This Omnibus Appropriations Act 2021 (CAA) is the most significant compliance challenge facing employers since the enactment of the Affordable Care Act. Benefits Advisor Companies that serve the health and wellbeing of our industry will undoubtedly need to continue to monitor this landmark legislation closely on behalf of their employer clients.
The new requirements are now in effect. They include reviewing plan contracts and removing any “ghost clauses”; determining the “reasonableness” of provider fees and services; prescription drug reporting for the 2020, 2021, and 2022 plan years; and peer analysis between medical and mental health coverage.
Failure to comply with these requirements puts employers at risk of fines and class action lawsuits. But most organizations remain in the dark, trusting that their broker or TPA will handle compliance on their behalf, or that it’s just “no big deal.”
read more: How CAA Ups the Stakes for Health Plan Sponsors
Make no mistakes. This is a big deal, and the Departments of Labor (DOL) and Health and Human Services (HHS) take these requests very seriously. Check out what we’ve seen over the past few months:
- DOL audit. Of more than 200 mental health equity analyzes reviewed, none Found to be in compliance with CAA requirements.
- congressional report. DOL and HHS submitted a joint report to congress This shows that health plans and health insurance issuers are failing to provide parity in mental health and substance use disorder benefits to those they cover.
- DOL focus. The House Education and Labor Committee sent a letter to DOL making clear that Congress intends to disclose the compensation applicable to pharmacy benefit managers and third-party administrators. It asked the DOL to issue guidance to clarify the issue.
- The grace period is short. The CAA prescription drug reporting deadline has been granted a brief grace period, which ends on January 31, 2023.
- litigation. Class action lawsuit filed in December 2022 accuses UnitedHealthcare Group of systematically underpaying benefits for out-of-network care health care provider. According to the complaint, this practice violated their program terms and violated the carrier’s fiduciary duties under ERISA. That same month, the self-funded program sued Anthem, alleging excessive fees and other ERISA violations.
Ignoring these new requirements will cost fiduciaries and suppliers time and money. Remember the irregularities in the retirement field?
read more: CAA raises bar on health plan trust governance
In 2006, the first “arbitrary charges” case (Tutsi v. ABB) changed the view of fiduciary duties in relation to fees. The retirement plan industry acted in unison, demanding lower fees for service providers, opting for lower-cost share classes, and insisting on greater transparency from all service providers. But the revelations sparked a wave of class-action lawsuits against providers, companies and nonprofits, alleging excessive program fees, a lack of oversight processes and negotiations with service providers.
Take a look at these jaw-dropping settlement sizes, from highest to lowest: Lockheed (2015) $62 million, Boeing (2015) $57 million, Novant Health (2016) $32 million, Mass Mutual ( 2016) $30.9 million, Ameriprise (2015) $27.5 million, American Airlines (2017) $22 million, Northrop Grumman (2017) $16.75 million, Allianz (2018) $12 million $10.5 million from Duke University, $6.9 million from Citigroup (2018), $6.5 million from the University of Chicago.
The list continues to this day. Now is the time for a change.The time to have an unpleasant conversation is Now. The change is here—whether you like it or not. All plan sponsors should immediately implement fiduciary status to control their health benefit plans and limit liability.
As Eleanor Roosevelt once wisely said: “Learn from the mistakes of others. You can’t live long enough to do it yourself.”