New Legal Pressures for Employers
With federal transparency rules making negotiated provider rates and pharmacy prices public, employers are under new scrutiny. Fiduciary responsibility now extends beyond simply offering a plan — it includes proving that plan choices are prudent, cost-effective, and defensible. In other words, legal accountability has entered the conversation.
Federal transparency rules were supposed to help employers and members by giving them a clearer view into healthcare costs. But there are unintended consequences resulting from the new rules. Employers are no longer just plan sponsors; they are fiduciaries with a legal responsibility to make prudent, cost-effective choices. Transparency has created accountability, and employers are being asked to prove they are acting in their members’ best financial interest. The bottom line, employers are no longer passive purchasers of health benefits.
What’s Driving These New Legal Issues?
Back in October 2020, the Transparency in Coverage (TiC) rule and other related regulations were finalized. That was early COVID lockdown times, so it’s reasonable to not recall this one. Here’s a breakdown.
The TiC rule, a federal regulation issued by the Centers for Medicare & Medicaid Services (CMS), requires health insurers and group health plans to make pricing information publicly available.
Different aspects of the rule have rolled out in phases:
- Machine-Readable Files (MRFs) (effective January 1, 2022):
- Health plans and issuers are required to post three types of publicly accessible machine-readable files on their websites:
- In-Network Rates: Details on negotiated rates for covered items and services.
- Out-of-Network Allowed Amounts: The billed charges and allowed amounts for services from out-of-network providers.
- Prescription Drug Rates: Negotiated rates and historical net prices for prescription drugs.
- Health plans and issuers are required to post three types of publicly accessible machine-readable files on their websites:
- Consumer Price Comparison Tool (500 Shoppable Services) (effective January 1, 2023 & 2024):
- Plans must provide members with an online tool (and paper on request) to see personalized cost estimates for 500 shoppable services (2023) and then all covered services (2024).
- Ongoing Compliance & Enforcement:
- The rule is meant to allow consumers and employers to “shop” for healthcare based on cost, increase competition among payers and providers, and give plan sponsors new visibility into negotiated rates.
TiC forced health plans and hospitals to release huge amounts of pricing data. And, for the first time, employers could see how the same procedure or therapy is priced across different payers and providers.
But with greater visibility comes greater responsibility. Experts warn that now that the information is available, employers may face greater legal and fiduciary risk. For example, choosing a health plan without considering value or failing to act on obvious cost discrepancies could expose employers to claims that they are not fulfilling their duty to manage plan assets in the best interests of members.
In short: transparency has shifted the fiduciary burden onto employers.
RazorMetrics Helps Protect Employers
Employers don’t need more spreadsheets with terabytes of raw pricing files. They need solutions that make transparency actionable, protect fiduciary responsibilities, and improve affordability for members. RazorMetrics delivers on this:
1. Actionable insights, not raw data
We translate complex pricing information into real savings opportunities by identifying safer, lower-cost drug alternatives that physicians can approve directly in their normal workflow.
2. Fiduciary protection
Every physician-approved switch is fully documented, giving employers a clear, defensible record of responsible cost management that supports fiduciary obligations.
3. Closing the pharmacy gap
Most transparency efforts focus on hospitals and providers, but pharmacy costs are growing even faster. RazorMetrics addresses this gap, where savings opportunities are significant and urgent.
4. Savings that last
Because our solution integrates seamlessly into physician workflow, acceptance and fill rates are high. Employers don’t just see recommendations, they see measurable, sustainable savings.
5. Smarter plan decisions
Aggregated results from RazorMetrics, including the use of discount cards that are not visible on claims data, help employers evaluate their plans and design benefit strategies that deliver real value for members.
With the Right Solution, Transparency is a Win
Price transparency has shifted employers from passive purchasers to active fiduciaries. With that comes new legal responsibility, but also new opportunities to contain healthcare costs. RazorMetrics helps employers turn transparency into action, reducing risk, lowering costs, and delivering meaningful savings for both members and plan sponsors.
Contact us today to get started.
