[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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