Employers should be aware of the top compliance issues that impact their health plan coverage for 2024. Some of these compliance issues are established requirements for employers, such as the expanded electronic reporting requirement under the Affordable Care Act (ACA).
Other top health plan compliance issues employers should be aware of in 2024 include:
- New health plan transparency requirements;
- Ongoing litigation regarding the ACA’s requirement to cover preventive care services without cost sharing;
- Possible expansion of the ACA’s contraceptive coverage mandate; and
- Proposed legislation at state and federal levels to regulate pharmacy benefit managers (PBMs).
New Transparency Requirements
Group health plans and health insurance issuers are subject to many requirements designed to increase health care transparency and protect consumers against surprise medical bills. In general, most employers rely on their issuers, third-party administrators (TPAs) and other service providers to satisfy many of these requirements, including the obligations to provide machine-readable files (MRFs) and a cost comparison tool and submit detailed reports on prescription drug spending. Employers should confirm that their written agreements with their issuers, TPAs or other service providers have been updated to address this compliance responsibility. In addition, employers should monitor their service providers’ compliance with federal transparency requirements.
Employers should watch for additional transparency guidance in 2024, including guidance on the currently delayed requirement to provide advanced explanations of benefits (EOBs) and possibly new transparency legislation
Cost Comparison Tool
For plan years beginning in 2023, health plans and issuers were required to make an internet-based price comparison tool available for 500 shoppable items, services and drugs. For plan years beginning in 2024, the internet-based price comparison tool must be expanded to cover all covered items, services and drugs.
Machine-Readable Files (MRFs)
Non-grandfathered health plans and issuers must publicly post three MRFs regarding in-network provider rates, out-of-network allowed amounts and billed charges, and prescription drug rates and prices. Federal agencies have ended an enforcement delay for posting the prescription drug file. Future guidance will specify a timeline for complying with this requirement.
Prescription Drug Reporting
Health plans and issuers must report information about prescription drugs and health care spending to the federal government annually. This reporting process is referred to as the “prescription drug data collection” (or “RxDC report”). The annual deadline is June 1, which means that the RxDC report is due by June 1, 2024, covering data for 2023. However, because June 1, 2024, is a Saturday, this deadline may be extended to the next business day, which is June 3, 2024.
Gag Clause Attestations
Health plans and issuers must annually submit an attestation of compliance with the federal prohibition on gag clauses. The gag clause attestation is due by December 31 of each year.
Preventative Care Benefits
The ACA requires non-grandfathered health plans and issuers to cover a broad range of preventive care services without charging copayments, coinsurance or deductibles when the services are delivered by in-network providers. The scope of this coverage mandate changes somewhat from year to year as preventive care guidelines are updated. To prepare for each upcoming plan year, health plans and issuers should update their first-dollar coverage of preventive care services to incorporate any new guidelines.
In addition to these routine updates, employers should be aware of recent developments that may impact their preventive care coverage for 2024 and beyond. These developments include:
- The end of certain coverage requirements related to the COVID-19 pandemic;
- Ongoing litigation regarding a key part of the ACA’s preventive care mandate; and
- Signals from the Biden administration that it may expand access to contraceptive coverage.
Ongoing Litigation
In March 2023, the U.S. District Court for the Northern District of Texas struck down a key component of the ACA’s preventive care mandate as unconstitutional. More specifically, the District Court ruled that preventive care coverage requirements based on an A or B rating by the U.S. Preventive Services Task Force on or after March 23, 2010, violate the U.S. Constitution. The court also ruled that the requirement to provide first-dollar coverage for preexposure prophylaxis (PrEP) drugs used by persons at high risk of getting HIV violates the Religious Freedom Restoration Act.
The Biden administration appealed the District Court’s decision to the 5th U.S. Circuit Court of Appeals. It is uncertain when the 5th Circuit will issue its decision and whether it will reverse or uphold the District Court’s ruling. However, for now, non-grandfathered health plans and issuers must continue to cover, without cost sharing, the full range of preventive care services required by the ACA.
If the 5th Circuit agrees that a key component of the ACA’s preventive care mandate is unconstitutional, employers will want to consult with their issuers or TPAs to assess the impact on their health coverage. The impact may not be immediate, as making significant midyear changes to plan coverage is unusual and typically triggers a 60-day advance notice requirement to participants. Also, employers may decide to continue providing first-dollar coverage for the full range of preventive care services to help control spending on preventable chronic conditions down the road.
Contraceptive Coverage
The scope of the ACA’s preventive care mandate may expand in 2024 as the federal government looks for ways to improve access to contraceptives. Federal agencies have indicated that they may expand the ACA’s preventive care mandate to include over-the-counter (OTC) preventive products. In July 2023, the U.S. Food and Drug Administration approved the first nonprescription daily oral contraceptive. This drug, called Opill, is expected to become available in stores and online in early 2024. Current guidance requires coverage for OTC preventive products without cost sharing only when they are prescribed by a health care provider. In 2024, employers should watch for any changes regarding coverage of OTC preventive products and make any necessary adjustments to their health plan coverage.
In addition, the Biden administration has indicated that it wants to expand access to contraceptives by narrowing the exemptions to the ACA’s contraceptive coverage mandate. Under the ACA, churches and houses of worship are not required to cover contraceptives. Also, current guidance exempts certain employers from covering contraceptives if they object to this coverage based on sincerely held religious beliefs or moral convictions. In January 2023, federal agencies released a proposed rule that would rescind the moral exemption to covering contraceptives but retain the religious exemption. Employers who rely on the moral exemption to cover contraceptives should monitor the release of a final rule in 2024 and adjust their health coverage going forward, if necessary.
Other Potential Developments
Other legislative and regulatory developments are possible in 2024. These would impact health plan coverage in the future. For example, these developments may include:
- New state and federal oversight of PBMs to help control health care spending, such as requirements for applying drug discounts and rebates and prohibitions on spread pricing (which occurs when PBMs keep the difference between actual pharmacy charges and the higher negotiated payments from health plans);
- New state insurance coverage mandates for fully insured health plans, such as cost-sharing caps on insulin and mandated coverage requirements for fertility treatments, gender-affirming care, abortion-related services and substance use disorder treatment; and
- Changes to the HIPAA privacy and security rules, which may require updates to HIPAA policies, notices and business associate agreements.
Connect with a UNICO Employee Benefits Advisor for more information.
This Compliance Bulletin is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2022-2023 Zywave, Inc. All rights reserved.
