BowTie Medical Blog

Consolidated Appropriations Act 2021

Written by BowTie Medical | Dec 12, 2023 3:34:27 PM

The Consolidated Appropriations Act (CAA) introduces several mandates affecting ERISA and Public Health Service Act (PHSA) health Plan Sponsors, necessitating careful consideration and action. Key provisions include the elimination of gag clauses from plan contracts, and granting Plan Sponsors enhanced access to their health plan data. Additionally, vendors servicing health plans are now required to disclose all compensation, prompting Plan Sponsors to assess the reasonableness of such compensation.

Furthermore, the CAA mandates that Plan Sponsors submit an annual report detailing prescription drug usage and costs, along with an attestation of compliance. To navigate these changes effectively, Plan sponsors—the entities establishing employee benefit plans—are advised to evaluate the governance and fiduciary oversight of their group health plans. Specific action items include:

Delegation of Fiduciary Responsibility:

  • Consider formally delegating fiduciary responsibility for group health plan governance to a committee.
  • Develop a committee charter outlining responsibilities and any limitations on authority.

Insurance and Indemnification:

  • Confirm that group health plan fiduciaries are covered by existing fiduciary liability insurance.
  • Ensure fiduciaries are indemnified in plan documents.

Review of Service Provider Agreements:

  • Review existing service provider agreements to determine the applicability of new broker/consultant disclosure requirements.
  • Request service provider fee disclosures as needed.

Evaluation of Service Provider Disclosures:

  • Assess service provider disclosures in alignment with ERISA fiduciary requirements, considering the quality, nature, and scope of services.
  • Refer to DOL guidance on retirement plan fees and the DOL white paper, “Understanding your Fiduciary Responsibilities under a Group Health Plan.”

Amendment of Service Provider Agreements:

  • Consider amending service provider agreements to include obligations for cooperation with the plan sponsor in meeting new transparency and fee disclosure requirements.

Establishment of Monitoring Processes:

  • Establish a systematic process to monitor group health plan fees regularly, ensuring they align with industry standards.
  • Consider periodic Request for Proposal (RFP) processes for group health plan service providers to benchmark fees.

Documentation of Review Process:

  • Document the review process for selecting and monitoring service providers.
  • Specify how the reasonableness of compensation was determined, providing transparency and accountability.

By addressing these action items, Plan Sponsors can proactively navigate the regulatory changes introduced by the Consolidated Appropriations Act and enhance the governance of their group health plans.

 

 

Learn more at cms.gov.