The "Hidden Fee Disclosure Act of 2025" aims to amend the Employee Retirement Income Security Act of 1974 (ERISA) by clarifying and strengthening disclosure requirements for employer-sponsored health plans. Its core purpose is to enhance transparency regarding fees and compensation received by service providers, particularly in the complex areas of pharmacy benefit management and third-party administration. This increased transparency is intended to empower plan fiduciaries to better understand costs and potential conflicts of interest.

The bill significantly expands the definition of services for which disclosure is required under ERISA. It clarifies that "services" include a wide range of activities beyond just brokerage, such as plan design, claim repricing, insurance selection, recordkeeping, medical management, stop-loss insurance, pharmacy benefit management services, wellness design, transparency tools, group purchasing organization agreements, and employee assistance programs. Furthermore, it mandates that disclosures must be provided "by service" rather than in aggregate, ensuring more granular detail.

For entities providing pharmacy benefit management services, the bill introduces robust new disclosure obligations. It specifies that arrangements for PBM services are considered an indirect furnishing of goods or services, triggering disclosure requirements. PBMs must disclose all compensation, including fees, rebates, alternative discounts, price concessions, and co-payment offsets, received from drug manufacturers, distributors, or other third parties. They must also detail compensation from paying lower drug amounts than charged to patients or from charging health plans more than they pay pharmacies (known as "spread pricing").

In addition to upfront disclosures, PBMs will be required to provide annual reports to plan fiduciaries. These annual disclosures must include total gross and net spending on drugs by the plan, spending at PBM-owned pharmacies, and aggregated cost-sharing amounts collected from participants that exceed contracted rates. This comprehensive reporting aims to shed light on the full financial picture of drug benefits.

Similarly, the bill strengthens disclosure requirements for third-party administrators (TPAs) of group health plans. TPAs must disclose the amount and form of rebates, discounts, and savings received from providers and facilities, indicating how much they retain. They also need to report fees received from other service providers and recoveries from overpayments, billing errors, or subrogation, specifying the amounts retained by the TPA.

The legislation also includes provisions for privacy, ensuring that disclosed information adheres to HIPAA and HITECH privacy regulations, and limits the redisclosure of sensitive data. The Secretary of Labor is tasked with issuing necessary rulemaking within one year of enactment to implement these provisions, accounting for varied compensation practices and establishing standards for expected compensation disclosure. These amendments will apply to contracts entered into or renewed on or after January 1, 2026.