Nowhere to Hide: The Consolidated Appropriations Act Ensures Broker Transparency in Employee Benefits Plans

Nowhere to Hide: The Consolidated Appropriations Act Ensures Broker Transparency in Employee Benefits Plans
Author

While insurance purchasing decisions should always be made in the best interest of the insured first and foremost, unfortunately, there is often a lack of transparency from brokers looking to pad their own pockets. 

This lack of transparency often includes excessive administrative fees, additional fees for things like prescriptions and the broker’s recommendation of carriers motivated by extra compensation from carriers to brokers.  In the past, we’ve highlighted ways brokers may not be entirely truthful with their clients regarding past fees.

At RCM&D, transparency is paramount and at the core of our values. We are committed to being your advocate. For brokers who do utilize these underhanded methods, the clock is ticking. Major provisions to the Consolidated Appropriations Act (CAA) are coming in early 2022. These provisions aim to end this pattern of deception while also shining a light on fee transparency. 

The Consolidated Appropriations Act New Provisions

The CAA’s new provisions provide much-needed support when it comes to fee transparency. Brokers will no longer be allowed to hide where their fees come from, and clients will now have the power to hold their brokers and carriers accountable.

Any covered service provider that expects to receive at least $1,000 in direct or indirect compensation for providing brokerage or consulting services to a group health plan will be subject to the CAA’s new disclosure rule. In the new rules, indirect compensation is defined as compensation from any service provider other than the group health plan, plan sponsor, covered service provider or affiliate. 

The following are some of the key provisions that service providers will now need to disclose:

  • A description of all services that will be provided to the group health plan.
  • Declaring whether or not the service provider will provide services as a fiduciary.
  • A description of all compensation received from the health plan.
  • A description of all indirect compensation that the covered service provider, affiliate or subcontractors expect to receive.
  • A description of the arrangement between the insurance buyer and the covered service provider, affiliate or subcontractor in accordance with which indirect compensation is paid.
  • A description of compensation paid among the covered service provider, affiliate, or subcontractor in connection with the services provided, if the compensation is based on a per-transaction basis.
  • The identification of services in which compensation will be paid and identifying the payers and recipients of this compensation (including the status of a payer or recipient as an affiliate or a subcontractor).
  • A description of compensation the covered service provider, affiliate or subcontractor expects to receive in connection with the termination of the contract and how any prepaid amounts will be calculated and refunded.

Why Fee Transparency Matters

Purchasing insurance is an important decision. The importance of these decisions is a big reason why we’re brought on as brokers in the first place; to help you find the best coverages personalized for your organization’s needs. But what if you found out the advice from your broker wasn’t tailored towards your needs, but tailored towards a large payday from insurance carriers instead? 

As brokers, RCM&D takes great pride in being carrier agnostic. This means that we are not beholden to any particular carrier and will collaborate with our clients to find what fits for them, not what provides us with the most financial gain. 

Webinar Series

Over the next few months, we will be releasing new blogs and hosting webinars so you can learn more about the CAA and how it will impact your organization. We hope you will join us for these sessions:

Questions?

The new provisions under the CAA are a tremendous step forward in ensuring fair and honest coverages for companies.

If you have any questions about fee transparency or the new guidelines taking effect early next year, talk to an RCM&D advisor today.