In my previous blog post (dated February 4th, which you can find here), I told you that the Federal Departments (i.e., the Departments of Health and Human Services, Labor, and Treasury) released proposed regulations to improve and strengthen the existing Transparency in Coverage (TiC) requirements. On Monday October 5th, the Federal Departments finally released regulations finalizing these proposed changes to the law.
What are these changes trying to solve? As I indicated previously, the TiC Files – which are the primary mechanism for disclosing medical and prescription drug prices to the public – are:
- Way too large. This has made it extremely difficult for plan sponsors and their service providers to download, analyze, and evaluate the publicly disclosed pricing information.
- Often times incorrect, inaccurate, and they contain duplicative pricing information. This has made it almost impossible to develop an accurate picture of the pricing information and provider patterns in a particular geographic region.
In addition, there has been a persistent level of non-compliance with the TiC regulatory requirements, which some believe is the root-cause for (1) the large-scale size of the TiC Files and (2) the disclosure of incorrect, inaccurate, and duplicative pricing data.1
I keep pointing you back to my previous blog post – so I can tell you in this blog post – the changes that were made from the proposed regulations stage to the final regulations stage.
Three Important Changes from the Proposed to Final Regulations
1. New Attestation of Accuracy to Require Accountability
In my opinion, the most important change from the proposed to final stage hits on the issue of non-compliance. In particular, the final regulations add an “attestation” requirement. Here, the chief executive officer (CEO), president, or other designated senior official of an insurance company or self-insured plan must “attest” that the pricing information included in their TiC Files are – to best of their knowledge and belief – complete, accurate, and in compliance with the TiC regulatory requirements.
Why is this “attestation” requirement such a big deal?
First, the proposed regulations failed to propose this type of “attestation” requirement (so again, this is a change from the proposed to final stage). And second, there is currently no accountability for the completeness and the accuracy of the pricing information set forth in the TiC Files. Many industry professionals have argued that this lack of accountability has resulted in the production of inaccurate and incomplete TiC Files, primarily by insurance companies producing their own TiC Files, but also when these insurance companies produce TiC Files for self-insured health plans that “rent” the insurer’s medical provider network and adjudicate incurred health claims on behalf of the self-insured plan.2 Only time will tell if this new “attestation” requirement will serve as an effective mechanism for ensuring compliance with the TiC rules. But, some believe that it is a much-needed addition to the law.3
2. Prescription Drug File Requirements
In 2020, the Federal Departments issued final rules requiring insurance companies and self-insured plans to – in addition to publicly disclosing in-network negotiated rates (through the “In-Network Rate File”) and out-of-network payments (through the “Out-of-Network Allowed Amount File”) – produce and publicly disclose prescription drug prices through a “Prescription Drug File.” The Departments later deferred enforcement of the Prescription Drug File requirement pending further rulemaking.
The proposed TiC regulations were silent on the Prescription Drug File, but these final regulations re-confirm the requirement for producing and publicly disclosing a Prescription Drug File, and the Federal Departments explained that they intend to implement the Prescription Drug File requirements in the near future.
Of particular importance here is the public disclosure of the “historical net price” of a prescription drug reflected as a dollar amount with the corresponding National Drug Code (NDC) for the prescription drug, as well as the National Provider Identifier (NPI), Taxpayer Information Number (TIN), or Place of Service Code for each in-network pharmacy.
Why is this a big deal?
Because even the Federal Departments believe that negotiated rates alone will not reveal the actual economic cost of prescription drugs because in-network rates exclude rebates and other discounts.4 So now, once these Prescription Drug Files are publicly posted, plan sponsors, plan service providers, researchers, and policymakers should have some visibility into how much insurance companies and self-insured plans actually pay for covered prescription drugs.
3. Earlier Effective Date of the Changes
The Federal Departments originally said that the proposed TiC regulatory changes would become effective 12 months after publication of the final regulations. However, the Departments moved up the effective date of the final regs to December 7, 2026, and set forth a specified applicability date for changes to the TiC Files – including the “attestation” requirement – of March 6, 2027. In other words, insurance companies and self-insured plans must start complying with the TiC File regulatory changes and the “attestation” requirement five month from now (on or before March 6, 2027).
Other Important Things to Know About the Final Regulations
Permission to Contract with Insurance Companies and TPAs to Produce the TiC Files on Behalf of a Self-Insured Health Plan
In cases where an insurance company “rents” their medical provider network to a self-insured health plan – or in cases where an independent TPA acts as an intermediary between the insurer and the plan for provider network access – the final regulations allow the self-insured plan to enter into a written agreement with the insurer or TPA (often times referred to as the “owner of the provider network”) to produce the TiC Files for the self-insured plan.
Under this agreement, the plan may also permit this owner of the provider network to produce one In-Network Rate File that is also used by other self-insured plans and the insurer’s fully-insured policies if all of the plans and policies use the same provider network.
In addition, in cases where a self-insured plan hires a third-party to adjudicate the plan’s out-of-network claims, the final regulations allow the plan to enter into a written agreement to permit this third-party to produce a single Out-of-Network Allowed Amount File on behalf of multiple self-insured health plans for which this third-party performs claims adjudication services.
Permission to Contract with Insurance Companies and TPAs to “Attest” on Behalf of a Self-Insured Plan
A self-insured plan may also enter into a written agreement with an insurance company or TPA (i.e., the owner of the provider network) that produces the TiC Files on behalf of the plan to make an “attestation” (discussed above) that the self-insured plan’s TiC Files are complete and accurate. Here, the owner of the provider network’s CEO or other senior official will agree to “attest” to the completeness and accuracy of the TiC Files produced for the plan.
But, Liability for Non-Compliance Still Falls on the Self-Insured Health Plan
Importantly, although a self-insured plan may enter into a written agreement wherein the CEO or other senior official of the owner of the provider network attests to the completeness and accuracy of the plan’s TiC Files, if the owner of the provider network produces incomplete or inaccurate TiC Files for the self-insured plan, the plan and its sponsor still remain liable for any non-compliance with the TiC regulatory requirements.
Note, these final regulations do not prevent a self-insured plan or its sponsor from contractually requiring the owner of the provider network to assume the plan’s liability if and when the insurer or TPA produces an inaccurate or incomplete TiC File on behalf of the plan. But, that is not easy for a self-insured plan or its sponsor to accomplish through the contracting process.
What’s Next
As stated above, the Federal Departments indicated that they will soon start implementing the Prescription Drug File requirements. This will include the release of a “schema” for the Prescription Drug File (expected to be finalized around May 2027) and the required public disclosure of the Files (expected to begin in December 2027). What is unknown, however, is this: Once the changes to the TiC Files take effect on March 6, 2027, will the Federal Departments increase enforcement efforts to require compliance with the TiC rules, aided by the new “attestation” requirement? What is also unknown is whether the Trump Administration will undertake a Transparency 3.0 rulemaking exercise and continue to improve and further strengthen these public pricing disclosure requirements. Many industry stakeholders are hopeful, and many believe there is plenty of time for this Administration to release more regulations and guidance between now and Inauguration Day, January 20, 2029. Stay tuned…
