- ACA preventive care in legal crosshairs. The Biden Administration filed an immediate appeal of a Texas judge’s ruling to invalidate ACA requirements that mandate free preventive healthcare like screenings and medications.
- Not all types of services are affected. Recommended immunizations, women’s preventive care and preventive screenings for children will continue, despite the decision.
- Adopt wait-and-see approach for now. Employment attorneys agree that it’s prudent for employers to wait for a final decision rather than immediately move to change health plan coverage for preventive services.
When a Texas judge recently struck down the Affordable Care Act (ACA) mandate that delivered free coverage for certain preventive healthcare services, the repercussions rippled nationwide.
Judge Reed O’Connor, of the U.S. Northern District Court of Texas, invalidated the ACA mandate requiring most private insurance plans to cover healthcare services recommended by an independent panel of experts, called the U.S. Preventive Services Task Force (USPSTF).
O’Connor ruled that the ACA cannot mandate free coverage of healthcare recommended by the USPSTF because the organization’s members were appointed without Senate approval. The same judge attempted to strike down the ACA completely in 2018, but the U.S. Supreme Court overruled that decision.
Within days of O’Connor’s ruling, the Biden Administration’s Justice Department appealed, and the case will now go to U.S. Fifth Circuit Court of Appeals. According to Health and Human Services, an estimated 150 million Americans benefited from the ACA-required free screenings, counseling, medications and other forms of healthcare that prevent disease.
According to Anne Sanchez LaWer, a shareholder at employment law firm Littler, the ruling means employers who sponsor self-insured plans and insurance companies can now add deductibles and co-pays for services deemed preventive by the USPSTF after 2010. However, she says, some states may require insurance policies issued in their state to continue to provide preventive care.
“There is no requirement that these services now be subject to cost sharing,” LaWer says. “Employers can still provide free preventive care, but they will want to work with their healthcare consultants and healthcare insurance brokers to understand the costs and make revisions to the summary plan description and plan documents if necessary.”
Wait for Final Guidance and Clarity
While the decision is effective immediately, the Biden administration appeal could result in a stay at the appellate court level, which in turn could require plans to continue to provide coverage until the decision reaches the Supreme Court. In the meantime, LaWer explained, it would be prudent for employers to wait for a final decision rather than immediately move to change coverage for preventive services.
She also noted that most insurance policies and TPA/provider network agreements have at least a one-year term, so any decisions with respect to preventive services should be considered prior to renewals for the next plan year.
Employers who decide to move forward with the changes also could see individual lawsuits if the services and medication employees have been receiving at no cost become subject to potentially significant increases in cost, LaWer said.
“However, since the decision was effective immediately it is unclear whether a plaintiff would be successful,” she noted.
Looking forward, LaWer says employers should work with their healthcare consultants and insurance brokers to determine the cost of continuing to provide preventive care at no cost to participants. Employers should then consider the costs of not providing preventive care. In particular, employers should keep in mind the cost of preventive care versus treatment of illnesses when employees forgo preventive care and need expensive treatment.
As for any speculation if the decision “will stick” as it works its way up through the courts, it all depends on the make-up of the courts hearing the appeals and ultimately the U.S. Supreme Court, according to LaWer.
If the ruling stands, Congress could initiate new legislation or the Biden Administration could issue an executive order, she added.
Scope Is Limited
Ilyse Schuman, senior vice president, health policy, at the American Benefits Council (ABC) in Washington, D.C., says as employers evaluate the decision’s implications it is important to note that the final judgment does not affect all the ACA preventive service requirements.
For example, the requirement to cover recommended immunizations, women’s preventive care and preventive screenings for children without cost-sharing will continue. This care follows the Centers for Disease Control and Prevention Advisory Committee on Immunization Practices and the Health Resources and Services Administration recommendations.
“It also appears that the court’s ruling only affects the USPSTF recommendations made or updated on or after March 23, 2010,” she said, which leaves intact the requirement for group health plans and issuers to cover USPSTF recommendations that were in effect before then.
Schuman said that with respect to insured plans, the insurance policy likely provides that such coverage without cost-sharing will continue until renewal and there may be state laws or regulations that limit mid-year changes.
With respect to health savings accounts (HSAs), Schuman explains that IRS Notice 2013-57 sets forth how qualified preventive services can be provided pre-deductible.
Although it appears that most of the USPSTF services would still qualify as preventive under the HSA rules (even though they are no longer “preventive care” under the ACA), ABC has asked the Treasury Department and IRS to provide further guidance on this issue, she said, adding that another question relates to requirements under the Mental Health Parity and Addiction Equity Relief Act and the ACA preventive services rule.
“While the court’s ruling appears unlikely to have an immediate impact on most plans and issues, uncertainty persists about the outcome of the appeals process,” Schuman said. “If the decision is not overturned and absent Congressional action, plans and issuers could have more flexibility in the manner in which they cover certain preventive services, although multiple considerations will come into play.”
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