Proposed Regulations Mandate New Price and Cost-Sharing Disclosures for Group Health Plans

On November 27, 2019, the Internal Revenue Service, U.S. Department of Labor, and U.S. Department of Health and Human Services (“Agencies”) issued proposed regulations setting forth new disclosure requirements for insured and self-insured group health plan sponsors to allow increased access to pricing information by plan participants and beneficiaries.

Upon the request of a participant, beneficiary or enrollee, the proposed regulations require group health plans and insurance issuers to provide personalized cost-sharing information regarding a particular covered item or service. The information must be provided through an online self-service tool and in paper form upon the request of the participant. Price and cost-sharing data that must be disclosed include the following:

• Cost-sharing information – An estimate of the participant’s liability for deductibles, coinsurance and copayments regarding the particular covered item or service.
• Accumulated Amount – A summary of the total cost-sharing amount the participant has incurred as of the date of the request;
• Negotiated Rate – The dollar amount the plan or insurer has contractually agreed to pay in-network providers for the requested item or service;
• Out of Network Allowed Amount – The amount that the plan or insurer will pay for the covered item or service if provided by an out-of-network provider;
• Bundled Services – If items or services are provided in a bundled arrangement, a list of the items or services for which the cost-sharing information is being disclosed;
• Prerequisites – A notice if coverage for the item or service is contingent upon satisfaction of prerequisites such as prior authorization, preauthorization, prior approval, precertification or other care management requirements; and
• Special Disclosures – A notice explaining how balance billing or changes to actual items and services may impact the cost estimate, and relaying other disclaimers.

The DOL issued a model notice that plans can use to comply with these disclosure requirements. Insured group health plans may rely upon their carriers to provide compliant disclosures pursuant to a written services agreement.

In addition to these personalized disclosures, issuers and plans must make public disclosure of the in-network negotiated rates for covered items and services, and disclose historical data regarding payments of allowed amounts to out-of-network providers. These public disclosures must be provided through standardized, machine-readable files.

The transparency disclosure rules will be effective one year after the regulations are finalized. The model disclosure can be found here.

“Cadillac Tax” Repealed; PCORI Fee Extended

The signing of the Further Consolidated Appropriations Act, 2020 (Act) at the close of 2019 affected two Affordable Care Act fees related to employer sponsored group health plans.

First, the good news: the Act repealed Internal Revenue Code Section 4980I (a.k.a. the Cadillac Tax). The so called Cadillac Tax was a 40% excise tax on certain high cost group health plans. Although the Cadillac Tax was originally scheduled to become effective in 2018, it was repealed before ever going into effect. Its effective date was initially delayed until 2020, and was delayed again to 2022, before ultimately being repealed.

Now, the bad news: the Act extends the Patient Centered Outcomes Research Institute (PCORI) fee for an additional 10 years. The amount of the PCORI fee is based on the average number of covered lives in a self-insured group health plan. Most recently, the fee was $2.45 per average covered life, but the amount of the fee is indexed and generally increases a little each year. The PCORI fee was originally applied to self-insured health plans for plan years ending after September 30, 2012 and before October 1, 2019. However, the Act extends the PCORI fee to 2029. (Further Consolidated Appropriations Act, 2020: H.R. 1865)