(3)(A)(vii) of PPACA encompasses ``information on cost sharing
and payments with respect to any out-of-network coverage,'' which, by
its plain terms, does not contemplate general or cumulative
information.
The final rules specify the nature of the information that must be
made available pursuant to sections 1311(e)(3)(A)(vii) and (ix) of
PPACA, and the manner in which it is to be made available to fully
implement the goals and purposes of the statute. Section 1311(e)(3)(C)
of PPACA concerns disclosures to participants, beneficiaries, and
enrollees receiving services from participating providers only, whereas
section 1311(e)(3)(A) of PPACA concerns disclosures to the public
generally and incorporates out-of-network payment information as well.
Taken together, and as implemented under the final rules, the statute
and regulatory schemes cover all persons seeking health pricing
information in a given market, and advance the purposes of enhancing
competition, reducing price disparities, and ultimately lowering costs
through transparency in coverage.
Ultimately, by adding section 2715A of the PHS Act and section
1311(e)(3) of PPACA through the manager's amendment prior to passing
PPACA in the Senate, Congress made transparency a key component of the
PPACA's comprehensive framework for regulating private health coverage
through Federal law. Notably, in contrast to the amendment rejected by
Congress discussed earlier in this preamble, the transparency in
coverage provisions signed into law provide a far more comprehensive
and expansive approach toward providing transparency. The law covers
nearly all private health plans, requires disclosure by plans through
an internet website, requires disclosures to more entities, requires a
broader set of information disclosures, and provides additional
discretion to expand information disclosures. By taking this approach,
Congress recognized both the importance and the complexity of requiring
transparency. The discretion provided under the statute ensures that
the Departments can accommodate changes in technology and health care
markets, as well as build on the information disclosures specifically
itemized in the statute.
A commenter also contended that the proposal to require issuers to
make estimates of out-of-network allowed amounts available through the
internet-based self-service tool is not authorized by the statute. This
commenter asserted that section 1311(e)(3)(C) of PPACA only authorizes
a requirement that payers make available information concerning cost-
sharing obligations with respect to items or services furnished by a
participating provider, not by out-of-network providers.
The Departments disagree and are of the view that the statute fully
supports a requirement that plans and issuers make available
information concerning cost-sharing obligations with respect to
[[Page 72170]]
items or services furnished by out-of-network providers. The
information to be made available under section 1311(e)(3) specifically
includes ``[i]nformation on cost sharing and payments with respect to
any out-of-network coverage,'' as well as ``[o]ther information as
determined appropriate by the Secretary.'' \79\ While section
1311(e)(3)(C) of PPACA focuses primarily on providing information to
enrollees, section 1311(e)(3)(A) of PPACA authorizes the Departments to
make certain out-of-network information available to the public, which
includes participants, beneficiaries, and enrollees. Thus the
Departments reasonably determined that section 1311(e)(3)(A) and (C),
together, authorize the requirement that plans and issuers provide cost
estimates for covered items and services provided by out-of-network
providers.
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\79\ Section 1311(e)(3)(A) of PPACA; see also Section
1311(e)(3)(A)(vii) and (ix) of PPACA.
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2. Constitutional Concerns
Several commenters asserted that requiring issuers to make rates
they have negotiated with providers available to the public constitutes
compelled commercial speech in violation of the First Amendment to the
Constitution, and an unlawful taking of trade secrets without just
compensation in violation of the Fifth Amendment. Commenters cited
various reasons for their belief that the requirement in the proposed
rules to disclose negotiated rates to the public could not survive
constitutional scrutiny.
Several commenters contended that the proposed requirement
constituted compelled commercial speech, and that the rationale the
Departments articulated to justify the proposed requirement failed to
meet the legal standard necessary to justify such action. One commenter
asserted that a standard of constitutional scrutiny higher than that
relevant to compelled commercial speech applies to the requirement to
publish negotiated rates because, the commenter contended, the
disclosure of negotiated rates does not propose a future commercial
transaction. Some commenters challenged the proposed rules on the basis
that negotiated rates have little or no relevance or value to consumers
attempting to ascertain their potential liability for a particular
service at a given point in time in the future because negotiated rates
do not reflect the terms of different plan designs or the status of the
individual consumer at a given point in time in relation to cost-
sharing obligations, in particular any annual deductible.
Two commenters asserted that the requirement to publicly disclose
negotiated rates would go well beyond the stated goal of providing
notice to participants, beneficiaries, and enrollees of cost-sharing
liability for covered services because it calls for negotiated rates to
be available to the public generally, not just to enrolled consumers
inquiring about their coverage. They also claimed that disclosure of
negotiated rates would be extremely burdensome because fulfilling the
mandate would require the disclosure of millions, or even billions, of
data points. One commenter asserted that because the requirement to
publish negotiated rates would not be useful to consumers in all
situations, the requirements in the proposed rules were not narrowly
tailored enough to survive constitutional scrutiny.
Some commenters also contended that the Departments' other stated
interests in mandating the publication of negotiated rates, including
lowering prices, increasing competition, and informing decision-making
in the market generally, are not authorized under relevant statute;
therefore, the breadth of these requirements is overly burdensome and
inclusive of information not necessary to advance the goals of the
statute. These commenters concluded that, to the extent the mandated
publication of negotiated rates is calculated to advance those
purposes, they are not sufficiently tailored to statutory goals to
survive constitutional scrutiny.
a. First Amendment Compelled Speech
The Departments disagree that the proposed rules and the final
rules run afoul of the First Amendment and would not survive
constitutional scrutiny. As the United States Supreme Court recognized
in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985) and
recently confirmed in National Institute of Family and Life Advocates
v. Becerra, 138 S. Ct. 2361, 2372, 2376 (2018) (``NIFLA''), required
disclosures of factual, uncontroversial information in commercial
speech are subject to more deferential First Amendment scrutiny. Under
the approach articulated in Zauderer, courts have upheld required
disclosures of factual information in the realm of commercial speech
where the disclosure requirement reasonably relates to a government
interest and is not unjustified or unduly burdensome such that it would
chill protected speech. See, e.g., Am. Meat Inst. v. U.S. Dept. of
Agric., 760 F.3d 18, 27 (D.C. Cir. 2014); Mass. Ass'n of Private Career
Sch. v. Healey, 159 F. Supp. 3d 173, 201 (D. Mass. 2016).
The Departments articulated substantial governmental interests in
proposing these requirements: Assisting consumers of health care
services in understanding the costs for which they will be liable for
covered services prior to the delivery of the services; assisting other
consumers of health care, such as employers and government health
benefits programs, in evaluating and negotiating coverage options and
obtaining the most value for health care dollars; and supporting a
market-driven health care economy that is sustainable. The preamble to
the proposed rules also explained how the information required to be
disclosed under the proposed rules is of substantial value to
consumers, including health plan participants, beneficiaries, and
enrollees who have and have not satisfied their annual deductible or
reached their maximum out-of-pocket limit, and that remains true under
the final rules. For such consumers who have not met their deductibles,
knowledge of negotiated rates is necessary for estimating their out-of-
pocket costs because these consumers generally will be responsible for
paying the full negotiated rate for health care items and services
until they reach their deductible (or the maximum annual limit on cost
sharing).
As the Departments noted earlier in the preamble, between the
enactment of PPACA and 2019, average family deductibles for private
sector employees increased by 85 percent, up to $3,655 in 2019.\80\
Consumers in the private health insurance market are increasingly
responsible for a greater share of their health care costs through
higher deductibles and shifts from copayments to coinsurance.\81\ The
final rules will give health care consumers and stakeholders
information vital to their roles in creating and supporting a
sustainable market-driven health care economy.
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\80\ See ``Medical Expenditure Panel Survey. Insurance Component
National-Level Summary Tables.'' United States Department for Health
and Human Services Agency for Healthcare Research and Quality.
Available at: https://www.meps.ahrq.gov/mepsweb/data_stats/quick_tables_search.jsp?component=2&subcomponent=1.
\81\ The preamble to the proposed rules contains a detailed
discussion regarding increases in deductibles. See 84 FR 65464,
65465 (Nov. 27, 2019) (citing Ray, M., Copeland, R., Cox, C.
``Tracking the rise in premium contributions and cost-sharing for
families with large employer coverage,'' Peterson-Kaiser Health
System Tracker. August 14, 2019. Available at: https://www.healthsystemtracker.org/brief/tracking-the-rise-in-premium-contributionsand-cost-sharing-for-families-with-large-employercoverage/.).
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[[Page 72171]]
The final rules also will provide critical information to consumers
who have satisfied their deductibles or reached their out-of-pocket
limit. These consumers may wish to base their health care spending
decisions on underlying prices to avoid excess spending by their issuer
or employer that could lead to premium increases, increased out-of-
pocket obligations, or lower employer contributions toward employer-
sponsored coverage. Knowing the rates negotiated by other issuers in
their geographic market will assist consumers during open enrollment,
as they search for a plan that may lower their out-of-pocket costs in
the coming year.
The government also has a substantial interest in assisting other
health care spenders, such as employers and government benefits
programs, to make coverage choices that drive value for the public.
Given the size and scope of the country's health care market and the
fact that choices made by employers and benefits programs operate at
scale to direct health care spending, the government can increase the
value of health care expenditures by ensuring those entities have
access to accurate information. Providing employers and government
benefit programs with actionable data may also help drive down total
health care spending, as issuers compete to offer higher-value
programs.
The government's interest in promoting a sustainable health care
economy driven by market forces is substantial, as reflected in section
1311(e) of PPACA. As of 2018, U.S. health care spending had reached
$3.6 trillion, or $11,172 per person and accounted for 17.7 percent of
the nation's Gross Domestic Product.\82\ Given the scope of the market
and the earlier-discussed data suggesting that price transparency and
market forces can drive down health care costs, the government's
interest in increasing price transparency is substantial.
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\82\ ``Historical National Health Expenditure Data.'' Centers
for Medicare and Medicare Services. Available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.
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Each of the three interests identified above is furthered by the
final rules. For individuals, the data provided will permit them to
compare prices for health care items and services and allocate their
funds accordingly. For benefit plans and employers, the information
provided will guide decision-making about which coverage options to
offer, and which providers or third parties, like pharmacy benefit
managers (PBMs), to contract with. For the health care economy as a
whole, the Departments are of the view (based on available data) that
transparency and market forces will drive savings and reduce
expenditures. Accordingly, the Departments continue to hold the view
that the final rules serve substantial government interests.
Furthermore, the requirement to provide these disclosures does not
unduly burden plan or issuer speech because nothing in the final rules
would ``drown out [a plans' or issuers'] own message'' or ``effectively
rule out'' any mode of communication. See NIFLA, 138 S. Ct. at 2378.
Plans and issuers remain free to communicate with consumers using
methods and media they have always used or may choose to use in the
future.
The Departments further disagree that the final rules would be
subject to a standard of constitutional scrutiny higher than that
applied to compelled commercial speech. For First Amendment purposes,
commercial speech is speech ``related solely to the economic interests
of the speaker and its audience.'' Cent. Hudson Gas & Electric Corp. v.
Pub. Serv. Comm'n of N.Y., 447 U.S. 557, 561 (1980). Price information
concerning the cost of health services is related solely to the
economic interests of providers and the consumers who seek their
services. The speech in question here, therefore, is commercial speech.
Furthermore, the disclosure of negotiated rates is one concerning
``purely factual and uncontroversial information about the terms [i.e.,
the price] under which services are available.'' See Zauderer, 471 U.S.
at 651; see also Am. Meat Inst. v. U.S. Dept. of Agric., 760 F.3d 18,
27 (D.C. Cir. 2014). Therefore, the imposition on commercial speech by
the final rules need only be ``reasonably related'' to the government's
stated interest. For the reasons discussed above, the Departments are
of the view that making available negotiated rates to consumers is
reasonably related to the government's stated interests in providing
greater cost information to consumers and benefit plans, as well as
increasing price transparency in the health care market more broadly.
While the Departments disagree that the stricter constitutional
scrutiny under Central Hudson would apply to the final rules for the
reasons discussed above, the Departments also are of the view that the
government interests described above are ``substantial,'' and the
regulations, for the reasons described above, directly advance that
governmental interest and are not more extensive than necessary to
serve that interest. None of the alternatives considered by the
Departments would provide the full panoply of information necessary to
achieve the identified interests. Specifically, the only way to provide
information concerning a consumer's personal liability for health care
services when the negotiated rate is all or any portion of that
liability is by disclosing those rates.
The Departments disagree that the rules are excessively burdensome
and are invalid because they purportedly exceed the statute's goal of
providing notice of cost-sharing liability. The Departments are of the
view that, in addition to providing participants, beneficiaries, and
enrollees with notice of cost-sharing liability, the final rules are
intended to advance a number of concurrent goals, as described earlier
in this preamble. These goals are consistent with the full text of
section 1311(e)(3) of PPACA and section 2715A of the PHS Act. They
include the overarching goal of facilitating a market-driven heath care
system by giving consumers of health care services data that will
enable consumers to make fully informed, cost-conscious decisions when
choosing health care. These transparency requirements will support the
creation of a competitive dynamic in health care markets that leads to
narrower price differentials for the same services, fosters innovation,
and potentially lowers overall health care costs over time.\83\ These
goals are consistent with the statutory mandate to promote transparency
in coverage by making available to the public accurate and timely
health care information, including cost-sharing information, and other
information as deemed appropriate by the Departments.
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\83\ 84 FR 65465 (Nov. 27, 2019).
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The Departments also disagree with any notion that, because
published negotiated rates would not be useful to all consumers in all
situations, the final rules are not sufficiently tailored to survive
constitutional scrutiny. Consumers seeking in-network items or services
must have access to negotiated rate information to calculate out-of-
pocket costs under the majority of health care payment models. These
negotiated rates determine the price they will be obliged to pay, up to
the applicable out-of-pocket limit. Thus, disclosing the negotiated
rate is important to the consumer's ability to reasonably estimate his
or her personal financial liability in advance of receiving services.
In particular, and as explained earlier in this preamble, annual
deductibles for plans and issuers
[[Page 72172]]
now routinely obligate consumers to pay several thousand dollars before
the plan or issuer pays any benefits. The requirement to disclose
negotiated rates to consumers is, therefore, crucial to providing
meaningful transparency in health care markets.
b. Fifth Amendment Taking
The Departments also disagree that the requirement to disclose
negotiated rates in the final rules constitutes an unlawful taking
without just compensation under the Fifth Amendment. As an initial
matter, the subject of any ``taking'' is a cognizable property
interest. Commenters asserted that their negotiated rates constitute
property because they are trade secrets. The Departments disagree. In
order for a piece of information to qualify as a trade secret, it must
be the subject of efforts to maintain its secrecy that are reasonable
under the circumstances. Under most circumstances, if a piece of
information is disclosed to third parties who have no obligation to
keep it a secret, it does not qualify for trade secrets protection.
Negotiated rates for health care items and services are routinely
disclosed in EOBs provided to participants, beneficiaries, and
enrollees. Participants, beneficiaries, and enrollees have no
obligation to keep the information contained in their EOBs secret; some
patients provide them to journalists or upload them to crowd-sourcing
websites.\84\ The Departments are of the view that this routine
disclosure of negotiated rate information is sufficient to defeat any
asserted trade-secret protection, and, therefore, the issuers have no
proprietary interest in the negotiated rates that could be the subject
of a constitutional ``taking.''
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\84\ Kliff, S. ``Why I'm Obsessed With Patients' Medical Bills,
New York Times. August 7, 2020. Available at https://www.nytimes.com/2020/08/07/insider/coronavirus-medical-bills.html;
see also Cerullo, M. ``As medical costs soar, more Americans turn to
crowdfunding.'' CBS News. February 21, 2020. Available at: https://www.cbsnews.com/news/health-care-costs-crowdfunding-medical-bills/.
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Moreover, plans' and issuers' expectations of confidentiality in
information provided as a condition of participation in a highly
regulated industry (for example, health insurance) are substantially
diminished by the highly regulated nature of the industry. See, e.g.,
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1007 (1984) (noting that
expectations are necessarily adjusted in areas that ``ha[ve] long been
the source of public concern and the subject of government
regulation''); Me. Educ. Ass'n Benefits Trust v. Cioppa, 695 F.3d 145
(1st Cir. 2012) (discussing a Maine law requiring health issuers to
disclose loss information); Franklin Mem'l Hosp. v. Harvey, 575 F.3d
121, 128 (1st Cir. 2009) (holding that a claimant's investment-backed
expectations were ``tempered by the fact that it operate[d] in the
highly regulated hospital industry'').\85\ Plans and issuers are
already subject to extensive regulation under Federal and state law. As
noted by the 1st Circuit in Pharmacy Care v. Rowe:
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\85\ PBMs serve as intermediaries between pharmacies and health
benefit plans, including plans covered by ERISA. PBMs contract with
pharmacies to establish pharmacy networks and contract with health
benefit plans to provide access to those pharmacy networks. When a
participant in a health benefit plan fills a drug prescription at a
network pharmacy, the PBM pays the pharmacy at the rate negotiated
in the contract between the PBM and the pharmacy (less any copayment
by the participant), and the health benefit plan then reimburses the
PBM at the rate negotiated in the contract between the PBM and the
health benefit plan.
If [regulated parties] truly assumed that they would be free
from disclosure requirements . . . this would be more wishful
thinking than reasonable expectation. Whether or not the law strikes
the right economic balance between competing producer and consumer
interests, it is no more a taking than the requirement that public
corporations disclose private corporate information about financial
---------------------------------------------------------------------------
prospects to the public through regular SEC filings.
Pharm. Care Mgmt. Ass'n v. Rowe, 429 F.3d 294, 316 (1st Cir. 2005)
(joint concurring opinion representing the opinion of the court). The
Court further stated: ``Given the absence of a full-scale taking and
the presence of a traditional regulatory interest, it is enough to
defeat the takings claim that no reasonable investment-backed
expectation is present at all.'' Id. at 315; see also Good v. United
States, 189 F.3d 1355, 1363 (Fed. Cir. 1999) (``We have previously held
that the government is entitled to summary judgment on a regulatory
takings claim where the plaintiffs lacked reasonable, investment-backed
expectations. . . .'').
Even if there were some property interest in negotiated rates, the
Departments are of the view that this regulation is not a taking. The
Supreme Court ``has identified several factors that should be taken
into account when determining whether a governmental action has gone
beyond `regulation' and effects a `taking.' '' Monsanto, 467 U.S. at
1005. Among those factors are ``the character of the governmental
action, its economic impact, and its interference with reasonable
investment-backed expectations.'' Id. (citing PruneYard Shopping Ctr.
v. Robins, 447 U.S. 74, 83 (1980)); see also Kaiser Aetna v. United
States, 444 U.S. 164, 175 (1979); Penn Cent. Transp. Co. v. City of
N.Y., 438 U.S. 104, 124 (1978).
In requiring disclosure under the final rules, the government does
not do so with the intention that the information is primarily and
explicitly for the government's own use, or that any such potential
impact is the purpose for requiring the disclosure. Instead, the final
rules are intended to, and will, enable consumers to access information
needed to make informed decisions on health care services. Under Penn
Central, ``[a] `taking' may more readily be found when the interference
with property can be characterized as a physical invasion by government
than when interference arises from some public program adjusting the
benefits and burdens of economic life to promote the common good.''
Penn Central, 438 U.S. at 124 (citation omitted). The final rules
clearly fall on the other end of the spectrum, arising from statutory
provisions, section 1311(e)(3) of PPACA and section 2175A of the PHS
Act, that ``adjust[t] the benefits and burdens of economic life to
promote the common good.'' Connolly v. Pension Benefit Guar. Corp., 475
U.S. 211, 212 (1986).
3. Protections for Proprietary, Confidential Business Information, and
Trade Secrets
Several commenters objected to the proposed rules on grounds that
the requirement that issuers make public negotiated rates with
providers would require the disclosure of allegedly confidential,
proprietary business information, and trade secrets that are expressly
protected from disclosure by a variety of Federal and state laws, and
the statute does not in any way purport to abrogate those protections.
Several commenters pointed to the Defend Trade Secrets Act (DTSA),
which protects the property rights of trade secret holders,\86\ and the
Freedom of Information Act (FOIA),\87\ which protects confidential,
proprietary business information, and trade secrets from public
disclosure, as examples of Congress' intent that such information be
protected.
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\86\ 18 U.S.C. 1836(b).
\87\ 5 U.S.C. 552.
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The Departments disagree. As discussed above, the Departments are
of the view that the routine disclosure of negotiated rate information
to third parties via EOBs means that the rate information is not a
trade secret, and the DTSA, therefore, does not apply. Even if it did,
there can be no meaningful sense in which the disclosure of this
information pursuant to the final rules would constitute a
misappropriation by
[[Page 72173]]
improper means prohibited by the DTSA. The disclosures in question
would be made pursuant to a regulatory mandate authorized by law, to
effectuate policy priorities enacted by Congress: Namely, transparency
in health care. These disclosures cannot reasonably be construed as
``theft, bribery, or misrepresentation.'' \88\
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\88\ 18 U.S.C. 1839(5)-(6).
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The disclosures required under the final rules would also not
constitute a breach or inducement of a breach of a duty to maintain
secrecy, as the final rules apply prospectively in a regulatory
environment in which all parties to provider agreements, and all
affected plans and issuers, are being placed on notice and should be
aware in advance of the requirements of the final rules. All parties to
these contracts are therefore positioned to modify contractual
arrangements, or similar policies, practices, or expectations relating
to privacy or trade secrets to conform to the final rules. Otherwise,
the final rules will supersede these arrangements to the extent
necessary to implement these rules.
FOIA is also not relevant to the disclosure that would be required
by the final rules.\89\ FOIA is a public information law that applies
to Federal agencies, and generally enables the public to obtain records
in possession of an agency.\90\ Under the final rules, by contrast,
negotiated rate information and out-of-network allowed amount
information would be made available for the express purpose of making
the information broadly available to the public, consistent with the
authority Congress vested in the Departments. FOIA does not apply to
disclosures by private entities such as the plans and issuers that
would be subject to the disclosure requirements in the final rules. The
exemptions found in the FOIA statute apply to disclosures by the
government; that a piece of information might be subject to a FOIA
exemption does not mean it is entitled to a heightened protection from
disclosure when held by a private party.
---------------------------------------------------------------------------
\89\ 5 U.S.C. 552.
\90\ 5 U.S.C. 552(b)(4).
---------------------------------------------------------------------------
Neither does FOIA apply to information maintained by private
entities and not by an agency or government contractor, as that
information would not constitute an agency record. To be an agency
record subject to FOIA, an agency must have created or obtained the
materials and must be in control of the materials. U.S. Dep't of
Justice v. Tax Analysts, 492 U.S. 136, 145 (1989). Regardless of
whether the negotiated rates and allowed amounts would constitute trade
secrets or commercial information under FOIA, a requirement that
private entities make certain information public does not implicate
FOIA.
One commenter contended that the proposed disclosure of negotiated
rates does not concern trade secrets, and is therefore not prohibited
for that reason. The commenter asserted that the proposed disclosures
concern end prices, which are comparable to the ``sticker price'' of a
medical service or device. The commenter stated that those prices are
not themselves trade secrets, which the commenter contended consist of
negotiating tactics which the proposed rules would not require issuers
to make available to the public. As indicated above in relation to the
DTSA, the Departments agree that the final rules do not implicate trade
secrets.
In support of the proposition that Congress could not have intended
to undermine existing protections for confidential or proprietary
business information and trade secrets when it enacted section
1311(e)(3) of PPACA, one commenter noted that elsewhere in PPACA, where
Congress mandated pricing-related disclosures, it included language or
arrangements that protected individual negotiated rates and pricing
information from disclosure. A provision relating to the disclosure of
drug cost information mandates release of only aggregated information
and includes a specific designation of the information as confidential
and protected from publication except in specific formats and for
limited purposes that protect the identity of the parties to particular
pricing arrangements.\91\ Another provision mandates that hospitals
make public a list of standard charges for items and services, not
negotiated rates, on an annual basis only.\92\ Both of these
provisions, the commenter suggested, indicate Congressional intent to
protect proprietary business information that is contrary to the
requirements of the proposed rule.
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\91\ 42 U.S.C. 1320b-23(c).
\92\ 42 U.S.C. 300gg(18)(e).
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The Departments are aware that Congress included provisions
preventing or limiting disclosures of health care information in other
sections of PPACA but note that Congress did not include such
provisions in section 1311(e)(3)(A) of PPACA, indicating no intention
that such restrictions apply in this context.\93\
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\93\ See, for example, Keene Corp. v. United States, 508 U.S.
200, 208 (1993) (``[W]here Congress includes particular language in
one section of a statute but omits it in another . . . it is
generally presumed that Congress acts intentionally and purposely in
the disparate inclusion or exclusion.'').
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Several commenters also pointed to the Sherman Antitrust Act, and
specific applications of antitrust principles relating to the
disclosure of trade secrets, including negotiated rates between issuers
and providers in the health care context. They contend that Congress
could not have intended to indirectly undermine these long-standing
standards and policies when it enacted section 1311(e)(3) of PPACA.
Several commenters also cited interpretive communications and similar
guidance from the Federal Trade Commission (FTC) and the Antitrust
Division of the Department of Justice for the proposition that public
disclosure of negotiated prices can have anticompetitive effects and
harm consumers, contrary to long standing principles of antitrust law.
One commenter recommended that any plan to make public privately
negotiated rates should include requirements to aggregate information
to ensure that arrangements of specific market participants remain
confidential, and that a time lag also should be applied to any
released data to ensure current information is not compromised.
The Departments disagree with the notion that the final rules will
lead to anticompetitive behavior by plans, issuers, and providers. The
Sherman Antitrust Act prohibits any contract, combination, or
conspiracy in restraint of trade or commerce.\94\ Specifically, the law
prohibits any ``person'' from entering into any such contract, trust,
or similar arrangement.\95\ ``The primary purpose of the antitrust laws
is to protect interbrand competition.'' State Oil Co. v. Khan, 522 U.S.
3, 15 (1997) (citing Bus. Elec. Corp. v. Sharp Elec. Corp., 485 U.S.
717, 726 (1988)). The Departments are not of the view that publication
of plans' and issuers' negotiated rates with providers is likely to
spur plans and issuers (``persons'') to violate the law by colluding to
fix their prices in a manner that restrains trade. Rather, while the
publication of price information sometimes facilitates tacit collusion,
based on public comments and the many empirical studies that have
investigated the impact of price transparency on other, non-health care
markets, the Departments are of the
[[Page 72174]]
view that transparency of negotiated rates will likely motivate plans,
issuers, and providers to reassess the competitiveness of their prices
in order to continue to successfully compete with lower premiums,
deductibles, and other cost-sharing responsibilities, and lower priced
health care items and services. As stated in the preamble of the
Hospital Price Transparency Final Rule, many empirical studies have
investigated the impact of price transparency on markets, with most
research, consistent with predictions of standard economic theory,
showing that price transparency leads to lower and more uniform
prices.\96\ Traditional economic analysis suggests that if consumers
were to have better pricing information for health care services,
providers would face pressure to lower prices and provide better
quality care. Falling prices may, in turn, expand consumers' access to
health care.\97\
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\94\ 15 U.S.C. 1.
\95\ Id. ``Person'' or ``persons'' are defined at 15 U.S.C.
12(a) (``[P]erson'' or ``persons'' wherever used in this Act shall
be deemed to include corporations and associations existing under or
authorized by the laws of either the United States, the laws of any
of the Territories, the laws of any State, or the laws of any
foreign country'').
\96\ 84 FR 65464, 65524 (Nov. 27, 2019).
\97\ Austin, A. D., and Gravelle, J. G. ``Congressional Research
Service Report for Congress: Does Price Transparency Improve Market
Efficiency? Implications of Empirical Evidence in Other Markets for
the Healthcare Sector''. April 29, 2008. Available at: https://crsreports.congress.gov/product/pdf/RL/RL34101.
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By disclosing negotiated rates, the Departments are of the view
that the public (including patients, employers, clinicians, and other
third parties) will have the information necessary to make more
informed decisions about their care. The Departments expect that the
impact of more expansive transparency in pricing information will
increase market competition and may ultimately drive down the cost of
health care services, making care more affordable for all consumers.
Although the Departments appreciate that regulated entities could
seek to engage in unlawful behavior in restraint of trade, antitrust
law does not proscribe or limit action by the Federal Government to
address chronic issues in the nation's health care markets. Such
actions include new, innovative measures that, based on evidence and
research, are likely to improve competition and lower costs to
consumers. The Departments also are of the view that the statute and
the final rules do not constitute an abrogation of antitrust law.
Nothing under the final rules creates, compels, or endorses agreements
or conspiracies between or among persons to form illegal arrangements
or trusts in restraint of trade or commerce. To the contrary, antitrust
law enforcement remains an important tool to protect these markets from
anticompetitive behavior.
The Departments are of the view that the disclosure of negotiated
rates would serve a greater public interest and that ``concealing
negotiated price information serves little purpose other than
protecting dominant providers' ability to charge above-market prices. .
. .'' \98\ For example, in Maine, one state official indicated that
``to date, there is no evidence that the release of [Maine Health Data
Organization] claims data has resulted in an anticompetitive market.
Similarly, disclosure of claims data in New Hampshire has resulted
increased competition and reduced prices for health care.\99\
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\98\ Catalyst for Payment Reform. ``Report Card on State Price
Transparency Laws.'' July 2015. Available at: https://www.catalyze.org/wp-content/uploads/woocommerce_uploads/2017/04/2015-Report-Card-on-State-Price-Transparency-Laws.pdf.
\99\ Brown Z.Y. ``Equilibrium Effects of Health Care Price
Information.'' 101 Rev. of Econ. & Stat. 699 (2019). Available at:
https://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf.
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For the reasons set forth in this preamble, the Departments are of
the view that the final rules will enhance competition, improve
markets, and benefit all consumers of health care, including
individuals, employers, and government health care programs. Under the
final rules, disclosure of the negotiated rate is critical to the
ability of consumers, including those who have not met their annual
deductible obligation, to be able to reasonably estimate in advance
their personal liability for covered services from participating
providers. It is also critical in estimating coinsurance liabilities
that are calculated as a percentage of provider charges. In addition,
the Departments are of the view that accessible pricing information
improves market efficiency.\100\
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\100\ Austin, D.A., and Gravelle, J.G. ``CRS Report for
Congress: Does Price Transparency Improve Market Efficiency?
Implications of Empirical Evidence in Other Markets for the
Healthcare Sector.'' July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf.
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4. Administrative Procedure Act (APA) and Arbitrary and Capricious
Agency Action
Some commenters asserted that the proposed rules were arbitrary and
capricious and thus violate the APA. Two commenters contended that the
Departments' rationale is entirely speculative. They also contended
that the Departments have not quantified in a reliable way the costs or
anticipated benefits of the proposed rules, examined relevant data, or
articulated a satisfactory explanation for the proposed rules. One
commenter held the opposite position and asserted that the proposed
rules were fully consonant with APA requirements. The commenter
believed the Departments are implementing PPACA appropriately, and that
the interpretation of the authorities underlying the proposed rules was
reasonable and rationally explained by the Departments.
The Departments are also of the view that the final rules are
consistent with the APA. Section 1311(e)(3) of PPACA and section 2715A
of the PHS Act are designed to assist consumers by enhancing their
ability to make cost-conscious decisions, which is essential to
establish and maintain the level of market competition necessary to
ensure that health care costs are rational, reasonable, and governed by
standard market discipline. As the preamble to the proposed rules
observed, there is substantial evidence that increased price
transparency improves market efficiency.\101\ For these reasons, it is
within the scope of the statute to assist consumers with selecting
providers, evaluating market options, increasing competition, and
reducing market disparities. The carefully targeted information is
essential to the goals of price transparency, and there is no other
means of making cost-sharing liability information available to
consumers whose personal liability is determined in whole or in part by
reference to negotiated rates or allowed amounts. The Departments
further hold the view that the Departments have made reasonable efforts
to quantify all aspects of the final rules, and their potential
effects, for which data is available. The Departments also note that
efforts have been made to qualitatively address those areas where the
Departments are unable to adequately derive quantitative assessments.
Responses to additional comments are discussed later in the Regulatory
Impact Analysis (RIA) and Regulatory Alternatives Considered sections
of this preamble.
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\101\ 84 FR 65464, 65489; 65495 (Nov. 27, 2019); see also
Austin, A.D., and Gravelle, J.G. ``Congressional Research Service
Report to Congress: Does Price Transparency Improve Market
Efficiency? Implications of Empirical Evidence in Other Markets for
the Healthcare Sector.'' July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf; see also Brown, Z.Y.
``Equilibrium Effects of Health Care Price Information.'' 100 Rev.
Econ. & Stat. 1. Available at: https://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf; see also Enthoven, A.
``Market Forces and Efficient Health Care Systems.'' Health Affairs,
Vol. 23, No. 2. Available at https://www.healthaffairs.org/doi/full/10.1377/hlthaff.23.2.25.
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This preamble (as well as the preamble to the proposed rules) cites
substantial research indicating that increased price transparency
increases competition and lowers costs, leads to
[[Page 72175]]
more uniform pricing within markets, and increases overall market
efficiency.\102\ This preamble also cites an abundance of evidence
indicating that industry and other stakeholders believe that increased
price transparency will enhance competition and benefit consumers. As
stated earlier in this preamble in relation to comments regarding the
First Amendment, the information the final rules require to be
disclosed is clearly identified and has a direct nexus to the
government's legitimate and substantial interest in ensuring that
consumers have sufficient information to calculate out of pocket costs
for health care items and services and ultimately assess whether the
payment terms of plans and coverages are fair, reasonable, or
advantageous to the consumer. Furthermore, in the Impact Estimates of
the Transparency in Coverage Provisions and Accounting Table section
later in this preamble, the Departments identify ranges of relevant
factors and categories of information that the Departments have
attempted to quantify, as well as those factors and categories that the
Departments cannot quantify at this time. Nevertheless, the Departments
are of the view that those determinations are reasonable and
sufficiently thorough, and that the Departments' expectations regarding
the impacts of the final rules are not speculative.
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\102\ 84 FR 65464, 65466-67 (Nov. 27, 2019).
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5. Other Legal Concerns
Several commenters asserted that requiring issuers to make
negotiated prices public could violate various state laws, principles
of common law, and tort laws concerned with the protection of trade
secrets and proprietary business information. Several commenters
specifically stated that the proposal would violate the Uniform Trade
Secrets Act (UTSA) \103\ as adopted by several states.
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\103\ The Uniform Trade Secrets Act is a model statute that a
majority of states have adopted in some form. The UTSA is
promulgated by the Uniform Law Commission. See generally, Uniform
Trade Secrets Act with 1985 Amendments, Nat'l Conference of
Commissioners on Uniform State Laws, August 1985. UTSA has been
adopted in some form by 48 states. New York and North Carolina are
the exceptions. See ``Trade Secrets Act.'' Uniform Laws Commission.
Available at: https://www.uniformlaws.org/committees/community-home?CommunityKey=3a2538fb-e030-4e2d-a9e2-90373dc05792.
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The Departments understand these concerns and appreciate that
States have passed laws and regulations that may address the same or
similar information the final rules require to be publicly disclosed,
or disclosed to participants, beneficiaries, or enrollees. The final
rules will preempt these laws, to the extent they conflict with Federal
law and would prevent application of Federal requirements, as required
under section 1321(d) of PPACA and section 2724(a) of the PHS Act. The
Departments discuss this issue in more detail later in this preamble in
the context of addressing federalism considerations.
Moreover, the Departments are also of the view that negotiated
rates do not constitute trade secrets as defined under the UTSA and
under principles of tort law. A trade secret under the UTSA is
``information, including a formula, pattern, compilation, program,
device, method, technique, or process'' that ``derives independent
economic value. . . from not being generally known [or] readily
ascertainable by proper means by . . . other persons who can obtain
economic value from its disclosure [and] is the subject of efforts to .
. . maintain its secrecy.'' \104\ Critically, and as discussed earlier,
negotiated rates are routinely disclosed to beneficiaries in EOBs.
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\104\ See Uniform Trade Secrets Act with 1985 Amendments, Nat'l
Conference of Commissioners on Uniform State Laws, August, 1985;
Restatement (First) of Torts section 757 (1939).
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To the extent the final rules require disclosure of trade secrets,
the activity that supports a cause of action under tort law includes
obtaining the information by improper means or a breach of
confidence.\105\ No such scenario is implicated where the disclosure is
made pursuant to a regulatory mandate authorized by statute. In this
context, the disclosure is a legal obligation, and so the disclosure is
by definition proper and made in the absence of any duty of confidence.
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\105\ Restatement (First) of Torts section 757 (1939) (``GENERAL
PRINCIPLE. One who discloses or uses another's trade secret, without
a privilege to do so, is liable to the other if (a) he discovered
the secret by improper means, or (b) his disclosure or use
constitutes a breach of confidence reposed in him by the other in
disclosing the secret to him, or (c) he learned the secret from a
third person with notice of the facts that it was a secret and that
the third person discovered it by improper means or that the third
person's disclosure of it was otherwise a breach of his duty to the
other, or (d) he learned the secret with notice of the facts that it
was a secret and that its disclosure was made to him by mistake.'').
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Finally, even if negotiated rates could constitute trade secrets
under a state's law, state law cannot invalidate the authority Congress
granted to the Departments under section 1311(e)(3) of PPACA to require
disclosure of negotiated rates and other information that the
Departments determine appropriate to create a level of transparency in
coverage sufficient to address chronic issues in American health care
markets, including rising health care prices.
Several commenters asserted that making negotiated rates public
would violate contractual arrangements between virtually all issuers
and providers, in particular contractual provisions that prohibit
disclosure of negotiated rates. One commenter noted that this would, at
a minimum, require a considerable effort to amend many existing
contracts.
The Departments understand that changes in applicable laws and
regulations may necessitate changes to certain business and contractual
relationships over time. The Departments are of the view, however, that
the final rules are necessary to advance the interests of consumers and
to fulfill the goals of the relevant statutes. The Departments also
anticipate that in most cases, affected contracts include clauses that
specifically anticipate the possibility of future changes to applicable
law or regulations. Additionally, even if a contract between a provider
and a payer includes a provision prohibiting the public disclosure of
its terms, it is the Departments' understanding that such contracts
typically include exceptions if a particular disclosure is required by
Federal law. Finally, as the Supreme Court has found, ``[c]ontracts,
however express, cannot fetter the constitutional authority of
Congress. Contracts may create rights of property, but when contracts
deal with a subject matter which lies within the control of Congress,
they have a congenital infirmity. Parties cannot remove their
transactions from the reach of dominant constitutional power by making
contracts about them.'' Norman v. Balt. & Ohio R.R. Co., 294 U.S. 240,
307-08 (1935) (``If the regulatory statute is otherwise within the
powers of Congress . . . its application may not be defeated by private
contractual provisions.''); see also Connolly, 475 U.S. at 224.
Several commenters contended that the proposed rules would be
inconsistent with certain Executive orders. One commenter contended
that Executive Order 13877, which the Departments cited as the impetus
for the proposed rules, directs the agencies to ``require . . . health
insurance issuers . . . to provide or facilitate access to information
about expected out-of-pocket costs for items or services to patients
before they receive care.'' The commenter asserted that this directive
does not rationally encompass a requirement that issuers make public
all negotiated rates and allowed amounts.
[[Page 72176]]
The commenter also asserted that the proposed rules are incompatible
with section 3(b) of Executive Order 13877, which provides that any
rulemaking be ``consistent with applicable law,'' in that the proposed
rules run contrary to antitrust law as well as prohibitions against
disclosing trade secrets.
The Departments disagree with these comments. First, Executive
Order 13877 clearly states that it is ``not intended to, and does not,
create any right or benefit, substantive or procedural, enforceable at
law or in equity by any party against the United States, its
departments, agencies, or entities, its officers, employees, or agents,
or any other person.'' Executive Order 13877, Sec. 8(c). Thus, an
Executive order cannot form the basis of a challenge to a rulemaking.
Second, for all the reasons detailed earlier in this preamble, the
Departments are of the view that the final rules are necessary and
appropriate measures that are sufficiently narrowly tailored to meet
the stated goals of the Executive order. Making public the negotiated
rates and out-of-network allowed amounts is essential for consumers to
obtain useful information about out-of-pocket costs they are likely to
incur before receiving services. Due to the prevalence of high
deductibles throughout markets nationwide, this information will be
crucial for a significant cohort of persons enrolled in health plans to
be able to anticipate costs in advance of each plan year. For the
public, access to information concerning allowed amounts is essential
to obtain reliable advance estimates of personal liability to
facilitate cost-conscious choices that enhance competition and lower
overall costs. Finally, as described later in this preamble, the
Departments considered many alternatives to the proposed and final
rules. The Departments are of the view that the final rules are a
straightforward implementation of the mandate of section 1311(e)(3) of
PPACA, and that the choices taken in particular instances are well
calculated to effectively and fully implement the goals of the
authorizing statutes. Moreover, the regulations provide tools and
information to consumers that are critical to their ability to access
meaningful price information, including the personal liability
associated with a substantial portion of health care services. This
directly facilitates the meaningful engagement of consumers with their
own health care and protects patients from the likelihood of
unanticipated health care costs. As such, the regulations fulfill the
mandate of Executive Order 13877.
For the foregoing reasons, the final rules adopt the majority of
the provisions in the proposed rules, with certain modifications, as
described in detail in the following sections of this preamble.
II. Overview of the Final Rules Regarding Transparency--the Departments
of the Treasury, Labor, and Health and Human Services
The Departments are finalizing price transparency requirements set
forth in the final rules in 26 CFR 54.9815-2715A1, 54.9815-2715A2, and
54.9815-2715A3, 29 CFR 2590.715-2715A1, 2590.715-2715A2, and 2590.715-
2715A3, and 45 CFR 147.210, 147.211, and 147.212. The final rules
separate the proposed regulations all contained in 26 CFR 54.9815-
2715A, 29 CFR 2590.715-2715A, and 45 CFR 147.210, into three separate
regulations for each of the Departments. The regulations set forth the
scope and relevant definitions in 26 CFR 54.9815-2715A1, 29 CFR
2590.715-2715A1, and 45 CFR 147.210 (which correspond with paragraph
(a) of the proposed regulations). The regulations at 26 CFR 54.9815-
2715A2, 29 CFR 2590.715-2715A2, and, 45 CFR 147.211 (which correspond
with paragraph (b) of the proposed regulations) include: (1) A
requirement that group health plans and health insurance issuers in the
individual and group markets disclose to participants, beneficiaries,
or enrollees upon request, through a self-service tool made available
by the plan or issuer on an internet website, cost-sharing information
for a covered item or service from a particular provider or providers,
and (2) a requirement that plans and issuers make such information
available in paper form, upon request. As explained in more detail
later in this preamble, the final rules adopt a three-year, phased-in
approach with respect to the scope of the requirement to disclose cost-
sharing information. Plans and issuers must make cost-sharing
information available for 500 items and services identified by the
Departments for plan years (in the individual market, for policy years)
beginning on or after January 1, 2023, and must make cost-sharing
information available for all items and services for plan years (in the
individual market, for policy years) beginning on or after January 1,
2024.
The regulations at 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3,
and 45 CFR 147.212 (at paragraph (c) of the proposed regulations)
require that plans and issuers disclose pricing information to the
public through three machine-readable files. One file requires
disclosure of payment rates negotiated between plans or issuers and
providers for all covered items and services. The second file will
disclose the unique amounts a plan or issuer allowed, as well as
associated billed charges, for covered items or services furnished by
out-of-network providers during a specified time period. To reduce the
complexity and burden of including prescription drug information in the
negotiated rate machine-readable file, the final rules require a third
file that will include pricing information for prescription drugs. The
final rules modify the applicability date for these provisions to plan
years (in the individual market, policy years) beginning on or after
January 1, 2022.
The provisions proposed at paragraph (d) of the proposed
regulations are finalized in 26 CFR 54.9815-2715A2 and 54.9815-2715A3,
29 CFR 2590.715-2715A2 and 2590.715-2715A3, and 45 CFR 147.211 and
147.212 with non-substantive editorial changes for increased
readability, and with effective dates reflecting the phased approach to
implementation mentioned earlier and discussed in more detail later in
this preamble.
In addition to splitting the final rules into three separate
regulations for each Department, the Departments have added
severability clauses to the final rules to emphasize the Departments'
intent that, to the extent a reviewing court holds that any provision
of the final rules is unlawful, the remaining rules should take effect
and be given the maximum effect permitted by law. The final rules
provide that any provision held to be invalid or unenforceable by its
terms, or as applied to any person or circumstance, or stayed pending
further agency action, shall be severable from the relevant section and
shall not affect the remainder thereof or the application of the
provision to persons not similarly situated or to dissimilar
circumstances.
To streamline the final rules, the Departments have removed
definitions of terms that are defined in the applicable statute or
elsewhere in such statutes' implementing regulations and have revised
certain definitions to provide more clarity. Finally, based on comments
received, the Departments have reassessed the associated burden
estimates in the Economic Impact Analysis and Paperwork Burden section
of this preamble.
A. Definitions
The final regulations at 26 CFR 54.9815-2715A1(a), 29 CFR 2590.715-
2715A1(a), and 45 CFR 147.210(a) (paragraph (a) of the proposed
regulations) set forth definitions that are applicable to the
regulations at 26 CFR 54.9815-2715A2, 29 CFR 2590.715-
[[Page 72177]]
2715A2, and 45 CFR 147.211 (paragraph (b) of the proposed regulations)
and 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, 45 CFR 147.212
(paragraph (c) of the proposed regulations). The Departments have
revised the proposed definitions of some terms and included new defined
terms in order to clarify the final requirements of 26 CFR 54.9815-
2715A2, 29 CFR 2590.715-2715A2, and 45 CFR 147.211, and 26 CFR 54.9815-
2715A3, 29 CFR 2590.715-2715A3, and 45 CFR 147.212. Comments on the
definitions in the proposed rule focused on concerns regarding
consistency of definitions across related government programs, the
general need for increased clarity in relation to some proposed
definitions, and the need for resolution of perceived ambiguities in
the proposed definitions. In response to these comments, the
Departments are not finalizing certain proposed definitions that are
already defined in existing, pertinent regulations. The Departments are
finalizing revised versions of other proposed definitions to clarify
their meaning, as well as the policies and requirements adopted in the
final rules.
Commenters recommended aligning definitions in the proposed
regulations with those in other existing regulations to avoid
conflicts. In light of these recommendations, the Departments are not
finalizing the proposed definition of ``participant'' under 26 CFR
54.9815-2715A1, 29 CFR 2590.715-2715A1, or 45 CFR 147.210 because the
term is already defined in the Departments' regulations at 26 CFR
54.9801-2, 29 CFR 2590.701-2, and 45 CFR 144.103. Likewise, the
Departments are not finalizing the proposed definition of
``beneficiary'' under proposed 45 CFR 145.210 and 29 CFR 2590.715-
2715A1, because the term is already defined under HHS regulation at 45
CFR 144.103 and in statute at ERISA section 3(8). The Departments,
however, are finalizing the definition of ``beneficiary'' proposed
under 26 CFR 54.9815-2715A(a) (now at 26 CFR 54.9815-2715A1), because
the term is not otherwise defined in Treasury Regulations or the Code.
Finally, the Departments are not finalizing the proposed definition for
``qualified health plan'' at 45 CFR 145.210 since the term is not used
in the regulation text.
Some commenters requested clarification of the terms
``participants'' and ``beneficiaries'' because the proposed rules'
definitions of these terms included individuals who may become eligible
for a plan or coverage, and as the proposed rules envisioned
personalized feedback to ``participants'' and ``enrollees'' it would be
impossible to provide such information to an individual not currently
enrolled in a plan or coverage. The Departments agree. However, instead
of modifying existing, applicable definitions for ``participants'' and
``beneficiaries,'' the final rules, at 26 CFR 54.9815-2715A2, 29 CFR
2590.715-2715A2, and 45 CFR 147.211, and this preamble below clarify to
whom these disclosures are required.
One commenter recommended the Departments define the term ``in-
network provider'' in the final rules to clearly exclude device
suppliers and manufacturers that, the commenter suggested, have not
traditionally been considered in-network providers and whose price
information is of limited value to consumers. The Departments do not
agree that device suppliers and manufacturers should be excluded. Based
on the numerous public comments from individuals who support broad
price transparency for all covered items and services, the Departments
are of the view that pricing information for all covered items and
services should be available, including pricing for durable medical
equipment (DME) or other medical devices that are supplied to a
participant, beneficiary, or enrollee by a provider under a contract
with a plan or issuer. To clarify, the final rules define in-network
provider to mean any provider of items and services with which the plan
or issuer, or a third-party for a plan or issuer, has a contract
setting forth the terms under which a covered item or service may be
provided to a participant, beneficiary, or enrollee. The Departments
broadened this definition to clarify that even where a provider and a
plan or issuer have a limited rate agreement of some kind, or a rate
agreement covering DME, those providers should be considered in-network
providers for purposes of the final rules. Additionally, if a plan or
issuer enters into a contract or has such payment arrangements, then
the pricing information for the specific covered items or services
subject to that contract or payment arrangement are required to be
disclosed as part of the internet self-service tool and machine-
readable files.
The proposed regulations included a definition for ``negotiated
rate'' to mean the amount a group health plan or health insurance
issuer, or a third party on behalf of a plan or issuer, has
contractually agreed to pay an in-network provider for covered items
and services, pursuant to the terms of an agreement between the
provider and the plan or issuer, or a third-party on behalf of a plan
or issuer. Consistent with the proposed and final definitions of
``items and services,'' plans and issuers are required to disclose
``negotiated rates'' for encounters, procedures, medical tests,
supplies, prescription drugs, durable medical equipment, and fees
(including facility fees) to participants, beneficiaries, and enrollees
through the internet-based self-service tool (and in paper form) as
well as to the public through a machine-readable file. One commenter
requested the Departments clarify the meaning of ``negotiated rate''
for prescription drugs, noting that they assumed the Departments
expected plans and issuers to provide the drug price negotiated by a
PBM on behalf of the plan. Another commenter asserted that the
``negotiated rate'' of prescription drugs for disclosure should be the
price patients will see at the point-of-sale, meaning the undiscounted
price of the drug, plus dispensing fees. Conversely, another commenter
stated that dispensing fees are not paid by enrollees or used in
determining cost-sharing liability. Other commenters suggested that the
Departments grant plans and issuers flexibility in determining the
appropriate rate for disclosure, as plans and issuers use a variety of
different benchmarks, such as the Average Wholesale Price (AWP), or
Wholesale Acquisition Cost (WAC) which may be considered as the
``negotiated rate'' for the purpose of determining cost-sharing
liability under the plan or coverage.
In the final rules, the Departments have revised the definition of
``negotiated rate'' to mean the amount a plan or issuer has
contractually agreed to pay for a covered item or service, whether
directly or indirectly through a third party administrator (TPA) or
PBM, to an in-network provider, including an in-network pharmacy or
other prescription drug dispenser, for covered items or services. The
final rules adopt the proposed definition with two key modifications.
First, the term ``third party'' from the proposed definition is
expanded in the final rules to explicitly refer to ``third-party
administrator or pharmacy benefit manager.'' Second, the final
definition of ``negotiated rate'' specifically notes that the term in-
network provider includes an in-network pharmacy or other prescription
drug dispenser. The purpose of these modifications is to confirm the
commenter's inference that in the case of prescription drugs, the plan
or issuer should include the price negotiated for that plan or issuer
by a PBM. Furthermore, the ``negotiated rate'' in the final rules is
intended to be broad enough to account for different plan
[[Page 72178]]
designs and benchmarks for determining negotiated rates.
The final rules also add definitions for the following terms that
were not included in the proposed regulations: ``billed charge,''
``copayment assistance,'' ``derived amount,'' ``historic net price,''
``national drug code,'' and ``underlying fee schedule.'' The addition
of these definitions is discussed later in this preamble.
One commenter noted that the Departments have proposed definitions
for ``accumulated amounts,'' ``cost-sharing liability,'' and ``cost-
sharing information'' that are unique to the proposed rules and, in
some cases, differ from definitions of similar terms used in other
related regulations. In particular, this commenter recommended that all
definitions should explicitly recognize that cost sharing can be paid
by or on behalf of an enrollee, participant, or beneficiary, since that
is how cost sharing is defined by HHS regulation. The commenter also
requested that the Departments clarify the proposed definition of
``accumulated amounts'' and suggested revising the definition to state
clearly that accumulated amounts are the ``amount of financial
responsibility a participant, beneficiary, or enrollee has incurred,
whether satisfied by or on behalf of the participant, beneficiary, or
enrollee. . . .''
The Departments recognize that cost sharing may be paid by a third-
party on behalf of an enrollee, participant, or beneficiary. However,
the Departments are of the view that some plans and issuers do not
count cost-sharing liability payments made by a third-party towards a
participant's, beneficiary's, or enrollee's accumulated amounts, and
modifying the definitions as suggested by the commenter could cause
confusion in the context of the final rules.
The Departments have added disclosure requirements that are
discussed in detail elsewhere in this preamble to address this concern.
The definitions being finalized also include non-substantive editorial
changes from the proposed regulations for readability to the following
terms; ``accumulated amounts,'' ``billing code,'' ``bundled payment
arrangement,'' ``cost-sharing liability,'' ``cost-sharing
information,'' ``covered items or services,'' ``item or services,'' and
``out-of-network allowed amount.''
The definitions identified as new or substantively modified in this
section, as well as those that are being finalized as proposed, are
discussed further in relation to the requirements of 26 CFR 54.9815-
2715A2, 29 CFR 2590.715-2715A2, and 45 CFR 147.211 and 26 CFR 54.9815-
2715A3, 29 CFR 2590.715-2715A3, and 45 CFR 147.212 throughout this
preamble.
B. Requirements for Disclosing Cost-Sharing Information to
Participants, Beneficiaries, and Enrollees
The final rules are intended to enable participants, beneficiaries,
and enrollees to obtain an estimate of their potential cost-sharing
liability for covered items and services they might receive from a
particular health care provider, consistent with the requirements of
section 2715A of the PHS Act and section 1311(e)(3)(C) of PPACA.
Accordingly, the Departments proposed in paragraph (b) of the proposed
regulations to require group health plans and health insurance issuers
to disclose certain information relevant to a determination of a
consumer's out-of-pocket costs for a particular health care item or
service in accordance with specific method and format requirements,
upon the request of a participant, beneficiary, or enrollee.
A majority of commenters supported the Departments' proposal and
urged the Departments to finalize this section of the proposed rules.
Many commenters were supportive of being able to know their costs
before receiving care in order to make informed shopping decisions.
Some commenters agreed that consumers should have access to cost
information in advance of receiving care, but suggested modifications
to the proposed requirements. The final rules adopt the requirement
that plans and issuers disclose certain cost-sharing information for a
particular health care item or service, generally as set forth in the
proposed rules, but with certain modifications and clarifications
explained later in this section of this preamble.
1. Information Required To Be Disclosed to Participants, Beneficiaries,
or Enrollees
Based on significant research and review of public comments, the
Departments concluded that requiring group health plans and health
insurance issuers to disclose to participants, beneficiaries, or
enrollees cost-sharing information in the manner most familiar to them
is the best means to empower individuals to understand their potential
cost-sharing liability for covered items and services furnished by
particular providers. The Departments, therefore, modeled the proposed
price transparency requirements on existing notice requirements.
Specifically, section 2719 of the PHS Act (incorporated into the
Code by section 9815 of the Code and into ERISA by section 715 of
ERISA) requires non-grandfathered plans and issuers offering non-
grandfathered coverage in the individual or group markets to provide a
notice of adverse benefit determination (typically satisfied by the
EOB) to participants, beneficiaries, or enrollees after health care
items or services are furnished and claims for benefits are
adjudicated. EOBs typically include the amount billed by a provider for
items and services, negotiated rates or underlying fee schedules with
in-network providers or allowed amounts for out-of-network providers,
the amount the plan paid to the provider, and the individual's
obligation for deductibles, copayments, coinsurance, and any other
balance under the provider's bill. Consumers are accustomed to seeing
cost-sharing information as it is presented in an EOB. The proposed
rules were intended to similarly require plans and issuers to provide
the specific price and benefit information on which an individual's
cost-sharing liability is based. Based on comments, the Departments are
of the view that participants, beneficiaries, and enrollees would also
benefit from understanding the price of items and services, even in
circumstances when their cost-sharing liability is not based upon a
negotiated rate or underlying fee schedule rate. Given this primary
goal of overall price transparency, the Departments are requiring
disclosure of the negotiated rate, even if it is not the amount used as
the basis for cost-sharing liability.
The proposed rules set forth seven content elements that a plan or
issuer must disclose, upon request, to a participant, beneficiary, or
enrollee for a covered item or service: estimated cost-sharing
liability, accumulated amounts, negotiated rates, out-of-network
allowed amounts, a list of items and services subject to bundled
payment arrangements, a notice of prerequisites, if applicable, and a
disclosure notice. These seven content elements generally reflect the
same information that is included in an EOB after health care services
are provided. The Departments determined that each of the seven content
elements, as well as two additional content elements, are necessary and
appropriate to implement the mandates of section 2715A of the PHS Act
and section 1311(e)(3)(C) of PPACA by permitting individuals to learn
the amount of their cost-sharing liability and understand the price for
specific items or services under a plan
[[Page 72179]]
or coverage from a particular provider. The final rules adopt the
requirement that plans and issuers must satisfy these elements through
disclosure of actual data relevant to an individual's cost-sharing
liability that is accurate at the time the request is made. The
Departments acknowledge that plans and issuers may not have processed
all of an individual's outstanding claims when the individual requests
the information; therefore, plans and issuers would not be required to
account for outstanding claims that have not yet been fully processed.
As set forth in 26 CFR 54.9815-2715A2, 29 CFR 2590.715-2715A2, and 45
CFR 147.211 this cost-sharing information must be disclosed upon
request in two ways: (1) Through a self-service tool that meets certain
standards and is available on an internet website, and (2) in paper
form, if requested by the participant, beneficiary, or enrollee.
Furthermore, under the final rules, the cost-sharing information
must be disclosed to the participant, beneficiary, or enrollee in plain
language. The final rules define ``plain language'' to mean written and
presented in a manner calculated to be understood by the average
participant, beneficiary, or enrollee. Determining whether this
standard has been satisfied requires an exercise of considered judgment
and discretion, taking into account such factors as the level of
comprehension and education of typical participants, beneficiaries, or
enrollees in the plan or coverage and the complexity of the terms of
the plan or coverage. Accounting for these factors would likely require
limiting or eliminating the use of technical jargon and long, complex
sentences, so that the information provided will not have the effect of
misleading, misinforming, or failing to inform participants,
beneficiaries, or enrollees.
Several commenters agreed that the information found in an EOB is a
good basis for informing individuals of their cost-sharing liability
and will effectively further coverage transparency efforts. One
commenter stated that information found in an advance EOB is neither a
trade secret, nor proprietary, as it is routinely disclosed following
care. Other commenters expressed concern about this concept of an
advance EOB, stating that most plans and issuers do not have access to
all the information necessary to provide beneficiaries with an upfront
adjudication of the beneficiary's claim, and that the vast majority of
data provided via online tools now rely on estimated costs drawn from
publicly available sources rather than personal information and
circumstances.
Many commenters expressed concerns that the elements and methods of
disclosure proposed by the Departments are overly prescriptive,
hindering health plan innovation and requiring potentially significant
reworking of existing transparency tools, as well as requiring massive
IT and resource investments by all commercial plans and issuers to
develop, build or modify, test, and implement tools that meet the new
standards. Several commenters recommended providing plans and issuers
with flexibility to build upon current systems. Another commenter urged
the Departments to evaluate the individualized tools currently
available, and that if requirements for cost-estimator tools are
adopted, they should give carriers and TPAs maximum flexibility in
designing their tools. One commenter felt a better approach would be to
educate consumers about the online tools that are currently available
and assist employers to encourage their use. Several commenters opposed
the requirement to provide the tool and suggested the Departments
remove this requirement from the final rules altogether. These
commenters stated that price estimator tools should not be required,
citing studies showing low tool utilization by consumers and plan
participants, beneficiaries, or enrollees. These commenters stated that
the administration should instead focus on educating consumers about
the online tools that are currently available and assisting employers
and plans in encouraging their use.
The Departments are of the view that modeling the pricing
disclosures on the elements provided within an EOB is both reasonable
and appropriate. The Departments acknowledge the potential burden of
updating existing tools to comply with the final rules, but the
Departments think that the potential burden is outweighed by the
importance of all enrollees, beneficiaries, and participants having
access to self-service tools that provide a baseline of accurate
pricing elements. The Departments also acknowledge that, historically,
there has been low utilization of existing tools; however, the
Departments are of the view that by creating minimum uniform standards,
consumers will have access to more reliable, personalized estimates and
will be more likely to use the tools.
As described earlier in this preamble, through independent
examination and engagement with stakeholders, the Departments are of
the view that existing tools vary widely in usability and reliability
due to the lack of minimum standards.\106\ The Departments received
thousands of supportive comments from individuals eager for access to
transparent pricing information, indicating that the current tools
available are inadequate in practice. Furthermore, as discussed in
great detail throughout this preamble, as consumers increasingly become
financially responsible for a greater proportion of the cost of their
care (through deductible and coinsurance requirements, for example)
they have a vested interest in comparing prices of potential providers
and such items as prescription drugs. As such, it is likely in the best
interest of plans, issuers, and providers to promote and educate their
consumers on the benefits of these shopping tools, and the Departments
encourage them to do so. The Departments do not agree with the
commenter who stated that educating consumers regarding existing tools
and encouraging their use would be a better approach than requiring the
self-service tool as proposed. While the Departments agree that
educating consumers on existing self-service tools is important, it
does not replace the benefits of making reliable self-service tools
available to most participants, beneficiaries, and enrollees in private
market plans and coverages. The Departments are of the view that
minimum consistent requirements for all plans and issuers may lead to
an increase in health literacy and drive consumerism as participants,
beneficiaries, and enrollees become more familiar with how plans and
issuers calculate cost-sharing liability. Furthermore, the final rules
adopt a phased implementation approach to these requirements as a
mechanism to help mitigate the associated implementation burdens.
---------------------------------------------------------------------------
\106\ ``Are healthcare's cost estimate tools making matters
worse for patients?'' Becker's Hospital CFO Report, November 2015.
Available at: https://www.beckershospitalreview.com/finance/are-healthcare-s-cost-estimate-tools-making-matters-worse-for-patients.html. Citing Gordon, E. ``Patients Want to Price-Shop For
Care, But Online Tools Unreliable.'' NPR. November 30, 2015,
Available at https://www.npr.org/sections/health-shots/2015/11/30/453087857/patients-want-to-price-shop-for-care-but-online-tools-unreliable. (``Some estimators reflect a combined range of possible
costs, while others are based off historical pricing or claims data
from various sources. Many online estimate tools are restricted in
the types of procedures they include. . .'').
---------------------------------------------------------------------------
Some commenters requested that the Departments confirm that the
intent of the proposed rules is that only participants and
beneficiaries enrolled in the plan would have access to the tool,
noting that the proposed regulations used the ERISA definitions of
``participant'' and ``beneficiary,''
[[Page 72180]]
which include individuals who may become eligible for the plan. Many
commenters encouraged the Departments to also require that plans and
issuers make cost-sharing information easily accessible to authorized
representatives--which may include health care providers--so that they
can better respond to patient inquiries. These commenters suggested
that patients reasonably turn to providers for this information when
contemplating or scheduling health care services, but providers often
face barriers in accessing the necessary details from issuers to
provide a timely, accurate estimate. Commenters suggested that plans
and issuers should be required to give providers access to their
patients' specific benefit information via a secure website, subject to
patient consent. One commenter recommended that the tool be made
applicable for the public while they are in the shopping and plan
selection phase, not just after someone is enrolled in a plan. This
commenter suggested that true cost transparency would not be possible
if this information was not made available in advance.
The final rules clarify that disclosures of cost-sharing
information are only required to individuals who are enrolled in the
plan or coverage; no disclosures are required to be made to a
``participant'' or ``beneficiary'' solely because they might become
eligible for the plan in the future. This is reflected by a revision to
the proposed language being finalized at 26 CFR 54.9815-2715A2(b), 29
CFR 2590.715-2715A2(b), and 45 CFR 147.211(b) to refer to plans and
issuers providing cost-sharing information to a participant,
beneficiary, or enrollee who is enrolled in a plan or coverage. The
Departments understand the value in provider access to cost-sharing
information required under the final rules. However, this rulemaking
focuses on implementing the statutory obligation for plans to make this
information available to participants, beneficiaries, and enrollees. A
participant, beneficiary, or enrollee may choose to share information
regarding their personal cost-sharing liability with a provider for the
purposes of making health care decisions. The final rules also require
that this information must be provided to a participant's,
beneficiary's, or enrollee's authorized representative. Under other
applicable regulations, participants, beneficiaries, or enrollees may
appoint a health care provider as their authorized representative.\107\
---------------------------------------------------------------------------
\107\ 29 CFR 2560.503-1(b)(4); see also 26 CFR 54.9815-
2719(b)(2)(i), 29 CFR 2590.715-2719(b)(2)(ii), and 45 CFR
147.136(b)(2)(ii).
---------------------------------------------------------------------------
Regarding whether other types of information should be required to
be disclosed in the self-service tool, several commenters expressed
concern that information regarding cost without accompanying provider
quality information could have a detrimental effect on overall health
care cost and delivery of value-based care. One commenter stated that
shifting care to a lower-cost provider could have unintended
consequences of higher costs associated with unnecessary or improper
care. Commenters recommended that a quality metric be included and that
quality information be allowed to be included alongside price.
As discussed in the background section of this preamble and later
in this preamble, the Departments acknowledge that quality information
could be a valuable addition to a self-service tool. However, the
Departments did not propose to require disclosure of quality
information. Rather, the Departments sought comments regarding quality
information in the proposed rules and plan to take those comments into
consideration for future action. The Departments encourage plans and
issuers to further innovate around the baseline standards outlined
above and include quality information and other metrics not required by
the final rules that would assist in consumer decision-making.
Several commenters suggested that plans and issuers should be
required to disclose information not directly related to cost sharing.
One commenter urged the Departments to include an additional
requirement in the final rules for plans and issuers to provide
consumers with information they need to fully understand their cost-
sharing obligations for emergency services at the time they obtain
their coverage, and recommended plans and issuers also update this
information on an annual basis or when major changes occur that would
impact their access to, and overall cost of, emergency care, such as
changes to their provider. Another commenter recommended that when
consumers enter a search for a primary service or treatment, that they
also be provided with an ``alert'' that additional services, such as
anesthesia, pathology, or laboratory tests, likely will be involved and
will entail additional costs, which should also be disclosed. Another
commenter requested that the Departments add the ``type of plan'' (for
example, ERISA-covered group health plan, a QHP, a Medicare Advantage
plan, a Medicaid MCO plan, an individual health plan, or a plan that is
grandfathered from PPACA requirements) and in what state the plan is
providing coverage as disclosure content elements that health plans
would be required to post on the proposed internet-based self-service
tool, so that the information is readily available.
The Departments recognize the benefit of providing information for
emergency services at the time consumers obtain their coverage. The
Departments are of the view, however, that existing rules governing
summaries of benefits and coverage are designed to provide such
information to consumers at the time they obtain coverage. As such, the
Departments are not inclined to duplicate existing requirements in the
final rules. The Departments also acknowledge that alerting consumers
to additional services associated with a service or treatment for which
they searched could be beneficial. For this reason, the final rules
provide plans and issuers flexibility to give disclaimers that can
address the likelihood that services in addition to the one for which a
consumer searched will be necessary. The final rules also require that
plans and issuers outline individual services when a consumer requests
an estimate for a service that, per the agreement between a payer and a
provider, will be provided and billed as a bundle. Plans and issuers
are also free to provide such information in any way they so choose,
including through an alert. The Departments are also of the view that
participants, beneficiaries, and enrollees are generally aware of the
type of plan they are enrolled in or can reasonably access this
information by contacting their plan or issuer and therefore decline to
require this information as part of the final rules.
Scope of Items and Services
Many commenters stated that the requirement to disclose the price
of all covered items and services was overly broad and overly
burdensome, and instead suggested the Departments limit disclosure to a
core set of ``shoppable services'' that are commonly searched for in
existing cost-estimator tools. Many commenters referenced the recently
finalized definition of a shoppable service that was included in the
Hospital Price Transparency final rule as ``a service that can be
scheduled by a health care consumer in
[[Page 72181]]
advance.'' \108\ Two commenters recommended no more than 300 shoppable
items and services, while another suggested a limit of 200. As a way to
reduce the cost burden, one commenter suggested that the requirements
under the rules be limited to services that are priced above a certain
threshold and provided $5,000 as an example. One commenter said the
Departments should permit health plans and issuers to tailor their
tools to best meet their enrollees' and providers' demonstrated needs
and priorities, including selection of the items and services for which
estimates are most useful and meaningful for participants,
beneficiaries, and enrollees. Another commenter recommended that the
cost-sharing requirement be limited to items and services where the
estimated out-of-pocket price is frequently the same as the final
price. Another recommended the tool not require data on those items/
services with volatile prices or low volume.
---------------------------------------------------------------------------
\108\ 84 FR 65524 (Nov. 27, 2019) (codified at 45 CFR 180.20).
---------------------------------------------------------------------------
One commenter, representing many plans and issuers, provided a list
of 421 items and services that they recommended including under this
disclosure requirement. The recommended list of 421 items and services
are a result of an analysis the commenter performed which compared
member feedback, claims frequency, operational feasibility, and state
mandates and regulations, as well as variability of cost and search
frequency. All 421 items and services were included by, at the minimum,
a subset of issuers, indicating confidence that the covered items and
services were shoppable. This commenter also noted that their survey of
existing tools found a median of 526 services available to consumers
enrolled in commercial coverage.
A few commenters recommended that the Departments limit the list of
items and services to only major medical services. One commenter
recommended the Departments not include cost sharing for DME. Several
commenters suggested that a Technical Expert Panel (TEP) was needed to
review data and input from stakeholders, advise on research the
Departments should undertake, and determine which items and services
and functional requirements would be suitable to include in the future.
Many individual commenters expressed their desire for dental,
vision, and other excepted benefits to be included under the
requirements of the final rules or in the near future. Further, a
majority of individual commenters encouraged the Departments to require
the inclusion of all items and services, stating that consumers have a
right to know this information for all items and services in advance.
Several commenters recommended that the rules be implemented in a more
gradual phased-in timeline, by requiring the tool to cover a narrower
data set of the most common shoppable services first and then broadened
to eventually include all items and services. Another commenter stated
that to the extent that the services include non-medical estimates like
pharmacy and dental costs, those costs could likely only be included by
allowing third parties that fulfill those benefits to provide separate
transparency tools that integrate with a plan's tool.
The Departments agree with commenters who stated that consumers
should be given price estimates in advance, and the Departments
understand that what is considered useful and meaningful pricing
information is likely to be unique to an individual's circumstances.
For these reasons, and the rationale for this rulemaking described
throughout this preamble, the Departments decline to accept suggestions
related to limiting the number or types of items and services included
under this requirement. However, the Departments acknowledge the
potential burden of incorporating all items and services into a self-
service tool immediately and are therefore finalizing a phased-in
implementation timeline. Under the final rules, plans and issuers are
required to provide estimates for the 500 items and services identified
in Table 1 for plan years (in the individual market, for policy years)
beginning on or after January 1, 2023. However, plans and issuers will
be required to disclose pricing information with respect to all items
and services for plan years (in the individual market, for policy
years) beginning on or after January 1, 2024. Given that pricing
estimates for all items and services will ultimately be required, the
Departments do not find it necessary to convene a TEP to determine
which items and services and functional requirements would be suitable
to include in the future.
Further, in finalizing the provision that plans and issuers
disclose cost-sharing liability information for all covered items and
services, the Departments are clarifying that cost-sharing information
must also be provided for covered prescription drugs and DME. As
discussed later in this preamble, a plan or issuer will be considered
compliant with this requirement if it offers its participants,
beneficiaries, or enrollees access to the pricing information that is
required under 26 CFR 54.9815-2715A2, 29 CFR 2590.715-2715A2, and 45
CFR 147.211, through a third-party tool, such as a PBM tool. As
discussed elsewhere in this preamble, the Departments clarify that
excepted benefits, such as limited-scope dental benefits offered under
a separate policy, certificate, or contract of insurance that are not
an integral part of a group health plan or health insurance coverage,
are not subject to the requirements established under the final rules.
In developing the list of 500 items and services that are required
to be included in the self-service tool during the first year of
implementation, the Departments considered the recommendations made by
the commenters to include shoppable items and services that are
commonly used in existing tools. As mentioned above, in a survey of
existing price transparency tools currently in use, one commenter found
that the median number of items and services in existing tools is 526.
Table 1 lists 500 items and services that will be required to be
included in the first phase of implementation of the internet-based
self-service tool. The Departments will publish a copy of this list on
a publicly available website. The majority of these items and services
(416) are based on the recommendation of several stakeholders. The
Departments have determined not to include five of the recommended
codes because they have since been retired. The Departments augmented
the list with 84 additional services. These 84 services reflect some of
the most frequently found services in External Data Gathering
Environment (EDGE) \109\ data, which are representative of services
commonly provided in the individual and small group (or merged)
markets. The Departments also examined the aggregate claims costs
associated with these services nationally and concluded that these
services could
[[Page 72182]]
have significant cost variability, ranging from the 25th percentile to
the 75th percentile of costs, depending on service.
---------------------------------------------------------------------------
\109\ CMS began collecting enrollee-level data from issuers'
EDGE servers beginning with the 2016 benefit year. See the HHS
Notice of Benefit and Payment Parameters for 2018; Final Rule, 81 FR
94058, 94101-94103 (Dec. 22, 2016). The enrollee-level EDGE data
collected by CMS includes an enrollment file, a medical claims file,
a pharmacy claims file, and a supplemental diagnosis file for risk
adjustment-covered plans in the states where HHS operates the risk
adjustment program. CMS does not collect enrollee-identifiable
elements to safeguard enrollee privacy and issuers' proprietary
information. See, for example, 45 CFR 153.720.
Table 1--500 Items and Services List
------------------------------------------------------------------------
Code Description Plain language description
------------------------------------------------------------------------
J0702............. BETAMETHASONE ACET&SOD Injection to treat reaction
PHOSP. to a drug.
J1745............. INFLIXIMAB NOT BIOSIMIL A biologic medication.
10MG.
G0102............. Prostate cancer ...........................
screening; digital
rectal examination.
G0103............. Prostate cancer ...........................
screening; prostate
specific antigen test
(psa).
G2061............. Qualified non physician Qualified non physician
healthcare healthcare professional
professional online online assessment, for an
assessment; 5-10 established patient, for
minutes. up to seven days,
cumulative time during the
7 days; 5-10 minutes.
G2062............. Qualified non physician Qualified non physician
healthcare healthcare professional
professional online online assessment service,
assessment service; 11- for an established
20 minutes. patient, for up to seven
days, cumulative time
during the 7 days; 11-20
minutes.
G2063............. Qualified non physician Qualified non physician
qualified healthcare qualified healthcare
professional professional assessment
assessment service; service, for an
21+ minutes. established patient, for
up to seven days,
cumulative time during the
7 days; 21 or more
minutes.
G0206............. Diagnostic mammography, ...........................
including computer-
aided detection (cad)
when performed;
unilateral.
G0204............. Diagnostic mammography, ...........................
including computer-
aided detection (cad)
when performed;
bilateral.
G0121............. Colon ca scrn; not hi Colorectal cancer
risk ind. screening; colonoscopy on
individual not meeting
criteria for high risk.
G0105............. Colorectal ca scrn; hi Colorectal cancer
risk ind. screening; colonoscopy on
individual at high risk.
S0285............. Cnslt before screen Colonoscopy consultation
colonosc. performed prior to a
screening colonoscopy
procedure.
G0289............. Arthro, loose body + Arthroscopy, knee,
chondro. surgical, for removal of
loose body, foreign body,
debridement/shaving of
articular cartilage
(chondroplasty) at the
time of other surgical
knee arthroscopy in a
different compartment of
the same knee.
G0120............. Colon ca scrn; barium Colorectal cancer
enema. screening; alternative to
g0105, screening
colonoscopy, barium enema.
460............... SPINAL FUSION Spinal fusion except
(POSTERIOR). cervical.
470............... KNEE REPLACEMENT....... Major joint replacement or
reattachment of lower
extremity.
473............... SPINAL FUSION Cervical spinal fusion.
(ANTERIOR).
743............... HYSTERECTOMY........... Uterine and adnexa
procedures for non-
malignancy.
1960.............. Anesthesia for vaginal ...........................
delivery.
1961.............. Anesthesia for cesarean ...........................
delivery.
1967.............. Anesthesia for labor ...........................
during planned vaginal
delivery.
1968.............. Anesthesia for cesarean ...........................
delivery following
labor.
10005............. FNA W IMAGE............ Fine needle aspiration
biopsy, including
ultrasound guidance; first
lesion.
10021............. FNA W/O IMAGE.......... Fine Needle Aspiration
Biopsy without imaging.
10040............. ACNE SURGERY........... Incision and Drainage
Procedures on the Skin,
Subcutaneous and Accessory
Structures.
10060............. DRAINAGE OF SKIN Incision and drainage of
ABSCESS. abscess; simple or single
and complex or multiple.
10140............. DRAINAGE OF HEMATOMA/ Incision and drainage of
FLUID. hematoma, seroma or fluid
collection.
10160............. PUNCTURE DRAINAGE OF Puncture aspiration of
LESION. abscess, hematoma, bulla,
or cyst.
11000............. DEBRIDE INFECTED SKIN.. Removal of infected skin.
11056............. TRIM SKIN LESIONS 2 TO Paring or cutting of benign
4. hyperkeratotic lesion.
11102............. BIOPSY SKIN LESION..... Tangential biopsy of skin
(for example, shave,
scoop, saucerize,
curette); single lesion.
11103............. BIOPSY SKIN ADD-ON..... Tangential biopsy of skin
(for example, shave,
scoop, saucerize,
curette); each separate/
additional lesion.
11200............. REMOVAL OF SKIN TAGS 15 common
MORE. or plantar warts.
17250............. CHEM CAUT OF GRANLTJ Chemical destruction of pre-
TISSUE. cancerous lesions of the
skin.
[[Page 72183]]
17311............. MOHS 1 STAGE H/N/HF/G.. Micrographic technique,
including removal of all
gross tumor, surgical
excision of tissue
specimens, mapping, color
coding of specimens,
microscopic examination of
specimens.
19120............. REMOVAL OF BREAST ...........................
LESION.
20550............. INJ TENDON SHEATH/ Injection of medication
LIGAMENT. into a tendon or ligament.
20551............. INJ TENDON ORIGIN/ Injection of medication
INSERTION. into the tendon/ligament
origin.
20553............. INJECT TRIGGER POINTS 3/ Injection of medication
>. into an area that triggers
pain.
20600............. DRAIN/INJ JOINT/BURSA W/ Draining or injecting
O US. medication into a small
joint/bursa without
ultrasound.
20605............. DRAIN/INJ JOINT/BURSA W/ Draining or injecting
O US. medication into a large
joint/bursa without
ultrasound.
20610............. DRAIN/INJ JOINT/BURSA W/ Draining or injecting
O US. medication into a major
joint/bursa without
ultrasound.
20612............. ASPIRATE/INJ GANGLION Removal of fluid or
CYST. injection of medication
into a ganglion cyst.
27440............. Revision of knee joint. Repair of knee joint.
27441............. Revision of knee joint. Repair of knee joint.
27442............. Revision of knee joint. Repair of knee joint.
27443............. Revision of knee joint. Repair of knee joint.
27445............. Revision of knee joint. Repair of knee joint with
hinged prosthesis.
27446............. Revision of knee joint. Repair of knee joint.
28296............. CORRECTION HALLUX Under Repair, Revision, and/
VALGUS. or Reconstruction
Procedures on the Foot and
Toes.
29826............. Subacromial Shaving of shoulder bone
Decompression. using an endoscope.
29848............. WRIST ENDOSCOPY/SURGERY Carpal tunnel release.
29880............. KNEE ARTHROSCOPY/ Surgery to remove of all or
SURGERY. part of a torn meniscus in
both medial and lateral
compartments.
29881............. KNEE ARTHROSCOPY/ Surgery to remove of all or
SURGERY. part of a torn meniscus in
one compartment.
29888............. KNEE ARTHROSCOPY/ ACL reconstruction.
SURGERY.
30520............. REPAIR OF NASAL SEPTUM. Repair procedures of the
nose.
31231............. NASAL ENDOSCOPY DX..... Nasal endoscopy,
diagnostic, unilateral or
bilateral.
31237............. NASAL/SINUS ENDOSCOPY Surgical nasal/sinus
SURG. endoscopy with biopsy,
polypectomy or
debridement.
31575............. DIAGNOSTIC LARYNGOSCOPY Flexible, fiberoptic
diagnostic laryngoscopy.
36415............. ROUTINE VENIPUNCTURE... Collection of venous blood
by venipuncture.
36471............. NJX SCLRSNT MLT Injections to remove spider
INCMPTNT VN. veins on the limbs or
trunk.
36475............. ENDOVENOUS RF 1ST VEIN. Ablation of incompetent
vein.
36478............. ENDOVENOUS LASER 1ST Laser removal of
VEIN. incompetent vein.
42820............. REMOVE TONSILS AND Removal of tonsils and
ADENOIDS. adenoid glands patient
younger than age 12.
42826............. REMOVAL OF TONSILS..... Primary or secondary
removal of tonsils.
42830............. REMOVAL OF ADENOIDS.... Primary removal of the
adenoids.
43235............. EGD DIAGNOSTIC BRUSH Diagnostic examination of
WASH. esophagus, stomach, and/or
upper small bowel using an
endoscope.
43239............. EGD BIOPSY SINGLE/ Biopsy of the esophagus,
MULTIPLE. stomach, and/or upper
small bowel using an
endoscope.
43846............. Gastric restrictive Surgical procedure used for
procedure, with weight loss resulting in a
gastric bypass for partial removal of
morbid obesity; with stomach.
small intestine
reconstruction to
limit absorption.
44388............. Colonoscopy thru stoma Diagnostic examination of
spx. large bowel using an
endoscope which is
inserted through abdominal
opening.
44389............. Colonoscopy with biopsy Biopsies of large bowel
using an endoscope which
is inserted through
abdominal opening.
44394............. Colonoscopy w/snare.... Removal of large bowel
polyps or growths using an
endoscope.
45378............. DIAGNOSTIC COLONOSCOPY. Diagnostic examination of
large bowel using an
endoscope.
45379............. Colonoscopy w/fb Removal of foreign bodies
removal. in large bowel using an
endoscope.
45380............. COLONOSCOPY AND BIOPSY. Biopsy of large bowel using
an endoscope.
45381............. Colonoscopy submucous Injections of large bowel
njx. using an endoscope.
45382............. Colonoscopy w/control Control of bleeding in
bleed. large bowel using an
endoscope.
45384............. Colonoscopy w/lesion Removal of polyps or
removal. growths in large bowel
using an endoscope.
45385............. COLONOSCOPY W/LESION Removal of polyps or
REMOVAL. growths of large bowel
using an endoscope.
45386............. Colonoscopy w/balloon Balloon dilation of large
dilat. bowel using an endoscope.
45388............. Colonoscopy w/ablation. Destruction of large bowel
growths using an
endoscope.
45390............. Colonoscopy w/resection Removal of large bowel
tissue using an endoscope.
45391............. Colonoscopy w/endoscope Ultrasound examination of
us. lower large bowel using an
endoscope.
45392............. Colonoscopy w/ Ultrasound guided needle
endoscopic fnb. aspiration or biopsy of
lower large bowel using an
endoscope.
45398............. Colonoscopy w/band Tying of large bowel using
ligation. an endoscope.
47562............. LAPAROSCOPIC Removal of gallbladder
CHOLECYSTECTOMY. using an endoscope.
47563............. LAPARO CHOLECYSTECTOMY/ Gallbladder removal with
GRAPH. use of an x-ray exam of
the bile ducts.
49505............. PRP I/HERN INIT REDUC Repair of groin hernia
>5 YR. patient age 5 years or
older.
49585............. RPR UMBIL HERN REDUC > Repair of umbilical hernia
5 YR. in patients over 5 years
old.
49650............. LAP ING HERNIA REPAIR Inguinal hernia repair done
INIT. by laparoscope.
50590............. FRAGMENTING OF KIDNEY Surgical procedures on the
STONE. kidney to break up and
remove kidney stones.
51741............. ELECTRO-UROFLOWMETRY A diagnostic test used to
FIRST. measure the flow of urine.
51798............. US URINE CAPACITY Ultrasound of bladder to
MEASURE. measure urine capacity.
52000............. CYSTOSCOPY............. Procedure on the bladder.
52310............. CYSTOSCOPY AND Removing an indwelling
TREATMENT. ureteral stent by
cystoscopy.
[[Page 72184]]
52332............. CYSTOSCOPY AND Ureteral stents inserted
TREATMENT. internally between the
bladder and the kidney and
will remain within the
patient for a defined
period of time.
55250............. EXCISION PROCEDURES ON Removal of sperm duct(s).
THE VAS DEFERENS.
55700............. Prostate biopsy........ Biopsy of prostate gland.
55866............. Surgical Procedures on Surgical removal of
the Prostate. prostate and surrounding
lymph nodes using an
endoscope.
57022............. Incision and drainage ...........................
of vaginal blood
accumulation following
delivery.
57288............. REPAIR BLADDER DEFECT.. Replacement of sling to
support the bladder.
57454............. BX/CURETT OF CERVIX W/ Biopsy of cervix or uterus.
SCOPE.
58100............. EXCISION PROCEDURES ON Biopsy of the lining of the
THE CORPUS UTERI. uterus.
58558............. HYSTEROSCOPY BIOPSY.... Surgical hysteroscopy with
biopsy.
58563............. HYSTEROSCOPY ABLATION.. Surgical procedure used to
treat premenopausal
abnormal uterine bleeding.
58565............. HYSTEROSCOPY Laparoscopic/Hysteroscopic
STERILIZATION. Procedures on the uterus.
58571............. TLH W/T/O 250 G OR LESS Laparoscopic hysterectomy.
58661............. LAPAROSCOPY REMOVE Removal of either benign or
ADNEXA. malignant tissue from the
uterus, ovaries, fallopian
tubes, or any of the
surrounding tissues using
a laparoscope.
58662............. LAPAROSCOPY EXCISE Removal of lesions of the
LESIONS. ovary, pelvic viscera, or
peritoneal surface.
58671............. LAPAROSCOPY TUBAL BLOCK Laparoscopic tubal
sterilization is surgery
to block the fallopian
tubes to prevent
pregnancy.
59000............. AMNIOCENTESIS Removal of amniotic fluid
DIAGNOSTIC. from the uterus for
diagnostic purposes.
59025............. FETAL NON-STRESS TEST.. A common prenatal test used
to check on a baby's
health.
59400............. OBSTETRICAL CARE....... Obstetrical pre- and
postpartum care and
vaginal delivery.
59409............. Vaginal delivery....... ...........................
59410............. Vaginal delivery with ...........................
post-delivery care.
59414............. Vaginal delivery of ...........................
placenta.
59425............. Pre-delivery care 4-6 ...........................
visits.
59426............. Pre-delivery care 7 or ...........................
more visits.
59510............. CESAREAN DELIVERY...... Cesarean delivery with pre-
and post-delivery care.
59514............. Cesarean delivery...... ...........................
59515............. Cesarean delivery with ...........................
post-delivery care.
59610............. VBAC DELIVERY.......... Vaginal delivery after
prior cesarean delivery.
59612............. Vaginal delivery after ...........................
prior cesarean
delivery.
59614............. Vaginal delivery after ...........................
prior cesarean
delivery with post-
delivery care.
62322............. SPINAL INJECTION FOR Injection of substance into
PAIN MANAGEMENT. spinal canal of lower back
or sacrum using imaging
guidance.
62323............. Injection of substance ...........................
into spinal canal of
lower back or sacrum
using imaging guidance.
63030............. LOW BACK DISK SURGERY.. Surgical procedure to
decompress a herniated
vertebra.
64483............. Transforaminal Epidural Injections of anesthetic
Injection. and/or steroid drug into
lower or sacral spine
nerve root using imaging
guidance.
64493............. INJ PARAVERT F JNT L/S Injection into lower back
1 LEV. of nerve block using
imaging guidance.
64721............. CARPAL TUNNEL SURGERY.. Release of the transverse
carpal ligament.
66821............. YAG capusulotomy Removal of recurring
surgery. cataract in lens capsule
using laser.
66984............. CATARACT SURG W/IOL 1 Removal of cataract with
STAGE. insertion of lens.
67028............. INJECTION EYE DRUG..... Injection of a
pharmaceutical agent into
the eye.
69210............. REMOVE IMPACTED EAR WAX Removal of ear wax from one
or both ears.
69436............. CREATE EARDRUM OPENING. Insertion of tubes into one
or both ears.
70450............. CT HEAD/BRAIN W/O DYE.. CT scan head or brain
without dye.
70486............. CT MAXILLOFACIAL W/O CT Scan of the face and jaw
DYE. without dye.
70491............. CT SOFT TISSUE NECK W/ CT scan of neck with dye.
DYE.
70551............. MRI BRAIN STEM W/O DYE. MRI of brain stem without
dye.
70553............. MRI BRAIN STEM W/O & W/ MRI scan of brain before
DYE. and after contrast.
71045............. CHEST X-RAY............ Single view.
71046............. CHEST X-RAY............ 2 views, front and back.
71047............. CHEST X-RAY............ 3 views.
71048............. CHEST X-RAY............ 4 or more views.
71101............. X-RAY EXAM UNILAT RIBS/ Radiologic examination of
CHEST. one side of the chest/
ribs.
71250............. CT THORAX W/O DYE...... CT scan of the thorax
without dye.
71260............. CT THORAX W/DYE........ CT scan of the thorax with
dye.
71275............. CT ANGIOGRAPHY CHEST... Diagnostic Radiology
(Diagnostic Imaging)
Procedures of the Chest.
72040............. X-RAY EXAM NECK SPINE 2- Radiologic examination of
3 VW. the neck/spine, 2-3 views.
72050............. X-RAY EXAM NECK SPINE 4/ Radiologic examination of
5VWS. the neck/spine, 4-5 views.
72070............. X-RAY EXAM THORAC SPINE Radiologic examination of
2VWS. the middle spine, 2 views.
72072............. X-RAY EXAM THORAC SPINE Radiologic examination of
3VWS. the middle spine, 3 views.
72100............. X-RAY EXAM L-S SPINE 2/ X-ray of the lower spine 2-
3 VWS. 3 views.
72110............. X-RAY EXAM L-2 SPINE 4/ X-ray of lower and sacral
>VWS. spine, minimum of 4 views.
72131............. CT LUMBAR SPINE W/O DYE CT scan of lower spine
without dye.
72141............. MRI NECK SPINE W/O DYE. MRI of the neck or spine
without dye.
72146............. MRI CHEST SPINE W/O DYE MRI of chest and spine
without dye.
[[Page 72185]]
72148............. MRI LUMBAR SPINE W/O MRI scan of lower spinal
DYE. canal.
72156............. MRI NECK SPINE W/O & W/ MRI of neck/spine with and
DYE. without dye.
72157............. MRI CHEST SPINE W/O & W/ MRI of chest and spine with
DYE. and without dye.
72158............. MRI LUMBAR SPINE W/O & MRI of lower back with and
W/DYE. without dye.
72170............. X-RAY EXAM OF PELVIS... Radiologic examination of
the pelvis.
72192............. CT PELVIS W/O DYE...... CT of pelvis without dye.
72193............. CT PELVIS W/DYE........ CT scan, pelvis, with
contrast.
72195............. MRI PELVIS W/O DYE..... MRI of pelvis without dye.
72197............. MRI PELVIS W/O & W/DYE. MRI of pelvis before and
after dye.
73000............. X-RAY EXAM OF COLLAR Radiologic examination of
BONE. the collar bone.
73030............. X-RAY EXAM OF SHOULDER. Radiologic examination of
the shoulder.
73070............. X-RAY EXAM OF ELBOW.... Radiologic examination,
elbow; 2 views.
73080............. X-RAY EXAM OF ELBOW.... Radiologic examination,
elbow; 3 or more views.
73090............. X-RAY EXAM OF FOREARM.. Radiologic examination of
the forearm.
73100............. X-RAY EXAM OF WRIST.... 3 or more views.
73110............. X-RAY EXAM OF WRIST.... Up to 3 views.
73120............. X-RAY EXAM OF HAND..... X-ray of the hand with 2
views.
73130............. X-RAY EXAM OF HAND..... X-ray of the hand with 3 or
more views.
73140............. X-RAY EXAM OF FINGER(S) Radiologic examination of
the finger(s).
73221............. MRI JOINT UPR EXTREM W/ MRI of upper extremity
O DYE. without dye.
73560............. X-RAY EXAM OF KNEE 1 OR Radiologic examination of
2. the knee with 1 or 2
views.
73562............. X-RAY EXAM OF KNEE 3... Radiologic examination of
the knee with 3 views.
73564............. X-RAY EXAM KNEE 4 OR Radiologic examination of
MORE. the knee with 4 or more
views.
73565............. X-RAY EXAM OF KNEES.... Radiologic examination of
both knees.
73590............. X-RAY EXAM OF LOWER LEG Radiologic examination of
the lower leg.
73600............. X-RAY EXAM OF ANKLE.... Radiologic examination of
the ankle with 2 views.
73610............. X-RAY EXAM OF ANKLE.... Radiologic examination of
the ankle with 3 views.
73620............. X-RAY EXAM OF FOOT..... Radiologic examination,
foot; 2 views.
73630............. X-RAY EXAM OF FOOT..... Radiologic examination of
the foot with 3 or more
views.
73650............. X-RAY EXAM OF HEEL..... Radiologic examination of
the heel.
73660............. X-RAY EXAM OF TOE(S)... Radiologic examination of
the toe(s).
73700............. CT LOWER EXTREMITY W/O CT scan of leg without dye.
DYE.
73718............. MRI LOWER EXTREMITY W/O MRI of leg without dye.
DYE.
73721............. MRI JNT OF LWR EXTRE W/ MRI of lower extremity
O DYE. joint (knee/ankle) without
dye.
73722............. MRI JOINT OF LWR EXTR W/ MRI of lower extremity
DYE. joint (knee/ankle) with
dye.
73723............. MRI JOINT LWR EXTR W/ MRI of lower extremity
O&W/DYE. joint (knee/ankle) with
and without dye.
74022............. X-RAY EXAM SERIES Serial radiologic
ABDOMEN. examination of the
abdomen.
74150............. CT ABDOMEN W/O DYE..... CT of abdomen without dye.
74160............. CT ABDOMEN W/DYE....... CT of abdomen with dye.
74170............. CT ABDOMEN W/O & W/DYE. CT of abdomen with and
without dye.
74176............. CT ABD & PELVIS W/O CT of abdomen and pelvis
CONTRAST. without dye.
74177............. CT ABD & PELV W/ CT scan of abdomen and
CONTRAST. pelvis with contrast.
74178............. CT ABD & PELV 1/> REGNS Computed tomography,
abdomen and pelvis;
without contrast material
in one or both body
regions, followed by
contrast material(s) and
further sections in one or
both body regions.
74181............. MRI ABDOMEN W/O DYE.... MRI of abdomen without dye.
74183............. MRI ABDOMEN W/O & W/DYE MRI of abdomen without and
with dye.
76000............. CHEST X-RAY............ Flouroscopy, or x-ray
``movie'' that takes less
than an hour.
76001............. CHEST X-RAY............ Flouroscopy, or x-ray
``movie'' that takes more
than an hour.
76512............. OPHTH US B W/NON-QUANT Ultrasound of the eye.
A.
76514............. ECHO EXAM OF EYE A diagnostic procedure that
THICKNESS. allows a provider to see
the organs and other
structures in the abdomen.
76536............. US EXAM OF HEAD AND Ultrasound of head and
NECK. neck.
76642............. ULTRASOUND BREAST Limited ultrasound of the
LIMITED. breast.
76700............. US EXAM ABDOM COMPLETE. Ultrasound of abdomen with
all areas scanned.
76705............. ECHO EXAM OF ABDOMEN... A diagnostic procedure that
allows a provider to see
the organs and other
structures in the abdomen.
76770............. US EXAM ABDO BACK WALL Ultrasound of back wall of
COMP. the abdomen with all areas
viewed.
76775............. US EXAM ABDO BACK WALL Ultrasound of back wall of
LIM. the abdomen with limited
areas viewed.
76801............. OB US < 14 WKS SINGLE Abdominal ultrasound of
FETUS. pregnant uterus (less than
14 weeks) single or first
fetus.
76805............. OB US >/= 14 WKS SNGL Abdominal ultrasound of
FETUS. pregnant uterus (greater
or equal to 14 weeks 0
days) single or first
fetus.
76811............. OB US DETAILED SNGL Ultrasound of single fetus.
FETUS.
76813............. OB US NUCHAL MEAS 1 Evaluation through
GEST. measurement of fetal
nuchal translucency.
76815............. OB US LIMITED FETUS(S). Ultrasound of fetus with
limited views.
76817............. TRANSVAGINAL US Transvaginal ultrasound of
OBSTETRIC. uterus.
76818............. FETAL BIOPHYS PROFILE W/ Fetal biophysical profile
NST. with non-stress test.
76819............. FETAL BIOPHYS PROFIL W/ Fetal biophysical profile
O NST. without non-stress test.
76830............. TRANSVAGINAL US NON-OB. Ultrasound of the pelvis
through vagina.
76831............. ECHO EXAM UTERUS....... A diagnostic procedure that
allows a provider to see
the uterus.
76856............. US EXAM PELVIC COMPLETE Complete ultrasound of the
pelvis.
[[Page 72186]]
76857............. US EXAM PELVIC LIMITED. Limited ultrasound of the
pelvis.
76870............. US EXAM SCROTUM........ Ultrasound of the scrotum.
76872............. US TRANSRECTAL......... Transrectal ultrasound.
76882............. US LMTD JT/NONVASC XTR Diagnostic ultrasound of an
STRUX. extremity excluding the
bone, joints or vessels.
77047............. MRI BOTH BREASTS....... Magnetic resonance imaging,
breasts, without contrast
material; bilateral.
77065............. DX MAMMO INCL CAD UNI.. Mammography of one breast.
77066............. DX MAMMO INCL CAD BI... Mammography of both
breasts.
77067............. SCR MAMMO BI INCL CAD.. Mammography of both breasts-
2 or more views.
77080............. BONE DENSITY STUDY OF Scan to measure bone
SPINE OR PELVIS. mineral density (BMD) at
the spine and hip.
77385............. Ntsty modul rad tx dlvr Radiation therapy delivery.
smpl.
77386............. Ntsty modul rad tx dlvr Radiation therapy delivery.
cplx.
77387............. Guidance for radia tx Guidance for localization
dlvr. of target delivery of
radiation treatment
delivery.
77412............. Radiation treatment Radiation treatment
delivery. delivery.
78014............. THYROID IMAGING W/BLOOD Scan using a radioactive
FLOW. medication
(radiopharmaceutical) to
take pictures or images of
the thyroid gland.
78306............. BONE IMAGING WHOLE BODY A procedure most commonly
ordered to detect areas of
abnormal bone growth due
to fractures, tumors,
infection, or other bone
issues.
78452............. HT MUSCLE IMAGE SPECT Image of the heart to
MULT. assess perfusion.
78815............. PET IMAGE W/CT SKULL- Tumor imaging, positron
THIGH. emission tomography (PET)
with concurrently acquired
computed tomography (CT)
for attenuation correction
and anatomical
localization.
80048............. METABOLIC PANEL TOTAL Basic metabolic panel.
CA.
80050............. GENERAL HEALTH PANEL... General health panel.
80051............. Blood test panel for .
electrolytes (sodium
potassium, chloride,
carbon dioxide).
80053............. COMPREHEN METABOLIC Blood test, comprehensive
PANEL. group of blood chemicals.
80055............. OBSTETRIC PANEL........ Obstetric blood test panel.
80061............. LIPID PANEL............ Blood test, lipids
(cholesterol and
triglycerides).
80069............. RENAL FUNCTION PANEL... Kidney function panel test.
80074............. ACUTE HEPATITIS PANEL.. Acute hepatitis panel.
80076............. HEPATIC FUNCTION PANEL. Liver function blood test
panel.
80081............. Blood test panel for .
obstetrics (cbc,
differential wbc
count, hepatitis b,
hiv, rubella,
syphilis, antibody
screening, rbc, blood
typing).
80197............. ASSAY OF TACROLIMUS.... Test is used to measure the
amount of the drug in the
blood to determine whether
the concentration has
reached a therapeutic
level and is below the
toxic level.
80307............. Drug test prsmv chem Testing for presence of
anlyzr. drug.
81000............. URINALYSIS NONAUTO W/ Manual urinalysis test with
SCOPE. examination using
microscope.
81001............. URINALYSIS; MANUAL OR Manual urinalysis test with
AUTO WITH OR WITHOUT examination with or
MICROSCOPY. without using microscope.
81002............. URINALYSIS NONAUTO W/O Manual urinalysis test with
SCOPE. examination without using
microscope.
81003............. URINALYSIS; MANUAL OR Automated urinalysis test.
AUTO WITH OR WITHOUT
MICROSCOPY.
81025............. URINE PREGNANCY TEST... Urine pregnancy test.
82043............. UR ALBUMIN QUANTITATIVE Urine test to measure
albumin.
82044............. UR ALBUMIN Urine test to measure
SEMIQUANTITATIVE. albumin-semiquantitative.
82248............. BILIRUBIN DIRECT....... Measurement of direct
bilirubin.
82306............. VITAMIN D 25 HYDROXY... Blood test to monitor
vitamin D levels.
82553............. CREATINE MB FRACTION... Blood test to detect heart
enzymes.
82570............. ASSAY OF URINE Test to measure creatinine
CREATININE. in the urine.
82607............. VITAMIN B-12........... Blood test to measure B-12.
82627............. DEHYDROEPIANDROSTERONE. Blood test to measure an
enzyme in the blood.
82670............. ASSAY OF ESTRADIOL..... Blood test to measure a
type of estrogen in the
blood.
82728............. ASSAY OF FERRITIN...... Test to determine level of
iron in the blood.
82784............. ASSAY IGA/IGD/IGG/IGM Test to determine levels of
EACH. immunoglobulins in the
blood.
82803............. BLOOD GASES ANY Test to measure arterial
COMBINATION. blood gases.
82947............. ASSAY GLUCOSE BLOOD Quantitative measure of
QUANT. glucose build up in the
blood over time.
82950............. GLUCOSE TEST........... Test of glucose level in
the blood.
82951............. GLUCOSE TOLERANCE TEST. Test to predict likelihood
of gestational diabetes.
83001............. ASSAY OF GONADOTROPIN Test of hormone in the
(FSH). blood.
83002............. ASSAY OF GONADOTROPIN Test of hormone in the
(LH). blood.
83013............. H PYLORI (C-13) BREATH. Test of breath for a
stomach bacterium.
83036............. GLYCOSYLATED HEMOGLOBIN Blood test to measure
TEST. average blood glucose
levels for past 2-3
months.
83516............. IMMUNOASSAY NONANTIBODY Chemical test of the blood
to measure presence or
concentration of a
substance in the blood.
83540............. ASSAY OF IRON.......... Blood test to measure the
amount of iron that is in
transit in the body.
83550............. IRON BINDING TEST...... Blood test that measures
the amount of iron carried
in the blood.
83655............. ASSAY OF LEAD.......... Blood test to determine the
concentration of lead in
the blood.
83718............. ASSAY OF LIPOPROTEIN... Blood test to measure the
level of lipoproteins in
the blood.
83880............. ASSAY OF NATRIURETIC Blood test used to diagnose
PEPTIDE. heart failure.
[[Page 72187]]
84134............. ASSAY OF PREALBUMIN.... Blood test to measure level
of prealbumin.
84153............. ASSAY OF PSA TOTAL..... PSA (prostate specific
antigen).
84154............. PSA (prostate specific .
antigen) measurement.
84436............. ASSAY OF TOTAL Blood test to measure a
THYROXINE. type of thyroid hormone.
84439............. ASSAY OF FREE THYROXINE Blood test to evaluate
thyroid function.
84443............. ASSAY THYROID STIM Blood test, thyroid
HORMONE. stimulating hormone (TSH).
84460............. ALANINE AMINO (ALT) Blood test to evaluate
(SGPT). liver function.
84480............. ASSAY TRIIODOTHYRONINE Blood test to evaluate
(T3). thyroid function.
84484............. ASSAY OF TROPONIN QUANT Blood test to measure a
certain protein in the
blood to determine heart
muscle damage.
84703............. CHORIONIC GONADOTROPIN Blood test to assess for
ASSAY. pregnancy.
85007............. BL SMEAR W/DIFF WBC Blood test to assess for
COUNT. infection.
85018............. HEMOGLOBIN............. Blood test to measure
levels of hemoglobin.
85025............. COMPLETE CBC W/AUTO Complete blood cell count,
DIFF WBC. with differential white
blood cells, automated.
85027............. COMPLETE CBC AUTOMATED. Complete blood count,
automated.
85610............. PROTHROMBIN TIME....... Blood test, clotting time.
85730............. THROMBOPLASTIN TIME Coagulation assessment
PARTIAL. blood test.
86039............. ANTINUCLEAR ANTIBODIES Blood test to determine
(ANA). autoimmune disorders.
86147............. CARDIOLIPIN ANTIBODY EA Blood test to determine
IG. cause of inappropriate
blood clot formation.
86200............. CCP ANTIBODY........... Blood test to diagnose
rheumatoid arthritis.
86300............. IMMUNOASSAY TUMOR CA 15- Blood test to monitor
3. breast cancer.
86304............. IMMUNOASSAY TUMOR CA Blood test to monitor for
125. cancer.
86336............. INHIBIN A.............. Blood test to monitor for
cancer in the ovaries or
testis.
86592............. SYPHILIS TEST NON-TREP Blood test to screen for
QUAL. syphilis.
86644............. CMV ANTIBODY........... Blood test to monitor for
cytomegalovirus.
86665............. EPSTEIN-BARR CAPSID VCA Blood test to diagnose
mononucleosis.
86677............. HELICOBACTER PYLORI Blood test to if peptic
ANTIBODY. ulcers are caused by a
certain bacterium.
86703............. HIV-1/HIV-2 1 RESULT Blood test to diagnose HIV.
ANTBDY.
86704............. HEP B CORE ANTIBODY Blood test indicating
TOTAL. infection with Hepatitis
B.
86708............. HEPATITIS A ANTIBODY... Blood test indicating
infection with Hepatitis
A.
86762............. RUBELLA ANTIBODY....... Blood test to determine if
antibodies exist for
rubella.
86765............. RUBEOLA ANTIBODY....... Blood test to determine if
antibodies exist for
measles.
86780............. TREPONEMA PALLIDUM..... Blood test to determine
existence of certain
bacterium that causes
syphilis.
86803............. HEPATITIS C AB TEST.... Blood test to determine
infection with Hepatitis
C.
86850............. RBC ANTIBODY SCREEN.... Blood test to screen for
antibodies that could harm
red blood cells.
87040............. BLOOD CULTURE FOR Blood test to screen for
BACTERIA. bacteria in the blood.
87046............. STOOL CULTR AEROBIC Blood test to identify
BACT EA. bacteria that may be
contributing to symptoms
in the gastrointestinal
tract.
87070............. CULTURE OTHR SPECIMN Test of body fluid other
AEROBIC. than blood to assess for
bacteria.
87077............. CULTURE AEROBIC Test of a wound for type of
IDENTIFY. bacterial infection.
87081............. CULTURE SCREEN ONLY.... Medical test to find an
infection.
87086............. URINE CULTURE/COLONY Culture of the urine to
COUNT. determine number of
bacteria.
87088............. URINE BACTERIA CULTURE. Culture of the urine to
determine bacterial
infection.
87101............. SKIN FUNGI CULTURE..... A procedure used to
determine if fungi are
present in an area of the
body.
87186............. MICROBE SUSCEPTIBLE MIC A test used to determine
which medications work on
bacteria for fungi.
87205............. SMEAR GRAM STAIN....... A lab test used to detect
bacteria or fungi in a
sample taken from the site
of a suspected infection.
87210............. SMEAR WET MOUNT SALINE/ A lab test to screen for
INK. evidence of vaginal
infection.
87324............. CLOSTRIDIUM AG IA...... A test of the stool to
diagnose Clostridium
difficile (C. diff)
infection.
87389............. HIV-1 AG W/HIV-1 & HIV- Test for HIV.
2 AB.
87491............. CHYLMD TRACH DNA AMP Test that detects
PROBE. Chlamydia.
87510............. GARDNER VAG DNA DIR Blood test for vaginitis.
PROBE.
87591............. N.GONORRHOEAE DNA AMP Blood test for an STD.
PROB.
87624............. Hpv high-risk types.... Detection test for human
papillomavirus (hpv).
87653............. STREP B DNA AMP PROBE.. Blood test for strep
infection.
87661............. TRICHOMONAS VAGINALIS Blood test for an STD.
AMPLIF.
87801............. DETECT AGNT MULT DNA Blood test to determine
AMPLI. genetic material of
certain infectious agents.
87804............. INFLUENZA ASSAY W/OPTIC Flu test.
87807............. RSV ASSAY W/OPTIC...... Test for RSV.
87880............. STREP A ASSAY W/OPTIC.. Test for strep A.
88112............. CYTOPATH CELL ENHANCE Urine test.
TECH.
88141............. CYTOPATH C/V INTERPRET. Cervical cancer screening
test with interpretation.
88142............. CYTOPATH C/V THIN LAYER PAP smear.
88150............. CYTOPATH C/V MANUAL.... Cervical cancer screening
test done manually.
88175............. CYTOPATH C/V AUTO FLUID PAP smear.
REDO.
88305............. TISSUE EXAM BY Test of tissues for
PATHOLOGIST. diagnosis of
abnormalities.
88312............. SPECIAL STAINS GROUP 1. Blood test to assist with
diagnosis.
88313............. SPECIAL STAINS GROUP 2. Blood test to assist with
diagnosis.
88342............. IMMUNOHISTO ANTB 1ST Pathology test.
STAIN.
90460............. IM ADMIN 1ST/ONLY Immunization administration
COMPONENT. in children <18.
90471............. IMMUNIZATION ADMIN..... Immunization administration
by a medical assistant or
nurse.
[[Page 72188]]
90474............. IMMUNE ADMIN ORAL/NASAL Immunization administered
ADDL. orally or nasally.
90632............. HEPA VACCINE ADULT IM.. Hepatitis A vaccination for
adults.
90633............. HEPA VACC PED/ADOL 2 Hepatitis A vaccination for
DOSE IM. adolescents and children.
90649............. 4VHPV VACCINE 3 DOSE IM 3-dose HPV vaccination.
90656............. IIV3 VACC NO PRSV 0.5 Flu shot-high dose for 2019-
ML IM. 2020 flu season given by
injection.
90658............. IIV3 VACCINE SPLT 0.5 Preservative free flu
ML IM. vaccine.
90672............. LAIV4 VACCINE Nasal flu vaccine.
INTRANASAL.
90681............. RV1 VACC 2 DOSE LIVE Rotavirus vaccination.
ORAL.
90686............. IIV4 VACC NO PRSV 0.5 Flu shot-high dose for 2019-
ML IM. 2020 flu season given by
injection for people >65.
90707............. MMR VACCINE SC......... Measles, mumps, and rubella
vaccine.
90710............. MMRV VACCINE SC........ Measles, mumps, rubella,
and varicella vaccine.
90715............. TDAP VACCINE 7 YRS/> IM Diphtheria, tetanus
acellular, and pertussis
vaccine for adults.
90716............. VAR VACCINE LIVE SUBQ.. Varicella vaccine.
90732............. PPSV23 VACC 2 YRS+ SUBQ/ pneumococcal vaccine.
IM.
90734............. MENACWYD/MENACWYCRM meningococcal conjugate
VACC IM. vaccine.
90736............. HZV VACCINE LIVE SUBQ.. Shingles vaccine.
90746............. HEPB VACCINE 3 DOSE Hepatitis B vaccine.
ADULT IM.
90791............. PSYCH DIAGNOSTIC A diagnostic tool employed
EVALUATION. by a psychiatrist to
diagnose problems with
memory, thought processes,
and behaviors.
90792............. PSYCH DIAG EVAL W/MED A diagnostic tool employed
SRVCS. by a psychiatrist to
determine if medications
are needed.
90832............. PSYTX W PT 30 MINUTES.. Psychotherapy, 30 min.
90833............. PSYTX W PT W E/M 30 MIN Psychotherapy, 30 minutes
with patient when
performed with an
evaluation and management
service.
90834............. PSYTX W PT 45 MINUTES.. Psychotherapy, 45 min.
90836............. PSYTX W PT W E/M 45 MIN Psychotherapy, 45 minutes
with patient when
performed with an
evaluation and management
service.
90837............. PSYTX W PT 60 MINUTES.. Psychotherapy, 60 min.
90838............. Psychotherapy, 60 ...........................
minutes.
90839............. Psychotherapy for ...........................
crisis, first 60
minutes.
90840............. Psychotherapy for ...........................
crisis.
90846............. Family psychotherapy, Family psychotherapy, not
50 minutes. including patient, 50 min.
90847............. FAMILY PSYTX W/PT 50 Family psychotherapy,
MIN. including patient, 50 min.
90853............. GROUP PSYCHOTHERAPY.... Group psychotherapy.
92002............. EYE EXAM NEW PATIENT... Intermediate exam.
92004............. EYE EXAM NEW PATIENT... Complete exam.
92012............. EYE EXAM ESTABLISH Eye exam on an established
PATIENT. patient.
92014............. EYE EXAM&TX ESTAB PT 1/ Eye exam and treatment for
>VST. established patient.
92083............. VISUAL FIELD An eye examination that can
EXAMINATION(S). detect dysfunction in
central and peripheral
vision.
92133............. CMPTR OPHTH IMG OPTIC Optic nerve imaging.
NERVE.
92507............. SPEECH/HEARING THERAPY. Therapy for speech or
hearing.
92523............. SPEECH SOUND LANG Evaluation of speech sound
COMPREHEN. production with evaluation
of language comprehension.
92552............. PURE TONE AUDIOMETRY Type of hearing test.
AIR.
93000............. ELECTROCARDIOGRAM Routine EKG using at least
COMPLETE. 12 leads including
interpretation and report.
93015............. CARDIOVASCULAR STRESS Test to determine heart
TEST. abnormalities.
93303............. ECHO TRANSTHORACIC..... Test to screen the heart
for abnormalities.
93306............. Tte w/doppler complete. Ultrasound examination of
heart including color-
depicted blood flow rate,
direction, and valve
function.
93307............. TTE W/O DOPPLER Echo without doppler study.
COMPLETE.
93320............. DOPPLER ECHO EXAM HEART Echo with doppler.
93350............. STRESS TTE ONLY........ Stress test with
echocardiogram.
93452............. Cardiac Catheterization Insertion of catheter into
left heart for diagnosis.
93798............. CARDIAC REHAB/MONITOR.. Use of EKG to monitor
cardiac rehabilitation.
93880............. EXTRACRANIAL BILAT Study of vessels on both
STUDY. sides of the head and
neck.
93922............. UPR/L XTREMITY ART 2 Limited bilateral
LEVELS. noninvasive physiologic
studies of upper or lower
extremity arteries.
93970............. EXTREMITY STUDY........ Complete bilateral study of
the extremities.
93971............. EXTREMITY STUDY........ One sided or limited
bilateral study.
94010............. BREATHING CAPACITY TEST Test to determine how well
oxygen moves from the
lungs to the blood stream.
94060............. EVALUATION OF WHEEZING. Test to determine if
wheezing is present.
94375............. RESPIRATORY FLOW VOLUME Graphical representation of
LOOP. inspiration and
expiration.
94726............. PULM FUNCT TST Measures how much air is in
PLETHYSMOGRAP. the lungs after taking a
deep breath.
94727............. PULM FUNCTION TEST BY Measure of lung function
GAS. and gas exchange.
94729............. CO/MEMBANE DIFFUSE Test to measure how well
CAPACITY. gases diffuse across lung
surfaces.
95004............. PERCUT ALLERGY SKIN Allergy test.
TESTS.
95115............. IMMUNOTHERAPY ONE Allergy shot-1 shot.
INJECTION.
95117............. IMMUNOTHERAPY Multiple allergy shots.
INJECTIONS.
95810............. POLYSOM 6/> YRS 4/> Sleep monitoring of patient
PARAM. (6 years or older) in
sleep lab.
[[Page 72189]]
95811............. POLYSOM 6/>YRS CPAP 4/> Sleep monitoring of patient
PARM. (6 years or older) in
sleep lab using CPAP.
95860............. MUSCLE TEST ONE LIMB... Test to measure electrical
activity of muscles or
nerves in 1 limb.
95861............. MUSCLE TEST 2 LIMBS.... Test to measure electrical
activity of muscles or
nerves in 2 limb.
95886............. MUSC TEST DONE W/N TEST Test to assess for nerve
COMP. damage.
96110............. DEVELOPMENTAL SCREEN W/ Childhood test to screen
SCORE. for developmental
disabilities.
96365............. THER/PROPH/DIAG IV INF Intravenous infusion, for
INIT. therapy, prophylaxis, or
diagnosis-initial
infusion.
96366............. THER/PROPH/DIAG IV INF Intravenous infusion, for
ADDON. therapy, prophylaxis, or
diagnosis-additional
infusions.
96374............. THER/PROPH/DIAG INJ IV Intravenous infusion, for
PUSH. therapy, prophylaxis, or
diagnosis-IV push.
96375............. TX/PRO/DX INJ NEW DRUG Intravenous infusion, for
ADDON. treatment, prophylaxis, or
diagnosis-new drug add on.
96376............. TX/PRO/DX INJ SAME DRUG Intravenous infusion, for
ADON. treatment, prophylaxis, or
diagnosis-same drug add
on.
96415............. CHEMO IV INFUSION ADDL Chemotherapy infusion-each
HR. additional hour.
96417............. CHEMO IV INFUS EACH Chemotherapy infusion-
ADDL SEQ. additional IV pushes of
the same medication.
97010............. HOT OR COLD PACKS Use of external hot or cold
THERAPY. packs.
97012............. MECHANICAL TRACTION Form of decompression
THERAPY. therapy of the spine.
97014............. ELECTRIC STIMULATION One time use unattended.
THERAPY.
97016............. VASOPNEUMATIC DEVICE Machines designed to pump
THERAPY. cold water into an
inflatable wrap or brace,
compressing the enveloped
area of the body.
97026............. INFRARED THERAPY....... Light-based method to treat
pain and inflammation.
97032............. ELECTRICAL STIMULATION. Repeated application to one
or more parts of the body.
97033............. ELECTRIC CURRENT Psychiatric treatment in
THERAPY. which seizures are
electrically induced in
patients to provide relief
from mental disorders.
97035............. ULTRASOUND THERAPY..... Use of sound waves to treat
medical problems,
especially musculoskeletal
problems like inflammation
from injuries.
97110............. THERAPEUTIC EXERCISES.. Therapeutic exercise to
develop strength,
endurance, range of
motion, and flexibility,
each 15 minutes.
97112............. NEUROMUSCULAR A technique used by
REEDUCATION. physical therapists to
restore normal body
movement patterns.
97113............. AQUATIC THERAPY/ Use of water for therapy/
EXERCISES. exercises.
97116............. GAIT TRAINING THERAPY.. A type of physical therapy.
97124............. MASSAGE THERAPY........ Use of massage.
97140............. MANUAL THERAPY 1/> Manipulation of 1 or more
REGIONS. regions of the body.
97530............. THERAPEUTIC ACTIVITIES. Incorporates the use of
multiple parameters, such
as balance, strength, and
range of motion, for a
functional activity.
97535............. SELF CARE MNGMENT Occupational therapy.
TRAINING.
97597............. RMVL DEVITAL TIS 20 CM/ Debridement (for example,
<. high pressure waterjet
with/without suction,
sharp selective
debridement with scissors,
scalpel, and forceps).
97811............. ACUPUNCT W/O STIMUL Acupuncture without
ADDL 15M. stimulation.
97813............. ACUPUNCT W/STIMUL 15 Acupuncture with
MIN. stimulation.
98940............. CHIROPRACT MANJ 1-2 Chiropractic manipulation
REGIONS. in 1-2 regions.
98941............. CHIROPRACT MANJ 3-4 Chiropractic manipulation
REGIONS. in 3-4 regions.
98943............. CHIROPRACT MANJ Chiropractic manipulation
XTRSPINL 1/>. not of the spine.
98966............. Hc pro phone call 5-10 Telephone assessment and
min. management service, 5-10
minutes of medical
discussion.
98967............. Hc pro phone call 11-20 Telephone assessment and
min. management service, 11-20
minutes of medical
discussion.
98968............. Hc pro phone call 21-30 Telephone assessment and
min. management service, 21-30
minutes of medical
discussion.
98970............. Qualified non physician Qualified non physician
health care health care professional
professional online online digital assessment
digital assessment and and management, for an
management est. established patient, for
patient 5-10 minutes. up to 7 days, cumulative
time during the 7 days; 5-
10 minutes.
98971............. Qualified non physician Qualified non physician
health care health care professional
professional online online digital assessment
digital assessment and and management, for an
management est. established patient, for
patient 11-20 minutes. up to 7 days, cumulative
time during the 7 days; 11-
20 minutes.
98972............. Qualified non physician Qualified non physician
health care health care professional
professional online online digital assessment
digital assessment and and management, for an
management for est. established patient, for
patients 21+ minutes. up to 7 days, cumulative
time during the 7 days; 21
or more minutes.
99051............. MED SERV EVE/WKEND/ Medical service during off-
HOLIDAY. hours.
99173............. VISUAL ACUITY SCREEN... Eye test.
99201............. OFFICE/OUTPATIENT VISIT New patient office or other
NEW. outpatient visit,
typically 10 minutes.
99202............. OFFICE/OUTPATIENT VISIT New patient office or other
NEW. outpatient visit,
typically 20 minutes.
99203............. OFFICE/OUTPATIENT VISIT New patient office or other
NEW. outpatient visit,
typically 30 min.
99204............. OFFICE/OUTPATIENT VISIT New patient office of other
NEW. outpatient visit,
typically 45 min.
99205............. OFFICE/OUTPATIENT VISIT New patient office of other
NEW. outpatient visit,
typically 60 min.
99211............. OFFICE/OUTPATIENT VISIT Outpatient visit of
EST. established patient not
requiring a physician.
99212............. OFFICE/OUTPATIENT VISIT Outpatient visit of
EST. established patient
requiring a physician.
99213............. OFFICE/OUTPATIENT VISIT Established patient office
EST. or other outpatient visit,
typically 15 minutes.
99214............. OFFICE/OUTPATIENT VISIT Established patient office
EST. or other outpatient visit,
typically 25 minutes.
99215............. OFFICE/OUTPATIENT VISIT Established patient office
EST. or other outpatient, visit
typically 40 minutes.
99243............. OFFICE CONSULTATION.... Patient office
consultation, typically 40
min.
[[Page 72190]]
99244............. OFFICE CONSULTATION.... Patient office
consultation, typically 60
min.
99283............. Emergency dept visit... Emergency department visit,
moderately severe problem.
99284............. Emergency dept visit... Emergency department visit,
problem of high severity.
99285............. Emergency dept visit... Emergency department visit,
problem with significant
threat to life or
function.
99381............. INIT PM E/M NEW PAT Initial visit for an
INFANT. infant.
99382............. INIT PM E/M NEW PAT 1-4 Initial visit for new
YRS. patients 1-4 years old.
99383............. PREV VISIT NEW AGE 5-11 New preventative visit in
new patients 5-11 years
old.
99384............. PREV VISIT NEW AGE 12- New preventative visit in
17. new patients 12-17 years
old.
99385............. PREV VISIT NEW AGE 18- Initial new patient
39. preventive medicine
evaluation (18-39 years).
99386............. PREV VISIT NEW AGE 40- Initial new patient
64. preventive medicine
evaluation (40-64 years).
99387............. INIT PM E/M NEW PAT 65+ Initial visit for new
YRS. patients 65 and older
years old.
99391............. PER PM REEVAL EST PAT Periodic primary re-
INFANT. evaluation for an
established infant
patient.
99392............. PREV VISIT EST AGE 1-4. Initial visit for new
patients 1-4 years old.
99393............. PREV VISIT EST AGE 5-11 New preventative visit in
new patients 5-11 years
old.
99394............. PREV VISIT EST AGE 12- New preventative visit in
17. new patients 12-17 years
old.
99395............. PREV VISIT EST AGE 18- Established patient
39. periodic preventive
medicine examination age
18-39 years.
99396............. PREV VISIT EST AGE 40- Established patient
64. periodic preventive
medicine examination age
40-64 years.
99397............. PER PM REEVAL EST PAT Periodic primary re-
65+ YR. evaluation for an
established patient 65 and
older.
99421............. ONLINE DIGITAL Online digital evaluation
EVALUATION AND and management service,
MANAGEMENT SERVICE; 5- for an established
10 MINUTES. patient, for up to 7 days,
cumulative time during the
7 days; 5-10 minutes.
99422............. Online digital Online digital evaluation
evaluation and and management service,
management service; 11- for an established
20 minutes. patient, for up to 7 days,
cumulative time during the
7 days; 11-20 minutes.
99441............. Phone e/m phys/qhp 5-10 Physician telephone patient
min. service, 5-10 minutes of
medical discussion.
99442............. Phone e/m phys/qhp 11- Physician telephone patient
20 min. service, 11-20 minutes of
medical discussion.
99443............. Phone e/m phys/qhp 21- Physician telephone patient
30 min. service, 21-30 minutes of
medical discussion.
------------------------------------------------------------------------
As outlined above, below are the five codes that appear on the
commenter list of recommended items and services that are not being
required for the initial list of 500 items and services.
------------------------------------------------------------------------
Commenter codes not used Reason for removal
------------------------------------------------------------------------
10022.................................... Code Retired.
11100.................................... Code Retired.
11101.................................... Code Retired.
77059.................................... Code Retired.
A288..................................... Code Retired.
------------------------------------------------------------------------
The Departments understand that plans and issuers may use different
billing codes (for example, MS-DRGs vs. APR DRGs). Therefore, in the
first year of the implementation of the self-service tool, when plans
and issuers are required to provide cost estimates for the 500 items
and services identified by the Departments, plans and issuers are
permitted to make appropriate code substitutions as necessary to allow
them to disclose cost-sharing information for the 500 items and
services through the self-service tool. If necessary, the Departments
will issue future guidance regarding standards for code substitutions.
a. First Content Element: Estimated Cost-Sharing Liability
The first content element that plans and issuers are required to
disclose under the final rules is an estimate of the cost-sharing
liability for the furnishing of a covered item or service by a
particular provider or providers. The calculation of the cost-sharing
liability estimate is required to be computed based on the other
relevant cost-sharing information that plans and issuers are required
to disclose, as described later in this section of this preamble.
The proposed rules defined ``cost-sharing liability'' as the amount
a participant, beneficiary, or enrollee is responsible for paying for a
covered item or service under the terms of the plan or coverage. The
disclosure must include all applicable forms of cost sharing, including
deductibles, coinsurance requirements, and copayments. The term cost-
sharing liability does not include premiums, any applicable balance
billing amounts charged by out-of-network providers, or the cost of
non-covered items or services. For QHPs offered through Exchanges, an
estimate of cost-sharing liability for a requested covered item or
service provided must reflect any cost-sharing reductions the
individual would receive under the coverage.
Many commenters supported the disclosure of cost-sharing liability
for a particular item or service. One stated that providing cost-
sharing amounts to consumers in advance of receiving a service would
likely make it easier for providers to collect consumers' cost-sharing
amounts. However, some commenters were concerned that information
provided in advance of care would not provide an accurate estimate of
actual participant, beneficiary, or enrollee liability, which would
lead to consumer confusion and frustration. A few commenters requested
that the tool include additional information, such as all providers
expected to be involved in providing an item or service, and the price
of items and services historically provided along with that particular
item or service by the provider. Some commenters urged the Departments
to ensure appropriate educational information is provided to patients
to help them better understand and navigate the information being
displayed. Others recommended a federally funded and coordinated
outreach and education campaign to encourage the use of price
transparency tools and help patients understand the complexities of
health care prices. One commenter urged the Departments to clarify
that, to the extent that the actual services provided are consistent
with those provided under the estimate, plans would not be permitted to
hold an enrollee responsible for more than what was provided under the
estimate.
The Departments underscore that the estimates required by the final
rules are
[[Page 72191]]
not required to reflect the actual or final cost of a particular item
or service. Unforeseen factors during the course of treatment (which
may involve additional services or providers) can result in higher
actual cost-sharing liability following receipt of care than the
estimate provided in advance. Nonetheless, the Departments are
finalizing the requirement that cost-sharing liability estimates be
built upon accurate information, including the relevant cost-sharing
information described in 26 CFR 54.9815-2715A2(b)(1)(ii)-(iv), 29 CFR
2590.715-2715A2(b)(1)(ii)-(iv), and 45 CFR 147.211(b)(1)(ii)-(iv).
However, this requirement does not mean that the estimates must reflect
the amount ultimately charged to a participant, beneficiary, or
enrollee. Instead, the estimate should reflect the amount a
participant, beneficiary, or enrollee would be expected to pay for the
covered item or service for which cost-sharing information is sought.
Thus, the final rules do not require the cost-sharing liability
estimate to include costs for unanticipated items or services the
individual could incur due to the severity of his or her illness or
injury, provider treatment decisions, or other unforeseen events.
Attendant notice requirements in 26 CFR 54.9815-2715A2(b)(1)(vii), 29
CFR 2590.715-2715A2(b)(1)(vii), and 45 CFR 147.211(b)(1)(vii) also
require inclusion of a statement that actual charges for the
participant's, beneficiary's, or enrollee's covered items and services
may be different from those described in a cost-sharing liability
estimate, depending on the actual items and services received at the
point of care.
Additionally, while the Departments acknowledge the value of not
allowing group health plans and health insurance issuers to impose
higher cost sharing than estimated, to the extent that the actual
services provided were consistent with those provided under the
estimate, the Departments are of the view that it would not be prudent
to hold plans and issuers liable to the exact estimate that is provided
through the tool, as cost-sharing obligations may ultimately vary from
the estimates provided in advance. Additionally, the Departments are
concerned that such a requirement could incentivize plans and issuers
to provide high estimates, rather than the most accurate estimates.
Commenters recommended the final rules provide plans and issuers
with the flexibility to apply a reasonable methodology for estimating
reliable out-of-pocket costs for a specific network provider, and
recommended that this methodology could include, but should not be
limited to, using current year negotiated rates, historical negotiated
rates, historical claims, or a combination of these data points. One
commenter urged the Departments to remove the proposed requirement that
cost-sharing liability information be calculated based on negotiated
rates, stating that this is not the methodology used by most existing
cost-estimate tools.
The Departments understand that plans and issuers with existing
cost-estimate tools may use advanced analytics in calculating cost-
sharing liability estimates. However, the Departments are of the view
that the most accurate estimates of cost-sharing liability should be
provided using the actual rates and fees upon which liability is
determined. It is the Departments' understanding that, while provider
reimbursement may be based on negotiated rates, plans and issuers do
not always calculate a consumer's liability using the negotiated rate
as defined in paragraph (a) of the proposed rules, such as in
capitation arrangements where the provider is reimbursed
retrospectively. Rather, some plans and issuers may determine a
participant's, beneficiary's, or enrollee's cost-sharing liability on a
contractually agreed upon underlying fee schedule between the provider
and the plan or issuer.
Therefore, the final rules require that cost-sharing liability for
a particular item or service be calculated based on in-network rates,
out-of-network allowed amounts, and individual-specific accumulators,
such as deductibles and out-of-pocket limits. However, the Departments
clarify that plans and issuers may incorporate additional metrics and
analytics beyond this minimum standard: For example, by using complex
historical analytics to predict total costs of items and services
available through a bundled payment arrangement. The Departments will
assess how additional useful information can be provided to consumers
in this area going forward.
Under the proposed rules, plans and issuers would be required to
provide participants, beneficiaries, and enrollees with cost-sharing
information for either a discrete item or service or for items or
services for a treatment or procedure for which the plan uses a bundled
payment arrangement, according to how the plan or issuer structures
payment for the item or service. Several commenters pointed out that
providing cost-sharing liability estimates for bundled payment
arrangements might introduce confusion as consumers may not realize
that billing and payment rates are different when items and services
are rendered individually versus as part of a bundled item or service.
Commenters stated that ultimately, patients would very likely receive
inaccurate or misleading estimates in a significant proportion of self-
service estimate requests. Similarly, several commenters sought
clarification regarding how plans and issuers that incorporate
innovative and cost-saving methods like reference-based pricing, value-
based insurance design, and direct primary care as part of their
services and plan designs would comply with the requirements of the
proposed rules.
The Departments recognize the variability in pricing structures and
plan designs for many plans and issuers. The Departments understand
that developers have demonstrated that formulas for unique pricing
models are already being incorporated into existing estimator tools.
The Departments further understand that while providing cost estimates
in advance for a plan or issuer that incorporates reference-based
reimbursement may be complex, it is still feasible to estimate such
costs. For example, plans or issuers could develop a method for
analyzing past claims of specific providers to look for patterns in
their payment rates from which to derive an accurate predictive
estimate in advance. In response to the Hospital Price Transparency
final rule, one hospital claims to have developed a tool that provides
cost estimates with 95 percent to 99 percent accuracy.\110\ While some
factors associated with the course of care are incorporated after
services are rendered, others, like gender or location, are known in
advance. Therefore, the Departments expect plans and issuers to provide
a reasonable estimate using information the plan or issuer knows about
the participant, beneficiary, or enrollee or the average participant,
beneficiary, or enrollee.
---------------------------------------------------------------------------
\110\ Meyer, H. ``Hospitals roll out online price estimators as
CMS presses for transparency.'' Modern Healthcare. June 23, 2018.
Available at https://www.modernhealthcare.com/article/20180623/NEWS/180629994/hospitals-roll-out-online-price-estimators-as-cms-presses-for-transparency.
---------------------------------------------------------------------------
The Departments again acknowledge that how a provider is reimbursed
does not necessarily indicate how a participant, beneficiary, or
enrollee will be billed. Specifically, as commenters explained, the
bundled payment arrangement as defined in the proposed rules may not
reflect the cost-sharing liability for which the consumer is liable.
For instance, if a provider is reimbursed in a bundled payment
arrangement for a surgical procedure that includes the surgery and pre-
and post-surgery office visits, but the
[[Page 72192]]
enrollee is billed a copayment for each office visit and coinsurance
for the surgical procedure, the enrollee should be able to obtain the
separate copayment liabilities for each of the office visits and the
surgical procedures, not one bundled charge. However, under this
example, if the individual is only responsible for one copayment that
includes all office visits and the surgical procedures, the plan or
issuer could provide the cost-sharing liability estimate for that
bundled payment arrangement.
Therefore, the final rules clarify that plans and issuers should
provide one overall cost-sharing liability estimate for a bundled
payment arrangement if that is the only cost sharing for which the
participant, beneficiary, or enrollee would be liable. However, if a
plan or issuer reimburses a provider under a bundled payment
arrangement for all covered items and services provided for a specific
treatment or procedure, but cost sharing is imposed separately for each
unique item and service included in the bundled payment, plans and
issuers should disclose the cost-sharing liability for those distinct
items and services to the participant, beneficiary, or enrollee. The
Departments also recognize that providing one estimate that includes
all items and services that are typically provided within an episode of
care may be consumer-friendly in some situations, even where the items
and services are not subject to a bundled payment arrangement.
Therefore, the final rules clarify that while plans and issuers are not
required to provide bundled estimates where the provider is not
reimbursed through a bundled payment arrangement, nothing prohibits
plans or issuers from providing bundled estimates in situations where
such estimates could be relevant to participants, beneficiaries, or
enrollees, as long as the plan or issuer also discloses information
about the relevant items or services individually, as required by the
final rules.
Plans and issuers should take a similar approach for plan designs
that incorporate alternative payment structures such as direct primary
care or other bundled or capitated payment arrangements. The
Departments understand that there are many unique plan designs and may
issue additional guidance to address specific questions from plans,
issuers, and enforcement entities regarding the requirements of the
final rules.
The Departments appreciate comments requesting education and
outreach to help ensure that participants, beneficiaries, and enrollees
know that these consumer tools exist and can understand the information
displayed. The Departments recognize that more than 94 percent of plans
and issuers recently surveyed already have some variation of an
internet self-service tool,\111\ yet another study noted that only 12
percent of participants, beneficiaries, or enrollees currently use the
tools available to them,\112\ which might suggest that there is an
opportunity for improved awareness and understanding of these tools.
However, the Departments are also of the view that plans and issuers
have their own incentives to provide quality customer service and know
what types of outreach and messaging would be most helpful to their
participants, beneficiaries, and enrollees. Therefore, the Departments
have decided not to institute specific outreach and education
requirements, but rather strongly encourage plans and issuers to
develop educational and outreach materials to promote awareness that
self-service tools exist, where to find them on the plan's or issuer's
website, how to use the tool, what, if any, further innovations above
the baseline standards that differentiates their tool from competitors,
and what additional information may be available. In addition, the
Departments are of the view that employers may want to conduct outreach
and education to encourage their employees to shop for lower-priced
services that may slow increases in employer-sponsored coverage
premiums.
---------------------------------------------------------------------------
\111\ Sharma A., Manning, R., and Mozenter, Z. ``Estimating the
Burden of the Proposed Transparency in Coverage Rule.'' Bates White
Economic Consulting. January 27, 2020. Available at: https://www.bateswhite.com/newsroom-insight-Transparency-in-Coverage-Rule.html.
\112\ See Mehrotra, A., Chernew, M., and Sinaiko, A. ``Promises
and Reality of Price Transparency.'' April 5, 2018. 14 N. Eng. J.
Med. 378. Available at: https://www.nejm.org/doi/full/10.1056/NEJMhpr1715229.
---------------------------------------------------------------------------
One commenter stated that the final rules should provide the
flexibility for health plans to display cost-sharing information either
as dollars or using some proxy variable that either conveys costs
relative to other providers or the cost-effectiveness of the providers
for a given items or service relative to their peers. Another commenter
recommended that cost estimates include both an average price and a
reasonable range of the possible prices that the treatment could cost.
Other commenters recommended the Departments allow cost estimates to be
provided as a range.
The Departments are of the view that cost-sharing averages and
ranges would not provide personalized and specific cost-sharing
information and therefore the final rules adopt, as proposed, the
provision that estimated cost-sharing liability be reflected as a
dollar amount. However, the Departments understand that providing an
estimated range could help consumers understand how their costs may
vary depending on the complexity of a procedure. In addition to
providing a cost-sharing estimate that is specific to the participant,
beneficiary, or enrollee, plans and issuers may also choose to provide
low and high ranges of what the consumer may expect to pay to reflect
other needed services, complications, and other factors.
Several commenters expressed concerns about the ability of plans
and issuers to provide these cost-sharing estimates, noting that few,
if any, currently provide this level of disclosure to participants,
beneficiaries, or enrollees before the incurrence of a claim.
Commenters stated that most major issuers have treatment cost
estimators available, but these tools are rudimentary and are not
necessarily available for all plan designs. Commenters also stated that
few regional issuers currently make any cost-estimation data available
and the vast majority of data provided via online tools currently
relies on estimated costs drawn from publicly available sources rather
than personal information and circumstances.
Another commenter stated that most self-insured group health plans
do not have easy access to all the data necessary to provide
beneficiaries with what they described as upfront adjudication of the
beneficiary's claim, like an EOB. One commenter expressed concern,
stating that plans could be subject to significant penalties for
failure to comply and highlighted that self-insured plans typically do
not establish their own networks, but rather contract with an issuer,
TPA or other entity for the use of their network. Another commenter
stated that issuers, preferred provider networks, and TPAs continue to
maintain network pricing information as confidential and proprietary,
even with respect to their own plan clients. Some commenters stated
that while the preamble to the proposed rules suggests that plans could
renegotiate their contracts in order to gain access to this proprietary
information, this ignores the realities of the market. These commenters
opined that, in the absence of clearer guidance applicable to issuers
and TPAs, plans and issuers will be burdened with trying to force
disclosure of this information.
The Departments are of the view that the ability to access cost-
sharing liability information in advance of
[[Page 72193]]
seeking care should not be limited by the participant's, beneficiary's,
or enrollee's plan or issuer type. The Departments are aware of several
issuers that provide advance cost estimates that are based on an
individual's specific information, such as out-of-pocket amount
accumulators. The intent of the final rules is to make this information
available to a larger number of participants, beneficiaries, and
enrollees, empowering them to shop for care that best meets their
needs.
Additionally, while the Departments recognize that some self-
insured group health plans (or TPAs acting on their behalf) may not
currently have access to the information that would be required to
calculate a participant's or beneficiary's cost liability, the
Departments do not foresee any barriers that would prohibit the plan or
TPA from obtaining this information. As discussed in the preamble to
the proposed rules, plans may have to amend existing contracts with
issuers, TPAs, or providers. Consistent with the discussion of legal
authority elsewhere in this preamble, even if a contract between a
self-insured plan and a TPA contains a provision prohibiting the public
disclosure of its terms, it is the Departments' understanding that such
contracts typically include exceptions where a particular disclosure is
required by Federal law, and Federal law would control over contractual
terms in any case.
In response to whether other types of information are necessary to
provide an estimate of cost-sharing liability prior to an individual's
receipt of items or services from a provider(s), one commenter
suggested--in order to enhance the usability and accuracy of these
data--that CMS and payers utilize the open-source episode grouper
maintained by the not-for-profit Patient-Centered Episode System
(PACES) Center, to create a single industry standard for defining
clinical episodes of care using current medical record and payment
systems and based on consensus across multiple stakeholders including
providers, payers, purchasers, and consumers.
While the Departments generally support standardization across the
complex health care ecosystem, there is no current required
standardization of items and services provided for certain common
episodes of care. Because of the lack of this particular standard,
requiring plans and issuers to use PACES or similar services to
determine costs will not accurately reflect what different plans and
issuers actually reimburse for different episodes of care.
The Departments acknowledge that section 2713 of the PHS Act
requires non-grandfathered group health plans and issuers offering non-
grandfathered coverage in the individual or group markets to provide
coverage without the imposition of any cost-sharing requirements for
select preventive items and services. However, if the same items or
services are furnished for non-preventive purposes, the participant,
beneficiary, or enrollee may be subject to the cost-sharing terms of
his or her plan. The Departments are of the view that if an item or
service will be furnished at no cost to the participant, beneficiary,
or enrollee, the participant, beneficiary, or enrollee should know this
information. One commenter expressed a desire that price transparency
not serve as a disincentive for individuals seeking preventive and
maintenance therapy services. The Departments are of the view that
clearly indicating when items and services have a $0 cost-sharing
liability may have the opposite effect--it may actually encourage
consumers to seek preventive care. The Departments understand that
determining whether an item or service is preventive or not for an
individual may be complex, and, indeed, may be impossible prior to
service. Therefore, to the extent an item or service is a recommended
preventive service under section 2713 of the PHS Act, and the plan or
issuer cannot determine whether the request is for preventive or non-
preventive purposes, the plan or issuer must display the non-preventive
cost-sharing liability in the internet-based self-service tool, along
with a statement that the item or service may not be subject to cost
sharing if it is billed as a preventive service. For example, if an
individual requests cost-sharing information for an in-network
colonoscopy, the plan should display the applicable cost-sharing
information for a diagnostic colonoscopy and a statement that the
service may not be subject to cost sharing if it is billed as a
preventive service from an in-network provider. As an alternative, a
plan or issuer may allow an individual to request cost-sharing
information for the specific preventive or non-preventive item or
service by including the appropriate terms such as ``preventive,''
``non-preventive,'' or ``diagnostic'' as a means to request the most
accurate cost-sharing information.
b. Second Content Element: Accumulated Amounts
The second content element is a participant's, beneficiary's, or
enrollee's accumulated amounts. The proposed rules defined
``accumulated amounts'' as the amount of financial responsibility that
a participant, beneficiary, or enrollee has incurred at the time the
request for cost-sharing information is made, with respect to a
deductible and/or an out-of-pocket limit. If an individual is enrolled
in other than self-only coverage, these accumulated amounts would
include the financial responsibility a participant, beneficiary, or
enrollee has incurred toward meeting his or her individual deductible
and/or out-of-pocket limit, as well as the amount of financial
responsibility that the individuals enrolled under the plan or coverage
have incurred toward meeting the other than self-only coverage
deductible and/or out-of-pocket limit, as applicable. The Departments
interpret section 2707(b) of the PHS Act as requiring non-grandfathered
group health plans to comply with the maximum out-of-pocket limit
promulgated under section 1302(c)(1) of PPACA, including the HHS
clarification that the self-only maximum out-of-pocket limit applies to
each individual, regardless of whether the individual is enrolled in
self-only coverage or in other than self-only coverage. Accordingly,
the self-only maximum out-of-pocket limit applies to an individual who
is enrolled in family coverage or other coverage that is not self-only
coverage under a group health plan.\113\ For this purpose, the
Departments proposed that accumulated amounts would include any expense
that counts toward the deductible or out-of-pocket limit (such as
copayments and coinsurance), but would exclude expenses that would not
count toward a deductible or out-of-pocket limit (such as premium
payments, out-of-pocket expenses for out-of-network services, or
amounts for items or services not covered under a plan or coverage).
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\113\ 80 FR 10750, 10824-10825 (Feb. 27, 2015); see also FAQs
About Affordable Care Act Implementation (Part XXVII), Q1. Available
at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/ACA/-FAQs-Part-XXVII/-MOOP/-2706/-FINAL.pdf and https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-xxvii.pdf.
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Furthermore, to the extent a plan or issuer imposes a cumulative
treatment limitation on a particular covered item or service (such as a
limit on the number of items, days, units, visits, or hours covered in
a defined time period) independent of individual medical necessity
determinations, the accumulated amounts would also include the amount
that has accrued toward the limit on the item or service (such as the
number of items, days, units, visits, or hours the participant,
beneficiary, or enrollee has used).
[[Page 72194]]
As discussed in the proposed rules, the Departments understand that
independent of cumulative treatment limitations, cost-sharing liability
may vary by individual based on a determination of medical necessity
and that it may not be reasonable for a plan or issuer to account for
this variance as part of the accumulated amounts. Therefore, under the
final rules, plans and issuers are required to provide cost-sharing
information with respect to an accumulated amount for a cumulative
treatment limitation that reflects the status of the individual's
progress toward meeting the limitation, and this information does not
include any individual determination of medical necessity that may
affect coverage for the item or service. For example, if the terms of
an individual's plan or coverage limit coverage of physical therapy to
10 visits per plan or policy year, subject to a medical necessity
determination, and at the time the request for cost-sharing information
is made the individual has had claims paid for three physical therapy
visits, the plan or coverage would make cost-sharing information
disclosures based on the fact that the individual could be covered for
seven more physical therapy visits in that plan or policy year,
regardless of whether or not a determination of medical necessity for
future visits has been made at that time.
Several commenters supported the inclusion of the accumulated
amounts as one of the content elements. One commenter agreed with the
proposed requirement that the accumulated amounts include the financial
responsibility incurred toward both an individual deductible and/or
out-of-pocket limit and toward the other than self-only coverage
deductible and/or out-of-pocket limit. One commenter recommended that
plans be required to disclose to prospective enrollees whether an
enrollee's accumulated amounts are reduced through a plan's accumulator
adjustment program because, the commenter noted, having this
information prior to enrollment in a plan is crucial because of the
impact such programs have on participant, beneficiary, and enrollee
access, adherence, and outcomes.
The Departments agree that an essential part of providing accurate
cost-sharing estimates is disclosing individuals' progress toward their
accumulated amounts. However, the intent of the self-service tool is to
provide current participants, beneficiaries, and enrollees with
information about their plan or issuer, and, therefore, the Departments
are not finalizing any provisions related to disclosures to potential
enrollees. The final rules adopt this provision as proposed.
One commenter recommended the Departments confirm amounts made
available in account-based arrangements that can or must be used toward
cost-sharing expenses under a separate plan need not be reflected in
the accumulated amounts or cost-sharing estimate under the tool. The
commenter stated that there is an array of these types of arrangements
of varying types and structures and to incorporate them into the cost-
sharing estimate could be administratively challenging and would impose
a significant burden.
The Departments clarify that the estimates do not include amounts
made available through separate account-based arrangements. In
addition, the Departments encourage, but are not requiring, plans and
issuers to issue a disclaimer regarding such arrangements, as
necessary.
Certain commenters stated that the proposed requirement to display
accumulated amounts toward a cumulative treatment limitation on a
particular item or service would be difficult to implement and
requested elimination or delay of this requirement. Commenters
expressed that in some cases, this information may be tracked by third-
party vendors and not integrated into claims systems; for example,
plans and issuers often contract with third parties that provide
medical benefits management for certain services (physical therapy, for
example). Commenters stated that building the connectivity necessary to
exchange information on accumulated amounts in real time would take
significant time. Other commenters recommended this requirement be
optional.
The Departments acknowledge that disclosure of accumulated amounts
may present challenges for plans and issuers. However, an accurate
estimate of cost-sharing liability cannot be achieved without taking
into account a participant's, beneficiary's, or enrollee's accumulated
amounts, including cumulative treatment limitations. Nonetheless, to
give plans and issuers additional time to prepare, the disclosure
requirements related to cost-sharing liability estimates in the final
rules are not applicable until plan years (or in the individual market,
policy years) beginning on or after January 1, 2023, providing two
years for implementation, which should give plans and issuers
sufficient time to ensure that they are able to comply.
One commenter urged the Departments to include a requirement for
plans to provide the cost for the beneficiary to purchase a non-covered
prescription drug and to indicate whether and, if so, to what extent,
that cost will be applied against the deductible. The commenter stated
that knowing to what extent a non-covered drug expense will count
towards meeting a deductible and the annual limitation on cost sharing,
if at all, especially with regard to specialty drugs, is critical
because there are significant coverage gaps.
While the Departments appreciate the suggestions related to non-
covered prescription drugs, this rulemaking is focused on covered items
and services. The Departments are not inclined to increase the burden
imposed by the final rules by adding requirements to disclose
information regarding non-covered services, given that plans and
issuers may not have access to the costs of drugs they do not cover and
include in their formulary. The Departments will take this suggestion
into consideration for future rulemaking.
c. Third Content Element: In-Network Rates
Negotiated Rates
In the proposed rules, the Departments proposed to require group
health plans and health insurance issuers to disclose the negotiated
rate, reflected as a dollar amount, for an in-network provider or
providers for a requested covered item or service, to the extent
necessary to determine the participant's, beneficiary's, or enrollee's
cost-sharing liability. Many commenters did not support the disclosure
of negotiated rates, stating that publishing negotiated rates would not
meet the Departments' purported goal of helping consumers understand
costs and would possibly make purchasing more confusing and difficult
for consumers. Additionally, some commenters expressed concerns that
publication of negotiated rates would force plans and issuers to
violate non-disclosure contracts with providers. Conversely, many other
commenters did support the disclosure of negotiated rates and offered
support for their disclosure to participants, beneficiaries, and
enrollees. These commenters stated that consumers should be engaged and
educated about health care spending, and as discussed in more detail
below, several commenters supported the disclosure of negotiated rates
even when it is not relevant to a consumer's cost-sharing liability.
The Departments maintain that the disclosure of the negotiated
rates is a key element of overall price transparency. Participants,
beneficiaries,
[[Page 72195]]
and enrollees are often responsible for a percentage of the negotiated
rate through coinsurance or the entire negotiated rate if they have not
yet met their deductible. Consistent with discussions elsewhere in this
preamble, the Departments are of the view that such contracts typically
include exceptions where a particular disclosure is required by Federal
law.
In the preamble to the proposed rules, the Departments acknowledged
that some provider contracts express negotiated rates as a formula (for
example, 150 percent of the Medicare rate), but disclosure of formulas
is not likely to be helpful or understandable for many participants,
beneficiaries, and enrollees viewing this information. For this reason,
the final rules require plans and issuers to disclose the negotiated
rates and underlying fee schedules that result from using such a
formula, as a dollar amount.
A few commenters recommended disclosing negotiated rate ranges or
benchmarks to help consumers compare prices among providers. One
commenter stated it would be useful if plans disclosed their range of
in-network rates (or their average or median rate) for each service.
This commenter stated that, for certain services such as complex
surgeries, for which fees may be bundled and may vary widely depending
on the severity of a participant's, beneficiary's or enrollee's
condition, providing the range of in-network fees may be particularly
appropriate. This type of disclosure could alert participants,
beneficiaries, and enrollees to consider, and prompt them to consult
providers about, the full range of potential expenses for their care.
Another commenter recommended that, regardless of the participant's,
beneficiary's, or enrollee's out-of-pocket liability, the participant,
beneficiary, or enrollee should always be provided the full in-network
amount, as well as a comparison of that amount to a benchmark such as
the Fair Price or median in-network price. This commenter stated that
the in-network price for a service can vary by as much as 200 to 1,000
percent, depending on the provider selected. In order to achieve the
goals of transparency, consumers need to know the full price of a
service prior to care so they are able to effectively compare
providers' prices.
In the Departments' view, disclosure of formulas or ranges are not
likely to be helpful or understandable for many participants,
beneficiaries, and enrollees viewing this information. The purpose of
the internet-based self-service tool is to provide personalized costs
based on the participant's, beneficiary's, or enrollee's specific plan
or coverage, and ranges and formulas do not achieve this goal. For this
reason, the final rules retain the proposed requirement to disclose the
rate that results from using such a formula, which is required to be
expressed as a dollar amount.
Underlying Fee Schedule Rate
Given the unique nature of certain plan designs, in the proposed
rules, the Departments requested comment on whether there were certain
reimbursement or payment models that should be exempt from all or
certain aspects of the proposed rules. A few commenters urged the
Departments to clarify how capitation arrangements and value-based
reimbursement designs, including bundled payment arrangements and
reference-based pricing, would be regulated under the proposed rules.
Commenters stated that provider payment amounts are not knowable under
these types of arrangements until after care is provided and that they
cannot be attributed to a particular item or service provided to a
particular participant, beneficiary, or enrollee. Other commenters
stated that participants, beneficiaries, and enrollees should have
access to cost-sharing liability data for items and services that might
be rendered in the course of their care, but that the Departments'
proposed approach downplayed the complexity of payer-provider contracts
in a way that could inadvertently lead to participants, beneficiaries,
and enrollees receiving misleading estimates of their cost-sharing
liability. The commenter stated that only the consumer's cost sharing
and the fee-for-service component of reimbursement should be required
to be disclosed under these requirements. Another commenter stated that
the vast majority of bundled payment arrangements use a retrospective
settlement, in which the payer and provider determine a final
settlement after all care in the relevant episode has been delivered,
suggesting that a negotiated rate under these arrangements could not be
provided in advance.
The Departments are of the view that, for transparency in coverage
to be truly effective, consumers should have access to all pricing
information related to their care so they can make meaningful decisions
about their health care spending. Further, the Departments do not agree
that the disclosure of negotiated rates will be misleading to
participants, beneficiaries, or enrollees. Negotiated rates are already
an element of an EOB that participants, beneficiaries, and enrollees
are accustomed to receiving after receiving health care items or
services. As stated elsewhere in this preamble, providing this
information in advance equips a more cost-conscious participant,
beneficiary, and enrollee with the necessary information to make a more
informed decision about their health care. Furthermore, the Departments
are of the view that it is in the best interest of plans and issuers to
indicate, when disclosing these rates, what each rate is and how it is
applicable to the participant's, beneficiary's, or enrollee's plan or
coverage.
To more fully understand the complexity of payer-provider contracts
and, in an effort to clarify how the proposed rules would apply to
capitated, bundled, and other alternative reimbursement designs, the
Departments considered these public comments and conducted additional
research to understand different contracting models and the inputs that
would be necessary for determining a participant's, beneficiary's, or
enrollee's cost-sharing liability under these models.
Under some capitation arrangements, payers reimburse a provider a
set amount per participant, beneficiary, or enrollee for a pre-defined
amount of time, regardless of whether the participant, beneficiary, or
enrollee uses the provider's services. Capitation payments are
generally guided by actuarial principles and may be determined by
different factors, such as a participant's, beneficiary's, or
enrollee's age and gender. For instance, under some capitated models,
plans and issuers pay a provider or a collective panel of providers a
per-member-per-month (PMPM) capitation amount, which is the negotiated
rate. It is the Departments' understanding that under certain capitated
and bundled payment arrangements, providers' payments may be reconciled
retrospectively to account for utilization, value adjustments, or other
weighting factors that can affect the final payment to a provider. The
Departments understand that capitation arrangements also may include at
least one underlying fee schedule rate upon which a participant's,
beneficiary's, or enrollee's cost-sharing liability is determined.
As the Departments acknowledged earlier in this preamble,
negotiated rates, as defined in the final rules, do not always affect a
participant's, beneficiary's, or enrollee's cost-sharing liability. To
account for alternative reimbursement arrangements such as capitated
and bundled payment arrangements, the Departments are renaming the
third content element as ``in-network rates,'' comprised of the
[[Page 72196]]
following elements, as applicable to the plan's or issuer's payment
model: negotiated rate and underlying fee schedule rate, reflected as
dollar amounts. Plans and issuers must disclose the underlying fee
schedule rate used to determine participant, beneficiary, or enrollee
cost-sharing liability only where that rate is different from the
negotiated rate. As discussed earlier in this preamble, the final rules
require that the cost-sharing liability estimate for a requested
covered item or service be calculated using the current underlying fee
schedule rate if the plan or issuer uses such a fee schedule. The
Departments are of the view that disclosing underlying fee schedule
rates will provide the most relevant data on which cost sharing is
based, if cost sharing is not based on the negotiated rate, as
originally proposed.
Disclosing the Negotiated Rate and Underlying Fee Schedule Rate
In the proposed rules, the Departments acknowledged that if the
negotiated rate does not impact an individual's cost-sharing liability
under a plan or coverage for a covered item or service (for example, if
the copayment for the item or service is a flat dollar amount or zero
dollars and the individual has met a deductible, or a deductible does
not apply to that particular item or service), disclosure of the
negotiated rate may be unnecessary to calculate cost-sharing liability
for that item or service. Therefore, the Departments proposed that
disclosure of a negotiated rate would not be required if it is not
relevant for calculating an individual's cost-sharing liability for a
particular item or service. The Departments sought comment on whether
there are any reasons disclosure of negotiated rates should nonetheless
be required under these circumstances.
Many commenters agreed that negotiated rates should only be
disclosed to the extent they are used for determining cost-sharing
liability. Commenters further expressed that only information
meaningful to consumers' cost-sharing liability should be required to
be disclosed. One commenter stated that this interpretation should be
extended to payments tied to value, such as ``shared savings,''
bonuses, and other performance-based reimbursements.
Conversely, as stated earlier, many commenters supported the
disclosure of negotiated rates in all circumstances. One commenter
stated that disclosing the amount of the negotiated rate is extremely
valuable regardless of whether the disclosure of this information
impacts a participant's cost-sharing liability, because it will
illuminate the costs of these particular items and services--reflecting
the benefit consumers receive from their enrollment in the plan or
coverage, as well as helping them to be conscious of the costs incurred
by the plan overall. This commenter pointed out that if the plan or
issuer has different negotiated in-network rates with different
providers furnishing the same item or service, participants,
beneficiaries, and enrollees will have the opportunity to compare the
different rates among the different providers.
Another commenter suggested a number of benefits that could come
from the disclosure of negotiated rates through the cost-sharing tool,
even in cases in which that information is not relevant to the specific
cost-sharing inquiry. The commenter pointed out that even if the
participant's, beneficiary's, or enrollee's cost is not affected, the
plan's or issuer's cost could be significantly affected and that
allowing participants, beneficiaries, and enrollees awareness and
visibility of negotiated rates could provide consumers with a greater
understanding of health care costs and enable participants,
beneficiaries, and enrollees to seek out lower cost providers. The
commenter further stated that although participants, beneficiaries, and
enrollees will use the tool to look up estimated cost-sharing for
specific items and services, often they will also expect to seek
services from the same provider repeatedly (for example, for ongoing
treatment and follow-up care).
The Departments agree with those commenters who favored requiring
disclosure of negotiated rates even when the negotiated rate is not
relevant to determining cost sharing, because it may promote awareness
and understanding of health care prices and promotes transparency in
coverage. Accordingly, the phrase ``to the extent relevant to the
participant's or beneficiary's cost-sharing liability'' that appeared
in paragraph (b)(1) of the proposed regulations has been removed from
the final rules. The final rules modify the third content element to
require that the negotiated rate always be disclosed with cost-sharing
liability estimates, even if it is not used to determine cost sharing,
and that the underlying fee schedule rate also be disclosed, to the
extent that it is different from the negotiated rate, as applicable to
the plan's payment model.
With regard to plans and issuers using an alternative reimbursement
model, such as a capitated or bundled payment arrangement that does not
have negotiated rates or an underlying fee schedule, one commenter
stated that issuers do not always have access to the negotiated rates
or internal payment methodologies utilized by capitated medical groups
or other providers and would not be able to reliably provide cost
transparency based on a negotiated rate at the service level. In
contrast, another commenter stated there is no justification for
excluding plans that reimburse their providers based on capitation from
the internet-based self-service tool requirements as this would result
in an incomplete data set, and these plans already assign values to
services to administer benefits with deductibles and coinsurance, as
well as for risk adjustment and internal reporting purposes. Another
commenter stated that the Departments should include Accountable Care
Organizations (ACOs) and other capitated arrangements within the ambit
of the final rules and should require transparency and full disclosure
of financial incentive arrangements that underlie capitated
arrangements under a specific plan or contract, not just a consumer's
anticipated liability. This commenter stated that any exemptions may
actually be incentives for plans and issuers to move toward opaque
pricing models.
The Departments acknowledge that it is possible that some plans and
issuers using alternative reimbursement models may not have negotiated
rates or underlying fee schedule rates to disclose in the internet-
based self-service tool. However, the numbers of plans and issuers
without negotiated rates or underlying fee schedule rates is limited
and the Departments are of the view that an exemption for such
arrangements is not necessary. Additionally, the Departments are of the
view that providing an exemption for such arrangements will result in
incomplete data sets. As stated in the final rules, the in-network rate
must be disclosed, as applicable to the plan's or issuer's payment
model. If the plan or issuer does not have negotiated rates or
underlying fee schedule rates, the third content element does not
apply.
Prescription Drugs
The final rules adopt the requirement that group health plans and
health insurance issuers disclose to participants, beneficiaries, or
enrollees an estimate of cost-sharing liability for each item or
service, including prescription drugs. As discussed in the preamble to
the proposed rules, this would allow participants, beneficiaries, and
enrollees to request cost-sharing information for a specific billing
code
[[Page 72197]]
(as described later in this preamble) associated with a prescription
drug or by descriptive terms (such as the name of the prescription
drug), which would permit participants, beneficiaries, and enrollees to
learn the estimated cost of a prescription drug obtained directly
through a provider, such as a pharmacy or mail order service. In
addition to allowing participants, beneficiaries, and enrollees to
obtain cost-sharing information by using a billing code or descriptive
term, the proposed rules would also have permitted participants,
beneficiaries, and enrollees to learn the cost of a set of items or
services that include a prescription drug or drugs that is subject to a
bundled payment arrangement for a treatment or procedure. In the
proposed rules, the Departments acknowledged that outside of a bundled
payment arrangement, plans and issuers often base cost-sharing
liability for prescription drugs on the undiscounted list price, such
as the AWP or WAC, which frequently differs from the price the plan or
issuer has negotiated for the prescription drug.\114\ In these
instances, providing the participant, beneficiary, or enrollee with a
rate that has been negotiated between the issuer or plan and its PBM
could be misleading, as this rate would reflect rebates and other
discounts, and could be lower than what the individual would pay--
particularly if the participant, beneficiary, or enrollee has not met
his or her deductible.
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\114\ ``Follow the Dollar.'' PhRMA. November 30, 2017. Available
at: https://www.phrma.org/report/follow-the-dollar-report.
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The Departments sought comment as to whether a rate other than the
negotiated rate, such as the undiscounted price, should be required to
be disclosed for prescription drugs, and whether and how to account for
any and all rebates, discounts, and dispensing fees to ensure
participants, beneficiaries, and enrollees have access to meaningful
cost-sharing liability estimates for prescription drugs.
Several commenters supported disclosure of rebates, discounts, and
other price concessions for drugs. One commenter referred to drug price
concessions as one of the ``most confounding black boxes of health
care'' and stated that data suggests these concessions are actually
increasing out-of-pocket costs for participants, beneficiaries, and
enrollees. This commenter urged the Departments to require plans and
issuers to disclose the list price, the negotiated rate, a single
dollar value reflecting the total amount of price concessions, and the
price used to calculate the participant's, beneficiary's, and
enrollee's coinsurance along with, if different from the negotiated
rate, an explanation as to why the price is different from the
negotiated rate. Another commenter opined that participants,
beneficiaries, and enrollees have the right to know a drug's
undiscounted price, discounted or negotiated price, and the total sum
of all price concessions for that drug, including fees, rebates, and
discounts. This commenter stated that providing a beneficiary with
these three data points strikes the appropriate balance between
improving transparency without misleading or overwhelming the
participant, beneficiary, or enrollee.
Many commenters suggested that plans and issuers be required to
disclose when the participant's, beneficiary's, or enrollee's cost-
sharing requirement exceeds the price paid by the plan or issuer. One
commenter stated that in cases where plans pass through some or all
rebates and other price concessions to participants, beneficiaries, and
enrollees, the prices disclosed to participants, beneficiaries, and
enrollees should be the price net of those rebates and concessions. The
commenter emphasized the importance of plans and issuers also
disclosing to participants, beneficiaries, and enrollees when
manufacturer rebates and discounts are not passed through to them at
the point-of-sale or factored into cost-sharing. One commenter noted
that negotiated prices for prescriptions or cash price alternatives may
sometimes appear less expensive, but that such alternative rates (for
example, cash price options) may increase overall costs if such rates
offset the ability to reach a plan's deductible or out-of-pocket
maximum thresholds. Therefore, this commenter requested that the
Departments provide clarity as to whether plans and issuers would be
responsible for notifying participants, beneficiaries, and enrollees of
such considerations and/or making such calculations. Similarly, two
commenters urged the Departments to require disclosure of the
negotiated rate for drugs in all situations, even where the beneficiary
owes a fixed-amount copayment, and cited reports of cases when, for
inexpensive generics, the beneficiary's fixed-amount copay actually
exceeded the negotiated rate.
Three commenters recommended that the Departments provide plans the
flexibility to display the most meaningful price to an enrollee for
drugs. One commenter stated that if the participant, beneficiary, or
enrollee's cost sharing is based upon a specified benchmark, the plan
should be allowed to specify the benchmark used in the tool's
documentation. This commenter suggested that requiring plans to conform
to a single standard is not possible, and in effect may be unhelpful to
consumers, given the multitude of contracts (and different contract
terms) that each plan's PBM may have with pharmacies. Another commenter
stated providing this flexibility will allow for issuer innovation in
developing cost-estimator functionality that provides real-time,
accurate, and useful prescription drug estimates to participants,
beneficiaries, or enrollees.
One commenter recommended the Departments consider using ``net
price'' rather than the ``negotiated rate'' for estimating cost-sharing
liability for prescription drugs. The commenter explained that direct
and indirect remuneration (DIR) fees under Medicare Part D and similar
PBM practices in the private market were originally designed to capture
rebates and other mechanisms not included at the point-of-sale.
However, the commenter stated that DIR fees and other retroactive fees
utilized by PBMs are now being used beyond their original purpose to
retroactively adjust pharmacies' payment months after the sale,
sometimes below the price paid by the pharmacy.
Some commenters stated that the Departments should not require
display of negotiated drug prices, rebates, or other discounts or fees.
Two commenters expressed that, rather than increasing transparency or
providing actionable or meaningful information to participants,
beneficiaries, or enrollees, estimated rebate information would simply
confound and frustrate participants, beneficiaries, or enrollees, given
its lack of direct relevance to the amount the participant,
beneficiary, or enrollee is required to pay for the drug at a pharmacy.
Another commenter stated that disclosing highly confidential dispensing
fees would benefit only those parties being paid dispensing fees, by
giving them a window into the dispensing fees paid to their
competitors, and advised that the Departments should avoid requiring
any disclosure of drug prices, rebates, discounts, or fees that would
undermine plans' and issuers' ability to negotiate lower drug costs.
The Departments also solicited comment as to whether there are
scenarios in which including drug pricing information in cost estimates
would be problematic. One commenter recommended that the final rules
require disclosure of an estimate of the cost-sharing liability
associated with a drug only when there is an out-of-pocket cost to the
participant, beneficiary, or enrollee that is directly
[[Page 72198]]
attributable to the drug. Another recommended that when the price of a
drug is not the basis of the enrollee's cost-sharing liability, plans
should be given the option to publish the benchmark price or omit a
price altogether, displaying only the enrollee's cost-sharing
liability.
The Departments also sought comment on whether the relationships
between plans or issuers and PBMs allow plans and issuers to disclose
rate information for drugs, or if contracts between plans and issuers
and PBMs would need to be amended to allow plans and issuers to provide
a sufficient level of transparency. If those contracts would need to be
amended, the Departments sought comment on the time that would be
needed to make those changes. While some commenters stated that the
rates negotiated between PBMs and pharmacies are considered
confidential, other commenters stated that existing contracts would not
prevent PBMs or issuers from disclosing the required information. One
commenter stated that it is common that contracts be modified in
response to changes in a statute or regulation, and that Federal public
policy imperatives override existing contractual provisions. This
commenter stated the public interest in complete disclosure to reduce
costs for consumers unquestionably outweighs any confidentiality
provisions in current contracts that might otherwise protect disclosure
of relevant information to the Federal Government.
The Departments agree that participants, beneficiaries, and
enrollees, as well as health care payers such as employers, should have
access to meaningful pricing information related to drug pricing in
order to meaningfully evaluate plan and issuer offerings and gain
transparency into potential out-of-pocket costs.
The Departments also acknowledge that contract terms may need to be
amended based on the final rules. The Departments agree that disclosure
of rebates, discounts, and other price concessions would further the
goals of price transparency, but also acknowledge other commenters'
concerns that disclosing all these elements might cause consumer
confusion. The Departments also acknowledge that there could be value
in using ``net price'' rather than ``negotiated rate'' and in
disclosing when a participant's, beneficiary's, or enrollee's cost-
sharing liability exceeds the price paid by the plan or issuer. As
described by commenters, there are numerous pricing inputs throughout
the drug supply chain that affect the final price for the consumer--
making complete transparency on drug pricing more complex than that of
other items and services. The Departments aim to strike a balance
between illuminating some of the factors that drive drug costs and not
overwhelming consumers with information that is not directly relevant
to their cost-sharing liability. To that end, the final rules require
plans and issuers to disclose in element (i), an individual's out-of-
pocket cost liability for prescription drugs, and in element (iii), the
negotiated rate of the drug. As discussed elsewhere in this preamble,
the Departments recognize that the negotiated rate might be different
for branded and generic drugs. For instance, the negotiated rate might
be the WAC for branded drugs and the Maximum Allowed Cost (MAC) for
generic drugs. The Departments also acknowledge that this price might
be established differently for different plans and issuers. The
Departments anticipate this disclosure generally will not necessitate
the disclosure of information on discounts, rebates, or price
concessions for a drug.
The Departments recognize there may be circumstances in which a
drug carries no cost-sharing liability for a participant, beneficiary,
or enrollee. If there is no cost sharing associated with a prescription
drug, under the final rules, the tool should reflect a cost-sharing
value of $0 for clarity, but the negotiated rate must be displayed.
The proposed rules sought comment on the possibility of requiring
access to the APIs used by pharmacies in accessing drug prices. One
commenter stated that drug prices frequently differ from period to
period over the course of the year, as well as across pharmacy
locations even within the same national pharmacy chain. The commenter
recommended that the Departments consider requiring PBMs to provide
payers, group plans, and third parties with access to the same price
APIs accessed by pharmacies, stating that, with access to an open API,
the plan or third party could request the estimated price for the same
prescription at multiple retail pharmacies and receive real-time retail
pricing based upon the participant's, beneficiary's, or enrollee's
plan. The Departments recognize the value in requiring cost-sharing
information be made available through an API and will use the comments
received to inform future rulemaking.
Commenters requested that the Departments confirm that issuers may
provide a link to prescription drug cost tools offered through PBMs or
vendors to satisfy the requirement to provide pricing information for
prescription drugs. One commenter also urged the Departments to
prohibit the internet-based, self-service tool from being used by
prescribers' e-prescribing and electronic medical record systems or by
plans to steer patients to pharmacies other than a patient's pharmacy
of choice, such as those owned wholly or partially by health plans or
PBMs.
The Departments agree that plans and issuers who provide
participants', beneficiaries', or enrollees' cost-sharing liability
estimates and negotiated rates through a standalone tool provided by a
PBM or third-party vendor satisfy the requirements under the final
rules. The Departments also clarify that if the PBM or other third-
party vendor fails to provide full or timely information, then the plan
or issuer, not the PBM or third-party vendor, violates these
transparency disclosure requirements. Regarding a prohibition on
steering patients to certain pharmacies by plans or prescribers, the
Departments are not finalizing any prohibitions at this time and will
monitor the implementation of these disclosure requirements.
d. Fourth Content Element: Out-of-Network Allowed Amount
The fourth content element is the out-of-network allowed amount for
the requested covered item or service. In the proposed rules, the
Departments proposed to define ``out-of-network allowed amount'' to
mean the maximum amount a group health plan or health insurance issuer
would pay for a covered item or service furnished by an out-of-network
provider. Under the proposed rules, plans and issuers would be required
to disclose an estimate of cost-sharing liability for a participant,
beneficiary, or enrollee. Therefore, the Departments proposed that,
when disclosing an estimate of cost-sharing liability for a covered
item or service from an out-of-network provider, a plan or issuer would
disclose the out-of-network allowed amount and any cost-sharing
liability the participant, beneficiary, or enrollee would be
responsible for paying. For example, if a plan has established an out-
of-network allowed amount of $100 for an item or service from a
particular out-of-network provider and the participant, beneficiary, or
enrollee is responsible for paying 30 percent of the out-of-network
allowed amount ($30), the plan would disclose both the allowed amount
($100) and the individual's cost-sharing liability ($30), indicating
that the individual is responsible for 30 percent of the out-of-network
allowed amount. Under the proposed rules, this element would only be
relevant when a participant, beneficiary, or enrollee
[[Page 72199]]
requests cost-sharing information for a covered item or service
furnished by an out-of-network provider.
In the proposed rules, the Departments explained that the
definition of cost-sharing liability does not include amounts charged
by out-of-network providers that exceed the out-of-network allowed
amount, which participants, beneficiaries, or enrollees must pay
(sometimes referred to as balance bills). Therefore, it may be
difficult for participants, beneficiaries, or enrollees to determine
their likely out-of-pocket costs for covered items and services
furnished by an out-of-network provider. The Departments also explained
that the statutory language of section 1311(e)(3)(A)(vii) of PPACA and
section 2715A of the PHS Act indicates that Congress intended that
participants, beneficiaries, enrollees, and other members of the public
have access to accurate and timely information regarding cost sharing
and payments with respect to any out-of-network coverage. In the
Departments' view, requiring plans and issuers to disclose out-of-
network allowed amounts and a participant's, beneficiary's, or
enrollee's cost-sharing obligation for covered items and services is
necessary and appropriate to fulfill this statutory mandate, and would
give individuals information necessary to estimate their out-of-pocket
costs, assuming they request additional information from an out-of-
network provider about how much the provider would charge for a
particular item or service.
One commenter encouraged the Departments to eliminate the proposed
``maximum amount'' standard and to instead incorporate usual,
customary, and reasonable (UCR) amounts as the required plan disclosure
for out-of-network cost estimates under any final rulemaking. The
commenter stated that the ``maximum amount'' a plan may be willing to
pay a given provider for a service is not necessarily predetermined.
This commenter stated that while some out-of-network providers and
plans may participate in super-regional or national ``discount''
arrangements through third parties, in many cases payments to out-of-
network providers are individually negotiated. Further, while a plan
might generally start with payment that is consistent with UCR
calculations (with every intention of paying no more than this amount),
other circumstances may result in negotiated increases to that
reimbursement. As such, prospectively reporting an accurate ``maximum
amount'' is impossible in some cases. Additionally, this commenter
stated that because many out-of-network reimbursements, and in
particular high-cost claims, are individually negotiated, initial
disclosure of a plan's true maximum reimbursement, insofar as this can
be calculated or even estimated in advance, would materially reduce a
plan's bargaining power by notifying non-contracted providers in
advance of the amount they are likely to secure from a plan if they
assert all available leverage in a negotiation. To the extent
participant, beneficiary, or enrollee cost-sharing liability is
ultimately derived from out-of-network payment amounts, this
requirement is likely to increase out-of-pocket costs for consumers
when seeking care from out-of-network providers.
Conversely, one commenter stated that while larger, for-profit,
national health plans can afford to utilize the UCR, smaller, regional
health plans are at a market disadvantage if they are compelled to base
allowed amounts on the UCR, rather than negotiating on a case-by-case
basis in a constrained market. As a result, some health plans will
struggle to determine and provide information about maximum out-of-
network allowed amounts--a range of possible ``allowed amounts'' may be
the most information some health plans have available.
The Departments agree with commenters that the UCR may be a more
accurate estimate of the amount a plan or issuer will pay an out-of-
network provider for covered items or services, if the plan relies on
UCR to determine out-of-network rates. However, the Departments
acknowledge that basing allowed amounts on the UCR may disadvantage
smaller plans. The Departments also acknowledge that a plan or issuer
may be able to provide a participant, enrollee, or beneficiary with a
more accurate estimate of an out-of-network allowed amount by using
calculations based on historical claims data, because the plan or
issuer does not have a pre-determined negotiated rate with out-of-
network providers. The Departments acknowledge the concern that plans
may lose bargaining power by disclosing out-of-network allowed amount
to consumers; however, the Departments are of the view that the out-of-
network allowed amount is a critical element of price transparency and
its disclosure is essential to enabling consumers to estimate their
out-of-network costs in advance. To this end, the Departments are
modifying this provision to require plans and issuers to disclose the
out-of-network allowed amount or any other calculation that provides a
more accurate estimate of the amount a plan will pay for the requested
covered item or service, such as a UCR. Allowing plans and issuers to
provide an amount other than the out-of-network allowed amount could
better serve consumers with a more accurate estimate of what a plan or
issuer may reimburse an out-of-network provider. The Departments
clarify that if a plan or issuer chooses to use another metric that
provides a reasonably accurate estimate of what a plan or issuer will
pay for a covered item or service from an out-of-network provider, the
plan or issuer must still provide a participant, beneficiary, or
enrollee with information regarding any cost sharing the participant,
beneficiary, or enrollee would be responsible for paying.
Some commenters recommended the Departments not require plans and
issuers to provide allowed amount and cost-sharing information for
covered services furnished by an out-of-network provider. One commenter
stated it is not possible for issuers to include allowed amounts for
out-of-network providers because, without a provider contract, issuers
do not have the necessary information, including provider names,
National Provider Identifier (NPI), address, specialty, or other
demographic information to include these providers in a price
transparency tool. One commenter stated that providing real-time
disclosures of allowed amounts could be challenging to the extent that
plans and issuers determine the allowed amount for certain out-of-
network items and services based on a percentage of billed charges, as
billed charges are unknown by the plan or issuer prior to a claim for
health care services.
The Departments acknowledge the challenges plans and issuers may
face disclosing this element, but the Departments are of the view that
information regarding out-of-network coverage is essential to the goal
of price transparency. With regard to plans and issuers lacking the
necessary information for providers with whom they do not contract, the
Departments are of the view that plans and issuers should know what
they are willing to pay for certain items and services, irrespective of
provider. The final rules provide flexibility for plans and issuers to
provide an estimate of what the plan will pay by allowing plans and
issuers to disclose either the out-of-network allowed amount or another
amount that would provide a reasonably accurate estimate of what a plan
would reimburse an out-of-network provider for a covered item or
service. Given that some plans and issuers determine the allowed amount
for certain out-of-network items and services based on a percentage of
billed charges, the final rules provide that a percentage can be
[[Page 72200]]
disclosed instead of a dollar amount, if plans and issuers reimburse
out-of-network providers a percentage of the billed charges for a
covered item or service.
One commenter sought clarification that the tool is meant to
provide cost-sharing information for out-of-network providers and not
just the allowed amounts.
As discussed earlier in this preamble under the first content
element, under the final rules, the plan or issuer is required to
disclose both the out-of-network allowed amount, as described earlier
in this preamble, and any cost-sharing liability, based on that allowed
amount, that the participant, beneficiary, or enrollee would be
responsible for paying.
One commenter stated that the Departments should not require Health
Maintenance Organizations' (HMOs') out-of-pocket calculators to provide
out-of-network data. The commenter noted that the proposed rules
limited the tool to covered services, and HMOs generally do not cover
benefits provided by out-of-network and, therefore, should not be
required to estimate out-of-network costs.
The Departments understand that some plans and issuers may not
provide any reimbursement to an out-of-network provider for an
otherwise covered item or service. Nonetheless, it is the Departments'
understanding that some HMOs reimburse an out-of-network provider for
covered items and services in certain circumstances and, therefore, the
Departments expect HMOs to provide cost-sharing information with regard
to out-of-network coverage. The Departments recognize that in many
cases, an HMO's maximum allowed amount for an out-of-network service
will be $0. However, the Departments are of the view that it is
important for a participant, enrollee, or beneficiary to understand
what the plan or issuer will or will not pay for out-of-network costs.
Therefore, if the plan or issuer, including an HMO, does not provide
any reimbursement for an item or service provided by an out of network
provider, the Departments expect the plan or issuer to disclose $0 as
the allowed amount.
e. Fifth Content Element: Items and Services Content List
The fifth content element is a list of those covered items and
services for which cost-sharing information is being disclosed for
items or services subject to a bundled payment arrangement. The
Departments proposed that this requirement would apply only when a
participant, beneficiary, or enrollee requests cost-sharing information
for an item or service that is subject to a bundled payment arrangement
that includes multiple items or services. The Departments proposed
that, in cases in which an individual requests a cost-sharing liability
estimate for a covered item or service that is subject to a bundled
payment arrangement, plans and issuers would be required to disclose a
list of each covered item and service included in the bundled payment
arrangement and the individual's cost-sharing liability for those
covered items and services as a bundle, but not a cost-sharing
liability estimate separately associated with each covered item or
service included in the bundle.
While some commenters supported the inclusion of cost-sharing
information for bundled payment arrangements, others did not support
requiring the disclosure of bundled payment arrangements and the items
and services included in the arrangement. These commenters stated
disclosure of this information would likely be unhelpful to the
participant, beneficiary, or enrollee and might cause confusion. One
commenter encouraged the Departments to clarify that disclosure for
diagnostic imaging procedures in particular should be presented to
consumers in a method that is inclusive of the combined professional
and technical rates, or the globally billed rate.
The Departments are of the view that understanding which items and
services are included in a bundled payment arrangement will provide
helpful information for participants, beneficiaries, and enrollees, so
that they understand what items and services are accounted for in
calculating their cost-sharing liability. The Departments are of the
view that this list is unlikely to cause confusion. Instead, it will
reduce confusion by clearly identifying what individual items and
services would be covered under their estimated cost-sharing liability.
If the plan or issuer reimburses a procedure, such as imaging, at a
global rate that includes both professional and technical charges, then
that global rate is a rate for a bundled payment arrangement for which
the applicable content elements must be disclosed, just as for all
other items and services. The final rules adopt the provision that
plans and issuers provide a list of items or services for items and
services subject to bundled payment arrangements for which a cost-
sharing liability estimate is being disclosed, with non-substantive
edits for improved readability.
f. Sixth Content Element: Notice of Prerequisites to Coverage
The sixth content element is a notification, whenever applicable,
informing the individual that a specific covered item or service for
which the individual requests cost-sharing information may be subject
to a prerequisite for coverage. The proposed rules defined the term
prerequisite to mean certain requirements relating to medical
management techniques for covered items and services that must be
satisfied before a plan or issuer will cover the item or service.
Specifically, the proposed rules provided that prerequisites include
such techniques as concurrent review, prior authorization, and step-
therapy or fail-first protocols. In the proposed rules, the Departments
intended for the definition of prerequisite to capture medical
management techniques that apply to an item or service that require
action by the participant, beneficiary, or enrollee before the group
health plan or health insurance issuer will cover the item or service.
Accordingly, the proposed definition of prerequisite did not include
medical necessity determinations generally, or other forms of medical
management techniques that do not require action by the participant,
beneficiary, or enrollee. While the prerequisites enumerated in the
proposed rules were provided as an illustrative list, the Departments
solicited comment on whether there are any additional medical
management techniques that should be explicitly included as
prerequisites in the final rules.
Several commenters supported the inclusion of this element. One
commenter stated that helping patients understand any coverage
prerequisites prior to care, such as prior authorization, may help to
eliminate some of the confusion and unnecessary administrative burden
following care. Another stated that requiring a plan to disclose
prerequisites in an easily understandable format may help patients
complete required protocols and thus would improve adherence.
A few commenters recommended additional disclosures or offered
suggestions to strengthen these requirements. One commenter encouraged
the Departments to include clinical coverage policies for services that
are more specific than general medical necessity criteria. For example,
some plans and issuers utilize coverage policies that require specific
diagnoses or documented symptoms before an item or service may be
covered. The commenter explained that while these
[[Page 72201]]
policies may not technically require an action by the beneficiary, they
are important in determining whether the specific item or service is
covered. Another commenter recommended that plans and issuers clearly
disclose every utilization control that stands between the participant,
beneficiary, or enrollee and a prescription, suggesting that this type
of disclosure would help patients meet utilization control standards.
Another commenter urged the Departments to strengthen this requirement
by requiring plans and issuers to provide a description of the actual
required prerequisites. The commenter stated that the proposed
regulation requires only notification of the existence of a
prerequisite, but not any detail about what the prerequisite is and how
it can be satisfied. Two commenters encouraged the Departments to
standardize this type of notification language to ensure that all
consumers receive a consistent message regarding the provision of
health care services.
One commenter requested that the Departments provide that the
prerequisites listed in proposed rules (that is, concurrent review,
prior authorization, step-therapy, and fail-first protocols) are an
exclusive list. Another commenter stated that prerequisite notification
should be limited to simple notifications that prerequisites apply to a
service, and communication of specific prerequisites should not be
required until a Fast Healthcare Interoperability Resources (FHIR)
standard for transmission of this information is established and
operationalized.
As discussed in the proposed rules, the Departments intended for
the definition of prerequisite to capture medical management techniques
that apply to an item or service that require action by the
participant, beneficiary, or enrollee before the plan or issuer will
cover the item or service. The Departments consider plan or policy
provisions that require a diagnosis or documented symptoms before a
service or item would be covered to be medical necessity determination
requirements that do not require action on behalf of the participant,
beneficiary, or enrollee. Therefore, the Departments did not include
such terms in the proposed prerequisite requirement. The Departments
are finalizing regulation text to reflect that concurrent review, prior
authorization, and step-therapy or fail-first protocols are the
exhaustive list of prerequisites about which plans and issuers would
need to provide notice. Furthermore, while the Departments acknowledge
that providing a complete description of prerequisites might be helpful
to consumers, the Departments are not of the view that requiring plans
or issuers to provide such descriptions is necessary. The Departments
determined that requiring a complete description of the prerequisite
would create unnecessary complexity and impose significant burdens on
plans and issuers regarding information that is already available in
plan documents. Additionally, while the Departments recognize the
importance of FHIR in the push towards greater interoperability, it is
not necessary to delay finalizing these rules until the FHIR standards
are finalized as the final rules do not require any APIs to be built
nor exposed for public consumption. The final rules adopt this content
element requirement, with the modifications discussed in this section.
g. Seventh Content Element: Disclosure Notice
The seventh and final content element proposed is a notice that
communicates certain information in plain language, including several
specific disclosures. First, the Departments proposed that this notice
would include a statement that out-of-network providers may bill
participants, beneficiaries, or enrollees for the difference between
providers' billed charges and the sum of the amount collected from the
group health plan or health insurance issuer and the amount collected
from the participant, beneficiary, or enrollee in the form of cost-
sharing (the difference often referred to as balance billing) and that
these estimates do not account for those potential additional amounts.
In the proposed rules, the Departments acknowledged that there are
numerous state laws that address balance-billing practices such that
the notice described in the proposed content element regarding balance
bills may be misleading or inaccurate for beneficiaries, participants,
or enrollees enrolled in a plan or coverage in certain states. The
Departments requested comment on whether any modifications to this
content element would be appropriate to allow plans and issuers to
accurately advise participants, beneficiaries, or enrollees of their
potential exposure to or protection from any balance bills.
Second, the Departments proposed that the notice be required to
convey that actual charges for the participant's, beneficiary's, or
enrollee's covered items and services may be different from those
described in a cost-sharing liability estimate, depending on the actual
items and services received at the point of care.
Third, the Departments proposed that the notice be required to
include a statement that the estimated cost-sharing liability for a
covered item or service is not a guarantee that coverage will be
provided for those items and services.
Finally, the Departments proposed that plans and issuers be
permitted to include any additional information, including other
disclaimers that the plan or issuer determines appropriate, so long as
the additional information does not conflict with the information they
are required to provide. For example, plans and issuers would have been
permitted to include additional language so long as the language could
not reasonably be read to disclaim the plan's or issuer's
responsibility for providing a participant, beneficiary, or enrollee
with accurate cost-sharing information, or plans and issuers could
choose to provide a disclaimer that informs consumers who are seeking
estimates of cost-sharing liability for out-of-network allowed amounts
that they may have to obtain a price estimate from the out-of-network
provider in order to fully understand their out-of-pocket cost
liability. Plans and issuers would also have been permitted to provide
a disclaimer indicating how long the price estimate will be valid,
based on the last date of the contract term for the negotiated rate or
rates (if multiple providers with different contract terms are
involved). The Departments are of the view that this type of disclaimer
could provide participants, beneficiaries, and enrollees with a better
understanding of how their cost estimate may change over time. The
Departments sought comment on whether a specific disclaimer indicating
the expiration of the cost estimate should be required. Furthermore,
the Departments explained in the proposed rules that plans and issuers
may also include disclaimer information regarding prescription drug
cost estimates and whether rebates, discounts, and dispensing fees may
impact the actual cost to the participant, beneficiary, or enrollee.
The Departments developed model language that plans and issuers
could use, but would not be required to use, to satisfy the disclosure
notice requirements described above. This model language was proposed
contemporaneously with, but separate from, the proposed rules.\115\ The
[[Page 72202]]
Departments sought comment on the proposed model language and any
additional information that stakeholders believed should be included in
the model notice or any information that should be omitted from the
model notice.
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\115\ ``Transparency in Coverage. Model Notice.'' United States
Department of Labor. Available at: https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers/transparency-in-coverage-draft-model-disclosure.pdf.
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The proposed rules clarified that this disclosure notice would be
in addition to the information that QHP issuers are currently required
to publish on their websites pursuant to 45 CFR 156.220(a)(7) regarding
cost-sharing and payments with respect to out-of-network coverage. In
addition, some portions of this disclosure may overlap with network
adequacy disclosure standards under 45 CFR 156.230(e). That section
requires QHP issuers to count the cost-sharing paid by an enrollee for
an out-of-network essential health benefit (EHB) provided by an out-of-
network ancillary provider in an in-network setting toward the
enrollee's out-of-pocket limit or provide a notice to the enrollee that
additional costs may be incurred for an EHB, including balance billing
charges, if applicable.
The Departments requested comment on the proposed notice
disclaimers and whether any additional disclaimers would be necessary
or beneficial to participants, beneficiaries, and enrollees in learning
about their potential cost-sharing liability for covered items and
services. For example, the Departments inquired whether the Departments
should require a notice that explains that the cost-sharing information
provided may not account for claims a participant, beneficiary, or
enrollee has submitted that the plan or issuer has not yet processed.
The Departments also considered whether to require plans and issuers to
provide a participant, beneficiary, or enrollee information regarding
non-covered items or services for which the individual requests cost-
sharing information. For example, there could be a requirement that a
plan or issuer provide a statement, as applicable, indicating that the
item or service for which the participants, beneficiaries, and
enrollees has requested cost-sharing information is not a covered
benefit under the terms of the plan or coverage, and expenses charged
for that item or service will not be reimbursed by the plan or
coverage.
Several commenters agreed with the proposed disclosure notice
requirements. Specifically, many commenters supported the disclosure
that estimates may not reflect the amount ultimately charged to the
participant, beneficiary, or enrollee. One commenter recommended the
disclosure include examples of circumstances under which a
participant's, beneficiary's, or enrollee's actual cost-sharing
liability may differ from the estimate provided by their plan or issuer
(for example, comorbidities or unanticipated complications). The
commenter stated that a more comprehensive explanation of how
participant, beneficiary, or enrollee characteristics might affect
charges for covered items and services would help them better
understand their potential exposure to higher cost-sharing amounts. One
commenter suggested that the notice include stronger wording to educate
the plan participant about the strong likelihood of a surprise amount
due that differs greatly from the estimate. One commenter recommended
that the notice include information that DIR Fees charged to pharmacies
inflate participants', beneficiaries', and enrollees' cost sharing and
that plans and issuers may claw back that inflated cost sharing from
the pharmacy.
One commenter recommended that plans and issuers be required to
disclose additional information to help participants, beneficiaries,
and enrollees understand the appropriate point of contact for questions
and complaints. This commenter recommended that the final rules require
issuers to provide participants, beneficiaries, and enrollees with
contact information for their state departments of insurance when
covered by insurance that is primarily state-regulated. For group
health plans that are not fully insured, the commenter recommended that
the plan provide contact information for the appropriate Federal
regulator.
One commenter requested flexibility with disclaimer language
regarding a notice provided in paper form to reflect that the estimate
may not be reflective of services received or claims processing, or to
direct the participant, beneficiary, or enrollee to call their plan or
issuer or use the internet for more up-to-date information. Similarly,
one commenter recommended that a timestamp be required for notices
provided in paper form to account for potential price changes. Several
commenters supported requiring plans and issuers to add to the notice a
date on which the estimate will expire, while other commenters did not.
One commenter expressed concern regarding the statement in the
preamble to the proposed rules that the required disclosure notice
regarding balance-billing information ``may be misleading or inaccurate
for beneficiaries, participants, or enrollees enrolled in a plan or
coverage in certain states,'' given the multi-state nature of most
employer-sponsored plans. Another commenter stated that state
regulators should be able to direct issuers to include information in
the disclosure that accurately describes the state's balance billing
laws, and that any notice provided to consumers in advance of receiving
services should have information as to whether the participant,
beneficiary, or enrollee is likely to be protected from liability under
state or Federal balance billing laws. The commenter further stated
that some states already have state laws related to disclosure of costs
to consumers and the final rules should be clear that this requirement
does not preempt these state requirements. Two commenters urged the
Departments to make clear that participants, beneficiaries, and
enrollees are not protected from out-of-network provider and facility
balance billing, except where balance billing would be barred by state
law.
The final rules are not intended to preempt state laws regarding
balance billing. In the final rules, the Departments have modified this
requirement to clarify that the balance billing statement is only
required if balance billing is permitted under state law. Plans and
issuers have flexibility to use the model notice language or create
their own notices with greater specificity regarding their state's
laws.
One commenter expressed concern that allowing plans to include a
statement that the estimated cost-sharing liability is not a guarantee
of coverage negates the intent of the proposed rules, given that
consumers who receive a notice from their health plan regarding
estimated out-of-pocket costs would naturally assume coverage of those
services.
The Departments acknowledge this concern; however, there are many
reasons estimated cost-sharing information may not be accurate when
items and services are ultimately furnished. For example, it is
possible for coverage to end (for example, due to non-payment of
premiums) between the time an estimate is provided and an item or
service is furnished. Additionally, an estimate may show the cost for
an item or service as a treatment for a certain condition, but the item
or service may not be covered for the condition that is ultimately
diagnosed at the point of care. Therefore, the final rules adopt the
provision as proposed.
Several commenters recommended that the Departments issue
guidelines as to what is considered ``plain language.'' The commenters
recommended that the Departments provide examples of
[[Page 72203]]
typical disclosure language compared to its ``plain language''
equivalent. They further recommended that these examples be tested
through various focus groups to ensure consumer comprehension.
The final rules define ``plain language'' to mean language written
and presented in a manner calculated to be understood by the average
participant, beneficiary, or enrollee.\116\ Determining whether this
standard has been satisfied requires taking into account such factors
as the level of comprehension and education of typical participants,
beneficiaries, or enrollees in the plan or coverage and the complexity
of the terms of the plan. Accounting for these factors would require
limiting the use of technical jargon and long, complex sentences, so
that the information provided will not have the effect of misleading,
misinforming, or failing to inform participants, beneficiaries, or
enrollees. The Departments are of the view that the final rules and
this preamble provide sufficient detail regarding the meaning of plain
language.
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\116\ 29 CFR 2520.102-2(a).
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Some commenters recommended that plans and issuers should disclose
whether they count copayment assistance and other third-party payments
in the calculation of the beneficiary's deductible and out-of-pocket
maximum. The commenter noted that as more plans implement copay
accumulators that do not count these payments, issuers should be
required to disclose these policies to their beneficiaries.
The Departments are of the view that knowing whether these payments
apply to accumulators is germane to price transparency and should be
required in the final rules. To that end, the final rules adopt a fifth
notice content requirement (codified at 26 CFR 54.9815-
2715A2(b)(1)(vii)(D), 29 CFR 2590.715-2715A2(b)(1)(vii)(D), and 45 CFR
147.211(b)(1)(vii)(D)) that plans and issuers must provide a statement
disclosing whether copayment assistance and other third-party payments
are included in the calculation of the participant's, beneficiary's, or
enrollee's deductible and out-of-pocket maximum.
As discussed under the first content element, some items or
services may not be subject to cost sharing if they are furnished as
preventive items or services, while the same item or service could be
subject to cost sharing if it is furnished for non-preventive purposes
or provided by an out-of-network provider. Therefore, the final rules
adopt an additional notice requirement (codified at 26 CFR 54.9815-
2715A2(b)(1)(vii)(E), 29 CFR 2590.715-2715A2(b)(1)(vii)(E), and 45 CFR
147.211(b)(1)(vii)(E)) stating that, for an item or service that is a
recommended preventive service under section 2713 of the PHS Act where
the plan or issuer cannot determine whether the request is for a
preventive or non-preventive item or service, the plan or issuer must
provide a statement that the item or service may not be subject to
cost-sharing if it is billed as a preventive service.
One commenter recommended information be included to help
participants, beneficiaries, and enrollees understand the appropriate
point of contact for questions and complaints. This commenter
recommended issuers provide consumers with contact information for the
appropriate regulator--either the State Department of Insurance or the
appropriate Federal office.
The Departments appreciate this recommendation, but are declining
to finalize this additional requirement because the Departments are of
the view that plans and issuers already have avenues in place to
address participants', beneficiaries', and enrollees' complaints.
Several commenters recommended that additional notice disclaimers
be provided. One commenter suggested that the final rules require a
statement that cost-sharing liability estimates may differ from actual
costs, depending on changes after claims are processed. Another
commenter recommended that the Departments develop model disclaimers
stating that quoted amounts for drugs may be time-limited and subject
to manufacturer pricing practices. Another commenter recommended the
addition of consumer disclaimers indicating that ``services subject to
the cost estimate may be provided and billed by providers associated
with multiple payer contracts which will result in multiple EOBs.''
Another commenter recommended the Departments permit plans to require
participants, beneficiaries, and enrollees to review and acknowledge a
disclaimer prior to viewing or searching for any pricing information,
which would help ensure that consumers understand that what they are
receiving may not be an accurate estimate of their total out-of-pocket
costs. Another commenter recommended that the presentation of the out-
of-network information make clear that the issuer is unable to provide
an estimate for the full cost of the service. The commenter suggested
that this disclosure should be presented on the same screen as the
maximum allowed amount and the participant, beneficiary, or enrollee's
cost liability because it may be unclear that the maximum allowed
amount is not the total cost of care. Another commenter requested that
the Departments add a requirement that plans or issuers provide
participants, beneficiaries, or enrollees with meaningful and simple
explanations regarding emergency care, including informing them of the
prudent layperson standard.\117\ Another commenter that recommended
plans and issuers be required to provide explanatory information about
the operation of their plans, including glossaries of relevant terms
and explanations of insurance plan features and health care services,
including in-network and out-of-network costs, limited plan designs,
deductibles, telehealth, and additional features in consumer-friendly
language.
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\117\ 42 CFR 438.114.
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The Departments decline to adopt these commenters' suggestions for
additional notice disclaimers. The Departments are of the view that
adopting these additional requirements would add to the burden imposed
on plans and issuers without creating corresponding benefits for
participants, beneficiaries, or enrollees that would outweigh the
burden, and would be unhelpfully prescriptive regarding the information
plans and issuers are required to convey to these individuals. Existing
plan and issuer resources for this information, such as the uniform
glossary required under the Summary of Benefits and Coverage (SBC)
final regulation \118\ provide consumer-friendly language definitions
of insurance terms. Additionally, in response to comment, the
Departments are providing flexibility to plans and issuers to design
their internet-based tools and disclosures so that they meet the needs
of their participants, beneficiaries, and enrollees. However, the
Departments encourage plans and issuers to provide additional
information at their discretion, if appropriate. The final rules adopt
these provisions as proposed, with one correction of a typographical
error (``bill'' rather than ``billed'') in 26 CFR 54.9815-
2715A2(b)(1)(vii)(A), 29 CFR 2590.715-2715A2(b)(1)(vii)(A), and 45 CFR
147.211(b)(1)(vii)(A) and a clarification that this statement element
is only required if balance billing is permitted under state law, with
paragraph (b)(1)(vii)(D) redesignated as paragraph (b)(1)(vii)(F), and
with new paragraphs (b)(1)(vii)(D) and (E) added,
[[Page 72204]]
as described earlier in this section of this preamble.
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\118\ 80 FR 34292 (Jun. 16, 2015).
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2. Required Methods for Disclosing Information to Participants,
Beneficiaries, or Enrollees
Section 1311(e)(3)(C) of PPACA requires that cost-sharing
information be made available through an internet website and other
means for individuals without access to the internet. Therefore, in the
proposed rules, the Departments proposed to require that group health
plans and health insurance issuers disclose to participants,
beneficiaries, or enrollees the cost-sharing information described
earlier in this preamble in two ways: (1) Through a self-service tool
that meets certain standards and is available on an internet website,
and (2) in paper form.
a. First Delivery Method: Internet-Based Self-Service Tool
Under the proposed rules, plans and issuers would be required to
make available a self-service tool on an internet website for their
participants, beneficiaries, or enrollees to use, without a
subscription or other fee, to search for cost-sharing information for
covered items and services. The tool would be required to allow users
to search for cost-sharing information for a covered item or service
provided by a specific in-network provider, or by all in-network
providers. The tool also would be required to allow users to search for
the out-of-network allowed amount for a covered item or service
provided by out-of-network providers. The tool would be required to
provide users real-time responses that are based on cost-sharing
information that is accurate at the time of the request.
Many commenters supported the Departments' proposal to require
plans and issuers to make available personalized out-of-pocket cost
information for all covered health care items and services through an
internet-based self-service tool and urged the Departments to finalize
this section of the regulation as proposed. Some commenters recommended
the Departments identify a core set of functional requirements that
must be included in all price transparency tools. Commenters suggested
that these functional requirements should ensure all people enrolled in
commercial products have access to the same baseline functionality,
while providing enough flexibility for issuers to develop, and iterate
on, innovative existing internet-based self-service tools. Examples of
functional requirements include providing tailored information to
participants, beneficiaries, or enrollees on their benefit summary
(plan coverage, copayments, deductibles); being able to browse by
service category (for example, medical specialty, procedures, drugs,
imaging, labs) or diagnosis; or being able to select from an A-Z list
of popular searches or episodes of care. One commenter recommended the
following functional requirements: (1) Provide individuals with their
personal health plan details, a digital ID card, deductible and copay
information, the ability to download and view claims, and information
on provider network status and quality performance; (2) display cost
and quality information in clear, user-friendly language to facilitate
and inform health care decisions; (3) allow consumers to compare
facilities and clinicians based on curated cost estimates, common
quality measures, value metrics, and patient ratings; (4) offer
personalized out-of-pocket cost estimates for episodes of care,
services, and prescriptions, calculated using their specific health
plan design before they receive care; (5) comply with all state and
Federal health care data privacy and security laws, including the
Health Insurance Portability and Accountability Act (HIPAA) privacy and
security rules and the Health Information Trust (HITRUST) Common
Security Framework.
The Departments agree that the self-service tool requirements
should ensure all people enrolled in group health plans and health
insurance coverage have access to the same baseline functionality,
while providing enough flexibility for plans and issuers to develop and
iterate on innovative internet-based self-service tools. It is the
Departments' intent that the required elements be broad enough to avoid
being overly prescriptive for plans and issuers. The Departments agree
that certain additional content elements could be beneficial to
participants, beneficiaries, and enrollees, including general benefit
summary information and quality metrics. However, the primary initial
goal of the self-service tool is to provide personalized out-of-pocket
cost estimates for episodes of care, services, and prescriptions, and
to provide transparency around the pricing elements that determine out-
of-pocket costs. Therefore, the Departments are not inclined to require
additional elements unrelated to this primary goal at this time. The
Departments note that the intent of the final rules is to provide a
minimum standard for the disclosure of pricing information to lay a
foundation for transparency in coverage and the Departments may
consider additional disclosure requirements to build upon the final
rules in the future. To that end, the Departments are finalizing the
required content elements for the self-service tool as described
earlier in this preamble to the final rules. The final rules include a
change regarding the search function related to out-of-network allowed
amounts. Specifically, that element is modified to include the other
metrics that a plan or issuer is permitted to use in place of out-of-
network allowed amounts, as discussed earlier in this preamble in
connection with the fourth content element that must be disclosed to
participants, beneficiaries, and enrollees. Additionally, the
Departments encourage plans and issuers to add additional elements to
their tools according to the needs of the populations they serve.
In order for plans and issuers to provide accurate cost-sharing
information, the Departments noted that the participant, beneficiary,
or enrollee will have to input certain data elements into the tool.
Therefore, under the proposed rules, plans and issuers would be
required to make available a tool that allows users to search for cost-
sharing information: (1) By billing code (for example, Current
Procedural Terminology (CPT) Code 87804) or, (2) by a descriptive term
(for example, ``rapid flu test''), at the option of the user. The tool
also would be required to allow users to input the name of a specific
in-network provider in conjunction with a billing code or descriptive
term, to produce cost-sharing information, and a cost-sharing liability
estimate for a covered item or service provided by that in-network
provider. Regarding a request for cost-sharing information for all in-
network providers, under the proposed rules, if a plan or issuer
utilizes a multi-tiered network, the tool would be required to produce
the relevant cost-sharing information for the covered item or service
for individual providers within each tier. In the proposed rules, the
Departments explained that to the extent that cost-sharing information
for a covered item or service under a plan or coverage varies based on
factors other than the provider, the tool would also be required to
allow users to input sufficient information for the plan or issuer to
disclose meaningful cost-sharing information. For example, if the cost-
sharing liability estimate for a prescription drug depends on the
quantity and dosage of the drug, the tool would be required to allow
the user to input a quantity and dosage for the drug for which he or
she is seeking cost-
[[Page 72205]]
sharing information. Similarly, to the extent that the cost-sharing
liability estimate varies based on the facility at which an in-network
provider furnishes a service (for example, at an outpatient facility
versus in a hospital setting), the tool would be required to either
permit a user to select a facility, or display in the results cost-
sharing liability information for every in-network facility at which
the in-network provider furnishes the specified item or service.
It remains the Departments' understanding that a plan or issuer may
require certain information, in addition to the identification of a
covered item or service, before it can provide an out-of-network
allowed amount for a covered item or service, and that plans and
issuers may have different ways of establishing an allowed amount for
covered items or services from an out-of-network provider (such as by
zip code or state). Therefore, under the final rules, plans and issuers
are required to allow users to search for the out-of-network allowed
amount or other metric as discussed in the fourth content element, for
a covered item or service provided by out-of-network providers, by
inputting a billing code or descriptive term and the information that
is necessary for the plan or issuer to produce the out-of-network
allowed amount (such as the zip code for the location of the out-of-
network provider).
To the extent a user's search returns multiple results, the tool
would be required to have functionalities that would allow users to
refine and reorder results (also referred to as sort and filter
functionalities) by geographic proximity of providers and the amount of
estimated cost-sharing liability. The Departments solicited comment on
whether the tool should be required to have additional refining and
reordering functionality, including whether it would be helpful or
feasible to refine and reorder by provider subspecialty (such as
providers who specialize in pediatric psychiatry), or by the quality
rating of the provider, if the plan or issuer has available data on
provider quality.
Some commenters stated that it is unrealistic to expect consumers
to know and understand CPT/Diagnosis Related Group (DRG)/International
Classification of Disease-10 (ICD-10) codes and supported the inclusion
of descriptive terms. One commenter stated that search capability by
standard medical terms will be crucial, and that, to be successful,
this type of search system will need to be broad and user-friendly,
accommodating an extensive range of consumer inputs and terms. Another
commenter recommended the tool also contain a layperson-friendly
descriptor of the service to improve understanding. Other commenters
lauded the requirement that issuers must use plain language when
disclosing price information, which would ensure that patients can
understand their expected costs without expert knowledge of insurance
language and practices. Some commenters recommended that the
Departments follow industry standards and use the CMS-approved National
Correct Coding Initiative (CCI) for consumer searches, as well as for
any information relating to standards for services that fall into
bundled payment arrangements.
One commenter expressed concern that the conversion of thousands of
CPT codes into plain English by thousands of health plans, carriers,
and TPAs is inefficient, and will result in inconsistencies across the
country. For example, there are multiple CPT codes for procedures in a
hospital that differ in price depending upon severity, which is often
unknown when a procedure is first recommended.
The Departments agree that it is essential for tools to support
descriptive terms because consumers may not be familiar with specific
procedure codes. The Departments acknowledge the challenge of
converting CPT code descriptions to plain language but are of the view
that the benefit to consumers outweighs the burden to plans and
issuers. The Departments also acknowledge the potential value in
requiring the use of CCI standards but are of the view that their use
should be voluntary, not required, in order to avoid placing additional
burdens on plans and issuers in the absence of clear benefits to
consumers. As noted earlier in this preamble, the intent of the final
rules is to provide foundational requirements and to allow plans and
issuers maximum flexibility to build upon existing tools while
providing consumers with reliable cost estimates. The Departments also
highlight that the phased implementation of the final rules affords
plans and issuers additional time to address administrative challenges.
Accordingly, the final rules adopt this provision as proposed.
One commenter sought clarification that the tool is not required to
support searches with multiple parameters at the same time (for
example, by provider name and medical code at once). Another commenter
suggested that the Departments allow that, as one permissible method,
the tool may provide for geographic proximity based on a zip code
entered by the participant, beneficiary, or enrollee to enable the
consumer to choose whether to search based on the proximity to home or
work or some other location.
The self-service tool must allow users to search for cost-sharing
information for a covered item or service by inputting the name of a
specific in-network provider in conjunction with a billing code or
descriptive term, as well as other relevant factors like location of
service, facility name, or dosage. For covered items and services
provided by out-of-network providers, the tool should provide the out-
of-network allowed amount, percentage of billed charges, or other rate
that provides a reasonably accurate estimate of the amount a plan or
issuer will pay by allowing consumers to input a billing code,
descriptive code, or other relevant factor, such as location. In
addition, the final rules adopt the requirement that the tool must
allow the user to refine and reorder search results based on geographic
proximity of in-network providers. The final rules require refining and
reordering search results only for in-network providers, as the
Departments are of the view that doing so for out-of-network providers
would be too burdensome at this stage. The Departments expect that in
order for beneficiaries, participants, and enrollees to search for out-
of-network providers, they would have to input, at minimum, the billing
code or name of an item or service and the geographical location of the
provider. In addition, in order to align with revisions to the fourth
content element allowing flexibility to provide another rate instead of
the out-of-network allowed amount, the final rules have been revised to
reflect that participants, beneficiaries, and enrollees can search for
the out-of-network allowed amount, the percentage of billed charges, or
other rate that provides a reasonably accurate estimate of the amount a
plan or issuer will pay for a covered item or service provided by out-
of-network providers. This ``other rate'' is also included in paragraph
(b)(2)(i)(B)(2) of the final regulations for consistency.
Regarding refining and reordering features, one commenter suggested
that the tools include an ability to display only in-network providers
and an ability to filter or sort by provider quality if a quality
metric is made available. Three commenters requested that requirements
not limit plans to developing provider and service filters that only
account for price and geographic proximity: they suggested that the
tools should also have functionality filters based on sub-specialty and
a measure of value. Another commenter requested that any
[[Page 72206]]
additional functionality relating to refining and reordering search
results be optional for plans and issuers at this time.
One commenter stated that, to enhance the accuracy of the tool and
better account for fluctuations in cost-sharing amounts, the
Departments should require that it be configured to allow users to
self-select health characteristics (for example, chronic conditions,
body mass index) in order to further personalize its outputs for
consumers. The commenter recommended that payers be given flexibility
to dictate the specific health characteristics to be included in their
tools based on their participant, beneficiary, and enrollee
populations, the types of products that they offer, and other elements
that might cause cost-sharing estimates to fluctuate.
The Departments agree that plans and issuers should have
flexibility to design tools that can maximize consumer utility and
acknowledge that the suggested additions to search functionality could
be beneficial to consumers. However, the Departments decline to require
the adoption of these suggestions to preserve plans and issuers'
discretion regarding the most effective way to provide search results
and to avoid being overly burdensome or prescriptive.
The Departments intend that plans and issuers create user-friendly
internet-based self-service tools, but the proposed rules did not
include a definition for ``user-friendly'' because there are a variety
of ways a tool can be designed to be user-friendly. The Departments
wish to preserve plan and issuer flexibility to create tools that are
best for their participants, beneficiaries, or enrollees, including by
soliciting user feedback and consumer testing in the development of
their tools. However, it is the Departments' view that a user-friendly
tool would mean a tool that allows intended users to search for the
cost-sharing information outlined in the final regulations efficiently
and effectively, without unnecessary steps or effort. The Departments
are of the view that plans and issuers can look to Federal plain
language guidelines, ERISA requirements for a Summary Plan
Description's method of presentation at 29 CFR 2520.102-2(a), and
general industry standards for guidance when designing and developing
their internet-based self-service tools.\119\
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\119\ ``Federal plain language guidelines.'' United States
General Services Administration. Available at: https://www.plainlanguage.gov/guidelines/.
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The Departments also received comments on whether the self-service
tool should be made available through an internet website, through a
mobile application, or both. The proposed rules provided that the self-
service tool be made available on an internet website to be consistent
with section 1311(e)(3)(C) of PPACA, which provides that ``at a
minimum,'' cost-sharing information be made available through an
``internet website.'' However, the Departments sought feedback on
whether this term should be interpreted to include other comparable
methods of accessing internet-based content. The statute was enacted in
2010, when the primary mode of accessing internet-based content was
through a personal computer. Since that time, ownership of mobile
devices with internet access and use of internet-based mobile
applications has become much more common. The Departments acknowledged
that there may be technical differences between a website and other
methods of viewing internet-based content, such as mobile applications.
However, as stated in the proposed rules, the Departments also
understand that technology evolves over time, and it is the
Departments' view that Congress did not intend to limit the ability to
access information via alternative methods of viewing internet-based
content that may be available now or in the future.
The Departments acknowledged that mobile applications may provide
benefits beyond those of traditional websites. Due to the portability
of mobile devices, a self-service tool that is made available through a
mobile application might provide participants, beneficiaries,
enrollees, and their health care providers greater opportunities to use
the tool together at the point of care to evaluate treatment options
based on price. The Departments further acknowledged that mobile
applications, as a general matter, may offer greater privacy and
security protections than an internet website, accessed either from a
mobile device or a computer.\120\ Accordingly, the Departments sought
comment on whether the final rules should permit the proposed
disclosure requirements to be satisfied with a self-service tool that
is made available through a website or comparable means of accessing
the internet, such as a mobile application, or whether multiple means,
such as websites and mobile applications, should be required. The
Departments also sought comment on the relative resources required for
building an internet website versus an internet-based mobile
application.
---------------------------------------------------------------------------
\120\ Kassner, M. ``Apps vs. mobile websites: Which option
offers users more privacy?'' Tech Republic. September 30, 2016.
Available at https://www.techrepublic.com/article/apps-vs-mobile-websites-which-option-offers-users-more-privacy/; see also Colburn,
K. ``Is using a banking app safer for managing your account
online?'' AZcentral. September 17, 2018. Available at https://www.azcentral.com/story/money/business/tech/2018/09/17/online-banking-app-safety-security-smartphone-tech-tips/1212736002/; see
also Ogata, M., et al. ``Vetting the Security of Mobile
Applications.'' National Institute of Standards and Technology,
United States Department of Commerce. April 2019. Available at:
https://doi.org/10.6028/NIST.SP.800-163r1.
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Some commenters recommended that the Departments finalize the
proposed rules with the self-service tool requirement satisfied by
being made available through a website or comparable means of accessing
the internet. Others believed that plans and issuers should be free to
determine whether to offer a mobile app, an internet website, or both.
One commenter stated the resources necessary for building and
supporting a mobile application are significantly greater than building
a website and did not support a proposal to require multiple
applications, while other commenters supported a mobile application to
enable patients to make cost-effective decisions in the doctor's
office. Another commenter recommended both a mobile application and an
internet-based platform with fully responsive internet-based design.
Two commenters recommended that the requirements not preclude a plan,
issuer, or TPA from developing other means of electronic delivery
beyond internet disclosure.
The Departments have considered these comments and are of the view
that requiring an internet website, as opposed to a comparable means of
accessing the internet, such as a mobile application or both, ensures
access to a broader set of consumers while limiting the burden on plans
and issuers to produce both an internet site and a mobile application.
Internet websites can be accessed on mobile devices and people without
access to the internet or mobile devices can access tools through
resources where internet access may be available, such as a local
library. Conversely, if the tool were available only through a mobile
device, people without a capable mobile device would not have access to
the tool. The final rules, therefore, adopt the requirement that the
self-service tool be provided via internet website; however, the
Departments encourage plans and issuers to also provide a mobile
application version in addition to an internet website.
[[Page 72207]]
b. Second Delivery Method: Paper Form
Paragraph (e)(3)(C) of section 1311 of PPACA specifies that at a
minimum, cost-sharing information be made available to an individual
through an internet website and such other means for individuals
without access to the internet. Therefore, the proposed rules included
a proposal that group health plans and health insurance issuers would
have to furnish, at the request of the participant, beneficiary, or
enrollee, without a fee, all of the information required to be
disclosed under paragraph (b)(1) of the proposed regulations, as
outlined earlier in this preamble, in paper form. Further, the proposed
rules included a proposal that a plan or issuer would be required to
provide the information in accordance with the requirements under
paragraph (b)(2)(i) of the proposed regulations and as described
earlier in this preamble. That is, the plan or issuer would be required
to allow an individual to request cost-sharing information for a
discrete covered item or service by billing code or descriptive term,
according to the participant's, beneficiary's, or enrollee's request.
Further, the plan or issuer would be required to provide cost-sharing
information for a covered item or service in connection with an in-
network provider or providers, or an out-of-network allowed amount for
a covered item or service provided by an out-of-network provider,
according to the participant's, beneficiary's, or enrollee's request,
permitting the individual to specify the information necessary for the
plan or issuer to provide meaningful cost-sharing liability information
(such as dosage for a prescription drug or zip code for an out-of-
network allowed amount). To the extent the information the individual
requests returns more than one result, the individual would also be
permitted to request that the plan or issuer refine and reorder the
information disclosed by geographic proximity and the amount of the
cost-sharing liability estimates.
The Departments proposed that this information would be required to
be mailed to a participant, beneficiary, or enrollee via the U.S.
Postal Service or other delivery system no later than 2 business days
after a participant's, beneficiary's, or enrollee's request is
received.
Two commenters supported the Departments' proposal to allow
individuals the ability to access their information through electronic
means or via paper form, given that many Americans lack access to high-
speed internet services. Some commenters opposed the requirement to
deliver the cost-sharing information to participants in paper form due
to administrative burden, while others recommend limiting the
requirements. Several recommended the timeframe to respond be expanded,
including a range of 5 days to 10 days. One commenter requested that
the compliance time for producing paper copies of personalized
information be consistent with current Federal requirements for
furnishing paper copies of the SBC, Summary Plan Description, or
Consolidated Omnibus Budget Reconciliation Act (COBRA) notices. Other
commenters expressed concern about volume, given that a participant,
beneficiary, or enrollee could request cost estimates for all in-
network providers of a given service, which could be tens of thousands
of providers, resulting in thousands of pages of results. Some
recommended a reasonable limit to the volume of information that would
be provided in response to any single request for a covered item or
service--for, example, no more than 20 or 25 providers per request.
Several commenters recommended that the Departments reconsider
mandating paper responses ``without a fee.'' While these commenters did
not support charging participants, beneficiaries, or enrollees for
access to cost-sharing information in general, they asserted that it is
unreasonable to expect health plans to provide what could easily be
boxes worth of information in response to multiple requests per
enrollee.
Nothing in the proposed rules would have prohibited a plan or
issuer from providing participants, beneficiaries, or enrollees with
the option to request disclosure of the information required under
paragraph (b)(1) of the proposed regulations through other methods
(such as, over the phone, through face-to-face encounters, by
facsimile, or by email). The Departments requested comment on these
proposed disclosure methods, including whether additional methods of
providing information should be required, rather than permitted. The
Departments were particularly interested in feedback on whether plans
and issuers should be required to provide the information over the
phone, or by email, at the request of a participant, beneficiary, or
enrollee.
Several commenters requested alternatives to the paper disclosure,
particularly a phone option. One commenter recommended the final rules
require that plans or issuers set up a designated toll-free number that
participants, beneficiaries, or enrollees can call to receive pricing
information, in addition to offering that as an option on their main
consumer information phone line. Two commenters urged the Departments
to consider making the second form of disclosure one of the plan or
issuer's choice (that is, paper or phone service). Conversely, one
commenter stated that the volume and complexity of information that a
given request could produce would preclude providing this information
over the phone or in-person. Another commenter recommended the
alternative format to include telephone, in-person, or fax. One
commenter recommended emailing digital versions of the paper requests
to a participant's, beneficiary's, or enrollee's inbox at the
participant's, beneficiary's, or enrollee's request, and another
requested that if results were emailed, the same information should not
also need to be provided via paper form.
The Departments acknowledge commenters' concerns that the volume of
paper requests could be unwieldy. To that end, the final rules adopt
the requirement that cost-sharing information be provided in paper
form, but a plan or issuer may limit any results for a paper request to
20 providers per request, as suggested by some commenters. The
Departments are of the view that the commenters' suggestion of limiting
paper request to 20 providers per request is a reasonable approach to
balancing the burdens on plans and issuers with the benefits of
providing consumers with enough information to be able to compare cost
and provider options. The final rules provide an additional flexibility
that, to the extent participants, beneficiaries, or enrollees request
disclosure by another means (for example, by phone or email), plans and
issuers may provide the disclosure through the means requested by the
participant, beneficiary, or enrollee, provided the participant,
beneficiary, or enrollee agrees that disclosure through such means is
sufficient to satisfy the request and the request is fulfilled at least
as rapidly as required for the paper method. The Departments further
acknowledge that requiring plans and issuers to set up a designated
toll-free number for pricing information could be beneficial to
participants, beneficiaries, and enrollees, but are not requiring this
step given the Departments' view that its burden outweighs its benefit
in light of the other available disclosure methods, including the
flexibility to provide this information via the preferred disclosure
method of the participant, beneficiary, or enrollee.
[[Page 72208]]
3. Special Rule To Prevent Unnecessary Duplication
a. Insured Group Health Plans
The proposed rules included a special rule to streamline the
provision of the required disclosures and to avoid unnecessary
duplication of the disclosures with respect to group health insurance
coverage. The Departments are finalizing this special rule, which
provides that, to the extent coverage under a plan consists of fully-
insured group health insurance coverage, the plan satisfies the
requirements of the final rules if the plan requires the issuer
offering the coverage to provide the information pursuant to a written
agreement between the plan and issuer. For example, if a plan and an
issuer enter into a written agreement under which the issuer agrees to
provide the information required under the final rules, and the issuer
fails to provide full or timely information, then the issuer, but not
the plan, has violated the transparency disclosure requirements.\121\
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\121\ Under section 4980D(d)(1) of the Code, the excise tax for
group health plans failing to satisfy the final rules is not imposed
on a small employer (generally fewer than 50 employees) which
provides health insurance coverage solely through a contract with an
issuer on any failure which is solely because of the health
insurance coverage offered by the issuer.
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Many commenters requested that the Departments extend the special
rule to self-insured group health plans that are administered by an
administrative service organization or other TPA. These commenters
stated that self-insured plan sponsors that contract in good faith with
their TPAs to comply with the reporting requirements should be held
harmless with respect to compliance obligations and liability under
this regulation because in many instances a provider network is merely
rented from a TPA, necessary information may not be held by the plan
itself, and because liability could be contractually assigned to the
TPA.
Section 2715A of the PHS Act provides the authority for the
Departments to require this information from plans and issuers, but not
TPAs. Therefore, it is ultimately the responsibility of the plan or
issuer to provide the information required by the final rules.
Nonetheless, the Departments note that nothing in the final rules
prevents a self-insured plan from contracting with another party to
provide the required disclosure, including, to the extent permitted
under other Federal or state law, entering into an agreement for the
other party to indemnify the plan in the event the other party fails to
make the full or timely disclosure required by the final rules.
However, the plan must monitor the other party to ensure that the
entity is providing the required disclosure. Moreover, the Departments
are of the view that the special rules providing certain safe harbors
for actions taken in good faith as further described later in this
preamble provide adequate protections for self-insured plans. The final
rules also include the addition of the phrase ``insured group health
plans'' to clarify that this special rule applies to insured group
plans.
b. Other Contractual Arrangements
The Departments also received requests for clarification about the
responsibility of employer plan sponsors that offer benefits under a
level-funded arrangement. In general, under a level-funded arrangement,
a plan sponsor self-insures expected claims and purchases stop-loss
insurance for claims that exceed a specified threshold. Group health
plans that are offered through a level-funded arrangement are subject
to the final rules. Just like self-insured plans that are not level-
funded, nothing in the final rules prevents a level-funded plan from
contracting with another party to provide the required disclosures, but
the level-funded plan remains liable for compliance with the final
rules, and must monitor the other party to ensure that the entity is
providing the required disclosure.
In several of the comments that addressed the special rule to
prevent unnecessary duplication, commenters requested that the
Departments permit plans and issuers to fulfill pricing disclosure
requirements for prescription drugs through a third-party tool, such as
a PBM tool. The Departments agree that this approach is permissible
under the final rules. The Departments recognize that self-insured
plans may rely on written agreements with other parties, such as PBMs,
to obtain the necessary data to comply with the disclosure
requirements. A plan or health insurance issuer may satisfy the
requirements for prescription drug items and services under paragraph
(b) by entering into a written agreement under which another party
(such as a PBM or other third-party) provides the information required
by paragraph (b) related to prescription drugs in compliance with this
section. Nonetheless, if a plan or issuer chooses to enter into such an
agreement and the party with which it contracts fails to provide the
information in compliance with the final rules, the plan or issuer may
be held responsible for violating the transparency disclosure
requirements of the final rules for the same reasons explained above in
connection with self-insured plans entering into agreements with TPAs.
c. Application to Account-Based Arrangements
Another commenter sought clarification about the responsibility of
employer plan sponsors that offer the following types of coverage to
employees: (1) Individual coverage health reimbursement arrangements
(HRAs); (2) qualified small employer HRAs (QSEHRAs); and (3) flexible
spending arrangements (FSAs) that are not fully integrated with group
major medical coverage, stating that these types of plans were not
explicitly addressed in the exemptions and the anti-duplication
provisions outlined in the proposed rules.
The final rules do not apply to account-based group health plans,
such as HRAs, including individual coverage HRAs, or health FSAs.
QSEHRAs are not group health plans and are, thus, not subject to the
requirements of section 2715A of the PHS Act.\122\ Therefore, these
types of arrangements are not required to comply with the final rules.
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\122\ Section 9831(d)(1) of the Code; section 733(a)(1) of
ERISA; and section 2791(a)(1) of the PHS Act.
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4. Privacy, Security, and Accessibility
The requirements for group health plans and health insurance
issuers to provide cost-sharing liability estimates and related cost-
sharing information will operate in tandem with existing state and
Federal laws governing the privacy, security, and accessibility of the
information that will be disclosed under these disclosure requirements.
For example, the Departments are aware that the content to be disclosed
by plans and issuers may be subject to the privacy, security, and
breach notification rules under HIPAA or similar state laws. Nothing in
the final rules is intended to alter or otherwise affect plans',
issuers', and other entities' data privacy and security
responsibilities under the HIPAA rules or other applicable state or
Federal laws.
The Departments also expect that plans and issuers will follow
applicable state and Federal laws regarding persons who may or must be
allowed to access and receive the information that is required to be
disclosed under the final rules. The final rules refer to such persons
as ``authorized representatives'' and do not establish any new class of
persons or entities who are authorized
[[Page 72209]]
to access the information specified by the final rules.
One commenter expressed concerns about potential privacy violations
related to implementation and compliance with the proposed measure.
This commenter stated that all entities need to be made aware of their
existing privacy and data-security responsibilities and that states and
Federal regulators need to be diligent about compliance and
enforcement. This commenter further stated it is important to note that
employers, TPAs, and carriers may incur increased costs related to
complying with the proposed rules regarding potential data breaches,
increased liability, and cyber-coverage costs that could impact plan
premiums.
The Departments agree that it is important that entities subject to
the final rules be aware of their privacy and data-security
responsibilities. Accordingly, the Departments are finalizing, as
proposed, a provision that reminds plans and issuers of their duty to
comply with requirements under other applicable state or Federal laws,
including requirements governing the accessibility, privacy, or
security of information, or those governing the ability of properly
authorized representatives to access participant, beneficiary, or
enrollee information held by plans and issuers.
The Departments further appreciate the concern that employers,
TPAs, and issuers may incur cybersecurity costs related to providing an
online tool that provides some access to participant, beneficiary, and
enrollee protected health information (PHI). However, given the
Departments' understanding that as many as 94.4 percent of surveyed
plans and issuers already maintain and operate an internet-based self-
service tool,123 the Departments anticipate any additional
costs associated with cybersecurity will not be substantial.\124\ The
Departments have otherwise evaluated the burden of operating an
internet-based self-service tool in section VI, later in this preamble.
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\124\ Sharma A., Manning, R., and Mozenter, Z. ``Estimating the
Burden of the Proposed Transparency in Coverage Rule.'' Bates White
Economic Consulting. January 27, 2020. Available at: https://www.bateswhite.com/newsroom-insight-Transparency-in-Coverage-Rule.html.
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One commenter expressed concern that certain requests for cost-
sharing information could include items and services that may reveal
particularly sensitive health information (for example, information
related to substance abuse, mental health, or HIV). This commenter
recommended the Departments provide carve-outs so that plans and
issuers are not required to disclose such information through unsecured
methods of communication (for example, email or phone). Alternatively,
they recommended that the Departments provide more clarity or examples
of when plans and issuers are not required to disclose certain
information to comply with HIPAA and other Federal and state privacy
laws.
The Departments remind stakeholders that current privacy and
security requirements applicable under HIPAA rules and other applicable
Federal requirements continue to apply under these rules. As noted
earlier in this section of the preamble, the final rules are not
intended to alter or otherwise affect plans', issuers', or other
entities' responsibilities under HIPAA or other applicable Federal
privacy laws. Furthermore, to the extent that state laws are more
stringent regarding the disclosure of information subject to the final
rules, plans and issuers are required to comply with the relevant state
laws. The Departments acknowledge that there have been several recent
security breaches affecting plans, issuers, and third-party vendors
that may have compromised the PII and PHI of participants,
beneficiaries, and enrollees. As acknowledged elsewhere in this
preamble, privacy and security are important to the Departments and,
while outside the scope of this rule, these are issues the Departments
will continue to monitor. In light of existing risks and new risks that
may arise as a result of increased innovation in the health care space,
the Departments encourage plans and issuers to continue to educate
their participants, beneficiaries, and enrollees about these risks and
about ways to minimize or prevent unintended usage or sharing of their
health data and encourage consumers to pay close attention to any new
internet-based tools or applications they may choose to use.
C. Requirements for Public Disclosure of In-Network Rates, Historical
Allowed Amount Data, and Prescription Drug Pricing Information for
Covered Items and Services From In- and Out-of-Network Providers
As explained earlier in this preamble and in the proposed rules,
the Departments proposed to exercise specific authority under section
1311(e)(3)(A)(vii) and (ix) of PPACA (as applied to group health plans
and health insurance issuers in the individual and group markets
through section 2715A of the PHS Act), which requires plans and issuers
to publicly disclose information on cost-sharing and payments with
respect to any out-of-network coverage and any other information the
Secretary of HHS determines to be appropriate to enhance transparency
in health coverage. Consistent with this authority, the Departments
proposed for plans and issuers to make public negotiated rates with in-
network providers and data outlining the different amounts a plan or
issuer has paid for covered items or services, including prescription
drugs, furnished by out-of-network providers. The Departments proposed
to require plans and issuers to make this information available in
machine-readable files that would include information regarding
negotiated rates with in-network providers, allowed amounts for all
covered items or services furnished by particular out-of-network
providers, and other relevant information in accordance with specific
method and format requirements. The Departments proposed to require
plans and issuers to update this information on a monthly basis to
ensure it remains accurate. The Departments are finalizing these
policies and requirements with modifications to clarify the proposed
requirements and underlying policies, and to respond to commenter
suggestions and concerns.
The preamble to the proposed rules outlined several reasons why the
public disclosure of negotiated rates and historical out-of-network
allowed amounts is both appropriate and necessary for transparency in
coverage. First, the Departments asserted that the public availability
of negotiated rates and historical out-of-network allowed amounts would
empower the nation's 26.1 million uninsured consumers to make more
informed health care decisions.\125\ Uninsured consumers generally must
pay a provider's full charges for health care items and services.
Though negotiated rates will not apply to the uninsured, it will offer
a baseline when negotiating with providers. Pricing information is
critical to their ability to evaluate their service options and control
their health care spending. Uninsured consumers could also use publicly
available pricing information to find which providers offer the lowest
price, depending on the consumer's personal needs and priorities. The
Departments noted in the preamble to the proposed rules that provider
lists of standard charges often do not reflect the true cost of
particular
[[Page 72210]]
items and services.\126\ Again, although a provider's negotiated rates
with plans and issuers do not necessarily reflect the prices providers
charge to uninsured patients, uninsured consumers could use this
information to gain an understanding of the payment amounts a
particular provider accepts for a service. Uninsured patients or
participants, beneficiaries, or enrollees seeking care from an out-of-
network provider also may use this data to negotiate a price prior to
receiving an item or service or negotiate down a bill after receiving a
service.\127\
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\125\ Income, Poverty and Health Insurance Coverage in the
United States: 2019.'' United States Census Bureau. September 15,
2020. Available at: https://www.census.gov/newsroom/press-releases/2020/income-poverty.html.
\126\ Arora, V., Moriates, C., and Shah, N. ``The Challenge of
Understanding Health Care Costs and Charges.'' 17 AMA J. Ethics 1046
(2015). Available at: https://journalofethics.ama-assn.org/article/challenge-understanding-health-care-costs-and-charges/2015-11.
\127\ ``How to Research Health Care Prices.'' Wall Street
Journal. Dec. 4, 2009. Available at: https://guides.wsj.com/health/health-costs/how-to-research-health-care-prices/ (``Researching
health-care pricing online can also help after you've already had a
medical procedure, if you want to dispute a bill, negotiate it down,
or figure out if you've been overcharged.'').
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Second, the Departments stated in the proposed rules that
information regarding negotiated rates and historical out-of-network
allowed amounts is critical for any consumer, insured, or uninsured,
who wishes to evaluate available options for group or individual market
coverage. Specifically, negotiated rate information for different plans
or coverage and their in-network providers is key to consumers' ability
to effectively shop for coverage that best meets their needs at prices
they can afford, whether the consumer wishes to purchase new coverage
or change existing coverage. Publicly-available negotiated rate data
will assist all consumers in choosing the coverage that best meets
their needs in terms of deductible requirements, coinsurance
requirements, and out-of-pocket limits--all factors frequently
determined by plan's or issuer's in-network rates, including negotiated
rates, or out-of-network allowed amounts. This information, added to
plan premium information and benefit design (for example coinsurance
percentages), will give consumers an understanding of how affordable a
particular coverage option will be.
In the preamble to the proposed rules, the Departments noted that
publicly available historical allowed amount data for covered items and
services provided by out-of-network providers would enable consumers
who require specialized services to find the best coverage for their
circumstances. For instance, plans and issuers often place limitations
on benefits for specialized services, which causes many specialists to
reject insurance; this can make it difficult, if not impossible, for
consumers in need of certain services to find in-network providers in
their area who are accepting new patients or who have sufficient
availability or expertise to meet their needs. The Departments
understand, for example, that many speech therapists and pathologists
do not accept insurance because of the limitations plans and issuers
place on coverage for their services, such as annual visit limits on
speech therapy services. Accordingly, consumers who have a need for
such specialized services may base their coverage choices primarily, if
not solely, on a plan's or issuer's out-of-network benefits. Historical
data outlining different amounts paid to out-of-network providers will
enable consumers who rely on out-of-network providers to ascertain
potential out-of-network benefits among different plans and issuers.
Third, the Departments stated in the preamble to the proposed rules
that public disclosure of pricing information is necessary to enable
consumers to use and understand price transparency data in a manner
that will increase competition, potentially reduce disparities in
health care prices, and potentially lower health care costs. One of the
recognized impediments to increased competition for health care items
and services is the widespread lack of knowledge many consumers have
regarding health care pricing. In the preamble to the proposed rules,
the Departments noted that many consumers do not fully comprehend the
basics of health coverage, much less the more complex facets of the
health care system that can affect an individual's out-of-pocket cost
for items and services, including: Its specialized billing codes and
payment processes; the various specialized terms used in plan and
coverage contracts and related documents (such as copayment and
coinsurance); and the various billing and payment structures plans and
issuers use to compensate providers and assign cost-sharing liability
to individuals (for example, bundled payment arrangements).\128\
Pricing information is necessary to spur innovation that will help
educate consumers on how to get the most value out of their plan or
coverage. Making the required pricing information public could
facilitate and incentivize the design, development, and offering of
internet-based self-service tools and support services that are
necessary to address the general inability of consumers to use or
otherwise understand the available health care pricing information.
---------------------------------------------------------------------------
\128\ Satter, M. ``Survey: Most workers don't understand health
insurance.'' BenefitsPRO. September 30, 2016. Available at: https://www.benefitspro.com/2016/09/30/survey-most-workers-dont-understand-health-insuran/?slreturn=20190803010341 (a UnitedHealthcare Consumer
Sentiment Survey found that even though 32 percent of respondents
were using websites and mobile apps to comparison shop for health
care, only 7 percent had a full understanding of all four basic
insurance concepts: Plan premium, deductible, coinsurance, and out-
of-pocket maximum; although 60 percent of respondents were able to
successfully define plan premium and deductible, respondents were
not as successful in defining out-of-pocket maximum (36 percent) and
coinsurance (32 percent)).
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In developing the proposed rules, the Departments considered that,
due to the complexity of the health care system and the data that
drives plan and issuer payments for health care items and services,
such raw data is likely to be difficult for the average consumer to
understand and effectively use. As a result, the Departments determined
that proposing to make public negotiated rates with in-network
providers and historical payment data outlining out-of-network allowed
amounts would be appropriate because it would encourage innovation that
could ultimately help consumers understand and effectively use price
transparency information.
The Departments stated that the proposed requirement to make
pricing information publicly available could allow health care software
application developers and other innovators to compile, consolidate,
and present this information to consumers in a manner that allows
consumers to consider price as a factor when making meaningful
comparisons between different coverage options and providers.\129\ For
instance, third-party developers could develop mobile applications that
operate as look-up tools and permit comparison of prices for specific
services across plans. The tools could also allow consumers to access
their medical records or other information about their health care
utilization and create estimates based upon patient-specific
information. Ultimately, the Departments are of the view that improved
access and usability of this information has the potential to increase
health insurance literacy, consumerism, and competition, resulting in
more reasonable costs for health care items and services.
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\129\ The Departments recognize that implementation of the API
discussed in section III, Request for Information, could go even
further toward the goal of empowering application developers and
other innovators to support price transparency in the health care
market.
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Fourth, in the proposed rules the Departments noted that, along
with
[[Page 72211]]
consumers, sponsors of self-insured and fully-insured group health
plans are also disadvantaged by the lack of price transparency.\130\
Absent action taken such as through the final rules, health care cost
trends are expected to continue to outpace inflation, with employer-
sponsored large group plans' annual per employee costs expected to
increase between 5.5 to 9.0 percent over the next decade.\131\ Without
information related to what other plans or issuers are actually paying
for particular items and services, employer plans currently lack the
pricing information necessary to shop or effectively negotiate for the
best coverage for their participants and beneficiaries. In the proposed
rules, the Departments stated that public availability of pricing
information is appropriate to empower plans to make meaningful
comparisons between offers from issuers and evaluate the prices offered
by providers who wish to be included in their pool of in-network
providers. The Departments noted that the pricing information would
also assist employer plans that contract with TPAs or issuers to
provide a network of physicians. That information would provide
valuable data an employer plan could use to assess the reasonableness
of network access prices offered by TPAs and issuers by evaluating the
specific price providers in a TPA's or issuer's network are accepting
for their services.
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\130\ Whaley, C., et al. ``Nationwide Evaluation of Health Care
Prices Paid by Private Health Plans: Findings from Round 3 of an
Employer-Led Transparency Initiative.'' RAND Corporation. 2020.
Available at: https://www.rand.org/pubs/research_reports/RR4394.html.
\131\ Congressional Budget Office, ``The Budget and Economic
Outlook: 2019 to 2029.'' Congress of the United States Congressional
Budget Office. January 2019. Available at: https://www.cbo.gov/system/files/2019-03/54918-Outlook-3.pdf; see also ``Medical cost
trend: Behind the numbers 2020.'' PwC Health Research Institute.
June 2019. Available at: https://heatinformatics.com/sites/default/files/images-videosFileContent/pwc-hri-behind-the-numbers-2020.pdf.
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Armed with transparency data, employers could also use their
leverage to negotiate for lower prices for their participants and
beneficiaries and, potentially, if enough employers take action, it
could help lower health care prices.\132\ For instance, employers could
employ network and benefit design tools to move participants and
beneficiaries toward lower-priced providers and shift from less
favorable provider contracting models (such as a discounted-charge
contact, which can be vulnerable to list-price inflation) to more
favorable, alternative value-based contracting models (such as
reference-based pricing and bundled payment arrangements).\133\ As
stated elsewhere in this preamble, based on 2019 Census data, there are
183 million Americans enrolled in employer-sponsored health coverage
through a household member's employer at some point during the
year.\134\ Based on estimates of the United States population in 2019,
this would mean that more than 56 percent of the nation's insured
population has employer-sponsored coverage. Therefore, the ability of
employer plans to effectively negotiate pricing for coverage and
services could be a boon to competition in the health care market.
---------------------------------------------------------------------------
\132\ Whaley, C., et al. ``Nationwide Evaluation of Health Care
Prices Paid by Private Health Plans: Findings from Round 3 of an
Employer-Led Transparency Initiative.'' RAND Corporation. 2020.
Available at: https://www.rand.org/pubs/research_reports/RR4394.html.
\133\ Id.
\134\ ``Income, Poverty and Health Insurance Coverage in the
United States: 2019.'' United States Census Bureau. September 15,
2020. Available at: https://www.census.gov/newsroom/press-releases/2020/income-poverty.html.
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Fifth, the Departments stated in the proposed rules that public
disclosure of price transparency information is also appropriate
because it could assist health care regulators in carrying out their
duties to oversee issuers in their states, as well as in designing and
maintaining sustainable health care programs. Regulators may be able to
independently access, aggregate, and analyze the data to support
oversight of plans and issuers. For example, because the machine-
readable files must be updated regularly, regulators could use the
pricing information to identify trends in rates of items and services
over time or identify potentially collusive practices or substantial
price variations within a geographic area that may be in need of
additional monitoring or future regulatory action. It may also become
possible for regulators to use the pricing information related to items
and services to assist in better understanding and monitoring premium
rate fluctuations and increases in their respective markets; further
allowing them to assess whether the trend rates issuers use in their
rate filings are reasonable in order to assess whether proposed rates
should be approved. Because the in-network applicable rate data will be
reasonably current, regulators may be able to address potential
concerns more quickly than at present.
Local, state, and Federal agencies responsible for implementing
health care programs that rely on issuers to provide access to care
would be privy to actual pricing information that could inform their
price negotiations with issuers. Insights gained from research using
the pricing information could support regulators in their oversight of
plans and issuers and could also help identify new ideas for market
reforms to enhance the performance and efficiency of health insurance
markets.
The public availability of health care pricing information offers
researchers the ability to better understand the impact of specific
plan, issuer, and provider characteristics on negotiated rates and out-
of-network payments, evaluate and supplement existing models and
predictions, and formulate new policies and regulatory improvements to
improve competition and lower health care spending. Researchers have
already utilized localized and state-wide data to review trends in
issuer market share, issuer location, and covered services and their
corollary effects on consumer pricing and experience in the
market.\135\ They have also examined these similar effects on consumers
by provider market shares, structures, and offered similar data.
Expanding the availability of this data could allow for the expansion
and validation of these and other models and hypotheses. With larger
and more complete datasets, researchers could refine their policy and
regulatory suggestions regarding payment and delivery models, including
those that are most likely to mitigate upwards pricing pressure from
issuer, provider, consumer, and geographic factors. The release of this
data could also supplement ongoing efforts to help control health care
costs.
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\135\ See Brown, Z.Y. ``Equilibrium Effects of Health Care Price
Information.'' The Review of Economics and Statistics. Volume. 101.
No. 4. September 30, 2019. Available at: https://www.mitpressjournals.org/doi/full/10.1162/rest_a_00765; see also Wu,
S. et al ``Price Transparency For MRIs Increased Use Of Less Costly
Providers And Triggered Provider Competition.'' Health Affairs.
August 2014. Available at: https://www.healthaffairs.org/doi/10.1377/hlthaff.2014.0168.
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The Departments acknowledge that these stakeholders, notably
researchers, may have access to some pricing data through existing
sources, such as the Health Care Cost Institute (HCCI) and databases
established through state health care price transparency efforts.
However, it is the Departments' understanding that these health care
pricing datasets are often costly to purchase, only contain older,
historical data, and generally only include de-identified plan data for
a limited number of plans and issuers who voluntarily participate in
the data collection.\136\
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\136\ For example, HCCI is expected to release their ``2.0''
dataset in December 2020. The ``2.0'' dataset includes over one
billion commercial claims and 60 million covered lives per year from
Aetna, Humana, Kaiser Permanente, and the Blue Cross Blue Shield
(BCBS) companies from 2012 through 2018. The data is nearly three
years old and will cost $45,000 annually on a per-project basis and
does not include other ``standard add-ons,'' such as data mergers.
Institutional membership prices will be customized for each
organization. Taken from ``Power Up Your Analytics on the Privately
Insured.'' Health Care Cost Institute. Available at: https://healthcostinstitute.org/images/pdfs/Health_Care_Cost_Institute_-_Power_Up_Your_Analytics.pdf. In addition to the HCCI dataset, BCBS
companies also sell their data through their analytics and
consulting platform, Blue Health Intelligence, with 20.3 billion
claims from 203 unique member organizations. The access price is not
listed on their website. More information is available at: https://www.bluehealthintelligence.com/.
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[[Page 72212]]
By contrast, the pricing information required through the final
rules would generally be current data for all plans and issuers and
will be available to the public free of charge. This data, where it is
related to in-network coverage, can also be tied back to specific plans
and issuers and the geographic regions in which they provide plans or
coverage. With access to the pricing data required through the final
rules, researchers may be able to design new studies that develop novel
insights into the health insurance markets. Stakeholders, including
employers, may be able to gain insights, inform oversight efforts,
negotiate improved terms for items and services, or make improvements
to insurance products, such as plans and issuers moving toward value-
based plan designs or broadening or narrowing networks based on
customer shopping habits. The pricing information could also support
market innovation and improvements by plans and issuers. For example,
researchers and industry experts could use pricing information to
establish baseline data to assist in identifying, designing, and
testing new or existing health care delivery and coverage models.
While all of these stakeholders stand to benefit from access to the
pricing information required through the final rules, the Departments
continue to be of the view that the ultimate beneficiaries of access to
pricing information are consumers. Indeed, public access to health care
pricing information could lead to more targeted oversight, better
regulations, market reforms to ensure healthy competition, improved
benefit designs, and more consumer-friendly price negotiations.
The Departments expressed the view that effective downward pressure
on health care pricing cannot be fully achieved without public
disclosure of pricing information. Standard economic theory holds that
markets work best when there is price competition.\137\ When consumers
shop for services and items based on price, providers and suppliers
typically compete to lower prices and improve quality.\138\ Based on
this understanding of standard economic principles and past experience,
the Departments are persuaded that innovators and other entities in the
health care market will be incentivized to innovate in the price
transparency and health care consumerism space once access to pricing
information that allows for meaningful evaluation of different options
for delivering health care items or services, coverage options, and
provider options becomes available.
---------------------------------------------------------------------------
\137\ ``FTC Fact Sheet: How Competition Works.'' United States,
Federal Trade Commission. Available at: https://www.consumer.ftc.gov/sites/default/files/games/off-site/youarehere/pages/pdf/FTC-Competition_How-Comp-Works.pdf.
\138\ Kessler, D., and McClellan, M. ``Is Hospital Competition
Socially Wasteful?'' 115 Q. J. of Econ. 577. May 2, 2000. Available
at: https://www.nber.org/papers/w7266.
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1. Information Required To Be Disclosed to the Public
The Departments are finalizing requirements, under 26 CFR 54.9815-
2715A3(b), 29 CFR 2590.715-2715A3(b), and 45 CFR 147.212(b), for plans
and issuers to make public applicable rates, including negotiated
rates, with in-network providers; data outlining the different billed
charges and allowed amounts a plan or issuer has paid for covered items
or services, including prescription drugs, furnished by out-of-network
providers; and negotiated rates and historical net prices for
prescription drugs furnished by in-network providers.\139\ The
Departments are of the view that public availability of in-network
applicable rates, including negotiated rates, billed charges and
historical out-of-network allowed amounts, and in-network negotiated
rates and historical net prices for prescription drugs is appropriate
and necessary to provide comprehensive effective transparency in
coverage, which may, in turn, empower consumers to make informed
decisions about their health care, spur competition in health care
markets, and slow or potentially reverse the rising cost of health care
items and services.
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\139\ As discussed in section II.B of this preamble, the
Departments are also finalizing requirements under 26 CFR 54.9815-
2715A2(b)(1)(iii)-(iv), 29 CFR 2590.715-2715A2(b)(1)(iii)-(iv), and
45 CFR 147.211(b)(1)(iii)-(iv) that plans and issuers include
negotiated rates and out-of-network allowed amounts within the
internet-based self-service tool.
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The vast majority of the commenters agreed with the Departments'
objectives of price transparency under the proposed rule. Many
commenters offered general support (in whole or in part) of the
proposed requirements for public disclosure of in-network negotiated
rates and out-of-network allowed amounts. One commenter supported the
public disclosure of out-of-network allowed amounts but expressed
concerns about disclosure of in-network negotiated rates.
Disclosure of Pricing Information Generally
Some commenters who offered support stated that the requirements
will help create more efficient and value-based health care systems by,
for example, encouraging plans and issuers to adopt innovative benefit
designs that push patients toward lower-cost care. Another commenter
who offered support stated that requiring plans and issuers to share
publicly the negotiated rates for in-network providers and allowed
amounts for out-of-network providers has the potential to increase
competition among issuers. One commenter stated that public disclosure
of negotiated rates is needed to address the provider consolidation
that is driving up health care costs and leading to more favorable
reimbursements to large hospitals with bargaining power. Another
commenter recommended the Departments reject arguments against
transparency that payment data should be protected as proprietary, and
adopt a presumption in favor of transparency.
The Departments received comments from state and local government
regulators who were supportive of the rules generally and provided
suggestions for improving the proposals. Regulators recognized that
greater transparency holds promise in improving pricing of health care
items and services in ways that improve consumer comprehension and
policymakers' ability to manage the health care system. One local
government commenter supported the goal of price transparency, but
voiced concern that the proposed rules might unintentionally drive up
the cost of health care. Individual consumers who submitted comments
offered general support and emphasized the importance of obtaining
pricing information in advance of receiving health care for their
personal health care decision-making. Some individual commenters noted
that consumers seek the price of a product or service in every other
sector prior to making a spending decision and should be able to do so
when purchasing health care. Other individual commenters stated their
support for policies that will help consumers choose whether to seek
care
[[Page 72213]]
from an in-network or out-of-network provider.
Many other commenters, comprised largely of health insurance
issuers and health care providers, offered support for the objective of
price transparency, but did not support the requirements for public
disclosure of in-network provider rates and out-of-network allowed
amounts, expressing particular concerns about the in-network provider
rate disclosure requirements
Commenters stated that, as proposed, the disclosure of payer-
specific negotiated rates could distort the markets, creating an
unbalanced focus on costs at the expense of other factors influencing
market dynamics, such as quality, efficiency, and effectiveness. Some
commenters stated that negotiated rates reflect factors other than
price such as experience, previous volumes/market power, anticipated
growth, strategic initiatives, and select concessions.
The Departments do not agree that publication of negotiated rates
for items and services will have negative distortive effects on health
care markets. Rather, the Departments are of the view that the final
rules will help to counteract the recognized price distortions that
result from the unavailability of pricing information to health care
consumers.\140\ As discussed elsewhere in this preamble, the current
unavailability of pricing information for health care items and
services prohibits the health care markets from achieving a meaningful
level of competition based on price because it ensures that health care
consumers typically are not able to include price in their health care
purchasing decisions. The Departments are of the view that making
pricing information available could begin to ameliorate price
distortions in health care by encouraging consumer decision-making that
takes cost into account.
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\140\ Under ideal market conditions, consumers have sufficient
information to make good choices. When consumers do not have
information on price, standard market forces cannot operate, and
prices for health care are distorted resulting in price
discrimination (charging consumers different prices for the same
product) and other problems that currently plague the health care
markets. See generally Mwachofi, Ari, and Assaf F. Al-Assaf.
``Health care market deviations from the ideal market.'' Sultan
Qaboos University Medical Journal vol. 11, 3 (2011): 328-37.
Available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3210041/.
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Another commenter stated that the release of negotiated rates would
inappropriately result in the steering of consumers to particular
providers based on contractual prices. The commenter stated that
informed decision-making is not solely based on price, but is multi-
factorial, involving looking at a provider's clinical expertise,
ability to coordinate care, quality, effectiveness of utilization
management, and guidance from a referring physician. The Departments
agree that informed decision-making is not solely based upon price. The
final rules are only one part of the solution to address issues
contributing to the lack of competition in the health care market and
resulting increases in health care costs. While the Departments address
the problem of price transparency through this rulemaking, other
government and industry stakeholders are working to address other
issues highlighted by commenters, such as the availability of reliable
quality data.
The Departments, in shaping the proposed and final rules,
considered that there is quality data available to individual consumers
and other consumers of health care like employers and government
programs. Various government and industry stakeholders sponsor programs
that aim to provide reliable health care quality information to health
care purchasers. For instance, HHS engages in continual efforts to
develop quality measures that are meaningful and accurately reflect
hospital quality. CMS's Hospital Inpatient Quality Reporting Program
collects quality data from certain hospitals with the goal of driving
quality improvement through measurement and transparency.\141\ CMS
publicly displays this quality data to help consumers make more
informed decisions about their health care.\142\ HHS's Agency for
Healthcare Research and Quality (AHRQ) publishes comparative
information on health plans that include reports sponsored by Federal
and state agencies, private organizations, and purchasing
coalitions.\143\ The Departments appreciate comments received through
the RFI in the proposed rule and are also evaluating future actions to
help ensure quality information is more readily available.
---------------------------------------------------------------------------
\141\ See CMS Hospital inpatient Quality Reporting Program web
page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/HospitalRHQDAPU, last
accessed Sep. 21, 2020.
\142\ CMS Hospital Compare website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/HospitalRHQDAPU, last accessed Sept. 21, 2020.
\143\ AHRQ Comparative Reports on Health Plans, https://www.ahrq.gov/talkingquality/resources/comparative-reports/health-plans.html, last accessed Sept. 21, 2020.
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The Departments are also of the view that it is worth noting that
private sector entities have been working to provide useful quality
information to consumers.\144\ For example, the National Quality Forum
(NQF) is a private standard-setting organization focused on the
evaluation and endorsement of standardized performance measurements
that makes available on its website all NQF work products, reports, and
quality measures.\145\ As another example, the Joint Commission is a
not-for-profit organization that develops and applies standards that
focus on patient safety and quality of care.\146\ Finally, the National
Committee for Quality Assurance (NCQA) measures and accredits health
plans as well as the quality of medical providers and practices. For
example, more than 191 million people are enrolled in health plans that
report quality results using NCQA's Healthcare Effectiveness Data and
Information Set (HEDIS),\147\ which includes more than 90 measures
across six ``domains of care,'' including effectiveness of care,
access/availability of care, and experience of care.\148\
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\144\ See, for example, Ranard, B.L., Werner, R.M.,
Antanavicius, T., Schwartz, H.A., Smith, R.J., Meisel, Z.F., Asch,
D.A., Ungar, L.H., & Merchant, R.M. (2016). ``Yelp Reviews Of
Hospital Care Can Supplement And Inform Traditional Surveys Of The
Patient Experience Of Care. Health Affairs'' (Project Hope), 35(4),
697-705. Available at: https://doi.org/10.1377/hlthaff.2015.1030
(``Online consumer-review platforms such as Yelp can supplement
information provided by more traditional patient experience surveys
and contribute to our understanding and assessment of hospital
quality.'').
\145\ See the National Quality Forum website, https://www.qualityforum.org/how_we_do_it.aspx, last accessed Oct. 8, 2020.
\146\ See The Joint Commission website, https://www.jointcommission.org/about-us/facts-about-the-joint-commission/joint-commission-faqs/, last accessed Oct. 8, 2020.
\147\ See NCQA website, https://www.ncqa.org/hedis/, last
accessed Oct. 8, 2020.
\148\ Id.
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Once pricing data is available through the final rules, existing
quality data can be considered with pricing data to produce a more
complete and accurate picture of total value. The same third-party
developers who will have access to the information published pursuant
to these final rules could develop platforms capable of presenting
available quality data alongside pricing information. The Departments,
therefore, anticipate that making health care prices transparent may
spur consumers to seek and consider available quality and price
information to determine whether a particular item or service is worth
a higher or lower price. There is evidence from retail sector studies
showing that consumers want high-quality, low-priced goods and will
seek the lower price among
[[Page 72214]]
products of the same quality.\149\ Given the high cost of health care,
the Departments are of the view that the same trend toward seeking
lower prices will more likely than not hold true in the health care
market when prices become transparent.\150\
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\149\ Shirai, M. ``Impact of `High Quality, Low Price' Appeal on
Consumer Evaluations.'' Journal of Promotion Management. December
2015. Available at https://www.tandfonline.com/doi/full/10.1080/10496491.2015.1088922.
\150\ Recent research evaluating the impact of New Hampshire's
price transparency efforts shows that providing insured patients
with information about prices can have an impact on the out-of-
pocket costs consumers pay for medical imaging procedures, not only
by helping users of New Hampshire's website choose lower cost
options, but also by leading to lower prices that benefited all
patients, including consumers in New Hampshire that did not use the
website. See Brown, Z.Y. ``Equilibrium Effects of Health Care Price
Information.'' The Review of Economics and Statistics. Volume. 101.
No. 4. Available at: https://www.mitpressjournals.org/doi/full/10.1162/rest_a_00765; see also Brown, Z.Y. ``An Empirical Model of
Price Transparency and Markups in Health Care.'' August 2019.
Available at: https://www-personal.umich.edu/~zachb/
zbrown_empirical_model_price_transparency.pdf.
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The Departments received many comments stating that publishing
negotiated rates is unlikely to meet the Departments' goal of helping
consumers understand their health coverage and reasonably predict their
out-of-pocket costs. Many of these commenters stated that negotiated
rates information would not provide consumers with meaningful,
actionable pricing information, and could possibly make purchasing
decisions more confusing and difficult for consumers. One commenter
noted that the public disclosure of negotiated rate information could
distract from relevant participant, beneficiary, or enrollee-specific
cost-sharing information such as accumulated amounts. One commenter
stated that confusing and unhelpful pricing information would erode
consumer trust and present long-term challenges for the health care
system.
The Departments disagree that public knowledge of the price of
health care items and services will increase individual consumers'
confusion regarding health coverage or distract them from other
information relevant to their out-of-pocket costs, such as the status
of their accumulated amounts and note that commenters who raised this
point cited no empirical or anecdotal evidence supporting these
concerns. On the contrary, as explained throughout this preamble, the
Departments are of the view that standard economic theory, experience
from several states, and evidence from other markets demonstrate that
increased transparency leads to better-informed purchasing decisions,
generally lower prices, and quality improvements. Moreover, the
Departments expect that third-party developers will compete to make
pricing information available to the public in formats that are user-
friendly, so disclosure of detailed pricing information is unlikely to
lead to significant consumer confusion.
As noted earlier in this preamble, the Departments expect the
public disclosure of pricing information related to health care items
and services to help both uninsured and insured individuals in their
health care and health coverage purchasing decisions. Furthermore,
research suggests that having access to pricing information can
increase consumers overall satisfaction and provide opportunities for
education and engagement on health care pricing.\151\ For instance,
when the Children's Hospital of Philadelphia incorporated a Patient
Cost Estimate Department, they found that cost estimates resulted in
``fewer billing-related complaints, decreased revenue losses, and
increased overall patient satisfaction.'' \152\ A targeted study in the
American Surgeon journal found five out of six medical centers that
adopted price transparency reported increases in patient satisfaction
and patient engagement after price transparency.\153\
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\151\ Revere, F.L., et al. ``A consumer-based evaluation of
Healthcare Price and Quality Transparency.'' Journal of Health Care
Finance. Summer 2016. Available at: https://www.healthfinancejournal.com/index.php/johcf/article/download/72/74.
\152\ Otero, H., et al. ``The Cost-Estimation Department: A Step
Toward Cost Transparency in Radiation.'' Journal of the American
College of Radiology. Vol 16. Issue 2. February 2019. Available at:
https://doi.org/10.1016/j.jacr.2018.07.033.
\153\ Mehta, A., et al. ``The Impact of Price Transparency for
Surgical Services.'' The American Surgeon. April 2018. Available at:
https://pubmed.ncbi.nlm.nih.gov/29712614/.
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One commenter stated that public disclosure of pricing information
through the machine-readable files is unlikely to benefit uninsured
consumers, in particular, as it will be difficult for them to make the
necessary comparisons or negotiate with providers as providers are not
incentivized to negotiate with uninsured consumers. Another commenter
stated that the machine-readable files would not be very helpful for
current beneficiaries, participants, or enrollees, but acknowledged
they could benefit uninsured individuals and enrollees considering
alternative coverage.
By contrast, other commenters, including many individual
commenters, stated that access to negotiated rate information would
empower both insured and uninsured consumers by helping to correct the
lack of consumer choice and information and help support efforts by
other market actors. In particular, one commenter stated that consumers
would likely use the pricing information, especially if their cost-
sharing liability is in the form of coinsurance that is tied to the
negotiated rates. One commenter stated that release of information on
negotiated rates would help consumers by spurring innovation by third-
party application developers to create tools to help consumers and
payers, especially self-insured group health plans. Finally, one
commenter did not support the requirements for public disclosure of in-
network provider rates but did acknowledge that public disclosure of
de-identified aggregated data for both in-network and out-of-network
providers could empower consumer decision-making.
The Departments agree that transparency would help provide more
consumer information and support consumer choice for both insured and
uninsured consumers. The Departments continue to be of the view that
market actors, including IT developers, researchers, industry experts,
and plans and issuers would be incentivized to innovate in the price
transparency and health care consumerism space once access to the
pricing information required to be disclosed through the final rules
becomes available. In the proposed rule, the Departments emphasized
that individual consumers need easy to use tools and resources to help
them better understand their current health care coverage, health
coverage they consider purchasing, and their out-of-pocket exposure
under those plans. Health care stakeholders and other industry
participants, including web and mobile application developers, are
already attempting to meet this need, despite the incomplete pricing
information available to them. Given actionable data that can improve
such tools and resources, industry actors will likely be incentivized
to design innovations to deliver the help and information consumers
need to make informed health care decisions based, at least in part, on
the important factor of price. The final rules will support current and
future efforts to help guide consumers to the lowest cost items and
services that meet their specific needs and qualifications. To spur
this innovation, the pricing information must allow for meaningful
evaluation of different options for delivering health care items or
services, coverage options, and provider options. One of the main
avenues through which
[[Page 72215]]
the Departments assumed this innovation would materialize is through IT
developers who could be incentivized to design and make available
internet-based tools and mobile applications that could guide consumers
in accessing available price information; as well as researchers who
would have the ability to analyze health care pricing at local and
national levels and provide the public with their findings. Industry
experts and plans and issuers would also have the ability to use
pricing information to develop innovative plan benefit designs that
could result increased competition and cost savings. Based on comments
received from interested IT developers and other innovators, the
Departments continue to believe many innovators are interested in
utilizing this pricing information, once available, to spur innovation
in the health care space, as intended. The Departments expect internet-
based tools and mobile applications will increase the likelihood that
both insured and uninsured consumers will be able to use the
information to make informed health care purchasing decisions. And, as
stated by a commenter, the information required to be made public
through the proposed rules would help reduce wasteful spending because
it would support efforts by employers, state regulators, and other
purchases of health care to evaluate prices and identify unwarranted
spending variation. Therefore, the Departments did not intend or expect
that behavioral changes emanating from public disclosure of this
information will be limited to consumers but will benefit a variety of
stakeholders.
The goals the Departments seek to achieve through these
requirements for public disclosure are not mutually exclusive. The
Departments expressed a desire to bring about an outcome where
innovators, including researchers, would enter or expand in the health
care purchasing space to develop tools, applications, and public
information that would support consumer decision-making. Thus, the
Departments disagree with commenters who argued that public disclosure
of negotiated rates would not support consumer decision-making.
The Departments disagree with commenters who suggested that pricing
information presented through the public disclosures would be confusing
and misleading to consumers and could erode consumer trust and present
long-term challenges for the health care system. Based on the review of
the over 25,000 comments received on the proposed rules, the vast
majority of which were submitted by individuals, consumer trust in the
health care system is already quite low, due in substantial part to the
opacity of health care pricing.\154\ In one study of a nationally
representative sample, researchers found that participants often
believed that providers and issuers set prices that do not reflect
either the quality or the cost of goods and services, contributing to
the study's conclusion that most Americans do not perceive the price
and quality of health care to be associated. Study participants
described prices as both too high and irrational, noting that prices
varied within their regions for unknown reasons.\155\ The Departments'
transparency efforts are meant to increase transparency of health care
pricing information. The Departments do not agree that this information
would further frustrate consumers compared to the status quo, even if
it is difficult to navigate for the average consumer without the use of
internet-based tools or applications.
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\154\ See, for example, Phillips, K.A., Schleifer, D., and
Hagelskamp, C. ``Most Americans Do Not Believe That There Is An
Association Between Health Care Prices And Quality Of Care.'' Health
Affairs. 2016. Available at https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2015.1334.
\155\ Id.
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One commenter stated that disclosure of negotiated rates could harm
the ability of health issuers to reward high performing providers with
higher reimbursements. Additionally, some commenters noted that focus
on price could particularly harm small health plans and TPAs who may
have been able to negotiate discounted rates by offering health plans
in a limited service area.
The Departments understand that requiring release of this pricing
information may impact commercial arrangements and result in certain
one-time and ongoing administrative costs, which could
disproportionately affect small group plans, TPAs, and issuers offering
coverage in the small group market. However, the Departments view
making this information available to consumers and the public as
beneficial to the public's long-term interests in facilitating a
consumer-oriented, information-driven, and more competitive market. In
addition, as discussed below, the Departments are establishing several
special rules for streamlining the provision of public disclosures
required through the final rules. These special rules will help
mitigate the concerns of small group plans and issuers by allowing them
to leverage a contractual relationship through an issuer or
clearinghouse to satisfy the public disclosure requirements of the
final rules.
Several commenters submitted feedback on how disclosures in the
proposed rules could affect contractual arrangements. One commenter
expressed the view that the requirement to release negotiated rates
threatens contracts negotiated between two private entities. Several
commenters submitted comments related to gag clauses or non-disclosure
agreements contained in provider contracts as well as other contract
terms that are often included in contracts between providers and payers
(such as anti-steering and anti-tiering provisions) that may limit the
ability of third parties to use the data. Gag clauses, which also may
be referred to as non-disclosure agreements, are terms that are often
included in provider-payer contracts, which prohibit one or both
parties from making public the negotiated rates therein.\156\ Anti-
steering and anti-tiering provisions are terms that may be included in
provider-payer contracts (usually between issuers and hospital
systems), which prohibit the plan or issuer from directing
participants, beneficiaries, or enrollees toward higher-quality or
lower-cost providers, and require that all providers associated with
the contracting provider (for example, for a hospital system this could
include hospitals, other affiliated facilities, and physicians) to be
placed in the most favorable tier of providers.\157\
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\156\ ``Provider Contracts.'' The Source on Healthcare & Price
Competition, UC Hastings College of Law. Available at: https://sourceonhealthcare.org/provider-contracts/.
\157\ Id.
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One commenter stated that if the Departments do not fully address
the implications of non-disclosure agreements in provider and payer
contracts, legal complications could arise from payers attempting to
meet the requirements to disclose negotiated rates and violating these
agreements in the process. Another commenter strongly supported
revisions to the proposed rules to address the barriers associated with
gag clauses. To address this issue, another commenter recommended the
Departments provide that the final rules supersede any provider
contract gag clause to the extent the final rules conflict with current
or future contractual language.
The Departments understand that this requirement may require
alterations to some existing contracts. For example, payers and
providers may need to remove contract terms that conflict with the
requirement to disclose negotiated
[[Page 72216]]
rates such as gag clauses or non-disclosure agreements.\158\ It is not
uncommon for new or modified regulatory requirements or new statutory
provisions to alter private contractual arrangements such as those
between a health insurance payer and health care provider. Because
changes in law or statute that may need to be reflected in payer-
provider contracts is not uncommon, the Departments expect that
providers and payers have processes in place address to these
requirements of the final rules. Often, the possibility that that new
or modified regulatory requirements or new statutory provisions could
alter such contracts is contemplated by the contracts themselves; for
example, drafters may include contract language that indicates terms
may be altered by changes in law or regulation. Such language would
obviate the need for updates outsides of the regular contracting
schedule.
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\158\ The Departments note that gag clauses that would prohibit
a pharmacy from informing a participant, beneficiary, or enrollee of
any differential between that individual's out-of-pocket cost under
the coverage option offered by his or her plan or issuer regarding
acquisition of the drug and the amount that individual would pay
without using any health plan or health coverage are already
prohibited. See Sec. 2729 of the PHS Act.
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As a general matter, the onus for ensuring a contract provision
does not violate applicable law rests with the parties to the contract.
Nothing in the final rules prevents providers and payers from
implementing contract revisions to ensure terms are not in conflict
with the requirements of the final rules. Because the Departments are
of the view that prescription or prohibition of specific contract terms
or language in payer-provider contracting is not necessary, the
Departments leave it to plans, issuers, and providers to avoid contract
terms that would prohibit or frustrate either party's compliance with
the final rules.
Many commenters who did not support the requirements for public
disclosure of in-network provider rates and out-of-network allowed
amounts requested that the Departments withdraw the proposed rules or
otherwise work with stakeholders to develop policy solutions that meet
consumer needs with less burden and guard against potential unintended
consequences. Some commenters suggested the Departments collect more
data about the potential impacts of public disclosure of negotiated
rates to ensure the policy is modified, if needed, to protect against
the risk of unintended consequences, noted earlier. One commenter
suggested the Departments pilot the requirement for public disclosure
of negotiated rates. Another commenter recommended the Departments
pilot the release of negotiated rates in a state where there are a few
small carriers to gain a clearer understanding of potential
consequences of the public disclosure requirements. Another commenter
recommended the Departments pilot full price transparency in several
markets and conduct longitudinal studies on the impacts.
Some commenters suggested the Departments refocus transparency
efforts to already existing solutions or different initiatives. Some
commenters recommended that the final rules require plans and issuers
to send claims data to the HCCI to ensure that health care cost data
reaches the public domain through researchers without disclosing
confidential information or distorting the market. A few commenters
suggested the Departments leverage existing data sources such as all-
payer claims databases to promote transparency goals. One commenter
stated the Administration should support congressional and states'
efforts to pursue and expand upon transparency efforts, including
through all-payer claims databases.
The Departments appreciate both private and public transparency
efforts already underway. In the development of the proposed and final
rules, the Departments sought feedback from industry and other
stakeholders. While the Departments agree that expanding data sent to
HCCI will help researchers gain a better understanding of market
dynamics, the Departments are of the view that health care pricing data
should be coupled with plan and issuer information. If the information
were to be decoupled, as through HCCI or in an all-payer claims
database, it would not provide the degree of transparency in prices
needed to effectuate the objectives the Departments seek to achieve
through the final rules. For example, pricing data, decoupled from plan
and issuer data, would not provide actionable information to consumers
that seek to evaluate health coverage options, as they would not be
able to connect pricing to specific plans.
The Departments view the disclosure requirements set forth in the
final rules as complementary to and supportive of state-level efforts.
States act as incubators for transparency efforts. Nothing in the final
rules precludes states from continuing to establish and run state-level
transparency efforts. Indeed, the Departments intend for state
regulators to be able to use the disclosures required to be made public
through the machine-readable files to support their oversight of health
insurance markets, including supporting their own state-level
transparency efforts such as all-payer claims databases. However, the
Departments are also aware that there are limits to the pricing
information that states can obtain through state-level transparency
efforts. For instance, states are not able to obtain pricing
information from self-insured group health plans; the final rules will
help states obtain this information.
The Departments further maintain that the final rules are
significantly more likely to achieve positive results for consumers and
health care markets than they are likely to result in the potential
negative consequences outlined by certain commenters. The Departments
are of the view that traditional market forces that affect prices in
any market, including competition between providers; the threat of new
market entrants that offer quality, lower cost services; and the
increased bargaining power of consumers will be supported by the final
rules. The Departments also are of the view that providers who choose
to arbitrarily or unreasonably increase their prices based on publicly-
available negotiated rate data are more likely to damage their own
competitive positions and reputation than they are to cause widespread
health care cost increases in their particular markets. For these
reasons, the Departments remain confident that the final rules'
requirements for disclosure of negotiated rate information will benefit
health care consumers by giving them information necessary to
effectively shop for and choose the health care coverage and providers
that fit their needs and budgets. As consumers make more informed
choices, based on available price data, market forces will have a
chance to operate and potentially correct the current course of
unsustainable increases in health care costs.
In light of the Departments' commitment to health care price
transparency and the importance of addressing the distortive effects of
the absence of pricing information, the Departments are not convinced
there is a need to change the policies in the final rules to mitigate
the risk of unintended consequences or violations of law such as price
fixing and collusion among providers. As discussed elsewhere in this
preamble, research, academic literature, and the experience of various
state efforts have provided support for the Departments' conclusion
that the public availability of in-network rate
[[Page 72217]]
information is substantially more likely than not to lead to more
informed health care choices, increased competition, and lower prices.
The Departments note that price transparency is not a novel
concept, even in health care pricing. Several states, including New
Hampshire and Maine, have implemented state-level price transparency
efforts. While the Departments acknowledge that these state efforts
differ in material ways from the disclosure requirements of the final
rules, the same underlying principle of price transparency that
undergirds state efforts also undergirds the final rules. These state
efforts provide evidence that transparency at a more localized
geographic level does not result in the extreme unintended consequences
postulated by some commenters. The Departments acknowledge that other
national health policy initiatives are sometimes tested through pilots;
however, the Departments are of the view that such an approach is not
necessary for price transparency, in part, because there is already
evidence through state initiatives that price transparency is
achievable.
The proposed and final rules reflect the Departments' conclusion
that an expansive implementation of these requirements will be the most
effective manner in which to reasonably ensure that the impact will be
spread across all markets, rather than isolated to particular
geographic areas, markets, or groups of consumers. The goal of the
final rules is to expand access to price transparency information among
the public, which will not be realized without an expansive
implementation. The Departments are concerned that if pricing
information for group health plans and insurance in the individual and
group markets is not made available to the public or is made public in
a piecemeal fashion, there will be little incentive for health care
researchers, third-party application developers, or other industry
actors to invest scarce resources into a tool that will only offer
regional or otherwise limited pricing data. Other stakeholders, such as
researchers and regulators, would also find incomplete pricing
information less useful to their efforts to better understand, better
oversee, and develop innovations in the health care markets. Finally,
the Departments are concerned that limiting the implementation of this
rule, by scope or by geographic market area, will limit the impact for
the millions of consumers (both individuals and employers) who are
expected to benefit from the public disclosures required through the
final rules. Consumers located in a geographic market where data would
not be made available under a more limited requirement would not
experience any benefit from the availability of actionable pricing
information in other markets. Even those consumers located in
geographic markets where pricing information would be made available
under a more limited requirement would likely experience more limited
benefits than with a market-wide requirement to release pricing
information because these consumers would likely not have access to
tools developed by third-party application developers. These consumers
would also be less likely to experience downstream benefits from
contributions expected from other stakeholders, such as researchers and
regulators.
In addition to establishing a preference for establishing market-
wide rules, in the preamble to the proposed rules, the Departments
explained the importance of timely action to increase
transparency.\159\ The Departments observed that continuously rising
health care costs and increases in out-of-pocket liability, without
transparent, meaningful information about health care pricing, have
left consumers poorly equipped to make cost-conscious decisions when
purchasing health care items and services. In addition, consumers
across all markets should come to expect and receive the same access to
standardized pricing information and estimates. This broader
applicability also has the greatest potential to reform health care
markets. The Departments recognized the need for a faster and nimbler
approach to addressing the pressing issue of rising health care prices.
For these reasons, the Departments are of the view that a pilot
approach in a specific geographic area or an otherwise phased-in
approach for the requirement to publicly disclose negotiated rates
through the machine-readable files would not be sufficient to meet the
requirement for transparency in coverage.
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\159\ 84 FR 65464, 65465 (Nov. 27, 2019).
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Because the Departments have determined a need for an expansive
implementation of transparency in coverage requirements, and for the
reasons discussed at length in response to public comments, the final
rules adopt the requirement to publicly disclose negotiated rates for
all group health plans and individual and group market issuers,
regardless of geographic market.
Scope of Pricing Information To Be Made Publicly Available
Several commenters explicitly supported public disclosure of
negotiated rates and out-of-network allowed amounts for all items and
services. However, other commenters recommended the Departments limit
the items and services to only the most common items and services or a
narrow set of shoppable services in order to make the machine-readable
files more meaningful to consumers. Another commenter did not support
the negotiated rate disclosure proposals, but acknowledged that
disclosure of rates for a subset of shoppable services would be
manageable, could allow issuers to account for innovative payment
arrangements, and could be used to gather empirical evidence on the
impact of transparency on the health care markets.
The Departments understand that requiring plans and issuers to
include all items and services in the machine-readable files could
produce large data sets that could be cumbersome and may be costlier to
maintain than a more limited file of shoppable services. However, the
Departments are of the view that release of this information for all
items and services, as proposed, is crucial for advancing the key
objectives of the final rules to spur innovation, increase competition,
and empower consumer activities in the health insurance markets. The
Departments are of the view that limiting the data in the machine-
readable files would undermine efforts to achieve these objectives. In
particular, the Departments are concerned that if the requirement were
to be modified to apply to only a shoppable subset of items and
services, then third-party application developers may not be as
interested in innovating in this area.
Furthermore, the Departments are of the view that efficiencies will
be gained after initial development of these files. Although the
initial implementation burden for some plans and issuers may be
sizeable, future releases of data could be automated, greatly reducing
the burden in subsequent years.
One commenter stated the type of data being required to be
disclosed is prohibited from disclosure by CMS for laboratory services
under section 1834A of the SSA, which requires CMS to keep confidential
payer rates reported by applicable laboratories. The commenter stated
section 1834A of the SSA should also apply to disclosure of similar
information by health plans.
Section 1834A of the SSA is applicable to reporting of private
sector
[[Page 72218]]
payment rates for the limited purpose of establishing Medicare
reimbursement rates for laboratory services. Section 1834A protects the
confidentiality of information disclosed to HHS by a laboratory and
prohibits the Secretary of HHS or a Medicare contractor from disclosing
the information in a manner that identifies the particular payer or
laboratory, identifies the prices charged, or identifies the payments
made to any such laboratory notwithstanding any other provision of law.
The confidentiality protections of the data required to be disclosed to
HHS under section 1834A protects laboratories and payers from re-
disclosure by HHS and Medicare contracts. These protections are not
applicable to the public disclosures required under the final rules.
First, the final rules require plans and issuers to publicly disclose
in-network providers' negotiated rates and out-of-network providers'
allowed amounts for all covered items and services. These disclosures
must be made through machine-readable files posted in a public location
on a plan or issuer's website. HHS or contractors of HHS will have no
active role in publicizing the information required to be public
through the final rules. Second, the confidentiality requirements in
section 1834A are applicable ``notwithstanding any other provision of
law.'' The public disclosure requirements in the final rules are being
finalized through an exercise of specific authority under section
1311(e)(3)(A)(vii) and (ix) of PPACA (as applied to plans and issuers
in the individual and group markets through section 2715A of the PHS
Act). Even if the public disclosures were to be subject to section
1834A of the SSA, the confidentiality provision of section 1834A would
not be applicable because the public disclosure requirements
established under the final rules are required by an exercise of
authority under a separate provision of law. For these reasons, and
because laboratory services fall within the scope of all covered items
and services, the final rules clarify that disclosure by plans and
issuers of pricing information for laboratory services is required
under the final rules.
As discussed earlier in this preamble, the Departments are
modifying the proposed requirements relating to inclusion of all items
and services in the internet-based self-service tool. For the internet-
based self-service tool, 26 CFR 54.9815-2715A2, 29 CFR 2590.715-2715A2,
and 45 CFR 147.211 adopt a phased-in approach under which plans and
issuers are required to include only include a subset of items and
services during the initial year of implementation. However, plans and
issuers will still eventually be required to include all covered items
and services in their internet-based self-service tools in order to
meet the requirements of the final rules. The Departments are of the
view that a similar phased-in approach for the machine-readable files
is not necessary and would not support the achievement of the goals of
the final rules.
For these reasons, the final rules adopt, as proposed, the
requirement to include all covered items and services, including
prescription drugs, in the public disclosures required to be made
through the machine-readable files.
One commenter made the point that in order to provide meaningful
transparency to consumers, as well as to address the issues of
inconsistent pricing among hospitals in particular, the Departments
should require public disclosure of data related to pricing in addition
to the negotiated rate. The commenter stated the data elements should
include the following: Number of procedures performed by the provider
in the reported period, number of bed days, total billed charges in the
reporting period, total amount received/paid for services in the
reporting period, mean billed charged amount, mean accepted amount,
median billed charged amount, mean accepted amount, median billed
charged amount, median accepted payment, minimum billed charged amount,
maximum billed charged amount, minimum accepted payment, and maximum
accepted payment.
A goal of the final rules is to provide transparency for all
covered health care items and services. To this end, the final rules'
public disclosures are tailored to require only certain critical
pricing information that the Departments view as most likely to achieve
this goal, while minimizing the burdens for plans and issuers of
producing and maintaining the information. Requiring additional data
elements, such as those listed by the commenter, would introduce an
increased level of complexity to the machine-readable files and
increase the burden of making the public disclosures.
Additionally, the Departments are of the view that it would be
unnecessarily burdensome to isolate hospital pricing information for
additional disclosure when hospitals already have separate price
transparency disclosure obligations. As discussed elsewhere in this
preamble, the Hospital Price Transparency final rule requires hospitals
to make public their standard charges for items or services they
provide.\160\ The Hospital Price Transparency final rule requires
disclosure of five types of standard charges:
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\160\ 84 FR 65524 (Nov. 27, 2019).
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The gross charge (the charge for an individual item or
service that is reflected on a hospital's chargemaster absent any
discounts);
the discounted cash price (the charge that applies to an
individual who pays cash, or cash equivalent, for a hospital item or
service);
the payer-specific negotiated charge (the charge that a
hospital has negotiated with a third-party payer for an item or
service);
the de-identified minimum negotiated charge (the lowest
charge that a hospital has negotiated with all third-party payers for
an item or service); and
the de-identified maximum negotiated charge (the highest
charge that a hospital has negotiated with all third-party payers for
an item or service).
The Departments are of the view that the public disclosure
requirements for hospitals under the Hospital Price Transparency final
rule, in combination with the public disclosure requirements of the
final rules, will address the concern raised by one commenter regarding
inconsistent pricing among hospitals. The disclosure required for
hospitals under the Hospital Price Transparency final rule will help
provide local and more specific pricing information through the
availability of information on five types of standard charges, but the
information will only be made publicly available for the items and
services that hospitals provide. The final rules supplement this
information by providing information related to negotiated rates or
derived amounts and allowed amounts for all covered items and services.
Thus, the final rules will provide a window into pricing for all items
and services, while the Hospital Price Transparency final rule requires
disclosure of more specific pricing information for the items and
services provided by hospitals. Finally, the final rules also
supplement the Hospital Price Transparency final rule because the final
rules make the information for all contracted network hospitals
available from one plan or issuer in a single, centralized file.
Therefore, the final rules permit consumers--especially when using
third-party web-based tools--to more readily compare hospital rates
within and across plans and issuers.
Several commenters expressed concerns about participant,
beneficiary,
[[Page 72219]]
and enrollee privacy related to the proposed disclosures of negotiated
rates and allowed amounts. Some commenters expressed concerns about how
third-party developers or other downstream entities would use and
protect participant, beneficiary, and enrollee data. They noted that
even though the Departments' disclosure requirements do not include
PHI, patients could be enticed to share personal data with third-party
developers and other secondary entities who could potentially use the
information to re-identify consumers. Some commenters stated that
parties not subject to HIPAA could seek to commercialize consumers'
information. One commenter suggested the Departments look to HCCI as an
example of how de-identified data can advance the goals of
transparency, which could mitigate concerns about proprietary
information while maintaining meaningful, granular information that
illuminates price variation in the health care system.
One commenter stated that the Departments should consider the
proposed rules in the context of other HHS rules related to the
interoperability of data and delay the implementation of all such rules
until HHS develops consumer privacy and protection requirements for
third-party applications developed by non-HIPAA-covered entities.
Another commenter recommended that, if the rules are finalized without
additional privacy protections, the Departments should conduct an
educational campaign to inform consumers of the consequences of
providing information to third-party application developers. A
commenter also expressed national security concerns regarding the
machine-readable files, noting that the health status of Americans is a
valuable commodity for foreign intelligence services.
The Departments acknowledge commenters' concerns about third-party
application developers and other entities gaining access to personally
identifiable information (PII) and PHI through consumer use of online
applications. The Departments further acknowledge comments that
consumers may not always fully understand how their information,
including sensitive medical information, will be used or stored by such
third parties. However, the Departments also acknowledge that consumers
have a right to access, use, and share their own health information,
both generally and under HIPAA. The Departments are also of the view
that there is ample evidence that consumers require help to understand
their health coverage, their out-of-pocket costs for health care items
and services, and how their health care choices affect the overall
costs of their health coverage and health care items and services.\161\
The final rules will allow access to data, supplementary resources, and
other assistance consumers need to make informed choices by fostering
innovation and offering access to tools that consumers may use to make
informed health care choices.
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\161\ Arora, V., Moriates, C., and Shah, N. ``The Challenge of
Understanding Health Care Costs and Charges.'' The American Medical
Association Journal of Ethics. November 2015. Available at: https://journalofethics.ama-assn.org/article/challenge-understanding-health-care-costs-and-charges/2015-11.
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The Departments likewise considered evidence of significant
consumer reliance on the internet for all kinds of information, but
especially for health information. In a study conducted by the Pew
internet & American Life Project and published in July 2003,
researchers found that 80 percent of internet users, or about 93
million Americans, have searched for a health-related topic online, a
62 percent increase since 2001.\162\ Popular search topics included
health insurance (25 percent); a particular doctor or hospital (21
percent); and alternative treatments (28 percent).\163\ By 2013, the
number of Americans searching for health information online had nearly
doubled from 2003, to about 182 million people.\164\ A 2018 study found
a significant correlation between the use of online resources to obtain
health information and the decisions consumers take concerning health
care services.\165\
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\162\ ``Health Searches and email Have Become More Commonplace,
But There is Room for Improvement in Searches and overall internet
access.'' internet Health Resources. Pew Research Center. July 16,
2003. Available at: https://www.pewresearch.org/internet/2003/07/16/internet-health-resources/.
\163\ Id.
\164\ Fox, S., and Duggan, M. ``Health Online 2013.'' Pew
Research Center. January 15, 2013. Available at: https://www.pewresearch.org/internet/2013/01/15/health-online-2013/.
\165\ Chen, Y. et al. ``Health Information Obtained From the
internet and Changes in Medical Decision Making: Questionnaire
Development and Cross-Sectional Survey.'' Journal of Medical
internet Research. Volume 20. No. 2. February 2017. Available at:
https://www.jmir.org/2018/2/e47/pdf.
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The Departments are of the view that many American consumers have
some experience with dealing with the disclosure of sensitive health
information on the internet \166\ and that consumer reliance on the
internet for health care information will only increase despite
inherent privacy risks. The Departments considered that websites and
internet applications that collect consumer information provide
information through privacy policies and terms of service that are
available to users of how their information may be used and shared.
Federal laws and enforcement mechanisms are in place to help protect
consumers from unfair and deceptive practices, including deceptive data
collection and the sale of data collected without adequate consumer
notice.\167\ Given existing measures to protect consumer privacy on the
internet, the Departments are of the view that common internet privacy
risks should not operate to deprive consumers of the information,
tools, and support they need to make informed choices related to health
care coverage, providers, items, and services.
---------------------------------------------------------------------------
\166\ Zhu, P., Shen, J., and Xu, M. ``Patients' Willingness to
Share Information in Online Patient Communities'' Questionnaire
Study.'' Journal of Medical internet Research. Volume 22. No. 4.
April 2020. Available at: https://pubmed.ncbi.nlm.nih.gov/32234698/.
\167\ ``Privacy & Data Security Update: 2019.'' United States
Federal Trade Commission. Available online at: https://www.ftc.gov/system/files/documents/reports/privacy-data-security-update-2019/2019-privacy-data-security-report-508.pdf; see also ``Privacy and
Security Enforcement.'' United States Federal Trade Commission.
Available at: https://www.ftc.gov/news-events/media-resources/protecting-consumer-privacy/privacy-security-enforcement (``the FTC
can and does take law enforcement action to make sure that companies
live up to [the] promises'' regarding how consumer information will
be safeguarded); see also Complaint in United States v. Facebook,
Case No. 19-cv-2184, U.S. District Court for the District of
Columbia. Available at: https://www.ftc.gov/system/files/documents/cases/182_3109_facebook_complaint_filed_7-24-19.pdf (FTC complaint
leading to a historic $5 billion fine for, among other things,
deceptive practices in violation of section 5(a) of the FTC Act
where the social media company failed to effectively disclose that
consumer information would also be used for advertising). The
referenced fine can be found at: https://www.ftc.gov/news-events/press-releases/2019/07/ftc-imposes-5-billion-penalty-sweeping-new-privacy-restrictions, last accessed Sep. 11, 2020 (press release
announcing fine).
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Even though the Departments are not persuaded that privacy risks
common to the use of internet applications outweigh the benefits of the
disclosures under these the final rules or the general need for price
transparency, ensuring the privacy and security of consumer PII and PHI
is a top priority for the Departments. The Departments will work with
plans and issuers to provide information they can use to educate
participants, beneficiaries, and enrollees about sharing their health
information with third party applications. This will include
information on about the roles of Federal agencies such as the Office
for Civil Rights (OCR), the FTC, and ONC, which already focus on
ensuring that consumer privacy rights and interests are appropriately
protected. The Departments will encourage plans
[[Page 72220]]
and issuers to share this information with their participants,
beneficiaries, and enrollees who might elect to share health
information with third-party applications.
In finalizing the rules, the Departments considered the large
number of consumers who have decided to share personal information
because they have determined that the benefits offered by an internet
website or mobile application outweigh potential risks to their
privacy. The Departments are of the view that consumers will be able to
make similar determinations with regard to applications that make use
of data to be disclosed through the machine-readable files required by
the final rules.
As discussed earlier in the preamble to the final rules, the
Departments also are not persuaded by the argument that the disclosures
required under the final rules, or disclosures consumers may make to
applications that leverage the data required, could introduce national
security concerns. First, the information the Departments are requiring
to be disclosed through the machine-readable files does not include PHI
or PII. Additionally, as discussed in more detail later in this
preamble, in an effort to ensure that the disclosures balance price
transparency with the need to protect privacy, the Departments have
modified the proposed rules to increase the minimum disclosure
threshold from 10 to 20 unique payment amounts, where any historical
payment amounts connected to less than 20 claims for payment would be
omitted from the machine-readable file containing out-of-network
allowed amounts and historical billed charges (the Allowed Amount
File). The increase will further limit the possibility that individual
participants, beneficiaries, and enrollees may be identified through
historical allowed amount data. Second, the information a consumer
could share with applications incorporating data required to be
disclosed through the final rules is not significantly different from
data consumers already actively share through similar applications.
Therefore, the Departments are not convinced there are unique national
security concerns flowing from the disclosures required by the final
rules.
One commenter was concerned about allowing third parties to use
plan and issuer information to provide cost and pricing information to
consumers without those third parties being obligated to provide
accurate and relevant information to consumers. The accuracy of third-
party internet-based tools and applications will be important to
achieving the goals of transparency in coverage. However, the cost and
pricing information included in third-party internet-based tools, and
tools developed by other secondary entities, would only be as accurate
as the public disclosures made by plans and issuers. Therefore, the
Departments are of the view that it is in the best interest of plans
and issuers to ensure data accuracy through a robust quality assurance
process if they have concerns about the accuracy of cost and pricing
information being provided to consumers through third-party internet-
based tools. Furthermore, nothing in the final rules prohibits plans
and issuers from including comprehensive data dictionaries and other
supplementary documentation along with the machine-readable files.
Plans and issuers are also free to provide plan-specific disclaimers or
clarifications regarding the information they are required to produce.
Finally, the Departments expect that consumers, plans, issuers, and
other health care stakeholders will monitor third-party internet-based
tools for accuracy and will and report concerns to the developer, the
public, and appropriate state and Federal agencies, including the
Departments, for evaluation and potential action.
The Departments further expect that market forces will act to weed
out applications that do not provide reliable information. Consumers
who use a third-party application or other online tools for health care
decision support and later conclude that the tool misled or misinformed
them will, at minimum, cease use of the tool. Such consumers are also
likely to rate the application poorly or leave unfavorable reviews,
reducing the likelihood that other consumers who see the rating or
review will rely on the tool. Over time, consumers and other
stakeholders may collectively identify the most accurate and highest
quality tools, while reducing use of less accurate, unreliable tools.
The Departments also expect that third-party tools will inform users of
limitations on the accuracy of their information and will present
relevant disclaimers informing consumers that any estimates of out-of-
pocket liability are not guarantees regarding consumer liability for
services. Tool users also will have the opportunity to evaluate and
could attempt to confirm any cost estimates provided by online tools by
contacting the plan, issuer, or health care provider they ultimately
choose based on information provided by the tool. Such measures will
address the risk that consumers will be led to unreasonably rely on any
cost estimate provided by a third-party tool to their financial
detriment.
The Departments are of the view that it is in plans', issuers', and
developers' best interests to provide accurate information. However,
the Departments will monitor the accuracy of the information provided
through third-party developers and secondary entities and will take
information obtained through this monitoring into account for future
regulatory action or guidance, as appropriate.
One commenter recommended that any information made available to
the public should provide an explanation of why the cost of care is
variable among hospitals. The commenter further suggested the
explanation reference unique challenges faced by essential hospitals
that care for a larger proportion of vulnerable patients.
Being mindful of the goal to provide sufficient technical
flexibility in the formatting of the machine-readable files, the
Departments decline to require plans and issuers to include specific
supplementary information beyond reporting the data specified for the
machine-readable file formats. As noted above, nothing in the final
rules prevents a plan or issuer from providing supplementary materials,
including footnotes, disclaimers, data dictionaries, and other
explanatory language, as accompaniments with the machine-readable
files. The Departments are of the view that any additional context
around the machine-readable files that can be provided through
supplementary materials are likely to be a benefit to consumers and
others who seek to understand and use the data contained in the
machine-readable files. The Departments recommend plans and issuers
work closely with providers, consumers, developers, community leaders,
and other stakeholders to ensure that all perspectives are taken into
account when developing materials supplemental to the machine-readable
files. While declining to require plans and issuers to include a
specific explanation for why the cost of care could vary among
hospitals, the Departments acknowledge that this information is an
example of appropriate explanatory language that could accompany the
machine-readable files.
The final rules adopt, with modifications, the requirements that
plans and issuers publicly disclose applicable in-network rates
(including negotiated rates, derived amounts, and underlying fee
schedule rates), out-of-network allowed amounts for covered items and
services, including prescription drugs, through machine-
[[Page 72221]]
readable files. The final rules also adopt the requirement that plans
and issuers publicly disclose in-network historical net prices for
covered prescription drugs through a machine-readable file. In
recognition of the unique pricing attributes of prescription drugs, the
final rules require the reporting of information on prescription drugs
that would have been included in the In-network Rate File (referred to
as the Negotiated Rate File in the proposed rules) in a separate
machine-readable file, as described later in this preamble. The
Departments continue to be of the view that the release of this
information is appropriate and necessary to empower consumers to make
informed decisions about their health care, spur competition in health
care markets, and to slow or potentially reverse the rising cost of
health care items and services.
The Departments stated the intention in the proposed rules to make
available non-substantive technical implementation guidance through the
collaborative GitHub platform (an online hosting platform for
development and source code management that permits version control),
which will facilitate further technical assistance in addressing how
unique plan designs can comply with the requirements of the final
rules, as needed. The Departments received comments that supported the
Departments' development of specific technical standards for the files
to which plans and issuers must adhere. One commenter recommended the
Departments provide guidance to plan sponsors who are able to provide
some, but not all, of the file data elements. Another commenter stated
that the proposed rules do not make clear how to report items and
services provided through capitated and bundled payment arrangements in
the files; noting that this information is necessary for consumers to
measure provider value. One commenter supported the Departments'
statement that it would provide technical implementation guidance for
the files but requested a robust public comment solicitation far in
advance of the applicability date for the rules.
The Departments are of the view that providing specific technical
direction in separate technical implementation guidance, rather than in
the final rules, will better enable the Departments to update the file
technical requirements to keep pace with and respond to technological
developments. The Departments note that the technical implementation
guidance is intended to facilitate a collaborative effort between the
Departments and plans and issuers in order for plans and issuers to
meet the public disclosure requirements of the final rules, while
providing flexibility to account for unique IT systems, and issuer and
plan attributes. To the extent a plan's or issuer's unique attributes
(such as use of an alternative contracting model) are not addressed
sufficiently through the technical implementation guidance, the
Departments intend to provide targeted technical assistance to help
ensure all plans and issuers are able to meet the public disclosure
requirements under the final rules. Therefore, the Departments are
developing technical implementation guidance for plans and issuers,
which will be available on GitHub, to assist them in developing the
machine-readable files.
In the proposed rules, the Departments indicated that minimum
requirements for standardized data elements would be necessary to
ensure users would have access to accurate and useful pricing
information. Without such baseline requirements, the negotiated rate
and allowed amount data for out-of-network services made available by
each group health plan and health insurance issuer could vary
dramatically. This would further create a disincentive to health care
innovators developing tools and resources to enable consumers to
accurately and meaningfully use, understand, and compare pricing
information for covered items and services across providers, plans, and
issuers. Accordingly, under the proposed rules, a plan or issuer would
be required to publish two machine-readable files. The first file would
include information regarding rates negotiated with in-network
providers. The second file would include historical data showing
allowed amounts for covered items and services furnished by out-of-
network providers. The preamble to the proposed rules referred to these
files as the Negotiated Rate File and the Allowed Amount File,
respectively. For the final rules, the file referred to as the
Negotiated Rate File in the proposed rules has been renamed the In-
network Rate File to reflect modifications made in the final rules to
ensure the file accommodates plans and issuers operating under payment
models other than the fee-for-service (FFS) model. The final rules
adopt the requirement to produce both the In-network Rate File and
Allowed Amount File with the modifications discussed elsewhere in this
preamble. As previously discussed, the final rules also adopt the
requirement to produce an additional file, referred to in this preamble
as the Prescription Drug File through which plans and issuers are
required to publicly disclose negotiated rates and historical net
prices connected to prescription drugs.
As noted, the final rules modify the In-network Rate File
requirements to clarify the expectations for reporting negotiated rates
(or comparable derived amounts, which are explained in detail later in
this section) for plans and issuers using alternative reimbursement
models. The final rules also clarify that plans and issuers must
include an underlying fee schedule rate when one is used to determine
cost-sharing liability, where that amount differs from the negotiated
rate (or comparable derived amount) used to determine provider
reimbursement.
The final rules modify the Allowed Amount File to clarify that it
must also include information related to billed charges in addition to
allowed amounts. The final rules also finalize additional requirements
for the In-network Rate File, Allowed Amount File, and Prescription
Drug File to require plans and issuers to include a Place of Service
Code and a provider tax identification number (TIN) in addition to the
provider NPI. These modifications are discussed in more detail later in
this section of this preamble.
Specific Content Elements
In the proposed rule, the Departments indicated that the Negotiated
Rate File and the Allowed Amount File would be required to include
content elements discussed in this section of this preamble. In the
final rules, these content elements continue to apply to the In-network
Rate File and the Allowed Amount File, as well as to the Prescription
Drug File, except where otherwise indicated.
a. First Content Element: Name and Identifier for Each Coverage Option
The first content element that plans and issuers will be required
to include in the machine-readable files is the name and identifier for
each coverage option offered by a group health plan or health insurance
issuer. For the identifier, the Departments proposed that plans and
issuers use their Employer Identification Number (EIN) or Health
Insurance Oversight System (HIOS) IDs, as applicable. The Departments
sought comment on whether EINs and HIOS IDs are the appropriate
identifiers for this purpose. The Departments also sought comment on
whether there are other plan or issuer identifiers that should be
considered and adopted.
The Departments did not receive any comments on this content
element, and the final rules adopt this provision with
[[Page 72222]]
modifications to ensure clarity of the expectations for reporting. As
reflected in the updated regulatory text, the Departments are
clarifying whether an EIN or HIOS ID is applicable for this element.
Plans and issuers must include their HIOS ID at the 14-digit product
level unless the plan or issuer does not have a HIOS ID at the plan or
product level, in which case the plan or issuer must use the HIOS ID at
the 5-digit issuer level. If a plan or issuer does not have a HIOS ID,
it must use its EIN.
b. Second Content Element: Billing Codes
The second content element that plans and issuers will be required
to include in the machine-readable files is any billing code consistent
with the definition of billing code provided in the final rules,
including:
A CPT code,
a Healthcare Common Procedure Coding System (HCPCS) code,
a DRG,
a National Drug Code (NDC) (The final rules define the NDC
code as a unique 10-digit or 11-digit 3-segment number assigned by the
Food and Drug Administration (FDA), which provides a universal product
identifier for drugs in the United States),\168\ or
---------------------------------------------------------------------------
\168\ In the preamble to the HIPAA regulations, HHS stated that
it was adopting a uniform 11-digit format to conform with customary
practice used in computer systems (65 FR 50314, 50329). (Aug. 17,
2000). The HIPAA 11-digit NDC format is standardized such that the
labeler code is always 5 digits, the product code is always 4
digits, and the package code always 2 digits. To convert a 10-digit
NDC to an 11-digit HIPAA standard NDC, a leading zero is added to
the appropriate segment to create the 11-digit configuration as
defined above. See 83 FR 38666 (Aug. 7, 2018).
---------------------------------------------------------------------------
another common payer identifier used by a plan or issuer,
such as a hospital revenue code, as applicable, and a plain language
description for each billing code.
The Departments proposed to require that plans and issuers
associate each negotiated rate or out-of-network allowed amount with a
CPT, HCPCS code, DRG, NDC, or other common payer identifier, as
applicable, because plans, issuers, and providers uniformly understand
these codes and commonly use them for billing and paying claims
(including for both individual items and services and items and
services provided under a bundled payment arrangement). The Departments
also proposed that plans and issuers must include plain language
descriptions for each billing code. In the case of items and services
that are associated with common billing codes (such as the HCPCS
codes), the Departments specified that the plan or issuer could use the
codes' associated short text description.
In order to ensure that the machine-readable files provide
meaningful information to consumers, as well as other stakeholders, the
final rules adopt this content element as proposed, with the following
modifications. For clarity, the regulation text is amended to remove
language that merely restated the definition for the term ``billing
code'' for each machine-readable file.\169\ This modification has been
made purely to streamline the regulatory language, and it does not
substantively alter the requirement to include a billing code, except
as otherwise noted in this preamble. Additionally, along with
separating prescription drugs into a separate machine-readable file,
the final rules include a modification that clarifies that, in the case
of prescription drugs, plans and issuers may only use the NDC as the
billing code type because, as discussed later in this preamble, the
accuracy of pricing information for prescription drugs requires precise
and specific product information, including package size and
manufacturer, which can only be achieved through the use of the NDC
billing code. However, the Departments recognize that prescription drug
products may be included in the In-network Rate File to the extent a
plan or issuer uses an alternative payment arrangement, such as a
bundled payment arrangement that includes prescription drugs. Therefore
the final rules clarify that the In-network Rate file must include the
required information under paragraph (b)(1)(i) of the final rules for
all covered items and services, except for prescription drugs that are
subject to a fee-for-service reimbursement arrangement, which would be
reported in the prescription drug machine-readable file pursuant to
paragraph (b)(1)(iii) of the final rules.
---------------------------------------------------------------------------
\169\ Specifically, the Departments have removed the following
language from billing code requirements for the machine-readable
files: ``. . . or other code used by the group health plan or health
insurance issuer to identify covered items or services for purposes
of claims adjudication and payment.''
---------------------------------------------------------------------------
The final rules require plans and issuers to include in the
machine-readable files a billing code or other code used to identify
covered items or services for purposes of claims adjudication, payment,
and cost-sharing liability when making public the disclosure required
under 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, and 45 CFR
147.212. The final rules adopt the requirement that plans and issuers
associate each amount required to be reported with a CPT, HCPCS, DRG,
NDC, or other common payer code identifier, as applicable, because
plans, issuers, and providers uniformly understand these codes and
commonly use them for billing and paying claims (including for both
individual items and services and for bundled payment arrangement). As
provided by the definition of billing code in the final rules, the
Departments intend to provide flexibility to plans and issuers to make
the data available through the codes that they use for billing
services. While the final rules do not require plans and issuers to use
a specific billing code (for example, CPT codes) for making public the
disclosures required through the final rules, definition of billing
code states that it is the code used by the plan or issuer ``for
purposes of billing, adjudicating, and paying claims for a covered item
or service.'' Therefore, where a plan or issuer uses a CPT code to
identify a covered item or service for purposes of billing,
adjudicating, and paying claims for that covered item or service, then
they would need to use the CPT code in order to make public the
disclosure required through the final rules for that item or service.
One commenter recommended that the negotiated rates should be
clearly stated in plain language that should be easy to understand
rather than provided by billing codes through the machine-readable
files. As an alternative, the Departments received some comments
stating that the Departments should require hospitals and health
insurance issuers to disclose all negotiated reimbursements by
International Classification of Disease (ICD) code.
The preamble to the proposed rules identified several common
billing codes, noting that the list provided was not exhaustive.
Further, the Departments did not explicitly prohibit including ICD-10
codes on the file. The Departments note that nothing in the final rules
would constrain plans or issuers from including ICD codes in the
machine-readable files when these codes are used by the plan or issuer
in a manner that meets the definition of a billing code in the final
rules. In other words, where the plan or issuer uses an ICD code to
identify health care items or services for the purpose of billing,
adjudicating, and paying claims for a covered item or service, the plan
or issuer may use the ICD code in the machine-readable files. As
discussed earlier in this preamble, the Departments intend to issue
technical implementation guidance; this guidance will include sample
file schemas for the machine-readable files. To facilitate
identification of the billing code type,
[[Page 72223]]
there will be an indicator in the file schemas that will allow plans
and issuers to specify the particular type of billing code entered for
each data entry in the machine-readable files.
The Departments are aware that some covered items and services may
not have a corresponding HCPCS, ICD, DRG, NDC or CPT code. The
Departments clarify that plans and issuers are still required to
include these covered items and services in their machine-readable
files regardless of whether all corresponding data elements are
available. When a covered item or service does not have a corresponding
HCPCS, ICD, DRG, or CPT code associated with an item or service, a plan
or issuer is permitted to choose its own indicator or other method to
communicate to the public that there is no corresponding code. In the
alternative, a plan or issuer is permitted to use the code to be
defined by the Departments in technical implementation guidance issued
along with the final rules that indicates that an item or service is
not defined.
At this time, the Departments have concluded that the common data
requirements adopted by the final rules, which include a requirement to
include a plain language description for each billing code, provides
consumers with sufficient information to meaningfully inform health
care purchasing decisions.
Regarding information about prescription drug pricing, a commenter
also suggested that, in lieu of NDC or HCPCS codes, a useful unit for
reporting for drugs would be the RxNorm concept unique identifier
(RxCUI).\170\ The commenter suggested use of RxCUIs because it would
minimize burden by reducing the list of entries (3,000 to 4,000 RxCUIs
down from 100,000 active NDCs) and because existing prescription drug
machine-readable file requirement for Medicare Part D (Part D) and QHPs
use RxCUIs.
---------------------------------------------------------------------------
\170\ The Departments note that the comments used the term ``Rx
Common Unit Identifier'' to identify the full phrase for the RxCUI.
The Departments assume that this is a misnomer and that the
commenter was referring to RxNorm concept unique identifier, which
is the generally accepted term for the acronym RxCUI.
---------------------------------------------------------------------------
The Departments appreciate the commenter's alternative suggestion
for including prescription drug information in the machine-readable
files. The Departments considered requiring prescription drug pricing
information through an alternative identifier. The Departments
understand that an RxCUI could minimize the burden on plans and issuers
by reducing the number of codes required to be included in the
Prescription Drug File. RxCUI is a drug naming system that is produced
by the National Library of Medicine (NLM), and RxCUIs are unique
identifiers, which can represent multiple NDCs for similar drug
products with the same brand name, active ingredient, strength and dose
form (for example, multiple package sizes and/or manufacturers can be
represented by a single RxCUI). The NDC, in contrast, is a unique 10-
digit or 11-digit 3-segment number, which provides a universal product
identifier for drugs in the United States. The three segments of the
NDC identify: The labeler (any firm that manufactures the drug); the
product (specific strength, dosage form, and formulation of a drug);
and the commercial package size and types. As noted above, multiple
NDCs can be encompassed by one RxCUI, which is why there are many fewer
RxCUI codes than NDCs. However, the accuracy of pricing information
requires precise and specific product information, including package
size and manufacturer. The Departments are concerned that permitting
drug pricing information disclosures to be made through RxCUIs would
potentially lead to inaccurate or misleading information being provided
to the consumer. If drug pricing information is provided in the
machine-readable files in the form of RxCUIs, then plans and issuers
may not be able to provide the manufacturer negotiated rate, especially
for those RxCUIs that include NDCs from several manufacturers.
Some commenters noted that, because RxCUI is used by the Part D
program and in the QHP program, the Departments should also require
RxCUI in the machine-readable file for consistency across programs.
While the Departments acknowledge that RxCUI is used in some contexts
in both the Part D and QHP programs, namely formulary development,
these programs do not exclusively use RxCUI. Indeed, both the Part D
and QHP programs use NDC in addition to RxCUI, and NDCs are more
generally used when information is required to be submitted to CMS for
payment programs. For example, the Part D program receives the NDC on
claims submitted by Part D plan sponsors through Prescription Drug
Events (PDEs) and issuers in the individual and small group market
include NDCs on claims data submitted to issuers' EDGE servers for HHS
risk adjustment purposes. In short, other programs cited by commenters
actually use NDCs for prescription drugs data submissions, particularly
for payment that is similar to the pricing data required by the final
rules. The Departments therefore conclude that requiring use of NDCs
for the prescriptions drug pricing information included in the machine-
readable files is consistent with the practices CMS follows in other
programs. Therefore, as stated earlier, the Departments are requiring
that the only allowable billing code for prescription drugs in the
machine-readable files is the NDC. The Departments determined that the
NDC should be the required billing code for the reasons stated above
and because the NDC is a standard billing code required for
prescription drug transactions.
c. Third Content Element: In-Network Applicable Amounts (Negotiated
Rates, Amounts in Underlying Fee Schedules, and Derived Amounts); Out-
of-Network Allowed Amounts; or Negotiated Rates and Historical Net
Prices for Prescription Drugs
The third-content element in the machine-readable files depends on
the type of file: in-network amounts for the In-network Rate File,
allowed amounts and historical billed charges for the Allowed Amount
File, or negotiated rates and historical net prices for the
Prescription Drug File.
All Machine-Readable Files
The proposed rules specified that the specific pricing information
within each file would have to be associated with a provider
identifier, specifically the provider's NPI. Some commenters suggested
additional data elements to support accurately identifying the provider
through the machine-readable files. One commenter recommended that the
Departments include the Place of Service Code in the machine-readable
files. The commenter explained that this data element would clarify
prices when provider entities associated with the same NPI have
multiple sites of service. Place of Service Codes are CMS-maintained
two-digit codes that are placed on professional claims, including
Medicare, Medicaid, and private insurance, to indicate the setting in
which a service was provided.\171\ The Place of Service code set is
required for use in the implementation guide adopted as the national
standard for electronic transmission of professional health care claims
under HIPAA.\172\
---------------------------------------------------------------------------
\171\ ``Place of Service Code Set.'' Centers for Medicare &
Medicaid Services. Available at: https://www.cms.gov/Medicare/Coding/place-of-service-codes/Place_of_Service_Code_Set.
\172\ ``Place of Service Codes.'' Centers for Medicare &
Medicaid Services. Available at: https://www.cms.gov/Medicare/Coding/place-of-service-codes.
---------------------------------------------------------------------------
[[Page 72224]]
The Departments have considered this comment and agree that, in
addition to NPI, including a Place of Service Code is important where a
provider could be using the same NPI for multiple places of service.
For instance, the same procedure from the same provider NPI received at
an ambulatory surgery center (Place of Service Code 24) could have a
significantly different price if received at an on-campus outpatient
hospital (Place of Service Code 22). The Departments are of the view
that being able to identify the place of service would be beneficial to
consumers seeking to rely on the machine-readable files or third-party
applications developed using the information publicly disclosed through
the machine-readable files, in order to make health care purchasing
decisions. The Departments are also of the view that this data element
will help provide valuable insights regarding market dynamics for
researchers, employers, regulators, and other files users. Because the
Place of Service Code is information that must be included on a
professional medical claim, the Departments do not foresee any issue
with plans and issuers including this data element in the machine-
readable files in addition to the NPI. For these reasons, the
Departments are finalizing a requirement to include the Place of
Service Code in all three machine-readable files.
In addition to the NPI and the Place of Service Code, the
Departments have also become aware, through independent research, that
a provider's TIN can be relevant to communication of accurate
negotiated rates and allowed amounts information. It is the
Departments' understanding that negotiated rates for items and services
are based on the unique combination of a provider (NPI), service or
item location (Place of Service code), and the TIN under which the
provider is furnishing the item or service. If the TIN is not required
in the file, the Departments are concerned that plans and issuers could
report multiple negotiated rates for the same NPI for the same item or
service without context to identify the underlying source of the
difference. For example, if a provider NPI has a relationship with two
different entities that have negotiated rates and bills under both of
these entities, the same item or service for that provider NPI could
appear in the report with two different negotiated rates. Without the
TIN, consumers of the file would not be able to discern the reason for
the difference in the two distinct negotiated rates. With the TIN,
consumers of the file could see that the provider is billing for the
same services under two separate entities. Therefore, if this unique
combination of NPI, Place of Service Code, and TIN is not required, the
pricing information represented in the machine-readable files might not
present a complete and accurate picture of the market or provide
consumers with reliable data upon which to base health care purchasing
decisions. The Departments are of the view that this information is
crucial to ensure that consumers are ultimately receiving location-
specific pricing information upon which they can rely to help make
informed health care purchasing decisions. In order for the machine-
readable files to provide meaningful and actionable information, the
final rules adopt a modification to all three machine-readable files,
to require plans and issuers to provide the provider TIN in the file in
addition to provider NPI and the Place of Service Code.
The Departments have updated the technical implementation guidance
and schemas for all three machine-readable files, so that location-
specific pricing information can be provided in the machine-readable
files. This guidance will also provide more details on how the Place of
Service Code, TIN, and NPI should be reported in order to represent the
information for which public disclosure is required through the
machine-readable files. The Departments are aware that this
modification to the machine-readable files will increase the complexity
and size of the machine-readable files and have considered this
additional burden in the Information Collection Requests (ICR) section
of the of the final rules. The benefits of including the Place of
Service Code and TIN outweigh the costs, as the Departments are of the
view that location-specific pricing information is critical to the
meaningfulness of these files for the public.
Another commenter noted that using NPIs to identify providers would
make it difficult for consumers to use the machine-readable files
because consumers do not usually have NPI information. The commenter
stated that it would also be useful for consumers using the In-network
Rate Files (including the uninsured and those shopping for alternative
coverage) to have access to public information that lists the providers
who participate in local plan and issuer networks.
The Departments agree that including provider names in the machine-
readable files in addition to NPIs would help consumers and other
stakeholders review and use the machine-readable files. However, the
Departments have some concerns about requiring inclusion of provider
names in the files. From a technical perspective, the Departments are
concerned that inclusion of provider names, which do not have a
consistent character length and can be quite long, will increase the
size of the machine-readable files and, therefore, increase the burden
of the files for plans and issuers. Additionally, provider names may
include non-alphanumeric or other non-standard character encoding types
that could interfere with the coding of the machine-readable files and
cause defects. The Departments are concerned that the additional
quality assurance procedures that plans and issuers would need to
implement in order to address these issues could add even more burden
with limited benefit.
In addition, because the Departments expect the greatest benefits
of these machine-readable files will be through the innovative tools
developed by third parties, the Departments are of the view that the
lack of availability of provider names in the machine-readable files is
not a significant concern. The Departments anticipate that third-party
internet-based developers and other secondary entities will be able to
link the NPIs in the machine-readable files to publicly available
provider information. The Departments note that there are several
internet-based NPI lookup tools available online, including CMS's
National Plan & Provider Enumeration System (NPPES) NPI registry.\173\
Nothing in the final rules prevents a plan or issuer from linking to an
NPI lookup tool or providing more information for consumers and other
stakeholders on its website through supplementary materials supporting
the machine-readable files.
---------------------------------------------------------------------------
\173\ CMS's NPPES registry is available online at the following
website address: https://npiregistry.cms.hhs.gov/.
---------------------------------------------------------------------------
For these reasons, the final rules do not require plans and issuers
to include provider names in addition to NPI, TINs, and Place of
Service Codes in the three machine-readable files.
In-Network Rate File
The Departments finalize with modifications the proposed
requirement that group health plans and health insurance issuers
publish as the third content element negotiated rates in a machine-
readable file for all covered items and services--except that the
Negotiated Rate File in the proposed rules has been re-named the In-
network Rate File. With the exception of information relevant to
prescription drug products that are included as part
[[Page 72225]]
of an alternative payment arrangement (such as a bundled payment
arrangement), the In-network Rate File will exclude information
relevant to prescription drugs, as that information will be provided in
the third machine-readable file. Based on comments and technical
expertise within the agencies, the Departments have made modifications
to clarify the expectations for reporting negotiated rates (or
comparable derived amounts as explained elsewhere in this section) for
plans and issuers using alternative reimbursement models for health
care items and services. These modifications also clarify that plans
and issuers must include an underlying fee schedule rate when one is
used to determine cost-sharing liability, where that amount differs
from the negotiated rate (or comparable derived amount) used to
determine provider reimbursement. The Departments also finalize this
change to reflect other modifications to the proposed rules meant to
ensure the required In-network Rate File accommodates plans and issuers
operating under payment models other than a standard fee-for-service
(FFS) model.
In the proposed rules, the third content element was negotiated
rates under a plan or coverage regarding each covered item or service,
including prescription drugs furnished by in-network providers. To the
extent a plan or issuer reimburses providers for an item or service
based on a formula or reference based-pricing (such as a percentage of
a Medicare reimbursement rate), the proposed rules would have required
the plan or issuer to provide the calculated dollar amount of the
negotiated rate for each provider.
In the proposed rules, the Departments expressed the understanding
that some plans and issuers do not vary negotiated rates across in-
network providers. For instance, some plans and issuers have a
negotiated rate that applies to every provider in a certain network
tier. In such a case, the Departments proposed to require the plan or
issuer to provide the negotiated rate for a covered item or service
separately for every provider that participates in that tier of the
network. If the plan or issuer reimburses for certain items and
services (for example, maternity care and childbirth) through a bundled
payment arrangement, the Departments proposed to require the plan or
issuer to identify the bundle of items and services by the relevant
billing code.
The Departments also proposed to require plans and issuers to
include the last date of the contract term for each provider-specific
negotiated rate that applies to each item or service (including rates
for both individual and bundled items and services).
Several commenters suggested modifications to the requirement for
public disclosure of negotiated rates, which they claimed would help
mitigate the risk of unintended consequences, such as anticompetitive
practices and increased health care prices. Commenters suggested that
the final rules require plans and issuers to disclose the median rate
or lowest negotiated rate instead of negotiated rates. Other commenters
also expressed the opinion that information presented as summary or
aggregated data would be more helpful for consumers. One of these
comments noted that this could be achieved through plans identifying a
range of in-network rates for common services.
The Departments considered modifying the requirement to require
plans and issuers to report the median negotiated rate, the lowest
negotiated rate, or some other aggregated negotiated rate. The
Departments noted in the proposed rules that consumers, researchers,
and regulators gaining access to pricing information, including
information on the variation in prices, could place downward pressure
on health care prices and reduce overall health care spending, which is
one of the goals of the final rules. The Departments are concerned that
using an aggregated or otherwise summarized rate would not sufficiently
address issues of pricing variation and could undermine other goals of
price transparency efforts. A median or summarized rate would not be as
reliable for insured or uninsured consumers to use when making health
care purchasing decisions as it is individual prices upon which these
consumers must rely to make health care purchasing decisions. Under
standard economic theory, it is individual prices, and consumers'
responses to those prices, that drive market forces. If the public
disclosures do not include specific individual prices for in-network
items and services, consumers may not have actionable information upon
which to rely to make specific decisions.\174\ A median or summarized
rate would not address the issue of price variation or dispersion, as
it would mask the variation in a given geographic area.\175\
Additionally, a median or summarized rate could mask the differences
between plans and coverages in a manner incompatible with drawing
comparisons between coverage options. Therefore, the Departments are of
the view that release of alternative data points, such as aggregated
negotiated rates, or other summarized forms of negotiated rates, would
not sufficiently advance the price transparency efforts and could
undermine the intended impacts of the In-network Rate File.
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\174\ Stigler, G. ``The Economics of Information.'' The Journal
of Political Economy. Volume 69. Issue 3. June 1961. Available at
https://home.uchicago.edu/~vlima/courses/econ200/spring01/
stigler.pdf.
\175\ Id.
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Commenters suggested the Departments limit the requirement for
public disclosure of negotiated rate information in a way that protects
plans and issuers from reverse engineering specific rates. For example,
a commenter suggested the Departments limit the disclosure to plans and
employer plan sponsors, while another commenter suggested that the
final rules require plans and issuers to provide limited information to
the public, such as statistical ranges, or rates distributions and
require the provision of more detailed information to other
stakeholders.
The Departments considered limiting these disclosures by
stakeholder type such that the disclosure of the most detailed
information to the widespread public would be more limited. The
Departments' determined that these limitations would conflict with the
statute, which requires public disclosure, and the goals of the final
rules. The Departments' goal is to empower consumers through the
disclosure of actionable pricing information through the In-network
Rate Files, as translated into consumer-friendly tools by third-party
application developers.
Some commenters expressed the view that public disclosure of rates
by plans and issuers with alternative reimbursement models should be
required and suggested the Departments work with stakeholders to
establish requirements that are consistent with innovative payment
models. One commenter stated that the Departments should not exclude
from the negotiated file requirements plans with reimbursement
arrangements different from FFS arrangements, such as plans with
reimbursements based on a capitated amount or a value-based agreement.
Some commenters noted that the release of negotiated rates places
emphasis on FFS provider contracting and may hinder innovation in
alternative payment contracting models, such as value-based
contracting.
The Departments received some comments on how the Departments could
require plans and issuers to report
[[Page 72226]]
capitated and bundled payment arrangements through the In-network Rate
File. One commenter noted that plans with a capitated arrangement
should be able to assign a price to items and services based on an
internal methodology. The commenter observed that plans with capitated
payment arrangements must assign prices for purposes of submission of
claims in support of the HHS risk adjustment program under 45 CFR
153.710(c). Some commenters, however, argued that implementing some
aspects of the proposed rules would not be feasible, such as listing
prices for quality-adjusted and risk-adjusted contracts, which can only
be calculated after the fact.
By contrast, other commenters did not support a requirement for
plans and issuers with alternative reimbursement arrangements to make
public the disclosures required through the In-network Rate File.
Commenters stated that releasing negotiated rate information for
bundled or capitation arrangements would be a significant operational
burden and could lead to inaccuracies and misinformed consumers. For
example, several commenters noted that the entire suite of services
that a consumer might need to look up for an episode of care is not
known to patients or providers prior to the receipt of care. Another
commenter noted that the information could be misleading to consumers
because prices may not include the services provided by all providers
that are involved in a patient's hospital care such as surgeons and
anesthesiologists.
The Departments agree that plans and issuers that use alternative
reimbursement arrangements should still be subject to requirements to
disclose rates through the In-network Rate File. Nowhere in the
proposed rules did the Departments indicate that only plans and issuers
that reimburse on a standard FFS model would be required to make public
the disclosure of negotiated rates. As evidenced by the discussion of
reporting of bundled payment arrangements and plans and issuers using
alternative reimbursement models such as formula-based or reference-
based pricing in the proposed rules, the Departments intended the
disclosures required through the final rules to apply to all plans and
issuers, regardless of reimbursement model. The Departments clarify
that plans and issuers that reimburse providers on a basis that is
different from a standard FFS model would still be required to make
public the disclosures of in-network negotiated rates, out-of-network
allowed amounts and prices for prescription drugs as required by the
final rules.
Later in this preamble, the Departments have summarized the general
reporting expectations for several alternative reimbursement models,
including bundled payment arrangements and capitation arrangements
(including sole capitation arrangements and partial capitation
arrangements), reference-based pricing without a defined network,
reference-based pricing with a defined network, and value-based
purchasing. This summary is not meant to be exhaustive, as the
Departments are aware that other alternative reimbursement or
contracting models exist. However, before clarifying how these payment
arrangements would work under the final rules, the Departments note
modifications to the requirements for the pricing information that must
be publicly disclosed through the In-network Rate File.
Some commenters stated that the proposed rules did not acknowledge
that negotiated rates alone provide an inaccurate or incomplete picture
of health care item and service pricing. In response, the Departments
conducted additional research to understand how the final rules could
require the appropriate level of detail in the In-network Rate File and
provide a more complete and transparent picture of prices of health
care items and services. In response to comments, and as a result of
this additional research, the Departments are modifying the language
describing the requirement for the pricing information that must be
publicly disclosed through the file. Specifically, the Departments are
clarifying that the In-network Rate File should include all applicable
rates, even where not referred to as negotiated rates. As described in
the final rules, this could include negotiated rates, an underlying fee
schedule rate or, derived amounts, as applicable. These modifications
are intended to clarify disclosure requirements for plans and issuers
that use alternative reimbursement arrangements and to ensure that the
rates upon which consumer cost-sharing liability is determined as well
as negotiated rates are publicly disclosed through the In-network Rate
File. The Departments are of the view that this approach is consistent
with the goals of transparency as outlined in the proposed rules
because it ensures that the In-network Rate File will be both
meaningful for consumers and requires transparency in price disclosures
that will promote increased competition in health care markets. Without
this clarification, the In-network Rate File could have potentially
excluded rates that are used to determine cost-sharing liability, which
is essential information upon which consumers would need to rely to
make health care purchasing decisions. Further, retaining as proposed
the requirement to include the negotiated rates that plans and issuers
use to determine provider reimbursement is crucial to price
transparency efforts, which will help foster competition and lower
prices. Public disclosure of negotiated rates and derived amounts will
also support research and regulatory oversight. For example, this
information will help researchers evaluate alternative payment models
in relation to the traditional FFS payment model, which could help spur
more innovation in health care markets. State regulators will also be
able to gain further insight into the various payment models, which
would support general oversight of plans and issuers using different
payment models, and could support market reform efforts.
One commenter noted that plans and issuers that use capitated
reimbursement arrangements may assign prices to items and services as a
normal course of business. Thus, they should be able to disclose those
prices as part of the In-network Rate File. The Departments agree. The
final rules require a plan or issuer that does not have a negotiated
rate to disclose a ``derived amount,'' which is defined as the price
that a plan or issuer assigns an item or service for the purpose of
internal accounting, reconciliation with providers, or for the purpose
of submitting data in accordance with the requirements of 45 CFR
153.710(c).
Title 45 CFR 153.710(c) sets forth a process through which
capitated plans that do not generate individual enrollee claims in the
normal course of business must submit data for the purpose of the HHS-
operated risk adjustment program.\176\ As stated in the preamble to the
HHS Notice of Benefit and Payment Parameters for 2014 final rule, many
capitated plans currently use some form of encounter data pricing
methodology to derive claims' prices, often by imputing an amount based
upon the Medicare fee-for-service equivalent price or the usual,
customary, and reasonable equivalent that would have been paid for the
service in the applicable state market risk pool.\177\ For
[[Page 72227]]
the purposes of 45 CFR 153.710(c), an issuer offering a capitated plan
is required to use its principal internal methodology for pricing those
encounters for purposes of submitting risk adjustment data, such as the
methodology in use for other State or Federal programs (for example, a
methodology used for the Medicare Advantage market).\178\ If an issuer,
including an issuer of a capitated risk adjustment covered plan, has no
such methodology, or has an incomplete methodology, it must supplement
the methodology in a manner that yields derived claims that are
reasonable in light of the specific market that the plan is serving.
Given these requirements under 45 CFR 153.710(c), the Departments are
of the view that most issuers offering capitated plans that do not
process claims on an individual basis, and therefore do not have
negotiated rates, will have a derived amount.
---------------------------------------------------------------------------
\176\ HHS has operated the risk adjustment program for the
individual and small group markets under section 1343 of PPACA on
behalf of all states and the District of Columbia since the 2017
benefit year.
\177\ 78 FR 15410, 15499-15500 (Mar. 11, 2013).
\178\ Id., see also 78 FR 15410, 15470-71 (Mar. 11, 2013).
---------------------------------------------------------------------------
The Departments acknowledge that 45 CFR 153.710(c)does not apply to
group health plans or all health insurance issuers subject to these
rules and so they may not calculate derived amounts for this purpose.
The final rules do not require plans or issuers to develop a new
methodology for providing derived amounts if the plan or issuer does
not have an existing methodology used in the normal course of business.
Therefore, the final rules require plans and issuers that do not have a
negotiated rate to provide a derived amount, to the extent these
amounts are already calculated in the normal course of business. Where
a plan or issuer does not have a derived amount calculated in the
normal course of business, they are not required to provide a derived
amount.
The Departments also note that under the final rules, where a plan
or issuer includes in the In-network Rate File a comparable derived
amount in lieu of the negotiated rate (for example, under a capitation
arrangement where a specific negotiated rate is not available for a
particular item or service), they will be required to add a notation to
the machine-readable files indicating that the rate is subject to an
alternative payment arrangement. The Departments are also aware that
some plan and issuer contracting models use a mixture of approaches and
note that plans and issuers should follow the general guidelines (to be
provided by the Departments in the technical implementation guidance)
based on how a particular covered item or service is reimbursed where a
mixture of approaches is used in the same plan or coverage.
The final rules clarify that, where plans and issuers use
negotiated rates or a comparable derived amount and an underlying fee
schedule rate as defined in the final rules, they are required to
report both the negotiated rate or comparable derived amount and the
underlying fee schedule rate used for that item or service. Therefore,
the Departments are also modifying the In-network Rate File to require
public disclosure of an underlying fee schedule rate, when applicable.
The Departments are aware that under some reimbursement models, one set
of negotiated rates is used for provider reimbursement (or comparable
derived amounts are used for internal accounting purposes) and another
set of rates, referred to in the final rules as an underlying fee
schedule rate, is used for determining consumer cost-sharing liability.
The Departments view the modification to the In-network Rate File to
require public disclosure of an underlying fee schedule rate important
to ensuring the public disclosures required through the rules include
transparency in the prices used by all plans and issuers in making
determinations of consumer cost-sharing liability. The final rules
define the underlying fee schedule rates as the rate for an item or
service that a plan or issuer uses to determine a participant's,
beneficiary's, or enrollee's cost-sharing liability from a particular
provider or providers, when that rate is different from the negotiated
rate. For instance, under certain capitation payments which reimburse a
provider a PMPM rate, the PMPM rate would be the negotiated rate.
However, the plan or issuer would also have assigned a price for an
item or service from that provider for the purpose determining cost-
sharing liability; that amount is the underlying fee schedule rate.
Therefore, in this example, in the In-network Rate File, the plan or
issuer would be required to report the negotiated rate, which in this
case is the PMPM rate, and the underlying fee schedule rate used to
determine cost-sharing liability.
In the final rules, plans and issuers are required to disclose only
those rates that are applicable to their particular reimbursement
arrangement model. If a plan or issuer only uses one rate for
determining both provider reimbursement and consumer cost-sharing
liability, then only that rate would be applicable to the plan or
issuer, and therefore required to be disclosed through the In-network
Rate File. Where a plan or issuer uses an alternative reimbursement
arrangement and does not have a negotiated rate, as defined in the
final rules, the plan or issuer would be required to publicly disclose
through the In-network Rate File the derived amount, to the extent the
plan or issuer generates such an amount in the normal course of
business. If a plan or issuer has a negotiated rate or a derived amount
but does not also use that applicable rate to make determinations of
consumer cost-sharing liability, then the plan or issuer would be
required to publicly disclose both the negotiated rate or derived
amount and the underlying fee schedule rate used to determine consumer
cost-sharing liability.
The Departments note that, while a scenario where a plan or issuer
uses both negotiated rates or a comparable derived amount and an
underlying fee schedule rate in their operations is more likely to
occur under an alternative reimbursement model, it is possible to have
both a negotiated rate and an underlying fee schedule rate in an FFS
reimbursement arrangement. Such a scenario is possible where a plan
that uses a traditional negotiated rate to reimburse a provider for a
particular covered item or service and bases participant, beneficiary,
or enrollee cost-sharing liability upon a different rate for the same
item or service.
Under bundled payment arrangements, plans and issuers may reimburse
a provider for multiple services and items under a single billing code.
Under these arrangements, plans and issuers should provide a negotiated
rate (or comparable derived amount) for that single billing code and
list the items and services, including prescription drugs, that are
included in that bundle. If a negotiated rate (or comparable derived
amount) exists for each item and service, including prescription drugs,
within the bundle, the plan or issuer should include the negotiated
rate for the total bundle and also include in the In-network Rate File
the respective negotiated rates (or comparable derived amount) for all
covered items or services included in the bundle.
It is the Departments' understanding that, if the bundled payment
arrangement exists to the exclusion of any reimbursement arrangement
for the underlying services and items, payers and providers often
continue to track, for purposes of informing renegotiation of the
bundle, reimbursement at the level of the individual item or service
using a derived amount. For the In-network Rate File, plans and issuers
with this type of model are required to disclose the negotiated rate
for the total
[[Page 72228]]
bundle and the derived amounts for individual items or services in the
bundled payment arrangement. If a derived amount for these purposes
does not exist, then plans and issuers would not be required to report
a derived amount. Where a plan or issuer uses a derived amount or
reasonable estimate in lieu of the negotiated rate, they will be
required to add a notation to the machine-readable files indicating
that the rate is subject to an alternative payment arrangement.
The Departments acknowledge that there are many different types of
capitation models. As stated in the example earlier, for capitation
arrangements that reimburse a provider a capitated amount, such as a
PMPM, or a similar direct primary care arrangement, the plan or issuer
would report the negotiated rate, which in this case is the PMPM
amount, and the underlying fee schedule, as applicable. Under certain
other capitation models, the provider's capitation amount may be
weighted dependent upon certain characteristics of the participant,
beneficiary, or enrollee, such as age, gender, or co-morbidities. Plans
and issuers with this type of capitation arrangement should provide the
base negotiated rate, which is the negotiated rate before adjustments
have been made for certain participant, beneficiary, or enrollee
characteristics. Plans and issuers using capitation arrangements should
notate any entry that represents a capitated amount and list all items
and services, including prescription drugs that are covered under a
particular capitation amount in the In-network Rate File.
In some cases, a sole capitation arrangement exists, such as staff
model HMOs under which services are provided by in-network salaried
providers and there are neither negotiated rates nor an underlying fee
schedule rate. In this case, plans and issuers are required to include
a derived amount in the In-network Rate File. If an applicable rate (a
negotiated rate, derived amount, or underlying fee schedule rate) does
not exist for an item or service, then plans and issuers are not be
required to report pricing information for that particular item or
service.
The Departments are aware that some plans and issuers use a partial
capitation model where the plan or issuer reimburses providers under a
variable FFS amount in addition to a flat capitation amount. The
Departments expect plans and issuers using a partial capitation model
to make public the FFS negotiated rate as well as the capitation
amount. Plan and issuers must also add a notation to the file
indicating that a capitation arrangement (or a partially capitated
arrangement) exists. For specific items and services where plans and
issuers using this model do not have an FFS negotiated rate in addition
to a capitation amount (that is, for items and services where they do
follow a full capitation model), plans and issuers are required to
follow the reporting requirements described for sole capitation
arrangements.
Reference-based pricing without a defined network is an arrangement
where payers reimburse providers based on a percentage (usually 120
percent to 200 percent) of the Medicare rate, but do not have
contractual agreements with providers. The Departments expect there
will be no In-network Rate File for this type of arrangement because
the plan or issuer does not have in-network providers as defined in the
final rules.
By contrast, under a reference-based pricing model with a defined
network, payers have contractual agreements to reimburse providers
based on a percentage of a different rate that is known or determinable
by the parties (usually 120 percent to 200 percent of the Medicare
rate), which is subject to change based upon adjustments that can be
specific to the participant, beneficiary, or enrollee, such as age,
gender, and severity of illness. To represent this type of arrangement,
and other provider reimbursement models that are based upon
participant, beneficiary, or enrollee-specific adjustments, the final
rules clarify that plans and issuers are required to include for each
item or service in the In-network Rate File, the base negotiated rate
that applies before adjusting for participant, beneficiary, or enrollee
-specific characteristics. The negotiated rate in the referenced-based
pricing model must be represented as a dollar value that is the result
of the calculation of the referenced amount and the applicable
reference-based percentage. For example, a plan calculates provider
reimbursement using a reference-based pricing model that sets
reimbursement to Provider X at 120 percent of the Medicare rate for
covered Item A. The reference-based percentage used to determine the
base negotiated rate would be 120 percent. In the general course of
business, the plan determines the Medicare rate for Item A using
participant, beneficiary, or enrollee-specific characteristics, but,
because there is no specific participant, beneficiary, or enrollee for
purposes of populating the In-network Rate File, the plan or issuer
must report the base negotiated rate that would apply prior to
application of any participant, beneficiary, or enrollee-specific
characteristics. In this example, the Medicare rate for Item A is $150,
before applying adjusters for participant, beneficiary, or enrollee-
specific characteristics. Therefore, the plan would report a negotiated
rate for Item A when received from Provider X of $180 ($150 multiplied
by 120 percent) and must include this rate in the In-network Rate File.
Finally, under a reimbursement arrangement that adjusts payments or
reconciles provider payments after providing care, such as in many
value-based purchasing models, the plan or issuer must also provide the
base negotiated rate for the specific provider in the In-network File.
For instance, in a value-based purchasing model, payers may adjust
negotiated rates for a particular provider if the provider meets
certain contractual goals, which may be related to quality, volume, and
efficiency of care. The Departments clarify that quality or value
dependent weighting factors or adjusters are not required to be
included in the negotiated rate made public under the final rules.
As noted earlier in this preamble, nothing in the final rules
prevents a plan or issuer from providing supplementary materials,
including footnotes, disclaimers, data dictionaries, and other
explanatory language, as accompaniments with the machine-readable
files. For example, a plan or issuer may choose to provide clarifying
information related to how the negotiated rate, if reported as a base
negotiated rate, may change depending on quality or value-dependent
weighting factors, or participant, beneficiary, or enrollee-specific
factors such as the severity of illness, age, or gender. Because base
rates unadjusted for participant, beneficiary, or enrollee-specific
factors are required to be reported for reference-based pricing
arrangements, the Departments note that it is a best practice to
include a disclaimer noting that the rate could change subject to
participant, beneficiary, or enrollee-specific characteristics.
Some commenters noted that simply listing the negotiated rates
without context regarding overall cost would not help consumers make
informed decisions. The commenter further noted that consumer decision-
making could be harmed if relying on negotiated rate information
without context regarding provider billing practices. Other commenters
stated that non-negotiated billed charges would be useful as an
additional category of pricing information for the public, especially
for
[[Page 72229]]
the uninsured and those seeking out-of-network care. Another commenter
agreed that information on provider-billed charges is important for
transparency, but this commenter suggested that providers, not issuers,
would be the appropriate source of this information.
As discussed later in this preamble, the Departments are of the
view that inclusion of billed charges in the In-network Rate File is
unnecessary to achieve the goals of the final rules because in-network
providers are not permitted to balance bill participants,
beneficiaries, or enrollees as in-network providers have agreed to
accept the negotiated rate as payment in full (less any participant,
beneficiary, or enrollee cost-sharing liability) for the item or
service. However, inclusion of billed charges in the Allowed Amount
File will provide meaningful information when coupled with allowed
amount information because it will allow consumers to estimate their
potential balance billing liability when receiving items and services
furnished by out-of-network providers if balance billing is allowed in
their state. Therefore, inclusion of billed charges in the In-network
Rate File would not provide additional value for consumers.
Moreover, the Departments are of the view that inclusion of the
billed charge could be more misleading in the In-network Rate File
because the billed charge is very rarely what the consumer or the payer
ends up paying for a particular claim and may not have a clear
relationship with the negotiated rate or underlying fee schedule. While
the Departments agree that inclusion of billed charges in the In-
network Rate File would provide another data point for developers in
developing the tools, adding billed charges would also increase both
the size and complexity of the In-network Rate File. Because it appears
that inclusion of this data element could obscure other pricing
information and would not increase transparency of actual prices paid
by participants, beneficiaries, enrollees, or payers, the Departments
decline to add a billed charge data element requirement to the In-
network Rate File at this time.
As discussed earlier in this preamble, the final rules finalize a
requirement for plans and issuers to associate the pricing information
disclosed on each of the three machine-readable files with three data
elements that identify the provider and the location where the service
was provided: NPI, TIN, and Place of Service Code. For the In-network
Rate File, the Departments proposed that the negotiated rate should be
the rate that applies to each item or service that is associated with
the last date of contract term for each provider NPI. The final rules
modify this requirement to clarify that the applicable rates publicly
disclosed in the In-network Rate File should be the rates that apply to
each item or service that is associated with the last date of the
contract term or the contract expiration date for each provider as
identified by NPI, TIN, and Place of Service Code.
Allowed Amount File
For the Allowed Amount File, the third content element is
historical out-of-network allowed amounts for covered items and
services. The proposed rules would require plans and issuers to include
in the Allowed Amount File each unique out-of-network allowed amount in
connection with covered items or services furnished by a particular
out-of-network provider during the 90-day time period that begins 180
days prior to the publication date of the Allowed Amount File. As with
the In-network Rate File, where a plan or issuer reimburses providers
for an item or service based on a formula or reference based-pricing
(such as a percentage of a Medicare reimbursement rate), the plan or
issuer would be required to provide the calculated dollar amount of the
allowed amount for each provider. Allowed amounts would have to be
associated with the provider's NPI, TIN, and Place of Service code.
The Departments designed this reporting requirement to elicit
payment data that reflects recent out-of-network allowed amounts in
connection with claims for out-of-network covered services. The
Departments assumed these amounts would provide payment data that is
useful to consumers because it is reflective of the most recent
reimbursements. Specifically, the Departments proposed to require
reporting based on dates of service within 180 days of the Allowed
Amount File publication date to ensure that data is composed of recent
claims (rather than older claims from multiple time periods) and to
avoid the reporting of payments from inconsistent periods of time. The
Departments took the view that payment data from defined periods of
time would enable users to make meaningful comparisons across plans and
coverage options.
When disclosing an out-of-network allowed amount under this
requirement, the Departments proposed to require a plan or issuer to
disclose the actual amount the plan or issuer paid to the out-of-
network provider, plus the participant's, beneficiary's, or enrollee's
share of the cost. For instance, if the out-of-network allowed amount
for a covered service was $100, and the plan or issuer paid 80 percent
of the out-of-network allowed amount ($80) per the terms of the plan or
coverage, so that the participant, beneficiary, or enrollee was
responsible for paying twenty percent of the out-of-network allowed
amount ($20), the plan or issuer would report an out-of-network allowed
amount of $100. This unique payment amount would be associated with the
particular covered item or service (identified by billing code) and the
particular out-of-network provider who furnished the item or service
(identified by NPI, TIN, and Place of Service Code).
The Departments clarify that, in contrast to the In-network Rate
File, no special considerations for reporting alternative payment
arrangements are necessary for the Allowed Amount File because plans
and issuers are required to disclose actual amounts paid in the Allowed
Amount File and can therefore account for retrospective reconciliations
and weighting factors that require special considerations. For the
Allowed Amounts File, the Departments expect plans and issuers that
reimburse in-network providers using alternative payment methodologies
to adhere to the standard requirement of providing allowed amounts on
historical claims paid to out-of-network providers for each covered
item or service during the applicable reference period. Plans and
issuers generally do not reimburse out-of-network providers, with whom
they do not maintain a contractual relationship, under an alternative
payment arrangement. However, to the extent a plan or issuer uses an
alternative payment arrangement to reimburse out-of-network providers,
the plan or issuer would still be required to report the allowed amount
paid to the out-of-network provider. The Departments will address,
through the technical implementation guidance, how a plan or issuer
will be able to represent data in the Allowed Amount File, as
necessary. The Departments anticipate that plans and issuers that
reimburse providers using reference-based pricing without a network
will have larger than average Allowed Amount Files, as all of the
payments would be made to out-of-network providers and would therefore
be subject to this requirement.
Some commenters supported disclosure of the ``historical'' payments
made by plans and issuers to out-of-network providers. One commenter
acknowledged that bulk de-identified data that informs a consumer of
historical out-of-network allowed
[[Page 72230]]
amounts may be relevant to consumer decision-making regarding a
particular provider or procedure. One commenter pointed out that if the
Departments failed to adopt this requirement in tandem with the In-
network Rate File requirement, providers could withdraw from networks
to avoid transparency requirements.
By contrast, other comments were less supportive of the Allowed
Amount File proposal. Several commenters stated that publishing
historical out-of-network allowed amounts would not meet the
Departments' purported goal of helping consumers understand costs and
would possibly lead to consumer confusion. Commenters expressed concern
that the Allowed Amount File could result in consumers receiving
misleading information, which would lead to negative financial
consequences for consumers because the file would not provide all
information about potential out-of-network costs, such as those that
could be incurred through balance billing, if allowed in their state.
One commenter stated that inclusion of billed charges would allow the
development of open source charge schedules. One commenter pointed out
that the information in the machine-readable files would not address
scenarios where a participant, beneficiary, or enrollee receives out-
of-network care in an in-network facility. Still other commenters
expressed concerns about the reliability of the data as historical
allowed amounts with out-of-network providers may not provide an
accurate portrait of future cost information because issuers do not
have contracts with out-of-network providers. Similarly, another
commenter stated that health plans should not be responsible for
publishing rates for providers with whom they do not maintain a
relationship.
One commenter recommended the Departments withdraw the proposal,
making the argument that small health plans are unlikely to have a
sufficient number of claims billed for any one procedure from a
particular provider to make the file meaningful. In lieu of requiring
the Allowed Amount File, another commenter suggested the Departments
instead place the onus on out-of-network providers or suppliers to
provide consumers with information about the costs of their services.
The Departments continue to be of the view that release of this
information is appropriate and necessary to empower consumers to make
informed decisions about their health care, spur competition in health
care markets, and to slow or potentially reverse the rising cost of
health care items and services. As noted earlier in this preamble and
in the preamble to the proposed rules, limiting access to data to a
subset of consumers would not promote the transparency goals of PPACA
and the final rules, and would reduce the potential for the final rules
to drive down health care costs by increasing competition. If the
Departments were to eliminate the Allowed Amount File requirement or
reduce its scope, it would significantly reduce the benefits of the
final rules for uninsured consumers and insured consumers evaluating
out-of-network treatment options.
The information in the Allowed Amount File, especially as filtered
through innovative platforms and tools, will help consumers make more
informed decisions regarding changes to their health coverage (for
example, the purchase of new coverage or switching to a new plan).
Furthermore, this information may help insured consumers make more
informed health care decisions when seeking out-of-network treatment;
and may help uninsured consumers make health care decisions and
potentially allow them to negotiate more effectively with providers.
Finally, the creation of Allowed Amount Files may help researchers and
regulators monitor plan benefit design and help spur innovation.
While there is some potential for some consumers to be confused by
the information in the Allowed Amount Files, the Departments do not
agree that the files will provide misleading information to consumers.
The Departments expect most consumers to access this information
through tools created by third-party application developers and other
stakeholders, which will be able to provide additional context for the
average consumer.
The Departments proposed to require plans and issuers to report
out-of-network allowed amounts for services furnished at least 90 days
in the past to help ensure the availability of reasonable volumes of
out-of-network allowed amount data in the Allowed Amount File. The
Departments expressed the view that a 90-day lag between the end of a
reporting period and the publication of required out-of-network allowed
amount data will allow plans and issuers sufficient time to adjudicate
and pay claims from out-of-network providers for the relevant reporting
period. Claims processing times may vary between plans and issuers, and
external factors may increase processing timelines. For example, the
Departments noted in the proposed rules that many out-of-network
providers do not send claims directly to plans and issuers but instead
require participant, beneficiary, or enrollee to file out-of-network
claims. This could mean that an out-of-network claim may not reach a
plan or issuer for 6 to 12 months after a service is rendered. Such
delays could negatively affect the volume of out-of-network allowed
amount data and the ultimate usefulness of this data. For this reason,
the Departments sought comment regarding whether requiring plans and
issuers to report out-of-network allowed amounts for items and services
furnished at least 90 days in the past is sufficient to ensure the
proposed disclosures will yield sufficient volumes of historical data
to be useful to consumers who wish to shop for services based on price.
The Departments requested comment on whether there should be more time
between the end of the reporting period and publication of the data,
such as 120 days, 180 days, or longer, which would increase the
likelihood that out-of-network claims from the relevant reporting
period have been adjudicated and paid by the time of publication.
The Departments did not receive comments directly in response to
this comment solicitation and are finalizing the Allowed Amount File
historical lookback period as proposed. The final rules, therefore,
adopt a requirement for the Allowed Amount Files to include data for
the 90-day period beginning 180 days before the file publication date.
For example, a file published on June 30, 2021, should include data for
a 90-day period beginning on January 1, 2021. The Departments will
monitor the implementation of this requirement for the Allowed Amount
Files and may revisit the lookback period if the 90-day reporting
period beginning 180 days before file publication fails to yield
sufficient out-of-network data on allowed amounts.
The Departments specifically sought comment on whether the required
disclosures of historical out-of-network allowed amounts would provide
useful information that can assist consumers in locating services at an
affordable cost, or whether there could be additional information that
would be both useful to anticipated users and practical for plans and
issuers to disclose for this purpose. For instance, the Departments
stated in the preamble to the proposed rules that the Departments
considered requiring plans and issuers to disclose amounts out-of-
network providers have charged participants, beneficiaries, and
enrollees for covered services in the Allowed Amount File. The
Departments noted they understood that such charged amounts would be
included in any
[[Page 72231]]
claim for out-of-network benefits and could be helpful to consumers
shopping for services based on price. The Departments sought comment on
this data element.
As summarized earlier in this preamble regarding the In-network
Rate File, some commenters who supported the inclusion of non-
negotiated billed charges in the In-network Rate File also supported
inclusion of billed charges in the Allowed Amount File. These
commenters noted that billed charge information would be especially
useful for the uninsured or those seeking out-of-network care. Another
commenter agreed that information on provider-billed charges is
important for transparency, but this commenter stated that providers,
not issuers, would be the appropriate source for this information.
Regarding these comments, the Departments agree that that a billed
charges data element is important to ensure that the public disclosures
required through the out-of-network Allowed Amount File are as useful
to consumers as possible, including in the scenario where an insured
consumer receives items or services from an out-of-network provider.
Although the Departments are aware that the amount an out-of-network
provider will ultimately balance bill (if allowed in their state) a
consumer for an item or service does not always equal the difference
between the billed charge and the allowed amount, the Departments are
of the view that this information would aid consumers in understanding
their potential out-of-pocket liability. In the jurisdictions that do
not prohibit or limit balance billing, information on billed charges
could aide consumers in their health care decision-making as it is
possible that consumers may choose to receive or forgo a particular
item or service from a particular provider based on the additional out-
of-pocket liability they could be expected to pay through a balance
billing charge from a provider.
Consumers may be able to shop for a particular out-of-network
provider based on total cost of an item or service. For example, in a
state that allows providers to balance bill, a consumer has a
coinsurance of 40 percent for Service X when Service X is furnished by
an out-of-network provider. Out of network Provider A's billed charge
for Service X is $200, and the consumer's plan allows an amount of $100
to be paid to the provider. Therefore, the consumer is responsible for
a coinsurance amount of $40 ($100 allowed amount multiplied by the
consumer's 40 percent coinsurance) and the consumer may be balance
billed an additional $100 ($200 billed charge minus the $100 allowed
amount). In comparison, out-of-network Provider B's billed charge for
Service X is $120 and the consumer's plan allows the same amount of
$100 to be paid to the provider. If the consumer receives Service X
from Provider B, they will be responsible for the same coinsurance
amount of $40 ($100 allowed amount multiplied by the consumer's 40
percent coinsurance). However, if the consumer receives Service X from
Provider B, the consumer may only be balance billed $20 ($120 billed
charge minus $100 allowed amount), which would be an $80 savings to the
consumer compared with receiving the Service X from Provider A. Note
that this example assumes that both Provider A and Provider B will
balance bill consumers, which is not always true even in states that
allow balance billing. Consumers should also contact providers to
inquire whether they will balance bill before making health care
purchasing decisions using this information. Therefore, with
information on both allowed amounts and billed charges, the consumer
may choose to receive Service X from Provider B because their total
out-of-pocket costs will likely be lower.
The Departments note that it is possible that plans and issuers
will populate the Allowed Amount File with multiple billed charges for
the same item or service furnished by the same out-of-network provider.
If this is the case, the billed charge in the Allowed Amount File will
present an expected range and give consumers access to a reasonably
accurate estimate of how much they can expect to be balance billed by
an out-of-network provider, but the billed charge cannot provide to the
consumer the exact amount they can expect to be balance billed when
receiving items and services furnished by the out-of-network provider.
For these reasons, the Departments are of the view that inclusion
of the billed charges in the Allowed Amounts File will help provide a
more complete picture of the full amount a provider could receive for a
particular item or service, either from plans and issuers or directly
from a participant, beneficiary, or enrollee. Furthermore, the
Departments are of the view that requiring this information is
consistent with the goal of providing consumers an understanding of
their potential out-of-pocket liability in advance, similar to an EOB
provided in advance, as billed charges are included on a participant's,
beneficiary's, or enrollee's EOB and are often the first data available
for understanding a participants, beneficiary's, or enrollee's out-of-
pocket liability.
The Departments are aware that plans and issuers have information
regarding providers' billed charges, even if they do not necessarily
have information regarding specific balance billing amounts. The
Departments are therefore of the view that the inclusion of billed
charges in the Allowed Amount File will not substantially increase the
burdens of the final rules. Nonetheless, the Departments are aware that
adding billed charges will also increase both the size and complexity
of the Allowed Amounts File. The Departments do not intend to increase
the burden of developing and maintaining these files unless the
inclusion of the additional data element is essential for providing
meaningful pricing information to consumers. Because it is the
Departments' view that this data element will increase transparency of
actual prices paid by participants, beneficiaries, enrollees, and
payers, the Departments are finalizing the Allowed Amounts File with
the modification to add billed charges as an additional data point
required to be disclosed through the file.
The final rules define billed charges as total charges for an item
or service billed to a plan or issuer by a provider. Plans and issuers
are required to publicly disclose billed charges associated with each
unique allowed amount that would be required under the final rules. The
final rules further clarify that plans and issuers must report each
unique combination of allowed amounts and billed charges for each out-
of-network provider, and their associated Place of Service Code,
provider NPI, and provider TIN. For example, an out-of-network provider
(under a single NPI, TIN, and Place of Service Code) submits 25 claims
(or any other number of claims to meet the 20 unique claim threshold
requirement discussed in more detail later in this preamble) to a plan
or issuer for the service Y. The 25 claims have three \179\ different
billed charges ($100, $150 and $200) and two different allowed amounts
($50 and $150) for item Y. The plan or issuer should have one entry
that represents each unique combination of billed charges and allowed
amounts submitted by the out-of-network provider. Therefore, in this
example, the Departments would expect
[[Page 72232]]
the plan or issuer to represent in the Allowed Amounts File no fewer
than three unique entries, and no more than six unique entries for item
Y from this out-of-network provider. For example:
---------------------------------------------------------------------------
\179\ The Departments note that it is possible for a provider to
have different allowed amounts for the same item or service covered
by the same out-of-network provider because the plan or issuer does
not have a contractual relationship with that out-of-network
provider, by definition. For similar reasons, it is also possible
for the billed charged submitted by the same out-of-network provider
to for the same item or service to be variable.
---------------------------------------------------------------------------
Entry A has a billed charge of $100 and an associated
allowed amount of $50;
Entry B has a billed charge of $150 and an associated
allowed amount of $50;
Entry C has a billed charge of $200 and an associated
allowed amount of $50;
Entry D has a billed charge of $100 and an associated
allowed amount of $150;
Entry E has a billed charge of $150 and an associate
allowed amount of $150;
Entry F has a billed charge of $200 and an associated
allowed amount of $150.
The Departments do not expect to see 25 different entries, unless
they represented 25 distinct combinations of billed charges and
associated allowed amounts from the out-out network provider for Item
Y.
In the Allowed Amount File, the file structure is envisioned as a
parent/child data relationship, where certain data elements are
included under or belong to other data elements, as a child to a
parent. In the Allowed Amount File, the billed charge data element
would serve as a child to the parent allowed amount element. Therefore,
under each unique allowed amount for a particular item or service from
a particular provider, the amount of each provider-billed charge is
listed as a unique dollar amount.
One commenter requested the Departments clarify what is meant by
``allowed amounts for covered items or services furnished by particular
out-of-network providers,'' questioning whether through inclusion of
the word ``particular'' the Departments intended to reference
specialized out-of-network providers upon which plans and issuers might
place coverage limitations. The Departments clarify that inclusion of
the word ``particular'' as a modifier of ``out-of-network providers''
was not intended to be a reference to specialized out-of-network
providers upon which plans and issuers might place coverage
limitations. Rather, use of the word ``particular'' indicates that
Allowed Amount Files must include the historical allowed amounts for
covered items and services furnished to each out-of-network provider to
whom such payments were made during the reference period. The
Departments clarify that under the final rules, and as contemplated in
the proposed rules, plans and issuers are expected to include
historical allowed amounts for every covered item or service furnished
by each out-of-network provider so long as the unique claims threshold
for the out-of-network provider is met.
The Departments further clarify that plans and issuers are only
required to include in the Allowed Amount File those covered items and
services furnished by an out-of-network provider for which the plan or
issuer has adjudicated claims and determined it will pay an allowed
amount. If the plan or issuer has not adjudicated claims and determined
it will pay an allowed amount for items or services furnished by an
out-of-network provider, the plan or issuer is not required to include
those allowed amounts or billed charges in the Allowed Amount File.
In response to the comment that the information in the files would
not address the scenario where a participant, beneficiary, or enrollee
receives out-of-network care in an in-network facility, the Departments
clarify that the expectation is that this information would be captured
in the Allowed Amounts File. If a participant, beneficiary, or enrollee
receives out-of-network care, even if the facility is in the
participant's, beneficiary's, or enrollee's network, the provider will
generate a claim and send a billed charge to the payer that will
establish an allowed amount for the claim; the Departments expect this
allowed amount to appear in the Allowed Amounts File in this scenario.
As noted elsewhere in this preamble, the Departments will provide
technical implementation guidance (as well as individualized technical
assistance, as needed) to ensure that plans and issuers are able to
make public the disclosures required through the final rules.
The Departments do not agree with the commenter who asserted that,
because some small health plans will not have a sufficient number of
any one procedure from a particular provider to make the file
meaningful, the Allowed Amount File requirement should be withdrawn.
The relevant commenter did not provide a number of claims that it
believed would make the file meaningful. In contrast, the Departments
are of the view that the files will be meaningful to the public
regarding all covered items and services from a particular provider
regardless of the specific numbers of claims at issue, even if a
particular provider bills relatively few claims to a particular plan or
issuer. As discussed elsewhere in this preamble, for privacy and
security reasons, the Departments are requiring disclosure for all
covered items and services from a particular provider that meets the
unique claims threshold established by the final rules. If a small
health plan does not have sufficient claims for a covered item or
service to meet the unique claims threshold for a particular provider,
then that health plan is not permitted to publicly disclose information
for that particular item or service paid to the particular provider.
The Departments are of the view that most health plans and issuers will
meet the unique claims threshold for a large proportion of items,
services, and providers to make the files sufficiently meaningful to
justify this requirement.
In the preamble to the proposed rules, the Departments noted that
providing this information could raise health privacy concerns. The
Departments are committed to protecting PHI and other sensitive
information. To address these privacy concerns, as discussed in this
preamble, the Departments proposed that plans and issuers would not be
required to provide out-of-network allowed amount data in relation to a
particular provider and a particular item or service when compliance
would require a plan or issuer to report out-of-network allowed amounts
to a particular provider in connection with fewer than 10 different
claims for payment. The Departments also noted that disclosure of such
information would not be required if compliance would violate
applicable health information privacy laws. In addition to proposing
this exemption, the Departments proposed to require plans and issuers
to include only unique out-of-network allowed amounts to mask the total
episodes of care for a particular provider and item or service. In the
proposed rules, the Departments expressed the view that these
mitigation strategies, in addition to flexibilities proposed to allow
the aggregation of reported data (as described later in this preamble),
were sufficient to protect patients from identification based on
information in the Allowed Amount File. The Departments solicited
comment on whether additional privacy protections would be required.
The Departments specifically requested comment on whether a higher
minimum claims threshold, such as a threshold of 20 claims, would
better mitigate privacy concerns and minimize complexity in complying
with Federal or state privacy laws without compromising the integrity
of the compiled information. The Departments also sought comment on
additional approaches that could decrease the potential for aggregated
health information that would be disclosed under the proposed rules to
be
[[Page 72233]]
identified, especially with respect to smaller group health plans.
In response, some commenters expressed concerns about maintaining
HIPAA protections on the Allowed Amount File due to the small number of
claims associated with specific services for out-of-network providers.
Several commenters stated the threshold of 10 unique claims to require
public disclosure of unique historical allowed amounts would be too low
to protect consumers' PHI. One commenter requested that the Departments
clarify how they arrived at the 10 claims threshold. Some commenters
recommended different minimum thresholds. Some commenters recommended a
minimum threshold of 50 claims. On the other hand, other commenters did
not support increasing the threshold, noting that the files do not
contain identifiable data and so would not pose a risk. One commenter
stated that the files should be released including the lowest number of
claims necessary to achieve the goal of protecting participant,
beneficiary, and enrollee privacy and recommended keeping the proposed
threshold of 10 claims. Another commenter requested that the
Departments not make the threshold any higher, and even consider
lowering the cutoff to five claims, to maintain access to price
transparency data for rural Americans.
Based upon comments received the final rules adopt a 20 unique
claim threshold. The Departments are of the view that the 20 unique
claim threshold balances the concerns expressed by commenters who
suggested the Departments increase the threshold to 50 claims with the
concerns of commenters who expressed the opinion that the proposed 10
claim threshold (or an even lower threshold) would be sufficient to
ensure the files include a meaningful amount of data. The Departments
are of the view that 20 unique claims are sufficient to balance the
privacy concerns against the needs for transparency through the Allowed
Amounts File. This 20 unique claim threshold is more stringent than
CMS' cell size suppression policy, which requires cells containing
values of 1 through 10 to be suppressed in CMS data sets.\180\
Increasing the unique claim threshold from 10 to 20 claims will not
significantly reduce the amount of data that are required to be made
public through the Allowed Amount File. However, if the Departments
were to increase the unique claim threshold to 50 claims, as suggested
by some commenters, the Departments are concerned that this could
significantly reduce the amount of data that are required to be made
public through the Allowed Amount File, which could undermine the goal
of price transparency.
---------------------------------------------------------------------------
\180\ The CMS Cell Size Suppression Policy is outlined on the
CMS website at the following location: https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/Data-Disclosures-Data-Agreements/DUA_-_NewLDS.
---------------------------------------------------------------------------
The Departments are of the view that increasing the unique claim
threshold from 10 to 20 claims will better balance the policy goal of
maximum transparency with the need to protect participants,
beneficiaries, and enrollees from the possibility of being re-
identified through the data included in the Allowed Amount File. In
addition to this strategy, the Departments expect that the flexibility
discussed later in this preamble under the special rule to permit
aggregation of reported data will help protect participants,
beneficiaries, and enrollees from identification based on information
in the Allowed Amount File. Finally, the Departments reiterate that the
disclosure of the information is not required if disclosure would
violate applicable health information privacy laws. The Departments
note that this exception does not mean that these disclosures are not
required where a law that would otherwise prohibit the disclosure
permits disclosure if required by law.
Prescription Drug File
The Departments finalize negotiated rates for prescription drugs as
the third content element in the Prescription Drug File. The
Departments received several comments related to whether negotiated
rates for prescription drugs should be disclosed through the machine-
readable files, and if so, which price or prices related to
prescription drugs should be required to be included. Many commenters
provided general support for the public release of negotiated rates for
prescription drugs. One commenter asserted that releasing negotiated
rates for prescription drugs would result in lower costs for health
plans and consumers, which could lead to a reduction in manufacturer
discounts of upwards of three percent.
Several commenters did not support disclosure of negotiated rates
for prescription drug prices through the machine-readable files.
Commenters recommended that the In-network Rate File should not include
prescription drugs for several reasons. These reasons include: The
complexity of prescription drug pricing (prices are determined by a
formula that is determined at the point-of-sale and can change on a
daily basis; the information would not be relevant to consumer
decision-making; and the existence of established drug pricing tools
that provide support for consumer decision-making. Some commenters
stated that the unique nature of prescription drug pricing would make
the release of negotiated rates difficult and further noted that the
rates negotiated between PBMs and pharmacies are considered
confidential. Another commenter stated that the Departments should only
require disclosure of prescription drug prices when the information
disclosed is directly related to the cost a plan participant,
beneficiary, or enrollee would need to pay out of pocket so as not to
undermine group health plans' and health insurance issuers' ability to
negotiate lower drug costs. Some commenters claimed that plans and
issuers have no control over prescription drug costs and may not be
able to provide this information. Instead, commenters asserted that
information related to prescription drug costs should come from PBMs or
prescription drug manufacturers.
In 2018, retail prescription drug spending represented
approximately nine percent ($335 billion) of overall health
spending.\181\ In 2017 large group health plans and issuers accounted
for the largest share of prescription drug spending amongst other
payers, despite generally having a younger and healthier population
than public payers.\182\ The Departments maintain that plans and
issuers have an essential role,\183\ and vested interest in controlling
prescription drug spending. Moreover, as prescription spending
continues to rise,\184\ so does the trend of prescription rebates.\185\
According to
[[Page 72234]]
surveyed health plan and PBM personnel, PBMs passed through 78 percent
of manufacturer rebates to health plans in 2012 and 91 percent in
2016.\186\ And while some plans and issuers may use these rebates to
dampen premium increases,\187\ there remains an unclear prescription
drug supply chain that masks the true costs of prescription drugs. The
Departments are of the view that it would not advance the goals of the
final rules to exclude a category of items and services that comprises
such a significant proportion of health care spending.
---------------------------------------------------------------------------
\181\ ``National Health Expenditures 2018 Highlights.'' Centers
for Medicare & Medicaid Services. Available at: https://www.cms.gov/files/document/highlights.pdf.
\182\ Cubanski, J., and Rae, M. ``How Does Prescription Drug
Spending and Use Compare Across Large Employer Plans, Medicare Part
D, and Medicaid?'' Kaiser Family Foundation. May 20, 2019. Available
at: https://www.kff.org/medicare/issue-brief/how-does-prescription-drug-spending-and-use-compare-across-large-employer-plans-medicare-part-d-and-medicaid/.
\183\ ``How are prescription drug prices determined?'' American
Medical Association. April 9, 2019. Available at: https://www.ama-assn.org/delivering-care/public-health/how-are-prescription-drug-prices-determined.
\184\ ``National Health Expenditure Projections 2019-28.''
Office of the Actuary. Centers for Medicare & Medicaid Services.
March 24, 2020. Available at: https://www.cms.gov/files/document/national-health-expenditure-projections-2019-28.pdf.
\185\ According to the Academy of Managed Care Pharmacy, a
prescription drug rebate is a monetary amount returned to a payer
from a prescription drug manufacturer based on pharmaceutical use by
a covered person or purchases by a provider. ``AMCP Guide to
Pharmaceutical Payment Methods, 2013 Update.'' Available at: https://www.amcp.org/sites/default/files/2019-03/Full-Pharmaceutical-Guide-%283.0%29.pdf; see also ``The Prescription Drug Landscape,
Explore.'' PEW Charitable Trusts. March 8, 2019. Available at:
https://www.pewtrusts.org/en/research-and-analysis/reports/2019/03/08/the-prescription-drug-landscape-explored.
\186\ Id.
\187\ Id.
---------------------------------------------------------------------------
The Departments agree that prescription drug pricing is complex but
are of the view that complexity is not a valid reason for inaction.
There are many different players in the prescription drug supply chain
that may have some control over costs, including plans and issuers,
manufacturers, wholesalers, pharmacies, and PBMs.\188\ As commenters
stated, it is often the case that PBMs negotiate the price of a
prescription drug for a plan or issuer based on a contract the plan or
issuer maintains with the PBM; however, it is ultimately the plan or
issuer who is responsible for deciding how the costs of prescription
drugs are passed along to a participant, beneficiary, or enrollee. The
Departments, therefore, are of the view that plans and issuers are
aware of the negotiated rate for a prescription drug for which their
participants, beneficiaries, or enrollees may have cost-sharing
liability, or can be informed of this negotiated rate by their
contracted PBM.
---------------------------------------------------------------------------
\188\ ``How are prescription drug costs really determined?''
Biotechnology Innovation Organization. Available at: https://www.drugcostfacts.org/prescription-drug-costs.
---------------------------------------------------------------------------
The Departments do not agree that prescription drug pricing
information, such as negotiated rates, will confuse consumers. As
discussed elsewhere in this preamble, the Departments recognize that
the information included in the machine-readable files may not be easy
for an average consumer to navigate and expect that third-party
developers will use this information to make tools available that make
this information more useful for the average consumer.
The Departments agree with commenters who acknowledged the
existence of many tools that provide prescription drug prices. However,
the Departments are of the view that existing prescription drug pricing
tools are insufficient as they lack competitive pricing information
across all PBMs, and health plans and issuers.\189\ Once prescription
drug pricing is made more fully available, health care providers will
have greater opportunity to factor pricing information into their
prescribing decisions. Many health care providers benefit financially
when they can reduce costs and improve their patients' medication
adherence.\190\ This benefit to providers can also have a significant
impact on overall health care spending.
---------------------------------------------------------------------------
\189\ Galewitz, P. ``Doctors Slow To Adopt Tech Tools That Might
Save Patients Money On Drugs.'' NPR. July 5, 2019. Available at:
https://www.npr.org/sections/health-shots/2019/07/05/738283044/doctors-slow-to-adopt-tech-tools-that-might-save-patients-money-on-drugs.
\190\ Id.
---------------------------------------------------------------------------
For these reasons, and those discussed more fully below, the
Departments are finalizing, with modifications from the proposed rules,
requirements to disclose pricing information for prescription drugs
through a machine-readable file. However, reflecting the unique
attributes of prescription drug pricing, the final rules respond to
comments by adopting requirements that are more detailed than what was
included in the proposed rules, including the inclusion of a third
machine-readable file for prescription drug pricing information.
The final rules require plans and issuers to produce a third
machine-readable file for reporting prescription drug pricing
information, the Prescription Drug File, whereas the proposed rules
would have required plans and issuers to include negotiated rates for
covered prescription drugs in the In-network Rate File. The Departments
have made this change to ensure that prescription drug pricing
information is produced in a manner that is most useful to the public.
As noted earlier in this preamble, there are upwards of 100,000 NDCs
for prescription drugs. Divorcing negotiated rates for prescription
drugs from negotiated rates for other items and services allows the
pricing information for medical items and services to be discernible
from pricing information for prescription drugs. Further, a PBM may
administer pharmacy benefits for a plan or issuer in addition to any
other services it may provide to a plan or issuer. Therefore, keeping
prescription drugs pricing data separate from pricing data for other
items and services is generally better aligned with plan and issuer
operations and will reduce the burden associated with combining data
from different sources. As discussed in the Information Collection
Requests (ICR) section of this preamble, the Departments estimate that
the Prescription Drugs File requirement will not add significantly to
the development and maintenance costs of the machine-readable files
because the cost and burdens related to prescription drugs will largely
be transferred from the In-network Rate File to the Prescription Drug
File. Additionally, the Departments anticipate that removal of
prescription drugs from the In-network Rate Files will significantly
reduce the size of those files, which could reduce the costs associated
with maintenance and storage of each individual file. The Departments
are of the view that removing prescription drugs from the In-network
Rate File and requiring this information to be included in a separate
Prescription Drug File is consistent with the Departments' goal of
separating fundamentally different types of data into distinct files.
Because, as many commenters observed, prescription drug prices are
unique, the Departments are of the view that this information would be
more appropriately represented through a third machine-readable file.
Furthermore, the updated machine-readable file structure will support
consumers, researchers, and third-party developers in reviewing,
ingesting, aggregating, and analyzing the data.
The Disclosure of Prescription Drugs Pricing Information
Under the proposed rules, group health plans and health insurance
issuers would be required to publicly disclose negotiated rates in the
In-network Rate file. The Departments defined negotiated rates in the
proposed rule as the amount a group health plan or health insurance
issuer, or a third party on behalf of a group health plan or health
insurance issuer, has contractually agreed to pay an in-network
provider for covered items and services, pursuant to the terms of an
agreement between the provider and the group health plan or health
insurance issuer, or a third party on behalf of a group health plan or
health insurance issuer. As discussed in the Definitions section of
this preamble, the final rules adopt this definition as proposed, with
modifications to provide additional clarity.
In the preamble to the proposed rules, the Departments acknowledged
that cost-sharing liability for prescription drugs is often based on an
amount other than the negotiated rate, such as manufacturer list prices
or undiscounted list prices such as AWP or
[[Page 72235]]
WAC. The Departments further acknowledged that, because of the
application of rebates and other discounts, the inclusion of just the
negotiated rate for prescription drugs could mislead consumers because
the rate paid by the plan could ultimately be lower than the price paid
by the consumer at the point-of-sale, as it is the Departments'
understanding that these rebates and other discounts typically are not
passed on to the consumers at the point of sale. The Departments
expressed the concern that including only the negotiated rate for
prescription drugs used to determine cost-sharing liability could
perpetuate the lack of transparency surrounding prescription drug
pricing. To this end, the Departments solicited comment on which
pricing information related to prescription drugs should be
disclosed.\191\
---------------------------------------------------------------------------
\191\ The Departments note that this discussion in the preamble
to the proposed rules occurred in the context of the third content
element (negotiated rates) for the internet-based self-service tool.
However, as negotiated rates were a proposed content element for the
machine-readable files, the Departments are of the view that the
comments received regarding negotiated rates in the context of the
internet-based self-service tool are equally applicable to the
prescription drug disclosures plans and issuers are being required
to make through the machine-readable files. The definition of
``negotiated rate'' for prescription drugs applies to both the
internet-based self-service tool and machine-readable file
provisions. Regarding the machine-readable files, the Departments
proposed that plans and issuers be required to include in-network
negotiated rates and out-of-network allowed amounts for all covered
items and services. In the Departments' view, the use of the same
term regarding both requirements underscores the relevance of these
comments to all disclosure requirements applicable to items and
services, including those applicable to prescription drugs.
Furthermore, several commenters did not clearly separate their
comments regarding the internet-based self-service tool and the
machine-readable files and provided broad comments that applied to
all relevant sections of the proposed rules.
---------------------------------------------------------------------------
Despite the Departments' concerns regarding negotiated rates for
prescription drugs outlined in the preamble to the proposed rules,
commenters responded that negotiated rates, in addition to other
information, are an important data point necessary to achieving useful
transparency into coverage and out-of-pocket costs for prescription
drugs. Several commenters recommended that the machine-readable file
include both the negotiated price and the undiscounted ``list'' price,
upon which coinsurance and deductibles are often based, in order to
promote competition. Other commenters suggested that plans and issuers
should disclose to enrollees when they do not pass through manufacturer
rebates and discounts at the point-of-sale or factor these amounts into
enrollee cost sharing. Another commenter recommended the Departments
consider requiring a ``net price'' for prescription drugs rather than
the negotiated rates. This commenter stated that, it is vital that this
``negotiated rate'' also include the ``net price'' (which accounts for
all price concessions, including direct and indirect remuneration fees
(DIR) and/or similar policies/terminology, such as ``true up''
practices under employer-sponsored and private plans to accurately
estimate participant, beneficiary, and enrollee cost-sharing liability
for prescription drugs). One commenter noted that if the public
disclosure did not include information related to rebates, the file
could be misleading and could lead to a continuing overemphasis on
prescription drug list prices without recognition of the role played by
rebates.
Another commenter recommended that the Departments allow plans and
issuers to report the most appropriate available price type based on
the plan's benefit design. This commenter suggested that plans should
also be required to identify the price reported, such as AWP or WAC or
the contracted pharmacy reimbursement amount (for example, the Part D
negotiated price).
The Departments have closely reviewed the comments to determine the
prescription drug pricing information plans and issuers should provide
in the Prescription Drug File in order to achieve the goals of
transparency. Based on this review, the final rules are adopting as
content element three for the Prescription Drug File a requirement for
plans and issuers to publicly disclose two amounts for prescription
drugs in the Prescription Drug File: The negotiated rate and the
historical net price.
Prescription Drug Negotiated Rate Disclosure
As evidenced by the comments and the Departments' independent
research, there is wide variability in how negotiated rates are
assigned for prescription drugs. For instance, some commenters noted
that negotiated rates for prescription drugs include rebates, price
concessions, and other ``true-ups, while others likened the negotiated
rates to the undiscounted list price used for determining cost-sharing
liability. Therefore, plans and issuers may use varying types of prices
when reimbursing providers for prescription drugs. For example, it is
the Departments' understanding that for generic prescription drugs, the
Maximum Allowable Cost (MAC)--an amount the plan or issuer uses as the
maximum amount they will pay for a particular prescription drug
product--may be the amount that plans and issuers use to pay providers
for a prescription drug. Plans and issuers may reimburse providers for
other prescription drugs using a UCR amount or an amount based on the
undiscounted list price, such as AWP or WAC. It is the Departments'
understanding that contracts negotiated between plans and issuers (or
their contracted PBM) and providers generally do not include specific
negotiated rates for prescription drugs, but instead include formulas
that determine the type of price that will be used to reimburse
providers for a particular prescription drug product. The negotiated
rate may differ by drug or class of drug in the contract as the lesser
of several types of prices based on one of the benchmarks described
above--that is, WAC, AWP, MAC, or UCR. Because prices for prescription
drugs can fluctuate on a daily basis, the price that is used to
reimburse the provider can also fluctuate based on application of the
contract terms.
In addition to better appreciating the wide variability in how
negotiated rates are assigned, the Departments also now understand
based on comments and independent research, that, contrary to the
Departments' understanding as explained in the preamble to the proposed
rule, no matter what benchmark or formula is used to determine the
negotiated rate, the negotiated rate is frequently also the rate upon
which cost-sharing liability is based for prescription drugs.
Based on the circumstances described above, the Departments
therefore agree with commenters that a certain amount of flexibility is
required for plans and issuers as it relates to the benchmarks and
inputs required for the disclosure of negotiated rates for prescription
drugs. To allow for flexibility, as proposed, the final rules do not
assign a benchmark or necessary inputs to the definition of negotiated
rates. The final rules include a broad definition for negotiated rates
to mean the amount a group health plan or health insurance issuer has
contractually agreed to pay an in-network provider, including an in-
network pharmacy or other prescription drug dispenser, for covered
items and services, whether directly or indirectly, including through a
TPA or PBM.
As noted above, the negotiated rate can be one of several different
rates and can fluctuate on a daily basis depending on the terms of the
contract between plans or issuers (or the PBM for the plan or issuer)
and the provider, which
[[Page 72236]]
includes pharmacies and other prescription drug dispensers. Therefore,
the Departments clarify that, where a plan or issuer uses a formula as
described above to determine the rate that will be used to reimburse
providers for a prescription drug, the negotiated rate that should be
included in the Prescription Drug File should be the rate that would be
used by the plan or issuer to reimburse providers on the date that the
file is extracted.
Notably, the final rules do not finalize a requirement to include
the manufacturer list price, as contemplated in the proposed rules. The
manufacturer list price is a manufacturer-specified metric for drug
prices that is commonly used by both Federal and commercial health care
programs as a benchmark for negotiated rates. The manufacturer list
price in this context is often the WAC, which is defined in statute as,
the manufacturer's list price for the drug or biological to wholesalers
or direct purchasers in the United States, not including prompt pay or
other discounts, rebates or reductions in price, for the most recent
month for which the information is available, as reported in wholesale
price guides or other publications of pricing data with respect to a
drug or biological.\192\
---------------------------------------------------------------------------
\192\ 42 U.S.C. 1395w-3a(c)(6).
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Like negotiated rates, the list price does not include discounts,
dispensing fees, rebates, or other retrospective pricing adjustments.
The manufacturer list price is not plan- or issuer-specific. If the
Departments were to require plans and issuers to include the
manufacturer list price in the Prescription Drug File, the information
included in the files would be the same or similar across all plans and
issuers. Further, manufacturer list price information is already
aggregated, available through several companies, and could be
incorporated into third party applications to be made accessible to
consumers. WAC prices for drugs and biologics are collected and
published by several companies, including First Databank and Medi-Span.
Additionally, CMS publishes a monthly National Average Drug Acquisition
Cost (NADAC), which provides a national benchmark for the prescription
drug prices paid by retail pharmacies.\193\ Because information on
manufacturer list prices would be largely redundant across plans and
issuers, and because this information is publicly available through
other existing resources, the Departments concluded this information
would be of limited value for the public.
---------------------------------------------------------------------------
\193\ ``National Average Drug Acquisition Cost.'' Centers for
Medicare & Medicaid Services. September 15, 2020. Available at:
https://data.medicaid.gov/Drug-Pricing-and-Payment/NADAC-National-Average-Drug-Acquisition-Cost-/a4y5-998d.
---------------------------------------------------------------------------
The Departments do not intend to increase the burden of developing
and maintaining the machine-readable files unless the inclusion of the
additional data element is essential to provide meaningful, transparent
pricing information to the public. Inclusion of the manufacturer list
price would not significantly advance transparency as this information
is already available publicly, and it would increase the burden of
developing the Prescription Drug File. The Departments expect that
third-party developers will access and incorporate publicly available
databases, such as those including manufacturer list pricing
information, where that information is relevant to providing meaningful
information to consumers.
The Departments are of the view that it is important for
transparency for negotiated rates to be included in the Prescription
Drug File. Consumers, both insured and uninsured, can use this
information to better understand the cost of prescription drugs and to
advocate for less expensive alternatives. The Departments are also of
the view that making the negotiated rate public in a manner that is
highly visible to consumers, researchers, innovators and regulators
could potentially place pressure on manufacturers to lower their list
prices, which could, in turn, lower negotiated rates upon which
consumer cost-sharing liability is based.
Nonetheless, as stated in this preamble and in the preamble to the
proposed rules, requiring disclosure of only the negotiated rate for
prescription drugs could perpetuate the lack of transparency
surrounding prescription drug pricing. As commenters noted, the
negotiated rate is not generally tied to the amount a plan or issuer
will ultimately pay for the prescription drug or prescription drug
service due to the use of post-point-of-sale rebates, discounts, and
other price concessions that reduce the price that plans and issuers
pay for prescription drugs. To address this issue and to introduce
greater transparency surrounding prescription drug pricing, in response
to comments, the Departments are also finalizing a requirement that
plans and issuers must publicly disclose historical net prices, as
discussed in detail below.
Prescription Drug Historical Net Price Disclosure
For purposes of the final rules, historical net price means the
retrospective average amount a plan or issuer paid for a prescription
drug, inclusive of any reasonably allocated rebates, discounts,
chargebacks, fees, and any additional price concessions received by the
plan or issuer with respect to the prescription drug. Net price is the
price for a prescription drug after discounts are deducted, and is paid
at different points in the prescription drug distribution chain (for
example, the plan or issuer to the pharmacy, the pharmacy to a
wholesaler, and the wholesaler to the manufacturer).\194\ For the
purposes of the final rules, the Departments are concerned with the
price ultimately paid by a plan or issuer to a drug manufacturer.\195\
Essentially, rebates, discounts, chargebacks, fees, and other
additional price concessions are adjustments made after the point-of-
sale that affect the total price paid by the plan or issuer (or through
a contract with the PBM) to the manufacturer for a prescription drug
product. As a general matter, a price concession is a discount or
rebate available to a purchaser of a product or service, wherein the
discount or rebate is conditioned upon the purchaser complying with the
contractual terms of the rebate or discount offer.\196\ More
specifically, a rebate is an amount that the prescription drug
manufacturer returns to a payer based on utilization by consumers
enrolled through a plan or issuer or based on purchases by a
provider.\197\ A chargeback is a type of discount process through a
prescription drug wholesaler where manufactures reimburse wholesalers
who offer drugs to purchasers at discounted prices, and the discount
negotiation occurs between the manufacturer and the purchaser.\198\
Finally, fees include any payment adjustments, incentives, or other
discounts that are not included in the negotiated price for a drug (for
example, prompt pay discounts, pharmacy network fees, performance-based
fees, and incentive fees).\199\ The Departments
[[Page 72237]]
note that manufacturers also may offer additional price concessions to
certain providers or directly to consumers in the form of coupons. The
final rules only require disclosure of reasonably allocated rebates,
discounts, chargebacks, fees, and any additional price concessions
received by the plan or issuer (or the PBM under contract with the plan
or issuer).
---------------------------------------------------------------------------
\194\ ``AMCP Guide to Pharmaceutical Payment Methods, 2013
Update'' Academy of Managed Care Pharmacy. 2013. Available at:
https://www.amcp.org/sites/default/files/2019-03/Full-Pharmaceutical-Guide-%283.0%29.pdf.
\195\ The Departments note that each plan or issuer (or the PBM
acting under contract with the plan or issuer) may utilize a
different combination of price concessions.
\196\ ``AMCP Guide to Pharmaceutical Payment Methods, 2013
Update. Academy of Managed Care Pharmacy. 2013. Available at:
https://www.amcp.org/sites/default/files/2019-03/Full-Pharmaceutical-Guide-%283.0%29.pdf.
\197\ Id.
\198\ Id.
\199\ ``Final Medicare Part D DIR Reporting Requirements for
2017.'' Centers for Medicare & Medicaid Services. Available at:
https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/HPMS/HPMS-Memos-Archive-Weekly-Items/SysHPMS-Memo-2018-May-30th.
---------------------------------------------------------------------------
As noted earlier, several commenters commented on the nature of the
prescription drug pricing information that should be captured to
achieve the goals of price transparency. Some commenters noted the net
price would be important to price transparency efforts because it would
put consumers on notice when the net price is less than their cost-
sharing amount and it would capture the actual prices of prescription
drugs after the application of price concessions, which would provide
transparency regarding actual prescription drug costs. The Departments
agree with these commenters that disclosure of information about the
net price for prescription drugs (and therefore rebates and other price
concessions that are included in the net price) is necessary to achieve
the goals of the final rules.
Therefore, the final rules adopt a requirement to make public a
historical net price, as defined by the final rules. Furthermore,
rather than require disclosure of the actual net price, the final rules
establish and adopt a definition of historical net price that balances
the need for transparency against concerns expressed by other
commenters that release of net prices could affect issuers and PBMs'
ability to negotiate drug prices, including rebates and other price
concessions. Specifically, the final rules define historical net price
as the retrospective average amount a plan or issuer paid an in-network
provider, including any in-network pharmacy or other prescription drug
dispenser, for a prescription drug, inclusive of any reasonably
allocated rebates, discounts, chargebacks, fees, and any additional
price concessions received by the plan or issuer with respect to the
prescription drug or prescription drug service. The Departments note
that for the purposes of the final rules, the definition of historical
net price only includes those price concessions received by the plan or
issuer (or under the contract between the PBM and the plan or issuer).
Because of timing delays related to application of rebates, discounts,
chargebacks, fees, and other price concessions, plans and issuers are
required to provide historical or retrospective data, rather than
prospective or current pricing data regarding the net price of
prescription drugs. In the case prescription drug net prices,
historical data will provide valuable information for stakeholders, as
the actual prices plans and issuers ultimately pay for prescription
drugs cannot be known until after the application of time-delayed
rebates, discounts, chargebacks, fees, and other price concessions. As
discussed later in this section, plans and issuers will be required to
include historical net prices for a 90-day period beginning 180 days
before the date a particular Prescription Drug File is published. The
final rules also require the historical net price, as defined earlier
in this section, to be disclosed through the Prescription Drug File.
As discussed earlier in this preamble, the Departments are aware
that an estimated allocation of rebates, discounts, chargebacks, fees,
and any other additional price concessions may be necessary to
represent the historical net price. Product-specific and non-product
specific rebates, discounts, chargebacks, fees, and other price
concessions must be allocated by dollar value if the total amount of
the price concession is known to the plan or issuer at the time of file
publication. It is the Departments' understanding that most discounts,
such as those related to market sharing and rebates based on volume,
are calculated within time periods as short as one to three months.
Therefore, the Departments expect the total amounts for these types of
discounts, rebates, and other price concessions will be known at the
time of file publication. Where the total amount of a price concession
is known at the time of file publication, plans and issuers must
allocate the price concession by the total dollar amount.
The Departments also understand that some product-specific and non-
product specific price concessions are based upon outcomes- or value-
based payment arrangements that calculate rebates over a longer period
of time--usually six months to more than three years. Because these
price concessions will not be known at the time of file publication,
the Departments are requiring plans and issuers to estimate the
historical net price using a reasonable allocation and good faith
estimate of the total concession amount. Therefore, if the total amount
of the price concession is not known to the plan or issuer at the time
of file publication, then rebates, discounts, chargebacks, fees, and
other price concessions should be reasonably allocated using an
estimate of the average price concessions based on the rebates,
discounts, chargebacks, fees, and other price concessions received over
a time period prior to the current reporting period and of equal
duration to the current reporting period.
Rebates may reflect discounts negotiated with drug manufacturers
that lower drug prices for the plan or issuer. Rebates may not directly
benefit participants, beneficiaries, or enrollees, however, as the
decision of whether and how to share savings from rebates is at the
discretion of the plan or issuer. Nonetheless, there is evidence that
rebates are positively correlated with increased manufacturer list
prices for prescription drugs, which is typically the basis for a
consumer's cost-sharing liability.\200\ A recent analysis found that,
on average, from 2015 to 2018, a $1 increase in rebates was associated
with a $1.17 increase in manufacturer list prices.\201\ Therefore, due
to the positive correlation between rebates and manufacturer list
prices, a policy that results in a reduction to rebates may result in a
reduction in the manufacturer list price (and also overall prescription
drug prices). A policy that requires plans and issuers to make public
historical net prices could expose the extent of rebates and other
price concessions, and this transparency in historical net price could
cause a reduction in the use of rebates and other price concessions,
and, therefore, a reduction in the manufacturer list price.\202\ The
resulting reductions in manufacturer list price could lead to lowered
out-of-pocket costs for both uninsured consumers who must pay the
manufacturer list price and insured consumers with deductibles and
coinsurance. Because negotiated rates for prescription drugs are
largely based upon the manufacturer list price, the reduction in the
manufacturer list price will likely be reflected in the negotiated
rate. Further, because negotiated rates are used to determine cost-
sharing liability for prescription drugs, a reduction in such rates
will likely result in lower consumer costs through a reduction to
deductibles and coinsurance.
---------------------------------------------------------------------------
\200\ Sood, N., et al. ``The Association Between Drug Rebates
and List Prices.'' U.S.C. Schaeffer Center for Health Policy and
Economics. February 11, 2020. Available at: https://healthpolicy.usc.edu/research/the-association-between-drug-rebates-and-list-prices/.
\201\ Id.
\202\ Id.
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The Departments are of the view that requiring both the negotiated
rate and the historical net price, as defined by the final rules, will
produce sufficient transparency regarding prescription drug pricing
information to support consumer health care purchasing
[[Page 72238]]
decisions and provide other stakeholders insight into actual
prescription drug pricing. Inclusion of both the negotiated rate and
historical net price addresses the Departments' concern, expressed in
the preamble to the proposed rules, that merely requiring disclosure of
the rate that is used to determine an individual's cost-sharing
liability (that is, as clarified in the final rules, the negotiated
rate) could perpetuate the lack of transparency in prescription drug
pricing.
Additionally, in the preamble to the proposed rules, the
Departments specifically solicited comment on whether and how the
public disclosure requirements should account for rebates, discounts,
and dispensing fees to ensure individuals have access to meaningful
cost-sharing liability estimates for prescription drugs.\203\ Upon
review of the comments, the Departments are of the view that public
disclosure of the historical net price, which takes into account
rebates, discounts, dispensing fees, and other price concessions, in
addition to the negotiated rate, upon which cost sharing is based,
provides the appropriate combination of pricing information to achieve
the goals of transparency and ensure that individuals have access to
meaningful prescription drug pricing information. First, the negotiated
rate will help support consumer health care purchasing decisions.
Second, the historical net price will support the public in gaining
enhanced knowledge of actual drug prices. Enhanced knowledge of actual
drug historical net prices could also support consumer health care
purchasing decisions, as consumers could use the information to
determine whether their out-of-pocket costs are commensurate with the
rebates, discounts, and other price concessions received by their plan
or issuer. The historical net price will also make consumers and other
stakeholders aware of situations where cost-sharing liability for a
prescription drug exceeds the amount their plan or issuer ultimately
paid for the prescription drug. In these situations, participants,
beneficiaries, and enrollees will be able to make an informed decision
regarding whether to utilize their plan or coverage when purchasing the
prescription drug. Furthermore, plans and issuers could be incentivized
to pass through a larger or more significant share of the rebates and
other discounts that they receive from drug manufacturers if those
discounts are effectively disclosed via historical net price
information.
---------------------------------------------------------------------------
\203\ 84 FR 65464, 65472 (Nov. 27, 2019).
---------------------------------------------------------------------------
The Departments acknowledge that there are potential adverse
consequences of requiring plans and issuers to make public rebates and
other price concessions, directly or indirectly, through the historical
net price. For instance, stakeholders such as PBMs and prescription
drug manufacturers could attempt to find ways to obscure rebates and
other price concessions such that they would not be required to be
publicly disclosed under the final rules. However, the Departments are
of the view that such attempts would likely be discouraged by the
nature of the disclosures themselves and would otherwise be
unsuccessful if attempted. A benefit of requiring the widespread public
disclosure of pricing information for prescription drugs is that the
transparency data itself can be used to identify where plans and
issuers (or third parties acting on their behalf) may be attempting to
circumnavigate disclosure requirements. Researchers and other entities
who aggregate and analyze the data will be able to compare pricing data
across plans and issuers. This can help identify plans and issuers
whose data is an outlier and identify them for further scrutiny by
regulators. The current lack of transparency in prescription drug
pricing does not allow this type of oversight and monitoring. While it
is possible that stakeholders will act in ways that conflict with the
intent of the public disclosures, it is also very likely that
transparency itself will help state and local regulators to identify
these anti-competitive practices. Indeed, it is possible that the
public disclosures could help to uncover other unknown anti-competitive
business practices that exist today. For these reasons, the Departments
are of the view that the benefits of public disclosure of prescription
drug pricing information outweigh the potential risk that certain
stakeholders may seek to take advantage of the disclosure requirements
in ways that would increase prescription drug costs.
A commenter observed that if the Departments were to include the
net price, it would be important to clarify that that the information
is not necessarily predictive of future transactions because
information about rebates is not known with certainty before a drug is
dispensed. The Departments recognize that prospective net prices for
prescription drugs could be complicated to estimate accurately due to
the nature of prescription drug pricing. Nonetheless, the Departments
are of the view that the historical net price will be a sufficiently
accurate guide for potential prescription drug prices and will fulfill
the objectives of the final rules.
The final rules adopt a requirement to include in the Prescription
Drug File the historical net price over a 90-day reporting period for
each NDC for dates of service within 180 days of the Prescription Drug
File publication date. This approach will ensure that data is composed
of the historical net price for relatively recent claims (rather than
older claims from multiple time periods) and will avoid the conflation
of payments from different periods of time. The Departments are of the
view that historical net prices from defined periods of time will
enable users to make meaningful comparisons across plans and coverages.
Additionally, the Departments chose this reporting reference period to
be consistent with the period proposed and being finalized through the
final rules for reporting of allowed amounts through the Allowed
Amounts File. The Departments are of the view that consistency across
machine-readable file requirements, where applicable, will reduce
potential confusion among file users as well as reduce burdens for
plans and issuers. The Departments are of the view that the 180-day
lookback period (which is expected to capture many of the market-share
and volume rebates and other price concessions) and requirement to make
a reasonable allocation will balance the need to be transparent in
current prices with the delayed timing of the application of certain
rebates and other price concessions.
To reasonably allocate any particular non-product specific or
product-specific rebate, discount, chargeback, fee, or other additional
price concession by dollar value of the drug where the totals amount is
fully known at the time of file publication, plans and issuers should
divide the rebate or discount amount by the total dollar value of drugs
on which the rebate is calculated, and then apply that percentage to
all applicable drugs. For example, if a rebate amount of $20,000 is
received during the 3-month file reference period in connection with
$100,000 in sales on two drugs during the same period, the rebate is
allocated as a 20 percent discount to the prices of those two drugs.
Sales for Drug A totaled $60,000 and sales for Drug B totaled $40,000.
A rebate of $12,000 ($60,000 multiple by 20 percent) is allocated to
Drug A, resulting in a historical net price populated in the
Prescription Drug File of $48,000. Similarly, a rebate of $8,000 is
allocated to Drug B, resulting in a historical net price populated in
the Prescription drug file of $32,000. The Departments are
[[Page 72239]]
aware that this allocation methodology will not always perfectly
allocate the rebate amounts because of the complexities of rebate
calculation, or because of timing issues. However, the Departments are
of the view that this simplified approach balances the goal of
providing actionable drug pricing information to the public while
limiting the burdens on plans and issuers in producing the information.
To reasonably allocate any particular non-product specific or
product-specific rebate, discount, chargeback, fee, or other additional
price concession where the total amounts are not fully known at the
time of file publication, plans and issuers must make a good faith,
reasonable estimate of the price concession using an historical
adjustment amount. To make this estimate, plans and issuers shall
determine the average value of price concessions for the relevant
product over a time period prior to the current reporting period and of
equal duration to the current reporting period and use that amount to
apply an estimated adjustment amount in the current reporting period.
For example, Plan X has $100,000 in total sales for 20,000 units--
averaging $5 per unit--of Drug A during the current reporting period,
which is January 1, 2020, through March 31, 2020. However, Plan X will
not know the total amount of product-specific rebate to expect for
sales of Drug A for at least another six months. To address this timing
issue, Plan X can apply a reasonable estimate to allocate an adjustment
to the current reporting period. For instance, Plan X can look back to
the total rebates received for the product during a comparable time
period. In this example, Plan X reviews its historical data and
determines the rebates received for Drug A, from the period between
January 1, 2019, and March 31, 2019, totaled $10,000 for sales of
30,000 units totaling $160,000. The average price per unit was $5.33
and the average discount per unit was $0.33 resulting in an average
final net price of $5 for Drug A. Plan X then applies this historical
rebate percentage to the current reporting period for Drug A. Plan X
subtracts $6,250 ($100,000 total sales for the current reporting period
multiplied by the estimated 6.25 percent historical rebate percentage)
from the $100,000 total sales for a total net price of $93,750 and an
average net price for Drug A, rounded to the nearest hundredth, of
$4.69. Plan X reports in the Prescription Drug File an average
historical net price for Drug A of $4.69 for the current reporting
period.
In the discussion of the Allowed Amounts File in the preamble to
the proposed rules, the Departments noted that providing the Allowed
Amounts information could raise health privacy concerns. The
Departments are of the view that similar concerns could be raised
regarding the historical net price information in the Prescription Drug
File. For example, there may be instances--such as in a small group
plan or with respect to an NDC for a rare chronic condition--where,
through deduction, disclosure of historical net price information may
enable users to identify the participant, beneficiary, or enrollee who
received a particular prescription drug because a very small number of
claims are used to derive the historical net price of a particular NDC
at a particular pharmacy or other prescription drug dispenser.
Additionally, as noted in relation to the Allowed Amount File, there
may also be instances when the historical net price public disclosure
requirement would be inconsistent with Federal or state laws governing
health information that are more stringent than HIPAA regarding the
use, disclosure, and security of health data that was produced pursuant
to a legal requirement, such that plans and issuers would be required
to further de-identify data. For example, some of the claims for
payment used to derive the historical net price could relate to
services provided for substance use disorders, which could implicate
disclosure limitations under 42 CFR part 2 governing the
confidentiality of patient records related to treating a substance use
disorder. The Departments are committed to protecting PHI. To address
privacy concerns, the final rules adopt an approach consistent with the
out-of-network Allowed Amount File. The final rules do not require
plans and issuers to provide historical net price data in relation to a
particular pharmacy or other prescription drug dispenser and a
particular NDC when compliance would require a plan or issuer to report
an historical net price for a particular pharmacy or other prescription
drug dispenser calculated with fewer than 20 different claims for
payment. Furthermore, the Departments note that disclosure of
historical net prices will not be required if compliance would violate
applicable health information privacy laws. The Departments are of the
view that these mitigation strategies, in addition to the historical
net price being an average of amounts paid to a particular provider for
a particular NDC during the reference period, are sufficient to protect
patients from identification based on information in the Prescription
Drug File. The Departments note that the low volume exemption applies
only to the requirement to include the historical net price and does
not affect the requirement to include the negotiated rates in the
Prescription Drug File.
Regarding prescription drugs, the Departments received a comment
that requested discounts under section 340B of the PHS Act be included
in the applicable machine-readable file, noting that providing this
information is important to ensure consumers can access those savings.
However, this commenter acknowledged that health plans often do not
have access to information about when a section 340B discount is paid
and so recommended the Departments develop and implement a process to
help health plans identify this information.
Discounts under the section 340B Drug Pricing Program are only
available to eligible providers (known as covered entities as outlined
in section 340B of the PHS Act) and regulations under section 340B of
the PHS Act are outside of the scope of the final rules.
2. Required Method and Format for Disclosing Information to the Public
As explained in section II.C.1.c of this preamble, the final rules
adopt the requirement that plans and issuers produce the In-network
Rate File, the Allowed Amount File, and the Prescription Drug File. The
Departments are finalizing a requirement that the In-network Rates,
Allowed Amounts, and Prescription Drug Files must be disclosed as
machine-readable files. The final rules define ``machine-readable
file'' to mean a digital representation of data or information in a
file that can be imported or read by a computer system for further
processing without human intervention, while ensuring no semantic
meaning is lost. The requirement ensures that the machine-readable file
can be imported or read by a computer system without those processes
resulting in alterations to the ways data and commands are presented in
the machine-readable file. The Departments proposed to require each
machine-readable file to use a non-proprietary, open format to be
identified by the Departments in technical implementation guidance (for
example, JavaScript Object Notation (JSON), Extensible Markup Language
(XML), or Comma Separate Value(s) (CSV)). A portable document format
(PDF) file, for example, would not meet this definition due to its
proprietary nature.
Contemporaneous with the proposed rules, the Departments published
a PRA package (OMB control number: 0938-1372 (Transparency in Coverage
(CMS-
[[Page 72240]]
10715)) that further described the specific data elements that would be
disclosed in the proposed machine-readable files. Updated cost and
burden estimates related to the collection requirements are discussed
in the ICR section of this preamble and are included in in the
corresponding PRA package, including changes to costs and burdens and
additional collection instruments as a result of modifications to the
proposed rule made through the final rules.
The Departments proposed requiring group health plans and health
insurance issuers to publish their negotiated rates and historical
allowed amount data in two machine-readable files, one including
required negotiated rate data with in-network providers, and a second
including required out-of-network allowed amount data. The Departments
proposed requiring plans and issuers to publish the data in two
separate machine-readable files to account for the dissimilarity
between the negotiated rates paid to in-network providers under
contract and the more variable allowed amounts paid to out-of-network
providers. The Departments solicited comment on whether building and
updating one file could be less burdensome for plans and issuers than
maintaining multiple files, and whether having the data in a single
file could facilitate use by third-party developers. The Departments
were particularly interested in comments regarding whether a single
file for disclosure of all the required information would likely be
extremely large, making it less than optimal for anticipated users,
such as software application developers and health care researchers.
Some commenters supported keeping the In-network Rates File and
out-of-network Allowed Amount File separate. One commenter noted the
structure would allow quick development of data aggregation efforts and
consumer-friendly tools. Additionally, the commenter stated that
keeping the files separate would support file ingestion. Another
commenter stated that each file would contain fundamentally different
data, and the costs associated with storing and maintaining a large
combined file would be very large.
The Departments agree that the information being required to be
publicly disclosed through the machine-readable files related to
negotiated rates and allowed amounts is sufficiently distinct to
justify separating the information into separate files. In particular,
the out-of-network allowed amounts information must be derived from
historical claims data, which is fundamentally different in kind from
simply listing applicable rates for each service. Furthermore, the
Departments also agree with comments indicating that splitting the
files would help reduce the maintenance and storage burdens of the
files. Throughout this preamble, the Departments have stressed the
importance of ensuring the public disclosures required through the
final rules are accessible, especially to internet-based and mobile
application developers, to support development of innovative consumer-
facing tools, as well as to other entities, such as researchers, and
regulators, to support efforts to better understand and support the
competitiveness of health care markets.
The requirement to publish more than one machine-readable file
which will facilitate the disclosure of data that is different in
character, scope, and other factors, which will help facilitate data
ingestion for users of the machine-readable files, including third-
party developers, researchers, regulators, and other interested
parties. This approach will also help facilitate file ingestion, data
aggregation, and data analysis by researchers whose projects could lead
to important market insights that could inform efforts to further
address the wide variation in health pricing, and by regulators who
would be able to leverage the data in their oversight activities.
As discussed earlier in this preamble, the final rules adopt a
third Prescription Drug File in recognition of the unique pricing
attributes of prescription drug products. Prices related to
prescription drug products that plans and issuers would have been
required to include in the In-network Rate File under the proposed
rules will now be required to be publicly disclosed through the third
Prescription Drug File. As discussed earlier in this preamble, the
Departments estimate that requiring a third file for prescription drugs
will not add significantly to the burdens and costs of developing and
maintaining the machine-readable files calculated in relation to the
final rules because costs and burdens calculated for prescription drugs
as included in the In-network Rate File will be transferred to the
Prescription Drug File. Additionally, the Departments anticipate that
removal of prescription drugs from the In-network Rate File will
significantly reduce the size of that file, which could reduce the
costs associated with maintenance and storage for the In-network Rate
File. The Departments clarify that not all prescription drug pricing
information required to be disclosed through the final rules is
required to be included in the Prescription Drug File. Rather, the
Prescription Drug File is required to include prescription drug pricing
information for in-network providers, including pharmacies and other
prescription drug dispensers, while the Allowed Amount File is required
to include prescription drug pricing information for out-of-network
providers, including pharmacies and other prescription drug dispensers.
The Departments also clarify that the In-network Rate file may also
contain prescription drug information to the extent the prescription
drug is a part of a bundled payment arrangement.
Some commenters argued that the method and format for providing
information to the public is not feasible. One commenter did not
support the policy that the machine-readable files should be provided
in a public use file format, claiming the files would be millions of
rows long and very difficult to review. Another commenter expressed
concern that the volume of data would make it impossible to post all of
the information in two files and further stated that there is no single
set of codes that describe every item or service, so it would be
impossible to post this data without very specific, standard
definitions. Given the lack of standard definitions, this commenter
argued that there is no systematic way to compile and display the
information requested, so claim compilation would have to be done
manually. The commenter further stated that, even if there were
standard definitions, it would be impossible to provide them in ``plain
language.''
Based on consultations with industry and IT development
professionals, the Departments do not agree with commenters who stated
that development of the machine-readable files would not be feasible as
envisioned by the proposed rules. The Departments are aware that these
files could be very large and could be difficult for laypersons to
navigate. However, the Departments are of the view that the files'
primary benefit to health care consumers will be the availability of
web-based tools and mobile applications developed for consumer use by
third-party developers, aggregation and analysis conducted by
researchers, and oversight efforts by regulators. The required machine-
readable files will be optimal for ingestion, data aggregation, and
data analysis, all of which are functions performed by third-party
internet-based developers, researchers, and regulators who use large
data sets in a manner that will lead to benefits for consumers.
Additionally, notwithstanding that the Departments have designed these
[[Page 72241]]
transparency requirements so that it is not necessary that individual
consumers use or ingest the data in the machine-readable files, the
Departments are of the view that many individual health care consumers
do possess the necessary expertise to access and navigate the files.
The final rules also impose a requirement to include plain language to
identify each item and service included in each file. This requirement
will help ensure consumers, third party application developers,
researchers, regulators, and other interested parties are able to
easily understand the information.
The Departments have determined that the potential benefits for
consumers of requiring the disclosure of required data through machine-
readable files outweigh the potential for consumer confusion at the
individual consumer level. Additionally, the Departments expect that
third party application developers, researchers, regulators, and other
file users will have the expertise to aggregate, standardize, and
interpret the pricing information included in the file and translate
the pricing information into products, research, and market oversight
and reforms that will ultimately benefit consumers.
The Departments also do not agree that the volume of data would
make the machine-readable files too large to post publicly, regardless
of whether the data is posted in two or three files. The Departments'
rough estimate of file size, based, in part, upon numbers provided by
commenters, suggests a file size of approximately 5 gigabytes.\204\ CMS
currently makes available for download on its website some large public
use file (PUF) data sets that are several gigabytes. For example, the
Part D Prescriber PUF, \205\ available on the CMS website, is over
three gigabytes in size. The Departments acknowledge that because of
the large file size, file users will likely need to use database or
statistical software to download the machine-readable files as
importing into Microsoft Excel would result in incomplete loading of
data. However, this approach is similar to that used for some of the
larger PUF data sets available on the CMS website, including the Part D
Prescriber PUF, which must be opened using specialty software.
---------------------------------------------------------------------------
\204\ As a reference point, a typical commercial two-hour Blu-
ray film is approximately 15-25 gigabytes. ``White Paper Blue-ray
Disc Format General.'' Blue-ray Disc Association. 2018. Available at
https://www.blu-raydisc.com/Assets/Downloadablefile/White_Paper_General_5th_20180216.pdf.
\205\ The Part D Prescriber Public Use File (PUF) is available
on the CMS website at the following location: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/PartD2017.
---------------------------------------------------------------------------
Assuming that plans' and issuers' negotiated rates are in a
digitized format, even if the negotiated rates are not stored in a
single database, this information can be systematically compiled and
maintained by the plan or issuer. In recognition that there is no
single set of billing codes for non-prescription drug services, the
Departments are providing flexibility in the final rules by not
prescribing which code or set of codes plans and issuers must use to
publicly disclose their data. Rather, the Departments are requiring
that plans and issuers associate each in-network applicable rate or
out-of-network allowed amount with a CPT, HCPCS code, DRG, or other
common payer identifier. In the case of prescription drugs, the
Departments are requiring plans and issuers to associate each
negotiated rate and historical net price with an NDC. The Departments'
expectation is that the type of billing code plans and issuers use to
populate the machine-readable files will be consistent with the billing
codes that plans and issuers use in their operations when actually
determining provider reimbursement and cost-sharing liability.
The Departments further note that nothing prevents plans and
issuers from including in the files a mixture of billing code types so
long as the billing codes included in the file are reflective of the
plan's or issuer's operations. To facilitate identification of the
billing code type, there will be an indicator in the file format
described by the technical implementation guidance that will allow
plans and issuers to specify the particular type of billing code
entered for each data entry in the machine-readable files. The final
rules also require that plans and issuers include plain language
descriptions for each billing code. The Departments note that in the
case of items and services that are associated with common billing
codes (such as the HCPCS codes), plans and issuers are permitted to use
the codes' associated short text description.
The final rules further clarify that, in the case of NDCs for
prescription drugs, the plain language description must be the
proprietary and nonproprietary name assigned to the NDC by the FDA. The
Departments have made this change to align with the change to require
only the NDC billing code to be used for prescription drugs. Requiring
the proprietary and nonproprietary name assigned to the NDC by the FDA
further standardized the product identifiers for prescription drugs and
will facilitate comparisons across prescription drug pricing
information for plans and issuers.
For all other items and services, as the Departments explicitly
stated in the proposed rules and elsewhere in this preamble, plans and
issuers can meet the ``plain language'' description requirements by
using their chosen code's short text description. However, the
Departments note that including the short text description for each
code is a minimum requirement and nothing in the final rules prevents
plans and issuers from providing a more consumer-friendly plain
language description for each covered item or service. Plans and
issuers may be incentivized to provide more consumer-friendly
information in machine-readable files because it may permit them to
include disclaimer or clarifying language in the files, where
applicable. Furthermore, if a plan or issuer uses plain language
descriptions for billing codes in its operations that are more
consumer-friendly than the established short text descriptions, the
Departments expect plans and issuers to include in the machine-readable
files the plain language descriptions they use in their operations.
The Departments received comments that supported the Departments'
development of specific technical standards for the files to which
plans and issuers must adhere. One commenter recommended the
Departments provide guidance to plan sponsors who are able to provide
some, but not all, of the file data elements. Another commenter stated
that the proposed rules do not make clear how to report items and
serviced provided through capitated and bundled payment arrangements in
the files; noting that this information is necessary for consumers to
measure provider value. One commenter responded positively to the
Departments' provision of technical implementation guidance for the
files, but requested a robust public comment solicitation far in
advance of the applicability date for the rules.
The Departments are of the view that providing specific technical
direction in separate technical implementation guidance, rather than in
the final rules, will better enable the Departments to respond to
technical issues and developments, as well as compliance questions
related to novel or rare payment arrangements. Therefore, as proposed,
the Departments are developing technical implementation guidance for
plans and issuers to assist them in developing the machine-readable
files.
The technical implementation guidance will be available online
[[Page 72242]]
through GitHub, a website and cloud-based service that helps developers
store and manage their code, as well as to track and control changes to
their code. The GitHub space offers the Departments the opportunity to
collaborate with industry, including regulated entities, and third-
party developers to ensure the file format is adapted for reporting of
the required public disclosure data for various plan and contracting
models. For example, the Departments have updated the schematics of the
file formats in response to comments received about and bundled
payments and capitated payment arrangements, as well as other
alternative contracting models. Plans and issuers will be able to
access the GitHub schemas at any time and collaborate with the
Departments in real-time.
The Departments' goal in using GitHub is to facilitate this
collaborative effort all allow plans and issuers to meet the public
disclosure requirements of the final rules while addressing their
unique IT system, issuer, and plan attributes. To the extent a plan or
issuer's unique attributes (for example, IT system, plan benefit
design, or reimbursement model) are not addressed sufficiently through
the technical implementation guidance, the Departments intend to
provide targeted technical assistance to ensure all plans and issuers
are able to meet the public disclosure requirements under the final
rules. The technical implementation guidance will provide instructions
on how to obtain this technical assistance should the need arise.
The technical implementation guidance hosted on GitHub will include
a repository set of schemas describing the data formats (encoded as
JSON, XML, and CSV) for all three machine-readable files: The In-
network Rate File, the Allowed Amount File, and the Prescription Drug
File. The technical implementation guidance will be available as part
of the PRA package developed for the ICRs included in the final rules.
As part of the PRA process, stakeholders have an additional opportunity
to submit comments related to the PRA for 30 days following the
publication of the final rules.
In the proposed rules, the Departments requested comment on whether
the final rules should adopt a single non-proprietary format for the
machine-readable files, specifically JSON files. The Departments
understand that this format generally is easily downloadable, and it
could simplify the ability of file users to access the data.
The Departments received one comment in support of requiring JSON
as the standardized file format for the required machine-readable
files. However, the Departments' internal technical experts agreed that
the speed of technology developments weighs heavily in favor of
maintaining flexibility to adopt a suitable file format as a non-
substantive, operational requirement that will be identified in the
relevant implementation guidance for the required machine-readable
files. Additionally, this flexibility will allow the Departments to
adapt the file technical specifications for new and emerging
technologies. Therefore, the Departments decline to require in
regulation a more specific file format for the machine-readable files.
The Departments reiterate that, as finalized, all machine-readable
files must conform to a non-proprietary, open-standards format that is
platform-independent and made available to the public without
restrictions that would impede the re-use of the information.
Therefore, because a PDF file format is proprietary, it would not be an
acceptable file format in which to produce the files. A plan or
issuer's file will be acceptable so long as it includes all required
data elements required for the respective file (that is, all applicable
rates in the In-network Rate File, allowed amounts and billed charges
in the Allowed Amounts File, and negotiated rates and historical net
process in the Prescription Drug File) and is formatted in a manner
consistent with the technical implementation guidance the Departments
are developing.
The final rules therefore adopt, with modification, the required
method and format for disclosure of information through the machine-
readable files. The Departments note several non-substantive
modifications to the regulatory text, which are being adopted in the
final rules to clarify and streamline the text. To further highlight
the file technical implementation guidance, the regulation text of the
final rules has been modified non-substantively to specify that the
machine-readable files must be made available in a form and manner
specified in guidance issued by the Departments. In the proposed rules,
the regulation text stated more broadly that the machine-readable files
must be made available in a form and manner determined by the
Departments. Additionally, the proposed rule included two sentences
that simply restated what must be publicly disclosed through the two
proposed machine-readable files.\206\ The Departments have removed
these sentences from this this section of the regulatory text because
they duplicate language contained in the previous sections of the
regulatory text, do not add any additional value to this section of the
regulatory text, and could cause confusion.
---------------------------------------------------------------------------
\206\ See 84 FR 65464, 65519 (Nov. 27, 2019).
---------------------------------------------------------------------------
3. Required Accessibility Standards for Disclosure of Information to
the Public
The Departments proposed to require a plan or issuer to make
available on an internet website the required machine-readable files,
and that the files must be accessible free of charge, without having to
establish a user account, password, or other credentials, and without
having to submit any personal identifying information such as a name,
email address, or telephone number. The Departments also proposed to
allow plans and issuers flexibility to publish the files in the
locations of their choosing based upon their superior knowledge of
their website traffic and the places on their website where the
machine-readable files would be readily accessible by the intended
users. The Departments are finalizing these requirements as proposed.
The Departments also considered requiring plans and issuers to submit
the internet addresses for the machine-readable files to CMS, and
having CMS make the information available to the public. A central
location could allow the public to access the information in one
centralized location, reducing confusion and increasing accessibility.
However, the Departments opted to propose flexible rules allowing plans
and issuers to publish the files in the locations they have chosen
based upon their determinations regarding where the files will be most
easily accessible by the intended users. The Departments also
considered that requiring plans and issuers to notify CMS of the
internet address for their machine-readable files would increase the
burdens on plans and issuers. The Departments requested comment on
whether the proposed requirement to allow issuers to display the files
in the location of their choice is superior to requiring plans and
issuers to report the internet-based addresses of their files to CMS
for public display. The Departments were specifically interested in
whether the burden associated with reporting file locations to CMS
would be outweighed by the risk that members of the public would be
unable to easily locate plans' and issuers' machine-readable files.
Several commenters supported the Departments' proposal to make the
machine-readable files easily and publicly available. One commenter
[[Page 72243]]
supported making the files available free of charge and stated that
individuals should not be required to register a user account,
password, or enter other credentials, or to submit PII to access the
files. Several commenters suggested alternative methods or more
stringent requirements for making public the information required to be
disclosed through the machine-readable files. One commenter expressed a
preference for CMS to maintain a centralized location on the CMS
website from which the public can access links to the files. The
commenter noted that if the Departments elected not to maintain a
centralized database, the Departments should require plans and issuers
to prominently display a link to the files in the main menu of the
homepage on their respective websites. Similarly, another commenter
asserted that the final rules should require issuers to report the
location of their files and provide a data dictionary to facilitate
oversight and enforcement of plans and issuers.
Other commenters suggested the Departments create a centralized
database to house the data required to be disclosed through the
machine-readable files. One commenter recommended the information
required to be disclosed through the files be loaded into a publicly
available searchable database that anyone can access prior to receiving
a medical service. Similarly, another commenter recommended that HHS
aggregate the data to create a centralized database. By contrast,
another commenter recommended the Departments should not create a
central location for negotiated rate information and historical data,
making the argument that the private sector is best suited to deliver
this information to consumers.
As proposed, the machine-readable files must be made publicly
available and accessible to any person free of charge and without
conditions, such as establishment of a user account, password, or other
credentials, or submission of PII to access the file. Additionally, the
proposed rules specified that the files must be made available in the
form and manner specified by the Departments. While the Departments
considered comments related to the manner of the public file
disclosures (such as prominent display on a plan or issuer's homepage),
the Departments are also mindful of the need to provide flexibility to
plans and issuers so that they are able to house the files in a
location that meets their unique technical specifications. At this
time, the Departments are of the view that reporting of the links to
the file locations is not necessary to achieve the goals of the final
rules. However, the Departments note that nothing in the final rules
prevents a Federal or state regulatory body, such as a state Department
of Insurance (DOI), from collecting this information from issuers
subject to their jurisdiction.
The Departments are aware and understand commenters' interest in
HHS aggregating and centralizing all of the data required to be
publicly disclosed through the machine-readable files. However, the
Departments are of the view that HHS is not best suited for this role.
As noted throughout this preamble, the Departments expect making
negotiated rate and allowed amount information available through the
machine-readable files will spur third-party internet-based developers
to innovate, resulting in consumer-facing tools. The Departments
anticipate that these consumer-facing tools developed by third parties
could act as centralized databases, aggregating the pricing information
for many plans and issuers. The Departments are of the view that the
private sector is better suited to developing internet-based tools
using this information than the Departments, and further, that the
competition spurred by several different third parties operating in
this space could benefit consumers seeking to find the third-party tool
that is best suited to their individual consumer needs.
The final rules adopt, as proposed, the accessibility requirements
for the machine-readable files. The final rules clarify that the
accessibility requirements apply to all three machine-readable files
finalized within the final rules: The In-network Rate File (referred to
in the proposed rules as the Negotiated Rate File), the Allowed Amount
File, and the Prescription Drug File.
4. Required Timing of Updates of Information To Be Disclosed to the
Public
The proposed rules would have required group health plans and
health insurance issuers to update the information required to be
included in each machine-readable file monthly. The Departments also
proposed to require plans and issuers to clearly indicate the date of
the last update made to the In-network Rate Files and Allowed Amount
Files in accordance with guidance issued by the Departments.
The Departments recognized in the proposed rules that information
in In-network Rate Files (referred to in the proposed rules as the
Negotiated Rate Files) could change frequently and considered whether
to require plans and issuers to update their In-network Rate Files more
often than monthly to ensure that consumers have access to the most up-
to-date negotiated rate information. Accordingly, the Departments
sought comment on whether the final rules should require plans' and
issuers' In-network Rate Files to be updated more frequently. The
Departments also sought comment on an alternate proposal that would
require plans and issuers to update negotiated rate information within
10 calendar days after the effective date of new rates with any in-
network provider, and on whether the update timelines for negotiated
rate information and historical out-of-network payment data should be
the same.
For the reasons discussed elsewhere in this section of this
preamble, the final rules adopt, as proposed, the requirement for a
plan or issuer to update the information required to be included in
each machine-readable file monthly. The final rules clarify that this
requirement to update the machine-readable files monthly applies to all
three machine-readable files being finalized through the final rules:
The In-network Rate File, the Allowed Amount File, and the Prescription
Drug File.
Several commenters stated that the requirement to update the In-
network Rate Files and Allowed Amount Files monthly is operationally
burdensome and the benefits of this requirement are limited because the
information will not change significantly on a monthly basis. Some
commenters recommended the Departments change the required frequency of
updates to every six months, while others suggested that the final
rules require updates to the In-network Rate File less frequently than
monthly (for example, quarterly or semi-annually), but recommended that
the Allowed Amount File should be updated monthly. Another commenter
recommended a phased-in approach where the files would be updated twice
a year in the first year of implementation and quarterly thereafter. In
contrast, one commenter recommended the files be updated in real-time
as soon as updates to rates are made.
Based on consultation with government-affiliated IT experts and the
design of the file schemas, the Departments are of the view that
building the first machine-readable file will facilitate the automation
of the process to build future files. In other words, the ability to
produce subsequent files should be streamlined after completing initial
development. Therefore, the Departments do not find
[[Page 72244]]
persuasive the contention that requiring file updates monthly will
significantly increase the overall costs and burdens related to
producing the files. The Departments, however, do not agree that the
files should be updated in real-time as soon as updates are made. With
the monthly update requirement, the Departments are seeking to balance
the need to ensure the data is current and accurate for consumers with
minimizing burdens on plans and issuers.
As noted in the proposed rules, the Departments acknowledge there
will be some costs with making updates to the files, including costs to
ensure the quality of data and costs associated with posting the
information on a public website. The Departments are of the view that
requiring plans and issuers to update the files on a monthly basis will
sufficiently limit the burden while ensuring that the most current data
generally available. However, requiring updates to the files more or
less frequently would not adequately balance these interests. Requiring
updates to the files more frequently (such as on a daily basis), would
add potentially unnecessary burdens for plans and issuers. Requiring
updates to the files less frequently would potentially result in
consumers relying on outdated information for health care purchasing
decisions. While negotiated rates, in particular, may not change
frequently for any one contract with a provider or group of providers,
the Departments understand that payer-provider contracts are updated on
a rolling basis and throughout the year. Therefore, updates throughout
the year are needed in order to ensure that the information disclosed
remains up-to-date.
The final rules also require that the Prescription Drug File be
updated on a monthly basis. The Departments understand the complexities
of prescription drug pricing and are aware that drug prices can
fluctuate as frequently as daily. However, the Departments have
determined that aligning the frequency of updates of all machine-
readable files will mitigate the burden associated with maintaining the
files for plans and issuers, and will best balance the need for
disclosing current and accurate information against that burden. The
Departments are aware that the number of pricing updates in the monthly
Prescription Drug File will likely be more than the number of monthly
pricing updates for medical services in the In-network Rate File.
However, the Departments are of the view that if plans and issuers can
update their pharmacy claims processing systems in real-time to account
for fluctuating prices and adjudicate claims for prescription drugs,
then the burden to pull current pricing information into the
Prescription Drug File should be manageable.
The Departments will monitor the implementation of the machine-
readable file requirements and consider updates in future rulemaking if
it is determined that monthly updates are not adequately balancing the
need for accurate and current information against the burdens for plans
and issuers.
5. Special Rules To Prevent Unnecessary Duplication and Allow for
Aggregation
Similar to the proposed cost-sharing information disclosure
requirements for participants, beneficiaries, and enrollees, the
Departments proposed a special rule to streamline the publication of
data that would be included in the proposed machine-readable files.
This special rule has three components: One for insured group health
plans where a health insurance issuer offering coverage in connection
with the plan has agreed to provide the required information, another
for plans and issuers that contract with third parties to provide the
information on their behalf, and a special rule allowing aggregation of
out-of-network allowed amount data.
a. Insured Group Health Plans
The Departments proposed that, to the extent coverage under a group
health plan consists of group health insurance coverage, the plan would
satisfy the proposed machine-readable file requirements if the issuer
offering the coverage were required to provide the information pursuant
to a written agreement between the plan and issuer. Accordingly, if a
plan sponsor and an issuer enter into a written agreement under which
the issuer agrees to provide the information required under the
proposed rules, and the issuer fails to provide full or timely
information, then the issuer, but not the plan, has violated the final
rule's disclosure requirements. This special rule would only apply,
however, to insured group health arrangements where the contractually-
obligated issuer is independently subject to the final rules.
The Departments received comments expressing strong support of the
special rule to streamline public disclosure and avoid unnecessary
duplication of disclosures for insured group health insurance coverage.
These commenters recommended the policy be retained in the final rules.
Accordingly, the final rules retain this special rule as proposed.
b. Use of Third Parties To Satisfy Public Disclosure Requirements
The Departments recognize that self-insured group health plans may
rely on written agreements with other parties, such as service
providers, to obtain the necessary data to comply with the final rules'
disclosure requirements. Furthermore, it is the Departments'
understanding that most health care coverage claims in the U.S. are
processed through health care clearinghouses and that these entities
maintain and standardize health care information, including information
regarding negotiated rates and out-of-network allowed amounts.\207\ As
a result, the Departments noted in the proposed rules that a plan or
issuer may reduce the burden associated with making negotiated rates
and out-of-network allowed amounts available in machine-readable files
by entering a business associate agreement and contracting with a
health care claims clearinghouse or other HIPAA-compliant entity to
disclose this data on its behalf.\208\ Accordingly, the Departments
proposed to permit a plan or issuer to satisfy the public disclosure
requirement of the proposed rules by entering into a written agreement
under which another party (such as a TPA or health care claims
clearinghouse) will make public the required information in compliance
with this section. However, if a plan or issuer chooses to enter into
such an agreement and the party with which it contracts fails to
provide full or timely information, the plan or issuer will have
violated the final rules' disclosure requirements.
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\207\ The Departments are adopting the definition of health care
clearinghouse under 45 CFR 160.103 for purposes of these rules.
Under that definition, health care clearinghouse means a public or
private entity that performs one of two functions that involve the
receiving and processing of health information data from a non-
standard format to a standard format or non-standard data elements
to standard data elements and vice versa.
\208\ 45 CFR 164.502(a)(3) and 164.504(e)(2).
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Generally, commenters supported the use of clearinghouses or TPAs
to store all of the information that must be disclosed under the
proposed rules. One commenter suggested that all HIPAA-compliant third
parties, not just clearinghouses, be allowed to satisfy the public
disclosure requirements. Some commenters raised concerns related to
using clearinghouses noting that the feasibility of using
clearinghouses is dependent on the clearinghouse receiving all of the
necessary data from health insurance issuers and providers who possess
the data. The commenter strongly recommended the final rules require
entities that possess the data to
[[Page 72245]]
share the information in a timely manner with the relevant
clearinghouses. The commenter also noted the costs charged by
clearinghouses associated with data storage and noted that the prices
must be reasonable and not discriminatory (for example, against smaller
plans).
Several commenters recommended the Departments' special rule
include protection for plan sponsors if they fail to meet the public
disclosure requirements due to an inability, while acting in good
faith, to obtain the data from a third-party service provider or when a
contracted third-party withholds information or fails to submit
information in a timely manner. One of these commenters also requested
the Departments establish a policy that liability for failure to comply
rests with a contracted third party in the event a plan sponsor can
show that, acting in good faith, it is unable to comply with the
disclosure requirements due to withholding of information by the third
party.
This special rule, as finalized, continues to permit a plan or
issuer to satisfy the public disclosure requirements of 26 CFR 54.9815-
2715A3(b), 29 CFR 2590.715-2715A3(b), and, 45 CFR 147.212(b) of the
final rules by entering into a written agreement under which another
party (such as a TPA or health care claims clearinghouse) will make
public the required information in compliance with this section. The
final rules identify TPAs and health care claims clearinghouses as
examples of the types of parties a plan or issuer may contract with,
but these are not the only types of entities that may enter into such
arrangements and the Departments expect that they will comply with any
applicable privacy protection requirements, including applicable
privacy protections under HIPAA.
Plans and issuers are not required to enter into such agreements in
order to comply with the public disclosure requirements of the final
rules. As the Departments noted in the preamble to the proposed rules,
if a plan or issuer chooses to enter into such an agreement it is
ultimately the responsibility of the plan or issuer to ensure that the
third party provides the information required by the final rules. As
noted earlier in this section, the special rule for insured plans is
only available to plans that contract with an entity that is an issuer
separately subject to final rules. This requirement ensures that the
Departments retain a mechanism to enforce the final rules. Accordingly,
this special rule relating to the use of third parties to satisfy these
requirements continues to provide that the plan or issuer would violate
the requirements of the final rules if the third party fails to provide
full or timely information.
Another commenter recommended the Departments create a special rule
or ``safe harbor'' for plans that are unable to disclose negotiated
rate information due to antitrust laws, which prevent the plan from
accessing information about its partners' contracts when engaged in a
partnership alliance agreement. The commenter described a partnership
alliance as shared partner networks in other geographic areas in order
to meet the needs of multi-state employer groups.
As discussed earlier in this preamble, the Departments acknowledge
that the Sherman Antitrust Act prohibits any contract, combination, or
conspiracy in restraint of trade or commerce.\209\ Specifically, the
law prohibits any ``person'' from entering into any such contract,
trust, or similar arrangement.\210\ Nothing under the proposed or final
rules creates, compels, or endorses agreements or conspiracies between
or among persons to form illegal arrangements or trusts in restraint of
trade or commerce. Antitrust law does not proscribe or limit action by
the Federal Government, to improve competition and lower costs to
consumers, even if these actions may involve disclosures that, if made
by private parties under a collusive agreement, might invite antitrust
scrutiny.\211\ Because the Departments are of the view that antitrust
law will not prevent plans and issuers from making the public
disclosures required under the final rules, there is no need for the
Departments to create a special rule for plans that are unable to
disclose negotiated rate information due to antitrust laws.
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\209\ 15 U.S.C. 1.
\210\ Id.
\211\ For example, see 84 FR 65464, 65464-65 (Nov. 27, 2019).
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One commenter expressed a concern that multiemployer plans
generally do not have access to the rate information needed to provide
the cost-sharing disclosures required under the proposed rules, yet
plans could be subject to significant penalties for failure to comply.
The Departments note that insured multiemployer plans would qualify for
the special rule for insured plans under which an issuer providing
coverage for a plan enters into an agreement to provide the required
information, which is being finalized through the final rules. If a
multiemployer plan sponsor enters into a written agreement with an
issuer under which the issuer agrees to provide the information
required under the final rules, and the issuer fails to provide full or
timely information, then the issuer, but not the plan, has violated the
transparency disclosure requirements and may be subject to enforcement
mechanisms applicable to plans under the PHS Act.\212\ Therefore,
insured multiemployer plans that contract with an issuer to provide the
information required under the final rules would not be subject to
enforcement actions under this mechanism; rather, the issuers with whom
they have contracted will be subject to enforcement action under the
final rules for failure to meet the transparency disclosure
requirements.
---------------------------------------------------------------------------
\212\ Section 2723 of the PHS Act.
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Under the second special rule, multiemployer plans may also
contract with a TPA or other third party (for example, a clearinghouse)
to meet the transparency disclosure requirements under the final rules.
However, this commenter is correct that if a plan or issuer chooses to
enter into such an agreement, and the party with which it contracts
fails to provide full or timely information, the plan or issuer would
violate the transparency disclosure requirements.
The notion that accountability for compliance rests with a plan or
issuer when the issuer or plan enlists a contractor or vendor for a
business function is not inconsistent with other applicable
regulations.\213\ While claims processing is the main function for
which an issuer or plan has contracted in this example, other
responsibilities, such as responding to Federal audits and report
requirements, may fall within the scope of the duties required by
contract. The Departments clarify that nothing in the final rules
prevents an issuer or plan from ensuring contracts with TPAs or other
third parties include clear terms specifying functions required to meet
the disclosure requirements of the final rules, as well as establish
service level agreements and performance metrics to hold the entities
with whom the issuer or plan decides to contract accountable.
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\213\ For example, plans remain liable for violations of claims
regulations under 26 CFR 54.9815-2719 and 29 CFR 2590.715-2719; and
QHPs issuers who contract with downstream or delegated entities must
maintain compliance with all applicable standards under 45 CFR
156.340(a).
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Because multiemployer plans may be able to take advantage of the
special rules established under the proposed rules, the Departments do
not view additional special considerations necessary to address the
ability of such
[[Page 72246]]
plans to comply with the transparency requirements of the final rules.
c. Aggregation for Allowed Amount Files
In order to further mitigate privacy concerns and to eliminate
unnecessary duplication, the Departments proposed to permit plans and
issuers to satisfy the public disclosure requirements of the proposed
rules by making available out-of-network allowed amount data that has
been aggregated to include information from more than one plan or
policy. As previously discussed, a plan or issuer may satisfy the
disclosure requirement by disclosing out-of-network allowed amounts.
Accordingly, under such circumstances, the proposed rules would have
permitted plans and issuers to aggregate out-of-network allowed amounts
for more than one plan or insurance policy or contract.
To the extent a plan or issuer provided aggregated out-of-network
allowed amount information, the Departments proposed to apply the
minimum claims threshold to the aggregated claims data set, but not at
the plan or issuer level. Based on commenters' requests for
clarification, the Departments have determined that the proposed
approach to apply the minimum claims threshold to the full aggregated
claims data set could undermine the goal of the minimum claims
threshold. The out-of-network Allowed Amount File must include a unique
plan identifier for each plan or coverage included in the file under 26
CFR 54.9815-2715A3(b)(1)(ii)(A), 29 CFR 2590.715-2715A3(b)(1)(ii)(A),
and 42 CFR 147.212(b)(1)(ii)(A). Therefore, even if the data for each
plan or coverage were to be aggregated for purposes of determining
whether the minimum claims threshold applies to a particular covered
item or service, the data in the Allowed Amounts File would be
distinguishable at the level of the plan identifier. The Departments
are of the view that this could be problematic if all plans or coverage
included in an aggregated Allowed Amount File meet the minimum claim
threshold for an item or service when combined, but some or all
individual plans do not independently meet the minimum claim threshold
of 20 claims.
For instance, data for two plans are aggregated in the same Allowed
Amount File under this rule. Plan A has 20 claims for Service X, while
Plan B only has six claims for Service X. In aggregate, the plans meet
the 20-claim threshold with 26 total claims for Service X. However,
individually, only Plan A has met the minimum claim threshold. Under
the proposal, data for Service X would be required to be included for
both Plan A and Plan B, along with both the plan identifiers. The
outcome of this requirement would be that Plan B would include data
identifiable at the plan level for Service X. The Departments are of
the view that allowing Plan B data to be included in the file for
Service X would undermine the minimum claim threshold, increasing risk
that individual patients' claims histories could be identified. To
prevent this outcome, data for each plan or coverage included in an
aggregated Allowed Amount File must independently meet the minimum
claims threshold for each item or service and for each plan or coverage
included in the aggregated Allowed Amount File. To highlight this
requirement, the Departments are finalizing this provision of the
proposed rules with a minor modification clarifying that the
flexibility to aggregate out-of-network allowed amounts for more than
one plan or coverage in a single machine-readable file is still subject
to the minimum claims threshold applicable to individual plans or
coverage as described under paragraph (b)(1)(ii)(C) of the same
section.
One commenter requested clarification of a plan's obligation if a
third party aggregates the Allowed Amount File. The commenter
specifically requested clarification regarding whether the plan or
third party would be responsible for posting the file, and whether
there will be any special labeling requirements for an aggregated file,
including if the file will need to include a disclosure that it
includes aggregated data.
Nothing in the final rules prevents the Allowed Amount File from
being hosted on a third-party website or prevents a plan administrator
from contracting with a third party to post the file. The Departments
have added text to the final rules to make clear that this flexibility
exists and to provide that if a plan chooses not to also host the file
separately on its own public website, it must provide a link on its
website to the location where the file is publicly available. The
Departments will provide additional information on the form and manner,
including labeling, through the file technical implementation guidance.
III. Overview of the Final Rule Regarding Issuer Use of Premium Revenue
Under the Medical Loss Ratio Program: Reporting and Rebate
Requirements--The Department of Health and Human Services
As stated in the preamble to the proposed rules, consumers with
health insurance often lack incentives to seek care from lower-cost
providers, for example when consumers' out-of-pocket costs are limited
to a set copayment amount regardless of the costs incurred by the
issuer. Innovative benefit designs can be used to increase consumer
engagement in health care purchasing decisions. HHS proposed to allow
issuers that empower and incentivize consumers through the introduction
of new or different plans that include provisions encouraging consumers
to shop for services from lower-cost, higher-value providers, and that
share the resulting savings with consumers, to take credit for such
``shared savings'' payments in their MLR calculations. HHS believes
this approach preserves the statutorily-required value consumers
receive for coverage under the MLR program, while encouraging issuers
to offer new or different plan designs that support competition and
consumer engagement in health care.
Formula for Calculating an Issuer's Medical Loss Ratio (45 CFR 158.221)
Section 2718(b) of the PHS Act requires a health insurance issuer
offering group or individual health insurance coverage (including
grandfathered health insurance plans) to provide rebates to enrollees
if the issuer's MLR falls below specified thresholds (generally, 80
percent in the individual and small group markets and 85 percent in the
large group market). Section 2718(b) of the PHS Act generally defines
MLR as the percentage of premium revenue (after certain adjustments) an
issuer expended on reimbursement for clinical services provided to
enrollees and on activities that improve health care quality.
Consistent with section 2718(c) of the PHS Act, the standardized
methodologies for calculating an issuer's MLR must be designed to take
into account the special circumstances of smaller plans, different
types of plans, and newer plans.
Several states have considered or adopted legislation over the last
few years to promote health care cost transparency and encourage
issuers to design and make available plans that ``share'' savings with
enrollees who shop for health care services and choose to obtain care
from lower-cost, higher-value providers.\214\ In addition, at least
five states and a number of self-insured group health plans have
incorporated such ``shared savings'' provisions into
[[Page 72247]]
all or some of their health plans.\215\ Under some plan designs, the
savings are calculated as a percentage of the difference between the
rate charged by the provider chosen by the consumer for a medical
procedure and the average negotiated rate for that procedure across all
providers in the issuer's network. Under other plan designs, the
``shared savings'' are provided as a flat dollar amount according to a
schedule that places providers in one or more tiers based on the rate
charged by each provider for a specified medical procedure. Under
various plan designs, the ``shared savings'' may be provided in form of
a gift card, a reduction in cost sharing, or a premium credit. HHS is
of the view that such unique plan designs would motivate consumers to
make more informed choices by providing consumers with tangible
incentives to shop for care at the best price. As explained elsewhere
in the preamble to the proposed rules, there is ample evidence that
increased transparency in health care costs would lead to increased
competition among providers.\216\ HHS is of the view that allowing
flexibility for issuers to include savings they share with enrollees in
the numerator of the MLR would increase issuers' willingness to
undertake the investment necessary to develop and administer plan
features that may have the effect of increasing health care cost
transparency, which in turn could lead to reduced health care costs.
---------------------------------------------------------------------------
\214\ 24-A Maine Rev. Stat. Ann. Sec. 4318-A (adopted Jun. 19,
2017); Neb. Rev. Stat. Sec. 44-1401 et seq. (adopted Apr. 23, 2018);
Utah Code Ann. Sec. 31A-22-647 (adopted Mar. 19, 2018); AZ SB 1471
(2018); N.H. HB 1784-FN (2018); MA H2184 (2017).
\215\ See the State of Kansas' SmartShopper program for state
employees enrolled with BCBSKS, available at: https://healthbenefitsprogram.ks.gov/docs/default-source/site-documents/sehp/vendor-documents/bcbs/smartshopper_state_of_kansas_steps.pdf?sfvrsn=cfa4e44_8; the state
of Kentucky employee member handbook for Livingwell CDHP's
SmartShopper program, available at: https://personnel.ky.gov/KEHP/2020%20LivingWell%20CDHP%20Medical%20Benefit%20Booklet.pdf and
https://www.smartshopper.com/legacy?utm_expid=.WJ_v45PuTXuo1k6ioPp4tA.1&utm; the State of
Massachusetts employee member handbook for Fallon Health Select
Care's SmartShopper program, available at: https://www.mass.gov/doc/fallon-select-care-handbook-fy21/download; the State of New
Hampshire employee medical benefit, the Site of Service and Vitals
SmartShopper Programs, available at: https://das.nh.gov/riskmanagement/active/medical-benefits/cost-savings-programs.aspx#vitals-smartshopper; Utah Public Employees Health
Program Cost Tools, available at: https://www.pehp.org/save.
\216\ Austin, D. A., and Gravelle, J. G. ``Congressional
Research Service Report for Congress: Does Price Transparency
Improve Market Efficiency? Implications of Empirical Evidence in
Other Markets for the Healthcare Sector.'' Congressional Research
Service. July 24, 2007.''Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf.
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HHS has in the past exercised its authority under section 2718(c)
of the PHS Act to take into account the special circumstances of
different types of plans by providing adjustments to increase the MLR
numerator for ``mini-med'' and ``expatriate'' plans,\217\ student
health insurance plans,\218\ as well as for QHPs that incurred Exchange
implementation costs \219\ and certain non-grandfathered plans (that
is, ``grandmothered'' plans).\220\ This authority has also been
exercised to recognize the special circumstances of new plans \221\ and
smaller plans.\222\ Consistent with this approach, HHS proposed to
exercise its authority to account for the special circumstances of new
and different types of plans that provide ``shared savings'' to
consumers who choose lower-cost, higher-value providers by adding a new
paragraph 45 CFR 158.221(b)(9) to allow such ``shared savings''
payments to be included in the MLR numerator. HHS made this proposal so
that issuers would not be required to pay MLR rebates based on a plan
design that would provide a benefit to consumers that is not currently
captured in any existing MLR revenue or expense category. HHS proposed
that the amendment to 45 CFR 158.221 would become effective beginning
with the 2020 MLR reporting year (for reports filed by July 31, 2021).
HHS invited comments on this proposal.
---------------------------------------------------------------------------
\217\ See 45 CFR 158.221(b)(3) for ``mini-med'' plans and 45 CFR
158.221(b)(4) for ``expatriate'' plans; see also the Health
Insurance Issuers Implementing Medical Loss Ratio (MLR) Requirements
Under the Patient Protections and Affordable Care Act; Interim Final
Rule; 75 FR 74864, 74872 (Dec. 1, 2010).
\218\ See 45 CFR 158.221(b)(5); see also the Student Health
Insurance Coverage; Final Rule, 77 FR 16453, 16458-16459 (Mar. 21,
2012).
\219\ See 45 CFR 158.221(b)(7); see also the Exchange and
Insurance Market Standards for 2015 and Beyond; Final Rule; 79 FR
30240, 30320 (May 27, 2014).
\220\ See 45 CFR 158.221(b)(6); see also 79 FR 30240, 30320 (May
27, 2014). See 45 CFR 158.221(b)(6); see also 79 FR 30240, 30320
(May 27, 2014); see also 45 CFR 158.221(b)(6); see also 79 FR 30240,
30320 (May 27, 2014). ``Grandmothered'' plans is a term for certain
non-grandfathered coverage in the small group and individual health
insurance markets. Since 2014, CMS has permitted, subject to
applicable State authorities, health insurance issuers to continue
certain coverage that could not otherwise remain in place without
significant changes to comply with PPACA. Such health insurance
coverage would not be treated as out of compliance with sections
2701-2707 and 2709 of the PHS Act and section 1312(c) of PPACA
(group health plans must still comply with section 2704 and 270505
of the PHS Act). See Extended Non-Enforcement of Affordable Care
Act-Compliance With Respect to Certain Policies, available at
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Limited-Non-Enforcement-Policy-Extension-Through-CY2020.pdf and https://www.cms.gov/files/document/extension-limited-non-enforcement-policy-through-calendar-year-2021.pdf.
\221\ See 45 CFR 158.121; see also 75 FR 74864, 74872-74873
(Dec. 01, 2010) and the HHS Notice of Benefit and Payment Parameters
for 2018 Final Rule; 81 FR 94058, 94153-94154 (Dec. 22, 2016).
\222\ See 45 CFR 158.230 and 158.232; see also 75 FR 74864,
74880 (Dec. 01, 2010).
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After considering the public comments, HHS is finalizing the
amendment to 45 CFR 158.221(b) as proposed.
The majority of comments on the proposed amendments to the MLR
program rules supported the proposal to add a new paragraph to 45 CFR
158.221(b). Supporters noted that allowing issuers to include ``shared
savings'' payments in their MLR calculation aligns issuer and enrollee
incentives, aligns with MLR's purposes, is innovative, provides
enrollees with value, increases consumer engagement and empowerment,
and will promote better enrollee decision-making and reduce total
health care costs. Several supportive commenters also noted that the
proposal may encourage more issuers to offer such ``shared savings''
programs, as allowing ``shared savings'' payments to be included in the
MLR numerator will remove any existing barriers to such programs and
facilitate the use of innovative benefit designs that increase consumer
engagement in health care purchasing decisions, while disallowing this
approach punishes issuers that offer innovative ``shared savings''
programs and disincentivizes issuers from adopting such programs.
Several commenters stated that there is evidence that patients are more
likely to shop for care when information on prices is coupled with
incentives, and that such shopping can generate significant savings for
issuers and lead health care providers to lower their prices in order
to remain competitive in the marketplace.\223\
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\223\ For example, one commenter shared that since 2015, its
``shared savings'' program issued over 149,000 incentive reward
payments, generating over $85 million in savings. See https://beta.regulations.gov/document/CMS-2019-0163-14320.
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HHS agrees with the comments in support of the proposal and is
finalizing this amendment as proposed to provide additional flexibility
to states and issuers and encourage the economic effects the commenters
highlighted.
Some commenters requested clarification regarding certain aspects
of the ``shared savings'' plans. Several commenters requested that HHS
develop uniform standards and a definition for ``shared savings,''
which according to commenters would, among other things, help prevent
fraud and abuse; and that HHS clarify the criteria for low-cost, high-
value providers. One commenter asked HHS to provide sub-regulatory
guidance to specify in what form the savings can be shared, how issuers
will report their ``shared
[[Page 72248]]
savings,'' how double-counting can be prevented, and whether ``shared
savings'' payments are taxable income. Other commenters suggested that
HHS provide maximum flexibility for issuers and states to innovate and
develop ``shared savings'' programs they determine are best suited for
their populations.
While HHS appreciates these suggestions and is also concerned with
preventing fraud and abuse, HHS is of the view that state legislators
and regulators are currently in a better position than HHS to work with
the issuers in their states to define the ``shared savings'' programs
that they support, issue standards and criteria for the programs for
their respective constituents, and decide in what form the savings can
be made. These considerations include the operational details of any
``shared savings'' program, such as creating standards and definitions,
developing acceptable payment methods, and addressing fraud concerns.
HHS notes that several issuers have already developed and implemented
such programs and that a few states have done the same. The amendment
being finalized in this rulemaking is specific to the recognition of
``shared savings'' payments in issuer MLR calculations and is intended
to encourage more state and issuer innovation with these types of
programs. Accordingly, HHS will provide technical guidance in the MLR
Annual Reporting Form Instructions to clarify the reporting of ``shared
savings'' payments specifically for MLR purposes. With respect to the
comment regarding how double-counting can be prevented, HHS notes that
45 CFR 158.170 prevents double-counting by requiring each expense to be
reported in only one category or to be pro-rated between categories for
MLR purposes. Finally, whether ``shared savings'' payments to enrollees
are taxable will vary based on certain specific facts and
circumstances. Some forms of ``shared savings'' may be taxable;
however, HHS defers to the Department of the Treasury to address the
taxability of such payments as necessary.
Opponents of the proposal stated that it fails to ensure that the
savings are actually used for health care or quality improvement
activities (QIA), that HHS is subverting the statutory scheme by
allowing issuers to spend less on enrollees' care and quality
initiatives without returning the premium dollars saved to all
enrollees, and that the proposal would allow issuers to further boost
profits and diminish the MLR standards and issuer accountability. Some
opponents of the proposal argued that since any plan type can offer
``shared savings,'' adding a ``shared savings'' payment component to a
policy does not make it a ``different'' type of plan and it should not
be treated as such. Others were concerned that the proposal would
incentivize issuers to artificially drive down negotiated rates with
providers and that these savings may not make their way back to
enrollees. One commenter opposed extending ``shared savings'' programs
to self-insured ERISA plans. Another commenter pointed out that the
National Association of Insurance Commissioners (NAIC) did not mention
the proposal in its comments and the MLR statute provides that the NAIC
shall establish the definitions and methodologies for MLRs.
HHS agrees that ``shared savings'' are neither an incurred claim
nor a QIA. Instead, in support of this amendment to 45 CFR 158.221(b),
HHS is relying on the statutory directive under section 2718(c) of the
PHS Act that the MLR standardized methodologies shall be designed to
take into account the special circumstances of different types of plans
and newer plans, such as plans that offer ``shared savings'' payments
to enrollees that seek care from lower-cost, higher-value providers.
HHS believes that any issuer that includes in its plan design(s) a
``shared savings'' component is offering a ``different'' type of plan
and a ``newer'' plan, as a ``shared savings'' program is a new and
unique feature. HHS notes that the amendment finalized in these rules
helps provide policyholders with value for their premium dollars, as
intended by section 2718 of the PHS Act. HHS disagrees that the
amendment somehow subverts the statutory scheme as issuers that
implement these programs are sharing the savings and returning dollars
to enrollees who participate in these programs, and issuers must still
otherwise meet the applicable MLR threshold or provide a rebate to
enrollees. For the same reasons, HHS does not share certain commenters'
view that the amendment weakens the MLR standards and enables issuers
to improperly boost profits, as the amendment simply allows issuers to
account for the portion of the ``shared savings'' that is passed to
participating enrollees and that consequently does not increase
issuers' profits. With respect to comments regarding the impact on
provider negotiated rates and enrollee access to savings, HHS is unsure
how the amendment would incentivize issuers to artificially drive down
negotiated rates with providers. However, if as a result of this
amendment, provider rates decrease, such a result would in fact benefit
enrollees. In addition, because only actual payments made to enrollees
can be included in an issuer's MLR calculation under the amendment,
issuers will benefit for MLR calculation and reporting purposes only if
the savings are actually shared with enrollees. With respect to the
comment regarding self-insured ERISA plans, HHS notes that this
amendment does not apply to or impact, either self-funded ERISA plans,
or self-funded non-ERISA plans, as these plans are not subject to the
MLR reporting and rebate requirements under section 2718 of the PHS
Act. Last, with respect to comments regarding the NAIC recommendations
to HHS, section 2718(c) of the PHS Act directed the NAIC, subject to
certification by the Secretary, to establish uniform definitions and
standardized methodologies to guide MLR reporting and calculations. The
NAIC met its statutory obligation when it provided recommendations to
HHS in 2010 in the form of a model regulation.\224\ The NAIC's
recommendations informed the Secretary's decisions about the Federal
definitions and methodologies for calculating MLRs.\225\ In this
rulemaking, HHS is taking further action to recognize the special
circumstances of the different and newer plans that include ``shared
savings'' programs with the addition of new paragraph (b)(9) to 45 CFR
158.221.
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\224\ ``Regulation for Uniform Definitions and Standardized
Methodologies for Calculation of the Medical Loss Ratio for Plan
Years 2011, 2012, and 2013 per section 2718(b) of the Public Health
Service Act,'' MDL-190. Available at: https://www.naic.org/store/free/MDL-190.pdf?4.
\225\ See the Health Insurance Issuers Implementing Medical Loss
Ratio (MLR) Requirements Under the Patient Protection and Affordable
Care Act; Interim Final Rule, 75 FR 74864 (Dec. 1, 2010); see also
45 CFR part 158.
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Some commenters expressed concerns that ``shared savings'' programs
in general could actually compromise the quality of care by driving
consumer choices based on cost without regard for quality, and that
these programs could encumber and curtail medically necessary clinical
services in serving the financial interest of the payer. Some
commenters requested that HHS only allow ``shared savings'' where there
is evidence that the participating enrollees actually receive better
care at reduced costs. One commenter stated that the proposal fails to
define higher-value, which varies based on each enrollee's
circumstances. One commenter questioned the feasibility of measuring
whether reward systems generate actual savings.
[[Page 72249]]
HHS disagrees that programs that reward enrollees for critically
examining their options and pursuing cost-effective care interfere with
the provision of medically necessary clinical services. However, HHS
agrees that quality as well as cost should be determinants of what
qualifies for inclusion in any given issuer's ``shared savings''
program. That is why the amendment to 45 CFR 158.221 includes both a
cost and quality component; it permits issuers to include in the MLR
numerator ``shared savings'' payment made to enrollees choosing to
obtain care from a lower-cost and higher-value provider. However, HHS
did not propose and is not finalizing elements or criteria issuers must
address or otherwise include in their respective ``shared savings''
programs. The amendment finalized in this rulemaking is specific to
recognizing ``shared savings'' payments in issuer MLR calculations. As
detailed above, HHS believes state legislators and regulators are
currently in the best position to work with issuers in their states to
develop standards and criteria for ``shared savings'' programs for
their respective constituents. HHS further believes that issuers are in
the best position to perform the necessary provider credentialing
activities that will ensure that network providers that are included in
their ``shared savings'' programs are high-value, high-quality
providers. Since higher-value can vary by enrollee demographics and
provider type, issuers must determine what this means for their
enrollees and providers and maintain all documents and other evidence
necessary to support that determination consistent with the maintenance
of records requirements contained in 45 CFR 158.502. Issuers are
sophisticated entities that understand that if their enrollees obtain
lower-quality care, their costs over the long-term will increase rather
than decrease as their enrollees will likely need additional and
possibly corrective medical care. HHS therefore believes that issuers'
incentives are aligned with those of their enrollees when it comes to
designing ``shared savings'' programs.
HHS received a few comments urging that issuers be allowed to
include some or all of the costs of implementing the requirements of
these price transparency rules as a QIA in the numerator of the MLR
calculation. A few commenters urged HHS to allow issuers to include
some or all of the costs of creating the cost estimator tool required
by the price transparency aspects of the proposed rules.
Price transparency implementation costs do not constitute an
improvement to the quality of health care and thus do not qualify as
QIA and cannot be included in the numerator of the MLR calculation.
Lastly, several commenters expressed support for or opposition to
the MLR reporting and rebate requirements in general. HHS appreciates
these comments but notes that they are outside the scope of the
amendments to the MLR program rules contained in the proposed rule.
IV. Applicability
A. In General
1. Entities Subject to the Final Rules
The Departments proposed requiring group health plans, including
self-insured plans, and health insurance issuers of individual and
group health insurance coverage to disclose pricing information, with
certain exceptions as discussed in more detail in this preamble. The
Departments are of the view that consumers across the private health
insurance market will benefit from the availability of pricing
information that is sufficient to support informed health care
decisions. Although the Departments considered making the requirements
applicable to a more limited segment of the private health insurance
market, the Departments are of the view that consumers across the
market should receive and benefit from the same access to standardized,
meaningful pricing information and estimates. Moreover, applied
broadly, these changes have a greater potential to reform health care
markets.
Additionally, the preamble to the proposed rules discussed how
pricing information related to items and services that are subject to
capitation arrangements under a specific plan or contract could meet
transparency standards by disclosing only the consumer's anticipated
liability. The Departments sought comment on whether there are certain
reimbursement or payment models (such as ACOs or staff model HMOs) that
should be partially or fully exempt from these requirements or should
otherwise be treated differently. Further, the Departments sought
comment on how consumers may become better informed about their cost-
sharing requirements under these reimbursement or payment models.
The Departments also considered limiting applicability to issuers
of individual health insurance coverage and insured group health
insurance coverage, but concluded that limiting applicability would be
inconsistent with section 2715A of the PHS Act. The Departments are
concerned that a more limited approach might encourage plans and
issuers to simply shift costs to sectors of the market where the final
rules would not apply and where consumers have diminished access to
pricing information. Additionally, the Departments are concerned that a
more limited approach may distort the health care market by creating
perverse incentives for plans and issuers to avoid participating in
certain markets that require compliance with these requirements.
The Departments are aware that certain plans and health coverage
are not subject to the transparency provisions under section 2715A of
the PHS Act and, therefore, are not be subject to the final rules. This
includes grandfathered health plans, excepted benefits, health care
sharing ministries, and short-term, limited-duration insurance (STLDI).
Grandfathered health plans are health plans that were in existence
as of March 23, 2010, the date of enactment of PPACA, and that are only
subject to certain provisions of PPACA, as long as they maintain their
status as grandfathered health plans under the applicable rules.\226\
Under section 1251 of PPACA, section 2715A of the PHS Act does not
apply to grandfathered health plans. Therefore, the proposed rules
would not have applied to grandfathered health plans (as defined in 26
CFR 54.9815-1251, 29 CFR 2590.715-1251, and 45 CFR 147.140).
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\226\ 26 CFR 54.9815-1251, 29 CFR 2590.715-1251, and 45 CFR
147.140.
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In accordance with sections 2722 and 2763 of the PHS Act, section
732 of ERISA, and section 9831 of the Code, the requirements of title
XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code do
not apply to any group health plan (or group health insurance coverage
offered in connection with a group health plan) or individual health
insurance coverage in relation to its provision of excepted benefits.
Excepted benefits are described in section 2791 of the PHS Act, section
733 of ERISA, and section 9832 of the Code. Section 2715A of the PHS
Act is contained in title XXVII of the PHS Act, and, therefore, the
proposed rules would not have applied to a plan or coverage consisting
solely of excepted benefits.
The Departments also proposed that the rules would not apply to
STLDI. Under section 2791(b)(5) of the PHS Act, STLDI is excluded from
the definition of individual health insurance coverage and is therefore
exempt from section 2715A of the PHS
[[Page 72250]]
Act.\227\ Therefore, the proposed rules would not have applied to STLDI
coverage.
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\227\ See 26 CFR 54.9801-2, 29 CFR 2590.701-2, and 45 CFR
144.103.
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The Departments also proposed that the rules would not apply to
health reimbursement arrangements, or other account-based plans, as
defined in 26 CFR 54.9815-2711(d)(6)(i), 29 CFR 2590.715-2711(d)(6)(i),
and 45 CFR[thinsp]147.126(d)(6)(i), that simply make reimbursements
subject to a maximum fixed dollar amount for a period, with the result
that cost-sharing concepts are not applicable to those arrangements.
In contrast, the Departments proposed that the final rules would
apply to grandmothered plans, meaning certain non-grandfathered health
insurance coverage in the individual and small group markets with
respect to which CMS has announced it will not take enforcement action
even though the coverage is out of compliance with certain specified
market requirements.\228\ The Departments sought comment on whether
grandmothered plans may face special challenges in complying with these
transparency reporting provisions and whether the proposed rules should
apply to grandmothered plans.
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\228\ Pate, R. ``Insurance Standards Bulletin Series.'' Centers
for Medicare & Medicaid Services. January 31, 2020. Available at:
https://www.cms.gov/files/document/extension-limited-non-enforcement-policy-through-calendar-year-2021.pdf.
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The final rules adopt these provisions as proposed. The final rules
apply these requirements to group health plans, and health insurance
issuers offering non-grandfathered group or individual health insurance
coverage, with certain exceptions. Thus, the final rules apply to
grandmothered plans. The Departments are finalizing, as proposed, that
these requirements will not apply to certain plans and coverages that
are not subject to the transparency provisions under section 2715A of
the PHS Act, including grandfathered health plans, excepted benefits,
and STLDI. Additionally, the final rules will not apply to health
reimbursement arrangements, or other account-based plans, as defined in
26 CFR 54.9815-2711(d)(6)(i), 29 CFR 2590.715-2711(d)(6)(i), and 45
CFR[thinsp]147.126(d)(6)(i), as these account-based arrangements simply
make certain dollar amounts available, with the result that cost-
sharing and price setting concepts are not applicable to those
arrangements.
The majority of commenters supported applying these requirements to
issuers of individual health insurance coverage and group health
insurance coverage, as well as group health plans. Commenters supported
allowing consumers across the market to access important pricing
information. Some commenters suggested additional plans and coverages
that should be required to comply with these requirements, as discussed
later in this preamble. The Departments did not receive comments
regarding application of the final rules to grandmothered plans.
One commenter stated that the proposed rules would create an uneven
playing field that would unfairly advantage plans and issuers offering
stand-alone dental or vision coverage over plans that incorporate such
benefits into major medical coverage. For example, the commenter stated
that a plan offering essential health benefits would have to include in
a machine-readable file negotiated rates for pediatric dental services.
However, a plan offering stand-alone dental coverage would not have to
publish pricing information. For these reasons, the commenter
recommended that vision, dental, and hearing benefits, if offered as
part of a plan or coverage subject to the transparency requirements,
should be excluded from information disclosed through the internet-
based self-service tool and machine-readable files.
In response to this comment, the Departments note that section
2721(b), (c)(1) through (3) of the PHS Act provides an exemption from
title XXVII of the PHS Act for ``any individual coverage or any group
health plan (and group health insurance coverage offered in connection
with a group health plan) in relation to its provision of excepted
benefits.'' (See also section 732 (b), (c) of ERISA, and section
9831(b), (c) of the Code) (emphasis added).\229\ To the extent that a
plan or issuer provides a participant, beneficiary, or enrollee with
the opportunity to opt out of limited scope dental or vision benefits,
those benefits are considered as not an integral part of the plan and,
accordingly, are considered excepted benefits.\230\ Therefore, under
the final rules, plans and issuers that offer excepted benefits, such
as limited scope dental or vision benefits, along with their major
medical coverage are not required to disclose the information required
by the final rules regarding their provision of those excepted
benefits. Accordingly, the final rules do not create an uneven playing
field that would unfairly advantage plans and issuers offering stand-
alone dental or vision coverage over plans that incorporate such
benefits into major medical coverage.
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\229\ See also section 2763 of the PHS Act.
\230\ 26 CFR 54.9831-1(c)(3)(ii), 29 CFR 2590.732(c)(3)(ii), and
45 CFR 146.145(b)(3)(ii).
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The Departments received a mix of comments regarding whether the
final rules should apply to alternative contracting and alternative
payment model structures, such as ACOs or HMOs. One commenter
recommended a narrower scope for ACOs and other capitated payment
arrangements, including only requiring transparency tools to display
amounts that are not service dependent (for example, flat copayments),
as well as accumulator information about deductibles and out-of-pocket
maximums. As discussed elsewhere in this preamble, some commenters
expressed concern regarding how the final rules would apply to
reference-based pricing models, direct primary care, bundled or
capitated payment arrangements, and value-based insurance design.
Additionally, some commenters expressed concern regarding how the final
rules would apply to plans with rental networks and quality-adjusted
and risk-adjusted contracts (under which prices can only be calculated
after the fact). These commenters recommended that these kinds of
arrangements be exempt from the final rules' requirements.
On the other hand, other commenters suggested that there is no
justification for excluding plans that reimburse their providers based
on capitation from the requirements of the final rules as this would
result in an incomplete data set, and issuers of risk adjustment-
covered plans already assign values to services to administer benefits
with deductibles and co-insurance, for risk adjustment purposes under
45 CFR 153.710(c), and for internal reporting. One commenter
recommended that the final rules should apply to ACOs and other
capitated arrangements and that these arrangements should be required
to disclose their underlying financial incentive arrangements, not just
consumer's anticipated liability. The commenter also noted that any
exemptions may incentivize plans to move to these pricing models, which
the commenter characterized as opaque and potentially consumer-
unfriendly. Several commenters agreed that pricing information related
to items and services subject to capitation arrangements could meet
transparency standards only through the disclosure of the consumer's
anticipated liability.
Some commenters raised the concern that the proposed rules would
have a particularly negative impact on smaller entities that are less
likely to have the financial reserves and technological
[[Page 72251]]
resources to build and maintain systems to operationalize disclosure
requirements. Some commenters requested that the final rules be
optional or that smaller plans and TPAs be exempted from the
requirements. For example, a few commenters recommended providing an
exception to the price transparency requirement for small issuers,
TPAs, and plans with revenue below the $41.5 million small entity
threshold or with 100,000 commercial participants, beneficiaries, and
enrollees or fewer. They suggested that an exception to the final rules
would allow small issuers to adopt elements of the requirements of most
relevance to their participants, beneficiaries, and enrollees while not
forcing them to create a much more expensive option that may be of
limited appeal.
In considering these concerns, the Departments weighed the
competing goals of ensuring that consumers have access to pricing
information, the burden on plans, including self-insured plans, and
issuers of individual health insurance coverage and group health
insurance coverage, and encouraging innovative plan design. As
finalized, all issuers of non-grandfathered individual and group health
insurance coverage and self-insured plans (that are not account-based
plans), are required to comply with the final rules. Finalizing these
rules to be applicable to plans as proposed is the most straightforward
approach as it is impossible to define and predict all possible
modifications, plans, or models. Furthermore, doing so mitigates
creating incentives to adopt certain plan designs over others. The
Departments believe that this is not likely to stifle innovation.
Rather, the Departments are of the view that this approach creates a
level playing field for non-grandfathered individual and group health
insurance coverage and self-insured plans (that are not account-based
plans) to create innovative plan designs and increase consumers' access
to pricing information that is sufficient to support informed health
care decisions. The Departments are of the view that exempting plan
designs, such as alternative contracting and alternative payment model
structures, would create an opportunity for plans and issuers to avoid
sharing important pricing information with consumers. The Departments
maintain the view that consumers across the market should come to
expect and receive the same access to standardized, meaningful pricing
information and estimates for all plans affected by the final rules. In
addition, as detailed earlier in this preamble, issuers of risk
adjustment-covered plans that include capitation arrangements are
required under the final rules to submit a derived amount, potentially
using the same internal methodology the issuer uses to assign a price
value to the item or service for purposes of submitting risk adjustment
data under 45 CFR 153.710(c).
A few commenters supported exempting grandfathered health plans,
HRAs or other account-based plans, excepted benefits, and STLDI from
the proposed rules. However, a majority of commenters were concerned
that the final rules, as proposed, would not apply to plans or
arrangements that may have the highest potential cost-sharing
obligations, such as STLDI and health care sharing ministries. These
commenters were concerned that STLDI plans often have dollar limits on
covered benefits, limits on prescription drug coverage and covered
doctor visits, and excluded benefits, which often means consumers
enrolled in these plans can face higher cost-sharing liability when
seeking medical care than patients covered by individual health
insurance coverage, as defined under section 2791(b)(5) of the PHS Act.
They stated that it is even more important for these patients to have
access to their cost-sharing liability under the final rules before
receiving care or even signing up for a STLDI plan, so they are aware
of their coverage limits and are prepared to receive bills from the
hospital and other health care providers for amounts that exceed their
coverage. One commenter stated that whether such plans are considered
``individual health insurance'' is not relevant for such a
determination, as the proposed rules would not apply to just individual
health insurance, but would also apply to group coverage and
grandmothered plans.
The Departments appreciate the concerns raised by commenters
regarding these plans. However, the final rules adopt these policies as
proposed. As noted earlier in this section of this preamble, certain
types of coverage and arrangements such as STLDI, excepted benefits and
health care sharing ministries, are not subject to the transparency
provisions under section 2715A of the PHS Act and, therefore, are not
subject to the final rules. However, the Departments encourage all
plans that are not subject to the final rules to work to increase the
transparency and availability of pricing information, to enable
consumers to make informed health care decisions.
One commenter sought clarification of the liability of individual
employers concerning Multiple Employer Welfare Arrangements (MEWAs) and
Taft-Hartley plans. Section 715 of ERISA incorporates section 2715A of
the PHS Act into part 7 of ERISA. Generally, employers are only
responsible for ensuring compliance with the requirements of ERISA for
a Taft-Hartley plan (also known as a multi-employer plan), if they are
a member of the association, committee, joint board of trustees, or
other similar group of representatives of the parties who establish or
maintain the plan, or are otherwise a fiduciary of the plan. For MEWAs
that are employee welfare benefit plans, the bona fide group or
association that sponsors the MEWA assumes and retains responsibility
for operating and administering the MEWA, including ensuring compliance
with Part 7 of ERISA. In cases where the MEWA itself is not a plan,
each employer that provides benefits through a MEWA and, therefore,
maintains its own plan, is separately responsible for compliance with
ERISA requirements, and thus with the requirements of the final rules.
Some commenters recommended adding additional plans and coverages
to the list of health coverage not subject to these transparency
requirements. One commenter recommended adding expatriate health plans
because the Expatriate Health Coverage Clarification Act of 2014
exempts expatriate health plans from most of the provisions of PPACA,
including sections 1311(e)(3) of PPACA and section 2715A of the PHS
Act, both of which the Departments cite in asserting statutory
authority to propose these transparency requirements. Another commenter
recommended that Denominational Health Plans be specifically exempted
from the final rules. This commenter noted that Denominational Health
Plans can only offer coverage to a limited segment of the population--
eligible employees in the denomination--based on church requirements,
beliefs, and polity. Therefore, most of the individuals to which this
information would be disclosed would not be eligible to enroll in these
plans even if they wished to do so. Other commenters recommended
extending the final rules to health coverage to which 2715A of the PHS
Act does not apply. For example, a commenter recommended that the
Departments add Medicaid Managed Care Organization plans and Medicare-
Medicaid Plans to the list of health plans not subject to the
transparency requirements. The commenter noted that the combination of
Medicaid payment rates and low cost-sharing requirements limit the
[[Page 72252]]
usefulness of this information in the Medicaid context.
The Departments are finalizing the final rules as proposed and,
therefore, all plans subject to section 2715A of the PHS Act must
comply with these requirements. The Departments agree with commenters
that sections 1311(e)(3) of PPACA and 2715A of the PHS Act do not apply
to expatriate health plans \231\ and, therefore, such plans are not
subject to the requirements in the final rules. Furthermore, the
Departments' authority for the final rules derive from section 2715A of
the PHS Act, which only applies to group health plans and health
insurance issuers offering group or individual health insurance
coverage, and not Medicaid Managed Care Organization plans, Medicare-
Medicaid Plans, and Denominational Health Plans.
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\231\ 42 U.S.C. 18014.
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Interaction of Final Rules With 45 CFR 156.220
The Departments recognize that health insurance issuers offering
group or individual health insurance coverage as QHPs through an
Exchange are already subject to reporting requirements under 45 CFR
156.220 that implement the transparency in coverage requirements of
section 1311(e)(3) of PPACA. Pursuant to 45 CFR 156.220, issuers of
QHPs offered through an individual market Exchange or a Small Business
Health Options (SHOP) Exchange, including stand-alone dental plans,
must submit specific information about their plans' coverage to the
appropriate Exchange, HHS, and the state insurance commissioner, as
well as make the information available to the public in plain language.
The Departments acknowledge the similar purposes served by 45 CFR
156.220 and the final rules. The Departments, however, note the final
rules do not alter requirements under 45 CFR 156.220. Accordingly, QHP
issuers must comply with both rules' requirements. If necessary and to
the extent appropriate, HHS may issue future guidance to address QHP
issuers' compliance with both 45 CFR 156.220 and the final rules.
2. Applicability Dates
Except as otherwise provided for in the proposed MLR
requirements,\232\ the Departments proposed that all the proposed
requirements would become applicable for plan years (or in the
individual market, policy years) beginning on or after one year after
the finalization of the final rules. The Departments requested feedback
about this proposed timing. In particular, the Departments were
interested in information regarding the time necessary to develop cost
estimation tools and machine-readable files. The Departments are
finalizing a modified applicability timeline for the machine-readable
files at 26 CFR 54.9815-2715A3, 29 CFR 2590.715-54.9815-2715A3, and 45
CFR 147.212. The requirements to publish the machine-readable files
will become effective for plan years (or in the individual market, for
policy years) beginning on or after January 1, 2022. The Departments,
in response to comments, are finalizing an applicability date that is
generally one-year later than the proposed applicability date for
complying with the internet-based self-service tool requirements.
Specifically, plans and issuers will be allowed to phase in the
requirements at 26 CFR 54.9815-22715A2, 29 CFR 2590.715-2715A2, and 45
CFR 147.211 regarding the items and services included in the internet-
based self-service tool. Plans and issuers will be required to provide
pricing information for a minimum of 500 items and services identified
by the Departments beginning with plan years (or in the individual
market, policy years) on or after January 1, 2023. Plans and issuers
will be required to provide the pricing information through the
internet-based self-service tool for all items and services by plan
years (or in the individual market, policy years) beginning on or after
January 1, 2024.
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\232\ As noted above, HHS proposed and finalized that the
amendment to the MLR regulation will become effective beginning with
the 2020 MLR reporting year (for reports filed by July 31, 2021).
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The Departments are finalizing applicability dates that do not tie
applicability timelines to the beginning of plan years (or in the
individual market policy years) that begin one year after the effective
date of the rules, as proposed. Because most plan and policy years
begin on January 1st, the Departments are of the view that this change
in the applicability date likely will not shorten the amount of time
plans and issuers have to comply with the machine-readable file
requirements, as it has been the Departments' intent, including under
the proposed rules, to require calendar year plans and policies to come
into compliance with the final rules by January 1, 2022. The changed
timeline is therefore unlikely to lead to increased burdens or costs.
The Departments are finalizing a 3-year applicability timeline for the
internet-based self-service tool requirements. Under the proposed
rules, plans and issuers would have had to comply with all relevant
proposed requirements beginning with plan or policy years beginning on
or after January 1, 2023. Under the final rules, full compliance with
all requirements associated with the internet-based self-service tool
will not be required until plan or policy years beginning on or after
January 1, 2024. For these reasons, the final rule's applicability
dates for the self-service tool requirements are also unlikely to lead
to increased burdens or costs.
Many commenters submitted comments regarding the proposed
applicability date of the proposed rules. The majority of commenters
strongly recommended delaying the proposed applicability date for the
internet-based self-service tool and machine-readable file requirements
of the rules for at least one year and up to five years from
publication of the final rules.
Commenters recommended delaying the applicability date of the final
rules because complying with the requirements will require negotiations
with administrative service providers, and the design, building, and
testing of websites. Other commenters cited the challenges in accessing
some of the required information from third parties and the technical
challenges plans will likely face as additional reasons to delay the
applicability dates of these requirements. Additionally, commenters
noted that the proposed rules would require disclosure of large volumes
of data, which will have to be coordinated among various parties and
for which systems will need to be put into place to ensure timely,
accurate disclosure. Some commenters noted that a delay would be needed
due to complex operational and compliance issues related to contracting
with TPAs, ownership of data, and building and operating new IT
systems.
Commenters also cited vendor supply/demand challenges; extensive
technology design, development, and deployment work; amending
agreements with third parties; financing required to meet the
requirements of the final rules; and time needed to test the tools for
consumer use as reasons to delay the applicability date. One commenter
noted that their current price estimator tools took considerable time
and resources to develop, and large portions of a tool's underlying
logic or feature set may not be compatible with the approach envisioned
in the proposed rules. Moreover, testing, evaluating, and resolving
these types of issues will require significant investment in IT
development, numerous iterations of quality assurance and consumer
testing, extensive education and training for plan staff, and
development of new consumer-facing materials, among other
[[Page 72253]]
challenges. Another commenter recommended that employers/plan sponsors
should not have to comply with the final rules until the first day of
the first plan year that is two years after the date on which the rules
are published. Similarly, commenters requested a lengthy phase-in
period to give employers, third parties, issuers, and health care
providers time to modify their contractual agreements to provide all of
the data the proposed rules would require to be disclosed.
A few commenters stated the Departments severely underestimated the
time needed to implement the machine-readable files. The commenter
noted that the timeline to implement the machine-readable files is very
short, which could compromise the integrity of the files and lead to
unintended consequences for consumers. Another commenter noted that, if
not eliminated, the requirement to make machine-readable files
available should be applicable no earlier than plan or policy years
beginning three years after the date the rules are finalized.
As discussed in the economic impact analysis, the Departments are
of the view that developing the machine-readable files should be
straightforward for most plans and issuers and that plans and issuers
will incur limited additional administrative burdens or costs after the
one-time initial file development. The development activities needed to
establish the machine-readable files involve gathering, formatting, and
making publicly available already existing data that plans and issuers
use in their everyday operations. Plans and issuers need to keep this
information current for operational purposes, and the additional costs
and burdens of ensuring that the machine-readable files are updated
monthly is expected to decrease in subsequent years and ultimately
become minimal, as the Departments expect plans and issuers to automate
the updating and verification processes in the years following initial
development.
The Departments are of the view that providing for a phased-in
approach with regard to the number of items and services required for
the internet-based self-service tool will provide more time for plans
and issuers to plan for any increased costs, work with various vendors,
perform user testing, and build appropriate technology to handle the
disclosure of data through the internet-based self-service tool.
Therefore, the final rules require plans and issuers to include in the
internet-based self-service tool (and by request, through the paper
method) 500 items and services identified by the Departments for plan
years (in the individual market, for policy years) beginning on or
after January 1, 2023, and all items and services for plan years (in
the individual market, for policy years) beginning on or after January
1, 2024. The Departments are of the view that providing more time to
implement the internet-based self-service tool while generally
maintaining the timeline for the machine-readable files, strikes the
appropriate balance between minimizing burdens for issuers and
maximizing price transparency for the public. Providing information to
the public through the machine-readable files sooner will also
accelerate researchers' and third-party developers' access to pricing
information and potentially provide additional resources and incentives
for plans to build out their own consumer-tools.
Many commenters also encouraged the Departments to allow for a
phased-in approach for the internet-based self-service tool and
machine-readable files. Some commenters suggested finalizing a rule
that allows for a phased-in approach for different group health plans
and health insurance issuers of individual and group health insurance
coverage to come into compliance with the final rules. Some commenters
recommended finalizing a rule that allows for a phased-in approach by
allowing smaller entities an extended implementation timeframe (that
is, an additional 3 to 5 years) due to the disproportionate IT burden
that will be placed on these smaller entities. Additionally, commenters
were concerned that the rules may create a competitive advantage for
larger issuers and TPAs.
A few commenters recommended that the rules be implemented in a
more gradual fashion by requiring a price transparency tool that covers
a narrower data set initially, for example, one that includes only the
most common shoppable services. These commenters asserted that, over
time, this scope could be broadened to be fully inclusive, but an
initial narrow focus could increase the chance that patients have
critical, actionable information as soon as possible.
Other commenters recommended a phased approach that would focus
first on the functionality providing the most value to consumers to
establish a baseline standard of price transparency across plans, while
allowing time for the industry to solve more difficult technical
challenges. Another commenter recommended allowing employers that have
highly customized benefit structures additional time to implement the
internet-based self-service tool. One commenter recommended allowing
for a transition period for issuers and plans to use their current
tools to meet the requirements.
A few commenters recommended including quality metrics. These
commenters noted that requiring quality information in the disclosures
would take additional time. In particular, one commenter was concerned
that in the absence of quality data, price transparency could actually
increase spending. The commenter therefore recommended delaying the
implementation of the final rules until quality information, such as
information related to patient satisfaction and experience, adherence
to clinical standards and evidence-based medicine, and patient safety
and clinical outcomes, could be incorporated. Another commenter stated
that, if pharmacy quality information could be included, the
Departments would need to provide for several years to transform
existing consensus-based processes to identify appropriate quality
metrics to include health plans serving different populations. Another
commenter urged the Departments to perform a study on the effects of
price transparency and the potential consequences on consumers seeking
care to better understand how best to integrate quality information
alongside prices to allow consumers to evaluate the services that best
respond to their individual needs.
As the Departments explain in section II.C.1 of this preamble,
government and private sector actors are working to develop and
implement reliable and reasonable quality measures that can be applied
to produce quality rating information that consumers may access and
consider alongside pricing. As commenters acknowledged, delaying the
final rules for the purpose of requiring the integration of quality
information with price information would require several additional
years. While the Departments appreciate the value of quality
information to informed health care decision-making, the Departments
are of the view that price transparency in health coverage must not be
delayed for years when some quality information is already available or
under development. Indeed, the Departments expect that the ready
availability of pricing information will create greater consumer
interest in quality information and other data relevant to health care
decision-making, and that the market will respond to provide such
information through innovative resources such as online tools and
mobile applications. The Departments anticipate that innovators will
seek ways to best present and
[[Page 72254]]
integrate pricing and quality data. However, the Departments also will
consider what next steps are appropriate and feasible within the
Departments' current authorities, including the possibility of
conducting a study to evaluate how to best integrate quality
information alongside prices. For these reasons and those noted earlier
in this preamble, the Departments decline to require plans and issuers
to include quality information in the disclosures required by the final
rules.
The Departments are finalizing the applicability dates of the final
rules as described earlier in this preamble. The Departments are of the
view that the additional time and flexibility regarding the internet-
based self-service tool will help address the concerns commenters
raised regarding smaller entities' ability to comply with these
requirements.
B. Enforcement and Good Faith Special Applicability
The preamble to the proposed rules did not discuss how the proposed
rules would be enforced. State regulators, in their comments to the
proposed rules, sought greater clarity on how the proposed rules'
requirements would be enforced as specifically applied to health
issuers in the individual and group markets. Section 1311(e)(3) is
located in title I of PPACA and, under section 1321(c)(2) of PPACA is
subject to the enforcement scheme set forth in section 2723 of the PHS
Act. Similarly, section 2715A of the PHS Act is subject to the
enforcement scheme set forth in section 2723 of the PHS Act. Therefore,
states will generally be the primary enforcers of the requirements
imposed upon health insurance issuers by the final rules.\233\ The
Departments expect to work closely with state regulators to design
effective processes and partnerships for enforcing the final rules.
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\233\ DOL has jurisdiction to enforce the final rules as they
apply to group health plans subject to ERISA. Treasury has
jurisdiction over certain church plans. HHS has jurisdiction over
non-Federal governmental plans and over health insurance issuers
where the HHS Secretary determines that a state has failed to
substantially enforce the requirements. OPM has jurisdiction over
the Federal Employees Health Benefits Plans.
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The proposed rules included a special applicability provision to
address circumstances in which a group health plan or health insurance
issuer, acting in good faith, makes an error or omission in its
disclosures. Specifically, a plan or issuer would not fail to comply
with the proposed rules solely because it, acting in good faith and
with reasonable diligence, made an error or omission in a disclosure,
provided that the plan or issuer corrects the information as soon as
practicable. Additionally, to the extent such an error or omission was
due to good faith reliance on information from another entity, the
proposed rules included a special applicability provision under which,
to the extent compliance would require a plan or issuer to obtain
information from any other entity, the plan or issuer would not fail to
comply with this section because it relied in good faith on information
from the other entity, unless the plan or issuer knew, or reasonably
should have known, that the information was incomplete or inaccurate.
Under the proposed rules, if a plan or issuer had knowledge that such
information was incomplete or inaccurate, the plan or issuer would be
required to correct the information as soon as practicable.
Furthermore, the proposed rules also included a special
applicability provision to account for circumstances in which a plan or
issuer fails to make the required disclosures available due to its
internet website being temporarily inaccessible. Accordingly, the
proposed rules provided that a plan or issuer would not fail to comply
with this section solely because, despite acting in good faith and with
reasonable diligence, its internet website is temporarily inaccessible,
provided that the plan or issuer makes the information available as
soon as practicable.
The Departments solicited comments regarding whether, in addition
to these special applicability provisions, additional measures should
be taken to ensure that plans and issuers that have taken reasonable
steps to ensure the accuracy of required information disclosures are
not exposed to liability by virtue of providing such information as
required by the proposed rules.
In general, commenters supported the good faith special
applicability provisions (also referred to as ``safe harbors'') and
recommended certain clarifications. One commenter requested
clarification regarding how the Departments would determine whether a
plan or issuer acted in ``good faith'' and with ``reasonable
diligence.'' Another commenter requested additional guidance on what it
would mean to ``correct'' information, and specifically whether this
requirement would apply on a prospective or retrospective basis.
Another commenter recommended the Departments allow health plans 30
days to update accumulated amounts in the internet-based self-service
tool.
The Departments are finalizing the ``good faith'' safe harbor as
proposed. While ``good faith'' is not explicitly defined in the final
rules, it is an established legal and business term that is generally
understood to involve honesty in fact and the observance of reasonable
commercial standards of fair dealing, according to the Uniform
Commercial Code.\234\ Efforts to correct omitted or erroneous
information should proceed promptly after the plan or issuer is
informed of the error. At a minimum, correcting information should
include replacing the incorrect information, and may include notifying
those affected of the error and the correction, using digital or
written communications to notify affected participants, beneficiaries,
and enrollees, and posting a notice on the internet website of the
expected time before the error will be corrected.
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\234\ ``Uniform Commercial Code. General Definitions.'' Cornell
Law School Legal Information Institute. Available at: https://www.law.cornell.edu/ucc/1/1-201#Goodfaith.
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The Departments received few comments on the good faith special
applicability provision to account for circumstances in which a plan or
issuer fails to make the required disclosures available due to its
internet website being temporarily inaccessible. One commenter
recommended that the website inaccessibility safe harbor be expanded to
cover situations in which the internet-based self-service tool or
machine-readable files are temporarily inaccessible, including because
the internet website is inaccessible. This clarification would cover
other technical issues, for example, that may affect only these
resources, even though the remainder of the issuer's or plan's website
is accessible.
Several commenters recommended that the Departments expand the
``safe harbor'' to account for additional circumstances. Commenters
recommended that a safe harbor be created for plans that do not have
direct access to negotiated in-network rates and allowed amounts, or
information regarding reference based re-pricing in real time, and that
may be unable to obtain some of the required information despite good
faith efforts. For example, commenters recommended exempting employers,
plan sponsors, and self-insured plans that rely on TPAs from liability
if they have made good faith efforts to obtain the required data but
have failed to do so. Commenters also recommended exempting plan
sponsors that have been unable to procure third-party vendors from
liability if these plans sponsors have acted in good faith. One
commenter recommended that the Departments finalize a good faith
special applicability provision to protect
[[Page 72255]]
health plans and issuers that provide cost estimates that meet the
requirements of the final rules if the estimates do not match the
amounts actually paid by participants, beneficiaries, or enrollees.
This commenter also requested that this safe harbor be extended to the
cost-sharing estimate requirements.
Commenters also recommended that the Departments consider a safe
harbor provision for covered entities that clearly provides that
issuers and plans are not responsible for the downstream privacy and
security of PHI shared by a participant, beneficiary, or enrollee with
a third-party application consistent with the recent guidance issued by
the HHS OCR.\235\ Another commenter recommended the creation of
additional safe harbor provisions to allow and encourage health care
organizations to share threat information about security risks and
incidents linked to third-party applications.
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\235\ ``HHS FAQ.'' United States Department of Health and Human
Services. Available at: https://www.hhs.gov/hipaa/for-professionals/faq/3009/does-a-hipaa-covered-entity-bear-liability.html.
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One commenter noted that disclosure of pricing information through
the machine-readable files and cost-sharing tool raises concerns for
plan sponsors about the potential for increased litigation under ERISA
based on the release of payer-specific negotiated rates. The commenter
encouraged DOL to effectively and expressly address this issue so that
any disclosure requirement is crafted in a way that does not increase
fiduciary liability for employer plan sponsors. The commenter
recommended that DOL consider proposing a ``safe harbor'' to protect
employers from downstream litigation risk related to the public
disclosure of negotiated rates and disclosure of negotiated rates
through the cost-sharing tool. Such a ``safe harbor'' could provide
that so long as an employer can demonstrate it ``considered''
negotiated rates as part of its decision-making process in selecting an
administrative service organization (ASO) for its plan, so that it
would not be deemed to have acted imprudently as a fiduciary for
purposes of ERISA with respect to the selection of the ASO by virtue of
the negotiated rates. While the Departments appreciate this comment
regarding increased litigation under ERISA, this request is beyond the
scope of this rulemaking.
Finally, several commenters requested a deemed compliance standard
for employers or plans that already offer transparency tools designed
to assist participants with cost estimates and obtaining up-to-date
cost-sharing information or for plans and issuers that voluntarily
submit their data to multi-payer claims databases. Other commenters
noted that some existing state laws require plans to provide the
ability for enrollees to look up their out-of-pocket costs for several
hundred procedures online or by phone. These commenters recommended--to
reduce burden on issuer implementation and avoid duplication of
effort--that health plans that comply with existing state laws
requiring treatment cost-estimator functionality be deemed in
compliance with any similar Federal requirements. Another commenter
recommended this safe harbor be extended to the machine-readable files.
The Departments understand that states have been at the forefront
of transparency initiatives and some have required disclosure of
pricing information for years. However, it is important to note that
states do not have authority to require such disclosures by plans
subject to ERISA, which compose a significant portion of the private
market.\236\ As a result, a significant portion of consumers do not
have access to information on their plans, even in states that have
implemented transparency requirements. The Departments are also aware
that many plans and issuers have moved in the direction of increased
price transparency. Despite these price transparency efforts, the
Departments understand that there continues to be a lack of easily
accessible pricing information for consumers to use when shopping for
health care services. The final rules are meant, in part, to address
this lack of easily accessible pricing information, and represent a
critical part of the `Departments' overall strategy for reforming
health care markets by promoting transparency, competition, and choice.
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\236\ Panis, C. W. A., and Brien, M. J. ``Self-Insured Health
Benefit Plans 2019: Based on Filings through Statistical Year
2016.'' Deloitte. January 7, 2019. Available at: https://www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/annual-report-on-self-insured-group-health-plans-2019-appendix-b.pdf.
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The Departments will take these additional safe harbor
recommendations into consideration for future rulemaking. The
Departments are not including in the final rules any safe harbor rule
that would substitute the offering of existing tools or compliance with
existing state transparency laws. The Departments have concluded that
additional price transparency efforts are necessary to empower
consumers, promote competition in the health care industry, and reduce
the overall rate of growth in health care spending. The additional safe
harbors recommended by commenters would not allow for the consistent
baselines and standards that the Departments seek to establish with the
final rules. As noted above, one of the goals of the final rules is to
empower plans and issuers in the commercial health care market to
innovate and compete in an industry where innovation and competition
currently appear to be limited. By requiring public disclosure of
pricing data a year after the effective date of the rules, the final
rules will encourage issuers, TPAs, and third-party developers and
innovators to create or enhance their shopping tools, including the
self-service tools also required by these final rules. The development
of these tools in turn will create additional consumerism, which will
lead to lower prices throughout the health care market. This impact is
only achievable, however if all applicable plans and issuers are held
to the same standards and timelines. Furthermore, limiting the
applicability of the final rules would undermine the Departments'
overall strategy for reforming health care markets by promoting
transparency, competition, and choice across the health care industry.
The Departments are of the view that, ultimately, plans and issuers
are responsible for complying with the requirements outlined in the
final rules. The Departments understand that plans may have to make
adjustments to their contracts and as such, the Departments have
factored that into the burden estimates and timing requirements for
implementation explained elsewhere in the final rules. As plans and
issuers are responsible for complying with the requirements outlined in
the final rules, they should carefully examine the capacity of any
partners they may contract with to provide the required information.
Finally, as discussed earlier in this preamble, the Departments
recognize the privacy concerns raised by commenters, but are of the
view that the final rules, which include an exemption for providers
with fewer than 20 different claims for payment and do not require any
disclosure of PII or PHI through an API, and the continuing obligation
of plans and issuers to comply with applicable privacy requirements, do
not raise sufficient privacy concerns to require an additional privacy-
related safe harbor.
V. Economic Impact Analysis and Paperwork Burden
A. Summary/Statement of Need
This regulatory action is taken, in part, in light of Executive
Order 13877
[[Page 72256]]
directing the Departments to issue an ANPRM, soliciting comments
consistent with applicable law, requiring providers, health insurance
issuers, and self-insured group health plans to provide or facilitate
access to information about expected out-of-pocket costs for items or
services to patients before they receive care. As discussed previously
in this preamble, in response to Executive Order 13877, the Departments
published the proposed rules entitled ``Transparency in Coverage.''
Despite the growing number of initiatives and the growing consumer
demand for, and awareness of, the need for pricing information, there
continues to be a gap in easily accessible pricing information for
consumers to use to shop for health care items and services. The final
rules add new requirements to 26 CFR part 54, 29 CFR part 2590, and 45
CFR part 147 aimed at addressing this gap, and are a critical part of
the Administration's overall strategy for reforming health care markets
by promoting transparency and competition, creating choice in the
health care industry, and enabling consumers to make informed choices
about their health care. As discussed later in the RIA, the Departments
acknowledge that more than 90 percent of plans, issuers, and TPAs
currently provide some form of internet-based self-service tool to
their consumers. However, as stated in section I.B of the final rules,
the Departments understand that utility and accuracy among existing
issuer cost estimator tools varies widely. Based on issuer
demonstrations of their tools given to the Departments, some estimators
reflect a combined range of possible costs; others give estimates based
off historical pricing or claims data from various sources, while
others are restricted in the types of procedures they include.
Moreover, some existing issuer tools do not take into account a
participant's, beneficiary's, or enrollee's accumulators.\237\ The
Departments are of the view that it is important to establish a minimum
set of standards of what is acceptable so that consumers can take
advantage of the information market-wide. Consistency will give
consumers confidence that the information presented by these tools will
not change arbitrarily. Reliability assures consumers that information
in these tools accurately reflects plans' and issuers' best estimates
of costs. The availability of these tools across all markets will
ensure that no participant, beneficiary, or enrollee is denied access
to the benefits of this rule and the Departments are of the view that
this consistency is vital for success and utilization. As discussed
previously in section I.B, state transparency requirements are
generally not applicable to self-insured group health plans, and as a
result, a significant portion of consumers may not have access to
information on their plans and their health care costs. The Departments
encourage additional functionality and innovation to be built around
the requirements of the final rules, but believe a baseline is required
to give the participant, beneficiary, or enrollee some confidence that
no matter which plans tool they used, it would at least offer the same
basic information. By requiring group health plans and health insurance
issuers to disclose to participants, beneficiaries, or enrollees such
individual's cost-sharing information for covered items or services
furnished by a particular provider, the final rules provide them
sufficient information to determine their potential out-of-pocket costs
related to needed care and encourages them to consider price when
making decisions about their health care.
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\237\ See also ``Are healthcare's cost estimate tools making
matters worse for patients?'' Becker's Hospital CFO Report.
Available at https://www.beckershospitalreview.com/finance/are-healthcare-s-cost-estimate-tools-making-matters-worse-for-patients.html (citing Gordon, E. ``Patients Want To Price-Shop For
Care, But Online Tools Unreliable.'' NPR. November 30, 2015.
Available at https://www.npr.org/sections/health-shots/2015/11/30/453087857/patients-want-to-price-shop-for-care-but-online-tools-unreliable) (``Some estimators reflect a combined range of possible
costs, while others are based off historical pricing or claims data
from various sources. Many online estimate tools are restricted in
the types of procedures they include. . . .'').
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B. Overall Impact
The Departments have examined the impact of the final rules as
required by Executive Order 12866 on Regulatory Planning and Review
(September 30, 1993), Executive Order 13563 on Improving Regulation and
Regulatory Review (January 18, 2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96-354), section 202 of the Unfunded
Mandates Reform Act of 1995 (March 22, 1995, Pub. L. 104-4), Executive
Order 13132 on Federalism (August 4, 1999), the Congressional Review
Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing Regulation
and Controlling Regulatory Costs (January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
A regulatory impact analysis (RIA) must be prepared for rules with
economically significant effects ($100 million or more in any 1 year).
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action that is likely to result in a rule:
(1) Having an annual effect on the economy of $100 million or more in
any 1 year, or adversely and materially affecting a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or state, local or tribal governments or communities
(also referred to as ``economically significant''); (2) creating a
serious inconsistency or otherwise interfering with an action taken or
planned by another agency; (3) materially altering the budgetary
impacts of entitlement grants, user fees, or loan programs or the
rights and obligations of recipients thereof; or (4) raising novel
legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive order. An RIA
must be prepared for major rules with economically significant effects
($100 million or more in any 1 year), and a ``significant'' regulatory
action is subject to review by the Office of Management and Budget
(OMB). The Departments have concluded that the final rules are likely
to have economic impacts of $100 million or more in at least 1 year,
and, therefore, meet the definition of ``economically significant
rule'' under Executive Order 12866. Therefore, the Departments have
provided an assessment of the potential costs, benefits, and transfers
associated with the final rules. OMB reviewed this regulation in
accordance with the provisions of Executive Order 12866.
Two commenters suggested that the proposed rules failed to comply
with Executive Order 12866. Executive Order 12866 defines rules likely
to have an economic impact in excess of $100 million as ``significant''
and requires that the agencies conduct an assessment of potential
costs. The commenters suggested that the economic impact analysis and
cost assessment the agencies provided for the proposed rules were short
of the concrete, well-founded analysis required of the economic
analysis directed by Executive Order 12866 that must accompany a
proposed rulemaking as far-reaching, and potentially costly, as the
proposed rules. One commenter suggested that the proposed rules were
inconsistent with
[[Page 72257]]
both Executive Order 12866 and Executive Order 13563, both of which
direct agencies to carefully consider alternatives to regulations an
agency has deemed necessary, and to select the least burdensome
approach available. The commenter maintained that the agencies did not
adequately consider alternatives and are proposing an unnecessarily and
excessively burdensome approach.
After consideration and discussion of the comments related to
proposed cost estimates received in response to the proposed rules, the
Departments chose to reevaluate the cost estimates associated with the
provisions in the final rules. The Departments also consulted with
internal and external IT professionals to gain a better insight into
what individuals and tasks would be needed to design, develop, and
deploy the internet-based self-service tool and the three machine-
readable files required by the final rules. Based on this consultation
and additional research, the Departments have chosen to increase the
cost estimates to account for the updated understanding of the costs
posed by the final rules, as well as the additional requirements
included in the final rules. The Departments further discuss changes to
the final cost estimates later in this preamble and in the associated
ICR sections.
The final rules will enable participants, beneficiaries, and
enrollees to obtain information about their potential cost-sharing
liability for covered items and services that they might receive from a
particular provider by requiring plans and issuers to disclose cost-
sharing information as described at 26 CFR 54.9815-2715A2, 29 CFR
2590.715-2715A2, and 45 CFR 147.211. As discussed earlier in section
I.B. of the final rules, there has been a shift in the health care
market from copayments to coinsurance. Coupled with increases in plans
and coverages with high deductibles, generally requiring sizeable out-
of-pocket expenditures prior to receiving coverage under the terms of
the plan or policy, participants, beneficiaries, and enrollees are now
shouldering a greater portion of their health care costs than before.
For example, over the period from 2008 to 2018, the average health care
costs incurred by families covered by large employers--including
premium contributions and out-of-pocket spending on health care
services--have increased 67 percent from $4,617 to $7,726 annually.
Over the same period, the average out-of-pocket costs alone have
increased from $1,779 to $3,020 annually.\238\ The Departments are of
the view that disclosure of pricing information is crucial for
participants, beneficiaries, or enrollees to engage in informed health
care decision-making and believe that with greater price transparency
and access to more accurate and actionable pricing information,
participants, beneficiaries, and enrollees will be able to consider the
value of an item or service when making decisions related to their
health care.
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\238\ Rae, M., Copeland, R., and Cox, C. ``Tracking the rise in
premium contributions and cost-sharing for families with large
employer coverage.'' Peterson-KFF. August 14, 2019. Available at:
https://www.healthsystemtracker.org/brief/tracking-the-rise-in-premium-contributions-and-cost-sharing-for-families-with-large-employer-coverage/?utm_campaign=KFF-2019-Health-Costs&;amp;utm_medium=email&_hsenc=p2ANqtz-
_72_RHB9Twe8BpbqOg28rdlGqxq_SBgV6rB-
kbC4PuYMItIOSxHQLmh_D3OH4GOnUKZXa8&utm_source=hs_email&am
p;hsCtaTracking=04848753-3235-436e-a0de-ae8238ad00ad%7Cc1097ae0-
0521-4e9a-8e45-e5a87f67af4a.
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In addition, as described at 26 CFR 54.9815-2715A1, 54.9815-2715A2,
and 54.9815-2715A3, 29 CFR 2590.715-2715A1, 2590.715-2715A2, and
2590.715-2715A3, and 45 CFR 147.210, 147.211 and 147.212, the final
rules require group health plans and health insurance issuers to make
public in-network rates, including amounts in underlying fee schedules,
negotiated rates, and derived amounts for in-network providers;
historical allowed amounts paid to out-of-network providers and billed
charges for all covered items and services; and negotiated rates and
historical net prices for prescription drugs. The Departments are of
the view that these requirements, through providing greater
transparency and access to pricing information, will provide
consistency and confidence across all internet-based self-service
tools. Access to data provided by the three machine-readable files will
ensure that all consumers have the pricing information they need in a
readily accessible format, which could inform their choices, in
addition to potentially impacting cost disparities and improvements to
the overall functioning of the health care market. The Departments are
of the view that greater price transparency and the availability of
price information to the public will empower the 26.1 million uninsured
consumers \239\ to make more informed health care decisions and allow
consumers who wish to shop among plans and coverage options to better
understand the potential cost of their care. Public availability of
this information will also allow third-party IT developers to provide
consumers with more accurate information on provider, plan, and issuer
value, as well as prescription drug pricing information, ensuring that
such information is available to consumers where and when it is needed.
Furthermore, providing the in-network rates along with out-of-pocket
costs will also show what future costs could be for a participant,
beneficiary, or enrollee for the same service, depending on the
progress of his or her deductible. This information will help consumers
make informed decisions related to their health care needs now and in
the future.
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\239\ ``Income, Poverty and Health Insurance Coverage in the
United States: 2019.'' United States Census Bureau. September 15,
2020. Available at: https://www.census.gov/newsroom/press-releases/2020/income-poverty.html.
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The Departments received many comments regarding the underlying
economic principles of the proposed rules. Many commenters were
concerned the rules as proposed could disrupt contract negotiations
between providers and health plans and result in providers acting in
anticompetitive ways (such as collusion, consolidation, or price
fixing), resulting in increased rates (a so-called ``race to the
top''). Some of these commenters were particularly concerned with the
potential of the Departments' proposals to spur anticompetitive
behavior in highly concentrated markets. Several of these commenters
cited the FTC's concerns about the potential negative impacts of price
transparency on competition in the health insurance markets, including
the possibility that providers (or sellers) will coordinate their
behavior or bid less aggressively, leading to higher prices. Commenters
also cited similar concerns expressed by the Department of Justice
(DOJ) and the Congressional Budget Office (CBO) about the unintended
consequences of releasing competitive proprietary information such as
the in-network rates of plans and issuers. Commenters further stated
increased costs would negatively impact consumer choice and reduce the
affordability of health insurance coverage of low- and middle-income
consumers. One commenter expressed concern that plans and issuers could
also coordinate to reduce provider payment levels below market
competitive rates, which could negatively impact patient access to
quality care. In contrast, one commenter suggested that concerns about
potential collusion among providers are unfounded as local markets are
currently populated by a limited number of providers who tend to have
knowledge of each other's rates and
[[Page 72258]]
consumers currently receive pricing information through EOBs. The
commenter also expressed the opinion that the argument put forth by
issuers that in-network rates are trade secrets is self-serving and
benefits them at the expense of consumers and the public.
One issuer stated that its experience in state markets where health
care price transparency was implemented (Massachusetts, New Hampshire,
and Maine) do not provide evidence that transparency efforts produce
reduced health care prices and that state price transparency efforts
negatively affected issuers' ability to negotiate lower rates. However,
another commenter cited a study of the New Hampshire transparency
initiative that found ``a significant reduction in negotiated prices.''
\240\
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\240\ Brown Z. Y. ``Equilibrium Effects of Health Care Price
Information.'' 101 Review of Economics & Stat. 699 (2019). Available
at: https://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf.
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Some commenters suggested that the Departments should ensure that
strong protections are in place to prevent price fixing or
unsustainably low reimbursement for care before requiring public
disclosure of in-network and out-of-network rates. For example, to
address concerns about price fixing, one commenter suggested working
closely with the FTC and other appropriate Federal and state
authorities to monitor health care provider markets for any incidence
of collusion, potentially leading to the prosecution of entities for
violations that raise costs for patients and plan sponsors.
By contrast, several commenters expressed the view that the public
disclosure of payer-specific in-network rates and transparency would
promote competition in the health insurance markets and will drive down
costs, which could result in lower, more reasonable health care prices.
One commenter cited a paper that reviewed outcomes after the
implementation of price transparency efforts and found evidence for
behavioral changes that could place pressure on providers to lower
rates.\241\ Specifically, the paper found evidence of shopping activity
among consumers, especially younger consumers, evidence of development
activity by third-party application developers using this information,
and evidence that employers will use the data to negotiate better
rates. Another commenter noted that employers and health plans would be
able to leverage the information to negotiate rates that are more
reasonable and encourage patients to access higher-value providers.
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\241\ Blase, B. ``Transparent Prices Will Help Consumers and
Employers Reduce Health Spending.'' Texas Public Policy Foundation.
September 27, 2019. Available at: https://galen.org/assets/Blase_Transparency_Paper_092719.pdf.
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As noted previously in sections I.B and I.C of this preamble, the
Departments are of the view that greater price transparency and the
public disclosure of pricing information is necessary to enable
consumers to use and understand pricing data in a manner that will
increase competition, improve markets, reduce disparities in health
care prices, and potentially lower health care costs. The Departments
continue to be of the view that effective downward pressure on health
care pricing cannot be fully achieved without increased price
transparency and the public disclosure of pricing information. As
discussed in section E.3 of this preamble, the Federal Government
maintains laws and processes to investigate reports of collusive or
other anticompetitive practices.
Section 1311(e)(3) of PPACA and section 2715A of the PHS Act, as
well the authority vested in the Departments, grant participants,
beneficiaries, enrollees, and the public the right to know the prices
of health care items and services, which will enable them make informed
health care purchasing decisions. Without access to price information,
consumers are unable to accurately assess and choose the least costly
care and coverage options among all available options, and choice
cannot be meaningful without adequate information about those choices.
Currently, insured participants, beneficiaries, or enrollees, as well
as uninsured consumers, do not have access to adequate and accessible
pricing information related to care and coverage. The potential benefit
of consumer access to this information is enormous. Furthermore, the
Departments are aware of consumer demand for this information.
According to a May 2019 poll conducted by the Harvard Center for
American Political Studies, 88 percent of U.S. registered voters (out
of a sample of 1,295) stated they would support an initiative by the
government to mandate issuers, hospitals, doctors and other providers
to disclose the cost of their services and discounted or negotiated
rates between these groups.\242\ Furthermore, 65 percent of these
individuals would favor these initiatives even if in the short term
they lead to an increase in prices by some providers.\243\ The vast
majority of comments the Departments received in response to the
proposed rules were from individuals who expressed general support for
the transparency proposals and expressed frustration at the lack of
information available about health care pricing and a desire to have
access to this information.
---------------------------------------------------------------------------
\242\ ``The CAPS Harris Poll.'' Harvard Center for American
Political Studies, 45. May 2019. Available at: https://harvardharrispoll.com/wp-content/uploads/2019/06/HHP_May19_vF.pdf?utm_source=hs_email&utm_medium=email&_hsenc=p2ANqtz--NgSdTYggGUP4tWyR2IEQ7i8TCg1s3DcHuQyhErIgkX3KFUi3SFgl9OZKm4-JUOOi9tmMQ.
\243\ Id.at 46.
---------------------------------------------------------------------------
As noted in the preamble to the proposed rules and earlier in this
preamble, the belief that greater price transparency will reduce health
care costs by encouraging providers to offer more competitive rates is
consistent with the predictions of standard economic theory and a
number of empirical studies regarding price transparency in other
markets. The Departments agree, however, that the health care market
presents unique challenges. The Departments reviewed a study that notes
certain special characteristics of the health care market, including
that: (1) Diseases and treatments affect each patient differently,
making health care difficult to standardize and making price dispersion
difficult to monitor; (2) patients cannot always know what they want or
need, and physicians effectively must serve as their agents (for
example, by recommending specialists and determining whether a patient
is admitted to a hospital); and (3) patients are typically in a poor
position to choose a hospital because they do not have sufficient
information about hospital quality and costs.\244\ This study suggests
that these special characteristics of the health care market, among
other relevant factors, make it difficult to draw conclusions based on
empirical evidence gathered from other markets. Nevertheless, the same
study concluded that despite these complications, greater price
transparency, such as access to posted prices, might lead to more
efficient outcomes and lower prices.
---------------------------------------------------------------------------
\244\ Austin, A. D., and Gravelle, J. G. ``Congressional
Research Service Report to Congress: Does Price Transparency Improve
Market Efficiency? Implications of Empirical Evidence in Other
Markets for the Healthcare Sector.'' Congressional Research Service.
July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf.
---------------------------------------------------------------------------
Another study evaluated hospital discharge information following
the publication of prices.\245\ Hospital
[[Page 72259]]
utilization increased for hospitals that priced below the mean market
price, while hospital utilization decreased for hospitals that priced
above the mean market price.
---------------------------------------------------------------------------
\245\ Kim, M. ``The effect of hospital price transparency in
health care markets.'' University of Pennsylvania. 2011. Available
at: https://repository.upenn.edu/dissertations/AAI3475926.
---------------------------------------------------------------------------
In a recent study of the New Hampshire price transparency tool,
researchers found that health care price transparency could shift care
to lower-cost providers and save consumers and payers money.\246\ The
study specifically focused on X-rays, CT scans, and MRI scans; it
determined that the transparency tool reduced the costs of medical
imaging procedures by five percent for patients and four percent for
issuers; and estimated savings of $7.9 million for patients and $36
million for issuers over a 5-year period.
---------------------------------------------------------------------------
\246\ Brown, Z.Y. ``Equilibrium Effects of Health Care Price
Information.'' 100 Rev. Econ. & Stat. 1. (2018). Available at:
https://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf.
---------------------------------------------------------------------------
In another example, in Kentucky, public employees were provided
with a price transparency tool that allowed them to shop for health
care services and share in any cost-savings realized by seeking lower-
cost care.\247\ Over a 3-year period, 42 percent of eligible employees
used the program to research information about prices and rewards.\248\
The study found that 57 percent of those that used the transparency
tool chose at least one cost-effective provider, saving state taxpayers
$13.2 million and resulting in $1.9 million in cash benefits paid to
public employees for seeking lower cost care.\249\
---------------------------------------------------------------------------
\247\ Rhoads, J. ``Right to Shop For Public Employees: How
health care incentives are saving money in Kentucky.'' The Dartmouth
Institute for Health Policy and Clinical Practice. March 8, 2019.
Available at: https://thefga.org/wp-content/uploads/2019/03/RTS-Kentucky-HealthCareIncentivesSavingMoney-DRAFT8.pdf.
\248\ Id.
\249\ Id.
---------------------------------------------------------------------------
The Departments recognize the transparency efforts in New Hampshire
and Kentucky are not necessarily generalizable nationwide and provide
only some empirical data to support the overarching goal of these final
rules that transparency in health care can lead to savings for
consumers and issuers by putting downward pressure on prices. The
Departments are of the view that consumers equipped with information
about the cost of their medical options prior to receiving care will
allow them to be able to make more informed decisions that will put
additional downward pressure on health care costs. While the often-
unequal relationship between patients and providers can sometimes mean
that patients are not always best equipped to determine their care,
there are many health care purchasing decisions that could and should
take into account a patient's financial concerns. For instance,
physician providers may also be able to provide health care
transparency information when referring patients to specialists for in-
or out-of-network care, such as for elective procedures. The pricing
information, combined with the physician's advice, could help health
care consumers evaluate options along the cost and quality spectrums
and help guide them to high-value options. The Departments are of the
view that health care pricing transparency may increase the impact of
economic market forces on the health care markets, despite the health
care market's unique characteristics. The Departments anticipate that
once issuers, plans, and providers are aware that consumers can engage
with the markets in an informed manner, they may adjust their costs to
potentially be more competitive in their pricing of items and services.
1. Impact Estimates of the Transparency in Coverage Provisions and
Accounting Table
The final rules set forth requirements for group health plans and
health insurance issuers to disclose to a participant, beneficiary, or
enrollee, his or her cost-sharing information for covered items or
services from a particular provider or providers. The final rules also
include requirements for plans and issuers to disclose in-network rates
(including negotiated rates, amounts in underlying fee schedules and
derived amounts) for in-network providers, historical allowed amounts
and billed charges for covered items and services provided by out-of-
network providers, and negotiated rates and historical net prices for
prescription drugs through machine-readable files posted on a public
internet website. In accordance with OMB Circular A-4, Table 2 depicts
an accounting statement summarizing the Departments' assessment of the
benefits, costs, and transfers associated with this regulatory action.
The Departments are unable to quantify all benefits and costs of
the final rules. The effects in Table 2 reflect non-quantified impacts
and estimated direct monetary costs and transfers resulting from the
provisions of the final rules for plans, issuers, beneficiaries,
participants, enrollees, and state and the Federal Governments.
Table 2--Accounting Table
------------------------------------------------------------------------
-------------------------------------------------------------------------
Intended Outcomes:
Provides consumers with a tool to determine their estimated
out-of-pocket costs, potentially becoming more informed on the cost
of their health care, which could result in lower overall costs if
consumers choose lower-cost providers or items and services.
Potential increase in timely payments by consumers of
medical bills as a result of knowing their estimated overall costs
prior to receiving services and having the ability to budget for
expected health care needs.
Potential profit gains by third-party mobile application
developers by selling and exchanging consumer health data and
potential benefits to consumers through the development of mobile
applications that may be more user-friendly and improve consumer
access to cost information, potentially resulting in reductions in
out-of-pocket costs.
Potentially enable consumers shopping for coverage to
understand the in-network rates for providers and the negotiated
rates and historical net prices for prescription drugs in different
group and individual health plans available to them and choose a
plan that could minimize their out-of-pocket costs.
States could potentially use the In-network Rate and
Prescription Drugs Files to determine if premium rates are set
appropriately.
Potential reduction in cross-subsidization, which could
result in lower prices as prices become more transparent.
Public posting of in-network rates (including negotiated
rates, amounts in underlying fee schedules, and derived amounts),
negotiated rates, and historical net prices for prescription drugs
could facilitate the review of anti-trust violations and potential
collusion.
Potential for the disclosure of in-network rates to apply
pressure on providers to bill less aggressively.
Strengthening of stakeholders' ability to support
consumers.
Benefits:
Potential societal resource savings (non-quantified
efficiency portion of any overall reduction in consumer health care
expenditures).
Potential to reduce the cost of surprise billing to
consumers.
------------------------------------------------------------------------
[[Page 72260]]
Low estimate High estimate Discount rate
Costs: (million) (million) Year dollar (percent) Period covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized ($/year)...................................... $4,080.2 $5,472.4 2020 7 2021-2025
4,047.7 5,392.9 2020 3 2021-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------
Quantitative:
Cost to plans, issuers and TPAs to plan, develop, and build
the required internet-based self-service tool and machine-readable
files, to provide in-network rates for in-network providers and out-
of-network allowed amounts, and negotiated rates and historical net
prices for prescription drugs, maintain appropriate security
standards and update and maintain the machine-readable files per
the final rules.
Increase operating costs to plans and issuers as a result
of training staff to use the internet-based self-service tool,
responding to consumer inquiries, and delivering consumer's cost-
sharing information and required notices.
Cost to plans and issuers to review all the requirements in
the final rules.
Non-Quantified:
Potential cost incurred by plans and issuers that wish to
develop a mobile accessible version of their internet-based self-
service tool.
Potential exposure of consumers to identity theft as a
result of breaches and theft of PII.
Potential increase in cyber security costs by plans and
issuers to prevent data breaches and potential loss of PII.
Potential increase in out-of-pocket costs for consumers if
providers or prescription drug manufacturers increase prices for
items and services or plans and issuers shift those costs to
consumers in the form of increased cost sharing other than
increased deductibles.
Potential costs to states to review and enforce provisions
of the final rules.
Potential increase in consumer costs if reductions in cross-
subsidization are for uncompensated care, as this could require
providers finding a new way to pay for those uncompensated care
costs.
Potential increase in health care costs if consumers
confuse cost with quality and value of service.
Potential costs to inform and educate consumers on the
availability and functionality of an internet-based self-service
tool.
Potential consumer confusion related to low health care
literacy and the potential complexity of internet-based self-
service tools.
Potential cost to plans and issuers to conduct quality
control reviews of the information in the in-network rate, out-of-
network allowed amounts, and prescription drug machine-readable
files.
Potential costs to plans, issuers, and TPAs if they are
required to renegotiate contracts in order to remove gag clauses in
order to meet the requirements of the final rules.
Potential costs to plans, issuers, and TPAs if they incur
use cases per user CPT licensure charges.
Potential increase in costs to consumers and issuers if
providers or prescription drug manufacturers engage in
anticompetitive behaviors.
Potential state and Federal costs associated with any
changes in prescription drug prices resulting from the prescription
drug machine-readable file release that may impact state Medicaid,
CHIP, and Basic Health Plan programs and Federal health care
programs.
------------------------------------------------------------------------
Estimate Discount rate
Transfers: (million) Year dollar (percent) Period covered
----------------------------------------------------------------------------------------------------------------
Federal Annualized Monetized ($/year)....... $425.2 2020 7 2021-2025
423.0 2020 3 2021-2025
Other Annualized Monetized ($/year)......... 274 2020 7 2021-2025
274 2020 3 2021-2025
----------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------
Quantitative:
Transfers from the Federal Government to consumers in the
form of increased premium tax credits by approximately $1,047
million in 2022, $623 million in 2023, $216 million in 2024, and
$218 million in 2025 as a result of estimated premium increases by
issuers in the individual market to comply with the final rules.
Transfer from consumers to issuers in the form of reduced
MLR rebate payments in the individual and group markets by
approximately $120 million per year by allowing issuers to take
credit for ``shared savings'' payments in issuers' MLR
calculations.
Transfers from providers to consumers and issuers of
approximately $154 million per year as a result of lower medical
costs for issuers and consumers by allowing issuers to share with
consumers the savings that result from consumers shopping for care
from lower-cost providers.
Non-Quantified:
Potential transfer from providers to consumers facing
collections to reduce the overall amounts owed to providers if they
are able to use competitor pricing as a negotiating tool.
Potential transfer from providers to consumers if there is
an overall decrease in health care costs due to providers reducing
prices to compete for customers.
Potential transfer from issuers to consumers if there is an
overall decrease in prescription drug costs due to potential
reductions in prescription drug prices.
Potential transfer from consumers to issuers or
prescription drug manufacturers if drug manufacturers increase
prescription drug prices.
Potential transfer from consumers to providers if there is
an increase in health care costs if providers and services increase
their in-network rates to match those of competitors.
Potential transfer from issuers to consumers if premiums
decrease and potential transfer from consumers to issuers if
premiums increase.
Potential transfer from issuers to consumers and the
Federal Government in the form of decreased premiums and premium
tax credits as a result of issuers adopting provisions encouraging
consumers to shop for services from lower-cost providers and
sharing the resulting savings with consumers.
Potential Transfers from the Federal Government to drug
manufacturers, PBMs, and retail pharmacies for any change in
prescription drug costs, which could impact prices paid by Federal
health care programs should prescription drug costs increase.
Potential Transfers from drug manufacturers, PBMs, and
retail pharmacies to the Federal Government to for any change in
prescription drug costs, which could impact prices paid by Federal
health care programs should prescription drug costs decrease.
------------------------------------------------------------------------
Table 2 provides the anticipated benefits and costs (quantitative
and non-quantified) to plans and issuers to disclose cost-sharing
information as described at 26 CFR 54.9815-2715A2, 29 CFR 2590.715-
2715A2, 45 CFR 147.211, and at 26 CFR 54.9815-2715A3, 29 CFR 2590.715-
2715A3, 45 CFR 147.212, and make public in-
[[Page 72261]]
network rates, amounts in underlying fee schedules, or derived amounts
of in-network providers, out-of-network allowed amounts paid for
covered items and services, and negotiated rates and historical net
prices for prescription drugs. The following information describes the
benefits and costs--qualitative and non-quantified--to plans and
issuers separately for these three requirements. Some commenters stated
that the Departments attempted analysis of the economic impact of the
proposed rules was wholly inadequate and demonstrated that the
Departments had not performed the basic fact-gathering and analysis
that agencies are expected to undertake before undertaking notice-and-
comment rulemaking. These comments stated that the material the
Departments presented under section VII, ``Economic Impact Analysis and
Paperwork Burden'' was a patchwork of speculation and assumptions
without any grounding in empirical data or analysis. The commenters
further stated: The Departments listed 10 specific cost elements that
they did not attempt to quantify; failed to include any consideration
of regulatory familiarization costs; omitted consideration of training
costs for both government employees who will be charged with enforcing
the regulation and for the staff of regulated issuers and plan sponsors
who will be responsible for compliance; and failed to account for the
impact of the litigation burden on regulated issuers, plan sponsors,
and the public judicial system. Another commenter suggested that the
Departments failed to conduct an adequate cost-benefit analysis because
they failed to consider and quantify regulatory alternatives, failed to
quantify potentially knowable costs, and failed to quantify benefits or
offer additional evidence supporting such benefits. Similarly, another
commenter stated that the Departments' analysis was lacking in any
quantitative assessment of benefits and did not credibly demonstrate
that quantification of benefits might be difficult.
The Departments consulted with various stakeholders in an effort to
develop the economic analysis associated with the final rules,
including the estimated costs. Additionally, the Departments requested
comment on the estimates presented in the proposed rules to obtain more
information and input with respect to the unquantified costs and
benefits. The Departments received a number of comments related to the
cost estimates, which are discussed later in the RIA and ICR sections.
However, the Departments did not receive any comments providing
actionable information as it relates to a number of the unquantifiable
aspects of the proposed rules.
As previously discussed in sections II.B.2.C and V.B.1 in this
preamble, the Departments received comments related to the lack of
estimated costs associated with the renegotiation of provider
contracts, litigation expenses, and the removal of gag clauses.
However, none of the comments received provided any information that
would aid the Departments in estimating such costs. The Departments
recognize that there are numerous aspects associated with the final
rules that they are unable to estimate due to an overall lack of
knowledge and information with regard to the actions that issuers,
providers, or TPAs may be required to take to meet the requirements of
the final rules. As discussed in sections V.C and D, the Departments
have sought to provide estimates to account for the regulatory
familiarization costs and other estimates related to the alternatives
considered in the development of the final rules. For the final rules,
the Departments have updated the regulatory review costs to include
familiarization costs for each state DOI (including the District of
Columbia), issuers, and TPAs.
2. Requirements for Disclosing Cost-Sharing Information to Participant,
Beneficiaries, or Enrollees Under 26 CFR 54.9815-2715A2, 29 CFR
2590.715-2715A2, and 45 CFR 147.211
Costs
Under 26 CFR 54.9815-2715A2(b), 29 CFR 2590.715-2715A2(b), and 45
CFR 147.211(b) of the final rules group health plans and health
insurance issuers must disclose required cost-sharing information in
accordance with prescribed method and format requirements upon the
request of a participant, beneficiary, or enrollee. The required cost-
sharing information includes seven content elements, which are
described in paragraph (b)(1) of the regulations and discussed earlier
in section II.B.1 in this preamble. The quantitative costs associated
with this requirement are detailed in the section VI.A.2--of the ICR
later in this preamble.
In addition to the costs described later in the corresponding ICR,
the Departments recognize there may be other costs associated with this
requirement that are difficult to quantify given the lack of
information and data. For example, while the Departments are of the
view that the overall effect of the final rules will lower health care
costs, the Departments recognize that price transparency may have the
opposite effect because in some markets where pricing is very
transparent, price ranges can narrow in response to greater
transparency, and costs can increase.\250\ In section II.B.2.C in this
preamble, the Departments addressed comments related to the potential
for unintended consequences related to the public disclosures required
through the In-network Rate. The Departments note that the current lack
of pricing information means that health care consumers are generally
not able to include price in their health care purchasing decisions.
The Departments are of the view that making pricing information
available will begin to ameliorate distortions resulting from consumer
decision-making not taking costs sufficiently into account.
Additionally, the Departments recognize that states may incur
additional costs to enforce the requirements in the final rules.
---------------------------------------------------------------------------
\250\ Kutscher, B. ``Report: Consumers demand price
transparency, but at what cost?'' Modern Healthcare. June 2015.
Available at: https://www.modernhealthcare.com/article/20150623/NEWS/150629957/consumers-demand-price-transparency-but-at-what-cost.
---------------------------------------------------------------------------
As described in section VI, the Departments assume most self-
insured group health plans will work with a TPA to meet the
requirements of the final rules. The Departments estimated costs in the
high-range estimate by assuming that all issuers and TPAs (for self-
insured group health plans) will need to develop and build their
internet-based self-service tool.
As described in section VI.A.1 of the ICR, the Departments assume
most self-insured group health plans will work with a TPA to meet the
requirements of the final rules. The Departments estimated cost in the
high-end estimate by assuming that all issuers and TPAs (for self-
insured group health plans) will need to develop and build their
internet-based self-service tools from scratch. However, the
Departments also provide a low-end estimate by assuming that over 90
percent of plans, issuers, or TPAs currently provide an internet-based
self-service tool and will only be required to modify an existing
internet-based self-service tool which may already meet some (if not
all) the requirements in the final rules.\251\ The
[[Page 72262]]
Departments recognize that some plans, issuers, or TPAs might also
voluntarily elect to develop or enhance a mobile application, if one is
already available or in some stage of planning and implementation,
which will result in additional costs. Additionally, TPAs generally
work with multiple self-insured group health plans, and as a result,
the costs for each TPA and self-insured group health plan may be lower
to the extent they are able to coordinate their efforts and leverage
any resulting economies of scale.
---------------------------------------------------------------------------
\251\ Sharma, A., Manning, R., and Mozenter, Z. ``Estimating the
Burden of the Proposed Transparency in Coverage Rule.'' Bates White
Economic Consulting. January 22, 2020. Available at: https://www.bateswhite.com/media/publication/183_Estimating%20Burden%20of%20Proposed%20TCR.pdf. In order to
determine our estimates in determining the low-range cost estimate,
the Departments estimated that only 90 percent of plans, issuers,
and TPAs provided an online tool that would meet the assumptions
used in developing the estimated costs.
---------------------------------------------------------------------------
Moreover, health care data breach statistics show there has been an
upward trend in data breaches over the past 10 years, with 2019 having
more reported data breaches than any other year since records first
started being published. Between 2009 and 2019 there have been 3,054
health care data breaches involving more than 500 records; resulting in
the loss, theft, exposure, or impermissible disclosure of 230,954,151
health care records, equating to more than 69.78 percent of the United
States population. Health care data breaches are now being reported at
a rate of more than one per day.\252\ Based on this information, the
Departments recognize the requirements of the final rules provide
additional opportunities for health care data breaches. Although
privacy and security costs have been imbedded into the development and
implementation cost estimates discussed in the section VI.A.1 and
further discussed in section II.B.4 of this preamble, the Departments
expect that plans and issuers will follow existing applicable state and
Federal laws regarding persons who may or must be allowed to access and
receive the information. The Departments recognize that some plans and
issuers may incur additional expenses to ensure a consumers' PHI and
PII are secure and protected. Additionally, as consumers accessing the
internet-based self-service tool may be required to input personal data
to access the consumer-specific pricing information, consumers may be
exposed to increased risk and experience identity theft as a result of
breaches and theft of PII. As noted previously in section II.B.4 of
this preamble, the Departments are finalizing a provision that reminds
plans and issuers of their duty to comply with requirements under other
applicable state or Federal laws, including requirements governing the
accessibility, privacy, or security of information, or those governing
the ability of properly authorized representatives to access
participant, beneficiary, or enrollee information held by plans and
issuers.
---------------------------------------------------------------------------
\252\ ``Healthcare Data Breach Statistics.'' HIPAA Journal.
Available at: https://www.hipaajournal.com/healthcare-data-breach-statistics/.
---------------------------------------------------------------------------
One commenter stated that since multiemployer plans do not directly
control the process of negotiations or the resulting information, these
plans do not have access to the information necessary to satisfy the
final rules and plans could be subject to significant penalties for
failure to comply. Another commenter, that surveyed employers who
sponsor self-insured ERISA-covered plans, noted that respondents would
likely contract with a TPA to comply with the final rules because
employers do not have all the necessary data nor the capability to
collect that data. Employers indicated that contracting with a TPA for
these requirements would come at a significant compliance cost to them.
Commenters noted that they rent networks from issuers and contract with
those issuers as TPAs to administer plan benefits. It is the issuer
that holds the pricing information for medical services, facilities,
and providers, not the self-insured employer. Another commenter stated
that the burden incurred by plans, issuers, and TPAs would be crippling
for smaller TPAs and health plans, and that burden would ultimately be
passed along to employers, and, therefore, to consumers. Another
commenter expressed concern that all of the data aggregation and
collection required under the regulations--along with the need to
contract with a third-party developer to create an on-line cost-sharing
liability service tool that is capable of providing customized cost-
sharing information to a particular participant, beneficiary, or
enrollee--may be overly costly to plans. The commenter further
suggested that there may also be significant costs associated with data
storage.
The Departments appreciate the comments received in response to the
proposed rules and recognize that not all plans will be the source of
the material information required to meet the requirements of the final
rules, and that many plans will ultimately seek out third-party
assistance in the development of their internet-based self-service tool
and machine-readable files, thus avoiding any potential penalties for
noncompliance. As noted in section II.B.5 of this preamble,
multiemployer plans may contract with a TPA or other third party (for
example, a clearinghouse) to meet the requirements under the final
rules. The Departments note that it is possible that obtaining third-
party assistance to meet the requirements of the final rules could
result in additional costs. The Departments expect, however, that TPA,
or other third party, assistance will help alleviate some of the cost
concerns expressed by commenters as a result of economies of scale. As
noted above, commenters noted that many self-insured ERISA plans rent
networks from issuers and contract with issuers as TPAs to administer
plan benefits. By leveraging their relationships with their issuer-TPA,
self-funded plans may be able to reduce their overall costs by using
any tools developed by those issuers. The Departments also recognize
that in order to meet the requirements of the final rules, some smaller
TPAs and issuers could face disproportionate increases in costs.
However, the Departments anticipate that a number of TPAs and issuer-
TPAs will seek to coordinate their efforts and take advantage of any
resulting economies of scale to reduce their overall costs, and that
this approach can be leveraged in order to reduce concerns related to
the development of both the internet-based self-service tool as well as
the required machine-readable files. The Departments recognize that
issuers and TPAs will incur potential costs associated with data
storage and providing access to the internet-based self-service tool.
These costs can be generally broken down into two sections: Bandwidth
pricing and disc space. Bandwidth Pricing accounts for the amount of
traffic going to a site, the size of the information that is
transferred from the server to the user's browser, and the speed in
which that happens. Provided that 99 percent of websites do not exceed
5 gigabytes of bandwidth per month,\253\ this means if an issuer's or
TPA's self-service tool, hosted on Microsoft's cloud product, would be
free or minimal if beyond five gigabytes.\254\ Disk Space Pricing
accounts for the size of the hard drives necessary to host a website.
Assuming that each issuer or TPA would need an estimated 351 gigabytes
of storage this would translate to approximately $8 per month. Thus,
assuming that each issuer or TPA will not require five gigabytes of
bandwidth for their internet-based self-service tool, the Departments
are of the
[[Page 72263]]
view that the overall costs to store and provide data through the
internet-based self-service tool will be minimal. The Departments
recognize that the final rules will impose significant costs on plans,
issuers, and TPAs, and that some of these costs may be transferred to
consumers in the form of higher premiums or changes in the cost-sharing
structure of plans.
---------------------------------------------------------------------------
\253\ ``How Much Bandwidth and Disk Space Do I Really Need?''
Hosting Manual. Available at: https://www.hostingmanual.net/bandwidth-disk-space-need/.
\254\ ``Bandwidth Pricing Details.'' Microsoft Azure. Available
at: https://azure.microsoft.com/en-us/pricing/details/bandwidth/.
---------------------------------------------------------------------------
Intended Outcomes
Informed Consumers. Through increased price transparency, consumers
armed with pricing information will have greater control over their own
health care spending, which can foster competition among providers,
resulting in less disparity in health care prices or an overall
reduction in health care prices. Consumers who use the internet-based
self-service tool will be able to access their cost-sharing amount paid
to date; their progress toward meeting their accumulators, such as
deductibles and out-of-pocket limits; their estimated cost-sharing
liability for an identified item or service; negotiated rates for in-
network providers for covered items and services, and the out-of-
network allowed amounts for covered items and services. Additionally,
consumers will know how much health care services will cost for a
particular treatment-, and, and if applicable, whether coverage of a
specific item or service is subject to a prerequisite. As discussed
previously in section II.B.1.a of this preamble, section 2713 of PPACA
requires group health plans and health insurance issuers to provide
certain recommended preventive items and services without cost-sharing.
However, if the same items or services are furnished as non-preventive
actions or by an out-of-network provider, the participant, beneficiary,
or enrollee may be subject to the cost-sharing terms of his or her
plan. If a plan or issuer cannot determine whether the request is for a
preventive item or service, the plan or issuer must display the non-
preventive cost-sharing liability, along with a note that the item or
service may not be subject to cost-sharing if it is billed as a
preventive service. Pricing information also gives consumers the
ability to plan ahead for any known items and services they may require
in the near future. The Departments are of the view that access to this
information is essential to enable consumers to make informed decisions
regarding specific services or treatments, budget appropriately to pay
any out-of-pocket expenses, and determine what impact any change in
providers, items, or services will have on the cost of a particular
service or treatment.
Several consumers stated that they want the opportunity to shop for
the best price when seeking out medical care and expressed that this
information is critical when deciding whether to proceed with a test or
procedure. Other consumers expressed the desire to shop for items and
services and stated that shopping for health care would give them more
control over their personal health care decisions and spending. Some
consumers felt strongly that they should be able to compare prices to
find the best deal for non-life-threatening care. Some other consumers
also expressed frustration when describing their own experiences of
trying and failing to obtain pricing information before receiving a
particular service.
The Departments agree that providing the information required in
the final rules will provide consumers with tools and information they
can use to determine and evaluate the potential costs associated with
their particular health care needs, thus providing them the opportunity
to obtain the care they need at a cost they find acceptable.
Consumers may become more cost conscious. The Departments are of
the view that with increased price transparency consumers may begin to
focus more carefully on the costs of services. Currently, consumers may
be aware they have a coinsurance of 20 percent for an item or service,
but they may be unaware of what dollar amount they will ultimately be
responsible for paying. Knowing that dollar amount may motivate
consumers to seek lower-cost providers and services or seek needed care
they did not obtain because of uncertainty or concerns about the costs.
As discussed in sections I.E.3, II.C, and V.B.2-4 in this preamble,
there has been recent evidence in New Hampshire and Kentucky that
supports the Departments' view that having access to pricing
information, along with currently available information on provider
quality and incentives to shop for lower prices, can result in
consumers choosing providers with lower costs for items and services,
thus potentially lowering overall health care costs.\255\ The
Departments acknowledge that this may only hold true if cost and cost
sharing varies between services and providers. Depending on the degree
of cost variation between specific items and services, there could be
large variations in the degree to which prices change per item or
service resulting in wide variations in health care costs and
associated out-of-pocket costs.\256\ Cost sharing in some alternative
contracting models, such as HMOs and Exclusive Provider Organizations
(EPO), generally occurs through fixed copayment amounts regardless
which provider furnishes a covered item or service and, therefore, the
internet-based self-service tool will provide little incentive for
consumers to choose less costly providers in this context.
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\255\ Brown, Z.Y. ``Equilibrium Effects of Health Care Price
Information.'' 100 Rev. of Econ. and Stat. 1. July 16, 2018.
Available at: https://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf; see also Rhoads, J.
``Right to Shop for Public Employees: How health care incentives are
saving money in Kentucky.'' The Dartmouth Institute for Health
Policy and Clinical Practice. March 8, 2019. Available at: https://thefga.org/wp-content/uploads/2019/03/RTS-Kentucky-HealthCareIncentivesSavingMoney-DRAFT8.pdf.
\256\ The evidence cited in this RIA yields per-capita annual
savings estimates ranging from between $3 and $5 (=$2.8 million +
$1.3 million + $7.0 million + $2.3 million two-year savings, across
1.3 million California public employees and their family members,
per Boynton and Robinson (2015)), to $6.50 (=$7.9 million + $36
million five-year savings found by Brown (2018), divided across the
1.36 million residents of New Hampshire), to $17 (=$13.2 million
three-year savings across 0.26 million beneficiaries, per Rhoads
(2019)). If these results were extrapolated to the entire U.S.
population, the estimate of rule-induced reductions in annual
consumer expenditures could range from $0.98 billion to $5.5
billion, with the median result across the three studies at $2.1
billion. This range has a tendency toward overestimation, in that
effects of the Hospital Price Transparency final rule and existing
non-Federal transparency programs have not been subtracted off.
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Timely Payment of Medical Bills. The Departments anticipate that
consumers with access to the information provided in response to the
final rules will be more likely to pay their medical bills on time. A
recent Transunion survey found that 79 percent of respondents said they
would be more likely to pay their bills in a timely manner if they had
price estimates before obtaining care.\257\ In addition, a non-profit
hospital network found that the more information they shared with
patients, the better prepared those patients were for meeting their
responsibilities. The hospital network reported that providing price
estimates to patients resulted in increased point of service cash
collections from $3 million in 2010 to $6 million in 2011.\258\
However, the Departments recognize that consumers may not be aware of
any potential balance billing charges, where not prohibited by state
law, and other potential costs associated with their
[[Page 72264]]
health care such as facility fees etc. While these consumers will have
a better idea of the costs they will incur when obtaining health care,
they will likely be unaware of any additional charges they could incur
as a result of obtaining care resulting in higher than expected out-of-
pocket costs. Additionally, consumers may not fully be aware of their
costs due to potential medical complications that might arise during
the course of treatment or while obtaining a specific service.
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\257\ Kutscher, B. ``Report: Consumers demand price
transparency, but at what cost?'' Modern Healthcare. June 2015.
Available at: https://www.modernhealthcare.com/article/20150623/NEWS/150629957/consumers-demand-price-transparency-but-at-what-cost.
\258\ ``Reimagining Patient Access.'' Insurancenewsnet. December
29, 2015. Available at: https://insurancenewsnet.com/oarticle/reimagining-patient-access#.
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Increased Competition Among Providers. Studies have found that
state price transparency regulations have resulted in hospitals
decreasing their charges and a decrease in mean price and price
variability for queried procedures. One study found the publication of
chargemaster data resulted in a decrease in mean price and price
variability for queried procedures.\259\ However, another study
attributed the reduction in charges to the ``reputational costs of
perceived overcharging,'' yet also noted that reductions in charges
were associated with decreases in discounts leading to no consumer
savings.\260\ Another issuer-initiated price transparency program,
designed to encourage the selection of high-value providers, provided
consumers with price differences among MRI facilities.\261\ Those
patients provided pricing information saw an 18.7 percent reduction in
the cost per test and a decrease in the use of hospital-based
facilities.\262\ The study also found that price variations between
hospital and non-hospital facilities were reduced by 30 percent.\263\
As discussed in sections I.B in this preamble, the Departments
recognize that requiring hospitals to display payer-specific negotiated
charges, discounted cash prices, and de-identified minimum and maximum
negotiated charges for as many of the 70 CMS selected shoppable
services and additional hospital-selected shoppable services for a
combined total of at least 300 shoppable services may play a role in
decreasing mean prices and price variability.\264\ However, the
Departments are of the view that the Hospital Price Transparency final
rule does not, in itself, result in reduced prices and price
variability as the rule does not result in consumers receiving complete
price estimates for health care items and services from both hospitals
and issuers. Further, the Hospital Price Transparency final rule does
not provide price transparency with respect to items and services
provided by other health care providers. Therefore, the Departments are
of the view that the requirements of the final rules will provide the
additional price transparency necessary to empower a more price-
conscious and responsible health care consumer and lead to increased
competition among providers as consumers will be aware of and have the
ability to compare the out-of-pocket cost of a covered item or service
prior to receiving an item or service, which could force higher-cost
providers to lower their prices in order to compete for the price
sensitive consumer.
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\259\ Ward, C., and Reeder, T. ``The Evolution and Impact of
Hospital Price Transparency in North Carolina.'' North Carolina
Medical Journal. Volume 81. Issue 2. April 2020. Available at:
https://www.ncmedicaljournal.com/content/81/2/95.short.
\260\ Christensen, H.B., Floyd, E., and Maffett, M. ``The Only
Prescription is Price Transparency: The Effect of Charge-Price-
Transparency Regulation on Healthcare Prices.'' Management Science.
February 21, 2019. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2343367.
\261\ Wu, S.J., et al. ``Price transparency for MRIs increased
use of less costly providers and triggered provider competition.''
Health Affairs. August 2014. Available at: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2014.0168.
\262\ Id.
\263\ Id.
\264\ 84 FR 65524 (Nov. 27, 2019).
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3. Requirements for Public Disclosure of In-Network Provider Rates for
Covered Items and Services, Out-of-Network Allowed Amounts and
Prescription Drug Pricing Information Through Machine-Readable Files
Under 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, and 45 CFR 147.212
Costs
Under 26 CFR 54.9815-2715A3(b), 29 CFR 2590.715-2715A3(b), and 45
CFR 147.212(b) of the final rules, group health plans and health
insurance issuers are required to make available to the public, on an
internet website, three digital files in a machine-readable format. The
first file (the In-network Rate File) must include information
regarding all applicable rates, which may include negotiated rates,
underlying fee schedules, or derived amounts, to the extent they may be
used for purposes of determining provider reimbursement or cost-sharing
for in-network providers. The Departments note that prescription drug
products may be included in the In-network Rate File only to the extent
they are included as part of an alternative payment arrangement, such
as a bundled payment arrangement. The second file (the Allowed Amount
File) must provide data showing the allowed amounts and billed charges
with respect to covered items and services, including prescription
drugs, furnished by out-of-network providers over a 90-day period
beginning 180 days prior to the publication date of the machine-
readable file. The third file (the Prescription Drug File) must include
information for negotiated rates and historical net prices for
prescription drugs, organized by NDC. Plans and issuers are required to
make the information available in accordance with certain method and
format requirements described at paragraph (b)(2) and update these
files monthly as required under paragraph (b)(3). The quantitative
costs associated with meeting these requirements are detailed in
section VI.2 of the ICR section.
Some commenters stated that the requirement to use billing codes
would be very costly and potentially cost-prohibitive. One commenter
indicated this is because use of CPT codes, the most commonly used
billing codes, requires licensure by the American Medical Association
(AMA). According to the commenter, the AMA charges licensing fees based
on use cases per user. Another commenter noted that some self-funded
plans rent networks and do not have real-time access to network
pricing, and there are fees charged to plans to access the negotiated
discounts with the provider network the plan has rented. As a result,
the commenter suggested that plans will have to pay the network access
fees twice--once the information required under the final rules and a
second time when the actual claim is received and processed through an
intermediary--to meet the requirements of the final rules.
The Departments understand that the use of CPT codes may represent
an additional cost for some plans and issuers. Generally, the
Departments anticipate that if a plan or issuer currently has the
capability or licensure to record CPT codes on EOBs mailed to
consumers, the plans or issuers should also be able to use that CPT
code to make the public disclosures required through the final rules
without, or with minimal, additional costs. The Departments also have
concluded that, as plans and issuers would already include licensing
costs for using CPT codes in the cost of doing business, they would not
incur additional costs to use the CPT codes to populate the machine-
readable files. The Departments acknowledge that some plans and issuers
could face instances where they could incur additional costs in order
to access the required CPT or network information based on the
structure of licensing agreements to which they are currently parties.
However, due to an overall lack of specific information and knowledge
associated with the number of plans and issuers that currently have
[[Page 72265]]
such licensing agreements, the structure of those agreements, and the
alternatives available to those plans and issuers, the Departments are
unable to accurately estimate any associated costs that might be
incurred under these circumstances.
One commenter stated that for many employer-sponsored health plans,
in-network rates usually belong to a network administrator, not the
health plan, and, in the event network administrators were to update
their contractual agreements to permit plans to receive and share
pricing information, it is likely they will charge fees or request
financial concessions from plans, which will increase administrative
burdens on group health plans.
The Departments understand that requiring release of this pricing
information will affect certain commercial arrangements and
expectations that prevail in parts of the health care industry today,
which could result in certain one-time and ongoing administrative
costs. However, the Departments are of the view that making this
information available to consumers and the public will serve consumers'
long-term interests in facilitating a consumer-oriented, information-
driven, more competitive market. Additionally, as discussed previously
in section II.C in this preamble, the Departments are finalizing
several special rules to streamline the provision of the public
disclosures required through the final rules. These special rules were
designed to reduce the overall compliance costs of the disclosures
required by the final rules and to support smaller issuers and plans in
meeting the requirements of the final rules by permitting certain
contractual arrangements and the aggregation of allowed amount data in
some circumstances.
The Departments also recognize that a certain amount of data
storage will be required to post the machine-readable files on a
publicly available internet website. Through the efficiencies of cloud
computing and data storage, the cost to host large files dramatically
decreased in price in the past several years. Popular services such as
Simple Storage Service from Amazon Web Services and Standard Storage
from the Google Cloud Platform can host files for roughly $0.026 per
gigabyte. The Departments' size estimates of roughly 5 gigabytes for
each machine-readable file would incur a monthly data storage cost of
approximately $0.39 for all of the machine-readable files.
Non-Quantified Costs for Public Disclosure of In-Network Rates. In
addition to the costs described in section VI.A.2, the Departments
recognize there may be other costs associated with the requirement to
make in-network rates publicly available that are difficult to quantify
given the current lack of information and data. While the Departments
are of the view that the overall effect of the final rules will be to
provide greater price transparency and potentially lower health care
prices, there are instances in very transparent markets where price
ranges can narrow and average costs can increase as a result of price
transparency.\265\ The Departments also recognize that plans and
issuers may experience ongoing additional costs (for example, the cost
of quality control reviews) to ensure they comply with the requirements
of the final rules. In addition, the Departments are aware that
information disclosures allowing competitors to determine the rates
their competitors are charging may dampen each competitor's incentive
to offer a lower price or result in a higher price equilibrium.\266\
While plans and issuers with the highest in-network rates may see a
decrease in their in-network rates, as their providers respond to
consumer and smaller issuers' concerns regarding paying more for the
same item and service, plans and issuers with the lowest in-network
rates may see their lower cost providers adjust their rates upward.
However, most research suggests that when better price information is
available, prices for goods sold to consumers fall. For example, in an
advertising-related study, researchers found that the act of
advertising the price of a good or service is associated with lower
prices.\267\
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\265\ Kutscher, B. ``Report: Consumers demand price
transparency, but at what cost?'' Modern Healthcare. June 2015.
Available at: https://www.modernhealthcare.com/article/20150623/NEWS/150629957/consumers-demand-price-transparency-but-at-what-cost.
\266\ Koslov, T., and Jex, E. ``Price transparency or TMI?''
United States, Federal Trade Commission. Available at: https://www.ftc.gov/news-events/blogs/competition-matters/2015/07/price-transparency-or-tmi.
\267\ Austin, D. A, and Gravelle, J. G. ``Does Price
Transparency Improve Market Efficiency? Implications of Empirical
Evidence in Other Markets for the Health Sector.'' Congressional
Research Service. June 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf.
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A potential additional non-quantified cost could be the cost to
remove gag clauses from contracts between plans, issuers, and
providers. Contracts between plans, issuers, and providers often
include a gag clause, which prevents plans and issuers from disclosing
in-network rates. The Departments recognize that plans, issuers and
providers may incur a one-time expense for their attorneys to review
and update their provider contracts to remove any relevant gag clauses.
Comments received regarding gag clauses and contract negotiations are
further discussed in section VI.A.2 later in this preamble.
Another potential cost concerns the final rules' impact on a plan's
or issuer's ability or incentive to establish a robust network of
providers. A health insurance provider network is a group of providers
that have contracted with a plan or issuer to provide care at a
specified price the provider must accept as payment in full. Many
times, plans and issuers want consumers to use the providers in their
network because these providers have met the plan's or issuer's quality
standards and agreed to accept an in-network rate for their services in
exchange for the patient volume they will receive by being part of the
plan's or issuer's network.\268\ Some plans and issuers offer a narrow
network: These networks operate with a smaller number of providers,
meaning a consumer will have fewer choices when it comes to in-network
providers, but often offer lower monthly premiums and out-of-pocket
costs.\269\ The Departments recognize that making in-network rates
public may create a disincentive for plans and issuers to establish a
contractual relationship with a provider (including in narrow networks)
because providers may be unwilling to give a discount to plans and
issuers when that discount will be made public. As addressed further in
section VI.C later in this preamble, the requirements of the final
rules could result in a reduction in revenue for those smaller plans
and issuers that are unable to pay higher rates to providers and may
require them to narrow their provider networks, which could affect
access to care for some consumers. Due to smaller plans' and issuers'
potential inability to pay providers with higher rates, smaller plans
and issuers may further narrow their networks to include only providers
with lower rates, possibly making it more difficult for smaller plans
and issuers to fully comply with network adequacy standards described
at 45 CFR 156.230 or other applicable state network adequacy
requirements.
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\268\ Davis, E. ``Health Insurance Provider Network Overview.''
Verywell Health. August 2019. Available at: https://www.verywellhealth.com/health-insurance-provider-network-1738750.
\269\ Anderman, T. ``What to Know About Narrow Network Health
Insurance Plans.'' Consumer Reports. November 23, 2018. Available
at: https://www.consumerreports.org/health-insurance/what-to-know-about-narrow-network-health-insurance-plans/.
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Some commenters stated that public disclosure of in-network rates
could affect the sustainability and affordability
[[Page 72266]]
of QHPs offered through the Exchanges by placing upward pressure on
rates and by placing provider participation in networks at risk. One
commenter stated that the potential negative effects on QHPs would
especially harm unsubsidized consumers and consumers in rural areas
where provider consolidation is most common and could impact overall
marketplace stability and the risk pool. Furthermore, commenters
asserted that increased premiums for QHPs could result in increased
Federal spending in the form of higher premium tax credit (PTC)
payments, which could substantially increase the Federal deficit over
10 years. One commenter stated that the Departments should not finalize
the release of in-network rates until they fully evaluate the impact on
affordable plan options on the Exchanges and the effects on Federal
spending.
As discussed later in section V.B.5 of this preamble, the
Departments estimate premiums for the fully-insured markets will be
$471 billion for 2022, including the individual, small group, and large
group markets. The Departments estimate that the cost for 2022
represents approximately 2.4 percent of projected commercial insured
premiums for the fully-insured market, 1.4 percent in 2023, 0.5 percent
in 2024, and 0.5 percent in 2025. Assuming this level of premium
increase in the individual market, PTC outlays are estimated to
increase by about $1,047 million in 2022, $623 million in 2023, $216
million in 2024, and $218 million in 2025. Given that the 2021
President's Budget estimates that PTC outlays are expected to be $43.8
billion in 2022, $44.8 billion in 2023, $45.875 billion in 2024, and
$48.2 billion in 2025,\270\ the Departments expect the estimated
increase of $1,047 million in 2022, $623 million in 2023, $216 million
in 2024, and $218 million in 2025 to have minimal impacts on
anticipated enrollment and are not of the view that this increase will
result in any widespread negative effects on market stability.
Additionally, the Departments have determined that enrollment impacts
will be minimal, as estimated premium impacts are relatively small, and
rate increases for subsidized enrollees in the individual market will
be largely mitigated. Additionally, participants, beneficiaries, and
enrollees currently make health insurance coverage decisions based on
their particular health and financial situations, and it is not
predictable how information provided as a result of the final rules
will significantly impact those health insurance coverage decisions.
Thus, the Departments do not expect the final rules to significantly
increase the selection risk beyond the levels that currently exist. The
Departments do acknowledge that the estimated increases in premiums
could result in minor harm to unsubsidized consumers as they could be
faced with increased premiums that would not be negated by any
increases in PTC and this could impact those consumers' decisions
related to obtaining health insurance coverage.
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\270\ OMB 2021 President's Budget. Available at: https://www.whitehouse.gov/wp-content/uploads/2020/02/budget_fy21.pdf.
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The Departments received several comments from issuers, providers,
and employers stating that the requirement to publicly disclose in-
network rates would threaten the viability of their business models or
business models upon which they rely. One commenter stated that the
proposal to release in-network rates could affect the viability of
individual and small group market health plans sold by small issuers.
The commenter further suggested that ``safety net'' health plans (which
serve individuals and families that do not have access to other sources
of coverage in markets that other issuers find unprofitable) currently
may be able to access more favorable contract terms with providers, and
these types of arrangements would be at risk if the in-network rate
information were required to be made public. The commenter expressed
particular concern that exposure of the rates of safety net hospitals
may uniquely disadvantage them in negotiations with plans and issuers
because they may have to raise rates on certain services to support
safety net activities. Similarly, a hospital system stated that
publishing in-network rates would negatively impact its ability to
contain costs and threaten its current participation in the networks of
nearly all area health plans. Another commenter indicated that
providers would leave plans' and issuers' networks if plans' and
issuers' attempts to achieve more favorable rates using public in-
network rate information proved unsuccessful. Another commenter argued
that the policy requiring disclosure of in-network rates could also
result in the collapse of the network administrator business model,
which would result in significantly increased administrative costs for
health plans that would need to contract separately with each
participating provider.
The Departments understand that requiring the release of this
pricing information will upset certain commercial arrangements and
expectations that prevail in parts of the health care industry today,
which could result in certain one-time and ongoing administrative
costs. However, the Departments have concluded that providing increased
price transparency and making this information available to the public
will serve the public's long-term interests in facilitating a consumer-
oriented, information-driven, more competitive market potentially
leading to reduced overall health care costs.
Some commenters suggested that, by using publicized in-network rate
information, plans and issuers could also coordinate to reduce provider
payment levels below market competitive rates, a so-called ``race to
the bottom.'' Some of these commenters stated that this ``race to the
bottom'' could also potentially hurt access to, and quality of, care.
For example, one commenter stated that if provider reimbursement rates
were set too low, patient access to care would be negatively impacted
because providers will not have the resources to invest in technology,
training, and equipment.
One commenter suggested that plans and issuers would likely want to
re-negotiate rates once they learn local prices and that dominant
issuers could use payer specific in-network rate information to deter
and punish hospitals that lower their rates or enter into value-based
arrangements with the dominant issuer's competitors.
Several commenters stated that required disclosure of in-network
rates could result in an increase in health care prices. Others
specifically expressed concerns that making payer-specific in-network
rates available would disrupt contract negotiations between providers
and health plans and result in providers changing their rates in
anticompetitive ways (``race to the top'') and could promote an
environment that could support collusion between providers, resulting
in increased prices. Other commenters suggested that required
disclosures would lead to the consolidation of providers and even
greater consolidation in the commercial health insurance industry, and
expressed concerns that disclosures could particularly harm small
health plans and TPAs who may have been able to get discounted rates by
offering health plans in a limited service area.
One commenter noted that other states' transparency systems used
several distinguishable features to mitigate the risks of publicizing
rates, but noted that, despite these efforts, the data was still used
in contract negotiations.
[[Page 72267]]
The Departments recognize that there is the potential for adverse
market outcomes as a result of the final rules. As noted previously,
the Departments are aware of the potential that plans and issuers could
seek to use the public availability of in-network rates or underlying
fee schedules in attempts to lower prices in what certain commenters
called a ``race to the bottom.'' As noted previously in this section,
the Departments recognize the potential for anticompetitive behaviors
and increased consolidation that may occur should providers use the in-
network rate or fee schedule data to increase their rates or should
smaller plans and issuers struggle to comply. The Departments recognize
that provider collusion could result in increased prices, and also
recognize that this sort of behavior could result in distinct coverage
areas or agreements where providers choose not to compete for
consumers. As discussed previously in this preamble, the Departments
nonetheless have concluded that providing increased price transparency
and making this information available to the public will serve the
public's long-term interests in facilitating a consumer-oriented,
information-driven, more competitive health care market.\271\ Should
the market become more competitive, as the Departments anticipate, the
reduction in prices may provide more options for those providers that
function as ``safety-net providers'' to expand their networks or
enhance the services they currently provide by organizing and
delivering a significant level of health care and other related
services to uninsured, Medicaid, and other vulnerable populations. The
Departments also reason that the likelihood of price and other forms of
collusion will be mitigated to some extent by the actions of state and
Federal regulatory and antitrust enforcement authorities and the
enforcement of current market laws and regulations. The Departments are
of the view that enforcement actions taken to reduce the likelihood of
price collusion will further reduce the chances that issuers will seek
to reduce the size of their networks.
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\271\ Gudiksen K.L., Chang, S.M., and King, J.S. ``The Secret of
Health Care Prices: Why Transparency Is in the Public Interest.''
California Health Care Foundation. July 2019. Available at: https://www.chcf.org/wp-content/uploads/2019/06/SecretHealthCarePrices.pdf.
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Although consumer education is not a requirement of the final
rules, plans, issuers and TPAs may face additional costs if they chose
to inform and educate their consumers about the options available to
them, how to use these tools, increase their general health care
knowledge. Providing educational opportunities to participants,
beneficiaries, or enrollees could encourage those participants,
beneficiaries, or enrollees to seek lower cost services, providing
plans, issuers and TPAs the potential to realize a return on the
investments incurred to comply with the final rules.
Non-Quantified Cost for Public Disclosure of out-of-network allowed
amounts. In addition to the costs described in section VI.A.2 and the
previous analysis related to the public disclosure of in-network rates,
the Departments recognize that there may be other costs associated with
the requirement to make historical payments of out-of-network allowed
amounts and billed charges publicly available that are difficult to
quantify, given the current lack of information and data.
Furthermore, while plans and issuers must de-identify data (such as
claim payment information for a single provider) and ensure certain
sensitive data are adequately protected, unauthorized disclosures of
PHI and PII may increase as a result of manual preparation and
manipulation of the required data. The potential disclosures of PHI and
PII may require plans, issuers, and TPAs to obtain additional cyber-
security insurance that could lead to additional costs.
Non-Quantified Cost for Public Disclosure of Prescription Drug
Pricing Information. In addition to the costs described in section
VI.A.2 and the previous analysis related to the public disclosure of
in-network rates and allowed amounts, the Departments recognize that
there are other costs associated with the requirement to make
negotiated rates and historical net prices for prescription drugs
publicly available that are difficult to quantify, given the current
lack of information and data. For example, as a result of the
availability of consolidated negotiated rates and historical net
prices, drug manufacturers may seek to restructure their rebate and
discount programs and could potentially cease providing rebates to
plans and issuers, PBMs, or pharmacies, which could then result in less
savings being passed on to consumers.
Intended Outcomes
The Departments are of the view that providing greater price
transparency by requiring group health plans and health insurance
issuers to make information regarding all applicable rates publicly
available, which may include negotiated rates, amounts in underlying
fee schedules, or derived amounts for in-network provider rates; 90-
days of historical allowed amount and billed charges data for out-of-
network providers; and prescription drug negotiated rates and
historical net prices will ultimately benefit plans and issuers,
regulatory authorities, consumers, and the overall health care market.
Group Health Plans and Health Insurance Issuers. Plans and issuers
may benefit from these requirements because under the final rules a
plan or issuer would have a better understanding of other plans' or
issuers' in-network rates. This may allow plans and issuers paying
higher rates for the same items or services to negotiate with certain
providers to lower their rates, thereby lowering provider reimbursement
rates, reducing price variation, and potentially resulting in an
overall decrease in health care costs. The Departments acknowledge,
however, as noted in the ``costs'' section (V.B.3) earlier in this
preamble, that knowledge of other providers' in-network rates could
also drive up rates if a provider discovers they are currently being
paid less than other providers by a plan or issuer and, therefore, seek
to negotiates higher rates.
In addition, the final rules may result in more plans and issuers
using a reference pricing structure. Under this structure,
participants, beneficiaries, or enrollees who select a provider
charging above the reference price (or contribution limit) must pay the
entire difference and these differences do not typically count toward
that individual's deductible or out-of-pocket limit. Plans and issuers
may want to use a reference pricing structure to pass on any potential
additional costs associated with what they can identify as higher-cost
providers to the participant, beneficiary, or enrollee. The Departments
recognize that reference pricing might not impact every consumer. For
example, the California Public Employees' Retirement System (CalPERS)
provides exceptions from reference pricing when a member lives more
than 50 miles from a facility that offers the service below the price
limit. It also exempts the patient if the patient's physician gives a
clinical justification for using a high-priced facility or hospital
setting. Another example is a business with a self-insured group health
plan that exempts laboratory tests for patients with a diagnosis of
cancer from its reference pricing program. However, reference pricing
has generally been shown to result in price reductions, as opposed to
mere slowdowns in the rate of price
[[Page 72268]]
growth. For example, in the first two years after implementation,
reference pricing saved CalPERS $2.8 million for joint replacement
surgery, $1.3 million for cataract surgery, $7.0 million for
colonoscopy, and $2.3 million for arthroscopy.\272\
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\272\ Boynton, A., and Robinson, J. ``Appropriate Use of
Reference Pricing Can Increase Value.'' Health Affairs Blog. July 7,
2015. Available at: https://www.healthaffairs.org/do/10.1377/hblog20150707.049155/full/.
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Regulatory Authorities. In many states, issuers must obtain prior
approval for rate changes from the state's DOI. Regulatory authorities
such as state DOIs might benefit from the final rules because knowledge
of provider in-network rates and out-of-network allowed amounts paid to
out-of-network providers could support determinations of whether
premium rates, including requests for premium rate increases, are
reasonable and justifiable.
Consumers. Access to the in-network rates between plans and issuers
and in-network providers, the amount plans and issuers have paid to
out-of-network providers, and prescription drug pricing information
will allow consumers to understand the impact of their choice of health
insurance coverage option and their choices of providers on the cost of
a particular service, item, or treatment. Giving consumers access to
this information as part of their health care decision-making process
may facilitate a greater degree of control over their own health care
costs. Furthermore, having access to publicly available out-of-network
allowed amounts will provide consumers who are shopping for health
insurance coverage the ability to compare the different rates plans and
issuers ultimately pay for items and services, including items and
services from providers that might be out-of-network. While the
Departments are of the view that consumers will benefit from the final
rules, the Departments recognize that utilizing the required
information will not be practical or reasonable in an emergency
situation. Similarly, some consumers may need assistance in
understanding complex terms or other associated mechanisms in order to
utilize this information.
The Departments recognize that beneficiaries and enrollees in state
and Federal health care programs (including Medicare, Medicaid, CHIP,
Basic Health Program and coverage provided by the Department of Defense
and Veterans Administration) will be impacted by spillover effects
related to any reductions or increase in prices for individual items
and services and prescription drugs as a result of the final rules. For
example, Medicare Part B has historically reimbursed physicians for
physician-administered drugs using a formula that is based off the
average sales price (ASP). To the extent the final rules drive changes
in prescription drug prices, that will change the Federal reimbursement
rates under Medicare Part B and may impact Medicare beneficiaries' out-
of-pocket costs for their prescriptions. In addition, by law, Medicaid
programs in every state receive the lowest negotiated rate for
prescription drugs. To the extent the final rules drive changes in
prescription drug prices, this will impact the amount all states, the
Federal Government, and some beneficiaries pay for prescription drugs.
Similarly, if providers start increasing (or decreasing) their in-
network rates, there could also be spillover effects for Medicare
Advantage or Medicaid Managed Care Organizations (MCO), particularly
for issuers and plans that use the same network for both private plans,
Medicare Advantage Plans and Medicaid MCOs. These changes will impact
the amount the Federal Government, states, and beneficiaries will need
to pay for their Medicare and/or Medicaid.
Overall Health Insurance Market. The price transparency required by
the final rules may also induce an uninsured person to obtain health
insurance coverage. Depending on premium rates, an uninsured individual
might select health insurance coverage after learning the actual dollar
difference between the usual and customary rates that he or she pays
for items and services and the in-network rates and out-of-network
allowed amounts under the terms of a plan or issuer's policy. In
addition, the final rules might force providers to lower their rates
for certain items and services in order to compete for the price
sensitive consumer, plan, or issuer. Although the immediate payment
impact would be categorized as a transfer, any accompanying health and
longevity improvements would be considered benefits (and any
accompanying increases in utilization would, thus, be considered
additional costs). As discussed in section V.B in this preamble, a
study of New Hampshire's HealthCost initiative found that the
availability of pricing information resulted in a five percent
reduction in costs for medical imaging procedures. The study further
found that patients saved approximately $7.5 million dollars on X-Ray,
CT, and MRI scans over the five-year study period (dollars are stated
in 2010 dollars).\273\
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\273\ Brown, Z.Y. ``Equilibrium Effects of Health Care Price
Information.'' 100 Rev. Econ. & Stat. 1. (2018). Available at:
https://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf.
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Some commenters suggested that the biggest impact on health care
spending and costs would come from self-insured employers who would now
be able to access and use in-network rate data to negotiate lower rates
on behalf of plan participants; improve their provider networks; make
more informed decisions about plan offerings; help steer enrollees to
higher-quality, lower-cost providers; and more meaningfully implement
value-based payment designs. Other commenters stated that the proposed
rules would help create more efficient and value-based health care
systems by encouraging issuers to design innovative benefit designs
that push patients toward lower-cost care. Another commenter stated
that requiring plans and issuers to share publicly their in-network
rates and the allowed amounts paid to out-of-network providers had the
potential to increase competition among plans and issuers.
The Departments are of the view that the requirements in the final
rules will provide providers, plans, and issuers the ability to provide
quality health care services at lower costs to participants,
beneficiaries, or enrollees through enhanced provider and payer
competition.
4. Medical Loss Ratio (45 CFR 158.221)
``Shared savings'' programs allow issuers to share with enrollees
any savings that result from enrollees shopping for, and receiving care
from, lower-cost, higher-value providers. In the final rules, HHS is
amending 45 CFR 158.221(b) to allow health insurance issuers that elect
to offer ``shared savings'' programs to take credit for such ``shared
savings'' payments in their MLR calculations. For this impact estimate,
HHS is assuming that only relatively large issuers (with at least
28,000 enrollees) that have consistently reported investment costs in
health IT on the MLR Annual Reporting Form of at least $10.50 per
enrollee, which represents issuers with 70 percent of total reported
commercial market health IT investment or issuers that operate in
states that currently or may soon support ``shared savings'' plan
designs,\274\ will initially choose to offer plan designs with a
``shared savings''
[[Page 72269]]
component. HHS assumes that such issuers will share, on average, 50
percent of the savings with enrollees (which will increase the MLR
numerator under the final rules), and that issuers whose MLRs were
previously below the applicable MLR standards will use their retained
portion of the savings to lower enrollees' premiums in future years
(which will reduce the MLR denominator). Based on 2017-2019 MLR data,
HHS estimates that this will reduce MLR rebate payments from issuers to
enrollees by approximately $120 million per year, while facilitating
savings that will result from lower medical costs of approximately $154
million per year for issuers and enrollees (some of which will be
retained by issuers, shared directly with enrollees, or used by issuers
to reduce future premium rates).
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\274\ The states that supported ``shared savings'' plan designs
at the time the estimate was developed and therefore were included
in the estimate are Maine, Massachusetts, New Hampshire, and Utah.
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5. Summary of Estimated Transfers
The Departments are assuming that because 2021 premium rates are
nearly finalized, health insurance issuers will not be able to charge
for the expenses incurred to implement the requirements of the final
rules in their 2021 rates. Because issuers will not have the
opportunity to reflect the 2021 development costs in the 2021 premium
rates, some issuers may apply margin to the ongoing expenses as they
develop premium rates for 2022 and after. The Departments estimate
premiums for the fully-insured markets will be $471 billion for 2022,
$494 billion in 2023, $516 billion in 2024, and $539 billion in 2025,
which includes the individual, small group, and large group
markets.\275\ The Departments estimate that the ongoing expense
represents approximately 2.4 percent of projected commercial insured
premiums for the fully-insured market in 2022, 1.4 percent in 2023, and
0.5 percent in 2024 and 2025 (an average of 1.2 percent per year).
Assuming this level of premium increase in the individual market, PTC
outlays are estimated to increase by about $1,047 million in 2022, $623
million in 2023, $216 million in 2024, and $218 million in 2025. Given
that 2022 PTC outlays are expected to be $44 billion,\276\ the
Departments expect that the estimated premium impacts will be
relatively small, and rate increases for subsidized enrollees in the
individual market will largely be mitigated. Therefore, the Departments
expect enrollment impacts to be minimal. The Departments note that any
impact of the final rules on provider prices has not been estimated as
limited evidence has generally shown no predictable impact on provider
prices. As a result, the Departments are assuming that the overall
impact will be minimal. However, there is a large degree of uncertainty
regarding the effect on prices, so actual experience could differ.
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\275\ 2017 earned premium data was taken from amounts reported
for MLR, and trended forward using overall Private Health Insurance
trend rates from the NHE projections.
\276\ OMB 2021 President's Budget. Available at: https://www.whitehouse.gov/wp-content/uploads/2020/02/budget_fy21.pdf.
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The Departments received comments stating that the broader impact
to premiums was not considered in the proposed rules. Several
commenters stated that increased health care prices could be passed
along to consumers, patients, and taxpayers in the form of higher
premiums. Some commenters specifically observed that the cost of
developing and maintaining the required machine-readable files on a
monthly basis would likely be passed on to consumers in the form of
higher premiums. Another commenter noted that employers, TPAs, and
issuers might incur increased costs relative to the rules regarding
potential data breaches, increased liability, and cyber-coverage costs
(liability insurance designed to cover financial losses that result
from data breaches and other cyber events) that could also impact plan
premiums.
Other commenters suggested that use of information in the In-
network Rate File could be used by consumers to engage in practices
that would lead to adverse selection and potentially higher premiums.
One commenter asserted that the proposed rules would allow individuals
to enter the insurance pool for specific costly treatments or
procedures and then drop coverage or switch coverage at the end of the
contract year for a plan with lower premiums, which would result in
higher premiums for all consumers because there is no ability for
health plans to spread the risk across a reliable and long-term
customer base.
By contrast, one commenter observed that premium increases could be
mitigated if low-deductible participants, beneficiaries, or enrollees
were given information about the cost of the health care they utilize,
and that over time price transparency could create lower health care
costs.
The Departments recognize that many issuers and TPAs will likely
transfer the costs associated with meeting the requirements in the
final rules to consumers in the form of increased premiums. However,
the Departments do not currently have enough information or evidence to
determine the overall effects the final rules will have on premiums and
therefore have not estimated how the final rules will impact an
individual's premium. The Departments also note that adverse selection
risk currently exists in the individual market; individuals already
make health care coverage decisions based on their particular health
and financial situations. It is not clear how the price information
contained in the In-network Rate, Allowed Amount, and Prescription Drug
Files will significantly impact an individual's health care coverage
decisions. The Departments do not expect the final rules to
significantly increase the selection risk beyond the levels that
currently exist.
Also, it is questionable how much the final rules will lower health
care costs for low deductible participants, beneficiaries, or enrollees
because cost-sharing amounts are usually much less than the cost of the
services, so that the participants, beneficiaries, or enrollee have no
economic incentive to seek lower cost services. Additionally, evidence
is limited but generally does not show significant differences in
insured participant, beneficiary, or enrollee behavior as a result of
price transparency.
C. Regulatory Review Costs
Affected entities will need to understand the requirements of the
final rules before they can comply. Group health plans and health
insurance issuers are responsible for ensuring compliance with the
final rules. However, as assumed elsewhere, it is expected that issuers
and TPAs (for self-insured group health plans) will incur this cost and
burden for most group health plans, and only the largest self-insured
plans may incur this cost and burden directly. Thus, issuers and TPAs
(and possibly some of the largest self-insured plans) will be
responsible for providing plans with compliant services. The
Departments are currently not aware of any specific number of large
self-insured plans that will seek to meet the requirements of the final
rules without third-party assistance and are thus unable to accurately
account for those plans, however, those plans will incur similar costs
and burdens as TPAs and issuers in order to develop the required tools
and to review and understand the final rules. Therefore, the cost and
burden for the regulatory review is estimated to be incurred by the
1,959 issuers and TPAs. The Departments also are of the view that each
state DOI, 50 states plus the District of Columbia, will need to review
and understand the final rules in order to be able to provide the
appropriate level of oversight and enforcement.
[[Page 72270]]
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret the final rules, the
Departments should estimate the cost associated with regulatory review.
Due to the uncertainty involved with accurately quantifying the number
of entities that will review and interpret the final rules, the
Departments are assuming that the total number of issuers, TPAs, and
state DOIs will be required to comply with the final rules.
Nonetheless, the Departments acknowledge that this assumption may
understate or overstate the costs of reviewing the final rules. It is
possible that not all affected entities will review the final rules in
detail, and some entities may seek the assistance of outside counsel to
read and interpret them. For these reasons, the Departments are of the
view that the number of issuers, TPAs, and DOIs would be a fair
estimate of the number of reviewers of the final rules.
Using the wage information from the Bureau of Labor Statistics
(BLS) \277\ for a Computer and Information Systems Manager (Code 11-
3021), a Lawyer (Code 23-1011) and a state Compliance Officer (Code 13-
1041).\278\ The Departments estimate that the cost for each issuer or
TPA to review the final rules will be $285.66 per hour, including
overhead and fringe benefits, and each state DOI will incur a cost of
approximately $55.58 per hour.\279\ Assuming an average reading speed,
the Departments estimate that it will take approximately two hours for
each staff member to review and interpret the final rules; therefore,
the Departments estimate that the cost of reviewing and interpreting
the final rules for each issuer and TPA will be approximately $571.32
and $111.16 for each state DOI, including the District of Columbia.
Thus, the Departments estimate that the overall cost for the estimated
1,959 issuers and TPAs and each state DOI will be $1,124,885.04
(($571.32 x 1,959 (total number of estimated issuers and TPAs)) +
($111.16 x 51 (total number of DOIs))).
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\277\ Wage information available at https://www.bls.gov/oes/current/oes_nat.htm.
\278\ Wages obtained for State Government, excluding schools and
hospitals at https://www.bls.gov/oes/current/naics4_999200.htm.
\279\ Adjusted hourly wages are determined by multiplying the
mean hourly rate by 100 percent to account for fringe benefits and
overhead costs.
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D. Regulatory Alternatives Considered
In developing the policies contained in the final rules, the
Departments considered alternatives to the final rules. In the
following paragraphs, the Departments discuss the key regulatory
alternatives the Departments considered.
1. Limiting Cost-Sharing Disclosures to Certain Covered Items and
Services, and Certain Types of Group Health Plans and Health Insurance
Issuers
The final rules require group health plans and health insurance
issuers to disclose cost-sharing information for any requested covered
item or service. The Departments considered limiting the number of
items or services for which plans and issuers would be required to
provide cost-sharing information to lessen the costs on these entities.
However, limiting disclosures to a specified set of items and services
reduces the breadth and availability of useful cost estimates to
determine anticipated cost-sharing liability and limits the impact of
price transparency efforts by reducing the incentives to lower prices
and provide higher-quality care. The Departments assumed that plans (or
TPAs on their behalf) and issuers, whether for a limited set of covered
items and services or for all covered items and services, would be
deriving these data from the same data source. Because the data source
would be the same, the Departments assumed that any additional costs to
produce the information required for all covered items and services, as
opposed to a limited set of covered items and services, would be
minimal. The Departments are of the view that this limited additional
cost is outweighed by the potentially large benefit to consumers of
having access to the required pricing information for the full scope of
items and services covered by their plan or issuer. For these reasons,
in order to allow consumers to estimate their out-of-pocket costs for
all services and items covered under their plan or coverage, and to
achieve lower health care costs and reduce spending through increased
price transparency, the final rules are requiring cost-sharing
information be disclosed for all covered items and services. However,
in recognition of commenters' concerns regarding the implementation
timetable for the internet-based self-service tool, the final rules
include a staggered implementation schedule for the disclosure of cost-
sharing information through the internet-based self-service tool.
The Departments also considered implementing a more limited
approach by imposing requirements only on individual market plans and
fully-insured group coverage. However, the Departments are concerned
that this limited approach might encourage plans to simply shift costs
to sectors of the market where these requirements would not apply and
where consumers would have less access to pricing information. The
Departments are of the view that all consumers should be able to access
the benefits of greater price transparency and that a broader approach
will have the greatest likelihood of controlling the cost of health
care industry-wide. Indeed, if the requirements of the final rules were
limited to only individual market plans, the Departments estimate only
9,716,000 individuals would receive the intended benefits of the final
rules. In contrast, under the final rules, a total of 212,314,000
participants, beneficiaries, and enrollees may receive the intended
benefits.\280\ The Departments acknowledge that limiting applicability
of the requirements of the final rules to the individual market would
likely reduce the overall cost estimates identified in section V.B.2,
but the overall cost estimates per covered life would likely increase.
Further, there is a great deal of overlap in issuers that offer
coverage in both the individual and group markets. Issuers offering
coverage in both markets would be required to comply with the
requirements of the final rules even if the Department limited the
applicability to only the individual market. Because TPAs provide
administrative functionality for self-insured group health insurance
coverage, those non-issuer TPA entities would not incur any costs
because they do not have any overlap between the individual and group
markets. The Departments are of the view that the benefits of providing
consumer pricing information to an estimated total 212,314,000
participants, beneficiaries, and enrollees outweigh the increased costs
that a subset of plans, issuers, and TPAs, that are not active
participants in the individual market, would incur. The Departments
have determined that the benefits of the final rules being widely
applicable will not only provide access to health care pricing
information to a greater number of individuals, but that any developed
economies of scale will have a much
[[Page 72271]]
greater likelihood of achieving the goal of controlling the cost of
health care industry-wide.
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\280\ ``Health Insurance Coverage in the United States: 2019''
(Appendix A). United States Census Bureau/September 15, 2020.
Available at: https://www2.census.gov/programs-surveys/demo/tables/p60/271/table1.pdf. The number of covered individuals in the
individual market and the total number of covered individuals have
been updated from those estimated in the proposed rule. The numbers
provided in this final rule are based on more recent data and more
accurately reflect the number of covered individuals in the private
market (excluding those enrolled in Tricare coverage). The data
provided is for 2019, whereas the data presented in the proposed
rule was derived from multiple sources for multiple years (2016 and
2019).
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As noted in section I.B of this preamble, in the summer and fall of
2018, HHS hosted listening sessions in which attendees stated that
existing tools usually use historical claims data, which results in
broad, sometimes regional, estimates, rather than accurate and
individualized prices. The Departments considered allowing plans and
issuers to use rate information from historical claims data to
calculate price estimates. The Departments recognize that many plans
and issuers use historical claims data to inform and determine cost-
sharing estimates, but the Departments are of the view that using
pricing information such as negotiated rates will provide for a more
accurate and reliable estimate. Providing more accurate estimates of
consumer prices will provide more benefit to consumers, allowing them
to better estimate their potential out-of-pocket costs and search for
items and services they feel are more affordable.
2. Requirement To Make Available Machine-Readable Files of In-Network
Rates, Historical Data for Out-of-Network Allowed Amount Payments Made
to Out-of-Network Providers, and Prescription Drug Pricing Information
on a Public Website
In proposing the requirement that group health plans and health
insurance issuers post in-network rates, historical data for out-of-
network allowed amount payments made to out-of-network providers, and
negotiated rates and historical net prices for each prescription drug
on a publicly accessible website, the Departments considered requiring
plans and issuers to submit the internet addresses for the machine-
readable files to CMS. CMS would then make the information available to
the public from CMS's website. A central location could allow the
public to access in-network rate information, out-of-network allowed
amounts, and prescription drug information for all plans and issuers in
one place, potentially reducing confusion and increasing accessibility.
Posting in-network rates, out-of-network allowed amounts, and
prescription drug information in a central location might also make it
easier to post available quality information alongside price
information. However, to provide flexibility and reduce costs, the
Departments are of the view that plans and issuers should determine
where to post the in-network rate, out-of-network allowed amount, and
prescription drug information rather than prescribing the location
where the information is to be disclosed. Further, requiring plans and
issuers to submit internet addresses for their machine-readable files
to CMS would result in additional costs to the extent plans and issuers
already post this information in a different location.
3. Frequency of Updates to Machine-Readable Files
In developing 26 CFR 54.9815-2715A3(b)(3), 29 CFR 2590.715-
2715A3(b)(3), and 45 CFR 147.212(b)(3) of the final rules, the
Departments considered requiring more frequent updates (i.e., within 10
calendar days of new rate finalization) to the in-network rates, out-
of-network allowed amounts, and prescription drug information. More
frequent updates would provide a number of benefits for patients,
providers, and the public at large. Specifically, such a process would
ensure that the public has access to the most up-to-date rate
information so that consumers can make the most meaningful, informed
decisions about their health care utilization. Requiring group health
plans, health insurance issuers, and TPAs (or other entity acting on a
plan or issuers behalf) to update the machine-readable files more
frequently would result in increased costs for those affected entities,
however. With respect to the In-network Rate File, the Departments
estimate that requiring updates within 10 calendar days of rate
finalization would result in each plan, issuer, or TPA incurring a
burden of 4,428 hours, with an associated equivalent cost of $635,112
in the second year after implementation of the final rules and an
annual burden of 1,116 hours, with an associated equivalent cost of
$162,828 in subsequent years. Based on recent data the Departments
estimate a total 1,959 entities--1,754 issuers \281\ and 205 TPAs
\282\--will be responsible for implementing the final rules. For all
1,959 issuers and TPAs, the total burden, in the second year of
implementation of the final rules, would be 8,674,452 hours, with an
associated equivalent cost of $1,244,184,408 and an annual ongoing
burden of 2,186,244 hours, with an associated ongoing annual costs of
$318,980,052 in subsequent years. As discussed in section VI.A.2,
requiring a less frequent 30 calendar day update will reduce the
burden, in year two, for each entity to 1,476 hours with an associated
equivalent cost of $211,704. The burden and associated costs, in
subsequent years, will be reduced to 372 hours, with an associated cost
of $54,276. For all 1,959 issuers and TPAs, the total burden, in year
two, is reduced to 2,891,484 hours, with and associated equivalent cost
of $414,728,136. For subsequent years, the total burden is reduced to
728,748 hours, with an associated equivalent cost of $106,326,684. With
respect to the Allowed Amount File, the Departments estimate that
requiring updates within 10 calendar days of rate finalization would
result in each plan, issuer, or TPA incurring a burden of 1,908 hours,
with an associated equivalent cost of $290,628 in the second year and
an annual ongoing burden of 468 hours, with an associated equivalent
cost of $61,452 in subsequent years. For all 1,959 issuers and TPAs,
the total burden, in year two, would be 3,737,772 hours with and
associated equivalent cost of $569,340,252. For subsequent years, the
total ongoing burden would be 916,812 hours, with an associated
equivalent cost of $120,384,468. As further discussed in section
VI.A.2, requiring a less frequent update will reduce the year two
burden for each issuer and TPA to 636 hours, with an associated
equivalent cost of $96,876. For subsequent years, the total ongoing
burden will be reduced to 156 hours, with an associated equivalent cost
of $20,848. For all 1,959 issuers and TPAs, the total burden for year
two is reduced to 1,245,924 hours, with an associated equivalent cost
of $189,780,084. For subsequent years, the total ongoing burden will be
reduced to 305,604 hours, with an associated equivalent cost of
$40,128,156. With respect to the Prescription Drug File, the
Departments estimate that requiring updates within 10 calendar days of
rate finalization would result in each plan, issuer, or TPA incurring a
burden of 2,700 hours, with an associated equivalent cost of $416,664
in the second year and an annual ongoing burden of 1,116 hours, with an
associated equivalent cost of $162,828 in subsequent years. For all
1,959 issuers and TPAs, the total burden, in year two, would be
5,289,300 hours with and associated equivalent cost of $816,244,776.
For subsequent years, the total ongoing burden would 2,186,244 hours,
with an associated equivalent cost of $318,980,052. As discussed in
section VI.A.2, requiring a less frequent update will reduce the year
two burden for each issuer and TPA to 900 hours, with an associated
equivalent cost of $138,888. For subsequent years, the total ongoing
burden will be reduced to 372 hours,
[[Page 72272]]
with an associated equivalent cost of $54,276. For all 1,959 issuers
and TPAs, the total burden for year two is reduced to 1,763,100 hours,
with an associated equivalent cost of $272,081,592. For subsequent
years, the total ongoing annual burden will be reduced to 728,748
hours, with an associated equivalent cost of $106,326,684. By requiring
monthly updates to the machine-readable files, rather than updates
every 10 calendar days, the Departments have chosen to strike a balance
between placing a significant burden on issuers (and their service
providers) and assuring the availability of accurate information.
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\281\ 2018 MLR Data Trends.
\282\ Non-issuer TPAs based on data derived from the 2016
Benefit Year reinsurance program contributions.
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4. File Format Requirements
In 26 CFR 54.9815-2715A3(b)(2), 29 CFR 2590.715-2715A3(b)(2), and
45 CFR 147.212(b)(2), the final rules require group health plans and
health insurance issuers to post information in three machine-readable
files. A machine-readable file is defined as a digital representation
of data or information in a file that can be imported or read by a
computer system for further processing without human intervention,
while ensuring no semantic meaning is lost. The final rules require
each machine-readable file to use a non-proprietary, open format. The
Departments considered requiring issuers and TPAs to post in-network
rates, allowed amounts paid for out-of-network services, and
prescription drug information using a specific file format, namely
JSON. However, the Departments are of the view that being overly
prescriptive regarding the file type will impose an unnecessary costs
on issuers and TPAs despite the advantages of JSON, namely that JSON
files are downloadable and readable for many health care consumers, and
the potential for JSON to simplify the ability of price transparency
tool developers to access the data. Therefore, the Departments are
requiring that issuers and TPAs post the in-network rate, allowed
amount, and prescription drug pricing information in three distinct
machine-readable files using a non-proprietary, open format. The
Departments will provide additional guidance regarding the file format
in future technical implementation guidance.
In addition, the Departments considered requiring plans and issuers
to provide the specific out-of-network allowed amount methodology
needed for consumers to determine out-of-pocket liability for services
by providers not considered in-network by the plan or issuer, rather
than historical data on paid out-of-network claims. However, the
Departments understand providing a formula or methodology for
calculating a provider's out-of-network allowed amount does not provide
the data users need in an easy-to-use machine-readable format. The
Departments determined that providing monthly data files on allowed
amounts by plans and issuers over a 90-day period for items and
services provided by out-of-network providers will enable users to more
readily determine what costs a plan or issuer may pay toward items or
services obtained out-of-network. Because a plan or issuer does not
have a contract with an out-of-network provider that establishes
negotiated rates, the plan or issuer cannot anticipate what that
provider's charges will be for any given item or service; therefore,
the Departments, as discussed previously in this preamble, are
requiring the inclusion of billed charges in the Allowed Amounts File.
Providing data on the billed charge in connection with each unique
allowed amount on the out-of-network Allowed Amount File will provide
consumer with information related to what their plan or issuer will
likely contribute to the costs of items or services obtained from out-
of-network providers and the billed charges associated with those item
or services. This information will provide the consumer with a
reasonably accurate estimate of the amount of additional liability a
consumer could be required to pay for a particular item or service
received from an out-of-network provider. Out-of-network allowed amount
and billed charges data will provide increased price transparency for
consumers, and the costs related to producing these data are not
considered to be significantly higher than that associated with
producing the methodology for determining allowed amounts for payments
to out-of-network providers. Given these circumstances, the final rules
are requiring that payers provide allowed amount data for out-of-
network covered items or services furnished by a particular out-of-
network provider during the 90-day time period that begins 180 days
prior to the publication date of the Allowed Amount File, and billed
charges rather than requiring plans and issuers to report their
methodology or formula for calculating the allowed amounts for out-of-
network items and services.
5. Requiring Disclosure of Cost-Sharing Information to Participants,
Beneficiaries, and Enrollees and Publicly-Posted Machine-Readable Files
With In-Network Rates, Out-of-Network Allowed Amounts, and Prescription
Drug Pricing Information
The Departments considered whether it would be duplicative to
require group health plans and health insurance issuers to disclose
cost-sharing information through an internet-based self-service tool or
in paper form to participants, beneficiaries, or enrollees so that they
may obtain an estimate of their cost-sharing liability for covered
items and services and publicly-posted machine-readable files
containing data on in-network rates, out-of-network allowed amounts,
and prescription drug pricing information. The requirement to disclose
cost-sharing information to participants, beneficiaries, or enrollees
in the final rules require plans and issuers to provide consumer-
specific information on potential cost-sharing liability to enrolled
consumers, complete with information about their deductibles, copays,
and coinsurance. However, cost-sharing information for these plans and
coverage would not be available or applicable to consumers who are
uninsured or shopping for plans pre-enrollment. Data disclosed to
participants, beneficiaries, or enrollees would also not be available
to third parties who are interested in creating internet-based self-
service tools to assist both uninsured and insured consumers with
shopping for the most affordable items or services. Limiting access to
data to a subset of consumers would not promote the transparency goals
of the final rules and would reduce the potential for the final rules
to drive down health care costs by increasing competition.
As discussed in more detail in section VI.A.1 in this preamble, the
Departments have estimated the high-end three-year average annual cost
to develop only the internet-based self-service tool, including the
initial tool build and maintenance, customer service training, customer
assistance, and mailing costs. The Departments estimate the three-year
average total burden per issuer, or TPA will be approximately 23,338
hours, with an associated equivalent average annual cost of
approximately $3,262,262. For all 1,959 issuers and TPAs, the
Departments estimate the total three-year average annual burden will be
45,718,171 hours with an associated equivalent total average annual
cost of approximately $6,390,770,952.
[[Page 72273]]
Additionally, the Departments estimated that for implementation of
the required internet-based self-service tool in conjunction with the
out-of-network allowed amount, in-network and prescription drug
machine-readable files, the Departments estimate that the annual high-
end three-year average annual costs and burden for each issuer or TPA
will be approximately 28,958 hours, with an associated equivalent cost
of approximately $4,040,142. For all 1,959 issuers and TPAs, the
Departments estimate the total three-year average annual burden and
cost to be 56,727,751 hours with an associated equivalent total average
annual cost of approximately $7,914,635,260.
In contrast, and as discussed in more detail in section VI.A.1, the
Departments estimate that the low-end three-year average burden and
cost to develop and maintain only the internet-based self-service tool,
including the initial tool build and maintenance, customer service
training, customer assistance, and mailing costs. The Departments
estimate the total three-year average cost and burden per issuer or TPA
will be approximately 15,475 hours, with an associated equivalent
average annual cost of approximately $2,150,169. For all 1,959 issuers
and TPAs, the Departments estimate the total three-year average annual
burden to be 30,315,730 hours with an associated equivalent total
average annual cost of approximately $4,212,181,157.
Finally, the Departments estimated that for implementation of the
required internet-based self-service tool in conjunction with the out-
of-network allowed amount, in-network rate, and prescription drug
machine-readable files, the Departments estimate that the three-year
average annual low-end cost and burden for each issuer or TPA will be
approximately 21,095 hours, with an associated equivalent average
annual cost of approximately $2,928,048. For all 1,959 issuers and
TPAs, the Departments estimate the total three-year average annual low-
end burden and cost will be 41,325,310 hours with an associated
equivalent total average annual cost of approximately $5,736,045,465.
While the Departments recognize that requiring disclosures through all
mechanisms will increase the costs for issuers and TPAs required to
comply with the final rules, the Departments are of the view that the
additional costs associated with greater price transparency are
outweighed by the benefits that will accrue to the broader group of
consumers (such as the uninsured and individuals shopping for coverage)
and other individuals who would benefit directly from the additional
information provided through the machine-readable files. Additionally,
the Departments are of the view that the final rules have the potential
to reduce the cost of surprise billing to consumers. The Departments
further believe that the final rules will, with the disclosure of in-
network rates, potentially apply pressure on providers to bill less
aggressively. Consumer advocacy groups could also use the wide price
dispersion of the same CPT level service or NDC level drug by the same
providers with different negotiated rates, depending upon issuer or TPA
contract, to further place downward pressure on health care costs. In
addition, as noted earlier in section II.C.1-2 of this preamble,
researchers and third-party developers will also be able to use the
data included in the machine-readable files in a way that could create
even more benefits to consumers, including those consumers not
currently enrolled in a particular plan or coverage. For these reasons,
the Departments have concluded that, in addition to requiring plans and
issuers to disclose cost-sharing information to participants,
beneficiaries, or enrollees through an internet-based self-service
tool, requiring plans and issuers to publicly disclose information
regarding in-network rates, out-of-network allowed amounts, and
prescription drug pricing will further the goals of price transparency
and create benefits for all potentially affected stakeholders.
6. Requiring an Internet-Based Self-Service Tool and Machine-Readable
Files in Lieu of an API
The Departments considered whether to require group health plans
and health insurance issuers to make the information required by the
final rules available through a standards-based API, instead of through
the proposed internet-based self-service tool and machine-readable
files. Access to pricing information through an API could have a number
of benefits for consumers, providers, and the public at large. This
information could ensure the public has access to the most up-to-date
rate information. Providing real-time access to pricing information
through a standards-based API could allow third-party innovators to
incorporate the information into applications used by consumers or
combined with electronic medical records for point-of-care decision-
making and referral opportunities by clinicians for their patients.
Additionally, being able to access this data through a standards-based
API would allow consumers to use the application of their choice to
obtain personalized, actionable health care price estimates, rather
than being required to use one developed by their plan or issuer (or a
service provider), although those consumers may be required to pay for
access to those applications.
While there are many benefits to a standards-based API, it is the
Departments' view that both an internet-based tool and machine-readable
files are the first iterative steps towards developing price
transparency standards-based APIs. It is the Departments' view that
standards-based API would be a natural next technological step. The
Departments also recognize that the majority of issuers have an
existing internet-based tool that could be enhanced to meet the
disclosure requirements in the final rules. The burden associated with
updating existing tools to standardize data attributes is going to be
less than building a standards-based API. Looking at the average cost
over a 3-year period for the API for all 1,959 issuers and TPAs, the
Departments estimate an average annual cost that would significantly
exceed the estimated annual cost of implementing the internet-based
self-service tool and machine-readable files. The Departments recognize
that the development of an API may be streamlined by leveraging
existing APIs currently used by plans, issuers, or TPAs for their own
applications. Additionally, any requirements for an API would build on
the requirements finalized in CMS's Interoperability & Patient Access
final rule \283\ requiring certain entities, such as Federally-
facilitated Exchange QHP issuers and companies that participate in both
Medicare and the individual or group market, to provide certain data
through a standards-based API. Building on the Interoperability &
Patient Access final rule could result in significantly lower costs for
issuers and TPAs as it relates to the development and implementation of
a standards-based API. Nonetheless, while the Interoperability &
Patient Access final rule focuses on the disclosure of information
regarding post care and clinical data, the rules finalized here require
plans and issuers to provide information related to a participant's,
beneficiary's, or enrollee's individual's cost-sharing, allowed amounts
for covered items and services from out-of-network providers, and
negotiated rates and historical net prices for each prescription drug
prior to seeking or obtaining care. The Departments are therefore of
the view
[[Page 72274]]
that plans, issuers, and TPAs would incur significant and distinct
costs if required to us a standards-based API to comply with the final
rules.
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\283\ 85 FR 25510 (May 1, 2020).
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Although not estimated here, the Departments expect any associated
maintenance costs would also decline in succeeding years as plans,
issuers, and TPAs gain additional efficiencies or undertake similar
procedures to maintain any currently used internal APIs. Nonetheless,
weighing the costs of providing the required information using an
internet-based self-service tool and machine-readable files against the
potential costs of using a standards-based API, particularly given the
timeframes required by the final rules, the Departments are of the view
that, at least in the short-term, requiring an internet-based self-
service tool and machine-readable files is the more sensible approach.
Even though the Departments are of the view that an internet-based
self-service tool and machine-readable files are appropriate in the
short-term, as discussed earlier in this preamble, the Departments
recognize that a standards-based API format in the long-term may be
more beneficial to the public, as it would provide access to the most
up-to-date rate information; would allow health care consumers to use
the application of their choice to obtain personalized, actionable
health care service price estimates; and would allow third-party
developers to use the collected data to develop internet-based self-
service tools. Therefore, the Departments are considering future
rulemaking to further expand access to pricing information through
standards-based APIs, including individuals' access to estimates about
their own cost-sharing liability and information about in-network
rates, historical payment data for out-of-network allowed amounts, and
negotiated rates and historical net prices for prescription drugs.
VI. Collection of Information Requirements
The final rules contain ICRs that are subject to review by OMB. A
description of these provisions is given in the following paragraphs
with an estimate of the annual burden, summarized in Table 24.
To fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the PRA requires that the
Departments solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of each of the Departments.
the accuracy of the Departments' estimate of the
information collection burden.
the quality, utility, and clarity of the information to be
collected.
recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
The Departments solicited comment on each of the required issues
under section 3506(c)(2)(A) of the PRA for the following information
collection requirements.
A. Wage Estimates
To derive wage estimates, the Departments generally use data from
the BLS to derive average labor costs (including a 100 percent increase
for fringe benefits and overhead) for estimating the burden associated
with ICRs.\284\ One commenter noted that the markup rates for labor,
fringe benefits, and overhead are underestimated at 100 percent, while
the conventional standard is 200 percent to 300 percent. The commenter
further stated that if the Departments were to update the burden
estimates with the conventional standard for overhead markup, the total
of annual quantified costs would increase to over $500 million per
year.
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\284\ May 2018 Bureau of Labor Statistics, Occupational
Employment Statistics, National Occupational Employment and Wage
Estimates. Available at: https://www.bls.gov/oes/current/oes_stru.htm.
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The Departments acknowledge that there are various methodologies
used to determine and estimate fringe benefits and other overhead
costs; however, the commenter did not provide any source recognizing or
supporting their assertion that the conventional standard is to use 200
percent to 300 percent increases. The Departments agree that if a
higher percentage were used to estimate hourly wages and overhead, then
the estimated costs for the final rules could potentially be
significantly higher. However, the Departments note that the use of 100
percent is necessarily a rough adjustment, both because fringe benefits
and overhead costs vary significantly across employers, and because
methods of estimating these costs vary widely across studies. The
Departments are of the view that doubling the hourly wage to estimate
total cost is a reasonably acceptable estimation method.
The Departments recognize that the maturity of technology will vary
from organization to organization. An independent study by Bates White
Economic Consulting (Bates White), commissioned by one commenter,
developed an assessment of the costs of the proposed rules by
interviewing a mix of 18 large and small health insurance issuers
covering about 78 million lives. They reported various degrees of
existing tools' compliance with the requirements of the proposed rules.
The Departments reevaluated its initial burden estimates developed for
the proposed rules based on feedback from commenters and the Bates
Whites study. Because the Departments could not make an estimate for
any specific issuer, an independent government cost estimate (IGCE) was
conducted for each of the machine-readable files and the internet-based
self-service tool to aid the Departments in conducting the burden and
cost estimates for the final rules. The goals of an IGCE are to aid the
government acquisition process in determining a project's cost
estimates based on project requirements or objectives that are
typically found in a performance work statement or statement of work.
IGCEs are developed by the government without contractor influence and
are based on market research. The estimated skill sets required to
build both the internet based self-service tool and machine-readable
files can be found in TABLE 3 below. The Departments based the IGCE
cost estimates on the rule's requirements and each IGCE has baseline
assumptions that are built into the final estimate.
The IGCE assumptions for the internet-based self-service tool
included things such as research, engineering development, and design
and were not based on any existing tools. There was an assumption that
product development would be done in the cloud to take advantage of
economies of scale or with on-premise infrastructure that allows for
the development of ``infrastructure as code.'' The IGCE assumptions for
the machine-readable files included that all items and services for a
specific plan have a negotiated price, that all price numbers are
digitized, that pricing information is stored in many locations (not in
a single database), that pricing information is accessible through
internal systems, that building the first machine-readable file will
facilitate automation for building future machine-readable files, and
that there is an ability to run queries against claims data.
Based on comments discussed later sections VI.A.1-2, the
Departments have chosen to use the Contract Awarded Labor Category
(CALC) \285\ database tool, managed by the General Services
Administration (GSA), to derive the
[[Page 72275]]
hourly rates for the burden and cost estimates in the final rules. The
CALC tool was built to assist acquisition professionals with market
research and price analysis for labor categories on multiple U.S. GSA &
Veterans Administration (VA) contracts. Wages obtained from the CALC
database are fully burdened to account for fringe benefits and overhead
costs. The Departments chose to use wages derived from the CALC
database because, even though the BLS data set is valuable to
economists, researchers, and others that would be interested in larger,
more macro-trends in parts of the economy, the CALC data set is meant
to help market research based on existing government contracts in
determining how much a project/product will cost based on the required
skill sets needed. The CALC data set also factors in the fully-burdened
hourly rates (base pay + benefits) into wages whereas BLS rates do not.
CALC occupations and wages provide the Departments with data that
aligns more with, and provides more detail related to, the occupations
required for the implementation of the requirements in the final rules.
As discussed earlier, after consideration and discussion of comments,
the Departments chose to further reevaluate the cost and burden
estimates. Based on the Departments consultation with internal and
external IT professionals and additional research, the Departments have
chosen to increase our overall costs and burden estimates to account
for our updated understanding of the burdens associated with the final
rules and the additional requirements included in the final rules. The
Departments further discuss changes to the final cost and burden
estimates in the corresponding ICR sections.
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\285\ CALC information and wage rates are available at: https://calc.gsa.gov/about/.
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While the following estimates for the internet-based self-service
tool assume that entities are either iterating on an existing tool or
building a brand new tool from the ground up, the Departments are of
the view that it is highly likely that third-party developers will take
this opportunity to build white-label products that meet the
requirements of the final rules and that they will reduce costs through
economies of scale by doing so. As such, the Departments' cost
estimates may have some tendency towards over-estimation.
Table 3 presents the fully burdened hourly wage and job
descriptions used in the Departments' estimates.
Table 3--Hourly Wages Used in Burden Estimates
------------------------------------------------------------------------
Mean
hourly
CALC occupation title wage ($/
hour)
------------------------------------------------------------------------
Project Manager/Team Lead.................................... $153.00
Scrum Master................................................. 105.00
Technical Architect/Sr. Developer............................ 149.00
Application Developer, Senior................................ 143.00
Business Analyst............................................. 120.00
UX Researcher/Service Designer............................... 154.00
Designer..................................................... 116.00
DevOps Engineer.............................................. 181.00
Customer Service Representative.............................. 40.00
Web Database/Application Developer IV........................ 152.00
Service Designer/Researcher.................................. 114.00
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1. ICR Regarding Requirements for Disclosures to Participants,
Beneficiaries, or Enrollees (26 CFR 54.9815-2715A2, 29 CFR 2590.715-
2715A2, and 45 CFR 147.211)
The Departments add 26 CFR 54.9815-2715A2(b), 29 CFR 2590.715-
2715A2(b), and 45 CFR 147.211(b), requiring group health plans and
health insurance issuers of individual and group health insurance
coverage to disclose, upon request, to a participant, beneficiary, or
enrollee, such individual's cost-sharing information for items;
negotiated rates and underlying fee schedule rates for in-network
providers; and allowed amounts for covered items and services from out-
of-network providers. As discussed previously in section II.B.1 of this
preamble, in paragraphs 26 CFR 54.9815-2715A2(b)(1)(i), 29 CFR
2590.715-2715A2(b)(1)(i), and 45 CFR 147.211(b)(1)(i) through (vii) the
final rules require plans and issuers to make this information
available through an internet-based self-service tool on an internet
website and, if requested, in paper form or other format agreed upon
between the plan, issuer, or TPA and participant, beneficiary, or
enrollee.
The final rules require plans and issuers to disclose, upon
request, certain information relevant to a determination of a
participant's, beneficiary's, or enrollee's cost-sharing liability for
a particular health care item or service from a particular provider, to
the extent relevant to the individual's cost-sharing liability for the
item or service, in accordance with seven content elements: The
individual-specific estimated cost-sharing liability; the individual-
specific accumulated amounts; the in-network rate; the out-of-network
allowed amount for a covered item or service, if applicable; the items
and services content list when the information is for items and
services subject to a bundled payment arrangement; a notice of
prerequisites to coverage (such as prior authorization); and a
disclosure notice. However, as discussed earlier in this section II.B.1
of this preamble, in instances where items or services, generally
considered preventive, are furnished as non-preventive items or
services, the participant, beneficiary, or enrollee may be subject to
the cost-sharing terms of his or her plan. If a plan or issuer cannot
determine whether the request is for a preventive item or service, the
plan or issuer must display the non-preventive cost-sharing liability,
along with a note that the item or service may not be subject to cost-
sharing if it is billed as a preventive service. The final rules also
require the disclosure notice to include several statements, written in
plain language, which include disclaimers relevant to the limitations
of the cost-sharing information disclosed, including: A statement that
out-of-network providers may balance bill participants, beneficiaries,
or enrollees, a statement that the actual charges may differ from those
for which a cost-sharing liability estimate is given, and a statement
that the estimated cost-sharing liability for a covered item is not a
guarantee that coverage will be provided for those items and services.
In addition, plans and issuers will be permitted to add other
disclaimers they determine appropriate so long as such information is
not in conflict with the disclosure requirements of the final rules.
The Departments have developed model language that plans and issuers
will be able to use to satisfy the requirement to provide the notice
statements described earlier in section II.B.1 of this preamble.
As discussed in section II.B.1 of this preamble, the final rules
require plans and issuers to make available the information described
in 26 CFR 54.9815-2715A2(b), 29 CFR 2590.715-2715A2(b), and 45 CFR
147.211(b) of the final rules through an internet-based self-service
tool. The information is required to be provided in plain-language
through real-time responses. Plans and issuers will be required to
allow participants, beneficiaries, or enrollees to search for cost-
sharing information for covered items and services by billing code, or
by descriptive term, per the user's request, in connection with a
specific in-network provider, or for all in-network providers. In
addition, the internet-based self-service tool must allow users to
input information necessary to determine the out-of-network allowed
amount for a covered item or service
[[Page 72276]]
provided by an out-of-network provider (such as zip code). The
internet-based self-service tool is required to have the capability to
refine and reorder results by the geographic proximity of in-network
providers, and the estimated amount of cost-sharing liability to the
beneficiary, participant, or enrollee.
As discussed in sections II.B.1 and 2 earlier in this preamble, the
final rules require plans and issuers to furnish upon request, in paper
form, the information required to be disclosed under 26 CFR 54.9815-
2715A2(b)(1), 29 CFR 2590.715-2715A2(b)(1), and 45 CFR 147.211(b)(1) of
the final rules to a participant, beneficiary, or enrollee. As
discussed in sections II.B.1 and 2 in this preamble, a paper disclosure
is required to be furnished according to the consumer's filtering and
sorting preferences and mailed to the participant, beneficiary, or
enrollee within two business days of receiving the request. Plans or
issuers may, upon request, provide the required information through
other methods, such as over the phone, through face-to-face encounters,
by facsimile, or by email.
The Departments assume fully-insured group health plans will rely
on issuers to develop and maintain the internet-based self-service tool
and provide any requested disclosures in paper form. While the
Departments recognize that some self-insured plans might independently
develop and maintain the internet-based self-service tool, at this time
the Departments assume that self-insured plans will rely on TPAs
(including issuers providing administrative services and non-issuer
TPAs) to develop the required internet-based self-service tool. The
Departments make this assumption because the Departments understand
that most self-insured group health plans rely on TPAs for performing
most administrative duties, such as enrollment and claims processing.
For those self-insured plans that choose to develop their own internet-
based self-service tools, the Departments assume that they will incur a
similar cost and burden as estimated for issuers and TPAs, as discussed
in section VI.A.1 later in this preamble. In addition, 26 CFR 54.9815-
2715A2(b)(3), 29 CFR 2590.715-2715A2(b)(3), and 45 CFR 147.211(b)(3) of
the final rules provide for a special rule to prevent unnecessary
duplication of the disclosures with respect to health insurance
coverage, which provides that a plan may satisfy the disclosure
requirements if the issuer offering the coverage is required to provide
the information pursuant to a written agreement between the plan and
issuer. Thus, the Departments have used issuers and TPAs as the unit of
analysis for the purposes of estimating required changes to IT
infrastructure and administrative costs and burdens. The Departments
estimate approximately 1,754 issuers and 205 TPAs will be affected by
the final rules.
The Departments acknowledge that the costs described in these ICRs
may vary depending on the number of lives covered, the number of
providers and items and services for which cost-sharing information
must be disclosed, and the fact that some plans and issuers already
have robust tools that can be easily adapted to meet the requirements
of the final rules. In addition, plans and issuers may be able to
license existing cost estimator tools offered by third-party vendors,
obviating the need to establish and maintain their own internet-based
self-service tools. The Departments assume that any related vendor
licensing fees would be dependent upon complexity, volume, and
frequency of use, but assume that such fees would be lower than an
overall initial build and associated maintenance costs. Nonetheless,
for purposes of the estimates in these ICRs, the Departments assume all
1,959 issuers and TPAs will be affected by the final rules. The
Departments also developed the following estimates based on the mean
average size, by covered lives, of issuers or TPAs. As noted later in
this section, the Departments sought comment on the inputs and
assumptions that were used to develop these cost and burden estimates,
particularly regarding existing efficiencies that would reduce the cost
and burden estimates.
High Range Estimate for Internet-Based Self-Service Tool From Start-Up
to Operational Functionality
The Departments estimate that the one-time costs and burden each
issuer or TPA will incur to complete the one-time technical build;
including activities such as planning, assessment, budgeting,
contracting, building and systems testing, incorporating any necessary
security measures, incorporating disclaimer and model notice language,
or development of the model and disclaimer notice materials for those
that choose to make alterations. The Departments assume that this one-
time cost and burden will be incurred in 2022 to develop and build the
internet-based self-service tool and provide information for the 500
required items and services, and additional one-time costs will be
incurred in 2023 in order to fully meet the requirements of the final
rules. As mentioned earlier in section V.A.2 of this preamble, the
Departments acknowledge that a number of issuers and TPAs have
previously developed some level of internet-based self-service tool
similar to, and containing some functionality related to, the
requirements in the final rules. The Departments thus seek to estimate
a burden and cost range (high-end and low-end) associated with the
final rules for those issuers and TPAs. In order to develop the high-
end hourly burden and cost estimates, the Departments assume that all
issuers and TPAs will need to develop and build their internet-based
self-service tool from start-up to operational functionality. The
Departments estimate that for each issuer or TPA it will take a Project
Manager/Team Lead 4,160 hours (at $153 per hour), a Scrum Master 4,160
hours (at $105 per hour), a Technical Architect/Sr. Developer 4,160
hours (at $149 per hour), an Application Developer, Senior 4,160 hours
(at $143 per hour), a Business Analyst 4,160 hours (at $120 per hour),
a UX Researcher/Service Designer 4,160 hours (at $154 per hour), a
Designer 4,160 hours (at $116 per hour), a DevOps Engineer 4,160 hours
(at $181 per hour), and a Web Database/Application Developer IV 4,160
hours to complete this task. The Departments estimate the total burden
per issuer or TPA will be approximately 37,440 hours, with an
equivalent cost of approximately $5,295,680. For all 1,959 issuers and
TPAs, the total first year one-time total burden is estimated to be
73,344,960 hours, with an equivalent total cost of approximately
$10,374,237,120. The Departments' estimates are higher-bound estimates
that do not consider potential cost savings that could be realized
should issuers and TPAs buy or lease an internet-based self-service
tool from a third-party vendor or other issuer. However, the
Departments are of the view that issuers or TPAs that choose to buy or
rent an internet-based self-service tool from another entity could
incur significantly less costs and burdens.
[[Page 72277]]
Table 4A--Total High-End First Year Estimated One-Time Cost and Hour Burden for Internet-Based Self-Service Tool
for Each Issuer or TPA
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost Total cost per
CALC occupation per respondent per hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead..................................... 4,160 $153.00 $636,480.00
Scrum Master.................................................. 4,160 105.00 436,800.00
Technical Architect/Sr. Developer............................. 4,160 149.00 619,840.00
Application Developer, Senior................................. 4,160 143.00 594,880.00
Business Analyst.............................................. 4,160 120.00 499,200.00
UX Researcher/Service Designer................................ 4,160 154.00 640,640.00
Designer...................................................... 4,160 116.00 482,560.00
DevOps Engineer............................................... 4,160 181.00 752,960.00
Web Database/Application Developer IV......................... 4,160 152.00 632,320.00
-------------------------------------------------
Total per respondent.......................................... 37,440 .............. 5,295,680.00
----------------------------------------------------------------------------------------------------------------
Table 4B--Total High-End First Year Estimated One-Time Cost and Hour Burden for Internet-Based Self-Service Tool
for All Issuers and TPAs
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 37,440.0 73,344,960 $10,374,237,120
----------------------------------------------------------------------------------------------------------------
Several commenters stated that the Departments grossly
underestimated the cost burden of implementation on plans and issuers.
One commenter stated that surveyed issuers estimated an average cost of
$6.2 million to build, develop or modify, implement, test, and launch
an internet-based self-service tool. This is 28 times greater than the
Departments' proposed estimate for an issuer that needs to build a new
tool and 112 times greater than the Departments' estimate for an issuer
that has an existing tool. Furthermore, this commenter noted that
surveyed issuers estimated average annual maintenance costs of $1.4
million per issuer--over 100 times greater than those anticipated by
the Departments. Surveyed issuers also estimated set-up costs that
averaged about $5.53 million (ranging from $1,000,000 to $15,000,000)
compared to the Departments' proposed estimate of $221,029. This is
more than 25 times what the Departments estimated as the cost for a
full build of the internet-based self-service tool. Although most of
the issuers surveyed had an existing internet-based self-service tool
meeting many of the required elements of the final rules, several
issuers expressed significant concern about the cost and feasibility of
complying with the requirements of the proposed rules. Specifically,
the issuers surveyed expressed concerns noting that the requirements
may necessitate a complete rebuild of their consumer tool. The surveyed
issuers further indicated that the proposed rules would be costlier
than implementing real-time claims adjudication, in which the claim for
the medical service is adjudicated at the time the service is provided.
They stated that they would need to effectively adjudicate the claim
before it actually happens--to provide estimates for every conceivable
type of medical item or service while integrating this information with
various benefits. The surveyed issuers also noted that condensing all
of the detail required in the final rules into a user-friendly format
for use by enrollees would be a considerable and possibly even
infeasible challenge. They further stated that the Departments'
assumption that issuers with an existing internet-based self-service
tool would face a lower hour burdens and costs to comply with the
proposed rules was incorrect.
The Departments have considered the comments submitted in response
to the cost and burden estimates related to the internet-based self-
service tool. In response, the Departments have adjusted the costs and
burden estimates to better reflect and align with the values submitted
by commenters. In addition, the Departments have developed the
estimates above, and in other ICR sections, using CALC wage rates as
discussed in section VI.A of this preamble.
Low Range Estimate for Internet-Based Self-Service Tool Requiring
Partial Build
The Departments recognize that a significant number of issuers and
TPAs may already have some form of internet-based self-service tool
that allows for comparison shopping of different plans and that a large
number of issuers and TPAs may currently provide participants,
beneficiaries, or enrollees with the ability to obtain some estimated
out-of-pocket costs.\286\ For those issuers and TPAs that currently
have some level of functional internet-based self-service tool that
would meet some (or all) of the requirements of the final rules, the
Departments recognize that these entities may incur lower burdens and
costs overall, as the Departments are of the view that these entities
may require an overall lower level of effort and capital expenditure to
meet the requirements of the final rules. Thus, the Departments have
estimated a low-end burden and cost to comply with the final rules.
Assuming that over 90 percent of issuers and TPAs currently provide an
internet-based self-service tool and will only be required to make
changes to their current system in order to meet the requirements in
the final rules, the Departments estimate that 175 issuers and 21 TPAs
will be required to develop an internet-based self-service tool from
start-up to operational functionality. The Departments also estimate
that each of those 196 entities will incur a first-year one-time cost
and burden of approximately 37,440 hours, with an
[[Page 72278]]
equivalent cost of approximately $5,295,680 (as discussed previously in
this ICR). For those 196 entities, the total first year one-time burden
is estimated to be 7,334,496 hours with an equivalent total cost of
approximately $1,037,423,712.
---------------------------------------------------------------------------
\286\ See AHIP release dated August 2, 2019. ``AHIP Issues
Statement on Proposed Rule Requiring Disclosure of Negotiated
Prices.'' America's Health Insurance Providers. August 2, 2019.
Available at: https://www.ahip.org/ahip-issues-statement-on-proposed-rule-requiring-disclosure-of-negotiated-prices/; see also
Higgins, A., Brainard, N., and Veselovskiy, G. ``Characterizing
Health Plan Price Estimator Tools: Findings from a National
Survey.'' 22 Am. J. Managed Care 126. 2016. Available at: https://ajmc.s3.amazonaws.com/_media/_pdf/AJMC_02_2016_Higgins%20(final).pdf.
Table 5A--Low-Range First Year One-Time Cost and Hour Burden for Internet-Based Self-Service Tool for Issuers
and TPAs Requiring a Complete Build
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
196 196 37,440 7,334,496 $1,037,423,712.00
----------------------------------------------------------------------------------------------------------------
The Departments estimate that those issuers and TPAs that will only
be required to make changes to their existing systems will already have
operational capabilities that meet approximately 70 percent of the
requirements in the final rules and will only incur costs and burdens
related to changes needed to fully meet the requirements of the final
rules. Based on this assumption, the Departments estimate that 1,579
issuers and 184 TPAs will incur a first-year one-time hour burden of
11,232 hours, with an associated cost of $1,588,704.00 to fully satisfy
the initial requirements of the final rules. For all 1,763 issuers and
TPAs, the Departments estimates the total first year one-time burden
will be 19,803,139 hours, with an equivalent total cost of
approximately $2,801,044,022.40. The Departments recognize that issuers
and TPAs may currently have some form of internet-based self-service
tool that may provide greater functionality that could meet a greater
proportion of the requirements in the final rules. In those cases,
issuers and TPAs could see lower costs and burdens. The Departments
also recognize that there are likely a number of issuers and TPAs that
currently provide some form of internet-based self-service tool that
would require more development to meet the requirements of the final
rules. In those instances, those issuers and TPAs could incur greater
costs and burdens. The Departments' estimates are higher-bound
estimates that do not consider potential cost savings that could be
realized should issuers and TPAs buy or lease an internet-based self-
service tool from a third-party vendor or other issuer. However, the
Departments are of the view that issuers or TPAs that choose to buy or
rent an internet-based self-service tool from another entity could
incur significantly less costs and burdens.
Table 5B--Low-End First Year One-Time Cost and Hour Burden for Internet-Based Self-Service Tool for Issuers and
TPAs Requiring Only a Partial Build
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,763 1,763 11,232 19,803,139 $2,801,044,022.40
----------------------------------------------------------------------------------------------------------------
Table 5C--Total Low-End First Year One-Time Cost and Hour Burden for Internet-Based Self-Service Tool for all
Issuers and TPAs
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 13,853 27,137,635 $3,838,467,734.40
----------------------------------------------------------------------------------------------------------------
In addition to the range of one-time costs and burdens estimated in
Tables 4B, 5B, 5C, 6A, and 6B, issuers and TPAs will incur annual costs
such as those related to ensuring cost estimation accuracy, providing
quality assurance, conducting website maintenance and making updates,
and enhancing or updating any needed security measures. The Departments
estimate that for each issuer and TPA, it will take a Project Manager/
Team Lead 1,040 hours (at $153 per hour), a Scrum Master 1,300 hours
(at $105 per hour), an Application Developer, Senior 1,560 hours (at
$143 per hour), a Business Analyst (at $120.00 per hour) 520 hours, a
Designer (at $116.00 per hour) 1,040 hours, a DevOps Engineer (at
$181.00 per hour) 520 hours, a Web Database/Application Developer IV
(at $152.00 per hour) 1,560 hours, and a UX Researcher/Service Designer
520 hours (at $154 per hour) to perform these tasks. The total annual
burden for each issuer or TPA will be 8,060 hours, with an equivalent
cost of approximately $1,113,060. For all 1,959 issuers and TPAs, the
total annual maintenance burden is estimated to be 15,789,540 hours,
with an equivalent associated total cost of approximately
$2,180,484,540.00. The Departments recognize that issuers and TPAs will
likely have varying levels of IT capabilities and experience in
maintaining and internet-based tool and could incur higher or lower
costs and burdens depending on those capabilities. The Departments
expect maintenance costs to decline in succeeding years as issuers and
TPAs gain efficiencies and experience in updating and managing their
internet-based self-service tool.
[[Page 72279]]
Table 6A--Estimated Year Two Implementation Cost and Hour Burden for Internet-Based Self-Service Tool for Each
Issuer or TPA
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 3,120 $153.00 $477.360.00
Scrum Master................................................. 3,120 105.00 327,600.00
Technical Architect/Sr. Developer............................ 3,120 149.00 464,880.00
Application Developer, Senior................................ 4,160 143.00 594,880.00
Business Analyst............................................. 2,080 120.00 249,600.00
UX Researcher/Service Designer............................... 2,080 154.00 320,320.00
Designer..................................................... 1,560 116.00 180,960.00
DevOps Engineer.............................................. 2,080 181.00 376,480.00
Web Database/Application Developer IV........................ 3,120 152.00
--------------------------------------------------
Total per Respondent..................................... 24,440 ............... 3,446,320.00
----------------------------------------------------------------------------------------------------------------
Table 6B--Estimated Year Two Implemenation Cost and Hour Burden for Internet-Based Self-Service Tool for All
Issuers and TPAs
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 24,440.0 47,877,960 $6,611,791,830.97
----------------------------------------------------------------------------------------------------------------
In addition to the range of one-time costs and burdens estimated in
Tables 4B, 5B, 5C, 6A, and 6B, issuers and TPAs will incur annual costs
such as those related to ensuring cost estimation accuracy, providing
quality assurance, conducting website maintenance and making updates,
and enhancing or updating any needed security measures. The Departments
estimate that for each issuer and TPA, it will take a Project Manager/
Team Lead 1,040 hours (at $153 per hour), a Scrum Master 1,300 hours
(at $105 per hour), an Application Developer, Senior 1,560 hours (at
$143 per hour), a Business Analyst (at $120.00 per hour) 520 hours, a
Designer (at $116.00 per hour) 1,040 hours, a DevOps Engineer (at
$181.00 per hour) 520 hours, a Web Database/Application Developer IV
(at $152.00 per hour) 1,560 hours, and a UX Researcher/Service Designer
520 hours (at $154 per hour) to perform these tasks. The total annual
burden for each issuer or TPA will be 8,060 hours, with an equivalent
cost of approximately $1,113,060. For all 1,959 issuers and TPAs, the
total annual maintenance burden is estimated to be 15,789,540 hours,
with an equivalent associated total cost of approximately
$2,180,484,540.00. The Departments recognize that issuers and TPAs will
likely have varying levels of IT capabilities and experience in
maintaining and internet-based tool and could incur higher or lower
costs and burdens depending on those capabilities. The Departments
expect maintenance costs to decline in succeeding years as issuers and
TPAs gain efficiencies and experience in updating and managing their
internet-based self-service tool.
Table 7A--Estimated Annual Cost and Hour Burden for Maintenance of Internet-Based Self-Service Tool for Each
Issuer or TPA
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 1,040 $153.00 $159,120.00
Scrum Master................................................. 1,300 105.00 136,500.00
Application Developer, Senior................................ 1,560 143.00 223,080.00
Business Analyst............................................. 520 120.00 62,400.00
Designer..................................................... 1,040 116.00 120,640.00
DevOps Engineer.............................................. 520 181.00 94,120.00
Web Database/Application Developer IV........................ 1,560 152.00 237,120.00
UX Researcher/Service Designer............................... 520 154.00 80,080.00
--------------------------------------------------
Total per Respondent..................................... 8,060 ............... 1,113,060.00
----------------------------------------------------------------------------------------------------------------
Table 7B--Estimated Annual Cost and Hour Burden for Maintenance of Internet-Based Self-Service Tool for All
Issuers and TPAs
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 8,060.0 15,789,540 $2,180,484,540.00
----------------------------------------------------------------------------------------------------------------
[[Page 72280]]
As noted previously in this ICR section, commenters stated that the
Departments grossly underestimated the cost burden of implementation on
plans and issuers. Additionally, commenters stated that the Departments
had underestimated the maintenance costs associated with the internet-
based self-service tool. Issuers estimated the annual maintenance costs
to be on average, about $3.78 million per issuer or TPA (ranging from
$375,000 to $10,000,000). As noted previously in this ICR section,
based on comments received, the Departments have adjusted the costs and
burden estimates to better reflect and align with the values submitted
by commenters. The Departments estimate the high-end three-year average
total hour burden, for all issuers and TPAs to develop, build, and
maintain an internet-based self-service tool will be 45,670,820 hours
annually, with an average annual total equivalent cost of
$6,388,837,830.
The Departments acknowledge that the costs described earlier in
this section may vary depending on the number of covered lives and the
number of providers and items and services incorporated into the
internet-based self-service tool. Recognizing that many issuers and
TPAs currently have some form of internet-based self-service tool in
operation that meets some aspects of the requirements of the final
rules, the Departments estimate the low-end average three-year annual
total burden, for all issuers and TPAs to develop, build, and maintain
an internet-based self-service tool will be 30,268,378 hours annually,
with an average annual total equivalent cost of $4,210,248,035. The
Departments recognize that plans, issuers, and TPAs may be able to
license existing internet-based self-service tools offered by vendors,
obviating the need to establish, upgrade, and maintain their own
internet-based self-service tools, and that vendor licensing fees,
dependent upon complexity, volume, and frequency of use, could be lower
than the burden and costs estimated here.
Table 8--Estimated High-End Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs To Develop and Maintain the Internet-Based Self-
Service Tool
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated
number of health Burden per Total annual Total estimated
Year insurance Responses respondent burden (hours) labor cost
issuers and TPAs (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2022....................................................... 1,959 1,959 37,440.0 73,344,960 $10,374,237,120
2023....................................................... 1,959 1,959 24,440.0 47,877,960 6,611,791,830.97
2024....................................................... 1,959 1,959 8,060.0 15,789,540 2,180,484,540.00
3 year Average............................................. 1,959 1,959 23,313 45,670,820 6,388,837,830.32
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 9--Estimated Low-End Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs to Develop and Maintain the Internet-Based Self-
Service Tool
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated
number of health Burden per Total annual Total estimated
Year insurance Responses respondent burden (hours) labor cost
issuers and TPAs (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2022....................................................... 1,959 1,959 13,853 27,137,635 $3,838,467,734.40
2023....................................................... 1,959 1,959 24,440 47,877,960 6,611,791,830.97
2024....................................................... 1,959 1,959 8,060 15,789,540 2,180,484,540.00
3 year Average............................................. 1,959 1,959 15,451 30,268,378 4,210,248,035.12
--------------------------------------------------------------------------------------------------------------------------------------------------------
In addition to the one-time and annual maintenance costs estimated
in Table 8 and Table 9, issuers and TPAs will also incur an annual
burden and costs associated with customer service representative
training, consumer assistance and education, and administrative and
distribution costs related to the disclosures required in the final
rules. The Departments estimate that, to understand and navigate the
internet-based self-service tool and provide the appropriate assistance
to consumers, each customer service representative will require
approximately two hours (at $40 per hour) of annual consumer assistance
training at an associated cost of $80 per hour. The Departments
estimate that each issuer and TPA will train, on average, 10 customer
service representatives annually, resulting in a total annual burden of
20 hours, with an associated total cost of $800. For all 1,959 issuers
and TPAs, the total annual burden is estimated to be 39,180 hours, with
an equivalent total annual cost of approximately $1,567,200. The
Departments recognize that some issuers or TPAs may require varying
levels of training to acquaint their customer service representatives
with the functionalities of their internet-based self-service tool
depending on the degree of changes required to comply with the final
rules, in which case some issuers could incur higher costs and burdens
to appropriately train personnel.
Table 10A--Estimated Annual Cost and Hour Burden per Issuer or TPA To Train Customer Service Representatives To
Provide Assistance to Consumers Related to the Internet-Based Self-Service Tool
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Customer Service Representatives............................. 2 $40.00 $80.00
--------------------------------------------------
Total per Respondent..................................... 2 ............... 80.00
----------------------------------------------------------------------------------------------------------------
[[Page 72281]]
Table 10B--Estimated Annual Cost and Hour Burden for All Issuers and TPAs To Train Customer Service
Representatives To Provide Assistance to Consumers Related to the Internet-Based Self-Service Tool
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 20 39,180 $1,567,200.00
----------------------------------------------------------------------------------------------------------------
The Departments assume that the greatest proportion of
beneficiaries, participants, or enrollees that will request disclosure
of cost-sharing information in paper form will do so because they do
not have access to the internet. However, the Departments acknowledge
that some consumers with access to the internet will contact a plan or
issuer for assistance with using the internet-based self-service tool
and may request to receive cost-sharing information in paper form.
Recent studies have found that approximately 20 million households
do not have an internet subscription.\287\ Further, approximately 19
million Americans (6 percent of the population) lack access to fixed
broadband services that meet threshold levels.\288\ Additionally, a
recent Pew Research Center analysis found that 10 percent of U.S.
adults do not use the internet, citing the following major factors:
difficulty of use, age, cost of internet services, and lack of computer
ownership.\289\ Additional research indicates that an increasing
number, 17 percent, of individuals and households are now considered
``smartphone only'' and that 37 percent of U.S. adults mostly use
smartphones to access the internet and that many adults are forgoing
the use of traditional broadband services.\290\ Further research
indicates that younger individuals and households, including
approximately 93 percent of households with householders aged 15 to 34,
are more likely to have smartphones compared to those aged over
65.\291\ The Departments are of the view that the population most
likely to use the internet-based self-service tool would generally
consist of younger individuals, who are more comfortable using
technology and are more likely to have internet access via broadband or
smartphone technologies.
---------------------------------------------------------------------------
\287\ ``2017 American Community Survey Single-Year Estimates.''
United States Census Bureau. September 13, 2018. Available at:
https://www.census.gov/newsroom/press-kits/2018/acs-1year.html.
\288\ ``Eight Broadband Progress Report.'' United States Federal
Communications Commission. December 14, 2018. Available at: https://www.fcc.gov/reports-research/reports/broadband-progress-reports/eighth-broadband-progress-report. In addition to the estimated 19
million Americans that lack access, they further estimate that ``in
areas where broadband is available, approximately 100 million
Americans still do not subscribe.''
\289\ Anderson, M. et al. ``10% of Americans don't use the
internet. Who are they?'' Pew Research Center. April 22, 2019.
Available at: https://www.pewresearch.org/fact-tank/2019/04/22/some-americans-dont-use-the-internet-who-are-they/.
\290\ Anderson, M. ``Mobile Technology and Home Broadband
2019.'' Pew Research Center. June 13, 2019. Available at: https://www.pewinternet.org/2019/06/13/mobile-technology-and-home-broadband-2019/ (finding that overall 17 percent of Americans are now
``smartphone only'' internet users, up from 8 percent in 2013. They
study also shows that 45 percent of non-broadband users cite their
smartphones as a reason for not subscribing to high-speed internet).
\291\ Ryan, C. ``Computer and internet Use in the United States:
2016.'' American Community Survey Reports: United States Census
Bureau. August 2018. Available at: https://www.census.gov/content/dam/Census/library/publications/2018/acs/ACS-39.pdf.
---------------------------------------------------------------------------
The Departments note that there are 212.3 million beneficiaries,
participants, or enrollees enrolled in group health plans or with
health insurance issuers required to comply with the requirements of
the final rules for at least part of the year.\292\ On average, it is
estimated that each issuer or TPA would annually administer the
benefits for 108,379 beneficiaries, participants, or enrollees.
---------------------------------------------------------------------------
\292\ Id. at 283.
---------------------------------------------------------------------------
A recent study noted that only one to 12 percent of consumers that
have been offered internet-based or mobile application-based price
transparency tools use them.\293\ Taking that into account, and
assuming that six percent of covered individuals lack access to fixed
broadband services, the Departments estimate that on average six
percent of participants, beneficiaries, or enrollees will seek customer
support (a mid-range percentage of individuals that currently use
available cost estimator tools) and that an estimated one percent of
those participants, beneficiaries, or enrollees will request any
pertinent information be disclosed to them in in a non-internet
manner--resulting in an estimated 0.06 percent of participants,
beneficiaries, or enrollees requesting information. As discussed in
section V.D.1 of this preamble, the Departments have adjusted the
estimates related to customer service and mailed requests in order to
account for more recent data related to the number of participants,
beneficiaries, and enrollees. The Departments estimate that each issuer
or TPA, on average, will require a customer service representative to
interact with a beneficiary, participant, or enrollee approximately 65
times per year on matters related to cost-sharing information
disclosures required by the final rules. The Departments estimate that
each customer service representative will spend, on average, 15 minutes
(at $40 per hour) for each interaction, resulting in a cost of
approximately $10 per interaction. The Departments estimate that each
issuer or TPA will incur an annual burden of 16 hours, with an
associated equivalent cost of approximately $650; resulting in a total
annual burden of 31,847 hours, with an associated cost of approximately
$1,273,884 for all issuers and TPAs.
---------------------------------------------------------------------------
\293\ Mehrotra, A., Chernew, M., and Sinaiko, A. ``Health Policy
Report: Promises and Reality of Price Transparency.'' April 5, 2018.
14 N. Eng. J. Med. 378. Available at: https://www.nejm.org/doi/full/10.1056/NEJMhpr1715229.
---------------------------------------------------------------------------
The Departments assume that all beneficiaries, participants, or
enrollees that contact a customer service representative will request
non-internet disclosure of the internet-based self-service tool
information. Of these, the Departments estimate that 54 percent of the
requested information would be transmitted via email or facsimile at
negligible cost to the issuer or TPA and that 46 percent will request
the information be provided by mail. The Departments estimate that, on
average, each issuer or TPA will send approximately 30 disclosures by
mail annually. Based on these assumptions, the Departments estimate
that the total number of annual disclosures sent by mail for all
issuers and TPAs will be 58,599. The Departments recognize that the
numbers of per issuer and TPA mailings may represent a low-end estimate
and the number of requests may vary amongst each issuer or TPA
depending on the demographics of their beneficiaries, participants, or
enrollees. The Departments are of the view that although more
individuals will contact customer support for cost information the vast
majority of those individuals will likely obtain this information over
the phone or have it emailed rather than have it mailed to them.
The Departments assume, on average, the length of the printed
disclosure will be approximately nine single-sided pages in length,
assuming two pages of
[[Page 72282]]
information (similar to that provided in an EOB) for three providers
(for a total of six pages) and an additional three pages related to the
required notice statements, with a printing cost of $0.05 per page.
Therefore, including postage costs of $0.55 per mailing, the
Departments estimate that each issuer or TPA will incur a material and
printing costs of approximately $1.00 ($0.45 printing plus $0.55
postage costs) per mailed request. Based on these assumptions, the
Departments estimate that each issuer or TPA will incur an annual
printing and mailing cost of approximately $30, resulting in a total
annual printing and mailing cost of approximately $58,599 for all
issuers and TPAs.
Table 11A--Estimated Annual Cost and Hour Burden per Response per Issuer or TPA To Accept and Fulfill Requests
for a Mailed Disclosures
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Customer Service Representatives............................. 0.25 $40.00 $10
--------------------------------------------------
Total per Respondent......................................... 0.25 ............... 10
----------------------------------------------------------------------------------------------------------------
Table 11B--Estimated Annual Cost and Hour Burden for All Issuers and TPAs To Accept and Fulfill Requests for Mailed Disclosures
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Number of Burden hours per Total labor cost of Printing and
respondents responses respondent Total burden hours reporting materials cost Total cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
1,959 1132,509 16 31,847 $1,273,884.00 $58,598.66 $1,332,482.66
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Departments solicited comment on the overall estimated costs
and burdens related to this collection of information request. The
Departments also sought comment on the technical and labor requirements
or costs that may be required to meet the requirements of the proposed
rules: For example, what costs may be associated with any potential
consolidation of information needed for the internet-based self-service
tool functionality. The Departments sought comment on the estimated
number of issuers and TPAs currently in the group and individual
markets and the number of self-insured group health plans that might
seek to independently develop an internet-based self-service tool, the
percentage of consumers who might use the internet-based self-service
tool, and the percentage of consumers who might contact their plan,
issuer, or TPA requesting information via a non-internet disclosure
method. The Departments sought comment on any other existing
efficiencies that could be leveraged to minimize the burden on plans,
issuers, and TPAs, as well as how many or what percentage of plans,
issuers, and TPAs might leverage such efficiencies. The Departments
sought comment on the proposed model notice and any additional
information that stakeholders thought should be included, removed, or
expanded upon and its overall adaptability.
All comments received with regard the topics above have been noted
and addressed in their corresponding ICR sections.
In conjunction with the final rules, CMS is seeking approval for
this information collection (OMB control number: 0938-1372
(Transparency in Coverage (CMS-10715)). CMS is requiring the following
information collections to include the following burden. DOL and the
Department of the Treasury will submit their burden estimates upon
approval.
2. ICRs Regarding Requirements for Public Disclosure of In-network
Rates, Historical Allowed Amount Data for Covered Items and Services
from Out-of-Network Providers and Prescription Drug Pricing Information
under 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, and 45 CFR
147.212.
The Departments are adding 26 CFR 54.9815-2715A3(b), 29 CFR
2590.715-2715A3(b), and 45 CFR 147.212(b) to the final rules requiring
group health plans and health insurance issuers to make public in-
network rates for covered items and services, out-of-network allowed
amounts for covered items or services, and negotiated rates and
historical net prices for each prescription drug NDC through three
machine-readable files that must conform to guidance issued by the
Departments. The list of required data elements that must be included
for each file for each covered item or service are discussed in section
II.C previously in this preamble and enumerated under paragraph
(b)(1)(i) for the In-network Rate File, paragraph (b)(1)(ii) for the
Allowed Amount File, and paragraph (b)(1)(iii) for the Prescription
Drug File of the final rules. Under paragraphs (b)(2) and (3) of the
final rules, the machine-readable files must be posted on a public
internet site accessible to any person free of charge and without
conditions and must be updated monthly.
For the In-network Rate File, the final rules require the
negotiated rates, underlying fee schedules, or derived amounts under a
plan or coverage regarding each covered item or service be furnished
for in-network providers. As discussed in section II.C earlier in this
preamble, the Departments expect plans and issuers to make public the
negotiated rate, fee schedule, or derived amount that is used to
adjudicate claims for the purpose of reconciling a provider's payment
to determine a participant's, beneficiary's, or enrollee's cost-sharing
liability. As discussed in the previous ICR section, the Departments
assume fully-insured group health plans will rely on issuers and most
self-insured group health plans will rely on issuers or TPAs to develop
and update the machine-readable files. The Departments recognize that
there may be some self-insured plans that wish to individually comply
with the final rules and will thus incur a similar burden and cost as
described in the following paragraphs.
Many commenters stated the costs associated with the technical
build and maintenance of the machine-readable files will be
significant, and many commenters strongly suggested that the costs and
burden of implementing the files would be significantly higher than
those estimated in the proposed rules. Some commenters stated that the
final rules would unreasonably burden
[[Page 72283]]
issuers with administrative costs and could be especially burdensome
for small issuers and self-insured plans. One commenter noted that a
significant amount of burden would be placed on out-of-network
providers to provide information regarding costs to plans and issuers.
Another commenter, a hospital association, stated that the proposed
rules would be an administrative burden for hospitals as they would
require a massive investment by hospitals to provide data to comply and
that these resources would be diverted from patient care support.
The Departments recognize that the requirements in the final rules
could result in instances where small issuers and self-insured plans
face a disproportionate burden due to their size; however, as noted
earlier in this preamble, the Departments expect that small issuers,
plans, and TPAs will combine their efforts and seek to take advantage
of any resulting economies of scale.
An independent study by Bates White Economic Consulting (Bates
White), commissioned by one commenter, developed an assessment of the
costs of the proposed rules by interviewing a mix of 18 large and small
health insurance issuers covering about 78 million lives; Bates White
assessed the average issuer cost to implement the In-network Rate File
as $2,139,167 with a range from $85,000 to $10,000,000. Bates White
reported that commercial issuers estimated an average cost of $2.1
million per issuer to develop and implement the In-network Rates File.
Per the study, issuers view the In-network Rate File as about 20 times
costlier to implement than the Departments' proposed estimate. In
addition, Bates White assessed the average annual issuer cost to
maintain the In-network Rate Files would be $467,000 with a range from
$15,000 to $1,000,000. Another commenter noted that commercial issuers
estimated annual costs of $600,000 per issuer to maintain the In-
network Rate File. Issuers viewed the In-network Rate File as about 13
times costlier to maintain than the Departments' proposed estimate.
In another attempt to quantify this burden, one commenter
emphasized that the potential universe of prices that would need to be
disclosed on the files is enormous and could be in the hundreds of
billions (more than 94,000 codes multiplied by the number of unique
practitioners, which in the large issuer's system alone could exceed 2
million).
One commenter noted that the effort to comply would involve an
immense amount of data aggregation, de-identification, and application
development work, and these tasks would be especially difficult for
small issuers and self-insured plans who are more likely to rely on
``rented'' networks. The commenter stated that to comply with the final
rules, issuers would need a team with data expertise and knowledge of
plan design and medical service billing to aggregate data, build re-
pricing engines, and assure accuracy.
Due to the belief that the burden estimate in the proposed rules
and related PRA grossly underestimated the burden of implementation on
plans and issuers, one commenter suggested the Departments should
retract the PRA and work with stakeholders to develop a less burdensome
transparency solution. Other commenters stated the burden estimates
included in the proposed rules violate the spirit and express provision
of the PRA.
The Departments recognize the concerns and issues noted by
commenters. As noted in section VI.A in this preamble, the Departments
have reviewed comments related to the costs and burdens associated with
the requirements of the final rules and devised updated estimates using
CALC derived wage rates. The Departments note that the conclusions of
the Bates White study referenced earlier in this preamble were based on
interviews with issuers in which issuers described the steps they
viewed as necessary to establish the required internet-based self-
service tool and the machine-readable files, and provided related costs
estimates associated with the estimated initial set-up of the internet-
based self-service tool and machine-readable files. These estimates,
however, did not provide the level of detail necessary for the
Departments to assess how those initial cost estimates differ from the
Departments' estimates.
The Bates White study also recognized the difficulty associated
with assessing issuer estimates reported from issuer study
participants. The study recognized that issuers interviewed varied
widely in size, had different levels of experience, and had engaged in
different levels of analysis of the impacts in the proposed rules. The
study further noted the differences in the extent to which issuers
evaluated the costs and feasibility of complying with the proposed
rules. The study also recognized that issuers interviewed made
different assumptions about the degree of support from vendors or trade
associations that may have affected issuers' perception of the
administrative and operational costs of implementation, and that
issuers did not provide details of the varied operational and
implementation costs and activities underlying their stated estimates
for complying with the proposed rules. Specifically, the study provided
no insight regarding the labor categories, wages, or hourly burdens
that were considered to produce these cost estimates. Accordingly, the
Bates White study did not provide details sufficient to allow those
estimates to be compared to the Departments' estimates in the proposed
rules.
Given the limited utility of information offered by the Bates White
study, the Departments took additional steps to ensure the
reasonableness and accuracy of the cost estimates associated with
compliance with the final rules. In developing the updated estimates,
the Departments took into account the potential aggregation of data and
the potential likelihood that the data required to meet the
requirements of the final rules would need to be obtained from multiple
sources. The Departments recognize that the size and complexity of the
machine-readable files will result in data files that are large.
However, the Departments do not anticipate that data storage would
impose a significant burden for issuers or TPAs due to the relatively
inexpensive costs associated with storage methods such as cloud
storage.
The Departments estimate a one-time first year burden and cost to
issuers and TPAs to make appropriate changes to IT systems and
processes, to develop, implement and operate the In-network Rate File
in order to meet the requirements of the final rules. The Departments
estimate that each health or TPA will require a Project Manager/Team
Lead 364 hours (at $153 per hour), a Scrum Master 1,404 hours (at $105
per hour), a Technical Architect/Sr. Developer 2,080 hours (at $149 per
hour), an Application Developer, Senior 1,716 hours (at $143 per hour),
a Business Analyst 1,404 hours (at $120 per hour), a Service Designer/
Researcher 520 hours (at $114 per hour) and a DevOps Engineer 260 hours
(at $181 per hour) to complete this task. The total one-time first year
burden for each issuer or TPA is estimated to be approximately 7,748
hours, with an equivalent associated cost of approximately $1,033,240.
For all 1,959 issuers and TPAs, the Departments estimate the total one-
time first year burden will be 15,178,332 hours with an associated cost
of approximately $2,024,117,160. The Departments emphasize that these
are upper bound estimates that are meant to be sufficient to cover
substantial, complex activities
[[Page 72284]]
that may be necessary for some plans, issuers, or TPAs to comply with
the final rules due to the manner in which their current systems are
designed. Such activities may include such significant activities as
the design and implementation of databases that will support the
production of the In-network Rate Files.
Table 12A--Estimated One-Time Year One Cost and Hour Burden per Issuer or TPA for the In-Network Rate File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 364 $153.00 $55,692.00
Scrum Master................................................. 1,404 105.00 147,420.00
Technical Architect/Sr. Developer............................ 2,080 149.00 309,920.00
Application Developer, Senior................................ 1,716 143.00 245,388.00
Business Analyst............................................. 1,404 120.00 168,480.00
Service Designer/Researcher.................................. 520 114.00 59,280.00
DevOps Engineer.............................................. 260 181.00 47,060.00
--------------------------------------------------
Total per Respondent..................................... 7,748 ............... 1,033,240.00
----------------------------------------------------------------------------------------------------------------
Table 12B--Estimated One-Time Year One Cost and Hour Burden for All Issuers and TPAs for the In-network Rate
File
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 7,748 15,178,332 $2,024,117,160.00
----------------------------------------------------------------------------------------------------------------
In addition to the one-time year one costs estimated in Tables 12A
and 12B, issuers or TPAs will incur an additional year two burden and
cost to update the In-network Rate File monthly as required in the
final rules. The Departments estimate that for each month each issuer
or TPA it will require a Project Manager/Team Lead 22 hours (at $153
per hour), a Scrum Master 22 hours (at $105 per hour), a Technical
Architect/Sr. Developer 22 hours (at $149 per hour), an Application
Developer, Senior 22 hours (at $143 per hour), a Business Analyst 13
hours (at $120 per hour) and a DevOps Engineer 22 hours (at $181 per
hour) to make the required updates and needed adjustments to the In-
network Rate File. The Departments estimate that each issuer or TPA
will incur a monthly year two burden of 123 hours, with an associated
monthly cost of approximately $17,642 to adjust and update the In-
network Rate File. Each issuer or TPA will need to update the In-
network Rate File 12 times during a given year, resulting in a year two
burden of 1,476 hours, with an associated equivalent cost of
approximately $211,704. The Departments estimate the total year two
burden for all 1,959 issuers and TPAs will be 2,891,484 hours, with an
associated equivalent cost of approximately $414,728,136. The
Departments consider this estimate to be an upper-bound estimate and
expect ongoing update costs to decline in succeeding years as issuers
and TPAs gain efficiencies and experience in updating and managing the
In-network Rate File.
Table 13A--Estimated Monthly Year Two Cost and Hour Burden per Issuer or TPA for the In-network Rate File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 22 $153.00 $3,366.00
Scrum Master................................................. 22 105.00 2,310.00
Technical Architect/Sr. Developer............................ 22 149.00 3,278.00
Application Developer, Senior................................ 22 143.00 3,146.00
Business Analyst............................................. 13 120.00 1,560.00
DevOps Engineer.............................................. 22 181.00 3,982.00
--------------------------------------------------
Total per Respondent..................................... 123 ............... 17,642.00
----------------------------------------------------------------------------------------------------------------
Table 13B--Estimated Year Two Cost and Hour Burden for All Issuers and TPAs for the In-network Rate File
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 23,508 1,476 2,891,484 $414,728,136.00
----------------------------------------------------------------------------------------------------------------
[[Page 72285]]
In addition to the one-time year one and monthly year two costs
estimated Tables 12A, 12B, 13A, and 13B, in subsequent years, issuers
and TPAs will incur an ongoing monthly burden and cost to update and
maintain the In-network Rate File on a monthly basis as required by the
final rules. The Departments estimate that for each issuer or TPA it
will require a Project Manager/Team Lead 9 hours (at $153 per hour) and
an Application Developer, Senior 22 hours (at $143 per hour) to make
the required updates to the In-network Rate File. The Departments
estimate that each issuer or TPA will incur a monthly burden of 31
hours, with an associated cost of approximately $4,523 to update the
In-network Rate File. Each issuer or TPA will need to update the In-
network Rate File 12 times during a given year, resulting in an ongoing
annual hour burden of 372 hours, with an associated equivalent cost of
approximately $54,276. The Departments estimate the total annual burden
for all 1,959 issuers and TPAs will be 728,748 hours, with an
associated equivalent cost of approximately $106,326,684. The
Departments consider this estimate to be an upper-bound estimate and
expect ongoing update costs to decline in succeeding years as issuers
and TPAs gain efficiencies and experience in updating and managing the
In-network Rate File.
Table 14A--Estimated Monthly Ongoing Cost and Hour Burden per Issuer or TPA for the In-network Rate File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 9 $153.00 $1,377.00
Application Developer, Senior................................ 22 143.00 3,146.00
--------------------------------------------------
Total per Respondent..................................... 31 ............... 4,523.00
----------------------------------------------------------------------------------------------------------------
Table 14B--Estimated Annual Ongoing Cost and Hour Burden for All Issuers and TPAs for the In-Network Rate File
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 23,508 372 728,748 $106,326,684.00
----------------------------------------------------------------------------------------------------------------
The Departments estimate the total one-time year one burden for all
issuers and TPAs will be 15,178,332 hours, with an associated
equivalent cost of approximately $2,024,117,160 to develop and build
the In-network Rate File in a machine-readable format. In year two, the
Departments estimate the burden and costs to update and maintain the
In-network Rate file for all issuers and TPAs will be 2,891,484 hours,
with an associated equivalent cost of approximately $414,728,136. In
subsequent years, the Departments estimate the total annual burden to
maintain and update the In-network Rate File will be 728,748 hours,
with an annual associated equivalent cost of approximately
$106,326,684. The Departments estimate the three-year average annual
total burden, for all issuers and TPAs, will be 6,266,188 hours, with
an average annual associated equivalent total cost of $848,390,660.
Table 15--Estimated Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs To Develop and Maintain the In-Network Rate File
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated
number of health Burden per Total annual Total estimated
Year insurance Responses respondent burden (hours) labor cost
issuers and TPAs (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021....................................................... 1,959 1,959 7,748 15,178,332 $2,024,117,160.00
2022....................................................... 1,959 23,508 1,476 2,891,484 414,728,136.00
2023....................................................... 1,959 23,508 372 728,748 106,326,684.00
3 year Average............................................. 1,959 16,325 3,199 6,266,188 848,390,660.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
As mentioned in sections V.B in this preamble, the Departments
understand that plans and issuers may include gag clauses in their
provider contracting agreements, which prevent disclosure of in-network
rates. The Departments sought comment on whether such agreements would
need to be renegotiated to remove such clauses, and, if so, sought
comment regarding any costs and burden associated with this action.
One commenter stated the Departments have not sufficiently
accounted for costs associated with updating legal agreements (with
physicians, hospitals, drug manufacturers, and device manufacturers,
for example), updating and integrating data from multiple systems, and
establishing processes for making updates to files in the ordinary
course of business. Another commenter observed the Departments have not
adequately accounted for the time, resources, and cost burdens of
renegotiating contracts to remove gag clauses or confidentiality
clauses, which prevent disclosure of in-network rates. One commenter
provided examples of these costs: Printing and paper, mailing, attorney
drafting initial amendments and review of non-standard language
requests, costs for employees charged with negotiation and
administration, and costs paid to vendors.
[[Page 72286]]
Due to the potential complexities and time involved in contract
negotiations, the Departments recognize that should contracts require
renegotiation, all associated parties will face additional costs and
burdens. However, the Departments do not have insight into these
complexities or knowledge of how these contracts are structured, and
they are thus not able to quantify the costs and burdens associated
with these tasks. Also, as addressed earlier in this preamble, it is
not uncommon for new or modified regulatory requirements or new
statutory provisions to alter private contract arrangements. The
Departments note that the possibility of new or modified regulatory
requirements or new statutory provisions altering such contracts often
is contemplated in the contracts themselves; for example, drafters may
include contract language indicating that terms may be altered by
changes in law or regulation. Such language would obviate the need for
updates outsides of the regular contracting schedule and any associated
costs and burden.
For the Allowed Amount File, the final rules require plans and
issuers to make available a machine-readable file showing the unique
out-of-network allowed amounts and billed charges for covered items or
services furnished by out-of-network providers during the 90-day time
period that begins 180 days before the publication date of the file. As
discussed earlier in this preamble, to the extent that a group health
plan or health insurance issuer has paid multiple bills for an item or
service to a particular out-of-network provider at the same allowed
amount, the final rules will only require a plan or issuer to list the
allowed amount once. Additionally, if the plan or issuer would only
display allowed amounts in connection with 20 or fewer claims for a
covered item or service for payment to a provider during any relevant
90-day period, the plan or issuer will not be required to report those
unique allowed amounts.
As previously noted, an independent study by Bates White,
commissioned by one commenter, assessed the average issuer cost to
implement the Allowed Amount File as $1,071,167 with a range from
$42,000 to $5,000,000 and estimated the cost to implement the Allowed
Amount File as about 9 times costlier to implement than the
Departments' proposed estimate. This commenter also argued that the
average annual issuer cost to maintain the Allowed Amount File would be
$643,000 with a range from $12,000 to $1,500,000. Another commenter
argued that the cost to maintain the Allowed Amount File would be about
44 times costlier than the Departments' proposed estimate.
As noted above regarding the In-network Rate File cost and burdens,
the Departments have devised updated estimates for the Allowed Amounts
File using CALC derived wage rates. In developing the updated
estimates, the Departments took into account the potential aggregation
of data and the potential likelihood that the data required to meet the
requirements of the final rules would need to be obtained from multiple
sources.
The Departments estimate a one-time year one burden and cost to
issuers and TPAs to make appropriate changes to IT systems and
processes, to develop, implement, and operate the Allowed Amount File
in order to meet the requirements of the final rules. The Departments
estimate that each issuer or TPA will require a Scrum Master 520 hours
(at $105 per hour), a Technical Architect/Sr. Developer 780 hours (at
$149 per hour), an Application Developer, Senior 2,080 hours (at $143
per hour), a Business Analyst 520 hours (at $120 per hour), and a
DevOps Engineer 260 hours (at $181 per hour) to complete this task. The
Departments estimate the total one-time first year burden for each
issuer or TPA will be approximately 4,160 hours, with an equivalent
associated cost of approximately $577,720. For all 1,959 issuers and
TPAs, the Departments estimate the total one-time year one burden will
be 8,149,440 hours, with an equivalent associated cost of approximately
$1,131,753,480.
Table 16A--Estimated One-Time Year One Cost and Hour Burden per Issuer or TPA for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Scrum Master................................................. 520 $105.00 $54,600.00
Technical Architect/Sr. Developer............................ 780 149.00 116,220.00
Application Developer, Senior................................ 2,080 143.00 297,440.00
Business Analyst............................................. 520 120.00 62,400.00
DevOps Engineer.............................................. 260 181.00 47,060.00
--------------------------------------------------
Total per Respondent..................................... 4,160 ............... 577,720.00
----------------------------------------------------------------------------------------------------------------
Table 16B--Estimated One-Time Year One Cost and Hour Burden for All Issuers and TPAs for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 4,160 8,149,440 $1,131,753,480.00
----------------------------------------------------------------------------------------------------------------
In addition to the one-time year one costs estimated in Tables 16A
and 16B, issuers and TPAs will incur additional monthly burdens and
costs in year two to update the Allowed Amount File. The Departments
estimate that, in year two, each issuer or TPA will require a Scrum
Master 9 hours (at $105 per hour), an Application Developer, Senior 22
hours (at $143 per hour), and a DevOps Engineer 22 hour (at $181) to
make the required monthly Allowed Amount File updates. The Departments
estimate that each issuer or TPA will incur a monthly burden of 53
hours, with an equivalent associated cost of approximately $8,073 to
update the Allowed Amount File. The Departments estimate that each
issuer or TPA will need to update the Allowed Amount File 12 times
during a given year, resulting in a year two annual burden of
approximately 636 hours, with an equivalent associated cost of
[[Page 72287]]
approximately $96,876. The Departments estimate the total year two
burden for all 1,959 issuers and TPAs will be 1,245,924 hours, with an
equivalent associated cost of approximately $189,780,084. The
Departments consider this estimate to be an upper-bound estimate and
expect ongoing Allowed Amount File update costs to decline in
succeeding years as issuers and TPAs gain efficiencies and experience
in updating and managing the Allowed Amount File.
Table 17A--Estimated Year Two Monthly Cost and Hour Burden per Issuer or TPA for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Scrum Master................................................. 9 $105.00 $945.00
Application Developer, Senior................................ 22 143.00 3,146.00
DevOps Engineer.............................................. 22 181.00 3,982.00
--------------------------------------------------
Total per Respondent..................................... 53 ............... 8,073.00
----------------------------------------------------------------------------------------------------------------
Table 17B--Estimated Year Two Cost and Hour Burden for All Issuers and TPAs for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 23,508 636 1,245,924 $189,780,084.00
----------------------------------------------------------------------------------------------------------------
In addition to the one-time year one, monthly and total year two
costs estimated in Tables 16A, 16B, 17A and 17B, in subsequent years,
issuers and TPAs will incur additional ongoing monthly burdens and
costs to update the required Allowed Amount File. The Departments
estimate that for each issuer or TPA it will require a Scrum Master 4
hours (at $105 per hour), and an Application Developer, Senior 9 hours
(at $143 per hour) to make the required monthly Allowed Amount File
updates. The Departments estimate that each issuer or TPA will incur a
monthly burden of 13 hours, with an equivalent associated cost of
approximately $1,707 to update the Allowed Amount File. The Departments
estimate that each issuer or TPA will need to update the Allowed Amount
File 12 times during a given year, resulting in an ongoing annual
burden of approximately 156 hours, with an equivalent associated cost
of approximately $20,484. The Departments estimate the total burden for
all 1,959 issuers and TPAs will be 305,604 hours, with an equivalent
associated cost of approximately $40,128,156. The Departments consider
this estimate to be an upper-bound estimate and expect ongoing Allowed
Amount File update costs to decline in succeeding years as issuers and
TPAs gain efficiencies and experience in updating and managing the
Allowed Amount File.
Table 18A--Estimated Monthly Ongoing Cost and Hour Burden per Issuer or TPA for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Scrum Master................................................. 4 $105.00 $420.00
Application Developer, Senior................................ 9 143.00 1,287.00
--------------------------------------------------
Total per Respondent..................................... 13 ............... 1,707.00
----------------------------------------------------------------------------------------------------------------
Table 18B--Estimated Annual Ongoing Cost and Hour Burden for All Issuers and TPAs for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
Number of Burden hours per
respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 23,508 156 305,604 $40,128,156.00
----------------------------------------------------------------------------------------------------------------
The Departments estimate the one-time year one burden for all
issuers and TPAs will be 8,149,440 hours, with an equivalent associated
cost of approximately $1,131,753,480 to develop and build the Allowed
Amount File to meet the requirements of the final rules. In year two,
the Departments estimate the total annual burden of 1,245,924 hours to
maintain and update the Allowed Amount File, with an equivalent
associated cost of approximately $189,780,084. In subsequent years, the
Departments estimate the total annual burden to maintain and update the
Allowed Amount File will be 305,604 hours, with an annual equivalent
associated cost of approximately $40,128,156. The Departments estimate
the three-year average annual total burden for all issuers and TPAs
will be 3,233,656 hours, with an average annual total
[[Page 72288]]
equivalent associated cost of approximately $453,887,240.
Table 19--Estimated Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs To Develop and Maintain the Allowed Amount File
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated number Burden per
Year of issuers and Responses respondent Total annual Total estimated
TPAs (hours) burden (hours) labor cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021....................................................... 1,959 1,959 4,160 8,149,440 $1,131,753,480.00
2022....................................................... 1,959 23,508 636 1,245,924 189,780,084.00
2023....................................................... 1,959 23,508 156 305,604 40,128,156.00
3 year Average............................................. 1,959 16,325 1,651 3,233,656 453,887,240.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Departments sought comment for this collection of information
request related to all aspects of the estimated burdens and costs.
Specifically, the Departments sought comments related to any technical
or operational difficulties associated with maintaining current and up-
to-date provider network information or any out-of-network allowed
amounts for covered items and services. The Departments also sought
comments related to the technical and labor requirements or costs that
may be required to meet the requirements in the final rules;
specifically, any factors that could minimize the frequency of updates
that issuers or TPAs would be required to make to the Allowed Amount
File.
The Departments also solicited comments for this collection of
information request related to all aspects of the estimated burdens and
costs. Specifically, the Departments sought comments related to any
technical or operational difficulties associated with collecting data
and maintaining any out-of-network allowed amounts for covered items
and services, including, any difficulties associated with the
adjudication of paid claims and incorporating covered items or services
furnished by a particular out-of-network provider during the 90-day
time period that begins 180 days prior to the publication date of the
Allowed Amount File. The Departments also sought comments related to
the technical and labor requirements or costs that may be required to
meet the requirements in the proposed rules: Specifically, any factors
that could minimize the burdens and costs associated with updates that
issuers or TPAs would be required to make to the Allowed Amount File.
As addressed in section II.C in this preamble, the use of a HIPAA-
compliant clearinghouse is permitted, but not required, in order to
make the required information public. Plans and issuers are permitted
to use HIPAA-compliant clearinghouses to meet the disclosure
requirements and the Departments anticipate they may do so if this
method is more efficient and cost-effective.
The Departments acknowledge that as many as 95 percent of group
health plans and health insurance issuers may already contract with
claims clearinghouses that currently collect some or all of the
information required to be disclosed under the final rules and might be
able to meet the requirements in the final rules easily, potentially
obviating the need for the plan, issuer, or TPA to invest in IT system
development. The Departments assume that these plans, issuers, and TPAs
will still incur burdens and costs, albeit reduced, related to
oversight and quality assurance regarding any associated clearinghouse
activities. The Departments sought comments on existing efficiencies,
such as the use of clearinghouses that could be leveraged by plans,
issuers, and TPAs related to the development and updating of the
required machine-readable files and how many issuers, TPAs, or self-
insured plans may already contract with clearinghouses that collect the
information required. Comments received are discussed earlier in the
Use of Third Parties to Satisfy Public Disclosure Requirements section
of this preamble.
For the Prescription Drug File, the Departments estimate one-time
first-year burdens and costs to issuers and TPAs to make appropriate
changes to IT systems and processes to develop, implement, and operate
the Prescription Drug File in order to meet the requirements in the
final rules. The Departments estimate that each issuer or TPA will
require a Project Manager/Team Lead 260 hours (at $153 per hour), a
Scrum Master 260 hours (at $105 per hour), an Application Developer,
Senior 520 hours (at $143 per hour), a Business Analyst 520 hours (at
$120 per hour), and a DevOps Engineer 260 hours (at $181 per hour) to
complete this task. The total one-time first year burden for each
issuer or TPA is estimated to be approximately 1,820 hours, with an
equivalent associated cost of approximately $250,900. For all 1,959
issuers and TPAs, the Departments estimate the total one-time first
year burden will be 3,565,380 hours, with an associated estimated cost
of approximately $491,513,100. The Departments emphasize that these are
upper bound estimates that are meant to be sufficient to cover
substantial, complex activities that may be necessary for some plans
and issuers to comply with the final rules due to the manner in which
their current systems are designed. Such activities may include such
significant activity as the design and implementation of databases that
will support the production of the Prescription Drug File.
Table 20A--Estimated One-Time Year One Cost and Hour Burden per Issuer or TPA for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 260 $153.00 $39,780.00
Scrum Master................................................. 260 105.00 27,300.00
Application Developer, Senior................................ 520 143.00 74,360.00
Business Analyst............................................. 520 120.00 62,400.00
[[Page 72289]]
DevOps Engineer.............................................. 260 181.00 47,060.00
--------------------------------------------------
Total per Respondent..................................... 1,820 ............... 250,900.00
----------------------------------------------------------------------------------------------------------------
Table 20B--Estimated One-Time Year One Cost and Hour Burden for All Issuers and TPAs for the Prescription Drug
File
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 1,959 1,820 3,565,380 $491,513,100.00
----------------------------------------------------------------------------------------------------------------
In addition to the one-time year one costs estimated in Tables 20A
and 20B, issuers and TPAs will incur additional year two burdens and
costs to update the required Prescription Drug File monthly. The
Departments estimate that for each month, each issuer or TPA will
require a Project Manager/Team Lead 22 hours (at $153 per hour), an
Application Developer, Senior 22 hours (at $143 per hour), a Business
Analyst 9 hours (at $120 per hour) and a DevOps Engineer 22 hours (at
$181 per hour) to make the required updates and needed adjustments to
the Prescription Drug File. The Departments estimate that each issuer
or TPA will incur a monthly, year two, burden of 75 hours, with an
associated monthly cost of approximately $11,574 to update the
Prescription Drug File. Each issuer or TPA will need to update the
Prescription Drug File 12 times during a given year, resulting in a
year two burden of 900 hours, with an associated equivalent cost of
approximately $138,888. The Departments estimate the total year two
burden for all 1,959 issuers and TPAs will be 1,763,100 hours, with an
associated equivalent cost of approximately $272,081,592. The
Departments consider this estimate to be an upper-bound estimate and
expect ongoing update costs to decline in succeeding years as issuers
and TPAs gain efficiencies and experience in updating and managing the
Prescription Drug File.
Table 21A--Estimated Monthly Year Two Cost and Hour Burden per Issuer or TPA for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.................................... 22 $153.00 $3,366.00
Application Developer, Senior................................ 22 143.00 3,146.00
Business Analyst............................................. 9 120.00 1,080.00
DevOps Engineer.............................................. 22 181.00 3,982.00
--------------------------------------------------
Total per Respondent..................................... 75 ............... 11,574.00
----------------------------------------------------------------------------------------------------------------
Table 21B--Estimated Year Two Cost and Hour Burden for All Issuers and TPAs for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 23,508 900 1,763,100 $272,081,592.00
----------------------------------------------------------------------------------------------------------------
In addition to the one-time year one and monthly year two costs
estimated in Tables 20A, 20B, 21A and 21B, in subsequent years, issuers
and TPAs will incur ongoing monthly burdens and costs to update and
maintain the Prescription Drug File on a monthly basis. The Departments
estimate that each issuer or TPA will require a Scrum Master 9 hours
(at $153 per hour) and an Application Developer, Senior 22 hours (at
$143 per hour) to make the required updates to the Prescription Drug
File. The Departments estimate that each issuer or TPA will incur a
monthly burden of 31 hours, with an associated cost of approximately
$4,523, to update the Prescription Drug File. An issuer or TPA will
need to update the Prescription Drug File 12 times during a given year,
resulting in an ongoing annual burden of 372 hours, with an associated
equivalent cost of approximately $54,276. The Departments estimate the
total annual burden for all 1,959 issuers and TPAs will be 728,748
hours, with an associated equivalent cost of approximately
$106,326,680. The Departments consider this estimate to be an upper-
bound estimate and expect ongoing update costs to decline in succeeding
years as issuers and TPAs gain efficiencies and experience in updating
and managing Prescription Drug File.
[[Page 72290]]
Table 22A--Estimated Monthly Ongoing Cost and Hour Burden per Issuer or TPA for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
Burden hours Labor cost per Total cost per
Occupation per respondent hour respondent
----------------------------------------------------------------------------------------------------------------
Scrum Master................................................. 9 $153.00 $1,377.00
Application Developer, Senior................................ 22 143.00 3,146.00
--------------------------------------------------
Total per Respondent..................................... 31 ............... 4,523.00
----------------------------------------------------------------------------------------------------------------
Table 22B--Estimated Annual Ongoing Cost and Hour Burden for All Issuers and TPAs for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
Burden hours per
Number of respondents Number of responses respondent Total burden hours Total cost
----------------------------------------------------------------------------------------------------------------
1,959 23,508 372 728,748 $106,326,684.00
----------------------------------------------------------------------------------------------------------------
The Departments estimate the total one-time year one burden for all
issuers and TPAs will be 3,565,380 hours, with an associated equivalent
cost of approximately $491,513,100 to develop and build the
Prescription Drug File in a machine-readable format. In year two, the
Departments estimate the burden and costs to update and maintain the
Prescription Drug File, on a monthly basis, for all issuers and TPAs to
be 1,763,100 hours, with an associated equivalent cost of approximately
$272,081,592. In subsequent years, the Departments estimate the total
annual burden of 728,748 hours to maintain and update the Prescription
Drug File, with an annual associated equivalent cost of approximately
$106,326,684. The Departments estimate the three-year average annual
total burden, for all issuers and TPAs, will be 2,019,076 hours with an
average annual associated equivalent total cost of $289,973,792.
Table 23--Estimated Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs To Develop and Maintain the Prescription Drug File
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated number Burden per
Year of issuers and Responses respondent Total annual Total estimated labor
TPAs (hours) burden (hours) cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021................................................... 1,959 1,959 1,820 3,565,380 $491,513,100.00
2022................................................... 1,959 23,508 900 1,763,100 272,081,592.00
2023................................................... 1,959 23,508 372 728,748 106,326,684.00
3 year Average......................................... 1,959 16,325 1,031 2,019,076 289,973,792.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
Due to comments received in response to the proposed rules, the
Departments have made changes to the final rules and the ICR sections
discussed above. The Departments seek comment regarding the changes
associated with these ICR sections. The Departments also seek comment
on the use of the CALC database, as discussed in section VI.A, to
determine occupational descriptions and hourly wage rates. The
Departments seek comment on the revised costs and burdens discussed in
section VI.A.1 as they relate to the required internet-based self-
service tool. The Departments also seek comment on model language
developed by the Departments, as discussed in section II.B.1.g of this
preamble, to meet the requirements of the final rule. The Departments
also seek comment on the revised costs and burdens, as discussed in
section VI.A.2, related to the requirements for the public disclosure
of In-network Rate, Allowed Amount, and Prescription Drug Files.
Additionally, the Departments seek comment on the data element changes
associated with those collection instruments. For the In-network Rate
File, the Departments seek comment regarding the data elements added to
the collection instrument; specifically, addition of data elements
including the TIN, Place of service code, derived amount, underlying
fee schedule rates, payment arrangement indicator, the use of base
negotiated rates (for certain reimbursement models), and other data
elements discussed in section C.1.c of this preamble. The Departments
also seek comment on the Allowed Amount File regarding the addition of
data elements including the TIN, NPI, and billed charges associated
with allowed amounts. The Departments seek comment on all data elements
discussed in section C.1.c of this preamble as they relate to the
Prescription Drug File, as well as the estimated costs and burdens
estimated above.
In association with amendments made to the final rules, CMS is
seeking OMB approval for the information collection requirements
associated with OMB control number 0938-1372 (CMS-10715--Transparency
in Coverage). Comments will be solicited through a 60-day Federal
Register notice, in accordance with Section 3506(c)(2)(A) of the
Paperwork Reduction Act. Data collection requirements associated with
the internet-based self-service tool, In-network Rate, Allowed Amount,
and Prescription Drug Files will not be effective until OMB approval is
sought. The Department of Labor and the Department of the Treasury will
submit their burden estimates upon approval.
2. ICRs Regarding Medical Loss Ratio (45 CFR 158.221)
HHS is finalizing its proposal to amend 45 CFR 158.221(b) to allow
health insurance issuers offering group or individual health insurance
coverage to include in the MLR numerator ``shared savings'' payments
made to
[[Page 72291]]
enrollees as a result of the enrollee choosing to obtain health care
from a lower-cost, higher-value provider. HHS does not anticipate that
implementing this provision will require significant changes to the MLR
Annual Reporting Form or will significantly change the associated
burden. The burden related to this collection is currently approved
under OMB Control Number 0938-1164 (Exp. 10/31/2020); Medical Loss
Ratio Annual Reports, MLR Notices, and Recordkeeping Requirements (CMS-
10418).
3. Summary of Annual Burden Estimates for Requirements
Table 24--Estimated Three Year Average Proposed Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total
OMB control Number of Number of Burden per annual Labor cost of Mailing
Regulation section(s) number respondents responses response burden reporting ($) cost ($) Total cost ($)
(hours) (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. Sec. 54.9815- 0938-1372* 1,959 1,959 23,313 45,670,820 $6,388,837,830.32 $0 $6,388,837,830.32
2715A2(b)(2)(i); 2590.715-
2715A2(b)(2)(i); and
147.211(b)(2)(i).
Sec. Sec. 54.9815- 0938-1372 1,306 84,926 11 21,231 849,256.00 39,065.78 888,321.78
2715A2(b)(2)(ii); 2590.715-
2715A2(b)(2)(ii); and
147.211(b)(2)(ii).
Sec. Sec. 54.9815- 0938-1372 1,959 16,325 3,199 6,266,188 848,390,660.00 0 848,390,660.00
2715A3(b)(i); 2590.715-
2715A3(b)(i); and
147.212(b)(1)(i).
Sec. Sec. 54.9815- 0938-1372 1,959 16,325 1,651 3,233,656 453,887,240.00 0 453,887,240.00
2715A3(b)(1)(ii); 2590.715-
2715A3(b)(1)(ii); and
147.212(b)(1)(ii).
Sec. Sec. 54.9815- 0938-1372 1,959 16,325 1,031 2,019,076 289,973,792.00 0 289,973,792.00
2715A3(b)(1)(iii); 2590.715-
2715A3(b)(1)(iii); and
147.212(b)(1)(iii).
Total...................... ................ ........... 135,860 29,204 57,210,971 7,981,938,778.32 39,065.78 7,981,977,844.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
* High-end three year estimated values are represented in the table and used to determine the overall estimated 3-year average.
For PRA purposes, the Departments are splitting the burden: CMS
will account for 50 percent of the associated costs and burdens and the
Departments of Labor and the Department of the Treasury will each
account for 25 percent of the associated costs and burdens. The burden
for CMS will be 28,605,486 hours, with an equivalent associated cost of
approximately $3,990,969,389 and a cost burden of $19,533. For the
Departments of Labor and the Treasury, each Department will account for
a burden of 14,302,743 hours with an equivalent associated cost of
approximately $1,995,484,695 and a cost burden of $9,766.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act, (5 U.S.C. 601, et seq.), requires
agencies to prepare a final regulatory flexibility analysis to describe
the impact of proposed rules on small entities, unless the head of the
agency can certify that the rule would not have a significant economic
impact on a substantial number of small entities. The RFA generally
defines a ``small entity'' as (1) a proprietary firm meeting the size
standards of the Small Business Administration (SBA), (2) a not-for-
profit organization that is not dominant in its field, or (3) a small
government jurisdiction with a population of less than 50,000. States
and individuals are not included in the definition of ``small entity.''
HHS uses a change in revenues of more than three to five percent as
its measure of significant economic impact on a substantial number of
small entities.
The final rules require that group health plans and health
insurance issuers disclose to a participant, beneficiary, or enrollee
such individual's cost-sharing information for covered items or
services from a particular provider or providers; to make public in-
network rates, including amounts in underlying fee schedules,
negotiated rates, and derived amounts for in-network providers;
historical allowed amounts paid to out-of-network providers and billed
charges for all covered items and services; and negotiated rates and
historical net prices for prescription drugs. The Departments are of
the view issuers generally exceed the size thresholds for ``small
entities'' established by the SBA, so the Departments are not of the
view that an initial regulatory flexibility analysis is required for
such firms. ERISA-covered plans are often small entities, however.
While the Departments are of the view that these plans would rely on
the larger issuers or TPAs to comply with the final rules, they would
still experience increased costs because the costs of complying with
these requirements will likely be passed on to them. However, as
discussed in more detail later in this section of this preamble, the
Departments are not of the view that the additional costs meet the
significant impact requirement. In addition, while the requirements of
the final rules do not apply to providers, providers may experience a
loss in revenue as a result of the demands of price sensitive consumers
and plans, and because smaller issuers may be unwilling to continue
paying higher rates than larger issuers for the same items and
services. The Departments are of the view that issuers would be
classified under the North American Industry Classification System code
524114 (Direct Health and Medical Insurance Carriers). According to SBA
size standards, entities with average annual receipts of $41.5 million
or less would be considered small entities under North American
Industry Classification System codes. Issuers could possibly be
classified under code 621491 (HMO Medical Centers) and, if this is the
case, the SBA size standard would be $35 million or less.\294\ The
Departments are of the view that few, if any, insurance companies
underwriting comprehensive health insurance policies (in contrast, for
example, to travel insurance policies or dental discount policies) fall
below these size thresholds. Based on data from MLR annual report
submissions for the 2017 MLR reporting year, approximately 90 out of
500 issuers of health insurance coverage nationwide had total premium
revenue of $41.5 million or less. \295\ This estimate likely overstates
the actual
[[Page 72292]]
number of small health insurance issuers that may be affected, since
over 72 percent of these small issuers belong to larger holding groups,
and most, if not all, of these small issuers are likely to have non-
health lines of business that will result in their revenues exceeding
$41.5 million. The Departments are of the view that these same
assumptions also apply to the TPAs that would be affected by the final
rules. The Departments do not expect any of these 90 potentially small
entities to experience a change in rebates under the amendments to the
MLR provisions of the final rules in 45 CFR part 158. The Departments
acknowledge that it may be likely that a number of small entities might
enter into contracts with other entities in order to meet the
requirements in the final rules, perhaps allowing for the development
of economies of scale. Due to the lack of knowledge regarding what
small entities may decide to do in order to meet these requirements and
any costs they might incur related to contracts, the Departments sought
comment on ways that the final rules will impose additional costs and
burdens on small entities and how many would be likely to engage in
contracts to meet the requirements.
---------------------------------------------------------------------------
\294\ ``Table of Small Business Size Standards Matched to North
American Industry Classification System Codes.'' United States Small
Business Administration. Available at: https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf.
\295\ ``Medical Loss Ratio Data and System Resources.'' CCIIO.
Available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.
---------------------------------------------------------------------------
The Departments received a number of comments related to the
potential additional costs, burdens, and other effects the final rules
could have on small entities. These comments have been noted and
addressed in the RIA and ICR sections titled Regarding Requirements for
Public Disclosure of In-network Rates, Historical Allowed Amount Data
for Covered Items and Services from Out-of-Network Providers and
Prescription Drug Pricing Information; Requirements for Disclosing
Cost-sharing information to Participant, Beneficiaries, or Enrollees;
and the Applicability Date section of this preamble.
For purposes of the RFA, the DOL continues to consider a small
entity to be an employee benefit plan with fewer than 100
participants.\296\ Furthermore, while some large employers may have
small plans, most small plans are maintained by small employers.
---------------------------------------------------------------------------
\296\ The basis for this definition is found in section
104(a)(2) of ERISA, which permits the Secretary of Labor to
prescribe simplified annual reports for pension plans that cover
fewer than 100 participants.
---------------------------------------------------------------------------
Thus, the Departments are of the view that assessing the impact of
the final rules on small plans is an appropriate substitute for
evaluating the effect on small entities. The definition of small entity
considered appropriate for this purpose differs, however, from a
definition of small business that is based on size standards
promulgated by the SBA (13 CFR 121.201) pursuant to the Small Business
Act (15 U.S.C. 631, et seq.). Therefore, EBSA requested comments on the
appropriateness of the size standard used in evaluating the impact of
the final rules on small entities. Using the DOL definition of small,
about 2,160,743 of the approximately 2,327,339 plans are small
entities. Using a threshold approach, if the total costs of the final
rules are spread evenly across all 1,754 issuers, 205 TPAs, and
2,327,339 ERISA health plans, without considering size, using the
three-year average costs, the per-entity costs could be $3,426.77
($7,981,977,844.10/2,329,298). If those costs are spread evenly across
the estimated 212.3 million beneficiaries, participants, or enrollees
\297\ enrolled in plans or issuers required to comply with the
requirements then the average cost per covered individual would be
$37.60 ($7,981,977,844.102/212.3 million). Neither the cost per entity
nor the cost per covered individual is a significant impact. Further,
the costs estimated in section VI in this preamble may be overstated as
it is assumed that all of issuers and TPAs will build the internet-
based self-service tool and the machine-readable files, compile the
appropriate data, and perform the required updates themselves rather
than using common third parties such as clearinghouses, as discussed in
section II.C in this preamble. If private health insurance transactions
are processed through clearinghouses, with at least the fields required
in the machine-readable files, there could be an unaccounted for source
of savings, as clearinghouses may already process much of the data that
issuers and TPAs would be required to collect under the final rules.
---------------------------------------------------------------------------
\297\ Id. at 272.
---------------------------------------------------------------------------
In addition, section 1102(b) of the SSA (42 U.S.C. 1302) requires
the Departments to prepare a regulatory impact analysis if a rule may
have a significant impact on the operations of a substantial number of
small rural hospitals. This analysis must conform to the provisions of
section 604 of the RFA. For purposes of section 1102(b) of the SSA, the
Departments define a small rural hospital as a hospital that is located
outside of a metropolitan statistical area and has fewer than 100 beds.
As noted and addressed in section II.B.2.C in this preamble,
commenters expressed concerns that exposure of in-network rates could
have various unintended consequences on the health care industry, group
health plans and health insurance issuers, and providers. Also as
discussed in the sections VI.A.2, one commenter stated that the
proposed rules would create administrative burdens for hospitals as
hospitals would be required to make massive investments to provide the
data required under the final rules. The Departments note that the
final rules do not explicitly apply to hospitals and do not agree that
hospitals will require massive investments to comply with the final
rules, as opposed to the potential costs they could incur in order to
comply with the Hospital Price Transparency final rule. Furthermore,
the Departments recognize that while the requirements of the final
rules do not apply to providers, including hospitals, some providers
may experience a loss in revenue as a result of the demands of price
sensitive consumers. The Departments also recognize that while the
requirements in the final rules may result in instances where small
rural hospitals face additional costs and burdens due to their size and
the market dynamics in their areas, the generally reduced competition
amongst rural hospitals, due to the overall lower number of hospitals
in these areas, will provide them more leverage when negotiating with
issuers. Nonetheless, some rural hospitals may see their costs increase
if the lack of competition results in these hospitals being unable to
negotiate more favorable terms with plans and issuers. This dynamic
could result in some small rural hospitals seeing their revenue
decrease as reimbursement rates decline and overall costs increase,
though rural hospitals could also see reduced costs and burdens if they
are able to successfully negotiate more favorable network contracts.
Due to a lack of information and overall knowledge, the Departments are
not able to confidently estimate the effects the final rules will have
on small rural hospitals; however, the Departments are of the view that
the final rules will not have a significant impact on the operations of
a substantial number of small rural hospitals.
Impact of Regulations on Small Business--Department of the Treasury
Pursuant to section 7805(f) of the Code, the proposed rules that
preceded the final rules were submitted to the Chief Counsel for
Advocacy of the SBA for comment on their impact on small businesses,
and no comments were received.
C. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated
[[Page 72293]]
costs and benefits and take certain actions before issuing a final rule
that includes any Federal mandate that may result in expenditures in
any one year by a state, local, or tribal governments, in the
aggregate, or by the private sector, of $100 million in 1995 dollars,
updated annually for inflation. In 2020, that threshold is
approximately $156 million.
State, local, or tribal governments may incur costs to enforce some
of the requirements of the final rules. The final rules include
instructions for disclosures that would affect private sector firms
(for example, issuers offering health insurance coverage in the
individual and group markets, and TPAs providing administrative
services to group health plans). The Departments acknowledge that state
governments could incur costs associated with enforcement of sections
within the final rules and, although the Departments have not been able
to quantify all costs, the Departments expect the combined impact on
state, local, and tribal governments to be below the threshold. The
costs incurred by the private sector have been previously discussed in
Collection of Information Requirements sections.
One commenter contended that due to the requirement to make the
machine-readable files publicly available, issuers would also be
required to post files with complete negotiated payment amount
information, and that these files would be very complex, with thousands
of procedure codes and many different plans and networks offered by
issuers. The commenter further contended that due to the complexity and
size of the files significant state resources would be required to
review these files in order to ensure their accuracy, completeness, and
timeliness. They contended that without funding states will be
challenged in maintaining effective enforcement and urged the
Departments to consider providing grants to states to cover the cost of
enforcing any final rules.
The Departments recognize that due to size and complexity of the
machine-readable files required some states will incur increased
burdens and costs to review and ensure compliance with the requirements
in the final rules. However, at this time, the Departments do not have
available funding to provide grants to assist states in their efforts.
The Departments will take it under consideration and evaluate the
potential necessity to provide grants to assist states in their efforts
should a significant need arise. The Departments expect that a number
of states with the requisite authority to enforce the provisions of the
final rules may defer enforcement to Federal regulators because of lack
of funds.
D. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it issues a final rule that imposes substantial
direct costs on state and local governments, preempts state law, or
otherwise has federalism implications. Federal agencies promulgating
regulations that have federalism implications must consult with state
and local officials and describe the extent of their consultation and
the nature of the concerns of state and local officials in this
preamble to the regulation.
In the Departments' view, the final rules may have federalism
implications, because they would have direct effects on the states, the
relationship between national governments and states, and on the
distribution of power and responsibilities among various levels of
government relating to the disclosure of health insurance coverage
information to the public.
Under the final rules, all group health plans and health insurance
issuers, including self-insured, non-Federal governmental group health
plans as defined in section 2791 of the PHS Act, will be required to
develop an internet-based self-service tool to disclose to a
participant, beneficiary, or enrollee, the consumer-specific estimated
cost-sharing liability for covered items or services from a particular
provider and also to provide this information by mail upon request. The
final rules also require plans and issuers to disclose provider in-
network rates, historical data on out-of-network allowed amounts, and
negotiated rates and historical net prices for prescription drugs
through digital files in a machine-readable format posted publicly on
an internet website. Such Federal standards developed under section
2715A of the PHS Act preempt any related state standards that require
pricing information to be disclosed to the participant, beneficiary, or
enrollee, or otherwise publicly disclosed, to the extent the state
disclosure requirements would provide less information to the consumer
or the public than what is required under the final rules.
The Departments are of the view that the final rules may have
federalism implications based on the required disclosure of pricing
information, as the Departments are aware of at least 28 states that
have passed some form of price-transparency legislation, such as all-
payer claims databases, consumer-facing price comparison tools, and the
right to shop programs.\298\ Under these state provisions, state
requirements vary broadly in terms of the level of disclosure
required.\299\ Some states list the price for each individual service,
whereas some states list the aggregate costs across providers and over
time to measure the price associated with an episode of illness. States
also differ in terms of the dissemination of the information. For
example, California mandates that uninsured patients receive estimated
prices upon request. In contrast, other states use websites or software
applications that allow consumers to compare prices across providers.
Only seven states have published the pricing information of issuers on
consumer-facing public websites.\300\ Therefore, the final rules may
require a higher level of disclosure by plans and issuers than some
state laws.
---------------------------------------------------------------------------
\298\ ``Transparency of Health Costs; State Actions.'' National
Conference of State Legislatures. March 2017. Available at: https://www.ncsl.org/research/health/transparency-and-disclosure-health-costs.aspx.
\299\ Mehrotra, A., Chernew, M., and Sinaiko, A. ``Promise and
Reality of Price Transparency.'' 14 N. Engl. J. Med. 378. April 5,
2018. Available at: https://www.nejm.org/doi/full/10.1056/NEJMhpr1715229.
\300\ Evans, M. ``One State's Effort to Publicize Hospital
Prices Brings Mixed Results.'' Wall Street Journal. June 26, 2019.
Available at: https://www.wsj.com/articles/one-states-effort-to-publicize-hospital-prices-brings-mixed-results-11561555562.
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One commenter asked that the Departments clarify their intentions
regarding Federal preemption with respect to state laws that conflict
with the final rules. Congress passed PPACA to improve the health
insurance markets on a nationwide basis. King. v. Burwell, 135 S. Ct.
2480, 2496 (2015). Under section 1321(d) of PPACA and section 2724(a)
of the PHS Act, nothing in these regulations would preempt state law
unless such state law prevents the application of the applicable
Federal requirement. Based on this legal context, the Departments
intend the implementation of the rules to preempt state law to the
extent enforcement of state law would prevent the application of
PPACA.\301\ To the extent the final rules preempt state law, they do so
under well-settled law.
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\301\ See section 1321(d) of PPACA (``Nothing in this title
shall be construed to preempt any State law that does not prevent
the application of the provisions of this title.)
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In general, through section 514, ERISA supersedes state laws to the
extent that they relate to any covered employee benefit plan, and
preserves state laws that regulate insurance, banking, or securities.
Furthermore, the preemption provisions of section 731 of ERISA and
section 2724 of the PHS Act
[[Page 72294]]
(implemented in 29 CFR 2590.731(a) and 45 CFR 146.143(a)) apply so that
the HIPAA requirements (including those of PPACA) are not to be
``construed to supersede any provision of state law which establishes,
implements, or continues in effect any standard or requirement solely
relating to issuers in connection with group health insurance coverage
except to the extent that such standard or requirement prevents the
application of a `requirement' of a federal standard.'' The conference
report accompanying HIPAA indicates that this preemption is intended to
be the ``narrowest'' preemption of states laws (See House Conf. Rep.
No. 104-736, at 205, reprinted in 1996 U.S. Code Cong. & Admin. News
2018). States may therefore continue to apply state law requirements to
issuers except to the extent that such requirements prevent the
application of PPACA requirements that are the subject of this
rulemaking. Accordingly, states have significant latitude to impose
requirements on issuers that are more restrictive than the Federal law.
In compliance with the requirement of Executive Order 13132 that
agencies examine closely any policies that may have federalism
implications or limit the policy making discretion of the states, the
Departments have engaged in efforts to consult with and work
cooperatively with affected states, including participating in
conference calls with and attending conferences of NAIC, and consulting
with state insurance officials on an individual basis. The Departments
intend to act in a similar fashion in enforcing PPACA, including the
provisions of section 2715A of the PHS Act. While developing the final
rules, the Departments attempted to balance the states' interests in
regulating issuers with Congress' intent to provide an improved level
of price transparency to the public in every state. By doing so, it is
the Departments' view that they have complied with the requirements of
Executive Order 13132.
Pursuant to the requirements set forth in section 8(a) of Executive
Order 13132, and by the signatures affixed to the final rules, the
Departments certify that the Department of the Treasury, Employee
Benefits Security Administration, and the CMS have complied with the
requirements of Executive Order 13132 for the final rules in a
meaningful and timely manner.
E. Congressional Review Act
The final rules are subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can
take effect, the Federal agency promulgating the rule shall submit to
each House of the Congress and to the Comptroller General a report
containing a copy of the rule along with other specified information.
Therefore, the final rules have been transmitted to the Congress and
the Comptroller General. Pursuant to the Congressional Review Act, the
Office of Information and Regulatory Affairs designated the final rules
as ``major rules'' as that term is defined in 5 U.S.C. 804(2), because
it is likely to result in an annual effect on the economy of $100
million or more. In accordance with the provisions of Executive Order
12866, this regulation was reviewed by the Office of Management and
Budget.
F. Reducing Regulation and Controlling Regulatory Costs
Executive Order 13771, titled Reducing Regulation and Controlling
Regulatory Costs, was issued on January 30, 2017. Section 2(a) of
Executive Order 13771 requires an agency, unless prohibited by law, to
identify at least two existing regulations to be repealed when the
agency publicly proposes for notice and comment, or otherwise issues, a
new regulation. In furtherance of this requirement, section 2(c) of
Executive Order 13771 requires that the new incremental costs
associated with new regulations shall, to the extent permitted by law,
be offset by the elimination of existing costs associated with at least
two prior regulations.
The final rules are considered an Executive Order 13771 regulatory
action. The Departments estimate that these rules will generate
$3,489.71 million in costs in 2021, $10,761.15 million in 2022, $6,569
million in 2023, and annual costs of approximately $2,330 million
thereafter. Discounted at 7 percent relative to year 2016, over a
perpetual time horizon the annualized value of these costs is $2,413.54
million. Details on the estimated costs of the final rules can be found
in the preceding analyses.
VII. Statutory Authority
The Department of the Treasury regulations are adopted pursuant to
the authority contained in sections 7805 and 9833 of the Code.
The Department of Labor regulations are adopted pursuant to the
authority contained in 29 U.S.C. 1135, 1185d, and 1191c; and Secretary
of Labor's Order 1-2011, 77 FR 1088 (Jan. 9, 2012).
The Department of Health and Human Services regulations are adopted
pursuant to the authority contained in sections 1311 of PPACA, 2701
through 2763, 2791, 2792, and 2794 of the PHS Act (42 U.S.C. 300gg
through 300gg-63, 300gg-91, 300gg-92, and 300gg-94), as amended.
List of Subjects
26 CFR Part 54
Excise taxes, Health care, Health insurance, Pensions, Reporting
and recordkeeping requirements.
29 CFR Part 2590
Continuation coverage, Disclosure, Employee benefit plans, Group
health plans, Health care, Health insurance, Medical child support,
Reporting and recordkeeping requirements.
45 CFR Part 147
Health care, Health insurance, Reporting and recordkeeping
requirements, State regulation of health insurance.
45 CFR Part 158
Administrative practice and procedure, Claims, Health care, Health
insurance, Penalties, Reporting and recordkeeping requirements.
Sunita Lough,
Deputy Commissioner for Services and Enforcement, Internal Revenue
Service.
Approved: October 28, 2020.
David J. Kautter,
Assistant Secretary of the Treasury (Tax Policy).
Signed at Washington DC, this 30th day of October, 2020.
Jeanne Klinefelter Wilson,
Acting Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
Dated: October 8, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: October 20, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Amendments to the Regulations
For the reasons set forth in this preamble, the Department of the
Treasury amends 26 CFR part 54 as set forth below:
PART 54--PENSION EXCISE TAXES
0
Par. 1. The authority citation for part 54 is amended by adding an
entry for Sec. Sec. 54.9815-2715A1, 54.9815-2715A2, and 54.9815-2715A3
in numerical order to read in part as follows:
[[Page 72295]]
Authority: 26 U.S.C. 7805, unless otherwise noted.
* * * * *
Sections 54.9815-2715A1, 54.9815-2715A2, and 54.9815-2715A3 are
also issued under 26 U.S.C. 9833;
* * * * *
0
Par. 2. Sections 54.9815-2715A1, 54.9815-2715A2, and 54.9815-2715A3 are
added to read as follows:
Sec. 54.9815-2715A1 Transparency in coverage--definitions.
(a) Scope and definitions--(1) Scope. This section sets forth
definitions for the price transparency requirements for group health
plans and health insurance issuers offering group health insurance
coverage established in this section and Sec. Sec. 54.9815-2715A2 and
54.9815-2715A3.
(2) Definitions. For purposes of this section and Sec. Sec.
54.9815-2715A2 and 54.9815-2715A3, the following definitions apply:
(i) Accumulated amounts means:
(A) The amount of financial responsibility a participant or
beneficiary has incurred at the time a request for cost-sharing
information is made, with respect to a deductible or out-of-pocket
limit. If an individual is enrolled in other than self-only coverage,
these accumulated amounts shall include the financial responsibility a
participant or beneficiary has incurred toward meeting his or her
individual deductible or out-of-pocket limit, as well as the amount of
financial responsibility that all the individuals enrolled under the
plan or coverage have incurred, in aggregate, toward meeting the other
than self-only deductible or out-of-pocket limit, as applicable.
Accumulated amounts include any expense that counts toward a deductible
or out-of-pocket limit (such as a copayment or coinsurance), but
exclude any expense that does not count toward a deductible or out-of-
pocket limit (such as any premium payment, out-of-pocket expense for
out-of-network services, or amount for items or services not covered
under the group health plan or health insurance coverage); and
(B) To the extent a group health plan or health insurance issuer
imposes a cumulative treatment limitation on a particular covered item
or service (such as a limit on the number of items, days, units,
visits, or hours covered in a defined time period) independent of
individual medical necessity determinations, the amount that has
accrued toward the limit on the item or service (such as the number of
items, days, units, visits, or hours the participant or beneficiary,
has used within that time period).
(ii) Beneficiary has the meaning given the term under section 3(8)
of the Employee Retirement Income Security Act of 1974 (ERISA).
(iii) Billed charge means the total charges for an item or service
billed to a group health plan or health insurance issuer by a provider.
(iv) Billing code means the code used by a group health plan or
health insurance issuer or provider to identify health care items or
services for purposes of billing, adjudicating, and paying claims for a
covered item or service, including the Current Procedural Terminology
(CPT) code, Healthcare Common Procedure Coding System (HCPCS) code,
Diagnosis-Related Group (DRG) code, National Drug Code (NDC), or other
common payer identifier.
(v) Bundled payment arrangement means a payment model under which a
provider is paid a single payment for all covered items and services
provided to a participant or beneficiary for a specific treatment or
procedure.
(vi) Copayment assistance means the financial assistance a
participant or beneficiary receives from a prescription drug or medical
supply manufacturer towards the purchase of a covered item or service.
(vii) Cost-sharing liability means the amount a participant or
beneficiary is responsible for paying for a covered item or service
under the terms of the group health plan or health insurance coverage.
Cost-sharing liability generally includes deductibles, coinsurance, and
copayments, but does not include premiums, balance billing amounts by
out-of-network providers, or the cost of items or services that are not
covered under a group health plan or health insurance coverage.
(viii) Cost-sharing information means information related to any
expenditure required by or on behalf of a participant or beneficiary
with respect to health care benefits that are relevant to a
determination of the participant's or beneficiary's cost-sharing
liability for a particular covered item or service.
(ix) Covered items or services means those items or services,
including prescription drugs, the costs for which are payable, in whole
or in part, under the terms of a group health plan or health insurance
coverage.
(x) Derived amount means the price that a group health plan or
health insurance issuer assigns to an item or service for the purpose
of internal accounting, reconciliation with providers, or submitting
data in accordance with the requirements of 45 CFR 153.710(c).
(xi) Historical net price means the retrospective average amount a
group health plan or health insurance issuer paid for a prescription
drug, inclusive of any reasonably allocated rebates, discounts,
chargebacks, fees, and any additional price concessions received by the
plan or issuer with respect to the prescription drug. The allocation
shall be determined by dollar value for non-product specific and
product-specific rebates, discounts, chargebacks, fees, and other price
concessions to the extent that the total amount of any such price
concession is known to the group health plan or health insurance issuer
at the time of publication of the historical net price in a machine-
readable file in accordance with Sec. 54.9815-2715A3. However, to the
extent that the total amount of any non-product specific and product-
specific rebates, discounts, chargebacks, fees, or other price
concessions is not known to the group health plan or health insurance
issuer at the time of file publication, then the plan or issuer shall
allocate such rebates, discounts, chargebacks, fees, and other price
concessions by using a good faith, reasonable estimate of the average
price concessions based on the rebates, discounts, chargebacks, fees,
and other price concessions received over a time period prior to the
current reporting period and of equal duration to the current reporting
period, as determined under Sec. 54.9815-2715A3(b)(1)(iii)(D)(3).
(xii) In-network provider means any provider of any item or service
with which a group health plan or health insurance issuer, or a third
party for the plan or issuer, has a contract setting forth the terms
and conditions on which a relevant item or service is provided to a
participant or beneficiary.
(xiii) Items or services means all encounters, procedures, medical
tests, supplies, prescription drugs, durable medical equipment, and
fees (including facility fees), provided or assessed in connection with
the provision of health care.
(xiv) Machine-readable file means a digital representation of data
or information in a file that can be imported or read by a computer
system for further processing without human intervention, while
ensuring no semantic meaning is lost.
(xv) National Drug Code means the unique 10- or 11-digit 3-segment
number assigned by the Food and Drug Administration, which provides a
universal product identifier for drugs in the United States.
[[Page 72296]]
(xvi) Negotiated rate means the amount a group health plan or
health insurance issuer has contractually agreed to pay an in-network
provider, including an in-network pharmacy or other prescription drug
dispenser, for covered items and services, whether directly or
indirectly, including through a third-party administrator or pharmacy
benefit manager.
(xvii) Out-of-network allowed amount means the maximum amount a
group health plan or health insurance issuer will pay for a covered
item or service furnished by an out-of-network provider.
(xviii) Out-of-network provider means a provider of any item or
service that does not have a contract under a participant's or
beneficiary's group health plan or health insurance coverage to provide
items or services.
(xix) Out-of-pocket limit means the maximum amount that a
participant or beneficiary is required to pay during a coverage period
for his or her share of the costs of covered items and services under
his or her group health plan or health insurance coverage, including
for self-only and other than self-only coverage, as applicable.
(xx) Plain language means written and presented in a manner
calculated to be understood by the average participant or beneficiary.
(xxi) Prerequisite means concurrent review, prior authorization,
and step-therapy or fail-first protocols related to covered items and
services that must be satisfied before a group health plan or health
insurance issuer will cover the item or service. The term prerequisite
does not include medical necessity determinations generally or other
forms of medical management techniques.
(xxii) Underlying fee schedule rate means the rate for a covered
item or service from a particular in-network provider, or providers
that a group health plan or health insurance issuer uses to determine a
participant's or beneficiary's cost-sharing liability for the item or
service, when that rate is different from the negotiated rate or
derived amount.
(b) [Reserved]
Sec. 54.9815-2715A2 Transparency in coverage--required disclosures to
participants and beneficiaries.
(a) Scope and definitions--(1) Scope. This section establishes
price transparency requirements for group health plans and health
insurance issuers offering group health insurance coverage for the
timely disclosure of information about costs related to covered items
and services under a group plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 54.9815-2715A1 apply.
(b) Required disclosures to participants and beneficiaries. At the
request of a participant or beneficiary who is enrolled in a group
health plan, the plan must provide to the participant or beneficiary
the information required under paragraph (b)(1) of this section, in
accordance with the method and format requirements set forth in
paragraph (b)(2) of this section.
(1) Required cost-sharing information. The information required
under this paragraph (b)(1) is the following cost-sharing information,
which is accurate at the time the request is made, with respect to a
participant's or beneficiary's cost-sharing liability for covered items
and services:
(i) An estimate of the participant's or beneficiary's cost-sharing
liability for a requested covered item or service furnished by a
provider or providers that is calculated based on the information
described in paragraphs (b)(1)(ii) through (iv) of this section.
(A) If the request for cost-sharing information relates to items
and services that are provided within a bundled payment arrangement,
and the bundled payment arrangement includes items or services that
have a separate cost-sharing liability, the group health plan or health
insurance issuer must provide estimates of the cost-sharing liability
for the requested covered item or service, as well as an estimate of
the cost-sharing liability for each of the items and services in the
bundled payment arrangement that have separate cost-sharing
liabilities. While group health plans and health insurance issuers are
not required to provide estimates of cost-sharing liability for a
bundled payment arrangement where the cost-sharing is imposed
separately for each item and service included in the bundled payment
arrangement, nothing prohibits plans or issuers from providing
estimates for multiple items and services in situations where such
estimates could be relevant to participants or beneficiaries, as long
as the plan or issuer also discloses information about the relevant
items or services individually, as required in paragraph (b)(1)(v) of
this section.
(B) For requested items and services that are recommended
preventive services under section 2713 of the Public Health Service Act
(PHS Act), if the group health plan or health insurance issuer cannot
determine whether the request is for preventive or non-preventive
purposes, the plan or issuer must display the cost-sharing liability
that applies for non-preventive purposes. As an alternative, a group
health plan or health insurance issuer may allow a participant or
beneficiary to request cost-sharing information for the specific
preventive or non-preventive item or service by including terms such as
``preventive'', ``non-preventive'' or ``diagnostic'' as a means to
request the most accurate cost-sharing information.
(ii) Accumulated amounts.
(iii) In-network rate, comprised of the following elements, as
applicable to the group health plan's or health insurance issuer's
payment model:
(A) Negotiated rate, reflected as a dollar amount, for an in-
network provider or providers for the requested covered item or
service; this rate must be disclosed even if it is not the rate the
plan or issuer uses to calculate cost-sharing liability; and
(B) Underlying fee schedule rate, reflected as a dollar amount, for
the requested covered item or service, to the extent that it is
different from the negotiated rate.
(iv) Out-of-network allowed amount or any other rate that provides
a more accurate estimate of an amount a group health plan or health
insurance issuer will pay for the requested covered item or service,
reflected as a dollar amount, if the request for cost-sharing
information is for a covered item or service furnished by an out-of-
network provider; provided, however, that in circumstances in which a
plan or issuer reimburses an out-of-network provider a percentage of
the billed charge for a covered item or service, the out-of-network
allowed amount will be that percentage.
(v) If a participant or beneficiary requests information for an
item or service subject to a bundled payment arrangement, a list of the
items and services included in the bundled payment arrangement for
which cost-sharing information is being disclosed.
(vi) If applicable, notification that coverage of a specific item
or service is subject to a prerequisite.
(vii) A notice that includes the following information in plain
language:
(A) A statement that out-of-network providers may bill participants
or beneficiaries for the difference between a provider's billed charges
and the sum of the amount collected from the group health plan or
health insurance issuer and from the participant or beneficiary in the
form of a copayment or coinsurance amount (the difference referred to
as balance billing), and that the cost-sharing information provided
pursuant to this paragraph (b)(1) does not account for these potential
[[Page 72297]]
additional amounts. This statement is only required if balance billing
is permitted under state law;
(B) A statement that the actual charges for a participant's or
beneficiary's covered item or service may be different from an estimate
of cost-sharing liability provided pursuant to paragraph (b)(1)(i) of
this section, depending on the actual items or services the participant
or beneficiary receives at the point of care;
(C) A statement that the estimate of cost-sharing liability for a
covered item or service is not a guarantee that benefits will be
provided for that item or service;
(D) A statement disclosing whether the plan counts copayment
assistance and other third-party payments in the calculation of the
participant's or beneficiary's deductible and out-of-pocket maximum;
(E) For items and services that are recommended preventive services
under section 2713 of the PHS Act, a statement that an in-network item
or service may not be subject to cost-sharing if it is billed as a
preventive service if the group health plan or health insurance issuer
cannot determine whether the request is for a preventive or non-
preventive item or service; and
(F) Any additional information, including other disclaimers, that
the group health plan or health insurance issuer determines is
appropriate, provided the additional information does not conflict with
the information required to be provided by this paragraph (b)(1).
(2) Required methods and formats for disclosing information to
participants and beneficiaries. The methods and formats for the
disclosure required under this paragraph (b) are as follows:
(i) Internet-based self-service tool. Information provided under
this paragraph (b) must be made available in plain language, without
subscription or other fee, through a self-service tool on an internet
website that provides real-time responses based on cost-sharing
information that is accurate at the time of the request. Group health
plans and health insurance issuers must ensure that the self-service
tool allows users to:
(A) Search for cost-sharing information for a covered item or
service provided by a specific in-network provider or by all in-network
providers by inputting:
(1) A billing code (such as CPT code 87804) or a descriptive term
(such as ``rapid flu test''), at the option of the user;
(2) The name of the in-network provider, if the user seeks cost-
sharing information with respect to a specific in-network provider; and
(3) Other factors utilized by the plan or issuer that are relevant
for determining the applicable cost-sharing information (such as
location of service, facility name, or dosage).
(B) Search for an out-of-network allowed amount, percentage of
billed charges, or other rate that provides a reasonably accurate
estimate of the amount a group health plan or health insurance issuer
will pay for a covered item or service provided by out-of-network
providers by inputting:
(1) A billing code or descriptive term, at the option of the user;
and
(2) Other factors utilized by the plan or issuer that are relevant
for determining the applicable out-of-network allowed amount or other
rate (such as the location in which the covered item or service will be
sought or provided).
(C) Refine and reorder search results based on geographic proximity
of in-network providers, and the amount of the participant's or
beneficiary's estimated cost-sharing liability for the covered item or
service, to the extent the search for cost-sharing information for
covered items or services returns multiple results.
(ii) Paper method. Information provided under this paragraph (b)
must be made available in plain language, without a fee, in paper form
at the request of the participant or beneficiary. In responding to such
a request, the group health plan or health insurance issuer may limit
the number of providers with respect to which cost-sharing information
for covered items and services is provided to no fewer than 20
providers per request. The group health plan or health insurance issuer
is required to:
(A) Disclose the applicable provider-per-request limit to the
participant or beneficiary;
(B) Provide the cost-sharing information in paper form pursuant to
the individual's request, in accordance with the requirements in
paragraphs (b)(2)(i)(A) through (C) of this section; and
(C) Mail the cost-sharing information in paper form no later than 2
business days after an individual's request is received.
(D) To the extent participants or beneficiaries request disclosure
other than by paper (for example, by phone or email), plans and issuers
may provide the disclosure through another means, provided the
participant or beneficiary agrees that disclosure through such means is
sufficient to satisfy the request and the request is fulfilled at least
as rapidly as required for the paper method.
(3) Special rule to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information required by this paragraph (b) in compliance with this
section pursuant to a written agreement. Accordingly, if a health
insurance issuer and a plan sponsor enter into a written agreement
under which the issuer agrees to provide the information required under
this paragraph (b) in compliance with this section, and the issuer
fails to do so, then the issuer, but not the plan, violates the
transparency disclosure requirements of this paragraph (b).
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a pharmacy benefit manager or other third-party) provides the
information required by this paragraph (b) in compliance with this
section. Notwithstanding the preceding sentence, if a group health plan
or health insurance issuer chooses to enter into such an agreement and
the party with which it contracts fails to provide the information in
compliance with this paragraph (b), the plan or issuer violates the
transparency disclosure requirements of this paragraph (b).
(c) Applicability. (1) The provisions of this section apply for
plan years beginning on or after January 1, 2023 with respect to the
500 items and services to be posted on a publicly available website,
and with respect to all covered items and services, for plan years
beginning on or after January 1, 2024.
(2) As provided under Sec. 54.9815-1251, this section does not
apply to grandfathered health plans. This section also does not apply
to health reimbursement arrangements or other account-based group
health plans as defined in Sec. [thinsp]54.9815-2711(d)(6) or short-
term, limited-duration insurance as defined in Sec. 54.9801-2.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized
[[Page 72298]]
representatives to access participant or beneficiary information held
by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph (b) of this section, provided that the plan or
issuer corrects the information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated
or to dissimilar circumstances.
Sec. 54.9815-2715A3 Transparency in coverage--requirements for public
disclosure.
(a) Scope and definitions--(1) Scope. This section establishes
price transparency requirements for group health plans and health
insurance issuers offering group health insurance coverage for the
timely disclosure of information about costs related to covered items
and services under a group plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 54.9815-2715A1 apply.
(b) Requirements for public disclosure of in-network provider rates
for covered items and services, out-of-network allowed amounts and
billed charges for covered items and services, and negotiated rates and
historical net prices for covered prescription drugs. A group health
plan or health insurance issuer must make available on an internet
website the information required under paragraph (b)(1) of this section
in three machine-readable files, in accordance with the method and
format requirements described in paragraph (b)(2) of this section, and
that are updated as required under paragraph (b)(3) of this section.
(1) Required information. Machine-readable files required under
this paragraph (b) that are made available to the public by a group
health plan or health insurance issuer must include:
(i) An in-network rate machine-readable file that includes the
required information under this paragraph (b)(1)(i) for all covered
items and services, except for prescription drugs that are subject to a
fee-for-service reimbursement arrangement, which must be reported in
the prescription drug machine-readable file pursuant to paragraph
(b)(1)(iii) of this section. The in-network rate machine-readable file
must include:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit Health Insurance
Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier
is not available, the 5-digit HIOS identifier, or if no HIOS identifier
is available, the Employer Identification Number (EIN);
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) All applicable rates, which may include one or more of the
following: negotiated rates, underlying fee schedule rates, or derived
amounts. If a group health plan or health insurance issuer does not use
negotiated rates for provider reimbursement, then the plan or issuer
should disclose derived amounts to the extent these amounts are already
calculated in the normal course of business. If the group health plan
or health insurance issuer uses underlying fee schedule rates for
calculating cost sharing, then the plan or issuer should include the
underlying fee schedule rates in addition to the negotiated rate or
derived amount. Applicable rates, including for both individual items
and services and items and services in a bundled payment arrangement,
must be:
(1) Reflected as dollar amounts, with respect to each covered item
or service that is furnished by an in-network provider. If the
negotiated rate is subject to change based upon participant or
beneficiary-specific characteristics, these dollar amounts should be
reflected as the base negotiated rate applicable to the item or service
prior to adjustments for participant or beneficiary-specific
characteristics;
(2) Associated with the National Provider Identifier (NPI), Tax
Identification Number (TIN), and Place of Service Code for each in-
network provider;
(3) Associated with the last date of the contract term or
expiration date for each provider-specific applicable rate that applies
to each covered item or service; and
(4) Indicated with a notation where a reimbursement arrangement
other than a standard fee-for-service model (such as capitation or a
bundled payment arrangement) applies.
(ii) An out-of-network allowed amount machine-readable file,
including:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit HIOS identifier, or,
if the 14-digit HIOS identifier is not available, the 5-digit HIOS
identifier, or, if no HIOS identifier is available, the EIN;
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) Unique out-of-network allowed amounts and billed charges with
respect to covered items or services, furnished by out-of-network
providers during the 90-day time period that begins 180 days prior to
the publication date of the machine-readable file (except that a group
health plan or health insurance issuer must omit such data in relation
to a particular item or service and provider when compliance with this
paragraph (b)(1)(ii)(C) would require the plan or issuer to report
payment of out-of-network allowed amounts in connection with fewer than
20 different claims for payments under a single plan or coverage).
Consistent with paragraph (c)(3) of this section, nothing in this
paragraph (b)(1)(ii)(C) requires the disclosure of information that
would violate any applicable health information privacy law. Each
unique out-of-network allowed amount must be:
(1) Reflected as a dollar amount, with respect to each covered item
or service that is furnished by an out-of-network provider; and
(2) Associated with the NPI, TIN, and Place of Service Code for
each out-of-network provider.
(iii) A prescription drug machine-readable file, including:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit HIOS identifier, or,
if the 14-digit HIOS identifier is not available, the 5-
[[Page 72299]]
digit HIOS identifier, or, if no HIOS identifier is available, the EIN;
(B) The NDC and the proprietary and nonproprietary name assigned to
the NDC by the Food and Drug Administration (FDA) for each covered item
or service that is a prescription drug under each coverage option
offered by a plan or issuer;
(C) The negotiated rates which must be:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy
or other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for
each in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the last date of the contract term for each
provider-specific negotiated rate that applies to each NDC; and
(D) Historical net prices that are:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy
or other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for
each in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the 90-day time period that begins 180 days
prior to the publication date of the machine-readable file for each
provider-specific historical net price that applies to each NDC (except
that a group health plan or health insurance issuer must omit such data
in relation to a particular NDC and provider when compliance with this
paragraph (b)(1)(iii)(D) would require the plan or issuer to report
payment of historical net prices calculated using fewer than 20
different claims for payment). Consistent with paragraph (c)(3) of this
section, nothing in this paragraph (b)(1)(iii)(D) requires the
disclosure of information that would violate any applicable health
information privacy law.
(2) Required method and format for disclosing information to the
public. The machine-readable files described in this paragraph (b) must
be available in a form and manner as specified in guidance issued by
the Department of the Treasury, the Department of Labor, and the
Department of Health and Human Services. The machine-readable files
must be publicly available and accessible to any person free of charge
and without conditions, such as establishment of a user account,
password, or other credentials, or submission of personally
identifiable information to access the file.
(3) Timing. A group health plan or health insurance issuer must
update the machine-readable files and information required by this
paragraph (b) monthly. The group health plan or health insurance issuer
must clearly indicate the date that the files were most recently
updated.
(4) Special rules to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information pursuant to a written agreement. Accordingly, if a health
insurance issuer and a group health plan sponsor enter into a written
agreement under which the issuer agrees to provide the information
required under this paragraph (b) in compliance with this section, and
the issuer fails to do so, then the issuer, but not the plan, violates
the transparency disclosure requirements of this paragraph (b).
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a third-party administrator or health care claims clearinghouse) will
provide the information required by this paragraph (b) in compliance
with this section. Notwithstanding the preceding sentence, if a group
health plan or health insurance issuer chooses to enter into such an
agreement and the party with which it contracts fails to provide the
information in compliance with this paragraph (b), the plan or issuer
violates the transparency disclosure requirements of this paragraph
(b).
(iii) Aggregation permitted for out-of-network allowed amounts.
Nothing in this section prohibits a group health plan or health
insurance issuer from satisfying the disclosure requirement described
in paragraph (b)(1)(ii) of this section by disclosing out-of-network
allowed amounts made available by, or otherwise obtained from, an
issuer, a service provider, or other party with which the plan or
issuer has entered into a written agreement to provide the information,
provided the minimum claim threshold described in paragraph
(b)(1)(ii)(C) of this section is independently met for each item or
service and for each plan or coverage included in an aggregated Allowed
Amount File. Under such circumstances, health insurance issuers,
service providers, or other parties with which the group health plan or
issuer has contracted may aggregate out-of-network allowed amounts for
more than one plan or insurance policy or contract. Additionally,
nothing in this section prevents the Allowed Amount File from being
hosted on a third-party website or prevents a plan administrator or
issuer from contracting with a third party to post the file. However,
if a plan or issuer chooses not to also host the file separately on its
own website, it must provide a link on its own public website to the
location where the file is made publicly available.
(c) Applicability. (1) The provisions of this section apply for
plan years beginning on or after January 1, 2022.
(2) As provided under Sec. 54.9815-1251, this section does not
apply to grandfathered health plans. This section also does not apply
to health reimbursement arrangements or other account-based group
health plans as defined in Sec. [thinsp]54.9815-2711(d)(6) or short
term limited duration insurance as defined in Sec. 54.9801-2.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized representatives to access participant,
or beneficiary information held by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph (b) of this section, provided that the plan or
issuer corrects the information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that
[[Page 72300]]
the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated
or to dissimilar circumstances.
DEPARTMENT OF LABOR
For the reasons set forth in this preamble, the Department of Labor
amends 29 CFR part 2590 as set forth below:
PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS
0
3. The authority citation for part 2590 continues to read as follows:
Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a, 1185b, 1191, 1191a, 1191b, and 1191c;
sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b), Pub. L.
105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L.
110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111-
148, 124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 1029;
Division M, Pub. L. 113-235, 128 Stat. 2130; Secretary of Labor's
Order 1-2011, 77 FR 1088 (Jan. 9, 2012).
0
4. Sections 2590.715-2715A1, 2590.715-2715A2, and 2590.715-2715A3 are
added to read as follows:
Sec. 2590.715-2715A1 Transparency in coverage--definitions.
(a) Scope and definitions--(1) Scope. This section sets forth
definitions for the price transparency requirements for group health
plans and health insurance issuers offering group health insurance
coverage established in this section and Sec. Sec. 2590.715-2715A2 and
2590.715-2715A3.
(2) Definitions. For purposes of this section and Sec. Sec.
2590.715-2715A2 and 2590.715-2715A3, the following definitions apply:
(i) Accumulated amounts means:
(A) The amount of financial responsibility a participant or
beneficiary has incurred at the time a request for cost-sharing
information is made, with respect to a deductible or out-of-pocket
limit. If an individual is enrolled in other than self-only coverage,
these accumulated amounts shall include the financial responsibility a
participant or beneficiary has incurred toward meeting his or her
individual deductible or out-of-pocket limit, as well as the amount of
financial responsibility that all the individuals enrolled under the
plan or coverage have incurred, in aggregate, toward meeting the other
than self-only deductible or out-of-pocket limit, as applicable.
Accumulated amounts include any expense that counts toward a deductible
or out-of-pocket limit (such as a copayment or coinsurance), but
exclude any expense that does not count toward a deductible or out-of-
pocket limit (such as any premium payment, out-of-pocket expense for
out-of-network services, or amount for items or services not covered
under the group health plan or health insurance coverage); and
(B) To the extent a group health plan or health insurance issuer
imposes a cumulative treatment limitation on a particular covered item
or service (such as a limit on the number of items, days, units,
visits, or hours covered in a defined time period) independent of
individual medical necessity determinations, the amount that has
accrued toward the limit on the item or service (such as the number of
items, days, units, visits, or hours the participant or beneficiary,
has used within that time period).
(ii) Billed charge means the total charges for an item or service
billed to a group health plan or health insurance issuer by a provider.
(iii) Billing code means the code used by a group health plan or
health insurance issuer or provider to identify health care items or
services for purposes of billing, adjudicating, and paying claims for a
covered item or service, including the Current Procedural Terminology
(CPT) code, Healthcare Common Procedure Coding System (HCPCS) code,
Diagnosis-Related Group (DRG) code, National Drug Code (NDC), or other
common payer identifier.
(iv) Bundled payment arrangement means a payment model under which
a provider is paid a single payment for all covered items and services
provided to a participant or beneficiary for a specific treatment or
procedure.
(v) Copayment assistance means the financial assistance a
participant or beneficiary receives from a prescription drug or medical
supply manufacturer towards the purchase of a covered item or service.
(vi) Cost-sharing liability means the amount a participant or
beneficiary is responsible for paying for a covered item or service
under the terms of the group health plan or health insurance coverage.
Cost-sharing liability generally includes deductibles, coinsurance, and
copayments, but does not include premiums, balance billing amounts by
out-of-network providers, or the cost of items or services that are not
covered under a group health plan or health insurance coverage.
(vii) Cost-sharing information means information related to any
expenditure required by or on behalf of a participant or beneficiary
with respect to health care benefits that are relevant to a
determination of the participant's or beneficiary's cost-sharing
liability for a particular covered item or service.
(viii) Covered items or services means those items or services,
including prescription drugs, the costs for which are payable, in whole
or in part, under the terms of a group health plan or health insurance
coverage.
(ix) Derived amount means the price that a group health plan or
health insurance issuer assigns to an item or service for the purpose
of internal accounting, reconciliation with providers, or submitting
data in accordance with the requirements of 45 CFR 153.710(c).
(x) Historical net price means the retrospective average amount a
group health plan or health insurance issuer paid for a prescription
drug, inclusive of any reasonably allocated rebates, discounts,
chargebacks, fees, and any additional price concessions received by the
plan or issuer with respect to the prescription drug. The allocation
shall be determined by dollar value for non-product specific and
product-specific rebates, discounts, chargebacks, fees, and other price
concessions to the extent that the total amount of any such price
concession is known to the group health plan or health insurance issuer
at the time of publication of the historical net price in a machine-
readable file in accordance with Sec. 2590.715-2715A3. However, to the
extent that the total amount of any non-product specific and product-
specific rebates, discounts, chargebacks, fees, or other price
concessions is not known to the group health plan or health insurance
issuer at the time of file publication, then the plan or issuer shall
allocate such rebates, discounts, chargebacks, fees, and other price
concessions by using a good faith, reasonable estimate of the average
price concessions based on the rebates, discounts, chargebacks, fees,
and other price concessions received over a time period prior to the
current reporting period and of equal duration to the current reporting
period, as determined under Sec. 2590.715-2715A3(b)(1)(iii)(D)(3).
(xi) In-network provider means any provider of any item or service
with which a group health plan or health insurance issuer, or a third
party for the plan or issuer, has a contract setting forth the terms
and conditions on which
[[Page 72301]]
a relevant item or service is provided to a participant or beneficiary.
(xii) Items or services means all encounters, procedures, medical
tests, supplies, prescription drugs, durable medical equipment, and
fees (including facility fees), provided or assessed in connection with
the provision of health care.
(xiii) Machine-readable file means a digital representation of data
or information in a file that can be imported or read by a computer
system for further processing without human intervention, while
ensuring no semantic meaning is lost.
(xiv) National Drug Code means the unique 10- or 11-digit 3-segment
number assigned by the Food and Drug Administration, which provides a
universal product identifier for drugs in the United States.
(xv) Negotiated rate means the amount a group health plan or health
insurance issuer has contractually agreed to pay an in-network
provider, including an in-network pharmacy or other prescription drug
dispenser, for covered items and services, whether directly or
indirectly, including through a third-party administrator or pharmacy
benefit manager.
(xvi) Out-of-network allowed amount means the maximum amount a
group health plan or health insurance issuer will pay for a covered
item or service furnished by an out-of-network provider.
(xvii) Out-of-network provider means a provider of any item or
service that does not have a contract under a participant's or
beneficiary's group health plan or health insurance coverage to provide
items or services.
(xviii) Out-of-pocket limit means the maximum amount that a
participant or beneficiary is required to pay during a coverage period
for his or her share of the costs of covered items and services under
his or her group health plan or health insurance coverage, including
for self-only and other than self-only coverage, as applicable.
(xix) Plain language means written and presented in a manner
calculated to be understood by the average participant or beneficiary.
(xx) Prerequisite means concurrent review, prior authorization, and
step-therapy or fail-first protocols related to covered items and
services that must be satisfied before a group health plan or health
insurance issuer will cover the item or service. The term prerequisite
does not include medical necessity determinations generally or other
forms of medical management techniques.
(xxi) Underlying fee schedule rate means the rate for a covered
item or service from a particular in-network provider, or providers
that a group health plan or health insurance issuer uses to determine a
participant's or beneficiary's cost-sharing liability for the item or
service, when that rate is different from the negotiated rate or
derived amount.
(b) [Reserved]
Sec. 2590.715-2715A2 Transparency in coverage--required disclosures
to participants and beneficiaries.
(a) Scope and definitions--(1) Scope. This section establishes
price transparency requirements for group health plans and health
insurance issuers offering group health insurance coverage for the
timely disclosure of information about costs related to covered items
and services under a group plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 2590.715-2715A1 apply.
(b) Required disclosures to participants and beneficiaries. At the
request of a participant or beneficiary who is enrolled in a group
health plan, the plan must provide to the participant or beneficiary
the information required under paragraph (b)(1) of this section, in
accordance with the method and format requirements set forth in
paragraph (b)(2) of this section.
(1) Required cost-sharing information. The information required
under this paragraph (b)(1) is the following cost-sharing information,
which is accurate at the time the request is made, with respect to a
participant's or beneficiary's cost-sharing liability for covered items
and services:
(i) An estimate of the participant's or beneficiary's cost-sharing
liability for a requested covered item or service furnished by a
provider or providers that is calculated based on the information
described in paragraphs (b)(1)(ii) through (iv) of this section.
(A) If the request for cost-sharing information relates to items
and services that are provided within a bundled payment arrangement,
and the bundled payment arrangement includes items or services that
have a separate cost-sharing liability, the group health plan or health
insurance issuer must provide estimates of the cost-sharing liability
for the requested covered item or service, as well as an estimate of
the cost-sharing liability for each of the items and services in the
bundled payment arrangement that have separate cost-sharing
liabilities. While group health plans and health insurance issuers are
not required to provide estimates of cost-sharing liability for a
bundled payment arrangement where the cost-sharing is imposed
separately for each item and service included in the bundled payment
arrangement, nothing prohibits plans or issuers from providing
estimates for multiple items and services in situations where such
estimates could be relevant to participants or beneficiaries, as long
as the plan or issuer also discloses information about the relevant
items or services individually, as required in paragraph (b)(1)(v) of
this section.
(B) For requested items and services that are recommended
preventive services under section 2713 of the Public Health Service Act
(PHS Act), if the group health plan or health insurance issuer cannot
determine whether the request is for preventive or non-preventive
purposes, the plan or issuer must display the cost-sharing liability
that applies for non-preventive purposes. As an alternative, a group
health plan or health insurance issuer may allow a participant or
beneficiary to request cost-sharing information for the specific
preventive or non-preventive item or service by including terms such as
``preventive'', ``non-preventive'' or ``diagnostic'' as a means to
request the most accurate cost-sharing information.
(ii) Accumulated amounts.
(iii) In-network rate, comprised of the following elements, as
applicable to the group health plan's or health insurance issuer's
payment model:
(A) Negotiated rate, reflected as a dollar amount, for an in-
network provider or providers for the requested covered item or
service; this rate must be disclosed even if it is not the rate the
plan or issuer uses to calculate cost-sharing liability; and
(B) Underlying fee schedule rate, reflected as a dollar amount, for
the requested covered item or service, to the extent that it is
different from the negotiated rate.
(iv) Out-of-network allowed amount or any other rate that provides
a more accurate estimate of an amount a group health plan or health
insurance issuer will pay for the requested covered item or service,
reflected as a dollar amount, if the request for cost-sharing
information is for a covered item or service furnished by an out-of-
network provider; provided, however, that in circumstances in which a
plan or issuer reimburses an out-of-network provider a percentage of
the billed charge for a covered item or service, the out-of-network
allowed amount will be that percentage.
(v) If a participant or beneficiary requests information for an
item or service subject to a bundled payment arrangement, a list of the
items and
[[Page 72302]]
services included in the bundled payment arrangement for which cost-
sharing information is being disclosed.
(vi) If applicable, notification that coverage of a specific item
or service is subject to a prerequisite.
(vii) A notice that includes the following information in plain
language:
(A) A statement that out-of-network providers may bill participants
or beneficiaries for the difference between a provider's billed charges
and the sum of the amount collected from the group health plan or
health insurance issuer and from the participant or beneficiary in the
form of a copayment or coinsurance amount (the difference referred to
as balance billing), and that the cost-sharing information provided
pursuant to this paragraph (b)(1) does not account for these potential
additional amounts. This statement is only required if balance billing
is permitted under state law;
(B) A statement that the actual charges for a participant's or
beneficiary's covered item or service may be different from an estimate
of cost-sharing liability provided pursuant to paragraph (b)(1)(i) of
this section, depending on the actual items or services the participant
or beneficiary receives at the point of care;
(C) A statement that the estimate of cost-sharing liability for a
covered item or service is not a guarantee that benefits will be
provided for that item or service;
(D) A statement disclosing whether the plan counts copayment
assistance and other third-party payments in the calculation of the
participant's or beneficiary's deductible and out-of-pocket maximum;
(E) For items and services that are recommended preventive services
under section 2713 of the PHS Act, a statement that an in-network item
or service may not be subject to cost-sharing if it is billed as a
preventive service if the group health plan or health insurance issuer
cannot determine whether the request is for a preventive or non-
preventive item or service; and
(F) Any additional information, including other disclaimers, that
the group health plan or health insurance issuer determines is
appropriate, provided the additional information does not conflict with
the information required to be provided by this paragraph (b)(1).
(2) Required methods and formats for disclosing information to
participants and beneficiaries. The methods and formats for the
disclosure required under this paragraph (b) are as follows:
(i) Internet-based self-service tool. Information provided under
this paragraph (b) must be made available in plain language, without
subscription or other fee, through a self-service tool on an internet
website that provides real-time responses based on cost-sharing
information that is accurate at the time of the request. Group health
plans and health insurance issuers must ensure that the self-service
tool allows users to:
(A) Search for cost-sharing information for a covered item or
service provided by a specific in-network provider or by all in-network
providers by inputting:
(1) A billing code (such as CPT code 87804) or a descriptive term
(such as ``rapid flu test''), at the option of the user;
(2) The name of the in-network provider, if the user seeks cost-
sharing information with respect to a specific in-network provider; and
(3) Other factors utilized by the plan or issuer that are relevant
for determining the applicable cost-sharing information (such as
location of service, facility name, or dosage).
(B) Search for an out-of-network allowed amount, percentage of
billed charges, or other rate that provides a reasonably accurate
estimate of the amount a group health plan or health insurance issuer
will pay for a covered item or service provided by out-of-network
providers by inputting:
(1) A billing code or descriptive term, at the option of the user;
and
(2) Other factors utilized by the plan or issuer that are relevant
for determining the applicable out-of-network allowed amount or other
rate (such as the location in which the covered item or service will be
sought or provided).
(C) Refine and reorder search results based on geographic proximity
of in-network providers, and the amount of the participant's or
beneficiary's estimated cost-sharing liability for the covered item or
service, to the extent the search for cost-sharing information for
covered items or services returns multiple results.
(ii) Paper method. Information provided under this paragraph (b)
must be made available in plain language, without a fee, in paper form
at the request of the participant or beneficiary. In responding to such
a request, the group health plan or health insurance issuer may limit
the number of providers with respect to which cost-sharing information
for covered items and services is provided to no fewer than 20
providers per request. The group health plan or health insurance issuer
is required to:
(A) Disclose the applicable provider-per-request limit to the
participant or beneficiary;
(B) Provide the cost-sharing information in paper form pursuant to
the individual's request, in accordance with the requirements in
paragraphs (b)(2)(i)(A) through (C) of this section; and
(C) Mail the cost-sharing information in paper form no later than 2
business days after an individual's request is received.
(D) To the extent participants or beneficiaries request disclosure
other than by paper (for example, by phone or email), plans and issuers
may provide the disclosure through another means, provided the
participant or beneficiary agrees that disclosure through such means is
sufficient to satisfy the request and the request is fulfilled at least
as rapidly as required for the paper method.
(3) Special rule to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information required by this paragraph (b) in compliance with this
section pursuant to a written agreement. Accordingly, if a health
insurance issuer and a plan sponsor enter into a written agreement
under which the issuer agrees to provide the information required under
this paragraph (b) in compliance with this section, and the issuer
fails to do so, then the issuer, but not the plan, violates the
transparency disclosure requirements of this paragraph (b).
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a pharmacy benefit manager or other third-party) provides the
information required by this paragraph (b) in compliance with this
section. Notwithstanding the preceding sentence, if a group health plan
or health insurance issuer chooses to enter into such an agreement and
the party with which it contracts fails to provide the information in
compliance with this paragraph (b), the plan or issuer violates the
transparency disclosure requirements of this paragraph (b).
(c) Applicability. (1) The provisions of this section apply for
plan years beginning on or after January 1, 2023 with respect to the
500 items and services to be posted on a publicly available website,
and with respect to all covered items and services, for plan
[[Page 72303]]
years beginning on or after January 1, 2024.
(2) As provided under Sec. 2590.715-1251, this section does not
apply to grandfathered health plans. This section also does not apply
to health reimbursement arrangements or other account-based group
health plans as defined in Sec. [thinsp]2590.715-2711(d)(6) or short
term limited duration insurance as defined in Sec. 2590.701-2.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized representatives to access participant or
beneficiary information held by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph (b) of this section, provided that the plan or
issuer corrects the information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated
or to dissimilar circumstances.
Sec. 2590.715-2715A3 Transparency in coverage--requirements for
public disclosure.
(a) Scope and definitions--(1) Scope. This section establishes
price transparency requirements for group health plans and health
insurance issuers offering group health insurance coverage for the
timely disclosure of information about costs related to covered items
and services under a group plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 2590.715-2715A1 apply.
(b) Requirements for public disclosure of in-network provider rates
for covered items and services, out-of-network allowed amounts and
billed charges for covered items and services, and negotiated rates and
historical net prices for covered prescription drugs. A group health
plan or health insurance issuer must make available on an internet
website the information required under paragraph (b)(1) of this section
in three machine-readable files, in accordance with the method and
format requirements described in paragraph (b)(2) of this section, and
that are updated as required under paragraph (b)(3) of this section.
(1) Required information. Machine-readable files required under
this paragraph (b) that are made available to the public by a group
health plan or health insurance issuer must include:
(i) An in-network rate machine-readable file that includes the
required information under this paragraph (b)(1)(i) for all covered
items and services, except for prescription drugs that are subject to a
fee-for-service reimbursement arrangement, which must be reported in
the prescription drug machine-readable file pursuant to paragraph
(b)(1)(iii) of this section. The in-network rate machine-readable file
must include:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit Health Insurance
Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier
is not available, the 5-digit HIOS identifier, or if no HIOS identifier
is available, the Employer Identification Number (EIN);
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) All applicable rates, which may include one or more of the
following: Negotiated rates, underlying fee schedule rates, or derived
amounts. If a group health plan or health insurance issuer does not use
negotiated rates for provider reimbursement, then the plan or issuer
should disclose derived amounts to the extent these amounts are already
calculated in the normal course of business. If the group health plan
or health insurance issuer uses underlying fee schedule rates for
calculating cost sharing, then the plan or issuer should include the
underlying fee schedule rates in addition to the negotiated rate or
derived amount. Applicable rates, including for both individual items
and services and items and services in a bundled payment arrangement,
must be:
(1) Reflected as dollar amounts, with respect to each covered item
or service that is furnished by an in-network provider. If the
negotiated rate is subject to change based upon participant or
beneficiary-specific characteristics, these dollar amounts should be
reflected as the base negotiated rate applicable to the item or service
prior to adjustments for participant or beneficiary-specific
characteristics;
(2) Associated with the National Provider Identifier (NPI), Tax
Identification Number (TIN), and Place of Service Code for each in-
network provider;
(3) Associated with the last date of the contract term or
expiration date for each provider-specific applicable rate that applies
to each covered item or service; and
(4) Indicated with a notation where a reimbursement arrangement
other than a standard fee-for-service model (such as capitation or a
bundled payment arrangement) applies.
(ii) An out-of-network allowed amount machine-readable file,
including:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit HIOS identifier, or,
if the 14-digit HIOS identifier is not available, the 5-digit HIOS
identifier, or, if no HIOS identifier is available, the EIN;
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) Unique out-of-network allowed amounts and billed charges with
respect to covered items or services furnished by out-of-network
providers during the 90-day time period that begins 180 days prior to
the publication date of the machine-readable file (except that a group
health plan or health insurance issuer must omit such data in relation
to a particular item or service and provider when compliance with this
paragraph (b)(1)(ii)(C) would require the plan or issuer to report
payment of out-of-network allowed amounts in connection with fewer than
20 different claims for payments under a single plan or coverage).
Consistent with paragraph
[[Page 72304]]
(c)(3) of this section, nothing in this paragraph (b)(1)(ii)(C)
requires the disclosure of information that would violate any
applicable health information privacy law. Each unique out-of-network
allowed amount must be:
(1) Reflected as a dollar amount, with respect to each covered item
or service that is furnished by an out-of-network provider; and
(2) Associated with the NPI, TIN, and Place of Service Code for
each out-of-network provider.
(iii) A prescription drug machine-readable file, including:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit HIOS identifier, or,
if the 14-digit HIOS identifier is not available, the 5-digit HIOS
identifier, or, if no HIOS identifier is available, the EIN;
(B) The NDC, and the proprietary and nonproprietary name assigned
to the NDC by the Food and Drug Administration (FDA), for each covered
item or service under each coverage option offered by a plan or issuer
that is a prescription drug;
(C) The negotiated rates which must be:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy
or other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for
each in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the last date of the contract term for each
provider-specific negotiated rate that applies to each NDC; and
(D) Historical net prices that are:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy
or other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for
each in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the 90-day time period that begins 180 days
prior to the publication date of the machine-readable file for each
provider-specific historical net price that applies to each NDC (except
that a group health plan or health insurance issuer must omit such data
in relation to a particular NDC and provider when compliance with this
paragraph (b)(1)(iii)(D) would require the plan or issuer to report
payment of historical net prices calculated using fewer than 20
different claims for payment). Consistent with paragraph (c)(3) of this
section, nothing in this paragraph (b)(1)(iii)(D) requires the
disclosure of information that would violate any applicable health
information privacy law.
(2) Required method and format for disclosing information to the
public. The machine-readable files described in this paragraph (b) must
be available in a form and manner as specified in guidance issued by
the Department of the Treasury, the Department of Labor, and the
Department of Health and Human Services. The machine-readable files
must be publicly available and accessible to any person free of charge
and without conditions, such as establishment of a user account,
password, or other credentials, or submission of personally
identifiable information to access the file.
(3) Timing. A group health plan or health insurance issuer must
update the machine-readable files and information required by this
paragraph (b) monthly. The group health plan or health insurance issuer
must clearly indicate the date that the files were most recently
updated.
(4) Special rules to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information pursuant to a written agreement. Accordingly, if a health
insurance issuer and a group health plan sponsor enter into a written
agreement under which the issuer agrees to provide the information
required under this paragraph (b) in compliance with this section, and
the issuer fails to do so, then the issuer, but not the plan, violates
the transparency disclosure requirements of this paragraph (b).
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a third-party administrator or health care claims clearinghouse) will
provide the information required by this paragraph (b) in compliance
with this section. Notwithstanding the preceding sentence, if a group
health plan or health insurance issuer chooses to enter into such an
agreement and the party with which it contracts fails to provide the
information in compliance with this paragraph (b), the plan or issuer
violates the transparency disclosure requirements of this paragraph
(b).
(iii) Aggregation permitted for out-of-network allowed amounts.
Nothing in this section prohibits a group health plan or health
insurance issuer from satisfying the disclosure requirement described
in paragraph (b)(1)(ii) of this section by disclosing out-of-network
allowed amounts made available by, or otherwise obtained from, an
issuer, a service provider, or other party with which the plan or
issuer has entered into a written agreement to provide the information,
provided the minimum claim threshold described in paragraph
(b)(1)(ii)(C) of this section is independently met for each item or
service and for each plan or coverage included in an aggregated Allowed
Amount File. Under such circumstances, health insurance issuers,
service providers, or other parties with which the group health plan or
issuer has contracted may aggregate out-of-network allowed amounts for
more than one plan or insurance policy or contract. Additionally,
nothing in this section prevents the Allowed Amount File from being
hosted on a third-party website or prevents a plan administrator or
issuer from contracting with a third party to post the file. However,
if a plan or issuer chooses not to also host the file separately on its
own website, it must provide a link on its own public website to the
location where the file is made publicly available.
(c) Applicability. (1) The provisions of this section apply for
plan years beginning on or after January 1, 2022.
(2) As provided under Sec. 2590.715-1251, this section does not
apply to grandfathered health plans. This section also does not apply
to health reimbursement arrangements or other account-based group
health plans as defined in Sec. [thinsp]2590.715-2711(d)(6) or short
term limited duration insurance as defined in Sec. 2590.701-2.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized representatives to access participant,
or beneficiary information held by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph
[[Page 72305]]
(b) of this section, provided that the plan or issuer corrects the
information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated
or to dissimilar circumstances.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
For the reasons set forth in this preamble, the Department of
Health and Human Services amends 45 CFR parts 147 and 158 as set forth
below:
PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND
INDIVIDUAL HEALTH INSURANCE MARKETS
0
5. The authority citation for part 147 continues to read as follows:
Authority: 42 U.S.C. 300gg through 300gg-63, 300gg-91, and
300gg-92, as amended.
0
6. Sections 147.210, 147.211 and 147.212 are added to read as follows:
Sec. 147.210 Transparency in coverage--definitions.
(a) Scope and definitions--(1) Scope. This section sets forth
definitions for the price transparency requirements for group health
plans and health insurance issuers in the individual and group markets
established in this section and Sec. Sec. 147.211 and 147.212.
(2) Definitions. For purposes of this section and Sec. Sec.
147.211 and 147.212, the following definitions apply:
(i) Accumulated amounts means:
(A) The amount of financial responsibility a participant,
beneficiary, or enrollee has incurred at the time a request for cost-
sharing information is made, with respect to a deductible or out-of-
pocket limit. If an individual is enrolled in other than self-only
coverage, these accumulated amounts shall include the financial
responsibility a participant, beneficiary, or enrollee has incurred
toward meeting his or her individual deductible or out-of-pocket limit,
as well as the amount of financial responsibility that all the
individuals enrolled under the plan or coverage have incurred, in
aggregate, toward meeting the other than self-only deductible or out-
of-pocket limit, as applicable. Accumulated amounts include any expense
that counts toward a deductible or out-of-pocket limit (such as a
copayment or coinsurance), but exclude any expense that does not count
toward a deductible or out-of-pocket limit (such as any premium
payment, out-of-pocket expense for out-of-network services, or amount
for items or services not covered under the group health plan or health
insurance coverage); and
(B) To the extent a group health plan or health insurance issuer
imposes a cumulative treatment limitation on a particular covered item
or service (such as a limit on the number of items, days, units,
visits, or hours covered in a defined time period) independent of
individual medical necessity determinations, the amount that has
accrued toward the limit on the item or service (such as the number of
items, days, units, visits, or hours the participant, beneficiary, or
enrollee has used within that time period).
(ii) Billed charge means the total charges for an item or service
billed to a group health plan or health insurance issuer by a provider.
(iii) Billing code means the code used by a group health plan or
health insurance issuer or provider to identify health care items or
services for purposes of billing, adjudicating, and paying claims for a
covered item or service, including the Current Procedural Terminology
(CPT) code, Healthcare Common Procedure Coding System (HCPCS) code,
Diagnosis-Related Group (DRG) code, National Drug Code (NDC), or other
common payer identifier.
(iv) Bundled payment arrangement means a payment model under which
a provider is paid a single payment for all covered items and services
provided to a participant, beneficiary, or enrollee for a specific
treatment or procedure.
(v) Copayment assistance means the financial assistance a
participant, beneficiary, or enrollee receives from a prescription drug
or medical supply manufacturer towards the purchase of a covered item
or service.
(vi) Cost-sharing liability means the amount a participant,
beneficiary, or enrollee is responsible for paying for a covered item
or service under the terms of the group health plan or health insurance
coverage. Cost-sharing liability generally includes deductibles,
coinsurance, and copayments, but does not include premiums, balance
billing amounts by out-of-network providers, or the cost of items or
services that are not covered under a group health plan or health
insurance coverage.
(vii) Cost-sharing information means information related to any
expenditure required by or on behalf of a participant, beneficiary, or
enrollee with respect to health care benefits that are relevant to a
determination of the participant's, beneficiary's, or enrollee's cost-
sharing liability for a particular covered item or service.
(viii) Covered items or services means those items or services,
including prescription drugs, the costs for which are payable, in whole
or in part, under the terms of a group health plan or health insurance
coverage.
(ix) Derived amount means the price that a group health plan or
health insurance issuer assigns to an item or service for the purpose
of internal accounting, reconciliation with providers or submitting
data in accordance with the requirements of Sec. 153.710(c) of this
subchapter.
(x) Enrollee means an individual who is covered under an individual
health insurance policy as defined under section 2791(b)(5) of the
Public Health Service (PHS) Act.
(xi) Historical net price means the retrospective average amount a
group health plan or health insurance issuer paid for a prescription
drug, inclusive of any reasonably allocated rebates, discounts,
chargebacks, fees, and any additional price concessions received by the
plan or issuer with respect to the prescription drug. The allocation
shall be determined by dollar value for non-product specific and
product-specific rebates, discounts, chargebacks, fees, and other price
concessions to the extent that the total amount of any such price
concession is known to the group health plan or health insurance issuer
at the time of publication of the historical net price in a machine-
readable file in accordance with Sec. 147.212. However, to the extent
that the total amount of any non-product specific and product-specific
rebates, discounts, chargebacks, fees, or other price concessions is
not known to the group health plan or health insurance issuer at the
time of file publication, then the plan or issuer shall allocate such
rebates, discounts, chargebacks, fees, and other price
[[Page 72306]]
concessions by using a good faith, reasonable estimate of the average
price concessions based on the rebates, discounts, chargebacks, fees,
and other price concessions received over a time period prior to the
current reporting period and of equal duration to the current reporting
period, as determined under Sec. 147.212(b)(1)(iii)(D)(3).
(xii) In-network provider means any provider of any item or service
with which a group health plan or health insurance issuer, or a third
party for the plan or issuer, has a contract setting forth the terms
and conditions on which a relevant item or service is provided to a
participant, beneficiary, or enrollee.
(xiii) Items or services means all encounters, procedures, medical
tests, supplies, prescription drugs, durable medical equipment, and
fees (including facility fees), provided or assessed in connection with
the provision of health care.
(xiv) Machine-readable file means a digital representation of data
or information in a file that can be imported or read by a computer
system for further processing without human intervention, while
ensuring no semantic meaning is lost.
(xv) National Drug Code means the unique 10- or 11-digit 3-segment
number assigned by the Food and Drug Administration, which provides a
universal product identifier for drugs in the United States.
(xvi) Negotiated rate means the amount a group health plan or
health insurance issuer has contractually agreed to pay an in-network
provider, including an in-network pharmacy or other prescription drug
dispenser, for covered items and services, whether directly or
indirectly, including through a third-party administrator or pharmacy
benefit manager.
(xvii) Out-of-network allowed amount means the maximum amount a
group health plan or health insurance issuer will pay for a covered
item or service furnished by an out-of-network provider.
(xviii) Out-of-network provider means a provider of any item or
service that does not have a contract under a participant's,
beneficiary's, or enrollee's group health plan or health insurance
coverage to provide items or services.
(xix) Out-of-pocket limit means the maximum amount that a
participant, beneficiary, or enrollee is required to pay during a
coverage period for his or her share of the costs of covered items and
services under his or her group health plan or health insurance
coverage, including for self-only and other than self-only coverage, as
applicable.
(xx) Plain language means written and presented in a manner
calculated to be understood by the average participant, beneficiary, or
enrollee.
(xxi) Prerequisite means concurrent review, prior authorization,
and step-therapy or fail-first protocols related to covered items and
services that must be satisfied before a group health plan or health
insurance issuer will cover the item or service. The term prerequisite
does not include medical necessity determinations generally or other
forms of medical management techniques.
(xxii) Underlying fee schedule rate means the rate for a covered
item or service from a particular in-network provider, or providers
that a group health plan or health insurance issuer uses to determine a
participant's, beneficiary's, or enrollee's cost-sharing liability for
the item or service, when that rate is different from the negotiated
rate or derived amount.
(b) [Reserved]
Sec. 147.211 Transparency in coverage--required disclosures to
participants, beneficiaries, or enrollees.
(a) Scope and definitions--(1) Scope. This section establishes
price transparency requirements for group health plans and health
insurance issuers in the individual and group markets for the timely
disclosure of information about costs related to covered items and
services under a plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 147.210 apply.
(b) Required disclosures to participants, beneficiaries, or
enrollees. At the request of a participant, beneficiary, or enrollee
who is enrolled in a group health plan or health insurance issuer
offering group or individual health insurance coverage, the plan or
issuer must provide to the participant, beneficiary, or enrollee the
information required under paragraph (b)(1) of this section, in
accordance with the method and format requirements set forth in
paragraph (b)(2) of this section.
(1) Required cost-sharing information. The information required
under this paragraph (b)(1) is the following cost-sharing information,
which is accurate at the time the request is made, with respect to a
participant's, beneficiary's, or enrollee's cost-sharing liability for
covered items and services:
(i) An estimate of the participant's, beneficiary's, or enrollee's
cost-sharing liability for a requested covered item or service
furnished by a provider or providers, which must reflect any cost-
sharing reductions the enrollee would receive, that is calculated based
on the information described in paragraphs (b)(1)(ii) through (iv) of
this section.
(A) If the request for cost-sharing information relates to items
and services that are provided within a bundled payment arrangement,
and the bundled payment arrangement includes items or services that
have a separate cost-sharing liability, the group health plan or health
insurance issuer must provide estimates of the cost-sharing liability
for the requested covered item or service, as well as an estimate of
the cost-sharing liability for each of the items and services in the
bundled payment arrangement that have separate cost-sharing
liabilities. While group health plans and health insurance issuers are
not required to provide estimates of cost-sharing liability for a
bundled payment arrangement where the cost-sharing is imposed
separately for each item and service included in the bundled payment
arrangement, nothing prohibits plans or issuers from providing
estimates for multiple items and services in situations where such
estimates could be relevant to participants or beneficiaries, as long
as the plan or issuer also discloses information about the relevant
items or services individually, as required in paragraph (b)(1)(v) of
this section.
(B) For requested items and services that are recommended
preventive services under section 2713 of the Public Health Service Act
(PHS Act), if the group health plan or health insurance issuer cannot
determine whether the request is for preventive or non-preventive
purposes, the plan or issuer must display the cost-sharing liability
that applies for non-preventive purposes. As an alternative, a group
health plan or health insurance issuer may allow a participant,
beneficiary, or enrollee to request cost-sharing information for the
specific preventive or non-preventive item or service by including
terms such as ``preventive'', ``non-preventive'' or ``diagnostic'' as a
means to request the most accurate cost-sharing information.
(ii) Accumulated amounts.
(iii) In-network rate, comprised of the following elements, as
applicable to the group health plan's or health insurance issuer's
payment model:
(A) Negotiated rate, reflected as a dollar amount, for an in-
network provider or providers for the requested covered item or
service; this rate must be disclosed even if it is not the rate the
plan or issuer uses to calculate cost-sharing liability; and
(B) Underlying fee schedule rate, reflected as a dollar amount, for
the requested covered item or service, to the
[[Page 72307]]
extent that it is different from the negotiated rate.
(iv) Out-of-network allowed amount or any other rate that provides
a more accurate estimate of an amount a group health plan or health
insurance issuer will pay for the requested covered item or service,
reflected as a dollar amount, if the request for cost-sharing
information is for a covered item or service furnished by an out-of-
network provider; provided, however, that in circumstances in which a
plan or issuer reimburses an out-of-network provider a percentage of
the billed charge for a covered item or service, the out-of-network
allowed amount will be that percentage.
(v) If a participant, beneficiary, or enrollee requests information
for an item or service subject to a bundled payment arrangement, a list
of the items and services included in the bundled payment arrangement
for which cost-sharing information is being disclosed.
(vi) If applicable, notification that coverage of a specific item
or service is subject to a prerequisite.
(vii) A notice that includes the following information in plain
language:
(A) A statement that out-of-network providers may bill
participants, beneficiaries, or enrollees for the difference between a
provider's billed charges and the sum of the amount collected from the
group health plan or health insurance issuer and from the participant,
beneficiary, or enrollee in the form of a copayment or coinsurance
amount (the difference referred to as balance billing), and that the
cost-sharing information provided pursuant to this paragraph (b)(1)
does not account for these potential additional amounts. This statement
is only required if balance billing is permitted under state law;
(B) A statement that the actual charges for a participant's,
beneficiary's, or enrollee's covered item or service may be different
from an estimate of cost-sharing liability provided pursuant to
paragraph (b)(1)(i) of this section, depending on the actual items or
services the participant, beneficiary, or enrollee receives at the
point of care;
(C) A statement that the estimate of cost-sharing liability for a
covered item or service is not a guarantee that benefits will be
provided for that item or service;
(D) A statement disclosing whether the plan counts copayment
assistance and other third-party payments in the calculation of the
participant's, beneficiary's, or enrollee's deductible and out-of-
pocket maximum;
(E) For items and services that are recommended preventive services
under section 2713 of the PHS Act, a statement that an in-network item
or service may not be subject to cost-sharing if it is billed as a
preventive service if the group health plan or health insurance issuer
cannot determine whether the request is for a preventive or non-
preventive item or service; and
(F) Any additional information, including other disclaimers, that
the group health plan or health insurance issuer determines is
appropriate, provided the additional information does not conflict with
the information required to be provided by this paragraph (b)(1).
(2) Required methods and formats for disclosing information to
participants, beneficiaries, or enrollees. The methods and formats for
the disclosure required under this paragraph (b) are as follows:
(i) Internet-based self-service tool. Information provided under
this paragraph (b) must be made available in plain language, without
subscription or other fee, through a self-service tool on an internet
website that provides real-time responses based on cost-sharing
information that is accurate at the time of the request. Group health
plans and health insurance issuers must ensure that the self-service
tool allows users to:
(A) Search for cost-sharing information for a covered item or
service provided by a specific in-network provider or by all in-network
providers by inputting:
(1) A billing code (such as CPT code 87804) or a descriptive term
(such as ``rapid flu test''), at the option of the user;
(2) The name of the in-network provider, if the user seeks cost-
sharing information with respect to a specific in-network provider; and
(3) Other factors utilized by the plan or issuer that are relevant
for determining the applicable cost-sharing information (such as
location of service, facility name, or dosage).
(B) Search for an out-of-network allowed amount, percentage of
billed charges, or other rate that provides a reasonably accurate
estimate of the amount a group health plan or health insurance issuer
will pay for a covered item or service provided by out-of-network
providers by inputting:
(1) A billing code or descriptive term, at the option of the user;
and
(2) Other factors utilized by the plan or issuer that are relevant
for determining the applicable out-of-network allowed amount or other
rate (such as the location in which the covered item or service will be
sought or provided).
(C) Refine and reorder search results based on geographic proximity
of in-network providers, and the amount of the participant's,
beneficiary's, or enrollee's estimated cost-sharing liability for the
covered item or service, to the extent the search for cost-sharing
information for covered items or services returns multiple results.
(ii) Paper method. Information provided under this paragraph (b)
must be made available in plain language, without a fee, in paper form
at the request of the participant, beneficiary, or enrollee. In
responding to such a request, the group health plan or health insurance
issuer may limit the number of providers with respect to which cost-
sharing information for covered items and services is provided to no
fewer than 20 providers per request. The group health plan or health
insurance issuer is required to:
(A) Disclose the applicable provider-per-request limit to the
participant, beneficiary, or enrollee;
(B) Provide the cost-sharing information in paper form pursuant to
the individual's request, in accordance with the requirements in
paragraphs (b)(2)(i)(A) through (C) of this section; and
(C) Mail the cost-sharing information in paper form no later than 2
business days after an individual's request is received.
(D) To the extent participants, beneficiaries, and enrollees
request disclosure other than by paper (for example, by phone or
email), plans and issuers may provide the disclosure through another
means, provided the participant, beneficiary, or enrollee agrees that
disclosure through such means is sufficient to satisfy the request and
the request is fulfilled at least as rapidly as required for the paper
method.
(3) Special rule to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information required by this paragraph (b) in compliance with this
section pursuant to a written agreement. Accordingly, if a health
insurance issuer and a plan sponsor enter into a written agreement
under which the issuer agrees to provide the information required under
this paragraph (b) in compliance with this section, and the issuer
fails to do so, then the issuer, but not the plan, violates the
transparency disclosure requirements of this paragraph (b).
[[Page 72308]]
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a pharmacy benefit manager or other third-party) provides the
information required by this paragraph (b) in compliance with this
section. Notwithstanding the preceding sentence, if a group health plan
or health insurance issuer chooses to enter into such an agreement and
the party with which it contracts fails to provide the information in
compliance with this paragraph (b), the plan or issuer violates the
transparency disclosure requirements of this paragraph (b).
(c) Applicability. (1) The provisions of this section apply for
plan years (in the individual market, for policy years) beginning on or
after January 1, 2023 with respect to the 500 items and services to be
posted on a publicly available website, and with respect to all covered
items and services, for plan years (in the individual market, for
policy years) beginning on or after January 1, 2024.
(2) As provided under Sec. 147.140, this section does not apply to
grandfathered health plans. This section also does not apply to health
reimbursement arrangements or other account-based group health plans as
defined in Sec. 147.126(d)(6) or short term limited duration insurance
as defined in 45 CFR 144.103.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized representatives to access participant,
beneficiary, or enrollee information held by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph (b) of this section, provided that the plan or
issuer corrects the information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated
or to dissimilar circumstances.
Sec. 147.212 Transparency in coverage--requirements for public
disclosure.
(a) Scope and definitions--(1) Scope. This section establishes
price transparency requirements for group health plans and health
insurance issuers in the individual and group markets for the timely
disclosure of information about costs related to covered items and
services under a plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 147.210 apply.
(b) Requirements for public disclosure of in-network provider rates
for covered items and services, out-of-network allowed amounts and
billed charges for covered items and services, and negotiated rates and
historical net prices for covered prescription drugs. A group health
plan or health insurance issuer must make available on an internet
website the information required under paragraph (b)(1) of this section
in three machine-readable files, in accordance with the method and
format requirements described in paragraph (b)(2) of this section, and
that are updated as required under paragraph (b)(3) of this section.
(1) Required information. Machine-readable files required under
this paragraph (b) that are made available to the public by a group
health plan or health insurance issuer must include:
(i) An in-network rate machine-readable file that includes the
required information under this paragraph (b)(1)(i) for all covered
items and services, except for prescription drugs that are subject to a
fee-for-service reimbursement arrangement, which must be reported in
the prescription drug machine-readable file pursuant to paragraph
(b)(1)(iii) of this section. The in-network rate machine-readable file
must include:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit Health Insurance
Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier
is not available, the 5-digit HIOS identifier, or if no HIOS identifier
is available, the Employer Identification Number (EIN);
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) All applicable rates, which may include one or more of the
following: Negotiated rates, underlying fee schedule rates, or derived
amounts. If a group health plan or health insurance issuer does not use
negotiated rates for provider reimbursement, then the plan or issuer
should disclose derived amounts to the extent these amounts are already
calculated in the normal course of business. If the group health plan
or health insurance issuer uses underlying fee schedule rates for
calculating cost sharing, then the plan or issuer should include the
underlying fee schedule rates in addition to the negotiated rate or
derived amount. Applicable rates, including for both individual items
and services and items and services in a bundled payment arrangement,
must be:
(1) Reflected as dollar amounts, with respect to each covered item
or service that is furnished by an in-network provider. If the
negotiated rate is subject to change based upon participant,
beneficiary, or enrollee-specific characteristics, these dollar amounts
should be reflected as the base negotiated rate applicable to the item
or service prior to adjustments for participant, beneficiary, or
enrollee-specific characteristics;
(2) Associated with the National Provider Identifier (NPI), Tax
Identification Number (TIN), and Place of Service Code for each in-
network provider;
(3) Associated with the last date of the contract term or
expiration date for each provider-specific applicable rate that applies
to each covered item or service; and
(4) Indicated with a notation where a reimbursement arrangement
other than a standard fee-for-service model (such as capitation or a
bundled payment arrangement) applies.
(ii) An out-of-network allowed amount machine-readable file,
including:
(A) For each coverage option offered by a group health plan or
health
[[Page 72309]]
insurance issuer, the name and the 14-digit HIOS identifier, or, if the
14-digit HIOS identifier is not available, the 5-digit HIOS identifier,
or, if no HIOS identifier is available, the EIN;
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) Unique out-of-network allowed amounts and billed charges with
respect to covered items or services furnished by out-of-network
providers during the 90-day time period that begins 180 days prior to
the publication date of the machine-readable file (except that a group
health plan or health insurance issuer must omit such data in relation
to a particular item or service and provider when compliance with this
paragraph (b)(1)(ii)(C) would require the plan or issuer to report
payment of out-of-network allowed amounts in connection with fewer than
20 different claims for payments under a single plan or coverage).
Consistent with paragraph (c)(3) of this section, nothing in this
paragraph (b)(1)(ii)(C) requires the disclosure of information that
would violate any applicable health information privacy law. Each
unique out-of-network allowed amount must be:
(1) Reflected as a dollar amount, with respect to each covered item
or service that is furnished by an out-of-network provider; and
(2) Associated with the NPI, TIN, and Place of Service Code for
each out-of-network provider.
(iii) A prescription drug machine-readable file, including:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit HIOS identifier, or,
if the 14-digit HIOS identifier is not available, the 5-digit HIOS
identifier, or, if no HIOS identifier is available, the EIN;
(B) The NDC, and the proprietary and nonproprietary name assigned
to the NDC by the Food and Drug Administration (FDA), for each covered
item or service that is a prescription drug under each coverage option
offered by a plan or issuer;
(C) The negotiated rates which must be:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy
or other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for
each in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the last date of the contract term for each
provider-specific negotiated rate that applies to each NDC; and
(D) Historical net prices that are:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy
or other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for
each in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the 90-day time period that begins 180 days
prior to the publication date of the machine-readable file for each
provider-specific historical net price that applies to each NDC (except
that a group health plan or health insurance issuer must omit such data
in relation to a particular NDC and provider when compliance with this
paragraph (b)(1)(iii)(D) would require the plan or issuer to report
payment of historical net prices calculated using fewer than 20
different claims for payment). Consistent with paragraph (b)(3) of this
section, nothing in this paragraph (b)(1)(iii)(D) requires the
disclosure of information that would violate any applicable health
information privacy law.
(2) Required method and format for disclosing information to the
public. The machine-readable files described in this paragraph (b) must
be available in a form and manner as specified in guidance issued by
the Department of the Treasury, the Department of Labor, and the
Department of Health and Human Services. The machine-readable files
must be publicly available and accessible to any person free of charge
and without conditions, such as establishment of a user account,
password, or other credentials, or submission of personally
identifiable information to access the file.
(3) Timing. A group health plan or health insurance issuer must
update the machine-readable files and information required by this
paragraph (b) monthly. The group health plan or health insurance issuer
must clearly indicate the date that the files were most recently
updated.
(4) Special rules to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information pursuant to a written agreement. Accordingly, if a health
insurance issuer and a group health plan sponsor enter into a written
agreement under which the issuer agrees to provide the information
required under this paragraph (b) in compliance with this section, and
the issuer fails to do so, then the issuer, but not the plan, violates
the transparency disclosure requirements of this paragraph (b).
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a third-party administrator or health care claims clearinghouse) will
provide the information required by this paragraph (b) in compliance
with this section. Notwithstanding the preceding sentence, if a group
health plan or health insurance issuer chooses to enter into such an
agreement and the party with which it contracts fails to provide the
information in compliance with this paragraph (b), the plan or issuer
violates the transparency disclosure requirements of this paragraph
(b).
(iii) Aggregation permitted for out-of-network allowed amounts.
Nothing in this section prohibits a group health plan or health
insurance issuer from satisfying the disclosure requirement described
in paragraph (b)(1)(ii) of this section by disclosing out-of-network
allowed amounts made available by, or otherwise obtained from, an
issuer, a service provider, or other party with which the plan or
issuer has entered into a written agreement to provide the information,
provided the minimum claim threshold described in paragraph
(b)(1)(ii)(C) of this section is independently met for each item or
service and for each plan or coverage included in an aggregated Allowed
Amount File. Under such circumstances, health insurance issuers,
service providers, or other parties with which the group health plan or
issuer has contracted may aggregate out-of-network allowed amounts for
more than one plan or insurance policy or contract. Additionally,
nothing in this section prevents the Allowed Amount File from being
hosted on a third-party website or prevents a plan administrator or
issuer from contracting with a third party to post the file. However,
if a plan or issuer chooses not to also host the file separately on its
own website, it must provide a link on its own public website to the
location where the file is made publicly available.
(c) Applicability. (1) The provisions of this section apply for
plan years (in the
[[Page 72310]]
individual market, for policy years) beginning on or after January 1,
2022.
(2) As provided under Sec. 147.140, this section does not apply to
grandfathered health plans. This section also does not apply to health
reimbursement arrangements or other account-based group health plans as
defined in Sec. 147.126(d)(6) or short term limited duration insurance
as defined in Sec. 144.103 of this subchapter.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized representatives to access participant,
or beneficiary information held by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph (b) of this section, provided that the plan or
issuer corrects the information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated
or to dissimilar circumstances.
PART 158--ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE
REQUIREMENTS
0
7. The authority citation for part 158 continues to read as follows:
Authority: 42 U.S.C. 300gg-18.
0
8. Section 158.221 is amended by adding paragraph (b)(9) to read as
follows:
Sec. 158.221 Formula for calculating an issuer's medical loss ratio.
* * * * *
(b) * * *
(9) Beginning with the 2020 MLR reporting year, an issuer may
include in the numerator of the MLR any shared savings payments the
issuer has made to an enrollee as a result of the enrollee choosing to
obtain health care from a lower-cost, higher-value provider.
* * * * *
[FR Doc. 2020-24591 Filed 11-3-20; 4:15 pm]
BILLING CODE 4830-01-P; 4510-29-P; 4120-01-P
