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13 Employer Tips For Coping With Health Care Reform Now!

March 5, 2013

Since the Supreme Court’s June 28, 2012 National Federation of Independent Business v. Sebelius health care reform ruling upholding the “pay or play” mandates of the Patient Protection & Affordable Care Act (ACA), most business leaders, plan fiduciaries, health insurers, administrators of employment-based group health plans have accepted the need to prepare for health care reform changes taking effect in 2014.

Unfortunately, delays in the release of anticipated regulatory guidance, the development and implementation of federal and state exchanges and other regulatory and market reforms have made it difficult for many businesses to understand their obligations, options, and their associated costs.

Most business and industry leaders report frustration with the continuing lack of clarity and uncertainty about rules and costs. Meanwhile, sequester just made life (and costs) worse for many small employers whose current 2013 health plan budget depends upon plans to benefit from he Small Business Health Care Tax Credit (SBHCTC) enacted as part of ACA.

Despite these continuing uncertainties and challenges, the impending January 1, 2014 deadline for compliance doesn’t allow most businesses the luxury for waiting for clarification. To complete the necessary arrangements, businesses unfortunately must decide the direction they plan to take and start working to implement their choice despite these existing uncertainties while managing their existing health benefit programs and costs through 2013.

Small Employers Relying On Health Plan Tax Credit Should Adjust Budgets In Response To Sequester Cut

For small employers and tax-exempt employers counting on the Small Business Health Care Tax Credit (SBHCTC) enacted as part of ACA to afford health care coverage for their employees, health benefit planning needs to begin with determining and dealing with any new problems that an almost 9% cut in the 2013 SBHCTC tax credit triggered by sequester may have on the amount of the credit for the current 2013 tax year.

ACA added the SBHCTC to the Internal Revenue Code (Code) to help and encourage qualifying small businesses to provide health coverage for their employees. For tax years 2010 through 2013, the maximum credit is 35 percent for a qualifying small business employer and 25 percent for small tax-exempt employers such as charities. See IRS 3 Simple Steps Publication for help estimating the credit. An enhanced version of the credit is scheduled to increase the tax credit rate to 50 percent and 35 percent, respectively in 2014.

Many small businesses are unaware that sequester automatically cut their 2013 SBHCTC tax credit. Under the sequester requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, certain automatic budget cuts went into effect on March 1, 2013. These required cuts include an 8.7% reduction to the refundable part of the SBHCTC for otherwise qualifying small employers under Code Section 45R. As a result, qualifying employers counting on the SBHCTC credit to pay for employee health coverage need to know that this credit effectively is reduced by 8.7% percent. The sequestration reduction rate will apply until the end of the fiscal year on September 30, 2013 or intervening Congressional action, at which time the sequestration rate is subject to change.

Health Care Reform Coping Steps For All Businesses

While the sequester SBHCTC cut uniquely affects small businesses employing 25 or fewer workers, almost all businesses regardless of size are struggling to cope with the challenges of health care reform. The following steps may be helpful for many businesses working to chart a path for moving forward amid these uncertainties:

1. Know Your Workforce & Proper Worker Classifications For Purposes of Health Plan Rules

Whether and how ACA’s “pay-or-play” employer shared responsibility payment, default enrollment, insured health plan non-discrimination and other federal health plan rules apply to your company’s health plan requires a correct understanding of what workers considered employed by your business and how these workers are counted and classified for purposes of ACA and other federal health plan mandates is the first step to projecting the potential costs and liabilities of your business under Code Section 4980H.

ACA and other federal health plan rules decide what rules apply to which businesses or health plans based on the number of employees a business is considered to employ, their hours worked, their seasonal or other status, and other relevant classification as determined by the applicable rule. The ACA and other rules vary in the relevant number of employees that trigger applicability of the rule and how businesses must count workers to decide when a particular rule applies.

Trying to predict the employer shared responsibility payment, if any under Code Section 4980H or model the burden or cost of any other federal health benefit mandate requires each business know who counts and how to classify workers for each of these rules. Most of these rules start with a “common law” definition of employee then apply rules to add or ignore various workers. Because most federal health plan rules also take into account “commonly controlled” and “affiliated” businesses’ employees when determining rule coverage, businesses also may need to know that information for other related or commonly owned businesses.

2. Make Rough Cost Projection To Preliminarily Decide Whether To “Pay” or “Play”

Under ACA, each business retains the option not to offer any health coverage for any employee or employee groups provided the business can tolerate the resulting consequences. When a business along with all commonly controlled or affiliated employers, if any, employ a combined workforce of 50 or more “full-time” and “full-time equivalent employees” (Large Employer) does not offer “affordable,” “minimum essential coverage” to every full-time employee and his dependents under a legally compliant health plan that provides “minimum essential value” within the meaning of ACA after 2013, the business generally should expect to pay a shared responsibility payment under Code Section 4980H for each month after 2013 that any “full-time” employee receives a tax subsidy or credit for enrolling in one of ACA’s health care exchanges. The amount of this required shared responsibility payment will be calculated under Code Section 4980H based on the plan design and coverage the employer health plan offers and the required employee contribution for employee only coverage. Consequently, most businesses should project the relative cost to their business of paying the shared responsibility payment under Code Section 4980H against the cost of providing coverage to decide if it makes sense to even consider continuing to offer health coverage.

While not yet final, recently proposed Internal Revenue Service (IRS) regulations that would implement Code Section 4980H (4980H Regulations) provide a fairly good roadmap for business leaders to use to project their likely shared responsibility payment if the business assumes that the cost of offering coverage to avoid paying the shared responsibility payment will not be less than its existing health plan costs. Starting with this assumption, the 4980H Regulations provide some roadmap that the business can use to project its likely shared responsibility payment if the business fails to offer health coverage under a plan offering minimum essential coverage to each full-time employee and their dependents. Using this assumption, a businesses also can get a rough comparison of the projected cost difference per full-time employee if the offers a plan providing minimum essential coverage to all full-time employees and their dependents with minimum essential value that turns out to be “unaffordable” to some of these employees under ACA.

While refinement of the data in the time and other employment records might help a business refine these estimates, the preliminary projections made using existing data and these assumptions generally will help a business decide if it wants to go ahead under the assumption it will pay or play. If the business plans only to pay the shared responsibility payment, its efforts should focus on collecting and retaining the data needed to prove compliance and minimize its liability by planning its workforce and taking advantage of any safe harbor or other elections available to it under the 4980H Regulations for counting and classifying its workers.

3. If Business Decides To Offer Health Coverage After 2013, Decide Plan Design

If the business intends to continue to offer health coverage, the business also needs to decide the plan coverage and terms of that plan. In all cases, any health coverage offered generally must be designed so the business prudently can afford to pay benefit and administration costs of the plan and also meet all applicable mandates. The mandates applicable to the plan generally are based on the size of the employer as determined by the applicable federal rules.

Within these parameters, the business generally has the following choices:

Offer health plan that provides minimum essential coverage with minimum essential value to all full-time employees, but pay a shared responsibility payment for full-time employees electing exchange coverage whose employee only contribution would be considered “unaffordable” under ACA because it exceeds 9.5% of their wages;
Offer health plan that provides minimum essential coverage with minimum essential value to all full-time employees, and subside the cost of coverage for any low-paid workers as necessary to prevent that coverage from being unaffordable for any worker;
Offer a health plan providing minimum essential coverage to some but not all full-time employees and pay the shared responsibility payment calculated under Code Section 4980H(b) for any full-time employee that elects coverage under the exchange to whom the plan is either unaffordable or doesn’t offer minimum essential coverage; or
Some combination of these options, designed to meet the other federal health plan rules applicable for health plans offered by businesses employing that number of workers.

When making these decisions, uncertainty about the cost of coverage, the income of the workers, and which low-income employees, if any, actually will choose to enroll in the health plan versus choose to get coverage from the exchange creates some uncertainty to the predictions. As guidance continues to emerge, however, the modeling of these issues becomes increasingly more reliable. In the meantime, businesses that plan to continue to offer coverage must make their best guess to project costs and design their health programs while keeping a careful eye on the emerging guidance and market cost data.

4. Understand The Cast Of Characters & What Hat(s) (Including You) They Wear

Employers and their management rely upon many vendors and advisors and assumptions when making plan design and risk management decisions. Many times, employer and members of their management unknowingly assume significant risk because of misperceptions about these allocations of duties and operational and legal accountability. Business and plan leaders need a correct understanding of these roles and responsibilities to understand the risks and to what extent they can rely upon a vendor or advisor to properly design and administer a health plan or carry out related obligations, what risks cannot be delegated, and how to manage these risks.

Under the Employee Retirement Income Security Act (ERISA), any party that exercises discretion or control over health plan administration, funds or certain other matters generally is considered a plan “fiduciary.” Fiduciaries generally are personally liable for prudently and appropriately administering their health plan related responsibilities prudently in accordance with ERISA and other applicable laws and the plan terms. Knowing who is acting as a fiduciary and understanding those duties and liabilities and how to manage these risks significantly affects the exposure that an employer or member of its management risks as a result of an employer’s sponsorship in a group health plan or other employee benefit program. Also, knowing what duties come first and how to prove that the fiduciary did the right thing is key to managing risks when an individual who has fiduciary responsibilities under ERISA also is responsible for carrying out other management duties of the sponsoring employer, a vendor or elsewhere that carries duties or interests that conflict with his health plan related fiduciary duties.

Also, by not knowing who the fiduciaries are, plans and their fiduciaries often fail to confirm the eligibility of some parties serving as fiduciaries, to arrange for bonding of service providers or fiduciaries as required to comply with Title I of ERISA. Failing to properly understand when the plan sponsor, member of its management or another party is or could be a fiduciary can create unnecessary and unexpected risks and lead to reliance upon vendors who provide advice but leave the employer or a management member holding the bag for resulting liability.

A correct understanding of the risks and who bears them is critical to understand the risks, opportunities to mitigate risk through effective contracting or other outsourcing, when outsourcing does not effectively transfer risks, where to invest resources for contract, plan or process review and changes or other risk management, and where to expect costs and risks and implement processes and procedures to deal with risks that cannot be outsourced or managed.

5. Know What Rules Apply To Your Plan, The Sponsoring Employer, The Plan Its Fiduciaries & Plan Vendors & How This Impacts You & Your Group Health Plan

The requirements for health plans and the resulting liabilities have undergone continuous changes. ACA adds to an already extensive list of complicated federal rules about health plans and their administration. ACA, the Code, ERISA, the Social Security Act, the Privacy, Security, and Administrative Simplification and Breach Notification rules of the Health Insurance Portability & Accountability Act (HIPAA) and various other federal laws also impose certain health plan related obligations and liabilities on health plan fiduciaries, their employer or other health plan sponsors and other parties. These ever-expanding requirements increasingly impose civil or criminal sanctions, excise tax or other liability on plan administrators or other parties for failing to maintain legally compliant plans, file required reports, give required notifications or meet other requirements. In many instances, this includes a requirement to know and self-report violations of some of these federal rules.

Since 2010, IRS regulations have required employers sponsoring group health plans not complying with mandates covered by Internal Revenue Code Section 6039D to self-report violations and pay related excise taxes. Under these regulations, the sponsoring employer (or in some cases, the insurer, HMO or third-party administrator) must report health plan compliance failures annually on IRS Form 8928 (“Return of Certain Excise Taxes Under Chapter 43 of the Internal Revenue Code”). Beyond any specific liability under ERISA or the particular law for such violations, the potential excise tax liability that can result under these provisions can be significant. For example, COBRA, HIPAA, and GINA violations typically carry excise tax liability of $100 per day per individual affected. Compliance with applicable federal group health plan mandates is critical to avoid these excise taxes as well as other federal group health plan liabilities.

6. Update Health Plan Documents, SPDs & Other Communications, Administrative Forms & Procedures, Contracts & Processes To Meet Requirements & Manage Exposures

Along with knowing what rules apply, timely updating written plan documents, communications and administration forms, administrative practices, contracts and other health plan related materials processes and procedures has never been more critical.

A tightly written plan document and other plan communications have never been more important. Federal law generally requires that health plan be established, maintained and administered in accordance with legally complaint, written plan documents and impose a growing list of standards and requirements governing the design and administration of these programs. In addition to the existing and impending ACA mandates, ERISA, the Code , the Social Security Act, federal eligibility and coverage continuation mandates of laws like the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Uniformed Services Employment and Reemployment Rights Act (USERRA), the Health Insurance Portability & Accountability Act, the Family & Medical Leave Act, the Genetic Information and Nondiscrimination Act (GINA), Michelle’s Law, mental health parity and other laws regulate the eligibility, coverage, administration and other design features of employment-based health plans and their administration. ACA and other laws also require that employers, health plan administrators and fiduciaries protect the privacy of data, as well as comply with claims and appeals, communication, fiduciary responsibility, bonding, record keeping, reporting and other requirements.

Failing to update documents, communications, administrative forms and processes and other materials and practices can unleash a host of exposures. ERISA requires that that all material plan terms be set forth in a written plan document. Many other federal health plan mandates require that this plan document include certain specific provisions. Beyond these mandated terms, the ability to uphold and enforce plan terms often can be hurt or hindered by the tightness or sloppiness of the plan language.

Among other things, noncompliant plan documents, communications and practices can trigger unanticipated costs and liabilities by undermining the ability to administer plan terms and conditions. They also may expose the plan, plan fiduciaries and others to lawsuits, administrative enforcement and sanctions and other enforcement liabilities.

For this purpose of deciding what and how much to do, it is critical to keep in mind the devil is in the details. Not only must the documentation meet all technical mandates, the language, its clarity and specificity, and getting the plan document to match the actual processes that will be used to administer the plan and ensuring that the plan documents and processes match the summary plan description, summary of benefits and coverage, administrative forms and documentation and other plan communications and documentation in a legally compliant way significantly impacts the defensibility of the plan terms and the expense that the plan, its sponsor and fiduciaries can expect to incur to defend it.

7. Clean Up Claims and Appeals, SPDs & Other Practices To Enhance Defensibility

Proper health plan claims and appeals plan and summary plan description language, procedures, processing, notification and documentation is critical to maintain defensible claims and appeals decisions required to enforce plan terms and manage claims denial related liabilities and defense costs. Noncompliance with these requirements may prevent health plans from defending their claims or appeals denials, expose the plan administrator and plan fiduciaries involved or responsible for these activities to penalties, prompt unnecessary lawsuits, Labor Department enforcement or both; and drive up plan administration costs.

Among other things, existing court decisions document that many plans existing plan documents, summary plan descriptions and explanations of benefits, claims and appeals investigations and documentation and notifications often need improvement to meet the basic plan document, summary plan description and reasonable claims rules of the plan document, summary plan description, fiduciary responsibility, reasonable claims and appeals procedures of ERISA and its implementing regulations. Court precedent shows that inadequate drafting of these provisions, as well as specific provisions coverage and benefit provisions frequently undermines the defensibility of claims and appeals determinations. In addition to requiring that claims be processed and paid prudently in accordance with the terms of written plan documents, ERISA also requirements that plan fiduciaries decide and administer claims and appeals in accordance with reasonable claims procedures.

Although the Labor Department updated its regulations implementing this reasonable claims and appeals procedure requirement more than 10 years ago, the Department of Labor updated its ERISA claims and appeals regulations to include detailed health plan claims and appeals requirements, many group health plans, their administrators and insurers still have not updated their health plans, summary plan descriptions, claims and appeals notification, and claims and appeals procedures to comply with these requirements.

These omissions only become more significant under ACA. The external review and other detailed additional requirements that the Affordable Care Act dictates that group health plans not grandfathered from its provisions and its provisions holding these non-grandfathered plans strictly liable for deficiencies in their claims and appeals procedures makes the need to address inadequacies even more imperative for those non-grandfathered group health plans. Inadequate attention to these concerns can force a plan to pay benefits for claims otherwise not covered as well as additional defense costs and penalties.

8. Consistency Matters: Build Good Plan, Then Follow It

Good documentation and design on the front end should minimize ambiguities in the meaning of the plan and who is responsible for doing what when.

With these tools in place, delays and other hiccups that result from confusion about plan terms, how they apply to a particular circumstance or who is responsible for doing what, when should be minimized and much more easily resolved by timely, appropriate action by the proper responsible party. This facilitation of administration and its consistency can do much to enhance the defensibility of the plan and minimize other plan related risks and costs.

9. Ensure Correct Party Carries Out Plan and Communications Plan Functions And Communications Compliant, Timely, Prudent, Provable Manner

Having the proper party perform plan related responsibilities and respond to claims and inquiries in a compliant, timely, prudent manner is another key element to managing health plan risk and promoting enforceability. Ideally, the party appointed to act as the named fiduciary for purposes of carrying out a particular function also should conduct all plan communications regarding that function in terms that makes clear its role and negates responsibility or authority of others.

When an employer or other plan sponsor goes to the trouble to appoint a committee, service provider or other party to serve as the named fiduciary then chooses to communicate about the plan anyway, the Supreme Court in FMC v. Halliday made clear it runs the risk that the plan related communications may be considered discretionary fiduciary conduct for which it may be liable as a functional fiduciary. Meanwhile, these communications by nonfiduciaries also may create binding obligations upon the plan and its named fiduciaries to the extent made by a plan sponsor or conducted by a staff member or service provider performing responsibilities delegated by the plan fiduciary.

Beyond expanding the scope of potential fiduciaries, communications conducted by nonfiduciaries also tend to create defensibility for many other reasons. For instance, allowing unauthorized parties to perform plan functions may not comport with the plan terms, and are less likely to create and keep required documentation and follow procedures necessary to promote enforceability. Also, the communications, decisions and other actions by these nonfiduciary actors also are unlikely to qualify for discretionary review by the courts because grants of discretionary authority, if any in the written plan document to qualify the decisions of the named fiduciary for deferential review by courts typically will not extend to actions by these nonfiduciary parties. Furthermore, the likelihood that the communication or other activity conducted will not comply with the fiduciary responsibility or other requirements governing the performance of the plan related functions is significantly increased when a plan sponsor, service provider, member of management, or other party not who has not been appointed or accepted the appointment act as a named fiduciary undertakes to speak or act because that party very likely does not accept or fully appreciate the potential nature of its actions, the fiduciary and other legal rules applicable to the conduct, and the potential implications for the nonfiduciary actor, the plan and its fiduciaries.

10. Clean Up Date Collection, Protection & Reporting

Existing and impending ACA and other federal mandates require that group health plans, their sponsors collect, maintain and administer is exploding. Existing eligibility mandates, for example, already require that plans have access to a broad range of personal identifying, personal health and a broad range of other sensitive information about employees and dependents who are or may be eligible for coverage under the plan.

While employers and their health plans historically have collected and retained the names, place of residence, family relationships, social security number, and other similar information about employees and their dependents, these data collection, retention and reporting requirements have and will continue to expand dramatically in response to evolving legal requirements.

Already, health plans also from time to time need employee earnings, company ownership, employment status, family income, family, medical, military, and school leave information, divorce and child custody, enrollment in Medicare, Medicaid and other coverage and a broad range of other additional information. Under the ACA, these data needs will explode to include a whole new range of information about total family income, availability and enrollment in other coverage, cultural and language affiliations, and many other items.

Collecting, retaining and deploying this information will be critical to meeting existing and new plan administration and reporting requirements. How this data collection is conducted, shared, safeguarded against misuse or other legally sensitive contact by the employer, service providers, the plan and others will be essential to mitigate exposures to federal employment and other nondiscrimination, HIPAA and other privacy, fiduciary responsibility and other legal risks and obligations.

To the extent that payroll providers, third party administrators or other outside service providers will participate in the collection, retention, or use of this data, time also should be set aside both to conduct due diligence about their suitability, as well as to negotiate the necessary contractual arrangements and safeguards to make their involvement appropriate.

Finally, given the highly sensitive nature of this data, employers, health plans and others that will collect and use this data will need to implement appropriate safeguards to prevent and monitor for improper use, access or disclosure and to conduct the necessary training to suitably protect this data.

11. Monitor, Assess Implications & Provide Relevant Input to Regulators About Emerging Requirements & Interpretive Guidance Implementing 2014 Affordable Care Act & Other Mandates.

While the Supreme Court’s decision upheld as Constitutional ACA’s individual and employer shared responsibility mandates as a tax, many opportunities to impact its mandates remain.

Beyond the highly visible, continuing and often heated debates ranging in Congress and the court of public opinion on whether Congress should change its provisions, a plethora of regulatory interpretations issued or impending release by the implementing agencies, the IRS, HHS and Labor Department, and state insurance regulators will significantly impact what requirements and costs employers, insurers, individuals and governments will bear when the law takes effect. Businesses sponsoring health plans should carefully scrutinize this regulatory guidance and provide meaningful, timely input to Congress, the regulators or both as appropriate to help influence the direction of regulatory or Congressional actions that would materially impact these burdens.

12. Help Employees & Their Families Build Their Health Care Self-Management Skills

Whether or not your company plans to continue to sponsor employee health coverage after 2014, providing training and tools to help employees and their families strengthen their ability to understand and manage their health, health care needs and benefits can pay big dividends. Beyond the financial costs to employees and employers of paying to care for a serious illness or injury, productivity also suffers while employees dealing with their own or a family member’s chronic or serious health care condition. Wellness programs that encourage and support the efforts of employees and their families to stay healthy may be one valuable component of these efforts. Beyond trying to prevent the need to cope with illness behind wellness programs, however, opportunities to realize big financial, productivity and benefit value recognition rewards also exist in the too often overlooked opportunity to provide training, education and tools that employees and their families need to better understand and self-manage care, benefits, finances and life challenges that commonly arise when dealing with their own or a family member’s illness. Providing education, tools and other resources that can help employees access, organize and effectively use health care and benefit information to manage care and the consequences of illness, their benefits and how to use them, to participate more effectively in care and care decisions, to recognize and self-manage financial, lost-time and other challenges associated with the illness not addressable or covered by health benefit programs, and other practical skills can help reduce lost time and other productivity impacts while helping employees and their families get the most out of the health care dollars spent.

13. Pack Your Parachute-Plan Your Defense & Exist Strategies

With the parade of expense and liabilities associated with health plans, businesses sponsoring health plans and the management, service providers and others involved in their establishment, continuation, maintenance or administration are well advised to pack their survival kit and develop their exit strategies to position to soften the landing in case their health plan experiences a legal or operational disaster.

Too often, while these service providers and advisors encourage plan sponsors and fiduciaries to allow the vendor to lead them or even handle on an ongoing basis plan administration services by touting their services, experience, expert systems and process and commitment to stand behind the customer when making the sale or encouraging reliance upon their advice when tough decisions are made, they rush to stand behind exculpatory and on-sided indemnification provisions in their service contracts to limit or avoid liability, demand indemnification from their customer or both when things go wrong.

While ERISA may offer some relief from certain of these exculpatory provisions under some circumstances, plan sponsors and fiduciaries should work to credential service providers and require service providers to commit to being accountable for their services by requiring contracts acknowledge all promised services and standards of quality, require vendors to commit to provide legally compliant and prudently designed and administered services that meet or exceed applicable legal requirements, to provide liability-backed indemnification or other protection for damages and costs resulting from vendor imprudence or malfeasance, to allow for contract termination if the vendor becomes unsuitable for continued use due to changing law or other circumstances and requiring the vendor to return data and other documentation critical to defend past decisions and provide for ongoing administration. Keep documentation about advice, assurances and other relevant evidence received from vendors which could be useful in showing your company’s or plan’s efforts to make prudent efforts to provide for the proper administration of the plan. When concerns arise, use care to investigate and redress concerns in a timely, measured fashion which both shows the prudent response to the concern and reflects sensitivity to the fiduciary and other roles and responsibilities of the employer sponsor and other parties involved.

Get Moving Now

Since many compliance deadlines already have past and the impending deadlines allow plan sponsors and fiduciaries limited time to finish arrangements, businesses, fiduciaries and their service providers need to get moving immediately to update their health plans to meet existing and impending compliance and risk management risks under ACA and other federal laws, decisions and regulations.

Even as businesses move forward to respond to health care reform’s challenges, their leaders should continue to give input to Congress and regulators about the need to improve the rules and reduce business uncertainty and burdens. With many regulations still in proposed or interim form and health care reform and its costs still a concern for many Congressional leaders, significant opportunity still exists to provide input to federal and state regulators on many key aspects of ACA and its relationship to other applicable laws. Businesses and other health plan sponsors, plan fiduciaries, insurers and administrators, and other vendors must stay involved and alert. Zealously monitor new developments and share timely input with Congress and regulators about existing and emerging rules that present concerns and other opportunities for improvement even as you position to respond to these rules before they become fully implemented.

For Help or More Information

If you need help reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices to respond to emerging health plan regulations, monitoring or commenting on these rules, defending your health plan or its administration, or other health or employee benefit, human resources or risk management concerns, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials on regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications. You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here.

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Posted by Cynthia Marcotte Stamer

Company President, Officer Can’t Use Bankruptcy To Avoid Liability For Using Plan Money For Company Operations

December 27, 2012

John Dombek III and John Dombek Jr. cannot use personal bankruptcy to avoid complying with a federal court order to restore $69,521 in health-care premiums and retirement plan contributions withheld from the paychecks of employees at several companies that are part of the JJD Industries in violation of the Employee Retirement Income Security Act (ERISA). The recent judgement against the two men in Solis v. John Dombek Jr., John Dombek III, Wisconsin Tool & Stamping Co. 401(k) Profit Sharing Plan & Trust, J.D. Acquisition 401(k) Profit Sharing Plan and Trust, and the JJD Industries Group Health Plan is a reminder to business owners, management and others with discretionary control over employee contributions or other plan assets of the importance of ensuring that all employee contributions withheld from pay and other plan assets are used only for appropriate plan expenses and timely deposited in trust or otherwise appropriately applied. Businesses owners and managers should treat these and other similar judgmentsas a wake-up call to meet employee benefit funding obligations, not to use plan monies for company operations and to take other required steps to make sure that retirement, health and other employee benefit plans moneys and other responsibilities are properly handled.

Company Leaders Ordered To Restore Misdirected Monies

A Chicago federal court ordered the two men to make restitution of $69,521 of employee contributions withheld from employee pay that the court ruled the Dombeks mismanaged by failing to ensure the timely deposit of these funds with the plans. See

Dombek III, who is president of the JJD Industries Group, and Dombek Jr. were co-fiduciaries of the Wisconsin Tool & Stamping Co. 401(k) plan and have been ordered to restore $22,164.45 in unremitted contributions and lost opportunity costs to the plan. Dombek III is also liable for an additional $2,222.78 in unremitted contributions and lost opportunity costs to the J.D. Acquisition 401(k) plan.

Dombek III must also restore $45,134.08 in unremitted contributions and lost opportunity costs to the JJD Industries sponsored group health plan. The company contracted with Blue Cross and Blue Shield of Illinois to provide health and dental benefits to the employees of its related companies, including Wisconsin Tool & Stamping Co., J.D. Acquisition Corp., Akorat Metal Fabricators Inc./Smithco Fabricators Inc. and Pavo Inc./Injection Plastics Corp. The companies paid their premiums separately, and premiums were partially funded through weekly employee payroll deductions.

The judgment also bars Dombek Jr. and Dombek III from serving as fiduciaries or service providers to any employee benefit plan subject to ERISA for a period of five years. An independent fiduciary will oversee the termination of the 401(k) plans of both Wisconsin Tool & Stamping and J.D. Acquisition, as well as the distribution of plan assets to eligible participants.

The Dombeks will not be able to claim bankruptcy protection to avoid liability for the judgments. Dombek Jr. and Dombek III both previously had filed for Chapter 7 bankruptcy protection. The Labor Department filed separate complaints to determine the dischargeability of these obligations and seek the enforcement of any monetary judgment against both individuals to restore the funds to the employee benefit programs. On October 5 and October 16, 2012, the U.S. Bankruptcy Court for the Northern District of Illinois granted the Labor Department’s motions for default judgment, finding that the debts Dombek Jr. and Dombek III owed to the plans were not dischargeable in bankruptcy.

Business Leaders Risk Personal Liability When Employee Contributions Used In Company Operations

The judgement is another reminder to business owners and leaders not to allow employee contributions or other plan assets to be used to pay company expenses or otherwise misdirected. The judgment is one many enforcement actions that the Department of Labor regularly takes against businesses and business leaders that allow plan assets to be used for company operations or other improper purposes.

“Failing to administer health insurance premiums properly demonstrates a total lack of concern for employees and their families,” said Steve Haugen, director of the Chicago Regional Office of the Labor Department’s Employee Benefit Security Administration. “Incorporating employees’ voluntary salary contributions into the general assets of a company and failing to forward them to the retirement plan are violations of both the law and the trust workers have placed in their employers.”

The judgement shows that owners, operators and managers of businesses that exercise discretion and control over the funding, investment or administration of employee benefit plans or their assets face significant liability for failing to properly fulfill their responsibilities with respect to their employee benefit plans. Businesses, their owners, board members, officers, and other members of management making decisions about the maintenance, funding, administration, termination, hiring or appointment of fiduciaries or service providers or other matters impacting the employee benefit plan should ensure that they understand the potential implications and responsibilities associated with these activities for themselves and their companies. Individuals who have authority or responsibility for employee benefit plans who also perform or take part in the performance of other company management functions also should pre-educate themselves about when ERISA may require that their plan responsibilities be put before otherwise applicable responsibilities to their company, appropriate processes for documenting decisions and activities, and other procedures to help position activities to mitigate exposures and promote defensibility.

For Help or More Information

If you need help reviewing and updating, administering or defending your employee benefit, human resources, insurance, health care matters or related documents or practices or with other employee benefits, human resources, health care or insurance matters, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on leading health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications. You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and registerto receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources available at ww.solutionslawpress.com.

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS. ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

1 Comment | Employee Benefits, Employers, ERISA, Fiduciary Responsibility, Health Plans, Mental Health, Mental Health Parity, Retirement Plans, Tax | Tagged: Bankruptcy, ERISA, fee disclosure, Fiduciary, plan investiments, prohibited traansaction, Prudence | Permalink
Posted by Cynthia Marcotte Stamer

Catch Up On Health Reform & Other Key Employee Benefits & Insurance Issues Emerging Issues and Litigation Relating to Life, Health, Disability and ERISA Symposium In Ft. Lauderdale

December 7, 2012

Cynthia Marcotte Stamer will be one of the featured panelists discussing “Implications of PPACA” on January 18, 2013 at the American Bar Association Tort Trial & Insurance Practice Section’s (TIPS) 39th Annual TIPS Midwinter Symposium on Insurance and Employee Benefits “Emerging Issues and Litigation Relating to Life, Health, Disability and ERISA” in Fort Lauderdale.

The “Implications on PPACA” program scheduled at 3:30 p.m. on January 18, 2012 is one of many content-rich series of programs on employee benefit and insurance issues that leading practitioners will lead during the Symposium W Hotel Fort Lauderdale in Fort Lauderdale, FL on January 17-19, 2013. To register, review the full agenda or get additional information about the Symposium, see here.

About Ms. Stamer

Managing Editor of Solutions Law Press, Inc. and a noted Texas-based employee benefits and employment lawyer with extensive involvement in the leadership of the ABA and other professional organizations involved in employee benefits, health care and workforce matters, is nationally and internationally known for her knowledgeable and creative leadership and work as an attorney, consultant, policy advocate, speaker and author helping businesses, governments, and communities on health and other insurance and employee benefits, patient education and empowerment, wellness and disease management, and other programs, policies, and processes. For more than 24 years, Ms. Stamer’s legal practice has focused on advising and representing employers, insurers, health care providers, community leaders and governments about health care and employee benefits policy and process improvement, quality, performance management, education, compliance, communications, risk management, reimbursement and finance, and other related matters. In addition to her legal practice, Stamer also extensively consults and provides leadership to a broad range of clients, professional and civic organizations, and others on strategies for improving the health care system and the ability of health care providers, payers, employers, community organizations, government agencies to promote the ability of patients and their families to access cost-effective, quality, affordable health care and other resource needs. She also has worked extensively with a broad range of business and government clients on health care, pension, social security, workforce, insurance and many other related policy matters.

In addition to her service with TIPS, Ms. Stamer also is active in the leadership of a broad range of other professional and civil organizations. For instance, Ms. Stamer presently serves as Executive Director of Project COPE, the Coalition on Patient Empowerment and the Coalition for Responsible Healthcare Policy; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Committee and its representative to the ABA Joint Committee on Employee Benefits and Vice Chair of its Welfare Benefits Committee; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; and as the Gulf Coast TEGE Council TE Committee Coordinator. She previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early retirement intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association; on many seminar faculties and in many other professional and civic leadership and volunteer roles.

Author of the hundreds of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. Nationally known for her work on health care reform and related matters, Ms. Stamer also regularly conducts training and speaks on these and other management, compliance and public policy concerns. For more information about Ms. Stamer, upcoming training, publications or other materials or events, see here or contact Ms. Stamer directly via email here or (469) 767-8872.

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here. If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to here.

Comments Off on Catch Up On Health Reform & Other Key Employee Benefits & Insurance Issues Emerging Issues and Litigation Relating to Life, Health, Disability and ERISA Symposium In Ft. Lauderdale | 105(h), Affordable Care Act, CHIP, COBRA, Disability, Disability, Employee Benefits, Employers, Employment Tax, ERISA, Excise Tax, Fiduciary Responsibility, FMLA, Health Care Reform, Health Plans, HIPAA, Human Resources, Income Tax, Insurance, Malpractice, Medicare Part D, Mental Health, Mental Health Parity, Patient Empowerment, Patient Protection and Affordable Care Act, Payroll Tax, Preemption, Prescription Drugs, Protected Health Information, Reporting & Disclosure, Tax Credit, Wellness Programs | Tagged: Affordable Care Act, ERISA, HIPAA | Permalink
Posted by Cynthia Marcotte Stamer

New OCR HIPAA De-Identification Guidance Among Developments Covered In 12/12 HIPAA Update Web Workshop

November 27, 2012

Get Up To Date On Details of New De-Identification Guidance & Other HIPAA Developments By Participating In 12/12 HIPAA Update Web Workshop

Health care providers, health plans, health care clearinghouses (covered entities) and their business associates and leadership should check and update their policies and practices for the de-identification of protected health information (PHI) in light of newly-released Guidance Regarding Methods for De-identification of Protected Health Information in Accordance With the Health Insurance Portability and Accountablity Act (HIPAA) Privacy Rule (Guidance) released by the Department of Health & Human Services (HHS) Office of Civil Rights yesterday (November 26, 2012).

Solutions Law Press, Inc. will host a one-hour, online HIPAA Update Workshop on the Guidance and other recent regulatory and enforcement developments under HIPAA for covered entities and their business associates on Wednesday, December 12 beginning at Noon Central Time. To register, see here.

PHI collected by health care providers, health plans, their management, sponsors, and vendors often includes a wealth of information valuable for use for functions unrelated to the HIPAA-covered functions and activities that leads covered entities or their business associates to collect or keep this data. While it might be tempting to repurpose this information for business planning and marketing purposes, covered entities and their business partners or associates frequently assume that covered entities and others that they deal with must take proper steps to that no PHI is used, accessed, disclosed or shared unless that action is allowed under the Privacy Rules, properly de-identified, or both.

When planning to rely upon the de-identification of PHI to engage in these activities, parties planning to rely upon HIPAA’s exception for de-identified PHI will want to consult new guidance just released by OCR about the de-identification requirements before moving forward. Existing Privacy Rules and the Guidance recognize two alternative methods that covered entities and their business can use to properly de-identify PHI for purposes of the HIPAA Privacy Rule.

OCR published the Guidance to help covered entities to understand what qualifies as de-identification, the general process by which de-identified information is created, and the options available for performing de-identification for purposes of the HIPAA Privacy Rule. The publication of this guidance was mandated as part of amendments to HIPAA enacted by Health Information Technology for Economic and Clinical Health (HITECH) Act included in the American Recovery and Reinvestment Act of 2009 (ARRA). Section 13424(c) of the HITECH Act requires the HHS to issue guidance on how best to implement the requirements for the de-identification of health information contained in the Privacy Rule.

De-identification & Its Rationale Under Privacy Rule

The Privacy Rule was designed to protect individually identifiable health information through permitting only certain uses and disclosures of PHI provided by the Rule, or as authorized by the individual subject of the information. However, in recognition of the potential utility of health information even when it is not individually identifiable, §164.502(d) of the Privacy Rule permits a covered entity or its business associate to create information that is not individually identifiable by following the de-identification standard and implementation specifications in Privacy Rule §164.514(a)-(b). These provisions allow the entity to use and disclose information that neither identifies nor provides a reasonable basis to identify an individual provided the Covered Entity can show that the PHI has been de-identified in accordance with either the Expert Determination Method or the Safe Harbor Method of the de-identification standard of the Privacy Rule and is not re-identified. Regardless of the method used to de-identify PHI, the Privacy Rule does not restrict the use or disclosure of de-identified health information, as it is no longer considered PHI and is not re-identified.

Privacy Rule De-Identification Implementation Standards Permit Alternative Methods of De-identification

Section 164.514(a) of the HIPAA Privacy Rule provides the standard for de-identification of protected health information. Under this standard, health information is not individually identifiable if it does not identify an individual and if the covered entity has no reasonable basis to believe it can be used to identify an individual. See Privacy Rule § 164.514.

Sections 164.514(b) and (c) of the Privacy Rule contain the implementation specifications that a covered entity must follow to meet the de-identification standard. As summarized in Figure 1, the Privacy Rule provides two methods by which health information can be designated as de-identified:

The formal determination by a qualified expert in accordance with the Privacy Rule (Expert Determination Method); or
The removal of specified individual identifiers as well as absence of actual knowledge by the covered entity that the remaining information could be used alone or in combination with other information to identify the individual (Safe Harbor Method).

In order for PHI to qualify as de-identified under the “Expert Determination Method, Privacy Rule § 164.514(b)(1) requires that a person with appropriate knowledge of and experience with generally accepted statistical and scientific principles and methods for rendering information not individually identifiable:

Applying such principles and methods, determines that the risk is very small that the information could be used, alone or in combination with other reasonably available information, by an anticipated recipient to identify an individual who is a subject of the information; and
Documents the methods and results of the analysis that justify such determination.

Alternatively, Privacy Rule § 164.514(b)(2) provides that PHI will qualify as de-identified under the Safe Harbor Method if:

All of an extensive list of identifiers of the individual or of relatives, employers, or household members of the individual, are removed from the data; and
The covered entity does not have actual knowledge that the information could be used alone or in combination with other information to identify an individual who is a subject of the information.

As long as the data is not re-identified, the Guidance indicates that a covered entity may prove fulfillment of the de-identification standard of Privacy Rule §164.514(a) by showing satisfaction of all applicable requirements of either method. Under the Privacy Rule, de-identified health information created following these methods is no longer protected by the Privacy Rule because it does not fall within the definition of PHI. Of course, de-identification leads to information loss which may limit the usefulness of the resulting health information in certain circumstances. Consequently, covered entities may wish to select de-identification strategies that minimize such loss.

Both alternatives for de-identification under the Privacy Rule require that covered entities and their business associates decide whether and how to keep the option for re-identification of PHI slated for de-identification and where applicable, appropriately manage the re-identification opportunity and data to avoid violation of the Privacy Rule.

According to the Privacy Rule, if a covered entity or business associate successfully undertook an effort to identify the subject of de-identified information it maintained, the health information now related to a specific individual would again be protected by the Privacy Rule, as it would meet the definition of PHI. Disclosure of a code or other means of record identification designed to enable coded or otherwise de-identified information to be re-identified is also considered a disclosure of PHI. In this regard, Privacy Rule §164.514(c) specifies that if the covered entity assigns a code or other means of record identification to allow information de-identified under this section to be re-identified by the covered entity, themeans of record identification is not derived from or related to information about the individual and is not otherwise capable of being translated so as to identify the individual; it can’t use elements of the protected PHI as the re-identification key,must safeguard the key, and can’t use or disclose the key or other re-identification tool for any other purpose.

Preparing For, Guiding & Documenting The De-identification Process For Defensibility

The Guidance stresses that importance of documentation for which values in health data correspond to PHI, as well as the systems that manage PHI and its risk of identification or re-identification in the de-identification process cannot be overstated.

The Guidance provides guidance to help guide covered entities and their business associates through the steps and analysis of using the Expert Determination versus Safe Harbor Method. A review of this Guidance makes clear that the design and administration of the de-identification process under either method requires careful and well-documented planning, analysis and implementation to fulfill and to keep the documentation that a covered entity or business associate might need to defend its decision to treat and use PHI as de-identified under the Privacy Rule against a potential audit or enforcement inquiry. The Guidance also seeks to further illuminate the requirements for effective de-identification through a series of questions and answers, supplemented by work flow and other charts, examples and other illustrations and tips on the proper use of each alternative Method and managing risks and the process associated with that Method. A Glossary of Terms also is shared. The discussion in the Guidance makes clear that covered entities and their businesses associates using either Method to de-identify PHI should be prepared to make a number of judgments about which Method to use, whether and how to make arrangements for re-identification, and how to properly manage the process to meet the requirements of the implementation standard and manage re-identification or other risks.

Register For 12/12 HIPAA Update Web Workshop To Catch Up On De-Identification Guidance & Other HIPAA & Texas HIPAA Regulatory & Enforcement Developments

Training and compliance mandates applicable to covered entities and their business associates under the newly strengthened Texas HIPAA law and HIPAA’s Privacy and Breach Notification Rules make it more important than ever that covered entities and their business associates get the timely training and other assistance needed to properly comply with requirements for the protection of PHI under the new Guidance and other HIPAA and Texas HIPAA mandates.

To aid in this process, Solutions Law Press, Inc. will host a 2012 HIPAA Update Web Workshop covering the new Guidance on de-identification and other regulatory and enforcement developments under HIPAA and the newly amended Texas HIPAA law on December 12, 2012 from 1:00 P.M.-2:00 P.M. Eastern | Noon – 1:00 P.M. Central | 11:00 A.M-Noon Mountain | 10:00A.M-11:00 A.M. Pacific Time.

Expanded health care privacy mandates of the Texas Medical Records Privacy Act that take effect September 1, 2012 and HIPAA regulations require covered entities and their business associates conduct training and take other steps to protect the privacy and security of PHI.

Complete HIPAA Training While You Catch Up On The Latest On HIPAA & Texas Medical Records Privacy Rules & Get Helpful Compliance And Risk Management Tips!

Health care providers, health plans, health care clearinghouses face new imperatives to strengthen their HIPAA and other procedures for handling protected health information and other sensitive information to manage expanding risks and responsibilities arising from evolving rules, expanding enforcement and oversight, and rising penalties and other liabilities.

The $4.3 million HIPAA Civil Monetary Penalty and growing list of $1 million plus resolution payments announced by the Office of Civil Rights coupled with its commitment to investigate all large breaches reported under the HITECH Act Breach Notification Rule and other stepped up enforcement and newly initiated audit activities send a clear signal that HIPAA-covered entities and their business associates face significant exposures for failing to appropriately manage their HIPAA and other responsibilities when handling protected health information. Meanwhile, Texas House Bill 300 has raised maximum state civil penalties for unlawful disclosures of Protected Health Information under the Texas Medical Records Privacy Act to from $5,000 to $1.5 million per year. Meanwhile HITECH Act amendments to HIPAA require covered entities provide notification of certain breaches while Texas House Bill 300 adds its own specific requirements to provide notice of certain breaches of computerized data containing sensitive personal information.

With Texas House Bill 300 expanding covered entities responsibilities and liabilities and OCR issuing new regulations and other guidance to implement amendments to the HIPAA Privacy & Security Standards and implement and enforce the HITECH Act Breach Notification Rule, health care providers, health plans and insurers, their brokers, third-party administrators, and other covered entities, as well as their business associates and employer and union clients must review and tighten their policies, practices, business associate and other contracts, and enforcement to manage HIPAA and other compliance and manage risks arising from the access, collection, use, protection and disclosure of PHI to meet expanding mandates and to guard against growing liability exposures under HIPAA and other federal and state laws.

Solutions Law Press, Inc. invites you to catch up on the latest on these and other key HIPAA requirements and enforcement and learn tips for managing risks and liabilities by participating in the “HIPAA Update Workshop” on Wednesday, December 12, 2012 via WebEx for a registration fee of $125.00.

Pre-approved for various types of continuing and professional education credit, the December 12, 2012 HIPAA Update Workshop will brief participants on the De-Identification Guidance as well as the latest on other regulatory and enforcement guidance under the HIPAA Privacy, Security and Breach Notification rules and guidance and share compliance and risk management lessons emerging from recent OCR enforcement and audit activities and other selected federal and state litigation and enforcement actions impacting the handling of protected health information. Among other things, the workshop will cover:

The De-Identification Guidance just released by OCR on November 26, 2012;
The latest HIPAA Privacy, Security & Breach Notification Guidance, Audits & Enforcement
Highlights Texas House Bill’s Amendments To Texas Medical Records Privacy Law That Took Effect September 1, 2012
Post HITECH Act Heightened Liability Risks: Audits, Civil Penalties, Criminal Penalties & State Lawsuits
Expansion of HIPAA Responsibilities & Liabilities To Business Associates & What Covered Entities & Business Associates Should Do In Response
HIPAA Data Breach Notification Requirements
Practical Challenges & Strategies For Managing These Responsibilities
Tips For Coordinating HIPAA & Other Federal & State Medical Privacy, Financial Information, Identity Theft & Date Security Compliance and Risk Management
Practical Strategies For Monitoring & Responding To New Requirements & Changing Rules
Participant Questions

About The Speaker

The workshop will be conducted by attorney Cynthia Marcotte Stamer. A Fellow in the American College of Employee Benefits Counsel, recognized in International Who’s Who, North Texas Health Care Compliance Professionals Association Vice-President and Board Certified in Labor & Employment Law, attorney Cynthia Marcotte Stamer has 25 years experience advising and representing private and public health care providers, employers, employer and union plan sponsors, employee benefit plans, associations, their fiduciaries, administrators, and vendors, group health, Medicare and Medicaid Advantage, and other insurers, governmental leaders and others on privacy and data security, health care, health and other employee benefit. employment, insurance and related matters. A well-known and prolific author and popular speaker, Ms. Stamer has worked extensively with heath care providers, health plans and other payers, health and insurance IT and data systems, and others on HIPAA and other privacy and data security concerns. She served as the scrivener for the ABA JCEB Agency Meetings with the Office of Civil Rights on HIPAA Privacy for the past two years. She presently serves as Co-Chair of the ABA RPTE Section Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Representative, an Editorial Advisory Board Member of the Institute of Human Resources (IHR/HR.com) and Employee Benefit News, and various other publications. A primary drafter of the Bolivian Social Security privatization law with extensive domestic and international regulatory and public policy experience, Ms. Stamer also has worked extensively domestically and internationally on public policy and regulatory advocacy on HIPAA and other privacy and data security risks and requirements as well as a broad range of other health, employee benefits, human resources, insurance, tax, compliance and other matters and representing clients in dealings with OCR and other HHS agencies, as well as the Departments of Labor, Treasury, Federal Trade Commission, HUD and Justice, Congress and state legislatures, and various state attorneys general, insurance, labor, worker’s compensation, medical licensure and disciplinary and other agencies and regulators. A prolific author and popular speaker, Ms. Stamer regularly authors materials and conducts workshops and professional, management and other training on HIPAA and other privacy, health care, employee benefits, human resources, insurance and related topics for the ABA, Aspen Publishers, the Bureau of National Affairs (BNA), SHRM, World At Work, Government Institutes, Inc., the Society of Professional Benefits Administrators and many other organizations. Her insights on privacy and other matters are quoted in Modern Healthcare, HealthLeaders, Benefits, Caring for the Elderly, The Wall Street Journal and many other publications. She also regularly serves on the faculty and planning committees of a multitude of symposium and other educational programs. For more details about Ms. Stamer’s services, experience, presentations, publications, and other credentials or to ask about arranging counseling, training or presentations or other services by Ms. Stamer, see www.CynthiaStamer.com.

Registration

The Registration Fee is $125.00 per person. Registration Fee Discounts available for groups of three or more. Pre-payment required via website registration required via website PayPal. No checks or cash accepted. Persons not registered at least 48 hours in advance will only participate subject to system and space availability.

Continuing Education Credit

The HIPAA Update Workshop is approved to be offered for general certification credit by the State Bar of Texas, Texas Department of Insurance, HRCI and WorldAtWork education credit for the time period offered subject to fulfillment all applicable accrediting agency requirements, completion of required procedures. Note that the applicable credentialing agency retain the final authority to determine whether an individual qualifies to receive requested continuing education credit. Neither Solutions Law Press, Inc., the speaker or any of their related parties guarantees the approval of credit for any individual or has any liability for any denial of credit. Special fees or other conditions may apply. CANCELLATION & REFUND POLICY: In order to receive credit, cancellation (either fax or mail) must be received at least 48 hours in advance of the meeting and are subject to a $10.00 refund processing fee. Refunds will be made within 60 days of receipt of written cancellation notice.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides business and management information, tools and solutions, training and education, services and support to help organizations and their leaders promote effective management of legal and operational performance, regulatory compliance and risk management, data and information protection and risk management and other key management objectives. Solutions Law Press, Inc.™ also conducts and assist businesses and associations to design, present and conduct customized programs and training targeted to their specific audiences and needs. For additional information about upcoming programs, to explore becoming a presenting sponsor for an upcoming event, e-mail your request to info@Solutionslawpress.com These programs, publications and other resources are provided only for general informational and educational purposes. Neither the distribution or presentation of these programs and materials to any party nor any statement or information provided in or in connection with this communication, the program or associated materials are intended to or shall be construed as establishing an attorney-client relationship, to constitute legal advice or provide any assurance or expectation from Solutions Law Press, Inc., the presenter or any related parties. If you or someone else you know would like to receive future Alerts or other information about developments, publications or programs or other updates, send your request to info@solutionslawpress.com. If you would prefer not to receive communications from Solutions Law Press, Inc. send an e-mail with “Solutions Law Press Unsubscribe” in the Subject to support@solutionslawyer.net. CIRCULAR 230 NOTICE: The following disclaimer is included to comply with and in response to U.S. Treasury Department Circular 230 Regulations. ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN. If you are an individual with a disability who requires accommodation to participate, please let us know at the time of your registration so that we may consider your request.

Comments Off on New OCR HIPAA De-Identification Guidance Among Developments Covered In 12/12 HIPAA Update Web Workshop | ADA, Civil Rights, Consumer Protection, Corporate Compliance, Data Security, Disease Management, Drug & Alcohol, Employers, ERISA, Fiduciary Responsibility, GINA, Health Plans, HIPAA, Human Resources, Insurance, Internal Controls, Medicare Part D, Prescription Drugs, Privacy, Wellness Programs | Tagged: compliance, Health Care, Heatlh Plans, HIPAA, PHI, Texas Medical Records Privacy | Permalink
Posted by Cynthia Marcotte Stamer

Boost Employee Recognition of Value Of Employer & Other Retirement Savings Tools & Plans

October 22, 2012

Studies suggest that employees need to save an estimated 40% of current earnings to have sufficient savings to fund the anticipated cost to keep up their lifestyle post retirement for their expected post retirement life expectancy. Although times are tough, American workers need to understand the importance of taking advantage of employer sponsored and other retirement saving and funding tools. Here is a free Department of Labor resource that employers might want to include in their retirement education toolkit.

For More Information Or Assistance

If you need help reviewing or responding to the defined benefit plan funding or other employee benefit, compensation or employment regulations or other related matters please contact Cynthia Marcotte Stamer here or (469)767-8872.

About Ms. Stamer

Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, an American College of Employee Benefits Counsel Fellow, past Chair and current Welfare Benefit Committee Co_Chair of the American Bar Association (ABA) RPTE Employee Benefit & Other Compensation Group, a Council Member of the ABA Joint Committee on Employee Benefits, current TIPS Employee Benefits Committee, Vice Chair, and Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, management attorney and consultant Cynthia Marcotte Stamer has more than 25 years experience advising and representing employers, health and other employee benefit plans, their sponsors, fiduciaries and plan administrators, consultants, vendors, outsourcers, insurers, governments and others about employment, employee benefit, compensation, and a wide range of other performance, legal and operational risk management practices and concerns. As a part of this work, Ms. Stamer has worked extensively with clients to manage risks and defend practices under a wide range of laws and circumstances. Her experience includes extensive work advising and representing employers, plans, plan fiduciaries, trustees, investors, and others about managing and resolving risks relating to distressed pension and other employee benefit plans, downsizing and other workforce re-engineering and other similar matters. A prolific author and popular speaker, Ms. Stamer also publishes, conducts client and other training, testifies, speaks and consults extensively on other employment and employee benefit risk management practices and concerns for the ABA, World At Work, SHRM, American Health Lawyers Association, Institute of Internal Auditors, Society for Professional Benefits Administrators, HCCA, Southwest Benefits Association and many other organizations. An Editorial Advisory Board member and contributing author of HR.com, Insurance Thought Leaders, Employee Benefit News and many other publications, her insights on these and related topics have appeared in Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, Managed Healthcare, Health Leaders, various ABA publications and a many other national and local publications. To learn more about Ms. Stamer, her experience, involvements, programs and publications, see here or contact Ms. Stamer.

Other Resources & Developments

If you found this information of interest, you also may be interested in reviewing other recent Solutions Law Press updates including:

If you or someone else you know would like to receive future updates and notices about upcoming programs and events, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at here. For important information concerning this communication click here.

Comments Off on Boost Employee Recognition of Value Of Employer & Other Retirement Savings Tools & Plans | Bankruptcy, Corporate Compliance, Employers, ERISA, Fiduciary Responsibility, Internal Controls, Reporting & Disclosure, Restructuring, Retirement Plans | Tagged: defined benefit plan, disclosure, ERISA, funding, Labor Department, notices, PBGC, pension plans, reporting, underfunded plans | Permalink
Posted by Cynthia Marcotte Stamer

Stamer Speaks On “The Practical Nitty Gritty For Coping With Health Care Reform NOW” 9/25 At DFW Web Meeting

September 10, 2012

Please Join WEB Dallas on Tuesday, September 25, 2012 for:
The Practical Nitty Gritty For Coping With Health Care Reform NOW
To register, please click here .

HRCI (SHRM) and WorldatWork Recertification Credit PENDING

With the initial debate about the Constitutionality of the Patient Protection & Affordable Care Act (ACA) now decided, employer and other health plan sponsors, insurers, fiduciaries and administrators are rushing to finish updating plan documents, communications, processes and procedures to meet current and impending ACA and other federal plan mandates while keeping a close eye out for more changes on the horizon. To help health plan sponsors, fiduciaries, administrators and insurers deal with the tough business of implementation, attorney Cynthia Marcotte Stamer will:

Share Her Practical 12-Step Process For Helping Employers Dealing With Today Health Plan Compliance Challenges
Share Key Updates and Tips For Dealing With New Summary of Benefits & Communications (SBC), Claims and Appeals, & Other Mandates
Share What To Watch For And Options For Maintaining Flexibility To Respond To Evolving Rules
Answer Common Questions That Health Plan Sponsors and Administrators Are Struggling With Submitted By Audience Members

Registrants are encouraged to help shape the program to reflect their questions and concerns by e-mailing their proposed questions prior to the program to cstamer@solutionslawyer.net. The program’s educational* discussion will be tailored taking into account this input with significant time set aside to share practical information and possible approaches for addressing questions and concerns of shared concern identified from this audience input.

A Fellow in the American College of Employee Benefits Counsel, recognized in International Who’s Who, and Board Certified in Labor & Employment Law, attorney and health benefit consultant Cynthia Marcotte Stamer has 25 years experience advising and representing private and public employers, employer and union plan sponsors, employee benefit plans, associations, their fiduciaries, administrators, and vendors, group health, Medicare and Medicaid Advantage, and other insurers, governmental leaders and others on health and other employee benefit. employment, insurance and related matters. A well-known and prolific author and popular speaker Board Certified in Labor & Employment Law, Ms. Stamer presently serves as Co-Chair of the ABA RPTE Section Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Representative, an Editorial Advisory Board Member of the Institute of Human Resources (IHR/HR.com) and Employee Benefit News, and various other publications.

Her Solutions Law Press, Inc. HR & Benefits Update publication has been recognized as one of the Top 50 Human Resources Blogs To Watch in 2012. A primary drafter of the Bolivian Social Security privatization law with extensive domestic and international regulatory and public policy experience, Ms. Stamer also has worked extensively domestically and internationally on public policy and regulatory advocacy on health and other employee benefits, human resources, insurance, tax, compliance and other matters and representing clients in dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, HUD and Justice, as well as a state legislatures attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators. A prolific author and popular speaker, Ms. Stamer regularly authors materials and conducts workshops and professional, management and other training on employee benefits, human resources and related topics for the ABA, Aspen Publishers, the Bureau of National Affairs (BNA), SHRM, World At Work, Government Institutes, Inc., the Society of Professional Benefits Administrators and many other organizations. She also regularly serves on the faculty and planning committees of a multitude of symposium and other educational programs. For more details about Ms. Stamer’s services, experience, presentations, publications, and other credentials or to inquire about arranging counseling, training or presentations or other services by Ms. Stamer, see http://www.CynthiaStamer.com.

* Registrants are reminded that this discussion is provided for general information and educational purposes. Accordingly, registrants are reminded that the discussion does not constitute legal advice, a substitute for legal advice or establish an attorney-client or other professional relationship.

LUNCHEON DATE & TIME: Tuesday, September 25, 2012
Registration: 11:30 to noon
Program: 12:00 to 1:15 PM
LOCATION: Doubletree Hotel, 4099 Valley View Lane, Dallas, Texas, 75244, 972-385-9000. Located on the NW Corner of Midway and LBJ Freeway (near Wal-Mart and Wendys). Parking is available in the front and back of the hotel.

COST TO ATTEND MEETING:
Member who registers in advance: $25 ($30 if a walk-in)
NonMember who registers in advance: $35 ($40 if a walk-in)
Walk-In Policy: Those without reservations are seated only if space permits. REGISTER BY: Tuesday morning, August 25, 2012. TO CANCEL: email tyneeta.morris@greyhound.com or call 214-849-7366 by noon, Friday, September 21, 2012.

Registration Procedures: . Please register online, whether or not you pay with a credit card. To register for the meeting, click the link at the top of this page. For those who do not want to pay online with a credit card, check the box at the bottom of the online registration form which reads “Check here if you do not wish to pay at this time”. Please do not hit “Reply” to this meeting notice.

If mailing a check, mail at least one week in advance of the meeting and include a copy of the registration form . Make payable to the Dallas Chapter of WEB, and send to: Dallas Chapter of WEB, c/o Carol Parker, Administration & Compliance Manager, Children’s Medical Center Dallas, 1935 Medical District Drive, Dallas, Texas 75235. WEB’s Tax ID# is 52-1360024. When paying at the door, we accept cash or checks, no credit cards are taken at the door.

QUESTION ABOUT THE MEETING? Contact Tyneeta Morris at 214-849-7366, tyneeta.morris@greyhound.com or Carol Parker at 214-456-6953, Carol.Parker@childrens.com.

Questions about membership? Contact Sherlynn at dallaswebmembership@tx.rr.com. To contact members of the Dallas WEB Board, please click here . Our next meeting will be October 30, 2012. Join us for: Benefits Jeopardy Please visit our website for more information on upcoming meetings.

If you are not already a WEB member, we hope you will join. Please visit our website and click Join WEB Now.

A special thanks to our current sponsors. Click their logos below to learn more about them!

Comments Off on Stamer Speaks On “The Practical Nitty Gritty For Coping With Health Care Reform NOW” 9/25 At DFW Web Meeting | Claims Administration, Employee Benefits, Employers, ERISA, Fiduciary Responsibility, Health Plans, Human Resources, Patient Empowerment, Patient Protection and Affordable Care Act, Reporting & Disclosure | Tagged: Employee Benefits, Health Plans, HR, WEB | Permalink
Posted by Cynthia Marcotte Stamer

USI Advisors Will Pay $1.27 Million To Settle Charges It Violated ERISA Fee Disclosure Requirements

August 23, 2012

USI Advisors Inc. (USI) will pay $1,265,608.70 to 13 pension plans to resolve charges it violated the Employee Retirement Income Security Act (ERISA) by failing to properly disclose 12b-1 fees it collected off of fund investments. The complaint behind the settlement reflects the commitment of the U.S Department of Labor Employee Benefit Security Administration (EBSA) to enforcing Employee Retirement Income Security Act (ERISA) fee disclosure and other requirements against service providers to employee benefit plans. With regulations tightening, the tough economy driving greater scrutiny of plan investments, expenditures and performance, and enforcement rising, plan vendors, and the employee benefit plan sponsors and fiduciaries responsible for their engagement, compensation and oversight need to ensure the adequacy of their processes for deciding and reporting compensation, as well as the qualification, selection and oversight of vendors and fiduciaries generally.

USI Settlement

An investigation by the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) USI, fiduciary investment adviser made investments in mutual funds on behalf of ERISA-covered defined benefit plan clients and received 12b-1 fees from those funds. A 12b-1 fee is paid by a mutual fund out of fund assets to cover certain expenses. USI Advisors failed to fully disclose the receipt of the 12b-1 fees, and to use those fees for the benefit of the plans either by directly crediting the amounts to the plans or by offsetting other fees the plans would be obligated to pay the company.

“If you, as an investment adviser, are a fiduciary under ERISA with respect to plan investments in mutual funds, you cannot use your fiduciary authority to receive an additional fee or to receive compensation from third parties for your own personal account in transactions involving plan assets. We are very pleased that this settlement addresses the problems we identified with USI’s practices and restores funds to the plans and their participants,” said Phyllis C. Borzi, assistant secretary of labor for employee benefits security. “We are also very pleased that recently finalized fee disclosure regulations issued by the Labor Department will require fiduciaries like USI to be more transparent about the fees they receive when dealing with their plan clients.”

Under the terms of the settlement, USI Advisors has agreed not to provide bundled investment advisory and actuarial services to any ERISA-covered defined benefit plan client without first entering into a written agreement, contract or letter of understanding that specifies the services provided and whether the company or its affiliates will act as a fiduciary to those plans. USI Advisors also will provide to clients a description of all compensation and fees received, in any form, from any source, involving any investment or transaction related to them.

The alleged violations in this case occurred between 2004 and 2010. USI Advisors is a wholly owned subsidiary of USI Consulting Group, a Goldman Sachs Capital Partners Co.

The investigation conducted by EBSA as part of the agency’s Consultant/Adviser Project, highlights the need for employee benefit plan fiduciaries and vendors alike to properly identify and report all vendor compensation received by employee benefit plan investment advisors and other service providers in compliance with ERISA’s fee disclosure and other requirements. The Consultant/Adviser Project targets vendors and advisors to employee benefit plans for review, and where applicable, enforcement action when service providers violate ERISA’s requirements. EBSA has made misconduct by consultants, advisors and other service providers a priority as part of its broader emphasis on enforcement of ERISA’s fiduciary responsibility and reporting requirements.

Tightening Rules, Enforcement & Tough Times Driving Risks

The EBSA’s announcement of the USI settlement comes as it continues to move forward to strengthen the transparency of vendor compensation and other fiduciary regulations and enforcement. Just shortly before today’s announcement, EBSA recently clarified its guidance about how its rules affect 401(k) plan brokerage window arrangements in response to public feedback. Field Assistance Bulletin No. 2012-02R published July 30, 2012, modifies and replaces Q&A 30 of Field Assistance Bulletin No. 2012-02 (issued May 7, 2012) with a new Q&A 39.

EBSA’s final fee disclosure regulation[i] published on requires plan administrators to make to disclose specified information about retirement plan fees and expenses to participants and beneficiaries. The regulation requires plan administrators to give participants and beneficiaries more informationm about administrative and investment fees and expenses in their 401(k) plans.

EBSA issued Field Assistance Bulletin No. 2012-02, which provided guidance to its field enforcement personnel in question and answer format on the obligations of plan administrators under the fee disclosure regulation on May 7, 2012. In response to questions and concerns about statements in Question 30 regarding brokerage windows and other arrangements that enable plan participants and beneficiaries to select investments beyond those designated by the plan, EBSA issued Field Assistance Bulletin No. 2012-02 which supersedes Field Assistance Bulletin 2012-02 by modifying its provisions about brokerage windows and inviting more public comments for EBSA to use to consider further clarification of this guidance.

As did its predecessor, Field Assistance Bulletin No. 2012-02R specifies that while the fee disclosure regulation covers “brokerage windows,” “self-directed brokerage accounts,” and other similar plan arrangements that enable participants and beneficiaries to select investments beyond those designated by the plan, its coverage of brokerage windows is limited to the disclosure requirements in paragraph (c) of the regulation relating to plan-related information. The disclosure requirements for investment-related information in paragraph (d) of the regulation do not apply to brokerage windows, self-directed brokerage accounts, and similar arrangements or to any investment selected by a participant or beneficiary that is not designated by the plan (i.e., any investments made through the window, account, or arrangement).

Beyond meeting the technicalities of the fee disclosure requirements, plan sponsors, fiduciaries and vendors should also ensure that their selection, oversight, determination of compensation and other dealings with plan vendors and consultants meet the general fiduciary responsibility, prohibited transaction, bonding and other requriements of ERISA, as well as any applicable securities and tax requirements.

Through its participant fee disclosure and other stepped up fiduciary regulations and enforcement, EBSA is sending clear signals that it stands ready to investigate and take action against service providers or others that charge excessive fees, failure to adequately justify or appropriately disclose fees or other compensation from plan transactions, or other fiduciary protections of ERISA. In the face of these requirements, plan fiduciaries, sponsors, advisors and vendors should carefully review the appropriateness of compensation received or promised to plan vendors, as well as the adequacy of practices for identifying and reporting that compensation and the selection and oversight of the vendors receiving that compensation.

For Help or More Information

If you need help reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices to respond to emerging regulations, monitoring or commenting on these rules, defending your health plan or its administration, or other health or employee benefit, human resources or risk management concerns, please contact the author of this update, Cynthia Marcotte Stamer.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications. You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and registerto receive future updates about developments on these and other concerns from Ms. Stamer here.

For important information concerning this communication click here. THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS. ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

[i]See 75 FR 64910 (Oct. 20, 2010).

1 Comment | Corporate Compliance, Defined Contribution Plans, Employers, ERISA, Excise Tax, Fiduciary Responsibility, Human Resources, Income Tax, Reporting & Disclosure, Retirement Plans | Tagged: 401(k) plans, brokerage accounts, compliance, Employee Benefits, Employer, ERISA, fee disclosure regulation, Fiduciary Responsibility, Finance, Health Care Reform. Employer, Management, Plan Sponosr, Retirement Plans, Risk Managment | Permalink
Posted by Cynthia Marcotte Stamer

Stamer Speaks On HIPAA Developments On 9/14 At ABA Joint Tax/RPTE Fall Meeting In Boston

August 14, 2012

Cynthia Marcotte Stamer will discuss recent HIPAA and other medical privacy developments impacting group health plans at a joint “Employee Benefits Welfare Benefits Design, EEOC and FMLA Update X “ session scheduled from 9:30 a.m. to 11:00 a.m. on September 14, 2012 at the American Bar Association jointly hosted by the Subcommittees on Welfare Plan Design, EEOC, FMLA and Leaves Issues (TX) and Cafeteria Plans and Reimbursement Accounts and Subcommittee on Welfare Plans at the American Bar Association Section of Taxation and Section of Real Property, Trust & Estate Law, Trust & Estate Division (RPTE) 2012 Joint Fall CLE Meeting In Boston.

Ms. Stamer will be among the a distinguished group of panelists scheduled to discuss regulatory and other developments under the Affordable Care Act and emerging issues related to stop-loss coverage, claims procedures, COBRA audits, DOL compliance initiatives, HIPAA/HITECH audits and enforcement (and regulations if released) and other concerns impacting health and welfare plan design and administration.

A noted Texas-based employee benefits and employment lawyer, policy consultant, author and speaker, Ms. Stamer has serves as the Scribe for the ABA JCEB Agency Meeting on the HIPAA Privacy Rules with the HHS Office of Civil Rights and has extensive experience on HIPAA and other health, financial, and other privacy and data security concerns as well as a broad range of other human resources, employee benefits and health care concerns.

A Fellow in the American College of Employee Benefits Counsel, the American Bar Association and the State Bar of Texas, Past Chair of the RPTE Employee Benefits and Other Compensation Group and current co-Chair of its Welfare Benefits Committee, Ms. Stamer is nationally and internationally known for her innovative leadership and work with businesses, governments, and communities on health and other insurance and employee benefits, patient education and empowerment, wellness and disease management, and other programs, policies, and processes. For more than 24 years, Ms. Stamer’s legal practice has focused on advising and representing employers, insurers, health care providers, community leaders and governments about health care and employee benefits policy and process improvement, quality, performance management, education, compliance, communications, risk management, reimbursement and finance, and other related matters. In addition to her legal practice, Stamer also extensively consults and provides leadership to a broad range of clients, professional and civic organizations, and others on strategies for improving the health care system and the ability of health care providers, payers, employers, community organizations, government agencies to promote the ability of patients and their families to access cost-effective, quality, affordable health care and other resource needs. She also has worked extensively with a broad range of business and government clients on health care, pension, social security, workforce, insurance and many other related policy matters.

Author of the hundreds of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also regularly conducts training and speaks on these and other management, compliance and public policy concerns.

Ms. Stamer also is active in the leadership of a broad range of other professional and civil organizations. For instance, Ms. Stamer presently serves as Executive Director of Project COPE, the Coalition on Patient Empowerment and the Coalition for Responsible Healthcare Policy; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Committee and its current Welfare Benefit Plans Committee Co-Chair, a Substantive Groups & Committee Member and its representative to the ABA Joint Committee on Employee Benefits; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee, and outgoing Coordinator of the Gulf Coast TEGE Council TE Division. She previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early retirement intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association; on numerous seminar faculties and in many other professional and civic leadership and volunteer roles..

Ms. Stamer will speak along a distinguished group of governmental and private panelists. Other panelists include:

Kevin Knopf, Attorney-Adviser, Office of Benefits Tax Counsel, Department of Treasury, Washington, DC;
Stephen B. Tackney, Deputy Associate Chief Counsel, Employee Benefits, Office of Division Counsel/Associate Chief Counsel, TE/GE, IRS, Washington, DC;
Russ Weinheimer, Senior Counsel, Office of the Chief Counsel, Tax Exempt and Government Entities, IRS, Washington, DC;
Amy Turner, Senior Advisor, Department of Labor, Employee Benefits Security Administration, Washington, DC;
Andy R. Anderson, Morgan Lewis, Chicago, IL; Chad R. DeGroot, Laner Muchin, Chicago, IL;
William M. Freedman, Dinsmore & Shohl LLP, Cincinnati, OH;
Bernard Kearse, Kearse Law Firm, Atlanta, GA;
Elizabeth Leight, Society of Professional Benefit Administrators, Chevy Chase, MD;
Gabriel Marinaro, Dykema, Bloomfield Hills, MI;
Linda Mendel, Vorys Sater Seymour & Pease LLP, Columbus, OH; Carrie A. Simons, Ropes & Gray, Boston, MA; Mark Stember, Kilpatrick Townsend & Stockton LLP, Washington, DC

To register or learn more about the Joint Fall CLE Meeting, see here. For additional information about Ms. Stamer, see here or contact Ms. Stamer directly via email here or (469) 767-8872.

Comments Off on Stamer Speaks On HIPAA Developments On 9/14 At ABA Joint Tax/RPTE Fall Meeting In Boston | Employers, ERISA, Fiduciary Responsibility, Health Plans, HIPAA | Tagged: Employee Benefits, Health Care, Health Plans, HIPAA, Tax | Permalink
Posted by Cynthia Marcotte Stamer

Employers & Plan Fiduciaries Reminded To Confirm Credentials & Bonding For Internal Staff, Plan Fidiciaries & Vendors Dealing With Benefits

August 13, 2012

Businesses sponsoring employee benefit plans and officers, directors, employees and others acting as fiduciaries with respect to these employee benefit plans should take steps to confirm that all of the appropriate fiduciary bonds required by the Employee Retirement Income Security Act of 1974, as amended (ERISA) are in place, that all employee benefit plans sponsored are appropriately covered, and that all individuals serving in key positions requiring bonding are covered and appropriately qualified to serve in that capacity under ERISA and the terms of the bond. Adequate attention to these concerns not only is a required component of ERISA’s fiduciary compliance, it also may provide invaluable protection if a dishonesty or other fiduciary breach results in a loss or other exposure.

ERISA generally requires that every employee benefit plan fiduciary, as well as every other person who handles funds or other property of a plan (a “plan official”), be bonded if they have some discretionary control over a plan or the assets of a related trust. While some narrow exceptions are available to this bonding requirement, these exceptions are very narrow and apply only if certain narrow criteria are met. Plan sponsors and other plan fiduciaries should take steps to ensure that all of the bonding requirements applicable to their employee benefit plans are met at least annually. Monitoring these compliance obligations is important not only for the 401(k) and other retirement plans typically associated with these requirements, but also for self-insured medical and other ERISA-covered employee benefit plans. This process of credentialing persons involved with the plan and auditing bonding generally should begin with adopting a written policy requiring bonding and verification of credentials and that that appropriate bonds are in place for all internal personnel and outside service providers.

Steps should be taken to ensure that the required fiduciary bonds are secured in sufficient amounts and scope to meet ERISA’s requirements. In addition to confirming the existence and amount of the fiduciary bonds, plan sponsors and fiduciaries should confirm that each employee plan for which bonding is required is listed in the bond and that the bond covers all individuals or organizations that ERISA requires to be bonded. For this purpose, the review should verify the sufficiency and adequacy of bonding in effect for both internal personnel as well as outside service providers. In the case of internal personnel, the adequacy of the bonds should be reviewed annually to ensure that bond amounts are appropriate. Unless a service provider provides a legal opinion that adequately demonstrates that an ERISA bonding exemption applies, plan sponsors and fiduciaries also should require that third party service providers provide proof of appropriate bonding as well as to contract to be bonded in accordance with ERISA and other applicable laws, to provide proof of their bonded status or documentation of their exemption, and to provide notice of events that could impact on their bonded status. When verifying the bonding requirements, it also is a good idea to conduct a criminal background check and other prudent investigation to reconfirm the credentials and suitability of individuals and organizations serving in fiduciary positions or otherwise acting in a capacity covered by ERISA’s bonding requirements. ERISA generally prohibits individuals convicted of certain crimes from serving, and prohibits plan sponsors, fiduciaries or others from knowingly hiring, retaining, employing or otherwise allowing these convicted individuals during or for the 13-year period after the later of the conviction or the end of imprisonment, to serve as:

An administrator, fiduciary, officer, trustee, custodian, counsel, agent, employee, or

representative in any capacity of any employee benefit plan,

A consultant or adviser to an employee benefit plan, including but not limited to any entity whose activities are in whole or substantial part devoted to providing goods or services to any employee benefit plan, or
In any capacity that involves decision-making authority or custody or control of the moneys, funds, assets, or property of any employee benefit plan.

Because ERISA’s bonding and prudent selection of fiduciaries and service provider requirements, breach of its provisions carries all the usual exposures of a fiduciary breach.

Bonding exposures can arise in audit or as part of a broader fiduciary investigation.The likelihood of discovery in an audit or investigation by the Labor Department in the course of an audit is high, as review of bonding is a standard part of audits and investigations. The Employee Benefit Security Administration (EBSA) Enforcement Manual specifies in connection with the conduct of a fiduciary investigation or audit:

… the Investigator/Auditor will ordinarily determine whether a plan is in compliance with the bonding, reporting, and disclosure provisions of ERISA by completing an ERISA Bonding Checklist … These checklists will be filled out in fiduciary cases and retained in the RO workpaper case file unless violations are uncovered, developed, and reported in the ROI.

In the best case scenario, where the bonding noncompliance comes to light in the course of an EBSA audit where no plan loss resulted, the responsible fiduciary generally runs at least a risk that EBSA will assess the 20 percent fiduciary penalty under ERISA Section 502(l). If the bonding lapse comes to light in connection with a fiduciary breach that resulted in damages to the plan by a fiduciary or other party, the bonding insufficiency may be itself a breach of fiduciary duty resulting in injury to the plan and where this breach left the plan unprotected against an act of dishonesty or fiduciary breach by an individual who should have been bonded, may spread liability for the wrongful acts of the wrongdoer to a plan sponsor, member of management or other party serving in a fiduciary role who otherwise would not be liable but for definiciences in the bonding or other credentialing responsibilities.

Under ERISA Section 409, a fiduciary generally is personally liable for injuries to the plan arising from his own breach (such as failure to properly bond) or resulting from breaches of another co-fiduciary who he knew or should have known through prudent exercise of his responsibilities.

Of course, in the most serious cases, such as embezzlement or other criminal acts by a fiduciary of ERISA, the consequences can be quite dire. Knowing or intentional violation of ERISA’s fiduciary responsibilities exposes the guilty fiduciary to fines of up to $10,000, imprisonment for not more than five years, or both. Even where the violation is not knowing or willful, however, allowing disqualified persons to serve in fiduciary roles can have serious consequences such as exposure to Department of Labor penalties and personal liability for breach of fiduciary duty for damages resulting to the plan if it is established that the retention of services was an imprudent engagement of such an individual that caused the loss. When conducting such a background check, care should be taken to comply with the applicable notice and consent requirements for conducting third party conducted background checks under the Fair Credit Reporting Act (FCRA) and otherwise applicable law. As such background investigations generally would be conducted in such a manner as to qualify as a credit check for purposes of the FCRA, conducting background checks in a manner that violates the FCRA credit check requirements itself can be a source of significant liability.

1 Comment | Affordable Care Act, Claims Administration, Corporate Compliance, Employers, ERISA, Excise Tax, Fiduciary Responsibility, Health Plans, Human Resources, Income Tax, Patient Empowerment, Patient Protection and Affordable Care Act, Payroll Tax, Preemption, Privacy, Reporting & Disclosure, Tax, Wellness | Tagged: compliance, Employee Benefits, Employer, Finance, Health Benefits, Health Care Reform, Health Care Reform. Employer, Health Plans, Management, Plan Sponosr, Risk Managment | Permalink
Posted by Cynthia Marcotte Stamer

EBSA Updates Guidance On Fee Disclosure Requirements For 401(k) Plan Brokerage Window Arrangements

August 6, 2012

U.S. Department of Labor’s Employee Benefits Security Administration recently clarified its guidance about how its rules affect 401(k) plan brokerage window arrangements in response to public feedback. Field Assistance Bulletin No. 2012-02R published July 30, 2012, modifies and replaces Q&A 30 of Field Assistance Bulletin No. 2012-02 (issued May 7, 2012) with a new Q&A 39.

New Q-39 of Field Assistance Bulletin No. 2012-02R addresses when a plan offers an investment platform that includes a brokerage window, self-directed brokerage account, or similar plan arrangement but the fiduciary did not designate any of the funds on the platform or available through the brokerage window, self-directed brokerage account, or similar plan arrangement as “designated investment alternatives” under the plan, if the brokerage account platform or the brokerage window, self-directed brokerage account, or similar plan arrangement is a designated investment alternative for purposes of the regulation. According to Field Assistance Bulletin No. 2012-02R, it is not. According to the Field Assistance Bulletin, the regulation does not require that a plan have a particular number of “designated investment alternative” (DIA), and the Bulletin does not prohibit the use of a platform or a brokerage window, self-directed brokerage account, or similar plan arrangement in an individual account plan. Rather, whether an investment alternative is a DIA for purposes of the regulation depends on whether it is specifically identified as available under the plan.

However Question 39 also cautions plan administrators and fiduciaries about the need to ensure other applicable ERISA obligations are fulfilled. Field Assistance Bulletin 2012-02R notes it does not change the 404(c) regulation or the requirements for relief from fiduciary liability under section 404(c) of ERISA or address the application of ERISA’s general fiduciary requirements to SEPs or SIMPLE IRA plans. Also, fiduciaries of such plans with platforms or brokerage windows, self-directed brokerage accounts, or similar plan arrangements that enable participants and beneficiaries to select investments beyond those designated by the plan are still bound by ERISA section 404(a)’s statutory duties of prudence and loyalty to participants and beneficiaries who use the platform or the brokerage window, self-directed brokerage account, or similar plan arrangement, including taking into account the nature and quality of services provided in connection with the platform or the brokerage window, self-directed brokerage account, or similar plan arrangement. It also notes that that a 401(k) or other individual account plan fiduciary’s failure to designate investment alternatives to avoid investment disclosures under the regulation, raises questions under ERISA section 404(a)’s general statutory fiduciary duties of prudence and loyalty.

For Help or More Information

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications. You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and registerto receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

[i]See 75 FR 64910 (Oct. 20, 2010).

Federal Mandate That Employer Health Plans Must Cover 100% Of Contraceptive, Other Women’s Health Services With No Cost Sharing Now Effective

August 6, 2012

August 1 Effective Date Of Obama Administration Addition of Contraception & Other Women’s Health Services To Already Lengthy List of Prevention Services Plans Must Cover

Effective August 1, 2012, federal regulators expanded the list of prevention-related services that the Patient Protection & Affordable Care Act (Affordable Care Act) requires that non-grandfathered group health plans cover in-network at no cost to covered persons to include eight more prevention-related health services for women including coverage for the mandate to cover certain contraceptive services that has engendered much debate and opposition from various religious organizations and others.

Employers and other sponsors and insurers of group health plans should review and update their health plan documents, contracts, communications and administration practices to ensure that their health plans and policies appropriately cover these and other prevention-related services that current federal regulations mandate that group health plans (other than grandfathered plans) must cover to comply with the Affordable Care Act.

Non-Grandfathered Health Plans Must Cover Expansive List of Prevention Services

As part of the sweeping reforms enacted by the Affordable Care Act, Congress has mandated that except for certain plans that qualify as “grandfathered,” group health plans and insurers generally must pay for 100% of the cost to cover hundreds of prevention-related health care services for individuals covered under their health plans without any co-payments or other cost-sharing.identified in the services without cost sharing.

Federal regulations have mandated since 2010 that group health plans and insurers provide in-network coverage in accordance with federal regulations implementing the Affordable Care Act’s prevention-related health services mandates for more than 800 prevention-related services listed in regulations originally published in 2009. See Agencies Release Regulations Implementing Affordable Care Act Preventive Care Mandates. The Affordable Care Act gives federal authorities the power to expand or modify this list. Following publication of the original list, the Obama Administration engaged in lengthy discussion considerations about the scope of contraceptive and other women’s health services that would qualify as prevention related services including lengthy discussions and negotiations about mandates to provide contraceptive services viewed as highly controversial by many religious organizations and several other employers. See Affordable Care Act To Require Health Plans Cover Contraception & Other Women’s Health Procedures.

Obama Administration Adds Contraceptive & Other Women’s Health Services To Required List Effective 8/1/2012

The Obama Administration moved forward on its promise to add contraceptive services and a broad list of other women’s health services to the list of prevention-related health services that employer-sponsored health plans must cover without cost to employees despite objections from religious organizations and others that the contraception mandate violates the Constitution’s freedom of religion protections.

The Obama Administration’s announcement earlier this year that it intended to move forward with plans to mandate that group health plans – including those of certain employers affiliated with religious organizations to cover contraceptive counseling and other services as prevention-related services has prompted outcry and legal challenges from a broad range of religious organizations and others. See e.g., University of Notre Dame v. Sebelius; Hercules Industries, Inc. v. Sebelius. On July 27, 2012, a Colorado District Court granted a temporary injunction barring enforcement of the contraceptive coverage mandate against a small, Catholic family-owned business challenging the mandate as a violation of the Constitutional religious freedoms of its owners. See Hercules Industries, Inc. v. Sebelius.

While these and other litigants continue to challenge the contraceptive mandates, Obama Administration officials continue to voice their commitment to standby and enforce the contraceptive and other prevention-related services mandates as implemented by current regulation. Employer and other health plan sponsors and fiduciaries that do not wish to risk exposure for violating these mandates should review and update their health plan documents, summary plan descriptions and other communications, and administrative and other procedures as necessary to comply with the applicable requirements of the regulations.

For Help or More Information

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on leading health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

1 Comment | Affordable Care Act, Claims Administration, Corporate Compliance, Employers, ERISA, Excise Tax, Fiduciary Responsibility, Health Plans, Human Resources, Patient Empowerment, Patient Protection and Affordable Care Act, Preemption, Privacy, Reporting & Disclosure, Tax, Wellness | Tagged: compliance, Employee Benefits, Employer, Finance, Health Care Reform. Employer, Health Plans, Management, Mandated Benefits, Plan Sponosr, preventive care, Risk Managment, Women's Health | Permalink
Posted by Cynthia Marcotte Stamer

96% Employers of 50+ Employees, 36% Employers of Smaller Employers Provide Health Coverage

August 4, 2012

Kaisers State Health Facts.org reports that almost 96% of large private sector employers (50+ employees) offer health insurance to employees, compared to 36% of small employers. On average, private sector employers cover 74% of premiums for family coverage. As the pay-or-pay mandate of the Patient Protection & Affordable Care Act (Affordable Care Act) approaches, U.S. employers of all size will decide whether to continue to provide health care coverage under the significantly expanded federal mandates governing those plans or to pay the required assessment to the federal government for failing to provide that coverage.

For Help or More Information

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications. You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and registerto receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

Comments Off on 96% Employers of 50+ Employees, 36% Employers of Smaller Employers Provide Health Coverage | Claims Administration, Employee Benefits, Employers, ERISA, Fiduciary Responsibility, Health Plans, Human Resources, Insurance, Mental Health | Tagged: Affordable Care Act, ERISA plans, Health Plans, Mandated Benefits, Mental Health, Mental Health Parity, MHPAEA | Permalink
Posted by Cynthia Marcotte Stamer

12 Steps Every Employer With A Health Plan Should Do Now To Manage 2012-14 Health Plan Risks & Liabilities

August 1, 2012

August 1 marked the effective date of yet another Affordable Care Act mandate: the controversial contraceptive coverage and other women’s health preventive coverage benefits mandates. Although many mandates have taken effect over the past two years, few employer plans are adequately updated. Here’s some suggestions about what employers and fiduciaries responsible for group health plan sponsorship or administration and their vendors should do now to manage exposures arising from current Affordable Care Act and other federal health plan rules. Following the Supreme Court’s June 28, 2012 National Federation of Independent Business v. Sebelius ruling, most employers and insurers of employment based group health plans now are bracing to cope with radical changes in their health plan related responsibilities scheduled to take effect in 2014.

While anticipating and preparing to cope with these future changes health plan sponsors, fiduciaries, administrators and advisors need to manage the substantial and growing health plan related costs and liabilities that the sponsorship or administration of an employee health plan between now and 2014 is likely to create for their company and its management. Consequently, while planning for 2014, employers sponsoring health plans and their management, insurers, administrators and vendors must act now to update and administer their group health plans timely to comply with the requirements of the Affordable Care Act and other federal rules that have, or in coming months will, take effect pending the law’s full rollout in 2014.

For most health plans, these steps should include the following:

Know The Cast Of Characters & What Hat(s) (Including You) They Wear & Prudently Select, Contract With & Monitor Them To Manage Risks

Employers and their management rely upon many vendors and advisors and assumptions when making plan design and risk management decisions. Many times, employer and members of their management unknowingly assume significant risk because of misperceptions about these allocations of duties and operational and legal accountability. An correct understanding of these roles and responsibilities is the foundation for knowing where the risks come from, who and to what extent a business or its management can rely upon a vendor or advisor to properly design and administer a health plan or carry out related obligations, what risks cannot be delegated, and how to manage these risks.

Under the Employee Retirement Income Security Act (ERISA), party or parties that exercise discretion or control over health plan administration, funds or certain other matters are generally called “fiduciaries.” Fiduciaries generally are personally liable for prudently and appropriately administering their health plan related responsibilities prudently in accordance with ERISA and other applicable laws and the plan terms. Knowing who is acting as a fiduciary and understanding those duties and liabilities and how to manage these risks significantly affects the exposure that an employer or member of its management risks as a result of an employer’s sponsorship in a group health plan or other employee benefit program. Also, knowing what duties come first and how to prove that the fiduciary did the right thing is critical to managing risks when an individual who has fiduciary responsibilities under ERISA also has other responsibilities in the management of the sponsoring employer, a vendor or elsewhere that carries duties or interests that conflict with his health plan related fiduciary duties.

The plan sponsor or members of its leadership, a service provider or members of their staff generally may be a fiduciary for purposes of ERISA if it either is named as the fiduciary, it functionally exercises the discretion to be considered a fiduciary, or it otherwise has discretionary power over plan administration or other fiduciary matters. Many plan sponsors and their management unwittingly take on liability that they assume rests with an insurer or service provider because the company or members of its management are named as the plan administrator or named fiduciary with regard to duties that the company has hired an insurer or service provider to provide or allowed that service provider to disclaim fiduciary or discretionary status with regard to those responsibilities. Also, by not knowing who the fiduciaries are, plans and their fiduciaries often fail to confirm the eligibility of all parties serving as fiduciaries, to arrange for bonding of service providers or fiduciaries as required to comply with Title I of ERISA. Failing to properly understand when the plan sponsor, member of its management or another party is or could be a fiduciary can create unnecessary and unexpected risks and lead to reliance upon vendors who provide advice but leave the employer holding the bag for resulting liability.

In addition to fiduciary status, employer and other plan sponsors also need to understand the additional responsibilities and exposures that the employer bears as a plan sponsor. Beyond contractual and fiduciary liabilities, federal law increasingly imposes excise tax or other liability for failing to maintain legally compliant plans, file required reports, provide required notifications or fulfill other requirements. The Affordable Care Act, the Internal Revenue Code, the Social Security Act, the Privacy, Security, and Administrative Simplification For instance, the Health Insurance Portability & Accountability Act (HIPAA) and various other federal laws also impose certain health plan related obligations and liabilities on employer or other health plan sponsors and other parties. The Internal Revenue Service interprets Internal Revenue Code § 6039D as obligating employers sponsoring health plans that violate these and certain other federal health plan rules to self-identify, self-report, and self-assess and pay excise and other taxes due under the Internal Revenue Code as a result of this non-compliance. Knowing what everyone’s roles and responsibilities are is a critical first step to properly understanding and managing health plan responsibilities and related risks.

An accurate understanding of the risks and who bears them is critical to understand the risks, opportunities to mitigate risk through effective contracting or other outsourcing, when outsourcing does not effectively transfer risks, where to invest resources for contract, plan or process review and changes or other risk management, and where to expect costs and risks and implement processes and procedures to deal with risks that cannot be outsourced or managed.

Know What Rules Apply To Your Plan, The Sponsoring Employer, The Plan Its Fiduciaries & Plan Related Vendors & How This Impacts You & Your Group Health Plan

The requirements and rules impacting health plans and their liabilities have undergone continuous changes. Amid these changing requirements, health plans, their sponsors, fiduciaries, insurers, and service providers often may not have kept their knowledge, much less their plan documents, summary plan descriptions and other communications, administrative forms and procedures and other materials and practices up to date. These requirements and their compliance and risk management significance may vary depending upon whether the reviewing or regulated party is the plan, its sponsor, fiduciary, insurer or services in some other rules; how the plans are arranged and documented, the risk and indemnification allocations negotiated among the parties, the risk tolerance of the party, and other factors. Proper understanding of these rules and their implications is critical to understand and manage the applicable risks and exposures.

Review & Update Health Plan Documents, SPDs & Other Communications, Administrative Forms & Procedures, Contracts & Processes To Meet Requirements & Manage Exposures

Timely updating written plan documents, communications and administration forms, administrative practices, contracts and other health plan related materials processes and procedures has never been more critical.

Federal law generally requires that health plan be established, maintained and administered in accordance with legally complaint, written plan documents and impose a growing list of standards and requirements governing the design and administration of these programs. In addition, ERISA, the Internal Revenue Code, the Social Security Act, federal eligibility and coverage continuation mandates of laws like the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Health Insurance Portability & Accountability Act, the Family & Medical Leave Act, Michelle’s Law and others require that health plan administrators or sponsors communicate plan terms and other relevant information to participants and beneficiaries.

Failing to update documents, communications, administrative forms and processes and other materials and practices can unleash a host of exposures. Among other things, noncompliant plans, communications and practices can trigger unanticipated costs and liabilities by undermining the ability to administer plan terms and conditions. They also may expose the plan, plan fiduciaries and others to lawsuits, administrative enforcement and sanctions and other enforcement liabilities.

Beyond these exposures, employers who sponsor group health plans that violate certain federal group health plan mandates have a duty to self-report certain regulatory plan failures and pay excise taxes where such failures are not corrected in a timely fashion once discovered, or are due to willful neglect. Internal Revenue Code Section 6039D imposes excise taxes for failure to comply with health care continuation (COBRA) , health plan portability (HIPAA), genetic nondiscrimination (GINA), mental health parity (MHPAEA) , minimum hospital stays for newborns and mothers (Newborns’ and Mothers’ Health Protection Act), coverage of dependent students on medically necessary leaves of absence (Michelle’s Law), health savings account (HSA) and Archer medical savings account (Archer MSA) contribution comparability and various other federal requirements incorporated into the Internal Revenue Code. Since 2010, Internal Revenue Service regulations have required employers sponsoring group health plans not complying with mandates covered by Internal Revenue Code Section 6039D to self-report violations and pay related excise taxes. Under these regulations, the sponsoring employer (or in some cases, the insurer, HMO or third-party administrator) must report health plan compliance failures annually on IRS Form 8928 (“Return of Certain Excise Taxes Under Chapter 43 of the Internal Revenue Code”) and self-assess and pay resulting excise taxes. The potential excise tax liability that can result under these provisions can be significant. For example, COBRA, HIPAA, and GINA violations typically carry excise tax liability of $100 per day per individual affected. Compliance with applicable federal group health plan mandates is critical to avoid these excise taxes as well as other federal group health plan liabilities.

For this purpose of deciding what and how much to do, it is critical to keep in mind the devil is in the details. Not only must the documentation meet all technical mandates, the language, its clarity and specificity, and getting the plan document to match the actual processes that will be used to administer the plan and ensuring that the plan documents and processes match the summary plan description, summary of benefits and coverage, administrative forms and documentation and other plan communications and documentation in a legally compliant way significantly impacts the defensibility of the plan terms and the cost that the plan, its sponsor and fiduciaries can expect to incur to defend it.

Update & Tighten Claims and Appeals Plan & SPD Language, EOBs & Other Notifications, Processes, Contracts & Other Practices For Changing Compliance Requirements & Enhanced Defensibility

Unfortunately, most group health plans, their insurers and administrators need to substantially strengthen their plan documentation; handling; timeliness; notifications and other claims denials; and other claims and other appeals processes and documentation to meet existing regulations and otherwise strengthen their defensibility. Among other things, existing court decisions document that many plans existing plan documents, summary plan descriptions and explanations of benefits, claims and appeals investigations and documentation and notifications often need improvement to meet the basic plan document, summary plan description and reasonable claims rules of the plan document, summary plan description, fiduciary responsibility, reasonable claims and appeals procedures of ERISA and its implementing regulations. Court precedent shows that inadequate drafting of these provisions, as well as specific provisions coverage and benefit provisions frequently undermines the defensibility of claims and appeals determinations. In addition to requiring that claims be processed and paid prudently in accordance with the terms of written plan documents, ERISA also requirements that plan fiduciaries decide and administer claims and appeals in accordance with reasonable claims procedures. Although the Labor Department updated its regulations implementing this reasonable claims and appeals procedure requirement more than 10 years ago, the Department of Labor updated its ERISA claims and appeals regulations to include detailed health plan claims and appeals requirements, many group health plans, their administrators and insurers still have not updated their health plans, summary plan descriptions, claims and appeals notification, and claims and appeals procedures to comply with these requirements. The external review and other detailed additional requirements that the Affordable Care Act dictates that group health plans not grandfathered from its provisions and its provisions holding these non-grandfathered plans strictly liable for deficiencies in their claims and appeals procedures makes the need to address inadequacies even more imperative for those non-grandfathered group health plans. Inadequate attention to these concerns can force a plan to pay benefits for claims otherwise not covered as well as other defense costs and penalties.

Consistency Matters: Build Good Plan Design, Documentation & Processes, Then Follow Them.

Defensible health plan administration starts with the building and adopting strong, legally compliant plan terms and processes that are carefully documented and communicated in a prudent, legally compliant way. The next key is to actually use this investment by conducting plan administration and related operations consistent with the terms and allocated responsibilities to administer the plan in a documented, legally compliant and prudent manner. Good documentation and design on the front end should minimize ambiguities in the meaning of the plan and who is responsible for doing what when. With these tools in place, delays and other hiccups that result from confusion about plan terms, how they apply to a particular circumstance or who is responsible for doing what, when should be minimized and much more easily resolved by timely, appropriate action by the proper responsible party. This facilitation of administration and its consistency can do much to enhance the defensibility of the plan and minimize other plan related risks and costs.

Ensure Correct Party Carefully Communicates About Coverage and Claims in Compliant, Timely, Prudent, Provable Manner

Having the proper party respond to claims and inquiries in a compliant, timely, prudent manner is another key element to managing health plan risk and promoting enforceability. Ideally, the party appointed to act as the named fiduciary for purposes of carrying out a particular function also should conduct all plan communications regarding that function in terms that makes clear its role and negates responsibility or authority of others. When an employer or other plan sponsor goes to the trouble to appoint a committee, service provider or other party to serve as the named fiduciary then chooses to communicate about the plan anyway, the Supreme Court in FMC v. Halliday made clear it runs the risk that the plan related communications may be considered discretionary fiduciary conduct for which it may be liable as a functional fiduciary. Meanwhile, these communications by non-fiduciaries also may create binding obligations upon the plan and its named fiduciaries to the extent made by a plan sponsor or conducted by a staff member or service provider performing responsibilities delegated by the plan fiduciary. Beyond expanding the scope of potential fiduciaries, communications conducted by nonfiduciaries also tend to create defensibility for many other reasons. For instance, allowing unauthorized parties to perform plan functions may not comport with the plan terms, and are less likely to create and preserve required documentation and follow procedures necessary to promote enforceability. Also, the communications, decisions and other actions by these non-fiduciary actors also are unlikely to qualify for discretionary review by the courts because grants of discretionary authority, if any in the written plan document to qualify the decisions of the named fiduciary for deferential review by courts typically will not extend to actions by these non-fiduciary parties. Furthermore, the likelihood that the communication or other activity conducted will not comply with the fiduciary responsibility or other requirements governing the performance of the plan related functions is significantly increased when a plan sponsor, service provider, member of management, or other party not who has not been appointed or accepted the appointment act as a named fiduciary undertakes to speak or act because that party very likely does not accept or fully appreciate the potential nature of its actions, the fiduciary and other legal rules applicable to the conduct, and the potential implications for the non-fiduciary actor, the plan and its fiduciaries.

Design and Implement Updated, Properly Secured Payroll, Enrollment, Eligibility and Other Data Collection Features To Meet New Requirements and Prepare For Added Affordable Care Act Data Gathering and Reporting Requirements.

Existing and impending Affordable Care Act mandates require that group health plans, their sponsors collect, maintain and administer is exploding. Existing eligibility mandates, for example, already require that plans have access to a broad range of personal indentifying, personal health and a broad range of other sensitive information about employees and dependents who are or may be eligible for coverage under the plan. While employers and their health plans historically have collected and retained the names, place of residence, family relationships, social security number, and other similar information about employees and their dependents, these data collection, retention and reporting requirements have and will continued to expand dramatically in response to evolving legal requirements. Already, health plans also from time to time need employee earnings, company ownership, employment status, family income, family, medical, military, and school leave information, divorce and child custody, enrollment in Medicare, Medicaid and other coverage and a broad range of other additional information. Under the Affordable Care Act, these data needs will explode to include a whole new range of information about total family income, availability and enrollment in other coverage, cultural and language affiliations, and many other items. Collecting, retaining and deploying this information will be critical to meeting existing and new plan administration and reporting requirements. How this data collection is conducted, shared, safeguarded against misuse or other legally sensitive contact by the employer, service providers, the plan and others will be essential to mitigate exposures to federal employment and other nondiscrimination, HIPAA and other privacy, fiduciary responsibility and other legal risks and obligations. To the extent that payroll providers, third party administrators or other outside service providers will participate in the collection, retention, or use of this data, time also should be set aside both to conduct due diligence about their suitability, as well as to negotiate the necessary contractual arrangements and safeguards to make their involvement appropriate. Finally, given the highly sensitive nature of this data, employers, health plans and others that will collect and use this data will need to implement appropriate safeguards to prevent and monitor for improper use, access or disclosure and to conduct the necessary training to suitably protect this data.

Monitor, Assess Implications & Provide Relevant Input to Regulators About Emerging Requirements & Interpretive Guidance Implementing 2014 Affordable Care Act & Other Mandates.

While the Supreme Court’s decision upholds the constitutionality of the Affordable Care Act’s individual mandates, many opportunities to impact its mandates remain. Beyond the highly visible, continuing and often heated debates ranging in Congress and the court of public opinion concerning whether Congress should modify or repeal its provisions, a plethora of regulatory interpretations issued or impending release by the implementing agencies, the Internal Revenue Service, Department of Health & Human Services, Department of Labor and state insurance regulators will significantly impact what requirements and costs employers, insurers, individuals and governments will bear when the law takes effect. Businesses sponsoring health plans should carefully scrutinize this regulatory guidance and provide meaningful, timely input to Congress, the regulators or both as appropriate to help influence the direction of regulatory or Congressional actions that would materially impact these burdens.

Help Employees & Their Families Build Their Health Care Coping Skills With Training & Supportive Tools

Whether or not your company plans to continue to sponsor employee health coverage after 2014, providing training and tools to help employees and their families strengthen their ability to understand and manage their health, health care needs and benefits can pay big dividends. Beyond the financial costs to employees and employers of paying to care for a serious illness or injury, productivity also suffers while employees dealing with their own or a family member’s chronic or serious health care condition. Wellness programs that encourage and support the efforts of employees and their families to stay healthy may be one valuable part of these efforts. Beyond trying to prevent the need to cope with illness behind wellness programs, however, opportunities to realize big financial, productivity and benefit value recognition rewards also exist in the too often overlooked opportunity to provide training, education and tools that employees and their families need to better understand and self-manage care, benefits, finances and life challenges that commonly arise when dealing with their own or a family member’s illness. Providing education, tools and other resources that can help employees access, organize and effectively use health care and benefit information to manage care and the consequences of illness, their benefits and how to use them, to take part more effectively in care and care decisions, to recognize and self-manage financial, lost-time and other challenges associated with the illness not addressable or covered by health benefit programs, and other practical skills can help reduce lost time and other productivity impacts while helping employees and their families get the most out of the health care dollars spent.

Pack Your Parachute & Locate The Nearest Exit Doors

With the parade of expenses and liabilities associated with health plans, businesses sponsoring health plans and the management, service providers and others involved in their establishment, continuation, maintenance or administration are well advised to pack their survival kit and develop their exit strategies to position to soften the landing in case their health plan experiences a legal or operational disaster.

Employers and other health plan sponsors and fiduciaries typically hire and rely upon a host of vendors and advisors to design and administer their health plans. When selecting and hiring these service providers, health plan sponsors and fiduciaries are well-advised to investigate carefully their credentials as well as require the vendors to provide written commitments to stand behind their advice and services. Too often, while these service providers and advisors encourage plan sponsors and fiduciaries to allow the vendor to lead them or even handle on an ongoing basis plan administration services by touting their services, experience, expert systems and process and commitment to stand behind the customer when making the sale or encouraging reliance upon their advice when tough decisions are made, they rush to stand behind exculpatory and on-sided indemnification provisions in their service contracts to limit or avoid liability, demand indemnification from their customer or both when things go wrong. While ERISA may offer some relief from certain of these exculpatory provisions under some circumstances, plan sponsors and fiduciaries should work to credential service providers and require service providers to commit to being accountable for their services by requiring contracts acknowledge all promised services and standards of quality, require vendors to commit to provide legally compliant and prudently designed and administered services that meet or exceed applicable legal requirements, to provide liability-backed indemnification or other protection for damages and costs resulting from vendor imprudence or malfeasance, to allow for contract termination if the vendor becomes unsuitable for continued use due to changing law or other circumstances and requiring the vendor to return data and other documentation critical to defend past decisions and provide for ongoing administration. Keep documentation about advice, assurances and other relevant evidence received from vendors which could be useful in showing your company’s or plan’s efforts to make prudent efforts to provide for the proper administration of the plan. When concerns arise, use care to investigate and redress concerns in a timely, measured fashion which both shows the prudent response to the concern and reflects sensitivity to the fiduciary and other roles and responsibilities of the employer sponsor and other parties involved.

Get Moving Now On Your Compliance & Risk Management Issues.

Since many compliance deadlines already have past and the impending deadlines allow plan sponsors and fiduciaries limited time to finish arrangements, businesses, fiduciaries and their service providers need to get moving immediately to update their health plans to meet existing and impending compliance and risk management risks under the Affordable Care Act and other federal laws, decisions and regulations.

Monitor, Assess Implications & Provide Relevant Input to Regulators About Emerging Requirements & Interpretive Guidance Implementing 2014 Affordable Care Act & Other Mandates.

While the Supreme Court upheld the individual mandate, employer and other health plan sponsors, Congress continues to debate changes to the Affordable Care Act and other federal health plan rules. Meanwhile, significant opportunity still exists to provide input to federal and state regulators on many key aspects of the Affordable Care Act and its relationship to other applicable laws even as court challenges to contraceptive coverage and other specific requirements are emerging. Businesses and other health plan sponsors, plan fiduciaries, insurers and administrators, and other vendors must stay involved and alert. Zealously monitor new developments and share timely input with Congress and regulators about existing and emerging rules that present concerns and other opportunities for improvement even as you position to respond to these rules before they become fully implemented.

For Help or More Information

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications. You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and registerto receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

Comments Off on 12 Steps Every Employer With A Health Plan Should Do Now To Manage 2012-14 Health Plan Risks & Liabilities | Affordable Care Act, Claims Administration, Corporate Compliance, Data Security, Employers, ERISA, Excise Tax, Fiduciary Responsibility, Health Plans, Human Resources, Income Tax, Patient Empowerment, Patient Protection and Affordable Care Act, Payroll Tax, Preemption, Privacy, Reporting & Disclosure, Tax, Wellness | Tagged: compliance, Employee Benefits, Employer, Finance, Health Benefits, Health Care Reform, Health Care Reform. Employer, Health Plans, Management, Plan Sponosr, Risk Managment | Permalink
Posted by Cynthia Marcotte Stamer

Congress Gives Defined Benefit Plan Sponsors Welcome Funding Relief, Raises PBGC Premiums & Makes Other Reforms

July 31, 2012

The Employee Retirement Income Security Act of 1974, as amended (ERISA) and the Internal Revenue Code generally require employers that sponsor defined benefit pension plans make sufficient contributions to their defined benefit pension plans to ensure that their plans meet minimum funding requirements.

Failure to meet minimum funding requirements triggers a series of complicated reporting and disclosure, funding and excise tax liabilities, liens and other obligations that are serious and require prompt redress through prompt payment of required contributions and penalties, request for funding waivers or termination under a series of complicated rules or both. Special controlled group, lien and successor liability rules incorporated into these funding requirements often spread the risk of funding deficiencies under these rules by extending liabilities to commonly controlled or affiliated employers, lenders, potential purchasers and others dealing with these plans or the businesses that sponsor them.

Because employer funding obligations under these rules depend heavily upon interest and other investment performance used to calculate funding levels, employer funding obligations tend to spike during economic depressions or slowdowns, resulting in sharp increases in funding obligations for employers at a time when the tight economy already makes finances tight. Congress has faced growing pressure to provide some sort of defined benefit pension plan funding relief as low investment returns and strained corporate budgets during the ongoing economic crisis have fueled an underfunding epidemic among employers sponsoring defined benefit pension plans and threatened the financial viability of many sponsoring employers and the federal insurance program responsible for providing backup insurance for private employer defined benefit commitments administered by the PBGC.

MAP-21 provides immediate defined benefit plan funding relief by changing how the interest rates that employers must use to calculate their current defined benefit plan funding obligations are calculated. MAP-21 defined benefit plan funding reforms effectively decrease current defined benefit plan funding costs by establishing a minimum and maximum for the interest segment rates defined benefit plans use to calculate currently required funding based on a historic 25-year average of those segment rates. It is important that employers and plan fiduciaries keep in mind that the MAP-21 interest rate change applies to the calculation of current funding obligations that employer. It does not apply for purposes of calculating lump sum distributions, limits on deductible contributions to single-employer plans, PBGC variable-rate premiums, fi

With many employers continuing to meet defined benefit plan funding requirements driven up by the continued excessively low investment performance of their benefit plan investment in the slow economic environment, defined benefit pension plan funding relief included in the “Moving Ahead for Progress in the 21st Century Act”(MAP–21”) signed into law by President Obama on July 6, 2012 provides welcome and much-needed pension funding relief. For many financially strapped businesses that sponsor defined benefit plans, the MAP-21 relief may allow the employer to avoid terminating its defined benefit plan, escape costly underfunding consequences that many defined benefit plan sponsors fear will financially cripple or bankrupt their companies, or both.

MAP-21 provides immediate funding relief for financially strapped defined benefit plan sponsors and makes various other reforms impacting defined benefit pension plans and the Pension Benefit Guarantee Corporation (PBGC) insurance program that helps to insure certain benefit commitments made under these defined benefit plans. The MAP-21 funding relief is intended to help employers struggling to meet heightened pension funding obligations brought about by the decline in investment performance resulting from the economic downturn.

nancial reporting under Section 4010 of ERISA, and qualified transfers of excess pension assets to retiree medical accounts.

In addition to changing the rules for calculating interest rates for purposes of determining defined benefit plan minimum funding obligations, MAP-21 also extends rules allowing transfers of excess pension assets to retiree health accounts to December 31, 2021 and expands those transfer rules also to allow transfers to fund retiree group term life insurance accounts.

Finally, in addition to these changes to defined benefit pension plan funding rules, MAP-21 also reorganizes the PBGC organizational structure and increases PBGC insurance premiums.

While the MAP-21 reforms will provide welcome relief, sponsoring businesses, their commonly controlled and affiliated employers, lenders, investors and successors still must exercise care to carefully monitor the funding status of defined benefit plans and the potential liabilities and responsibilities associated with these plans. Appropriate steps should be taken to maintain required funding levels or, at the first sign of trouble, to seek experienced legal and actuarial advice and help to identify and take prompt steps to pursue options to head off a potential crisis by freezing or terminating the plan, providing required notifications and disclosures to participants and beneficiaries, the PBGC, lenders, investors, and other concerned parties, and other actions to mitigate exposures.

For More Information Or Assistance

A Fellow in the the American College of Employee Benefits Council, Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, Immediate Past Chair and current Welfare Plan Committee Co-Chair of the American Bar Association (ABA) RPTE Employee Benefit & Other Compensation Group, a Council Member of the ABA Joint Committee on Employee Benefits, Vice-Chair of the ABA TIPS Employee Benefits Commitee, Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, management attorney and consultant Cynthia Marcotte Stamer nearly 25 years experience advising and representing employers, employee benefit plans, their sponsors, bankruptcy creditors, debtors and trustees, plan fiduciaries and plan administrators, consultants, vendors, outsourcers, insurers, governments and others about employment, employee benefit, compensation, and a wide range of other performance, legal and operational risk management practices and concerns. As a part of this work, Ms. Stamer has worked extensively with clients to manage risks and defend practices under a wide range of laws and circumstances. Her experience includes extensive work advising and representing employers, plans, plan fiduciaries, trustees, investors, and others about managing and resolving risks relating to distressed pension and other employee benefit plans, downsizing and other workforce reengineering and other similar matters. A prolific author and popular speaker, Ms. Stamer also publishes, conducts client and other training, speaks and consults extensively on GINA and other employment and employee benefit risk management practices and concerns for the ABA, World At Work, SHRM, American Health Lawyers Association, Institute of Internal Auditors, Society for Professional Benefits Administrators, HCCA, Southwest Benefits Association and many other organizations. Her insights on these and related topics have appeared in Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, Managed Healthcare, Health Leaders, various ABA publications and a many other national and local publications. To learn more about Ms. Stamer, her experience, involvements, programs and publications, see here or contact Ms. Stamer.

Other Resources & Developments

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Posted by Cynthia Marcotte Stamer

New Health Plan Partnership, Data Sharing With Federal Health Care Fraud Enforcers Promises Greater Federal Oversight of Providers & Health Plans

July 30, 2012

Health care providers and payers should ensure that practices for billing private payers can withstand the scrutiny of federal and state health care fraud enforcers after the July 26, 2012 announcement of a ground-breaking new public-private antifraud initiative between federal and state health care fraud fighters and a private insurers under which private insurers will share an unprecedented amount of private health claims data, fraud detection practices, and other coöperation with federal and state official fraud prevention and prosecution efforts. While the partnership signals a new opportunity for health plans to secure federal support if their efforts to monitor and address suspected health care fraud impacting private health plans, private payers also should keep in mind that federal fraud prosecutors also are likely to use the data and information gleened from the partnership to identify and redress noncompliance by private health plans with federal Medicare and other federal program secondary payor, nondiscrimination and other coordination of benefits requirements; Affordable Care Act and other federal benefit, coverage and eligibility requirements and other applicable rules. Accordingly, even while anticipating greater support by federal agencies in the fight against fraud affecting private payers, health insurers and other private health plans also should tighten their practices to prepare for heightened scrutiny and enforcement by federal officials of federal health plan rules.

Government Health Care Fraud Fighters Partner With Private Insurers

The Federal health care fraud fighting departmental duo of the Departments of Health and Human Services (HHS) Justice (DOJ) last week expanded their network of fraud fighting resources by launching a “ground-breaking” partnership among the federal government, State officials, several leading private health insurance organizations, and other health care anti-fraud groups to prevent health care fraud. HHS and DOJ say the following organizations and government agencies are among the first to join this partnership:

America’s Health Insurance Plans
Amerigroup Corporation
Blue Cross and Blue Shield Association
Blue Cross and Blue Shield of Louisiana
Centers for Medicare & Medicaid Services
Coalition Against Insurance Fraud
Federal Bureau of Investigations
Health and Human Services Office of Inspector General
Humana Inc.
Independence Blue Cross
National Association of Insurance Commissioners
National Association of Medicaid Fraud Control Units
National Health Care Anti-Fraud Association
National Insurance Crime Bureau
New York Office of Medicaid Inspector General
Travelers
Tufts Health Plan
UnitedHealth Group
U.S. Department of Health and Human Services
U.S. Department of Justice
WellPoint, Inc.

HHS & DOJ Say Partnering With Private Insurers Will Give Ongoing Anti-Fraud Efforts Even More Punch

In announcing the new partnership on July 26, 2012, HHS Secretary Kathleen Sebelius and Attorney General Eric Holder touted this new voluntary, collaborative public-private arrangement as the “next step” in the Obama administration’s efforts to combat health care fraud.

“This partnership is a critical step forward in strengthening our nation’s fight against health care fraud,” said Attorney General Holder. “This Administration has established a record of success in combating devastating fraud crimes, but there is more we can and must do to protect patients, consumers, essential health care programs, and precious taxpayer dollars. Bringing additional health care industry leaders and experts into this work will allow us to act more quickly and effectively in identifying and stopping fraud schemes, seeking justice for victims, and safeguarding our health care system.”

“This partnership puts criminals on notice that we will find them and stop them before they steal health care dollars,” Secretary Sebelius said. “Thanks to this initiative today and the anti-fraud tools that were made available by the health care law, we are working to stamp out these crimes and abuse in our health care system.”

Partnership Allows Feds To Use Private Payer Claims Data, Knowledge & Other Fraud Detection Resources

According to HHS and DOJ, the new partnership is designed to share information and best practices in order to improve detection and prevent payment of fraudulent health care billings. Its goal is to reveal and halt scams that cut across a number of public and private payers. HHS and DOJ say the partnership will private insurers to share their anti-fraud insights more easily with investigators, prosecutors, policymakers and other stakeholders and law enforcement officials more effectively to identify and prevent suspicious activities, better protect patients’ confidential information and use the full range of tools and authorities provided by the Patient Protection & Affordable Care Act (Affordable Care Act) and other statutes to combat and prosecute illegal actions.

One unprecedented element of this partnership will involve the sharing of information on specific schemes, utilized billing codes and geographical fraud hotspots between the public and private partners. The partners say the planned sharing of claims data and other information will help partners prevent, detect and respond to potential health care billing fraud by:

Helping partners to take action, to prevent losses to both government and private health plans before they occur;
Improving their ability to spot and stop payments billed to different insurers for care delivered to the same patient on the same day in two different cities;
In the future to use sophisticated technology and analytics on industry-wide healthcare data to predict and detect health care fraud schemes.

Presumably, this will involve the extension of the use of state-of-the-art technology and data mining practices like those the Centers for Medicare & Medicaid Services (CMS) already uses to review claims, to track suspected fraud trends and flag suspected fraudulent activity.

Partnership Expands Use & Reach of New Affordable Care Act & Other Health Care Fraud Detection & Enforcement Tools & Collaboration

The partnership builds upon and extends the reach and use of expanded legal tools created by the Affordable Care Act and other laws that Federal and state officials are using in their highly publicized war against health care fraud, waste and abuse in Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) and, increasingly, private insurance plans. Using these and other new tools, convictions under the Health Care Fraud and Abuse Control Program increased by over 27% (583 to 743) between 2009 and 2011, and the number of defendants facing criminal charges filed by federal prosecutors in 2011 increased by 74% compared with 2008 (1,430 vs. 821).

The Affordable Care Act and other legislative changes and related programs have significantly strengthened the powers of HHS, DOJ and other federal and state agencies to investigate and prosecute health care fraud. Among other things, these amendments and programs include:

Qui tam and other whistleblower incentives and programs that encourage employees, patients, competitors and others to report suspicious behavior;
Require providers, plans to self-identify, self-report and self-correct false claims and certain other non-compliance;
Increase the federal sentencing guidelines for health care fraud offenses by 20-50% for crimes that involve more than $1 million in losses;
Create penalties for obstructing a fraud investigation or audit;
Make it easier for the government to recapture any funds acquired through fraudulent practices;
Make it easier for the Department of Justice (DOJ) to investigate potential fraud or wrongdoing at facilities like nursing homes;
Under the risk-based provider enrollment rules, providers and suppliers wishing to take part in Medicare, Medicaid, and CHIP who federal officials view as posing a higher risk of fraud or abuse now must undergo licensure checks, site visits and other heightened scrutiny including ongoing monitoring as part of the new Automated Provider Screening (APS) system CMS implemented in December 2011. The APS uses existing information from public and private sources to automatically and continuously verify information submitted on a provider’s Medicare enrollment application including licensure status Secretary to impose a temporary moratorium on newly enrolling providers or suppliers of a particular type or in certain geographic areas if necessary to prevent or combat fraud, waste, and abuse.
Increased information sharing and coördination of investigations and enforcement among states, CMS, and its law enforcement partners at the Office of the Inspector General (OIG) and DOJ including the highly publicized activities of the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint effort between HHS and DOJ to fight health care fraud.
The power of CMS, in consultation with OIG, to suspend Medicare payments and require States to suspend Medicaid and SCHIP payments to providers or suppliers during the investigation of a credible allegation of fraud;
The deployment and use of the sophisticated data collection and mining technologies of CMS’ new Fraud Prevention System, which since June 30, 2011 has used advanced predictive modeling technology to screen all Medicare fee-for-service claims before payment and target investigative resources on areas that this profile identifies as reflecting heightened risks of health care fraud vulnerability to allow regulators and prosecutors to more efficiently identify and respond to suspected fraudulent claims and emerging trends;
Focused fraud prevention, detection and enforcement activities on Home Health agencies, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers and certain other categories of providers and suppliers that federal officials view as historically presenting heightened concerns;
Expansion of the overpayment detection and recovery activities ofthe Recovery Audit Contractor (RAC) program to Medicaid, Medicare Advantage, and Medicare Part D programs; and
Various other tools.

Health Plan Partnership Latest Wrinkle In Fed’s Efforts To Use Private Whistleblower & Other Resources To Find Fraud

The partnership with the health plans is the latest wrinkle in a growing network of private relationships and outreach that HHS and DOJ use to discover health care fraud. By partnering with health plans, HHS and DOJ have recruited the health plans to help federal officials find and redress potential fraud in public and private health plans.

HHS and DOJ already know the value of getting private citizens to watch for and report suspected illegal behavior. Indeed, extended qui tam and other whistleblower activities already are paying off big for federal officials. For example, a former executive’s qui tam claim helped bring about the settlement announced in June, 2012 under which Christus Spohn Health System Corporation recently paid more than $5 million to settle Justice Departmentclaims that it profited from violations of the False Claims Act by inappropriately admitted patients to inpatient status for outpatient procedures. The investigation leading to the settlement began in March 2008 after Christus – Shoreline’s former director of case management filed a lawsuit under seal under the qui tam provisions of the False Claims Act alleging the six hospitals were submitting false claims to the Medicare program by billing for services that should have been performed on an outpatient basis as if they were more expensive inpatient services. The allegations stated that these hospitals were routinely billing outpatient surgical procedures as if they required an inpatient level of care even though the patients often were discharged from the hospital in less than 24 hours. The federal False Claims Act empowers private citizens with knowledge of fraud against the United States to present those allegations to the United States by bringing a lawsuit on behalf of the United States under seal. If the government’s investigation substantiates those allegations, then the private citizen is entitled to share in any recovery. In this case, that person will receive 20% of the $5,100,481.74 recovery.

With qui tam and other reports of suspected fraud an increasingly frequent and valuable tool in the federal and state wars on health care fraud, officials have added a wide range of programs encouraging and in some cases financially rewarding individuals and businesses that report circumstances leading to fraud convictions. The partnership with health plans reflects the latest wrinkle in these efforts.

Health Plans Also Targeted For Federal Health Care Fraud & Other Enforcement

While welcoming federal efforts in their private war against health care fraud, private health insurers and other payers also need to prepare to defend their own practices against a separate but equally determined wave of federal enforcement of federal health plan laws against payers.

The debate leading up to and activities of the Obama Administration since the passage of the Affordable Care Act make clear that health plans also stand in the line of fire for enforcement by federal health care officials. With alleged excesses and abuses by health plans among the leading arguments used by administration officials and Congressional supporters to justify the passage of the Affordable Care Act’s insurance reforms, it should come as no surprise that federal regulators are aggressively moving to enforce federal health care regulations against health plans and insurers.

For instance, the Obama Administration has been very aggressive in its implementation of the “Medical Loss Ratio,” “Rate Review” and other features of the health care law it touts as holding insurers accountable and has widely publicized its efforts to use these provisions to force insurers to forego rate increases and make other changes. Recent audits of Medicare Advantage and other private health plans and payers by the HHS Office of Inspector General (OIG) have identified several areas of concern, according to OIG. OIG in February, 2012 issued a publication entitled Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse that reports flawed performance by Medicare Advantage plans under both Part C and Part D with regard to the measurement, detection and implementation of corrective action and referral of potentially fraudulent or abusive practices. The report notes a “lack of common understanding of key fraud and abuse program terms and raise questions about whether all MA organizations are implementing their programs to detect and address potential fraud and abuse effectively.” See also e.g. Medicare Advantage Plans’ Fraud Oversight Weak, Says OIG.

Medicare Advantage Plans are not the only plans targeted for enforcement. For many years, CMS, the Department of Defense and other agencies have been stepping up oversight and enforcement of federal rules that prohibit discrimination by health plans against individuals also covered by Medicare, Medicaid, CHIP, PIP, Department of Defense TRICARE and other federal programs and requiring these plans to pay benefits primary to government program benefits. Sophisticated new electronic data reporting rules are enhancing the enforceability of these rules.

Meanwhile, private health plans also face increased exposures for noncompliance with other laws. As currently interpreted by the Internal Revenue Service, employer or other sponsors of group health plans that fail to comply with the portability rules of the Health Insurance Portability & Accountability Act (HIPAA), mental health parity, medical coverage continuation mandates of the Consolidated Omnibus Budget Reconciliation Act (COBRA) or Michelle’s Law, the genetic nondiscrimination requirements of the Genetic Information & Nondiscrimination Act (GINA) and a host of other laws have an obligation under Internal Revenue Code Section 5001 to self-det eect, self-report and self-assess and pay excise tax penalties even as these plans face federal civil liability from Employee Benefit Security Administration, HHS and private plaintiff actions. As the implementation of the Affordable Care Act, agency officials responsible for the enforcement of these laws are promising stepped up enforcement of these and other federal health plan regulations.

Health Care Providers & Health Plans Both Must Act To Manage Risks & Compliance

In response to the growing emphasis and effectiveness of Federal officials in investigating and taking action against health care providers and payers, both health plans and health care providers should take proper steps to help prevent, detect and timely redress health care fraud and other noncompliance exposures within their organization and to position their organization to respond and defend against potential investigations or charges. In light of the growing qui tam risks, these activities should include both comprehensive compliance review and oversight, as well as tightened internal investigation, exit interview and other human resources and business partner oversight, reporting and investigation policies and practices to help find and redress potential fraud or other qui tam, retaliation and similar exposures early and more effectively.

For Help or More Information

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications. You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and registerto receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

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Posted by Cynthia Marcotte Stamer

Update Health Plans For Expanded MHPAEA & Health Care Reform Mental Health Mandates

July 15, 2012

With attention heavily focused on the health care reform mandates of the Patient Protection & Affordable Care Act (ACA), many employer and union sponsored group health plans are underestimating plan costs and risking significant liability from outdated mental health and substance abuse coverage rules to comply with the mental health parity mandates of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

Although covered group health plans and issuers generally have been required to comply with the statutory provisions of the MHPAEA for all plan years beginning after October 2, 2009 and with the interim final regulations jointly issued by the Departments of Labor, Treasury and Health and Human Services for all plan years beginning after June 30, 2010, many employer or other plan sponsors have yet to properly update their health plan documents, claims and appeals processes, summary plan descriptions and other communications to comply with these MHPAEA mental health benefit mandates or a myriad of other changes to federal health plan rules that already are effective. Violations of these mandates can result Labor Department or private plaintiff lawsuits, requiring the health plan to pay benefits not budgeted for and in some cases, not covered by stop loss or other insurance, as well as Internal Revenue Service and other penalties, as well as attorneys’ fees and other costs of defense.

Solutions Law Press, Inc. invites you to catch up on what private employer and union health plans, their sponsors, fiduciaries and administrators need to do to update and administer their group health plans to comply with MHPAEA and other federal health plan mandates in addition to updating their health plans in response to the ACA requirements already effective or scheduled to take effect in upcoming months by participating in person or via WebEx in the “2012 Health Plan Update Workshop” on July 24, 2012.

Many Health Plans Need Update For MHPAEA & Other Federal Mental Health Mandates

The MHPAEA supplemented the previously enacted mental health parity requirements enacted under the Mental Health Parity Act of 1996 (MHPA).

For plans and policies subject to its provisions, the MHPAEA as implemented by the Departments’ interim final rules generally prohibit group health plans or group health insurance issuers from imposing financial or quantitative requirements (such as a copayment or coinsurance) or a quantitative treatment limitation (such as a limit on the number of outpatient visits or inpatient days covered) on mental health or substance use disorder benefits in any of 6 classifications that is more restrictive than those that apply to medical/surgical benefits in the same classification. Thus, if a plan generally applies a $25 copayment to at least 2/3 of outpatient, in-network, medical/surgical benefits, a higher copayment could not be imposed on outpatient, in-network mental health or substance use disorder benefits.

In addition to financial requirements and quantitative treatment limitations, plans and issuers often impose nonquantitative treatment limitations, such as:

Medical management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether a treatment is experimental or investigative;
Formulary design for prescription drugs;
Standards for provider admission to participate in a network, including reimbursement rates;
Plan methods used to determine usual, customary, and reasonable fee charges;
Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective (also known as fail-first policies or step therapy protocols); and
Exclusions based on failure to complete a course of treatment.

Since it released interim regulations, the Departments have published a series of FAQ guidance that answers various questions about interim final rules and taken other steps to promote awareness and understanding of the MHPAEA, as well as taken other steps to prepare for its enforcement.

Despite the availability of this guidance, many employer and other health plan sponsors, fiduciaries and administrators have not updated their health plans to comply with the MHPAEA guidance.

Attention focused on the political fights and regulatory demands of ACA and an often unwarranted assumption of the compliance adequacy of plan designs and documentation provided by insurers, administrators and other professional service providers have lead many employer and other health plan sponsors, their health plan fiduciaries and administrators to fail to make legally required or otherwise needed changes. These oversights are exposing many plans and their sponsors to unanticipated costs and potentially significant liability by failing to appropriately update their plans documentation, communications and procedures to comply with evolving mandates such as the mental health parity requirements of the MHPAEA as implemented by evolving guidance.

Following the release of updates to the MHPAEA portion of the Employer Self Compliance Tool here by the Department of Labor Employee Benefit Security Administration (EBSA) last week and with mental health benefits among those that ACA specifically identifies as an “essential benefit,” employer and union health plans, their sponsors, fiduciaries and administrators should expect greater scrutiny of their plans compliance with federal mental health parity mandates by updating their health plans’ mental health and substance abuse provisions in response to the MHPAEA and other federal mandates.

7/24 Workshop Provides Update on MHPAEA & Other Health Plan Mandates

Solutions Law Press, Inc. invites you to catch up on the latest MHPAEA and other federal requirements impacting employer and union sponsored group health plans under ACA and other federal health plan regulations by participating in “Coping With Health Care Reform: 2012 Health Plan Update Workshop on Tuesday, July 24, 2012. Participants may choose to attend the live briefing in Addison, Texas or participate via WebEx for a registration fee of $125.00. To register or for more information, see here.

For Help or More Information

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

Comments Off on Update Health Plans For Expanded MHPAEA & Health Care Reform Mental Health Mandates | Claims Administration, Employee Benefits, Employers, ERISA, Fiduciary Responsibility, Health Plans, Human Resources, Insurance, Mental Health | Tagged: Affordable Care Act, ERISA plans, Health Plans, Mandated Benefits, Mental Health, Mental Health Parity, MHPAEA | Permalink
Posted by Cynthia Marcotte Stamer

Stamer Speaks 11/15 About Things Plan Committees Must Do Differently In 2012 At SWBA Meeting

July 10, 2012

Stamer Speaks About Things Plan Committees Must Do Differently In 2012 At SWBA Meeting In November

Cynthia Marcotte Stamer will be among the featured panelists speaking about “The Flood of Things a Plan Committee Must Do Differently in 2012” at the Southwest Benefits Association (SWBA) 23rd Annual Employee Benefits Conference for Practitioners and Plan Sponsors scheduled for November 15-16, 2012 at the Doubletree Galleria Hotel in Dallas, Texas

During “The Flood of Things a Plan Committee Must Do Differently in 2012” program, scheduled to begin at 4:00 PM on November 15, Ms. Stamer and other panelists will discuss the grow emerging challenges and responsibilities that employee benefit plan committees and other fiduciaries must deal with in 2012 such as new provider disclosures and participant disclosures about internal retirement plan fees, to new processes for handling claims and appeals arising under health plans now (and other types of plans soon), to identifying and documenting who really are the other fiduciaries of its plan, to avoiding stock drop exposure (especially after Pfiel), excessive fees exposure, securities lending exposure and others.

The program is part of two days of educational programs that the SWBA will provide during the Conference. To register or for additional details, see here.

About Ms. Stamer

A Fellow in the American College of Employee Benefits Counsel, recognized in International Who’s Who, and Board Certified in Labor & Employment Law, attorney and health benefit consultant Cynthia Marcotte Stamer has 25 years experience advising and representing private and public employers, employer and union plan sponsors, employee benefit plans, associations, their fiduciaries, administrators, and vendors, group health, Medicare and Medicaid Advantage, and other insurers, governmental leaders and others on health and other employee benefit. employment, insurance and related matters. Her experience includes extensive work on advising employee benefit plans, their fiduciaries and advisors, employers, creditors, debtors, trustees, financial services organizations about employee benefit and other rerengineering, performance management, risk management, compliance, public policy and other concerns and opportunities.

A well-known and prolific author and popular speaker Board Certified in Labor & Employment Law, Ms. Stamer presently serves as Co-Chair of the ABA RPTE Section Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Representative, an Editorial Advisory Board Member of the Institute of Human Resources (IHR/HR.com) and Employee Benefit News, and various other publications. A primary drafter of the Bolivian Social Security privatization law with extensive domestic and international regulatory and public policy experience, Ms. Stamer also has worked extensively domestically and internationally on public policy and regulatory advocacy on health and other employee benefits, human resources, insurance, tax, compliance and other matters and representing clients in dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, HUD and Justice, as well as a state legislatures attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators. A prolific author and popular speaker, Ms. Stamer regularly authors materials and conducts workshops and professional, management and other training on employee benefits, human resources, health care, privacy and data security, technology and other compliance and management topics. Her publications and insights appear in the Health Care Compliance Association, American Bar Association, Atlantic Information Service, Bureau of National Affairs, World At Work, SHRM, The Wall Street Journal, Government Institutes, Inc.,Business Insurance, the Dallas Morning News, HR.Com, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications. An Editorial Advisory Board member and author for HR.com, Insurance Thought Leaders and many other publications, Ms. Stamer also regularly serves on the faculty and planning committees of a multitude of symposium and other educational programs. For more details about Ms. Stamer’s services, experience, presentations, publications, and other credentials or to inquire about arranging counseling, training or presentations or other services by Ms. Stamer, see www.CynthiaStamer.com or contact Ms. Stamer at (469) 767-8872 or via e-mail here

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

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Posted by Cynthia Marcotte Stamer

Supreme Court Decision Puts Health Plans Under Fire To Complete ACA-Required Summary of Benefits & Communications & Other Health Plan Updates

July 10, 2012

SBCs Required By 1st Day Of 1st Enrollment Period Beginning After September 22, 2012

Health Plan-U Coping With Health Care Reform Workshop Series Provide Timely Updates Beginning July 24

The June 28, 2012 Supreme Court National Federation of Independent Business v. Sebelius ruling rejecting constitutional challenges to the Patient Protection and Affordable Care Act (Affordable Care Act). means most health plans, their employer and other sponsors, fiduciaries and administrators, and insurers must rush to update their health plan documents, summary plan descriptions and other communications, administrative procedures and contracts, reporting and other arrangements to meet the “Summary of Benefits & Coverage” (SBC) and other requirements of Affordable Care Act and other federal rules that have, or by year-end will, apply to their group health plans.

Final SBC Regulations[*] implementing the Affordable Care Act’s summary of benefits and coverage requirements jointly published February 14, 2012 by the Departments of Labor, Health and Human Services (HHS), and the Treasury (the Departments) will require most health plans and health insurers begin providing the SBC and Uniform Glossary meeting Department standards to covered persons and coverage applicants beginning on the opening day of the first enrollment period beginning after September 22, 2012.

Parties responsible for completing these arrangements should expect to need significant lead time properly to tailor a SBC and Glossary to their health plan, and complete other necessary arrangements to timely comply with the Final SBC Regulations. Most health plans will need significant time to complete the analysis needed to prepare a SBC appropriately tailored to their health plan. In addition, most group health plans and insurers, their sponsors, administrators and fiduciaries also generally want to identify and make changes to their health plan design, documents, summary plan descriptions and other materials and practices in response to the new requirements.

Completing the preparations to meet the deadline for providing SBCs won’t be easy for most health plans and insurers planning to conduct annual or other enrollment periods this Fall. Most employer and other health plan sponsors, fiduciaries, insurers and administrators can expect to experience significant challenges completing the arrangements necessary to comply with the highly technical and extremely rigid requirements of the SBC rules. Most health plan sponsors, fiduciaries and administrators also will want to consider tightening plan document, summary plan description, claims and appeals notices and other plan documentation and associated administrative procedures to coördinate with the SBC language and other Affordable Care Act requirements.

Regulations implementing the SBC requirements published in February, 2012 and later regulatory guidance dictate detailed requirements about the required content of the SBC, as well as dictate that health plans and insurers covered by the SBC rules provide a Uniform Glossary of terms, many of which are likely to differ from definitions of the same or similar terms in plan documents, summary plan descriptions or other plan related documents. To help further clarify these requirements, the Departments on March 19, 2012 published a new FAQ[†] that clarifies certain information about the SBC Regulation and its deadline and other requirements. When plans cover a culturally diverse workforce, health plans also will need to make the necessary arrangements to prepare their plans where necessary to comply with the Affordable Care Act’s requirement that health plans and insurers communicate in culturally and linguistic way.

Taking time to make changes needed to find and resolve potential conflicts and other ambiguities between required terms of the SBC and Glossary and existing health plan documentation, communications and procedures is particularly important in light of the United States Supreme Court’s May 16, 2011 ruling in Cigna Corp. v. Amara. In Amara, the Supreme Court ruled that federal courts may use equitable remedies provided for under the Employee Retirement Income Security Act to give a remedy to individuals hurt because summary plan descriptions or other communication or disclosure documents provided by the health plan contain terms that conflict with the official health plan documents under certain conditions. Health plans, their fiduciaries, sponsoring employers and unions, insurers, administrative service providers and their management also generally will want to carefully craft the SBC and other related plan materials and processes to manage these risks and support the enforceability of the intended plan design.

Workshops Helps Health Plans, Fiduciaries, Insurers & Administrators Prepare

Health plans, their fiduciaries, employer and other sponsors, insurers and administrator can catch up on steps to take to prepare their health plans to comply with the new SBC and other requirements by participating in the 2012 Health Plan-U Coping With Health Care Reform Workshops that Solutions Law Press, Inc. will host beginning on July 24, 2012.

The Workshop Series now includes the following four Workshops to be conducted between July 24, 2012 and August 28, 2012:

2012 Health Plan Update*

July 24, 2012

11:30 A.M.-1:30 P.M. Central

Claims & Appeals Bootcamp*

July 31, 2012

11:30 A.M.-1:00 P.M. Central

HIPAA Bootcamp*

August 14, 2012

11:30 A.M.-1:30 P.M. Central

Health Plan Communications

Bootcamp:

SBCs, SPDs & Beyond*

August 28, 2012

11:30 A.M.-1:00 P.M.

More programs are planned for later in the Fall. To register for these programs or get more details, see here.

For Help or More Information

If you need help preparing to comply with the SBC requirements or other help with reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on leading health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to watch legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available here including:

For important information concerning this communication click here. THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TOU.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS. ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

[*] See 26 CFR 54.9815-2715, 29 CFR 2590.715-2715, and 45 CFR 147.200, published February 14, 2012 at 77 FR 8668.

[†] See FAQS About Affordable Care Act

Implementation (Part VIII) at http://www.dol.gov/ebsa/pdf/faq-aca8.pdf.

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Posted by Cynthia Marcotte Stamer

$27M+ Settlement Highlights Fiduciary Risks Plan Sponsors & Fiduciaries Risk If Plan Vendors, Compensation Improperly Set

July 7, 2012

A $27 million settlement announced by the Department of Labor on July 7 shows the big liability that employer, union or association plan sponsors and their fiduciaries risk by failing to take appropriate steps when deciding who will serve as fiduciaries or other plan sponsors or setting the compensation paid by the plan for those services.

The National Rural Electric Cooperative Association (NRECA) will restore $27,272,727 to three association-sponsored employee benefit plans covered by the Employee Retirement Income Security Act (ERISA) to settle U.S. Department of Labor Employee Benefits Security Administration (EBSA) charges that the association violated ERISA by selecting itself as a service provider to the plans, determining its own compensation and making payments to itself that exceeded NRECA’s direct expenses in providing services to the employee benefit plans. EBSA announced the settlement on July 5, 2012.

Following an EBSA investigation, EBSA accused NRECA of violating NRECA by selecting itself to act as the administrator of various association employee benefit plans and arranging for the NRECA to receive unreasonable compensation for these services which NRECA set without the use of independent parties to prudently verify the appropriateness of the selection or compensation arrangements. EBSA said these arrangements violated the self-dealing and other fiduciary responsibility requirements of ERISA.

Headquartered in Arlington, NRECA is a nonprofit trade association for electric power cooperatives. The sponsored plans are open to members of the trade association as well as the association’s employees. As of 2010, the latest information available, the NRECA 401(k) Plan had 68,970 participants, the NRECA Retirement Security Plan had 64,286 participants and the NRECA Group Benefits Plan had 73,644 participants.

Under the terms of the agreement, NRECA will not provide administrative services to the NRECA Retirement Security Plan, the NRECA 401(k) Plan and the NRECA Group Benefits Plan without entering into a written contract or agreement with the plans that must be approved by an independent fiduciary. The independent fiduciary must determine whether the use of NRECA to provide administrative services to the plans is prudent and reasonable, determine the categories of direct expenses that NRECA may charge to the plans and the methods of calculating those expenses, and monitor NRECA’s compliance with certain terms of the agreement. The agreement also provides that during a 60-month period following the implementation date, NRECA shall discount the amount of permissible direct expenses for which it seeks reimbursement from all three plans in the amount of $22,727,272. The balance of the settlement payment, $4,545,455, already has been paid directly to the NRECA 401(k) Plan. In addition to the amounts returned to the plans, NRECA will pay $2,727,276 in civil penalties.

“This settlement sends a clear message to plan fiduciaries that they cannot profit from selecting themselves to provide services to plans,” said Phyllis Borzi, assistant secretary of labor for employee benefits security in announcing the settlement.

Employee benefit plan vendor selection and compensation arrangements made by association and other employee benefit plan sponsors, fiduciaries and service providers are coming under increasing scrutiny by the EBSA. While ERISA technically grants plan sponsors and fiduciaries wide latitude to make these choices, the exercise of these powers comes with great responsibility. See e.g., Plan Sponsors. Their Owners & Management & Others Risk Personal Liability If Others Defraud Plans or Mismanage Employee Benefit Plan Responsibilities; New Rules Give Employee Benefit Plan Fiduciaries & Investment Advisors New Investment Advice Options;DOL Proposes To Expand Investment Related Services Giving Rise to ERISA Fiduciary Status As Investment Fiduciary.

Associations, employer and other plan sponsors, and other entities and individuals who in name or in function possess or exercise discretionary responsibility or authority over the selection of plan fiduciaries, administrative or investment service providers or other services to the plan or the establishment of their compensation generally must make those decisions in accordance with the fiduciary responsibility and prohibited transaction rules of ERISA. Among other things, these rules generally require that fiduciaries exercising discretion over these and other plan matters:

ü Must act prudently for the exclusive benefit of plan participants and beneficiaries;

ü Must not involve the plan or its assets in any arrangement that is listed as a prohibited transaction under ERISA § 406; and

ü Must not act for the benefit of themselves or any third party.

Fiduciaries that violate these rules risk personal liability to the plans for the greater of profits realized or losses sustained by the plan, plus attorneys’ fees and costs, as well as exposure to an EBSA-assessed ERISA civil penalty equal to 20% of the amount of the fiduciary breach.

Since the earliest days of ERISA, the EBSA as well as private plaintiffs have aggressively enforced these and other fiduciary responsibility rules. In recent years, EBSA has taken further steps to tighten and enforce these protections such as the new fee disclosure rules recently implemented by the EBSA and other fiduciary guidance. See, e.g., Western Mixers & Officers Ordered To Pay $1.2M+ For Improperly Using Benefit Plan Funds For Company Operations, Other ERISA Violations; Plan Administrator Faces Civil & Criminal Prosecution For Allegedly Making Prohibited $3.2 Million Real Estate Investment; Tough times are no excuse for ERISA shortcuts.

Despite these well-document fiduciary exposures and a well-established pattern of enforcement by the Labor Department and private plaintiffs, many companies and their business leaders fail to appreciate the responsibilities and liabilities associated with the establishment and administration of employee benefit plans. Frequently, employer and other employee benefit plan sponsors fail adequately to follow or document their administration of appropriate procedures to be in a position to demonstrate their fulfillment of these requirements when selecting plan fiduciaries and service providers, determining the compensation paid for their services, overseeing the performance of these parties, or engaging in other dealings with respect to plan design or administration. In other instances, businesses and their leaders do not realize that the functional definition that ERISA uses to determine fiduciary status means that individuals participating in discretionary decisions relating to the employee benefit plan, as well as the plan sponsor, may bear liability under many commonly occurring situations if appropriate care is not exercised to protect participants or beneficiaries in these plans. For this reason, businesses and associations providing employee benefits to employees or dependents, as well as members of management participating in, or having responsibility to oversee or influence decisions concerning the establishment, maintenance, funding, and administration of their organization’s employee benefit programs need a clear understanding of their responsibilities with respect to such programs, the steps that they should take to demonstrate their fulfillment of these responsibilities, and their other options for preventing or mitigating their otherwise applicable fiduciary risks.

In light of the significant liability risks, employer, association and other employee benefit plan sponsors and their management, plan fiduciaries, service providers and consultants should exercise care when selecting plan fiduciaries and service providers, establishing their compensation and making other related arrangements. To minimize fiduciary exposures, parties participating in these activities should seek the advice of competent legal counsel concerning their potential fiduciary status and responsibilities relating to these activities and take appropriate steps to minimize potential exposures.

For Help or More Information

If you need help reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices or with other employee benefits, human resources, health care or insurance matters, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on leading health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

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Posted by Cynthia Marcotte Stamer

7/24 “Health Plan Update” Workshop Kicks Off 2012 Health Plan-U Coping With Health Care Reform Workshop Series

July 6, 2012

2012 Health Plan-U Coping With Health Care Reform Series Provides Key Training & Information For Health Plans, Sponsoring Employers,

Fiduciaries, Administrators & Advisors On ACA & Other Responsibilities

Health plans, their employer and other plan sponsors, fiduciaries, administrators, brokers and consultants and other service providers are invited to geta 2012/2013 Health Plan Compliance Checkup by participating in the Health Plan Update Workshop Solutions Law Press, Inc. is hosting on July 24, 2012 as part of its 2012 Health Plan-U Coping with Health Care Reform Workshop Series beginning with the kickoff program, “2012 Health Plan Update” on July 24, 2012.

The Supreme Court’s June 28, 2012 National Federation of Independent Business v. Sebelius ruling upholding the health care reform law means health plans, their employer and other sponsors, fiduciaries and administrators, and insurers must quickly update their health plan documents, summary plan descriptions and other communications, administrative procedures, contracts, reporting and other arrangements to meet Affordable Care Act and other federal rules that have, or by plan year end will, take effect pending the full rollout of the law in 2014. Beginning with the Health Plan Update Workshop on July 24, 2012, Solutions Law Press, Inc. is working to help health plans and their leaders quickly and cost-effectively get up to speed with and respond to these requirements by hosting the following series of workshops as part of its 2o12 Health Plan-U Coping With Health Care Reform Worksop Series:

Coping With Health Care Reform: 2012 Health Plan Update Workshop*

July 24, 2012

12:30 P.M.-2:30 P.M. Eastern | 11:30 A.M.-1:30 P.M. Central | 10:30 A.M-12:30 P.M. Mountain | 9:30 A.M-11:30 A.M. Pacific

Claims & Appeals Bootcamp*

July 31, 2012

12:30 P.M.-2:00 P.M. Eastern | 11:30 A.M.-1:00 P.M. Central | 10:30 A.M-12:00 P.M. Mountain | 9:30 A.M-11:00 A.M. Pacific

HIPAA Bootcamp*

August 14, 2012

12:30 P.M.-2:30 P.M. Eastern | 11:30 A.M.-1:30 P.M. Central | 10:30 A.M-12:30 P.M. Mountain | 9:30 A.M-11:30 A.M. Pacific

Health Plan Communications Bootcamp: SBCs, SPDs & Beyond*

August 28, 2012

12:30 P.M.-2:00 P.M. Eastern | 11:30 A.M.-1:00 P.M. Central | 10:30 A.M-12:00 P.M. Mountain | 9:30 A.M-11:00 A.M. Pacific

The Workshops are designed to help health plans, their employer and other sponsors, fiduciaries, administrators, brokers and consultants and others with responsibilities for these plans quickly learn key steps that they may need to take to update and admininster their health plans to meet existng and emerging ACA, Employee Retirement Income Security Act (ERISA), Internal Revenue Code (Code) and other federal mandates.

7/24 Health Plan Update Workshop Kicks Off Series

Solutions Law Press, Inc. HR & Benefits Update will kick off its 2012 Health-U Coping With Health Care Reform Workshop Series by hosting the 2012 Health Plan Update Workshop on July 24, 2012 from 12:30 P.M.-2:30 P.M. Eastern, 11:30 A.M.-1:30 P.M. Central, 10:30 A.M-12:30 P.M. Mountain and 9:30 A.M-11:30 A.M. Pacific Time.

The June 28, 2012 Supreme Court National Federation of Independent Business v. Sebelius ruling rejecting constitutional challenges to the ACA health care reform law means most health plans, their employer and other sponsors, fiduciaries and administrators, and insurers must rush to update their health plan documents, summary plan descriptions and other communications, administrative procedures and contracts, reporting and other arrangements to meet the requirements of ACA that have, or by year end will, take effect pending the full rollout of the law in 2014.

Solutions Law Press, Inc. invites you to catch up on the latest requirements and guidelines impacting employer and union sponsored group health plans under ACA and other federal health plan regulations by participating in “Coping With Health Care Reform: 2012 Health Plan Update Workshop on Tuesday, July 24, 2012. Participants may choose to attend the live briefing in Addison, Texas or take part via WebEx for a registration fee of $125.00. Texas Department of Insurance Continuing Education Credit and other professional certification credit may be requested by qualifying participant for an added charge.

The Coping With Healthcare Reform: 2012 Health Plan Update Workshop will cover the latest guidance on Affordable Care Act and other federal health plan regulatory changes impacting employment-based group health plans and other key information employer and other group health plan sponsors, group health plans, insurers, plan administrators, fiduciaries, brokers and advisors and others working with these plans need to understand and cope with 2012-2013 ACA and other health plan requirements including:

√ ACA Summary of Benefits And Communications Mandates & Their Implications On Plan Documents, SPDs & Administration

√ ACA Culturally and Linguistically Appropriate Mandates

√ ACA External & Internal Review, ERISA Claims & Appeals, & Other Federal Claim Handling Requirements: What rules apply to which plans? What to do to minimize the impact of changing requirements?

√ ACA “Essential Health Benefit” Rules & Their Implications For Health Plans & Their Sponsors Now & After 2014

√ ACA, ADA & Other Federal Health Plan Nondiscrimination Rules

√ ACA W-2 & Other Federal Reporting, Notice & Disclosure Requirements

√ ACA grandfathered plan status: Do you have it? How do you lose it? What it does for your program?

√ ACA, COBRA, HIPAA, GINA, FMLA, Military Leave, Michelle’s Law & Other Federal Eligibility Mandates

√ Preventive care coverage & wellness program rules under Affordable Care Act, GINA, ADA & other federal regulations

√ Mental health & substance abuse, provider choice & other benefit mandates under ACA, Mental Health Parity & other federal rules

√ Federal Health Plan Notice & Communication Rules

√ ERISA Fiduciary Responsibility, Reporting & Disclosure & Other Rules

√ New HIPAA Privacy Rules & Audits & How Plans & Plan Sponsors Should Respond

√ Consumer Driven Health Plan Communication Strategies

√ Tips To Help Review & Update Plans, Communications, Vendor Agreements & Processes

√ Expected & Proposed ACA & Other Federal Health Plan Rules

√ Practical Strategies For Monitoring & Responding To New Requirements & Changing Rules

√ Participant Questions

√ More

Cynthia Marcotte Stamer Leads Workshops

The 2012 Health Plan Update and other Coping With Healthcare Reform Workshops will be lead by attorney Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefits Counsel, recognized in International Who’s Who, and Board Certified in Labor & Employment Law, Ms. Stamer has 25 years experience advising and representing private and public employers, employer and union plan sponsors, employee benefit plans, associations, their fiduciaries, administrators, and vendors, group health, Medicare and Medicaid Advantage, and other insurers, governmental leaders and others on health and other employee benefit. employment, insurance and related matters. A well-known and prolific author and popular speaker Board Certified in Labor & Employment Law, Ms. Stamer presently serves as Co-Chair of the ABA RPTE Section Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Representative, an Editorial Advisory Board Member of the Institute of Human Resources (IHR/HR.com) and Employee Benefit News, and various other publications. A primary drafter of the Bolivian Social Security privatization law with extensive domestic and international regulatory and public policy experience, Ms. Stamer also has worked extensively domestically and internationally on public policy and regulatory advocacy on health and other employee benefits, human resources, insurance, tax, compliance and other matters and representing clients in dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, HUD and Justice, as well as a state legislatures attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators. A prolific author and popular speaker, Ms. Stamer regularly authors materials and conducts workshops and professional, management and other training on employee benefits, human resources and related topics for the ABA, Aspen Publishers, the Bureau of National Affairs (BNA), SHRM, World At Work, Government Institutes, Inc., the Society of Professional Benefits Administrators and many other organizations. She also regularly serves on the faculty and planning committees of a multitude of symposium and other educational programs. For more details about Ms. Stamer’s services, experience, presentations, publications, and other credentials or to inquire about arranging counseling, training or presentations or other services by Ms. Stamer, see www.CynthiaStamer.com.

Registration, Continuing Education & Other Details

Register Now! The Registration Fee per course is $125.00 per person (plus an additional $10 service fee for each individual seeking Texas Department of Insurance Continuing Education Credit). Registration Fee Discounts are available for groups of three or more. Payment required via website registration required 48 hours in advance of the program to complete registration. Payment only accepted via website PayPal. No checks or cash accepted. Persons not registered at least 48 hours in advance will only participate subject to system and space availability.

* Texas Department of Insurance and Other Continuing Education Credit

All Health Plan- U Coping With Health Care Reform programs are approved to be offered for general certification credit by the Texas Department of Insurance for the time period offered subject to fulfillment all applicable Texas Department of Insurance requirements, completion of required procedures and payment of the additional service processing fee of $10.00. An application for continuing education credit for other programs is pending. The HIPAA Bootcamp program is approved for 1.5 hours of General Credit and .5 Hours of Ethics Credit. The Texas Department of Insurance possesses the final authority to determine whether an individual qualifies to receive requested continuing education credit. Neither Solutions Law Press, Inc., the speaker or any of their related parties guarantees the approval of credit for any individual or has any liability for any denial of credit. HRCI and World At Work certification credit for the these programs has been requested but approval is currently pending. If you have special continuing education credit needs that you wish us to consider, please let us know. We are happy to visit with you about our ability to accommodate your request. Special fees or other conditions may apply.

Camcellation & Refund Policies

In order to receive refund credit, written cancellation (either fax or e-mail) must be received at least 48 hours in advance of the meeting and are subject to a $10.00 refund processing fee. Refunds will be made within 60 days of receipt of written cancellation notice.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides business and management information, tools and solutions, training and education, services and support to help organizations and their leaders promote effective management of legal and operational performance, regulatory compliance and risk management, data and information protection and risk management and other key management objectives. Solutions Law Press, Inc.™ also conducts and assist businesses and associations to design, present and conduct customized programs and training targeted to their specific audiences and needs. For additional information about upcoming programs, to inquire about becoming a presenting sponsor for an upcoming event, e-mail your request to info@Solutionslawpress.com These programs, publications and other resources are provided only for general informational and educational purposes. Neither the distribution or presentation of these programs and materials to any party nor any statement or information provided in or in connection with this communication, the program or associated materials are intended to or shall be construed as establishing an attorney-client relationship, to constitute legal advice or provide any assurance or expectation from Solutions Law Press, Inc., the presenter or any related parties. If you or someone else you know would like to receive future Alerts or other information about developments, publications or programs or other updates, send your request to info@solutionslawpress.com. If you would prefer not to receive communications from Solutions Law Press, Inc. send an e-mail with “Solutions Law Press Unsubscribe” in the Subject to support@solutionslawyer.net. CIRCULAR 230 NOTICE: The following disclaimer is included to comply with and in response to U.S. Treasury Department Circular 230 Regulations. ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN. If you are an individual with a disability who requires accommodation to participate, please let us know at the time of your registration so that we may consider your request

Comments Off on 7/24 “Health Plan Update” Workshop Kicks Off 2012 Health Plan-U Coping With Health Care Reform Workshop Series | 105(h), Affordable Care Act, Claims Administration, COBRA, Employee Benefits, Employers, ERISA, family leave, Fiduciary Responsibility, FMLA, Health Plans, Human Resources, Income Tax, medical leave, Medicare Part D, Mental Health, Mental Health Parity, MEWA, Patient Empowerment, Patient Protection and Affordable Care Act, Payroll Tax, Prescription Drugs, Public Policy, Tax, Wellness Programs | Permalink
Posted by Cynthia Marcotte Stamer

Model Language May Aid Section 83(b) Elections Even As Executive & Other Special Compensation Carry Growing Liability Traps

June 26, 2012

Businesses wishing to accelerate their ability to deduct the value of nonqualified stock or other property transferred to an employee or contractor as compensation for services and employees and independent contractors anticipating the need to make a Section 83(b) election to minimize income tax on property to be received as compensation for service subject to a substantial risk of forfeiture which the recipient expects to grow in value may find sample language contained in Revenue Procedure 2012-29 (Revenue Procedure) helpful. While this new tool may faciliate the cost of preparing an election, executives and others receiving property as compensation and the businesses providing that compensation should exercise care to properly understand and manage responsibilities and requirements impacting these and other compensation arrangements under Section 89 and a growing list of increasingly complicated and diverse laws, regulations and other requirements.

The Revenue Procedure contains sample language that the Internal Revenue Service (IRS) says employees and independent contractors may (but are not required) to use to make the “83(b) election” that Section 83(b) of the Internal Revenue Code (Code) requires the property recipient to make to accelerate income recognition as well as provides examples of the income tax consequences of making such an election.

Section 83(b) Election As Tax Planning Tool

Code Section 83 plays a key rule in determining when:

When the value of property received by an employee or other service provider as compensation for the performance of services becomes taxable to the recipient;
The timing of the valuation of the property; and
The timing of the employing businesses’ deduction of this property.

Treasury Regulation Section 1.83-3(f) specifies that property is transferred in connection with the performance of services if it is transferred to an employee or independent contractor (or beneficiary thereof) in recognition of the performance of services, or refraining from performance of services. Where Section 83 applies, the transfer of property is subject to Section 83 whether such transfer is in respect of past, present, or future services.

Code Section 83(a) generally provides that if, in connection with the performance of services, property is transferred to any person other than the person for whom such services are performed, the excess of the fair market value of the property (determined without regard to any restriction other than a restriction which by its terms will never lapse) as of the first time that the transferee’s rights in the property are transferable or are not subject to a substantial risk of forfeiture, whichever occurs earlier, over the amount (if any) paid for the property is included in the service provider’s gross income for the taxable year which includes such time.

Where the property transferred as compensation is expected to increase in value from the time of the grant until transfer restrictions or risks of forfeiture lapse, the delay in income recognition dictated by Section 83(a) generally has the effect of increasing the income tax that the recipient will pay on the property.

Assuming that the value of the property when the property is granted is adequately ascertainable, however, Section 83(b) and Section 1.83-2(a) permit the service provider to elect to include in gross income the excess (if any) of the fair market value of the property at the time of transfer over the amount (if any) paid for the property, as compensation for services by making a timely Section 83(b) election.

Under Section 83(b)(2), an election made under Section 83(b) is only effective to accelerate the recognition of taxable income from the transfer of property for services if made in accordance with the regulations and filed with the IRS no later than 30 days after the date that the property is transferred to the service provider.

Treasury Regulation Section 1.83-2(c) provides for a service provider to make a Section 83(b) election be made under Section 83(b) is made by filing a copy of a written statement that meets the requirements of the Regulation with the IRS office with which the person who performed the service files his return and submitting a copy of that statement with his income tax return for the taxable year in which such property was transferred. Section 1.83-2(d) requires that the person who performed the services also submit a copy of the Section 83(b) election to the person for whom the services were performed.

While the Regulations dictate the required content of the Section 83(b) election, until now the IRS had not dictated or otherwise provided model language for use in making this election.

The Revenue Procedure provides model language to aid service providers who receive substantially nonvested property in connection with the performance of services and wish to file an election under Section 83(b).

While the model language should make the completion and filing of a desired Section 83(b) election easier for those wishing to accelerate income recognition from property received as compensation for services, employees and other service providers receiving property as compensation and their employers are cautioned to consult with qualified tax counsel or advisor about the applicability and implications of making a Section 83(b) election. Section 83 conditions the availability of the option to make a Section 83(b) election on the property having a “readily ascertainable fair market value” when transferred and timely election. In the case of stock options and certain other property, valuation issues may disqualify the transfer for coverage by a Section 83(b) election.

Beyond the restrictions on the use of the Section 83(b) election, parties considering making the election are cautioned to fully understand the consequences of making the election. Under certain circumstances, making an election to minimize future taxes can have unexpected consequences. For instance, a taxpayer that makes the election should be prepared to pay taxes on the property in the year received even though transfer or forfeiture restrictions on the property may prevent the taxpayer from selling or using the property currently.

Because the election is irrevocable hardships also can happen if the property decreases rather than increases in value after the date of transfer. Once made, Section 83(b) elections generally are irrevocable without the approval of the IRS, which is difficult to secure. Consequently, a service provider that makes a Section 83(b) election also runs the risk that he may pay greater taxes by making the election if the property subsequently declines in value. Of course where the employer conditions the grant of property on the making of the Section 83(b) election, the recipient employee or contractor may not be able to avoid this risk. At minimum, however, the service provider should be prepared for this possibility and have arrangements in place to meet the resulting tax obligations when they arise.

Ensure Old Compensation Experience Not Rendered Obsolete By New Rules

Because of the lengthy tenure of Section 83 of the Code, many businesses and their leaders often feel comfortable that past experience makes the need to consult tax and other experts about the design and implementation of property based or other compensation arrangements. While this may be the case in some instances, changing rules make it advisable that parties participating in these arrangements check their understanding to avoid stepping into unanticipated traps.

The longstanding provisions of Section 83 are part of a growing list of tax, securities and other rules that executives, board members, and other service providers and the businesses that receive their services may be required to successfully negotiate when seeking to use stock or other property as compensation for services.

Ongoing changes in the law and regulations concerning executive and other compensation transactions and evolving lender, shareholder and contractual relationships makes it advisable that parties participating in these and other compensation arrangements seek the advice of competent legal and accounting service providers with experience with these concerns.

Beyond Section 83, executive and other compensation arrangements increasingly also be impacted by new Code provisions like the complicated rules of Code Section 409A, shareholder approval, securities and other disclosure requirements, conflict of interest and other board and organizational governance, and a host of other requirements that may have ramifications well in excess of the tax consequences that were historically the primary concern in the design of these arrangements in past decades. For certain publically traded businesses, proper valuation, reporting and disclosure and in some instances, even shareholder approval of certain compensation arrangements may be critical. Likewise, IRS Form 990 and other emerging tax and other rules increasingly require that nonprofit health care, education and other non-profit organizsations be prepared to defend the design, valuation, and reporting of executive and certain other compensation arrangements . Even in closely held start ups and certain other organizations, founders and others often unintentionally incur significant liability by offering employees who do not qualify as exempt under the Fair Labor Standards Act or as accredited investors under securities law private placement exemptions or making other expensive compensation design missteps.. Amid these and other growing responsibilities, getting executive and other compensation arrangements right plays a critical role to the success of a business and the management of its liability.

For Help With Risk Management, Compliance & Other Management Concerns

If you need assistance in auditing or assessing, updating or defending your organization’s compensation, employee benefits and other workforce compliance, risk management or other internal controls practices or actions, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469)767-8872.

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 24 years of work helping employers and other management; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit and management policies and practices. Her experience includes extensive work helping employers implement, audit, manage and defend union-management relations, wage and hour, discrimination and other labor and employment laws, privacy and data security, internal investigation and discipline and other workforce and internal controls policies, procedures and actions.

Immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee and current Co-Chair of its Welfare Benefits Committee, Vice Chair of the ABA TIPS Employee Benefits Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, and former Employee Benefits & Insurance Professor for the University of Dallas Graduate School of Management, Ms. Stamer works, publishes and speaks extensively on management, reengineering, investigations, human resources and workforce, employee benefits, compensation, internal controls and risk management, federal sentencing guideline and other enforcement resolution actions, and related matters. Her experience includes extensive work advising businesses and executives on Code Section 83, 409A, 280G, and other tax, employment, securities and relates concerns relating to nonqualified and qualified deferred compensation, incentive stock option, severance, and other compensation and benefits arrangements. She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources at www.solutionslawpress.com.

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Posted by Cynthia Marcotte Stamer

Making Wellness Work On A Shoestring Budget

May 28, 2012

With tight budgets preventing many businesses from investing in wellness consulting resources, a tight budget doesn’t mean your company, church, or other group can’t have a thriving wellness program. Wellness is a culture. While the resources and advice of consultants and bells and whistles can be helpful sometimes, the inability to afford them doesn’t mean that your organization or group can’t have a healthy and effective wellness program.

The key to promoting wellness in your workplace, organization or community is to promote a culture of healthy eating, movement and lifestyles. Establish the culture by leading the way. Make healthy food choices available at meetings. Require or urge your leadership to model good eating behavior. Have a healthy pot luck and challenge employees to bring and share their tastiest, healthy dish.

Encourage leaders and others to incorporate movement into the day. Walking meetings and other inexpensive activities can help promote health with very little cost. Encourage employees to walk in walk-a-thons, participate in running groups, walk or skip to lunch, take the stairs, participate in sports leagues or other similar activities.

Don’t overlook the wealth of available free resources. Project COPE”s Play For Life Program relies upon a host of free often government provided resources. Many great wellness tools are available from NIH and other government sources at little or no cost including the newly released NIH and the Weight of the Nation resources just made available by NIH here.

Project COPE: Coalition On Patient Empowerment & Coalition For Responsible Health Care Quality

Project COPE: Coalition on Patient Empowerment & the Coalition for Responsible Health Care Quality are coalitions of individuals and organizations that share the belief that every American and American organization has a stake, and something to contribute to our ability to find and implement the best options for ensuring that the U.S. health care system provides quality, affordable health care.

Health care impacts every individual and every organization in America. Consequently, every American citizen and organization including but not limited to health care providers, employers, insurer, and community organizations should take part. The government, health care providers, insurers and community organizations can help by providing education and resources to make understanding and dealing with the realities of illness, disability or aging easier for a patient and their family, the affected employers and others. At the end of the day, however, caring for people requires the human touch. Americans can best improve health care by not waiting for someone else to step up or speak up.

Project COPE urges and invites each individual and organization speak up to help communicate and act to make health care work for themselves, their families and others when you can and share your input to help preserve and continue to develop real meaningful improvements to our health care system by joining Project COPE: Coalition for Patient Empowerment here by sharing ideas, tools and other solutions and other resources.

Other Helpful Resources & Other Information

We hope that this information is useful to you. If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .

Wellness is a culture. While the resources and advice of consultants and bells and whistles can be helpful sometimes, the inability to afford them doesn’t mean that your organization or group can’t have a healthy and effective wellness program.

The key to promoting wellness in your workplace, organization or community is to promote a culture of healthy eating, movement and lifestyles. Establish the culture by leading the way. Make healthy food choices available at meetings. Require or encourage your leadership to model good eating behavior. Have a healthy pot luck and challenge employees to bring and share their tastiest, healthy dish.

Encourage leaders and employees and others to incorporate movement into the day. Walking meetings and other inexpensive activities can help promote health with very little expense. Encourage employees to walk in walk-a-thons, participate in running groups, participate in sports leagues or other similar activities.

The key to wellness is getting started and keeping going. Making healthy living part of your culture can pay big benefits in health and absentee savings, increased productivity and workforce retention. What are you waiting for? Get moving!

Other Helpful Resources & Other Information

For Help or More Information

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

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Posted by Cynthia Marcotte Stamer

Review & Update Health Plan Mental Health Coverage As DOL Supplements Guidance On Health Plan Mental Health Parity Rules

May 23, 2012

Group health plans and health insurers subject to the mental health parity requirements of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) have extra guidance about the effect of these requirements on utilization management and copayment requirements. As the Labor Department and other federal agencies celebrate Mental Health Awareness Month, plan sponsors, administrators and fiduciaries should review and update their plans to comply with the current requirements and tighten administration and other documentation to position decisions for defensibility against growing scrutiny.

In conjunction with its marking of Mental Health Awareness month in May, the Department of Labor’s Employee Benefits Security Administration (EBSA) recently updated its guidance and resources about the MHPAEA. The updated resources include:

New Mental Health Parity webpage, available here; and
Understanding (and Common Misunderstandings Related to) Implementation of the Mental Health Parity and Addiction Equity Act of 2008, available here.

This new guidance supplements a growing list of guidance concerning the interpretation and enforcement of the MHPAEA by the U.S. Departments of Health and Human Services (HHS), Labor and the Treasury (the Departments). On November 17, 2011, the Departments jointly published more FAQs that share insights on how the MHPAEA requirements impact certain common copayments and utilization review arrangements historically used by plans and insurers. The new FAQ guidance here provides more clarification about the meaning of the interim final rules implementing MHPAEA the Departments jointly issued on February 2, 2010, and earlier FAQ guidance published on June 30, 2010 and December 22, 2010 as applied to these practices.

For group health insurers and group health plans subject to its provisions, MHPAEA generally requires that insurer or plan:

Cannot impose financial requirements and treatment limitations on mental health and substance use disorder benefits that are more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits; and
Cannot impose separate financial requirements or treatment limitations that are applicable only to mental health or substance use disorder benefits.

Insurers, plan sponsors, fiduciaries and administrators also should consider the potential implications of various other federal requirements on the design and administration of mental health and substance abuse coverage and benefits under their programs. For example, the express reference to mental health and substance abuse benefits as included within the definition of “essential benefits” for purposes of the Affordable Care Act requires additional consideration of the effect of the Affordable Care Act’s annual and lifetime limit and other mandates relating to essential benefit coverage be evaluated and addressed. In addition, specific attention should be devoted to the potential effects of the Affordable Care Act’s independent review and other rules concerning the processing and payment of health benefit claims by non-grandfathered health plans.

Along with considering the potential implications of these emerging requirements, health insurers, group health plans and those involved in their design and administration also should verify that their eligibility and other program terms or practices do not inappropriately violate the nondiscrimination rules of laws such as the Americans with Disabilities Act, the Health Insurance Portability & Accountability Act, the Genetic Information Nondiscrimination Act or other laws and that their plan and those involved in its administration are properly safeguarding the confidentiality of sensitive information about mental health , substance abuse or other health information about covered persons or their family. Learn more here.

For Help or More Information

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

Comments Off on Review & Update Health Plan Mental Health Coverage As DOL Supplements Guidance On Health Plan Mental Health Parity Rules | Claims Administration, Employee Benefits, Employers, ERISA, Health Plans, Mental Health, Mental Health Parity, Retirement Plans, Tax | Tagged: ADA, Affordable Care Act, group health plan, Health Insurance, Health Plans, HIPAA, Mental Health Benefits, Mental Health Parity, Substance Abuse Benefits | Permalink
Posted by Cynthia Marcotte Stamer

Western Mixers & Officers Ordered To Pay $1.2M+ For Improperly Using Benefit Plan Funds For Company Operations, Other ERISA Violations

May 23, 2012

Businesses owners and managers should treat last week’s judgment against a California fruit and nut supplier Western Mixers Inc. and its officers as a wake-up call to meet employee benefit funding obligations, not to use plan monies for company operations and to take other required steps to make sure that retirement, health and other employee benefit plans moneys and other responsibilities are properly handled.

Under a judgment entered in Solis v. Frank L. Rudy et. al. and Western Mixers Inc. Money Purchase Pension Plan, Western Mixers Inc., its owners and officers will pay a total of $1,287,901 to the company’s pension plan, plus a 20 percent penalty to the Department of Labor.

Following an investigation by the Employee Benefits Security Administration (EBSA), the Department of Labor sued Western Mixers Inc. and two officers who served as trustees of the plan for failing to make approximately $952,511 in mandatory employer contributions for the benefit of participants and beneficiaries and improperly using plan monies in the company’s business operations. Investigators also found that the same two officers as well as the company’s chief financial officer made $565,000 in unauthorized withdrawals from the plan accounts, commingling those funds in the company’s general accounts and using them for the benefit of the business.

Labor Department officials sued the company, and the officers for violation of the fiduciary responsibility rules of the Employee Retirement Income Security Act (ERISA). ERISA generally requires that plan trustees and other plan fiduciaries carry out duties with respect to an employee benefit plan assets prudently for the exclusive benefit of participants.

Pursuant to the consent judgment, the company and its officers admitted to violation of ERISA. During the course of the investigation leading up to the lawsuit, the company previously repaid to the plan $485,000 of the total funds identified as missing by the Labor Department. According to an announcement of the U.S. Department of Labor on May 14, 2012, Midwest Mixers Inc.’s officers agreed to repay $802,901 to participants’ accounts within 10 day of the judgment.

In addition to repaying the missing funds with interest, defendants also must pay a penalty equal to 20 percent of the recovered amount. The court also has appointed an independent fiduciary to terminate the plan and to collect, marshal, pay out and administer plan assets. Frank L. Rudy and David H. Bolstad, owners of the company, are removed as plan trustees and fiduciaries. Together with Robert J. Fischer, Western Mixers, Inc.’s chief financial officer, they are permanently enjoined and restrained from violating ERISA and from serving as fiduciary or service providers to any ERISA-covered plan in the future.

The Western Mixer’s judgement demonstrates that owners, operators and managers of businesses that exercise discretion and control over the funding, investment or administration of employee benefit plans or their assets face significant liability for failing to properly fulfill their responsibilities with respect to their employee benefit plans. Businesses, their owners, board members, officers, and other members of management making decisions about the maintenance, funding, administration, termination, hiring or appointment of fiduciaries or service providers or other matters impacting the employee benefit plan should ensure that they understand the potential implications and responsibilities associated with these activities for themselves and their companies. individuals who have authority or responsibility for employee benefit plans who also perform or take part in the performance of other company management functions also should pre-educate themselves about when ERISA may require that their plan responsibilities be put before otherwise applicable responsibilities to their company, appropriate processes for documenting decisions and activities and other procedures that can help position activities to mitigate exposures and promote defensibility.

For Help or More Information

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on leading health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

Comments Off on Western Mixers & Officers Ordered To Pay $1.2M+ For Improperly Using Benefit Plan Funds For Company Operations, Other ERISA Violations | Employee Benefits, Employers, ERISA, Fiduciary Responsibility, Health Plans, Mental Health, Mental Health Parity, Retirement Plans, Tax | Tagged: Bankruptcy, ERISA, fee disclosure, Fiduciary, plan investiments, prohibited traansaction, Prudence | Permalink
Posted by Cynthia Marcotte Stamer

Plan Administrator Faces Civil & Criminal Prosecution For Allegedly Making Prohibited $3.2 Million Real Estate Investment

May 22, 2012

The U.S. Department of Labor has filed a complaint in the U.S. District Court for the District of Idaho against Matthew D. Hutcheson alleging that he violated the Employee Retirement Income Security Act (ERISA) by imprudently investing retirement plan assets in a now-failed real estate venture. Hutcheson also faces a separate criminal indictment, which was filed in the same court on April 10, in connection with the same transaction.

The Labor Department civil complaint alleges that, toward the end of 2010, Hutcheson used more than $3.2 million representing the retirement plan savings of workers from multiple employers for his own personal expenses and in an attempt to buy an interest in the Tamarack Resort – a failed ski and golf resort in Idaho.

Labor Department officials charge this imprudent prohibited transaction has left affected retirement plans without sufficient funds to pay participants all the benefits owed to them.

The Labor Department also has filed an application for a temporary restraining order seeks to remove Hutcheson and other named defendants as fiduciaries of the affected plans, and seeks to appoint an independent fiduciary to administer the plans. In addition to Hutcheson, defendants include Hutcheson Walker Advisors LLC; Green Valley Holdings LLC; and the Retirement Security Plan and Trust, formerly known as the Pension Liquidity Plan and Trust.

Appropriate management of retirement and other employee benefit plan assets is a key obiligation of employee benefit plan investment advisors and other fiduciaries that have authority over plan assets. Plan fiduciaries generally are required by ERISA 404 to invest prudently and for the exclusive benefit of plan participants and beneficiaries. Additionally, ERISA generally prohibits plan fiduciaries from investing in or involving the plan or its assets in certain prohibited transactions or dealing with plan assets for the benefit of themselves or other third parties.

Because violations of ERISA’s fiduciary responsibility rules can create personal liability, employer and other plan sponsors, plan fiduciaries and others participating in decisions or administration of a rebate exercise care in dealing with any rebate. Many plan sponsors also may want to consider reviewing and tightening as warranted existing plan, trust, insurance policy, plan communications and other documentation to lower risks and promote desired characterization of rebates and other amounts paid into or with respect to their plans.

For Help or More Information

If you need help reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices or with other employee benefits, human resources, health care or insurance matters, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on leading health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

Comments Off on Plan Administrator Faces Civil & Criminal Prosecution For Allegedly Making Prohibited $3.2 Million Real Estate Investment | Employee Benefits, Employers, ERISA, Fiduciary Responsibility, Mental Health, Mental Health Parity, Retirement Plans, Tax | Tagged: 404, 406, ERISA, fiduciary liabiity, Fiduciary Responsibility, investment, investment advisor, plan administrator, prohibited transactions | Permalink
Posted by Cynthia Marcotte Stamer

Employee Plan Fee Disclosure Rules Clarified

May 22, 2012

The Department of Labor’s Employee Benefits Security Administration (EBSA) has made a technical correction to recently released participant-level fee disclosure regulation (29 CFR § 2550.404a-5) contained in Field Assistance Bulletin No. 2012-02 (Fab 2012-02) as initially released on May 7, 2012.

Fab 2012-02 contains frequently asked questions and answers about the Department’s participant-level fee disclosure regulation. As originally released a sentence in the answer to Question 19 concerning quarterly Web site updates to “average annual total return” information inadvertently referred to the most recently completed calendar “year” rather than the most recently completed calendar “quarter.”

In its technical correction of this provision on May 17, 2012, EBSA revised the Faq to track the regulation of the regulation amd re,pved the word “calendar”from the phrase “… 10-calendar year periods …” in the same sentence. See Q-19, n.2. The Fab as revised is available at: here.

For Help or More Information

If you need help reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices or with other employee benefits, human resources, health care or insurance matters, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on leading health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

Comments Off on Employee Plan Fee Disclosure Rules Clarified | Employee Benefits, Employers, ERISA, Fiduciary Responsibility, Health Plans, Mental Health, Mental Health Parity, Retirement Plans, Tax | Tagged: ERISA, fee disclosure, Fiduciary, participant fee disclosuyrenvestment-advisor, plan investiments, prohibited traansaction, Prudence | Permalink
Posted by Cynthia Marcotte Stamer

OIG: “Extremely High” Prescription Drug Retail Pharmacy Billings Warrant Tighter Medicare Part D Oversight & Controls

May 18, 2012

The Office of Inspector General (OIG) of the Department of Health & Human Services (HHS) is recommending a “strong response” to improve Medicare Part D oversight of retail pharmacy prescriptions by the Centers for Medicare & Medicaid Services (CMS) based on findings of a recent study. See here. OIG says that “extremely high” prescription drug billings by many retail pharmacies merit scrutiny under medical necessity or other grounds. In anticipation of tighter controls, retail pharmacies, as well as the physician and other providers prescribing medications for Medicare Part D participants should review and tighten prescribing and billing practices to position their actions to withstand anticipated challenge in response to the OIG recommendations.

Under the Medicare Part D program, CMS contracts with private insurance companies, known as sponsors, to provide prescription drug coverage to beneficiaries who choose to enroll. According to OIG, OIG has issued several reports that OIG has found that Part D had limited safeguards in place in the 6 years since Part D began.

In response to these concerns, OIG recently conducted a study based on an analysis of prescription drug event records. Sponsors submit these records to CMS for each drug dispensed to beneficiaries enrolled in their plans. Each record contains information about the pharmacy, prescriber, beneficiary, and drug. OIG analyzed all of the records for drugs billed by retail pharmacies in 2009 and developed eight measures to describe Part D billing and to identify pharmacies with questionable billing.

Based on this study, OIG reports that retail pharmacies each billed Part D an average of nearly $1 million for prescriptions in 2009. According to OIG, the study revealed “questionable billing” by more than 2,600 of these pharmacies. OIG reports that these pharmacies had ‘extremely high billing” for at least one of the eight measures developed and applied by OIG For example, many pharmacies billed what OIG characterized as “extremely high” dollar amounts or numbers of prescriptions per beneficiary or per prescriber. The Miami, Los Angeles, and Detroit areas were the most likely to have pharmacies with questionable billing.

Although OIG concedes that some of this billing may be legitimate, OIG believes that pharmacies that bill for extremely high amounts warrant further scrutiny The OIG report expresses concern that these high dollar prescription drug billings could mean that a pharmacy is billing for drugs that are not medically necessary or were never provided to the beneficiary.

Accordingly, OIG is recommending that CMS: (1) strengthen the Medicare Drug Integrity Contractor’s monitoring of pharmacies and ability to find pharmacies for further review, (2) provide additional guidance to sponsors on monitoring pharmacy billing, (3) require sponsors to refer potential fraud and abuse incidents that may warrant further investigation, (4) develop risk scores for pharmacies, (5) further strengthen its compliance plan audits, and (6) follow up on the pharmacies identified as having questionable billing. CMS concurred with four of the recommendations and partially concurred with the other two.

Private health plans and other payers are likely to check the study to decide whether it provides justification for closer scrutiny of prescription drug claims made to private payers.

Whether or not private health plans follow suit, retail pharmacies and other providers should expect that CMS will increase scrutiny and challenges of prescription drug charges submitted to Medicare Part D. Accordingly, retail pharmacies and the physician and other providers prescribing medications likely to be billed should tighten documentation and other procedures to defend against possible medical necessity and other challenges.

For Help or More Information

If you need help these or other concerns, please contact the author of this update, Cynthia Marcotte Stamer.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern Health Care and many other national and local publications. You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

For important information concerning this communication click here. THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TOU.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS. ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

[*] See 26 CFR 54.9815-2715, 29 CFR 2590.715-2715, and 45 CFR 147.200, published February 14, 2012 at 77 FR 8668.

[†] See FAQS About Affordable Care Act

Implementation (Part VIII) at http://www.dol.gov/ebsa/pdf/faq-aca8.pdf.

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Posted by Cynthia Marcotte Stamer

HHS OIG Finds The New York Hotel Trades Council and Hotel Association of New York City, Inc., Health Benefits Fund Reported Unallowable Costs on 2009 Medicare Cost Report

May 18, 2012

Health Plans taking in Medicare funds beware. The Department of Health & Human Services Office of Inspector General (OIG) is watching.

OIG says its audit of the New York Hotel Trades Council and Hotel Association of New York City, Inc., Health Benefits Fund (the Fund) found that the Fund improperly reported $237,000 in Medicare Part B costs that were not reasonable and allowable. According to OIG, the Fund reported that the Fund paid a total of $8.2 million for services provided to 3,180 plan members on its final 2009 cost report. Of this amount, the Fund included Medicare Part B costs totaling $237,000 Specifically, the OIG says the Fund reported costs for services to plan members that were not Medicare-eligible, costs for services that were billed to both the Fund and Medicare by contracted providers, and costs for services not eligible for Medicare reimbursement.

While the disallowed costs made up a relatively small percentage of the total costs paid by the Fund, the audit report is notable in that it shows the need for health plans to be prepared to defend costs submitted to Medicare against potential challenge by OIG or other federal oversight officials.

In a separate compliance review, OIG also recently reported that Indiana University Health generally complied with Medicare billing requirements for selected inpatient and outpatient claims. According to OIG, of 198 sampled claims, 35 selected inpatient and outpatient claims had errors, resulting in overpayments totaling $280,000 from October 2008 through September 2010. See here.

Health plans and their fiduciaries and sponsors need to keep in mind that Federal health care oversight and enforcement is not just about detecting provider misconduct. Federal officials also are watching the health plans. While both audits found substantial compliance, the occurrence of the audits itself merits mention. While OIG and other federal health program fraud and integrity oversight and enforcement activities against health care providers receive widespread attention, the conduct and results of these activities with regard to health plan often goes largely unremarked. The OIG reports show that federal officials also are scrutinizing health plans to make sure that Medicare, Medicaid or other program funds are not being improperly expended to or accessed by health plans. Accordingly, health plans receiving early retiree or other program subsidies, participating as Medicare Advantage plans, receiving subsidies or other federal funds, or coordinating benefits with these and other federal programs should prepare for possible federal review and, if applicable enforcement.

For Help or More Information

If you need help preparing to comply with reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern Health Care and many other national and local publications. You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

For important information concerning this communication click here. THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TOU.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS. ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

[*] See 26 CFR 54.9815-2715, 29 CFR 2590.715-2715, and 45 CFR 147.200, published February 14, 2012 at 77 FR 8668.

[†] See FAQS About Affordable Care Act

Implementation (Part VIII) at http://www.dol.gov/ebsa/pdf/faq-aca8.pdf.

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Posted by Cynthia Marcotte Stamer

Labor Department Annual Self-Insured Health Plan Report To Congress Released

May 3, 2012

The U.S. Department of Labor (Labor Department) submitted to Congress its 2012 Annual Report on Self-Insured Group Health Plans (2012 HP Report) today (May 4, 2012).

The 2012 HP Report is the second the Labor Department has prepared to comply with the requirement of Section 1253 of the Patient Protection and Affordable Care Act (the “Affordable Care Act”) that the Labor Secretart prepare an aggregate annual report that includes certain general information on self-insured group health plans using data collected from the Annual Return/Report of Employee Benefit Plan (the “Form 5500”), as well as certain data from financial filings of self-insured employers.

The Labor Department provided the the first report, Annual Report on Self-Insured Group Health Plans, March 2011 (March 2011 Report)to Congress in March 2011.

Section I of the 2012 HP Report presents aggregate statistics describing self-insured plans that file a Form 5500 – generally, private-sector employee health plans that cover 100 or more participants or hold assets in trust.

Section II of the 2012 HP Report presents certain available financial information on employers that sponsor such plans. Section III shares various Labor Department conclusions relating to the 2012 HP Report data.

Along with the 2012 HP Report, the Labor Department also included two additional documents as Appendixes:

Appendix A, Group Health Plans Report: Abstract of 2009 Form 5500 Annual Reports Reflecting Statistical Year Filings, provides detailed statistics describing group health plans that file a Form 5500; and
Appendix B, Self-Insured Health Benefit Plans 2012, presents a study that explores statistical issues associated with Form 5500 health plan data and analyzes available data on the financial status of employers that sponsor group health plans filing the Form 5500.

The 2012 HP Report shares and discusses various implications of statistics relating to practices and other elements of self-insured plans. Among other things, the 2012 HP Report indicates that Sponsors of self-insured plans generally bear the risk associated with paying their plans’ covered health expenses. In contrast, sponsors of fully-insured plans generally pay premiums to insurers and transfer all such risk to them. Some sponsors retain the risk for a subset of benefits, but transfer the risk for the remaining benefits to health insurers – that is, they finance their plans’ benefits using a mixture of self-insurance and insurance.

A complete copy of the Report is available for review here.

For Help or More Information

If you need additional information about Affordable Care Act or other help with reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern Health Care and many other national and local publications. You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

For important information concerning this communication click here. THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TOU.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS. ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

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Posted by Cynthia Marcotte Stamer

Brokerage Firm To Pay $630,000+ To Benefit Plans To Settle DOL Charges It Wrongfully Steered Clients To Investments

April 18, 2012

News that Memphis-based brokerage firm Morgan Keegan and Co., Inc. will pay more than $600,000 to settle charges it violated the Employee Retirement Income Security Act (ERISA) reminds employee benefit plan fiduciaries and brokerage or other providers of investment advice or services to employee benefit plans.

The Employee Benefit Security Administration (EBSA) announced April 16, 2012 that Morgan Keegan has agreed to pay $633,715.46 to 10 ERISA-covered pension plans to settle EBSA charges that it violated ERISA when it recommended certain hedge funds of funds as investments to its ERISA-covered employee benefit plan clients. These recommendations resulted in the hedge funds of funds paying Morgan Keegan revenue-sharing and other fees.

Following an investigation by EBSA’s Atlanta Regional Office as part of EBSA’s “Consultant/Adviser Project,” EBSA charged Morgan Keegan violated ERISA between April 2001 and November 2008 by accepting undisclosed compensation to steer employee benefit plan investments. The Consultant/Advisor Project focuses on the receipt of improper or undisclosed compensation by employee benefit plan consultants and other investment advisers.

Under the terms of the settlement, Morgan Keegan has agreed to disclose to its ERISA plans clients whether the company will act as a fiduciary to those plans. If the company is acting as a fiduciary, Morgan Keegan has agreed to specify the services that it is providing as a fiduciary and to provide the ERISA plan clients a description of all compensation and fees received, in any form, from any source, involving any investment or transaction related to them. Morgan Keegan also agrees not to collect commissions or, if it does collect them, to refund to its ERISA plans clients 100 percent of the amount collected from third parties.

Meanwhile, EBSA also increasingly has focused regulatory and enforcement attention on broker or other service provider arrangements involving compensation arrangements that might involve a brokerage or other fiduciary service provider in a conflict of interest in contravention of these ERISA duty of loyalty requirements.

ERISA Section 404 generally requires that plan fiduciaries act prudently and for the exclusive benefit of plan participants and beneficiaries when dealing with plan assets or conducting other plan related responsibilities.

As part of this general fiduciary duty, plan fiduciaries selecting service providers for the plan generally are required to conduct due diligence and prudently review the fees and other compensation received by a service provider. To help support the ability of plan fiduciaries to carry out these responsibilities, EBSA fee disclosure regulations also generally require plan consultants and investment advisors to disclose compensation they receive as a result of plan related transactions and activities.

Along side their fee disclosure obligations, where investment advisor and other service provider acts as employee benefit plan fiduciary, ERISA Section 404 also requires that service provider to conduct its duty prudently and “for the exclusive benefit” of the plans and their beneficiaries. Additionally, ERISA Section 406 generally prohibits plan fiduciaries and other parties in interest from acting for the benefit of a party other than the plan and from engaging in certain other enumerated “party-in-interest” transactions except in certain narrowly proscribed circumstances.

The Morgan Keegan investigation and settlement highlights the readiness of the EBSA to enforce these requirements against broker or other service providers who abuse these rules. “The law is very clear: If you accept a fee to give investment advice to a retirement plan, you are a fiduciary and must therefore act solely in the best interests of the participants in that plan,” said Phyllis C. Borzi, assistant secretary of labor for employee benefits security. “Third-party payments should never be the motivating factor behind which investments brokers and advisers steer retirement clients into.”

To mitigate liability risks arising from fee related violations like those charged against Morgan Keegan, employee benefit plan fiduciaries and brokerage other service providers to employee benefit plans should carefully review and update existing fee and other practices to ensure that the fee disclosure, fiduciary responsibility, prohibited transaction and other requirements of ERISA and other applicable federal law are met. Documented analysis should be conducted and retained to position the parties to demonstrate that the service provider and its fees were prudently determined and disclosed, and that the transaction is free from any prohibited conflicts of interests.

For Help or More Information

If you need help reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices or with other employee benefits, human resources, health care or insurance matters, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on leading health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

Comments Off on Brokerage Firm To Pay $630,000+ To Benefit Plans To Settle DOL Charges It Wrongfully Steered Clients To Investments | Employee Benefits, Employers, ERISA, Fiduciary Responsibility, Health Plans, Mental Health, Mental Health Parity, Retirement Plans, Tax | Tagged: ERISA, fee disclosure, Fiduciary, investment advisor, plan investiments, prohibited traansaction, Prudence | Permalink
Posted by Cynthia Marcotte Stamer

Small Employers Should Evaluate Eligibility For Small Business Health Care Tax Credit

March 14, 2012

Small employers that provide health insurance coverage to their employees should consider whether they qualify for and should claim the small business health care tax credit authorized by Congress as part of the Patient Protection and Affordable Care Act (Affordable Care Act).

The small business health care tax credit enacted two years ago may provide a tax credit for certain small employers that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for this credit. The credit is specifically targeted to help small businesses and tax-exempt organizations provide health insurance for their employees.

Depending upon how they are structured, eligible small employers are likely subject to one of the following three tax-filing deadlines, which fall in coming weeks:

March 15: Corporations that file on a calendar year basis can figure the credit on Form 8941 and claim it as part of the general business credit on Form 3800, both of which are attached to their corporate income tax return.
April 17: Individuals have until April 17 to complete and file their returns on Form 1040. This includes Sole proprietors, as well as people who have business income reported to them on Schedules K-1—partners in partnerships, S corporation shareholders and beneficiaries of estates and trusts. They also attach Forms 8941 and 3800 to their return. The resulting credit is entered on Form 1040 Line 53.
May 15: Tax-exempt organizations that file on a calendar year basis can use Form 8941 and then claim the credit on Form 990-T, Line 44f.

Taxpayers needing more time to determine eligibility might consider obtaining an automatic tax-filing extension, usually for six months. See Form 4868 for individuals, Form 7004 and its instructions for businesses and Form 8868 for tax-exempt organizations.

Businesses that have already filed and later find that they qualified in 2010 or 2011 can still claim the credit by filing an amended return for one or both years. Corporations use Form 1120X, individuals use Form 1040X and tax-exempt organizations use Form 990-T.

Some businesses and tax-exempt organizations that already locked into health insurance plan structures and contributions may not have had the opportunity to make any needed adjustments to qualify for the credit for 2010 or 2011. These employers can still make the necessary changes to their health insurance plans so they qualify to claim the credit on 2012 returns or in years beyond. Eligible small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014.

The recently-revamped Small Business Health Care Tax Credit page on IRS.gov provides additional information and resources designed to help small employers see if they qualify for the credit and then figure the amount of the credit, if any, that the employer qualifies to claim. These include a step-by-step guide for determining eligibility, examples of typical tax savings under various scenarios, answers to frequently-asked questions, a YouTube video and a webinar.

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 appeared in 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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Posted by Cynthia Marcotte Stamer

Health Plan BCBST To Pay $1.5 Million In 1st OCR Enforcement Action Prompted By HITECH Breach Report

March 13, 2012

Resolution Agreement Also 1^st Announced With Health Plan

Health plans and other covered entities beware and prepare! Health plans and other covered entities that report large breaches of unsecured protected health information to the Department of Health & Human Services (HHS) Office of Civil Rights and face potential civil monetary penalties (CMPs) for violating the Privacy & Security Rules of the Health Insurance Portability & Accountability Act of 1996 (HIPAA).

The HIPAA investigation and exposures to CMPs likely to result following the report of a large breach of unsecured protected health information is demonstrated by a new Resolution Agreement announced March 13, 2012 by OCR.

Blue Cross Blue Shield of Tennessee (BCBST) has agreed to pay the U.S. Department of Health and Human Services (HHS) $1,500,000 and to take certain other actions specified in a corrective action plan to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy and Security Rules. The BCBST Resolution Agreement is particularly significant, both as:

The first reported enforcement action directly resulting from the filing by a covered entity of a breach report required by the Health Information Technology for Economic and Clinical Health (HITECH) Act Breach Notification Rule; and
The first reported resolution agreement reached with a covered entity that is a health plan.

These notable enforcement firsts prove both the importance the HITECH Breach Notification Rule’s significance as an OCR HIPAA enforcement tool, and the readiness of OCR to sanction health plans that breach HIPAA’s Privacy or Security Rules.

The OCR investigation that lead to the BCBST settlement began in response to the submission by BCBST of a notice required under the Breach Notification Rule of the theft of 57 unencrypted computer hard drives from a leased facility in Tennessee, which contained the protected health information (PHI) of over 1 million individuals. Read more details here.

The Breach Notification Rule requires covered entities to report an impermissible use or disclosure of protected health information, or a “breach,” of 500 individuals or more to HHS and the media as well as an annual consolidated report of smaller breeches to HHS.[1]

To resolve being officially sanctioned for HIPAA violations stemming from these findings under the strengthened enforcement rules and sanctions enacted as part of the HITECH Act, BCBST has agreed to pay $1,500,000 and adopt other corrective actions detailed in a corrective action plan.

Enforcement Actions Highlight Growing HIPAA Exposures For Covered Entities

The BCBST Resolution Agreements, like the 1^st-ever $4.3 million HIPAA CMP that OCR imposed against Cignet Health of Prince George’s County, Md. (Cignet) in 2011 and a series of high dollar Resolution Agreements OCR has announced against various health care providers over the past few years highlight the significance of the HITECH Act amendments to HIPAA’s enforcement and CMP rules, as well as use of its Breach Notification Rule as a tool in OCR’s investigation and enforcement efforts.

“This settlement sends an important message that OCR expects health plans and health care providers to have in place a carefully designed, delivered, and monitored HIPAA compliance program,” said OCR Director Leon Rodriguez. “The HITECH Breach Notification Rule is an important enforcement tool and OCR will continue to vigorously protect patients’ right to private and secure health information.”

BCBST’s breach notification report clearly prompted the investigation that lead to the Resolution Agreement. The opening of the investigation in response to the BCBST Breach Notification report reflects the need for covered entities to be prepared to respond to an investigation when these reports are made. OCR officials previously have stated that it is the practice of OCR to conduct an investigation into all breaches of the protected health information of 500 individuals or more reported to it under the Breach Notification Rule.

The BCBST Resolution Agreement provides yet another reminder to covered entities and their business associates of the need to carefully and appropriately manage their HIPAA responsibilities. See HIPAA Heats Up: HITECH Act Changes Take Effect & OCR Begins Posting Names, Other Details Of Unsecured PHI Breach Reports On Website. Covered entities are urged to heed these warning by strengthening their HIPAA compliance and adopting other suitable safeguards to minimize HIPAA exposures. For more tips, see here.

[1] The Breach Notification Rule also requires that covered entities report smaller breaches annually to OCR as part of a consolidated disclosure.

For Help or More Information

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

Comments Off on Health Plan BCBST To Pay $1.5 Million In 1st OCR Enforcement Action Prompted By HITECH Breach Report | Claims Administration, Employee Benefits, Employers, ERISA, Health Plans, Mental Health, Mental Health Parity, Retirement Plans, Tax | Tagged: 36B, Affordable Care Act, exchanges, group health plan, health care exchanges, Health Insurance, Health Plans, HIPAA, Mental Health Benefits, Mental Health Parity, Patient Empowerment, premium subsidies, Substance Abuse Benefits | Permalink
Posted by Cynthia Marcotte Stamer

HHS Chides Trustmark Life Insurance Company For “Excessive” Health Premium Increases After Affordable Care Act Rate Audit

January 12, 2012

Trustmark Life Insurance Company is the latest health insurance issuer coming under fire from the Department of Health & Human Services (HHS) for making what HHS views as “unreasonable” health insurance premium increases under its new “rate review” powers created by the Patient Protection & Affordable Care Act (Affordable Care Act).

HHS Secretary Kathleen Sebelius announced today (January 12, 2012) HHS considers to be unreasonable premium rate increases proposed by Trustmark Life Insurance Company in five states—Alabama, Arizona, Pennsylvania, Virginia, and Wyoming. According to HHS, the allegedly excessive rate hikes would affect nearly 10,000 residents across these five states.

According to HHS, a review of the health insurance premium disclosures filed by Trustmark Life Insurance Company here found that Trustmark has raised rates by 13 percent in these five states. For small businesses in Alabama and Arizona, when combined with other rate hikes made over the last 12 months, HHS claims rates have increased by 27.2 percent and 18.1 percent, respectively. According to HHS, HHS says that an independent review engaged by HHS found that the rate increases were unreasonable because the insurer “would be spending a low percent of premium dollars on actual medical care and quality improvements, and because the justifications were based on unreasonable assumptions.” HHS is calling upon Trustmark Health Insurance Company to rescind the rates and issue rebates to consumers or publically explain its refusal to do so. The new rate review procedures allow Trustmark Health Insurance Company and other carriers accused by HHS of making unreasonable rate increases various options to dispute the charges

The rate review and reduction demand by HHS reflects its efforts to use its “rate review” authority from the Affordable Care Act to discourage health insurers from raising health insurance premiums by more than 10 percent. HHS requires health insurers to notify HHS of rate increases over 10 percent and justify these increases. HHS generally views health insurance premium increases of more than 10 percent as unreasonable. Under these new rate review powers,

Under the new rate review rules, HHS has the power to review proposed rate reviews and to report its findings but does not have the direct authority to force health insurers to limit premium increases to less than 10 percent or to impose legal or administrative sanctions directly against insurers for making what HHS views as unreasonable premium increases. However, as many as 37 states have the authority to regulate or reject unreasonable premium increases. In the absence of direct authority to regulate insurer rates, HHS uses its ability to publicize its rate review determinations to invite state regulators and the public to apply pressure to insurers to keep down rate increases.

In today’s announcement, HHS credits its new rate review powers with helping to prevent health insurance premium increases, According to HHS, states with the power to regulate insurer premiums increasingly are using this authority. Examples of how states have used this authority include:

In New Mexico, the state insurance division denied a request from Presbyterian Healthcare for a 9.7 percent rate hike, lowering it to 4.7 percent;
In Connecticut, the state stopped Anthem Blue Cross Blue Shield, the state’s largest insurer, from hiking rates by a proposed 12.9 percent, instead limiting it to a 3.9 percent increase;
In Oregon, the state denied a proposed 22.1 percent rate hike by Regence, limiting it to 12.8 percent.
In New York, the state denied rate increases from Emblem, Oxford, and Aetna that averaged 12.7 percent, instead holding them to an 8.2 percent increase.
In Rhode Island, the state denied rate hikes from United Healthcare of New England ranging from 18 to 20.1 percent, instead seeing them cut to 9.6 to 10.6 percent.
In Pennsylvania, the state held Highmark to rate hikes ranging from 4.9 to 8.3 percent, down from 9.9 percent.

Targeting health insurers proposing rate increases of 10 or more percent is likely to result in a significant number of reviews. A Kaiser Family Foundation Employer Health Benefits 2011 Annual Survey found average premiums increased 8% for single coverage and 9% for family coverage through May, 2011.

Companies that HHS finds have made excessive rate increases can either reduce their rate hikes or post a justification on their website within 10 days of the rate review determination.

For More Information Or Assistance

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

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Posted by Cynthia Marcotte Stamer

Portion of Health Care Costs Paid By Government Programs Rose As Employer Provided & Other Private Health Care Coverage Declined In 2010

January 9, 2012

Declining enrollment in private insurance resulted in continuing growth in government financing of health care expenditures in 2010 according to the Annual Report of National Health Expenditures (Report). The Report notes that since 2007, the economic recession and legislative changes led to a noticeable change in the shares of health care spending financed by businesses, households, and governments.

The federal government financed 29 percent of the nation’s health care spending in 2010, an increase of six percentage points from its share in 2007 of 23 percent, and reached $742.7 billion. Part of that increase came from enhanced Federal matching funds for State Medicaid programs under the American Recovery & Reinvestment Act which expired in 2011.

U.S. health care spending grew 3.9 percent in 2010 to $2.6 trillion or $8,402 per person according to the Report. Review the details of the Report here.

National Health Expenditures 2010 Highlights

U.S. health care spending grew 3.9 percent in 2010. Coupled with record slow growth of 3.8 percent in 2009; the 2009-2010 represents the two slowest rates of growth in the fifty-one year history of the National Health Expenditure Accounts. The Report reflects the following breakdown of these expenditures;

Hospital Care: Hospital spending increased 4.9 percent to $814.0 billion in 2010 compared to 6.4-percent growth in 2009. Average annual growth in hospital spending between 2007 and 2010 was 5.5 percent. CMS reports this increase was slower than the trend between 2003 and 2006, when spending increased an average of 7.4 percent per year. Growth in private health insurance spending for hospital services, which in 2010 accounted for 35 percent of all hospital care, slowed considerably in 2010. The Report states that these trends occurred at the same time median inpatient hospital admissions declined and emergency department and outpatient hospital visits grew more slowly than in 2009.
Physician and Clinical Services: Spending on physician and clinical services increased 2.5 percent in 2010 to $515.5 billion, a deceleration from 3.3-percent growth in 2009. The 2010 deceleration reflects a decline in utilization, driven by a drop in total physician visits between 2009 and 2010 and a less severe flu season than in 2009.
Other Professional Services: Spending for other professional services, which includes providers of services such as physical therapy, chiropractic medicine, and mental health, decelerated slightly in 2010, increasing 3.6 percent to $68.4 billion after growth of 3.8 percent in 2009.
Dental Services: Spending for dental services increased 2.3 percent in 2010 to $104.8 billion compared to growth of only 0.1 percent in 2009. Out-of-pocket spending for dental services (which accounts for over 40 percent of dental spending) increased 0.5 percent in 2010 following a decline of 5.2 percent in 2009.
Other Health, Residential, and Personal Care Services: Spending for other health, residential, and personal care services grew 5.3 percent in 2010 to $128.5 billion, a deceleration from growth of 7.7 percent in 2009. This category includes expenditures for medical services delivered in non-traditional settings (such as schools or community centers), ambulance providers, and residential mental health and substance abuse facilities.
Home Health Care: Spending growth for freestanding home health care services slowed in 2010, increasing 6.2 percent to $70.2 billion following growth of 7.5 percent in 2009, as Medicare and Medicaid spending growth slowed in 2010.
Nursing Care Facilities and Continuing Care Retirement Communities: Spending for freestanding nursing care facilities and continuing care retirement communities increased 3.2 percent in 2010 to $143.1 billion, a deceleration from growth of 4.5 percent in 2009, driven by slower growth in Medicare and Medicaid spending.
Prescription Drugs: Retail prescription drug spending grew only 1.2 percent to $259.1 billion in 2010, a substantial slowdown from 5.1-percent growth in 2009. The slowdown was driven by slower growth in the volume of drugs consumed, a continued increase in the use of generic medications, loss of patent protection for certain brand name drugs, fewer new drug introductions, and a substantial increase in Medicaid prescription drug rebates.
Durable Medical Equipment: Spending for durable medical equipment, which includes items such as eyeglasses, contacts and hearing aids, increased 7.3 percent to $37.7 billion in 2010 after increasing 0.8 percent in 2009.
Other Non-durable Medical Products: Spending for other non-durable medical products, such as over-the-counter medicines, reached $44.8 billion, an increase of 2.6 percent in 2010, the same rate of growth as in 2009.

Health Spending by Major Sources of Funds

The Report indicates that the portion of health care expenditures financed by private health insurance continued to decline as private health plan enrollment declined. As a result, the proportion of health care expenditures paid by government programs continued to rise. The federal government financed 29 percent of total health spending in 2010, a substantial increase from its share of 23 percent in 2007. Meanwhile, the shares of the total health care bill financed by state and local governments (16 percent), private businesses (21 percent), and households (28 percent) declined during the same time period. Specifically, the Report indicates the following:

Medicare: Medicare spending grew 5.0 percent in 2010 to $524.6 billion, a deceleration from growth of 7.0 percent in 2009. Spending for fee-for-service (FFS) Medicare grew 5.0 percent in 2010 following growth of 4.5 percent in 2009. Medicare Advantage (MA) spending increased 4.7 percent in 2010, a steep deceleration from 15.6-percent growth in 2009 that resulted from an adjustment to payment rates in 2010.
Medicaid: Total Medicaid spending grew 7.2 percent in 2010 to $401.4 billion, a deceleration from 8.9-percent growth in 2009, driven primarily by slower growth in enrollment. Federal Medicaid expenditures increased 8.9 percent, while state Medicaid expenditures grew 3.9 percent. This difference in growth was due to approximately $41 billion in enhanced federal aid to states—a result of increased Federal Medical Assistance Percentages (FMAP) mandated by the American Recovery and Reinvestment Act of 2009 (ARRA).
Private Health Insurance: Growth in total spending for private health insurance premiums slowed in 2010 to 2.4 percent from 2.6 percent in 2009, continuing a deceleration that began in 2003. Growth in aggregate benefit payments also slowed, from 3.7 percent in 2009 to 1.6 percent in 2010. The slowdown reflects a decline in private health insurance enrollment, increases in cost sharing, and a shift by some consumers to plans with lower premiums. However, for the first time in seven years, growth in total premiums exceeded growth in total benefits; as a result, the private health insurance net cost ratio increased from 11.4 percent in 2009 to 12.1 percent in 2010.
Out-of-Pocket: Out-of-pocket spending grew 1.8 percent in 2010, an acceleration from growth of 0.2 percent in 2009. Faster growth in 2010 partially reflects higher cost-sharing requirements for some employers, consumers’ switching to plans with lower premiums and higher deductibles and/or copayments, and the continued loss of health insurance coverage.

The Report found household health care spending equaled $725.5 billion in 2010 and represented 28 percent of total health spending, slightly lower than its 29 percent share in 2007. Growth in total private health insurance premiums slowed in 2010 to 2.4 percent from 2.6 percent in 2009, continuing a slowdown that began in 2003. Despite this deceleration, for the first time in seven years, the growth in premiums exceeded the growth in insurer spending on health care benefits, with the net cost of insurance increasing by 8.4 percent or $11.3 billion in 2010. Out-of-pocket spending by consumers increased 1.8 percent in 2010, accelerating from 0.2-percent growth in 2009.

The state and local government share of total health spending declined from 18 percent in 2007 to 16 percent in 2010 and totaled $421.1 billion, in part due to the temporary assistance in the Recovery Act.

Project COPE: Coalition On Patient Empowerment & Coalition For Responsible Health Care Quality

For Help or More Information

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

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Posted by Cynthia Marcotte Stamer

Senator Tells IRS To Fix Proposed Health Care Exchange Premium Tax Credit Regulations

December 16, 2011

U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, says the premium subsidy provisions of the Patient Protection & Affordable Care act (Affordable Care Act) does not authorize the Internal Revenue Service (IRS) to allow individuals purchasing coverage through a federal health insurance exchange to receive the tax credits and subsidies authorized under new Internal Revenue Code § 36B to offset the cost of being mandated to buy health insurance created under Affordable Care Act Section 1311.

As created under the Affordable Care Act, Internal Revenue Code (Code) § 36B grates a refundable tax credit for certain individuals purchasing qualifying health insurance coverage from a qualified health plan. According to Senator Hatch, IRS proposed regulations here to implement Code § 36B would violate its provisions by allowing individuals that buy coverage through federal exchanges to claim premium tax credits because the express language of the statute only calls for amounts paid for coverage from “State” exchanges to count when calculating the amount of the credit. Read more details here.

For Help or More Information

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

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Posted by Cynthia Marcotte Stamer

IRS Urges Preparers to Renew PTINs for 2012

December 15, 2011

The Internal Revenue Service is reminding tax return preparers to renew their Preparer Tax Identification Numbers (PTINs) before year’s end. All 2011 PTINs will expire on Dececember 31 and must be renewed annually. Tax preparers can renew by loging in here. The fee to renew is $63.

According to the IRS, preparers who applied for PTINs using a paper Form W-12 last year are encouraged to renew online. An activation code and instructions were mailed to each paper applicant for this purpose. Individuals who prefer to renew their PTIN on paper must mail a Form W-12, IRS Paid Preparer Tax Identification Number Application and Renewal. The response time is 4 to 6 weeks.

Tips about dealing with password or other issues are available on the PTIN page here.

For Help or More Information

If you need help reviewing, updating, administering or defending your fringe benefit or other employee benefit, compensation or human resources practices, please contact the author of this update, Cynthia Marcotte Stamer.

Recently selected for induction as a Fellow in the American College of Employee Benefit Council and for extensive work and accomplishments in the employee benefits and human resources area, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to watch legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

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Posted by Cynthia Marcotte Stamer

New Guidance On Fiduciary Duties In Handling ACA Group Health Plan Premium Rebates Highlight Advisability Of Tightening Funding Terms & Fund Handling Practices To Manage Fiduciary Risks

December 13, 2011

Group health plan sponsors and fiduciaries need to exercise care to properly handle any premium rebates, if any, received by from insurers to comply with the medical loss ratio rules enacted as part of the Patient Protection and Affordable Care Act (Affordable Care Act) to avoid violating the plan assets and other fiduciary responsibility rules of the Employee Retirement Income Security Act of 1974 (ERISA), according to Technical Release No. 2011-04, Technical Release on Fiduciary Requirements for Handling Medical Loss Ratio (MLR) Rebates (“Technical Release”) published December 2, 2011.

As amended by the Affordable Care, Section 2718 of the Public Health Service Act (PHSA) requires that health insurance issuers:

Publicly report on major categories of spending of policyholder premium dollars, such as clinical services provided to enrollees and activities that will improve health care quality;
Establishes medical loss ratio (MLR) standards for issuers; and
Requires issuers to provide rebates to enrollees when their spending for the benefit of policyholders on reimbursement for clinical services and health care quality improving activities, in relation to the premiums charged (as adjusted for taxes), is less than the MLR standards.

Employers or other sponsors that are group policyholders on insurance contracts covered by the MLR rules are likely to receive any rebates due because Department of Health and Human Services (HHS) final regulations implementing these MLR requirements published December 7, 2011 require issuers to pay any MLR rebates “to the policyholder.”

In anticipation insurers’ payment of these rebates, the Employee Benefit Security Administration (EBSA) is cautioning employers and other ERISA-covered group health plan sponsors and plan fiduciaries that premium rebates received from an insurer pursuant to these HHS MLB regulations may be plan assets required to be handled in accordance with ERISA’s plan assets and other fiduciary responsibility rules.

In the December 2, 2011 Technical Release, EBSA reminds plan sponsors and fiduciaries that premium rebates distributed pursuant to the Affordable Care Act’s MLR standards with respect to a group health plan are likely to be plan assets protected by ERISA’s fiduciary responsibility rules. Accordingly, the Technical Release cautions that plan sponsors or other parties receiving or exercising discretion over the rebated amounts that are ERISA plan assets generally should see that rebated amounts are handled in accordance with the fiduciary responsibility and trust requirements generally applicable to ERISA plan assets.

Determination whether the premium rebate is a plan asset generally requires a careful evaluation of whether the plan has a beneficial interest in the rebate and certain other factors. According to the Technical Release, a distribution such as the rebate to a group health plan will be a plan asset if the plan has a beneficial interest in the distribution under ordinary notions of property rights. While the identity of the policyholder – the employer or other plan sponsor versus a trust or plan – is one important consideration, the Technical Release warns that this is not the only factor.

The Technical Release says the fact that the employer is the policyholder or the owner of the policy would not, by itself, indicate that the employer may retain the distributions. Rather, determining who is entitled to the distribution requires careful analysis of a broad range of factors including:

The terms of the governing plan documents;
The funding sources of the policy;
The parties’ understandings and representations; and
Other relevant facts and circumstances.

If the rebate is an ERISA plan asset, employers or others receiving a premium rebate payment and others with discretion over the use and handling of the rebate should take steps to ensure that they can demonstrate the rebate is handled and expended in accordance with ERISA’s fiduciary responsibility requirements. Among other things, this means that rebated amounts should be:

Held in trust unless the plan fiduciaries verify that an exception applies;
Used only for the exclusive purpose of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan;
Handled in accordance with the fiduciary responsibility provisions of ERISA section 404 and the prohibited transaction provisions of ERISA section 406;
Held in trust in accordance with ERISA section 403; and
Not allowed to inure to the benefit of any employer.

The Technical Release reminds plan sponsors and administrators that if the rebate is a plan asset, decisions about and actions taken to deposit in trust, allocate, apply, spend and other aspects of handling the plan’s portion of a rebate generally are subject to ERISA’s general standards of fiduciary conduct, prohibited transaction and trust requirements. The Technical Release also provides guidance about allocation of the rebate under certain circumstances and certain other questions that are likely to arise in connection with the receipt of a rebate. Insurers, brokers, consultants and others working with employers or other plan sponsors, administrators, or fiduciaries who may receive a rebate or otherwise involved in making funding decisions also may want to discuss the guidance and other fiduciary responsibility rules with their clients to help promote understanding and compliance.

For Help or More Information

If you need help reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices or with other employee benefits, human resources, health care or insurance matters, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on leading health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

Comments Off on New Guidance On Fiduciary Duties In Handling ACA Group Health Plan Premium Rebates Highlight Advisability Of Tightening Funding Terms & Fund Handling Practices To Manage Fiduciary Risks | Claims Administration, Employee Benefits, Employers, ERISA, Health Plans, Mental Health, Mental Health Parity, Retirement Plans, Tax | Tagged: ADA, Affordable Care Act, Fiduciary Responsibility, group health plan, Health Insurance, Health Plans, HIPAA, Mental Health Benefits, Mental Health Parity, Substance Abuse Benefits | Permalink
Posted by Cynthia Marcotte Stamer

Mental Health Parity Guidance On Mental Health & Substance Abuse Copays, Utilization Management Limits Released

December 7, 2011

The U.S. Departments of Health and Human Services (HHS), Labor and the Treasury (the Departments) on November 17, 2011 published additional FAQs that share insights on how the MHPAEA requirements impact certain common copayments and utilization review arrangements historically used by plans and insurers. The new FAQ guidance here provides additional clarification about the meaning of the interim final rules implementing MHPAEA the Departments jointly issued on February 2, 2010, and previous FAQ guidance published on June 30, 2010 and December 22, 2010 as applied to these practices.

For group health insurers and group health plans subject to its provisions, MHPAEA generally requires that insurer or plan:

Cannot impose financial requirements and treatment limitations on mental health and substance use disorder benefits that are more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits; and
Cannot impose separate financial requirements or treatment limitations that are applicable only to mental health or substance use disorder benefits.

The new FAQs share the Departments joint response to questions about their interpretation of the interim final rules on nonquantitative treatment limitations in various respects. Among other things, the new FAQs reflect:

The new FAQs respond to various questions about the effect of the MHPAEA on various medical necessity and other utilization management practices that health plans and health insurers historically have applied mental health and substance abuse coverage’s.

The FAQs generally reaffirm that group health plans and health insurers generally cannot apply stricter medical necessity or other utilization review for mental health or substance abuse treatments than the prevailing requirements generally applicable to medical surgical benefits under the plan or policy.

The FAQ also provides insight into evidence that health insurers or health plan sponsors should consider and retain when designing fraud control or other medical management techniques to be defensible under the MHPAEA’s parity requirements.

Furthermore, the new FAQs also provide guidance about the viability and use of differences in clinical standards of care, length of stay, and other clinical standards to justify differences in the periods of coverage provided for mental and substance abuse coverage versus other types of treatments.

Finally, the FAQs also address when a group health plan or health insurer can require covered persons to pay a higher specialist copayment for mental health or substance abuse treatments than generally applies to care rendered to a non-specialist.

For Help or More Information

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

Comments Off on Mental Health Parity Guidance On Mental Health & Substance Abuse Copays, Utilization Management Limits Released | Claims Administration, Employee Benefits, Employers, ERISA, Health Plans, Mental Health, Mental Health Parity, Retirement Plans, Tax | Tagged: ADA, Affordable Care Act, group health plan, Health Insurance, Health Plans, HIPAA, Mental Health Benefits, Mental Health Parity, Substance Abuse Benefits | Permalink
Posted by Cynthia Marcotte Stamer

Group Health Plans & Insurer To Get More Time To Meet Affordable Care Act Summary of Benefits and Coverage Requirements

December 7, 2011

Delayed Deadline Allows Much Needed Time To Continue Preparations

Group health plans and insurers, their sponsors, fiduciaries, administrators and other services providers are getting more time to comply with the Affordable Care Act’s new Summary of Benefits and Coverage (“SBC”) mandate beyond the March 23, 2012 deadline originally set forth in the Proposed Regulations jointly published by the U.S. Departments of Health and Human Services (HHS), Labor and the Treasury (the Departments). Plans, their insurers and administrators should make good use of this time to continue the time consuming planning and preparations expected to be required to comply with the final rules.

As amended by the Affordable Care Act, Public Health Service Act (“PHS Act”) § 2715 PHS requires group health plans and health insurance issuers to provide a “Summary of Benefits and Coverage” and “Uniform Glossary” meeting standards developed by the Departments.

In August, 2011, the Departments jointly published proposed regulations and accompanying templates detailing the content, format, supplements and other requirements that they proposed requiring health plans and health insurers to meet to satisfy the SBC requirements.

If implemented in final form as proposed, group health plans and insurers, their sponsors, administrators and fiduciaries can expect that significant work will be required to evaluate and prepare the SBC and associated adjustments to plan documents, summary plan descriptions and other materials and practices that are likely to be required in response to the new requirements. Since health plan documents and insurance contracts are unlikely to already use the same definitions as the SBC regulations require be used in the Glossary, group health insurers and self-insured group health plans, their sponsors, fiduciaries and other administrators generally will want to review and adjust definitions and other plan document and insurance cotnract provisions to eliminate inconsistencies and address other concerns. Likewise, adjustments to summary plan descriptions, certificates of benefits and other communication materials also likely will be needed. Furthermore, most health insurers and group health plan may want to reevaluate claims and other cost and reserve projections and consider other adjustments in response to potential implications of these adjustments.

As originally proposed by the Departments, health plans and issuers faced a March 23, 2012 deadline to begin complying with the SBC rules. Since August, 2011, we and various other attorneys from the American Bar Association RPTE and Tax leadership, as well as others have shared concerns with representatives of the Departments about the compliance deadlines and other aspects of the Proposed Rules. New guidance released by the Departments in November reflects that the Departments are taking this input to heart.

According to joint guidance issued by the Departments in November, the health plans and insurers will not be expected to comply by March 23. Frequently Asked Question (FAQ) guidance jointly issued by the Departments indicates that health plans and health insurers will not be required to comply with the SBC mandate until after the Departments issue finalize regulations.

According to the FAQ, the Departments’ final regulations, once issued, will include an applicability date that allows group health plans and health insurance issuers “sufficient time to comply.” The FAQ does not indicate when the Departments expect to publish final regulations or the length of the period following this publication that the Departments anticipate health plans and issuers will have to come into compliance.

This news provides welcome relief for group health plans and insurers, and the employers, administrators and others working to update and administer group health plans in response to the Affordable Care Act. Health plans, insurers, their sponsors, administrators and service providers are cautioned to make good use of this added time to begin preparing to respond quickly when regulations are finalized. While the Departments are expected to make various refinements when finalizing the regulations beyond adjusting the compliance deadline, plans and insurers are expected to be required to engage in significant planning and other preparations to meet the revised rules. In light of this, health insurers and group health plans, their sponsors, administrators and fiduciaries generally are advised to continue these preparations based upoln the guidance set forth in the proposed regulations so that they can be prepared to respond in a timely fashion to the final regulations.

For Help or More Information

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

About Solutions Law Press

Comments Off on Group Health Plans & Insurer To Get More Time To Meet Affordable Care Act Summary of Benefits and Coverage Requirements | 105(h), Affordable Care Act, CHIP, COBRA, Employee Benefits, Employers, Employment Tax, ERISA, Excise Tax, Fiduciary Responsibility, FMLA, Health Care Reform, Health Plans, HIPAA, Human Resources, Income Tax, Insurance, Malpractice, Medicare Part D, Mental Health, Mental Health Parity, Patient Empowerment, Patient Protection and Affordable Care Act, Payroll Tax, Preemption, Prescription Drugs, Protected Health Information, Reporting & Disclosure, Tax Credit, Wellness Programs | Tagged: Affordable Care Act, Employee Benefits, employee benefits policy, Employer, Health Care Reform, Health Insurance, health issuer, Health Plans, health premiums, instruction, Insurance, Insurer, speech, Speeches, Training, WEB | Permalink
Posted by Cynthia Marcotte Stamer

CMS Final Medicare Rule Imposes Many Conditions On Access To Medicare Claims Data To Evaluate Providers & Suppliers

December 6, 2011

Final Rules Make Direct Access To Data By All But Most Sophisticated Impossible

The Centers For Medicare & Medicaid Services (“CMS”) says disclosures of certain Medicare provider and supplier claims performance data scheduled to begin in January will empower employers, health plans and consumers to better evaluate the quality of these health care providers and suppliers.

CMS plans to begin sharing certain Medicare parts A, B and D provider claims data with “qualifying entities” that can demonstrate the necessary experience and qualifications for use in assisting employers, health plans and others to evaluate the performance of providers and suppliers. CMS also will generate public reports about this performance data for purposes of aiding employers, consumers and others in evaluating the quality for provider or suppliers.

The disclosures will be made in response to Section 10332 of the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010 (collectively the “Affordable Care Act”). Section 10332 generally requires CMS make available this Medicare data to “qualifying entities” for use in conjunction with other claims data to evaluate provider performance effective January 1, 2012.

The new Final Rule on Availability of Medicare Data for Performance Measurement (“Final Rule”) available for review here establishes detailed requirements about who, when and under what conditions that Medicare will allow qualifying entities to obtain and use certain standardized extracts of Medicare Parts A, B, and D provider and supplier performance data in conjunction with other claims data to evaluate provider and supplier performance pursuant to Section 10332. The Final Rule also discusses privacy requirements that qualifying entities must meet when handling this data. scheduled for official publication in the December 7, 2011 Federal Register

The disclosure of provider performance data is intended to provide greater transparency to employers, health plans, consumers and other parties in evaluating health care provider and supplier quality. To access this information, however, entities will have to comply with detailed requirements. Complicated restrictions included in the Final Rules make it likely that only sophisticated health plans and service providers will be able to directly access and use the provider and supplier data intended to be made available under the Final Rule, however.

As implemented under the Final Rule, entities wishing to access the provider or supplier claims data will be required to meet detailed qualification and other requirements. For instance, among other things, the Final Rule generally only allows an entity to access and use the provider data if it is an entity or business contractor to an entity that:

CMS determines is an entity eligible to obtain the provider data under the eligibility criteria set forth in the Final Rule;
Apply to obtain the provider data under the Final Rule for an allowed purpose in accordance with a demonstrated plan as required by the Final Rules;
Meet a detailed list of requirements demonstrating that it has the experience, governance, policies, procedures and other required qualifications specified in the Final Rules to qualify to obtain and use the provider data;
Pays the required fee;
Comply with annual reporting and other reporting and monitoring requirements;
Comply with the specific requirements of the Final Rules concerning the protection of the privacy of accessed data;
Agree to meet the requirements described in the Final Rules; and
Otherwise comply with all other applicable requirements of the Final Rule.

Entities accessing the information also will be monitored and subject to sanction for failing to comply with the Final Rule in using or handling the provider performance data once it is received. Once an entity is allowed to access the provider claims data, the Final Rules specify that CMS will monitor and assess the performance of qualified entities and their contractors through audits, review of data source documentation and data as requested by CMS; site visits; review of data reported by the qualified entity as part of required annual reporting and other reporting requirements set forth in the Final Rule; analysis of complaints from beneficiaries and/or providers or suppliers. If CMS determines that a qualified entity has breached any of these requirements, it may warn; require a corrective action plan (“CAP”); place the qualified entity on a special monitoring plan; or terminate the qualified entity from participation in the program in accordance with the Final Rules.

Health plans, employers, and other entities desiring to access or use this information will need to exercise care when applying to obtain and handling the data to ensure that all requirements are met. To ensure that these requirements are met, parties interested in obtaining these rules should seek assistance from competent counsel and other qualified advisors concerning their proposed application and use of this data.

In light of these and other conditions for accessing and using this information, only a very limited of very sophisticated health plans, employers or other entities or their advisors are likely to apply to or qualify to access and use the provider and supplier claims data as contemplated by the rule. Individual consumers, and most employers generally will only benefit from the new access allowed to this data indirectly, by accessing the analysis of these entities.

For Help or More Information

If you need help responding to this new guidance or otherwise to deal with other health plan or insurance, employee benefit, human resources, compensation, health care matters or related matters, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with health and managed care, insurance and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend insured and self-insured medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. She also has worked extensively with Medicare and Medicaid Advantage, association, employer and other group insurance arrangements, MEWAs, fraternal benefit and mutual aid programs, government programs, and a broad range of other specialized health and other programs and insurers to design and administer arrangements in response to their unique regulatory and operational needs. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:

You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here. For important information concerning this communication click here.

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Posted by Cynthia Marcotte Stamer

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