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Machine-Readable File Requirements: More Transparency in Coverage Work for Health Plans

Oct 23, 2023

During the last week of September, the Departments of Labor, Treasury, and Health and Human Services (the “Agencies”) rescinded the machine-readable file (“MRF”) nonenforcement policies related to prescription drugs and negotiated rates. The Agencies will move forward in enforcing the posting of these files as required by the Transparency in Coverage (“TiC”) final rule.

Ultimately the TiC regulation is designed to promote consumerism by making the cost of healthcare more digestible by providing additional price comparison. Removing the opaqueness surrounding the delivery of healthcare services will provide a better understanding to consumers. The Agencies predict third-party developers and other entities will download, process, and compile this data, creating more advanced price transparency tools from the MRF. This data is not designed for member or consumer usage. 

Changes in Enforcement Policy Regarding Prescription Drug Pricing Disclosure Requirements

The Agencies issued their change in enforcement in Frequently Asked Questions About Affordable Care Act Implementation Part 61 (“FAQs”). According to Part 61, the Agencies will no longer adhere to a deferred enforcement policy with respect to the TiC requirements that plans and issuers publish MRFs relating to prescription drug pricing, which was announced in Part 49 of the FAQs in August 2021 following the enactment of the prescription drug reporting requirements in the Consolidated Appropriations Act, 2021 (“CAA”).

The deferred enforcement policy resulted from the Agencies reviewing the prescription drug data collection (“RxDC”) requirements for overlapping conflicts with the prescription drug MRF. After reviewing the last two years of RxDC reporting, the Agencies have concluded that there is no overlap between the RxDC and MRF requirements. As a result, they find no reason for a categorical deferral of enforcement of this requirement.

The Agencies say they do not intend to change this stance by engaging in rulemaking soon, but they plan to provide guidance on technical requirements with an implementation timeline. This means that plan sponsors may have some lead time to gather the necessary information to post the file.

Challenges in Reporting Negotiated Rates under TiC Rules

TiC rules also require plans to publish all applicable rates, including negotiated rates, underlying fee schedule rates, or derived amounts for all covered items and services in the in-network (“INN”) MRF. In other words, the INN MRF requirement applies to plans regardless of the type of payment model(s) under which they provide coverage.

Complicating this is the fact that the TiC Rules require that these rates be reflected in the INN MRF as dollar amounts. Yet, reimbursement arrangements are not always conducive to reporting this way because they don’t always have a current and accurate dollar amount for the items and services in the file before the item or service is provided or rendered. For example, how does one report dollar amounts for negotiated rates resulting from “percentage-of-billed charges” contract arrangements?

As a result of these uncertainties, the Agencies provided in Part 53 for those plans with alternative reimbursement arrangements that don’t permit plans to accurately derive specific dollar amounts in advance of the provision of the item or service (unless the Agencies determined that the arrangement could indeed sufficiently disclose a dollar amount).

Rescission of Safe Harbor and Case-by-Case Compliance Assessments

The Agencies state in Part 61 that they are rescinding the enforcement safe harbor provided in Part 53, which applied to circumstances where compliance with the TiC rules was not possible "due to alternative reimbursement arrangements that do not permit the plans and issuers to derive with accuracy specific dollar amounts contracted for covered items and services in advance of the provision of that item or service," as applied to the INN MRF. This limitation on advance determination of provider rates made it impossible for plans and issuers to comply with TiC requirements mandating disclosure of provider contracted rates in the MRF.

The Agencies now state that whether a plan or issuer can comply with the requirement to disclose specific rates as dollar amounts is a fact-specific determination, and going forward, they intend to exercise enforcement discretion with respect to this requirement on a case-by-case basis, without any categorical "safe harbor."

The Agencies note that in exercising their enforcement discretion, they are unlikely to pursue enforcement action if a plan or issuer can demonstrate that compliance with the relevant provisions of the TiC rules would have been "extremely difficult or impossible," but provide no guidance as to what these conditions would be, other than referencing the difficulties stated in Part 53. With no direction from the Agencies about future guidance or an implementation timeline, the enforcement of this provision appears to be immediate.

Get Prepared to Post Machine-Readable Files

Since most health plans do not have a public website and are not required to establish one, they will need to rely on the insurance carrier or the third-party administrator’s (“TPA”) posting of the MRFs. The plan sponsor will need a written agreement with the carrier or TPA to rely on these postings. If an agreement is not obtainable, plan sponsors should retain any communications with the carrier TPA regarding their actions with the MRF requirements.

While plan sponsors wait for future guidance, they should immediately set to work with their health plan providers on implementing a strategy to gather the necessary information required to compile the prescription drug MRF. Additionally, plan sponsors will want to review INN rates with their health plan providers to make sure that reliance on the enforcement safe harbor is justified; otherwise, quick changes will need to be made to the information required to be posted in this MRF.

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Stephen Mehaffey

Stephen Mehaffey is an Associate Director in the firm’s Tax Services Group and has over 25 years of accounting experience. 

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