[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4508 Introduced in House (IH)]

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118th CONGRESS
  1st Session
                                H. R. 4508

To amend the Employee Retirement Income Security Act of 1974 to clarify 
  and strengthen the application of certain employer-sponsored health 
                     plan disclosure requirements.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 10, 2023

 Mr. Courtney (for himself and Mrs. Houchin) introduced the following 
    bill; which was referred to the Committee on Education and the 
                               Workforce

_______________________________________________________________________

                                 A BILL


 
To amend the Employee Retirement Income Security Act of 1974 to clarify 
  and strengthen the application of certain employer-sponsored health 
                     plan disclosure requirements.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Hidden Fee Disclosure Act''.

SEC. 2. CLARIFICATION OF THE APPLICATION OF FEE DISCLOSURE REQUIREMENTS 
              TO COVERED SERVICE PROVIDERS.

    (a) Services.--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--
            (1) in subitem (AA) by striking ``Brokerage services,'' and 
        inserting ``Services (including brokerage services),''; and
            (2) in subitem (BB)--
                    (A) by striking ``Consulting,'' and inserting 
                ``Other services,''; and
                    (B) by inserting ``any of the following:'' before 
                ``plan design''.
    (b) Disclosures.--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''.

SEC. 3. STRENGTHENING DISCLOSURE REQUIREMENTS WITH RESPECT TO PHARMACY 
              BENEFIT MANAGERS AND THIRD PARTY ADMINISTRATORS FOR GROUP 
              HEALTH PLANS.

    (a) Certain Arrangements for PBM Services Considered as Indirect.--
            (1) In general.--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--
                    (A) by striking ``requirements of this clause'' and 
                inserting ``requirements of this subparagraph''; and
                    (B) 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.''.
            (2) Health insurance issuer and health insurance coverage 
        defined.--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 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)''.
    (b) Specific Disclosure Requirements With Respect to Pharmacy 
Benefit Management Services.--
            (1) In general.--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:
                    ``(VII) 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)--
                            ``(aa) 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, 
                        group purchasing organization, or any other 
                        third party; and
                            ``(bb) 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;
                            ``(cc) all compensation expected to be 
                        received by the covered service provider as a 
                        result of paying a lower amount for the drug 
                        than the amount charged as a copayment, 
                        coinsurance amount, or deductible;
                            ``(dd) all compensation expected to be 
                        received by the covered service provider as a 
                        result of paying pharmacies less than what is 
                        charged the health plan, plan sponsor, or 
                        participants and beneficiaries under the 
                        covered plan;
                            ``(ee) all compensation expected to be 
                        received by the covered service provider from 
                        drug manufacturers and any other third party in 
                        exchange for--
                                    ``(AA) administering, invoicing, 
                                allocating, or collecting rebates 
                                related to the covered plan;
                                    ``(BB) providing business services 
                                and activities, including providing 
                                access to drug utilization data;
                                    ``(CC) keeping a percentage of the 
                                list price of a drug; or
                                    ``(DD) 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.''.
            (2) Annual disclosure.--
                    (A) 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:
                    ``(III) 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:
                            ``(aa) 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)).
                            ``(bb) For each drug covered under the 
                        covered plan, the amount by which the price for 
                        the drug paid by the plan exceeds the amount 
                        paid to pharmacies by the covered service 
                        provider.
                            ``(cc) The total gross spending by the 
                        covered plan on drugs (excluding rebates, 
                        discounts, or other price concessions).
                            ``(dd) The total net spending by the 
                        covered plan on drugs.
                            ``(ee) The total gross spending at all 
                        pharmacies wholly or partially owned by the 
                        covered service provider, including mail-order, 
                        specialty and retail pharmacies, with a 
                        breakdown by individual pharmacy location.
                            ``(ff) The aggregate amount of clawback 
                        from pharmacies, including mail-order, 
                        specialty, and retail pharmacies.
                                    ``(AA) 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
                                    ``(BB) individual explanations for 
                                such clawbacks.
                            ``(gg) Total aggregate amounts of fees 
                        collected by the covered service provider in 
                        connection with the provision of pharmacy 
                        benefit management services to the covered 
                        plan.
                            ``(hh) 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.''.
            (3) Pharmacy benefit management services defined.--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:
                            ``(gg) 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--
                                    ``(AA) the processing and payment 
                                of claims;
                                    ``(BB) design of pharmacy networks;
                                    ``(CC) negotiation, aggregation, 
                                and distribution of rebates, discounts, 
                                and other price concessions;
                                    ``(DD) formulary design and 
                                maintenance;
                                    ``(EE) operation of pharmacies 
                                (whether retail, mail order, specialty 
                                drug, or otherwise); recordkeeping;
                                    ``(FF) utilization review;
                                    ``(GG) adjudication of claims; and
                                    ``(HH) any other services specified 
                                by the Secretary through guidance or 
                                rulemaking.''.
            (4) Clawback defined.--Clause (ii)(I) of section 
        408(b)(2)(B) of such Act (29 U.S.C. 1108(b)(2)(B)), as amended 
        by paragraph (3), is amended by adding at the end the 
        following:
                            ``(hh) The term `clawback' means amounts 
                        collected by a pharmacy benefit manager from a 
                        pharmacy for copayments collected from a 
                        participant or beneficiary in excess of the 
                        contracted rate.''.
    (c) Specific Disclosure Requirements With Respect to Third Party 
Administration Services for Group Health Plans.--
            (1) In general.--Clause (iii) of section 408(b)(2)(B) of 
        such Act (29 U.S.C. 1108(b)(2)(B)), as amended by subsection 
        (b)(1), is amended by adding at the end the following:
                    ``(VIII) 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)--
                            ``(aa) 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;
                            ``(bb) 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
                            ``(cc) 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--
                                    ``(AA) overpayments;
                                    ``(BB) erroneous payments;
                                    ``(CC) uncashed checks or 
                                incomplete payments;
                                    ``(DD) billing errors;
                                    ``(EE) subrogation;
                                    ``(FF) fraud; or
                                    ``(GG) any other reason on behalf 
                                of the covered plan, .''.
            (2) Annual disclosure.--Clause (v) of section 408(b)(2)(B) 
        of such Act (29 U.S.C. 1108(b)(2)(B)), as amended by subsection 
        (b)(2), is amended by adding at the end the following:
                    ``(IV) 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:
                            ``(aa) All direct compensation described in 
                        subclause (III) of clause (iii).
                            ``(bb) All indirect compensation described 
                        in subclause (IV) of clause (iii) received by 
                        the covered service provider (including such 
                        compensation described in subclause (VIII) of 
                        clause (iii)).
                            ``(cc) The aggregate amount for which the 
                        covered service provider received indirect 
                        compensation and the estimated amount of cost-
                        sharing incurred by plan participants and 
                        beneficiaries as a result.
                            ``(dd) The total gross spending by the 
                        covered plan on all costs and fees arising 
                        under or paid under the administrative services 
                        agreement with the third-party administrator 
                        (not including any amounts described in items 
                        (aa) through (cc) of clause (iii)(VIII).
                            ``(ee) 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.
                            ``(ff) The aggregate fees collected by the 
                        covered service provider.
                            ``(gg) 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.''.
            (3) Third party administration services for group health 
        plans defined.--Clause (ii)(I) of section 408(b)(2)(B) of such 
        Act (29 U.S.C. 1108(b)(2)(B)), as amended by subsection (b)(3), 
        is amended by adding at the end the following:
                            ``(ii) The term `third party administration 
                        services for group health plans' includes any 
                        services provided by a covered service provider 
                        to a covered plan with respect to the 
                        administration of health benefits under the 
                        covered plan, including--
                                    ``(AA) the processing, repricing, 
                                and payment of claims;
                                    ``(BB) design, creation, and 
                                maintenance of provider networks;
                                    ``(CC) negotiation of discounts off 
                                gross rates;
                                    ``(DD) benefit and plan design; 
                                negotiation of payment rates;
                                    ``(EE) recordkeeping;
                                    ``(FF) utilization review;
                                    ``(GG) adjudication of claims;
                                    ``(HH) regulatory compliance; and
                                    ``(II) any other services set forth 
                                in an administrative services agreement 
                                or similar agreement or specified by 
                                the Secretary through guidance or 
                                rulemaking.''.
    (d) Rule of Construction.--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.
    (e) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2025.

SEC. 4. IMPLEMENTATION.

    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 Act. The Secretary shall 
ensure that such rulemaking--
            (1) accounts for the varied compensation practices of 
        covered service providers (as defined under section 
        408(b)(2)(B); and
            (2) establishes standards for the disclosure of expected 
        compensation by such covered service providers.
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