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What does the CAA require of us?

The Consolidated Appropriations Act of 2021 (the CAA) added a set of transparency and compliance requirements for employer health plans, and together they changed what is expected of plan fiduciaries. The short version: the data employers once could not see is now available, so “we didn't know” is no longer a defense.

Here are the parts that matter most for fiduciary responsibility.

Fee and compensation disclosure

Brokers and consultants to group health plans now have to disclose the direct and indirect compensation they expect to receive for their services. For the first time, employers can see clearly what they are paying their advisors, and weigh whether that compensation is reasonable for the work being done.

The gag clause prohibition and annual attestation

Health plans can no longer agree to contract terms that block them from seeing their own claims and pricing data. Plans also have to attest each year that their agreements contain no such “gag clauses.” The practical effect is that the underlying data a fiduciary needs to evaluate the plan can no longer be contractually hidden.

Prescription drug and spending reporting

Plans are required to report detailed information on prescription drug and health care spending to federal regulators. It reinforces the broader shift toward transparency in what plans pay and why.

Mental health parity analysis

Plans must prepare and maintain a comparative analysis showing that limits on mental health and substance use benefits are no more restrictive than those on medical and surgical benefits. It is a documentation and compliance obligation that regulators can request.

A note on surprise billing

The same law created the No Surprises Act, which protects members from certain surprise out-of-network bills. That is a member protection rather than a fiduciary fee duty, so it sits outside the scope of this article.

Why it matters for fiduciaries

Each of these requirements points the same direction. Compensation is disclosed, data can no longer be hidden, and spending is reported. Taken together, they mean employers now have access to the information needed to judge whether their plan's fees are reasonable. Having that information is what creates the expectation to use it. This is the link between the CAA and the fiduciary duty every plan sponsor already carries (see “Am I a fiduciary for our health plan?”).

What to do about it

  • Collect the compensation disclosures your brokers and consultants are now required to provide.

  • Complete your annual gag clause attestation.

  • Benchmark your plan's fees and value against comparable plans, so you can show the fees are reasonable and document a prudent process. See How It Works.

The bottom line

The CAA did not just add paperwork. It removed the excuse that the data was out of reach. With the information now in hand, the open question for every employer is whether the plan's fees are reasonable, and whether you can prove it.

 

This article is general information, not legal advice. Consult your own counsel about your plan's specific obligations.

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