October 04, 2023

Background on Transparency in Coverage Machine-Readable Files

The TiC Final Rules require individual and group health plans and health insurance issuers offering non-ACA grandfathered health coverage to disclose the following information on a public website: (i) in-network rates for covered items and services, (ii) out-of-network allowed amounts and billed charges for covered items and services, and (iii) negotiated rates and historical net prices for covered prescription drugs). This information must be provided in three separate MRFs.

The TiC Final Rules also require that group health plans and health insurance issuers make price comparison information available to participants, beneficiaries, and enrollees through an internet-based self-service tool and in paper form, upon request. This price comparison information must be made available for plan years beginning on or after January 1, 2023 for 500 items and services identified by the Departments in the preamble to the TiC Final Rules, and for all covered items and services for plan years beginning on or after January 1, 2024.

The TiC Final Rules took effect for plan years beginning on or after January 1, 2022. Advocacy by Business Group on Health, however, led the Departments to issue FAQs Part 49 in August 2021 that delayed enforcement of the MRFs disclosing the in-network and out data until July 1, 2022, and defer enforcement of the Rx-related MRFs indefinitely pending future notice-and-comment rulemaking if appropriate.

The Departments subsequently issued FAQs Part 53 in April 2022 establishing an enforcement safe harbor for the in-network rate file for circumstances when plans and issuers use alternative reimbursement arrangements – including, “percentage-of-billed-charges” contracts that prevent plans and issuers from deriving specific dollar amounts for covered items and services in advance of those being provided.

FAQs Part 61 Announces Enforcement Will Recommence for Prescription Drug Files

On September 27, 2023, the Departments published FAQs About Affordable Care Act Implementation Part 61 in which they announce two changes to their enforcement approach regarding the TiC Final Rules.

• FAQ Part 61 Q1: The Departments confirm they are rescinding the temporary enforcement delay regarding the TiC Final Rules Rx MRFs requirements outlined in Q1 of FAQs Part 49. The Departments indicate they have determined there is no conflicting overlap between these Rx MRFs and the required Rx data reporting under the Consolidated Appropriations Act, 2021 (CAA ’21), arguing the reporting requirements involve disclosure of different information. This recission is effective immediately; however, the Departments confirmed they intend to develop technical file specifications and an implementation timeline in future guidance.
• FAQ Part 61 Q2: The Departments also confirm they will be rescinding the in-network rate file enforcement safe harbor outlined in FAQs Part 53. The Departments explain that their intention was not provide a categorical exception, but rather to provide clarity for plan sponsors and health insurance issuers with “percentage-of-billed-charges” contracts for whom it would be difficult to determine exact dollar amounts for the rate file. Instead, the Departments will now use their enforcement discretion on a case-by-case basis, stating they are unlikely to pursue enforcement action against a plan or issuer if they can demonstrate that reporting under their payment arrangement would be “extremely difficult or impossible.”

Next Steps

Employer plan sponsors should review FAQs Part 61 with legal counsel, carriers/vendors, and third-party administrators to develop (or refresh) their compliance plan regarding the Rx MRF. Additionally, employer plan sponsors with alternative reimbursement arrangements should review the FAQs and discuss the implications of the Departments’ rescission of the in-network rate file enforcement safe harbor with carriers/vendors and TPAs.

The Business Group strongly supports the objectives and promise of broad transparency. Our members have long considered transparent and accessible cost and quality data as key elements for driving change in how health care is purchased and contracted by health plans, as well as how patients shop for health care.

While transparency is important, implementing it the right way and with sufficient time to prepare is critical. Business Group on Health continues to engage the Departments and encourage them to consider, among other things, employers’ reliance on and work with their carriers/vendors and TPAs in relation to complying with the TiC Final Rules. The Business Group will continue to keep members informed as the Departments issue technical file specifications for the Rx MRFs and other regulatory developments related to TiC compliance obligations.

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Policy & Advocacy Pharmacy/Prescription Drugs