Gag Clause Prohibitions in ERISA, the Internal Revenue Code and the Public Health Service Act

If you work for or represent group health plans or issuers of group health plans, it is important that you take a look at the contracts they have with health care providers before the end of 2023. The Internal Revenue Code (“IRC”) at 26 U.S.C. § 9824, the Employee Retirement Income Security Act (“ERISA”) at 29 U.S.C. § 1185m and the Public Health Service Act (“PHS”) at 42 U.S.C. § 300gg-119(a)(1) all include provisions that, in simplest terms, prohibit group health plans and issuers of such plans from entering into contracts with health care providers and other parties (e.g., a third-party administrator or “TPA”) if those contracts contain language restricting the plans and issuers from sharing or accessing certain information such as cost or quality of care information, or claims and encounter information (a FAQ sheet published by the Centers for Medicare and Medicaid Services provides additional information including a more comprehensive list of the types of relevant information that cannot be restricted). The PHS Act establishes a similarly worded gag clause prohibition at 42 U.S.C. § 300gg-119(a)(2) applicable to issuers of individual health plans.

Plans and issuers subject to these gag clause prohibitions are required to submit an annual attestation here, with the first due Dec. 31, 2023, and on each Dec. 31 thereafter. The initial attestation due for 2023 covers the period from Dec. 27, 2020, through the date of the attestation. CMS has published instructions. The FAQ sheet mentioned above includes helpful examples of what constitutes a gag clause. One such example, reproduced below, makes clear that a provision giving a TPA discretion over the plan’s access is considered a gag clause:

As another example, if a contract between a TPA and a plan provides that the plan sponsor’s access to provider-specific cost and quality of care information is only at the discretion of the TPA, that contractual provision would be considered a prohibited gag clause. Plans and issuers must ensure that their agreements with health care providers, networks or associations of providers, or other service providers offering access to a network of providers do not contain these or other provisions that violate the prohibition on gag clauses under Code section 9824, ERISA section 724, and PHS Act section 2799A-9.

The FAQ sheet also states that the following entities are not required to submit an attestation:

  • Plans or issuers offering only excepted benefits
  • Issuers offering only short-term, limited-duration insurance
  • Medicare and Medicaid plans
  • State Children’s Health Insurance Program (CHIP) plans
  • TRICARE program
  • Indian Health Service program
  • Basic Health Program plans

Plans and issuers must authorize an appropriate individual, such as the plan administrator of a group health plan, to attest on behalf of the plan or issuer. Third parties, such as a TPA that has been expressly granted the authority to make such an attestation on behalf of its client, may submit the attestation for its plan client by authorizing an appropriate individual within its organization to do so.

With year-end fast approaching, now is the time to review those contract provisions and get ready to submit the attestation.