EBSA Plans To Include Health Care Reform Compliance In Health Plan Audits Beginning In FY 2012; Disputes OIG Criticism Of ACA Enforcement Efforts


Look for the Department of Labor Employee Benefit Security Administration (EBSA) to begin looking at compliance with the group health plan reform mandates of the Patient Protection & Affordable Care Act (PPACA) and amended by the Health Care and Education Reconciliation Act (HCERA)(collectively “ACA”)  requirements as part of health plan audits in its Fiscal Year 2012. 

Assistant Secretary of Labor Phyllis Borzi  announced EBSA’s plan to begin examining ACA compliance as part of broader health plan compliance audits that the EBSA intends to conduct in Fiscal Year 2012 in her response to a critique of EBSA’s ACA inplementation and enforcement efforts contained in a September 30, 2011 audit report issued by the Departmentof Labor’s Office of Inspector General.   According to that response, EBSA has developed a comprehensive checklist for auditing ACA compliance by health plans that it plans to use as part of health plan audits and has conducted significant staff training as part of its ACA implementation activities.  In light of EBSA plans to add ACA compliance to its health plan audits in 2012, employer and union health plans, their sponsors, insurers and administrators should take appropriate steps to ensure that their programs terms and practices are up to date with these requirements.

Ms. Borzi shared the plans for audit as part of a broader rebuttle  on behalf of EBSA to criticisms contained in a September 30, 2011 report by the  U.S. Department of Labor Office of Inspector (OIG) critical of the effectiveness and speed of EBSA’s efforts to implement certain health care reform provisions of ACA. 

Enacted on March 23, 2010, ACA makes EBSA, along with the Internal Revenue Service and the Department of Health & Human Services, a key player in the implementation and enforcement of the health benefit targeted reforms enacted as part of its sweeping health care reforms.  The September 30, 2011 OIG report identified various areas of improvement that OIG indicated EBSA should make to its implementation efforts based on OIG’s review of efforts by the EBSA to carry out its responsibilities to interpret, implement and enforce these reforms.

OIG Concerns

While its September 30, 2011 report titled “Further Action By EBSA Could Help Ensure PPACA Implementation And Compliance,” (OIG Report) acknowledged the significant actions taken by EBSA toward implementing ACA, the OIG Report still found that EBSA should take additional action to help ensure the timely and effective implementation and enforcement of ACA’s reforms. 

The most significant criticism expressed in the OIG report related to the adequacy of work and data reported by EBSA to HHS for HHS to use to define the benefits to be considered “essential benefits” under ACA.  Under ACA, EBSA was required to provide HHS with the results of a survey of benefits typically covered by employers that is sufficiently broad to enable HHS to determine benefits provided under a typical employer plan.   The OIG Report expresses several concerns about the breadth and validity of the information that EBSA provided to HHS.  According to the OIG, EBSA was unable to state that the report it provided HHS was broad enough to encompass all benefits EBSA considered to be typically covered by employers. Moreover, EBSA did not address all benefits HHS requested.  As a result, OIG expressed concern that HHS may not be able to ensure that State Insurance Exchanges offer the appropriate essential health benefits required by ACA.

In addition to its critique of EBSA’s essential benefits survey, the OIG also concluded:

  • EBSA could work with Treasury and HHS to establish a public timeline for addressing the public comments received on interim-final PPACA regulations and issuing final regulations;
  •  EBSA should have included the ACA requirements in its health plan investigations to better leverage its enforcement resources to assist plans in complying with the new regulations; and
  • EBSA should develop a regulation concerning MEWAs under PPACA Section 6604, regarding the applicability of State law as a means to combat fraud and abuse.

In light of these findings, the OIG recommended that EBSA take the following actions to strengthen its ACA implementation and enforcement actions:

  • Work with the Departments of HHS, Treasury, and the Office of Management and Budget to establish specific timetables to respond to public comments and issue final regulations;
  • Incorporate the ACA requirements immediately into the enforcement program to assist plans in complying with ACA;
  • Provide HHS with the results of a survey of benefits typically covered by employers that is sufficiently broad to enable HHS to determine benefits provided under a typical employer plan; and
  • Proceed with rulemaking relative to MEWAs under ACA section 6604.

EBSA Says Will Start Checking ACA Compliance in FY 2012 But Response Disputes Certain OIG Findings

While agreeing with the first and last recommendations, Ms. Borzi defended EBSA’s decision to delay auditing of health plan compliance with ACA and the adequacy of the survey data it reported to HHS for use in establishing essential benefits under ACA.

Concerning the auditing, Ms. Borzi said that EBSA has developed a comprehensive checklist to promote consistent investigations of ACA compliance, which EBSA plans to begin using when it conducts compliance assessments as part of its Fiscal Year 2012 Health Benefits Security Project as part of a broad range of implementation activities that EBSA has performed.  Ms. Borzi’s response to the OIG recommendations indicated that EBSA disagrees with OIG’s assessment that EBSA should be auditing compliance with ACA as part of its current year audits.  Rather, Ms. Borzi indicated that EBSA’s assessment and experience leads it to believe it more suitable for EBSA to use a phased implementation approach under which EBSA which delayed ACA compliance audits pending the development of regulations and after plans and insurers have had the opportunity to proccss the implementing regulations and related guidance and benefit from EBSA’s extensive outreach.

Ms. Borzi also took exception to the OIG’s criticism of EBSA’s survey.  In her response, she states that the report EBSA made to HHS “fully satisfies” the requirements of ACA.  She pointed out that ACA “clearly requires the Secretary of HHS, rather than the Secretary of Labor, to determine the scope of benefits offered by a typical employer plan. Thc stated purpose of the Secretary of Labor’s survey is to inform this determination.”  According to Ms. Borzi, the survey is based on the National Compensation Survey conducted regularly by the Department’s Bureau of Labor Statistics uses a large, nationally representative sample of employers to collect detailed information on whether particular benefits are included in employer health plans. Ms. Borzi concluded that this survey “will al1ow the Secretary of HHS to determine which are offered by a typical employer plan.

Likewise, Ms. Borzi disagreed with the OIG’s criticism that the report provided to HHS does not expressly tate which benefits are “typical” as unfounded.  According to Ms. Borzi, the statute docs not require the DOL to determine a specified threshold of incidence above which (and only above which) the benefit should be considered “typical.”  As a result, Ms. Borzi concluded that the EBSA report, by providing detailed data on the incidence of different benefits, fulfills the statutory purpose and requirements without taking on the function of the Secretary of HHS. 

Ms. Borzi’s response also reported the EBSA’s disagreement with the OIG’s assertion that EBSA’s approach to the report could impair the public comment process.   She stated that the report and associated supporting materials are easily available to the public and that commcntcrs are free to provide their views on the survey and on what benefits arc offered by a typical employer plan. Furthermore,Ms. Borzi pointed to planned opportunities for public input announced by the Secretary of HHS as offering additional opportunities for public input.

For More Information Or Assistance

If you need help reviewing or updating your health benefit program for compliance with ACA or other laws or with any other employment, employee benefit, compensation or internal controls matter, please contact the author of this article, attorney Cynthia Marcotte Stamer.

A 2011 inductee to the American College of Employee Benefits Council, immediate past-Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPPT Employee Benefits & Other Compensation Arrangements, an ABA Joint Committee on Employee Benefits Council Representative, the ABA TIPS Employee Benefit Plan Committee Vice Chair, former ABA Health Law Section Managed Care & Insurance Interest Group Chair, past Southwest Benefits Association Board Member, Employee Benefit News Editorial Advisory Board Member, and a widely published speaker and author,  Ms. Stamer has more than 24 years experience advising businesses, plans, fiduciaries, insurers. plan administrators and other services providers,  and governments on health care, retirement, employment, insurance, and tax program design, administration, defense and policy.   Nationally and internationally known for her creative and highly pragmatic knowledge and work on health benefit and insurance programs, Ms. Stamer’s  experience includes extensive involvement in advising and representing these and other clients on ACA and other health care legislation, regulation, enforcement and administration. 

Widely published on health benefit and other related matters, Ms. Stamer’s insights and articles have been published by the HealthLeaders, Modern Health Care, Managed Care Executive, the Bureau of National Affairs, Aspen Publishers, Business Insurance, Employee Benefit News, the Wall Street Journal, the American Bar Association, Aspen Publishers, World At Work, Spencer Publications, SHRM, the International Foundation, Solutions Law Press and many others.

For additional information about Ms. Stamer and her experience, see www.CynthiaStamer.com.

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