The Consolidated Appropriations Act (CAA) of 2021, which was
signed into law at the end of 2020, included several provisions on COVID-19
relief in addition to a host of other provisions, most notably a ban on
surprise billing that seeks to increase transparency in healthcare, including
broker compensation. This week, NAHU submitted a letter to the relevant federal agencies
outlining our questions and concerns surrounding the implementation of this law.
Section 202 of the CAA requires that agent, broker and
consultant compensation related to all group health plans and individual health
insurance policies be disclosed for arrangements entered into, renewed or
extended on or after December 27, 2021. This law requires agents, brokers
and/or consultants (and their subcontractors) to disclose their compensation to
plan fiduciaries. Specifically, any covered service provider that receives
compensation in excess of $1,000 annually must provide this disclosure. The
disclosure must include amounts paid directly and those received indirectly
related to group and individual health plans. This requirement applies to
contracts with both fully insured and self-funded group health plan
arrangements.
In our comments, we requested additional guidance in several
areas, including additional information about the timing of compensation disclosures
and advance disclosures. We made it clear to the Administration that the broker
community would prefer to provide the calculation and disclosure when a
purchasing decision is made in order to reduce the administrative burden and
chance of error when providing calculations based on multiple options, and even
then there are other factors at play that could complicate the timing. For
example, in the case of electronic employee enrollment (something that happens
more and more), the brokers will not know what their compensation for a group
will truly be until they receive their first commission payment, which may be
up to two months after the contract goes into effect. As such, there is only so much accuracy
possible in an advance disclosure.
NAHU also requested clarification regarding agents and
brokers who receive commission statements from insurance companies or
third-party administrators detailing their compensation. For some markets and
covered service providers, broker disclosure through carrier or TPA invoicing
might be the easiest option. For others, it may not even be a possibility to
rely on a third party. Additionally, it is currently unclear how this law deals
with multi-year contracts. For example, a broker might have a multi-year
contract with a large self-funded employer group plan that does not change over
its lifespan. However, the plan may have
annual arrangements with the PBM or the rental network that renew on the basis
of the group’s plan year. Will employer fiduciaries expect to receive a
disclosure every year? Or, is a new
disclosure only necessary if the compensation arrangement changes mid-contract?
Section 202 specifies covered service providers must provide
comprehensive descriptions of their compensation agreements. What makes a
description comprehensive? In our comments, NAHU requested that the departments
release a model disclosure form. We noted that a streamlined template approved
by the Departments would be useful not only for guiding brokers to comply with
the law, but also to provide a uniform disclosure device for brokers who may
have clients in multiple states with varying rules of their own. We also
requested guidance regarding what constitutes indirect compensation for both
group and individual markets.
In our comments we also made sure to educate the
Administration on the complexity of compensation flow. For example, brokers
regularly receive indirect compensation from health insurance carriers based on
a book of overall business, and not on a plan-specific basis. Since this
indirect compensation is paid to an entire firm, and sometimes it might be to
an individual producer within a firm, the amount of this compensation is often unknown
until over a year after a broker contracts with a related group. NAHU sought
clarification on how the law will deal with this issue.
Other considerations we asked federal agencies to make
regard the responsibilities and liability placed on employers. We made it clear
that virtually no employers understand or are even aware of their new
responsibilities as outlined in Section 202, and thus require additional
direction. NAHU requested that a model form be made available to plan
fiduciaries to assist them with their reporting obligations and asked for
clarification on potential future safe harbors for plan fiduciaries.
Section 202 also specifies that a health insurance issuer
offering individual health insurance coverage or a health insurance issuer
offering short-term limited duration insurance coverage must also disclose
direct or indirect compensation information to enrollees. NAHU requested that
the agencies begin the regulatory process regarding individual- market
compensation disclosures soon, as it would be tremendously helpful to get
additional guidance regarding individual-market disclosures, including the
types of coverage affected by the requirements and any related agent or broker
responsibilities, as soon as possible. We also requested clarification regarding
disclosures for products that touch both the group and individual markets. |