In response to the Trump Administration's request for public comments on the recently proposed Transparency in Coverage ("TiC") regulations, SIIA formally submitted comments on behalf of the self-insurance industry. 

SIIA supports the Administration's ongoing efforts to increase the disclosure of in-network negotiated rates ("INN Rates") and out-of-network allowed amounts ("OON Payments") through a public website. We agree with the Federal Departments that the transparency of INN Rates and OON Payments disclosed through Machine-Readable Files (known as the “INN Rate File” and the “OON Allowed Amount File”) is vital for self-insured plan sponsors and their service providers, researchers, and policymakers to analyze health care spending, benchmark costs, and inform future policy decisions.

With these goals in mind, SIIA conveyed support for the proposed changes to:

• The INN Rate Files, which are intended to improve the standardization, accuracy, and accessibility of the pricing information and to reduce the size and number of INN Rate Files, along with reducing the duplication of the pricing data inputted into these Files;
• The OON Allowed Amount Files, which are intended to increase the amount of OON Payment data that must be publicly disclosed; and
• Provide “additional context” to the pricing data through a new Change Log File, Text File, Taxonomy File, and Utilization File so plan sponsors and their service providers can better understand the pricing information.

SIIA emphasized, however, that the only way to ensure that the pricing information inputted into the INN Rate and OON Allowed Amount Files is usable and understandable is to:

• Require the CEO or authorized representative of the “owner of the provider network” that is responsible for producing the Files to “attest” to the completeness and accuracy of the pricing information as well as compliance with the TiC regulatory requirements; and
• Clarify that the pricing data that must be inputted into the INN Rate and OON Allowed Amount Files are “plan assets” under ERISA.

We also explained that self-insured plan sponsors and their service providers need access to complete and accurate health claims data to make the pricing information actionable. Without complete and accurate claims data and pricing information, plan sponsors are unable to do their job and satisfy their ERISA fiduciary duties.

You can find our comment letter here. 

Washington, D.C. Happenings

Another Government Shutdown...Well Sort Of

The new normal these days in Washington, DC, is a Government Shutdown. And we have one again...well, sort of. This time, it's a "partial" Government Shutdown. But actually, it's even more limited than that. This particular Government Shutdown is limited to the Department of Homeland Security (DHS). Driven by the politics surrounding ICE and the Trump Administration's immigration policies, both Democrats and Republicans are dug into their respective positions, resulting in Republicans rejecting Democrats' demands for reforming how ICE agents operate and Democrats refusing to agree to fund DHS in the absence of any reforms. And to add to the drama, both the House and Senate left town for a week-long recess, so the DHS Shutdown – which will start at 12:01 am tonight – will last through at least Monday the 23rd, but likely longer, impacting DHS-related agencies and programs like TSA and Airport Security Operations. 

No Compromise on the ACA's "Enhanced Premium Subsidies"

We find it interesting how politicians and the media are quick to move off of making headlines that have dominated the airwaves and the internet for so long when other breaking news arrives. What we mean is this: As you know, the vitriol over extending the ACA's "enhanced premium subsidies" dominated the headlines for about 3 months, resulting in the longest Government Shutdown in history. But now, you don't hear much about the "enhanced premium subsidies," as other current events have overtaken everyone's attention on this issue. And now, you might not even be aware that efforts to find some sort of compromise to extend the "enhanced premium subsidies" are all but dead. They are. However, despite the diverted attention on "health care," fasten your seat belts, as the expiration of the "enhanced premium subsidies" – along with reductions in Medicaid coverage – will be amplified on the campaign trail as we inch closer to the mid-term elections. 

SIIA's Coalition Work

One of the ways SIIA remains active on issues most important to our members is through our Coalition work. This week, the Partnership for Employer-Sponsored Coverage (P4ESC) (of which SIIA is a Steering Committee member) submitted a statement for the Record to the House Energy & Commerce Health Subcommittee. The main focus of our Statement (which you can read here) focused on how prescription drug costs and access to primary care providers are central issues for self-insured plan sponsors. Also, in collaboration with the Coalition Against Surprise Medical Billing (CASMB) (of which SIIA is also a member), SIIA signed on to a letter to the Federal Departments expressing our concern that the current operation of the Federal IDR Process is undermining affordability and weakening protections for millions of Americans. Lastly, as State Legislatures begin to kick their sessions into high gear, SIIA's team is working with stakeholders to advocate on top-of-mind issues. 

Healthcare Focus

Long-Awaited DOL Compensation Disclosure Regulations Released

On Thursday, Jan. 29th, the Department of Labor (DOL) finally released long-awaited proposed regulations implementing – and clarifying – important aspects of the 408(b)(2)(B) Compensation Disclosure requirements. In short, these proposed rules clarify – and confirm – that Pharmacy Benefit Managers (PBMs) and any other service provider that furnishes "pharmacy benefit management services" to a self-insured group health plan are subject to the Compensation Disclosure requirements. The proposed rules further confirm that PBMs and these service providers would be required to disclose up to 8 different compensation streams to the plan's fiduciary and also required to permit the plan's fiduciary to conduct audits (you can read a 2-page summary of these proposed regulations here).

Some Important Points for the Self-Insurance Industry to Know About Compensation Disclosures

These proposed changes go beyond what the statutory language set forth in 408(b)(2)(B) requires. In essence, the DOL (through these proposed regs) is creating a new – and separate – sub-set of Compensation Disclosure requirements within 408(b)(2)(B) that ONLY apply to entities furnishing "pharmacy benefit management services." Importantly, you do NOT have to explicitly call yourself a PBM to be subject to this new sub-set of Compensation Disclosure Requirements. All you need to be is an entity that furnishes at least one of the services listed in the examples of "pharmacy benefit management services" set forth in the regs. By way of example, the DOL explained that when the operator/producer of a Level-Funded Plan furnishes services to the Plan, this operator/producer will typically provide "pharmacy benefit management services," which would require the operator/producer to furnish a Compensation Disclosure to the Plan's fiduciary. Also, a TPA that contracts with a self-insured plan to furnish a myriad of services – one of which is "pharmacy benefit management services" – is subject to these Compensation Disclosure requirements, and even if this TPA never furnishes "pharmacy benefit management services," but instead subcontracts with another service provider to furnish the "pharmacy benefit management services," this TPA would still be subject to this new sub-set of Comp Disclosure requirements. 

Congress Joins the Party on PBM reforms and Comp Disclosure Requirements

In a “1-2 punch” for PBM transparency, Congress enacted legislative language that would require a PBM to disclose to a group health plan, among other things, PBM payment practices including the receipt of rebates, price concessions, and “spread pricing, ” along with the gross and net costs of prescription drugs in the PBM’s drug formulary, and other information like whether the PBM is dispensing covered drugs through PBM-owned pharmacies, mail-order, or specialty programs (click here to see our member comm which includes a bullet-pointed list of information that PBMs must now disclose). Importantly, this legislative language also amended ERISA section 408(b)(2)(B) to delete the references to “Brokerage Services” and “Consulting, ” and instead, clarified that any plan service provider that furnishes the “types of services” included in the statute’s enumerated “list of services” are subject to the 408(b)(2)(B) Compensation Disclosure requirements. And not to be outdone, this recently enacted legislation also requires a PBM to pass through 100% of the rebates paid to the PBM by a drug manufacturer to the plan itself.

Some Important Points to Know About the 408(b)(2)(B) Amendment

The amendment to 408(b)(2)(B) is intended to confirm that (1) PBMs that furnish “pharmacy benefit management services” and (2) TPAs that furnish “third-party administrative services” (both of which are “types of services” included in the statute’s enumerated “list of services”) are required to disclose “direct” and “indirect” compensation to a plan’s fiduciary. However, this clarification reaches further than just PBMs and TPAs to other entities furnishing services to a self-insured plan. For example, we believe that compensation received for services related to “stop-loss insurance” must be disclosed in a 408(b)(2)(B) Compensation Disclosure furnished to the plan fiduciary. Why? Because “stop-loss insurance” shows up on the statute’s enumerated “list of services. ” While time and effort is needed to determine what “types” of services would be considered services related to “stop-loss insurance” for purposes of triggering the 408(b)(2)(B) Compensation Disclosure, it appears that a stop-loss carrier that is paid fees or commissions for the sale of a stop-loss policy to a plan sponsor – where the plan sponsor pays for the stop-loss coverage out of the plan sponsor’s general assets – would be subject to 408(b)(2)(B).

Surprise Billing Update

In the recently enacted spending bills, Congress increased funds for enforcement of the Surprise Billing Rules by $42 billion dollars. We are hopeful that these funds will be used to help fix the Federal IDR Process and not used to penalize self-insured plans. In other news, the Supreme Court turned down the review of a lawsuit filed by an air ambulance company that argued that the health care payer (here, an insurance carrier) failed to timely pay Federal IDR awards. The current statute does NOT allow a provider to sue for unpaid IDR awards, and the air ambulance company lost at both the District Court and Appeals Court level. The Supreme Court’s decision here signals that providers cannot sue payers for unpaid IDR awards.

State Policy Update

2026 Legislative Trends

As State Legislative sessions are kicking into gear, there are a number of trends SIIA is following. We told members that for 2026, we can expect State policymakers to continue their focus on stop-loss insurance, including ways to regulate Level-Funded Plans, as well as efforts to erode ERISA's preemption protections for self-funded plans with stop loss. We still expect that to be the case, but so far this year, we have noticed a trend of bills aimed at increasing state revenue by imposing "assessments"on health care entities, including stop-loss insurance carriers. We will continue to monitor these developments and inform our members as these proposals take shape.

As we told you on Friday, the DOL released proposed regulations requiring PBMs to disclose up to 8 “types” of compensation streams to a self-insured group health plan in accordance with ERISA’s section 408(b)(2)(B) Compensation Disclosure requirements (which you can read below, along with a 2-page summary of these proposed regs here).

And today, in a “1-2 punch” for PBM transparency, Congress enacted legislative language that would require a PBM to disclose to a group health plan, among other things, PBM payment practices including the receipt of rebates, price concessions, and “spread pricing,” along with the gross and net costs of prescription drugs in the PBM’s drug formulary, and other information like whether the PBM is dispensing covered drugs through PBM-owned pharmacies, mail-order, or specialty programs.  Below is a bullet-pointed list of information that PBMs must now disclose to the plan.

And to pile on, this legislative language also amended ERISA section 408(b)(2)(B) to delete the references to “Brokerage Services” and “Consulting,” and instead, clarified that any plan service provider that furnishes the “types of services” included in the statute’s enumerated “list of services” are subject to the 408(b)(2)(B) Compensation Disclosure requirements.  This amendment is intended to confirm that (1) PBMs that perform “pharmacy benefit management services” and (2) TPAs that perform “third-party administrative services” (both of which are “types of services” included in the statute’s enumerated “list of services”) are required to disclose “direct” and “indirect” compensation to a plan’s fiduciary in accordance with ERISA section 408(b)(2)(B).

And not to be outdone, this recently enacted legislation also requires a PBM to pass through 100% of the rebates paid to the PBM by a drug manufacturer to the plan itself.

The proposed regulations, and now this legislation, include industry-changing requirements, and only time will tell how transformative they may be.  We will keep you posted…

Bullet-Pointed Summary of Required PBM Transparency Disclosures

• Effective for the first plan year starting 30 months after the date of enactment, an entity providing pharmacy benefit management services (e.g., a PBM) on behalf of a group health plan must furnish to the group health plan every 6 months (or quarterly if requested by the group health plan) a report in a Machine-Readable Format with the following information relating to the prescription drugs covered under the group health plan:
  • A list of covered drugs for which a claim was filed and the proprietary name and National Drug Code for each drug.
  • The amount of compensation paid by the plan to the PBM for each covered drug.
  • The amount of compensation the PBM paid to a pharmacy for each covered drug.
  • The difference between the amount of compensation (1) paid by the plan to the PBM and (2) paid by the PBM to the pharmacy for each covered drug.
  • The type of dispensing channel used to furnish each covered drug (e.g., retail, mail-order, or specialty).
  • With respect to each drug dispensed through any of these channels, disclose (1) the “wholesale acquisition cost” (in the case of a brand-name drug) and (2) the “average wholesale price” (in the case of a generic drug).
  • With respect to the brand-name and generic drugs, disclose (1) the original prescription and refill claims, (2) the participants and beneficiaries for whom a claim was filed through any one of the dispensing channels, (3) the dosage units and dosage units per fill, and (4) days supply of such drug per fill.
  • The net price, after rebates, fees, or discounts received from a drug manufacturer, per course of treatment or single fill.
  • The total amount of participant out-of-pocket spending for each covered drug.
  • The total net spending for each covered drug.
  • The total amount received, or expected to be received, by the plan from a drug manufacturer in rebates, fees, or discounts.
  • The total amount received, or expected to be received, by the PBM from a drug manufacturer in rebates, fees, or discounts (1) for claims incurred and (2) related to utilization of a drug or spending on a drug.
  • If applicable, the total amount of copay assistance, copay cards, or other discounts offered by each drug manufacturer to plan participants.
  • A list of each “therapeutic class” for which a claim was filed and with respect to each such “therapeutic class” (1) the total gross spending on drugs in such class before rebates, price concessions, or discounts, (2) total net spending in such class after rebates, price concessions, or discounts, (3) total amount received, or expected to be received, by the PBM from a drug manufacturer in rebates, price concessions, or discounts for (a) claims incurred and (b) related to utilization of a drug or spending on a drug.
  • The average net spending per 30-day and per 90-day supply by the plan among all drugs within the “therapeutic class” for which a claim was filed.
  • The number of participants and beneficiaries who filled a prescription for a drug in such “therapeutic class,” including the National Drug Code for each drug.
  • If applicable, a description of the formulary tiers and utilization mechanisms (e.g., prior authorization or step therapy) for the drugs in the “therapeutic class.”
  • The total amount of participant out-of-pocket spending for the drugs in the “therapeutic class.”
  • With respect to any drug for which gross spending under the plan exceeded $10,000 during the 6-month reporting period OR in the case that gross spending under the plan exceeded $10,000 during the 6-month reporting period with respect to fewer than 50 drugs:
    • The highest gross spending for the 50 covered drugs under the plan.
    • For the 50 covered drugs with the highest gross spending during the 6-month reporting period, (1) a list of all other drugs in the same “therapeutic class” as these drugs, (2) the rationale for the formulary placement of such drug in that “therapeutic class,” and (3) any change in formulary placement from plan year to plan year
• If the PBM providing services to the plan owns a pharmacy, or owns a mail-order or specialty home delivery program, or owns a retail and mail auto-refill programs, or provides cost-sharing assistance funded by the PBM, this PBM must:
  • Provide an explanation of any benefit design parameters that encourage or require participants and beneficiaries to fill prescriptions at the PBM-owned mail-order, specialty, or retail pharmacies.
  • Provide the percentage of total prescriptions dispensed by such PBM-owned pharmacies to plan participants.
  • Provide a list of all drugs dispensed by such PBM-owned pharmacies to plan participants including (1) the amount charged to the plan per dosage unit or 30-day or 90-day supply, (2) the median amount charged to the plan and the interquartile range of the costs per dosage unit or 30-day or 90-day supply, including amounts paid by plan participants, when the same drug is dispensed by pharmacies NOT owned by the PBM, (3) the lowest cost per dosage unit or 30-day or 90-day supply for each drug, including amounts charged to the plan and participants, that is available from ANY pharmacy in the plan’s network, and (d) the net acquisition cost per dosage unit or 30-day or 90-day supply if such drug is subject to a maximum price discount.

On Thursday, Jan. 29th, the Department of Labor (DOL) finally released long-awaited proposed regulations implementing – and clarifying – important aspects of the 408(b)(2)(B) Compensation Disclosure requirements.  In short, these proposed rules clarify – and confirm – that Pharmacy Benefit Managers (PBMs) and any other service provider that furnishes “pharmacy benefit management services” to a self-insured group health plan are subject to the Compensation Disclosure requirements.  The proposed rules further confirm that PBMs and these service providers would be required to furnish specified disclosures to the self-insured plan’s fiduciary, and also to permit the plan’s fiduciary to conduct an audit for accuracy of the Disclosures.  

What Led to the Development of These Proposed Regulations?

At the end of 2020, the Consolidated Appropriations Act of 2021 (CAA 2021) was enacted into law.  Among other provisions included in the CAA 2021 was a requirement that an entity or individual furnishing specified services to a group health plan must disclose to the plan’s fiduciary the “direct” and “indirect” compensation paid to the entity/individual.  This new requirement – set forth in ERISA section 408(b)(2)(B) (hence the name 408(b)(2)(B) Compensation Disclosure requirements) – used the terms “Brokage Services” and “Consulting,” which led the industry to believe that ERISA’s Compensation Disclosure requirements ONLY applied to “Brokers” and “Consultants.”  

However, on December 14, 2022, Congress sent a letter to the DOL explaining that Congress intended for the Compensation Disclosure requirements to apply to ANY entity/individual furnishing services set forth in an enumerated list of services in the statute, including PBMs and also Third-Party Administrators (TPAs) that, for example, develop a provider network or prescription drug formulary, process claims and maintain records, and negotiate rates for covered medical items and services or prescription drugs.

While the Biden Administration’s DOL did not issue guidance in response to Congress’s letter, on April 15, 2025, the most recent Trump Administration issued an Executive Order directing the Trump DOL to develop regulations confirming that PBMs are subject to the 408(b)(2)(B) Compensation Disclosure requirements.  These proposed regulations are in response to President Trump’s directive.

What Do the Proposed Regulations Say?

The following provides you with a detailed summary of the most important aspects of these proposed regulations.  Note, public comments are due on March 31st.  SIIA will be submitting comments.

Proposed 408(b)(2)(B) Compensation Disclosure Regulations Applicable to PBMs and Other Service Providers

As part of confirming that PBMs and other service providers are subject to ERISA’s Compensation Disclosure requirements, the proposed regulations explain that any person, business, or entity furnishing “pharmacy benefit management services” to a self-insured plan or a providing advice, recommendations, or referrals regarding the provision of “pharmacy benefit management services” must disclose to the plan’s fiduciary (1) the “types” of services provided to the plan and (2) the “types” of compensation received from the plan, from other third parties, and from any other arrangements with any parties in the pharmaceutical supply chain. 

Pharmacy Benefit Management Services - Defined

Importantly, the proposed regulations define “pharmacy benefit management services” as services necessary for the management or administration of the self-insured plan’s prescription drug benefits, including, for example:

• Acting as a negotiator or aggregator of rebates, fees, discounts, and other price concessions for prescription drugs;
• Establishing or maintaining prescription drug formularies;
• Establishing or maintaining pharmacy networks, through contract or otherwise, including a mail-order pharmacy, a specialty pharmacy, a retail pharmacy, a nursing home pharmacy, a long-term care pharmacy, and an infusion or other outpatient pharmacy, to provide prescription drugs;
• Processing and payment of claims for prescription drugs;
• Performing utilization review and management, including the processing of prior authorization requests for drugs, step-therapy protocols, patient compliance analyses, conducting therapeutic intervention, and administering generic substitution programs;
• Adjudicating appeals or grievances related to the self-insured plan’s prescription drug benefits;
• Record keeping related to the self-insured plan’s prescription drug benefits; and
• In conjunction with any of these other services, performing regulatory compliance with respect to the self-insured plan’s prescription drug benefits under the contract or arrangement.

The proposed regulations confirm that it does not matter whether the person, business, or entity performing these services identifies itself as a PBM.  What matters is whether the person, business, or entity is performing any of these services (and if the person, business, or entity is performing any of these services, then they are subject to these Compensation Disclosure requirements).

Disclosure of the “Types” of Services

The proposed regulations would require PBMs and other service providers to include in their Compensation Disclosures a description of each “pharmacy benefit management service” or of the advice, recommendations, or referrals regarding the provision of “pharmacy benefit management services” to be provided to the plan pursuant to the contract with the plan.  

Disclosure of the “Types” of Compensation Received

“Direct Compensation”:  The Compensation Disclosure would be required to include a description of “direct compensation” paid to the PBM or service provider directly (1) from the self-insured plan itself (with plan assets) AND/OR (2) from the plan sponsor on behalf of the plan (for example, from the plan sponsor’s general assets).  This description must include the dollar amount of all “direct compensation” – both in the aggregate and by service – that the PBM or service provider reasonably expects to receive on a quarterly basis from (1) the plan AND/OR (2) the plan sponsor.

Payments from Drug Manufacturers:  The proposed regulations would also require the Compensation Disclosure to include the amount of any payments (including rebates, fees, and other compensation) from drug manufacturers, as well as from rebate aggregators or other entities that negotiate rebates with drug manufacturers.  This disclosure must cover the amount of any payment – both in the aggregate and for each drug on the formulary – and it must be expressed as an amount reasonably expected to be paid on a quarterly basis.  Importantly, this disclosure must specify the amount that will be retained by the PBM or service provider, and also, the amount that will be passed on to (1) the self-insured plan or (2) the plan sponsor (if applicable).

Spread Pricing:  Referred to as “Spread Compensation” in the proposed regulations, the Disclosure would be required to include (1) the amount the PBM or service provider received each quarter from the plan and (2) the amount the PBM or service provider paid each quarter to the pharmacy dispensing drugs – both in the aggregate and for each drug on the formulary – and for each dispensing channel (i.e., retail, mail-order, and specialty pharmacy). 

Drug Pricing Methodology:  The Disclosure would be required to include a description of the net cost to the self-insured plan of each drug on the formulary, for each dispensing channel, expressed as a dollar amount.  If a dollar amount is not ascertainable, the PBM or service provider must disclose the methodology used to determine the cost the plan will pay for each drug on the formulary, for each dispensing channel, along with an objective means to verify the accuracy.

Co-Pay Clawbacks:  The Disclosure would also be required to include a description of the quarterly amount of co-pay clawback compensation (i.e., the dollar amount of the difference between a copayment or coinsurance amount paid to the pharmacy by a plan participant or beneficiary and the reimbursement to the pharmacy) that the PBM or service provider recouped from a pharmacy in connection with prescription drugs dispensed under contract with the plan, also specifying the anticipated total number of transactions resulting in recoupment. 

Price Protection Agreements:  The Disclosure would include a description of any inflation protection or price protection agreements that the PBM or service provider has entered with any drug manufacturer or other party in connection with prescription drugs dispensed under the contract with the plan, specifying the quarterly amount reasonably expected to be retained by the PBM or service provider in connection with each such inflation protection or price protection contract or arrangement and the amount that will be passed on to (1) the plan and/or (2) the plan sponsor (if applicable).

Formulary Placement Incentives:  The Disclosure would be required to include a description of any formulary placement incentives that the PBM or service provider has entered with any drug manufacturer in connection with the contract with the plan, along with an explanation of how the incentives affect services to, and are aligned with, the interests of the plan and/or its participants.  If the PBM or service provider has the authority to modify the formulary during the term of the contract with the plan – such as by adding or deleting drugs or changing their tiering – the Disclosure must include an explanation of the reasons for retaining such authority, the expected frequency of such changes, and that the plan fiduciary will be notified reasonably in advance of any modifications that are expected to have a material impact on the reasonableness of compensation paid to the PBM or service provider, as well as the plan’s right to terminate the PBM’s or service provider’s contract on reasonably short notice under the circumstances.

Termination of Contract:  The PBM or service provider would be required to disclose the amount of compensation (if any) they will receive if the contract with the plan is terminated, and how any pre-paid amounts (if any) will be calculated and refunded upon termination.

Other Important Stuff In These Proposed Regulations

If a TPA (who is not otherwise a PBM) contracts with a self-insured plan to provide “pharmacy benefit management services” to the plan, that TPA would become subject to these Compensation Disclosure requirements, even if the TPA intends to rely on another service provider to perform those “services.”  In this case, the TPA would be responsible for making the required Disclosures discussed above, and therefore, must be able to obtain information necessary for furnishing the proper Disclosure from the other service provider performing the “pharmacy benefit management services.”

Separately, but also related to TPAs, the DOL explicitly requests comments on whether the Department should extend these Compensation Disclosure requirements to apply to TPAs that are performing “third party administrative services,” which is a “service” set forth in the enumerated list of services in the statute.

The DOL also requests comments on whether the proposed required Compensation Disclosure should include other items like claims data, payments to providers, and pricing information.  In other words, should claims data and pricing information be considered “compensation” under ERISA section 408(b)(2)(B), thus requiring the disclosure of claims data and pricing information to a self-insured plan’s fiduciary?