Executive Summary: The CAA and Price Transparency: The Compliance Obligations Most Employers Are Ignoring
LFP-03.04 — The Regulatory Landscape#
The Consolidated Appropriations Act of 2021 created four categories of compliance obligation for self-funded plan sponsors. Most small employers sponsoring level funded plans have not implemented any of them. Penalties are real. Enforcement is increasing.
Section 202 requires group health plans to obtain itemized compensation disclosure from brokers and consultants, covering all direct and indirect compensation from every source: commissions, overrides, bonuses, production incentives, and any other payment from carriers, TPAs, or PBMs connected to the plan. The compliance deadline was December 27, 2021. A broker who discloses their commission from the plan but not their override from the stop loss carrier has not met the statutory requirement. Enforcement responsibility sits with the employer as fiduciary; failure to obtain compliant disclosure is an ERISA fiduciary breach.
Section 204 requires annual prescription drug cost reports (RxDC reports) submitted to HHS, DOL, and Treasury by June 1 of each year. The report must cover the 50 most costly drugs by total annual spending, the 50 drugs with the highest year-over-year cost increase, total plan spending by therapeutic class, average monthly cost per participant, rebate impact on premiums, and other specified data elements. The data must be assembled across the TPA and PBM; PBMs have historically treated rebate data as proprietary, creating a structural gap between what plans can report and what the statute requires. Many small plan sponsors have not filed.
The No Surprises Act, effective January 1, 2022, prohibits balance billing for emergency care at out-of-network facilities and for non-emergency services by out-of-network providers at in-network facilities. Application to self-funded plans is direct; ERISA preemption does not shield plans from these federal requirements. CMS and DOL enforce at the federal level; the statute also delegates enforcement authority to state attorneys general and state insurance commissioners, creating a pathway for state regulators to investigate self-funded plans without overcoming ERISA preemption.
Section 114 requires price comparison tools allowing members to estimate their specific cost-sharing for items and services by provider, accounting for accrued deductibles and out-of-pocket maximums. The requirement expanded to cover all items and services for plan years beginning on or after January 1, 2024. Compliance among small self-funded plans is near-zero; a provider search function is not the same as a personalized cost estimator integrated with benefit accumulator data.
The compliance risk sits with the employer as fiduciary, not with the TPA or broker. The employer who cannot produce CAA documentation when DOL requests it is not behind on paperwork. They have fiduciary breach exposure.