The Blueprint

One of the fastest evolving areas in the healthcare industry is transparency. Over the last few years, and in 2024 especially, the government has introduced increasingly strong compliance standards to steer the industry toward more transparent and informed care. Just this year, health plans have seen several key pieces of legislation including the Transparency in Coverage (TiC) Final Rule and the CMS Prior Authorization Final Rule.

But, beyond just guiding how members shop for care, how does transparency affect health plans’ risk appetites and stop loss strategies?

Transparency in Coverage Final Rule
Introduced in three phases between 2022 and 2024, the TiC Rule has been gradually equipping members with more healthcare shopping information. As of 2024, the TiC Final Rule requires that members have access to online health shopping tools and MRFs (Machine Readable Files), both containing pricing data for all services in a plan¹. The objective of this legislation is to ensure that members can research, compare, or receive an estimate for the cost of care before being billed for it.

However, the TiC Rule doesn’t protect individual members from rising medical costs. For plans as well, this legislation can be key in reducing risk exposure and even lowering stop loss rates. With the TiC Rule’s information on medical service prices, reinsurance carriers can more accurately assess a plan’s financial risk and stop loss needs. Ultimately, less risk and uncertainty on the reinsurance provider’s part means more affordable stop loss coverage for employers.

CMS Prior Authorization Final Rule
In addition to the TiC Rule, 2024 has seen the implementation of the CMS’s Prior Authorization Final Rule. Prior authorizations (PAs) require that healthcare providers get approval from a health plan for administering potentially costly care to members. The Final Rule puts limitations on PAs, stating that PAs can only be used to confirm diagnoses, that PAs must approve care for as long as medically required, and that members have a 90-day grace period from PAs when switching plans².

Across these requirements, the CMS Final Rule aims to streamline the PA process while protecting members³. And many states are adding their own restrictions on top of this federal legislation⁴. But how does this rule affect employers?

While these PA restrictions could open employers to more costly claims in the short-term since it is easier for members to access more expensive care options, these same employers are actually at a lower financial risk in the long-term. By enhancing access to care today, even if at a higher cost, groups are saving themselves from costly long-term care and claims that would’ve been otherwise preventive.

The Bigger Picture
What’s best for the member really is what’s best for the employer and health plan—even if it requires more upfront costs. From these two pieces of transparency legislation, the TiC Rule and the CMS PA Final rule, employers can expect to see lower long-term care risk on the horizon and, as a result, lower stop loss rates.

Discover how RMTS helps clients like yours shape their risk and stop loss needs at www.rmts.com.

Sources
^1. https://www.cms.gov/newsroom/fact-sheets/transparency-coverage-final-rule-fact-sheet-cms-9915-f
^2. https://healthpayerintelligence.com/features/key-regulations-and-policies-that-will-impact-payers-in-2024
^3. https://www.cms.gov/priorities/key-initiatives/burden-reduction/policies-and-regulations/cms-interoperability-and-prior-authorization-final-rule-cms-0057-f
^4. https://kffhealthnews.org/news/article/health-202-prior-authorization-crackdown-states/