If I asked you to explain the costs behind every health insurance option you provide your employees, could you? What about the quality of care each plan offers?
While these seem like simple questions, most employers would have a difficult time providing adequate answers. And, truth be told, the reason for it is no fault of their own.
The culprit? Gag clauses included in healthcare agreements.
These contract provisions restrict employers from access to detailed information about the costs and quality of health insurance plans, making it difficult to compare health plans and guarantee that the employee benefits they offer are actually as beneficial as they might look on paper.
However, a new regulation designed to increase transparency within the healthcare and insurance industries takes effect on December 31, 2023.
In this article, we will explore what this new regulation known as the Gag Clause Prohibition Compliance Attestation (GCPCA) means for employers.
By reading it, you will learn:
- What the GCPCA provision is
- How it will affect the way you manage health insurance plans
- And practical steps you can take to implement it effectively and compliantly
Let’s get started!
Costs concealed – The ‘gag clause’
Imagine you go out to dinner and decide to order a dish listed at “market price.” After eating, you are stunned by the bill – the menu item was far more expensive than you anticipated, causing you to wonder whether you paid the true “market price” for it.
What is a gag clause?
A gag clause is the "market price" label on health insurance plans that conceals true cost information from employers and keeps them guessing about the coverage plans they are paying for. It is essentially a contractual agreement between healthcare providers and insurance carriers to hide coverage costs, allowing them to set prices without any justification or rate competition.
By keeping costs secret, gag clauses maintain a situation where pricing power is firmly in the hands of providers and insurers. It benefits them but leaves employers – like an uninformed restaurant guest – feeling that they've been served a hefty bill for what should have been a more reasonably priced meal.
Costs revealed – The Gag Clause Prohibition Compliance Attestation (GCPCA)
What if before you ordered a dish at “market price,” your server was required to tell you what the price was and how that price point was determined? How would this transparency, removing any mystery from the “market price” label, affect your dinner order?
The introduction of the GCPCA is like a policy in the restaurant industry where guests are guaranteed an upfront cost breakdown before they commit to their meal.
When it comes to health insurance, the GCPCA aims to provide employers with this same type of transparency. It provides visibility into cost data so that they can compare healthcare plans and choose employee benefits to match the needs of their business as well as their budget.
What is the Gag Clause Prohibition Compliance Attestation (GCPCA)?
As part of an update to the Consolidations Appropriations Act, 2021 (CAA), the GCPCA provision is a regulatory response to the obscure health insurance disclosure practices that gag clauses have long enforced. It's a transformative piece of legislation that requires healthcare providers and insurers to disclose the full pricing structure of health plans to employers.
This means that starting December 31, 2023, the "market price" label on health insurance will be removed. Instead, employers will have the right to a detailed bill of healthcare plan information, outlining what they and their employees are truly paying for.
For employers, the GCPCA opens the closed doors behind which healthcare costs have been determined. With this clarity, they can make more informed decisions, negotiate better deals, and ultimately provide their employees with higher-quality benefits for less.
But what does this mean in practical terms?
It means that the days of accepting healthcare plans at face value are over. Employers will now be able to dissect the costs, compare the value of different plans, and challenge any discrepancies.
This level of scrutiny is not just beneficial – it's a significant shift towards transparency in an industry that has traditionally been anything but transparent.
How will the Gag Clause Prohibition Compliance Attestation (GCPCA) benefit employers?
The GCPCA stands to fundamentally change the way employers manage health plans, placing them in a position of informed authority.
With the right to access and make health insurance decisions using previously obscured cost and quality data regarding health insurance plans, employers stand to benefit in several key areas:
Strengthened decision-making abilities
Employers will gain the ability to scrutinize and compare health plan options with a newfound depth of detail. This transparency means that the selection of healthcare plans can now be based on a comprehensive understanding of cost structures and quality of care, rather than relying on limited information filtered through the lens of healthcare providers and insurers.
Amplified negotiation leverage
With access to detailed pricing information, employers can engage in more effective negotiations with insurance carriers. This could lead to competitive plan pricing and better terms since insurers will be aware that employers can take their business elsewhere if they feel the value proposition is not in their favor.
Enhanced cost management insights
By understanding the true costs associated with different health plans, employers can make decisions that favor cost savings. This could be particularly impactful among self-insured employers who bear the direct financial responsibility for the healthcare costs of their employees.
Improved employee satisfaction and retention
Employers who leverage data to provide better healthcare plan options may see increased satisfaction from their workforce. Because employees who feel their health benefits meet their needs at a reasonable cost are more likely to remain with an employer, heightened employee satisfaction can reduce turnover and the costs associated with it.
Implementing the Gag Clause Prohibition Compliance Attestation (GCPCA) provision
Now that you understand what the GCPCA is and how it can benefit you and your business, let’s talk about the details surrounding the implementation of this new provision.
Who does the GCPCA provision apply to?
The GCPCA is not a suggestion – it's a mandate that extends across the healthcare landscape, impacting all employers that provide fully-insured or self-insured group health plans to their employees.
With few exceptions, this includes the full spectrum of insurance plan types such as:
- ERISA plans
- Grandfathered plans
- Non-federal governmental plans
- Church plans subject to the IRS code
The exceptions to GCPCA regulation are aptly named "excepted benefits" and include:
- Most dental and vision plans
- Health flexible spending accounts
- Employee assistance programs
- Health reimbursement arrangements
Click here to view the Department of Labor’s detailed overview of GCPCA requirements including qualifying and exempt plan types.
When does the GCPCA provision take effect?
The inaugural GCPCA submission is due by December 31, 2023, and must cover the period from December 27, 2020, until the attestation date.
Subsequent annual attestations must be filed by December 31st of each year, accounting for the period since the last attestation.
How to submit the GCPCA attestation?
Submitting the Gag Clause Prohibition Compliance Attestation (GCPCA) is a straightforward process. Employers can submit electronically to fulfill their attestation requirements.
Note: Third-party administrators can attest on behalf of employers offering applicable group healthcare plans.
For further instructions on how to comply with the GCPCA attestation submission, here is a comprehensive guide on the submission process.
Why submit the GCPCA attestation?
Noncompliance with the GCPCA requirements can lead to significant enforcement actions.
As stipulated under Code section 9824, ERISA section 724, and PHS Act section 2799A-9, entities that fail to meet the attestation deadlines may face penalties. While these enforcement penalties have yet to be determined, it is speculated that they may be as much as $100 per day for each individual affected by a violation.
Take the next steps toward implementing the Gag Clause Prohibition Compliance Attestation (GCPCA)
In this article, you learned what the GCPCA is and how it can enable you to offer healthcare options that truly align with the needs and financial well-being of your employees.
And you only have to follow a few steps to both facilitate this monumental change in benefits management and avoid compliance penalties.
But, with the December 31, 2023, deadline for GCPCA attestation submission quickly approaching, the importance of acting in line with this new mandate cannot be overstated.
Here at Combined, our experienced team can help make sure that you effectively meet this deadline while ensuring compliance with all necessary GCPCA requirements.
Don’t wait until it’s too late – Schedule a meeting with a benefits expert today!
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
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