Transparency in Coverage Rule

Summary and Frequently Asked Questions



The Departments of Health and Human Services, Labor and the Treasury finalized the Transparency in Coverage Rule on November 12, 2020. This rule requires health insurers and group health plans to create a member-facing price comparison tool and post publicly available machine-readable files. The rule requires the files to include in-network negotiated payment rates and historical out-of- network charges for covered items and services, including prescriptions drugs. The data provided in the machine-readable files must be updated monthly.

Publicly Available Machine-Readable Files Overview:

Beginning July 1, 2022, insurers and plans will be required to make available to the public machine-readable files disclosing detailed cost information for covered items and services.  This requirement includes negotiated rates and historic net prices for prescription drugs.  The files must be available to the public at no cost and must be updated monthly.

Data files must be displayed in a standardized format as determined by CMS guidance and cannot be PDF or excel files.

Three files are required:

  1. In-network rate file. Work with the medical plan administrator for this file.
  2. The out-of-network historical rate file. Work with the medical plan administrator for this file.
  3. The prescription drug file. Work with your PBM for this file.

The prescription drugs file must detail the in-network negotiated rates and historical net    prices for all covered prescription drugs by plan or issuer at the pharmacy location level. The historical prices are for the 90-day time-period that begins 180 days prior to the file publication date.

Prescription Drug data should include:

  1. Strength, dosage and formulation level at the first 9-digit NDC level;
  2. Dollar amount of negotiated rate for each in-network pharmacy;
  3. The pharmacy tax ID number (TIN), place of service code, NPI; and
  4. Amount the issuer or health plan paid for the prescription drug including any allocated price concessions, rebate, discounts, chargebacks, fees.

Other Requirements:

  1. The machine-readable files must be made available on an internet website.  
  2. Users cannot be required to establish a user account, password or other credentials.
  3. Users cannot be required to submit personal identifying information such as a name, email address or telephone number.

Plans and issuers are allowed to publish the files in the locations of their choosing based upon their knowledge of their website traffic and website location.  

A plan administrator or issuer may contract with a third-party website to post the files, however, if the files are hosted on a third-party site, the plan or issuer must also provide a link on its own website to the location where the file is made publicly available.

PBMs will provide plans and issuers with the required prescription drug file, and may charge administrative fees. Fees vary by PBM and in general range from a set-up fee of up to at least $2,500, and monthly fees per file of $0 to $300 per file per month.

Member Price Comparison Tool Overview:

Beginning January 1, 2023, insurers and plans are required to create online consumer tools that create personalized information for members’ cost-sharing responsibilities for covered prescription drugs. The tool must allow members to:

  • Search based on a billing code or a product or service description
  • Compare both in-network and out-of-network prices
  • Access accumulated deductible and out of pocket costs
  • Provide information on factors impacting prices
  • Provide the cost estimates in a paper format if requested.

Effective Dates:

  • July1, 2022: Publish three machine readable files for public access
  • January 1, 2023: Provide a cost estimator tool & must disclose information on
    500 items
  • January 1, 2024: Provide a cost estimator tool & must disclose information on all covered items

Who needs to comply with the rule?

  1. Exchange plans
  2. Individual and group market health insurers
  3. Transitional relief plans

Who is exempt from the rule?

  1. Excepted benefit plans
  2. Flexible Spending Accounts (FSA)
  3. Grandfathered plans
  4. Health Reimbursement Accounts (HRA)
  5. Health Savings Accounts (HSA)
  6. Medicaid
  7. Medicare
  8. Short-term limited duration (STLD) plans

Penalties for noncompliance

Plans or issuers may be fined $100 per day for each individual for whom they are not in compliance. They will also be at risk of being blocked from selling or renewing plans.

Beckie Fenrick is chief pharmacy officer at AlignRx, a consulting practice that advises benefit consultants, employers and health plans on pharmacy benefits. AlignRx is part of Goodroot, a community of companies reinventing healthcare one system at a time.

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