The Transparency in Coverage Rule

Transparency in Coverage is a federal rule that makes health-plan prices public. It was issued as a joint final rule by the Department of the Treasury (through the IRS), the Department of Labor (through the Employee Benefits Security Administration), and the Department of Health and Human Services (85 FR 72158, published November 12, 2020, effective January 11, 2021), and it is codified for the individual and group markets at 45 CFR 147.210 (definitions), 147.211 (the member disclosures and self-service tool), and 147.212 (the public machine-readable files), with parallel Treasury and Labor regulations for the plans they oversee.

The rule binds non-grandfathered group health plans — both fully insured and self-funded — and health insurance issuers offering non-grandfathered coverage in the group and individual markets. Grandfathered plans, and certain excepted arrangements, are outside it. It imposes two obligations on those plans and issuers: publish machine-readable files of their rates, and give members a way to look up what a service will cost them before they receive it. The intent, stated in the rule, is to let purchasers and patients see negotiated prices that were previously confidential.

The first requirement (45 CFR 147.212) is public. A plan or issuer must post machine-readable files — files structured so a computer can import and process them without a person reading each entry — on a website. The codified rule calls for three files (45 CFR 147.212(b)(1)):

• An in-network rate file, listing the negotiated rates the plan or issuer has agreed to pay in-network providers for all covered items and services, together with provider identifiers such as EIN, National Provider Identifier, and Tax Identification Number, and the billing codes for the items and services (45 CFR 147.212(b)(1)(i)).
• An out-of-network allowed-amount file, listing the unique out-of-network allowed amounts and billed charges for covered items and services furnished by out-of-network providers (45 CFR 147.212(b)(1)(ii)).
• A prescription-drug file, listing negotiated rates and historical net prices for covered prescription drugs (45 CFR 147.212(b)(1)(iii)). This file is in the codified rule, but its enforcement history is unsettled — see the note below.

Two features make the files usable. They must be publicly available and accessible to any person free of charge and without conditions — no user account, no password or other credentials, and no requirement to submit personally identifiable information to reach the file (45 CFR 147.212(b)(2)). And they must be updated monthly (45 CFR 147.212(b)(3)). The Departments prescribe the technical format in implementation guidance rather than in the regulation itself; in practice the files use open, non-proprietary formats such as JSON, which is why they are readable by software but unwieldy to open by hand.

The rule applies for plan years — in the individual market, policy years — beginning on or after January 1, 2022 (45 CFR 147.212(c)). The Departments exercised enforcement discretion for the first several months and, in their FAQs About ACA Implementation (Part 49), set the date on which they would begin enforcing the in-network rate file and the out-of-network allowed-amount file at July 1, 2022.

For a billing operation, the in-network file is the interesting one, because it contains negotiated rates. But two cautions apply. The files are built at the plan level and are enormous — they list rates across an entire network, not a single practice's contract — so they are meant for bulk analysis, not a quick lookup. And they are the payer's representation of its rates; a practice's own executed contract and loaded fee schedule remain the source of truth for what it is owed. The file is a cross-reference, not a substitute for the contract.

The second requirement (45 CFR 147.211) is member-facing. On request from a participant, beneficiary, or enrollee, a plan or issuer must disclose personalized cost-sharing information for a covered item or service from a specific provider. The regulation lists the content that disclosure must include (45 CFR 147.211(b)(1)):

• The member's estimated cost-sharing liability for the item or service (45 CFR 147.211(b)(1)(i)).
• Accumulated amounts — how much the member has already put toward any deductible or out-of-pocket limit (45 CFR 147.211(b)(1)(ii)).
• The in-network rate, expressed as the negotiated rate and, where it applies, the underlying fee schedule rate (45 CFR 147.211(b)(1)(iii)).
• The out-of-network allowed amount, or another rate that gives a more accurate estimate of what the plan will pay an out-of-network provider (45 CFR 147.211(b)(1)(iv)).
• For an item or service under a bundled payment arrangement, a list of the items and services in the bundle (45 CFR 147.211(b)(1)(v)).
• Notice of any prerequisites to coverage — prior authorization, concurrent review, step therapy, or other utilization-management requirements (45 CFR 147.211(b)(1)(vi)).
• A disclosure notice with prescribed content, including a statement that the estimate is not a guarantee that benefits will be provided for the item or service (45 CFR 147.211(b)(1)(vii)).

The plan must make that information available two ways (45 CFR 147.211(b)(2)): through an internet-based self-service tool in plain language and at no charge, which returns results in real time and lets the member search by a billing code or a descriptive term, by provider, and by location; and, on request, on paper mailed no later than two business days after the request. For the paper channel the plan may limit a single response to no fewer than 20 providers.

The tool phased in. For plan years — in the individual market, policy years — beginning on or after January 1, 2023, the plan had to cover an initial list of 500 items and services; for plan years beginning on or after January 1, 2024, it had to cover all covered items and services (45 CFR 147.211(c)(1)).

Three federal transparency-and-billing rules arrived close together and use overlapping words, so they are easy to blur. The quickest way to keep them straight is to ask who the rule binds and what it makes that party disclose.

Because the rule's duties fall on payers, a practice's job is to use it well and explain it correctly. It belongs among the practice's other regulatory knowledge, inside its compliance program, and alongside the rest of the rules this compliance and regulations category covers.

1. 01

   Know you are not the one who must post the files

   The obligation to publish machine-readable files and to run a price tool is the plan's or issuer's. A practice does not need to build either, and a vendor pitch to help a physician office comply with Transparency in Coverage should be read against that fact.
2. 02

   Use the in-network file as a cross-reference, not a source of truth

   A payer's in-network file lists negotiated rates and can corroborate what the practice expects to be paid, but it is plan-wide, huge, and the payer's own representation. The executed contract and the loaded fee schedule remain the source of truth for what the practice is owed; the file is a way to sanity-check, not to replace them.
3. 03

   Point insured patients to their plan's tool

   When an insured patient asks what a scheduled service will cost, their plan's self-service tool is built to return a personalized cost-sharing estimate for their specific benefits. Directing them there is often more accurate for their out-of-pocket number than a practice-side guess, because the plan holds their accumulated deductible and out-of-pocket data.
4. 04

   Keep the three regimes straight

   Be able to tell a patient or a staff member the difference between the plan's price tool, a hospital's posted standard charges, and the practice's own Good Faith Estimate for a self-pay patient. Answering the wrong rule's question is the most common error here.
5. 05

   Confirm current status before relying on specifics

   The enforcement of parts of this rule — the prescription-drug file in particular — has moved, and technical format guidance is updated by the Departments. Confirm the current requirements against the Departments' latest guidance rather than a static summary before acting on a detail.