Following a dynamic 2023 coupled with a continually evolving legal landscape, employers may feel that they are left with more questions than answers. During a recent webinar, McDermott’s employment team took a dive into the most pertinent legal updates of 2023 and shed light on uncertainties to prepare employers for the year ahead. The discussion covered new laws taking effect in 2024, explored key developments impacting the workforce and advised on what employers can expect heading into the new year.
The Biden administration recently announced that 28 healthcare payors and providers intend to implement and adhere to voluntary commitments for the safe, secure and trustworthy development and deployment of artificial intelligence (AI) in healthcare. The signatory companies aligned around the FAVES principle—namely, that AI should lead to healthcare outcomes that are fair, appropriate, valid, effective and safe.
On November 6, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule for the Medicare Advantage and Part D programs. Among other proposals, CMS proposed significant changes to longstanding rules on permissible payment structures for agents and brokers. Specifically, CMS proposes to prohibit “overrides” or administrative fees paid to agents and brokers outside of the fair market value enrollment compensation limits established by CMS. This could have a significant impact on MA and Part D plan arrangements with agents and brokers.
How can the independent sector and choice make a dent in reversing the increasingly high number of United Kingdom healthcare patients waiting for treatment? In this LaingBuisson News article, Sharon Lamb examines the latest waiting time data and offers perspective on potential solutions.
How can HR professionals elevate their game to attract talent and spearhead innovative strategies?
In this ManageHR article, Elizabeth Vassolo, McDermott’s Global Head of Employment Brand, shares her perspective on emerging HR trends, highlights a game-changing project and offers actionable advice.
The Protect Illinoisans from Unfair Medical Debt bill will require Illinois hospitals to take a much more active role in limiting consumers’ medical debt. The bill puts into place four primary requirements designed to reduce the medical debt burden of individuals receiving care. These requirements will apply to services provided on or after June 29, 2024.
After a brief hiatus to discuss the pleading standards adopted by the US Court of Appeals for the Tenth Circuit in E.W. v. Health Net Life Insurance Company, we return to our examination of the comments submitted in response to the proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). The US Departments of Labor, Health and Human Services and the Treasury (the Departments) issued the proposed regulations in 2023. Our previous MHPAEA content is available here.
In this post, we examine the impact of the proposed regulations on small and medium-sized self-funded plans through the lens of a National Association of Benefits and Insurance Professionals (NABIP) comment letter.
The MHPAEA governs the conduct of group health plans and health insurance issuers. This structure works fine in the case of fully insured group health plans, since compliance by the issuer or carrier generally results in compliance by the plan. The former acts on the latter’s behalf. The calculus is different, however, in the case of self-funded plans that typically rely on third-party administrators for their MHPAEA compliance. Often, the third-party administrator is also a licensed carrier that is providing services on an “administrative services only” basis. Here, the group health plan alone bears the responsibility for MHPAEA compliance even though, as a practical matter, the plan will rely heavily, if not entirely, on its administrative services only provider to comply.
One of the attractions of self-funding is that the plan has the ability (in theory) to customize plan design features and strategies, including mental health benefits. In practice, only large employers have the bargaining leverage to modify their group health plan’s design features, however. Other employers are essentially beholden to their service provider(s) for their mental health benefits and other plan designs. To date, that compliance has been less than robust. See, e.g., a comment letter submitted by the state attorneys general of New York, California, Colorado, Delaware, the District of Columbia, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, Oregon, Pennsylvania, Rhode Island, Vermont and Washington addressing their efforts to enforce their mental health and substance use parity laws against carriers. In this sense, then, it can be said that MHPAEA compliance does not “scale.” As a plan’s leverage over its service providers decreases, so does its design flexibility and options.
There is another, perhaps more basic, sense in which the MHPAEA rules do not scale. The cost of compliance can be substantial. That cost may be manageable when spread over hundreds of thousands of covered lives but not so much when spread over hundreds of lives. The net effect of this disparity is that small plans will likely be forced to adopt far simpler, prepackaged and potentially less effective nonquantitative treatment limitation (NQTL) design strategies.
The NABIP’s comment letter addressed the following issues, principally from the perspective of self-funded plans:
Beginning in 2024, employers and plan sponsors will need to implement new minimum eligibility rules, enacted by the SECURE and SECURE 2.0 Acts, that significantly expand eligibility for long-term, part-time employees to participate in employer-sponsored retirement plans.
The new rules require that employers who maintain such plans provide employees who work at least 500 hours for three consecutive years (reduced to two in 2025), and are at least age 21, the opportunity to make elective deferrals under their 401(k) plans beginning in 2024 and their 403(b) plans beginning in 2025. This change has generated numerous questions about what employers need to do to comply.
In a series of recent posts, we have examined a sampling of comments submitted in response to proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). The proposed regulations were issued earlier this year by the US Departments of Labor, Health and Human Services and the Treasury (the Departments). Our previous MHPAEA content is available here.
This post considers a MHPAEA-related case decided by the US Court of Appeals for the Tenth Circuit, E.W. v. Health Net Life Insurance Company (available here). The case is notable because it represents the first US court of appeals to establish the elements required to state a claim under the current 2013 MHPAEA final regulations; it also provides us with an opportunity to consider how things might differ if the proposed regulation is adopted as a final rule.
Health Net involved a claim against Health Net Insurance Company and Health Net of Arizona, Inc. (collectively, Health Net) by the parents of a minor (I.W.). I.W. was admitted to a subacute care facility (an adolescent mental health residential treatment center), but her stay was cut short because it was determined that her treatment was no longer medically necessary. The determination of medical necessity was based on the application of the McKesson InterQual Behavioral Health 2016.3 Child and Adolescent Psychiatry Criteria (the InterQual Criteria).
At trial, the plaintiffs claimed that Health Net violated the MHPAEA by imposing medical necessity criteria for mental health benefits that were more stringent than those for medical/surgical benefits. The district court did not agree. On appeal, the Tenth Circuit reversed the MHPAEA claim based on the 2013 MHPAEA final regulations. (There was also an Employee Retirement Income Security Act-related claim, the dismissal of which by the district court was affirmed by the Tenth Circuit.) The Tenth Circuit held the medical necessity criteria applied by the plan to medical/surgical benefits in a subacute setting was less stringent than analogous, intermediate-level metal health benefits. In its holding, the court fashioned the following test under which, to state a claim under the MHPAEA, a plaintiff must:
Plausibly allege that the relevant group health plan is subject to the MHPAEA;
Identify a specific treatment limitation on mental health or substance use disorder benefits covered by the plan;
Identify medical or surgical care covered by the plan that is analogous to the mental health or substance use disorder care for which the plaintiffs seek benefits; and
Plausibly allege a disparity between the treatment limitation on mental health or substance use disorder benefits as compared to the limitations that defendants would apply to the medical or surgical analog.
Item (1) was not in dispute; the relevant group health plan was clearly subject to the MHPAEA. The court instead focused on, and dealt exhaustively with, each of the other three items:
Identify a specific treatment limitation on mental health or substance use disorder benefits covered by the plan.
The price of prescription drugs has brought scrutiny to the entire drug supply chain. Congress and other policymakers continue to seek opportunities to lower costs for patients and the federal government. Pharmacy benefit managers (PBMs) are a key stakeholder in the drug supply chain, functioning as intermediaries between insurance providers and pharmaceutical manufacturers.
Congress and other stakeholders are raising questions about PBMs’ operations and their impact on drug prices and out-of-pocket costs for patients. In the 118th Congress, six key committees have advanced legislation that would increase PBM transparency and reporting obligations and modify other business practices. In the House, three committees combined to introduce H.R. 5378, the Lower Costs, More Transparency Act, which passed the House December 11, 2023. Read on as we review and compare policies in the Lower Costs, More Transparency Act and the PBM bills considered individually by the relevant House and Senate committees.
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