As new transparency rules go into effect, doubts persist

As of July 1, employer-sponsored plans will be required to comply with transparency requirements first passed in 2020. But questions remain over whether these new rules will truly help consumers.

The Transparency in Coverage (TiC) rules have been some time in the making; the original deadline was January 1, but that was pushed to July 1. The new rules are part of a larger overall reform measure that includes provisions on “surprise billing” and other provisions intended to make health insurance more consumer accessible.

Although most of the changes required will be put in place by insurers and third party-administrators (TPAs), employers should be aware of the new requirements and include the necessary information about accessing the data in employee communications.

What the new rules say

The TiC rules requires employers to provide “machine readable files” (MRF) to the public, which will show in-network insurance rates, out-of-network charges, and information relating to prescription drug coverage.

The MRFs apply to group medical plans, whether the company has a fully-insured or self-insured plan. The rules specify how employers are identified and how to provide information on billing codes.

The MRFs must be updated monthly, and while much of the compliance will be handled by insurance carriers, guidance from SHRM notes that employer-sponsored plans may be held responsible for any failure to follow the rules.

“A carrier will be responsible for any MRF failure as long as it is required in writing to ensure a plan’s compliance. Self-funded plans also can contract to have a third party provide and update MRF, but the TiC rules do not shift liability to a third party for self-insured plan failures. Thus, self-funded plans should carefully review indemnification provisions in all relevant vendor service agreements,” said Carlton Pilger, an HR attorney with Fisher Phillips, writing for the SHRM website. “Most carriers and TPAs have already contacted employer plan sponsors offering to assist with preparing, updating, and hosting the MRF. Employers should be carefully reviewing their service agreements and related contracts to make certain they include specific provisions dealing with all aspects of the required disclosures.”

One broker’s view: more of a burden than a useful tool

Derek Winn, a consultant with Business Benefits Group, said he is skeptical about the usefulness of the new system. “What this is designed to do is allow third party applications and developers to scrape data,” he says, noting that new rules are about machine-readable files, rather than clear information that consumers can understand.

“’Transparent’ to me means that someone with a basic reading level can read and interpret and apply the information that’s provided,” he says. “This information is not going to be available in that format. It’s like reading code, it’s not like ordering off a menu.”

Wynn also notes that recent transparency efforts have been handed down on the federal level but implementation has been left up to industry shareholders such as health plans, providers, and group plan sponsors.

“We’ve learned very little in our efforts to breathe transparency into health care,” he says. “A great example is the number of hospitals who still aren’t complying with their own transparency guidelines.”

Wynn says he believes health plans were already providing more useful information for consumers via their websites and price comparison tools. “Most good health plans are already far more accessible and transparent through their own solutions than what this will bring to any consumer.”