ACA Transparency Provisions: What You Need to Know

ACA Transparency Provisions: What You Need to Know

FAQs regarding implementation of transparency provisions under the Affordable Care Act and the No Surprises Act from the Departments of Labor, Health and Human Services, and Treasury provide welcome relief to plan sponsors struggling to comply with transparency requirements that were effective for certain plans beginning July 1, 2022, and for those facing additional obligations coming on January 1, 2023, and January 1, 2024.  

 

Background

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The Transparency in Coverage final rules were released on November 12, 2020, and require non-grandfathered group health plans and health insurance issuers to disclose cost-sharing information in a standardized format that is updated monthly. The Departments delayed the enforcement date for this requirement so calendar-year plans and plans beginning on or before July 1, 2022, were required to post the data to their public websites by July 1. Plans renewing on or after July 1, 2022, are required to post this information upon renewal. The data is to be provided in a machine-readable format (MRF) that is not easily used by the employer or their employees, which have many employers questioning the value and necessity of adding this data, or a link to the data, to their website.

In addition, the No Surprises Act requires plan sponsors and insurers to develop and maintain an online price comparison tool to enable participants to compare cost-sharing amounts for items and services from in-network providers. Beginning January 1, 2023, plans must provide a tool that provides pricing data for the 500 most common medical items and services, and then must include all covered items and services on January 1, 2024.

Plan sponsors typically delegate plan administrative tasks, such as claims processing, ID card preparation, and provider network contracting, to their third-party administrators (TPAs) or insurance carriers. Most were surprised to learn that the transparency in coverage rules required additional written agreements, amendments to service agreements, setting up links on their company website, and in some cases, setting up a separate website to house a link to the TPA’s website to fulfill the transparency requirements.

The final rules grant plan sponsors of fully insured plans the ability to shift responsibility for posting the MRFs to their carriers if they have a written agreement where the insurance carrier agrees to do so. If they contract with the carrier to post this information and the insurance carrier fails to satisfy the posting requirement, the carrier, not the plan sponsor, is considered to have violated the rules. Self-funded plan sponsors, on the other hand, have a higher level of compliance obligations.

The transparency rules obligate self-funded plan sponsors to make these files publicly available, by either hosting the files on their own publicly available website or contracting with their TPA to host the files, and then posting a link to files on the TPA’s site. Unlike fully insured plan sponsors, self-funded plan sponsors will be held responsible for violating the transparency rules if their TPA fails to fulfill the disclosure requirements, even if they have a written agreement to do so. Penalties for failure to comply with this rule can be up to $100 per day (adjusted annually), per violation, per affected individual, so self-funded plan sponsors need to monitor their TPAs to ensure compliance.

 

The Bottom Line for Employers

The recent FAQs provide that if a plan enters into a written agreement with an insurance carrier or TPA to post the MRFs and cost-comparison tool on their website, the plan sponsor does not need to post a link to those files on their own company’s website. The requirement to post a link to the MRFs and cost comparison tool only applies if the group health plan maintains a public website for the plan, which is not common since most plans maintain their information on an intranet site, not a website accessible to the public.

The guidance also spells out that if a group health plan does not have its own public website, the plan is not required to create a website for the purpose of providing a link to a location where the MRFs are publicly available. This is welcome news for many plans who may have been advised this is required.

 

What’s Next?

Plan sponsors who have entered into a written agreement with their insurance carrier or TPA to maintain and post the MRFs and cost-comparison tools required under the transparency rules, may remove any link to the files that are currently posted to their company’s public website and do not need to add a link to their company’s public website going forward. Self-funded plans who have created a public website to host this information or to provide a link to the MRFs may take down the site after entering a written agreement with the TPA to provide this data. The written agreement with the carrier or TPA is critical to ensuring compliance with the transparency rules, so all plan sponsors need to confirm this is in place prior to removing any links or data from their website.

Additionally, given the potential penalties that can be assessed for failure to comply with these rules, self-funded plan sponsors should implement a process to ensure their TPAs are meeting the requirements of the transparency rules.