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A group of stakeholders wants the Labor Department to hold off on finalizing the association health plan rule until the agency releases data on fraudulent health plans.
The group, which includes the AFL-CIO, the acting attorney general of Hawaii, the DC Health Benefit Exchange Authority, and Georgetown University’s Center on Health Insurance Reforms, made the demand in a March 1 comment letter on the proposed rule. The group also filed a Freedom of Information Act request demanding that the DOL release any statistics or information it has about the agency’s enforcement efforts against multiple employer welfare arrangements.
There’s long been concern about fraud and abuse by MEWAs, which are similar in structure to association health plans. The proposed rule on association health plans would change the definition of “employer” to make it easier for individuals and employers in the same industry or geography to band together in an association and form their own health plan.
The coalition says the public needs a fuller picture of the problems association health plans could face and to have that, the public needs data on fraudulent MEWAs.
The FOIA request comes at a time when the DOL has faced criticism for shelving an unfavorable internal analysis from its proposed rule on tip pooling. The agency’s Office of Federal Contract Compliance Programs also is facing a lawsuit regarding its FOIA documents policy. The DOL also was sued last fall for failing to respond to a FOIA request on its fiduciary rule.
The DOL didn’t respond to requests for comment from Bloomberg Law.
The DOL has collected information about fraud and abuse by MEWAs, but it didn’t detail that information in its proposed rule on association health plans, Marc Machiz, former director of the DOL’s Employee Benefits Security Administration’s regional office in Philadelphia, told Bloomberg Law. Machiz advised the coalition making the FOIA request.
MEWAs and association health plans have a “a long history of fraud, insolvencies, and market segmentations,” Kevin W. Lucia, research professor at the Georgetown University’s Center on Health Insurance Reforms, told Bloomberg Law. “When you think about this history and the framework that’s proposed it really does give you pause,” he said.
The DOL proposed the rule after President Donald Trump asked it to consider revising the rules for association health plans in an October 2017 executive order. Some tout this as a way to give small businesses and individuals access to more affordable health care. Skeptics think the rule could bring back fraudulent health arrangements that the DOL and states had worked to tamp down for decades.
The group would like the DOL to withdraw or substantially delay the proposed rule while it looks at the data on MEWAs that the department has collected over the years.
There would be precedent if the DOL decided to change the analysis of a proposed rule. In 2011, the DOL withdrew the original iteration of its fiduciary rule in order to perform a more thorough economic analysis of the regulation’s impact. It took the agency five more years to finalize the rule.
In recent months, the agency ramped up its enforcement of MEWAs. In November, it issued its first cease-and-desist order against a MEWA operator. The letter prevents people working on behalf of the MEWA from marketing it to new employers or enrolling those employers in the plan. Just last week, the DOL sued the National Association of Prevailing Wage Employers, alleging it was drained of assets by the family managing the program.
This recent flurry of activity could indicate increased enforcement against MEWAs from the Trump administration as it tries to push association health plans as a positive step on health-care offerings for smaller employers.
The proposed rule was short on details on how these plans would work and how the DOL would protect consumers against the potential for fraud, Mila Kofman, executive director of the DC Health Benefit Exchange Authority, told Bloomberg Law. The agency also made little mention of any analysis on fraudulent health plans it has found or how many people it has used to find those “scams,” making it hard for interested parties to make informed comments on the proposal, she said.
In the proposal, the DOL mentions state enforcement on MEWAs and the Affordable Care Act’s tightened reporting requirements on MEWAs, but it doesn’t go much further.
Machiz is hoping the DOL will comply with the request to slow down its work on the rule and take a look at the data on MEWAs before finalizing. If the agency forges ahead, the FOIA request will still produce documents showing the DOL’s research on fraudulent MEWAs in the past, something that could be used in a future lawsuit, he said.
“If they decide to just barrel through, the FOIA request still stands. We’re going to get the data,” he said.
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