Health & Welfare Plans Newsletter

April 18, 2016

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University of California Office of the President
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[Guidance Overview]

How to Prepare for the Next Round of HIPAA Audits
"OCR views the audits as an opportunity to discover risks and vulnerabilities faced by entities in different sectors and geographic regions of the industry and to get out in front of potential problems before they result in breaches. However, OCR has warned that if a serious compliance issue is uncovered during the audit, a compliance review may be initiated." (Bryan Cave LLP)  


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[Guidance Overview]

How Shared Responsibility Affects Fringe Benefits for Federal Contract Workers
"[An] employer subject to the [McNamara-O'Hara Service Contract Act (SCA) and the Davis-Bacon Act and Related Acts (DBRAs)] that offers a health plan to employees in order to avoid the ACA's shared responsibility payment must still abide by the SCA and DBRA regulations the govern the extent to which the employer may credit the cost of the plan to it prevailing wage and fringe benefit obligations. In addition, an employer that seeks to fulfill its SCA and DBRAs obligations by providing health coverage to its employees is subject to the shared responsibility provisions of the ACA, just like ALEs." (Wolters Kluwer Law & Business)  

Congress Considers Capping Health Plan Deduction for Employers
" 'Let's consider the largest health tax expenditure, for employer-sponsored health insurance plans, commonly referred to as the employer exclusion,' said committee chairman Kevin Brady, R-Texas 'Congress incorporated this highly popular tax break into the tax code decades ago so that employers could attract and keep workers during a time of wage freezes. At the time this provision was created, the labor market and the health insurance market both looked very different.' ... Brady contended that the tax break limits the number of choices available to employees who might want to shop for a health care plan that might better fit their needs, and the tax break may also contribute to higher costs." (Accounting Today)  

Innovations in Health Care: Exploring Free-Market Solutions for a Healthy Workforce
Archived webcast of hearing held April 15, 2016. Also written opening statement by Chairman David P. Roe (R-TN), and written testimony of four witnesses: [1] Ms. Sabrina Corlette, J.D., Georgetown University Center on Health Insurance Reforms; [2] Ms. Tresia Franklin, on behalf of the American Benefits Council; [3] Ms. Amy McDonough, of Fitbit, Inc.; and [4] Mr. John Zern, of Aon. (Committee on Education and the Workforce, U.S. House of Representatives)  

Employer-Sponsored Health Plans Find Solace in Private Exchanges
"Data security and wellness programs were a primary focus for lawmakers, insurers and business representatives during a Senate subcommittee hearing [April 14] on employer-sponsored health plans that are reaping the benefits of switching to a private exchange." (FierceHealthPayer)  


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As Drug Costs Rise, a Few Bright Spots Appear for Payers
"Overall, total spending on prescription drugs in the U.S. reached $424.8 billion in 2015, an increase of 12.2 percent from 2014 ... Spending adjusted for net prices reached $309.5 billion, an increase of 8.5 percent over 2014. Yet ... the average net price for brands already in the market is estimated to have increased by just 2.8 percent in 2015, down from a 5.1 percent rise in 2014 and 'significantly lower' than seen in prior years." (FierceHealthPayer)  

Competition Works: Every Health Insurer Added to a Market Correlates to a 2% Decrease in Your Premiums
"As Anthem and CIGNA seek to merge along with Aetna and Humana, we can expect an even larger jump in premiums. Economies of scale are a real advantage but ... absolutely nothing holds prices down like insurer competition. And it appears we are on the verge of losing much of that." (Benefit Revolution)  

Obama Administration Admits It Could Have Respected Nuns' Rights After All
"In a brief filed at the Supreme Court [on April 12] ... the Obama administration told the justices that it could have mandated insurers issue separate contraceptive and abortion-inducing drug coverage to those who want it without hijacking the health plans of religious employers. This could spell big trouble for the government's defense of the mandate." [Zubik v. Burwell, Nos. 14-1418 et al. (3d Cir. Feb. 11, 2015; cert. pet. granted Nov. 6, 2015; argued Mar. 23, 2016)] (The Daily Signal)  

CMS Escalates Primary Care Reform
"CMS is looking for payers willing to align their payment structures, quality metrics, and data sharing with those of Medicare to meet the goals of its two-track successor to the Comprehensive Primary Care initiative." (HealthLeaders Media)  

Benefits in General

Assistant Labor Secretary: Spotlight on Gig Economy Underscores Need for Portable Benefits
"The President's proposal in February marked the first time the White House has pushed for a portable benefits system. The proposal and Borzi's comments come alongside a recent surge of support of portable benefits from both policymakers and the business community, the latter of which faces challenges in funding benefits for contingent workers without it being considered an indicia of employment that would render them fully liable under various employment laws." (HR Policy Association)  

District Court Opinion Provides a Primer on ERISA Venue Considerations
"In this claim for long term disability benefits case, the plaintiff filed suit in the Western District of Kentucky though she lived in the Northern District of Alabama for a company that was headquartered in Wisconsin. Which district is proper for venue? The district court reviewed the various factors and provides a useful overview of considerations involved in on a motion to transfer venue (which the defendant LINA filed). The plaintiff clearly wanted the case in the Sixth Circuit but the court found that Alabama was the proper venue after applying the factor analysis." [Youngblood v. Life Ins. Co. of North America, No. 3:16-CV-34 (W.D. Ky. Apr. 13, 2016)] (Health Plan Law)  

ERISA Plan's Noncompliance with Claims-Procedure Rule Prompts De Novo Review Absent Harmless Mistake
"[The DOL] advises plans that certain inadvertent and harmless errors will not trigger de novo review. The Second Circuit saw no reason why courts should not also tolerate such minor deviations, but cautioned that the deviations should not be tolerated lightly. Accordingly, the court held that when denying a claim for benefits, a plan's failure to comply with the claims-procedure regulation will result in the claim being reviewed de novo, unless the plan has otherwise established procedures in full conformity with the regulation and can show that its failure to comply was inadvertent and harmless." [Halo v. Yale Health Plan, No. 14-4055 (2d Cir. Apr. 12, 2016)] (Wolters Kluwer Law & Business)  

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