Understanding Price Transparency Laws and Gag Clauses: A Guide for Healthcare Providers
Date: March 25, 2025
By:
Rachel Carey
Price Transparency Laws: History and Implementation
Price transparency laws were introduced to address the opaque nature of healthcare pricing, which often left consumers and providers in the dark about the costs of medical services. The Centers for Medicare & Medicaid Services (CMS) implemented the Hospital Price Transparency Final Rule in January 2021, requiring hospitals to publish their pricing information online in two formats: machine-readable files (MRFs) and a display of shoppable services (Hospital Price Transparency Final Rule, 84 Fed. Reg. 65524 (Nov. 27, 2019)).
In 2023, the Transparency in Coverage rule extended these requirements to health plans and issuers of group or individual health insurance, mandating the publication of pricing information for covered services online. Transparency in Coverage Rule, 85 Fed. Reg. 72158 (Nov. 12, 2020). These rules aim to foster competition, allowing consumers and employers to compare prices and make informed choices, ultimately driving down the cost of care.
Gag Clause Prohibition
Gag clauses in healthcare contracts have historically restricted providers and payers from sharing pricing and claims data, hindering transparency and informed decision-making. The prohibition of gag clauses was codified in the Consolidated Appropriations Act of 2021, which added Section 9824 to the Internal Revenue Code, Section 724 to the Employee Retirement Income Security Act (ERISA), and Section 2799A-9 to the Public Health Service (PHS) Act (Consolidated Appropriations Act of 2021, Pub. L. No. 116-260, 134 Stat. 1182 (2020); CMS Gag Clause Prohibition Compliance Attestation FAQs, January 14, 2025).
These provisions prohibit group health plans and issuers from entering into agreements that restrict the sharing of information on provider-specific costs, quality of care, and claims data. The Gag Clause Prohibition Compliance Attestation (GCPCA) requires plans and issuers to attest to their compliance with these requirements annually. Regardless of whether a plan is considered “grandfathered” under the ACA, attestation is required for fully insured and self-insured group health plans, including ERISA plans, non-federal governmental plans, and church plans. However, plans that only provide certain benefits and account-based plans, such as health reimbursement arrangements (HRAs), are exempt from the requirement. For fully insured group health plans, the plan and the issuer are each required to submit a gag clause compliance attestation annually, but the issuer of fully insured group health issuers may submit a gag clause compliance attestation on behalf of the plan to satisfy the attestation submission requirement. A self-insured employer can also satisfy the requirement by entering into a written agreement under which the plan’s service provider, such as a TPA, will submit an attestation on behalf of the plan; however, the legal attestation requirement remains with the health plan.
Requirements for Payers Under Price Transparency Laws and Gag Clause Prohibition
Currently, under the price transparency laws, payers are required to:
- Publish Pricing Information: Health plans and issuers must publish detailed pricing information for covered services online, including negotiated rates and historical payments to providers.
- Provide Advanced Explanation of Benefits (AEOB): The No Surprises Act mandates that payers provide personalized cost estimates to privately insured patients before they receive scheduled care.
The Department of Labor, the Department of Treasury, and the Department of Health and Human Services (HHS) launched a website through CMS for health plans and issuers to submit their gag clause compliance attestations. They have also provided instructions for submitting the attestation, a system user manual, and a reporting entity Excel template for plans and issuers to submit the required attestation, all of which are available here. December 31, 2023, was the first time plans and issuers had to submit GCPCA.
Information and Data Entitlements for Providers
Under the Gag Clause Prohibition, providers are entitled to access comprehensive pricing and claims data, including:
- Negotiated Rates: Detailed information on the rates negotiated between payers and providers.
- Historical Payments: Data on historical payments made to providers for specific services.
- Volume Information: Data on the volume of services provided, which helps eliminate irrelevant "ghost codes" and streamline data files.
Pivotal CMS FAQ Updates for 2025
The CMS FAQs for 2025 provide critical updates on the gag clause prohibition, including:
- Clarification on Downstream Agreements: Restrictions in downstream agreements that limit the sharing of de-identified claims data are prohibited (CMS Gag Clause Prohibition Compliance Attestation FAQs, January 14, 2025).
- Annual Attestation Requirement: Plans and issuers must submit attestations even if they are aware of existing agreements that violate the gag clause prohibition (CMS Gag Clause Prohibition Compliance Attestation FAQs, January 14, 2025).
Several issues remain with price transparency laws and gag clause prohibitions. Many health plans and providers still fail to provide complete and accurate pricing data due to limited enforcement, making it challenging for consumers and employers to make informed decisions. The vast amount of data, often spread across numerous files, can be difficult to navigate and analyze. Limited enforcement actions have been taken against non-compliant entities, reducing the effectiveness of the regulations.
To address these issues, policymakers should consider implementing stricter penalties and more rigorous enforcement actions against non-compliant entities. Requirements for simplified and standardized data files to make them more accessible and usable for less sophisticated providers would also help level the playing field as insurers often have more complex programs than less resourceful providers. Extending transparency reporting to more providers and including additional data, such as negotiated prices for prescription drugs.
Tips for Providers
Despite the GCPA having gone through two iterations now, many providers do not know how to effectively use these requirements to their advantage or that they even exist. To leverage price transparency laws and gag clause prohibitions in contract negotiations, providers should:
- Request Comprehensive Data: Actively request detailed pricing and claims data from payers, including negotiated rates and historical payments.
- Benchmark Against Competitors: Use available data to benchmark prices against competitors and identify areas for improvement.
- Highlight Value: Combine price transparency data with performance metrics to demonstrate value and negotiate better reimbursement rates.
- Stay Informed: Keep up to date with regulatory changes and compliance requirements to ensure adherence and leverage new opportunities.
- Obtain Appropriate Consultant or Counsel: Providers should examine their ability to utilize information obtained under the Price Transparency Law. If they can not use the information effectively or struggle to use the laws to their advantage, bringing in outside consultants or counsel to assist could be beneficial.
Future of Price Transparency and Price Negotiations
Price transparency laws and gag clause prohibitions represent significant steps towards a more transparent and competitive healthcare market but there are still major steps that need to be taken to make insurers have less of the goliath role in the contracting process. While hopeful that the new administration will hold payers' feet to the fire with substantially increased enforcement and that it will make it easier for payers to report non-compliant activity in order to see payers act in accordance with the rules. If you have questions on how to more effectively negotiate managed care contracts, please feel free to reach out to Rachel Carey.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.