Technical Guidance Issued on Transparency in Coverage Regulations
On April 19, 2022, the U.S. Departments of Health and Humans Services, Labor, and Treasury (collectively, the Departments) issued guidance which sets forth two separate safe harbors for group health plans and health insurance issuers whose alternative payment arrangements with health care providers render it difficult to fulfill their “dollar amount” reporting requirements under the Transparency in Coverage (TiC) Final Rules.
The TiC Final Rules require non-grandfathered group health plans, and health insurance issuers offering non-grandfathered health insurance in the individual and group markets, to post on a public website the following pieces of information in three machine-readable files1:
- Information regarding the in-network 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.
For the In-network Rate File, the TiC Final Rules require plans and issuers to publish all applicable rates, which may include one or more of the following: negotiated rates, underlying fee schedule rates, or derived amounts for all covered items and services. The In-network Rate File requirement applies to plans and issuers regardless of the type of payment model under which the coverage is provided: whether it is the standard Fee For Service payment model (where health care providers are paid directly for each covered item or service provided), bundled payment arrangements, or alternative reimbursement arrangements. Additionally, if negotiated rates for reimbursement of items and services are not used, then the plan or issuer must report derived amounts, to the extent those amounts already are calculated in the normal course of business. If the plan or 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 rates or derived amounts.
The TiC Final Rules require that these rates are reflected in the In-network Rate File as dollar amounts. The Departments note that while many alternative reimbursement arrangements do not have a dollar amount associated with a particular item or service before such item or service is provided, a dollar amount can still be determined in some instances under these models. The TiC Final Rules provide a non-exhaustive list of alternative reimbursement arrangements and summarize general reporting expectations for these models. The TiC Final Rules specifically summarize reporting expectations for bundled payment arrangements and capitation arrangements (including sole capitation arrangements and partial capitation arrangements), reference-based pricing with (and without) a defined network, and value-based purchasing. For payment arrangements where adjustments are made after care is provided, plans and issuers should disclose the base negotiated rate before adjustments are applied.
The Departments admit that because of the unique nature of such alternative arrangements, plans and issuers can only estimate the potential range of rates in advance, but they cannot determine accurate dollar amounts until a claim is made. The new guidance addresses these situations by providing enforcement safe harbors for satisfying the reporting requirements where reimbursement arrangements do not permit the plans and issuers to accurately derive specific dollar amounts in advance, or where the rates are not supported by the schema established by the TiC Final Rules or additional context is required.
The Departments note that they may revisit these safe harbors in the future, especially when access to underlying fee schedules become more widely available when the advanced explanations of benefits under the Consolidated Appropriations Act, of 2021, begin to be issued.
Safe Harbor for Negotiated Rates Resulting From Certain “Percentage-of-Billed Charges”
Where a plan or policy provides that the plan or issuer will pay a fixed percentage of a provider’s billed charges, a dollar amount for the service cannot be determined in advance.2 For these types of arrangements, the guidance permits plans and issuers to report a percentage number, in lieu of a dollar amount. For instance, if a negotiated arrangement for a particular item or service provides for reimbursement for 70 percent of billed charges, and the plan or issuer is unable to ascertain the dollar amount that will be billed for the item or service in advance, the Departments will permit the plan or issuer to report the in-network rate using 70 percent. However, the Departments clarified that this safe harbor will not apply to a particular alternative reimbursement arrangement if it is determined that it can sufficiently disclose a dollar amount. The guidance provides a link to the documentation specific to the format requirements for percentage-of-billed-charges arrangements.
Safe Harbor for In-Network Rates Provided Under Alternative Reimbursement Arrangements That Are Not Supported by the Schema or Require Additional Context to be Understood
In situations where alternative reimbursement arrangements are not supported by the schema, or in instances where the contractual arrangement with a provider requires the submission of additional information to describe that nature of the negotiated rate, plans and issuers may disclose in an open text field a description of the formula, variables, methodology, or other information needed to understand the arrangement. The open text field may be used for reporting only if the schema, as provided in the Departments’ technical implementation guidance, does not otherwise support the arrangement. The guidance provides a link to the documentation specific to use of the open text field.
Ballard Spahr attorneys in the Employee Benefits and Executive Compensation and Health Care practice groups are ready to assist plan sponsors and plan administrators to effectively communicate with their vendors how to prepare these machine readable files and remain compliant with the nuanced TiC Regulations.
- However, the Departments previously announced that they will not begin enforcement of the requirements related to machine-readable files for in-network and out-of-network data until July 1, 2022. The Departments also previously announced that they will defer enforcement of the requirement that plans and issuers publish a machine-readable file related to prescription drugs while they determine whether the requirement remains appropriate in view of a new set of reporting requirements in the Consolidated Appropriations Act, 2021.
- These types of arrangements may apply to low-volume procedures or high-cost, outlier inpatient care, where the arrangement limits the health care provider’s ability to charge amounts for furnished items and services that significantly vary from an established rate schedule (such as a hospital’s chargemaster).
Subscribe to Ballard Spahr Mailing Lists
Copyright © 2024 by Ballard Spahr LLP.
(No claim to original U.S. government material.)
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.
This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.