Plan Administrators Need to Identify all Responsibilities and Liabilities of Contraception Coverage Mandate
With today being the start date for plans to begin providing contraception coverage to plan participants, it’s important that all administrators of self-insured, “exempted” plans be fully-aware of what their responsibilities and liabilities are in such situations. As part of the PPACA, plans are mandated to cover preventative services on a first-dollar basis. Regulators recently released guidance stating that contraception coverage is to be considered a preventative service in regards to this provision. Earlier this year, the Administration released a Proposed Rule which granted exemptions to certain religious-based organizations from having to provide such coverage as part of their plan; however, participants in these plans would still be able to receive such services. The Rule stipulated that for participants in exempted plans whose sponsors fully-insure their coverage, the financial obligation would be levied on the fully-insured carrier. For participants of exempted plans whose sponsor self-insures, the Rule obligates TPAs to provide the coverage.
Specifically, the TPA for a plan sponsored by an exempted entity is responsible for covering the cost of the mandated contraception coverage. The TPA is not permitted to bill the plan, but the Rule lays out certain funding sources a TPA may use to provide the coverage, including; drug rebates, service fees or credits against mandated fees. The Rule also would allow a TPA to separately arrange contraception coverage through an insurer.
At each stage of the rule-making process, SIIA’s Government Relations Staff has communicated with senior regulators as to the many practical and legal problems such a requirement on TPAs would have. Staff has also been invited to meet with a number of high-level Capitol Hill policy-makers and was even requested to draft a talking points paper on the areas we identified as problematic.
As part of our officially submitted comments on the subject, SIIA classified a number of reasons why this requirement on TPAs is unworkable. First, that coverage of contraception services by the TPA would be constituted as a prohibited transaction under ERISA as it would not be approved by the plan-sponsor. Also highlighted is that TPAs may not use any secured rebates to fund the services as the rebates belong directly to the plan-sponsor and not to the TPA. Lastly, that a TPA is limited to plan administration and not claims payment.
While SIIA will continue to lobby the relevant Agencies as to the many problems this mandate will have for TPAs, as of today, all plan administrators who provide services to exempted plan-sponsors must be acutely aware of what their responsibilities and liabilities are. For further details about the Rule’s specific provisions or for help with interpretation, please contact Jay Fahrer, SIIA’s Director of Government Relations at 202-463-8161 or email@example.com.
From a PBM: