Ep #477 - Understanding Compliance Issues and Future Legislative Developments in Employee Benefits - with ERISA attorney Jennifer Berman.

David Saltzman: 0:00

What are the compliance issues that you should be aware of and what's coming down the pike legislatively? We'll find out on this episode of Shift Shapers.

Announcer: 0:09

Change either energizes or paralyzes. The choice is yours. This is the Shift Shapers podcast, bringing the employee benefits industry interviews with individuals and companies who are shaping the industry shifts. And now here's your host, David Saltzman.

David Saltzman: 0:31

And to help us answer that question, we have invited NABIP legislative vice chair and CEO of MZQ consulting Arisa attorney, jennifer Berman. Welcome, jen.

Jennifer Berman: 0:42

Thanks. Thank you for having me.

David Saltzman: 0:44

It's, it's totally our pleasure. So let's dig right in and let's start with one of the big daddies. Let's talk about mental health parity. Why, where, who and how do you get there?

Jennifer Berman: 0:57

Oh, that's a lot of good questions, so let's start with the why. So this is really about trying to make sure that health plans are providing mental health and substance use disorder benefits in parity with, or kind of basically somewhat equal to, the medical and surgical benefits that are offered under that plan. Now, obviously these are not the same things. You know apples and oranges, or however we want to discuss it but the way that the rules are designed is to say that in six different categories and those are inpatient and outpatient, in and out of network, and then prescription drug and emergency care we want to look at medical and surgical benefits against mental health and substance use disorder benefits and make sure that what's being offered are comparable to one another. And when we do that, we're doing it across two paradigms. The first is called quantitative treatment limitations, that's things like co-pays, co-insurance, deductibles and the second is non-quantitative treatment limitations, and those are really anything that is a barrier to access to care other than those quantitative ones. So think prior authorization, but also think formulary design, or even how a network goes about credentialing physicians. There's all sorts of ways that you could restrict access to care throughout the plan that aren't just those numerical pieces.

Jennifer Berman: 2:33

So when we sit down and we look at this big picture mental health parody thing, the next important thing to know is that this is not a new law. So everything I just talked about is old law. In my world it's like ancient history. It's over a decade old. So why is there so much talk about this now? And that's because the law changed in December of 2020 with the CAA of 2021 and what I call the Congressionally Mandated Book Report. So it's kind of an interesting thing.

Jennifer Berman: 3:05

Basically, what Congress said is we don't think that health plans are complying with mental health parody and news slash. They were not, and our biggest concern is the NQTLs the non-quantitative stuff Although I'll tell you, david, they were also not complying with the QTL stuff. But Congress was focused on the non-quantitative stuff and they said every health plan now needs to do an analysis demonstrating how they are complying. You can sort of see how this exercise works from a policy perspective, right? So go and document how it is that you're complying, and the goal behind that was that that documentation process would lead to more compliance. So that's really big picture what this is all about.

David Saltzman: 3:47

Is there an annual reporting requirement?

Jennifer Berman: 3:50

So the reporting requirement is not technically annual in nature. The requirement is that these NQTL analyses be maintained, that they be up to date and accurate and that they be available to both the Department of Labor and participants upon request. And so because plans change annually, because of the current operational data changes annually, we do recommend that these be maintained on an annual basis, but the law does not say annual specifically, and I think that's something that certainly the Department of Labor and the regulators are grappling with as they're trying to figure out sort of exactly how to go about doing this.

David Saltzman: 4:33

Well and correct me if I'm wrong, but isn't this just something that you have to have on hand as a planner and employer? It's not something that you actually send to the government every year, is it?

Jennifer Berman: 4:42

That's correct. You don't actually send it to the government, but you do have to have it on hand. There's a fiduciary obligation to have it and it's also available not just if the government asks for it, but I mentioned this already. It's available if a participant asks for it and in my world that means it's available if a plaintiff's attorney asks for it. So you know the question I get. The unasked question is what's going to happen to me if I don't do this? There is certainly risk that the DOL will come after you. I don't want to say that there's not, because this is actually the DOL's number one enforcement priority. So it's real from the DOL. But there is as much, if not more, risk that a plaintiff's attorney or participant might come after a plan for not having what they need to have in place.

David Saltzman: 5:32

Now these are fairly extensive. I know that some of the some folks I've spoken to recently have kind of been surprised at what compliance firms charge for doing this kind of work. But it's not just a simple fill-in-the-blanks form, is it?

Jennifer Berman: 5:48

No, it's a very, very extensive exercise where in each NQTO that we talked about so for every plan that you look at, there could be anywhere from 15 to 30 of these things, and for every single one of them we have to look in each of those six buckets that I mentioned and look at how the plan is designed in writing across a number of paradigms and then how it's working in operations, look at actual operational data so there are numbers involved. It's not just non-quasitative and to and look at is the plan in compliance? So it is a very extensive exercise.

David Saltzman: 6:24

Well, and isn't the government actually looking into whether the government is doing enough? Isn't there an Inspector General who's out, you know, kind of looking under rocks and things now?

Jennifer Berman: 6:33

There is. So the Office of Inspector General is in fact investigating the Department of Labor to see if they are doing enough to enforce this law.

David Saltzman: 6:40

And in the middle of all of this last fall there was almost 400 pages of proposed regulations. What about those? And when, if ever, might we see those? And what were the kind of comments about?

Jennifer Berman: 6:54

Yeah. So, first off, they're mind blowing. They're overwhelming even to me, and this is what I do for a living every day. There were over 10,000 comments submitted, so there is a lot there. They make it even more complicated than it already is. So this is not a you know, everybody's failing their reports. Nobody can do this sort of response from the DOL. This is they were making it harder proposal. And then you know when are we going to get the final rule?

Jennifer Berman: 7:23

Anybody's guests don't have a crystal ball, but what I will say is the Department of Labor does not have an extensive, massive staff and they do have a legal obligation to review all of the comments that were submitted. Over 10,000 comments were submitted, so I am not holding my breath or expecting these proposed drugs to become finalized anytime soon. That being said, there are final rules already in existence and there's a statute in existence. So I've heard many say we're going to wait for the final rule. There's no waiting for the final rule for this law to become effective. The law is effective and plans that don't have this are out of compliance today.

David Saltzman: 8:04

So let's move on to another subject, because there's a deadline coming up early this summer on RxDC. What is RxDC all about and what do folks need to know?

Jennifer Berman: 8:13

Well, it's mandatory reporting in the District of Columbia. No, it has nothing to do with the District of Columbia, but some people ask that. So RxDC stands for prescription drug data collection and it's another CAA 21 requirement. If you ever wonder why we keep naming the year of the CAA, there are lots of CAAs. Caa stands for Consolidated Appropriations Act, and so there are many, so the 2021 one is the most interesting to benefit attorneys.

Jennifer Berman: 8:43

So it's another CAA requirement, rxdc, and what it is all about is that the government wants to evaluate and understand sort of the finances of health claims, and it's not just the employer-sponsored world although I'm most focused on what I do every day on the employer-sponsored world so they want to know sort of all of the money flowing into that system and then all of the money flowing out of the system, both for medical claims as well as for prescription drug claims, and the name of the project is Prescription Drug Data Collection. There's a lot of very detailed prescription drug information, but there is also information about the money coming in again and the money going out to medical claims. So it's a pretty complex set of information that CMS is looking to collect, and the reason for that collection is so that they can complete studies and explain to Congress where the money is going in our health system.

David Saltzman: 9:37

And there's a whole bunch of different reports, starting with D1 through 9?.

Jennifer Berman: 9:43

D1 through 8, yeah, d1 through 8. And then there's the P reports. So the P reports just tell you who you're reporting on. That's the identifying reports, and then the real content and the meat of this is in the D1 through 8 reports. I like to break them up into three chunks. D1 is the information about stuff going into the plan. How much money went into the plan, broken down between sort of total dollars, so think, in short, premium dollars or fully insured equivalents for a self-funded plan. And then, when you look at that dollars, they want to understand how much of this was employer dollars versus how much was employee dollars and how many people got covered. So that's what D1 is all about. D2 is medical claims when did the money go from a medical perspective? And then D3 through 8 is a whole bunch of detailed information about where the money went on prescription drugs.

David Saltzman: 10:39

Are carriers and TPAs doing this for clients?

Jennifer Berman: 10:43

Yes and no, and that no part is the real key to this. So D3 through 8, the prescription drug piece pretty much being taken care of for the vast majority of plans. So, whether you're fully insured, self-funded in most cases, whoever is responsible for administering that pharmacy benefit is taking care of it. Then we've got D2. So, moving backwards now, that's the information on the medical claims and that is typically being reported by whomever is administering those medical claims. So fully insured plans, again it's your carrier. Self-funded plans TPAs are typically taking that off.

Jennifer Berman: 11:25

D1 is the hard piece to this and that's because it's enrollment data. It's also cost data broken down between employee and employer dollars. That's where things get tricky, because that's not information that carriers, tpas and PBMs typically have. And so the real key is for plan sponsors, who are the ones who are ultimately legally liable for this, to make sure that the D1 is happening, the D2 is happening and the D3 is happening. So it's are all three of these pieces happening. And then for extra bonus credit, anybody who really wants to be super, super astute about this. So there's aggregation rules as to what level this can be reported at. That gets super complicated, but it's nice to say that there has to be coordination between TPAs and PBMs as to have a D2 and the D3 through A piece work. If you're doing it at the plan level and most employers are relish to their D1 piece you don't have to worry about it. But when you start rolling plans up and you can do some level of coordination, it gets even thornier.

David Saltzman: 12:33

So if you are a mere mortal, we're just two subjects into what we're talking about and your eyes are glazing over. But wait, there's more. As they say, we don't typically start thinking about ACA reporting until later in the year, but there have been some changes and people need to be aware of them because they're pretty pervasive. What's happened on those?

Jennifer Berman: 12:52

So a couple of points here, although now you've got me scared that nobody wants to talk to me, but okay.

David Saltzman: 13:00

Everybody wants to talk to you.

Jennifer Berman: 13:02

Thank you for that. Big points. Just a reminder I can't remind people of this enough ACA affordability thresholds have like plummeted in 2024. So the percentage is now well below 9% for coverage to be considered affordable to avoid that 49 to 80 HB penalty, which is now more than $4,000 per year. So please, please, please, watch that number carefully when you are designing your plans and designing your premiums the lowest cost, employee only premium To make sure that, if it's not your intention to offer unaffordable coverage, you are not accidentally offering unaffordable coverage. That is a big one to be aware of in the ACA reporting world.

Jennifer Berman: 13:48

Next big one in the ACA reporting world and trap for the unwary Electronic filing requirements. Until this year the reporting that is due this spring for the 2023 calendar year employers who were under 250 returns, filing less than 250, 1095s, 1095 Bs or 1095 Cs had the option to file those on paper. It's like a print them out from any number of different sources or you know opportunities to do them themselves. Fill them out of my hands, use a computer software and print it and mail it to the IRS. That is no longer an option. Electronic filing is now required unless you are filing fewer than 10 forms, and so you need to make sure that any system you are using to help with your ACA reporting is going to do the e-filing component for you, unless you are filing less than 10, it requires you to be a self-funded plan with fewer than 10 people on the plan, which is a very, very, very, very small minority of plans. So very almost everyone with an ACA reporting obligation at this point has to do it electronically.

Jennifer Berman: 14:58

Fun and games and the last fun and game of the ACA world is just to say that IRS enforcement of penalties related to both the employer mandate as well as filing penalties late penalties, incorrect penalties is at an all-time high. It's something that I see and deal with almost every day. So just be cognizant, be careful. We no longer live in a world of good faith reporting, which means you've got to get your 1094s and 1095s right. You can't just go to the IRS and say I'm sorry, I did my best. That rule is gone and so you know. It's something to focus on and make sure you're getting right, not just getting done. What do you do if you're an employer and you haven't forbid, didn't?

David Saltzman: 15:41

file last year's or the year before? What if you're in a rear's and you're in a rear's and you're in a rear's and you're in a rear's and you want to just get caught up and get to good standing?

Jennifer Berman: 15:52

Find a reporting partner who has the ability to do prior year filings. It is absolutely possible that late filing can trigger some late filing penalties. However, they can be relatively easily remediated and negotiated down. The penalties for late filings and failure to file are about they're nearing $600 per form at this point. You don't want to go there.

David Saltzman: 16:21

So get yourself caught up, if you're not.

Jennifer Berman: 16:24

Get yourself caught up if you're not and, by the way, there's not a week that goes by that I don't get a letter in from a client somewhere that has just never filed and is being actively penalized so there is an active IRS enforcement regime happening here.

David Saltzman: 16:38

And that's something that everybody who's listening should be aware of and should be talking to their clients about, if they haven't already. I'd like to think that all of our listeners are astute enough so that they've had these conversations, but if you haven't, now's the time.

Jennifer Berman: 16:52

Or if you had them five years ago.

David Saltzman: 16:55

Correct, Absolutely. So let's move on to the thing that maybe made the least amount of sense last year, at least to me, which is gag clause attestation. What is it? Why was it such a bear to do and why did parts of it not really make any sense?

Jennifer Berman: 17:11

So the gag clause attestation stems from a CAA requirement that health plans cannot have gag clauses in their contracts with their service providers. So a gag clause is a provision restricting the plan's access, the plan of participants' access, to cost and quality information. So when, basically, the plan participants and the plan sponsor need to have access to information about what they're paying towards claims and quality information about providers and they contract out of that information, say through a confidentiality clause or something like that, so those clauses and contracts are now not legal under the CAA. Step two of this is the CAA didn't just say gag clauses are illegal, it also said and therefore plan sponsors must go in a test to CMS that they have no gag clauses In any of their contracts, both direct contracts and indirect contracts.

Jennifer Berman: 18:13

So an indirect contract is one that the plan sponsor might not be a party to. They might have a contract, say, with the third party administrator, and then that third party administrator might have a contract with somebody else and they're worried about if there are gag clauses there. It's very hard to know and make a federal attestation to the presence of language being in or not being in a contract that you're not even a direct party to. So that's one issue, but a bigger issue is what exactly is a gag clause? And many of the provisions that we find when we sit down and we actually read these contracts between plans and their sponsor and their carriers, or TPAs, is that there is language that restricts access or restricts business associates access or could qualify as a gag clause, and so then that puts these planned fiduciaries in the position of having to decide.

Jennifer Berman: 19:04

Well, it's not legal for me to have this provision in my contract, but it's there, and I have a legal obligation to go tell CMS that it's not there, but it is there. So what do I do?

Jennifer Berman: 19:16

What indeed yeah and you want me to answer that? Yeah, you're going to ask me to answer the question, so I spent months trying to decide the answer to that question. The first answer is we don't lie to the federal government, so filing an attestation that says that there is no gag clause when there is, in fact, a gag clause is not a good idea. So the next step is beginning to work with and actively getting rid of those gag clauses and working with those vendors to find a way to eliminate them, and ultimately, over time, if it becomes impossible to eliminate them, then there is a decision that needs to be made in their fiduciary capacity, as a planned fiduciary, as to whether or not it's appropriate to maintain a relationship with a vendor who's not willing to take illegal provisions out of a contract. And so it's a documentation and a process question, but it's also a question of a legislative policy that is now the law, and now it has an enforcement mechanism behind it that is attempting to change the industry and change how things are done.

David Saltzman: 20:22

But the software that was required to be used for the federal government's software for reporting didn't give a lot of room for you know, gee, we did our best, or we tried, or we're not sure, or whatever, and attestation you're the lawyer on the call, but attestation is an actual thing and they didn't just say make your best efforts, let us know. They said you're going to attest. What are employers and plans to do?

Jennifer Berman: 20:49

Well, I am not here to provide legal advisor counsel and I should have read a disclaimer at the beginning of the call on that point. So this is worth exactly how much money you paid for me to be here and talk to you about this, and it's not supposed to be deemed as legal advice, but, again, you cannot attest to something that you do not know to be true.

David Saltzman: 21:09

And so, what do you do?

Jennifer Berman: 21:14

You need to make sure that you're working actively to get rid of those provisions. And document your process.

David Saltzman: 21:20

It's a big job and it's, I think, the intent was great, but the actual implementation was challenging, especially for plans and employers that might not even have those contracts or have access to those contracts. So it's. It'll be interesting to see how that shakes up and what happens going forward. Let's move to something that I don't think a lot of people have heard about, which is FinCEN. What is FinCEN? What is it, why does it matter and who's got to do what?

Jennifer Berman: 21:54

So FinCEN is the next big reporting requirement coming down the pike. It is actually Department of Treasury requirement. It does not relate directly to benefit plans, but I think all of us in the legal and accounting community are taking up the mantle of making sure that we inform folks about this, because this, this is a big one. It has criminal penalties associated with it and significant financial penalties, and it is essentially a registration requirement. It's a registration of ownership that has to be filed with the Department of Treasury, specifically FinCEN, which is a new department created for this purpose, to tell them who owns what. And when I say who owns what, I mean who owns what. So almost the vast majority of companies in the country are subject to this Building companies, operating companies, not nonprofits and not large entities with more than 20 employees and more than $5 million in annual revenue.

Jennifer Berman: 22:53

And then there's some exceptions for certain financial services organizations. Pretty much everybody else is subject to this. And what they have to do? They have to go to FinCEN or work with a vendor partner to register who their beneficial owners are. Beneficial owners include people who actually own the company more than 25% of it but also key decision makers within the company, so the C-suite and the people who control the C-suite, the board and those folks have to be registered with FinCEN, with the Department of Treasury, and then those registrations have to be maintained and kept current and it's who you are, where you live, driver's license or passport number, so name, rank and serial number for every company, except for those exceptions. But it's a big, big project and as recently as this morning I heard statements from the Department of Treasury about their plans around it and why they're not meaning to be punitive with those that penalty authority and the criminal penalties and dollar authority. They're very, very serious about enforcing this registration appointment.

David Saltzman: 24:01

Well, and they're pretty clear and open and honest about it on the website. They say that the reason they're doing this is because they want to make sure that they have all their ducks in a row if they find any RICO activity, a racketeering and corrupt organizations activity, or they need to go after somebody.

Jennifer Berman: 24:18

Yep. They don't know who owns what. Everybody's registered, all the companies are registered with the states and even those registrations don't have enough information in them. I mean, and the exceptions? The rules are thorny, and you know, I mean it's like, well, if the owner is less than 18, then the mom can do it for them. But I mean there's not a lot of exceptions here.

David Saltzman: 24:38

I mean, as we've talked to people, is that there are attorneys and there are CPAs and financial planners and other people who aren't even aware of this yet.

Jennifer Berman: 24:48

It's true, and the deadlines are coming up fast. So every single entity in the country that existed before this year has to be registered. That's subject to this by the end of this year, and the new companies have 90 days from their registration. So it's real, it's here and it is happening.

David Saltzman: 25:06

And if you change an ownership, that also needs to be updated.

Jennifer Berman: 25:08

Yes, yeah, and it not just changes an ownership, because and this is, this is one of those thorny things we call it beneficial ownership reporting. But again, it's not just about ownership, it's about those key decision makers. So CEOs, cfos, coos they're considered beneficial owners too under this very broad definition.

David Saltzman: 25:28

So let's make the small leap from there to something you're starting to talk I know an awful lot about, and that's fiduciary responsibility and, if indeed it needed any rocket fuel underneath the conversation, recent events at Johnson and Johnson, which you'll talk about, have kind of started the afterburners on that haven't they?

Jennifer Berman: 25:52

We live in interesting times don't we Indeed.

Jennifer Berman: 25:57

So Johnson and Johnson was the case we've all been waiting for, or the case we've all been dreading, or certainly something that those of us in the ERISA bar have been anticipating for a long time. So this is a case where the fiduciaries of a health and welfare plan were named directly in a lawsuit for breach of fiduciary duty, and it was just filed in the first week of February here, the first full week of February 2024 against J&J and its fiduciaries for failure to exercise the duty of prudence. Basically, they said you didn't act like a good fiduciary when you were administering this plan. And the biggest claim circles around the cost of prescription drugs under the plan. The big marquee example in the case, although there are others named, is an MS drug.

Jennifer Berman: 26:48

The plan paid over $10,000 for a 90-day supply of this generic drug that was available retail for $70 to $80. And it's low. In some cases it's $30. So we're talking I mean just massive disparity. And the PBM is named in the case, the broker is named in the case and the plans fiduciary committee and J&J did have a fiduciary committee, which is a step ahead of many, many health and welfare plans that I work with. Every single member of the fiduciary committee was named and the three top members of the fiduciary committee, the CHRL, j&j and their two VPs were named specifically. Their names are in the case.

David Saltzman: 27:38

It's pretty amazing and this came from inside J&J. This was somebody who was on the J&J plan.

Jennifer Berman: 27:46

And still is. They're technically currently employed by J&J.

David Saltzman: 27:53

Wow. So what means this in a broader context?

Jennifer Berman: 27:58

This is a huge wake up call to the entire employer plan community and reminder that Arisa is still here and that all of these we talk about the CAA, we talk about the Affordable Care Act, we talk about a lot of law that governs health and welfare plans, but the biggest, the big kahuna of them all is Arisa, which says employer plan sponsors are always a fiduciary and they all have a heightened duty with respect to the administration of that plan. And we forget that in the midst of things, that folks who are running health plans have to act in the best interest of the participants and beneficiaries always and they have to demonstrate a process and procedure that they have gone through in doing that. And there is a massive disconnect today between how that is done in the retirement plan world, where we are making decisions about people's money, and the health and welfare plan world, where we're making decisions about people's lives, and that's a wake up call about the need to change that.

David Saltzman: 29:11

So let me ask the question that's probably on a lot of people's minds, which is how would the folks who are running this plan, these three fiduciaries, how would they have known what the cost of that drug was?

Jennifer Berman: 29:24

So asking questions, really understanding how that formula worked, how the relationship with the PBM in that case worked, making sure that the advisors that they had.

Jennifer Berman: 29:38

So I'm not there's no expectation that as a plan fiduciary you become an expert in everything that there is to do in administering a plan.

Jennifer Berman: 29:47

The law completely contemplates that the average fiduciary can't do everything, but what it says is that that fiduciary is going to go through a process and make sure that they have advisors in place who are counseling them on those things.

Jennifer Berman: 30:01

So the questions that I would have asked if I were part of that process were has this fiduciary committee hired the correct consultants who understand how the pharmacy industry works, and are they telling them to ask the right questions?

Jennifer Berman: 30:16

Are they going through a comparative benchmarking process where they're looking at the cost of drugs and seeing it wasn't just this one example in the case. They give the case names a litany of other drugs where the same pattern and practice is seen in the way that the J&J Health Plan was administered. And so the way that I would assume that J&J is going to defend this case is going to be to show that there was a pattern or practice of making good decisions that are documented there and that, even despite that, this was the result and here's why. And that might be a successful defense we'll see but in any case, the way to protect and the entire concept of fiduciary duty is that you're going through a process, that you're looking at benchmarks and that you're acting as a reasonable person of like capability would under the circumstances. So it's a heightened standard. This is not just negligence, this is you have a higher standard and a higher duty to really understand what you're doing.

David Saltzman: 31:21

If you're an advisor out there in the universe, should bringing these professionals to the fiduciaries be something that you engage in, or at least discuss or encourage, because you just have a broker named in this thing, so you want to stay out of court. What should you do as an advisor?

Jennifer Berman: 31:41

Absolutely. This is again something where advisors need to have the right partnerships and be in the right table, and I think so many advisors have this automatic visceral reaction. I don't want to be involved with anybody who's going to evaluate me or talk about me and my comp. But if I'm doing a good job and, by the way, any fiduciary advisor or somebody who's coming in and working with a fiduciary committee is going to put vendor evaluation, including the evaluation of the broker, on that list and broker comp and the compensation of every vendor is going to go reasonable compensation is a fiduciary responsibility. They have to monitor that. So, straight up, anybody who comes in to talk to you about fiduciary duty is going to talk about if you, as the advisor, are doing your job. So thing number one, if you're doing your job, that should not scare you.

David Saltzman: 32:33

Go to thing number two.

Jennifer Berman: 32:34

Go to thing number two. Okay, fine, I can't help myself. But thing number two is that is how you protect your plan is by going through the motions and documenting it and really saying, yes, we've evaluated these things. Compensation does make benchmarks. The amounts being paid out do meet benchmarks, and here's how we are showing those things Right. There's nothing to be afraid of here. It's process, it's procedure, and that's how you demonstrate that you've in fact met these compliance obligations. And, by the way, along the way, you're going to find that you were wrong and that there are things that you're going to find that you didn't anticipate finding, and that's okay too. I used to say there's no arrester jail. There is, but only very, very, very bad people go to arrester jail Most of the time when you find a mistake, you know better and then you do better, and that's what the process is designed for.

David Saltzman: 33:38

Oh my Well, you know now that we've had a romp down compliance lane. Let's turn to the legislative side of the equation, because there's always something going on in Washington, and there are a few things that advisors need to keep their eye on, first of which would probably be the employer reporting bill. What's in that? What does it mean? What are its chances of passing? How will it affect things?

Jennifer Berman: 34:03

Employer reporting bill. Super high likelihood of passing, probably when they keep the federal government open at the beginning of March. It's great and wonderful and will be very exciting when it passes. It will not change very much. Employer reporting is here to stay. This is still ACA reporting we're talking about. It's going to fix some of the biggest problems with ACA reporting Allow for birth dates to be used Sometimes when SSNs aren't available, allow for a little bit more electronic distribution, give a little bit more time to respond to employer mandate penalties and those are all good things. It is not the once upon a time version of the employer reporting bill that did things like allowing for perspective reporting or eliminating ACA reporting. That is long ago off the table, and so this employer reporting bill does make some nice substantive improvements, but it is nothing that's going to change the game or really make it substantively a super different process than what it is today.

David Saltzman: 35:06

Another thing that's floating around in DC, which somebody once described as 20 square miles surrounded by reality, is the lower cost, more transparency bill. Not exactly a title that rolls off the tongue, but what's that all about?

Jennifer Berman: 35:20

So that one does a few things. Most significantly, it codifies a lot of the regulations that we have around transparency. So there was a set of regulations at the end of Trump administration. Then there's some legislative stuff in the CAA, and so a lot of that is in that bill, and then there are some additional provisions there around something we call site neutral, which is making sure that when the same provider or provider group really has both and things like that is, owns both inpatient and outpatient facilities, that you pay the same amount for certain things whether you're at the inpatient or outpatient facility. So there's some site neutral legislation as part of that bill, specifically as it relates to certain Medicare administration though, and we would like to see that spread further into the employer plan world and stuff like that. So there's a few additional transparency related pieces to this, but a lot of it really is codifying existing law, existing regulations and then making them statute.

David Saltzman: 36:24

So things to watch for, but not to be concerned about. Now there's a whole bunch of PBM legislation floating around too. What's that all about?

Jennifer Berman: 36:32

Well, that is the topic for another source in another day, and I know you've got plans to bring in some folks from the PBM world who will do a far better job explaining what is going on in the PBM world than me, suffice to say, here's what I will say. There's a lot of need for legislation and reform, probably in the PBM business it's J and J case being an excellent explanation of how things get a little bit wonky and sideways in the prescription drug world. And then what we have happening is because the federal government has not done a lot of this, we're seeing lots of states start to do this, and so now we have very interesting Supreme Court legislation, or Supreme Court oh my god, supreme Court legislation. The Supreme Court theoretically does not legislate according to the Constitution. No, I will leave it to you to decide if they actually do it or not. Legislate Supreme Court decisions about whether or not state governments can regulate these PBMs in aris of plans, because aris of preempts state law, blah, blah, blah, blah, blah.

Jennifer Berman: 37:33

So it's a very, very interesting world. And we have states trying to get in on the act because federal government hasn't done it yet. Then you have a lot of federal rules. It's all fascinating. There's no question in most people's minds that there is a need for pharmacy legislation and we have a little bit of a push and pull until we get something federal. We're seeing it at the state level. That's causing a lot of tension in the arisal world. It's a big old mess and could be an entire another hour, but I will spare you because, if they've stuck with me this long, there already should be up for safe.

David Saltzman: 38:05

I mean, I guess the question is, given the amount of money that Big Pharma has to throw around on the hill, are we actually going to see anything? A in an election year and B even thereafter. That's substantive.

Jennifer Berman: 38:18

So there is a lot of money from Big Pharma, right and so, but sometimes the need gets so big that it, it, it, you know, outweighs even the most powerful of lobbies. And you know I don't know about you, but you know I certainly have that experience every couple months where I'm standing in the pharmacy and dealing with a copay card and trying to figure it all out. You know there's so many stories and so much need and so much happening that I would not be surprised to see some level of PBM legislation passed. The question is if it's going to have any teeth and which piece is going to be. So my guess is yes, you will see something with the letters PBM in it. Federally, how much teeth that's going to have?

David Saltzman: 39:07

Yeah, but it does seem that with, with, with PBMs, we've gotten to the point where we're standing on the corner of anything goes meets enough already.

Jennifer Berman: 39:17

It's an interesting place to be.

David Saltzman: 39:18

It is Last thing to talk about telehealth relief. Why does? Why does telehealth need relief? What's that all about? I don't know.

Jennifer Berman: 39:26

Why does telehealth need relief? Telehealth needs relief because and it's this is all virtual care. It's not just telehealth I'm reminded that most of it's not on the telephone anymore but because of HSAs and high-deductible health plans. So you might recall that in order to participate in HSA you cannot have disqualifying non-high-deductible health plan coverage, which basically means you have to hit your deductible before anything can be covered under your health plan.

Jennifer Berman: 39:54

During COVID that rule got suspended, specifically with respect to virtual care or telehealth, and there had been before that a whole lot of conversation about well, can we provide free telehealth to people before they hit their deductible, because we want to encourage that behavior. And then that rule got extended a couple of times. There was a gap. It was very complicated and very difficult for all of us complainants. Today that extension runs out at the end of 2024. So under current law, you can in fact have access to virtual care before you hit your deductible and remain qualified for an HSA, but that will revert back to the old law on January 1st 2025, unless there's legislative action to change it, so kind of in that boring but not at all boring category of things that really will impact people if they don't get changed.

David Saltzman: 40:54

Not that that's not enough, but is there anything else on the radar that we should be looking for?

Jennifer Berman: 40:58

Well, there's always something and you never know what's happening next. But I think we probably have covered enough territory for today.

David Saltzman: 41:09

And we're grateful for your time. Nabip legislative vice chair and CEO at MZQ Consulting Arisa attorney, jen Berman. Jen, thanks so much for sharing your expertise.

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