Last week, CMS published guidance that delays enforcement dates of certain payer price transparency requirements in both the Transparency in Coverage final rule and the Consolidated Appropriations Act (CAA).
CMS and Congress finalized a suite of policies at the end of 2020 that deal with price transparency in health care. In October 2020, CMS finalized its Transparency in Coverage Rule for payers, requiring them to create out-of-pocket cost estimator tools for their members and publish rates negotiated with providers and pharmacies. Then in December 2020, Congress passed the CAA, which includes the No Surprises Act—a bill that protects patients from receiving so-called surprise medical bills—and other transparency statues. Many of those requirements are set to take effect either at the end of this December or on January 1, 2022.
But as CMS notes in the guidance, there are several areas of overlap between the price transparency final rule and the CAA provisions. So, CMS is looking to provide payers with both extra time to meet certain requirements and to clarify areas where there may be redundancy. The biggest changes are to requirements for the machine-readable files, advanced explanation of benefits, online shopping tools, and pharmacy benefit and drug cost reporting. Let's take each of these in turn.
CMS delays enforcement for final rule's machine-readable file requirements
The price transparency final rule requires payers to publish machine-readable files containing negotiated rates with in-network providers, historical payments to and charges from out-of-network providers, and negotiated rates for in-network prescription drugs. Payers have noted that this will be no easy task, requiring them to dedicate staff, time, and money to collating data from a variety of different internal systems.
Given those concerns—and perhaps taking a lesson or two from the slow uptake on the provider side—CMS is giving payers an additional six months to publish machine-readable files with in-network and out-of-network rates. Payers will now have until July 1, 2022. However, CMS stated that it intends to begin enforcement on that date and encouraged payers to post their files in the month in which the plan year begins.
CMS also will delay enforcement of the price transparency final rule's requirement for prescription drug machine-readable files as it considers ways in which the rule overlaps with prescription drug reporting requirements included in the CAA. CMS said it will issue new rulemaking to address potential redundancies, and it floated potentially removing the requirement under the price transparency final rule altogether.
CMS delays CAA's advanced explanation of benefits until further notice
The CAA requires payers to provide members with an advanced explanation of benefits before a service is rendered. The notice includes a "good faith estimate" of the provider or facility's expected charges for furnishing a service, meaning providers and payers have to create systems to quickly share the needed information. Both groups have raised concerns about this task and have asked CMS to extend the January 1, 2022, compliance deadline.
Based on the feedback, CMS acknowledged that getting the technology in place by 2022 is unlikely and that the agency must still issue rulemaking to establish appropriate data transfer standards. Therefore, CMS said it will delay enforcement of the advanced explanation of benefits requirement until those rules are finalized and implemented.
CMS sets new deadline for online shopping tool requirements
The guidance also acknowledges areas of overlap between the insurer price transparency final rule and the CAA. CMS said it would issue a new proposed rule to align requirements for consumer price comparison tools and address discrepancies in pricing information that must be made available to consumers online, in paper form, or over the phone. As such, the agency said it will align the enforcement dates for online and telephone price comparison tool requirements under both the final rule and CAA to be January 1, 2023.
CMS delays CAA's pharmacy benefit and drug cost reporting
The CAA outlines new pharmacy benefit and drug cost reporting requirements for payers. For instance, payers must report the 50 most frequently dispensed brand-name drugs, the 50 costliest drugs by total annual spending, and the 50 drugs with the greatest year-over-year increase in plan expenditures. Payers also must report prescription drug spending by the plan or coverage as well as by participants, beneficiaries, and enrollees. Payers also must assess the impact of rebates, fees, and other payment from drug companies on premiums.
Enforcement for certain provisions was set to take effect December 27, 2021. However, CMS said it will delay enforcement until it is able to issue new regulations or guidance. In the meantime, payers are encouraged to ensure they will be able to report such data for 2020 and 2021 by December 27, 2022.
What this means for price transparency
It's worth noting that the payer price transparency final rule goes hand-in-hand with the hospital price transparency rule. And it's clear that implementation of the hospital price transparency rule has been bumpy to say the least. Studies have shown that few hospitals and health systems are in compliance with the current rules, and in Q1 of this year, reports surfaced that some hospitals and health systems were inserting codes to hide the data. From a consumer standpoint, the current files have done little to improve "shopability"—and even health care researchers have noted how complex navigating the disparate systems can be.
But that is where the payer data is expected to be helpful. With fewer payers than providers, compliance is expected to be higher than we've seen on the provider side and the data payers will be disclosing could help fill some gaps. That is because the hospital data is based on prices, which can vary based on how hospitals calculate their base rates for services and what numbers hospitals choose to report as their base rates, whereas the payer information will be based on claims data, which is a more solid number when calculating the ultimate out-of-pocket cost to the consumer.
The delays to the payer price transparency regulations do not necessarily change any of those implications. The Biden administration's recent proposal to crack down on hospital compliance suggests the administration is still serious about these regulations. We expect to have a better understanding of how much health care prices vary once payers actually publish their data and make their consumer price comparison tools available. What has changed is the timeline. We now need to wait longer to gain those insights and see how price transparency plays out in the market.