On November 12, 2020, the United States Department of Health and Human Services ("HHS"), Department of Labor and Department of the Treasury jointly published a final rule requiring health care payors to publicly disclose certain price and cost-sharing information (the "Final Rule"). The Final Rule, which HHS refers to as the "Transparency in Coverage" rule, includes three distinct requirements, each with a separate effective date, the earliest of which is January 1, 2022.

The Final Rule is just the latest in the federal government's efforts to increase price transparency within the health care industry but is separate from the recent Hospital Price Transparency requirements that are still scheduled to take effect January 1, 2021.


On June 24, 2019, the Trump administration released an Executive Order on price transparency entitled "Improving Price and Quality Transparency in American Healthcare to Put Patients First." The Executive Order directed a number of federal agencies to promote transparency in health care pricing. The proposed version of this Final Rule was published on November 27, 2019, setting forth proposed requirements for group health plans and health insurance issuers in the individual and group markets to disclose certain rate and cost-sharing information.

Highlights of the Final Rule

Negotiated Price Disclosure

The Final Rule requires almost all health care payors to publish a standardized and monthly-updated data file which will display the payor's (i) negotiated rates with in-network providers; (ii) billed charges and allowed amounts paid historically to out-of-network providers; and (iii) in-network negotiated rates and historical net prices for prescription drugs. According to its press release announcing the Final Rule, HHS believes that publishing this information will allow the public to have better access to health care pricing information and provide "an open opportunity for research, innovation and comparison within the healthcare market." This requirement will take effect beginning on January 1, 2022.

Cost-Sharing Tool

The Final Rule also requires payors to create a consumer tool, whereby their enrollees can receive real-time, personalized estimates of potential cost-sharing liability for any covered item or service furnished by a particular provider. The cost-sharing estimator must be available online and in paper form, if requested by the enrollee. Payors must make this cost-sharing information available for 500 specified items and services for plan years beginning on or after January 1, 2023, and for all items and services for plan years beginning on or after January 1, 2024.

MLR Reporting

HHS believes that payors will experience savings as a result of these transparency measures. HHS is incentivizing payors to share these savings with their enrollees by amending the Medical Loss Ratio ("MLR") program.1 Specifically, beginning with the 2020 MLR reporting year, payors may receive credit in their MLR calculations for savings they share with enrollees that result from the enrollees shopping for, and receiving care from "lower cost, higher-value providers."


The Final Rule did not explain how HHS will ensure that payors comply with these new transparency requirements. HHS appears to be relying in part on the MLR incentive to encourage compliance. Further, HHS intends to leave the primary enforcement activities up to the states. This structure leaves a great deal of uncertainty as to what each state will do, if anything, to enforce these new transparency requirements. Moreover, true enforcement might be difficult, as the Final Rule has safe harbors to protect payors who attempt to comply with the transparency requirements in good faith, but fail to report accurate information.

Payor Concerns

This Final Rule is already facing substantial pushback from payors, who are making similar arguments to those that hospitals have made in challenging the Hospital Price Transparency Rule. Specifically, payors are alleging that these transparency requirements will increase, rather than decrease, health care costs. Some payors believe that the Final Rule will reduce incentives for health care providers to accept lower rates during contract negotiations - creating a floor, rather than a ceiling, for rates.

Additionally, many payors already provide cost-share estimators for their enrollees. However, payors report that they struggle to get enrollees to utilize such mechanisms because (i) enrollees become less motivated to make cost-conscious decisions as soon as their deductibles are met; and (ii) many enrollees choose providers simply based on their physicians' recommendations, regardless of the price.

It is likely that payors will file lawsuits challenging the Final Rule, similar to challenges the hospital industry has brought against the Hospital Price Transparency Rule. To date, however, the Hospital Price Transparency Rule has survived these challenges and is set to go into effect in a few weeks. It is also not clear at this time whether the upcoming change in Presidential administration will have an impact on any of the federal government's price transparency initiatives.

Key Takeaways

Notwithstanding their anticipated resistance, we recommend that payors begin planning how to implement the requirements of the Final Rule within the required timelines. For hospitals that are preparing to comply with the Hospital Price Transparency Rule, this Final Rule targets much of the same information about reimbursement rates that hospitals are already compiling. For non-hospital health care providers, though, this Final Rule means that their rate information will also soon be subject to disclosure. We encourage providers who are concerned about the Final Rule to communicate with their major payors about how those payors intend to implement the new requirements.


1. MLR is the proportion of a payor's premium revenue actually spent on clinical services and quality improvement activities, rather than on administrative costs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.