Understanding the Consolidated Appropriations Act Gag Clause Prohibition: What Plan Sponsors Must Do

The Consolidated Appropriations Act, 2021 (CAA), introduced a significant change for group health plans and insurers by prohibiting gag clauses in agreements with healthcare providers, networks, and other entities. This provision is part of a broader effort to promote transparency and ensure plan sponsors can access critical information about healthcare costs and quality.

Plan sponsors must take specific steps to comply with the gag clause prohibition and ensure they meet their legal obligations. Here’s what you need to know.

What Is a Gag Clause?

Gag clauses are contractual provisions that prevent health plans or insurers from sharing key information. These clauses often restrict access to:

1. Pricing data, including negotiated rates between providers and insurers.
2. Cost-sharing information, such as out-of-pocket costs for participants.
3. Information on provider quality and patient outcomes.

By prohibiting these clauses, the CAA seeks to empower plan sponsors and participants with the data needed to make informed healthcare decisions.

What Does the Gag Clause Prohibition Require?

The CAA prohibits group health plans and insurers from entering into agreements with providers, networks, or third-party administrators that include gag clauses. Specifically, plans cannot agree to contractual terms that restrict:

1. Access to cost or quality information.
2. Disclosure of de-identified claims or encounter data for plan analysis.
3. Sharing of this information with participants or other authorized parties.

To demonstrate compliance, plans must annually attest to the Department of Labor (DOL), Department of Health and Human Services (HHS), and the Treasury that they do not have agreements containing prohibited gag clauses.

Steps Plan Sponsors Should Take

1. ** Review Existing Agreements** Plan sponsors should conduct a thorough review of all contracts with: Healthcare providers and facilities.
2. Third-party administrators (TPAs).
3. Pharmacy benefit managers (PBMs).

Ensure no agreements include terms that restrict access to cost, quality, or claims data.

4. ** Engage with Vendors** Collaborate with TPAs and PBMs to confirm they are also compliant with the gag clause prohibition. Request written assurances or amendments to existing contracts if necessary.
5. ** Implement Data-Sharing Protocols** Ensure that mechanisms are in place to provide plan participants with access to cost-sharing information and de-identified data as required under the CAA.
6. ** Prepare for Annual Gag Clause Attestation** Plan sponsors must submit an attestation of compliance annually. This requires: Certifying that no gag clauses exist in contracts.
7. Filing the attestation electronically with the Centers for Medicare & Medicaid Services (CMS).

Attestations must be filed annually by December 31. Employers should find out if their insurance companies made the required attestation for 2024.

8. ** Educate Stakeholders** Ensure internal teams and key stakeholders, such as HR and benefits administrators, understand the requirements of the gag clause prohibition and the compliance steps.

Why Compliance Matters

Noncompliance with the gag clause prohibition can result in penalties and audits. Beyond regulatory risks, failing to meet these obligations may undermine participant trust and transparency—core objectives of the CAA.

Looking Ahead

The prohibition of gag clauses is part of a larger push toward healthcare transparency, which includes other initiatives such as the Transparency in Coverage Rule and the No Surprises Act. By taking proactive steps now, plan sponsors can not only meet their compliance obligations but also provide greater value to plan participants.

If you’re unsure about your compliance status, consider consulting with legal and benefits experts to ensure your contracts and procedures are fully aligned with the CAA’s requirements.