A group of employer stakeholders urged White House officials at a recent meeting to alter HHS' insurance nondiscrimination rule as it undergoes final review, arguing the department overstepped its authority by applying the Obamacare provision to any entity that receives federal financial assistance. Third-party administrators working with self-insured employers should not be subject to the rule, the stakeholders argued. They also believe HHS didn't properly analyze the rule's potential economic impacts.
Consumer advocates say there is precedent for the agency's interpretation of the Affordable Care Act's nondiscrimination provision and want the department to be even more aggressive in applying the requirements.
The April 19 meeting included the U.S. Chamber of Commerce, American Benefits Council and ERISA Industry Committee (ERIC), as well as several White House budget officials, according to meeting records posted online.
At issue is a statement in the preamble of the proposed rule that says: “[A]n issuer that participates in the Marketplace and thereby receives Federal financial assistance, and that also offers plans outside the Marketplace, will be covered by the proposed regulation for all of its health plans, as well as when it acts as a third party administrator for an employer-sponsored group health plan.”
Gretchen Young, ERIC's senior vice president for health policy, stresses that employers are not against the principles of the nondiscrimination provision -- a stance echoed by sources from the Chamber and ABC -- but they disagree with HHS' interpretation.
Young says ERIC has major concerns with the proposed rule, which covers Section 1557 of the ACA. Most importantly, the group believes HHS overreached in applying the rule to self-insured plans who use third-party administrators. This interpretation is an “enormous stretch” from the statutory language, Young says.
In written comments on the rule, Young and ERIC President Annette Guarisco Fildes note that most employers who self-insure hire third-party administrators to manage their plans. TPAs are often also licensed health insurance companies. The TPA “does not insure the benefits provided by the group health plan … does not design the plan or decide what categories of individuals and health services the plan will cover,” the officials write.
“ERIC’s members are concerned … that the Department’s proposed rule does not adequately reflect the way in which self-funded group health plans are designed and administered,” they add. “The proposed rule would disrupt the administration of these plans and increase health care costs for employers and employees alike, without adding any additional protection against discrimination.”
Young and Fildes note the rule's preamble indicates that, if a third-party administrator is legally separate from an issuer that receives federal assistance, HHS would engage in a “case-by-case” inquiry to evaluate whether that entity is appropriately subject to Section 1557. But they add that HHS does not explain what standards it will use for such determinations, and the proposed regulation itself does not even mention this concept.
The group stresses it is the employer, not the TPA, that controls the benefits, and so placing certain requirements on the administrator could result in non-compliance with employer contracts which would violate the Employee Retirement Income Security Act (ERISA).
ERIC members are also upset that the rule would apply additional requirements on communications with people who speak foreign languages. The group asserts those requirements would overlap with existing protections for such individuals under ERISA.
It is a waste of resources to develop a response to one set of rules and then be asked to deal with totally different requirements, Young tells Inside Health Policy.
She says her group also met with HHS but the agency seemed unwilling to make the changes. Stakeholder meetings with White House Office of Management and Budget officials are “listen-only,” so it is unclear how the administration will respond, Young adds.
But both Young and James Gelfand, who will soon take over Young's position at ERIC, are hopeful the administration will agree with their stance. Part of OMB's responsibility is making sure that HHS does not overstep its statutory authority, Gelfand says.
ERIC could take its concerns to Capitol Hill if the final rule doesn't address the group's concerns, Young suggests.
Kathryn Wilber, senior health policy counsel for the American Benefits Council, also says that employer groups do not object to the policy goals in the proposed rule, but are upset with how HHS proposes to implement them.
“Our concerns have to do with the process of rulemaking itself and the practical effect on self-insured employers,” she says, adding that the rule did not adequately assess the potential economic impact.
The statute was aimed at the private insurers selling products through the exchanges, and HHS' rule should not affect private employers that are not otherwise involved in the health care industry and do not received federal financial assistance, she said. “We believe the interpretation is an overreach.”
Katie Mahoney, executive director for health policy at the U.S. Chamber of Commerce, says the Chamber is concerned about the rule's lack of an adequate economic analysis, its application to TPAs and its potential coverage of a market that was not contemplated by the statute. The Chamber also is upset that the rule extrapolates gender identity out from sex when discussing nondiscrimination, which Mahoney says may not be appropriate.
Essentially, the proposed rule acts as if such an interpretation is “settled law,” when that is not the case, adds Jim Plunkett, the Chamber's director of labor policy.
However, the Chamber focused its comments on HHS' alleged lack of sufficient research to back up the rule's regulatory impact analysis. The group says HHS failed to consider the resources needed to “familiarize” employers with the provision and the potential costs of ligation. The department underestimated the costs of compliance training and other activities by at least one-third, the Chamber argues.
HHS also made unfounded assumptions regarding the level of staff that would be involved in compliance by presuming the burden would fall on mid-level rather than executive-level employees, and by saying that it would only impact about 50 percent of staff instead of all employees, according to the Chamber. HHS failed to establish a credible pre-regulation compliance baseline, and didn't propose regulatory alternatives as required, the Chamber adds.
But consumer advocates support the administration's view.
Wayne Turner, staff attorney for the National Health Law Program (NHeLP), dismisses the argument that TPAs have no direct control over plan benefit design and should not be held responsible for discriminatory practices. Turner argues that broad applicability is consistent with long-standing principles in civil rights law, including the Civil Rights Act and Title VI, which bring “uniformity and permanence to protections.”
He also argues that the TPA does often have a significant role in benefit design, such as by building provider networks and formularies, and that setting rules that would parse out how much involvement is necessary for the rule to apply would be impossible. A narrow application would further lead to a “two-tiered” system of 1557-compliant and non-compliant plans, incentivize discriminatory practices by self-insured plans and lead to greater market segmentation, Turner argues.
The AIDS Institute and other consumer advocates say HHS should be even more aggressive in preventing nondiscrimination in the final version of the rule. The advocates have filed complaints under Section 1557, charging that certain insurance plans violated the provision by placing all HIV/AIDS drugs -- even generics -- in high-cost tiers. The AIDS Institute is also part of the 200-member “I Am Essential Coalition,” which urged HHS to better define and address discriminatory insurance benefit design in the final rule.
The coalition, in its November comments on the proposed rule, called for HHS to define the following practices as discriminatory: placing all or nearly all medications to treat a certain condition on the highest cost-sharing tier; not covering certain medications or not following treatment guidelines; imposing excessive medication management tools such as unreasonable prior authorization and step therapy requirements; charging high cost-sharing to patients with chronic conditions; and having narrow and exclusionary provider networks.
The coalition also urged HHS to detail standards and parameters for benefit and plan design, and to expand the definition of those protected under the provision to include all beneficiaries with chronic conditions or serious illnesses.
“The proposed rule lacks the specificity necessary to protect all beneficiaries purchasing coverage in the exchanges,” Andrew Sperling, director of federal legislative advocacy at the National Alliance on Mental Illness, said in November. “If discrimination practices are not clearly defined, then patients are left vulnerable. In order to ensure adequate protections exist within the marketplace, there must be a clear understanding of discrimination practices for all patients.” -- Amy Lotven (alotven@iwpnews.com)