# Transparency in Coverage > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2019-25011 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** November 27, 2019 - **Citation:** 84 FR 65464 ## Text DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 54 [REG-118378-19] RIN 1545-BP47 DEPARTMENT OF LABOR Employee Benefits Security Administration 29 CFR Part 2590 RIN 1210-AB93 DEPARTMENT OF HEALTH AND HUMAN SERVICES 45 CFR Parts 147 and 158 [CMS-9915-P] RIN 0938-AU04 Transparency in Coverage AGENCY: Internal Revenue Service, Department of the Treasury; Employee Benefits Security Administration, Department of Labor; Centers for Medicare & Medicaid Services, Department of Health and Human Services. ACTION: Proposed rule. SUMMARY: These proposed rules set forth proposed requirements for group health plans and health insurance issuers in the individual and group markets to disclose cost-sharing information upon request, to a participant, beneficiary, or enrollee (or his or her authorized representative), including an estimate of such individual's cost-sharing liability for covered items or services furnished by a particular provider. Under these proposed rules, plans and issuers would be required to make such information available on an internet website and, if requested, through non-internet means, thereby allowing a participant, beneficiary, or enrollee (or his or her authorized representative) to obtain an estimate and understanding of the individual's out-of-pocket expenses and effectively shop for items and services. These proposed rules also include proposals to require plans and issuers to disclose in-network provider negotiated rates, and historical out-of-network allowed amounts through two machine-readable files posted on an internet website, thereby allowing the public to have access to health insurance coverage information that can be used to understand health care pricing and potentially dampen the rise in health care spending. The Department of Health and Human Services (HHS) also proposes amendments to its medical loss ratio program rules to allow issuers offering group or individual health insurance coverage to receive credit in their medical loss ratio calculations for savings they share with enrollees that result from the enrollee's shopping for, and receiving care from, lower-cost, higher-value providers. DATES: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on January 14, 2020. ADDRESSES: Written comments may be submitted to the addresses specified below. Any comment that is submitted will be shared with the Department of the Treasury (Treasury Department), Internal Revenue Service (IRS) and the Department of Labor (DOL). Please do not submit duplicates. All comments will be made available to the public. Warning: Do not include any personally identifiable information (such as name, address, or other contact information) or confidential business information that you do not want publicly disclosed. All comments are posted on the internet exactly as received, and can be retrieved by most internet search engines. No deletions, modifications, or redactions will be made to the comments received, as they are public records. Comments may be submitted anonymously. In commenting, please refer to file code CMS-9915-P. Because of staff and resource limitations, the Departments of Labor, HHS, and the Treasury (the Departments) cannot accept comments by facsimile (FAX) transmission. Comments must be submitted in one of the following three ways (please choose only one of the ways listed): 1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the “Submit a comment” instructions. 2. By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9915-P, P.O. Box 8010, Baltimore, MD 21244-8010. Please allow sufficient time for mailed comments to be received before the close of the comment period. 3. By express or overnight mail. You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9915-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. The comments are posted on the following website as soon as possible after they have been received http://www.regulations.gov. Follow the search instructions on that website to view public comments. FOR FURTHER INFORMATION CONTACT: Deborah Bryant, Centers for Medicare and Medicaid Services, (301) 492-4293. Christopher Dellana, Internal Revenue Service, (202) 317-5500. Matthew Litton or David Sydlik, Employee Benefits Security Administration, (202) 693-8335. Customer Service Information: Individuals interested in obtaining information from the DOL concerning employment-based health coverage laws may call the Employee Benefits Security Administration (EBSA) Toll-Free Hotline at 1-866-444-EBSA (3272) or visit DOL's website ( http://www.dol.gov/ebsa ). In addition, information from HHS on private health insurance for consumers can be found on the Centers for Medicare & Medicaid Services (CMS) website ( www.cms.gov/cciio ) and information on health reform can be found at http://www.healthcare.gov. SUPPLEMENTARY INFORMATION: I. Background A. Executive Order On June 24, 2019, President Trump issued Executive Order 13877, “Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First.” 1 Section 3(b) of Executive Order 13877 directs the Secretaries of the Departments of Labor, Health and Human Services (HHS), and the Treasury (the Departments) to issue an advance notice of proposed rulemaking (ANPRM), consistent with applicable law, soliciting comment on a proposal to require health care providers, health insurance issuers, and self-insured group health plans to provide or facilitate access to information about expected out-of-pocket costs for items or services to patients before they receive care. The Departments have considered the issue, including by consulting with stakeholders, and have determined that a notice of proposed rulemaking (NPRM), rather than an ANPRM, would allow for more specific and useful feedback from commenters, who would be able to respond to specific proposals. Additionally, increases in health care costs and out-of-pocket liability without transparent, meaningful information about health care pricing have left consumers with little ability to make cost-conscious decisions when purchasing health care items and services. An NPRM, rather than an ANPRM, would enable the Departments to more quickly address this pressing issue. 1 84 FR 30849 (June 27, 2019). The Executive Order was issued on June 24, 2019 and was published in the Federal Register on June 27, 2019. B. Benefits of Transparency in Health Coverage and Past Efforts To Promote Transparency As explained earlier in this preamble, these proposed rules will fulfill the Departments' responsibility under Executive Order 13877. These proposed rules also would implement legislative mandates under sections 1311(e)(3) of the Patient Protection and Affordable Care Act (PPACA) and section 2715A of the Public Health Service (PHS) Act. The overarching goal of these proposed rules is to support a market-driven health care system by giving consumers the information they need to make informed decisions about their health care and health care purchases. Specifically, the purposes of these proposed rules are to provide consumers with price and benefit information that will enable them to evaluate health care options and to make cost-conscious decisions; reduce surprises in relation to consumers' out-of-pocket costs for health care services; create a competitive dynamic that will begin to narrow price differences for the same services in the same health care markets; foster innovation by providing industry the information necessary to support informed, price-conscious consumers in the health care market; and, over time, potentially lower overall health care costs. The Departments are of the view that this price transparency effort will equip consumers with information to actively and effectively participate in the health care system, the prices for which should be driven and controlled by market forces. For these reasons and those explained in more detail later in this preamble, these price transparency efforts are crucial to providing consumers with information about health care costs and to stabilizing health care spending. As explained in the report “Reforming America's Healthcare System through Choice and Competition,” 2 consumers have an important role to play in controlling costs, but consumers must have meaningful information in order to create the market forces necessary to achieve lower health care costs. Most health care consumers rely on third-party payers, including the government and private health insurance, to reimburse health care providers for a large portion of their health care costs. Third-party payers negotiate prices with health care providers and reimburse the providers on the consumer's behalf, which conceals from consumers the true market price of their care. When consumers seek care, they do not typically know whether they could have received the same service from another provider offering lower prices. Because a large portion of insured consumers' out-of-pocket financial liability has historically, for many consumers, not been dependent on the provider's negotiated rate with the third-party payer, there has been little or no incentive for some consumers to consider price and seek out lower-cost care. 3 However, as health care spending continues to rise, consumers are shouldering a greater portion of their health care costs. 4 2 Azar, A.M., Mnuchin, S.T., and Acosta, A. “Reforming America's Healthcare System Through Choice and Competition.” December 3, 2018. Available at: https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf. 3 Id. 4 Claxton, G., Levitt, L., Long M. “Payments for cost sharing increasing rapidly over time.” Peterson-Kaiser Health System Tracker. April 2016. Available at: https://www.healthsystemtracker.org/brief/payments-for-cost-sharing-increasing-rapidly-over-time/. In the private health insurance market, consumers are responsible for a greater share of their health care costs through higher deductibles and shifts from copayments to coinsurance. 5 A deductible is the amount a consumer pays for covered health services before his or her health plan starts to pay. 6 Generally, the amount the consumer pays for a specific item or service furnished by a network provider before the deductible is met is the rate the group health plan or health insurance issuer has negotiated with the provider, also referred to as the negotiated rate. A study of large employer health plans found that the portion of payments paid by consumers for deductibles increased from 20 percent to 51 percent between 2003 and 2017. 7 Furthermore, enrollment in health plans with high deductibles is also increasing. In 2018, the Centers for Disease Control and Prevention estimated that 47 percent of persons under age 65 with private health insurance were enrolled in health plans with high deductibles, up from 25.3 percent in 2010. 8 5 Ray, M., Copeland, R., Cox, C. “Tracking the rise in premium contributions and cost-sharing for families with large employer coverage,” Peterson-Kaiser Health System Tracker. August 14, 2019. Available at: https://www.healthsystemtracker.org/brief/tracking-the-rise-in-premium-contributions-and-cost-sharing-for-families-with-large-employer-coverage/. 6 https://www.healthcare.gov/glossary/deductible/. 7 Claxton, G., Levitt, L., Long, M. “Payments for cost sharing increasing rapidly over time.” Peterson-Kaiser Health System Tracker. April 2016. Available at: https://www.healthsystemtracker.org/brief/payments-for-cost-sharing-increasing-rapidly-over-time/. 8 Cohen, R., Martinez, M., Zammitti, E. “Health insurance Coverage: Early Release of Estimates from the National Health Interview Survey, January-March 2018.” August 2018. Available at: https://www.cdc.gov/nchs/data/nhis/earlyrelease/Insur201808.pdf. Coinsurance is the percentage of costs a participant, beneficiary, or enrollee pays for a covered item or service after he or she has paid his or her deductible. 9 Copayments (sometimes called “copays”) are a fixed amount ($20, for example) that a consumer pays for a covered item or service, usually when he or she receives the service. Copays can vary for different items or services within the same plan, like prescription drugs, laboratory tests, and visits to specialists. 10 Copayments are both more predictable for consumers, because the copayment amount is set in advance, and often less expensive for consumers than coinsurance amounts. For instance, assuming an individual has met his or her deductible, if a plan or issuer has negotiated the cost of a procedure with a particular provider to be $1,000, and the plan or issuer has a 20 percent coinsurance requirement, the individual would be responsible for paying a $200 coinsurance amount toward the cost of the procedure. 9 https://www.healthcare.gov/glossary/co-insurance/. 10 https://www.cms.gov/CCIIO/Resources/Files/Downloads/uniform-glossary-final.pdf. In the health care market, where consumers generally are responsible for paying higher deductibles and have more cost sharing in the form of coinsurance, out-of-pocket liability is often directly contingent upon the reimbursement rate a health plan has negotiated with a provider. The fact that more consumers are bearing greater financial responsibility for the cost of their health care provides the opportunity to establish a consumer-driven health care market. If consumers have better pricing information and can shop for health care items and services more efficiently, they can increase competition and demand for lower prices. 11 Currently, however, consumers have little insight into negotiated rates until after services are rendered. As a result, it can be difficult for consumers to estimate potential out-of-pocket costs because of the wide variability in health care prices for the same service. 12 11 Azar, A.M., Mnuchin, S.T., and Acosta, A. “Reforming America's Healthcare System Through Choice and Competition.” December 3, 2018. Available at: https://www.hhs.gov/sites/default/ files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf. 12 Cooper, Z., Craig, S., Gaynor, M., Reenen J. “The Price Ain't Right? Hospital Prices and Health Spending on the Privately Insured.” 134. Q. J. of Econ 51. September 4, 2018. Available at: https://academic.oup.com/qje/article/134/1/51/5090426?searchresult=1. Without transparency in pricing, there are little to no market forces to drive competition, as demonstrated by significant variations in prices for procedures, 13 even within a local region. For example, a study of price variation in the San Francisco area showed that, even for a relatively commoditized service such as a lower-back MRI, prices ranged from $500 to $10,246. 14 A study on reference pricing in the California Public Employees' Retirement System found a range of $12,000 to $75,000 for the same joint replacement surgery, $1,000 to $6,500 for cataract removal, and $1,250 to $15,500 for arthroscopy of the knee. 15 Variability in pricing, such as in these examples, suggests that there is substantial opportunity for increased transparency to save money by shifting patients from high to lower-cost providers. 16 13 Id. 14 Pinder, J. “Why do MRI prices vary so much? And a note about our data.” Clear Health Costs. July 17, 2014. Available at: https://clearhealthcosts.com/blog/2014/07/prices-vary-much-mini-case-study-mri/. 15 Boynton, A., Robinson, J. “Appropriate Use of Reference Pricing Can Increase Value.” Health Affairs Blog. July 7, 2015. Available at: https://www.healthaffairs.org/do/10.1377/hblog20150707.049155/full/. 16 Sinaiko, A., Rosenthal, M. “Examining a Health Care Price Transparency Tool: Who Uses it, and How They Shop for Care.” 35 Health Affairs 662. April 2016. Available at: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2015.0746. Many empirical studies have investigated the impact of price transparency on markets, with most research showing that price transparency leads to lower and more uniform prices, consistent with predictions of standard economic theory. One study notes special characteristics of the health market, including that: (1) Diseases and treatments affect each patient differently, making health care difficult to standardize and making price dispersion difficult to monitor; (2) patients cannot always know what they want or need, and physicians must serve as their agents; and (3) patients are in a poor position to choose a hospital because they do not have a lot of information about hospital quality and costs. 17 This study suggests that these special characteristics of the health care market, among other relevant factors, make it difficult to draw conclusions based on empirical evidence gathered from other markets. Nevertheless, the same study concluded that despite these complications, greater price transparency, such as access to posted prices, might lead to more efficient outcomes and lower prices. 17 Congressional Research Service Report to Congress: Does Price Transparency Improve Market Efficiency? Implications of Empirical Evidence in Other Markets for the Healthcare Sector, July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf. In Kentucky, public employees are provided with a price transparency tool that allows them to shop for health care services and share in any cost-savings realized by seeking lower-cost care. Over a 3-year period, 42 percent of eligible employees used the program to look up information about prices and rewards and 57 percent of those chose at least one more cost-effective provider, saving state taxpayers $13.2 million and resulting in $1.9 million in cash benefits paid to public employees for seeking lower cost care. 18 In 2007, New Hampshire launched a website that allows consumers with private health insurance to compare health care costs and quality. 19 In a recent study of the New Hampshire price transparency tool, researchers found that health care price transparency can shift care to lower-cost providers and save consumers and payers money. 20 The study specifically focused on X-rays, CT scans, and MRI scans; determined that the transparency tool reduced the costs of medical imaging procedures by 5 percent for patients and 4 percent for issuers; and estimated savings of $7.9 million for patients and $36 million for issuers over a 5-year period. At the end of the 5-year period, out-of-pocket costs for these services in New Hampshire were 11 percent lower than for medical imaging services not included in the transparency tool. Individuals who had not yet satisfied their deductible saw almost double the savings, and prices for services listed in the tool became less dispersed over time. 21 The Departments are of the view that health care markets could work more efficiently and provide consumers with lower cost health care if individuals could see an estimate of their out-of-pocket liability prior to making their health care purchases. 18 Rhoads, J. “Right to Shop for Public Employees: How Health Care Incentives are Saving Money in Kentucky.” Dartmouth Inst. for Health Pol'y and Clinical Prac. March 8, 2019. Available at: https://thefga.org/wp-content/uploads/2019/03/RTS-Kentucky-HealthCareIncentivesSavingMoney-DRAFT8.pdf. 19 “Compare Health Costs & Quality of Care in New Hampshire.” NH HealthCost. https://nhhealthcost.nh.gov/. 20 Brown, Z. “Equilibrium Effects of Health Care Price Information.” 100 Rev. of Econ. and Stat. 1. July 16, 2018. Available at: http://www-personal.umich.edu/~zachb/zbrown_eqm_effects_price_transparency.pdf. ) 21 Id. A study of enrollees in plans with high deductibles found that respondents wanted additional health care pricing information so they could make more informed decisions about where to seek care based on price. 22 Another study found that 71 percent of respondents said that out-of-pocket spending was either important or very important to them when choosing a doctor. 23 22 Sinaiko, A., Mehrotra, A., Sood, N. “Cost-Sharing Obligations, High-Deductible Health Plan Growth, and Shopping for Health Care: Enrollees with Skin in the Game.” 176 JAMA Intern. Med. 395. March 2016. Available at: https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2482348. 23 Ateev, M., Dean, K., Sinaiko, A., Neeraj, S. “Americans Support Price Shopping For Health Care, But Few Actually Seek Out Price Information.” 36 Health Affairs. 1392. August 2017. Available at: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2016.1471. Currently, the information that consumers need to make informed decisions based on the prices of health care services is not readily available. The 2011 Government Accountability Office (GAO) report, “Health Care Price Transparency: Meaningful Price Information is Difficult for Consumers to Obtain Prior to Receiving Care,” found that the lack of transparency in health care prices, coupled with the wide pricing disparities for particular procedures within the same market, can make it difficult for consumers to understand health care prices and to effectively shop for value. 24 The report references a number of barriers that make it difficult for consumers to obtain price estimates in advance for health care services. Such barriers include, for example, the difficulty of predicting health care service needs in advance, a complex billing structure resulting in bills from multiple providers, the variety of insurance benefit structures, and the lack of public disclosure of rates negotiated between providers and third-party payers. 24 https://www.gao.gov/products/GAO-11-791. The GAO report also explored various price transparency initiatives, including tools that consumers could use to generate price estimates before receiving a health care service. The report notes that pricing information displayed by tools varies across initiatives, in large part due to limits reported by the initiatives in their access or authority to collect certain necessary price data. According to the GAO report, transparency initiatives that provided consumers with a reasonable estimate of their complete costs integrated pricing data from both providers and plans and issuers. The GAO report, therefore, recommended that HHS determine the feasibility, and the next steps, of making estimates of out-of-pocket costs 25 for health care services available to consumers. 26 25 GAO defines an estimate of a consumer's complete health care cost as pricing information on a service that identifies a consumer's out-of-pocket cost, including any negotiated discounts, and all costs associated with a service or services. 26 https://www.gao.gov/products/GAO-11-791. States have been at the forefront of transparency initiatives and some have required disclosure of pricing information for years. More than half of the states have passed legislation establishing price transparency websites or mandating that health plans, hospitals, or physicians make pricing information available to patients. 27 As of early 2012, there were 62 consumer-oriented, state-based health care price comparison websites. Half of these websites were launched after 2006, and most were hosted by a state government agency (46.8 percent) or hospital association (38.7 percent). Most websites reported prices of inpatient care for medical conditions (72.6 percent) or surgeries (71.0 percent). Information about prices of outpatient services such as diagnostic or screening procedures (37.1 percent), radiology studies (22.6 percent), prescription drugs (14.5 percent), or laboratory tests (9.7 percent) were reported less often. 28 However, it is important to note that the state efforts directed at plans are not applicable to self-insured group health plans. As a result, the data collected does not include data from self-insured group health plans and a significant portion of consumers would not have access to information on their plans. 27 Frakt, A., Mehrotra, A. “What Type of Price Transparency Do We Need in Health Care?” 170 Ann. Intern. Med. 561. April 16, 2019. Available at: https://mfprac.com/web2019/07literature/literature/Misc/HealthTransparency_Frankt.pdf. 28 Kullgren, J., Duey, K, Werner, R. “A Census of State Health Care Price Transparency Websites.” 309 JAMA 2437. June 19, 2013. Available at: https://jamanetwork.com/journals/jama/fullarticle/1697957. States have adopted a variety of approaches to improve price transparency. 29 In 2012, Massachusetts began requiring issuers to provide, upon request, the estimated amount insured patients would be responsible to pay for proposed admissions, procedures, or services based upon the information available to the issuer at the time, and also began requiring providers to disclose the charge for the admission, procedure, or service upon request by the patient within 2 working days. 30 Sixteen states have implemented all-payer claims databases that include health care prices and quality information; and of these 16 states, 8 states make both price and quality information available to the public through state-based websites. 31 29 “2017 Price Transparency & Physician Quality Report Card.” Catalyst for Payment Reform. Available at: https://www.catalyze.org/product/2017-price-transparency-physician-quality-report-card/. 30 Jenkins, K. “CMS Price Transparency Push Trails State Initiatives.” Nat'l L. Rev. February 8, 2019. Available at: https://www.natlawreview.com/article/cms-price-transparency-push-trails-state-initiatives. 31 “The State Of State Legislation Addressing Health Care Costs And Quality,” Health Affairs Blog. August 22, 2019. Available at: https://www.healthaffairs.org/do/10.1377/hblog20190820.483741/full/. Health insurance issuers and self-insured group health plans also have moved in the direction of increased price transparency. For example, some group health plans are using price transparency tools to incentivize employees to make cost conscious decisions when purchasing health care services. Most large issuers have embedded cost estimator tools into their enrollee websites, and some provide their enrollees with comparative cost information, which includes rates that the issuers and plans have negotiated with in-network providers and suppliers. In the HHS 2020 Notice of Benefit and Payment Parameters (2020 Payment Notice) proposed rule, 32 HHS sought input on ways to provide consumers with greater transparency with regard to their own health care data, Qualified Health Plan (QHP) offerings on the Federally-facilitated Exchanges (FFEs), 33 and the cost of health care services. Additionally, HHS sought comment on ways to further implement section 1311(e)(3) of PPACA, as implemented by 45 CFR 156.220(d), under which, upon the request of an enrollee, a QHP issuer must make available in a timely manner the amount of enrollee cost sharing under the enrollee's coverage for a specific service furnished by an in-network provider. HHS was particularly interested in what types of data would be most useful to improving consumers' abilities to make informed health care decisions, including decisions related to their coverage specifications and ways to improve consumer access to information about health care costs. 32 84 FR 227 (Jan. 24, 2019). 33 The term “Exchanges” means American Health Benefit Exchanges established under section 1311 of PPACA. See section 2791(d)(21) of the PHS Act. Commenters on the 2020 Payment Notice overwhelmingly supported the idea of increased price transparency. Many commenters provided suggestions for defining the scope of price transparency requirements, such as providing costs for both in-network and out-of-network health care, and providing health care cost estimates that include an accounting for consumer-specific benefit information, like progress toward meeting deductibles and out-of-pocket limits, as well as remaining visits under visit limits. Commenters expressed support for implementing price transparency requirements across all private markets and for price transparency efforts to be a part of a larger payment reform effort and a provider empowerment and patient engagement strategy. Some commenters advised HHS to carefully consider how such policies should be implemented, warning against federal duplication of state efforts and requirements that would result in group health plans and health insurance issuers passing along increased administrative costs to consumers, and cautioning that the proprietary and competitive nature of payment data should be protected. In the summer and fall of 2018, HHS hosted listening sessions related to the goal of empowering consumers by ensuring the availability of useable pricing information. Participants included a wide representation of stakeholders from providers, issuers, researchers, and consumer and patient advocacy groups. Participants noted that currently available pricing tools are underutilized, in part because consumers are often unaware that they exist, and even when used, the tools sometimes convey inconsistent and inaccurate information. Participants also commented that tool development can be expensive, especially for smaller health plans, which tend to invest less in technology because of the limited return on investment. Participants also commented that most tools developed to date do not allow for comparison shopping. Participants stated that existing tools usually use historical claims data, which results in broad, sometimes regional estimates, rather than accurate and individualized prices. In addition, participants noted pricing tools are rarely available when and where consumers are likely to make health care decisions, for example, during interactions with providers. This means that patients are not able to consider relevant cost issues when discussing referral options or the tradeoffs of various treatment options with referring providers. In a national study, there was alignment between patients, employers, and providers in wanting to know and discuss the cost of care at the point of service. 34 With access to patient-specific cost estimates for services furnished by particular providers, referring providers and their patients could take pricing information into account when considering treatment options. 34 “Let's Talk About Money.” University of Utah. https://uofuhealth.utah.edu/value/lets-talk-about-money.php. In response to this feedback, CMS has pursued initiatives in addition to these proposed rules to improve access to the information necessary to empower consumers to make more informed decisions about their health care costs. These initiatives have included a multi-step effort to implement section 2718(e) of the PHS Act, which was added by section 1001 of PPACA (Pub. L. 111-148), as amended by section 10101 of the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152). Section 2718(e) of the PHS Act requires each hospital operating within the United States to, for each year, establish (and update) and make public (in accordance with guidelines developed by the Secretary) a list of the hospital's standard charges for items and services provided by the hospital, including for diagnosis-related groups established under section 1886(d)(4) of the Social Security Act (SSA). In the Fiscal Year (FY) 2015 Hospital Inpatient Prospective Payment Systems and Long Term Care Hospital Prospective Payment Systems (IPPS/LTCH PPS) final rule, 35 CMS reminded hospitals of their obligation to comply with the provisions of section 2718(e) of the PHS Act and provided guidelines for its implementation. At that time, CMS required hospitals to either make public a list of their standard charges or their policies for allowing the public to view a list of those charges in response to an inquiry. In addition, CMS stated that it expected hospitals to update the information at least annually, or more often as appropriate, to reflect current charges, and encouraged hospitals to undertake efforts to engage in consumer-friendly communication of their charges to enable consumers to compare charges for similar services across hospitals and to help them understand what their potential financial liability might be for items and services they obtain at the hospital. 35 79 FR 49854, 50146, (Aug. 22, 2014). In the FY 2019 IPPS/LTCH PPS final rule, 36 CMS again reminded hospitals of their obligation to comply with section 2718(e) of the PHS Act and announced an update to its guidelines. The updated guidelines, which have been effective since January 1, 2019, require hospitals to make available a list of their current standard charges (whether in the form of a “chargemaster” or another form of the hospital's choice) via the internet in a machine-readable format and to update this information at least annually, or more often as appropriate. The intent of the guidelines is to improve consumer access to important information regarding the cost of their health care through hospital websites. Price transparency and the ability to compare standard charges across hospitals can empower consumers to be more informed and exercise greater control over their purchasing decisions. 36 83 FR 41144, 41686 (Aug. 17, 2018). In response to stakeholder feedback and Executive Order 13877, CMS took another important step toward improving health care value and increasing competition in the Calendar Year 2020 Hospital Outpatient Policy Payment System (OPPS) Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates: Price Transparency Requirements for Hospitals to Make Standard Charges Public (CMS-1717-F2) final rule (OPPS Price Transparency final rule) by codifying requirements under section 2718(e) of the PHS Act as well as a regulatory scheme under section 2718(b)(3) of the PHS Act that enables CMS to enforce those requirements. 37 To further improve public access to meaningful hospital charge information, CMS is requiring hospitals to make publicly available their gross charges (as found in the hospital's chargemaster), their payer-specific negotiated charges, their discounted cash prices, and their de-identified minimum and maximum negotiated charges for all items and services they provide through a single online machine-readable file that is updated at least once annually. Additionally, the final rule requires hospitals to display online in a consumer-friendly format the payer-specific negotiated charges, discounted cash prices and de-identified minimum and maximum negotiated charges for as many of the 70 shoppable services selected by CMS that the hospital provides and as many additional hospital-selected shoppable services as are necessary for a combined total of at least 300 shoppable services (or if the hospital provides less than 300 shoppable services, then as many as the hospital provides). CMS defines shoppable services as a service that can be scheduled by a health care consumer in advance, and has further explained that shoppable services are typically those that are routinely provided in non-urgent situations that do not require immediate action or attention to the patient, thus allowing patients to price shop and schedule such services at times that are convenient for them. 37 Published elsewhere in this issue of the Federal Register . The Departments have concluded that the final rules under section 2718(e) of the PHS Act would not result in consumers receiving complete price estimates for health care items and services because, as the GAO concluded, complete price estimates require pricing information from both providers and health insurance issuers. 38 In addition, because section 2718(e) of the PHS Act applies only to items and services provided by hospitals, the final requirements under that section would not improve the price transparency of items and services provided by other health care entities. Accordingly, the Departments have concluded that additional price transparency efforts are necessary to empower a more price-conscious and responsible health care consumer, promote competition in the health care industry, and lower the overall rate of growth in health care spending. 38 https://www.gao.gov/products/GAO-11-791. Despite these price transparency efforts, there continues to be a lack of easily accessible pricing information for consumers to use when shopping for health care services. While there are several efforts across states, many still do not require private market plans and issuers to provide real-time, out-of-pocket cost estimates to participants, beneficiaries, and enrollees. 39 Furthermore, states do not have authority to require such disclosures to participants and beneficiaries of self-insured group health plans, which compose a significant portion of the private market. 40 These proposed rules are meant, in part, to address this lack of easily accessible pricing information, and represent a critical part of the Departments' overall strategy for reforming health care markets by promoting transparency, competition, and choice across the health care industry. 39 “2017 Price Transparency & Physician Quality Report Card.” Catalyst for Payment Reform. Available at: https://www.catalyze.org/product/2017-price-transparency-physician-quality-report-card/. 40 Self-Insured Health Benefit Plans 2019: Based on Filings through Statistical Year 2016. January 7, 2019. Available at: https://www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/annual-report-on-self-insured-group-health-plans-2019-appendix-b.pdf. The Departments, therefore, believe that additional rulemaking is necessary and appropriate to ensure consumers can exercise meaningful control over their health care and health care spending. The disclosures that the Departments are proposing to require would ensure consumers have ready access to the information they need to estimate their potential out-of-pocket costs for health care items and services before a service is delivered. These proposed rules would also empower consumers by incentivizing market innovators to help consumers understand how their plan or coverage pays for health care and to shop for health care based on price, which is a fundamental factor in any purchasing decision. C. Statutory Background and Enactment of PPACA The Patient Protection and Affordable Care Act was enacted on March 23, 2010 and the Health Care and Education Reconciliation Act of 2010 was enacted on March 30, 2010 (collectively, PPACA). As relevant here, PPACA reorganized, amended, and added to the provisions of part A of title XXVII of the PHS Act relating to health coverage requirements for group health plans and health insurance issuers in the group and individual markets. The term “group health plan” includes both insured and self-insured group health plans. PPACA also added section 715 to the Employee Retirement Income Security Act of 1974 (ERISA) and section 9815 to the Internal Revenue Code (Code) to incorporate the provisions of part A of title XXVII of the PHS Act, PHS Act sections 2701 through 2728 into ERISA and the Code, making them applicable to plans and issuers providing health insurance coverage in connection with group health plans. 1. Transparency in Coverage Section 2715A of the PHS Act provides that group health plans and health insurance issuers offering group or individual health insurance coverage shall comply with section 1311(e)(3) of PPACA, except that a plan or coverage that is not offered through an Exchange shall only be required to submit the information required to the Secretary and the state's insurance commissioner, and make such information available to the public. Section 1311(e)(3) of PPACA addresses transparency in health care coverage and imposes certain reporting and disclosure requirements for health plans that are seeking certification as QHPs that may be offered on an Exchange. Paragraph (A) of section 1311(e)(3) of PPACA requires plans seeking certification as a QHP to submit the following information to state insurance regulators, the Secretary of HHS, and the Exchange and to make that information available to the public: • Claims payment policies and practices, • Periodic financial disclosures, • Data on enrollment, • Data on disenrollment, • Data on the number of claims that are denied, • Data on rating practices, • Information on cost sharing and payments with respect to any out-of-network coverage, and • Information on enrollee and participant rights under this title. Paragraph (A) also requires plans seeking certification as a QHP to submit any “[o]ther information as determined appropriate by the Secretary.” Paragraph (C) requires those plans, as a requirement of certification as a QHP, to permit individuals to learn the amount of cost sharing (including deductibles, copayments, and coinsurance) under the individual's coverage that the individual would be responsible for paying with respect to the furnishing of a specific item or service by an in-network provider in a timely manner upon the request of the individual. Paragraph (C) specifies that, at a minimum, such information shall be made available to such individual through an internet website and such other means for individuals without access to the internet. On March 27, 2012, HHS issued the Exchange Establishment final rule 41 that implemented sections 1311(e)(3)(A) through (C) of PPACA at 45 CFR 155.1040(a) through (c) and 156.220. The Exchange Establishment final rule created standards for QHP issuers to submit specific information related to transparency in coverage. QHPs are required to post and make data related to transparency in coverage available to the public in plain language and submit this same data to HHS, the Exchange, and the state insurance commissioner. In the preamble to the Exchange Establishment final rule, HHS noted that “health plan standards set forth under this final rule are, for the most part, strictly related to QHPs certified to be offered through the Exchange and not the entire individual and small group market. Such policies for the entire individual and small and large group markets have been, and will continue to be, addressed in separate rulemaking issued by HHS, and the Departments of Labor and the Treasury.” 41 https://www.govinfo.gov/content/pkg/FR-2012-03-27/pdf/2012-6125.pdf. 2. Medical Loss Ratio (MLR) Section 2718(a) and (b) of the PHS Act, as added by PPACA, generally requires health insurance issuers to submit an annual MLR report to HHS, and provide rebates to enrollees if the issuers do not achieve specified MLR thresholds. HHS proposes to amend its MLR program rules under section 2718(c) of the PHS Act, under which the methodologies for calculating measures of the activities reported under section 2718(a) of the PHS Act shall be designed to take into account the special circumstances of smaller plans, different types of plans, and newer plans. Specifically, HHS proposes to recognize the special circumstances of a different and newer type of plan for purposes of MLR reporting and calculations when that plan shares savings with consumers who choose lower-cost, higher-value providers. HHS proposes to revise 45 CFR 158.221 to add a new paragraph (b)(9) to allow such shared savings, when offered by an issuer, to be factored into an issuer's MLR numerator calculation beginning with the 2020 MLR reporting year. II. Overview of the Proposed Rules Regarding Transparency—the Departments of the Treasury, Labor, and Health and Human Services The Departments propose the price transparency requirements set forth in these proposed rules in new 26 CFR 54.9815-2715A, 29 CFR 2590.715-2715A, and 45 CFR 147.210. Paragraph (a) of the proposed rules sets forth the scope and relevant definitions. Paragraph (b) of the proposed rules includes: (1) A requirement that group health plans and health insurance issuers in the individual and group markets disclose to participants, beneficiaries, or enrollees (or their authorized representatives) upon their request, through a self-service tool made available by the plan or issuer on an internet website, cost-sharing information for a covered item or service from a particular provider or providers, and (2) a requirement that plans and issuers make such information available in paper form. Paragraph (c) of the proposed rules would require that plans and issuers disclose to the public, through two machine-readable files, the negotiated rates for in-network providers, and unique amounts a plan or issuer allowed for items or services furnished by out-of-network providers during a specified time period. The Departments request comments on all aspects of these proposed rules. In the preamble discussion that follows, the Departments also solicit comments on a number of specific issues related to the proposed rules where stakeholder feedback would be particularly useful in evaluating whether and how to issue final rules. Sections III and IV of this preamble include requests for information on topics closely related to this rulemaking. Due to the design and capability differences among the information technology systems of plans and issuers, as well as difficulties consumers experience in deciphering information relevant to health care and health insurance, the Departments seek comment on additional price transparency requirements that could supplement the proposed requirements of paragraphs (b) and (c) of these proposed rules. For example, in section III, the Departments seek comment on whether the Departments should require plans and issuers to disclose information necessary to calculate a participant's, beneficiary's, or enrollee's cost-sharing liability through a publicly-available, standards-based application programming interface (API). Section IV of this preamble requests comment on how existing quality data on health care provider items and services can be leveraged to complement the proposals in these proposed rules. Although these proposed rules do not include any health care quality disclosure requirements, the Departments appreciate the importance of health care quality information in providing consumers the information necessary to make value-based health care decisions. 42 42 “2017 Price Transparency & Physician Quality Report Card.” Catalyst for Payment Reform. Available at: https://www.catalyze.org/product/2017-price-transparency-physician-quality-report-card/. A. Proposed Requirements for Disclosing Cost-Sharing Information to Participants, Beneficiaries, or Enrollees As described earlier in this preamble, the Departments' intention regarding these proposed rules is to enable participants, beneficiaries, and enrollees to obtain an estimate of their potential cost-sharing liability for covered items and services they might receive from a particular health care provider, consistent with the requirements of section 2715A of the PHS Act and section 1311(e)(3)(C) of PPACA. Accordingly, paragraph (b) of these proposed rules would require group health plans and health insurance issuers to disclose certain information relevant to a determination of a consumer's out-of-pocket costs for a particular health care item or service in accordance with specific method and format requirements, upon the request of a participant, beneficiary, or enrollee (or his or her authorized representative). 1. Information Required To Be Disclosed to Participants, Beneficiaries, or Enrollees Based on significant research and stakeholder input, the Departments conclude that requiring group health plans and health insurance issuers to disclose to participants, beneficiaries, or enrollees cost-sharing information in the manner most familiar to them is the best means to empower individuals to understand their potential cost-sharing liability for covered items and services that might be furnished by particular providers. The Departments, therefore, modeled these proposed price transparency requirements on existing notices that plans and issuers generally provide to participants, beneficiaries, or enrollees after health care items and services have been furnished. Specifically, section 2719 of the PHS Act requires non-grandfathered plans and issuers to provide a notice of adverse benefit determination 43 (commonly referred to as an explanation of benefits (EOB)) to participants, beneficiaries, or enrollees after health care items or services are furnished and claims for benefits are adjudicated. EOBs typically include the amount billed by a provider for items and services, negotiated rates with in-network providers or allowed amounts for out-of-network providers, the amount the plan paid to the provider, and the individual's obligation for deductibles, copayments, coinsurance, and any other balance under the provider's bill. Consumers are accustomed to seeing cost-sharing information as it is presented in an EOB. This proposal similarly would require plans and issuers to provide the specific price and benefit information on which an individual's cost-sharing liability is based. 43 An adverse benefit determination means an adverse benefit determination as defined in 29 CFR 2560.503-1, as well as any rescission of coverage, as described in 29 CFR 2590.715-2712(a)(2) (whether or not, in connection with the rescission, there is an adverse effect on any particular benefit at that time). See 26 CFR 54.9815-2719, 29 CFR 2590.715-2719 and 45 CFR 147.136. Plans subject to the requirements of ERISA (including grandfathered health plans) are also subject to a requirement to provide an adverse benefit determination under 29 CFR 2560.503-1. The Departments have concluded that proposing to require plans and issuers to disclose to participants, beneficiaries, or enrollees price and benefit information that is analogous to the information that generally appears on an EOB would be the most effective and reasonable way to present cost-sharing information prior to the receipt of care, in a manner that can be understood by these individuals. Providing individuals with access to information generally included in EOBs before they receive covered items and services would enable individuals to understand their cost-sharing liability for the item or service and consider price when choosing a provider from whom to receive the item or service. Cost-sharing liability estimates would be required to be built upon accurate information, including actual negotiated rates, out-of-network allowed amounts, and individual-specific accumulated amounts. This does not mean the Departments would require that the estimate reflect the amount that is ultimately charged to a participant, beneficiary, or enrollee. Instead, the estimate would reflect the amount a participant, beneficiary, or enrollee would be expected to pay for the covered item or service for which cost-sharing information is sought. Thus, these proposed rules would not require the cost-sharing liability estimate to include costs for unanticipated items or services the individual could incur due to the severity of the his or her illness or injury, provider treatment decisions, or other unforeseen events. In designing this price transparency proposal, the Departments also considered stakeholder input regarding the importance of protecting proprietary information. As explained earlier in this preamble, all of the information that would be required to be disclosed under these proposed rules is currently disclosed in EOBs that plans and issuers provide to individuals as a matter of course after services have been furnished and payment has been adjudicated. Therefore, the Departments are of the view that the proposed requirement that plans and issuers disclose this same information, to the same parties, before services are rendered does not pose any greater risk to plan or issuer proprietary information. Consistent with how the information for an item or service would typically be presented on an EOB, the Departments propose to allow plans and issuers to provide participants, beneficiaries, and enrollees with cost-sharing information for either a discrete item or service or for items or services for a treatment or procedure for which the plan bundles payment, according to how the plan or issuer structures payment for the item or service. Accordingly, these proposed rules set forth seven content elements that a plan or issuer must disclose, upon request, to a participant, beneficiary, or enrollee (or his or her authorized representative) for a covered item or service, to the extent relevant to the individual's cost-sharing liability for the item or service. These seven content elements generally reflect the same information that is included in an EOB after health care services are provided. The Departments have determined that each of the content elements is necessary and appropriate to implement the mandates of section 2715A of the PHS Act and section 1311(e)(3)(C) of PPACA by permitting individuals under a plan or coverage to learn the amount of their cost-sharing liability for specific items or services under a plan or coverage from a particular provider. The Departments propose that plans and issuers must satisfy these elements through disclosure of actual data relevant to an individual's cost-sharing liability that is accurate at the time the request is made. The Departments acknowledge that plans and issuers may not have processed all of an individual's outstanding claims when the individual requests the information; therefore, plans and issuers would not be required to account for outstanding claims that have not yet been processed. Furthermore, under these proposals, the cost-sharing information would need to be disclosed to the participant, beneficiary, or enrollee in plain language. The proposed rules define “plain language” to mean written and presented in a manner calculated to be understood by the average participant, beneficiary, or enrollee. Determining whether this standard has been satisfied requires an exercise of considered judgment and discretion, taking into account such factors as the level of comprehension and education of typical participants, beneficiaries, or enrollees in the plan or coverage and the complexity of the terms of the plan. Accounting for these factors would likely require limiting or eliminating the use of technical jargon and long, complex sentences, so that the information provided will not have the effect of misleading, misinforming, or failing to inform participants, beneficiaries, or enrollees. a. First Content Element: Estimated Cost-Sharing Liability The first content element that plans and issuers would be required to disclose under these proposed rules would be an estimate of the cost-sharing liability for the furnishing of a covered item or service by a particular provider or providers. The calculation of the cost-sharing liability estimate would be required to be computed based on the other relevant cost-sharing information that plans and issuers would be required to disclose, as described later in this section of the preamble. The proposed rules define “cost-sharing liability” to mean the amount a participant, beneficiary, or enrollee is responsible for paying for a covered item or service under the terms of the plan or coverage. Cost-sharing liability calculations must consider all applicable forms of cost sharing, including deductibles, coinsurance requirements, and copayments. The term cost-sharing liability does not include premiums, balance billing amounts for out-of-network providers, or the cost of non-covered items or services. For QHPs offered through Exchanges, an estimate of cost-sharing liability for a requested covered item or service provided must reflect any cost-sharing reductions the individual would receive under the coverage. The proposed rules define “items or services” to mean all encounters, procedures, medical tests, supplies, drugs, durable medical equipment, and fees (including facility fees), for which a provider charges a patient in connection with the provision of health care. This proposed definition of items or services is intended to be flexible enough to allow plans and issuers to disclose cost-sharing information for either discrete items or services for which an individual is seeking cost-sharing information, or, if the issuer bundles payment for items or services associated with a treatment or procedure, for a set of items or services included in the bundle. These proposed rules further define “covered items or services” to mean items or services for which the costs are payable, in whole or in part, under the terms of a plan or coverage. The Departments solicit comment on whether other types of information are necessary to provide an estimate of cost-sharing liability prior to an individual's receipt of items or services from a provider or providers. The Departments also solicit comment on these definitions. b. Second Content Element: Accumulated Amounts The second content element would be a participant's, beneficiary's, or enrollee's accumulated amounts. These proposed rules define “accumulated amounts” to mean the amount of financial responsibility that a participant, beneficiary, or enrollee has incurred at the time the request for cost-sharing information is made, either with respect to a deductible or an out-of-pocket limit (such as the annual limitation on cost sharing provided in section 2707(b) of the PHS Act, as incorporated into ERISA and the Code, or a maximum out-of-pocket amount the plan or issuer establishes that is lower than the requirement under the PHS Act). In the case where an individual is enrolled in a family plan or coverage (or other-than-self-only coverage), these accumulated amounts would include the financial responsibility a participant, beneficiary, or enrollee has incurred toward meeting his or her individual deductible and/or out-of-pocket limit as well as the amount of financial responsibility that the individuals enrolled under the plan or coverage have incurred toward meeting the other-than-self-only coverage deductible and/or out-of-pocket limit, as applicable. 44 For this purpose, accumulated amounts would include any expense that counts toward the deductible or out-of-pocket limit (such as copayments and coinsurance), but would exclude expenses that would not count toward a deductible or out-of-pocket limit (such as premium payments, out-of-pocket expenses for out-of-network services, or amounts for items or services not covered under a plan or coverage). 44 The Departments read section 2707(b) as requiring non-grandfathered group health plans to comply with the maximum annual limitation on cost sharing promulgated under section 1302(c)(1) of PPACA, including the HHS clarification that the self-only maximum annual limitation on cost sharing applies to each individual, regardless of whether the individual is enrolled in self-only coverage or in other-than-self-only coverage. Accordingly, the self-only maximum annual limitation on cost sharing applies to an individual who is enrolled in family coverage or other coverage that is not self-only coverage under a group health plan. See 80 FR 10749, 10824-10825 (Feb. 27, 2015); see also FAQs About Affordable Care Act Implementation (Part XXVII), Q1, available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/ACA-FAQs-Part-XXVII-MOOP-2706-FINAL.pdf and https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-xxvii.pdf. Furthermore, to the extent a plan or issuer imposes a cumulative treatment limitation on a particular covered item or service (such as a limit on the number of items, days, units, visits, or hours covered in a defined time period) independent of individual medical necessity determinations, the accumulated amounts would also include the amount that has accrued toward the limit on the item or service (such as the number of items, days, units, visits, or hours the participant, beneficiary, or enrollee has used). The Departments understand that certain cumulative treatment limitations may vary by individual based on a determination of medical necessity and that it may not be reasonable for a plan or issuer to account for this variance as part of the accumulated amounts. Therefore, plans and issuers would be required to provide cost-sharing information with respect to an accumulated amount for a cumulative treatment limitation that reflects the status of the individual's progress toward meeting the limitation, and would not include any individual determination of medical necessity that may affect coverage for the item or service. For example, if the terms of an individual's plan or coverage limit coverage of physical therapy visits to 10 per plan or policy year, subject to a medical necessity determination, and at the time the request for cost-sharing information is made the individual has had claims paid for three physical therapy visits, the plan or coverage would make cost-sharing information disclosures based on the fact that the individual could be covered for seven more physical therapy visits in that plan or policy year, regardless of whether or not a determination of medical necessity has been made at that time. c. Third Content Element: Negotiated Rate The third content element under these proposed rules would be the negotiated rate, reflected as a dollar amount, for an in-network provider or providers for a requested covered item or service, to the extent necessary to determine the participant's, beneficiary's, or enrollee's cost-sharing liability. These proposed rules define “negotiated rate” to mean the amount a plan or issuer, or a third party (such as a third-party administrator (TPA)) on behalf of a plan or issuer, has contractually agreed to pay an in-network provider for a covered item or service pursuant to the terms of an agreement between the provider and the plan, issuer, or third party on behalf of a plan or issuer. The Departments understand that some provider contracts express negotiated rates as a formula (for example, 150 percent of the Medicare rate), but disclosure of formulas is not likely to be helpful or understandable for many participants, beneficiaries, and enrollees viewing this information. For this reason, these proposed rules would require disclosure of the rate that results from using such a formula, which would be required to be expressed as a dollar amount. Negotiated rates generally are an essential input for the calculation of a participant's, beneficiary's, or enrollee's cost-sharing liability. For example, cost-sharing liability for a covered service with a 30 percent coinsurance requirement cannot be determined without knowing the negotiated rate of which an individual must pay 30 percent. Additionally, if an individual has not met an applicable deductible and the cost for a covered item or service from an in-network provider is less than the remaining deductible, then the cost-sharing liability will in fact be the negotiated rate. The Departments acknowledge, however, that if the negotiated rate does not impact an individual's cost-sharing liability under a plan or coverage for a covered item or service (for example, the copayment for the item or service is a flat dollar amount or zero dollars and the individual has met a deductible, or a deductible does not apply to that particular item or service), disclosure of the negotiated rate may be unnecessary to calculate cost-sharing liability for that item or service. Therefore, the Departments propose that disclosure of a negotiated rate would not be required under these proposed rules if it is not relevant for calculating an individual's cost-sharing liability for a particular item or service. The Departments seek comment on whether there are any reasons disclosure of negotiated rates should nonetheless be required under these circumstances. Under these proposed rules, plans and issuers would be required to disclose to participants, beneficiaries, or enrollees an estimate of cost-sharing liability for items and services, including prescription drugs. This would allow individuals to request cost-sharing information for a specific billing code (as described later in this preamble) associated with a prescription drug or by descriptive term (such as the name of the prescription drug), which will permit individuals to learn the estimated cost of a prescription drug obtained directly through a provider, such as a pharmacy or mail order service. In addition to allowing individuals to obtain cost-sharing information by using a billing code or descriptive term, the rules would also permit individuals to learn the cost of a set of items or services that include a prescription drug or drugs that is subject to a bundled payment arrangement for a treatment or procedure. The proposed rules define the term “bundled payment” to mean a payment model under which a provider is paid a single payment for all covered items or services provided to a patient for a specific treatment or procedure. However, the Departments acknowledge that outside of a bundled payment arrangement, plans and issuers often base cost-sharing liability for prescription drugs on the undiscounted list price, such as the average wholesale price or wholesale acquisition cost, which frequently differs from the price the plan or issuer has negotiated for the prescription drug. 45 In these instances, providing the individual with a rate that has been negotiated between the issuer or plan and its pharmacy benefit manager could be misleading, as this rate would reflect rebates and other discounts, and could be lower than what the individual would pay—particularly if the individual has not met his or her deductible. However, arguably, requiring the issuer to disclose only the rate upon which the individual's cost-sharing liability estimate is based would perpetuate the lack of transparency around drug pricing. 45 “Follow the Dollar: How the pharmaceutical distribution and payment system shapes the prices of brand medicines.” PhRMA. November 2017. Available at https://www.phrma.org/report/follow-the-dollar-report. The Departments seek comment regarding whether a rate other than the negotiated rate, such as the undiscounted price, should be required to be disclosed for prescription drugs, and whether and how to account for any and all rebates, discounts, and dispensing fees to ensure individuals have access to meaningful cost-sharing liability estimates for prescription drugs. The Departments also solicit comment as to whether there are certain scenarios in which drug pricing information should not be included in an individual's estimated cost-sharing liability. For example, would the cost to an individual for a drug outside of a bundled payment arrangement be so impacted by factors beyond the negotiated rate for the drug, and not reasonably knowable by the plan or issuer, that the cost-sharing liability estimate for that drug would not be meaningful for the individual and should not be provided outside of a cost-sharing liability estimate for a bundled payment? Alternatively, should drug costs be required to be included in a cost-sharing liability estimate in all scenarios, including when the consumer searches for cost-sharing information for a particular drug by billing code or descriptive term in connection with items and services for which the plan or issuer does not bundle payment? The Departments also seek comment on whether the relationship between plans or issuers and pharmacy benefit managers 46 allows plans and issuers to disclose rate information for drugs, or if contracts between plans and issuers and pharmacy benefit managers would need to be amended to allow plans and issuers to provide a sufficient level of transparency. If those contracts would need to be amended, the Departments seek comment on the time that would be needed to make those changes. 46 Pharmacy benefit managers are third-party companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, self-insured group health plans, and other payers. d. Fourth Content Element: Out-of-Network Allowed Amount The fourth content element would be the out-of-network allowed amount for the requested covered item or service. This element would only be relevant when a participant, beneficiary, or enrollee requests cost-sharing information for a covered item or service furnished by an out-of-network provider. These proposed rules define “out-of-network allowed amount” to mean the maximum amount a plan or issuer would pay for a covered item or service furnished by an out-of-network provider. Under these proposed rules, plans and issuers would be required to disclose an estimate of cost-sharing liability for a participant, beneficiary, or enrollee. Therefore, when disclosing an estimate of cost-sharing liability for an out-of-network item or service, the plan or issuer would disclose the out-of-network allowed amount and any cost-sharing liability the participant, beneficiary, or enrollee would be responsible for paying. For instance, if a plan has established an out-of-network allowed amount of $100 for an item or service from a particular out-of-network provider and the participant, beneficiary, or enrollee is responsible for paying 30 percent of the out-of-network allowed amount ($30), the plan would disclose both the allowed amount ($100) and the individual's cost-sharing liability ($30), indicating that the individual is responsible for 30 percent of the out-of-network allowed amount. Because the proposed definition of cost-sharing liability does not include amounts charged by out-of-network providers that exceed the out-of-network allowed amount, which participants, beneficiaries, or enrollees must pay (sometimes referred to as balance bills), it may be difficult for participants, beneficiaries, or enrollees to determine their likely out-of-pocket costs for covered items and services furnished by an out-of-network provider. Nonetheless, under section 1311(e)(3)(A)(vii) of PPACA and section 2715A of the PHS Act, Congress intended that participants, beneficiaries, enrollees, and other members of the public have access to accurate and timely information on cost sharing and payments with respect to any out-of-network coverage. In the Departments' view, requiring plans and issuers to disclose out-of-network allowed amounts and a participant's, beneficiary's, or enrollee's cost-sharing obligation for covered items and services is necessary and appropriate to fulfill this statutory mandate, and would give individuals information necessary to estimate their out-of-pocket costs if they request additional information from an out-of-network provider about how much the provider would charge for a particular item or service. e. Fifth Content Element: Items and Services Content List The fifth content element would be a list of those covered items and services for which cost-sharing information is disclosed. This requirement would be relevant only when a participant, beneficiary, or enrollee requests cost-sharing information for an item or service that is subject to a bundled payment arrangement that includes multiple items or services, rather than one discrete item or service. This requirement would not apply when an individual requests cost-sharing information for an item or service not subject to a bundled payment arrangement. In cases in which an individual requests a cost-sharing liability estimate for a covered item or service that is subject to a bundled payment arrangement, plans and issuers would be required to disclose a list of each covered item and service included in the bundled payment arrangement and the individual's cost-sharing liability for those covered items and services as a bundle, but not a cost-sharing liability estimate separately associated with each covered item or service included in the bundle. In the Departments' view, in order to support consumers' ability to shop for services, consumers need to know precisely what items and services are included in the cost-sharing information provided. f. Sixth Content Element: Notice of Prerequisites to Coverage The sixth content element would be a notice, whenever applicable, informing the individual that a specific covered item or service for which the individual requests cost-sharing information may be subject to a prerequisite for coverage. The proposed rules define the term “prerequisite” to mean certain requirements relating to medical management techniques for covered items and services that must be satisfied before a plan or issuer will cover the item or service. Specifically, prerequisites include concurrent review, prior authorization, and step-therapy or fail-first protocols. The definition of prerequisite in these proposed rules is intended to capture medical management techniques that apply to an item or service that require action by the participant, beneficiary, or enrollee before the plan or issuer will cover the item or service. Accordingly, the proposed definition of prerequisite does not include medical necessity determinations generally, or other forms of medical management techniques that do not require action by the participant, beneficiary, or enrollee. The Departments solicit comment on whether there are any additional medical management techniques that should be explicitly included as prerequisites in the final rules. g. Seventh Content Element: Disclosure Notice The seventh and final content element would be a notice that communicates certain information in plain language and includes several specific disclosures. First, this notice would include a statement that out-of-network providers may bill participants, beneficiaries, or enrollees for the difference between providers' billed charges and the sum of the amount collected from the plan or issuer and the amount collected from the patient in the form of cost sharing (the difference often referred to as balance billing) and that these estimates do not account for those potential additional amounts. The Departments understand that there are numerous state laws that address balance-billing practices such that the notice described in this proposed content element regarding balance bills may be misleading or inaccurate for beneficiaries, participants, or enrollees enrolled in a plan or coverage in certain states. The Departments request comment on whether any modifications to this content element would be appropriate to allow plans and issuers to accurately advise participants, beneficiaries, or enrollees of their potential exposure to or protection from any balance bills. Second, the notice would be required to convey that actual charges for the participant's, beneficiary's, or enrollee's covered items and services may be different from those described in a cost-sharing liability estimate, depending on the actual items and services received at the point of care. Third, the notice would be required to include a statement that the estimated cost-sharing liability for a covered item or service is not a guarantee that coverage will be provided for those items and services. Finally, under these proposed rules, plans and issuers would be permitted to include any additional information, including other disclaimers that the plan or issuer determines appropriate, as long as the additional information does not conflict with the information required to be provided. Plans and issuers would be permitted to include additional language so long as the language could not reasonably be read to disclaim the plan's or issuer's responsibility for providing a participant, beneficiary, or enrollee with accurate cost-sharing information. For example, plans and issuers may choose to provide a disclaimer that informs consumers who are seeking estimates of cost-sharing liability for out-of-network allowed amounts that they may have to obtain a price estimate from the out-of-network provider in order to fully understand their out-of-pocket cost liability. Plans and issuers may also provide a disclaimer indicating how long the price estimate will be valid, based on the last date of the contract term for the negotiated rate or rates if multiple providers with different contract terms are involved. The Departments are of the view that this type of disclaimer could provide participants, beneficiaries, and enrollees with a better understanding of how their cost estimate may change over time, and seek comment on whether a disclaimer indicating the expiration of the cost estimate should be required. Furthermore, plans and issuers may also include disclaimer information regarding prescription drug cost estimates and whether rebates, discounts, and dispensing fees may impact the actual cost to the consumer. The Departments have developed model language that plans and issuers could use, but would not be required to use, to satisfy the disclosure notice requirements described above. This model language is being proposed contemporaneously with, but separate from, these proposed rules. The Departments seek comment on the proposed model language and any additional information that stakeholders believe should be included in the proposed model notice or any information that should be omitted from the proposed model notice. As noted later in the preamble, to obtain copies of the proposed model notice, please visit CMS's website at www.cms.hhs.gov/PaperworkReductionActof1995, or call the Reports Clearance Office at 410-786-1326. If you wish to comment, please submit your comments electronically as specified in the ADDRESSES section of these proposed rules and identify the rule (CMS-9915-P), the ICR's CFR citation, CMS ID number, and OMB control number. The Departments further clarify that this proposed disclosure notice would be in addition to the information that QHP issuers are currently required to publish on their websites pursuant to 45 CFR 156.220(a)(7) regarding cost sharing and payments with respect to out-of-network coverage. In addition, some portions of this disclosure may overlap with network adequacy disclosure standards under 45 CFR 156.230(e). That section requires QHP issuers to, notwithstanding 45 CFR 156.130(c), count the cost sharing paid by an enrollee for an out-of-network essential health benefit (EHB) provided by an out-of-network ancillary provider in an in-network setting toward the enrollee's annual limitation on cost sharing or provide a notice to the enrollee that additional costs may be incurred for an EHB, including balance billing charges. The Departments request comment on the proposed notice disclaimers and whether any additional disclaimers would be necessary or beneficial to consumers' learning about their potential cost-sharing liability for covered items and services. For example, should the Departments require a notice that explains that the cost-sharing information provided may not account for claims an individual has submitted that the plan or issuer has not yet processed? The Departments are also considering whether to require plans and issuers to provide a participant, beneficiary, or enrollee information regarding non-covered items or services for which the individual requests cost-sharing information. For example, there could be a requirement that a plan or issuer provide a statement, as applicable, indicating that the item or service for which the individual has requested cost-sharing information is not a covered benefit under the terms of the plan or coverage, and expenses charged for that item or service will not be reimbursed by the plan or coverage. 2. Required Methods for Disclosing Information to Participants, Beneficiaries, or Enrollees Section 1311(e)(3)(C) of PPACA requires that cost-sharing information be made available through an internet website and other means for individuals without access to the internet. Therefore, these proposed rules would require that group health plans and health insurance issuers disclose to participants, beneficiaries, or enrollees (or their authorized representatives) the cost-sharing information described earlier in this preamble in two ways: (1) Through a self-service tool that meets certain standards and is available on an internet website, and (2) in paper form. a. First Delivery Method: Internet-Based Self-Service Tool Under these proposed rules, plans and issuers would be required to make available a self-service tool on an internet website for their participants, beneficiaries, or enrollees to use, without a subscription or other fee, to search for cost-sharing information for covered items and services. The tool would be required to allow users to search for cost-sharing information for a covered item or service provided by a specific in-network provider, or by all in-network providers. The tool also would be required to allow users to search for the out-of-network allowed amount for a covered item or service provided by out-of-network providers. The tool would be required to provide users real-time responses that are based on cost-sharing information that is accurate at the time of the request. In order for plans and issuers to provide accurate cost-sharing information, the Departments understand that the participant, beneficiary, or enrollee will have to input certain data elements into the tool. Therefore, plans and issuers would be required to make available a tool that allows users to search for cost-sharing information: (1) By billing code (for example, CPT Code 87804) or, (2) by a descriptive term (for example, “rapid flu test”), at the option of the user. The tool also would be required to allow users to input the name of a specific in-network provider in conjunction with a billing code or descriptive term, to produce cost-sharing information and a cost-sharing liability estimate for a covered item or service provided by that in-network provider. With respect to a request for cost-sharing information for all in-network providers, if a plan or issuer utilizes a multi-tiered network, the tool would be required to produce the relevant cost-sharing information for the covered item or service for each tier. To the extent that cost-sharing information for a covered item or service under a plan or coverage varies based on factors other than the provider, the tool would also be required to allow users to input sufficient information for the plan or issuer to disclose meaningful cost-sharing information. For example, if the cost-sharing liability estimate for a prescription drug depends on the quantity and dosage of the drug, the tool would be required to allow the user to input a quantity and dosage for the drug for which he or she is seeking cost-sharing information. Similarly, to the extent that the cost-sharing liability estimate varies based on the facility at which an in-network provider furnishes a service (for example, at an outpatient facility versus in a hospital setting), the tool would be required to either permit a user to select a facility, or display in the results cost-sharing liability information for every in-network facility at which the in-network provider furnishes the specified item or service. The Departments request comment on whether there are any scenarios under which plans and issuers may not be able to ascertain the in-network facilities at which an in-network provider furnishes services. As stated previously, the Departments acknowledge that plans and issuers may not have sufficient information on providers outside of their network to provide the participant, beneficiary, or enrollee a complete estimate of out-of-pocket expenses, since the plan or issuer may not know what the out-of-network provider will bill for an item or service. However, if the plan or issuer provides coverage for out-of-network items or services, the plan or issuer generally will have established an out-of-network allowed amount that the participant, beneficiary, or enrollee could use, in conjunction with information he or she may request from the out-of-network provider about what the total bill for services may be, to compute an estimate of his or her out-of-pocket expenses. It is the Departments' understanding that a plan or issuer may require certain information, in addition to the identification of a covered item or service, before it can provide an out-of-network allowed amount for a covered item or service, and that plans and issuers may have different ways of establishing an out-of-network provider's allowed amount for a covered item or service (such as by zip code or state). Therefore, plans and issuers would be required to allow users to search for the out-of-network allowed amount for a covered item or service provided by out-of-network providers by inputting a billing code or descriptive term and the information that is necessary for the plan or issuer to produce the out-of-network allowed amount (such as the zip code for the location of the out-of-network provider). To the extent a user's search returns multiple results, the tool would be required to have functionalities that would allow users to refine and reorder results (also referred to as sort and filter functionalities) by geographic proximity and the amount of estimated cost-sharing liability to the beneficiary, participant, or enrollee. The Departments solicit comment on whether the tool should be required to have additional refining and reordering functionality, including whether it would be helpful or feasible to refine and reorder by provider subspecialty (such as providers who specialize in pediatric psychiatry), or by the quality rating of the provider, if the plan or issuer has available data on provider quality. It is the Departments' intention that these proposed rules would require plans and issuers to create a user-friendly internet-based self-service tool, but these proposed rules do not include a definition for “user-friendly” since there are a variety of ways a tool can be designed to be user-friendly. The Departments want to preserve plan and issuer flexibility to create tools that are best for their participants, beneficiaries, or enrollees, by soliciting user feedback and consumer-testing in the development of their tools. However, it is the Departments' view that a user-friendly tool would mean a tool that allows intended users to search for the cost-sharing information outlined in paragraph (b)(1) of these proposed rules efficiently and effectively, without unnecessary effort. The Departments are of the view that plans and issuers can look to federal plain language guidelines, 47 the requirements for a Summary Plan Description's method of presentation at 29 CFR 2520.102-2(a), and general industry standards for guidance when designing and developing their consumer tools. The Departments solicit comment on whether there is different or additional guidance that should be consulted. 47 https://www.plainlanguage.gov/guidelines. These proposed rules require that the self-service tool be made available on an internet website to provide consistency with section 1311(e)(3)(C) of PPACA, which uses the term “internet website.” However, the Departments seek feedback on whether this term should be interpreted to include other comparable methods of accessing internet-based content. The statute was enacted in 2010 when the primary mode of accessing internet-based content was through a personal computer. Since that time, ownership of mobile devices with internet access and use of internet-based mobile applications has become much more common. The Departments acknowledge that there may be technical differences between a website and other methods of viewing internet-based content, such as mobile applications. However, the Departments also understand that technology evolves over time, and it is the Departments' view that Congress did not intend to limit the ability to access information via alternative methods of viewing internet-based content that may be available now or in the future. Mobile applications also may provide additional benefits beyond those of traditional websites. Due to the portability of mobile devices, a self-service tool that is similar to the kind required for an internet website under these proposed rules that is made available through a mobile application might provide participants, beneficiaries, enrollees, and their health care providers greater opportunities to use the tool together at the point of care to evaluate treatment options based on price. The Departments further understand that mobile applications may, in certain cases, offer greater privacy and security protections than an internet website for the information protected by applicable privacy and security requirements, such as the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rules (45 CFR parts 160 and 164) (HIPAA Rules) that would be accessible through the proposed tool. Accordingly, the Departments seek comment on whether the final rules should permit the proposed disclosure requirements to be satisfied with a self-service tool that is made available through a website or comparable means of accessing the internet, such as a mobile application, or whether multiple means, such as websites and mobile applications, should be required. The Departments also seek comment on the relative resources required for building an internet website versus an internet-based mobile application. b. Second Delivery Method: Paper Form With respect to a delivery method that would not require a participant, beneficiary, or enrollee (or his or her authorized representative) to have access to the internet, plans and issuers would have to furnish, at the request of the of the participant, beneficiary, or enrollee (or his or her authorized representative), without a fee, all of the information required to be disclosed under paragraph (b)(1) of these proposed rules, as outlined earlier in this preamble, in paper form. A plan or issuer would be required to provide the information in accordance with the requirements under paragraph (b)(2)(i) of these proposed rules and as described earlier in this preamble. That is, the plan or issuer would be required to allow an individual to request cost-sharing information for a discrete covered item or service by billing code or descriptive term, according to the participant's, beneficiary's, or enrollee's request. Further, the plan or issuer would be required to provide cost-sharing information for a covered item or service in connection with an in-network provider or providers, or an out-of-network allowed amount for a covered item or service provided by an out-of-network provider, according to the participant's, beneficiary's, or enrollee's request, permitting the individual to specify the information necessary for the plan or issuer to provide meaningful cost-sharing liability information (such as dosage for a prescription drug or zip code for an out-of-network allowed amount). To the extent the information the individual requests returns more than one result, the individual would also be permitted to request that the plan or issuer refine and reorder the information disclosed by geographic proximity and the amount of the cost-sharing liability estimates. This information would be required to be mailed to a participant, beneficiary, or enrollee no later than 2 business days after a participant's, beneficiary's, or enrollee's request is received. This would mean that cost-sharing information must be mailed via the U.S. Postal Service or some other delivery system within 2 business days of receipt of an individual's request. Nothing in these proposed rules prohibits a plan or issuer from providing individuals with the option to request disclosure of the information required under paragraph (b)(1) of these proposed rules through other methods (such as, over the phone, through face-to-face encounters, by facsimile, or by email). The Departments request comment on these proposed disclosure methods, including whether additional methods of providing information should be required, rather than permitted. The Departments are particularly interested in feedback on whether plans and issuers should be required to provide the information over the phone, or by email, at the request of a participant, beneficiary, or enrollee. The Departments also are considering requiring all plans and issuers to allow individuals to seek cost-sharing information by inputting a description of a treatment or procedure (such as knee replacement) that often involves the provision of multiple items and services. The Departments are interested in feedback on whether it would be feasible for plans and issuers to allow individuals to request cost-sharing information by such a treatment or procedure if the plan or issuer makes payments based on a discrete billing code for each item and service associated with a treatment or procedure, and not as a bundled payment for all items and services associated with the treatment or procedure. For instance, if an individual requests cost-sharing information for a knee replacement, and the plan or issuer does not bundle payment for multiple items and services provided in connection with a knee replacement, would it be unduly burdensome for a plan or issuer to disclose meaningful cost-sharing information for items and services typically provided in connection with a knee replacement? 3. Special Rule To Prevent Unnecessary Duplication These proposed rules include a special rule to streamline the provision of the required disclosures and avoid unnecessary duplication of the disclosures with respect to group health coverage. The proposed special rule is similar to the one that applied with respect to the requirement for group health plans and health insurance issuers to provide certificates of creditable coverage before that requirement was generally superseded by PPACA. 48 48 As of December 31, 2014, group health plans are generally no longer required to provide HIPAA certificates of creditable coverage. See 26 CFR 9801-5 and 29 CFR 2590.701-5. An exception to this general rule is expatriate health plans, which must satisfy the provisions of title XXVII of the PHS Act, Chapter 100 of the Code, and part 7 of subtitle B of title I of ERISA that would otherwise apply if PPACA had not been enacted. See section 3(d)(2)(G) of the Expatriate Health Coverage Clarification Act (EHCCA), enacted as Division M of the Consolidated and Further Continuing Appropriations Act of 2015. The special rule provides that to the extent coverage under a plan consists of group health insurance coverage, the plan would satisfy the requirements of these proposed rules if the issuer offering the coverage is required to provide the information pursuant to a written agreement between the plan and issuer. Accordingly, for example, if there were a plan and an issuer that enter into a written agreement under which the issuer agrees to provide the information required under these proposed rules, and the issuer failed to provide full or timely information, then the issuer, but not the plan, would violate the transparency disclosure requirements. 49 49 Under section 4980D(d)(1) of the Code, the excise tax for group health plans failing to satisfy these proposed rules is not imposed on a small employer (generally fewer than 50 employees) which provides health insurance coverage solely through a contract with an issuer on any failure which is solely because of the health insurance coverage offered by the issuer. 4. Privacy, Security, and Accessibility These proposed requirements for group health plans and health insurance issuers to provide cost-sharing liability estimates and related cost-sharing information would operate in tandem with existing state and federal laws governing the privacy, security, and accessibility of the information that would be disclosed under these proposed disclosure requirements. For example, the Departments are aware that the content proposed to be disclosed by plans and issuers may be subject to the privacy, security, and breach notification rules under HIPAA or similar state laws in the hands of a HIPAA covered entity or business associate. Nothing in these proposed rules is intended to alter or otherwise affect plans' and issuers' data privacy and security responsibilities under HIPAA Rules or other applicable state or federal laws. The Departments also expect that plans and issuers will follow existing applicable state and federal laws regarding persons who must be allowed to access and receive the information that would be disclosed under these proposed rules. These proposed rules refer to such persons as “authorized representatives” and do not establish any new class of persons or entities who are authorized to access the information that would be provided through the proposed internet-based, self-service tool. Accordingly, the Departments expect plans and issuers to follow existing laws with regard to persons who may or must be allowed to access the cost-sharing information that would be required to be disclosed under these proposed rules. B. Proposed Requirements for Public Disclosure of Negotiated Rates and Historical Allowed Amount Data for Covered Items and Services From Out-of-Network Providers The Departments take the position that health care spending cannot be curbed without more competition in the market, and competition cannot be achieved without greater price transparency. As explained earlier in this preamble, section 2715A of the PHS Act and section 1311(e)(3)(A) of PPACA require group health plans and health insurance issuers to make public certain specified information, as well as other information the Secretary of HHS determines to be appropriate to provide transparency in health coverage. Thus, these provisions evidence Congress' intent that members of the public play a role in using health coverage transparency information to promote consumer interests. Consistent with this authority, the Departments have determined that it would be appropriate to require plans and issuers to make public negotiated rates with in-network providers and data outlining the different amounts a plan or issuer has allowed for covered items or services furnished by out-of-network providers. The Departments have concluded that public availability of such information would create price transparency for persons who are uninsured, as well as insured persons who are considering coverage alternatives. The proposal would also support meaningful comparisons between plan coverage options and issuer options for all consumers, comparisons that would not be supported through the internet-based consumer tool proposed earlier in this rule. In proposing requirements for public disclosure of negotiated rates and historical out-of-network allowed amounts, the Departments are exercising specific authority under section 1311(e)(3)(A)(vii) and (ix) of PPACA (as applied to plans and issuers in the individual and group markets through section 2715A of the PHS Act), which requires plans and issuers to disclose other information the Secretary of HHS determines to be appropriate to create transparency in health coverage. As explained later in this preamble, the proposed disclosure requirements would provide consumers, including third-party software developers and health care researchers, information about health care prices that is necessary to make informed health care purchasing decisions. These requirements would also help to expose price differences so that consumers can judge the reasonableness of provider prices and shop for care at the best price. Accordingly, it is the Departments' view that public availability of negotiated rates and historical out-of-network allowed amounts is appropriate and necessary to empower consumers to make informed decisions about their health care, spur competition in health care markets, and to slow or potentially reverse the rising cost of health care items and services. 1. Public Disclosure of Negotiated Rates and Historical Out-of-Network Allowed Amounts Is Necessary To Create Price Transparency for All Consumers and Payers of Health Care Items and Services, as Well as of Benefit to State and Federal Regulators First, public availability of negotiated rates and historical out-of-network allowed amounts would empower the nation's 28.5 million uninsured consumers 50 to make more informed health care decisions. Uninsured consumers often must pay full cost for health care items and services, such that pricing information is critical to their ability to evaluate their service options and control their health care spending. Uninsured consumers could use publicly-available pricing information to find affordable service providers or providers who offer the lowest price, depending on the consumer's personal needs and priorities. Provider lists of standard charges often do not reflect the true cost of particular items and services. 51 Although a provider's negotiated rates with group health plans and health insurance issuers do not necessarily reflect the prices providers charge to uninsured patients, uninsured consumers could use this information to gain an understanding of the payment amounts a particular provider accepts for a service, which could inform their own negotiations with that provider for the same item or service. 50 Keith, K. “Two New Federal Surveys Show Stable Uninsured Rate.” Health Affairs Blog. September 13, 2018. Available at: https://www.healthaffairs.org/do/10.1377/hblog20180913.896261/full/. 51 Arora, V., Moriates, C., Shah, N. “The Challenge of Understanding Health Care Costs and Charges.”17 AMA J. Ethics. 1046. November 2015. Available at: https://journalofethics.ama-assn.org/article/challenge-understanding-health-care-costs-and-charges/2015-11. Second, information on negotiated rates and historical out-of-network allowed amounts is critical for any consumer, insured or uninsured, who wishes to evaluate available options for group or individual market coverage. The proposed requirements that plans and issuers disclose negotiated rates and out-of-network allowed amounts to their participants, beneficiaries, or enrollees (or their authorized representatives) through an internet self-service tool or in paper form will make critical pricing information available to consumers with health insurance coverage. However, the Departments are of the view that both insured and uninsured consumers need access to data on negotiated rates and out-of-network allowed amounts across plans and issuers to be able to shop most effectively for their health care coverage. Public disclosure of plan and issuer negotiated rates and out-of-network allowed amounts would create and promote price transparency in the health care market for all consumers and payers, including insured consumers, uninsured consumers, sponsors of self-insured and fully-insured group health plans, as well as government sponsors and regulators of local, state, and federal health care programs. For any consumer, insured or uninsured, who wishes to evaluate available options for group or individual market coverage, pricing information is also essential. Specifically, for those uninsured consumers who wish to purchase coverage and become insured, pricing information for different plans or coverage and their in-network providers would be key to consumers' ability to effectively shop for coverage that best meets their needs at prices they can afford. The same is true for insured or uninsured consumers who wish to evaluate coverage options under their employer's plan or shop for coverage in the individual market. Publicly-available negotiated rate data will assist all consumers in choosing the coverage that best meets their needs in terms of deductible requirements, coinsurance requirements, and maximum out-of-pocket limits—all factors directly determined by a plan's or issuer's negotiated rates or out-of-network allowed amounts. Publicly-available historical allowed amount data for covered items and services provided by out-of-network providers would enable consumers who require specialized services to find the best coverage for their circumstances. For instance, the Departments understand that plans and issuers often place limitations on benefits for specialized services. This causes many specialists to reject insurance, making it difficult, if not impossible, for consumers to find in-network providers in their area who are accepting new patients or who have sufficient availability or expertise to meet their needs. The Departments understand, for example, that many speech therapists and pathologists do not accept insurance because of the limitations plans and issuers place on coverage for their services. Such limitations may include exclusions from coverage for speech issues that are developmental in nature, and are not due to a specific illness or injury. 52 Moreover, many plans and issuers that do provide coverage for developmental speech issues place annual visit limits on speech therapy services. Accordingly, consumers who have a need for such specialized services often base their coverage choices primarily, if not solely, on a plan's or issuer's out-of-network benefits. Historical data outlining different amounts paid to out-of-network providers will enable consumers who rely on out-of-network providers to compare out-of-network benefits among different plans and issuers. 52 https://www.asha.org/practice/reimbursement/private-plans/PrivatePlansCoverageSLP/. Third, public disclosure of pricing information is necessary to enable consumers to use and understand price transparency data in a manner that will increase competition, reduce disparities in health care prices, and potentially lower health care costs. The Departments are of the view that true downward pressure on health care pricing cannot be fully achieved without public disclosure of pricing. General economic theory holds that markets work best when there is price competition. 53 When consumers can shop for services and items based on price, providers and suppliers compete to lower price and improve quality. 54 53 https://www.consumer.ftc.gov/sites/default/files/games/off-site/youarehere/pages/pdf/FTC-Competition_How-Comp-Works.pdf. 54 Kessler, D., McClellan, M. “Is Hospital Competition Socially Wasteful?” 115 Q. J. of Econ. 577. May 2, 2000. Available at: https://www.nber.org/papers/w7266. One of the recognized impediments to increased competition through health care consumerism is widespread knowledge gaps most consumers have when it comes to evaluating health care options. Making this information public would facilitate and incentivize the design, development, and offering of consumer tools and support services that are necessary to address the general inability of consumers to use or otherwise make sense of health care pricing information. The Departments' proposal to make this information publicly available would allow health care software application developers and other innovators to compile, consolidate, and present this information to consumers in a manner that supports meaningful comparisons between different coverage options and providers, and that assists consumers in making informed health care and coverage decisions. 55 One of the primary purposes of these proposals to make price information publicly available is to put price information in the hands of those best equipped to use it in a manner that will support greater consumerism in the health care market (for example, information technology developers who build tools to help consumers make informed health care decisions). 55 The Departments recognize that implementation of the API discussed in Section III, Request for Information, could go further toward the goal of empowering application developers and other innovators to support price transparency in the health care market. In developing these proposed rules, the Departments considered that, due to the complexity of our health care system and the data that drives plan and issuer payments for health care services, such data is unlikely to be usable by the average consumer. Put plainly, consumers would not (or could not) effectively use pricing information they do not understand or cannot decipher. The Departments understand many consumers do not fully comprehend the basics of health coverage, much less the more complex facets of our health care system that can affect an individual's out-of-pocket cost for items and services, including its specialized billing codes and payment processes; the various specialized terms used in plan and coverage contracts and related documents (such as copayment and coinsurance); and the various billing and payment structures plans and issuers use to compensate providers and assign cost-sharing liability to individuals (bundled payment arrangements, for example). 56 As a result, the Departments have determined that the proposal to make public negotiated rates with in-network providers and historical payment data outlining out-of-network allowed amounts is appropriate because it would encourage innovation that could help consumers understand and effectively use price transparency information. The more consumers use transparent price data effectively to find quality services they need at the best available prices, the greater the rise in consumerism and competition, as well as downward pressure on the costs of health care items and services. 56 See https://www.benefitspro.com/2016/09/30/survey-most-workers-dont-understand-health-insuran/?slreturn=20190803010341 (a UnitedHealthcare Consumer Sentiment Survey found that even though 32 percent of respondents were using websites and mobile apps to comparison shop for health care, only 7 percent had a full understanding of all four basic insurance concepts: Plan premium, deductible, coinsurance, and out-of-pocket maximum; although 60 percent of respondents were able to successfully define plan premium and deductible, respondents were not as successful in defining out-of-pocket maximum (36 percent) and coinsurance (32 percent)). The Departments assume that market actors will be incentivized to innovate in the price transparency and health care consumerism space, once access to pricing information that allows for meaningful evaluation of different options for delivering health care items or services, coverage options, and provider options becomes available. The Departments further assume that technology developers will be incentivized to design and make available web tools and mobile applications that can guide consumers in accessing available price information, increasing the likelihood that consumers will use the information to make informed health care purchasing decisions. Ultimately, improved access and usability of this information has the potential to increase health insurance literacy, consumerism, and competition, resulting in more reasonable, controlled costs for health care items and services. Additionally, the information would provide industry researchers and experts with baseline data to assist them with identifying, designing, and testing new or existing health care delivery and coverage models. Fourth, along with consumers, sponsors of self-insured and fully-insured group health plans are also disadvantaged by the lack of price transparency. Group health plans bear the increasing cost of their participants' and beneficiaries' health care. Without information related to what other plans or issuers are actually paying for particular items and services, plans currently lack the pricing information necessary to shop or effectively negotiate for the best coverage for their participants and beneficiaries. Public availability of pricing information is appropriate to empower plans to make meaningful comparisons between offers from issuers and evaluate the prices offered by providers who wish to be included in their pool of in-network providers. The pricing information will also assist plans that contract with TPAs or issuers to provide a network of physicians. That information would provide valuable data a plan could use to assess the reasonableness of network access prices offered by TPAs and issuers by evaluating the specific prices members of a TPA's or issuer's network are accepting for their services. Given that, as of 2017, more than 55 percent of the nation's population received coverage from their employers, 57 the ability of group health plans to effectively negotiate pricing for coverage and services would be a boon to competition in the health care market. 57 As of 2017, employer-based coverage was the most common, covering 56.0 percent of the population for some or all of the calendar year. Berchick, E., Hood, E. Barnett, J. “Health Insurance Coverage in the United States: 2017.” U.S. Government Printing Office. September 2018. Available at: https://www.census.gov/content/dam/Census/library/publications/2018/demo/p60-264.pdf. Fifth, public disclosure of price transparency information is also appropriate because it would assist health care regulators in carrying out their duties to oversee health insurance issuers in their states, as well as in designing and maintaining sustainable health care programs. Public disclosure of pricing information would enable state regulators to monitor actual trends in prices for health care items and services. States would be able to assess whether the trend rates issuers use in their rate filings are reasonable in order to assess whether the rates should be approved. Local, state, and federal agencies responsible for implementing health care programs that rely on issuers to provide access to care would be privy to actual pricing information that would inform their price negotiations with issuers. The Departments understand, however, that some government agencies may already have access to the information proposed to be made public. The Departments, thus, are specifically interested in comments from government stakeholders regarding whether and how the price transparency proposed to be created under these proposed rules would benefit government regulators and health care programs. For these reasons, the Departments propose, in paragraph (c), to require plans and issuers to make available two machine-readable files (as defined later in this preamble) that include information regarding negotiated rates with in-network providers, allowed amounts for covered items or services furnished by particular out-of-network providers, and other relevant information as defined in accordance with specific method and format requirements. These proposed rules would also require plans and issuers to update this information on a monthly basis to ensure it remains accurate. 2. Information Required To Be Disclosed to the Public The Departments are of the view that minimum requirements for standardized data elements would be necessary to ensure users would have access to accurate and useful pricing information. Without such baseline requirements, the negotiated rate and allowed amount data for out-of-network services made available by each group health plan and health insurance issuer could vary dramatically, creating a disincentive to health care innovators developing tools and resources to enable consumers to accurately and meaningfully use, understand, and compare pricing information for covered items and services across providers, plans, and issuers. Accordingly, under these proposed rules a plan or issuer would be required to publish two machine-readable files. The first file would include information regarding rates negotiated with in-network providers. The second file would include historical data showing allowed amounts for covered items and services furnished by out-of-network providers. For convenience, these are respectively referred to as the Negotiated Rate File and the Allowed Amount File in this preamble. The files would include the following content elements. a. First Content Element: Name or Identifier for Each Plan Option or Coverage The first content element that plans and issuers would be required to include in both the Negotiated Rate File and the Allowed Amount File would be the name and identifier for each plan option or coverage offered by a plan or issuer. For the identifier, the Departments propose that plans and issuers use their Employer Identification Number (EIN) or Health Insurance Oversight System (HIOS) IDs, as applicable. The Departments seek comment on whether EINs and HIOS IDs are the appropriate identifiers for this purpose. The Departments also seek comment on whether there are other plan or issuer identifiers that should be considered and adopted. b. Second Content Element: Billing Codes The second content element that plans and issuers would be required to include in both files would be any billing or other code used by the plan or issuer to identify items or services for purposes of claims adjudication, or accounting or billing for the item or service, including but not limited to, the Current Procedural Terminology (CPT) code, the Healthcare Common Procedure Coding System (HCPCS) code, the Diagnosis Related Group (DRG), the National Drug Code (NDC), or other common payer identifier used by a plan or issuer, such as hospital revenue codes, as applicable. The Departments propose to require that plans and issuers associate each negotiated rate or out-of-network allowed amount with a CPT or HCPCS code, DRG, NDC, or other common payer identifier, as applicable, because plans, issuers, and providers uniformly understand them and commonly use them for billing and paying claims (including for both individual items and services and service packages). The Departments also propose that plans and issuers must include plain language descriptions for each billing code. In the case of items and services that are associated with common billing codes (such as the HCPCS codes), the plan or issuer could use the codes' associated short text description. c. Third Content Element: Negotiated Rates or Out-of-Network Allowed Amounts Negotiated Rate File The third content element that plans and issuers would be required to include in the Negotiated Rate File would be negotiated rates under a plan or coverage with respect to each covered item or service furnished by in-network providers. To the extent a plan or issuer reimburses providers for an item or service based on a formula or reference based-pricing (such as a percentage of a Medicare reimbursement rate), the plan or issuer would be required to provide the calculated dollar amount of the negotiated rate for each provider. Negotiated rates would have to be associated with the provider's [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2019-25011. Public record. Not legal advice.