Sec. 402. Hidden Fees Disclosure Requirements
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Clause (ii)(I)(bb) of section 408(b)(2)(B) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1108(b)(2)(B) ) is amended— in subitem
(AA)by striking Brokerage services, and inserting Services (including brokerage services), ; and in subitem (BB)— by striking Consulting, and inserting Other services, ; and by inserting any of the following: before plan design . Clause (iii)(III) of section 408(b)(2)(B) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1108(b)(2)(B) ) is amended by striking , either in the aggregate or by service, and inserting by service . Clause
(i)of section 408(b)(2)(B) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1108(b)(2)(B) ) is amended— by striking requirements of this clause and inserting requirements of this subparagraph ; and by adding at the end the following: For purposes of applying section 406(a)(1)(C) with respect to a transaction described under this subparagraph, a contract or arrangement for services between a covered plan and a health insurance issuer providing health insurance coverage in connection with the covered plan in which the health insurance issuer contracts, in connection with such plan, with a service provider for pharmacy benefit management services shall be considered to constitute an indirect furnishing of goods, services, or facilities between the plan and the service provider acting as the party in interest. . Clause (ii)(I)(aa) of section 408(b)(2)(B) of such Act ( 29 U.S.C. 1108(b)(2)(B) ) is amended by inserting before the period at the end and the terms . health insurance coverage and health insurance issuer have the meanings given such terms in section 733(b) Clause (ii)(I)(aa) of section 408(b)(2)(B) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1108(b)(2)(B) ) is further amended by inserting in after defined . Clause
(iii)of section 408(b)(2)(B) of such Act ( 29 U.S.C. 1108(b)(2)(B) ) is amended by adding at the end the following: With respect to a contract or arrangement with the covered plan in connection with the provision of pharmacy benefit management services, as part of the description required under subclauses
(III)and (IV)— all compensation described in clause (ii)(I)(dd)(AA), including fees, rebates, alternative discounts, co-payment offsets, and other remuneration expected to be received by the covered service provider, an affiliate, or a subcontractor from a pharmaceutical manufacturer, distributor, rebate aggregator, accumulator, and maximizer, group purchasing organization, or any other third party; the amount and form of any rebates, discounts, or price concessions, including the amount expected to be passed through to the plan sponsor or the participants and beneficiaries under the covered plan; all compensation expected to be received by the covered service provider, an affiliate, or a subcontractor as a result of paying a lower amount for the drug than the amount charged as a copayment, coinsurance amount, or deductible; all compensation expected to be received by the covered service provider, an affiliate, or a subcontractor as a result of paying pharmacies less than what is charged the health plan, plan sponsor, or participants and beneficiaries under the covered plan; and all compensation expected to be received by the covered service provider, an affiliate, or a subcontractor from drug manufacturers and any other third party in exchange for— administering, invoicing, allocating, or collecting rebates related to the covered plan; providing business services and activities, including providing access to drug utilization data; keeping a percentage of the list price of a drug; or any other reason related to the role of a covered service provider as a conduit between the drug manufacturers or any other third party and the covered plan. . Clause
(v)of section 408(b)(2)(B) of such Act ( 29 U.S.C. 1108(b)(2)(B) ) is amended by adding at the end the following: A covered service provider, with respect to a contract or arrangement with the covered plan in connection with providing pharmacy benefit management services, shall disclose, on an annual basis not later than 60 days after the beginning of the current plan year, to a responsible plan fiduciary, in writing, the following with respect to the twelve months preceding the current plan year: All direct compensation described in subclause
(III)of clause
(iii)and indirect compensation described in subclause
(IV)of clause
(iii)received by the covered service provider (including such compensation described in subclause
(VII)of clause (iii)). The total gross spending by the covered plan on drugs (excluding rebates, discounts, or other price concessions). The total net spending by the covered plan on drugs. The total gross spending at all pharmacies wholly or partially owned by the covered service provider or any entity affiliated with the covered service provider, including mail-order, specialty and retail pharmacies, with a breakdown by individual pharmacy location. The aggregate amount of clawback from such pharmacies, including mail-order, specialty, and retail pharmacies. categorical explanations (grouped by the reason for clawback, such as contractual true-up provisions, overpayments, or non-covered medication dispensed, and including information on the amount in each category that was passed through to the covered plan and to participants and beneficiaries of the covered plan); or individual explanations for such clawbacks. Total aggregate amounts of fees collected by the covered service provider, an affiliate, or a subcontractor in connection with the provision of pharmacy benefit management services to the covered plan. Any other information specified by the Secretary through regulations or guidance that may be necessary for a responsible plan fiduciary to consider the merits of the contract or arrangement with the covered service provider and any conflicts of interest that may exist. . Clause (ii)(I) of section 408(b)(2)(B) of such Act ( 29 U.S.C. 1108(b)(2)(B) ) is amended by adding at the end the following: The term pharmacy benefit management services includes any services provided by a covered service provider to a covered plan with respect to the administration of prescription drug benefits under the covered plan, including— processing and payment of claims; design of pharmacy networks; negotiation, aggregation, and distribution of rebates, discounts, and other price concessions; formulary design and maintenance; operation of pharmacies (whether retail, mail order, specialty drug, or otherwise); recordkeeping; utilization review; adjudication of claims; and any other services specified by the Secretary through guidance or rulemaking. . Clause (ii)(I) of section 408(b)(2)(B) of such Act ( 29 U.S.C. 1108(b)(2)(B) ), as amended by subparagraph (C), is amended by adding at the end the following: The term clawback means amounts collected by a provider of pharmacy benefit management services from a pharmacy for copayments collected from a participant or beneficiary in excess of the contracted rate. . Clause
(iii)of section 408(b)(2)(B) of such Act ( 29 U.S.C. 1108(b)(2)(B) ), as amended by paragraph (2)(A), is further amended by adding at the end the following: With respect to a contract or arrangement with the covered plan in connection with the provision of third party administration services for group health plans, as part of the description required under subclauses
(III)and (IV)— the amount and form of any rebates, discounts, savings fees, refunds, or amounts received from providers and facilities, including the amounts that will be retained by the covered service provider as a fee; the amount and form of fees expected to be received from other service providers in relation to the covered plan, including the amounts that will be retained by the covered service provider as a fee; and the amount and form of expected recoveries by the covered service provider, including the amounts that will be retained by the covered service provider as a fee (disaggregated by category), as a result of— overpayments; erroneous payments; uncashed checks or incomplete payments; billing errors; subrogation; fraud; or any other reason on behalf of the covered plan. . Clause
(v)of section 408(b)(2)(B) of such Act ( 29 U.S.C. 1108(b)(2)(B) ), as amended by paragraph (2)(B), is amended by adding at the end the following: A covered service provider, with respect to a contract or arrangement with the covered plan in connection with providing third party administration services for group health plans, shall disclose, on an annual basis not later than 60 days after the beginning of the current plan year, to a responsible plan fiduciary, in writing, the following with respect to the twelve months preceding the current plan year: All direct compensation described in subclause
(III)of clause (iii). All indirect compensation described in subclause
(IV)of clause
(iii)received by the covered service provider, an affiliate, or a subcontractor (including such compensation described in subclause
(VIII)of clause (iii)). The aggregate amount for which the covered service provider, an affiliate, or a subcontractor received indirect compensation and the estimated amount of cost-sharing incurred by plan participants and beneficiaries as a result. The total gross spending by the covered plan on all costs and fees arising under or paid under the administrative services agreement with the covered service provider (not including any amounts described in items
(aa)through
(cc)of clause (iii)(VIII)). The total net spending by the covered plan on all costs and fees arising under or paid under the administrative services agreement with the covered service provider. The aggregate fees collected by the covered service provider, an affiliate, or a subcontractor. Any other information specified by the Secretary through regulations or guidance that may be necessary for a responsible plan fiduciary to consider the merits of the contract or arrangement with the covered service provider and any conflicts of interest that may exist. . Clause (ii)(I) of section 408(b)(2)(B) of such Act ( 29 U.S.C. 1108(b)(2)(B) ), as amended by paragraph (2)(C), is amended by adding at the end the following: The term third party administration services for group health plans includes any services provided by a covered service provider, an affiliate, or a subcontractor to a covered plan with respect to the administration of health benefits under the covered plan, including— the processing, repricing, and payment of claims; design, creation, and maintenance of provider networks; negotiation of discounts off gross rates; benefit and plan design; negotiation of payment rates; recordkeeping; utilization review; adjudication of claims; regulatory compliance; and any other services set forth in an administrative services agreement or similar agreement or specified by the Secretary through rulemaking. . Nothing in the amendments made by this section shall be construed to imply that a practice in relation to which a covered service provider is required to provide information as a result of such amendments is permissible under Federal law. No contract or arrangement entered into prior to January 1, 2025, shall be subject to the requirements of subsection (b). Section 408(b)(2) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1108(b)(2) ), as amended by section 401, is further amended by adding at the end the following: Covered service providers shall provide information under subparagraph
(B)in a manner consistent with the privacy, security, and breach notification regulations promulgated under section 13402(a) of the Health Information Technology for Clinical Health Act ( 42 U.S.C. 17932(a) ), and consistent with the HIPAA privacy regulations (as defined in section 1180(b)(3) of the Social Security Act) and shall restrict the use and disclosure of such information according to such privacy, security, and breach notification regulations and such HIPAA privacy regulations. A responsible plan fiduciary receiving information disclosed under subparagraph
(B)may disclose such information only to the entity from which the information was received, the group health plan for which the information pertains, or to that entity’s business associates as defined in section 160.103 of title 45, Code of Federal Regulations (or successor regulations) or as permitted by the HIPAA Privacy Rule (45 CFR parts 160 and 164, subparts A and E). Nothing in this section shall prevent a group health plan or health insurance issuer offering group health insurance coverage, or a covered service provider, from placing reasonable restrictions on the public disclosure of the information described in this subparagraph, except that such plan, issuer, or entity may not restrict disclosure of such information to the Department of Labor. Covered service providers shall ensure that information provided under subparagraph
(B)contains only summary health information, as defined in section 164.504(a) of title 45, Code of Federal Regulations (or successor regulations). A group health plan must comply with section 164.504(f) of title 45, Code of Federal Regulations and a responsible plan administrator who is a plan sponsor must act in accordance with the terms of the agreement described in such section. Nothing in this section shall be construed to modify the requirements for the creation, receipt, maintenance, or transmission of protected health information under the HIPAA privacy regulations (as defined in section 1180(b)(3) of the Social Security Act). . Not later than 1 year after the date of enactment of this Act, the Secretary of Labor shall issue notice and comment rulemaking as necessary to implement the provisions of this section. The Secretary shall ensure that such rulemaking— accounts for the varied compensation practices of covered service providers (as defined under section 408(b)(2)(B); and establishes standards for the disclosure of expected compensation by such covered service providers.
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