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.
In recent years, the Centers for Medicare & Medicaid Services (CMS) has expanded payment for remote monitoring services in an effort to pay for non-face-to-face services that improve care coordination for Medicare beneficiaries. On November 2, 2023, CMS released the calendar year 2024 final rule for services reimbursed under the Medicare Physician Fee Schedule. In the final rule, CMS clarified certain guidance for remote monitoring services, finalized separate reimbursement for remote monitoring provided by rural health centers and federally qualified health centers, and discussed a recent request for information for digital therapies.
The Internal Revenue Service (IRS) recently issued new guidance clarifying key aspects of the broadened retirement plan eligibility rule for long-term, part-time employees under the SECURE 2.0 Act. However, with the new rule effective for 401(k) plans beginning January 1, 2024, the guidance leaves employers and plan sponsors very little time to make changes to how their human resources information system providers and recordkeepers currently track hours for this purpose. As a result, it is imperative that employers review their existing eligibility-tracking processes as soon as possible to determine if changes are needed.
The enactment of the Affordable Care Act in 2010 led to a sharp increase in employers self-funding their group health insurance plans, with the market tripling in size in the decade that followed. While larger employers can self-fund their group medical coverage in a relatively efficient manner, it does not work well for smaller employers. As year-over-year spending on healthcare in the United States outpaces growth in real gross domestic product by wide margins, employers of all sizes continue to seek to make group health insurance coverage available to their employees at a reasonable cost. Group captive-funded medical stop-loss insurance offers a way for smaller employers to obtain the full benefit of self-funding. This Special Report explains what group medical stop-loss captives are and how they are structured and regulated.
Numerous states—including Florida, Texas and Michigan—have been busy finalizing telehealth-related rulemaking and legislation. Michigan’s proposed bills, for example, push for coverage parity across insurers and payment parity.
What else have these states been up to over the last month?
As of December 31, 2023, all employees physically working in Chicago for at least two hours in a two-week period will earn both one hour of paid leave and one hour of paid sick leave for every 35 hours worked, pursuant to an ordinance passed by the Chicago City Council on November 9, 2023. The new ordinance expands the current ordinance, which requires employers to provide only paid sick leave to employees.
On October 30, 2023, the Biden administration released a long-awaited Executive Order (EO) on the “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.” The EO acknowledges the transformative potential of AI while highlighting many known risks of AI tools and systems. It directs a broad range of actions around new standards for AI that will impact many sectors, and it articulates eight guiding principles and priorities to govern the development and use of AI.
This post continues our focus on comment letters 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.
The MHPAEA generally requires parity between mental health/substance use disorder (MH/SUD) benefits and medical/surgical (M/S) benefits with respect to annual and lifetime dollar limits, financial requirements and treatment limitations. Treatment limitations may be quantitative (quantitative treatment limitations or QTLs) or nonquantitative (nonquantitative treatment limitations or NQTLs). As the names suggest, QTLs involve limits to which numbers may be applied, e.g., cost-sharing amounts or length of a hospital stay, while NQTLs involved limitations that are not so restricted. The Consolidated Appropriations Act, 2021 added a requirement that plans and issuers perform and document comparative analyses of the design and application of NQTLs on MH/SUD and M/S benefits. The proposed regulations focus on the regulation of NQTLs and compliance with the comparative analyses requirement.
The proposed regulations establish a three-prong test that plans and issuers must pass to impose an NQTL in a classification. To qualify, an NQTL:
Must be no more restrictive when applied to MH/SUD benefits as compared to M/S benefits;
The plan or issuer must meet specified design and applications requirements; and
The plan or issuer must collect, evaluate and consider the impact of relevant data on access to MH/SUD benefits as opposed to M/S benefits and take reasonable action to address any material differences.
These requirements, if adopted as proposed, could make it difficult for group health plans to use third-party payers that manage their MH/SUD benefits under so-called “MH/SUD carve-out” vendor arrangements. Also referred to generically as “managed behavioral health organizations,” MH/SUD carve-out vendors are payers that claim specialized expertise with, and focus exclusively on the treatment of, mental health and substance use disorders. Plans contract with these providers for reasons of cost, quality and ease of administration. Even under current law, demonstrating compliance for a single NQTL involves a number of steps, each of which must be repeated for each additional NQTL. NQTLs designed and adopted by mainstream M/S providers and administrative services vendors and carve-out vendors will differ in their particulars. Layering on new, quantitative “no more restrictive” and “data collection” requirements will add a new level of complexity that may be prohibitively costly for plans that seek to use MH/SUD carve-out vendors.
Even if plans using MH/SUD carve-out vendors could manage to obtain and process all the required data, there is another concern: These entities typically design and adopt their own NQTLs that are presumably informed by their expertise adjudicating MH/SUD claims. These NQTLs will at least in some if not many instances bear little resemblance to the NQTLs adopted by a plan’s M/S benefit vendors, networks and payers. The proposed regulations include exceptions under which an NQTL applied to MH/SUD benefits [...]
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