Starting July 1, 2022, most group health plans and issuers of group or individual health began posting pricing information for covered items and services. Known as the Transparency in Coverage Act, this provision is intended to empower consumers with the necessary information to make better-informed decisions regarding their health care in three stages, starting with the July 1 enactment. The rule requires plans and issuers to make machine-readable files publicly available that will disclose in-network rates and out-of-network allowed amounts and billed charges for plan or policy years that start on or after January 1, 2022.
This act is one of several laws and regulations that have passed over the years, complementing the No Surprises Act and the Consolidated Appropriations Act of 2021 as ways to offer consumers more information about health care prices and to protect them from being overcharged. Employers and benefits advisors need to be proactively thinking about this change so they can set employees up for success. Some employers have stepped in to remedy this situation, implementing year-round communications campaigns focusing on employee benefits, offering one-on-one enrollment support, and providing employees with tools and services to help them navigate their health plans and benefits coverage.
According to a 2021 postponement by DirectPath, 72% of surveyed respondents learned about health insurance from their family and friends, rather than the employer who provided their coverage. To ensure that employees receive the right information, employers can leverage brokers to assist in communicating information related to the Transparency in Coverage Act. So, what exactly do brokers need to know about these changes? And how should they be thinking about the impact on employees?
1. Health insurance providers must provide machine-readable files containing costs for certain items and services. Brokers must know how to access them.
The finalized Transparency in Coverage rules require health plans in both the group and individual markets to disclose online information regarding in-network provider 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. This information must be available in three separate machine-readable files, meaning they can easily be processed by a computer.
All in-network rate files must include any negotiated rates, underlying fee schedule rates used to determine cost-sharing or derived amounts, whichever rate is applicable to their reimbursement model. Out-of-network rate files must include the historical out-of-network allowed amounts for covered items or services and the billed charges for those items and services, including each unique amount, associated with the provider by national provider identifier (NPI). Prescription drug files must include negotiated rates and historical net prices connected to prescription drugs.
With this information readily available and accessible, brokers can relay rates and service information to employees, empowering them to take ownership over their cost of in- and out-of-network coverage and for prescriptions, ultimately helping them make better decisions regarding health care.
2. Health insurance providers must offer price comparison tools. Brokers must know how to help employees shop around for different plan options and health care procedures.
Issuers are required to make price comparison information available to participants, beneficiaries and enrollees through an internet-based self-service tool and in paper form, upon request. These requirements for the disclosure of cost-sharing information allow a participant, beneficiary or enrollee to request cost-sharing information for a discrete covered item or service. Participants can search by billing code or descriptive term and compare prices of requested services under their health care.
DirectPath’s 2021 report found that 55% of respondents did not know they could comparison shop for health care services. Employees need to learn not only how to shop for coverage (eg, choosing from their employer’s plan offerings), but also for the health care services, treatments and procedures they need. The first step is understanding that, while it is tempting to choose the plan with the lowest premium or simply keep rolling over the same plan year after year, health and financial needs change over time, and what made sense last year may not make sense now . Employees may also be tempted to visit a specialist their doctor recommends without researching a less expensive option or going to the emergency room instead of an urgent care clinic when it may not be necessary — both of which can cost more out-of-pocket for employees , and their employers. Brokers play a key role in ensuring the needs of employees are met. Making sure employees know how to compare shop is vital for this level of transparency to effectively occur.
3. Health insurance providers must offer insurance identification cards. Brokers must be able to explain their use.
Health care providers are now required to include in clear writing, on any physical or electronic plan or insurance identification (ID) card issued to participants, beneficiaries or enrollees, any applicable deductibles, any applicable out-of-pocket maximum limitations and a telephone number and website address for individuals to seek customer assistance. Insurance cards are an important tool to help participants understand their payment for each time they use a different health care service. Insurance ID cards are also a great way for participants to find the best phone number to reach out to their insurer with any questions. With brokers’ help, employers can encourage employees to use these cards to get the information they need from their insurers regarding costs.
Making sure brokers understand the ins and out of the Transparency in Coverage Act is important in case employees have any questions regarding any newly available resources. For too long, Americans have been in the dark about the cost of their health care until after they obtain services and receive a bill. Employees have an important role to play in controlling costs, but they must have meaningful information in order to create the market forces necessary to achieve lower health care costs. It is important brokers understand what employees are paying for health care so they can best help them choose the coverage that is best for them and their families. These requirements will empower brokers to help employees shop around and compare costs between specific providers before receiving care, saving both the employee and their employer time and money.
Kim Buckey is VP of Client Services at Optavise (formerly DirectPath).