Transparency. It’s something we all want in our business and personal relationships so that we can make the best decisions possible. When it comes to an employee benefits broker, you want someone who keeps you informed about issues important to your interests – including exactly how much they get paid.
The Consolidated Appropriations Act (CAA), signed into law in late 2020, was crafted with just that in mind.
But that wasn’t the only thing on lawmakers’ and regulators’ minds. Although we’ve recently learned that compliance won’t be front and center on some of the law's provisions until the middle of 2022 or even later, the CAA is a game-changer on a number of fronts. So is the No Surprises Act, another piece of legislation adopted at about the same time late last year that will help protect insured patients from unexpectedly large medical bills.
The CAA, among other things, will mean changes in prescription drug cost reporting requirements. Also, gag clauses on price and quality data in contracts between providers and insurers will soon be a thing of the past. Another section of the law is designed to ensure provider directories are as up-to-date as possible, in another step to avoid surprise billing.
In one of the clearest transparency provisions, the CCA also will require health plans to maintain online price comparison tools that will allow patients to compare expected out-of-pocket costs for items and services across multiple providers. Health plans also will need to provide price comparisons over the phone.
This requirement was set to become effective Jan. 1, 2022, but regulators recently announced they planned to delay enforcement until 2023 while they sort out duplicative measures in the Affordable Care Act. Despite that, health plans, insurers and providers are expected to move forward with implementation of the rules rather than wait for final word.
Another provision that will no doubt mean greater transparency and prove popular with health plan enrollees will require insurers to print deductible and out-of-pocket maximums on their ID cards.
Good Faith Estimates
Meanwhile, there’s also delay ahead in putting into effect a provision requiring providers – including hospitals – to send an individual’s health plan a “good faith estimated amount” of planned services, including billing and diagnostic codes for all items and services to be provided.
Getting that done, regulator acknowledged in August, will be tricky, hence the move to put off enforcement for a time.
A transparency provision that will be enforced by year’s end affects covered service providers (CSPs) — e.g., insurance brokers and benefits consultants.
Under the new law, CSPs must disclose all compensation to clients if they expect to receive $1,000 or more in direct or indirect compensation for providing their services. This means employers will be able to see exactly how brokers earn money, which can help inform their plan decisions.
Among other items, brokers and other CSPs will be required to disclose the following to plan fiduciaries in writing:
- A description of all direct compensation, either in aggregate or by service, that the broker, an affiliate or a subcontractor reasonably expects to receive in connection with the services.
- A description of indirect compensation that the broker, an affiliate or a subcontractor reasonably expects to receive in connection with the services.
- A description of the arrangement between the payer and the broker, an affiliate or a subcontractor (as applicable) pursuant to which such indirect compensation is paid.
- Identification of the services for which the indirect compensation will be received, if applicable.
- Identification of the payer of the indirect compensation.
- A description of the services for which compensation will be paid and identification of the payers and recipients if such compensation is set on a transaction basis (such as commissions, finder’s fees or other similar incentive compensation based on business placed or retained).
- A description of any compensation the broker, an affiliate or a subcontractor reasonably expects to receive in connection with termination of the contract and how prepaid amounts will be calculated and refunded upon termination.
- A description of how the compensation will be received.
Thanks to this new compensation disclosure rule, employers will see precisely the cost of a broker’s services. Understanding these prices can help you establish greater trust with your broker. And greater transparency, of course, can help you make better, more informed choices.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the nation. For more information about employee benefits plans, contact us online or call 480-730-4920.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.