What is the CAA and why does it matter?


In the employee benefits industry, the “CAA” is an acronym that refers to the Consolidated Appropriations Act of 2021. The CAA was a large government bill passed with financial relief for the country following the pandemic and woven within was the Consolidated Appropriations Act, which is 2126 pages. I’m sure you all read that, right?


Well, there were 90 pages of content dedicated to employee-benefit plans (in the commercial insurance sector of health care). By commercial insurance, we’re referring to employer-sponsored health plans.


The CAA was designed to address how unaffordable healthcare is for everyday Americans and the escalating costs. Try as they might, employers and benefit advisers have been unable to “tame the beast of healthcare costs and inflation.”


The CAA set out to do this to address the root of the problem: Transparency. Specifically, the CAA addresses these four issues taken directly from the CAA Table of Contents:

  • Sec. 201. Increasing transparency by removing gag clauses on price and quality information.
  • Sec. 202. Disclosure of direct and indirect compensation for brokers and consultants to employer-sponsored health plans and enrollees in plans on the individual market.
  • Sec. 203. Strengthening parity in mental health and substance use disorder benefits.
  • Sec. 204. Reporting on pharmacy benefits and drug costs.

A key part of the CAA addressed transparency by mandating that hospitals and health plans reveal the long-hidden pricing discrepancies and hidden fees for everything from a routine doctor’s visit to a hospitalization for an appendectomy to a total knee replacement.


Our view on health care is the world before CAA and the world after will have changed significantly. We all know what the world before CAA looks and feels like, and it’s unaffordable and unsustainable for both businesses, their employees, and families.


The end game of CAA was to create a price transparency that doesn’t allow for smoke and mirrors to happen anymore. The price is this price.


We believe the future includes employers taking a seat at the helm. The roles that make up fiduciaries are CEOs, CFOs, CHRO’s, and other C-Suite roles that decide how a company’s health plan will work and operate in the company. As business leaders, you have control over the health plan spend, employee contributions, plan design, deductibles, copays, out-of-pocket maximums and so much more. Legally, you are serving in a Fiduciary role with corporate and personal liability.


With the CAA, the group of individuals listed above are now mandated by law to review EVERY component of the health plan for reasonable cost and quality. The standard for their assessment is called a “good faith compliance effort” to examine pharmacy, physician, diagnostic testing, inpatient or outpatient care, and so on.


Effective immediately, (there is an expiration on this!), employers and their fiduciary teams need to create and perform an ongoing and recurring process of fiduciary assessment on their health plan for both medical and pharmacy spend. There are specific requirements to create a process, document that process, and be ready to demonstrate their thorough due diligence on assessing all the elements of a health plan and pharmacy program.


So, a law and mandate are in place, but most organizations have no idea this law exists and the ramifications that can take place with non-compliance. Most brokers and benefit advisors in the industry are not skilled at this process.


As we move forward, if you are a plan sponsor or employer who offers a health plan to your employees and you don’t know about the CAA and your new fiduciary duties, you need to get moving now. The deadline is at the end of 2023. What do you need to do before then as a fiduciary?

  1. Sign an attestation and submit it to the government.
  2. That there is an active and recurring documented fiduciary process as described above.
    1. If you fail to attest or do the process. You expose yourself to significant financial penalties and legal action. The penalties are $100 per-day-per-employee. Non-compliance can also in expose the employer to a class action lawsuit from employees on your health plan who claim they are overpaying for health care on the plan that you provided.

In summary, do not ignore the CAA and the impending deadline. Act now to initiate your fiduciary compliance team to avoid legal ramifications and monetary fines. It’s very good for your business to act now.

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