Transparency in Coverage Rule – Boosting Healthcare Consumerism Through Added Compliance

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The Transparency in Coverage Rule (TIC), released in October 2020 by the Department of Health and Human Services, Department of Labor, and the Department of Treasury, represents the most significant step toward lowering healthcare prices and improving price transparency since the Affordable Care Act and the No Surprises Act (NSA). The NSA is a stair-step to the TIC when it comes to the consumer price transparency resources that must be made available. The rule provides consumers with access to pricing information within their health plans, building off the previous requirement that hospitals must disclose their standard charges and negotiated third-party payer rates.

What Will the Transparency in Coverage Rule Mandate?

  • Health Plan Transparency: Most group health plans and health insurance issuers must disclose price, cost-sharing, and out-of-pocket expense information to their participants, beneficiaries, and prospective enrollees.
  • Drug and Service Price Transparency: Insurance companies must also disclose their billed charges, in-network negotiated rates, allowed amounts for out-of-network providers, and prescription drug prices (both historic and negotiated) on a publicly available, self-service website (and in paper form upon request).
  • Machine-readable Files: Consumers, employers, researchers, and third-party developers will receive access to Machine-readable Files (MRF) containing detailed pricing information, including covered items and negotiated rates among in-network providers. MRFs are a digital representation of data or information in a file that can be imported or read by a computer processor. Following the regulatory specifications, these files must be provided in JavaScript Object Notation (JSON) or Extensible Markup Language (XML). Out-of-network and pharmacy benefit files can also be represented as MRFs.
  • Shoppable Codes: Consumers will gain access to a more robust, self-service tool showing cost-sharing information and how much they’re expected to pay for a particular service. Online pricing for a specific set of 500 services as defined by CMS must first be available, followed by the scheduled release of all services and associated materials; pricing for all of these services must also be available in paper form in case a member requests this format. The four types of standard charges a hospital is required to provide in their consumer-friendly display will include: the discounted cash price, payer-specific negotiated charge, de-identified minimum negotiated charge, and de-identified maximum negotiated charge. For the first time, consumers will be able to compare costs and shop around among providers before receiving care. Shoppable codes do not apply to Medicare and Medicaid, as these provider payment amounts are already public knowledge.

In a nutshell, TIC equates to Transparency, Transparency, and More Transparency. The desired results of these requirements are to protect consumers from surprise out-of-pocket bills, empowering them to take a closer look at their options for care, and facilitate cost-conscious decisions. Greater transparency creates a more competitive dynamic among providers, effectively placing downward pressure on prices that lead to a sustainable model of care for all involved.

When Does the Transparency in Coverage Rule Go Into Effect?

As this information goes public, healthcare providers and insurers may be rethinking some of their prices and negotiating new rates. The rule allows some time for these discussions to take place.

  • As of January 1, 2022: the historical net prices for all covered prescription drugs by plan or issuer must be publicly disclosed at pharmacies.
  • As of January 1, 2023: a list of 500 shoppable services will be available online.
  • As of January 1, 2024: the remaining items and services will be listed online.

How Will the Transparency in Coverage Rule Be Enforced?

On July 19, 2021, the Centers for Medicare and Medicaid increased the civil monetary penalty of $300/day for smaller hospitals (with 30 or fewer beds) and apply a $10/bed/day for larger hospitals for a daily maximum of $5,500. Under this approach, a hospital charged with one year of noncompliance could face a penalty of $109,500 to $2,007,500.

How Is Payer Compass Addressing the Urge for Transparency and Improved Consumerism?

Payer Compass has long led the way to greater price transparency with our cost containment and claim processing solutions. CompassConnect is our most recent transparency development that takes an enterprise approach by offering tech-stack modules that can be adopted individually or ideally as a bundle to meet the compliance requirements necessary for self-insured organizations, plan administrators, brokers, stop-loss carriers, and accountable care organizations.

Our in-house capabilities track and update all of the ongoing regulations so you aren’t burdened with the extra workload. Our team is committed to providing education and ongoing support through the development and implementation of our Transparency Suite of Solutions. Click here to contact us and learn more.