Departments Issue New FAQs on Transparency in Coverage Final Rule Implementation

On September 27, 2023, the DOL, HHS, and IRS (the departments) issued FAQs regarding implementing certain requirements under the Transparency in Coverage (TiC) Final Rules. The guidance rescinds the departments’ prior nonenforcement policy with respect to the TiC prescription drug disclosure.

The TiC Final Rules were published on November 12, 2020, and require non-grandfathered group health plans and insurers to disclose the following information on a public website in machine-readable files (MRFs):

1. In-network provider rates for covered items and services.
2. Historical out-of-network allowed amounts and billed charges.
3. Negotiated rates and historical net prices for prescription drugs.

The TiC public pricing disclosures were effective for plan years beginning on or after January 1, 2022.

However, on December 27, 2020, the CAA, 2021 was enacted and also included transparency provisions requiring prescription drug reporting (now known as “RxDC” reporting) by plans and insurers. Due to concerns regarding potentially duplicative and overlapping requirements under both sets of rules, in the August 20, 2021, FAQs, the departments deferred enforcement of the TiC prescription drug MRF disclosure pending further review. In the April 19, 2022, FAQs, the departments also provided a limited enforcement safe harbor from the TiC in-network provider rate disclosure for plans and insurers that could not reasonably express the rate in a dollar amount, as otherwise required.

In the new guidance, the departments withdraw their prior enforcement discretion for the TiC prescription drug MRF disclosure. Based upon the collection of the CAA, 2021 RxDC reporting data for the 2020, 2021, and 2022 reference years, the departments determined there is “no meaningful conflict” between the TiC and CAA, 2021 prescription drug reporting requirements. Rather, the CAA, 2021 requires disclosure of different and additional information than required by the TiC Final Rules. Therefore, the departments have determined that a general or categorical exercise of enforcement discretion is no longer warranted, and a case-by-case enforcement approach is more appropriate. They further emphasize that the previous enforcement relief was intended to be temporary and did not change the TiC requirements. The departments intend to develop technical requirements and an implementation timeline for the TiC prescription drug MRF disclosure in future guidance that considers any reliance interest that plans and insurers developed based on the prior guidance.

Additionally, the departments withdrew the enforcement discretion provided for plans and insurers unable to report in-network provider rates as a dollar amount and instructed such plans and insurers to adhere to the existing guidance for expressing percentage-of-billed-charges arrangements. Prospectively, any enforcement decisions regarding this in-network rate requirement will also be addressed on a case-by-case basis.

Employers that sponsor prescription drug plans should be aware of the updated guidance and consult with their carriers, TPAs, pharmacy benefit managers, and/or other service providers regarding the posting of the prescription drug MRF, once required. Employers should also monitor for additional guidance regarding the implementation timeline.

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