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Wegovy: Not Just a Weight Loss Drug

On March 20, 2024

By: David Ostrowsky

As if there weren’t enough buzz surrounding Wegovy.

Earlier this month, the wildly popular weight loss medication was approved in the US to help prevent life-jeopardizing cardiovascular events in people who are overweight, obese, and/or have a history of cardiovascular disease. The FDA’s stamp of approval for drugmaker Novo Nordisk to include cardiovascular benefits to Wegovy’s label meant it was the first weight loss drug to market itself in this manner. Now the million-dollar question (no pun, intended) becomes, will this label expansion make insurers feel more inclined to provide coverage? For good measure, will Medicare, currently barred by law from covering drugs for weight loss alone, be compelled to include Wegovy under its umbrella? 

Currently, Wegovy costs over $1,300 per month before any applied discounts. Obviously, for nearly every single American, this out-of-pocket cost is prohibitively expensive – especially considering that many patients may need to take it for the rest of their lives. Furthermore, the age-old rule of supply and demand suggests that the price isn’t likely to drop anytime soon: amid soaring demand for Wegovy, Novo Nordisk has struggled to maintain an adequate supply, although the company has pledged to boost production for the balance of 2024. (Novo Nordisk has also asked European Union regulators to expand the use of the drug for heart problems; however EU regulators have not responded to the request.) Unfortunately, many Americans – whether they are on private employer-sponsored plans or government-sponsored ones – have not been able to get financial relief from their insurance. Wegovy is simply too costly and – until this month at least – considered primarily to be a vanity drug.

But now there appears to be irrefutable evidence that Wegovy doesn’t just help people get ready for their new stylish beachwear, but actually prolongs life by reducing the risks of cardiovascular issues surfacing amongst the most vulnerable patients. Consider that the recent FDA approval stemmed from a 17,000-patient study that demonstrated that people taking Wegovy had a 20 percent lower risk of experiencing a cardiac event than those taking the placebo. It is important to note that the participants already had some form of cardiovascular disease and it has been suggested that further studies need to be conducted to demonstrate whether there are benefits for those who haven’t experienced a cardiac event. Regardless, the salubrious effects are undeniable. As Dr. Melanie Jay, director of the N.Y.U. Langone Comprehensive Program on Obesity, told the New York Times, “when you treat obesity seriously in people who have a high burden of disease, you can get really good outcomes.” Meanwhile, the more common side effects of Wegovy, which have been reported to include nausea, diarrhea, vomiting, and constipation, do manifest themselves in many patients (for older ones, it is fairly common to experience a loss of muscle mass), but are not considered as severe as those that have been linked to weight loss drugs in the past.

Ultimately, many insurers and self-funded plans are now scrambling to justify how they can deny coverage of a medically necessary medication. But aside from the optics, insurers and plan sponsors may have an understandably pragmatic reason to start providing coverage of Wegovy: while covering even some of the costs may seem imposing, the considerable outlay could be offset by the savings realized from reduced spending on long-term medical care relating to obesity and heart disease.

Stay tuned.

Empowering Plans: P185 – Weighing the Options

On March 14, 2024

Over the last twelve months we have seen major interest in GLP-1s  (Semaglutide- Ozempic / Wegovy and Tirzepatide – Mounjaro / Zepbound). Although GLP-1s have been around for years as a treatment for diabetes, the recent popularity is due to their use as a weight loss drug. Join Ron Peck and Corey Crigger as they discuss the impact this surge in demand has had on health plans and consumers. Are health plans and consumers informed about the benefits and drawbacks of this drug?  Are consumers too focused on the benefits? Are health plans too focused on cost? Find out as Ron and Corey discuss one of the hottest topics in the industry.

 

Click here to check out the podcast! (Make sure you subscribe to our YouTube and Apple Podcasts Channels!)

 

The Indirect (But Significant) Impact of a Recent Massive Healthcare Breach on Benefit Plans

On March 11, 2024

By: Andrew Silverio, Esq.

It’s not often we see a healthcare/health benefit story so big that it crosses into the mainstream. The recent cyberattack in the healthcare industry is just that type of story, however, and the American Hospital Association has already called it “the most significant cyberattack on the U.S. health care system in American history.” 

At stake were over 14 billion yearly transactions and this attack has seriously disrupted provider billing, interfering with patient care, and even preventing some providers from paying their employees. On top of that, a massive amount of patient information, protected under HIPAA, has been compromised.

Most of the focus among news outlets has been on the impact to providers, which is of course enormous. Those using the affected claim systems have essentially no way to be paid for their services, and many have seen cash flow come to a prompt and complete halt. The government has advised Medicare plans and related entities to relax prior authorization and timely filing requirements and the entity involved has announced a program to actually offer loans to affected providers.  However, those of us in self-funding know that it’s no simple matter to simply waive requirements like prior authorization and timely filing limits, and we have heard no word from stop-loss carriers on what action it will take if plans provide some allowances to safeguard patient care.  Plans are still able to enforce timely filing limits and other plan terms, but most don’t want to leave patients in the lurch with unpaid claims due to system disruptions entirely outside their control.  A plan that chooses to accept a late claim or waive a preauthorization requirement will be at real risk, since the stop-loss carrier is always free to enforce the terms of the plan, and its own policy, strictly and as-written. 

The industry is still scrambling to get the system “working” again and establish something resembling a normal claim submission pipeline and cash flow.  But once the dust settles, we would expect in the coming months to see some regulatory relief for plans and providers alike, to account for concessions and audibles that had to be made to keep the ship afloat. Looking ahead, hopefully precautionary systemic measures can be taken to account for future incidents. After all, healthcare and technology promise to be forever intertwined and there’s no telling when the next cybersecurity breach will rock the industry as it did last month.

Empowering Plans: P184 – State of the Union, 2024

On March 8, 2024

In his third State of the Union address, President Biden touted his administration’s record and outlined the issues he and his team will likely be campaigning on heavily as the 2024 presidential race kicks off in earnest. Sprinkled throughout were a number of policy wish list items, including some key healthcare initiatives that we’ll be keeping a close eye on in the coming months. Attorneys Brady Bizarro and Nick Bonds bring you some of the highlights in this episode of the Empowering Plans podcast. 

Click here to check out the podcast! (Make sure you subscribe to our YouTube and Apple Podcasts Channels!)

How the Recent Industry Cyberattack Impacts You

On March 7, 2024

By: David Ostrowsky

Late last month, an apparent massive cybersecurity incident involving the potential theft of patient data – this could entail personally identifiable information, sensitive health information, and financial information -- and encrypted company files seemingly paralyzed one of the nation’s largest pipelines for healthcare payments and prior authorization processing. Impacting a substantial percent of Americans’ medical claims (billions of claims totaling over a trillion dollars per year), millions have been affected. But perhaps the worst part is that many don’t even know it – and won’t be aware until they need to visit their physician or refill a prescription and face new hurdles in getting their customary treatment.

Just this week, The Washington Post published stories of patients getting billed hundreds of dollars for prescriptions that had normally been fully covered by insurance. Meanwhile, others cannot get their prescriptions filled at all no matter how much they are willing to pay and still others have found that discount coupons are no longer effective (this can literally save a person hundreds of dollars per month on a given prescription). For Americans living on airtight budgets, which is certainly a great number of our fellow countrymen, they’ve had to forego taking medications for an untold number of physical and psychiatric conditions. While it’s by no means a long-term fix, some physicians have provided their patients with sample packs of pills or offered more affordable replacement prescriptions for those needing to pay out of pocket. But we all know this band-aid solution will only go so far.

As this horrific situation has been playing out across pharmacies throughout our country, physicians in both massive hospital networks and small clinics are struggling to obtain prior authorization for exams, medications, and procedures; subsequently, many patients have faced significant delays in receiving life-altering and/or life-prolonging medical care. Such delays have also been exacerbated by the unfortunate reality that some hospitals and medical providers have not received payments and thus lack the wherewithal to keep their employees. As it is, many medical practices throughout America do not carry significant cash reserves and entirely depend on healthy cash flow to execute claim submission and payment on a timely basis as well as keep up with payroll. For facilities that administer the most expensive services (i.e., chemotherapy and other forms of cancer drugs), burning through cash reserves can mean being unable to treat patients in dire need. 

Simply put, the residual effects of this historically monumental data breach are endless – and, for many of the most vulnerable Americans who are already living on the margins of society, there appears to be no end in sight to physicians and hospitals not receiving adequate funding from private insurers, Medicare, and Medicaid.

As Molly Fulton, the chief operating officer of Arlington Urgent Care, a chain of urgent care centers around Columbus, Ohio, that’s currently carrying over $650,000 in unpaid insurance reimbursements, told the New York Times, “This is worse than when Covid hit because even though we didn’t get paid for a while then either, at least we knew there was going to be a fix. Here, there is just no end in sight.”

Empowering Plans: P183 – The Therapeutic Equivalence Approach: A New “Pill”ar of Contraceptive Coverage

On February 29, 2024

The DOL recently issued new guidance on the long-standing contraceptive coverage mandate, and this time they took a different approach. Instead of clarifying prior guidance or issuing novel interpretations of the law, the DOL is giving health plans an alternative way to comply with the contraceptive coverage mandate: either follow the prior guidance issued in 2022… or don’t! The DOL introduced the “therapeutic equivalence” approach, whereby plans can comply with the law in a different, potentially less-burdensome way. Join The Phia Group’s Kendall Jackson and Jon Jablon as they discuss this “therapeutic equivalence” approach to compliance, what it means for consumers, and what it means for health plans.

Click here to check out the podcast! (Make sure you subscribe to our YouTube and Apple Podcasts Channels!)

Millions Saying Good-Bye to Medicaid

On February 22, 2024

By: David Ostrowsky

That millions of Americans have been losing Medicaid coverage over the past year may be unsurprising, but it doesn’t make it any less heartbreaking.

Some historical context: Normally, Medicaid recipients who receive federally funded health insurance due to disabilities or low incomes undergo eligibility reviews every year to see if they are eligible for renewed coverage. But, of course, March 2020 was far from a normal time and the feds froze the checks due to it being a public health emergency. Subsequently, Medicaid recipients would retain their enrollment for the following three years . . . until this past spring when President Biden terminated the public health emergency and an “unwinding” process soon ensued whereby millions have thus far been disenrolled from Medicaid.

According to KFF, the renowned non-profit organization that bills itself as an independent source for health policy research, polling, and journalism, as of December 20, 2023, over thirteen million Americans had been taken off Medicaid since the spring. Texas, perhaps understandably given its mammoth size, has been at the epicenter of this gargantuan development. Since the COVID-era coverage protections were stripped last spring, over two million Texans have been cut off from their state’s Medicaid program. For reference, Houston, Texas’ largest city population-wise, has 2.3 million residents. It also should be noted that Texas hasn’t finished assessing eligibility information for all Medicaid enrollees, meaning more residents will likely forfeit coverage. Nationwide, an untold number of Medicaid beneficiaries will be receiving such disheartening notifications through May, after which the pre-pandemic status quo is slated to resume. 

While there is not exactly a universal way to categorize the tens of millions who receive Medicare funds, some common profiles include:

--Single parents working multiple low-paying jobs while struggling to stay above the Federal Poverty Level

--Parents with children who have serious, perhaps even terminal, illnesses that require incredibly expensive, drawn-out treatment

--Americans who may be unable to work in a full or part-time capacity due to incurring sudden debilitating injuries

The harsh reality is that for many of these Medicare recipients who lack robust employer-sponsored health benefits, being denied coverage – even for just a few weeks – can represent a life-or-death scenario (i.e., no longer having access to chemotherapy, radiation, and/or round-the-clock medical care.)

In fairness, Texas officials have been responsive to outreach efforts on behalf of the Center for Medicaid and Children’s Health Insurance Program Services (CHIP) as they convened to review Texas’ eligibility evaluation procedures and examine cases of state residents becoming disenrolled. Ultimately, Texas reinstated over 90,000 people who were deemed falsely disenrolled from Medicaid.

In a statement to NBC News, the Texas Health and Human Services Commission said it “planned this massive unwinding effort for more than a year,” and that if issues surfaced, the commission “works systematically to resolve any issues and reinstate recipients’ coverage if necessary.” And even for those who do not get coverage reinstated, it’s not Medicaid or nothing – there is also potential to qualify for no or low-cost premiums in the health insurance marketplace or obtain coverage from a new employer.

Also in fairness, for virtually every single American alive, this decade’s pandemic was an unprecedented time in our country’s history with many systems, including Medicaid, being thrown out of whack. From spring 2020 to spring 2023, Medicaid enrollment spiked to historic highs (as in over ninety-seven million Americans) – a situation that may very well have been unsustainable going forward. This spring, meanwhile, state agencies will have their hands full playing catch-up in examining cases to determine who should and should not retain Medicaid coverage.

On another level, this historic purge of Medicaid recipients has exposed longstanding administrative and technical problems in the systemic framework that covers the most vulnerable Americans. As New York Medicaid director Amir Bassiri recently told a national board of Medicaid advisers: “It would be a failure if we come out of this with the same old standards and processes we had in place prior to the public health emergency.” These antiquated standards and processes very well prevent many from enrolling (and re-enrolling) in Medicaid in the first place.

For now, such shortcomings – not to mention persistent staffing challenges -- are also making it significantly harder for states to redetermine who is Medicaid eligible.

The Skinny on Weight Loss Drugs

On February 21, 2024

From Contrave to Saxenda to Wegovy and beyond, society is being bombarded with messaging about weight loss drugs.  While many publicly debate their efficacy and long term viability, far fewer are openly asking who will pay for them – and how.  For those of us that sponsor and service health benefit plans, the costs arising from this trend are very real.  While we want to help people lose weight, get fit, and improve their overall health – the best way to approach this matter is still uncertain.  Join The Phia Group for another free webinar!  Our team will discuss this very relevant topic, including related issues such as off-label drug usage, international drug importation, defining medical necessity, plan drafting and exclusions.  Likewise, the importance of educating plan membership about the costs of healthcare, and what it means to be self-funded.  

Click Here to View Our Full Webinar

To obtain a copy of our webinar slides, please reach out to mpainten@phiagroup.com.

Empowering Plans: P182 – Navigating Post-Settlement Fund Pursuits

On February 15, 2024

Attorneys Andrew Silverio and Cindy Merrell discuss a newly decided case which provides a roadmap for pursuing settlement funds after disbursement. Who has the burden of proof when the funds have been dissipated? What is lowest intermediate balance rule?

Click here to check out the podcast! (Make sure you subscribe to our YouTube and Apple Podcasts Channels!)

Welcome to the Subrogation Sphere

On February 9, 2024

By: Cindy Merrell, Esq.

The Subrogation Sphere Is a Place Where Opponents Become Allies  

Las Vegas does not have the only sphere that can provide an extraordinary experience for its participants. Let me introduce you to the subrogation sphere where participants may first appear to have conflicting interests but can become allies. When a health plan member is injured because of a third-party action it sets into motion a dance involving many players, potentially including the plan participant, at-fault party, medical providers, stop loss carrier, and the health plan. Each player is trying to determine which player is the proper payor of the plan participant’s medical expenses.

The Alliance Begins

My primary duty as a subrogation attorney is to identify the proper payor of the health plan participant’s medical expenses. To successfully perform my job, I have regular contact with attorneys for both stop loss carriers, facilities, and plan participants’ attorneys.

Just the other week, one of our third-party administrator clients reached out to us because they were having difficulty getting a group’s stop loss carrier to process a $500,000.00 trauma bill. When we took a deep dive into the facts, we found out the member had been involved in a motor vehicle wreck caused by a third party. In this case, the auto policy limits were minimal. The hospital lien and health plan reimbursement amount far exceeded the available auto policy limits. Given the size of the trauma bill, the hospital retained an attorney to pursue their interest. The injured plan participant retained an attorney. The general counsel for the stop loss carrier was involved and The Phia Group was pursuing the subrogation/reimbursement interest on behalf of the health plan. Everyone was at a stalemate.

I knew that no one could “win” on this case. The plan participant was stressing over the $500,000.00 unpaid trauma bill. The self-funded health plan employer group was stressing over the same bill, not only because their valued employee was stressed and injured, but because this large of a claim without the stop loss reimbursement could be financially catastrophic to the health plan. The plan participant’s attorney could not resolve the plan participant’s claim against the auto carrier given the size of the provider lien and the health plan’s reimbursement interest.

No One Wins, but Everyone Wins

When I talked to the plan participant’s attorney, I could hear the desperation in his voice as he simply did not know what to do. His client who had suffered a catastrophic injury was more worried about the large trauma bill than his own recovery. I asked the plan participant’s attorney if his client would consider entering into a pre-settlement agreement in which the health plan and the plan participant could both get at least some portion of the minimal limits. After the plan participant agreed to my proposal, I had to get the stop loss carrier on board. I quickly realized the stop loss carrier simply did not have all the facts and I was able to provide the missing information and get the trauma bill processed. Once the trauma bill was processed and paid, the hospital lien was withdrawn.

Why Does the Alliance Matter?

The subrogation sphere can provide a meaningful impact for many people. In my example, the plan participant did not face the financial hardship of a $500,000.00 trauma bill. The hospital that provided the medical care received compensation for the services it provided. Finally, the health plan could remain self-funded. The health plan’s self-funded status allows its employees and their dependents to have comprehensive health care with lower premiums.

Empowering Plans: P181 – Chevron Deference in Peril – What It Could Mean for Healthcare Regulations

On February 1, 2024

In this episode of the Empowering Plans podcast, attorneys Brady Bizarro and Brian O’Hara discuss the legal doctrine involved in two cases now before the Supreme Court – Chevron deference. They’ll explain what it means, why it is important for federal agency action, and how it impacts the entire healthcare industry. With a decision expected by this summer, you do not want to miss our take on how the NSA, the Medicare drug price negotiations, and the ACA itself could be at stake.

Click here to check out the podcast! (Make sure you subscribe to our YouTube and Apple Podcasts Channels!)

Are Measles Making a Comeback?

On January 31, 2024

By: David Ostrowsky

When Dr. Michael Osterholm speaks, people listen – even if many do so begrudgingly.

The ever-serious epidemiologist out of Minnesota, who forewarned of a global pandemic years ago and has garnered the not-so-flattering nickname “Bad News Mike,” has a new dire message about the recent measles outbreak, one to which children are most susceptible, that has started to trickle through pockets of Europe and, more recently, the US:

“We're going to start seeing more and more of these outbreaks,” Osterholm told USA TODAY last month. “We're going to see more kids seriously ill, hospitalized and even die. And what's so tragic about this, these are all preventable.”

In late January, the World Health Organization (WHO) reported that measles cases spiked more than 40-fold in 2023 compared with 2022. Approximately 30 percent of those cases were in Kazakhstan, where there is an exceptionally high number of children who aren’t vaccinated. In England, there were 250 confirmed measles cases, most impacting children younger than ten. Although last year in the US, the number of measles cases reported was lower compared to most pre-COVID years, there have been ominous signs of trouble: Philadelphia has thus far recorded nine cases of measles, Washington State has identified three cases and investigated three others, while several other states have been tracing contacts of a single case. From a global perspective, 49 countries are experiencing what the WHO calls “large or disruptive outbreaks.”

As Osterholms noted, an uptick in severe illnesses, hospitalizations, and even deaths will follow. Per the Centers for Disease Control and Prevention (CDC), approximately a fifth of those who contract measles will be hospitalized due to a range of issues including uncontrollable diarrhea, dehydration, fever, conjunctivitis, skin rash, pneumonia triggering long-term respiratory issues, and possibly even brain inflammation sparking neurological issues. More alarmingly, it is estimated that out of every thousand children who come down with measles, one to three will inevitably die.

But, most maddeningly, as Osterholm also referenced, the vast majority of recent measles cases, which are incredibly contagious as the virus can drift in the air for a couple hours, could have been prevented. A single dose of the measles vaccine is 93 percent effective at stopping the virus, according to the CDC. For that reason alone, nearly every single parent alive has their children vaccinated (in the US, the measles vaccine is given twice, at 12-15 months old and then again at 4-6 years of age); but there’s always a small minority that doesn’t – and that is precisely what appears to be the root cause of the current problem. Generally speaking, for measles to remain in check, at least 95 percent of a given population needs to be immunized; in Europe, the percentage of people who had received a first dose dipped from 96 percent in 2019 to 93 percent in 2022.

“We actually knew this was going to happen, so it’s not news for us,” Dr. Natasha Crowcroft told the New York Times in regard to Europe’s current rise in measles cases. “There are times when there’s absolutely no pleasure in being right, and this is one of those.”

In terms of the aforementioned stateside cases, most unsurprisingly involved young children and adolescents who didn’t receive the measles, mumps and rubella (MMR) vaccine, despite being eligible. (Undoubtedly, measles is far from the only vaccine-preventable disease that looms as a major public health threat; other such diseases include polio, mumps, diphtheria, tetanus, whooping cough, and hepatitis B.) But it is important to note that the rising number of unvaccinated children may not solely be attributed to an increasing body of parents reluctant to comply with vaccine recommendations for their children – a problem that only becomes magnified when their children have returned from international travel. Another chief culprit may be the larger, socioeconomic force in play: the unfortunate reality that broad swaths of the American population, naturally those uninsured and living below the Federal Poverty Level, (never mind millions living in impoverished communities around the globe) simply don’t have access to proper healthcare, a dynamic more broadly known as health inequity. Even more so, it has been well documented that childhood vaccination rates have been on the decline in America since the onset of COVID, further broadening pre-existing gaps in vaccine participation.

This unjust situation speaks to many issues, not least of which is that health insurance remains prohibitively expensive for many Americans who are unemployed, self-employed, employed by companies that provide substandard coverage, or ineligible for Medicare and/or Medicaid. While immunizations, including those for measles, are considered preventive care and thus covered without cost-sharing under private health plans, millions of tax-paying Americans remain without adequate access to such plans. When will that change for the betterment of society?

Empowering Plans: P180 – The Continuing Evolution of MHPAEA

On January 18, 2024

One might think they’re listening to a broken record when hearing Jennifer McCormick and Kelly Dempsey discuss the ever-shifting landscape of the Mental Health Parity and Addiction Equity Act (MHPAEA), but alas, this is a brand new podcast! As we start 2024, we are reframing our mindset and are making some changes to address the evolving MHPAEA regulations and insights we have received from regulating bodies through the NQTL Comparative Analysis Process. In addition to highlighting the significance of how these issues should be addressed within an employer’s PD/SPD, there are three main changes discussed to create visibility for employers creating new 2024 PD/SPDs.

Click here to check out the podcast! (Make sure you subscribe to our YouTube and Apple Podcasts Channels!)

A New Year Brings New (Higher) Prescription Drug Prices

On January 18, 2024

By: David Ostrowsky

It must be January. W-2 forms are hitting the mail. Fitness centers are packed to the brim. The NFL playoffs are in full force.

And, yes, pharmaceutical companies are hiking prices on their drugs. This time of year, when insurance plans turnover, Big Pharma unveils its list of new (aka elevated) prices for drugs, which, particularly concerning newly launched ones, sparks sticker shock for consumers. Certainly, January 2024 does not appear to be an exception to this unpleasant trend.

On December 29 -- as many were making last-minute New Year’s Eve plans – the unsettling news dropped: globally recognized drugmakers, including Pfizer, Sanofi, and Takeda Pharmaceutical (all multibillion-dollar, publicly traded companies), were gearing up for price hikes on over 500 drugs, including over 140 different brands of drugs. For the second consecutive year, Pfizer declared the most price hikes in January as the New York-based drugmaker is responsible for more than a quarter of all the drugs with anticipated price hikes. Meanwhile, Takeda-owned Baxalta released the second-highest number of price increases, with 53 hikes planned thus far, and Sanofi plans to elevate prices on its typhoid fever, rabies and yellow fever vaccines each by 9% this month.

Why the markup for an exceptionally large number of medications this year? The expected culprits – lingering high inflation and supply chain backups, largely stemming from a drawn-out Middle East Conflict – account for some, but certainly not all, of the issues. At this moment in time, there are also notable political forces at play, namely Big Pharma bracing for the profound impact of healthcare cost reduction measures in President Biden’s Inflation Reduction Act (IRA) coming into effect. (This past August, the U.S. Department of Health and Human Services (HHS) publicly released the first ten drugs covered under Medicare Part D for negotiation; the negotiated prices will become effective beginning in 2026.) Not to oversimplify the matter, but Big Pharma is essentially anticipating lost revenue in the not-so-distant future and it feels it needs to compensate for the shortfall somehow, hence the hefty volume of upticks this month.

In other words, in the coming weeks, millions of Americans, many of whom are of advanced age and living below the federal poverty level, will be walking up to their local pharmacy counter to pay for their respective medications and learn that their co-pays and/or out-of-pocket expenses have gone up at least moderately, and in some cases, dramatically. And they will be faced with the gut-wrenching decision: do they fork over the extra cash for life-altering or even life-prolonging medications at the expense of cutting back on groceries and turning off the heat in single-digit temperatures?

Of course, this conundrum does not only apply to January as throughout the calendar year, Americans grapple with such dilemmas. But it’s certainly a problem that becomes particularly acute this time of year – one that already presents considerable challenges to many people’s physical and mental health.

While geopolitical events and policy decisions may be uncontrollable and unpredictable, there are cost containment techniques that employer-sponsored health plans can employ to alleviate said burden on their respective participants. There are, in fact, viable methods for lowering prescription drug costs even when the titans of the pharma industry inflate their prices. Certainly, prescription (and overall healthcare) cost containment programs are not necessarily easy to execute. They require ingenuity, extensive data benchmarking, and widespread participant engagement. But they do represent one effective means for countering what continues to be a dreaded January tradition: a surge in prescription drug prices across the board.

Considerations Regarding the Exclusion of Gender-Affirming Care

On January 16, 2024

By: Kendall Jackson, Esq.

Gender-affirming care was a particularly popular topic throughout 2023. As we enter the new year, the prevalent discussion concerning plan coverage of such care will certainly continue.

For self-funded health plans, the decision of whether to cover or exclude gender-affirming care is quite multilayered. Specifically for plans that exclude gender-affirming care within their plan documents, there are several potential discrimination concerns. An important element when evaluating these concerns is what law applies to the plan. For instance, certain state laws may not apply to a self-funded plan governed by the Employee Retirement Income Security Act (ERISA) due to ERISA preemption. ERISA preemption operates to preempt state insurance laws as they relate to employee benefit plans. Accordingly, any state laws that may require coverage or ban coverage for gender-affirming care would not apply to an ERISA plan. This is noteworthy as ERISA affords an employer the broad discretion to construct and design the coverage and benefits for its employees. As there is no federal requirement for plans to cover gender-affirming care, an ERISA plan may choose to cover or exclude benefits for gender-affirming care. Alternatively, non-ERISA plans, such as self-funded church plans or non-federal governmental plans, have slightly less flexibility and must adhere to both state and federal law.

Federal protections against discrimination have been, and will continue to be, integral to filling the gaps in health coverage for marginalized groups. Consequently, the potential compliance concerns outlined below apply particularly to plans that elect to exclude gender-affirming care. The first consideration is whether the plan is subject to Section 1557 of the Affordable Care Act (ACA), which hinges on whether the plan sponsor receives any federal financial assistance through the Department of Health and Human Services (HHS). Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age, or disability. HHS provided guidance in a notice in March 2022 that clarified the extent of Section 1557’s protections.[1] HHS opined that Section 1557’s protection against sex discrimination encompassed an individual’s right to access health programs that are free from discrimination based on gender identity. HHS stated that a plan categorically excluding benefits due to an individual’s gender identity was discrimination and prohibited by Section 1557. At the time, this guidance had a significant impact because if a plan was subject to Section 1557, generally, any exclusion of benefits or services related to, for example, transgender care, would be deemed a categorical exclusion and would be prohibited. Although HHS’s viewpoint was contested, nevertheless, it demonstrates the movement to protect against the exclusion of benefits based on gender identity. Accordingly, to avoid allegations of discrimination, self-funded plans subject to Section 1557 should consider removing gender-affirming care exclusions.

Even if a plan is not subject to ACA Section 1557, there are still significant discrimination concerns for plans with gender-affirming care exclusions if they create a disparity in coverage for certain individuals. These concerns stem from scrutiny from the Equal Employment Opportunity Commission and the protection against discrimination based on gender identity under Title VII of the Civil Rights Act of 1964. There have been several lawsuits brought forth by transgender individuals under these laws and Section 1557 about gender-affirming care exclusions, and courts have ruled in their favor on some occasions. An example of an exclusion that could create a disparity in coverage is a sex reassignment exclusion. In this case, while it does not exclude care for transgender individuals specifically, it is possible it could be viewed as discriminatory because it functions to categorically exclude services which will overwhelmingly be needed only by transgender individuals. As a result, while self-funded health plans are not mandated to cover gender-affirming care, the compliant approach with regard to all applicable laws would be to remove exclusions for gender-affirming care from the plan.

Pivoting to a different perspective, for self-funded non-ERISA plans subject to state law, there have been many changes surrounding gender-affirming care over the past year. For example, in Texas, on September 1, 2023, a law banning gender-affirming care, such as treatments for gender dysphoria, transitioning, and reassignment for minors took effect. The law prohibits health plans from covering services “that are intended to transition a child’s biological sex as determined by the child’s sex organs, chromosomes, and endogenous profiles.”[2] In Ohio, governor Mike DeWine signed an executive order on January 5, 2024, that banned hospitals and ambulatory surgical facilities from performing gender-affirming surgeries on minors.[3] In New Hampshire, the New Hampshire House recently passed a bill that will now be sent to the New Hampshire Senate. This bill proposes to ban gender-affirming procedures for minors.[4] The bill also proposes to prohibit health care workers from referring minors to out-of-state facilities that may perform gender-affirming procedures. These are only a few examples of the recent developments in state legislation that concern gender-affirming care. As of November 2023, 22 states had a law or policy banning gender-affirming care.[5] There will likely be more development in state legislation in the new year and plans subject to state law should be mindful of how these laws and policies may influence their plan structure.

The decision of whether to cover or exclude gender-affirming care is a multilayered matter and will likely depend on the intent of the employer. There are varying considerations depending on the type of plan and applicable law. As the landscape is constantly changing in regard to gender-affirming care laws, it is essential that plans consider plan document compliance, the potential for discrimination allegations, and, if applicable, what is mandated or banned by relevant states.

 

[1] HHS Notice and Guidance on Gender Affirming Care, Civil Rights, and

Patient Privacy, https://www.hhs.gov/sites/default/files/hhs-ocr-notice-and-guidance-gender-affirming-care.pdf

[2] Senate Bill 14, https://capitol.texas.gov/tlodocs/88R/billtext/html/SB00014I.htm

[3] Ohio Gov. DeWine signs executive order banning hospitals from gender transition surgeries on minors, https://ohiocapitaljournal.com/2024/01/05/ohio-gov-dewine-signs-executive-order-banning-hospitals-from-gender-transition-surgeries-on-minors/

[4] House Bill 619, https://gencourt.state.nh.us/bill_status/legacy/bs2016/billText.aspx?sy=2024&id=71&txtFormat=pdf&v=current

[5] HRC Foundation, https://www.hrc.org/resources/attacks-on-gender-affirming-care-by-state-map