The Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (collectively, Departments) have addressed how group health plans and health insurers should determine cost-sharing estimates for items and services that have low utilization, under the Affordable Care Act's (ACA's) transparency in coverage (TiC) rules. The Departments intend to use their enforcement discretion and not take action against plans or insurers that do not provide an estimate for low-use items and services (if certain conditions are met).
The Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (collectively, Departments) have issued FAQ guidance addressing how group health plans and health insurers should determine cost-sharing estimates for items and services with low utilization rates, under the Affordable Care Act's (ACA's) transparency in coverage (TiC) rules (FAQ guidance (Feb. 2, 2024); Section 2715A of the Public Health Service Act (PHSA) (42 U.S.C. § 300gg-15a)). Under the FAQ guidance, the Departments intend to use their enforcement discretion and not take action against plans and insurers that do not provide an estimate for low-use items and services (if certain conditions are met).
Overview of ACA's Transparency in Coverage (TiC) Rules
The ACA's TiC requirements were implemented in final regulations issued by the Departments in November 2020 (85 Fed. Reg. 72158 (Nov. 12, 2020)). As implemented, the TiC rules require plans and insurers to disclose certain cost-sharing information on request to plan participants or beneficiaries. These disclosures include estimates of an individual's cost-sharing liability for covered items or services furnished by a particular health provider. Plans and insurers must make this information available:
On an internet website.
In paper form, if requested, so that individuals or their authorized representatives can obtain estimates of their out-of-pocket expenses for covered items and services.
Plans and insurers must make available cost-sharing information for:
A preliminary set of 500 items or services, using an internet-based self-service tool, for plan years that began on or after January 1, 2023.
All covered items and services for plan years beginning on or after January 1, 2024.
The required cost-sharing information must be:
Accurate as of when the request is made regarding a participant's or beneficiary's cost-sharing liability for covered items and services under the plan.
Under the TiC final regulations, plans and insurers also must publicly post on a website three machine-readable files (MRFs) that separately include in-network rates with providers for all covered services, out-of-network allowed amounts and billed charges for covered services, and negotiated rates and historical net prices for prescription drugs. For more information, see Practice Note, Transparency in Coverage (TiC) Requirements Under the ACA: Public Disclosures.
Guidance on Cost-Sharing Estimates for Low-Use Items and Services
Although TiC cost-sharing estimates are generally based on contracted rates, plans and insurers may use other methods and analytics, including prior claims data, to provide more accurate estimates. Under certain percentage-of-billed-charges arrangements, for example, rates for items and services might not be negotiated as prospective dollar rates. For these arrangements, TiC cost estimates may be based on past claims data. In some cases, however, past claims data may:
Be unavailable in large quantities—for example, regarding items or services with low utilization.
Result in less predictive or accurate cost estimates.
The Departments acknowledged that plans and insurers may be unable to provide accurate cost-sharing estimates for low-use items and services such as these. As a result, the Departments' FAQ guidance therefore addresses how plans and insurers should create TiC cost-sharing estimates:
For items and services with "extremely low utilization."
That are based on claims data rather than prospective rates.
The Departments will likely exercise their enforcement discretion (on a case-by-case basis) and not take action against plans or insurers that do not provide a cost estimate for items and services if:
The estimate would need to be based on past claims data.
There were fewer than 20 distinct claims for the items and services during the prior three years.
For example, the Departments' enforcement discretion could be invoked if payment (and an individual's liability) for an item or service described above is determined retrospectively. For example, this could be the case for rates based on a percentage of billed charges and where cost-sharing is based on a percentage of those charges.
The Departments may use their enforcement discretion for plans and insurers that fail to include the above-described cost estimates in their self-service tools (or in paper form, on request), or in providing over-the-phone cost-sharing information.
For the items and services described above, the plan or insurer should indicate on its self-service tool that:
The item or service is covered.
A specific cost estimate is unavailable due to insufficient data.
Participants and beneficiaries should contact the plan or insurer for more information about the item's or service's cost-sharing requirements.
For participants and beneficiaries who do request more information, plans and insurers should be prepared to provide relevant information. For example, this information may include: