Health Coverage Transparency Proposed Rule Would Require Insurers to Disclose Out-of-Pocket Costs

On November 15, 2019, the Centers for Medicare and Medicaid Services (“CMS”) published a proposed rule entitled the Transparency in Coverage Proposed Rule, which would require health plans to disclose price and cost-sharing information to participants, beneficiaries and enrollees up front. As with other price transparency regulations, this proposed rule is intended to empower patients and increase competition, ultimately leading to lower healthcare prices.

The proposed rule is directed to most employer-based group health plans, as well as health insurance issuers offering group and individual coverage. If the rule is finalized, these entities would have to provide patients with accurate estimates of out-of-pocket costs that they must pay to meet their deductible, co-pay or co-insurance requirements. Specifically, the health plans and insurance issuers would be required to:

Provide real-time cost-sharing information: Plans would have to provide participants with real-time, personalized cost-sharing information through an online tool. This information would include an estimate of the participant’s cost-sharing liability for all covered items and services. This information would allow consumers to shop and compare costs between providers prior to receiving care.

Disclose rates for in-network and out-of-network providers: Plans would be required to disclose their negotiated rates for in-network providers, as well as the amount they would pay for out-of-network providers.

The proposed rule would also encourage plans and insurance issuers to offer plan designs that would incentivize participants to shop for services from lower-cost, higher-value providers. Should participants do so, the issuers would be permitted to take credit for the shared savings in their medical loss ratio calculations.

Commenting on the proposed rule, CMS noted that it is “intended to drive innovation, support informed, price-conscious decision-making, and promote competition in the healthcare industry.” CMS added that “[m]aking this information public directly helps the consumer, but, more importantly, creates new opportunities for researchers, employers and other developers to build new tools to help consumers.”

The pushback from health insurance plans has already begun. Commenting on the proposed rule, America’s Health Insurance Plans (“AHIP”) noted that “consumers deserve transparency about out-of-pocket costs to help them make informed decisions about their own care,” and that “[t]ransparency should be achieved in a way that encourages – not undermines – competitive negotiations to lower patients’ and consumers’ costs and premiums.” However, AHIP noted that the proposed rule does not satisfy these principles. Nevertheless, they “will continue to engage collaboratively with the Administration and other health care stakeholders on how we can best work together to achieve lower prices and costs while protecting health care quality, choice, value, and privacy” for patients.

There will be a 60-day comment period once the proposed rule is published in the Federal Register.5