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Many employers offer health insurance as a way to recruit and retain talent. However, when it comes to sponsoring a group health plan, employer plan sponsors are subject to the We may be exposed to significant legal and regulatory burdens. Activities. The Consolidated Appropriations Act of 2021 (CAA) creates a measure that strengthens plan sponsors’ fiduciary duties and adds the potential for employer liability. As a result, employers who sponsor health plans should familiarize themselves with the requirements of the CAA to avoid being subject to class action lawsuits or government audits.
In recent years, employer-sponsored benefit plans, such as 401(k)s and pension plans, have become common targets for class action lawsuits.1 Specifically, the fees charged to plan participants by employer-sponsored benefit plans have received increased attention. Plaintiffs’ attorneys have also focused on group health plans, including the fees charged by such plans and the services provided to plan participants, and these lawsuits are currently going through various circuits. Understanding the new obligations imposed by the CAA can help group health plan sponsors avoid audits and class action lawsuits, and even allow sponsors to take advantage of new defenses against liability. Additionally, group health plan sponsors may benefit if they treat the new CAA disclosure requirements as both a challenge and an opportunity. The new disclosure requirements require sponsors to provide a new level of detail to ensure plan fees are reasonable. However, keep in mind that the same data could also be used against plan sponsors in litigation over the reasonableness of disclosed fees.
gag clause
The CAA amended ERISA to prohibit so-called “gag clauses” in contracts between group health plans and service providers.2 This requires a group health plan sponsor to directly disclose information about the costs and quality of services provided by a particular health care provider to the plan sponsor, plan participants, or individuals eligible to become participants. This means that you cannot agree to a contract that restricts you directly or indirectly. To ensure compliance with this new rule, group health plan sponsors must avoid including gag clauses in their contracts and provide annual certification confirming that the group health plan complies with this requirement. must be submitted to the Ministry of Labor.3 The initial certification deadline was December 31, 2023.
Gag clauses have previously led medical sponsors to bring lawsuits against insurance companies to force disclosure of claims data. Banning these provisions may allow plan sponsors to better understand the financial impact of their decisions on participants seeking health care benefits. This information would also be made available to plan participants, potentially increasing the likelihood of lawsuits alleging that plan fiduciaries knew the fees were “excessive” in light of the services provided. Please keep this in mind. This means plan sponsors may face increased high-risk fees. Lawsuit. Therefore, plan sponsors should ensure compliance with the prohibition on gag clauses and take advantage of future public information on the cost burdens faced by participants using health benefits. A close examination of the realities of these costs may enable fiduciaries to effectively negotiate with service providers and consider plan fee options to provide maximum benefit to participants.
Equivalence between mental health and substance abuse
The CAA also requires that group health plans remain compliant with the Mental Health Parity and Addiction Equity Act (MHPAEA). MHPAEA imposes stricter financial burdens (such as copays) and treatment restrictions (such as visitation restrictions) for mental health and substance abuse disorders in group health plans than those applicable to comparable medical and surgical benefits. It is prohibited to do so. MHPAEA also prohibits group plans from imposing non-qualitative treatment limitations on mental health or substance abuse treatment unless comparable limitations are imposed on similar medical and surgical benefits. Non-qualitative treatment restrictions include processes or criteria that limit the scope or duration of benefits that participants can receive from a group health plan. For example, a plan term that requires prior authorization before a participant can receive mental health treatment benefits would be a non-qualitative treatment restriction on mental health treatment.
The CAA strengthened these requirements by requiring plans to conduct a comparative analysis of the design and application of non-qualitative treatment restrictions. Each plan must be prepared to disclose these comparative analyzes to the Department of Labor upon request. The disclosure indicates, among other things, that the plan has a process to ensure that non-qualitative treatment limitations are not applied more strictly to mental health or substance abuse benefits than to comparable medical or surgical benefits. There must be.
The field of mental health parity has been a hotbed of litigation for many years, and important mental health parity cases that could shape this landscape for years to come are pending in the Court of Appeals.
Even before the enactment of the CAA, the DOL began auditing plans to ensure compliance with the MHPAEA, and we understand that the DOL has found many plans that violate these rules. The CAA’s new requirements make compliance more difficult and may result in participant claims and government audits impacting employers who do not strictly adhere to these rules.
As well as required cost disclosures, plan fiduciaries should scrutinize these comparative analyzes and understand changes over time to better understand the economic realities faced by participants seeking to access medical benefits. You may find that you can provide valuable insight into Such information helps fiduciaries ensure that the plan design meets the primary needs of participants. It can also provide fiduciaries with the data they need to negotiate costs with networks of government and medical service providers. Such an analysis may also serve as an effective defense against claims that a fiduciary has failed to comply with these new requirements.
Pharmaceutical benefit reporting
The CAA also requires group health plans to disclose extensive data about drug benefits provided to plan participants throughout the year. Currently, plans must be disclosed annually to the Department of Labor, Department of Health and Human Services, and Department of Treasury.Four The disclosure must identify:
- The start and end of the plan year for the plan.
- Number of plan participants and beneficiaries.
- States in which the plan provides coverage.
- The 50 brands of prescription drugs most frequently dispensed in connection with claims paid by the plan and the total number of claims paid for each of those drugs.
- The 50 most expensive branded prescription drugs (based on total annual spending) and the total amount spent by plans to cover each of those drugs.
- The 50 brands of prescription drugs that caused the largest increases in planned spending and the changes in planned spending for each of those drugs.
- Total spending on health services by the plan, and total spending on prescription drugs (must be broken down by plan spending and participant and beneficiary spending).
- Average monthly premium (must be broken down into amounts paid by the employer on behalf of the participant or beneficiary and amounts paid by the participant or beneficiary).
- The effect on premiums of rebates or fees paid by pharmaceutical companies to plans or their service providers.and
- Reductions in premiums or out-of-pocket costs due to rebates or commissions paid by pharmaceutical companies to plans or their service providers.
The provisions of the CAA require health plan sponsors to gather important information that was not previously available regarding the costs of various elements of a health plan. Again, this increase in information creates opportunities and challenges. These reports provide plan fiduciaries an opportunity to understand the financial burden that plan participants are incurring regarding prescription drug prices. This ensures that plan fiduciaries can negotiate with health care providers and rate arrangements to maximize value for plan participants.
On the other hand, similar disclosures could increase the likelihood that plan participants could question fiduciary choices regarding preferred providers and administrative fee arrangements based on currently available information, increasing their exposure to litigation. There is sex. Drug pricing is currently one of the most hotly debated issues among policymakers, and plan sponsors are wondering which drugs and providers impose the greatest burden on their plans. Students will be able to understand what is happening. In fact, the government now knows which drugs are the most expensive for Medicare, and is using that data to bring drug companies to the negotiating table.Five Similarly, plan fiduciaries need to take advantage of that increased data. This reporting requirement should not be viewed solely as another “tick the box” regulatory requirement. Rather, plan fiduciaries need to understand that they have a responsibility to make wise choices given the information available to them, and that they will soon have more information available than ever before.
Take-out
The CAA imposes a number of new obligations that group health plan fiduciaries must be familiar with to ensure their plans comply with federal law. These new requirements impact gag provisions and require numerous disclosures regarding non-qualitative treatment limitations and pharmaceutical benefits. The CAA provides employers with important information to help them manage their plans. However, these new disclosures may also provide avenues for government agencies and participants to pursue potentially adverse actions against employers.
