The Consolidated Appropriations Act Imposes Health Plan Fiduciary Responsibilities on Employers

By Bolton February 13th, 2023

The Consolidated Appropriations Act (CAA) of 2021 has created new opportunities for employers who insure their personnel with health benefit plans. Due to previously existing gag clauses, employers have been widely unable to obtain important insights from medical and pharmacy carriers. With the CAA now mandating access to the prices of health care services, employers have greater accessibility to carrier transparency. Additionally, CAA requires plan sponsors to demonstrate that their purchased health care services are cost effective, high quality, and meet mental health parity and pharmacy benefit requirements for their members. This means employers must take steps to establish oversight procedures and processes to document efforts to comply with the CAA as fiduciaries, similar to the governance practices organizations have already established for their 401(k) and retirement plans.

With the CAA legislation, health plan sponsors can evaluate the cost and quality of services purchased from providers and other vendors to make informed procurement decisions. Limited analysis of service provider data for reasonableness of charges, including outlier analysis and service cost benchmarking, can lead to overpayments and medically inappropriate care. This is the single largest area of exposure for health plan fiduciaries under the CAA.

In light of these rules, there are steps employers should begin taking:

  • Plan Oversight: Establish a health plan fiduciary committee
  • Asset Management: Conduct a health plan risk assessment
  • Plan Operations: Own your own data to efficiently manage your current and future costs, and manage the integrity and value of your benefits offering

With a great deal of prior experience helping clients through similar compliance and regulatory changes, Bolton is prepared to help your organization navigate these new waters. Bolton Innovation Group has vetted several best-in class vendors to manage your data and has the internal expertise to help you meet the CAA regulations. We work with our partners to help “fix” our clients healthcare costs for better financial line-of-sight.

There is no doubt that class action lawyers see this development as a watershed event for new cases, as they anticipate that service providers will provide confusing disclosures and, in turn, that health plan sponsors will allow overcompensation to occur into the future due to apathy or lack of information. As of Q1 2023, there are 17 issued or pending lawsuits due to non-compliance by payors, providers, and employers, an indication that this is not going away. To avoid the risk of litigation and financial liability, we urge employers to begin taking action now.

Check out this recent article about a county in Pennsylvania that took its fiduciary responsibility seriously and is making a difference. Bolton can help your organization with a similar strategy.