In response to evolving market demands, an increasing number of hospitals and health systems are considering creating provider-sponsored health plans (PHSPs), which are health insurance plans owned and operated by healthcare providers. McDermott’s healthcare team recently hosted a webinar exploring how PSHPs may offer hospitals a strategic pathway towards achieving sustainable, patient-centered care delivery by driving improvements in care coordination, health outcomes, and member satisfaction.
The Internal Revenue Service (IRS) recently released a new revenue procedure that outlines how sponsors of defined benefit pension plans should request approval to use plan-specific substitute mortality tables for plan years beginning on or after January 1, 2025. The IRS also issued new proposed regulations that would increase penalties for employers that erroneously claimed employment tax credit refunds under the Families First Coronavirus Response Act; the Coronavirus Aid, Relief, and Economic Security Act; and the American Rescue Plan Act of 2021.
In a consequential decision for Health Insurance Portability and Accountability Act (HIPAA)-regulated entities, on June 20, 2024, the US District Court for the Northern District of Texas ruled that the US Department of Health and Human Services Office for Civil Rights exceeded its authority in certain respects in sub-regulatory guidance. The guidance concerned HIPAA’s application to cookies and other online tracking technologies on HIPAA-regulated entities’ unauthenticated webpages.
In California, pending Assembly Bill 3129 could severely limit the ability of digital health companies to grow and operate in the state by prohibiting arrangements between physician, psychiatric, and dental practices and any entity that furnishes business or management services to providers that accept investments from private equity groups and hedge funds. The legislation’s current definition of private equity is arguably broad enough to capture venture capital funds, angel investors, family offices and even the innovation or investment arms of academic and nonprofit medical centers. Digital health companies based in California who provide benefits services should closely monitor the potential impact of this proposed legislation on their businesses.
On June 26, 2024, the US Food and Drug Administration (FDA) released its much-anticipated draft guidance on Diversity Action Plans to Improve Enrollment of Participants from Underrepresented Populations in Clinical Studies. The draft guidance provides valuable information about what steps the FDA will expect sponsors to take to promote adequate representation across demographic characteristics in study populations.
Increasingly, sellers of stock and others who customarily have not been named as defendants alongside employee stock ownership plan (ESOP) trustees are being sued in lawsuits relating to ESOPs. Chris Nemeth and Jane Kim recently presented a webinar to members of the National Center for Employee Ownership (NCEO) analyzing this trend. They discussed the types of claims recently brought against sellers, company executives, outside investors and other non-trustees in recent lawsuits relating to ESOPs, and they offered practical tips for protecting against such lawsuits.
Recent lawsuits filed against the group health plans of two large US employers underscore the importance of implementing formal welfare benefit plan governance structures that include fiduciary committees comparable to the governance structures employer sponsors of retirement plans routinely adopt. Establishing such committees can help employers reduce litigation risk and ensure compliance with Employee Retirement Income Security Act fiduciary standards.
The Biden administration recently released its Spring 2024 Unified Agenda (a few months late), which lists all the regulations that the administration plans to issue by the end of the year and beyond.
In this update, Jeffrey Davis previews new regulations that could impact the health and welfare benefits industry related to the No Surprises Act, new standards for the exchange of health information under the Health Insurance Portability and Accountability Act, the finalization of new Mental Health Parity and Addiction Equity Act rules, and more.
If our trade and industry sources have it right, we could see final regulations implementing the Mental Health Parity and Addiction Equity Act (MHPAEA), as most recently amended by the Consolidated Appropriations Act, 2021 (CAA), any day now. Last week, we offered a wish list of things we would like to see modified or addressed once the rules become final. Our previous MHPAEA commentary is available here.
An August 1, 2024, letter from Viginia Foxx, chairwoman of the US House of Representatives Committee on Education and the Workforce, to the secretaries of the US Department of Health and Human Services (HHS) and the US Department of the Treasury (Treasury) and the acting secretary of the US Department of Labor (DOL) leads us to add one more item to our wish list. It relates to a subject that has been a major item of contention and the cause of considerable frustration in MHPAEA audits: network composition and adequacy.
The CAA added a requirement that plans and issuers perform and document comparative analyses of the design and application of nonquantitative treatment limitations (NQTLs) on mental health and substance use disorder (MH/SUD) benefits and medical and surgical (M/S) benefits. Nothing in the CAA modifies prior law relating to network composition or adequacy, however. MHPAEA generally requires that the application of NQTLs on MH/SUD benefits “in operation” be comparable and no more stringent than on M/S benefits. In the case of an audit, the DOL has analyzed diverse types of outcomes data, such as denial or reimbursement rates.
But – and this is critical – nothing in existing law requires comparability of outcomes. Indeed, the DOL’s self-compliance tool makes clear that disparate outcomes are not determinative of noncompliance, recognizing that the law requires only that the processes and standards used in applying the NQTL be comparable across MH/SUD and M/S benefits. Different outcomes can still be MHPAEA-compliant. An intervening FAQ (No. 7) suggests otherwise, saying that disparate outcomes raise a “red flag.” FAQs lack the force of law, however.
The proposed rules upend current law by making differences in outcomes a strong indicator of noncompliance or, in the case of network composition, a conclusive determination of noncompliance. Chairwoman Foxx criticizes this approach, saying that “This [ ] suggests that approval or denial rates in either a MH/SUD or M/S context are indicative of appropriateness.” This is in her view a flawed assumption. She also claims that the DOL, HHS and Treasury (the Departments) have exceeded their statutory authority in the matter. The DOL is in our experience applying this rule on audit as though the proposed rule is the law.
We express no opinion on whether the proposed rule comports with the statue. This is for the courts to decide. It’s no secret, however, that the Departments now face a higher bar in the wake of the US Supreme Court’s decision in Loper Bright Enterprises v. Raimondo (wherein the Court overruled the [...]
In this “Trending in Telehealth” installment, Amanda Enyeart and Jay Hyun Lee of McDermott’s Healthcare Group highlight a new Pennsylvania law that requires health insurance coverage for telehealth and in-home program services for pregnant and postpartum women.
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