New Guidance for Health Plan Cost-Sharing Tool

TiC Cost Sharing Tool Background

Non-grandfathered group health plans are required to provide a searchable, internet-based self-service tool that reflects accurate cost-sharing and rate information for plan participants, in accordance with the Transparency in Coverage (TiC) Final Rules. The TiC Final Rules were passed in late 2020 with the intended goal of helping consumers make informed health care decisions and hopefully lead to improved health outcomes. Group health plans have a significant role in supporting this goal by providing plan participants with required information in compliance with the TiC.

This self-service tool requirement was implemented in two phases:

• January 1, 2023 Deadline: The first phase required information for 500 specified items and services to be accessible to plan participants by January 1, 2023. Click here for a Risk Strategies article detailing this prior deadline.
• January 1, 2024 Deadline: The remaining covered items and services under the TiC rules were required to be made available through this self-service tool for plan years beginning on or after January 1, 2024.

Note that the following plans are not subject to the TiC requirements:

• Grandfathered plans, excepted benefit plans, retiree-only plans, short-term limited duration insurance plans, and account-based plans such as Flexible Spending Accounts (FSAs), Heath Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs).

TiC Self-Service Tool Details

In an effort to increase health plan pricing transparency for participants, the TiC self-service tool is designed to provide estimates of cost-sharing responsibility for a specific item or service from a specific provider. The intent of the self-service tool is to enable health care consumers to compare cost and quality across health care providers and choose those providers that work best for themselves and covered dependents while also managing their finances.

The searchable, internet-based self-service tool must disclose the following data elements:

• Estimated cost-sharing: Provide an estimate of the cost-sharing liability for a covered item or service by providers at the time the request is made, including deductibles, coinsurance, and copayments.
• Accumulated amounts: Inform plan participants of their status related to plan “accumulators” limits at the time the request is made (e.g., amounts that count toward deductibles, out-of-pocket maximums, visit or treatment limits, etc.).
• In-network rates: Inform plan participants of the negotiated rate or the underlying fee schedule rate, reflected as a dollar amount, for in-network providers for a requested covered item or service.
• Out-of-network allowed amounts: Provide the maximum amount a group health plan would pay for a covered item or service furnished by an out-of-network provider. Alternatively, the tool also may reflect another amount that would provide a reasonably accurate estimate of what a plan would reimburse an out-of-network provider for a covered item or service.
• Bundled payments: Disclose cost-sharing information for each item and service within an applicable bundled payment arrangement.
• Prerequisites: Inform plan participants of applicable coverage prerequisites, such as prior authorization or step therapy, which must be satisfied before they can receive an item or service.
• Disclosure notice: Provide a disclosure notice in plain language (written and presented to be understood by an average plan participant) containing specific disclosures at the time the request is made. A Model Notice is available from the federal agencies and may be used for this purpose.

Plans are also required to provide cost estimates, free of charge, in paper format or over the telephone upon a participant’s request. This paper disclosure must be mailed out within two business days of receiving the request.

New FAQ Guidance – Low Utilization

The federal agencies released this new FAQ guidance acknowledging that, in certain, limited circumstances, group health plans may not be able to provide accurate cost-sharing estimates as required by the TiC Final Rules for items and services with extremely low utilization rates. In these instances, the federal agencies will likely exercise their discretion, on a case-by-case, not to bring enforcement actions against group health plans for failure to include information in their self-service tool (or upon paper or phone request) for items and services in which:

• A cost estimate would need to be based on past claims data^[1] and
• There have been fewer than 20 different claims over the past three years.^[2]

In these instances, the group health plan should indicate on the self-service tool that the item or service is covered, but that a specific cost estimate is not available due to insufficient data. Additionally, the self-service tool should encourage plan participants to contact the plan for more information on relevant cost-sharing amounts.

For plan participants that contact the group health plan directly, instead of using the self-service tool, the plan should provide any available relevant information, such as information available on the Summary of Benefits and Coverage (SBC), or the cost-sharing portion of the item or service for which the participant will be responsible.

Next Steps for Employers

Since plan carriers and third-party administrators (TPAs) are in the best position to regularly update the TiC self-service tool, group health plans must rely on them for full compliance with these requirements, including this new FAQ guidance.

• Fully-Insured Medical Plans: Employers sponsoring fully insured medical plans should rely on their insurance carriers for full compliance with the TiC self-service tool requirement.
• Self-Funded Plans: Employers sponsoring self-funded medical plans (including level-funded plans) are directly responsible for the TiC self-service tool requirement but should contract with their TPA or other third-party vendor to satisfy this obligation via a written agreement. However, as with most compliance obligations, if the TPA or other contracted vendor fails to satisfy this TiC requirement, the self-funded plan bears the ultimate responsibility for such failures.

TiC Machine Readable Files

On a related note, the TiC compliance requirements for group health plans also require public posting of machine-readable files (MRFs), specifically:

1. An in-network rate MRF, including negotiated rates for all covered services and items between the plan/carrier and in-network providers.
2. An out-of-network allowed amounts MRF, including amounts paid to, and billed charges from, out-of-network providers for all covered services and items within a 90-day period.
3. A prescription drug MRF, including negotiated rates and historical net prices.

The first two MRFs listed above (in-network and out-of-network rates) were required to be posted on the public websites of group health plans by July 1, 2022. Click here and here for prior Risk Strategies articles detailing these MRF requirements.

The federal agencies initially deferred enforcement of the prescription drug MRF requirement^[3]. However, the federal agencies rescinded their deferred enforcement policy for the prescription drug MRF in September 2023^[4] and indicated they will develop technical requirements and an implementation timeline for enforcement in future guidance. Once the federal agencies release this updated guidance, group health plans are advised to work with their plan service providers (carriers, TPAs, and/or pharmacy benefit managers) to update contractual obligations for compliance with the prescription drug MRF requirement.

Risk Strategies is here to help. Contact us directly at benefits@risk-strategies.com.

[1] The FAQ document provides an example of rates based on a percentage of billed charges and where cost-sharing is based on a percentage of those charges.

[2] The FAQ document states that to determine whether this 20 different claim threshold is met, group health plans’ contracted service providers (such as carriers, TPAs) may aggregate claims for items and services for more than one plan in a manner consistent with how the service provider uses claims data to support the self-service tool.

[3] Affordable Care Act FAQs Part 49.

[4] Affordable Care Act FAQs Part 61.