Final Rule on Health Plan Price Transparency
Nov 3, 2020
Last November, we published an alert discussing two rules that were issued in response to the President’s “Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First.” As a brief recap, the two rules discussed in our alert last year were as follows:
Federal regulators have evaluated all public comments from the proposed rule and announced a 556-page final rule requiring transparency of health insurers and health plans. Here’s a summary of the final transparency initiatives:
Employers are directly liable for these requirements, despite rarely being in a position to provide this kind of data themselves and relying heavily on claims payers for these services. If the employer’s health plan is fully insured, then the rule allows insurers to transfer the liability from the employer to them (likely for a fee or increased premium). Also note the insurer will be able to credit savings from member “shopping” to their medical loss ratio (MLR) rebate calculations.
Regulators state in their press release that the “Administration has already finalized requirements for hospitals to disclose their standard charges, including negotiated rates with third-party payers. The requirements in the Transparency in Coverage final rule will reduce the secrecy behind health care pricing with the goal of bringing greater competition to the private health care industry.”
However, many providers and payers are of the opinion this will not foster competition but rather set a floor on pricing, and payers tend to safeguard their privately negotiated rates as confidential trade information, so time will tell whether any lawsuits are filed. We did see a lawsuit successfully challenge the drug pricing transparency rule scheduled for July 1, 2019, striking the requirement for drug manufacturers to disclose wholesale acquisition cost (WAC) in their ads. Regulators were careful to divide this final rule into several parts with severability clauses.
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.