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Tenth Circuit Reaffirms Preemption of State Pharmacy Network Regulations

The US Court of Appeals for the Tenth Circuit recently held in Pharmaceutical Care Management Association v. Mulready (PCMA) that the Employee Retirement Income Security Act (ERISA) and Medicare Part D preempted several provisions of Oklahoma law regulating pharmacy benefit managers and pharmacy networks. Left unchallenged, these provisions threaten the ability of employers and Medicare Advantage organizations to design uniform nationwide health plans. The Tenth Circuit’s decision in favor of PCMA overturned a lower court decision that caused great concern about the ability of states to indirectly dictate the design of plans governed by ERISA and Medicare Part D.

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IRS Opines on the Tax Treatment of Employer-Funded, Insured, Fixed-Indemnity Wellness Policies

In light of recent Internal Revenue Service (IRS) guidance, employers should carefully examine any supplemental health plan, program or arrangement (which may or may not claim to leverage fixed indemnity insurance) that promises substantial payroll tax savings. In a legal advice memorandum, the IRS’s Office of Chief Counsel addressed and rejected the claimed tax treatment and purported advantages of certain “wellness indemnity” payments under an employer-funded hospital indemnity or other fixed indemnity insurance policy. The arrangement described in the memo is similar to other so-called “double dipping” arrangements that the IRS has previously rejected.

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Treasury, DOL and HHS Issue Landmark Mental Health Parity Proposed Rule

The US Departments of the Treasury, Labor, and Health and Human Services (the Departments) recently issued much-anticipated proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA) to better ensure that health plans allow access to mental health or substance use disorder benefits as easily as medical or surgical benefits. The proposed regulations reiterate the Departments’ focus on mental health parity and underscore the importance of compliance for health plan sponsors. They also come after many plans have been subject to audit by the Departments which focused heavily on MHPAEA compliance, leaving plan sponsors frustrated at the lack of guidance and inconsistent application of MHPAEA.

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Nevada and Connecticut Pass Consumer Health Data Laws

Following in the footsteps of Washington State’s My Health My Data Act, the governors of Nevada and Connecticut recently approved Nevada SB 370 and Connecticut SB 3. These bills impose a number of new requirements on the processing of consumer health data. Nevada SB 370 will go into effect on March 31, 2024, while the consumer health data-related provisions of Connecticut SB 3 that amend the Connecticut Data Privacy Act will take effect on July 1, 2023.

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How Dobbs Has Changed the Data Privacy Landscape

Companies are taking a fresh look at their privacy policies in the wake of Dobbs v. Jackson Women’s Health Organization. According to this Law360 article, policymakers are putting more pressure on companies to tighten their restrictions on collecting and disclosing personal health and location data.

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Agencies Issue FAQs on Surprise Billing and Cost-Sharing Rules Coordination

A recent article by the Kaiser Family Foundation (KFF) and National Public Radio (NPR) raised the prospect that patients may still see surprise medical bills despite the enactment of the No Surprises Act (NSA).

The article, entitled A Surprise-Billing Law Loophole? Her Pregnancy Led to a Six-Figure Hospital Bill, reports the story of a woman who was admitted for an extended inpatient hospital stay and follow-up postpartum procedure after experiencing a serious pregnancy complication. According to the article, the plan initially determined that the hospital was a nonparticipating provider, but the specialty clinic at which she was treated was in the carrier’s network. (The clinic’s doctors admitted patients only to the nonparticipating provider hospital.) The result was some $135,000 in uncovered expenses.

There are two relevant statutory provisions at play here:

  • The NSA provides protections against surprise medical bills for, among other things, nonemergency services furnished by nonparticipating providers with respect to a visit to a participating healthcare facility.
  • The Affordable Care Act (ACA) imposes limits on annual cost sharing, which includes deductibles, coinsurance, copayments or similar charges. Cost sharing does not, however, include balance billing amounts for non-network providers.

A great deal is riding on whether facilities and providers are participating or nonparticipating for NSA purposes, and whether providers are in or out of network for ACA purposes. If it is possible for a nonparticipating facility to have a participating provider, then there would seem to be a gap in the NSA’s protections. In the government’s view, this is not possible, so there is no gap.

The US Departments of Labor, Health and Human Services, and the Treasury (the Departments) weighed in on the issue in Q&As 1 and 2 of recently issued FAQs Part 60. According to the Departments, either:

  1. The balance billing and cost-sharing protections under the NSA will apply because the items and services are furnished by a nonparticipating provider, emergency facility or provider of air ambulance services; or
  2. The ACA limits will apply because the items or services are furnished by an in-network provider or provider of air ambulance services.

Under no circumstance, however, can a facility be a “participating” provider for NSA purposes and at the same time claim that they are not subject to the ACA out-or-pocket limits on in-network cost sharing.

The KFF/NPR article does not report the details about the underlying contractual arrangements. This might have been a health maintenance organization or other network-related plan, for example. The article does report that the balance bill was reversed, although no rationale is provided. The lesson here, according to the Departments, is that a plan or carrier cannot be in network for one purpose and out of network for other purposes to evade the surprise billing rules.

Congress Advances Four Bipartisan Healthcare Bills

The US House and Senate returned from recess, beginning a three-week sprint toward the August break. The bipartisan healthcare legislation on pharmacy benefit managers (PBMs) and healthcare transparency is moving through both the House and Senate.

The House Education and the Workforce Committee held a markup of a bipartisan healthcare package of four bills. The July 12 markup included four bills under the committee’s jurisdiction related to the Employee Retirement Income Security Act of 1974, to increase cost transparency for employers and patients, increase oversight of pharmacy benefit managers (PBMs), lower premiums, reduce healthcare spending and increase competition by removing incentives for provider consolidation.

  • H.R. 4509, the Transparency in Billing Act, would require accurate billing practices by hospitals, ensuring that group health plans pay for appropriately billed services. The bill advanced by a vote of 39–0.
  • H.R. 4507, the Transparency in Coverage Act, would codify the Transparency in Coverage final rule, which would provide consumers with price transparency for medical services and prescription drugs, and bring light to PBM practices. The bill advanced by a vote of 38–1.
  • H.R. 4527, the Health DATA Act, would ensure that health plan fiduciaries are not contractually restricted from receiving cost or quality of care information about their plan, including by adding PBMs to the list of groups that can be liable for violating gag clause provisions. The bill advanced by a vote of 38–1.
  • H.R. 4508, the Hidden Fee Disclosure Act, would strengthen requirements that PBMs and Third-Party Administrators disclose compensation to plan fiduciaries. The bill advanced by a vote of 39–1.

Almost every House and Senate committee with healthcare jurisdiction has now considered bipartisan PBM reform and healthcare transparency and consolidation reforms. This week, the Senate Finance Committee released a draft bill that would require increased disclosures by PBMs about their business practices. The Senate Finance Committee also announced a markup on July 26 to consider a package of PBM legislation.

IRS Clarifies Status of Fixed-Indemnity Health Plans Claiming Big Tax Savings

A recent Internal Revenue Service (IRS) memorandum addresses the tax status of certain fixed-indemnity health plans that promise employers major payroll tax savings. In this American Staffing Association article, Alden J. Bianchi summarizes the memorandum and outlines what employers need to know.

Read the article.




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