Health & Welfare Plans Newsletter

June 18, 2020

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Coronavirus-Related Paid Leave Benefits for California Agricultural Employers and Workers in Spanish
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Current Developments in Employment Law - Part A
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[Official Guidance]

Text of CMS Proposed Regs: Value-Based Purchasing for Drugs Covered in Medicaid; Medicaid Drug Rebate and Third Party Liability Requirements

"[CMS is] proposing new regulatory policies and clarifying certain already established policies to assist manufacturers and states in participating in [value-based purchasing arrangements (VBPs)] ... This proposed rule also proposes revisions to regulations regarding: [1] authorized generic sales when manufacturers calculate average manufacturer price (AMP); [2] pharmacy benefit managers (PBM) accumulator programs and their impact on AMP and best price; [3] state and manufacturer reporting requirements to the MDRP; ... [4] payments for prescription drugs under the Medicaid program; and [5] coordination of benefits (COB) and third party liability rules related to the special treatment of certain types of care and payment in Medicaid and Children's Health Insurance Program (CHIP)."

Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]

[Guidance Overview]

CMS Proposed Regs on Value-Based Purchasing for Prescription Drugs: New Tools for Negotiating Prices for the Next Generation of Therapies

"The specific proposals in CMS's proposed rule would provide commercial health insurers with new options for approaching negotiations with manufacturers while ensuring that Medicaid always gets the best deal. The proposed rule would ensure that Best Price accurately captures both the prices that are paid in new types of payment models and the circumstances in which those prices are paid."

CMS Director Seema Verma, in Health Affairs

[Guidance Overview]

IRS Releases Guidance on Charitable Leave-Based Donation Programs

"[E]mployers are permitted to elect to deduct the cash payments either as charitable contributions (up to the applicable limitations) or as business expenses to the extent of goodwill advertising. In addition, the employer reduces its FICA tax liability because the donations, as compared to the leave payments, are exempt from FICA taxes."

Morgan Lewis

[Guidance Overview]

Leave Donation Programs for COVID-19

"[IRS Notice 2020-46 ] provides for a special leave donation program available for the COVID-19 pandemic. This brings the total to three tax-favored leave programs that are currently available to employees and employers to assist with COVID-19 relief: COVID-19 Leave Program per Notice 2020-46; Medical Emergency Plan per Rev. Rul. 90-29 ; [and] Major Disaster Plan per Notice 2006-59 ."

Groom Law Group

[Guidance Overview]

Department of Treasury and IRS Clarify Tax Treatment of Direct Primary Care Arrangements and Health Care Sharing Ministries

"[T]he Proposed Rule does not address any issues under Title I of ERISA, such as whether any particular arrangement or payment constitutes, or is part of, an employee welfare benefit plan within the meaning of ERISA Section 3(1). However, the Proposed Rule highlights that an employer's funding of a benefit arrangement, in most circumstances, is sufficient to treat an arrangement that provides health benefits to employees as an ERISA-covered plan. Thus, DPCAs that are funded, in whole or part, by an employer subject to ERISA will likely be treated as employer group health plans for purposes of ERISA."

Winston & Strawn LLP

D.C. Court of Appeals Invalidates CMS Rule Requiring Disclosure of Drug Prices in TV Ads (PDF)

19 pages. "In May 2019, [CMS] published a rule that broadly requires drug manufacturers to disclose in their television advertisements the wholesale acquisition cost of many prescription drugs and biological products for which payment is available under Medicare or Medicaid ... The Department acted unreasonably in construing its regulatory authority to include the imposition of a sweeping disclosure requirement that is largely untethered to the actual administration of the Medicare or Medicaid programs. Because there is no reasoned statutory basis for its far-flung reach and misaligned obligations, the Disclosure Rule is invalid and is hereby set aside." [Merck & Co. v. HHS, No. 19-5222 (D.C. Cir. Jun. 16, 2020)]

U.S. Court of Appeals for the District of Columbia Circuit

Senate HELP Committee Hearing on Telehealth: Lessons from the COVID-19 Pandemic

Video of June 17 hearing, with testimony from [1]  Karen S. Rheuban, M.D. , University of Virginia; [2]  Joseph C. Kvedar, M.D. , American Telemedicine Association; [3]  Sanjeev Arora, M.D. , M.A.C.P., F.A.C.G., University of New Mexico Health Sciences Center; and [4]  Andrea D. Willis, M.D. , M.P.H., F.A.A.P., BlueCross BlueShield of Tennessee.

Committee on Health, Education, Labor and Pensions, U.S. Senate

Providers to Congress: Patients Will Lose Access to Care Without Permanent Expansion of Telehealth

"Healthcare leaders testifying [before the Senate HELP committee on June 17] all supported making the temporary changes permanent, including modernizing statutory limitations on originating sites, allowing federally qualified health centers and rural clinics to serve as distant sites and expanding the types of providers who can be reimbursed for telehealth visits as well as the types of services that be offered through virtual care."

FierceHealthcare

A Scalpel Instead of a Sledgehammer: The Potential of Value-Based Deductible Exemptions in High-Deductible Health Plans

"It is becoming increasingly clear that HDHPs' indiscriminate reductions in care usage may not be the best way to contain health care costs.... [The authors] suggest that combining the principles of HDHPs and value-based insurance design (VBID), by offering deductible exemptions for high-value services, could provide nuanced incentives with potential to preserve access to the most important services while reducing use of only more wasteful care."

Douglas Barthold and Anirban Basu, in Health Affairs

2021 Health Care Cost Model

"This model allows a user to consider a variety of scenarios and create inputs that can forecast the impact on the health care service system. The model will be updated periodically to reflect the latest data on both the outbreak and insurance health care costs. A user guide, user training video and model documentation guide have also been developed to support the model[.]"

Society of Actuaries

95% of Employers Now Include Emotional and Mental Health Programs in Well-Being Platforms

"Examples of commonly offered mental/emotional help programs included teletherapy, which will be offered by 69% of employers this year, along with stress management (50%) and resiliency programs (49%). Another 33% of employers will offer programs to help improve sleep, up from 25% in 2019.... The average budget for well-being programs increased to $4.9 million in 2020, up 36% over 2019.... 31% of employers indicated they will have two or more full-time staff members dedicated to the company's well-being program, while 13% will have more than five full-time employees dedicated to managing these programs."

Business Group on Health

Gaps in the Emergency Paid Sick Leave Mandate: Health Care Workers

"[The authors] estimate that at least 69.4 million workers, or approximately four in ten workers, are potentially ineligible for emergency paid sick leave benefits.... [T]he law automatically excludes the 9.5 million health care workers that work for a private employer with 500 or more employees (6% of the American workforce). An additional 8.1 million health care workers are subject to exemption (5% of the workforce) at their employer's discretion. Taken together, as many as 17.7 million health care workers are not guaranteed access to emergency paid sick leave benefits under this law."

Henry J. Kaiser Family Foundation

Benefits in General

[Guidance Overview]

M&A Considerations Raised by CARES Act

"Financial assistance and other relief provided to employers under the [CARES Act] will have a short- and long-term impact on employee benefit plans in mergers and acquisitions. The chart [in this article] highlights some considerations buyers and sellers should consider in addressing potential 'pop-up' liabilities and/or other issues relating to the CARES Act in transactions."

Morgan Lewis

Pandemic Considerations for Employee Benefit Plan Financial Statements

"Many preparers and auditors are working from home and unable to go to the office to handle or review documents. The economic fallout from the pandemic has led to cash flow problems for plan sponsors resulting in layoffs of employees and even bankruptcy proceedings. Meanwhile, the [CARES Act] has led to changes that affect plans, including penalty-free withdrawals and delays of sponsors' deadlines to make contributions for 2019. Here are some things to keep in mind related to employee benefit plan financial statements amid the pandemic."

Journal of Accountancy

Selected Discussionson the BenefitsLink Message Boards

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Telemedicine Products Outside of Group Health Plans: Are They Subject to ACA?

"Several of our clients have been approached by vendors to offer telemedicine products outside of their group health plans (e.g., to part-time employee groups who are not eligible for medical coverage). I've seen some vendors make the argument that the telemedicine benefits could fall under the excepted benefits rules, as EAPs. However, in order for an EAP to be an excepted benefit, it cannot offer significant benefits in the nature of medical care. I find it hard to believe a telemedicine benefit could meet that requirement. Are these products becoming common?"

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BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2020 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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