New Rules, New Realities: The Impact Of New Transparency Rules On Organizations

Aligning employee expectations with regulatory compliance

In recent years, workplace dynamics have undergone significant shifts, with employees becoming increasingly vocal about their expectations regarding diversity, transparency and acceptably evenhanded treatment. These evolving employee needs, along with a public policy belief that transparency reduces waste and inefficiency, have prompted significant regulatory changes. Among these, new employer transparency requirements for employee benefit programs are poised to reshape organizational practices and obligations.
 
The Internal Revenue Service (IRS), Employee Benefits Security Administration and Centers for Medicare & Medicaid Services (CMS) issued their final rules on transparency in coverage back in November 2020, with phased implementation continuing through 2024, significantly impacting organizations and their workforce.

 

A New, Transparent Landscape

The new transparency requirements include:
 
● Transparency of Healthcare Costs: As part of phase II of the Consolidated Appropriations Act (CAA) of 2021, starting January 1, 2023, employers must provide transparent details regarding health plan rates for covered items and services between the plan or issuer and in-network providers. They are also required to disclose costs associated with out-of-network providers. Organizations must offer an Internet-based price comparison tool that enables individuals to estimate their cost-sharing responsibilities accurately. This tool, which should cover at least 500 items and services (but will soon be expanded further), must also be accessible via phone or in paper format upon request.

● Posting Machine-Readable Files: As of July 1, 2022, per the CAA’s new Transparency in Coverage Final Rule, health insurers must publicly showcase healthcare procedure price details using machine-readable files on their websites. These files must encompass negotiated rates with in-network providers, allowable amounts for out-of-network providers, and historical billed charges for out-of-network providers. The availability of pricing information ensures access to care, allows for monitoring the cost-effectiveness of different treatments and safeguards consumers.  Although the format of these machine-readable files is not directly useful to consumers, government regulators, researchers and consumer advocacy organizations will be positioned to use the data and, in turn, generate tools, calculators, and other comparative information to support consumers. 
 
● Prescription Drug Reporting: Insurers and employer-based health plans must provide specific information regarding expenditures on drugs and overall plan costs (including premiums paid by members and employers) on the CMS portal via a prescription drug data collection (RxDC) report. Required by the Prescription Drug and Health Care Spending Data Collection rule, effective June 1, 2023, this report must detail the prescription drugs that contribute the most to spending, the drugs that are most frequently prescribed, and any rebates received from drug manufacturers. The data will be used to identify the primary factors driving increases in healthcare spending and enhance transparency in prescription drug pricing. This is a particular area in which pricing transparency is expected to help curb skyrocketing prescription drug costs. 
 
● Agreements Without Gag Clauses: The CAA prohibits insurers and group health plans from entering into agreements with providers or networks that prevent the sharing of certain information, such as provider cost and quality information, or limiting electronic access to de-identified claims upon request. Such clauses will be deemed unenforceable as per new legal regulations, and submitting the attestation is done on the CMS website. 

The first Gag Clause Prohibition Compliance Attestation was due no later than December 31, 2023, and subsequent attestations are due by December 31 of each year thereafter.  Although insurance carriers are positioned to handle this requirement for most employers, self-funded plan sponsors absorb this obligation as well.  If you’re unsure if this applies to you, reach out to legal counsel before attesting.
 
● Certainty in Billing and Costs: The No Surprises Act, effective January 1, 2022, imposes several requirements on providers. It means providing clear and understandable information about benefits as well as protections against surprise billing, safeguarding against out-of-network billing for emergency rooms and certain services, and resolving payment disputes through an Independent Dispute Resolution process. Additionally, offering good-faith estimates for uninsured individuals, establishing a patient-provider dispute resolution process, and providing additional claims appeals processes contribute to creating a transparent and fair healthcare system for employees of organizations. 

Employers must ensure that their healthcare plans are affordable, provide comprehensive coverage, and offer employees a sense of financial security and trust.  Although there have been significant ongoing legal challenges in this zone and further regulatory changes are anticipated, the long-term legislative goal is to deliver health coverage users a more predictable framework around the medical expenses they may potentially face. 

Diversity and Inclusion Imperatives

Along with the new transparency rules, legal developments related to judicial rulings and regulatory action under the Affordable Care Act or ACA’s key discrimination provision (Section 1557) underscore the importance of offering the same healthcare plan coverage regardless of employee sexual orientation, gender, disability, or any other class or demographic, reflecting a broader societal shift towards equitable practices.
 
Ensuring fair and equal benefits, diversity and inclusion efforts not only builds employee trust but also showcases fairness within the workplace. It is crucial for employers not to show favoritism towards highly paid employees and to ensure that eligibility, contributions and benefits are distributed equally. Nontaxable benefits should not disproportionately favor key employees, and considerations must be made for various populations, including those undergoing gender transition, individuals with bilingual needs and pregnant employees. These principles are in line with employer obligations as outlined by IRS nondiscrimination rules.

Navigating Transformation in a New Era

The new transparency rules, along with evolving employee expectations, are reshaping the landscape of organizational responsibilities. Proactively addressing these challenges by embracing transparency, fostering inclusivity, prioritizing employee well-being and maintaining regulatory compliance will not only meet current expectations but also build a resilient and engaged workforce poised for long-term success in a rapidly evolving business environment.

	Dennis Fiszer is the Chief Compliance Officer and Senior Vice President at Hub International, with the role of providing compliance and consulting services regarding health plans and other employee benefits. He is a widely recognized speaker and editorial contributor on healthcare reform, employee medical benefits, and human resources issues.
	Kevin Brady is the Chief Compliance Consultant at Hub International. He is a healthcare attorney with experience at law firms serving healthcare providers and health insurance clients. At Hub, he is focused on EB Compliance issues - including (but not limited to) ACA, ERISA, HIPAA, and IRS compliance.
	Dawn Smith is the Employee Benefits Compliance Manager for the South Region at Hub International. She helps clients with their day-to-day compliance considerations within ERISA, Section 125, ACA, COBRA, and Medicare, as well as many other subjects.