Trump Administration Proposals Would Require Extensive Cost-Sharing Disclosures by Health Plans and Insurers

Practical Law Legal Update w-022-8792 (Approx. 9 pages)

Trump Administration Proposals Would Require Extensive Cost-Sharing Disclosures by Health Plans and Insurers

by Practical Law Employee Benefits & Executive Compensation

Health Care Transparency: Statutory and Regulatory Background

The proposed regulations would implement an Affordable Care Act (ACA) requirement under which group health plans must disclose specified plan-related information, including information on cost-sharing and payments regarding any out-of-network coverage (Section 2715A of the Public Health Service Act (PHSA) (42 U.S.C. § 300gg-15a); 42 U.S.C. § 18031(e)(3); see Practice Note, Grandfathered Health Plans Under the ACA: ACA Provisions That Do Not Apply to Grandfathered Plans). Section 2715A relates to another ACA provision on health coverage transparency that imposes reporting and disclosure requirements for qualified health plans (QHPs) offered on an ACA exchange (see Article, Health Insurance Exchange and Related Requirements Under the ACA). In ACA FAQ guidance (August 2015), the Departments indicated their intent to implement regulations regarding Section 2715A transparency reporting for:

Non-grandfathered group health plans (including large group and self-insured health plans).
Health insurers offering group and individual health insurance coverage.

The proposed regulations were also issued in response to a Trump administration order directing the Departments to require health plans, insurers, and providers to make available information concerning out-of-pocket (OOP) costs for health care items and services before a participant receives the care or service (Executive Order 13877 (June 24, 2019)). As a result, the proposed regulations are intended to encourage a market-driven health care system in which participants are provided information to make informed health care decisions.

The regulatory citations for the proposed regulations are: 26 C.F.R. § 54.9815-2715A; 29 C.F.R. § 2590.715-2715A; 45 C.F.R. § 147.210.

Cost-Sharing Disclosures for Participants and Beneficiaries

The proposed regulations would require plans and insurers to disclose certain information regarding participants' OOP costs for a particular health care item or service—consistent with specific method and format requirements—on request by a participant, beneficiary, or enrollee (or the authorized representative of any of these individuals). These disclosure requirements were modelled after existing health plan notices provided by plans and insurers (see Health Plan Notices and Disclosures Chart). In this regard, the Departments expressly referenced notices for benefit claims denials under the claims regulations which—according to the Departments—are synonymous with post-service explanations of benefits (EOBs) (see Practice Note, Internal Claims and Appeals Under the ACA: Additional Content Requirements for Benefit Notices). The proposed regulations' disclosures would therefore provide cost-sharing information before the receipt of care.

The disclosures would include cost-sharing liability estimates built on accurate information that includes:

Actual negotiated rates.
Out-of-network allowed amounts.
Individual-specific accumulated amounts.

The Departments reasoned that because this information is the same information currently provided post-service on EOBs, there should not be issues about protecting plans' and insurers' proprietary information.

Depending on how payment is structured, plans and insurers could provide participants with cost-sharing information for either:

A single item or service for a treatment/procedure.
Multiple items or services for which the plan bundles payment.

Content Requirements: Information Must Be Relevant and Accurate

The proposed regulations include seven content requirements that would need to be included in a cost-sharing disclosure, as applicable. Plans and insurers would need to satisfy the content requirements addressed below by disclosing actual data that is both relevant to a participant's cost-sharing liability and accurate as of when a request is made.

First Content Element: Estimated Cost-Sharing Liability

Plans and insurers would need to disclose an estimate of the cost-sharing liability for furnishing a covered item or service, including prescription drugs, by a specific provider(s). Cost-sharing liability, a defined term under the proposed regulations, would mean the amount a participant is responsible for paying for a covered item or service under the plan's terms. The term would reflect all forms of cost-sharing, for example, deductibles, coinsurance, and copayments. However, cost-sharing liability would not include:

Premiums.
Balance-billed amounts for out-of-network providers.
The cost of non-covered items or services.

The proposed regulations would define "items or services" as all "encounters, procedures, medical tests, supplies, drugs, durable medical equipment, and fees (including facility fees)" charged to a participant by a provider in furnishing health care.

Second Content Element: Accumulated Amounts

The cost-sharing disclosure would need to include a participant's "accumulated amounts"—that is, a participant's financial responsibility incurred when the request for cost-sharing information is made. Examples include:

Deductibles or OOP limits, such as the ACA's annual limit on cost-sharing (see Practice Note, Cost-Sharing Restrictions Under the ACA).
A maximum OOP amount set by a plan or insurer that is lower than the ACA limit.

Accumulated amounts would:

Include expenses that count toward a deductible or OOP limit (for example, copayments and coinsurance).
Exclude expenses that do not count toward a deductible or OOP limit (for example, premiums, OOP expenses for out-of-network services, or amounts for items or services not covered by the plan).

Some plans impose a cumulative treatment limit for particular covered items or services that are independent of individual medical necessity determinations (for example, a limit on the number of days or visits). If so, the accumulated amount would need to reflect accruals toward this independent limit.

Third Content Element: Negotiated Rates

The disclosure would need to contain the negotiated rate (in dollars) for one or more in-network provider regarding a requested covered item or service. (This assumes, however, that the rate is necessary to determine a participant's cost-sharing liability.) A defined term, the negotiated rate would mean how much a plan or insurer (or third-party administrator (TPA) on the plan's or insurer's behalf) has contractually agreed to pay an in-network health provider for a covered item or service. If a provider contract expresses the negotiated rate as a formula (for example, 150% of the Medicare rate), that formula would need to be distilled to a dollar amount. In requiring this disclosure, the Departments reasoned that a participant's cost-sharing liability for an item or service (for example, a 30% coinsurance requirement) cannot be known without first knowing the negotiated rate of which the participant must pay 30%. Subject to comments, however, the negotiated rate need not be included if it is inapplicable (for example, the copayment is a flat dollar amount).

The proposed regulations also would permit participants to:

Obtain cost-sharing information by using a billing code or descriptive term.
Learn the cost of a set of items or services that includes a prescription drug and is subject to a bundled payment arrangement for a treatment or procedure.

Fourth Content Element: Out-of-Network Allowed Amount

As applicable, the cost-sharing disclosure must include the maximum amount a plan or insurer would pay for a covered item or service furnished by an out-of-network provider (that is, the out-of-network amount). In addition to the out-of-network amount, the plan or insurer would need to disclose the participant's cost-sharing outlay (for example, 30% of the out-of-network amount).

Fifth Content Element: Items and Services Content List

The cost-sharing disclosure would also need to include a list of covered items and services for which cost-sharing information is provided. This requirement would only apply if a participant asks for cost-sharing information for an item or service that is part of a bundled payment arrangement that includes more than one item or service (versus a single item or service). If applicable, plans or insurers would need to provide:

A list of each covered item and service in the bundle.
The participant's cost-sharing liability for the covered items and services as a bundle.

However, cost-sharing liability for each item or service in the bundle would not be required.

Sixth Content Element: Notice of Coverage Prerequisites

This disclosure, included if applicable, would inform participants that a particular item or service for which cost-sharing was requested may be subject to a coverage prerequisite. A prerequisite refers to medical management techniques that must be satisfied (for example, concurrent review, preauthorization, and step-therapy or fail-first protocols). (See Practice Notes, Preventive Health Services Under the ACA, Other Than Contraceptives: Use of Reasonable Medical Management and Mental Health Parity: NQTLs and Other Issues: Fail-First Requirement and Lack of Programs in Geographic Area to Meet Requirement.)

However, a prerequisite would not include:

Medical necessity determinations generally.
Other forms of medical management techniques that do not require action by a participant.

Seventh Content Element: Disclosure Notice

The cost-sharing disclosure would also need to include a plain-language notice of certain standard information and four specific disclosures. First, the notice would need to state that out-of-network providers may bill participants for the difference (referred to as balance billing) between:

A health provider's billed charges.
The sum of the amount collected from the plan or insurer and the amount collected from the individual in the form of cost-sharing.

The notice would state that cost-sharing estimates do not reflect potential additional amounts that are balance-billed (see Practice Note, Patient Protections and Clinical Trials Under the ACA: Cost-Sharing Requirements: Balance Billing).

Second, the notice would need to state that actual charges for covered items and services could differ from those described in a cost-sharing liability estimate (depending on the actual items and services received). A third provision would state that estimated cost-sharing liability for a covered item or service would not guarantee that coverage would be provided for the items and services.

Under a fourth provision, plans and insurers could include additional information (for example, other disclaimers) if the additional information did not:

Conflict with information required to be provided.
Attempt to disclaim the plan's or insurer's responsibility to provide accurate cost-sharing information.

Additional information could indicate how long any price estimates would be valid.

The Departments provided model language regarding this seventh disclosure that plans and insurers could (but would not be required to) use.

Plain Language Standard

Information in a cost-sharing disclosure must be provided in plain language, which – in a standard akin to one applied for summary plan descriptions (SPDs) and other benefits disclosures – means written and presented in a manner calculated to be understood by the average participant or beneficiary (see SPD Compliance Chart for ERISA Health and Welfare Plans and Practice Note, COBRA Overview: Initial (General) Notice). To meet this standard, plans and insurers would need to consider factors such as:

The level of comprehension and education of typical participants.
The complexity of the relevant plan's terms.

In carrying out the plain language standard, plans and insurers would need to limit or eliminate technical jargon and long, complex sentences, so that information would not mislead or fail to inform participants.

Required Distribution Methods

Under the proposed regulations, plans and insurers would be required to disclose the cost-sharing information described above either:

Through a self-service tool that meets certain standards and is available on an internet website.
In paper form.

Required Functionality of Internet-Based Self-Service Tool

Plans and insurers would need to make available a self-service tool on an internet website for participants' use, free of charge, to search for cost-sharing information on covered items and services. The tool would need to allow users to search for:

Cost-sharing information about a covered item or service provided by either a specific in-network provider or all in-network providers.
Out-of-network allowed amounts for a covered item or service provided by out-of-network providers.

The tool would also need to provide users with real-time responses based on cost-sharing information that was accurate at the time of request.

The tool would need to allow participants to search for cost-sharing information using either:

A billing code (for example, CPT Code 87804).
A descriptive term (such as "rapid flu test").

The proposed regulations include a special rule for information requests for all in-network providers and plans or insurers with multi-tiered networks. The tool would need to produce the relevant cost-sharing information for the covered item or service for each tier. Also, if the cost-sharing information for a plan-covered item or service varies based on factors other than the provider, the tool would need to allow users to enter enough information for the plan or insurer to disclose meaningful cost-sharing information.

Practical Impact

The Departments have requested comments on all aspects of their proposals, and plans and insurers may have a good deal to say regarding the regulations' general feasibility—including, for example, their access to particular disclosures that would be required under the regulations. Comments on the government's proposals are due by January 14, 2020.

Trump Administration Proposals Would Require Extensive Cost-Sharing Disclosures by Health Plans and Insurers | Practical Law