Skip to main content

The ERISA Edit: New ACA FAQs and an ERISA RFI from Congress

Employee Benefits Alert

New FAQs Addressing Contraception Coverage under the Affordable Care Act (ACA)

On January 22, 2024, the U.S. Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments) issued a new set of Frequently Asked Questions (FAQs) implementing Public Health Services (PHS) Act section 2713 preventive services provisions governing coverage of contraceptives and contraceptive care. In the new FAQs, which clarify and expand upon prior guidance, the Departments announce a "therapeutic equivalence approach" that plans and issuers may adopt to design "reasonable" medical management techniques for contraception benefits. The Departments state that adoption of the therapeutic equivalence approach should lessen reliance on the still-required contraception coverage exceptions process by patients and their healthcare providers.

The Departments have interpreted PHS Act 2713 and its implementing regulations, together with the Health Resources and Service Administration (HRSA)-supported Women's Preventive Services Guidelines (HRSA-supported Guidelines), to require non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage to cover, without cost-sharing: 

  1. At least one form of contraception in each of the 17 categories listed in the HRSA-supported Guidelines 
  2. Any contraceptive services and Food and Drug Administration (FDA)-approved, -cleared, or -granted contraceptive products that an individual's attending provider determines to be medically appropriate for the individual. 

Plans and issuers may use reasonable medical management techniques within a specific category of contraception but, if doing so, must have in place an "easily accessible, transparent, and sufficiently expedient exceptions process that is not unduly burdensome" to cover, without cost-sharing, contraceptive products and services determined medically necessary by an individual's attending provider. Prior agency guidance and congressional oversight reports have discussed at length medical management techniques, such as "first-fail" protocols and age-related restrictions, and certain features of exception processes that regulators and lawmakers say pose unreasonable barriers to accessing contraceptive coverage without cost-sharing. 

The new FAQs outline a therapeutic alternative approach to assessing the reasonableness of a plan's or issuer's medical management techniques: 

"[W]ith respect to FDA-approved contraceptive drugs and drug-led devices, if a plan or issuer utilizes medical management techniques within a specified category described in the HRSA-supported Guidelines (or group of substantially similar products that are not included in a specified category), the Departments will generally consider such medical management techniques to be reasonable if the plan or issuer covers all FDA-approved contraceptive drugs and drug-led devices in that category (or group of substantially similar products) without cost sharing, other than those for which there is at least one therapeutic equivalent drug or drug-led device that the plan or issuer covers without cost sharing. Even then, a plan's or issuer's medical management techniques would generally be considered reasonable only if the plan or issuer provides an exceptions process that allows an individual to access without cost sharing the specific contraceptive drug or drug-led device (that is a therapeutic equivalent to the product that is covered without cost sharing) that is determined to be medically necessary with respect to the individual, as determined by the individual's attending provider."

Under the new guidance, therapeutic equivalency is determined by the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book). The therapeutic equivalence approach does not apply to forms of contraception not listed in the Orange Book. As noted above, plans and issuers must still maintain a compliant exceptions process. Plans and issuers are not required to adopt the therapeutic equivalency approach and can continue to comply by adhering to prior guidance. 

The Departments' pending notice of proposed rulemaking, Coverage of Certain Preventative Services Under the Affordable Care Act, released last February, sought comments on whether further clarification is needed on what constitutes a reasonable medical management technique to control costs and promote efficient delivery of care and what qualifies as an accessible, transparent, and expedient exceptions process. The proposal is still pending before the agencies and is expected to be finalized on or before August 2024. Also pending is the Departments' request for information (RFI) concerning how the ACA's preventive services rules apply to over-the-counter preventive items and services.

The FAQs state that the Departments are actively investigating complaints and reports of non-compliance with the contraceptive coverage mandate.

House Committee on Education and the Workforce Seeks Feedback on ERISA

Also on January 22, the House Committee on Education and the Workforce issued an RFI on "ways to build upon and strengthen ERISA" in the lead-up to the law's 50th anniversary in September. The Committee noted that employer-sponsored health insurance, as the core of the American healthcare system, has been heavily impacted by rising health costs, leading to higher premiums, reductions in benefits, and less coverage held by small businesses. Given this situation, the Committee seeks feedback on several issues to explore ways of increasing affordability of coverage and quality of care.

The RFI covers a wide variety of topics. The Committee is interested in information regarding the following issues:

  • Preemption: Ways it might "strengthen and clarify" ERISA's preemption provisions and evidence regarding the impact of non-preempted state laws on multistate employers.
  • Fiduciary requirements: How it might change or build upon the definition and obligations of fiduciaries under ERISA and how Congress could clarify the applicability of fiduciary responsibilities and in how fiduciary obligations impact small businesses.
  • Reporting requirements: How Congress can better streamline reporting and disclosure requirements, including by better supporting electronic disclosures.
  • Prohibited transactions: How consolidation in the sector and pharmacy steering impact ERISA's prohibited transactions and whether the DOL should update its prohibited transactions exceptions.
  • Data sharing: Ways to improve data sharing between health plans and contracted entities. Specifically, the Committee wants to know whether the "gag clause" prohibition in the Consolidated Appropriations Act, 2021 (CAA) has been effective in ensuring fiduciaries can access quality and cost information.
  • Cybersecurity: First, comments on the structure of Health Insurance Portability and Accountability Act (HIPAA) and its efficacy in protecting personal health information in employer-sponsored health plans. Second, feedback on the ERISA Advisory Council's 2022 recommendations on cybersecurity, including whether Congress should pass any of the recommendations into statute.
  • Direct and indirect compensation: Feedback on the implementation of the No Surprises Act (NSA), which requires brokers and consultants to disclose compensation received for services to health plans.
  • ERISA Advisory Council: Whether the role of the ERISA Advisory Council should be expanded to encompass providing advice to Congress on issues related to employer-sponsored health benefits.
  • Medical loss ratio: Whether medical loss ratio requirements decrease incentives to reduce healthcare spending or drive vertical integration in the sector.
  • Portability: Ways to improve the portability of health benefits under ERISA, specifically by improving affordability and coverage for continuation benefits for employees under Consolidated Omnibus Budget Reconciliation Act (COBRA).
  • Specialty drug coverage: Innovative ways to reduce barriers for employers to cover high-cost specialty drugs in their health plans.

Responses to its RFI must be submitted by March 15, 2024. Readers who are interested in compiling a response to any of the topics discussed above, or participating in a joint response, may contact the ERISA Edit team for assistance and support. 

Second Circuit Remands NSA Constitutional Challenge Following Dismissal

On January 23, 2023, the U.S. Court of Appeals for the Second Circuit issued a summary order in Haller v. U.S. Department of Health and Human Services, No. 22-3054 (2nd Cir., Jan. 23, 2023), remanding back to the district court for further proceedings part of a group of surgeons' constitutional challenge to the NSA. The plaintiff-surgeons filed suit against the Departments and the Office of Personnel Management (OPM), alleging that the NSA exceeded Congress' authority by assigning adjudicatory functions to non-Article III tribunals, violated the right to a jury trial under the Seventh Amendment, and effected an unconstitutional taking of payments they would otherwise receive from patients. The district court granted the government's motion to dismiss the lawsuit and the plaintiffs appealed.

With respect to the plaintiffs' Article III and Seventh Amendment claims, the lower court discussed how the Seventh Amendment protects a litigant's right to a jury trial only if a cause of action is legal in nature and involves a matter of "private right." When Congress creates new statutory "public rights," it can assign their adjudication to an administrative agency without a jury trial without violating the Seventh Amendment's injunction that a jury trial is to be preserved in suits at common law. The plaintiffs asserted the NSA unlawfully usurped their right to bring private causes of action to recover the value of their services from patients for out-of-network services, to which the right to a trial by jury would attach. However, the plaintiffs ended up conceding that the NSA does not adjudicate payments between providers and patients and that they had no common law claims to recover payments directly from health insurers. Hence, the district court ruled that the NSA does not compel providers to arbitrate common law claims to which they had a right to a jury trial. According to the district court, "Congress is not precluded from creating a distinct claim for out-of-network providers against insurers and assigning the adjudication to arbitration."

On appeal, the plaintiffs-appellants asserted for the first time that they may have a common-law private right of action against insurers. The Second Circuit affirmed the district court's decision dismissing plaintiffs' Article III and Seventh Amendment claims based on the plaintiffs' failure to state a claim premised on their right to bring a common law action against patients. However, the court's dismissal was without prejudice to allow the plaintiffs' the opportunity to plead a common-law claim against insurers "if they so choose." The court held, "We decline to consider that argument for the first time on appeal. But neither should Appellants be prejudiced if they wish to replead and to advance such claims before the district court at a later date." We anticipate the providers will do just that and that this case will continue.

The Second Circuit affirmed the parts of the district court decision that dismissed the plaintiffs' Fifth and Fourteenth Amendments due process takings claim, finding that the plaintiffs failed to allege a regulatory taking and their allegations of a diminution in income too vague and speculative. 

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.