Compliance and Regulatory
May 23, 2023
On May 15, 2023, the US Court of Appeals for the Fifth Circuit (the Fifth Circuit) issued an administrative stay (i.e., a pause) of the lower court’s remedy in Braidwood Management Inc. v. Becerra. As a result of the stay, all ACA preventive care mandates remain in effect until the Fifth Circuit rules on the substance of the case.
As explained in our prior article, on March 30, 2023, the US District Court for the Northern District of Texas invalidated and prevented enforcement of certain ACA preventive care mandates by the DOL, HHS and IRS (the departments) on a nationwide basis. Specifically, the court struck down preventive care requirements recommended by the US Preventive Services Task Force (PSTF) with an “A” or “B” rating after determining the PSTF members were not properly appointed under the US Constitution. The departments appealed the decision to the Fifth Circuit and requested a stay of the court’s remedy pending the outcome of the litigation.
Employers should be aware of the Fifth Circuit’s grant of the stay and ensure their group health plans continue to provide coverage of the PSTF-recommended preventive services without cost-sharing until a final decision is issued on the merits of the case.
US Court of Appeals for the Fifth Circuit Stay: Braidwood v. Becerra »
May 09, 2023
On April 27, 2023, CMS published the 2024 Notice of Final Benefit and Payment Parameters and an accompanying fact sheet. The final rule is primarily directed at health insurers and the ACA marketplace but includes information that may indirectly impact group health plans.
Generally, the annual parameters update the ACA requirements and uniform standards for marketplace coverage. Among other items, the 2024 changes are designed to improve network adequacy (e.g., by requiring provider networks for marketplace coverage), encourage enrollment in plans with reduced cost-sharing for lower-income individuals and simplify the enrollment process.
Beginning in 2024, the final rule will allow federally facilitated exchanges to apply a special enrollment rule for individuals losing Medicaid or Children’s Health Insurance Program (CHIP) coverage due to eligibility redeterminations. Under the special rule, these individuals can choose an exchange plan 60 days before or 90 days after their loss of coverage. (Under current rules, the coverage loss must be reported within 60 days.) State-based exchanges can allow additional enrollment time and can implement the rule in 2023. To avoid potential gaps in coverage, exchanges may offer earlier coverage effective dates for those who attest in advance to a future loss of minimum essential coverage.
These marketplace special enrollment flexibilities may assist individuals who lose Medicaid or CHIP coverage in the coming months as the COVID-19 continuous enrollment policy ends and states return to normal eligibility requirements. Those losing coverage who are eligible for employer-sponsored group health coverage may also seek to exercise their HIPAA special enrollment right to enroll in the group health plan. Employers should be aware of the potential increase in employees losing Medicaid or CHIP coverage who may be seeking to enroll in the employer-sponsored group health plan or marketplace coverage.
Additionally, for federally facilitated exchange coverage, the final rule formalizes the policy of allowing children to stay on their parent’s coverage until the end of the year when they turn 26. (The ACA technically only requires such coverage until age 26, but the rule now prohibits mid-year terminations of the child’s coverage.) However, this policy is optional for state-based exchange coverage.
As a result of a policy change in 2023, the benefit and payment parameters no longer announce the permitted ACA plan annual cost-sharing limits. As a reminder, the 2024 limits, as specified in a prior CMS memo, are $9,450 for self-only coverage and $18,900 for family coverage. (The 2023 limits are $9,100 and $18,200.) These limits are distinct from the IRS out-of-pocket maximums applicable to HSA-compatible high deductible health plans.
Employers should be aware of the release of the final rule, which is effective June 18, 2023.
April 25, 2023
On April 13, 2023, the DOL, HHS and IRS (the “agencies”) jointly issued FAQs (Part 59) to provide initial guidance on how the recent court decision in Braidwood Management Inc. v. Becerra affects the requirement to cover preventive services without cost-sharing under the ACA. According to the FAQs, the agencies anticipate issuing additional guidance in the future to further address plans' and issuers' obligations in light of the Braidwood decision.
As background, under the ACA, non-grandfathered group health plans must cover certain preventive services without cost-sharing when they are delivered by an in-network provider. The covered requirements have historically included services given an “A” or “B” rating from the US Preventive Services Task Force (USPSTF), vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), and preventive care and screenings for children and women recommended by the Health Resources and Services Administration (HRSA). On March 30, 2023, the US District Court for the Northern District of Texas (the “court”) issued a final judgment in Braidwood Management Inc. v. Becerra, which invalidates and prohibits the agencies from enforcing all USPSTF-recommended preventive care mandates issued since the ACA’s March 23, 2010, enactment, on a nationwide basis. Additionally, the final judgment prevents the agencies from enforcing the PrEP coverage requirements as to the plaintiffs with religious objections. For additional background information, please see our April 11, 2023, article.
Below is the key summary of the FAQs:
Preventive Service Coverage Requirements Affected by the Decision
The FAQs emphasize that the court ruling only removes the ACA coverage requirements and cost-sharing prohibitions for preventive care based on the USPSTF recommendations (e.g., lung cancer screening and pre-exposure prophylaxis (PrEP) drugs to prevent HIV infection). Preventive care recommendations by ACIP (e.g., vaccines and immunizations) and HRSA for women's health services, including contraceptive coverage requirements, would not be affected and, therefore, could not be subject to the cost-sharing requirement.
Specifically, the ruling prevents the agencies from implementing and enforcing preventive items and services given an “A” or “B” recommendation by the USPSTF on or after March 23, 2010. However, the agencies encourage plans to continue coverage without cost-sharing. Furthermore, plans and issuers must continue to cover, without cost-sharing, items and services recommended by ACIP or HRSA that overlap with stricken USPSTF recommendations.
Impact of State Laws and Midyear Coverage Changes
The court ruling does not impact state insurance law requirements to cover preventive care with an "A" or "B" rating by the USPSTF on or after March 23, 2010. Therefore, the agencies encourage issuers to continue to comply with any applicable state laws. Further, any midyear changes would need to comply with applicable state and federal laws, contractual provisions, and, if applicable, collective bargaining agreements.
Notice Requirements
Plans must comply with applicable notice requirements. If SBC content is affected, notice must be 60 days in advance of the change. Additionally, ERISA requires a summary of material reduction in covered services or benefits within 60 days following the change.
Qualified HDHP status
Until further notice, an HDHP can continue to provide benefits without cost-sharing for items and services recommended with an "A" or "B" rating by the USPSTF on or after March 23, 2010, before the minimum annual deductible is met.
Employers should be aware of the FAQ guidance and monitor future developments. The court’s decision has been appealed to the Fifth Circuit Court of Appeals, and the final outcome is not yet known. Employers considering any changes because of the court ruling should consult with counsel for guidance.
FAQs About ACA and Coronavirus Aid, Relief, and Economic Security Act Implementation »
April 11, 2023
On March 30, 2023, the US District Court for the Northern District of Texas (the “court”) issued a final judgment in Braidwood Management Inc. v. Becerra, which invalidates and prohibits enforcement of certain ACA preventive care requirements on a nationwide basis. As explained below, the final judgment follows the court’s September 7, 2022, ruling in a case challenging the legality of the preventive care mandates.
Under the ACA, non-grandfathered group health plans must cover certain preventive services without cost-sharing when they are delivered by an in-network provider. The covered requirements have historically included services given an “A” or “B” rating from the US Preventive Services Task Force (PSTF), vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), and preventive care and screenings for children and women recommended by the Health Resources and Services Administration (HRSA).
In this case, the plaintiffs included two businesses and six individuals who sought health insurance that excluded or limited coverage required by the ACA preventive care mandates. Among other claims, the plaintiffs argued that the ACA preventive care mandates violate the US Constitution because the appointment process for members of the PSTF, ACIP and HRSA did not satisfy the constitutional method for appointing US “officers.” A person is a US “officer” if that person occupies a continuing position established by federal law and exercises significant authority under that law.
On September 7, 2022, the court ruled that the appointment of ACIP and HRSA officers satisfied the constitutional requirements, since they are supervised and directed by the HHS Secretary. In contrast, PSTF members are independent experts that provide evidence-based recommendations related to preventive care services. The court found that the appointments of PSTF experts violated the US Constitution because they exercise officer-level authority but are not supervised or directed by an administrative agency. The plaintiffs had also asserted that the PSTF-recommended requirement to cover pre-exposure prophylaxis (PrEP) drugs to prevent HIV infection violated their religious rights under the Religious Freedom Restoration Act. On this issue, the court ruled in favor of the plaintiffs. Please see our previous article summarizing the court’s prior ruling.
The court reserved ruling on the appropriate remedies in their September 7, 2022, opinion. Accordingly, the March 30, 2023, judgment invalidates and prohibits the DOL, IRS and HHS (the “departments”) from enforcing all PSTF-recommended preventive care mandates issued since the ACA’s March 23, 2010, enactment, on a nationwide basis. Additionally, the final judgment prevents the departments from enforcing the PrEP coverage requirements as to the plaintiffs with religious objections.
Braidwood Management Inc. v. Becerra Second Memorandum Opinion and Order on Remedies »
Group Health Plan Considerations
First, it’s important to recognize that the court ruling only removes the ACA coverage requirements and cost-sharing prohibitions for preventive care based on the PSTF recommendations. Preventive care recommendations by ACIP (e.g., vaccines and immunizations) and HRSA for women's health services (including contraceptive coverage requirements) would not be affected and therefore, could not be subject to cost-sharing requirements. Employers may want to consult with their carriers or TPAs for further details on which preventive care coverage requirements (e.g., specific screenings for various types of cancer) are affected.
Second, the departments announced their intention to appeal the decision to the US Court of Appeals for the Fifth Circuit. The departments may also ask for a stay (i.e., delay) of the court’s remedy pending the outcome of the final litigation. If a stay is not granted, the US Supreme Court may be asked to review the issue of the stay. The merits of the underlying case could eventually be reviewed by the US Supreme Court, depending upon the outcome of any appeal. We will have to wait and see, but if a stay is granted at either appellate level, the PSTF-recommended services would continue to be required without cost-sharing, as they have been under the ACA.
Third, during the appeal proceedings, it is anticipated many group health plans will continue to cover all preventive services without cost-sharing. Typically, health plan contracts are in place for the plan year, and employers generally do not make coverage or cost changes midyear. Employers that sponsor fully insured plans may be limited in their ability to make midyear plan changes and should always consult with their carriers regarding potential plan changes and the relating timing and disclosures. (The related rules would generally require 60-days advance notice if a change to cost-sharing occurs outside of open enrollment.) Additionally, states may pass insurance laws mandating coverage of the PSTF-recommended services if the federal coverage requirement is not reinstated.
Generally, employers that sponsor self-insured plans have greater plan design flexibility than fully insured plans. However, cost or coverage changes based on the court’s ruling may need to be reversed if the ruling is overturned on appeal. Employers may also want to consider whether assessing cost sharing for PSTF-recommended preventive services could deter participants from receiving routine screenings, thus delaying disease detection and hindering long-term cost containment strategies. Employers contemplating plan changes should also be mindful that midyear changes that affect the content of the Summary of Benefits Coverage will generally require at least 60 days’ notice to participants in advance of the change effective date. Accordingly, self-insured plan sponsors should always consult with their TPAs, service providers and counsel regarding the implementation of any plan changes and related plan document and disclosure requirements.
Fourth, it's unclear whether HSA eligibility could be negatively impacted for participants who receive the invalidated PSTF-recommended preventive care. It is possible that the IRS will consider these services to be preventive care for this purpose. Hopefully, the IRS will address this concern soon; employers should watch for IRS guidance.
Fifth, plan participants may be confused by the case developments and seek reassurances from employers as plan sponsors that their preventive care coverage has not been adversely impacted. Employers should consult with their carriers and TPAs regarding any related updates or participant communications.
As this case continues through the legal process, employers should be aware of the recent court judgment, consult with their carriers and TPAs and monitor future developments. For specific advice and guidance, employers should always engage their legal counsel.
March 14, 2023
On March 9, 2023, the IRS released Revenue Procedure 2023-17, which provides, in part, indexing adjustments for penalties under the employer mandate. As a reminder, the ACA requires applicable large employers (ALEs) – those with 50 or more full-time and full-time equivalent employees (FTEs) – to offer affordable minimum value coverage to substantially all FTEs and their dependents or risk a penalty.
For plan years beginning after December 31, 2023, the annual penalties are as follows:
Although generally expressed as an annual amount, as listed above, both penalties are calculated and assessed on a monthly basis.
February 14, 2023
On January 30, 2023, the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury (collectively, the departments), issued proposed rules to amend regulations regarding coverage of certain contraceptive preventive services under the ACA.
Current regulations require non-grandfathered group health plans and non-grandfathered group or individual health insurance coverage to cover certain contraceptive services without cost-sharing unless an exemption exists. Exemptions may be granted to group health plans, student health plans, health insurance issuers, or individuals who purchase individual health insurance with religious or moral objections to coverage of contraceptive services.
The proposed regulations would leave the existing religious exemptions in place and rescind the moral exemption rule, while establishing a new program, called an individual contraceptive arrangement. The new program would allow an individual enrolled in an exempted plan to access contraceptive services at no cost directly from a provider or facility that furnishes contraceptive services. The individual contraceptive arrangement would not require any involvement from the objecting entity; instead, providers would receive reimbursement from issuers on the federally-facilitated exchange or state-based exchange on the federal platform.
Public comments on the proposed rule must be submitted by April 3, 2023. We will continue to report on further developments in Compliance Corner.