The Hidden Fee Disclosure Act of 2025 mandates transparent disclosure of fees and compensation for pharmacy benefit managers, third-party administrators, and other service providers in group health plans, ensuring employers and participants have clear information about costs and potential conflicts of interest.
Joe Courtney
Representative
CT-2
The Hidden Fee Disclosure Act of 2025 amends ERISA to clarify and strengthen fee disclosure requirements for covered service providers, particularly pharmacy benefit managers and third-party administrators for group health plans. It mandates detailed disclosure of compensation received from various sources, including drug manufacturers and providers, ensuring transparency in pricing and service costs. The Act directs the Secretary of Labor to establish rules for implementation, setting standards for disclosing expected compensation, with the changes taking effect for contracts entered into on or after January 1, 2026.
Hidden Fee Disclosure Act Aims for Healthcare Transparency: PBMs and TPAs Face Stricter Fee Reporting Rules Starting 2026
A new piece of legislation, the "Hidden Fee Disclosure Act of 2025," is taking aim at the often murky world of healthcare costs paid by employers and employees. It amends the Employee Retirement Income Security Act (ERISA) – that's the law governing many workplace retirement and health plans – to demand clearer, more detailed fee disclosures from companies managing prescription drug benefits and administering health plans.
Shining a Light on Drug Deals
The bill puts Pharmacy Benefit Managers (PBMs) – the middlemen who negotiate drug prices and manage pharmacy networks for health plans – under a brighter spotlight. Section 3 mandates that PBMs must reveal all compensation they get from drug manufacturers, distributors, or other third parties. This isn't just about basic fees; it includes rebates, discounts, and any other payments received. Annually, they'll have to report their total direct and indirect compensation, the plan's gross and net spending on drugs, how much was spent at PBM-owned pharmacies, and any cost-sharing collected from patients that exceeded the negotiated drug price. The goal is to show employers exactly where the money is going when it comes to prescription drug spending.
Decoding Your Health Plan's Admin Costs
It's not just PBMs. Third-Party Administrators (TPAs), the companies often hired to handle the day-to-day operations of a health plan (like processing claims and managing provider networks), also face stricter rules under Section 3. They'll need to disclose rebates, discounts, or savings they negotiate with hospitals or doctors, including any portion they keep for themselves. They also have to report fees received from other service providers involved with the plan and any money they expect to recover from things like billing errors or fraud investigations. Like PBMs, TPAs will provide annual summaries detailing their compensation and the plan's overall spending.
The Fine Print: Rollout and Privacy
These changes won't happen overnight. The Department of Labor has a year to create specific rules for how this information needs to be presented (Section 4). The new disclosure requirements kick in for contracts or renewals signed on or after January 1, 2026 (Section 3). Importantly, the bill includes privacy protections, stating that any health information shared must comply with HIPAA and related privacy laws, generally limiting disclosures to summary health information rather than individual patient details (Section 3). This aims to balance the need for financial transparency with protecting personal health data.