Karen Handorf, Christine H. Monahan, and Kennah Watts
On July 17, 2025, Senators John Hickenlooper (D-CO) and Roger Marshall (R-KS) introduced a bipartisan bill entitled the Patients Deserve Price Tags Act designed to make health care costs more transparent. The bill offers employers more and better tools to hold accountable the companies they hire to administer employee health plans. In addition to strengthening and expanding existing health care price transparency measures, the bill improves employers’ access to benefits claims data. It also requires disclosure of underlying contracts and methodologies used by third-party administrators (TPAs) and pharmacy benefit managers (PBMs) to price claims and determine their own compensation.
While an important step forward, the bill relies on private employers to drive out any abusive conduct in the commercial health insurance system by arming them with information. However, change through transparency alone requires employers to have the resources and motivation to act on the information available to them, as well as the negotiating power to get better deals from their service providers. Policy makers evaluating the bill should consider what other measures would complement its transparency provisions—from strengthening the Department of Labor’s (DOL’s) regulatory authority, combatting anticompetitive practices in health care, to prohibiting egregious practices explicitly or by expanding fiduciary duties under the Employee Retirement Income Security Act (ERISA) of 1974.
What Problems Does The Bill Address?
Almost half of Americans receive employer-sponsored health insurance as part of their compensation package, and nearly two-thirds of covered workers receive this coverage through self-funded plans. Recently, awareness is growing about shortcomings in this market. Health care costs for employers and workers alike are becoming increasingly unaffordable. Hospital and prescription drug prices share significant blame, but an array of intermediary service providers profit tremendously from the complexity and opaqueness in the system. Chief among the intermediaries are PBMs and TPAs, the largest of which are affiliated with major health insurance companies.
Concerns regarding business practices of the PBM industry—particularly the “big three” PBMs that dominate it—have been amply documented by Congress, the Federal Trade Commission, and the media. We highlighted concerns about business practices of TPAs owned by large insurance carriers (carrier TPAs) in a previous article. These companies can make substantial sums from vague or undisclosed practices that increase their compensation and drive up self-funded plans’ overall benefits costs.
Employers are required by ERISA to manage their health plans in accordance with strict fiduciary standards and are prohibited from paying TPAs and PBMs more than reasonable compensation. PBMs and TPAs can sometimes be held liable for knowingly participating in employer breaches, but they are not explicitly regulated by ERISA, unless they are acting as plan fiduciaries, a label they often seek to avoid, regularly arguing (with frequent success) that fiduciary standards do not apply to their operations. While some health plans and plan members have sought to hold PBMs and TPAs liable as fiduciaries for wasteful spending, conflicts of interest, and other abuses, they face an uphill battle. In practice, most employers have limited leverage to obtain information about pricing and compensation practices necessary to determine whether the amount paid to PBMs and TPAs is reasonable.
Congress, to date, has addressed these issues with transparency measures, giving employers more information about the practices of their TPAs and PBMs so that they can be better health care purchasers. A “gag clause” ban added to ERISA in the Consolidated Appropriations Act of 2021 (CAA) sought to enable employers to “look under the hood” at their plans’ claims data and their TPA’s pricing and compensation practices. Yet, employers have often met resistance from carrier TPAs, who assert that the CAA does not explicitly require them to give employers unlimited access to claims data and instead only obligates employer plans to avoid entering into contracts with gag clauses. Carrier TPAs have also used delay tactics to put off disclosing requested claims data, limited employers’ ability to conduct independent audits on their plan data, and argued that their provider contracts and internal practices are proprietary, even though this information could be essential to understanding claims data. While Congress also required health plan service providers to disclose both direct and indirect fees in the CAA, some TPAs and PBMs assert that the disclosure requirements do not apply to them.
How Does The Bill Address These Problems?
The Patients Deserve Price Tags Act, if passed, would amend ERISA to require PBM and TPAs to affirmatively disclose their compensation practices, rather than leaving the sole legal burden on employers to acquire this information, as under current law. The bill would give employers sufficient information to monitor benefit costs and service provider compensation throughout the life of their contracts. The bill does so by requiring service providers to eliminate restrictions on access to claims and encounter data and other payment information as a condition for providing services to plans; and affirmatively requiring disclosure of claims information and TPA compensation on a quarterly basis. (While primarily focused on private health plans, the bill also extends the quarterly reporting requirements to state employee health plans and other non-federal governmental plans.)
Prohibiting Contract Terms That Limit Plan Sponsor’s Access To Information
Under the bill, PBMs, TPAs, and other covered service providers must open their books to group health plans that come calling. Expanding on the CAA’s gag clause ban, the bill prohibits contract language that does any of the following:
- Allows covered service providers to delay access to claims files and other information for more than 15 days;
- Limits the number of claims that the plan can request or audit;
- Restricts the plan’s choice of auditor and scope or frequency of audits;
- Limits plan access to pricing terms for capitated or value-based payment arrangements; and
- Limits plan access to overpayment recovery information and fees for plan administration and claims processing, including renegotiation, access, repricing, and enhanced review fees (which may take the form of potentially pricey “savings” fees).
To ensure that the information sought by plans is usable, the bill specifies the data format and requires paper claims sent by providers to be converted to an electronic format. The bill also requires that claims information must include “contractual terms containing calculation formulae, pricing methodologies, and other information used to determine the dollar value of reimbursements.” Non-claims costs must be itemized and available in real time in multiple formats.
The bill makes void any provisions in plan-service provider contracts that contain any of the limitations discussed above or unduly delay plan access to specified information. This means that even if a TPA or PBM won’t remove gag clauses from all contracts, it will not be able to enforce those clauses in court. The bill also requires the DOL, the agency responsible for ERISA enforcement, to implement these provisions through notice and comment rulemaking and gives the DOL authority to assess against covered service providers a civil penalty of $10,000 per day for each day a violation continues.
Requiring Service Providers To Make Quarterly Disclosures To Plans
The bill adds a new provision to ERISA requiring PBMs, TPAs, and other administrative service providers to make extensive quarterly reports to plans detailing pricing and compensation practices. Service providers must disclose claims and encounter information, and contractual and subcontractual fee schedules, formulas, or calculation methodologies used to determine reimbursement amounts to providers and subcontractors. Service provider disclosures also must include payment data and reconciliation information related to “alternative compensation arrangements”—ranging from value-based payments, to performance payments or other incentives, to shared savings programs—in connection to which the plan paid or owed money. Finally, service providers must report the total amount they and their subcontractors have been paid or expect to be paid in rebates, fees, discounts, and other forms of remuneration for claims incurred and administrative services, and the remuneration they have paid or expect to pay to others for administrative services.
The bill makes failure to provide the required information a violation of ERISA and requires the DOL to bring enforcement action within 90 days of becoming aware of the violation. The DOL is also required to implement the section through notice and comment rulemaking and is empowered to assess a civil penalty of $100,000 per day for each violation.
Does The Bill Go Far Enough To Empower Employers And Contain Costs?
The bill, if passed as currently written, would give plans substantial information explaining how claims are priced and paid and how PBMs, TPAs and their subcontractors are compensated. These entities will no longer be able to rely on contract language limiting the scope and nature of plan audits or claim that their relevant external contracts and internal practices and procedures are proprietary.
The claims audits and the quarterly reports should reveal many of the hidden fees and conflicts of interest described in our prior article, but it is unclear whether plans will be able to effectively analyze the substantial amount of data and information provided to them every quarter. Most employers delegate responsibility for their health plans to their human relations departments, which are unlikely to have the expertise necessary to engage in a meaningful review of complex claims data and contractual provisions. Instead, many employers would need to retain costly non-conflicted consultants and data analytic firms to review the information. Employers then must be prepared to act on any suggestions of unreasonable spending or other potential violations of ERISA, or else they could be held liable for mismanaging their plans.
Whether these disclosures will ultimately lower spending is also unclear. The bill requires that information be made available free of cost to plans, but it seems likely that service providers will make up the expense by raising the per-employee-per-month fees that serve as the base rate for administrative service contracts. Prudent plan fiduciaries will also likely need to spend significant sums on auditors and other experts to analyze the data.
Additionally, the disclosed information is useful for cost containment purposes only if plans have enough leverage to force PBMs, carrier TPAs, and corporate health systems to lower their prices or fees, stop predatory practices, and neutralize conflicts of interest. For example, the bill does not ban spread pricing or savings fees, or prohibit other practices that allow PBMs and carrier TPAs to favor their own or their parent company’s interests over the interests of the plan and its participants. Large employers with workers spread across multiple states typically require access to the large networks of pharmacies and providers primarily offered by the big three PBMs and carrier TPAs, but these companies are all likely to engage in the same types of practices and have the same conflicts of interest. Moving from one carrier TPA or PBM to another could cause workforce disruption with no certainty that the new service provider will be any better.
What Other Strategies Would Maximize The Bill’s Impact?
This bill aims to give employers information that is essential to the responsible oversight of spending under their group health plans. However, policy makers in and outside of Congress should consider additional measures to enhance the value and usability of this information. This is critical given that these markets are dominated by a few large entities that do not function competitively. For example:
- Most employers will need resources and technical support to properly analyze the disclosures coming their way. Whether funded through public or private channels, this support should come from neutral, independent sources rather than conflicted brokers or benefit consultants.
- The DOL will need to be well-funded and fully staffed to implement these provisions after notice and comment rulemaking. They must be able to conduct investigations and bring enforcement actions for noncompliance. Even before recent staff cuts, the scope of the DOL’s oversight obligations under ERISA alone far exceeded its capacity. Effective implementation through the DOL will require significant additional funding.
- Consolidation across the health care system will impede employers’ ability to negotiate better contract terms and prices. Antitrust investigations into major players and potential action to break up health care conglomerates may hold promise.
- Prohibiting more egregious business practices and conflicts of interest—either directly through bans or indirectly by explicitly making PBMs and TPAs fiduciaries under ERISA when performing most of their business practices—will ease employers’ burdens while lowering costs. Such prohibitions would allow employers to focus on other pressing matters instead of putting their energy into uphill battles to negotiate away practices most if not all people agree are inappropriate, anticompetitive, and cost increasing.
The Patients Deserve Price Tags Act, in combination with additional reforms to bolster competition, could allow employers to constructively contain costs and mitigate some of the shortcomings of the employer-sponsored self-insured market.
Karen Handorf, Christine H. Monahan, and Kennah Watts “The ‘Patients Deserve Price Tags’ Act Would Empower Employers With Information—Is That Enough?” October 10, 2025, https://www.healthaffairs.org/content/forefront/patients-deserve-price-tags-act-would-empower-employers-information-enough. Copyright © 2025 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.
