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No-Gag Clause Rule Update

Publications - Newsletter | January 4, 2024

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Effective December 27, 2020, a health plan cannot enter into an agreement with a health care provider, network, third-party administrator, or other service provider offering access to a network of providers if that contract directly or indirectly restricts the plan from providing or accessing specified information (a “gag clause”). A health plan must submit an attestation annually to the federal government that the plan complies with this rule.

On February 23, 2023 the Departments of Labor, Health and Human Services, and Treasury (“Departments”) issued guidance on the “no gag clause” rule that was added as part of the Consolidated Appropriations Act, 2021 (“CAA”). More information on the CAA may be found in our January 2021 Client Alert and November 2021 Client Alert.

To comply with this gag clause prohibition, a plan fiduciary should verify that its health plan is not party to a contract (e.g., service agreement, business associate agreement) that contains a gag clause prohibiting the plan from:

  1. providing provider-specific cost or quality care information or data to the plan sponsor or participants;
  2. electronically accessing de-identified claims information for each participant, including per-claim financial information, provider information, and service codes; or
  3. sharing such data with a business associate.

A health plan subject to the rule must also submit an attestation that it is not party to a contract that contains a prohibited gag clause. These attestations are submitted electronically through the online CMS Health Information Oversight System Portal.

Entities required to submit an attestation include fully insured and self-insured group health plans, such as ERISA plans, non-federal governmental plans, and church plans subject to the Internal Revenue Code. Excepted benefits (e.g., most dental, vision, and employee assistance plans), short-term limited duration insurance, Medicare plans, and certain other arrangements are exempt from the attestation rule. A self-insured plan should consider negotiating an agreement with its third-party administrator to provide the attestation on the plan’s behalf. A fully insured plan should coordinate with the insurer and confirm in writing that the insurer will submit the attestation on the plan’s behalf. Unless the insurance carrier or third-party administrator agrees in writing to prepare and submit the attestation on behalf of the plan, the employer must do so.

The first attestation is due December 31, 2023, and will cover the period December 27, 2020 through December 31, 2023. If the health plan had multiple insurance carriers during this period, the health plan will need to submit multiple attestations. Beginning January 1, 2024, attestations will cover only the year in which the attestation is made. Failure to submit an attestation—or submitting a late attestation—may be subject to enforcement action by the Departments, which may be a $100 tax under the Internal Revenue Code or civil penalty under ERISA.

If you need assistance with no gag clause compliance, contact a member of our Employee Benefits and Executive Compensation Group.