The Regulatory Stew

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State regulatory filings for health plans issued to association trusts to be treated as large group plans were not available on the Washington Office of the Insurance Commissioner (OIC) website. I made a public disclosure request for the carrier filings and for correspondence between the agency and carriers. The filings have been provided and I will post correspondence when received.

The OIC provided filings made in 2014 by insurers for treatment as large group, “single employer,” association health plans not subject to health care reform’s small employer coverage standards. The OIC provided filings for Premera BlueCross, Group Health Cooperative and Regence BlueShield. Premera filings were published in the last post. These are the remaining filings provided by the OIC.

Regence Blue Shield of Washington
  1. Washington Farm Bureau Healthcare Trust
  2. Marine Trade Association
  3. Master Builders Association of King and Snohomish County
  4. Building Industry Association of Washington
Group Health Cooperative of Washington
  1. Lutheran Services in the Northwest
  2. Washington Fire Commissioners
  3. Washington Counties Insurance Fund
  4. Northwest Financial Association
  5. Association of Washington Cities
  6. Hospitality Industry Healthy Trust
  7. Central Region Insurance Pool
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In my last article, (Part Three – Bona Fide Associations…still waiting), I observed that the state regulatory filings for health plans issued to association trusts to be treated as large group plans were not available on the Washington Office of the Insurance Commissioner (OIC) website. Nothing has changed since July. Most industry insiders predict that the OIC will allow non-compliant plans to continue providing coverage at least until the end of the year.

Of course, employers and beneficiaries can always create legal surprises when they realize that they either didn’t get required benefits or paid too much for coverage. If you think I’m joking take a read of this case where employers sued Blue Cross of Montana for overcharging for a health plan sold through an association with experience rated premiums – Fossen v. Blue Cross & Blue Shield of Mont., Inc., 660 F.3d 1102, 51 EBC 2697 (9th Cir. 2011) (No. 11-1155 U.S. Supreme Court cert. denied 1/22/2013 ).

Here’s the DOL brief to the Supreme Court arguing that ERISA does not preempt state law claims alleging unfair practices in health plan rates. Here is the NAIC amicus brief to the 9th Circuit in which the Commissioners argued, “Plaintiffs’ claims for return of excess premium charges are governed by [state law], which prohibits premium discrimination between individuals based on health status. The Montana statute is not preempted by ERISA’s civil enforcement provisions.”

Associations continue to sell and the OIC continues to review; but, the OIC has taken no official action identifying association plans that qualify for treatment as a single, large group plan. Moreover, the OIC has yet to decide what it will do about plans currently sold to small employers through these filed but unapproved association plans. The OIC has gone back and forth with insurers; but, the agency appears stuck between old decisions and new rules.

For a glimpse of this “back and forth,” here is the OIC’s direction to Premera as to how to resolve “grandfather plan” issues with a new bona fide plan filing for the Washington Biotechnology and Biomedical Association (I intentionally omitted the names). Note the dates of correspondence:

Objection Letter Date 06/11/2014
Submitted Date 06/11/2014
Respond By Date 07/11/2014

Dear *****,
Introduction:
Thank you for your filing submission. To allow our continued review of this filing, please reply on or before the Respond By Date.
Objection 1
Comments: Thank you for your response to Objection 1. We stand by our objection that an association cannot be both a true employer association as defined by ERISA [WAC 284-170-958(1)] and an association offering grandfathered closed pool plans [WAC 284-170-958(3)].

However, to address your concerns related to grandfathered health plans, you may split your filing into two submissions (one for grandfathered and one for non-grandfathered). This means that you must keep this filing as an association under true employer since the corresponding rate filing only identifies the association as a True Employer.

For the grandfathered closed pool plans under WAC 284-170-958(3), you will need to file a separate form filing with a corresponding rate filing. Per WAC 284-170-958(3), a grandfathered closed pool include groups that do not meet the definition of true employer under ERISA and WAC 284-170-958(1). Therefore, you must not name your grandfathered closed pool plans in connection with a True Employer association under ERISA. Please also note that WAC 284-170-958(4) requires issuer to submit specific information for each grandfathered plan in the rate filing.

Conclusion:

Sincerely,
********

——————————————————–

OIC Comments: You have submitted forms for a True Employer association as defined by ERISA 3[5] (see WAC 284-170-958[1]), and an association offering grandfathered large group plans (see WAC 284-170-985[3]). The corresponding rate filing identifies the association as a True Employer under ERISA. Please withdraw the applicable forms identified as grandfathered plans under this filing.

Premera Response: We respectfully disagree that a True Employer cannot offer a mixture of non-grandfathered and grandfathered plans. Federal regulations, 45 CFR 147.140(a) states in part that: “The rules of this section apply separately to each benefit package made available under a group health plan or health insurance coverage.” The rules are specific that grandfathered status is determined on a benefit package-by benefit package basis. Therefore, an employer can have some plans that are grandfathered, and others that are not. The Federal Grandfathering rules (75 CFR 34559-60 as an example) include multiple examples which indicate that a group may have multiple benefit plans, including a mixture of grandfathered and non-grandfathered plans. 75 CFR 34560, Example 2 states, in part: “…(j) Facts. A group health plan offers two benefit packages on March 23, 2010, Options F and G. During a subsequent open enrollment period, some of the employees enrolled in Option F on March 23, 2010 switch to Option G. (ii) Conclusion. In this Example 1, the group health coverage provided under Option G remains a grandfathered health plan under the rules of paragraph (b)(1) of this section because employees previously enrolled in Option F are allowed to enroll in Option G as new employees.”

The Federal rules are clear regarding the permissibility of an employer’s having a mixture of nongrandfathered and grandfathered plans. The OIC’s General Filing Instructions are not clear on how to submit group filings when the group offers a mixture of grandfathered and non-grandfathered plans. If your office requires a split of the filing into two separate submissions (one for grandfathered and one for nongrandfathered) we can accommodate that. We would appreciate your guidance on this question.

Naturally, a handful of readers have been annoyingly persistent in asking that I publish the filings. Following my public disclosure request for these filings, marked as unavailable on the OIC website, the OIC provided filings made in 2014 by insurers for treatment as large group, “single employer,” association health plans not subject to health care reform’s small employer coverage standards. I will post for other carriers later. These carriers have not made as many filings as Prermera.

Premera Blue Cross of Washington

Below you will find the Rate/Form filings made by Premera in 2014 on behalf of “bona fide” associations as disclosed by the Washington Office of the Insurance Commissioner on August 29, 2014:

  1. Aerospace Industry
  2. Agriculture Industry
  3. Business Services Trust
  4. Community Services Organization Industry
  5. Construction Industry
  6. End-Line Manufacturers
  7. Healthcare Industry
  8. Information Technology
  9. Media Industry
  10. Northwest Financial Associations
  11. Retail Industry
  12. Tourism Industry
  13. Transportation Industry
  14. Washington Auto Dealers
  15. Washington Biotechnology
  16. Washington Clean Technology Alliance
  17. Washington Counties Insurance Fund
  18. Washington Rural Hospitals
  19. Wenatchee Valley Traffic Fruit Growers Program
  20. Wholesale Industry
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Four years ago in an article posted here, I wrote the following:

I don’t know yet what will happen in the association plan market or how the battle over sick kids will play out. I can only wait for HHS and the Insurance Commissioner to provide direction. While I wait and reflect on Samuel Beckett’s more famous play, Waiting for Godot, I consider my belt and its length and strength. [10/18/2010]

Since then many trade association plans closed their doors and turned away employers who had been insured through group health plans offered through the association. In the drip, drip, drip of regulatory change, inaction, misdirection, and abrupt changes in course, we continue to wait in line at the Insurance Commissioner’s Office. Following a new strategy of regulatory torpor may resolve the regulatory backlog as licensees die of acute boredom and ennui.

Clients continue to ask “are we there yet” to which I am left to reply, “don’t make me come back there!”

And to those who niggle over regulatory matters like transparency, certainty, and equal application of law, please give it a rest. Take your ticket and wait in line for your particular unique, off the record ruling like everyone else.

Here is an example of what I look at every day “Waiting for Godot” while perfectly nice people lose business and insurance producers snipe at each other. The following is just one of many pages listing the filing of association health plans with the Insurance Commissioner’s Office showing the date the insurer filed the plan and its current approval status. It must be hard to come down on both sides of an issue.

Please also note for those who keep asking, unlike most other plan filings, no the information is not available for public inspection. I am sure it will be some day.

The following can be found on the agency’s rate and form filing website here:

Download Filing Details
Imaged documents not available online.
OIC Tracker ID: 267191
Company Tracker ID: AGRIRATESPUBLIC2014
SERFF Tracker ID: PBCC-129414787
Type: Rate/Rule
Has Manual: No
Public: Yes
Received Date: 2/12/2014
Effective Date:
Status: Review Pending
Types Of Insurance: H16G Group Health – Major Medical
Companies: PREMERA BLUE CROSS
Description: Association or member-governed true employer group under 29 U.S.C. Section 1002(5) of ERISA – Agriculture Industry Trust – Public
Imaged documents not available online.
OIC Tracker ID: 267192
Company Tracker ID: BSIHT2014EA
SERFF Tracker ID: PBCC-129412281
Type: Form
Has Manual: No
Public: Yes
Received Date: 2/12/2014
Effective Date:
Status: Review Pending
Types Of Insurance: H16G Group Health – Major Medical
Companies: PREMERA BLUE CROSS
Description: Association or member-governed true employer group under 29 U.S.C. Section 1002(5) of ERISA – Business Services Industry Health Trust
Form # Form Description
1000000780114B1 Your Future – HSA $1,500
1000000780114B2 Your Future – HSA $2,500
1000000780114B3 Your Future – HSA $3,500
1000000780114B4 Your Choice – Sterling 250
1000000780114B5 Your Choice – Sterling 500
15 of 18 Forms   1234Show All
Imaged documents not available online.
OIC Tracker ID: 267193
Company Tracker ID: BUSSSVCRATESPUBLIC2014
SERFF Tracker ID: PBCC-129414821
Type: Rate/Rule
Has Manual: No
Public: Yes
Received Date: 2/12/2014
Effective Date:
Status: Response Received
Types Of Insurance: H16G Group Health – Major Medical
Companies: PREMERA BLUE CROSS
Description: Association or member-governed true employer group under 29 U.S.C. Section 1002(5) of ERISA – Business Services Industry Trust – Public
Imaged documents not available online.
OIC Tracker ID: 267229
Company Tracker ID: AGRI2014EA
SERFF Tracker ID: PBCC-129412354
Type: Form
Has Manual: No
Public: Yes
Received Date: 2/12/2014
Effective Date:
Status: Review Pending
Types Of Insurance: H16G Group Health – Major Medical
Companies: PREMERA BLUE CROSS
Description: Association or member-governed true employer group under 29 U.S.C. Section 1002(5) of ERISA – Agriculture Industry Health Trust
Form # Form Description
1000000770114B1 Your Future – HSA $1,500
1000000770114B2 Your Future – HSA $2,500
1000000770114B3 Your Future – HSA $3,500
1000000770114B4 Your Choice – Sterling 250
1000000770114B5 Your Choice – Sterling 500
15 of 18 Forms   1234Show All
Imaged documents not available online.
OIC Tracker ID: 267289
Company Tracker ID: TRANR2014
SERFF Tracker ID: PBCC-129412796
Type: Rate/Rule
Has Manual: No
Public: No
Received Date: 2/12/2014
Effective Date:
Status: Response Received
Types Of Insurance: H16G Group Health – Major Medical
Companies: PREMERA BLUE CROSS
Description: Association or member-governed true employer group under 29 U.S.C. Section 1002(5) of ERISA – Transportation Industry Health Trust – Proprietary
Imaged documents not available online.
OIC Tracker ID: 267292
Company Tracker ID: ENDLR2014
SERFF Tracker ID: PBCC-129412732
Type: Rate/Rule
Has Manual: No
Public: No
Received Date: 2/12/2014
Effective Date:
Status: Response Received
Types Of Insurance: H16G Group Health – Major Medical
Companies: PREMERA BLUE CROSS
Description: Association or member-governed true employer group under 29 U.S.C. Section 1002(5) of ERISA – End-Line Manufacturing Industry Health Trust – Proprietary
Imaged documents not available online.
OIC Tracker ID: 267293
Company Tracker ID: HEAR2014
SERFF Tracker ID: PBCC-129412746
Type: Rate/Rule
Has Manual: No
Public: No
Received Date: 2/12/2014
Effective Date:
Status: Response Received
Types Of Insurance: H16G Group Health – Major Medical
Companies: PREMERA BLUE CROSS
Description: Association or member-governed true employer group under 29 U.S.C. Section 1002(5) of ERISA – Healthcare Industry Health Trust – Proprietary
Imaged documents not available online.
OIC Tracker ID: 267294
Company Tracker ID: HEALTHCARERATESPUBLIC2014
SERFF Tracker ID: PBCC-129414769
Type: Rate/Rule
Has Manual: No
Public: Yes
Received Date: 2/12/2014
Effective Date:
Status: Response Received
Types Of Insurance: H16G Group Health – Major Medical
Companies: PREMERA BLUE CROSS
Description: Association or member-governed true employer group under 29 U.S.C. Section 1002(5) of ERISA – Healthcare Industry Trust – Public
Imaged documents not available online.
OIC Tracker ID: 267295
Company Tracker ID: MEDIARATESPUBLIC2014
SERFF Tracker ID: PBCC-129414762
Type: Rate/Rule
Has Manual: No
Public: Yes
Received Date: 2/12/2014
Effective Date:
Status: Response Received
Types Of Insurance: H16G Group Health – Major Medical
Companies: PREMERA BLUE CROSS
Description: Association or member-governed true employer group under 29 U.S.C. Section 1002(5) of ERISA – Media Industry Trust – Public
Imaged documents not available online.
OIC Tracker ID: 267296
Company Tracker ID: CONSTRUCTIONRATESPUBLIC2014
SERFF Tracker ID: PBCC-129414770
Type: Rate/Rule
Has Manual: No
Public: Yes
Received Date: 2/12/2014
Effective Date:
Status: Response Received
Types Of Insurance: H16G Group Health – Major Medical
Companies: PREMERA BLUE CROSS
Description: Association or member-governed true employer group under 29 U.S.C. Section 1002(5) of ERISA – Construction Industry Trust – Public
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I’ve had a number of requests from folks who want to view the Washington Farm Bureau Healthcare Trust video produced and directed by my wife and I back in the day when starting a video production company seemed like a good idea. It wasn’t.

The work was fun and we enjoyed the opportunity to learn about real farmers who work harder than I do. We created this video ourselves and yes, of course, real video professionals could do a much better job. Frankly, we could do a better job now too; but, well…you had to be there…



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I know I promised to publish more of the bona fide association plan rate and form filings; but, I stumbled across the following “Objection Letter” from the Office of the Insurance Commissioner (OIC) to Regence for a filing made on behalf of the Northwest Fire Fighters Benefits Trust. I have been puzzling over it ever since.

I am absolutely stumped as to how the OIC reconciles its analysis with the federal regulation cited in the letter. My mystical powers have faded after reading so many filings. So let’s have a scavenger hunt. I invite you tender reader, to find me the bridge between the letter and the  regulation each quoted below.

OIC Objection Letter-  02/05/2014:

Introduction:
This letter has been sent to you under rate filing B861-129359640 . We are restating and requiring you to respond in the public form filing. Please see the objections below and provide your response before the Response By date.
First, Health Insurance Portability and Accountability Act (HIPAA) prohibits discrimination against participants and beneficiaries based on a health status-related factor. Under 29 CFR Chapter XXV, Section 2590.702, a group health plan, and a health insurance issuer offering group health insurance coverage in connection with a group health plan, may not establish rules for the eligibility (including continued eligibility) of any individual to enroll under the terms of the plan based on any of the following health status-related factors in relation to the individual or a dependent of the individual.
(i) Health status.
(ii) Medical condition (including both physical and mental illnesses).
(iii) Claims experience.
(iv) Receipt of health care.
(v) Medical history.
(vi) Genetic information
(vii) Evidence of insurability.
(viii) Disability.

If an association health plan (AHP) is a true-employer large group health plan (the association is defined as an “employer” under 29 U.S.C.S. 1002(5)), a health plan offered to the association is ONE large group health plan, and the carrier and the association must comply with HIPAA (29 CFR Chapter XXV, Section 2590.702) that prohibits discrimination against participants and beneficiaries based on a health status-related factor.

An issuer may use any non-health status-related rating factors permitted by federal or state law for a particular large group health plan such as demographics, age, area, and gender. However, Under HIPAA, an issuer or association must not use health-status related data or information from a specific participant, a subgroup of participants, or a group purchaser within the association to establish rates for the participant or the group purchaser. This includes specific health status, claims experience, participation requirements, etc. As an example, for any two similarly situated individuals (the same age and gender) within the association employer, the association health plan as the group health plan or the carrier as the issuer cannot charge higher rates for one individual simply because the one individual has more medical claim history or existing medical conditions than the other individual.

…Objection 2
– Cover Memo (Supporting Document)
Comments: As required by the Washington State SERFF Health and Disability Form Filing General Instructions, please submit a certification from a company officer that this association group health coverage as one large group meets the requirements of HIPAA under 29 CFR Chapter XXV, Section 2590.702. [Objection Letter, emphasis added]

So, according to the OIC, every employer purchasing coverage for their employees from a bona fide association must be charged a rate without regard to the loss experience of the employer. For this principle the OIC cites 29CFR Chapter XXV, Section 2590.702 which states in part:

(c) Prohibited discrimination in premiums or contributions
(2) Rules relating to premium rates
(i) Group rating based on health factors not restricted under this section. Nothing in this section restricts the aggregate amount that an employer may be charged for coverage under a group health plan. But see § 2590.702-1(b) of this Part, which prohibits adjustments in group premium or contribution rates based on genetic information.

…(iii) Examples. The rules of this paragraph (c)(2) are illustrated by the following examples:
Example 1.

(i) Facts. An employer sponsors a group health plan and purchases coverage from a health insurance issuer. In order to determine the premium rate for the upcoming plan year, the issuer reviews the claims experience of individuals covered under the plan. The issuer finds that Individual F had significantly higher claims experience than similarly situated individuals in the plan. The issuer quotes the plan a higher per-participant rate because of F’s claims experience.

(ii) Conclusion. In this Example 1, the issuer does not violate the provisions of this paragraph (c)(2) because the issuer blends the rate so that the employer is not quoted a higher rate for F than for a similarly situated individual based on F’s claims experience. (However, if the issuer used genetic information in computing the group rate, it would violate § 2590.702-1(b) of this Part.)

In other words, the employer may be charged more but the individual employee cannot be assigned a higher rate for his or her own loss experience. Right?

The OIC analysis fits the federal regulation only if we pretend each employee of each participating employer is really an employee of the association or maybe each employer is an employee of the association and the employer member’s employees are beneficiaries or…help me out here because my law professors did not teach me pretend law.

Why does the OIC feel the need to interpret federal regulations to achieve policy objectives that the federal agencies could achieve by amending their own rules?

Seriously, if anyone can find me a federal regulation or federal guidance that requires every employer purchasing through an ERISA bona fide association plan to pay without regard to loss experience, contact me.

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