In the wide world of price transparency, payers have their own unique set of rules and regulations that apply specifically to them. We’ve waxed poetic about these rules for nigh three years running, so you’d think we would have run out of things to say by now. And yet. When combing through our price transparency resources hub, we realized a technicality had been missing from our guidance: are self-funded employers under the umbrella of required parties that need to post an MRF? When we say “payer price transparency,” should we also say “employer price transparency”? Yes and yes. If you’re a self-funded employer, you’re also technically a payer subject to price transparency legislation*. Bingo. Wow. Newsflash.

Here’s what the heck that means.

*Price transparency legislation encompasses one law and two final rules. Simply saying “price transparency legislation,” is technically incorrect but easier to conceptualize. For this blog, we’re going to be as technically correct as possible while also providing explanations that will help you decipher what can often be confusing technicalities. It wouldn't be the healthcare system we all know and love if it were straightforward!

What is employer price transparency?

Self-funded Employer price transparency is payer price transparency. Mandated by the Centers for Medicare and Medicaid Services (CMS), the Transparency in Coverage Final Rule (TiC) and No Surprises Act (NSA) define a series of regulations that all boil down to making certain rates publicly available via machine-readable files (MRFs) and a patient estimate tool.

A quick history lesson for the enthusiasts among us: Mandated by the United States Department of Health and Human Services (HHS), Labor, and Treasury in November 2020, TiC requires most group health plans and health insurance issuers (including: self-funded employers!) to disclose price and cost-sharing information to the public. The rule involved three phases, the first started on 7/1/2022, and the next two started on the first of each subsequent year. If this is the first you’re hearing of this….buckle up.

What’s required of self-funded employers to comply?

According to TiC, effective July 1, 2022, self-funded employers must provide two (soon to be three!) unique publicly available machine-readable files (MRFs). These MRFs must show in-network negotiated rates, out-of-network historical payments and charges, and in-network prescription drug rates and historical net prices. The prescription drug MRF effective date has yet to be announced, but the other two MRF requirements are in effect and must be updated monthly.

How the files are organized is a key part of complying. Each file should be labeled properly and contain as follows:

  • File 1: Negotiated rates for all covered items and services between the plan and in-network providers
  • File 2: Billed charges from and historical patients to out-of-network providers
  • File 3: In-network negotiated rates in addition to historical net prices for all prescription drugs covered by the plan at the granularity of a pharmacy location

File Formatting

Guidance from CMS has been augmented to better reflect the technical expertise needed to create files. CMS has published a GitHub repository with more detailed file specifications and example files, and we’ll give you a high-level overview below that’s included with the price of admission. Whereas the complementary provider rule required MRFs and suggested JSON, XML, or CSV, TiC specifically excludes XLS/XLSX files as not meeting the definition since they are proprietary Microsoft file formats. Additionally, CMS has specified dates that should be in YYYY-MM-DD format (ISO 8601) within each file. The file naming conventions are also well-covered on the GitHub repo.

Borrowing from CMS’ robust documentation (as of 4/12/2021):

File Naming Convention

The following is the required naming standard for each file: <YYYY-MM-DD>_<payer or issuer name>_<plan name>_<file type name>.json For payer or issuer’s names and plan names that have spaces (i.e. “healthplan 100”), those spaces would be replaced with dashes –

For example, the following would be the required naming for CMS:

  • 2020-01-05_cms_medicare_in-network-rates.json
  • 2020-01-05_cms_medicare_allowed-amounts.json
  • 2020-01-05_cms_medicare_prescription-drugs.json

An example of a plan named healthcare 100 with an issuer’s name issuer abc, the following would be the naming output:

  • 2020-01-05_issuer-abc_healthcare-100_in-network-rates.json
  • 2020-01-05_issuer-abc_healthcare-100_allowed-amounts.json
  • 2020-01-05_issuer-abc_healthcare-100_prescription-drugs.json

Medical Loss Ratio (MLR) Rebates

The MLR is the percentage of premium payments that a health plan spends on claims and quality improvements versus administrative costs. The passage of the Affordable Care Act included a requirement that individual and small-group insurance carriers must spend at least 80% of premiums on medical expenses. For large-group plans and Medicare Advantage plans, it’s 85%. For those same entities, profits and other expenses, largely administrative, cannot make up more than 20% or 15%, respectively, of premiums paid by members. If the administrative expenses exceed the defined percentages, the insurer must provide rebates to its members for the excess amount. From 2012 to 2020, insurers returned almost $8 billion of excess premiums.

Since TiC has a high anticipated administrative burden, self-funded employers can claim credit towards their MLR for “shared savings” when an employee selects a lower-cost, higher-value provider. TiC expects self-funded employers and consumers to save $154 million per year due to lower medical costs from the effort.

Patient (Employee) Estimate Tool

But wait, there’s more! TiC also includes a Patient Estimate Tool (PET) requirement. For both phases, upon request, self-funded employers must disclose cost-sharing info to Participants, Beneficiaries, and Enrollees (PBE)* via an online self-service tool (here at Turquoise Health, we call this the Patient Estimate Tool) so PBEs can access the following info:

  • Estimated Cost-Sharing Liability: Includes copay, coinsurance and deductibles
  • Accumulated Amounts: PBE’s remaining deductible and out-of-pocket amounts at the time of request
  • In-Network Rate: Payer contractual allowed amount
  • Out-of-Network Allowed Amount: Max amount a plan would pay for an item or service out-of-network
  • List of Items/Services subject to bundled payment arrangements
  • Notice of prerequisites, if applicable: Concurrent review, prior authorization, or the step-therapy/fail-first approach of prescribing patients less expensive medication before more costly medication is authorized
  • Disclosure Notice: predetermined list of disclosures provided by CMS

*So many abbreviations!

Some requirements above overlap with requirements outlined as Advanced Explanation of Benefits (AEOBs) from the No Surprises Act, although there are some notable differences. This patient estimate tool focuses on the self-service aspect, meaning the PBE should be able to operate independently to receive the cost-sharing and other information. With AEOBs, PBEs are reliant on providers and insurers to provide cost-sharing and charge information.

TiC is also focused on cost-sharing estimates specifically for CPT Codes. The rates, cost, and disclosures within the PET must be written in approachable, easy-to-understand language PBEs can easily understand (defined as “plain language”) and PBEs must be able to request the information via paper form. CMS published a list of 500 pre-determined CPT Codes required to be included in every patient estimate tool. Estimates for all other items and services must be available on the patient estimate tool, which went into effect on January 1, 2024.

Yeah, wow. That’s a lot. All that, huh?

Yep. But luckily, there are some very kind exceptions for self-funded employers when it comes to the method of fulfilling the requirements. Self-funded employers are allowed to use Third Party Administrators (TPA’s) (or vendors like us, for example) to generate MRFs and build their PET. However, even if a TPA is used, the employer is still responsible for ensuring the end result is compliant. Meaning, that if you choose a vendor that creates a non-compliant file and you get fined by CMS for non-compliance, you are held accountable for compliance regardless of if your organization created the file yourself.

One more fun tidbit for employers: say you don’t want to generate files. TiC says you can partner with your issuer to provide rates via your issuer’s website. Meaning: if you officially approach your issuer and come to a mutual agreement for them to post rates on your behalf, you will be considered in compliance if the issuer does so correctly. We’d suggest you keep that agreement handy in case CMS comes a-knockin’ on your door with questions about your rates within the payer’s file.

A recap and a supportive, “there, there”

To summarize, here’s what you need to do and when you need to do it. Spoiler alert for the less observant among us: all of the following dates are in the past. So if you haven't done any of these things….we’d suggest you get to it to avoid fines!

Effective 7/1/22, Three MRFs containing:

  • File 1: Negotiated rates for all covered items and services between the plan and in-network providers
  • File 2: Billed charges from and historical patients to out-of-network providers

Effective as of 1/1/24:

  • A publicly accessible PET containing all items and services

We have created countless resources to help you de-bunk compliance. If you’re looking for more detailed information than what we have here, here, and here, feel free to send us an email! We’re happy to help explain or just do all this for you.