Gender-affirming care has become a central topic in US political discussions, significantly affecting employer-sponsored group health plans. Depending on whether they purchase insurance or self-fund their health benefits, group health plan sponsors face different challenges in covering gender-affirming care. In this PlanSponsor article, Alden Bianchi, Sarah Raaii, and Scott Kenkel explore these challenges and share best practices for group health plans to navigate this complex issue.
The Mental Health Parity and Addiction Equity Act (MHPAEA) generally requires group health plans and health insurance issuers to ensure that financial requirements (such as copays and deductibles), quantitative treatment limitations (such as visit limits), and nonquantitative treatment limitations (such as prior authorization and concurrent review) applicable to mental health or substance use disorder (MH/SUD) benefits are generally no more restrictive than the requirements or limitations applied to medical/surgical (M/S) benefits. The Consolidated Appropriations Act, 2021 imposed further obligations in the case of nonquantitative treatment limitations (NQTLs), which are the subject of final regulations issued in September 2024. (We explained the final regulations here.)
Among many other things, the final regulations establish a two-part test that applies to NQTLs consisting of:
The relevant data evaluation requirement has proven especially challenging for self-funded group health plans of every size, as third-party administrators fail, refuse, or are otherwise unable to provide the information necessary to comply. There may be another option, however.
The final regulations do not specify the data set on which compliance with the relevant data requirement is tested. Rather, the regulations, which apply to both plans and issuers, seem to assume that the plans test on the basis of plan data, and issuers test on the basis of the issuer’s corresponding block of business. In their informal remarks at trade and industry conferences, representatives of the US Department of Labor (DOL), expressing their own views and not those of the DOL, have acknowledged that they are aware of and are considering their options related to the proper testing data set.
Some large carriers have shared the NQTL analysis that they previously prepared for their fully insured groups with the self-funded group to whom they provide administrative services. Presumably, this will give their self-funded groups a starting point. Many self-funded groups, particularly smaller groups, are not inclined to modify the standard set of NQTLs offered by their carriers/administrative-service-only (ASO) providers. If these groups were allowed to test based on the carrier’s corresponding book of business, a good deal of the work would be done. This would also have the salutary effect of exerting market pressure [...]
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On November 18, 2024, the Internal Revenue Service (IRS) released Internal Revenue Bulletin 2024-47, which includes proposed regulations designed to ensure that non-grandfathered group health plans and insurance issuers provide an accessible exceptions process for preventive services, allowing coverage without cost sharing if deemed medically necessary by an individual’s provider.
Learn more about new IRS guidance in the latest Weekly IRS Roundup published by McDermott’s Tax Group.
Employee Retirement Income Security Act class action lawsuits filed earlier this year 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.
This recent article, published by the Society for Human Resource Management, offers plan sponsors a list of practical action items to consider to help protect themselves from risks related to the fiduciary governance of their health and welfare plans.
On September 9, 2024, the Biden administration issued much-anticipated final regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). The rules implement a host of complicated new compliance requirements for sponsors and issuers of health plans, instituting new obligations to collect and evaluate plan data, conduct comparative analyses, and act to address material differences in access to mental health and substance abuse benefits as compared to medical and surgical benefits.
During a recent webinar, Alden Bianchi, Jake Mattinson, and Sarah Raaii provided a comprehensive overview of the new rules, including compliance deadlines and key takeaways for employers, plan sponsors, and issuers of group health plans. The speakers also addressed how the new rules might impact any ongoing US Department of Labor investigations.
Health plan fiduciary issues have taken on increased urgency following a new wave of Employee Retirement Income Security Act class action lawsuits filed by plaintiffs’ firms. Sarah Raaii and Alden Bianchi recently joined the Moving to Value Alliance, a healthcare nonprofit, for a podcast episode focused on how group health plan sponsors and third-party service providers to group health plans can comply with the new fiduciary requirements enacted under the Consolidated Appropriations Act of 2021 (CAA). They also discussed what health plan fiduciaries can do to ensure they fulfill their responsibilities to beneficiaries.
Section 1557 of the Affordable Care Act (ACA) prohibits discrimination on the basis of race, color, national origin, sex, age or disability, or any combination thereof, in a health program or activity, any part of which is receiving federal financial assistance.
On May 6, 2024, the US Department of Health and Human Services Office for Civil Rights (OCR) and the Centers for Medicare & Medicaid Services published final regulations (final regulations) implementing Section 1557 (Our summary and overview of the final regulations is available here.) Entities that are subject to Section 1557 (covered entities) include hospitals, health clinics, health insurance issuers, state Medicaid agencies and community health centers. While group health plans are not themselves covered entities unless they receive federal financial assistance (e.g., certain Medicare Part D programs and Employer Group Waiver Plans), carriers that provide administrative services to group health plans may themselves be covered entities if they receive federal financial assistance (e.g., by selling Medicare Advantage products).
Reversing prior law, the final regulations unambiguously prohibit categorical coverage exclusions or limitations for health services related to gender transition or other gender-affirming care. OCR finds support for this change in the US Supreme Court’s decision in Bostock v. Clayton County, which held that Title VII of the Equal Employment Act prohibits an employer from discriminating against an individual on the basis of sexual orientation. But prohibiting categorical coverage exclusions is not the same thing as requiring covered entities to provide access to gender-affirming care under all circumstances. There are limits; covered entities must not:
[D]eny or limit services based on gender identity or sex assigned at birth, adopt any policy of treating individuals differently on the basis of sex, including to the extent it prevents an individual from engaging in a health program or activity consistent with the individual’s gender identity, or deny or limit services sought for gender transition or other gender-affirming care based on sex assigned at birth or gender identity.
The provision would outlaw blanket bans on both gender-affirming care itself and on specific gender-affirming procedures (like facial feminization surgery). But it would also prohibit plans or carriers that qualify as covered entities from covering breast reconstruction for cancer treatment, or hormones to treat post-menopause symptoms, without also covering these procedures to treat gender dysphoria.
The final regulations do not interfere with individualized clinical judgment about the appropriate course of care for a patient. (The preamble makes further claims that OCR has a general practice of deferring to a clinician’s judgment about whether a particular service is medically appropriate for an individual, or whether the clinician has the appropriate expertise to provide care.) A provider’s belief that gender transition or other gender-affirming care can never be beneficial, or its compliance with a state or local law that reflects a similar judgment, is not a sufficient basis for a judgment that a health service is never clinically appropriate, however.
The 2016 final Section 1557 regulations were successfully challenged in Franciscan Alliance v. Burwell (N.D. [...]
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Group health plan sponsors, third-party administrators and other health plan service providers must navigate a shifting legal landscape as they determine how to offer gender-affirming benefits, including whether − and to what extent − group health plans must cover gender-affirming medical or surgical treatments, especially regarding minors. In this On the Subject, we discuss recent legal developments impacting gender-affirming care and approaches to group health plan coverage.
The Biden administration has announced its intention to end the COVID-19 National Emergency (NE) and the COVID-19 Public Health Emergency (PHE) on May 11, 2023 (read our series introduction for more information). Among other things:
MHPAEA
MHPAEA requires that the financial requirements (such as coinsurance and copays) and quantitative treatment limits (such as visit limits) imposed on mental health or substance use disorder (MH/SUD) benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical/surgical benefits in a particular benefit classification. During the public health emergency period, group health plans and health insurance issuers were permitted to disregard certain items and services related to testing for the detection of SARS-CoV-2, the virus that causes COVID-19, when performing the “substantially all” and “predominant” tests. Absent this relief, the costs of covering COVID-19 testing items and services without cost-sharing would be the amounts allocated to medical/surgical benefits, thereby putting group health plans and health insurance issuers at risk of running afoul of MHPAEA quantitative treatment limits.
From and after the end of the PHE, group health plans and health insurance issuers must include the cost of covering COVID-19 tests, either diagnostic or over-the-counter, or testing-related services, when calculating MHPAEA quantitative treatment limits.
Action Items: Employers should revisit their MHPAEA compliance testing to ensure that the coverage of COVID-19 tests is properly accounted for in applying the relevant quantitative treatment limits. There is, however, no longer a requirement that a group health plan or health insurance issuer cover these services without charge.
EMPLOYEE ASSISTANCE PLANS
The end of the NE and the PHE could have various impacts on EAPs depending on the specific plan design. Employers may, for example, see a spike in the need for mental health support that could be met through EAP services. While the pandemic may be winding down, the mental health impacts of the past three years may continue for by many employees. Employers may need to continue to offer mental health services and resources through their EAPs, and potentially explore expanding mental health services through an EAP or otherwise, to support employees who are struggling with anxiety, depression or other mental health issues related to the pandemic.
Particular attention is required in the case of excepted benefit EAPs. Excepted benefit EAPs do not provide minimum essential coverage for Affordable Care [...]
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The US Departments of Labor, Health and Human Services, and the Treasury recently released Frequently Asked Questions (FAQs) regarding the implementation of certain reporting provisions of the Affordable Care Act (ACA). The FAQs were released to provide clarity on the required drug price disclosures identified in the Transparency in Coverage final rule (the Rule) issued on October 29, 2020. As described in this SHRM article, employers are responsible for making sure that these disclosures are ready and available.
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