Recent Supreme Court Decisions Impacting Health & Welfare Plans (Benefit Minute)
The Supreme Court is wrapping up a busy year with several decisions that potentially impact health and welfare benefit plans. Two of the prominent cases are described below.
Dobbs v Jackson Women’s Health Organization
In the decision, the Court ruled that access to abortion is not a right protected by the Constitution, overturning prior decisions in Roe v Wade and Planned Parenthood v Casey. The decision does not make abortion illegal, but instead now allows each state to establish its own law protecting, limiting or prohibiting access to abortion services within the state.
There are no federal laws or regulations that require a group health plan to provide coverage for abortions that are not medically necessary. For fully-insured plans, certain states have insurance laws that require health insurers to cover abortions. For example, Maryland recently added a new mandate that requires insurers, nonprofit health service plans, and HMOs that provide labor and delivery coverage to cover abortion care services for policy years beginning on or after January 1, 2023. Other state insurance laws explicitly restrict abortion coverage, often limiting coverage for such services to situations where the life of the mother is in jeopardy.
Self-insured group health plans of private employers are generally governed by ERISA and not subject to state insurance law. As a result, there is more flexibility for a self-insured plan to cover legal abortion services, regardless of the state where the employer or its employees are located.
To the extent that legal abortion services will not be available in all states, some employers have implemented or are considering tax-free travel and lodging benefits to assist in providing equal access to services covered under the group health plan. Under the Internal Revenue Code, medical expenses include amounts paid for transportation and lodging primarily for, and essential to, medical care. The daily tax-free limit for lodging expenses is $50 per person. These travel and lodging benefits may be provided directly through the group health plan or via an integrated Health Reimbursement Arrangement (HRA). For employees enrolled in a qualified high deductible health plan, employers should require that the deductible be satisfied before paying or reimbursing travel expenses so that health savings account (HSA) eligibility is not impacted. Privacy and security of protected health information under HIPAA would apply to the travel benefits.
Several large employers, including Dicks Sporting Goods, JPMorgan Chase, and Apple have announced that they will cover the expenses of employees who travel out of state for medical services up to a defined maximum dollar amount. Some employer policies are specific to abortion services that are not available in the state where the employee resides, while other policies are more general and will cover travel expenses for medical procedures that are not available in the employee’s home state or within a specified number of miles of the employee’s home. Provision of a broader travel benefit (not tied only to abortion services) under the group health plan limits exposure to Mental Health Parity and Addiction Equity Act (MHPAEA) compliance concerns.
As a result of this decision, multi-state employers are left with the challenge of navigating potentially up to 50 separate state legal frameworks that will continue to evolve and change. While ERISA preemption of state laws that relate to an employee benefit plan may provide some protection for plan sponsors, it is uncertain whether it would provide broad protection against state criminal laws, particularly laws that impose criminal liability for aiding and abetting an abortion through the group health plan. Clear guidance regarding the impact of this decision on group health plans is unlikely in the foreseeable future as these are novel questions that have not yet been addressed by the judicial system. Future litigation over these questions is likely, so plan sponsors evaluating these issues may wish to consult with legal counsel.
Marietta Memorial Hospital Employee Health Benefit Plan v DaVita, Inc.
In a decision involving Medicare Secondary Payer rules (MSP), the Court held that the Marietta Memorial Hospital group health plan’s reimbursement rates for outpatient dialysis did not violate MSP prohibitions.
Under the MSP rules, a group health plan is the primary payer for plan participants who have end stage renal disease (ESRD) and are on Medicare during the 30-month coordination period. The coordination period generally starts on the first day of the fourth month in which a course of regular dialysis begins. Medicare becomes the primary payer of benefits after the 30-month coordination period ends, as long as the individual retains Medicare eligibility based on ESRD.
The Marietta Memorial Hospital group health plan classified all dialysis treatment as out-of-network (the plan has no in-network providers) and reimbursed at a lower rate (often stated as a percentage of Medicare) than would have applied to in-network providers. Enrollment in Medicare Part B is important when the group health plan’s reimbursement is tied to the Medicare allowable amount for dialysis service providers during the 30-month coordination period because providers cannot balance bill Medicare patients.
DaVita, Inc. is a large dialysis provider that receives lower payments when reimbursed at the out-of-network rates (without the ability to balance bill in some cases). They argued that treating all dialysis providers as out-of-network with lower reimbursement rates discriminated against participants with ESRD in violation of MSP requirements. The group health plan countered that the lower out-of-network rates applied to all participants receiving dialysis treatment, whether the individual had ESRD or not.
The majority of the Court determined that the group health plan did not differentiate in coverage between participants with ESRD and those without because the plan provided the same coverage level for dialysis in both cases. They stated that there is no MSP requirement to provide any specific level of benefits for dialysis patients. Therefore, there was no MSP violation. In its dissent, the minority agreed with DaVita that “outpatient dialysis is an almost perfect proxy for end stage renal disease” and urged Congress to revisit the Medicare Secondary Payer Act to address the majority decision.
Sponsors of self-insured plans that offer or may consider offering only out-of-network benefits for dialysis should carefully review the Supreme Court decision and plan materials to make certain that the health plan does not provide different coverage to individuals who have ESRD compared to those who do not.