HomeResourcesArticles
October 18, 2023

What does the Consolidated Appropriations Act (CAA) mean for employers?

Donna Wilkinson
Donna Wilkinson
General Counsel

The Consolidated Appropriations Act (CAA) was passed in 2021, and although it brought significant changes that will continue to impact employers offering group health insurance and their employees, many organizations still haven’t made changes to meet the mandates.

What are the key requirements of CAA legislation that employers need to act on?

Gag Clause

One provision of the CAA that remains applicable post-COVID is the prohibition of gag clauses in provider contracts. Previously, these clauses restricted healthcare professionals from discussing cost and quality information with patients, which kept patients from making informed decisions about their care. 

What does the prohibition of gag clauses change? 

Group health insurance participants now benefit from open communication with their providers to make the best decisions for their healthcare and budget.

Employers sponsoring group health benefits have the responsibility to ensure that their contracts with insurance companies comply with this provision and do not include any gag clauses that restrict provider-patient communication. 

Fiduciary Requirements

Another provision of the CAA applicable post-COVID is the fiduciary obligations of the employers offering group health benefits. Employers have the responsibility to act in the best interests of their employees and ensure that their group health insurance plans provide quality coverage at a reasonable cost. 

The theme of the story is “responsibility.” Employers will have to do more than go along with the status quo and trust that the insurance broker or carrier they’ve always used has their employees’ best interests at heart and blindly follow them into the next plan year. 

Selecting insurance providers, negotiating terms, and making plan design choices that promote transparency and provide comprehensive coverage all rests on the shoulders of the employer. 

Mental Health Parity

Employers also have the responsibility of making sure their mental health benefits are in line with general medical benefits. Although versions of mental health parity have been in place since 1996, the CAA created a six-step process to solidify it. The steps help provide some guidance for employers in making sure they’re meeting the requirements. 

In a Department of Labor blog post titled, Mental Health Parity is the Law, and We’re Enforcing it, they reported an increase in mental health parity investigations, saying, “This increase is no accident: We’re purposefully ramping up our efforts to ensure everyone gets the mental health and substance use disorder care they are entitled to under the law.” 

Considering the lack of overall follow-through from employers, maybe this will prompt more action. 

Pharmacy Reporting

Next on the list is pharmacy reporting.  Every year, employers who sponsor group health plans must provide healthcare spending reports that include pharmacy benefits. A big question has been, how do prescription drug costs affect group healthcare premiums? Pharmacy reporting could eventually help provide better insight.

Employers can often rely on their insurance carrier or third-party administrator to assist to complete these reports. However, it’s still the employer’s responsibility to ensure completion of the report.

Broker Compensation Transparency

Under the CAA, employers must ensure transparency in broker compensation, including commissions and fees paid. This information should be disclosed to employees to help them make informed decisions. 

As healthcare costs continue to rise, efforts to promote price transparency are becoming more important in managing costs for employers and employees alike, and efforts to enforce it will continue to grow stronger. It’s up to each employer to determine the best action plan for them and their employees. 

For more information about the Consolidated Appropriations Act and expert insight, join the discussion with In-House Counsel, Donna Wilkinson, and Employee Benefits Practice Leader, Jason Andrade.

What’s in this article?

Other Recent Posts
Employee benefits play a pivotal role in attracting and retaining top talent while fostering a positive work culture. However, designing a comprehensive benefits strategy requires careful consideration, especially within the regulatory framework of laws like the Consolidated Appropriations Act. In this article, we’ll explore the essential steps to creating an effective employee benefits strategy while...
Following the success of our webinar, Telescope Health and the CAA, which delved into the implications of the Consolidated Appropriations Act (CAA) for employers, it became evident that attendees departed with a host of questions. In response, this article is dedicated to addressing those inquiries, to help foster a deeper understanding of the intersections of...
What is the Transportation Benefits Program Act? The State of Illinois recently passed the “Transportation Benefits Program Act” that will go into effect January 1, 2024, and require employers with 50 or more employees located in specific areas to offer a pre-tax commuter benefit to “covered employees.” Employees who take advantage of the benefit can...
Stay Updated

Join us to stay on top of the latest healthcare news, legislation and product features from Ameriflex

We value your privacy
We will not rent or sell your information