CMS Delays Transparency Rules for Health Insurers

For more information about this blog post, please contact Khaled J. KleleRyan M. MageeLabinot Alexander BerlajolliBrianna J. Santolli, or Connor Breza.

On August 20, 2021, the Centers for Medicare and Medicaid Services (“CMS”) released guidance with respect to the timeline for implementation and enforcement of the new insurance price transparency rule. Citing the number of provisions that insurers are required to “implement by January 1, 2022 and the considerable time and effort required to make the machine-readable files available in the form and manner required in the TiC Final Rules at the same time,” the Departments of Labor, Health and Human Services, and the Treasury have decided to defer enforcement of the Transparency in Coverage (“TiC”) Final Rules requirement to publish the remaining machine-readable files until July 1, 2022. 

The purpose of the TiC Final Rule is to increase transparency by requiring public disclosure of:

  • in-network provider rates for covered items and services,
  • out-of-network allowed amounts and billed charges for covered items and services, and
  • negotiated rates and historical net prices for covered prescription drugs in three separate machine-readable files.

Notwithstanding the deferred enforcement, the machine-readable file requirements of the TiC Final Rules are applicable for plan years beginning on or after January 1, 2022.

However, CMS’s final price transparency rule applicable to hospitals took effect on January 1, 2021, and CMS has already sent approximately 165 warning letters to hospitals advising them of non-compliance. Per the language of the rule, in the event of noncompliance, CMS may:

  • request that noncompliant hospitals undertake a corrective action plan,
  • impose civil monetary penalties of up to $300 per day, or
  • publicize the penalty on the CMS website. 

The nonprofit group Patient Rights Advocate’s recent analysis between the period of May 15 and July 8, 2021 found that roughly 94.4% of hospitals are not in complete compliance with the final rule.  Hoping to incentivize compliance, CMS proposed a new rule on July 19, 2021 that could result in steeper penalties for non-compliant hospitals.