The 2020 Consolidated Appropriations Act (CAA) laid out new transparency responsibilities for hospitals and payers, including removing all gag clauses limiting data access and utilization. Benefits advisors should prepare, plan, and take all steps necessary to ready their plan sponsor clients for these major changes in the healthcare landscape. The newly available hospital and payer transparency (HPT) will allow plan sponsors to evaluate all components of their systems in terms of cost and quality measures.
Although some remain skeptical about whether this HPT legislation will truly effectuate change in the industry, swift action based on the newly available data is already occurring, much as it did in the retirement industry amidst similar legislation two decades ago. In that industry, those retirement advisors who embraced the changes and leveraged transparency grew to own a larger market share. In contrast, those who were reluctant to accept the changes could not catch up and ultimately lost clients, as 67% of employers changed their brokers over two years. As a result, those benefit plan advisors who properly anticipate and work with the changes in transparency to the healthcare industry are likely in the best position to benefit from them.
Self-funded employers, as fiduciaries, will begin to undergo government audits similar to those seen by fiduciaries in the retirement plan industry after the enactment of the Pension Protection Act of 2006. The audits aim to determine whether plan sponsors are working in the best interests of plan participants. The outcome of the retirement plan audits was a reduction in asset management fees of over 50% and the addition of billions of dollars to participants’ retirement accounts. Plan sponsors that failed to adapt quickly faced significant government fines and became the targets of class action litigation.
HPT responsibilities have already led to major changes in some healthcare systems. For instance, a New York City multiemployer fund discovered that it was paying 358% more than Medicare for similar services at New York-Presbyterian hospitals. As a result of that data, the fund opted to remove the hospitals from the plan’s network and reallocate the additional funds to support plan members.
Given the newly available HPT data, plan advisors must guide their self-insured clients toward compliance, focusing on eliminating waste and meeting their fiduciary responsibilities. In addition, they must optimize the healthcare procurement process and save money for plan participants by measuring and comparing hospital and payer rates.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
Hall Benefits Law, LLC
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