The Consolidated Appropriations Act of 2021 (CAA) is a federal law that has significantly impacted the healthcare industry. It aims to increase transparency by providing health plan sponsors with information on healthcare costs and quality. This information can help plan sponsors make informed decisions. The CAA is one of three recent regulatory developments, including the Transparency in Coverage Rules Act (TICRA) and the Hospital Price Transparency Rule, all aimed at transforming healthcare purchasing.

The CAA places a strong emphasis on fiduciary responsibility for health plans, expanding it to levels comparable to retirement plan regulations. This increased transparency empowers plan sponsors/fiduciaries (employers) to fulfill their duties better, such as assessing whether fees and compensation to service providers are reasonable.

Remember that sponsors of welfare plans have a strict fiduciary duty to act with undivided loyalty, prudence, and conformity to the plan documents, making day-to-day plan-related decisions for the sole benefit of participants.

What are the CAA Requirements for Employers?

1. Compensation Disclosure:
   • Applies to service provider contracts signed or entered into as of 12/27/21
   • Requires disclosure of direct and indirect compensation of $1,000 or more for any plan providing "medical care" to employees.
2. Gag Clause Prohibition:
   • Requires insurers and TPAs (all group health plans) to provide detailed claims information to the plan sponsor
   • Helpful hint: Look for any references to “Proprietary Materials” in contracts
   • Prohibits gag clauses as of December 27, 2020
   • Attestations are due by December 31 each year
3. RxDC Reporting:
   • Requires insurance companies and employer-based health plans to submit information about prescription drugs and health care spending
   • First report was due January 31, 2023, for 2021 and 2022 CYs then due again on June 1, 2023
   • Subsequent reports due annually by June 1
4. Mental Health Parity:
   • Detailed Mental Health Parity (MHP) reports required since February 10, 2021.
   • Plan Sponsor must have parity analyses on hand for every treatment limitation (must be specific; cannot be a generalization, equation, statement of methodology, or document dump)

What Next?

1. Make sure your clients are aware of their fiduciary duties.
2. Ensure service provider contracts specify compensation.
3. Check for and eliminate gag clauses in contracts.
4. Have clients submit gag clause attestations by December 31, 2023, and again by December 31, 2024.
5. Have clients submit Rx Reporting for the 2023 CY by June 1, 2024.
6. Consider how and when to address MHP.
7. For FI groups, check with insurers to confirm they will handle compliance actions.
8. Give extra attention to self-funded groups, check with TPAs, PBMs, and other service providers to ensure they comply, and confirm which compliance actions they will complete on behalf of employers.
9. Be aware of the $100/day per affected participant penalty for CAA compliance violations.

In summary, the CAA introduces crucial requirements for employers to enhance transparency, ensure compliance, and fulfill fiduciary responsibilities for their health plans. Medcom is always here to help – don’t hesitate to contact us if you need help with your plans!