Archived Insight | November 5, 2020

Final Transparency Rule for Group Health Plans and Insurers

The Departments of Health and Human Services (HHS), Treasury, and Labor have issued a final rule that will require group health plans and insurers to:

  • Disclose cost-sharing information to plan participants
  • Publicly disclose negotiated rates for in-network providers and allowed amounts for out-of-network providers.
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This rule, known as the “transparency rule,” is based on the ACA’s group health plan mandate framework regulating insurers and group health plans. The agencies state that the transparency rule will provide greater information to consumers, allowing them to shop for healthcare and help prevent surprise billing. The rule is intended to complement a rule already in effect that requires hospitals to publish prices for their most popular services.

Plan sponsors have a short implementation period in which to prepare for the disclosure requirements: January 1, 2022. They have an additional year to prepare for the cost-sharing requirements.

In addition to the technical side of the disclosure rule, plan sponsors will need to revisit contracts with service providers and inform plan participants about how to use the new tools the rule requires. The rule contains several enforcement safe harbors which are only available if the plan is exercising good faith and reasonable diligence. In our experience, the federal agencies generally require plans to create a compliance plan for implementation to demonstrate good-faith compliance with complicated requirements such as these.

Disclosure of provider rates

Under the rule, effective January 1, 2022, non-grandfathered health plans and insurers must publish their negotiated rates and allowable out-of-network charges on a public website, updated monthly through three machine-readable files. The files will show negotiated rates for in-network services as well as historical payments to and billed charges from out-of-network providers and in-network negotiated rates. They will also show historical net prices for covered prescription drugs at the pharmacy level. This information must be publicly available, accessible without charge, and cannot require a user account, password or other credentials, or submission of personally identifiable information to access the files. Data fields are established for each file.

Disclosing cost-sharing information to plan participants

Effective January 1, 2023, non-grandfathered group health plans and health insurers would have to provide to a participant or beneficiary, or their authorized representative, certain information upon request, which will enable them to better understand their healthcare costs before obtaining treatment. The information would be similar to what is provided in an Explanation of Benefits (EOB) form, but the information would be provided before services are rendered. A notice that is required to be provided at the same time as the cost-sharing information will include information about balance billing and disclaimers that the information provided does not mean that benefits are guaranteed.

The information that must be provided includes:

  • Estimated cost-sharing liability
  • Accumulated amounts
  • Negotiated rates
  • Out-of-network allowed amounts
  • A list of items and services subject to bundled payment arrangements
  • A notice of prerequisites (e.g., prior authorization or step-therapy), if applicable
  • Disclosure notice

Cost-sharing information must be provided about medical items and services, durable medical equipment and prescription drugs.

For the first year, 2023, plans are only required to disclose information concerning an initial list of 500 items and services, which are listed in the rule. Information about all other items and services must be disclosed beginning on January 1, 2024.

Plan sponsors will be required to provide the information at no cost to the participant through a self-service tool on a public website that provides real-time responses based on cost-sharing information that is accurate at the time of the request. If requested by the participant, the information must be mailed in paper form within two business days.

Allocation of responsibility

Plans with insurers, third-party administrators or pharmacy benefit managers may allocate through written agreements responsibility for compliance with both disclosure obligations. In the case of insured plans, the issuer will be liable for any noncompliance. Self-insured plans ultimately retain liability for compliance. The proposal would not apply to excepted benefits (such as dental or vision programs that meet the standards for an excepted benefits plan), short-term limited duration insurance and health reimbursement arrangements (HRAs) or other account-based plans.


Plans will be subject to enforcement mechanisms and civil monetary penalties applicable to group health plans under ERISA and the Public Health Service Act.

A group health plan will not fail to comply with the rule solely because it makes an error or omission, or because a public website is temporarily inaccessible, as long as it is acting in good faith and with reasonable diligence. However, the plan must correct any errors as soon as possible. If a plan needs to obtain information from another entity to comply, a plan that acts in good faith and with reasonable diligence will not be out of compliance unless the plan knows or reasonably should have known that the information is incomplete or inaccurate.

Medical loss ratios for insured plans

As part of the transparency rule, HHS also issued a rule that would allow insurers to take credit for shared-savings programs when they conduct medical loss ratio (MLR) calculations. In general, large group insurers must spend 85 percent of premiums on health care expenses. Insurance companies would be permitted to receive credit in their MLR calculations for savings they share with plan participants that result from the participants obtaining care from lower-cost, higher-value providers.

Impact on plan sponsors

Some plans may already have public websites with robust cost-sharing information. Others may rely on telephone contact for this information. All plans are likely to need to improve processes for tracking both negotiated rates and out-of-network allowable charges.

In addition, with respect to disclosure of rates, it may be difficult for plan sponsors to access negotiated rates and out-of-network payment amounts from service providers on a monthly basis and post them online for several reasons, including contract limitations and technical ability. Plans will need to work closely with service providers to assure compliance.

When technology rules such as this one are enforced, the federal agencies will generally look to determine whether a health plan has assessed its compliance obligations and prepared a compliance plan. A well-thought-out compliance plan can demonstrate good-faith efforts and reasonable diligence. This type of plan is particularly important where there are multiple internal and external stakeholders who must uphold their contractual obligations in order to assure compliance. A compliance plan would include policies and procedures for providing information to participants, monitoring policies to assure that service providers have complied with providing information and regular review of the plan’s ongoing compliance status.

A DOL webpage has additional information about the transparency rule, including a fact sheet.

Have questions about the final rule?

We have answers and can help you prepare a compliance plan to demonstrate good faith and reasonable diligence.

Get in Touch

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.