ERISA Preemption Developments in Managed Care

By and on April 13, 2023

For plans governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 (ERISA), the doctrine of federal ERISA preemption over state statutes, regulations or administrative schemes has been a central subject of litigation since the inception of the statute. In December 2020, the US Supreme Court issued a decision on the subject in Rutledge v. Pharm. Care Mgmt. Ass’n, 208 L. Ed. 2d 327 (2020).

In the short, unanimous opinion, the Supreme Court in Rutledge held that ERISA did not preempt an Arkansas statute that regulates pharmacy benefit managers’ (PBM) drug reimbursement rates. Arkansas passed Act 900 in 2015 to regulate PBM reimbursement rates for pharmacies, which, in effect, established a reimbursement floor that requires PBMs to reimburse pharmacies at a rate that reflects the pharmacy’s acquisition cost for the drug in question.

Access this McDermott Health 2023 Annual Report (pg. 9).

Jeremy Earl
Jeremy Earl focuses his practice on providing complex regulatory counseling and advice to a variety of health care organizations such as health insurers, health maintenance organizations, pharmacy benefit managers, health care providers and other industry stakeholders on federal and state regulatory matters. He also drafted and negotiated numerous value-based provider reimbursement agreements on behalf of managed care entities and health care providers such as accountable care organizations (ACOs), health systems and health insurers.Read Jeremy Earl's full bio.

Kate McDonald
Kate McDonald focuses her practice on transactional and regulatory counseling for clients in the health care industry, with particular focus on federal and state health care government programs and the intersection between health care payors and providers. Kate regularly advises health insurers, health maintenance organizations (HMOs), health care government contractors, health care providers and other clients on compliance with health care laws and regulations, particularly in connection with Medicare Advantage, Medicare Part D, Medicaid managed care, the Affordable Care Act, state insurance laws, and state licensure and professional practice regulations. Read Kate McDonald's full bio.




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