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

<DOC>





                                                 Union Calendar No. 209
118th CONGRESS
  1st Session
                                H. R. 4508

                          [Report No. 118-259]

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

                            November 1, 2023

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on July 
                               10, 2023]


_______________________________________________________________________

                                 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 of 2023''.

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 paragraphs (3) and 
        (4) of subsection (b), 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.
                                                 Union Calendar No. 209

118th CONGRESS

  1st Session

                               H. R. 4508

                          [Report No. 118-259]

_______________________________________________________________________

                                 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.

_______________________________________________________________________

                            November 1, 2023

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed