The Consolidated Appropriations Act (CAA) amended ERISA to prohibit group health plans from entering into agreements with TPAs or service providers that restrict the plan from accessing de-identified claims data upon request and sharing that information with business associates.
The CAA’s Gag Clause Prohibition has caused confusion. Plans take a broad view while service providers take a narrow view. PBMs and their rebate aggregators have contract terms that violate the “gag clause” by limiting and, in some instances, avoiding the production of data. However, the Department of Labor, Health and Human Services, the Treasury, and Office of Personnel Management recently issued frequently asked questions (FAQs) to provide guidance regarding the Gag Clause Prohibition.
Frier Levitt attorneys Matthew Modafferi and Terence Park discuss this topic in their article “Government FAQs Clarify CAA Gag Clauses: But Will PBMs Comply?” published in Benefits Pro. The piece explores three key takeaways for plan sponsors.
- The prohibition applies to downstream entities or affiliates that subcontract to perform work for the TPA or contracted service provider.
- The prohibition applies even if the terms of an agreement state that the ability to share data with a plan’s business associate is at the discretion of the TPA or service provider.
- Common PBM contract terms that violate the prohibition.
Although the CAA mandates transparency, many PBMs and TPAs continue to obstruct meaningful access to data. Plan sponsors must be proactive in enforcing their rights, demanding full compliance, and using the data to monitor service providers and uphold fiduciary duties.
Senior Associate
