New Law Bans Surprise Medical Billing

Part of the COVID–19 relief package that Congress passed in late December includes a notable provision that bans surprise medical bills when out–of–network doctors work on insureds at in–network hospitals.

This so–called “balance billing” occurs when an out–of–network provider is involved in a patient’s care at a hospital that accepts their insurance, often without the patient knowing about it. Patients can end up facing unexpected bills in the tens of thousands of dollars. 

Specifically, the law bars out–of–network providers and air ambulance firms from billing patients for more than they would be charged by in–network providers (ground ambulance services are not covered under the law).

Additionally, health plans are barred from requiring patients to pay more for care they unknowingly receive from out–of–network providers at in–network facilities.

According to the Kaiser Foundation, 18% of emergency visits lead to at least one out–of–network charge for people covered by large group plans, as do 16% of in–network inpatient admissions.

Here are the main points of the legislation:

  • The law requires that patients be billed on their plan’s in–network rate for emergency medical care at an out–of–network facility, or if they are treated by an out–of–network clinician at an in–network hospital.
  • It protects patients admitted to an in–network hospital for a planned procedure when an out–of–network doctor works on the patient. Most often this happens when a doctor is called to provide assistance in the operating room, or if the anesthesiologist on duty is out of network.
  • Doctors and health plans are allowed to bill for out–of–network treatment in the above situations if the patient is informed of the estimated costs at least 72 before they receive care.
  • Whatever the patient pays for the above out–of–network services must be counted towards in–network annual deductibles.

Billing disputes

For the health insurers and providers to agree on the cost of care, the new law sets up an arbitration process to settle payment disputes for out–of–network claims. The plan sponsor and the covered employee are not part of this dispute resolution process. 

The law gives the insurer and provider 30 days to settle a dispute and if they can’t come to an agreement during that time, they can go to a binding arbitration process that the law creates. This “Independent Dispute Resolution” (IDR) will be administered by independent entities. 

During IDR, both the insurance company and the provider submit what they want to pay to the dispute resolution arbiter, who will decide a fair amount based on what other providers charge for similar services. 

The arbiter will not be allowed to consider rates paid by Medicare and Medicaid, which tend to be lower than what commercial insurers pay for services and what hospitals normally charge. 

The decisions are binding. after which the insurer has 90 days to pay the bill. The new law takes effect in January 2021.

One more thing…

Besides banning surprise billing, the law also bars gag clauses. Many contracts between health insurers and providers include provisions that bar enrollees, plan sponsors or referring providers from seeing cost and quality data on providers. These provisions will now be prohibited.

 

Final Rule Paves Way for Drug Imports to Reduce Patient Outlays





The Department of Health and Human Services and the Food and Drug Administration have issued a final rule and guidance that paves the way for states to allow pharmacists and wholesalers to import prescription drugs in order to reduce costs for patients. 

The final rule implements a provision of federal law that allows FDA-authorized programs to import prescription drugs from Canada under specific conditions, according to a report by Kaiser Health News. Prices are cheaper in Canada because the government there caps how much drug makers can charge for medicines, while the free market reigns supreme in the United States.

Even though insulin is not included among the drugs covered by the rule, the Trump administration also issued a request for proposals seeking plans from private companies on how insulin could be safely brought in from other countries and made available to consumers at a lower cost than products sold in the U.S.

Why now?

Congress has allowed drug importation since 2003, but only if the secretary of the Department of Health and Human Services certified it is safe. That had never happened until this year, when Secretary Alex Azar approved an application by Florida, according to a letter he wrote to congressional leaders. 

For decades, Americans have been buying drugs from Canada for personal use – either by driving over the border, ordering medication online or using storefronts that connect them to foreign pharmacies, according to Kaiser Health News. Though the practice is illegal, the FDA has generally permitted purchases for individual use.

About 4 million Americans import medicines for personal use each year, and about 20 million say they or someone in their household has done so because prices are much lower in other countries, according to surveys.

How it would work

The administration envisions a system in which a Canadian-licensed wholesaler buys from a manufacturer of drugs approved for sale in Canada and exports them to a U.S. pharmacy, wholesaler or importer that has contracted with the state in which they operate.

To be eligible for importation, a drug would need to be approved by Canada’s Health Canada’s Health Products and Food Branch and needs to meet the conditions in an FDA-approved new drug application.

Essentially, eligible prescription drugs are those that could be sold legally on either the Canadian market or the American market with appropriate labeling. 

Under the final HHS and FDA rule, state importation programs will have the flexibility to decide which drugs to import and in what quantities. 

The rule also requires drug manufacturers to provide importers with documentation guaranteeing the medications are the same drugs as those already sold in the U.S. 

Parts of this report were reprinted from Kaiser Health News.

Uncertainty Weighs on Group Plan Cost Expectations

U.S. employers are expecting their group health insurance costs to climb 4.4% in 2021, despite the ravages of pandemic and a likely uptick in health care usage next year, according to a new survey.

The expected rate increases are on par with much of the last few years, when insurance premium inflation has hovered between 3% and 4%. Despite the expected increase, employers do not plan to cut back on benefits for their employees, according to the Mercer “National Survey of Employer-Sponsored Health Plans 2020.”

The COVID-19 pandemic has injected a large dose of uncertainty into the marketplace. Overall, health care expenditures have plummeted since the pandemic started, which at first seems counterintuitive. But many hospitals postponed elective and non-emergency surgeries and procedures, while fewer individuals were seeking care either out of fear of going in for it or because they could not get appointments.

For example, the first three months after the pandemic had gotten a foothold in the U.S., according to the Willis Towers Watson “2020 Health Care Financial Benchmarks Survey,” monthly paid claims per employee dropped as follows:

  • April: 21%
  • May: 29%
  • June: 14%

“So far, the additional medical costs associated with the testing and treatment of COVID-19 have been more than offset by significant reductions in utilization across many service categories,” the insurance industry research firm recently wrote in its report.

Additionally, the Mercer report predicts that a significant portion of the deferred care will never be realized. And, for those people who have deferred care, when they eventually decide to come for the care will also depend on the course of the pandemic, hospital capacity and whether people feel safe to go in for the treatment.

“Different assumptions about cost for COVID-related care, including a possible vaccine, and whether people will continue to avoid care or catch up on delayed care, are driving wide variations in cost projections for next year,” Tracy Watts, a senior consultant with Mercer, said.

Employer reactions

Despite the expected cost increases, Mercer found that few employers plan to make any changes to their benefits this year, as they seek to keep things stable for their staff. The survey found that:

  • 57% will make no changes at all to reduce cost in their 2021 medical plans (up from 47% in the prior year’s survey).
  • 18% will take cost-saving measures that shift more health care expenses to their employees, including raising deductibles and copays.

Employers are also adding benefits, some of them prompted by the pandemic and shifts in how health care is accessed. For example:

  • 27% are adding or improving their telemedicine services (telemedicine for episodic care, artificial-intelligence-based symptoms triage, ‘text a doctor’ apps and virtual office visits with a patient’s own primary care doctor).
  • 22% are adding or improving their voluntary benefits (critical illness insurance or a hospital indemnity plan).20% are boosting their mental health services coverage.
  • 12% are offering targeted health services, like for diabetes and other chronic conditions.
  • 9% are offering more support for complex cases.
  • 4% are offering services to limit surprise billing.

The takeaway

Mercer noted the following trends going into 2021:

Keeping the status quo – A majority of employers surveyed are avoiding making any changes to their health plans, including increasing employee cost-sharing, even if premiums increase. Instead they are focused on providing a stable source of health insurance for their staff and supporting their workers as they deal with stress and effects of the pandemic.

Digital migration – More employers are offering digital health resources like telemedicine, tele-health apps and virtual office visits, for their convenience, safety, efficiency and cost-effectiveness.

Costs uncertain – Due to the effects of the COVID-19 pandemic, cost projections are uncertain at best. The avoidance of medical care could translate into a higher utilization in 2021 and hospitals may start charging more to recoup lost revenues from 2020. Or people may have forgone a lot of that care forever. It’s too early to tell.

Can Employers Require Their Workers to Vaccinate?

As the COVID-19 pandemic rages on and more employers bring staff back to the workplace, many businesses are considering implementing mandatory vaccination policies for seasonal flus as well as the coronavirus.

A safe and widely accessible vaccine would allow businesses to open their workplaces again and start returning to a semblance of normalcy. But employers are caught in the difficult position of having to protect their workers and customers from infection in their facilities as well as respecting the wishes of individual employees who may object to being required to be vaccinated.

The issue spans Equal Employment Opportunity Commission regulations and guidance, as well as OSHA workplace safety rules and guidance. With that in mind, employers mulling mandatory vaccination policies need to consider:

  • How to decide if such a policy right for the company,
  • How they will enforce the policy,
  • The legal risks of enforcing the policy, and
  • Employer responsibilities in administering the policy.

Proceed with caution

A number of law firms have written blogs and alerts on the subject of mandatory vaccinations, and the overriding consensus recommendation is to proceed with caution. 

In 2009 pandemic guidance issued during the H1N1 influenza outbreak, the EEOC stated that both the Americans with Disabilities Act and Title VII bar an employer from compelling its workers to be vaccinated for influenza regardless of their medical condition or religious beliefs – even during a pandemic.

The guidance stated that under the ADA, an employee with underlying medical conditions should be entitled to an exemption from mandatory vaccination (if one was requested) for medical reasons. And Title VII would protect an employee who objects due to religious beliefs against undergoing vaccination.

In these cases, the employer could be required to provide accommodation for these individuals (such as working from home).

Additionally, the employer would have to enter into an interactive process with the worker to determine whether a reasonable accommodation would enable them to perform essential job functions without compromising workplace safety. This could include:

  • The use of personal protective equipment,
  • Moving their workstation to a more secluded area,
  • Temporary reassignment,
  • Working from home, or
  • Taking a leave of absence.

One issue that employment law attorneys say may not have any legal standing is if an employee objects to inoculation based on being an “anti-vaxxer,” or someone who objects to vaccines believing that they are dangerous. In this case, depending on which state your business is located, you may or may not be able to compel an anti-vaxxer to get a vaccine shot.

Protecting your firm

To mount a successful defense of a vaccination policy if sued, you would need to be able to show that the policy is job-related and consistent with business necessity. And that the rationale is based on facts, tied to each employee’s job description and that you enforce the policy consistently without prejudice or favoritism. 

Also, you must ensure that any employee who requests accommodation due to their health status or religious beliefs does not suffer any adverse consequences. In other words, you cannot punish someone that is covered by the ADA or Title VII for refusing a vaccine.

Also, you will need to project and safeguard your employees’ medical information, under the law.

The takeaway

A number of employment law experts say that once a vaccine is widely available, most employers will likely have the right to require that workers get it, as long as they heed the advice above about the ADA and Title VII. Until then, you may want to consider following the 2009 guidance.

If you do implement a policy requiring vaccination, consider:

  • Fully covering vaccine costs if they are not fully covered by your employees’ health insurance.
  • Allowing employees to opt out entirely if they have medical or religious objections.
  • In the event of a medical or religious objection, you must engage in an interactive process to determine whether the individual’s objections can be accommodated.
  • Including safeguards for keeping your employees’ medical information confidential.
  • Not abandoning your other efforts to keep your workplace safe, such as the use of social distancing, regular cleaning and disinfecting, and the use of personal protective equipment.

Executive Orders Take Aim at Medicare Drug Costs

President Trump in late September issued three executive orders that would affect Medicare outpatient drug prices, protect people with pre-existing conditions from health insurance pricing discrimination and end surprise billing.

The main, and most substantive, order would fix prices that Medicare pays for outpatient and pharmacy-sold pharmaceuticals to the lowest prices offered in comparable developed countries.

The Trump administration had announced in July that it would release an order on Medicare outpatient drug prices pending negotiations with the pharmaceutical industry. But after those talks failed to yield the results the administration had hoped for, the president decided to release the latest version of the order.

The original planned order would have focused on drugs covered by Medicare Part B (most of these pharmaceuticals are typically administered in the health provider’s office in an outpatient setting). But the new order also includes outpatient drugs covered by Medicare Part D (drug plan coverage, which is often included in Medicare Advantage (Part C) plans).

‘Most-favored nation’ prices

The executive order would use a “most-favored nation” payment system, which would guarantee that Medicare would pay the lowest price found in any country that is a member of the Organization for Economic C-operation and Development and that has a similar per-capita gross domestic product to the United States.

Specifically, the order directs the Health and Human Services secretary to write new regulations that tie Medicare outpatient drug payment to international prices, including:

  • Creating a demonstration of a payment model to ensure Medicare Part B pays the most-favored-nation prices for some high-cost outpatient drugs.
  • Creating a Center for Medicare and Medicaid Innovation demonstration for Medicare to pay the most-favored-nation price for Part D drugs for which there is insufficient competition (alternative drugs) and that have U.S. prices compared to other developed countries.

While the executive order only gives a broad outline of what the regulations the HHS has to create, it is likely to be similar to the draft plan for a Center for Medicare and Medicaid Innovation that the administration released in 2018.

That plan would set Medicare Part B reimbursement based in part on drug prices paid in other countries. One key component of this would be that new middlemen would have to be created that would have to buy pharmaceuticals from manufacturers and sell them to providers.

The draft calls for mandatory participation by providers.

However, with an upcoming election and the time it takes to write regulations that need to be sent out for public comment, it’s unclear when final rules would be issued.

The other orders

The executive order on pre-existing conditions does not identify a specific action to protect individuals, but states that such protection is the policy of the U.S. (it is also included in the Affordable Care Act).

The executive order on ending surprise medical billing requires the HHS secretary to work with Congress to reach a legislative solution by Dec. 31. If one is not enacted, the order directs the secretary to use administrative action to protect patients from such bills.

Group Plan Affordability Levels Set for 2021

The IRS has announced the new affordability requirement test percentage that group health plans must comply with to conform to the Affordable Care Act.

Starting in 2021, the cost of self-only group plans offered to workers by employers that are required to comply with the ACA, must not exceed 9.83% of each employee’s household income. 

Under the ACA, “applicable large employers (ALEs)” – that is, those with 50 or more full-time workers – are required to provide health insurance that covers 10 essential benefits and that must be considered “affordable,” meaning that the employee’s share of premiums may not exceed a certain level (currently set at 9.78%). The affordability threshold must apply to the least expensive plan that an employer offers its workers. 

The threshold was increased because premiums for health coverage increased at a greater rate than national income growth during 2020.

With this in mind, if you are an ALE you should consult with us to ensure that you offer at least one plan with premium contribution levels that will satisfy the new threshold.

Failing to offer a plan that meets the affordability requirement to 95% of your full-time employees can trigger penalties of $4,060 (for 2021) per full-time employee, minus the first 30. The penalty is triggered for each employee that declines non-compliant coverage and receives subsidized coverage on a public health insurance exchange.

Since most employers don’t know their employees’ household incomes, they can use three ways to satisfy the requirement by ensuring that the premium outlay for the cheapest plan won’t exceed 9.83% of:

  • The employee’s W-2 wages, as reported in Box 1 (at the start of 2021).
  • The employee’s rate of pay, which is the hourly wage rate multiplied by 130 hours per month (at the start of 2021).
  • The individual federal poverty level, which is published by the Department of Health and Human Services in January of every year. If using this method, an employee’s premium contribution cannot be more than $104.52 per month.

Out-of-pocket maximums

The IRS also sets out-of-pocket maximum cost-sharing levels for every year. This limit covers plan deductibles, copayments and percentage-of-cost co-sharing payments. It does not cover premiums.

The new out-of-pocket limits for 2021 are as follows:

  • Self-only plans – $8,550, up from $8,150 in 2020.
  • Family plans – $17,100, up from $16,300 in 2020.
  • Health savings account-qualified self-only plans – $7,000, up from $6,900 in 2020.
  • HSA-qualified family plans – $14,000, up from $13,800 in 2020.

COVID-19 Clouds Health Insurance Cost Expectations

With large employers expecting health insurance rates to climb 5.3% in 2021, they are concerned about how the COVID-19 pandemic will affect overall health care costs in the coming years, a new survey has found. 

Those expectations gleaned from the survey by the National Business Group on Health would mean average premiums and out-of-pocket spending could reach $15,500 per worker. The expected increase is on par with the average 5% annual increase that large employers have projected in the last five years.

Employers have been using different strategies to tame those costs, most notably pushing more telemedicine for their workers, a trend that has increased during the pandemic.

Additionally, employers have increased their investments in employee health and well-being programs, a trend that was largely spurred by the pandemic and employers understanding that their business performance is linked to the health of their workers.

The numbers going into 2021 are squishy because there has been a significant drop-off in the use of medical services in 2020 due to the pandemic. Many people have delayed non-urgent care to avoid the risk of being infected with COVID-19 if they go to the hospital.

Other people with serious conditions have also unwisely decided to forgo care out of fear of getting sick from the coronavirus.

Health care experts are not sure if that means there will be an uptick in utilization in 2021 and think the 5.3% estimate increase in costs will pan out if people continue to put off care, Conversely, if care resumes in 2021, the projected trend may prove to be too low.

Here’s what large employers are expecting:

  • Average total health care spending on premiums and out-of-pocket costs will reach $15,500 per worker in 2021, up from $14,769 this year.
  • Large employers will cover nearly 70% of costs (premiums), while employees bear the rest. That would mean the average outlay per employee would be $10,850 for the employer and $4,650 for the employee.

Trends

Employers are continuing to address health care costs by focusing on new areas that can improve health outcomes for their workers. The trends that large employers predict would continue in 2021 are:

Continued move towards telehealth services – The use of telemedicine has exploded during the COVID-19 pandemic. Among the survey respondents:

  • 76% have made changes to provide better access to telehealth services.
  • 71% have boosted the types of telehealth services they offer, such as adding health coaching and emotional well-being support.
  • 80% expect virtual health will play a significant role in how care is delivered in the future. That’s compared with just 64% last year and 52% in 2018.
  • 52% will offer more virtual care options next year.
  • Nearly all will offer telehealth services for minor, acute services.
  • 91% will offer online counseling or therapy.
  • 29% may start offering virtual care for musculoskeletal issues, like physical therapy for back and joint pain.

Boosting wellness and mental health services – As many as 88% of respondents said they would provide access to online mental health support resources, such as apps, videos and articles. The survey also found that:

  • 54% are lowering or waiving costs for virtual mental health services in 2021.
  • 27% will reduce the cost of counseling services at the worksite.

Focusing on primary care – More employers are looking at advanced primary care strategies to reduce costs, with 51% saying they will have one at least one such strategy in place for 2021.

This would include contracting directly with primary care providers who can improve the delivery of preventive services, chronic-disease management, mental health and whole-person care. 

Addressing high-cost drug therapies – Two-thirds of respondents said they were very concerned with the cost of new million-dollar treatments, just one of which can blow up their health cost budget.

Trump Issues Executive Orders to Reduce Drug Costs

President Trump has issued executive orders aimed at reducing the cost of medications by tying Medicare payment for outpatient drugs to international prices, passing drug-maker rebates to patients and not middlemen, and allowing individuals to import prescription medications.

Another executive order aims to force community health centers that receive 340B drug discounts to pass discounts for insulin and injectable epinephrine on to patients.

Here’s a run-down of the orders:

Drug importation

The Executive Order on Increasing Drug Importation to Lower Prices for American Patients calls for new regulations that would:

  • Allow individual state health plans to import certain drugs.
  • Authorize the reimportation of insulin products that were made in the United States and later exported, and
  • Set up a system to grant drug importation waivers for individuals to use at authorized pharmacies. 

The system that Trump is proposing is reportedly modeled after new laws that took effect in Vermont in 2018, Florida in 2019 and then Colorado and Maine last year, allowing for the importation of certain prescription drugs from Canada. 

Florida’s bill directed the state’s Agency for Health Care Administration to establish a Canadian Prescription Drug Importation Program and an International Prescription Drug Importation Program.

Vermont and Florida have already submitted proposals to the U.S. Department of Health and Human Services to import prescription drugs from Canada, as the president in recent weeks has reiterated his intention to allow states to do so.

Federal law already grants HHS the authority to allow drug imports, as long as the department’s secretary certifies the imported drugs are safe and effective and would lower costs to U.S. consumers.

HHS and the Food and Drug Administration in early August unveiled two pathways that entities could use to import drugs.

Under one pathway, HHS and the FDA would use existing rulemaking authority to allow states, pharmaceutical manufacturers and pharmacists to develop pilot programs to import drugs from Canada “that are versions of FDA-approved drugs that are manufactured consistent with the FDA approval.”

Eliminating secret deals

Another order would prohibit secret deals between drug makers and pharmacy benefit manager (PBM) middlemen, ensuring patients directly benefit from available discounts at the pharmacy counter.

The Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen would pass drug-maker rebates to patients  and allow them to apply the rebate to their cost-sharing, such as deductibles in Medicare Part D plans.

The order states that the any rebate rule could not be advanced unless the HHS secretary gave public confirmation that it would not raise premiums, taxpayer spending or out-of-pocket costs. 

In particular, the proposed rule would exclude from safe-harbor protections under the anti-kickback statute price reductions that are not applied at the point-of-sale or other remuneration that drug manufacturers provide to health plan sponsors, pharmacies or PBMs in operating the Medicare Part D program.

It would also establish new safe harbors that would allow health plan sponsors, pharmacies and PBMs to apply discounts at the patient’s point-of-sale in order to lower the patient’s out-of-pocket costs.

This would be a significant step in getting drug-maker discounts to patients instead of the PBMs. One of the reasons pharmaceutical prices are so high is the complex mix of payers and negotiators that often separates the consumer from the manufacturer in the drug-purchasing process. 

The result is that the prices patients see at the point of sale do not reflect the prices that their insurance companies, and PBMs hired by those companies, actually pay for medicines. Instead, PBMs negotiate significant discounts off of the list prices, sometimes up to 50% of the cost of the drug, and often the Medicare patient can never enjoy that discount.

International reference pricing

Another executive order, which hasn’t yet been published publicly, would establish an international pricing index that would set the price Medicare Part B pays for the costliest medications covered under the program to the lowest price in other economically advanced countries. 

However, Trump said his administration will hold the order until Aug. 24 because he may not implement it. He said he needs to meet with pharmaceutical executives first.

Epinephrine and insulin discounts

The Executive Order on Access to Affordable Life-saving Medications would require federally qualified health centers to pass along discounts on insulin and injectable epinephrine received from drug companies to certain low-income Americans.

Only patients with low incomes; those with high cost-sharing requirements for insulin or epinephrine; those with high, unmet deductibles; and/or those without health insurance would be eligible for the discount.

What’s next

In all, Trump issued four executive orders that will require the Centers for Medicaid and Medicare Services to draft new regulations, which would likely not be completed by the end of the year. Regulations often take months to draft and then have to be sent out for public comment before final regs are written. 

The regulations will likely only come to fruition if Trump wins the presidency for a second term, as any regulatory initiatives in mid-stream would probably otherwise be abandoned.

Preparing for Open Enrollment During the Pandemic

With the coronavirus showing no signs of slowing, health insurance is likely top of mind for your employees. Many of them will be anxious and it’s likely that they will be more engaged and interested in understanding whether their current coverage is sufficient should they be stricken by the virus.

Not only that, but due to social distancing and with many employees working remotely, employers will need to adjust their open enrollment procedures to make sure they are safe, efficient and a success for both them and their employees.

This year in particular, it’s important that you use a multi-pronged approach that keeps everyone informed and safe.

Comprehensive and simple communications

When you are informing your staff about their benefits and open enrollment procedures, make sure you keep things simple. Don’t delve into too many details that are likely to confuse them, but explain the bigger picture and direct them to other documents and information for the detail.

When explaining the benefits and procedures, don’t get bogged down in insurance jargon. Use everyday language, charts, graphs or infographics, checklists and other tools that make absorbing the information easier.

Use many communication media

Many workplaces are multi-generational and different generations prefer different modes of communication, particularly if you have employees who are working remotely due to the pandemic

To make sure you can reach all of your workforce, blast them information using a number of media. And follow up with phone calls to remote staff that don’t respond.

E-mails and e-mail newsletters

E-mails are an excellent way to communicate important information to employees, and to gather information on what they are opening, reading and forwarding.

You can inform them about open enrollment, provide them documentation on the plan offerings and inform them of upcoming web meetings and other important enrollment information.

Web meetings

Hold webinar meetings with videoconferencing to inform your staff about their benefit choices and what, if any, changes are being made to plans going into the new year.

You should focus on the main topics:  

  • Any increases in health plan premiums,
  • Plan changes like deductibles, out-of-pocket maximums, copays, and more,
  • Network changes,
  • New offerings, and
  • Resources to help your workers choose the right plan.

There will likely be many queries about COVID-19 coverage, so be prepared to answer related questions.

During these web meetings, encourage your staff to ask questions and get answers. Record the meeting for employees that are unable to make it, so they can view it on their own time.

You should require all of your staff to either participate in the actual meeting or view the meeting. Set up a virtual sign-up for them to confirm they attended and received all the information.

Offer benefit support

Not everyone is going to be able to wrap their noodle around everything you went over during the web meeting. And plan documents can sometimes be daunting and confusing to someone who is not experienced in your system or is new to the workforce. 

Additionally, some of your staff may have questions they are not comfortable asking during a group meeting and that would be more appropriately directed at a benefit counselor. This way, they can talk to someone who can guide them in choosing the right plan for them.

Don’t forget text messaging

Since most everyone has a smartphone on their person or nearby at all times these days, sending them text messages is a sure-fire way to get in front of them.

Use texting to notify staff about open enrollment dates, resources about their benefits, upcoming benefit meetings, contact resources, how to access the enrollment and benefit portal, and who to call for assistance.

Company intranet, enrollment portal

Post all of your open enrollment information on your company intranet if you have one, including links to the open enrollment portal. Every time you communicate with your staff, include the link to the open enrollment information.

This page should have all of your enrollment information, including start and end dates, links or pdfs of all plan benefit guides and plan summaries, contact information of key personal and benefit counselors, as well as all other resources they will need to choose their health plan.

The takeaway

By employing a mixture or all of the above strategies, you can conduct a safe and informative open enrollment that can help your staff choose their plan wisely and also feel comfortable about not catching COVID-19 during the process.

What Insurers, Employers Expect in Pandemic Aftermath

A study has come out predicting that COVID-19, as devastating as it has been, will have little effect on 2021 group health plan rates, as well as offerings.

The study, by eHealth Inc., also found that many insurers have increased utilization of telemedicine and that many of them are extending benefits related to coronavirus testing and treatment.

Here are the main points of the study:

Waiving COVID-19 testing costs ― 97% of insurer respondents say they are waiving out-of-pocket costs for coronavirus testing.

Waiving treatment costs ― 58% of the insurers say they’re waiving out-of-pocket costs for COVID-19 treatment. Among insurers who say they have done this, 80% say they have waived all out-of-pocket costs, while 20% say they have waived only a portion of members’ out-of-pocket expenses.

Premium assistance ― 60% of carriers are letting enrollees financially affected by the coronavirus defer premium payments.

Few anticipate raising 2021 premiums due to coronavirus – 83% say they do not anticipate raising rates for 2021 in response to the crisis, while 17% anticipate raising rates no more than 5%. Eighty-seven percent of respondents offering Affordable Care Act plans say it is unlikely they will leave the ACA market due to the coronavirus.

More telemedicine services ― 96% of insurers say they are seeing increased demand for telemedicine services that include virtual doctor visits. Eighty-five percent think the crisis will drive increased demand for telemedicine benefits into the future. 

Elective or non-emergency services spike – 80% of insurers expect a spike in these claims after the crisis is over. Seventy-three percent of those who anticipate this believe it will come within the next six to 12 months.

More use of mental health benefits – 33% of insurers surveyed say they have seen an increase in utilization of mental health benefits by members since the beginning of the coronavirus crisis.

Rate hikes, but more involvement

The Centers for Medicare and Medicaid Services has predicted that the country could spend $4 trillion on all forms of health care this year, which is 5.2% higher than in 2019.

Willis Towers Watson’s “COVID-19 Benefits Survey” estimates that due to COVID-19 testing and treatment, health insurance premiums could increase as much as 7% on top of the 5% increase employers previously projected for 2021. 

At the same time, the survey found that despite facing unprecedented challenges and rapidly shifting business priorities due to COVID-19, many organizations are taking steps to protect the health and wellbeing of their employees. In particular, it found that:

  • Employers are focusing on promoting virtual medical care by raising awareness and reducing point-of-care costs.
  • Over 80% of employers have or are planning to offer expand access to virtual mental health services.
  • About two in five employers are planning to revise their 2021 health care strategy.
  • Nearly two-thirds of companies will prioritize access to mental health solutions in their 2021 health care program.
  • Employers are looking to communicate more on existing benefits.
  • Employers plan to enhance mental health services and stress management.
  • Companies are addressing benefits for employees on leave and furlough.

More Workers Sue Employers over COVID-19 Issues

As the COVID-19 pandemic wears on and more employees go back to work, the risk of catching the disease for workers has spawned a growing wave of employment litigation. 

Lawsuits are flying as employers struggle to keep their workplaces safe and negotiate an often-confusing mishmash of new and existing laws and regulations. Regulators have been issuing new rules for dealing with COVID-19 among workers, and Congress has passed laws addressing workers and the pandemic.

Law firm Ogletree Deakins reviewed court filings for March through May and found that COVID-19-related lawsuits fell into a number of categories. The list is instructive for any employer who has continued operating or has or is about to reopen operations after local stay-at-home orders are lifted.

Knowing what kind of actions are most prevalent can also help you devise strategies to avoid being sued in the first place.

Here are the types of claims, and the percentage of all COVID-19-related claims against employers that they account for:

Whistleblowing/retaliation/wrongful discharge – 40% of COVID-related claims against employers. These lawsuits will typically include allegations of retaliation for objecting to unsafe working conditions and exposure to individuals with COVID-19 symptoms in the workplace.

Unsafe working conditions – 23% of COVID-19-related claims against employers. These lawsuits will typically include allegations:

  • That an unsafe workplace has caused sickness and/or death due to COVID-19.
  • That an employer has failed to take appropriate measures to adequately clean and sanitize workplaces.
  • That an employer has failed to provide necessary personal protective equipment, present adequate handwashing areas and sanitizing dispensers, or enforce social distancing protocols.

Disability discrimination – 15% of COVID-19-related claims against employers. These lawsuits will typically include allegations:

  • Related to forced leaves of absence.
  • Related to alleged failures to accommodate, including denials of requests to work from home.
  • Related to taking leave due to COVID-19 concerns.

Family and Medical Leave Act/ Families First Coronavirus Response Act – 12% of COVID-19-related claims against employers. These lawsuits will typically include allegations:

  • Of failure to provide leave related to COVID-19.
  • Of retaliation for utilizing leave related to COVID-19.

Wage and hour – 6% of COVID-19-related claims against employers. These lawsuits will typically include allegations of failure to pay for hours worked prior to business closures due to COVID-19 concerns.

The law firm noted that it anticipates this last type of cases to grow as more employees work remotely, and employees spend time off the clock completing health screenings, temperature checks and other tests employers may administer to clear them for work.

Ogletree predicts that all employee-initiated lawsuits that relate to COVID-19 will increase dramatically as states and local municipalities ease stay-at-home orders and more people go back to work, just as it seems that there is a new wave of cases in some areas that may have opened too early. 

In addition to these lawsuits, as of June 1, Fed-OSHA had received more than 1,500 COVID-19 whistleblower complaints.

The takeaway

The law firm recommends that to reduce the risk to coronavirus-related employment lawsuits employers should:

  • Keep policies up to date, particularly those related to harassment, discrimination, retaliation and the FMLA.
  • Train managers, supervisors and HR staff on how to respond appropriately if employees make requests or express concerns regarding COVID-19 safety practices. 
  • Prepare a COVID-19 workplace safety plan and communicate and train your staff on the plan.
  • If you are conducting health screenings, temperature checks or virus-testing, make sure that you do so safely by complying with social distancing requirements and with privacy laws in mind (you may want to consider having employees sign releases so they can’t sue you for conducting the testing).
  • Document the steps your organization takes if an employee tests positive for COVID-19.If you are changing employees’ pay, make sure you give them notice of those changes in advance.
  • If you are cutting staff, make sure you set uniform rules and criteria for who stays and who is let go or furloughed, in order to avoid claims of discrimination. Seniority, for example, is a good way to avoid discrimination allegations.

Changes to Health Plans Must Be Documented, Circulated

A number of plan sponsors have made changes to their group health plans in response to the COVID-19 pandemic, such as covering testing and sometimes treatment without any cost-sharing by the plan enrollee.

But any changes that are made must be followed up by amending the plan and communicating the changes to the enrollees.

Under the Employee Retirement Income Security Act, all health plans are required to deliver a Summary Plan Description (SPD) to enrollees to inform them of the full spectrum of coverage and their rights under the plan.

Whenever a plan sponsor makes a material modification to the terms of the plan or the information required to be in an SPD, they must amend the plan and let participants know about the change through a Summary of Material Modification (SMM).

Material changes

To qualify as “material,” a change must be important to plan enrollees. Examples include adding or eliminating a benefit, changing insurance companies, or changing rules for dependent eligibility.

Plan changes related to the COVID-19 pandemic that would have to be included in the SMM and SPD could include:

  • Offering continuing coverage to staff who would otherwise lose coverage due to a furlough, layoff or reduction of hours.
  • Changing eligibility terms to allow workers who may not have been eligible for coverage before to secure coverage (this could include part-time workers).
  • Covering a larger portion of an employee’s premium share.
  • Adding an employee assistance program to provide counseling for workers who may be undergoing unusual stress.
  • Adding telemedicine coverage.
  • Using funds in health savings accounts (HSAs) and flexible spending accounts (FSAs) to purchase over-the-counter medications.
  • Covering COVID-19 testing with no cost-sharing. 
  • Covering COVID-19 treatment without cost-sharing.

Some of the above changes are required by new laws and health plans must respond accordingly by changing their SMMs and SPDs. For example, the Families First Coronavirus Response Act requires that group health insurance and individual health insurance plans cover coronavirus testing with zero cost-sharing.

And the Coronavirus Aid, Recover and Economic Stabilization Act reverses an Affordable Care Act rule that barred policyholders from using funds in HSAs and FSAs to pay for over-the-counter medications. 

When the plan sponsor adopts these changes, it must also amend its plan summaries.

And SMMs must be delivered to plan participants within 60 days after a change has been adopted. You can deliver the SMM by mail, e-mail or posting it on your company’s intranet site. It’s recommended at this time that you opt for e-mail delivery.

One of the issues that may come up with any changes implemented in response to the COVID-19 outbreak is that some of the changes may be temporary. 

If that’s the case, the plan needs to include the termination date of any benefits that are adopted on a temporary basis.

However, if you don’t know how long the temporary benefits will be in effect, their temporary nature must be communicated in the SMM. Employers need to issue another SMM when the temporary benefit or coverage term ends.

The takeaway

This is an unusual time and unusual times call for unusual measures. It’s unusual for changes to be made to a plan in the middle of a plan year but because of the way the pandemic crash-landed, many plan sponsors have had to make changes. 

That said, you should work with us and your carrier on ensuring that the amended documents are sent out to staff.

As the employer, you should be aware of all the changes that have been made in response to COVID-19 so you can discuss them with any employees that have concerns or questions.

Handling Group Health Coverage for Laid-off, Furloughed Staff

As the COVID-19 pandemic wears on, many employers have had to lay off or furlough staff due to a tremendous drop-off in business. Besides the loss of income they face, these workers will often also lose their employer-sponsored health insurance.

With this in mind, many employers have been wondering if they can permit coverage to continue during the time the staff is temporarily laid off or furloughed due to the COVID-19 outbreak. If you are looking at options for keeping these employees on your group plan, you’ll need to read your policy to see if it’s possible and explore all of your options.

The options

Most group health plans will define what constitutes an eligible employee. Typical requirements include working at least 30 hours a week. The policy may also address how long an employee can be absent from work before they lose eligibility for the plan. Some policies allow coverage to continue for a furloughed employee, but not for someone who is laid off.

Another option is to approach your group health plan provider and ask them to amend policy language to allow for laid-off or furloughed staff to continue coverage. If your policy doesn’t address these workers or prohibits keeping them on the plan, you will need to approach the insurance company about this.

Due to the COVID-19 pandemic, several states have issued orders requiring or encouraging insurers to let employers make changes to their eligibility requirements.

Some states have extended grace periods to give employers and workers more time to make their premium payments if they are under financial duress. You can check with your state’s insurance department to see what accommodations are available.

If you maintain health insurance for furloughed employees, you need to decide if you will require them to continue paying for their share of the premium. Some employers allow employees to defer their contribution until they are working again.

Whatever you decide, you will need to have the appropriate documentation and administrative procedures in place.

COBRA and exchanges

Most employers who have staff they cannot keep on the group health plan, will be required to offer them and their covered beneficiaries continuation coverage through COBRA.

But COBRA can be expensive, and most workers are better off purchasing coverage on an Affordable Care Act insurance exchange. 

They can qualify for a premium tax credit if they have seen their income fall or disappear, and shop for a plan that will likely cost them less than COBRA continuation coverage. If any employee is laid off, they qualify for a special enrollment period to sign up on the exchanges.

Additionally, about a dozen states have also opened up special enrollment periods during the coronavirus crisis for people who are suddenly uninsured to sign up for coverage.

The dangers

Whatever you do, you should not try to game the system by continuing to keep laid-off or furloughed staff on the group health plan if the plan prohibits it. Some of the risks you would face include:

  • Your plan potentially losing its tax-exempt status (health benefits are usually not taxed). This would cause both you and your employees to potentially be saddled with back taxes.
  • The insurance company could deny claims for employees it determines were ineligible to participate in the plan.
  • COBRA violations, in particular for failing to send out notices to laid-off staff who are no longer eligible for the group plan.
  • A possible fiduciary breach under the Employee Retirement Income Security Act) if plan assets were used to pay for benefits of non-eligible individuals.

Protecting Your Firm from Employee Benefit Lawsuits

Employment practices and employee benefit-related lawsuits are on the rise – and employers have to be eternally vigilant when it comes to meeting their compliance obligations as plan sponsors.

Take the case of Visteon, a global automotive industry supplier, which outsourced its payroll and enrollment/disenrollment functions to outside plan administrators. 

But because of internal mistakes at the firms that Visteon outsourced these noncore HR functions to, some of its former employees who should have received COBRA eligibility notices after leaving the firm never received them. At first it was just a handful, but ultimately 741 co-workers signed on to a class-action lawsuit.

Visteon argued in court that it was not its own mistakes that had caused the error, and that it had made a good-faith effort to hire outside experts to take over this function for them. Payroll and enrollment, after all, are not core competencies for an auto parts supplier, the company said, and it had been relying on the expertise of these other payroll companies to properly execute these functions and provide these notices.

The court didn’t buy Visteon’s argument. Rather, it held the company responsible in 2013 for poor internal tracking systems, negligence in overseeing its third party administrators, and failure to accept responsibility for its COBRA notification efforts.

That exposed them to the statutory penalty of $110 per worker per day for failure to provide notification.

In the end, doing what tens of thousands of employers are doing nationwide – relying on third party administrators to handle payroll functions that are regulated under COBRA – Visteon was slapped with $1.8 million in penalties.

Employers are frequent lawsuit targets

As much as companies rely on their employees to generate profits, simply having them around and administering their benefit plans potentially exposes employers to significant possible liability.

According to a survey from insurer CNA, employment-related disputes are the fastest-growing category of civil lawsuits in America.

Employers face risk from the potential of lawsuits employees may bring for alleged failure to fulfill their fiduciary duties as sponsors of retirement plans under ERISA, for example, or for accidental or unauthorized leaks of personally identifiable information, which carries significant penalties under HIPAA.

Sponsors of defined contribution pension plans, such as 401(k)s, are particularly frequent targets of lawsuits for various fiduciary failures, errors or omissions.

Protecting your firm from legal action

So how can employers protect themselves against the potential costs of employee benefit-related litigation? You should:

  • Carefully monitor your plan third party administrators. Insist that they document their own compliance practices to you. Don’t take their word for it.
  • Reconcile your own lists of recently departed employees with your payroll company’s COBRA notifications.
  • Understand that your commercial general liability insurance policy usually will not cover you against liability arising from improper administration of employee benefit plans, ERISA, COBRA, USERRA, wage and hour laws, Title VII related lawsuits, and the like.
  • Consider employment practices liability insurance. This coverage will often protect against lawsuits like this and cover legal expenses, and even judgments.
  • Conduct regular reviews with advisers of investments in pension and 401(k) plans. Investments should be reviewed at least annually – and quarterly is not unusual.
  • Ensure that fees paid to 401(k) and other plan administrators are not excessive. You don’t have to go with the cheapest provider (that can be trouble, too). But if you do choose a higher-fee vendor, document why you made that decision so that you can show your reasoning in court and defend your decision-making as sound and prudent.
  • Invest in data security and HR compliance expertise.

Grandfathered Plans Get More Leeway on Hiking Cost-Sharing

The Trump administration has proposed a new rule that would give more leeway to group health plans that have grandfathered status under the Affordable Care Act.

Under the proposed rule, these plans could increase their cost-sharing requirements for enrollees at a higher level than they can now without losing their grandfathered status.

Grandfathered plans were in existence before the ACA took effect in March 2010 and as long as they are continually offered with only a small amount of certain changes, they do not have to comply with a number of the law’s provisions. The only ACA provisions that apply to grandfathered plans are a ban on the following:

  • preexisting condition exclusions.
  • excessive waiting periods.
  • lifetime and annual dollar limits.
  • policy rescissions.
  • plans must cover dependents up to age 26.
  • enrollees must receive a summary of benefits and coverage.

Grandfathered plans do not have to comply with a number of major ACA provisions, including:

  • Covering essential health benefits without cost-sharing.
  • Covering preventive services without cost-sharing.
  • Capping out-of-pocket costs for enrollees.
  • Guaranteeing an enrollee’s right to appeal a coverage decision.
  • Patient protections like the right to choose a primary care provider designation, OB/GYN access without a referral, and coverage for out-of-network emergency department services.

The proposed changes

All of the above is left untouched by the proposed rule, issued by the departments of Health and Human Services, Labor and Treasury. Here are the changes on tap:

1. A “special rule” for high-deductible health plans. Under the proposed rule, plans would not risk losing their grandfathered status if they increase fixed-amount cost-sharing requirements for enrollees as long as they have to make the change to comply with HDHP rules that require a minimum deductible. 

The concern is that annual deductible cost-of-living adjustments that are set by the Centers for Medicare and Medicaid Services will start increasing at a higher rate than grandfathered plans are allowed to increase their own cost-sharing requirements.

This way, even grandfathered plans can increase fixed-amount cost-sharing requirements at whatever level is required to meet a future deductible requirement.

2. New way to calculate “maximum percentage increase.” The proposed rule would allow grandfathered plans to use an alternative method for calculating the maximum percentage increase for fixed-amount cost-sharing requirements. 

Currently, grandfathered plans cannot increase cost-sharing requirements by more than $5, or a percentage equal to medical inflation (an amount published annually by the Department of Labor) plus 15%, whichever is greater.

The proposed rule would permit plan sponsors to use the “premium adjustment percentage” published annually by HHS as an alternative method for measuring permitted increases in fixed-amount cost-sharing.

The departments stated that the premium adjustment percentage might be a more appropriate measurement of changes in health care costs for the private sector because, unlike the medical inflation amount, it does not reflect changes in price for self-pay patients and Medicare.

Critics say it could mean that plans are able to increase copays at a higher rate than they currently can.

Changes on Tap for Group Health Plans in 2021

While most business owners and executives have been fretting about the COVID-19 pandemic and the effects on the economy and the survival of their business, now is a good time to conduct a review of group health plans in light of changes and new rules for 2021.

Here are some of the main changes that you should consider ahead of the new year:

Out-of-pocket limits – The out-of-pocket limit amounts for 2021 are:

  • $8,550 for self-only coverage.
  • $17,100 for family coverage.

For HSA-compatible high-deductible health plans, the out-of-pocket limits for HDHPs with attached health savings accounts for 2021 are:

  • $$7,000 for self-only coverage
  • $14,000 for family coverage.

New preventative care recommendations

ACA-compliant health plans are required to cover preventative care services with no out-of-pocket costs, and new ones that become effective in 2020 and 2021 include:

  • Perinatal depression prevention.
  • HIV prevention pill for healthy people at risk.
  • Updated recommendation for prevention of BRCA 1 and 2-related cancer.
  • Updated recommendation for breast cancer: medication use to reduce risk.
  • Updated recommendation for hepatitis screening.
  • Updated recommendation for screening for unhealthy drug use in adults.

Flexible spending accounts

This year, the IRS issued a notice that increased the maximum allowable amount of unused funds at year end in FSAs that can be carried over to the next year.

The notice increases the maximum $500 carryover amount for 2020 or later years to an amount equal to 20% of the maximum health FSA salary reduction contribution for that plan year. That means the health FSA maximum carryover from a plan year starting in calendar year 2020 to a new plan year starting in calendar year 2021 is $550.

Additionally, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) allows employers to remove restrictions that funds in FSAs, health reimbursement accounts and HSAs cannot be used for over-the-counter medications.  This is not a requirement that employers relax this rule for their FSA plans, but it allows them to choose to do so.

Summary of benefits and coverage

There are new Summary of Benefits and Coverage (SBC) materials and supporting documents that must be used for all plans that incept on or after Jan. 1, 2021.

Please remember that any changes to benefits in your group plan must be reflected in the SBC plan document and summary plan description.

The takeaway

2021 is fast approaching and with all the chaos of 2020, it would be wise to get a head start on understanding changes in store for the plans you offer. This would benefit both you and your employees.

Insurers Don’t Have to Pay for Testing Returning Workers: HHS

New guidance from the Trump administration absolves insurers of the responsibility of paying for COVID-19 tests that are required for workers who are returning to the job.

The guidance, released by the departments of Health and Human Services, Labor and Treasury, means that employers will likely either have to foot the bill themselves as they screen workers during the pandemic or pass those costs on to their workers. But in states that require employers to test workers, passing testing costs on to staff is usually not an option.

There had been some confusion about who would pay for the tests after the Families First Coronavirus Response Act required insurers to cover COVID-19 tests without patient cost-sharing. The new guidance has added a new caveat to that rule: that insurers cannot require health plan enrollees to pay for the test if it is deemed “medically appropriate” by a health care provider.

“Testing conducted to screen for general workplace health and safety (such as employee “return to work” programs), for public health surveillance for SARS-CoV-2, or for any other purpose not primarily intended for individualized diagnosis or treatment of COVID-19 or another health condition, is beyond the scope of section 6001 of the [Families First Coronavirus Response Act],” the guidance states.

Resistance from advocacy groups

The guidance was met with resistance from employer and consumer groups, with the advocacy group Families USA arguing that the nation’s workers should not be saddled with additional costs during these economically uncertain times.

Employers can require employees to be tested before returning to work, but the Pacific Business Group on Health said it would be highly unusual for a large employer to require testing for employees without paying for the tests in full.

Democrats have asked the administration to withdraw the guidance, but the White House has said it won’t and that it would like to see Congress come up with a solution in its next economic stimulus package for the coronavirus pandemic.

The HHS has said that states should use the $10.25 billion that lawmakers appropriated for testing to help pay for tests of returning workers.

Insurance companies may opt to pay for such tests anyway, as a precautionary measure. America’s Health Insurance Plans, however, is calling on more government support to cover the costs, which it says could be between $6 billion and $25 billion annually.

Proposed Rules on Group Plan Prescription Drug Prices

The Centers for Medicare and Medicaid Services has floated proposed regulations that would affect drug benefits for group plans and association plans and attempt to reduce drug expenses for health plan enrollees and drug plans.

While the rules seem to be focused on individual plans sold on government-run exchanges, three of the changes would also affect small and mid-sized group plans.

Mid-year formulary changes

Under current regulations, health insurers are barred from making changes to their drug formularies mid-year. They can only introduce changes upon renewal.

The CMS says it wants to boost incentives for drug plans to use generic drugs, so it is proposing a new rule that would allow insurers to:

  • Add a generic drug that becomes available mid-year.
  • Remove the equivalent brand-name drug from the formulary, or
  • Remove the equivalent brand-name drug to a different tier in the formulary.

Under the rules, insurers would have to notify their affected enrollees at least 60 days before the change would take effect. They must also offer a process for an enrollee to appeal the decision.

This rule would affect insurers in the individual, small group, and large group markets.

Excluding certain brand-name drugs

Under existing regulations, all prescription medications covered under an insurance contract are considered an essential health benefit, including the requirements that aim to ensure that the drug coverage is comprehensive. Under the Affordable Care Act, health plans are required to cover 10 essential benefits, and that includes the medications that are required to treat them.

The CMS wants to change this by letting insurers exclude a brand-name pharmaceutical from “essential health benefits”, or EHBs, if there is a generic equivalent that is available and medically suitable.

As with the current rule, the proposal would only apply to plans in the individual and small group markets. That’s because large group and self-insured plans are not required to cover all 10 categories of EHBs.

The proposal would also permit insurers to count only the cost of the generic equivalent (and not the cost of the brand-name drug) toward the enrollee’s out-of-pocket limit. Also, insurers would be permitted to apply an annual and/or lifetime dollar maximum to the brand-name drug, since the prohibition against annual and lifetime dollar limits only applies to EHBs.

Manufacturers’ coupon-handling

Currently, some insurers will count manufacturer coupons for brand-name drugs in addition to what the enrollee pays in calculating their out-of-pocket outlays for deductible purposes. They may do so depending on laws in the various states in which they operate.

For example, take the scenario of a drug that costs $600, and the manufacturer provides a $400 coupon that can be used to reduce the cost of the drug and the enrollee pays $200 out of pocket. Currently, insurers will count the full $600 towards the deductible and out-of-pocket maximum.

The CMS’s proposed rule would allow insurers to only include the actual out-of-pocket expense for the enrollee when calculating how much of an out-of-pocket maximum has been satisfied.

What comes next

The comment period for the proposed regulations ended on Feb. 19, 2019, and the final rules could be out before summer. We will keep you posted once the new regulations are out.

Judge Shoots Down Administration’s Rules for Association Plans

A federal judge has rejected the Trump administration’s rules for association plans, saying they are an attempt to allow employers to skirt their obligations under the Affordable Care Act. The rules that the Department of Labor finalized last year allow employers to band together as “associations” for no other purpose than to purchase health insurance for their employees.  And under those rules, the plans do not have to comply with many of the ACA’s provisions, including providing plans that are “affordable” and offer a set of minimum essential benefits.

Judge John Bates of the U.S. District Court for the District of Columbia wrote in his decision that the DOL’s final rule goes beyond the department’s authority under the Employee Retirement Income Security Act (ERISA) of 1974. The judge particularly homed in on the fact that the associations would become the de facto employer for members to allow them to band together for the sole purpose of having access to lower rates.

To date, about 30 association plans have been formed around the country in response to the regulations, which took effect last year. The association plans are reportedly not up and running, but have been gearing up to start Jan. 1, 2020. Under the rule, employers in the same industry can form a plan across state lines, as can any businesses in a specific geographic area. Sole proprietors can also join, along with small businesses, and obtain coverage for themselves and their families.

By banding together to form a pool with more than 100 workers, the employers would be considered a “large” employer under the ACA. While employee health plans for companies with fewer than 100 workers must abide by all of the ACA’s provisions, including covering 10 essential benefits, large plans do not have the same constraints.

This means that sole proprietors who may be purchasing their health plans on a state exchange would suddenly have the purchasing power of a large employer in the health insurance market.

The judge homed in on the part of the regulation that adopted a new definition of “employer” under ERISA, for purposes of determining when employers can join together to form an association health plan that is treated as a group health plan under that law. The new definition of employer includes sole proprietors with no employees.The judge did not issue a stay on the start of these plans, but the ruling could create difficulties for those that have already been formed and are ready to launch in 2020.

The Trump administration is likely to appeal the ruling, but the judge has made it difficult since he struck down the linchpin of the regulation, which had changed the definition of what constitutes an employer and employee (“the association has become the employer and sole proprietors the association’s employees for the purpose of purchasing coverage at large group rates.“)

Existing association plans

Interestingly, the fears that many observers had expressed about association health plans have not come to bear. Many had predicted that these plans would be stripped-down health plans devoid of many of the protections offered by the ACA, particularly being able to keep your children on your plan until they are 26 as well as coverage of 10 essential benefits.

A report by the trade publication Modern Healthcare found that association plans it had analyzed actually had not pared back benefits to enrollees. The analysis found that the plans it examined covered all of the 10 essential benefits as required by the ACA, and also at comparable costs, premiums, deductibles, and out-of-pocket requirements.

While the plans that have already been set up are slated to start on Jan. 1, 2020, for now, it’s likely they will continue planning for a 2020 start, but whether they actually get off the ground will depend on the courts going forward.

For the time being, employers that are interested in joining an association health plan may want to take a pause and consider other options if the appeals process drags on.

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