October 30, 2020

Price Transparency Regulations Applicable to Group Health Plans and Insurers Are Here

3 min

On October 29, 2020, the U.S. Department of Health and Human Services, the Centers for Medicare and Medicaid Services (CMS), the U.S. Department of Labor, and the U.S. Department of the Treasury issued the final rule on price transparency applicable to health plans and insurers (Final Rule). The Final Rule arises out of President Trump’s executive order, “Improving Price and Quality Transparency in American Healthcare to Put Patients First.”

The Final Rule comes nearly 11 months after the proposed rule was published back in November 2019. It applies to most group health plans, including employer group health plans, and to health insurance companies offering group and individual health coverage. Under the Final Rule, group health plans and health insurers will have to provide personalized out-of-pocket cost information, including negotiated rates, for all covered healthcare items and services, including prescription drugs, through an internet-based self-service tool. They will also have to make their in-network negotiated rates with providers and out-of-network allowable rates available to the public, along with their negotiated pharmaceutical prices and historical net prices for all covered drugs at the pharmacy location level.

The Final Rule will begin to take effect in January 2022, but it will not take full effect until 2024. Specifically, information about healthcare costs must be made available for plan years beginning on or after January 1, 2022. Cost-sharing information for over 500 “shoppable services” must be made available for plan years beginning on or after January 1, 2023. Cost-sharing information will be required for all services for plan years beginning on or after January 1, 2024.

The Final Rule shares a lot of similarities with CMS’s final rule on hospital price transparency released in November 2019. The hospital price transparency rule will require thousands of U.S. hospitals to disclose their negotiated rates with insurers for 300 common medical services and the discounted cash price they are willing to accept for such procedures. In December 2019, the American Hospital Association (AHA), along with several other stakeholders, filed a lawsuit seeking a permanent injunction preventing CMS from enforcing the hospital price transparency rule. In June 2020, a federal district court upheld the rule, but that decision was appealed. In October 2020, the case was argued before the D.C. Circuit. The case remains under submission.

Federal regulators believe the Final Rule will "give consumers the tools needed to access pricing information through their health plans. . . . For too long, Americans have been in the dark about the cost of their health care until they obtain services and receive a bill."1 We anticipate the Final Rule will be challenged in court by insurance companies and other stakeholders that argue that the rule undermines competition in the industry.

Venable attorneys will continue to monitor the efforts to implement the Final Rule, along with any legal challenges arising from its release, and keep clients apprised of any updates. For more information about the topics discussed in this client alert, please contact one of the authors.

"1 Transparency in Coverage Final Rule Fact Sheet (CMS-9915-F),” CMS.gov, Oct. 29, 2020, available at: https://www.cms.gov/newsroom/fact-sheets/transparency-coverage-final-rule-fact-sheet-cms-9915-f"