Health plans have a variety of reporting and disclosure requirements and other compliance issues to contend with. In recent years, requirements for plan sponsors have been included in the Consolidated Appropriations Act, 2021 (CAA) and No Surprises Act (NSA) signed into law on December 27, 2020. The CAA and NSA include consumer protections for surprise billing issues and health care transparency.
Although the law went into effect on January 1, 2022, guidance was not immediately issued at that time to make health plans aware of the implementation steps. The Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (collectively, the Departments) jointly issued two sets of frequently asked questions (FAQs) that address gag clauses for price and transparency purposes:
This blog highlights the new information in FAQ 69, including challenges with certain service provider agreements, examples of impermissible restrictions on claims reviews and clarifications on how plans that violate the gag clause prohibition should complete their attestation.
Background on the Gag Clause Requirement for Health Plans
A gag clause is a contractual provision addressing health care providers and networks that do not typically release information on health costs due to the data being confidential and proprietary. The provision was included in many contracts seeking to restrict the information that can be made available to others. However, this has subsequently hindered plan sponsors and their participants from knowing the cost of health care services and the negotiated rates included in a health plan.
As health care transparency is included as part of the CAA, the act amended ERISA to remove gag clauses typically found in service provider contracts. ERISA plans have fiduciary requirements for plan sponsors, of particular importance for self-funded plans. This lack of transparency has made it difficult for plan fiduciaries to effectively monitor the plan in the best interest of the plan participants.
Gag Clause Prohibition
The law prohibiting gag clauses has multiple parts. Health plans and insurance issuers are prohibited from entering into contracts with providers, networks, third-party administrators (TPAs), or other service providers that restrict access to data or prevent disclosure of cost and quality data, either directly or indirectly. In addition, the CAA provided that contracts should:
- Ensure that plan sponsors and participants have access to both provider costs and quality data to evaluate plan costs (Service providers can no longer consider the data to be proprietary and restrict the release of data)
- Allow plan sponsors to access data on a per-claim basis that explains costs related to a particular service
- Not limit business associates, such as accountants, lawyers, brokers and consultants, access to provider reimbursement rates and de-identified claims.
Claims Data
FAQ 69 explains in detail about prohibiting any restriction on accessing data. Specifically, in Question 8, the Departments state that “a limitation on the scope, scale, or frequency of electronic access to de-identified claims and encounter information or data is considered a [prohibited] restriction.” Electronic access for plans and business associates is required to be available on request.
In addition, Question 8 explains some of the impermissible gag clauses that place limits on access to data:
- For a “statistically significant” number of de-identified claims
- For a process such as an audit
- Based on the frequency of claims reviews
- Based on the number and types of de-identified claims available to access
- Based on the elements of a de-identified claim that a plan or issuer may access.
What Is the Gag Clause Attestation, and Who Must File?
Plan sponsors are now required to ensure their contracts do not contain prohibited gag clauses. The CAA requires the filing of an annual attestation of compliance for the plan sponsor (in the case of a self-funded plan) or insurance issuer (in the case of a fully insured plan). Submissions are due by December 31 of each year. The Centers for Medicare and Medicaid (CMS), as part of HHS, has published an attestation webpage, containing the pertinent details, forms and process for filing the attestation.
The attestation applies to the following plans.
- Fully insured plans: The insurance carrier is generally responsible for submitting the attestation on behalf of a fully insured plan, but plan sponsors should confirm the process.
- Self-funded plans: The plan sponsor is generally responsible for compliance and submission of the attestation. However, the TPA or other service provider can submit the attestation on behalf of the plan if the plan sponsor agrees in writing.
- ERISA plans
- Nonfederal government plans and church plans
Attestation exemptions include:
- Health plans or health insurance issuers offering only short-term, limited-duration plans
- Plans with ACA excepted benefits, such as limited-scope dental and vision plans
- Long-term care plans
- Certain hospital or other fixed indemnity insurance
- Specific disease insurance
- Accident, disability and workers’ compensation benefits
- Health reimbursement arrangements or health flexible spending accounts.
According to WTW, excepted benefits are “determined on a case-by-case basis, with the assistance of an employer’s legal counsel.”
Question 9 of FAQ 69 addresses the issue that may apply if a plan has either knowingly agreed to a contract that would violate the gag clause prohibition or is aware that a prohibited gag clause has not yet been removed. For either situation, the attestation is still submitted with the plan attesting to the noncompliant language. Using the CMS webpage mentioned above, this is found under “Additional Information” on Step 3 of the form. Details to include are, but are not limited to, the following:
- Gag clause language that a service provider has not removed
- The name of the TPA or other service provider
- Requests made by the plan to remove the gag clause
- Other steps that the plan has taken to be compliant with the provision.
Action Items for Plan Sponsors
- Determine which group health plans are subject to the gag clause prohibition.
- Gather and review contracts with insurance companies and the various service providers of their plans, such as TPAs, pharmacy benefit managers (PBMs) and administrative service agreements (ASOs).
- Engage legal counsel for contract review.
- Work with service providers to remove the gag clauses to bring contracts into compliance.
- Establish procedures for the ongoing review of service provider contracts.
- Document communications with the entities and the process for future reference.
Stay tuned to the International Foundation as additional guidance is released related to gag clauses and health care transparency.
Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.
