Transparency in Coverage Summary

Background on Transparency in Coverage Rule

Released at the end of October 2020, the final Transparency in Coverage rule requires group health plans and insurance issuers in both the individual and group markets to disclose extensive, detailed price and cost-sharing information, with an intended three phase roll-out beginning January 1st, 2022.

Issued by the Department of Treasury, the Department of Labor, and the Department of Health and Human Services, the finalized rules have been modified, enhanced, and clarified from the previously proposed regulations. Following the Trump Administration’s 2019 executive order aimed at improving both price and quality transparency within healthcare, the Transparency in Coverage rule aims to accomplish multiple objectives, including:

  • addressing wide price variations between in-network providers,
  • reducing waste in healthcare systems, and
  • helping individuals make informed choices about their healthcare

The Departments provided the following reasons why public disclosure is necessary:

  • Empowers the 1 million uninsured to better negotiate their bills down from charges;
  • Empowers the commercially insured population to evaluate their plan options considering the costs for services under negotiations between each payer and their preferred providers;
  • For some specialty care, members choose a plan based solely on out-of-network benefits and rates for care (speech therapy and pathology were provided as examples). Having all out-of-network rates would facilitate this review;
  • Encourages innovation of third parties to make better sense of the complexities of healthcare and display them in a unified and comprehensible way;
  • Empowers self- and fully insured employers to seek better negotiated rates by switching carriers/TPAs/rented networks or by other means, spurring competitive dynamics and decreasing prices at large
    • Employee cost sharing for large-group plans is expected to rise by 5.5% – 9.0% each year over the next decade without Employee cost sharing may rise 71% – 137% by 2030
  • For oversight by state regulators – allows the evaluation of annual premium increase reasonableness, identification of collusive practices, and facilitates further regulation

Overview of Transparency in Coverage Final Rule

The rule’s premise is based upon Section 2715A of the Public Health Service Act, which states that group health plans and insurance issuers must comply with Section 1311(e)(3) of the Affordable Care Act, also known as Obamacare.

On January 1st, 2022, Employer-sponsored Group Health Plans and Health Insurance Issuers must provide the following three machine-readable files:

  • negotiated rates for all covered items and services between the plan or issuer and in- network providers;
  • historical payments to, and billed charges from, out-of-network providers; and
  • in-network negotiated rates and historical net prices for all covered prescription drugs by plan or issuer at the pharmacy location

Additionally, the above files must use a standardized format, as defined in GitHub, and must be updated on a monthly basis. More details regarding these files follow below in Appendix A.

Self Service Tool

Employer-sponsored Group Health Plans and Health Insurance Issuers must also provide a self- service tool for enrollees to obtain personalized out-of-pocket cost estimates for prospective medical and pharmaceutical care. The self-service tool must make available to participants, beneficiaries and enrollees (or their authorized representative) personalized out-of-pocket cost information, and the underlying negotiated rates for covered health care items and services, including prescription drugs, through an internet-based self-service tool and in paper form upon request.

Like the machine-readable files, there are certain data elements that must be included. More details regarding these files follow below in Appendix B.

Unlike the machine-readable files, the self-service tool may be introduced over two phases:

  • For all plans beginning on or after January 1, 2023 – Plans and issuers must make cost-sharing information available for 500 items and services identified by the Department for plan years (in the individual market for policy years) :
  • For all plans beginning on or after January 1, 2024 – The same requirement imposed as of 1/1/23, but for ALL services, items, and prescription drugs

No Quality Metrics

Throughout the proposal process, regulators had received a multitude of comments supporting quality metrics alongside transparent pricing, but the final rule does not require any quality performance indicators. Quality metrics are intended to be considered for future action and the agencies actively encourage plans to develop innovative, impactful quality metrics to improve healthcare consumer’s decision-making process.

Impact to Medical Loss Ratio (MLR)

Also outlined within the rule, insurers that share in savings with their membership when the member decides to use a lower-cost, higher-value provider based on a program sponsored by the payer or issuer, can record the value of the reward as medical loss for the purpose of computing their MLR, to avoid having to pay rebates on their account. This dynamic does not help or hinder self-insured plans, given they are not subject to MLR rules. As stated within the rule, alternatives must be higher value, but the rule does not provide a definition of value, allowing each state to interpret and present the definition.

Transparency in Coverage Compliance

Self-funded plans can become compliant with the transparency in coverage rule if they enter into a written agreement with a third-party, like a TPA or healthcare claims clearinghouse, but cannot contract away the liability. If the third-party fails to provide the necessary information and remain in compliance with the rules, the plan will be responsible for the non-compliance.

For fully insured plans, the group can establish a written agreement requiring their insurance carrier to provide the compliant transparency information, and thereby pass the liability of compliance failure unto the carrier

TALON’s Perspective on Transparency in Coverage

The publishing of the Transparency in Coverage rule, ( on October 29, 2020, is the most significant mandate upon the healthcare market since the ACA was enacted. This continues an industry- wide shift toward healthcare consumerism and provides unprecedented transparency to most employer- sponsored health plans participants. This information includes all network negotiated rates, actual amounts paid towards out-of-network benefits, and prescription drug costs net of rebates and similar discounts.

TALON has been building medical price transparency technology for years. Since our inception in 2014, we have configured a user experience for healthcare consumers that mirrors experiences available in every other functional consumer-centric market. With radical transparency and healthcare consumerism as our founding principles, we strive to deliver cost-efficiency on behalf of patients by placing the economic purchasing power and decision-making into their hands. We call this Healthcare Independence.

This paradigm shift, radical transparency and healthcare consumerism, creates the same pressures on industry players within the healthcare environment that exist in virtually every other mass market, like consumer electronics, for the complete benefit of the consumers. Given that a well-functioning, competitive market depends on information symmetry between engaged buyers and sellers, the accurate and timely disclosure of cost information to healthcare consumers will lead to a more efficient, competitive healthcare market.

With the seamless, automated, and customized TALON platform, users benefit not only from the gold- standard for pricing transparency, but also from the necessary education and intuitive incentives to meaningfully drive down healthcare costs.

Through independent, third-party validated case studies, the TALON platform has delivered savings of close to $1,800 per enrolled employee, with gross estimated savings delivering a 25x return on total program fees. These savings results were driven and provided by our founding principles, the enablement of radical price transparency and healthcare consumerism.

TALON is the expert in parsing complex non-standard historical claims files and payer arrangements from disparate sources. Since its founding, TALON has been creating standard format file structures to expose the hidden prices for procedures and bundled services. The Company is uniquely qualified to parse the complex non-standard file formats from TPAs’ upstream networks and other value-added pricing arrangements. Through proprietary machine-learning algorithms, TALON creates standard GitHub compliant machine-readable files as defined and required under the Transparency in Coverage rule. Due to timing of up-stream arrangement data file availability, TALON leverages its unique ability to ingest and parse the Medical TPAs historical claims files to establish in-and-out-of-network negotiated rates for services, items, and prescriptions. This approach allows TALON to collaboratively produce the required machine-readable files and ensure early compliance prior to the 2022 deadline, followed by support and production of monthly updates constructed by TALON’s machine-parsing of up-stream payment arrangements.

Create a competitive advantage and market differentiation with TALON by offering Safe Harbor for valued employer groups while enabling access to a fully-compliant Self-Service Tool (MyMedicalShopper™) a year in advance of mandates.

Appendix A

Required Data Elements Disclosure: In general, these files have the following components as posted in GitHub.

  • Machine-readable file elements:
    • Name and identifier for each coverage option – HIOS ID (14-digit product level, if available; otherwise, the 5-digit issuer level) or EIN/TIN if there is no HIOS
    • Billing Code – CPT, HCPCS, DRG, NDC, revenue code, plain language description, or any other basis on which the plan or issuer bases billing, adjudicating and paying of a covered service
    • NPI, EIN/TIN, and place of service code
    • Applicable Amounts
      • In-network – Negotiated rates, Underlying Fee Schedule rates (where one exists to describe cost sharing liability), and derived amounts (where the rate is expressed as a multiple of another number, for example).
      • Out-of-Network Allowed Amounts in 90-day period starting 180-days before each publication date
  • Prescriptions – Negotiated Amounts and Historical Net Prices – Negotiated rate is the basis for payer reimbursement and member cost sharing, contrary to how it works with medical pricing, however, the payer will later receive rebates which are not considered for either purpose. Therefore, the historical net price is a newly required
    • Requires disclosure of all reasonably allocated rebates, coupons, discounts, chargebacks, fees, and other price concessions not reflected in the allowed amount for prescription
    • Historical net price must be provided, to help consumers judge when the net price may be lower than their personal cost sharing
    • Same schedule for disclosure as OON medical 90-day period beginning 180 days before.
  • Last date of validity for the price
  • Notation where the price is not related to an FFS model

Appendix B

Cost-sharing liabilityNot RequiredRequired
In-network rateRequiredRequired
Out-of-network allowed amountRequiredRequired
Historical net prices for prescription drugsRequiredNot Required
Items and services subject to bunded paymentRequiredRequired
Accumulated AmountsNot RequiredRequired
NoticesNot RequiredRequired