The 2021 Consolidated Finance Law (CAA), which was enacted on December 27, 2020, includes provisions to increase the transparency of employee health benefit plans in four key areas.
Removal of gag clauses on price and quality information
Section 201 of the CAA amends the Employees Retirement Income Security Act (ERISA), the Public Health Services Act (PHSA) and the Internal Revenue Code to require that health plans sponsored by the The employer ensure that they have access to certain information on the costs and quality of care. . As a result of the amendment, plans may not accept restrictions in provider network contracts that would prevent them from accessing cost and quality of care information and providing that information to plan members. This information includes provider-specific cost and quality of care data.
The changes also require group health insurance plans to ensure they have access to specific claim data indicating claim costs. Although group health insurance plans are required to have access to this specific cost data, providers and provider networks would be allowed to prohibit plans and health insurers from publicly disclosing the information received. The plans should certify their compliance every year.
Section 201 does not specify a date of entry into force, which means that it would come into force once adopted.
Disclosure of compensation to brokers and consultants
Article 408 (b) (2) of ERISA requires that any compensation paid to plan service providers be “reasonable”. Although the United States Department of Labor (DOL) issued regulations under this provision in 2012, those regulations apply to pension plans, not health plans. The regulations reserve space for further guidance related to health plans.
CAA adds additional requirements to section 408 (b) (2) of ERISA regarding brokers and consultants for health plans. Group health insurance plans would be required to disclose compensation paid to any broker or consultant who receives $ 1,000 or more. The broker or consultant will be required to make certain disclosures to the plan trustee, including a description of the services provided and a description of all compensation covered (direct and indirect). If you fail to do so, the contract will not be considered “reasonable” under ERISA.
These changes come into effect one year after the bill is enacted.
Mental Health Parity and Substance Use Disorders Benefits
The Mental Health Parity and Addiction Equity Act (MHPAEA) prohibits group health plans from offering disproportionately worse benefits for mental health and addiction disorders than for medical and surgical care. A specific area of concern is that of “non-quantitative processing limitations”, which are benefit limitations that are not linked to specific monetary or visit limits. For example, requiring prior authorization for processing is a non-quantitative processing limitation.
The CAA reviews the ERISA, PHSA, and the tax code to require group health plans to formally analyze their compliance with MHPAEA requirements related to non-quantitative processing limitations. The plans should document and make analysis available, upon request, to the secretaries of the United States Department of Health and Human Services (HHS), DOL, and the United States Department of the Treasury.
The secretaries of HHS, DOL and Treasury are responsible for issuing guidance regarding the required analysis within 18 months of the bill being enacted. If a participant lodged a complaint or if agency secretaries suspected a violation, they would request a copy of the plan analysis. CAA directs agency secretaries to request analysis from at least 20 group health plans per year. Although the secretaries of the three agencies have 18 months to issue final guidelines under this section, they could request reports as early as 45 days after the enactment of the CAA.
Drug Benefits and Drug Costs Reports
CAA updates ERISA, PHSA, and tax code to require each group health plan to report certain prescription drug information to the secretaries of HHS, DOL, and Treasury, including:
the year of the plan, the number of registrants and each state in which the plan is proposed;
the top 50 brand-name prescription drugs paid for by the plan, “and the total number of claims paid for each of these drugs”;
the 50 most expensive prescription drugs paid for by the plan “based on total annual expenditure and annual amount spent by the plan… for each of these drugs”;
“[t]the 50 prescription drugs with the largest increase in plan spending ”since the previous plan year, and the change in amounts spent for each drug;
total expenditure on health care services by plan, broken down into specific categories, including hospital costs, primary care costs, specialized care costs and prescription drug costs;
average monthly premiums paid by employers and participants; and
the impact on premiums of rebates and fees “paid by drug manufacturers to the plan… or to its administrators or service providers”, including “[a]ny reduction in premiums and reimbursable costs associated with discounts and fees.
The first report would be due a year after the enactment of the CAA. Each subsequent report would be due no later than June 1 of each year.
With these new compliance obligations, plan sponsors may want to consider how to comply and whether they may need to engage their service providers to gather the necessary information.
© 2021, Ogletree, Deakins, Nash, Smoak & Stewart, PC, All rights reserved.Revue nationale de droit, volume X, number 363