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HHS Proposes Drug Transparency Rules for TV Advertisements

By: Patrick Ouellette, Esq.

In a move geared toward making drug prices more visible to consumers, the Department of Health and Human Services (HHS) recently released a proposed regulation that would force drug companies to include prices in their television advertisements of prescription drugs and biological products. HHS focused the proposal on drugs in which payment is available through or under Medicare or Medicaid to include the Wholesale Acquisition Cost (WAC, or “list price”) of that drug or biological product.

There are some drug price components of WAC to note, as WAC is generally the manufacturer’s price for drugs before the supplier of the product offers any rebates, discounts, allowances or other price concessions. True pricing involves a number of other variables to determine what the final drug costs are to patients beyond the WAC, such as what their insurance covers or whether their deductible has been met. These proposed regulations are also limited only to drugs covered under Medicare or Medicaid. However, it will be instructive in the long-term to see whether the inclusion of pricing in advertisements will actually lower final drug payments for patients. Similar to CMS requiring (starting in 2019) hospitals to make public a list of their standard charges via the Internet in a machine-readable format, there are no assurances that patients armed with new information will reduce final costs.

If these regulations prove to be successful, it will be interesting to see whether HHS would extend them to drugs payable by private insurers. In particular, HHS regulations could affect pharmacy benefit manager (PBM) rebates in the self-funded health plan space:

Because the list price of a drug does not reflect manufacturer rebates paid to a PBM, insurer, health plan, or government program, obscuring these discounts can shift costs to consumers in commercial health plans and Medicare beneficiaries. Many incentives in the current system reward higher list prices, all participants in the chain of distribution, e.g., manufacturers, wholesalers, pharmacy benefit managers, and even private insurers, gain as the list price of any given drug increases. These financial gains come at the expense of increased costs to patients and public payors, such as Medicare and Medicaid, which ultimately fall on the backs of American taxpayers.

Furthermore, consumers who have not met their deductible or are subject to coinsurance, pay based on the pharmacy list price, which is not reduced by the substantial drug manufacturer rebates paid to PBMs and health plans. As a result, the growth in list prices, and the widening gap between list and net prices, markedly increases consumer out-of-pocket spending, particularly for high-cost drugs not subject to negotiation.

Though the proposed regulations only affect companies in which their drugs covered by public payers, Medicare and Medicaid, all payers across healthcare should keep track of this initiative. The Pharmaceutical Research and Manufacturers of America (PhRMA) has already argued that such rules would violate the First Amendment and not affect patient costs.


Is Your Life Insurance Policy Subject to ERISA?

By: Krista Maschinot, Esq.

You may think this is a ridiculous question; however, Plan Sponsors and employers may want to reconsider this inquiry in light of a recent Seventh Circuit ruling.

The case, Cehovic-Dixneuf v. Wong (7th Cir. July 11, 2018), involved a dispute as to the true identity of the beneficiary of a life insurance policy.  The defendants argued that the policy was NOT governed by ERISA, thus the policy was not the controlling document.  However, the Court disagreed and explained that the life insurance policy was in fact subject to ERISA because it satisfied the five requirements outlined under 29 USC §1002(1) establishing that the policy was an employee welfare benefit plan that did not satisfy the requirements of the safe harbor exception contained in 29 C.F.R. §2510.31-(j).

The Court explained that the following elements must be present for an employee welfare benefit plan to be subject to ERISA:

  1. A plan,
  2. Established or maintained,
  3. By an employer or by an employee organization, or by both,
  4. For the purpose of providing medical, surgical, hospital care, sickness, accident, disability, death, unemployment or vacation benefit, apprenticeship or other training programs, day care centers, scholarship funds, prepaid legal services or severance benefits,
  5. To participants or their beneficiaries.

The life insurance policy at issue satisfied all five of the elements as it was an employer established plan that provided the beneficiaries of the participants with death benefits.  The Court went on to exam the four requirements of the Department of Labor safe harbor provision and found that the policy did not meet all four requirements:

  1. The employer made no contributions;
  2. Employee participation is completely voluntary;
  3. The employer does not endorse the plan, and its sole functions are to permit the insurer to offer the program to employees, collects premiums through payroll deductions, and remit them to the insurer; and
  4. The only consideration the employer receives in connection with the plan is for reasonable compensation for payroll deduction services.

The reason the safe harbor provision was not satisfied was that the employer violated the third provision by performing all administrative functions in association with the policy.  In making their determination, the Court looked to the Summary Plan Description (“SPD”) as it explained how the employer was involved with the maintenance of the policy.  With this finding, the court precluded the defendants from making any state law arguments as to why the named beneficiary should be disregarded.

So again, is your life insurance policy subject to ERISA?  Perhaps it is time to review your SPD and determine whether adjustments are necessary.


Communication Breakdown – More Lessons Learned from My Wife’s Battle Against Lymphoma

By: Ron Peck, Esq.

For those who did not tune into the “Empowering Plans” podcast, wherein I revealed why I’ve been absent from other recent Phia Group podcasts and webinars, please do check it out.  In that recording, I describe my wife’s diagnosis (the specific type of Non-Hodgkin’s Lymphoma she’s fighting), and early lessons learned through her diagnosis.  Key among them is the need for second (and even third opinions) to ensure the right diagnosis is ultimately achieved.  I implore plan sponsors to pay for – and advocate for – second (and third) opinions.  The funds expended on these opinions more than pay for themselves when we avoid unnecessary (and possibly dangerous) treatments for the wrong conditions.

The next lesson learned has been about and orbits around communication.  Communication is comprised of more than just what we say, but how we say it.  To effectively communicate, it’s necessary to put ourselves in the shoes of the ones with whom we’re communicating.  Empathy is the greatest Rosetta Stone.  With that in mind, my wife experienced a failure in communication not because the communicator was unclear, but rather, their focus, medium, and other elements missed the mark.

For instance, there were specific instructions she needed to follow to secure certain medications in accordance with rules set forth by the PBM.  Nothing was withheld, and the coverage is great – but only if the rules are obeyed.  The issue, however, was that the rules were communicated via US Mail (a/k/a “snail mail”).  I love my mail carrier as much as the next red blooded American, but – if we’re being empathetic – we need to accept that a cancer patient is likely falling behind on their mail, and are unlikely to rush to open a letter that doesn’t look like a bill.  To ensure the patient knows about the particulars of the program, we should notify them when the first dose is filled by notifying the pharmacist (so the message can be conveyed at the point of sale), and electronically (via phone call, text, e-mail, etc.). This is one silly little example of things we may not spot from the payer perspective, but as a patient, suddenly it’s clear.

Likewise, case management.  Again, the benefit plan attempts – in its estimation – to go above and beyond in its servicing of the patient, assigning a case manager to the patient’s case.  This person, the patient believes, is supposed to offer advice, act as a second set of eyes on proposed care, and generally look out for the patient’s best interest.  In our mind, that would include financial interests too, right?  Yet, when a conflict arose between the provider and plan representative, the case manager was quick to report to my wife – the patient – that the conflict was raging, claims would likely be denied, and she – the cancer patient – should encourage her oncologist (the person, the patient believes, that stands between her and certain death) to work with the plan.

Now, from the case manager’s perspective, they foresee the patient enduring financial hardship if the matter isn’t resolved, and they are trying to act preemptively to avoid it.  This is not a bad thing!  Yet, from the patient’s perspective, they are being dragged into matters of money – irrelevant and unimportant – compared to their own battle to survive.

Again, we need to step into the shoes of the patient and ask: “How would I feel if I received a call, threatening to deny my claims and saddle me with debt, unless I turn on my doctor and become their adversary on the plan’s behalf?”  We know this isn’t the purpose of the case manager’s efforts, but this is how the patient (and if we’re honest – even we) may interpret it during such a time of stress and grief.

Moreover, if the patient is enraged by this turn of events, they may take this “heads up” from the case manager to be a directive from the plan administrator – and suddenly the case manager is looking like a final, fiduciary decision maker.  I worry here, because we do not want this independent third party case manager to suddenly be a fiduciary, or impact the actual fiduciary, by “making decisions” on the plan’s behalf – without the plan’s authorization.

As my wife continues to battle cancer, my eyes continue to be opened as it relates to the patient perspective, and how they may interpret things we in the benefits industry often say without concern.  I look forward to continuing to share my observations with you.


Wilderness Therapy Exclusions Causing Mental Health Parity Concerns

By: Erin M. Hussey, Esq.

The plan exclusion of wilderness therapy has spurred some lawsuits over the past year. These lawsuits are based on alleged violations of the Mental Health Parity and Addiction Equity Act (MHPAEA).

By way of background, the MHPAEA does not require that self-funded group health plans cover mental health or substance use disorder (MH/SUD) benefits, but if the plan chooses to cover those MH/SUD benefits then they must be covered in parity with the medical/surgical benefits. Among other items, pursuant to the MHPAEA, if a plan offers mental health and substance use disorder benefits in any classification, then those benefits must be provided in every classification in which medical/surgical benefits are provided. Those classifications include: (1) Inpatient, in-network; (2) Inpatient, out-of-network; (3) Outpatient, in-network; (4) Outpatient, out-of-network; (5) Emergency care; and (6) Prescription drugs.

With that said, the following cases allege that the exclusion for wilderness therapy is a categorical mental health exclusion, and therefore, if the plan covers other analogous “facilities” for medical/surgical benefits, the plan would be violating the MHPAEA.

In the following Massachusetts case, Vorpahl v. Harvard Pilgrim Health Care Ins. Co. (D. Mass. July 20, 2018), the U.S. District Court for Massachusetts ruled on a Motion to Dismiss filed by the insurer. This case involves a fully-insured plan that denied coverage (based on the plan’s exclusion) for an employee’s dependent children who received treatment at a state-licensed outdoor youth treatment program that was authorized to provide mental health services. The children’s parents claim that the plan’s exclusion for “health resorts, recreational programs, camps, wilderness programs, outdoor skills programs, relaxation or lifestyle programs, and services provided in conjunction with (or as part of) those programs” violates the MHPAEA and the Affordable Care Act (ACA). The court dismissed the ACA claim but the MHPAEA claim will proceed.

Most notably, however, is that the plan argued that its exclusion is a categorical exclusion that applies to both medical/surgical and MH/SUD benefits provided at this type of facility. The example the plan gave for the medical/surgical equivalent was a “diabetes camp”, which the plan would also exclude. By contrast, the plan participants argued that since the plan covers medical/surgical benefits at other inpatient treatment facilities, then the plan should also cover this wilderness program as it would be the MH/SUD equivalent for an inpatient treatment facility. This argument was supported by the Joseph F. v. Sinclair Servs. Co. case from 2016, wherein the court ruled that the plan violated MHPAEA by covering skilled nursing facilities (medical/surgical benefits), but not covering residential treatment facilities (MH/SUD benefits).

Furthermore, in a subsequent case in Washington, A.Z. v. Regence Blueshield, 2018 WL 3769810 (W.D. Wash. 2018), the court denied a motion to dismiss and allowed mental health parity claims to proceed  against an insurer who denied coverage for wilderness therapy programs for the employer’s dependent child who was diagnosed with depression. The 16 year old dependent filed a class action lawsuit against the insurer arguing that the Counseling in the Absence of Illness exclusion, which applied to her wilderness therapy programs, violated the MHPAEA. The lawsuit alleged that the insurer had a practice of excluding wilderness therapy, but would cover the medical/surgical equivalent of skilled nursing facilities and rehabilitation hospitals (citing the above-noted Vorpahl case). As such, the argument was made that this would be a categorical mental health exclusion.

Most recently, in the following New York case, Gallagher v. Empire HealthChoice Assurance, Inc., 2018 WL 4333988 (S.D.N.Y. 2018), a participant sued a third party administrator (TPA) for payment of wilderness therapy benefits for his dependent. This court also denied a motion to dismiss and allowed the mental health parity claim to proceed. Additionally, the court found the reasoning in Vorpahl and A.Z. to be persuasive. The court detailed that the question remains whether the plan provided benefits for skilled nursing facilities and rehabilitation centers for medical/surgical benefits while denying residential treatment centers offering wilderness therapy for mental health patients. This specific case presents another interesting layer revealing the TPA’s responsibilities when it comes to the MHPAEA.

In sum, the above-noted cases present an unsettled issue regarding whether a wilderness therapy exclusion would be considered a categorical mental health exclusion, or whether a wilderness therapy exclusion is a categorical exclusion that applies to both medical/surgical and MH/SUD benefits provided at this type of facility. In other words, does a wilderness therapy exclusion single out facilities for mental health services while other equivalent medical/surgical facilities are covered. These cases are in their early stages procedurally, but plans should be paying to what the outcome may be. These lawsuits are not only costly given the litigation expenses, but if it is determined that wilderness therapy must be covered to remain in parity, then this will become an additional expense for the plan.

The Phia Group will be watching the above-noted cases to see how they develop and what that could mean for current wilderness therapy related exclusions.

 


REMINDER: Medicare Part D Creditable Coverage Notices Due to Certain Employees by October 14th

By: Philip Qualo, J.D.


The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires group health plan sponsors and employers that provide prescription drug coverage to disclose to employees and dependents eligible for Medicare Part D whether the plan's coverage is creditable or non-creditable. Prescription drug coverage is creditable when it is at least actuarially equivalent to Medicare's standard Part D coverage and non-creditable when it does not provide, on average, as much coverage as Medicare's standard Part D plan. The Centers for Medicare & Medicaid Services (CMS) has provided a Creditable Coverage Simplified Determination method that plan sponsors can use to determine if a plan provides creditable coverage.


The notice requirement applies to all employers and health plans who offer prescription drug coverage, regardless of size, whether insured or self-funded, Affordable Care Act (ACA) grandfathered status or whether the plan pays primary or secondary to Medicare. Accordingly, the notice obligation is not limited to retirees but also Medicare-eligible active employees, COBRA participants and their respective dependents.


Notices of creditable or non-creditable coverage must be provided before the Medicare Part D annual enrollment period, which commences on October 15. Disclosure of whether prescription drug coverage is creditable or not allows individuals to make informed decisions about whether to remain in their current prescription drug plan or enroll in Medicare Part D plan during the enrollment period. The required notices may be provided in annual enrollment materials, separate mailings or electronically. Whether plan sponsors use the CMS model notices or other notices that meet prescribed standards, they must provide the required disclosures no later than Oct. 14, 2018. Individuals who do not enroll in Medicare Part D during their initial enrollment period and subsequently go at least 63 consecutive days without creditable coverage will generally pay higher premiums if they enroll in a Medicare drug plan at a later date.


It is important to note that Medicare-eligible individuals must be given notices of creditable or non-creditable prescription drug coverage at other times throughout the year as well. The notice must be provided: (1) before the effective date of coverage for any Medicare-eligible individual who joins an employer plan (2) whenever prescription drug coverage ends or creditable coverage status changes and (3) upon the individual’s request.


In addition to the to the notice distribution requirement, plan sponsors that provide prescription drug coverage to Medicare-eligible individuals must also disclose their Part D creditable or non-creditable prescription drug coverage status directly to CMS annually, no later than 60 days after the beginning of each plan year.

 


A Contract By Any Other Name

By: Jon Jablon, Esq.

As you may know, the regulators have been impressively sparse in their opinions of reference-based pricing (or RBP, for short). Courts have scarcely weighed in at all, and the DOL has published a few bits of guidance, some more helpful than others, but it’s still the wild west out there in the RBP space.

One of the central themes – and in fact one of the only themes – of prior DOL guidance has been that balance-billed amounts do not count toward a patient’s out-of-pocket maximum. That’s from way back in the ACA FAQ #18, published in January 2014. Then, in April 2016, the DOL clarified a bit. Question 7 of FAQ #31 (which we have previously webinarred about, and yes, that’s a word, as of right now) indicates that the previous guidance still holds true.

Well, sort of.

Yes, amounts balance-billed by out-of-network providers are still exempt from being counted toward a patient’s cost-sharing maximum, but the wording “out-of-network providers” apparently specifically implies that there are some in-network providers, according to the DOL. Many RBP plans have no in-network providers whatsoever; the result is that balance-billed amounts are counted toward the patient’s out-of-pocket if there are no “in-network” options. What does “in-network” mean, though, in this context?

At first blush, the concept seems to create a problem for RBP, since having “in-network” providers is antithetical to RBP. In most cases, however, RBP is not administered in a vacuum; usually, RBP is administered, at least in part, by a vendor, and that vendor generally has some processes in place for avoiding member balance-billing. The plan must somehow ensure that members are not balance-billed above their out-of-pocket limits, unless they had options and consciously chose not to utilize them.

For instance, if a plan is using RBP for out-of-network claims only – that is, accessing a primary network, but paying based on a reference price for anything falling outside that network – the plan could, in theory, allow any patients to be balance-billed for any amounts, if those patients have chosen to go out-of-network. That’s because the plan has established options for the patient to avoid balance-billing – but if the patient has chosen to not utilize those options, that’s the patient’s prerogative.

The problem arises, however, in the context of a plan that uses no network and has no contracted providers; if a provider balance-bills a patient above the out-of-pocket maximum when the patient had no choice but to be balance-billed, that’s when an employer could be in a state of noncompliance.

Greatly simplified, the regulators have specified that plans using reference-based pricing must provide patients some reasonable way to avoid being balance-billed. If all providers are non-contracted and will balance-bill, the plan is not permitted to sit idly by and allow the balance-billing to occur without doing anything about it. The plan will have no choice but to settle those claims with providers on the back-end. If, however, patients have “reasonable access” (whatever that means) to providers that will not balance-bill the patient – whether through some sort of network, or direct contracts, or even case-by-case agreements – the plan will have met its regulatory obligations, and can continue to not count balance-billed amounts toward patients’ out-of-pocket maximums.

The take-away here is that if you’re doing RBP, make sure you’re doing it right! The legal framework may be the wild west, but your own individual RBP plans shouldn’t be. Contact The Phia Group’s consulting team (PGCReferral@phiagroup.com) to learn more.


The Kavanaugh Hearings: The Future of Abortion and Obamacare at Stake

By: Brady Bizarro, Esq.

 

After more than thirty-two hours of testimony (and a record number of interruptions) before the Senate Judiciary Committee, the Supreme Court confirmation hearings for Judge Kavanaugh finally concluded last Friday. Republicans have already set a date for a vote and plan to have him seated for the Supreme Court’s new term, which begins in early October. Democratic opposition to Judge Kavanaugh is multi-faceted, but for our purposes, specifically related to health law, many fear he would vote to overturn Roe v. Wade and strike down the Affordable Care Act’s (“ACA”) pre-existing condition protections. Given the fact that a case to overturn ACA protections is currently sitting before a federal court in Texas, the Supreme Court may indeed be asked to weigh in sooner rather than later.

 

Judge Kavanaugh, like many nominees before him, refused to give assurances on specific hypotheticals. After all, he argued, independent judges should not give a thumbs up or thumbs down before litigants have appeared before them in court. Senators knew ahead of time that Kavanaugh would answer hypotheticals about abortion rights and the ACA in this way; yet, many of them still asked such questions in a rhetorical fashion to dramatize their points. A more effective strategy, at least politically, would have been to ask rhetorical questions, but also to ask Judge Kavanaugh about specific wording he used in prior dissents to expose signals that the judge might be prepared to overturn Roe v. Wade and/or the ACA.

 

Of all the committee members that questioned Judge Kavanaugh (and I watched them all), Senator Richard Blumenthal (D-CT) did this most effectively. The senator asked Judge Kavanaugh about his dissent in a case called Garza v. Hargan, the only abortion case on which the nominee has ruled. In that case, Judge Kavanaugh wrote that his colleagues on the D.C. Circuit Court of Appeals had decided that “unlawful immigrant minors have a right to immediate abortion on demand.” To Senator Blumenthal, this was a coded message to the White House. The phrase “abortion on demand,” according to the senator, is often used by the anti-abortion community to refer to repeal of Roe v. Wade.

 

In addition, in a 2003 memo, Judge Kavanaugh noted that the Supreme Court “can always overrule” Roe v. Wade. In particular, he wrote, “I am not sure that all legal scholars refer to Roe as the settled law of the land at the Supreme Court level since [the] Court can always overrule its precedent,” adding that some conservative justices then on the Court “would do so.” Finally, Senator Blumenthal noticed Kavanaugh’s description of Roe as “existing precedent.” In his review of hundreds of Judge Kavanaugh’s prior opinions, Senator Blumenthal could not find the use of the adjective “existing” before the word “precedent.” To the senator from Connecticut, this implies that Judge Kavanaugh believes that there will be a time when Roe can be overturned and will no longer be the legal precedent on abortion.

 

Regardless of the Democratic opposition, the simple fact remains that Republicans, in solidarity, have enough votes to confirm him. Unless something dramatic happens between now and the end of September, we can expect Judge Kavanaugh to soon become Justice Kavanaugh, the newest member of the United States Supreme Court. When cases reach the Court that deal with abortion rights and the ACA, we will learn whether or not Senator Blumenthal’s concern was warranted.


Texas v. U.S. Serves as Latest Threat to ACA’s Pre-Existing Condition Protections

Patrick Ouellette, Esq.

This week has featured opening oral arguments in Texas v. U.S. as part of the latest formal attack upon the Affordable Care Act (ACA). The case features 20 Republican governors and state attorneys general pursuing a preliminary injunction on the ACA. Despite technically serving as the defendant, the Trump Administration is defending the law and instead a group of Democratic attorneys have intervened in the case to defend the ACA. Among the key items at stake is the federal law’s guarantee that those with pre-existing conditions will not be denied coverage.

Congress eliminated the ACA’s individual mandate penalty starting in 2019, but the individual coverage mandate remains part of the law even if there technically are no “teeth” to this part since the tax penalties were essentially “zeroed out” by the Trump Administration. However, in their complaint filed on February 26, 2018, the plaintiffs argue that the “individual mandate to buy health insurance that lacks any constitutional basis”. For the mandate to be considered unconstitutional, according to the group, would have far-reaching ramifications that mean “the remainder of the ACA must also fall.” If successful, the governors and state attorneys general would abolish the ACA entirely along with its protection of those with pre-existing conditions.

Employers with self-funded health plans will be watching the results closely, as the pre-existing condition safeguards afforded to members would be removed completely along with the rest of the ACA. Concurrent with this court battle, North Carolina Sen. Thom Tillis led a group of Republican senators in introducing a bill recently that would apparently ensure coverage for those with pre-existing conditions. “This legislation is a common-sense solution that guarantees Americans with pre-existing conditions will have health care coverage, regardless of how our judicial system rules on the future of Obamacare.” However, the “Ensuring Coverage for Patients with Pre-Existing Conditions Act” only provides that insurers must accept those with pre-existing conditions, not necessarily that they need to treat them. This is an important distinction for insurers, as it would allow them far more liberty to deny coverage based on cost than what the ACA currently permits.

Stakeholders in the self-funded industry should pay attention to the progression of both Texas v. U.S. and the Tillis bill.


Has the Life Expectancy of Drug Rebates Been Reduced?

By: Kelly Dempsey, Esq.

That’s a pretty big question as we learn more about the Trump Administration’s attempt to reduce drug costs.

We all know drug prices are off the charts and several attempts to control pricing have failed to get up and running. As you may recall, President Trump indicated during his campaigning that he would develop a plan to lower prescription medicine costs. The U.S. health secretary (Azar) is making some moves and has indicated that eliminating drug rebates may help reduce costs.

Cost containment is key to self-funding and high drug costs have caused employers and plans to explore options to keep plan costs down, including utilizing vendor programs that obtain drugs from outside the U.S. and/or build certain rebate programs into the customized plan design. While there’s still a lot that must be worked through before changes are implemented, these four key takeaways may give plans, employers, brokers, PBMs, and other vendors some heart burn:

  1. In July 2017 the Department of Health and Human Services proposed regulations that reduce the protections for rebate programs – without these protections, these programs could be found to be illegal under federal ant-kickback laws.
  2. The PBM industry has contested the proposed rules indicating that Congress would need to modify a federal statute (instead of HHS just issuing rules).
  3. The FDA released a plan to increase the use of biosimilars (lower cost versions of biotech medicines).
  4. Health Secretary Azar directed the FDA to explore importation of drugs from other counties to combat high prices in the U.S.

Plans and vendors that utilize these types of programs should be on the look-out for rule changes to ensure continued health plan compliance. 


With the Lack of Guidance on AHPs, States Take Matters into Their Own Hands

By: Erin M. Hussey, Esq.

Since the final Association Health Plan (AHP) rules were issued in June, many states have opposed them arguing they would create adverse selection. The argument is that healthy individuals would join AHPs as a cheaper option, because they do not have to cover certain benefits such as essential health benefits (EHBs), while unhealthier individuals would join the individual and small group markets for more robust coverage. As a result, the more people that move from the individual and small group markets, in order to join AHPs, will cause an increase in premiums for those markets making it less affordable for unhealthy individuals who stay on them. In addition, Massachusetts Attorney General Maura Healey argues that the new rules are unlawful as they will create deception, fraud and mismanagement.

The final AHP rules have also left states with more questions than answers. As a result, states have recently been taking their own actions with the continued lack of guidance from the U.S. Department of Labor (DOL). For example, Michael Pieciak, Vermont Commissioner of the Department of Financial Regulation, issued an emergency regulation on August 1st stating, among other things, that fully-insured AHPs must offer EHBs. Additionally, on August 2nd Jessica Altman, the Pennsylvania Insurance Commissioner, sent a letter to the secretaries at the DOL and Health and Human Services (HHS) stating that AHPs must comply with ACA individual and small group market rules and ACA benefits and protections. This is in stark contrast to the AHP final rules which detail that an employer member who is considered a small employer would be able to avoid the small group market rules, such as covering EHBs, by joining an AHP that would constitute as a large employer or by joining a self-funded AHP. The final AHP rules attracted small employers since they would have the opportunity to offer large group market health coverage to their employees, but some states could make it difficult to do so.

With the final AHP rules becoming effective on August 20th, it is expected that states will continue to take matters into their own hands without further guidance from the DOL. As states continue to challenge the ability for AHPs to operate under the new rules, it is likely that lawsuits will be brought by business groups and individuals who seek to operate an AHP under the new rules.