Welcome to the January 2024 issue of the Baldwin Bulletin – a monthly guide to important legal news and employee benefits-related industry happenings, designed to keep you abreast of the latest developments.
This month’s issue of the Baldwin Bulletin focuses on providing you with important upcoming compliance deadlines as well as information regarding certain hot-button compliance issues significantly impacting employers.
Upcoming Compliance Deadlines
Employers must comply with numerous reporting and disclosure requirements in connection with their group health plans. Please note the following upcoming deadlines. Our complete 2024 compliance calendar is also attached.
Our 2024 compliance calendar is available here.
ACA Non-English Language Requirements Update
The Centers for Medicare and Medicaid Services (CMS) has recently published its listing of U.S. counties in which certain notices must be provided to individuals in a non-English language to satisfy the requirements under the Public Health Services (PHS) Act section 2719, and its implementing regulations. PHS Act Section 2719 was added by the Affordable Care Act (ACA) and mandates that relevant notices must be provided in a culturally and linguistically appropriate manner to those residing in counties that have a population with at least 10 percent of their population illiterate only in the same non-English language.
The listing was based on the 2016-2020 American Community Survey (ACS) data and is applicable for plan years beginning on or after January 1, 2025.
Employer Action Items
Health insurance issuers and group health plans must comply with the ACA’s non-English language requirements with respect to the Summary of Benefits and Coverage (SBC)s, claims and appeals notices, and other written documents required under the ACA.
Interpretive services and written translations of the documents must be provided upon request. In addition, English versions of SBCs and claims and appeals notices must include a one-sentence statement (in the applicable language) indicating that the language assistance is available.
While these requirements have been in effect since final regulations were issued back in 2012, to ensure compliance, plan sponsors should review the updated listing to determine if there have been any changes impacting them.
To read the CMS release, including the most current listing of counties exceeding the 10 percentage threshold (rounded to the nearest percent), see here. See also Frequently Asked Questions, prepared jointly by the Departments of Labor, Health and Human Services and the Treasury here.
Mental Health Parity Litigation Ruling
On November 21, 2023, the United States 10th Circuit Court of Appeals (Court) published a major decision involving the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, better known by its acronym, MHPAEA. MHPAEA is a federal law that generally prevents group health plans and health insurance issuers that provide mental health and substance use disorder (MH/SUD) benefits from imposing less favorable benefit limitations on those benefits than on medical and surgical (M/S) coverage.
This decision is significant because it provides a framework for how plan administrators, claims payors and the courts may apply the law to determine how a claim under MHPAEA should be considered. The decision is also a cautionary warning that plan administrators must review not only how the health plan is written but also, how it operates.
Employer Action Items
Well-established, expert-based claim determination processes of the past should be reviewed and amended, if necessary, in the new age of MHPAEA. The review must be conducted in such a way as to assure that the health plan meets the requirements of MHPAEA not just in how it is written but also, in how it is administered. Although not specifically stated in the District Court’s decision, the review must also verify that claim outcomes for MH/SUD benefits are consistent with the outcomes of M/S benefits.
The case arose when Health Net Life Insurance Company (Health Net) decided that the care for a dependent daughter at an adolescent residential treatment center was no longer medically necessary. The decision was based upon McKesson InterQual Behavioral Health 2016.3 Child and Adolescent Psychiatry Criteria, a recognized expert resource in the field of psychiatry. According to this criteria, inpatient treatment is medically necessary if the patient satisfies any one of several criteria relevant to either a serious emotional disturbance or an eating disorder. Health Net determined the patient did not satisfy the InterQual Criteria within the relevant period and notified her family of that decision. This decision was later supported by outside, independent experts.
Subsequently, after satisfying the ERISA claims appeal process, the family brought suit against Health Net under ERISA and MHPAEA. The ERISA claim was dismissed after the court granted summary judgement favorable to Health Net, but the MHPAEA claim was advanced for consideration.
The family did not argue that the expert opinion and criteria were invalid or incorrect. Instead, it argued that “the [plan’s] medical necessity criteria for intermediate level mental health treatment benefits are more stringent or restrictive than the medical necessity criteria the [plan] applies to intermediate level medical or surgical benefits.” If correct, it would be a violation of MHPAEA which requires that, “treatment limitations applicable to . . . mental health or substance use disorder benefits are no more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits covered by the plan (or coverage) and [that] there are no separate treatment limitations that are applicable only with respect to mental health or substance use disorder benefits.” 29 U.S.C. § 1185a(a)(3)(A)(ii).
To support its claim, the family alleged that “the [plan’s] medical necessity criteria for intermediate level mental health treatment benefits are more stringent or restrictive than the medical necessity criteria the plan applies to intermediate level medical or surgical benefits.” It argued:
- Comparable benefits offered by the plan for medical/surgical treatment analogous to the benefits the plan excluded for treatment include sub-acute inpatient treatment settings such as skilled nursing facilities, inpatient hospice care, and rehabilitation facilities. For none of these types of treatment does Health Net exclude or restrict coverage of medical/surgical conditions based on medical necessity, geographic location, facility type, provider specialty, or other criteria in the manner Health Net excluded coverage of treatment for this patient.
- The actions of Health Net and the plan requiring that the patient satisfy acute care medical necessity criteria in order to obtain coverage for residential treatment violates MHPAEA because the plan does not require individuals receiving treatment at sub-acute inpatient facilities for medical/surgical conditions to satisfy acute medical necessity criteria to receive Plan benefits.
The Court ruled in favor of the family’s claim under MHPAEA and explained the “test” it utilized to come to that decision. According to the Court, a plaintiff must:
- Provide a valid determination that the health plan is subject to MHPAEA;
- State what the underlying Quantitative/Nonquantitative Treatment Limitation (QTL/NQTL) being used by the plan to deny or limit benefits;
- Name the M/S benefit used to compare to the MH/SUD benefit in question; and
- Explain how the health plan applies the QTL/NQTL differently to the M/S benefit than to the MH/SUD benefit.
Significantly, the Court did not apply any sort of reasoning requiring that outcomes of MHSUD claims be consistent with M/S claims. This policy has been stated by the Department of Labor as a further indicator of a plan’s compliance with MHPAEA.
DOL Issues 2024 Adjusted Penalty Amounts
The Department of Labor (DOL) has published the inflation-adjusted benefit-related penalty amounts for 2024. The increased penalty levels apply to any penalties assessed after January 15, 2024.
Employer Action Items
Employers should become familiar with the new penalty amounts and review their benefit plan administration protocols to ensure full compliance.
Federal law requires agencies across the federal government to adjust their penalties for inflation no later than January 15 of each year. Violations concerning the following requirements have penalty increases that may affect employers and employee benefit plan administrators:
The DOL publication is available here.
Another HIPAA Settlement Announced
On December 15, 2023, the Department of Health and Human Services’ Office for Civil Rights (OCR) announced a $160,000 settlement with Optum Medical Care of New Jersey (Optum Medical Care) regarding multiple complaints filed with the OCR concerning potential violations of the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule’s Right of Access provision. This settlement follows a settlement this past summer against United Health Insurance Group resulting in multiple complaints received by individual participants alleging Optum Medical Care failed to respond to their requests to access their medical records.
In addition to the monetary settlement, Optum Medical Care must implement a corrective action plan that requires workforce training, reporting records requests to OCR and reviewing and revising as necessary, its right of access policies and procedures to provide timely responses to requests.
Employer Action Items
Investigation and enforcement of potential HIPAA violations remains a top OCR priority. As evidenced by recent settlements, both health care providers and health plans are potential targets of OCR’s investigations into Right of Access complaints. Thus, plan sponsors should take necessary steps to properly train those with access to protected health information to ensure that participants have proper access to their health information. Policies and procedures should also be reviewed to ensure they comply with HIPAA’s Right to Access requirement.
HIPAA’s Right of Access provision requires that individuals or their personal representatives have timely access to their health information for a reasonable cost. Specifically, the Right of Access provision requires that providers must give access to medical records requested no later than 30 calendar days from receiving the individual’s request.
In the fall of 2021, OCR received six complaints alleging that Optum Medical Care failed to provide copies of medical records requested by an adult patient or by the parents of minor patients. In February 2022, OCR initiated investigations of these Right of Access complaints. The complaints disclosed that patients received their requested records between 84 and 231 days after their respective requests were submitted. Those timeframes are well outside of the HIPAA Right of Access requirement. OCR investigated these complaints and determined that Optum Medical Care’s failure to provide timely access to the requested medical records was a potential violation of HIPAA.
A copy of the resolution agreement and corrective action plan may be found at: https://www.hhs.gov/hipaa/for-professionals/compliance-enforcement/agreements/optum-medical-care.html. OCR’s guidance on the HIPAA Right of Access is available at: https://www.hhs.gov/hipaa/for-professionals/privacy/guidance/access/index.html. OCR’s guidance on the HIPAA Privacy Rule and personal representatives is available at: https://www.hhs.gov/hipaa/for-professionals/privacy/guidance/personal-representatives/index.html.
2024 HIPAA Privacy and Security Rule Training Calendar
BRCC’s HIPAA training calendar is available here. Please note that all trainings will be broadcast on the first Tuesday of each month (there is no training scheduled for March), beginning at 3:00 pm Eastern, 12:00 pm Pacific time. You will also see that the HIPAA training is divided into four sessions and repeated twice throughout the year. Pre-registration is required. Registration links are embedded in the attachment.
2024 BRCC Educational Webinar Calendar
The BRCC’s monthly webinar calendar for 2024 has been released and is available here. Note that the webinar series is scheduled for the last Wednesday of every month at 1:00 pm Eastern, 10:00 am Pacific time. Program participants who attend a live BPEC webcast presentation are eligible to apply for HRCI or SHRM professional continuing education credits. Pre-registration is required. Registration links are embedded in the attachment.
Question of the Month
Question: What is an ERISA plan?
Answer: In a nutshell, an ERISA plan is a benefit plan that is subject to a federal law, known as the Employee Retirement Income Security Act of 1974 (ERISA). ERISA establishes the minimum standards for employee benefit plans sponsored by virtually all private-sector employers that maintain welfare benefit plans for their employees, regardless of the size of the employer. This includes corporations, partnerships, limited liability companies, sole proprietorships, and nonprofit organizations. An ERISA plan may be either fully insured or self-insured. Exceptions apply for certain payroll practices and voluntary plans.
Only two categories of employers are exempt from ERISA:
- Governmental plans, including those maintained by a federal, state or local (for example, a city, county or township) government entity, as well as those plans established by an “agency” or “instrumentality” of a federal, state or local governmental entity. Although ERISA does not define these terms, the Department of Labor (DOL) has issued many written opinions on the scope of ERISA’s exemption for governmental plans. In general, the specific facts and circumstances of the relationship between the particular entity and the government must be examined to determine if the entity is a political subdivision, agency or instrumentality that is exempt from ERISA.
- Church plans are also exempt from ERISA. A church plan is any employee benefit plan established or maintained by a church or by a convention or association of churches that is exempt from tax under Section 501 of the Internal Revenue Code (Code) and that has not made an election under Code Section 410(d) to be subject to ERISA.
ERISA’s church plan exemption also includes any plan maintained by a “principal-purpose organization,” which is an organization that (1) is controlled by or associates with a church or a convention or association of churches; and (2) has a principal purpose or function of funding or administering benefits to the employees of the church or convention or association of churches. The DOL has interpreted this definition as an exemption for plans maintained by employers that are not churches themselves but have church affiliations. The DOL has issued numerous written opinions to various church-affiliated employers, including hospitals, orphanages, schools and old-age homes, advising them that their employee benefit plans are exempt from ERISA as church plans.
In 2017, the U.S. Supreme Court confirmed this position by holding that ERISA’s church-plan exemption applies to both plans established and maintained by churches and plans maintained by principal-purpose organizations.
If an employee benefit plan is exempt from ERISA, the plan’s sponsor does not have to comply with certain requirements that are designed to protect plan participants and ensure plan solvency. On the other hand, an ERISA exemption also means that the plan sponsor does not enjoy certain protections afforded to employers under the law. Most significantly, employers that sponsor ERISA plans are generally protected against lawsuits for punitive and other types of damages under state laws with respect to their benefit plans.
The DOL, through its Employee Benefits Security Administration (EBSA), enforces most of ERISA’s provisions. Violating ERISA can have serious and costly consequences for employers that sponsor welfare benefit plans, either through DOL enforcement actions and penalty assessments or through participant lawsuits.