Major Improvement for Employer Plans on the Horizon

The U.S. Senate’s HELP (Health, Education, Labor, and Pensions) Committee has advanced health price transparency legislation containing provisions that expand group health plan access to medical and Rx plan data, enhance explanation-of-benefits notices, and implement strict consumer data privacy rules.

What was approved is Section 7 of the committee’s health package, the Increasing Group Health Plan Access to Health Data Amendment, which rewrites ERISA Section 408(b) (29 U.S.C. § 1108(b)) to require vendors to open their books.

It’s not law yet. It still needs to pass the full Senate, the House, and receive a presidential signature. But if it survives, the proposed ERISA updates will give employers the right to more closely and accurately manage their medical and pharmacy plans – which is finically beneficial and crucial in the face of today’s increased litigation challenging fiduciary decisions.

Expanding Access for Claim Audits

For employers sponsoring group health plans, Section 7 provides unprecedented leverage to conduct thorough claim audits.

• Direct Claims Verification: Fiduciaries and their claim auditors can review actual, de-identified claims data directly from the provider, bypassing the restrictive, often truncated summarizations traditionally supplied by third-party administrators (TPAs).
• Fiduciary Duty Enforcement: Under ERISA, plan sponsors have a strict legal duty to ensure they are not overpaying for services. Section 7 removes gag clauses, giving audit teams the raw material needed to verify that the plan is receiving competitive market rates.
• PBM and Rebate Reviews: Corporate internal auditors can actively track exact formulary costs, drug rebates, and administrative fees to check for hidden markups or “spread pricing” by pharmacy benefit managers (PBMs).

Why This is So Important

Under the current arrangement, employers fund every claim and bear fiduciary responsibility, but own none of the data. TPAs, carriers, and PBMs can withhold data behind proprietary walls, gag clauses, and audit restrictions that limit who can look, how often, and at how many claims.

You can’t manage what you can’t measure, and currently, employers are limited on one of their biggest line items, and one for which they bear legal responsibility. This ERISA amendment will assure data access and transparency.

What Changes and the Compliance Impacts

For employer plan sponsors and self-insured administrators, the advancing legislation brings a significant overhaul of vendor contracting, reporting, and consumer communication:

• Unrestricted Claims Data Access: Plans gain the right to access underlying claims and plan-performance data. This legally overrides gag clauses commonly used by Third-Party Administrators (TPAs) and Pharmacy Benefit Managers (PBMs).
• Bi-Annual Service Provider Audits: Plan service providers must submit extensive cost and contract disclosures to employers and insurers at least twice a year. Employers must review these to fulfill fiduciary duties.
• Enhanced Explanation of Benefits (EOBs): Group health plans must issue significantly more detailed EOBs to both patients and providers. These notices must outline itemized charges alongside provider charity care policies.
• Strict Consumer Privacy Rules: Consumer health data protections—including provisions originally detailed in S. 3097 — introduce a geofencing ban. It makes establishing a virtual perimeter of up to 2,000 feet around a healthcare facility to track patients or deliver targeted ads illegal

New Legal Requirements Would Have Teeth

Section 7’s language creates a statutory right to claims and remittance data, not a contractual request, but instead a legal entitlement. Under the proposed 29 U.S.C. § 1108(b) amendments, covered service providers must provide unmodified 837/835 files, disclose every hidden fee (access, repricing, renegotiation, enhanced review), and reveal the formulas behind value-based and capitated payments.

More importantly, it voids gag clauses as against public policy, building on the CAA 2021 gag-clause ban (29 U.S.C. § 1191c) but going further by nullifying and prohibiting data-blocking contract terms. Also, it puts real money behind compliance: $10,000 per day in civil penalties under ERISA’s enforcement framework (29 U.S.C. § 1132).

The amendment removes limits on claim auditor selection, scope, frequency, and claim volume. Translation: employers can hire whoever they want, dig as deep as they need to, and do it as often as they choose.

The Top 10 Most Important Changes

1. Statutory data ownership — Employers gain legal right to all claims/payment data they fund, not vendor-filtered summaries
2. Unrestricted audit rights — No limits on auditor choice, scope, frequency, or number of claims reviewed
3. Hidden fee exposure — Access, repricing, renegotiation, and enhanced review fees must be disclosed
4. Value-based transparency — Capitated and bundled payment formulas, incentives, and methodologies revealed
5. Original file access — Unmodified 837/835 claim and remittance files required for independent verification
6. Gag clauses dead — Contract terms restricting data access are void and become illegal
7. Real penalties — Covered providers fined $10,000 per day for noncompliance
8. Fiduciary enablement — Sponsors can document ERISA prudent-person compliance
9. Cost control leverage — Independent verification creates negotiating power and waste recovery
10. Vendor market disruption — Intermediaries must compete on verified value, not opacity

Why Approval Would be a Win for Plan Sponsors

If approved and signed into law, Section 7 will shift employer plan sponsors from trusting vendors to independently verifying every dollar, more fully meeting their fiduciary responsibilities, and better safeguarding themselves in the event of fiduciary breach lawsuits.
When sponsors can audit any TPA’s payment against original remittance files, hidden spread pricing goes away. When capitated payment formulas are transparent, it’s clear whether value-based contracts are delivering value versus delivering bonuses to intermediaries.

For plan sponsors carrying ERISA fiduciary duties, the expanded data access is the difference between documenting prudent oversight and hoping vendors are performing honestly.

Where Things Stand Now

So far, Section 7 has been approved by the Senate HELP Committee, which is the first of four steps.  Next, it needs floor passage in both chambers and a presidential signature.

The language could change in markup or conference. But the framework — statutory data rights, unrestricted audits, voided restrictions, and daily penalties — is now in the legislative pipeline, and that’s an important step forward.

Hospitals are expected to resist because required openness exposes their billing practices. Carriers are likely to oppose transparency because it stops information asymmetry, which is a part of their business model.

But for employer plan sponsors, this could be the beginning of far greater accountability in health care costs and charges — real, audit-backed, penalty-enforced accountability. If Section 7 becomes law, a new era of transparency and fairness in health care billing will become a reality.