Gag Clause | What is it, Guide and Examples

Gag Clause Prohibition Compliance Attestation

In the complex world of health care, knowledge is power and transparency is the key to informed decision-making. As health plan vendors and issuers of group and individual coverage, you are pivotal in shaping health care for many. That's why understanding the gag clause prohibition compliance attestation is crucial.

Gag clauses have long been a source of concern in the health care industry, limiting the flow of vital information, impacting patients' choices and ultimately affecting health care outcomes. This blog aims to shed light on the intricacies of gag clause prohibition, attestation and requirements. 

What Is a Gag Clause?

A gag clause is a contractual provision that directly or indirectly restricts a health plan or issuer from sharing specific cost or quality information with certain external parties. These clauses primarily serve to safeguard information considered proprietary, such as negotiated rate data. 

In the healthcare context, gag clauses are intended to protect sensitive data, ensuring that proprietary information remains confidential. This, in turn, upholds the reputation of the company and its competitive advantage. It also, however, stifles transparency and prevents consumers from obtaining some important information.

Congress has taken steps to limit the instances of gag clauses in the healthcare sector. Some feel that the requirement should be on vendors, such as those that draft the contracts and those generally with the bargaining power, rather than on health plans. However, Congress cannot so easily regulate those other entities, so instead the law prohibits health plans from agreeing to gag clauses.

What Is Now Prohibited?

To ensure clarity and transparency in the health care sector, it's vital to understand precisely what the GCPCA restricts. For vendors of health plans and health insurance providers, compliance with these restrictions is a legal requirement and a commitment to ethical business practices. 

Preventing Cost and Quality Information Sharing

One of the fundamental prohibitions within a gag clause is the restriction of sharing cost and quality information. Health insurance suppliers, whether or not they are subject to the Employee Retirement Income Security Act (ERISA), are strictly barred from agreeing to gag clauses within their various service agreements. This prohibition may impact various stakeholders, including insurers, third-party administrators (TPAs), health care providers, and other vendors that provide services related to accessing providers or accessing provider data.

Exemptions and Clarifications

The requirement to avoid gag clauses applies broadly, but there are certain exceptions. These prohibitions do not apply to health reimbursement arrangements (HRAs), excepted benefits or other account-based plans. Therefore, these specific plans and arrangements are not bound by the restrictions on disclosing cost and quality information.

The Importance of Reviewing Agreements

In light of these prohibitions, plan sponsors play a pivotal role in ensuring compliance. It's their responsibility to meticulously review all agreements with insurers, health care providers and service providers. This review process is essential to identify and eliminate any existing gag clauses that may contravene the GCPCA.

In summary, what is prohibited in the gag clause, as per the Gag Clause Prohibition Compliance Attestation, is the restriction on sharing cost and quality information in agreements involving group health plans, except for specific exempted benefits and arrangements. Ensuring compliance with these prohibitions is crucial for maintaining transparency, ethical conduct and trust in the health care industry. 

Gag Clause Examples

One common instance involves pharmacy pricing. Imagine a scenario where a health insurance issuer contracts with a pharmacy benefit manager (PBM) to handle prescription drug benefits. A gag clause could be inserted in the contract, preventing the disclosure of lower-priced alternatives — since the gag clause may prohibit disclosure of pricing information to begin with — or the fact that a medication may be cheaper without insurance. This restricts pharmacists from informing patients about more cost-effective options.

Health plans often build extensive networks of health care providers to offer comprehensive care to their members. Gag clauses may come into play when a health care provider signs a contract with a health plan, maintaining the confidentiality of negotiated rates or quality metrics.

In addition, TPAs sometimes require health plans to maintain the confidentiality of pricing or quality information, often in turn required by a network or other vendor that the TPA has a contractual relationship with.

Gag Clause Prohibition in a Nutshell

In the world of health care, transparency and open communication are of vital importance. When individuals seek medical care, they should have access to all the information they need to make informed decisions about their health and financial well-being. This principle led to the prohibition of gag clauses in health insurance policies — for health plans, understanding and complying with these requirements is crucial. However, since vendors must agree to forgo gag clauses as well, vendors’ understanding of the GCPCA is equally important, as health plans cannot unilaterally remove gag clauses from their agreements. 

The gag clause prohibition revolves around the idea of promoting transparency and removing a barrier from empowering patients to make informed decisions about their health care. It prohibits clauses in agreements that would stifle the sharing of certain essential information, such as cost, quality of care data, and more. Because patients so often already have such a hard time navigating their healthcare plans and choices, the removal of gag clauses can help improve the consumer experience across the board.

In this section, we will delve into the key requirements of the gag clause prohibition and how attestation plays a crucial role.

Prohibition on Gag Clauses

The first and foremost requirement is the complete prohibition of gag clauses. Any existing or future agreements between health care entities — such as health insurance suppliers and providers — cannot contain clauses that restrict the disclosure of vital health care information. Specifically, these clauses must not hinder the sharing of information on cost, quality of care data and other related details.

Compliance Attestation

The compliance attestation process is critical to meeting the gag clause prohibition requirements. Health insurance providers for group and individual coverage, along with health plan vendors, must attest to their compliance with the prohibition. This attestation is a legally binding declaration that the issuer or vendor follows the law and is not party to any agreements that violate the prohibition.

Annual Attestation

For ongoing compliance, issuers and vendors are required to make annual attestations. The initial deadline for submitting the GCPCA was December 31, 2023. Moving forward, these attestations must be submitted annually by December 31 to ensure compliance with the prohibition remains a top priority.

Reporting Entity Details

When submitting the attestation, it is essential to provide specific details about the reporting entity. This includes the entity's name, Federal Tax Employer Identification Number (EIN), the type of entity — for example, health insurance issuer, ERISA plan, non-federal governmental plan and a point-of-contact who can respond to any questions about compliance. All this information must be accurate and up to date.

Compliance Verification

The attestation includes a verification that the issuer or vendor is not party to any agreements, directly or indirectly, that restrict the disclosure of critical information. This involves ensuring that the reporting entity is not bound by any provider agreements that contain gag clauses.

Maintaining Transparent Provider Directories

It's vital that the provider directories maintained by issuers and vendors are transparent and up-to-date. Patients rely on these directories to make informed decisions about their health care providers. Compliance with the prohibition also includes ensuring that the directories provide accurate and complete information.

The Empowered Path to Compliance

Understanding the gag clause prohibition requirements is the first step toward compliance. It is essential to approach compliance confidently and be knowledgeable about the process.

To meet these requirements successfully, issuers and vendors should have systems in place to verify that their provider agreements are free from any gag clauses. Moreover, they should regularly update and maintain their provider directories to ensure patients can access accurate and up-to-date information. Compliance attestation should be a meticulous process, and accuracy is critical.

How to Complete and Submit a Gag Clause Attestation?

The process of completing and submitting a gag clause attestation typically involves ensuring compliance with relevant regulations and standards. Here are the general steps that such entities may need to follow:

  • Review applicable laws and regulations: First, review all applicable federal, state and local laws and regulations related to the use of gag clauses. The use of gag clauses may be restricted or prohibited in certain contexts, particularly in the health care and insurance sectors.
  • Identify gag clauses: Review the contracts, agreements or documents that contain gag clauses. These clauses may be found in various types of agreements, including provider contracts, insurance policies and business associate agreements.
  • Understand the gag clause requirements: Ensure a clear understanding of the specific requirements and limitations imposed by the gag clauses in the relevant contracts. This includes understanding what information is subject to the gag clause, the duration of the clause and any exceptions or carve-outs allowed.
  • Legal review and compliance: Seek legal counsel or compliance officers to ensure that the use of gag clauses complies with applicable laws and regulations. Determine if the specific gag clauses in the contracts align with legal requirements.
  • Create gag clause attestation forms: Develop standardized attestation forms for parties to complete, acknowledging their understanding and compliance with the gag clause. These forms should include clear language explaining the obligations.
  • Distribute attestation forms: Distribute the attestation forms to the relevant parties, including health care providers, vendors and other entities subject to the gag clauses. Communication methods may include email, mail or an online portal.
  • Collect and maintain attestations: Collect completed attestation forms from the parties subject to the gag clauses. Maintain copies of these attestations for record-keeping and auditing purposes.
  • Review and monitor compliance: Regularly review and monitor compliance with the gag clause prohibition. Ensure that parties are adhering to their obligations and not violating the terms of the contract.
  • Report violations or non-compliance: Establish a process for reporting any violations or non-compliance with the gag clauses. This may involve internal reporting mechanisms or procedures for resolving disputes.
  • Periodic renewal and updates: Gag clause attestations should be reviewed and renewed periodically, as required by the contracts. Be prepared to update and reissue attestations when necessary.
  • Maintain documentation: Maintain comprehensive documentation regarding the use of gag clauses, including the text of the clauses, attestation forms and any communication related to the clauses.
  • Educate parties: Provide education and training to parties subject to the gag clauses to ensure they understand their obligations and the implications of non-compliance.
  • Consult legal counsel when needed: Seek legal advice as needed to address any legal or compliance issues and to ensure that your use of gag clauses aligns with evolving laws and regulations.

It's crucial to note that the specific requirements and processes for completing and submitting gag clause attestations may vary based on the specific contracts and agreements involved, as well as the applicable laws and regulations in your jurisdiction. Always ensure that your practices comply with the law and that you have a clear process for addressing potential issues or disputes related to gag clauses.

Contact The Phia Group for Gag Clause Consulting

In the intricate world of health care, mastering GCPCA is crucial. As we've explored the ins and outs of gag clause requirements and compliance attestation, you're now equipped with the knowledge needed to navigate these complexities with confidence.

At The Phia Group, LLC, we understand the changing landscape of health care regulations and the significance of transparency in benefit offerings. Our team of experts is here to assist you in achieving full compliance and optimizing your health plans. We offer various consulting services, including legal expertise, claims negotiations and compliance advisory.

Contact us online today to benefit from our comprehensive cost-saving solutions and ensure your organization stays ahead of the curve.