[House Report 118-259]
[From the U.S. Government Publishing Office]


 118th Congress    }                                     {    Report
                         HOUSE OF REPRESENTATIVES
  1st Session      }                                     {    118-259

======================================================================


 
                   HIDDEN FEE DISCLOSURE ACT OF 2023

                                _______
                                

November 1, 2023.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

        Ms. Foxx, from the Committee on Education and the Workforce,
                         submitted the following

                              R E P O R T

                        [To accompany H.R. 4508]

    The Committee on Education and the Workforce, to whom was 
referred the bill (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, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

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.

                                Purpose

    H.R. 4508, the Hidden Fee Disclosure Act, amends the 
Employee Retirement Income Security Act of 1974 (ERISA) \1\ to 
clarify and strengthen the application of certain employer-
sponsored health plan disclosure requirements. The bill 
clarifies the services under current law for which covered 
service providers must disclose direct and indirect 
compensation. The bill also requires pharmacy benefit managers 
(PBMs) and third-party administrators (TPAs) to provide 
specific reports to responsible plan fiduciaries on direct and 
indirect compensation. This legislation will give plan 
fiduciaries the tools needed to avoid excessive fees and 
conflicts of interest that raise costs for employers, workers, 
and their families.
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    \1\1A 29 U.S.C. Sec. 1001 et seq.
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                            Committee Action


                             116TH CONGRESS

Subcommittee Hearing on Making Health Care More Affordable: Lowering 
        Drug Prices and Increasing Transparency

    On September 26, 2019, the Subcommittee on Health, 
Employment, Labor, and Pensions (HELP) held a hearing entitled 
``Making Health Care More Affordable: Lowering Drug Prices and 
Increasing Transparency,'' which examined the impact of rising 
prescription drug prices on workers and businesses and the need 
for greater transparency in health care. The witnesses were Mr. 
Frederick Isasi, Executive Director, Families USA, Washington, 
D.C.; Mr. David Mitchell, Founder, Patients for Affordable 
Drugs, Washington, D.C.; Ms. Bari Talente, Executive Vice 
President, National Multiple Sclerosis Society, Washington, 
D.C.; Dr. Mariana Socal, Assistant Scientist, Johns Hopkins 
University Bloomberg School of Public Health, Department of 
Health Policy and Management, Baltimore, Maryland; Mr. 
Christopher Holt, Director of Health Care Policy, American 
Action Forum, Washington, D.C.; and Dr. Craig Garthwaite, 
Associate Professor of Strategy, Northwestern University 
Kellogg School of Management, Evanston, Illinois.

Full Committee Markup of H.R. 5800, the Ban Surprise Billing Act

    On February 11, 2020, the Committee met to mark up H.R. 
5800, the Ban Surprise Billing Act. The legislation included 
provisions to amend ERISA to require covered service providers 
to disclose direct or indirect compensation to responsible plan 
fiduciaries. The Committee favorably reported the bill, as 
amended, by a vote of 32 yeas and 13 nays.

                             117TH CONGRESS

Subcommittee Hearing on Lower Drug Costs Now: Expanding Access to 
        Affordable Health Care

    On May 5, 2021, the HELP Subcommittee held a hearing 
entitled ``Lower Drug Costs Now: Expanding Access to Affordable 
Health Care,'' which examined the causes of rising health care 
costs. The witnesses were Dr. Douglas Holtz-Eakin, President, 
American Action Forum, Washington, D.C.; Mr. Frederick Isasi, 
Executive Director, Families USA, Washington, D.C.; Mr. David 
Mitchell, Founder, Patients for Affordable Drugs, Washington, 
D.C.; and Dr. Mariana Socal, Assistant Scientist, Johns Hopkins 
University Bloomberg School of Public Health, Baltimore, 
Maryland. The hearing included discussion regarding how the 
lack of PBM transparency contributes to higher costs for plans 
and consumers.

                             118TH CONGRESS

Subcommittee Hearing on Reducing Health Care Costs for Working 
        Americans and Their Families

    On April 26, 2023, the HELP Subcommittee held a hearing 
entitled ``Reducing Health Care Costs for Working Americans and 
Their Families,'' which examined lowering health care costs, 
including through expanding oversight of PBMs. Witnesses were 
Mr. Joel White, President, Council for Affordable Health 
Coverage (CAHC), Washington, D.C.; Mrs. Tracy Watts, Senior 
Partner, Mercer, Washington, D.C.; Ms. Marcie Strouse, Partner, 
Capitol Benefits Group, Des Moines, Iowa; and Ms. Sabrina 
Corlette, J.D., Research Professor and Co-Director, Center on 
Health Insurance Reforms, Georgetown University McCourt School 
of Public Policy, Washington, D.C.

Subcommittee Hearing on Competition and Transparency: The Pathway 
        Forward for a Stronger Health Care Market

    On June 21, 2023, the HELP Subcommittee held a hearing 
entitled ``Competition and Transparency: The Pathway Forward 
for a Stronger Health Care Market,'' which examined the role of 
PBMs and the need for transparency. The witnesses were Dr. 
Gloria Sachdev, President and CEO, Employers' Forum of Indiana, 
Carmel, Indiana; Ms. Sophia Tripoli, Senior Director of Health 
Policy and Director of the Center for Affordable Whole-Person 
Care, Families USA, Washington, D.C.; Mr. Greg Baker, CEO, 
AffirmedRx, Louisville, Kentucky; Ms. Christine Monahan, 
Assistant Research Professor, Center on Health Insurance 
Reforms, Georgetown University McCourt School of Public Policy, 
Washington, D.C.; and Mr. Juan Carlos ``JC'' Scott, President 
and CEO, Pharmaceutical Care Management Association, 
Washington, D.C. The hearing included extensive discussion on 
the role of PBMs and the impacts of transparency, or lack 
thereof. Witnesses testified to the impacts of hospital 
consolidation and acquisition of outpatient departments on 
raising health care costs for employers and the need to combat 
unwarranted hospital facility fees applied to outpatient 
services, including requiring that each separate hospital 
outpatient facility obtain and use a unique national provider 
identifier (NPI). Members and witnesses further discussed the 
need to codify the Transparency in Coverage rule, prohibit gag 
clauses in contracts between PBMs and TPAs, and require PBMs 
and TPAs to disclose their compensation.

Full Committee Markup of H.R. 4508, the Hidden Fee Disclosure Act,

    On July 10, 2023, Rep. Joe Courtney (D-CT-2) introduced 
H.R. 4508, the Hidden Fee Disclosure Act, with Rep. Erin 
Houchin (R-IN-9) as an original cosponsor. The bill clarifies 
the application of existing ERISA group health plan disclosure 
requirements to covered service providers providing services 
specified in current law and further improves specific 
disclosure requirements for PBMs and TPAs, particularly with 
respect to indirect compensation. On July 12, 2023, the 
Committee met to mark up H.R. 4508 and adopted an Amendment in 
the Nature of a Substitute offered by Rep. Courtney that made 
technical corrections to H.R. 4508. The Committee reported the 
bill favorably, as amended, to the House of Representatives by 
a vote of 39 yeas and 1 nay.

                            Committee Views


                       PHARMACY BENEFIT MANAGERS

    PBMs serve as intermediaries between pharmaceutical 
manufacturers and health insurers, Medicare Part D drug plans, 
employers, and other payers. PBMs create formularies, negotiate 
rebates with manufacturers, process claims, create pharmacy 
networks, and review drug utilization. Although the 
Congressional Budget Office (CBO) found that PBMs' ability to 
negotiate larger rebates from manufacturers may have lowered 
program costs and copays for plan enrollees in Medicare Part D 
and Medicaid,\2\ in light of rising health care costs, PBMs 
have faced growing scrutiny of their role in prescription drug 
costs and spending.
---------------------------------------------------------------------------
    \2\ https://www.cbo.gov/system/files/2019-05/55151-
SupplementalMaterial.pdf.
---------------------------------------------------------------------------
    By negotiating with drug manufacturers and pharmacies to 
control drug costs, PBMs have a significant behind-the-scenes 
impact in determining total drug costs for payers, shaping 
patients' access to medications, and determining how much 
pharmacies are paid. PBMs primarily earn profits through 
administrative fees charged for their services, spread pricing, 
and shared savings, where the PBM keeps part of the rebates or 
discounts negotiated with drug manufacturers. There has been 
increasing concern that the current structure creates a 
perverse incentive as higher drug list prices often translate 
into higher compensation for PBMs, who often earn a percentage 
of reductions negotiated off of the list prices.\3\
---------------------------------------------------------------------------
    \3\ Id.
---------------------------------------------------------------------------
    PBM reimbursement methods can be complex and unclear. Two 
practices of particular concern are rebate pricing models and 
spread pricing. One study found a direct correlation between 
rebate increases and manufacturer price increases: a $1 
increase in rebates corresponds with a $1.17 increase in drug 
list price, suggesting that rebates play a role in increasing 
list prices.\4\ PBMs may retain manufacturer rebates as profits 
rather than passing them through to their health plan clients. 
When health plans lack full transparency and cannot see how 
much manufacturers paid in rebates, they do not know how much 
their PBM retained as profits. Spread pricing occurs when PBMs 
charge health plans and payers more for a prescription drug 
than what they reimburse to the pharmacy and then they keep the 
difference. Because neither the plan nor the pharmacy knows 
what the other side was paid or charged, the practice hides the 
PBM's margins.
---------------------------------------------------------------------------
    \4\ https://healthpolicy.usc.edu/research/the-association-between-
drug-rebates-and-list-prices/.
---------------------------------------------------------------------------

                       THIRD PARTY ADMINISTRATORS

    A self-funded group health plan may contract with an 
entity, known as a third-party administrator (TPA), for the 
purpose of providing a number of services to the plan. Among 
these services include claims processing, recordkeeping, 
communicating with participants and beneficiaries, and ensuring 
compliance with reporting requirements under ERISA and other 
laws.\5\ Although often an insurance company, a TPA does not 
itself act as an insurer with respect to the plan; instead, the 
plan sponsor bears the financial responsibility of paying 
claims incurred under the plan. The lack of transparency with 
respect to the compensation of TPAs has raised concerns that 
their practices might not be in the best interests of plan 
sponsors or participants and beneficiaries.\6\ These concerns 
have prompted bipartisan reforms such as the recent ban on 
``gag clauses'' that restrict plan fiduciaries from accessing 
plan data held by TPAs and other service providers.\7\
---------------------------------------------------------------------------
    \5\ https://content.next.westlaw.com/practical-law/document/
I8b78d20587b211e9adfea82903531a62/Third-Party-Administrator- TPA.
    \6\ https://chirblog.org/questionable-conduct-allegations-insurers-
acting-third-party-administrat ors/.
    \7\ 29 U.S.C. Sec. 1185m.
---------------------------------------------------------------------------

                   ERISA FEE DISCLOSURE REQUIREMENTS

    Under ERISA, an employee benefit plan may enter into 
reasonable contracts or arrangements for the provision of 
certain services ``necessary for the establishment or operation 
of the plan. . . . if no more than reasonable compensation is 
paid therefor.'' \8\ This allows a plan to contract with 
entities such as PBMs, TPAs, brokerage firms, benefits 
consultants, and others, while ensuring that plan fiduciaries 
continuously monitor the reasonableness of such arrangements 
and the compensation received by service providers.\9\ However, 
without clear disclosures to plan fiduciaries of the services 
provided and the compensation earned, either directly or 
indirectly, it is essentially impossible to monitor service 
providers and ensure they are acting in the best interest of 
the plan. A lack of meaningful oversight could lead to higher 
costs for plans and, with respect to indirect compensation, 
creates the risk that service providers may have conflicts of 
interest.\10\
---------------------------------------------------------------------------
    \8\ 29 U.S.C. Sec. 1108(b)(2).
    \9\ 29 U.S.C. Sec. 1104(a)(1).
    \10\ https://www.propublica.org/article/health-insurance-brokers-
cost-commissions-bonuses.
---------------------------------------------------------------------------
    Although no final regulatory action has been taken, there 
have been several efforts to improve the disclosure of fees 
with respect to ERISA-covered group health plans. In 2007, the 
U.S. Department of Labor (the Department) proposed regulations 
that would have required disclosure of compensation earned by 
service providers that contract with employee benefit plans, 
including group health plans.\11\ This would have provided plan 
fiduciaries with important information from a broad range of 
service providers, which would have greatly facilitated the 
ability of fiduciaries to monitor the reasonableness of their 
contracts.\12\ This proposal was never finalized with respect 
to group health plans. Similarly, in 2014, the Advisory Council 
on Employee Welfare and Pension Benefit Plans recommended the 
Department consider issuing fee disclosure regulations 
regarding contracts and arrangements between group health plans 
and PBMs, which would have specifically included rebates 
received by PBMs as indirect compensation.\13\ To date, the 
Department has not issued a proposed rule on this topic.
---------------------------------------------------------------------------
    \11\ https://www.federalregister.gov/documents/2007/12/13/E7-24064/
reasonable-contract-or-arran gement-under-section-408b2-fee-disclosure.
    \12\ Id.
    \13\ https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/about-
us/erisa-advisory-council/2014AC report1.pdf.
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        DIRECT AND INDIRECT COMPENSATION DISCLOSURE REQUIREMENTS

    The No Surprises Act, enacted as part of the Consolidated 
Appropriations Act, 2021 (CAA),\14\ protected patients from 
surprise medical bills for emergency and out-of-network 
services and created a process by which providers and plans 
could reconcile billing disputes. In addition, the CAA sought 
to limit growth in health care spending through increased 
transparency. Importantly, Section 202 of Title II of Division 
BB of the CAA requires entities providing brokerage and 
consulting services to disclose direct or indirect compensation 
to group health plan fiduciaries (a similar provision extended 
broker disclosure requirements to individual market consumers). 
This provision amended section 408(b)(2) of ERISA to provide 
that any ``covered service provider'' that enters into a 
contract or arrangement with a group health plan must disclose 
to a responsible plan fiduciary a description of the direct and 
indirect compensation they expect to receive in connection with 
the services they provide to the plan.\15\ This disclosure 
requirement applies to the provision of brokerage services and 
broadly to entities providing consulting, including the 
``development or implementation of'' pharmacy benefit 
management services and third-party administration services. 
Although the text of this statute clearly encompasses the 
activities of TPAs and PBMs, many service providers have failed 
to comply with the law and may not be providing the required 
disclosures to plan fiduciaries.
---------------------------------------------------------------------------
    \14\ Pub. L. No. 116-260 (2020).
    \15\ ERISA Sec. 408(b)(2), 29 U.S.C. Sec. 1108.
---------------------------------------------------------------------------
    While the Department's Employee Benefits Security 
Administration (EBSA) has previously issued guidance that 
service providers may assess the applicability of these 
requirements consistent with similar regulations applicable to 
retirement plans (which explicitly apply to TPAs),\16\ 
additional action is needed to clarify the scope of entities 
subject to the requirements under the law. Because higher-cost 
drugs often offer higher rebates and, in turn, contribute to 
rising prescription drug spending, detailed disclosures of 
these and other compensation practices will assist plan 
fiduciaries in assessing their contracts with service 
providers. In December 2022, then-Chairman Scott (D-VA-3) and 
then-Ranking Member Foxx (R-NC-5) of the Committee on Education 
and Labor sent a bipartisan letter urging EBSA to issue 
additional, clarifying guidance, but the agency has to date 
taken no action.\17\
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    \16\ https://www.dol.gov/agencies/ebsa/employers-and-advisers/
guidance/field-assistance-bulletins /2021-03.
    \17\ https://democrats-edworkforce.house.gov/imo/media/doc/
bipartisan_scott-foxx_letter_to_ebsa_ re_health_transparency.pdf.
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                H.R. 4508, THE HIDDEN FEE DISCLOSURE ACT

    H.R. 4508 will help ensure that plan sponsors and plan 
fiduciaries have the information they need to make informed 
choices on behalf of plan participants. By receiving 
information on the nature and amount of compensation that PBMs 
and TPAs receive, plan fiduciaries can better evaluate the 
reasonableness of their compensation and whether PBMs and TPAs 
are acting in the best interest of the plan. Plans can measure 
whether savings are being appropriately passed through and can 
confirm that PBMs and TPAs are not unduly benefitting from 
rebate decisions at the expense of the plan. H.R. 4508 will 
improve accountability and competition among PBMs and TPAs and 
empower plans to make better decisions on behalf of employees, 
leading to lower spending.

                  H.R. 4508 Section-by-Section Summary


Section 1. Short title

    Section 1 provides that the short title is ``Hidden Fee 
Disclosure Act.''

Section 2. Clarification of the application of fee disclosure 
        requirements to covered service providers

    Section 2(a) amends ERISA to clarify that compensation 
disclosure requirements apply to all services specified in 
current law.
    Section 2(b) amends ERISA to provide that direct 
compensation must be described by service, rather than in the 
aggregate.

Section 3. Strengthening disclosure requirements for PBMs and TPAs

    Section 3(a) amends ERISA to provide that PBM services 
provided to a health insurance issuer on behalf of a group 
health plan shall be considered an indirect furnishing of 
goods, services, or facilities, thereby ensuring disclosures 
are provided to responsible plan fiduciaries of fully insured 
plans.
    PBM Disclosure Requirements. Section 3(b)(1) requires that 
PBMs report to responsible plan fiduciaries (as part of 
disclosure requirements under current law) the following 
information:
           All compensation, including fees, rebates, 
        discounts, or price concessions, co-payment offsets, 
        and other remuneration;
           The amount and form of rebates, discounts, 
        or price concessions that are passed through to the 
        plan sponsor or participants and beneficiaries;
           The amount of compensation received as a 
        result of the PBM paying less for a drug than the 
        amount charged to the participant or beneficiary;
           The amount of compensation received from 
        paying pharmacies less than what was charged to the 
        plan or participant or beneficiary; and
           The amount of compensation expected to be 
        received from drug manufacturers, including 
        compensation gained in exchange for administering the 
        plan, for providing business services and drug 
        utilization data, and for gaining compensation through 
        high rebates or a percentage of the list price.
    The PBM must report this information when it enters a 
contract with the plan, and it is required to disclose any 
changes as soon as practicable but no later than within 60 
days.
    PBM Annual Reporting. Section 3(b)(2) requires that PBMs 
annually report to responsible plan fiduciaries the following 
information:
           All direct and indirect compensation;
           For each drug covered under the plan, the 
        amount by which the price for the drug paid by the plan 
        exceeds the amount paid to the pharmacy;
           The total gross spending by the plan on 
        drugs (excluding rebates, discounts, or other price 
        concessions);
           The total net spending by the plan on drugs;
           The total gross spending at all PBM-owned 
        pharmacies, with a breakdown by individual pharmacy 
        location;
           The aggregate amount of clawback from 
        pharmacies, including an explanation for the clawback;
           The total aggregate amount of fees 
        collected; and
           Any other information specified by the 
        Secretary of Labor.
    TPA Disclosure Requirements. Section 3(c)(1) requires that 
TPAs report to responsible plan fiduciaries (as part of 
disclosure requirements under current law) the following 
information:
           The amount of, and a description of, any 
        rebates, discounts, savings fees, refunds, and amounts 
        received from providers and facilities;
           The amount of, and a description of, fees 
        received from other service providers; and
           The amount of, and a description of, 
        compensation recovered by the TPA from overpayments, 
        erroneous payments, uncashed checks, incomplete 
        payments, billing errors, subrogation, or fraud.
    The TPA must report this information when it enters a 
contract with the plan, and it is required to disclose any 
changes as soon as practicable but no later than within 60 
days.
    TPA Annual Reporting. Section 3(c)(2) requires that TPAs 
report to responsible plan fiduciaries annually the following 
information:
           All direct and indirect compensation;
           The aggregate amount for which the TPA 
        received indirect compensation and the estimated amount 
        of cost-sharing incurred by beneficiaries as a result;
           The total gross spending by the plan on all 
        cost and fees;
           The total net spending by the plan on all 
        cost and fees;
           The aggregate fees collected by the TPA; and
           Any other information specified by the 
        Secretary of Labor.
    The amendments made by Section 3 take effect on January 1, 
2025.

Section 4. Implementation

    Section 4 requires the Secretary of Labor to conduct notice 
and comment rulemaking within one year of enactment of the Act.

                       Explanation of Amendments

    The amendments, including the amendment in the nature of a 
substitute, are explained in the body of this report.

              Application of Law to the Legislative Branch

    Section 102(b)3 of Public Law 104-1 requires a description 
of the application of this bill to the legislative branch. H.R. 
4508 takes important steps to preserve and expand access to 
affordable, high-quality health care by ensuring that plan 
sponsors and plan fiduciaries have the information they need to 
make informed choices on behalf of plan participants. H.R. 4508 
is applicable only to group health plans subject to ERISA and 
therefore does not affect the legislative branch.

                       Unfunded Mandate Statement

    Pursuant to Section 423 of the Congressional Budget and 
Impoundment Control Act of 1974, Pub. L. No. 93-344 (as amended 
by Section 101(a)(2) of the Unfunded Mandates Reform Act of 
1995, Pub. L. No. 104-4), the Committee adopts as its own the 
cost estimate prepared by the Congressional Budget Office (CBO) 
pursuant to section 402 of the Congressional Budget and 
Impoundment Control Act of 1974.

                           Earmark Statement

    H.R. 4508 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI of the Rules of the House of 
Representatives.

                            Roll Call Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee Report to include for 
each record vote on a motion to report the measure or matter 
and on any amendments offered to the measure or matter the 
total number of votes for and against and the names of the 
Members voting for and against.


[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


         Statement of General Performance Goals and Objectives

    In accordance with clause (3)(c) of House rule XIII, the 
goal of H.R. 4508 is to improve accountability and competition 
among PBM and TPAs by requiring PBMs and TPAs to disclose 
compensation information to plan fiduciaries to allow plans to 
make informed contracting decisions.

                    Duplication of Federal Programs

    No provision of H.R. 4508 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

          Statement of Oversight Findings and Recommendations
                            of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the committee's oversight findings and recommendations are 
reflected in the body of this report.

            Required Committee Hearing and Related Hearings

    In compliance with clause 3(c)(6) of rule XIII of the Rules 
of the House of Representatives, the following hearing held 
during the 118th Congress was used to develop or consider H.R. 
4508: ``Competition and Transparency: The Pathway Forward for a 
Stronger Health Care Market.''

               New Budget Authority and CBO Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee requested a 
cost estimate from the Congressional Budget Office. The 
Committee adopts the following estimate for H.R. 4508 provided 
by the Congressional Budget Office to Majority staff via email 
on September 12, 2023: ``We have completed our estimate of H.R. 
4508. We estimate the bill would reduce the deficit by $1.3 
billion over the 2023-2033 window. Please note that the savings 
is driven by the PBM transparency provisions and there is an 
interaction with section 3 of H.R. 4507.''

                        Committee Cost Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.R. 4508. 
However, clause 3(d)(2)(B) of that rule provides that this 
requirement does not apply when, as with the present report, 
the committee adopts as its own the cost estimate of the bill 
prepared by the Congressional Budget Office under section 402 
of the Congressional Budget Act.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                       EMPLOYEE RETIREMENT INCOME
                          SECURITY ACT OF 1974




           *       *       *       *       *       *       *
TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS

           *       *       *       *       *       *       *



Subtitle B--Regulatory Provisions

           *       *       *       *       *       *       *



Part 4--Fiduciary Responsibility

           *       *       *       *       *       *       *



                EXEMPTIONS FROM PROHIBITED TRANSACTIONS

  Sec. 408. (a) The Secretary shall establish an exemption 
procedure for purposes of this subsection. Pursuant to such 
procedure, he may grant a conditional or unconditional 
exemption of any fiduciary or transaction, or class of 
fiduciaries or transactions, from all or part of the 
restrictions imposed by sections 406 and 407(a). Action under 
this subsection may be taken only after consultation and 
coordination with the Secretary of the Treasury. An exemption 
granted under this section shall not relieve a fiduciary from 
any other applicable provision of this Act. The Secretary may 
not grant an exemption under this subsection unless he finds 
that such exemption is--
          (1) administratively feasible,
          (2) in the interests of the plan and of its 
        participants and beneficiaries, and
          (3) protective of the rights of participants and 
        beneficiaries of such plan.
Before granting an exemption under this subsection from section 
406(a) or 407(a), the Secretary shall publish notice in the 
Federal Register of the pendency of the exemption, shall 
require that adequate notice be given to interested persons, 
and shall afford interested persons opportunity to present 
views. The Secretary may not grant an exemption under this 
subsection from section 406(b) unless he affords an opportunity 
for a hearing and makes a determination on the record with 
respect to the findings required by paragraphs (1), (2), and 
(3) of this subsection.
  (b) The prohibitions provided in section 406 shall not apply 
to any of the following transactions:
          (1) Any loans made by the plan to parties in interest 
        who are participants or beneficiaries of the plan if 
        such loans (A) are available to all such participants 
        and beneficiaries on a reasonably equivalent basis, (B) 
        are not made available to highly compensated employees 
        (within the meaning of section 414(q) of the Internal 
        Revenue Code of 1986) in an amount greater than the 
        amount made available to other employees, (C) are made 
        in accordance with specific provisions regarding such 
        loans set forth in the plan, (D) bear a reasonable rate 
        of interest, and (E) are adequately secured. A loan 
        made by a plan shall not fail to meet the requirements 
        of the preceding sentence by reason of a loan repayment 
        suspension described under section 414(u)(4) of the 
        Internal Revenue Code of 1986.
          (2)(A) Contracting or making reasonable arrangements 
        with a party in interest for office space, or legal, 
        accounting, or other services necessary for the 
        establishment or operation of the plan, if no more than 
        reasonable compensation is paid therefor.
          (B)(i) No contract or arrangement for services 
        between a covered plan and a covered service provider, 
        and no extension or renewal of such a contract or 
        arrangement, is reasonable within the meaning of this 
        paragraph unless the [requirements of this clause] 
        requirements of this subparagraph are met. 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.
          (ii)(I) For purposes of this subparagraph:
                  (aa) The term ``covered plan'' means a group 
                health plan as defined section 733(a).
                  (bb) The term ``covered service provider'' 
                means a service provider that enters into a 
                contract or arrangement with the covered plan 
                and reasonably expects $1,000 (or such amount 
                as the Secretary may establish in regulations 
                to account for inflation since the date of 
                enactment of the Consolidated Appropriations 
                Act, 2021, as appropriate) or more in 
                compensation, direct or indirect, to be 
                received in connection with providing one or 
                more of the following services, pursuant to the 
                contract or arrangement, regardless of whether 
                such services will be performed, or such 
                compensation received, by the covered service 
                provider, an affiliate, or a subcontractor:
                          (AA) [Brokerage services,] Services 
                        (including brokerage services), for 
                        which the covered service provider, an 
                        affiliate, or a subcontractor 
                        reasonably expects to receive indirect 
                        compensation or direct compensation 
                        described in item (dd), provided to a 
                        covered plan with respect to selection 
                        of insurance products (including vision 
                        and dental), recordkeeping services, 
                        medical management vendor, benefits 
                        administration (including vision and 
                        dental), stop-loss insurance, pharmacy 
                        benefit management services, wellness 
                        services, transparency tools and 
                        vendors, group purchasing organization 
                        preferred vendor panels, disease 
                        management vendors and products, 
                        compliance services, employee 
                        assistance programs, or third party 
                        administration services.
                          (BB) [Consulting,] Other services, 
                        for which the covered service provider, 
                        an affiliate, or a subcontractor 
                        reasonably expects to receive indirect 
                        compensation or direct compensation 
                        described in item (dd), related to the 
                        development or implementation of any of 
                        the following: plan design, insurance 
                        or insurance product selection 
                        (including vision and dental), 
                        recordkeeping, medical management, 
                        benefits administration selection 
                        (including vision and dental), stop-
                        loss insurance, pharmacy benefit 
                        management services, wellness design 
                        and management services, transparency 
                        tools, group purchasing organization 
                        agreements and services, participation 
                        in and services from preferred vendor 
                        panels, disease management, compliance 
                        services, employee assistance programs, 
                        or third party administration services.
                  (cc) The term ``affiliate'', with respect to 
                a covered service provider, means an entity 
                that directly or indirectly (through one or 
                more intermediaries) controls, is controlled 
                by, or is under common control with, such 
                provider, or is an officer, director, or 
                employee of, or partner in, such provider.
                  (dd)(AA) The term ``compensation'' means 
                anything of monetary value, but does not 
                include non-monetary compensation valued at 
                $250 (or such amount as the Secretary may 
                establish in regulations to account for 
                inflation since the date of enactment of the 
                Consolidated Appropriations Act, 2021, as 
                appropriate) or less, in the aggregate, during 
                the term of the contract or arrangement.
                  (BB) The term ``direct compensation'' means 
                compensation received directly from a covered 
                plan.
                  (CC) The term ``indirect compensation'' means 
                compensation received from any source other 
                than the covered plan, the plan sponsor, the 
                covered service provider, or an affiliate. 
                Compensation received from a subcontractor is 
                indirect compensation, unless it is received in 
                connection with services performed under a 
                contract or arrangement with a subcontractor.
                  (ee) The term ``responsible plan fiduciary'' 
                means a fiduciary with authority to cause the 
                covered plan to enter into, or extend or renew, 
                the contract or arrangement.
                  (ff) The term ``subcontractor'' means any 
                person or entity (or an affiliate of such 
                person or entity) that is not an affiliate of 
                the covered service provider and that, pursuant 
                to a contract or arrangement with the covered 
                service provider or an affiliate, reasonably 
                expects to receive $1,000 (or such amount as 
                the Secretary may establish in regulations to 
                account for inflation since the date of 
                enactment of the Consolidated Appropriations 
                Act, 2021, as appropriate) or more in 
                compensation for performing one or more 
                services described in item (bb) under a 
                contract or arrangement with the covered plan.
                  (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.
                  (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.
                  (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.
          (II) For purposes of this subparagraph, a description 
        of compensation or cost may be expressed as a monetary 
        amount, formula, or a per capita charge for each 
        enrollee or, if the compensation or cost cannot 
        reasonably be expressed in such terms, by any other 
        reasonable method, including a disclosure that 
        additional compensation may be earned but may not be 
        calculated at the time of contract if such a disclosure 
        includes a description of the circumstances under which 
        the additional compensation may be earned and a 
        reasonable and good faith estimate if the covered 
        service provider cannot otherwise readily describe 
        compensation or cost and explains the methodology and 
        assumptions used to prepare such estimate. Any such 
        description shall contain sufficient information to 
        permit evaluation of the reasonableness of the 
        compensation or cost.
          (III) No person or entity is a ``covered service 
        provider'' within the meaning of subclause (I)(bb) 
        solely on the basis of providing services as an 
        affiliate or a subcontractor that is performing one or 
        more of the services described in subitem (AA) or (BB) 
        of such subclause under the contract or arrangement 
        with the covered plan.
          (iii) A covered service provider shall disclose to a 
        responsible plan fiduciary, in writing, the following:
                  (I) A description of the services to be 
                provided to the covered plan pursuant to the 
                contract or arrangement.
                  (II) If applicable, a statement that the 
                covered service provider, an affiliate, or a 
                subcontractor will provide, or reasonably 
                expects to provide, services pursuant to the 
                contract or arrangement directly to the covered 
                plan as a fiduciary (within the meaning of 
                section 3(21)).
                  (III) A description of all direct 
                compensation[, either in the aggregate or by 
                service,] by service that the covered service 
                provider, an affiliate, or a subcontractor 
                reasonably expects to receive in connection 
                with the services described in subclause (I).
                  (IV)(aa) A description of all indirect 
                compensation that the covered service provider, 
                an affiliate, or a subcontractor reasonably 
                expects to receive in connection with the 
                services described in subclause (I)--
                          (AA) including compensation from a 
                        vendor to a brokerage firm based on a 
                        structure of incentives not solely 
                        related to the contract with the 
                        covered plan; and
                          (BB) not including compensation 
                        received by an employee from an 
                        employer on account of work performed 
                        by the employee.
                  (bb) A description of the arrangement between 
                the payer and the covered service provider, an 
                affiliate, or a subcontractor, as applicable, 
                pursuant to which such indirect compensation is 
                paid.
                  (cc) Identification of the services for which 
                the indirect compensation will be received, if 
                applicable.
                  (dd) Identification of the payer of the 
                indirect compensation.
                  (V) A description of any compensation that 
                will be paid among the covered service 
                provider, an affiliate, or a subcontractor, in 
                connection with the services described in 
                subclause (I) 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), including identification of the 
                services for which such compensation will be 
                paid and identification of the payers and 
                recipients of such compensation (including the 
                status of a payer or recipient as an affiliate 
                or a subcontractor), regardless of whether such 
                compensation also is disclosed pursuant to 
                subclause (III) or (IV).
                  (VI) A description of any compensation that 
                the covered service provider, an affiliate, or 
                a subcontractor reasonably expects to receive 
                in connection with termination of the contract 
                or arrangement, and how any prepaid amounts 
                will be calculated and refunded upon such 
                termination.
                  (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.
                  (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.
          (iv) A covered service provider shall disclose to a 
        responsible plan fiduciary, in writing a description of 
        the manner in which the compensation described in 
        clause (iii), as applicable, will be received.
          (v)(I) A covered service provider shall disclose the 
        information required under clauses (iii) and (iv) to 
        the responsible plan fiduciary not later than the date 
        that is reasonably in advance of the date on which the 
        contract or arrangement is entered into, and extended 
        or renewed.
          (II) A covered service provider shall disclose any 
        change to the information required under clause (iii) 
        and (iv) as soon as practicable, but not later than 60 
        days from the date on which the covered service 
        provider is informed of such change, unless such 
        disclosure is precluded due to extraordinary 
        circumstances beyond the covered service provider's 
        control, in which case the information shall be 
        disclosed as soon as practicable.
          (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.
          (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.
          (vi)(I) Upon the written request of the responsible 
        plan fiduciary or covered plan administrator, a covered 
        service provider shall furnish any other information 
        relating to the compensation received in connection 
        with the contract or arrangement that is required for 
        the covered plan to comply with the reporting and 
        disclosure requirements under this Act.
          (II) The covered service provider shall disclose the 
        information required under clause (iii)(I) reasonably 
        in advance of the date upon which such responsible plan 
        fiduciary or covered plan administrator states that it 
        is required to comply with the applicable reporting or 
        disclosure requirement, unless such disclosure is 
        precluded due to extraordinary circumstances beyond the 
        covered service provider's control, in which case the 
        information shall be disclosed as soon as practicable.
          (vii) No contract or arrangement will fail to be 
        reasonable under this subparagraph solely because the 
        covered service provider, acting in good faith and with 
        reasonable diligence, makes an error or omission in 
        disclosing the information required pursuant to clause 
        (iii) (or a change to such information disclosed 
        pursuant to clause (v)(II)) or clause (vi), provided 
        that the covered service provider discloses the correct 
        information to the responsible plan fiduciary as soon 
        as practicable, but not later than 30 days from the 
        date on which the covered service provider knows of 
        such error or omission.
          (viii)(I) Pursuant to subsection (a), subparagraphs 
        (C) and (D) of section 406(a)(1) shall not apply to a 
        responsible plan fiduciary, notwithstanding any failure 
        by a covered service provider to disclose information 
        required under clause (iii), if the following 
        conditions are met:
                  (aa) The responsible plan fiduciary did not 
                know that the covered service provider failed 
                or would fail to make required disclosures and 
                reasonably believed that the covered service 
                provider disclosed the information required to 
                be disclosed.
                  (bb) The responsible plan fiduciary, upon 
                discovering that the covered service provider 
                failed to disclose the required information, 
                requests in writing that the covered service 
                provider furnish such information.
                  (cc) If the covered service provider fails to 
                comply with a written request described in 
                subclause (II) within 90 days of the request, 
                the responsible plan fiduciary notifies the 
                Secretary of the covered service provider's 
                failure, in accordance with subclauses (II) and 
                (III).
          (II) A notice described in subclause (I)(cc) shall 
        contain--
                  (aa) the name of the covered plan;
                  (bb) the plan number used for the annual 
                report on the covered plan;
                  (cc) the plan sponsor's name, address, and 
                employer identification number;
                  (dd) the name, address, and telephone number 
                of the responsible plan fiduciary;
                  (ee) the name, address, phone number, and, if 
                known, employer identification number of the 
                covered service provider;
                  (ff) a description of the services provided 
                to the covered plan;
                  (gg) a description of the information that 
                the covered service provider failed to 
                disclose;
                  (hh) the date on which such information was 
                requested in writing from the covered service 
                provider; and
                  (ii) a statement as to whether the covered 
                service provider continues to provide services 
                to the plan.
          (III) A notice described in subclause (I)(cc) shall 
        be filed with the Department not later than 30 days 
        following the earlier of--
                  (aa) The covered service provider's refusal 
                to furnish the information requested by the 
                written request described in subclause (I)(bb); 
                or
                  (bb) 90 days after the written request 
                referred to in subclause (I)(cc) is made.
          (IV) If the covered service provider fails to comply 
        with the written request under subclause (I)(bb) within 
        90 days of such request, the responsible plan fiduciary 
        shall determine whether to terminate or continue the 
        contract or arrangement under section 404. If the 
        requested information relates to future services and is 
        not disclosed promptly after the end of the 90-day 
        period, the responsible plan fiduciary shall terminate 
        the contract or arrangement as expeditiously as 
        possible, consistent with such duty of prudence.
          (ix) Nothing in this subparagraph shall be construed 
        to supersede any provision of State law that governs 
        disclosures by parties that provide the services 
        described in this section, except to the extent that 
        such law prevents the application of a requirement of 
        this section.
          (3) A loan to an employee stock ownership plan (as 
        defined in section 407(d)(6)), if--
                  (A) such loan is primarily for the benefit of 
                participants and beneficiaries of the plan, and
                  (B) such loan is at an interest rate which is 
                not in excess of a reasonable rate.
        If the plan gives collateral to a party in interest for 
        such loan, such collateral may consist only of 
        qualifying employer securities (as defined in section 
        407(d)(5)).
          (4) The investment of all or part of a plan's assets 
        in deposits which bear a reasonable interest rate in a 
        bank or similar financial institution supervised by the 
        United States or a State, if such bank or other 
        institution is a fiduciary of such plan and if--
                  (A) the plan covers only employees of such 
                bank or other institution and employees of 
                affiliates of such bank or other institution, 
                or
                  (B) such investment is expressly authorized 
                by a provision of the plan or by a fiduciary 
                (other than such bank or institution or 
                affiliate thereof) who is expressly empowered 
                by the plan to so instruct the trustee with 
                respect to such investment.
          (5) Any contract for life insurance, health 
        insurance, or annuities with one or more insurers which 
        are qualified to do business in a State, if the plan 
        pays no more than adequate consideration, and if each 
        such insurer or insurers is--
                  (A) the employer maintaining the plan, or
                  (B) a party in interest which is wholly owned 
                (directly or indirectly) by the employer 
                maintaining the plan, or by any person which is 
                a party in interest with respect to the plan, 
                but only if the total premiums and annuity 
                considerations written by such insurers for 
                life insurance, health insurance, or annuities 
                for all plans (and their employers) with 
                respect to which such insurers are parties in 
                interest (not including premiums or annuity 
                considerations written by the employer 
                maintaining the plan) do not exceed 5 percent 
                of the total premiums and annuity 
                considerations written for all lines of 
                insurance in that year by such insurers (not 
                including premiums or annuity considerations 
                written by the employer maintaining the plan).
          (6) The providing of any ancillary service by a bank 
        or similar financial institution supervised by the 
        United States or a State, if such bank or other 
        institution is a fiduciary of such plan, and if--
                  (A) such bank or similar financial 
                institution has adopted adequate internal 
                safeguards which assure that the providing of 
                such ancillary service is consistent with sound 
                banking and financial practice, as determined 
                by Federal or State supervisory authority, and
                  (B) the extent to which such ancillary 
                service is provided is subject to specific 
                guidelines issued by such bank or similar 
                financial institution (as determined by the 
                Secretary after consultation with Federal and 
                State supervisory authority), and adherence to 
                such guidelines would reasonably preclude such 
                bank or similar financial institution from 
                providing such ancillary service (i) in an 
                excessive or unreasonable manner, and (ii) in a 
                manner that would be inconsistent with the best 
                interests of participants and beneficiaries of 
                employee benefit plans.
        Such ancillary services shall not be provided at more 
        than reasonable compensation.
          (7) The exercise of a privilege to convert 
        securities, to the extent provided in regulations of 
        the Secretary, but only if the plan receives no less 
        than adequate consideration pursuant to such 
        conversion.
          (8) Any transaction between a plan and (i) a common 
        or collective trust fund or pooled investment fund 
        maintained by a party in interest which is a bank or 
        trust company supervised by a State or Federal agency 
        or (ii) a pooled investment fund of an insurance 
        company qualified to do business in a State, if--
                  (A) the transaction is a sale or purchase of 
                an interest in the fund,
                  (B) the bank, trust company, or insurance 
                company receives not more than reasonable 
                compensation, and
                  (C) such transaction is expressly permitted 
                by the instrument under which the plan is 
                maintained, or by a fiduciary (other than the 
                bank, trust company, or insurance company, or 
                an affiliate thereof) who has authority to 
                manage and control the assets of the plan.
          (9) The making by a fiduciary of a distribution of 
        the assets of the plan in accordance with the terms of 
        the plan if such assets are distributed in the same 
        manner as provided under section 4044 of this Act 
        (relating to allocation of assets).
          (10) Any transaction required or permitted under part 
        1 of subtitle E of title IV.
          (11) A merger of multiemployer plans, or the transfer 
        of assets or liabilities between multiemployer plans, 
        determined by the Pension Benefit Guaranty Corporation 
        to meet the requirements of section 4231.
          (12) The sale by a plan to a party in interest on or 
        after December 18, 1987, of any stock, if--
                  (A) the requirements of paragraphs (1) and 
                (2) of subsection (e) are met with respect to 
                such stock,
                  (B) on the later of the date on which the 
                stock was acquired by the plan, or January 1, 
                1975, such stock constituted a qualifying 
                employer security (as defined in section 
                407(d)(5) as then in effect), and
                  (C) such stock does not constitute a 
                qualifying employer security (as defined in 
                section 407(d)(5) as in effect at the time of 
                the sale).
          (13) Any transfer made before January 1, 2033, of 
        excess pension assets from a defined benefit plan to a 
        retiree health account in a qualified transfer 
        permitted under section 420 of the Internal Revenue 
        Code of 1986 (as in effect on the date of enactment of 
        the SECURE 2.0 Act of 2022).
          (14) Any transaction in connection with the provision 
        of investment advice described in section 3(21)(A)(ii) 
        to a participant or beneficiary of an individual 
        account plan that permits such participant or 
        beneficiary to direct the investment of assets in their 
        individual account, if--
                  (A) the transaction is--
                          (i) the provision of the investment 
                        advice to the participant or 
                        beneficiary of the plan with respect to 
                        a security or other property available 
                        as an investment under the plan,
                          (ii) the acquisition, holding, or 
                        sale of a security or other property 
                        available as an investment under the 
                        plan pursuant to the investment advice, 
                        or
                          (iii) the direct or indirect receipt 
                        of fees or other compensation by the 
                        fiduciary adviser or an affiliate 
                        thereof (or any employee, agent, or 
                        registered representative of the 
                        fiduciary adviser or affiliate) in 
                        connection with the provision of the 
                        advice or in connection with an 
                        acquisition, holding, or sale of a 
                        security or other property available as 
                        an investment under the plan pursuant 
                        to the investment advice; and
                  (B) the requirements of subsection (g) are 
                met.
          (15)(A) Any transaction involving the purchase or 
        sale of securities, or other property (as determined by 
        the Secretary), between a plan and a party in interest 
        (other than a fiduciary described in section 3(21)(A)) 
        with respect to a plan if--
                  (i) the transaction involves a block trade,
                  (ii) at the time of the transaction, the 
                interest of the plan (together with the 
                interests of any other plans maintained by the 
                same plan sponsor), does not exceed 10 percent 
                of the aggregate size of the block trade,
                  (iii) the terms of the transaction, including 
                the price, are at least as favorable to the 
                plan as an arm's length transaction, and
                  (iv) the compensation associated with the 
                purchase and sale is not greater than the 
                compensation associated with an arm's length 
                transaction with an unrelated party.
          (B) For purposes of this paragraph, the term ``block 
        trade'' means any trade of at least 10,000 shares or 
        with a market value of at least $200,000 which will be 
        allocated across two or more unrelated client accounts 
        of a fiduciary.
          (16) Any transaction involving the purchase or sale 
        of securities, or other property (as determined by the 
        Secretary), between a plan and a party in interest if--
                  (A) the transaction is executed through an 
                electronic communication network, alternative 
                trading system, or similar execution system or 
                trading venue subject to regulation and 
                oversight by--
                          (i) the applicable Federal regulating 
                        entity, or
                          (ii) such foreign regulatory entity 
                        as the Secretary may determine by 
                        regulation,
                  (B) either--
                          (i) the transaction is effected 
                        pursuant to rules designed to match 
                        purchases and sales at the best price 
                        available through the execution system 
                        in accordance with applicable rules of 
                        the Securities and Exchange Commission 
                        or other relevant governmental 
                        authority, or
                          (ii) neither the execution system nor 
                        the parties to the transaction take 
                        into account the identity of the 
                        parties in the execution of trades,
                  (C) the price and compensation associated 
                with the purchase and sale are not greater than 
                the price and compensation associated with an 
                arm's length transaction with an unrelated 
                party,
                  (D) if the party in interest has an ownership 
                interest in the system or venue described in 
                subparagraph (A), the system or venue has been 
                authorized by the plan sponsor or other 
                independent fiduciary for transactions 
                described in this paragraph, and
                  (E) not less than 30 days prior to the 
                initial transaction described in this paragraph 
                executed through any system or venue described 
                in subparagraph (A), a plan fiduciary is 
                provided written or electronic notice of the 
                execution of such transaction through such 
                system or venue.
          (17)(A) Transactions described in subparagraphs (A), 
        (B), and (D) of section 406(a)(1) between a plan and a 
        person that is a party in interest other than a 
        fiduciary (or an affiliate) who has or exercises any 
        discretionary authority or control with respect to the 
        investment of the plan assets involved in the 
        transaction or renders investment advice (within the 
        meaning of section 3(21)(A)(ii)) with respect to those 
        assets, solely by reason of providing services to the 
        plan or solely by reason of a relationship to such a 
        service provider described in subparagraph (F), (G), 
        (H), or (I) of section 3(14), or both, but only if in 
        connection with such transaction the plan receives no 
        less, nor pays no more, than adequate consideration.
          (B) For purposes of this paragraph, the term 
        ``adequate consideration'' means--
                  (i) in the case of a security for which there 
                is a generally recognized market--
                          (I) the price of the security 
                        prevailing on a national securities 
                        exchange which is registered under 
                        section 6 of the Securities Exchange 
                        Act of 1934, taking into account 
                        factors such as the size of the 
                        transaction and marketability of the 
                        security, or
                          (II) if the security is not traded on 
                        such a national securities exchange, a 
                        price not less favorable to the plan 
                        than the offering price for the 
                        security as established by the current 
                        bid and asked prices quoted by persons 
                        independent of the issuer and of the 
                        party in interest, taking into account 
                        factors such as the size of the 
                        transaction and marketability of the 
                        security, and
                  (ii) in the case of an asset other than a 
                security for which there is a generally 
                recognized market, the fair market value of the 
                asset as determined in good faith by a 
                fiduciary or fiduciaries in accordance with 
                regulations prescribed by the Secretary.
          (18) Foreign exchange transactions.--Any foreign 
        exchange transactions, between a bank or broker-dealer 
        (or any affiliate of either), and a plan (as defined in 
        section 3(3)) with respect to which such bank or 
        broker-dealer (or affiliate) is a trustee, custodian, 
        fiduciary, or other party in interest, if--
                  (A) the transaction is in connection with the 
                purchase, holding, or sale of securities or 
                other investment assets (other than a foreign 
                exchange transaction unrelated to any other 
                investment in securities or other investment 
                assets),
                  (B) at the time the foreign exchange 
                transaction is entered into, the terms of the 
                transaction are not less favorable to the plan 
                than the terms generally available in 
                comparable arm's length foreign exchange 
                transactions between unrelated parties, or the 
                terms afforded by the bank or broker-dealer (or 
                any affiliate of either) in comparable arm's-
                length foreign exchange transactions involving 
                unrelated parties,
                  (C) the exchange rate used by such bank or 
                broker-dealer (or affiliate) for a particular 
                foreign exchange transaction does not deviate 
                by more than 3 percent from the interbank bid 
                and asked rates for transactions of comparable 
                size and maturity at the time of the 
                transaction as displayed on an independent 
                service that reports rates of exchange in the 
                foreign currency market for such currency, and
                  (D) the bank or broker-dealer (or any 
                affiliate of either) does not have investment 
                discretion, or provide investment advice, with 
                respect to the transaction.
          (19) Cross trading.--Any transaction described in 
        sections 406(a)(1)(A) and 406(b)(2) involving the 
        purchase and sale of a security between a plan and any 
        other account managed by the same investment manager, 
        if--
                  (A) the transaction is a purchase or sale, 
                for no consideration other than cash payment 
                against prompt delivery of a security for which 
                market quotations are readily available,
                  (B) the transaction is effected at the 
                independent current market price of the 
                security (within the meaning of section 
                270.17a-7(b) of title 17, Code of Federal 
                Regulations),
                  (C) no brokerage commission, fee (except for 
                customary transfer fees, the fact of which is 
                disclosed pursuant to subparagraph (D)), or 
                other remuneration is paid in connection with 
                the transaction,
                  (D) a fiduciary (other than the investment 
                manager engaging in the cross-trades or any 
                affiliate) for each plan participating in the 
                transaction authorizes in advance of any cross-
                trades (in a document that is separate from any 
                other written agreement of the parties) the 
                investment manager to engage in cross trades at 
                the investment manager's discretion, after such 
                fiduciary has received disclosure regarding the 
                conditions under which cross trades may take 
                place (but only if such disclosure is separate 
                from any other agreement or disclosure 
                involving the asset management relationship), 
                including the written policies and procedures 
                of the investment manager described in 
                subparagraph (H),
                  (E) each plan participating in the 
                transaction has assets of at least 
                $100,000,000, except that if the assets of a 
                plan are invested in a master trust containing 
                the assets of plans maintained by employers in 
                the same controlled group (as defined in 
                section 407(d)(7)), the master trust has assets 
                of at least $100,000,000,
                  (F) the investment manager provides to the 
                plan fiduciary who authorized cross trading 
                under subparagraph (D) a quarterly report 
                detailing all cross trades executed by the 
                investment manager in which the plan 
                participated during such quarter, including the 
                following information, as applicable: (i) the 
                identity of each security bought or sold; (ii) 
                the number of shares or units traded; (iii) the 
                parties involved in the cross-trade; and (iv) 
                trade price and the method used to establish 
                the trade price,
                  (G) the investment manager does not base its 
                fee schedule on the plan's consent to cross 
                trading, and no other service (other than the 
                investment opportunities and cost savings 
                available through a cross trade) is conditioned 
                on the plan's consent to cross trading,
                  (H) the investment manager has adopted, and 
                cross-trades are effected in accordance with, 
                written cross-trading policies and procedures 
                that are fair and equitable to all accounts 
                participating in the cross-trading program, and 
                that include a description of the manager's 
                pricing policies and procedures, and the 
                manager's policies and procedures for 
                allocating cross trades in an objective manner 
                among accounts participating in the cross-
                trading program, and
                  (I) the investment manager has designated an 
                individual responsible for periodically 
                reviewing such purchases and sales to ensure 
                compliance with the written policies and 
                procedures described in subparagraph (H), and 
                following such review, the individual shall 
                issue an annual written report no later than 90 
                days following the period to which it relates 
                signed under penalty of perjury to the plan 
                fiduciary who authorized cross trading under 
                subparagraph (D) describing the steps performed 
                during the course of the review, the level of 
                compliance, and any specific instances of non-
                compliance.
        The written report under subparagraph (I) shall also 
        notify the plan fiduciary of the plan's right to 
        terminate participation in the investment manager's 
        cross-trading program at any time.
          (20)(A) Except as provided in subparagraphs (B) and 
        (C), a transaction described in section 406(a) in 
        connection with the acquisition, holding, or 
        disposition of any security or commodity, if the 
        transaction is corrected before the end of the 
        correction period.
          (B) Subparagraph (A) does not apply to any 
        transaction between a plan and a plan sponsor or its 
        affiliates that involves the acquisition or sale of an 
        employer security (as defined in section 407(d)(1)) or 
        the acquisition, sale, or lease of employer real 
        property (as defined in section 407(d)(2)).
          (C) In the case of any fiduciary or other party in 
        interest (or any other person knowingly participating 
        in such transaction), subparagraph (A) does not apply 
        to any transaction if, at the time the transaction 
        occurs, such fiduciary or party in interest (or other 
        person) knew (or reasonably should have known) that the 
        transaction would (without regard to this paragraph) 
        constitute a violation of section 406(a).
          (D) For purposes of this paragraph, the term 
        ``correction period'' means, in connection with a 
        fiduciary or party in interest (or other person 
        knowingly participating in the transaction), the 14-day 
        period beginning on the date on which such fiduciary or 
        party in interest (or other person) discovers, or 
        reasonably should have discovered, that the transaction 
        would (without regard to this paragraph) constitute a 
        violation of section 406(a).
          (E) For purposes of this paragraph--
                  (i) The term ``security'' has the meaning 
                given such term by section 475(c)(2) of the 
                Internal Revenue Code of 1986 (without regard 
                to subparagraph (F)(iii) and the last sentence 
                thereof).
                  (ii) The term ``commodity'' has the meaning 
                given such term by section 475(e)(2) of such 
                Code (without regard to subparagraph (D)(iii) 
                thereof).
                  (iii) The term ``correct'' means, with 
                respect to a transaction--
                          (I) to undo the transaction to the 
                        extent possible and in any case to make 
                        good to the plan or affected account 
                        any losses resulting from the 
                        transaction, and
                          (II) to restore to the plan or 
                        affected account any profits made 
                        through the use of assets of the plan.
          (21) The provision of a de minimis financial 
        incentive described in section 401(k)(4)(A) or section 
        403(b)(12)(A) of the Internal Revenue Code of 1986.
  (c) Nothing in section 406 shall be construed to prohibit any 
fiduciary from--
          (1) receiving any benefit to which he may be entitled 
        as a participant or beneficiary in the plan, so long as 
        the benefit is computed and paid on a basis which is 
        consistent with the terms of the plan as applied to all 
        other participants and beneficiaries;
          (2) receiving any reasonable compensation for 
        services rendered, or for the reimbursement of expenses 
        properly and actually incurred, in the performance of 
        his duties with the plan; except that no person so 
        serving who already receives full time pay from an 
        employer or an association of employers, whose 
        employees are participants in the plan, or from an 
        employee organization whose members are participants in 
        such plan shall receive compensation from such plan, 
        except for reimbursement of expenses properly and 
        actually incurred; or
          (3) serving as a fiduciary in addition to being an 
        officer, employee, agent, or other representative of a 
        party in interest.
  (d)(1) Section 407(b) and subsections (b), (c), and (e) of 
this section shall not apply to a transaction in which a plan 
directly or indirectly--
          (A) lends any part of the corpus or income of the 
        plan to,
          (B) pays any compensation for personal services 
        rendered to the plan to, or
          (C) acquires for the plan any property from, or sells 
        any property to,
any person who is with respect to the plan an owner-employee 
(as defined in section 401(c)(3) of the Internal Revenue Code 
of 1986), a member of the family (as defined in section 
267(c)(4) of such Code) of any such owner-employee, or any 
corporation in which any such owner-employee owns, directly or 
indirectly, 50 percent or more of the total combined voting 
power of all classes of stock entitled to vote or 50 percent or 
more of the total value of shares of all classes of stock of 
the corporation.
  (2)(A) For purposes of paragraph (1), the following shall be 
treated as owner-employees:
          (i) A shareholder-employee.
          (ii) A participant or beneficiary of an individual 
        retirement plan (as defined in section 7701(a)(37) of 
        the Internal Revenue Code of 1986).
          (iii) An employer or association of employees which 
        establishes such an individual retirement plan under 
        section 408(c) of such Code.
  (B) Paragraph (1)(C) shall not apply to a transaction which 
consists of a sale of employer securities to an employee stock 
ownership plan (as defined in section 407(d)(6)) by a 
shareholder-employee, a member of the family (as defined in 
section 267(c)(4) of such Code) of any such owner-employee, or 
a corporation in which such a shareholder-employee owns stock 
representing a 50 percent or greater interest described in 
paragraph (1).
  (C) For purposes of paragraph (1)(A), the term ``owner-
employee'' shall only include a person described in clause (ii) 
or (iii) of subparagraph (A).
  (3) For purposes of paragraph (2), the term ``shareholder-
employee'' means an employee or officer of an S corporation (as 
defined in section 1361(a)(1) of such Code) who owns (or is 
considered as owning within the meaning of section 318(a)(1) of 
such Code) more than 5 percent of the outstanding stock of the 
corporation on any day during the taxable year of such 
corporation.
  (e) Sections 406 and 407 shall not apply to the acquisition 
or sale by a plan of qualifying employer securities (as defined 
in section 407(d)(5)) or acquisition, sale or lease by a plan 
of qualifying employer real property (as defined in section 
407(d)(4))--
          (1) if such acquisition, sale, or lease is for 
        adequate consideration (or in the case of a marketable 
        obligation, at a price not less favorable to the plan 
        than the price determined under section 407(e)(1)),
          (2) if no commission is charged with respect thereto, 
        and
          (3) if--
                  (A) the plan is an eligible individual 
                account plan (as defined in section 407(d)(3)), 
                or
                  (B) in the case of an acquisition or lease of 
                qualifying employer real property by a plan 
                which is not an eligible individual account 
                plan, or of an acquisition of qualifying 
                employer securities by such a plan, the lease 
                or acquisition is not prohibited by section 
                407(a).
  (f) Section 406(b)(2) shall not apply to any merger or 
transfer described in subsection (b)(11).
  (g) Provision of Investment Advice to Participant and 
Beneficiaries.--
          (1) In general.--The prohibitions provided in section 
        406 shall not apply to transactions described in 
        subsection (b)(14) if the investment advice provided by 
        a fiduciary adviser is provided under an eligible 
        investment advice arrangement.
          (2) Eligible investment advice arrangement.--For 
        purposes of this subsection, the term ``eligible 
        investment advice arrangement'' means an arrangement--
                  (A) which either--
                          (i) provides that any fees (including 
                        any commission or other compensation) 
                        received by the fiduciary adviser for 
                        investment advice or with respect to 
                        the sale, holding, or acquisition of 
                        any security or other property for 
                        purposes of investment of plan assets 
                        do not vary depending on the basis of 
                        any investment option selected, or
                          (ii) uses a computer model under an 
                        investment advice program meeting the 
                        requirements of paragraph (3) in 
                        connection with the provision of 
                        investment advice by a fiduciary 
                        adviser to a participant or 
                        beneficiary, and
                  (B) with respect to which the requirements of 
                paragraph (4), (5), (6), (7), (8), and (9) are 
                met.
          (3) Investment advice program using computer model.--
                  (A) In general.--An investment advice program 
                meets the requirements of this paragraph if the 
                requirements of subparagraphs (B), (C), and (D) 
                are met.
                  (B) Computer model.--The requirements of this 
                subparagraph are met if the investment advice 
                provided under the investment advice program is 
                provided pursuant to a computer model that--
                          (i) applies generally accepted 
                        investment theories that take into 
                        account the historic returns of 
                        different asset classes over defined 
                        periods of time,
                          (ii) utilizes relevant information 
                        about the participant, which may 
                        include age, life expectancy, 
                        retirement age, risk tolerance, other 
                        assets or sources of income, and 
                        preferences as to certain types of 
                        investments,
                          (iii) utilizes prescribed objective 
                        criteria to provide asset allocation 
                        portfolios comprised of investment 
                        options available under the plan,
                          (iv) operates in a manner that is not 
                        biased in favor of investments offered 
                        by the fiduciary adviser or a person 
                        with a material affiliation or 
                        contractual relationship with the 
                        fiduciary adviser, and
                          (v) takes into account all investment 
                        options under the plan in specifying 
                        how a participant's account balance 
                        should be invested and is not 
                        inappropriately weighted with respect 
                        to any investment option.
                  (C) Certification.--
                          (i) In general.--The requirements of 
                        this subparagraph are met with respect 
                        to any investment advice program if an 
                        eligible investment expert certifies, 
                        prior to the utilization of the 
                        computer model and in accordance with 
                        rules prescribed by the Secretary, that 
                        the computer model meets the 
                        requirements of subparagraph (B).
                          (ii) Renewal of certifications.--If, 
                        as determined under regulations 
                        prescribed by the Secretary, there are 
                        material modifications to a computer 
                        model, the requirements of this 
                        subparagraph are met only if a 
                        certification described in clause (i) 
                        is obtained with respect to the 
                        computer model as so modified.
                          (iii) Eligible investment expert.--
                        The term ``eligible investment expert'' 
                        means any person--
                                  (I) which meets such 
                                requirements as the Secretary 
                                may provide, and
                                  (II) does not bear any 
                                material affiliation or 
                                contractual relationship with 
                                any investment adviser or a 
                                related person thereof (or any 
                                employee, agent, or registered 
                                representative of the 
                                investment adviser or related 
                                person).
                  (D) Exclusivity of recommendation.--The 
                requirements of this subparagraph are met with 
                respect to any investment advice program if--
                          (i) the only investment advice 
                        provided under the program is the 
                        advice generated by the computer model 
                        described in subparagraph (B), and
                          (ii) any transaction described in 
                        subsection (b)(14)(A)(ii) occurs solely 
                        at the direction of the participant or 
                        beneficiary.
                Nothing in the preceding sentence shall 
                preclude the participant or beneficiary from 
                requesting investment advice other than that 
                described in subparagraph (A), but only if such 
                request has not been solicited by any person 
                connected with carrying out the arrangement.
          (4) Express authorization by separate fiduciary.--The 
        requirements of this paragraph are met with respect to 
        an arrangement if the arrangement is expressly 
        authorized by a plan fiduciary other than the person 
        offering the investment advice program, any person 
        providing investment options under the plan, or any 
        affiliate of either.
          (5) Annual audit.--The requirements of this paragraph 
        are met if an independent auditor, who has appropriate 
        technical training or experience and proficiency and so 
        represents in writing--
                  (A) conducts an annual audit of the 
                arrangement for compliance with the 
                requirements of this subsection, and
                  (B) following completion of the annual audit, 
                issues a written report to the fiduciary who 
                authorized use of the arrangement which 
                presents its specific findings regarding 
                compliance of the arrangement with the 
                requirements of this subsection.
        For purposes of this paragraph, an auditor is 
        considered independent if it is not related to the 
        person offering the arrangement to the plan and is not 
        related to any person providing investment options 
        under the plan.
          (6) Disclosure.--The requirements of this paragraph 
        are met if--
                  (A) the fiduciary adviser provides to a 
                participant or a beneficiary before the initial 
                provision of the investment advice with regard 
                to any security or other property offered as an 
                investment option, a written notification 
                (which may consist of notification by means of 
                electronic communication)--
                          (i) of the role of any party that has 
                        a material affiliation or contractual 
                        relationship with the fiduciary adviser 
                        in the development of the investment 
                        advice program and in the selection of 
                        investment options available under the 
                        plan,
                          (ii) of the past performance and 
                        historical rates of return of the 
                        investment options available under the 
                        plan,
                          (iii) of all fees or other 
                        compensation relating to the advice 
                        that the fiduciary adviser or any 
                        affiliate thereof is to receive 
                        (including compensation provided by any 
                        third party) in connection with the 
                        provision of the advice or in 
                        connection with the sale, acquisition, 
                        or holding of the security or other 
                        property,
                          (iv) of any material affiliation or 
                        contractual relationship of the 
                        fiduciary adviser or affiliates thereof 
                        in the security or other property,
                          (v) the manner, and under what 
                        circumstances, any participant or 
                        beneficiary information provided under 
                        the arrangement will be used or 
                        disclosed,
                          (vi) of the types of services 
                        provided by the fiduciary adviser in 
                        connection with the provision of 
                        investment advice by the fiduciary 
                        adviser,
                          (vii) that the adviser is acting as a 
                        fiduciary of the plan in connection 
                        with the provision of the advice, and
                          (viii) that a recipient of the advice 
                        may separately arrange for the 
                        provision of advice by another adviser, 
                        that could have no material affiliation 
                        with and receive no fees or other 
                        compensation in connection with the 
                        security or other property, and
                  (B) at all times during the provision of 
                advisory services to the participant or 
                beneficiary, the fiduciary adviser--
                          (i) maintains the information 
                        described in subparagraph (A) in 
                        accurate form and in the manner 
                        described in paragraph (8),
                          (ii) provides, without charge, 
                        accurate information to the recipient 
                        of the advice no less frequently than 
                        annually,
                          (iii) provides, without charge, 
                        accurate information to the recipient 
                        of the advice upon request of the 
                        recipient, and
                          (iv) provides, without charge, 
                        accurate information to the recipient 
                        of the advice concerning any material 
                        change to the information required to 
                        be provided to the recipient of the 
                        advice at a time reasonably 
                        contemporaneous to the change in 
                        information.
          (7) Other conditions.--The requirements of this 
        paragraph are met if--
                  (A) the fiduciary adviser provides 
                appropriate disclosure, in connection with the 
                sale, acquisition, or holding of the security 
                or other property, in accordance with all 
                applicable securities laws,
                  (B) the sale, acquisition, or holding occurs 
                solely at the direction of the recipient of the 
                advice,
                  (C) the compensation received by the 
                fiduciary adviser and affiliates thereof in 
                connection with the sale, acquisition, or 
                holding of the security or other property is 
                reasonable, and
                  (D) the terms of the sale, acquisition, or 
                holding of the security or other property are 
                at least as favorable to the plan as an arm's 
                length transaction would be.
          (8) Standards for presentation of information.--
                  (A) In general.--The requirements of this 
                paragraph are met if the notification required 
                to be provided to participants and 
                beneficiaries under paragraph (6)(A) is written 
                in a clear and conspicuous manner and in a 
                manner calculated to be understood by the 
                average plan participant and is sufficiently 
                accurate and comprehensive to reasonably 
                apprise such participants and beneficiaries of 
                the information required to be provided in the 
                notification.
                  (B) Model form for disclosure of fees and 
                other compensation.--The Secretary shall issue 
                a model form for the disclosure of fees and 
                other compensation required in paragraph 
                (6)(A)(iii) which meets the requirements of 
                subparagraph (A).
          (9) Maintenance for 6 years of evidence of 
        compliance.--The requirements of this paragraph are met 
        if a fiduciary adviser who has provided advice referred 
        to in paragraph (1) maintains, for a period of not less 
        than 6 years after the provision of the advice, any 
        records necessary for determining whether the 
        requirements of the preceding provisions of this 
        subsection and of subsection (b)(14) have been met. A 
        transaction prohibited under section 406 shall not be 
        considered to have occurred solely because the records 
        are lost or destroyed prior to the end of the 6-year 
        period due to circumstances beyond the control of the 
        fiduciary adviser.
          (10) Exemption for plan sponsor and certain other 
        fiduciaries.--
                  (A) In general.--Subject to subparagraph (B), 
                a plan sponsor or other person who is a 
                fiduciary (other than a fiduciary adviser) 
                shall not be treated as failing to meet the 
                requirements of this part solely by reason of 
                the provision of investment advice referred to 
                in section 3(21)(A)(ii) (or solely by reason of 
                contracting for or otherwise arranging for the 
                provision of the advice), if--
                          (i) the advice is provided by a 
                        fiduciary adviser pursuant to an 
                        eligible investment advice arrangement 
                        between the plan sponsor or other 
                        fiduciary and the fiduciary adviser for 
                        the provision by the fiduciary adviser 
                        of investment advice referred to in 
                        such section,
                          (ii) the terms of the eligible 
                        investment advice arrangement require 
                        compliance by the fiduciary adviser 
                        with the requirements of this 
                        subsection, and
                          (iii) the terms of the eligible 
                        investment advice arrangement include a 
                        written acknowledgment by the fiduciary 
                        adviser that the fiduciary adviser is a 
                        fiduciary of the plan with respect to 
                        the provision of the advice.
                  (B) Continued duty of prudent selection of 
                adviser and periodic review.--Nothing in 
                subparagraph (A) shall be construed to exempt a 
                plan sponsor or other person who is a fiduciary 
                from any requirement of this part for the 
                prudent selection and periodic review of a 
                fiduciary adviser with whom the plan sponsor or 
                other person enters into an eligible investment 
                advice arrangement for the provision of 
                investment advice referred to in section 
                3(21)(A)(ii). The plan sponsor or other person 
                who is a fiduciary has no duty under this part 
                to monitor the specific investment advice given 
                by the fiduciary adviser to any particular 
                recipient of the advice.
                  (C) Availability of plan assets for payment 
                for advice.--Nothing in this part shall be 
                construed to preclude the use of plan assets to 
                pay for reasonable expenses in providing 
                investment advice referred to in section 
                3(21)(A)(ii).
          (11) Definitions.--For purposes of this subsection 
        and subsection (b)(14)--
                  (A) Fiduciary adviser.--The term ``fiduciary 
                adviser'' means, with respect to a plan, a 
                person who is a fiduciary of the plan by reason 
                of the provision of investment advice referred 
                to in section 3(21)(A)(ii) by the person to a 
                participant or beneficiary of the plan and who 
                is--
                          (i) registered as an investment 
                        adviser under the Investment Advisers 
                        Act of 1940 (15 U.S.C. 80b-1 et seq.) 
                        or under the laws of the State in which 
                        the fiduciary maintains its principal 
                        office and place of business,
                          (ii) a bank or similar financial 
                        institution referred to in subsection 
                        (b)(4) or a savings association (as 
                        defined in section 3(b)(1) of the 
                        Federal Deposit Insurance Act (12 
                        U.S.C. 1813(b)(1)), but only if the 
                        advice is provided through a trust 
                        department of the bank or similar 
                        financial institution or savings 
                        association which is subject to 
                        periodic examination and review by 
                        Federal or State banking authorities,
                          (iii) an insurance company qualified 
                        to do business under the laws of a 
                        State,
                          (iv) a person registered as a broker 
                        or dealer under the Securities Exchange 
                        Act of 1934 (15 U.S.C. 78a et seq.),
                          (v) an affiliate of a person 
                        described in any of clauses (i) through 
                        (iv), or
                          (vi) an employee, agent, or 
                        registered representative of a person 
                        described in clauses (i) through (v) 
                        who satisfies the requirements of 
                        applicable insurance, banking, and 
                        securities laws relating to the 
                        provision of the advice.
                For purposes of this part, a person who 
                develops the computer model described in 
                paragraph (3)(B) or markets the investment 
                advice program or computer model shall be 
                treated as a person who is a fiduciary of the 
                plan by reason of the provision of investment 
                advice referred to in section 3(21)(A)(ii) to a 
                participant or beneficiary and shall be treated 
                as a fiduciary adviser for purposes of this 
                subsection and subsection (b)(14), except that 
                the Secretary may prescribe rules under which 
                only 1 fiduciary adviser may elect to be 
                treated as a fiduciary with respect to the 
                plan.
                  (B) Affiliate.--The term ``affiliate'' of 
                another entity means an affiliated person of 
                the entity (as defined in section 2(a)(3) of 
                the Investment Company Act of 1940 (15 U.S.C. 
                80a-2(a)(3))).
                  (C) Registered representative.--The term 
                ``registered representative'' of another entity 
                means a person described in section 3(a)(18) of 
                the Securities Exchange Act of 1934 (15 U.S.C. 
                78c(a)(18)) (substituting the entity for the 
                broker or dealer referred to in such section) 
                or a person described in section 202(a)(17) of 
                the Investment Advisers Act of 1940 (15 U.S.C. 
                80b-2(a)(17)) (substituting the entity for the 
                investment adviser referred to in such 
                section).
  (h) Provision of Pharmacy Benefit Services.--
          (1) In general.--Provided that all of the conditions 
        described in paragraph (2) are met, the restrictions 
        imposed by subsections (a), (b)(1), and (b)(2) of 
        section 406 shall not apply to--
                  (A) the offering of pharmacy benefit services 
                to a group health plan that is sponsored by an 
                entity described in section 3(37)(G)(vi) or to 
                any other group health plan that is sponsored 
                by a regional council, local union, or other 
                labor organization affiliated with such entity;
                  (B) the purchase of pharmacy benefit services 
                by plan participants and beneficiaries of a 
                group health plan that is sponsored by an 
                entity described in section 3(37)(G)(vi) or of 
                any other group health plan that is sponsored 
                by a regional council, local union, or other 
                labor organization affiliated with such entity; 
                or
                  (C) the operation or implementation of 
                pharmacy benefit services by an entity 
                described in section 3(37)(G)(vi) or by any 
                other group health plan that is sponsored by a 
                regional council, local union, or other labor 
                organization affiliated with such entity,
        in any arrangement where such entity described in 
        section 3(37)(G)(vi) or any related organization or 
        subsidiary of such entity provides pharmacy benefit 
        services that include prior authorization and appeals, 
        a retail pharmacy network, pharmacy benefit 
        administration, mail order fulfillment, formulary 
        support, manufacturer payments, audits, and specialty 
        pharmacy and goods, to any such group health plan.
          (2) Conditions.--The conditions described in this 
        paragraph are the following:
                  (A) The terms of the arrangement are at least 
                as favorable to the group health plan as such 
                group health plan could obtain in a similar 
                arm's length arrangement with an unrelated 
                third party.
                  (B) At least 50 percent of the providers 
                participating in the pharmacy benefit services 
                offered by the arrangement are unrelated to the 
                contributing employers or any other party in 
                interest with respect to the group health plan.
                  (C) The group health plan retains an 
                independent fiduciary who will be responsible 
                for monitoring the group health plan's 
                consultants, contractors, subcontractors, and 
                other service providers for purposes of 
                pharmacy benefit services described in 
                paragraph (1) offered by such entity or any of 
                its related organizations or subsidiaries and 
                monitors the transactions of such entity and 
                any of its related organizations or 
                subsidiaries to ensure that all conditions of 
                this exemption are satisfied during each plan 
                year.
                  (D) Any decisions regarding the provision of 
                pharmacy benefit services described in 
                paragraph (1) are made by the group health 
                plan's independent fiduciary, based on 
                objective standards developed by the 
                independent fiduciary in reliance on 
                information provided by the arrangement.
                  (E) The independent fiduciary of the group 
                health plan provides an annual report to the 
                Secretary and the congressional committees of 
                jurisdiction attesting that the conditions 
                described in subparagraphs (C) and (D) have 
                been met for the applicable plan year, together 
                with a statement that use of the arrangement's 
                services are in the best interest of the 
                participants and beneficiaries in the aggregate 
                for that plan year compared to other similar 
                arrangements the group health plan could have 
                obtained in transactions with an unrelated 
                third party.
                  (F) The arrangement is not designed to 
                benefit any party in interest with respect to 
                the group health plan.
          (3) Violations.--In the event an entity described in 
        section 3(37)(G)(vi) or any affiliate of such entity 
        violates any of the conditions of such exemption, such 
        exemption shall not apply with respect to such entity 
        or affiliate and all enforcement and claims available 
        under this Act shall apply with respect to such entity 
        or affiliate.
          (4) Rule of construction.--Nothing in this subsection 
        shall be construed to modify any obligation of a group 
        health plan otherwise set forth in this Act.
          (5) Group health plan.--In this subsection, the term 
        ``group health plan'' has the meaning given such term 
        in section 733(a).

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