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New digital health regulations arose at the federal and state level in 2018, bolstering the existing legal framework to further support and encourage digital health adoption in the context of care coordination and the move to value-based payment. McDermott’s 2018 Digital Health Year in Review: Focus on Care Coordination and Reimbursement report – the second in a four-part series – highlighted these developments within the digital health landscape. These efforts brought changes to coverage of telehealth and other virtual care services, as well as information gathering for regulatory reform, and can help bridge the gap between research, funding and implementation as regulations build a framework within which companies can deploy their products, receive reimbursement and demonstrate value to patients. Here we outline digital health developments from the second half of 2018 and how they can help drive digital health forward in 2019. For a closer look at key care coordination and reimbursement developments that shaped digital health in 2018, along with planning considerations and predictions for the digital health frontier in the year ahead, download our full report.

To view the first report in the series, 2018 Digital Health Year in Review: Focus on Data, click here.

 

https://www.employeebenefitsblog.com/2019/02/digital-health-drives-forward-a-roadmap-of-regulations/

Several large employers are disputing how much money the New York Times owes a union multiemployer pension fund. Recently, six companies—including US Foods Inc. and United Natural Foods Inc.—filed an amicus brief supporting the New York Times in its case before the US Court of Appeals for the Second Circuit. Ruprecht Co., an Illinois meat processor, also filed its own brief in support of the New York Times.

Under the Employer Retirement Income Security Act of 1974 (ERISA), when determining an employer’s withdrawal liability, the actuarial assumptions and methods must “offer the actuary’s best estimate of the anticipated experience under the plan.” The underlying issue in this case involves an actuarial method called the “Segal Blend,” which often is used to value unfunded vested benefits and calculate withdrawal liability (an exit fee) from a union multiemployer pension plan. Under the Segal Blend, the actuary blends the multiemployer plan’s assumed interest rate on investments with a lower interest rate used by the Pension Benefit Guaranty Corporation for terminating plans. Many multiemployer pension plans commonly use the Segal Blend to calculate an employer’s unfunded liability and payment upon exiting the multiemployer plan (known as “withdrawal liability”). These large employers claim that using the Segal Blend results in an artificially lower interest rate, which in turn results in larger employer withdrawal liability and larger amounts an employer must pay to exit the multiemployer pension plan.

The suit claims that using the Segal Blend does not reflect the actuary’s best estimate of the anticipated experience under the multiemployer plan and violates of ERISA. The listed companies object to the use of the Segal Blend, arguing that the calculation fundamentally undermines ERISA and allows multiemployer pension funds to impose disproportionately large liability on employers leaving the fund (while avoiding strict judicial review). The legal briefs note that multiemployer plans have an incentive to inflate the amounts owed by withdrawing employers, and that this is easy to do by altering the calculation method with the Segal Blend. In this case, the employers allege that the artificially deflated interest rate under the Segal Blend does not reflect the multiemployer fund’s anticipated experience. Rather, the companies claim that the interest rate for the withdrawal liability calculation should be the same interest rate used by the actuaries to determine the multiemployer plan’s required minimum funding.

On the other side of the case, several groups have filed briefs supporting the multiemployer fund’s calculation, including the Segal Group, Inc. (creator of the Segal Blend), the federal pension insurance agency, and an interest group representing multiemployer pension and welfare plans. Given both the large liabilities at issue in this case and the general funding crisis for many multiemployer pension plans, the Second Circuit’s decision could have a wide-reaching impact on the financial health of all multiemployer plans.

We are watching the developments of this case, and employers with multiemployer plans should contact their regular McDermott lawyer or one of the authors for more information.

https://www.employeebenefitsblog.com/2019/02/piling-on-corporations-support-the-new-york-times-in-multiemployer-pension-calculation-dispute/

Data privacy and security legislation and enforcement saw significant activity in 2018 and early 2019. McDermott’s 2018 Digital Health Year in Review: Focus on Data report – the first in a four-part series – highlights notable developments and guidance that health care providers, digital health companies and other health care industry stakeholders should navigate in 2019. Here, we summarize four key issues that stakeholders should watch in the coming year. For more in-depth discussion of these and other notable issues, access the full report.

  1. EU General Data Protection Regulation (GDPR) enhances protections for certain personal data on an international scale. US-based digital health providers and vendors that either (a) offer health care or other services or monitor the behavior of individuals residing in the EU, or (b) process personal data on behalf of entities conducting such activities should be mindful of the GDPR’s potential applicability to their operations and take heed of any GDPR obligations, including, but not limited to, enhanced notice and consent requirements and data subject rights, as well as obligations to execute GDPR-compliant contracts with vendors processing personal data on their behalf.
  2. California passes groundbreaking data privacy law. The California Consumer Privacy Act (CCPA), which takes effect on January 1, 2020, will regulate the collection, use and disclosure of personal information pertaining to California residents by for-profit businesses – even those that are not based in California – that meet one or more revenue or volume thresholds. Similar in substance to the GDPR, the CCPA gives California consumers more visibility and control over their personal information. The CCPA will affect clinical and other scientific research activities of academic medical centers and other research organizations in the United States if the research involves information about California consumers.
  3. US Department of Health and Human Services (HHS) Office of Civil Rights (OCR) continues aggressive HIPAA enforcement. OCR announced 10 enforcement actions and collected approximately $25.68 million in settlements and civil money penalties from HIPAA-regulated entities in 2018. OCR also published two pieces of guidance and one tool for organizations navigating HIPAA compliance challenges in the digital health space.
  4. Interoperability and the flow of information in the health care ecosystem continues to be a priority. The Office of the National Coordinator for Health Information Technology (ONC) submitted its proposed rule to implement various provisions of the 21st Century Cures Act to the Office of Management and Budget (OMB) in September 2018; this is one of the final steps before a proposed rule is published in the Federal Register and public comment period opens. The Centers for Medicare & Medicaid Services (CMS) released its own interoperability proposed rule and finalized changes to the Promoting Interoperability (PI) programs to reduce burden and emphasize interoperability of inpatient prospective payment systems and long-term care hospital prospective payment systems.

https://www.employeebenefitsblog.com/2019/02/2018-digital-health-data-developments-navigating-change-in-2019/

A recent Eighth Circuit decision regarding “cross-plan offsetting” serves as an important reminder of how ERISA’s fiduciary duties impact both employers and fiduciaries who handle claims.

The case involved the common practice of cross-plan offsetting, which occurs when a claims administrator resolves an overpayment to a provider by refusing to pay that provider for a future claim (or reducing the amount paid for that future claim)—even if the latter claim was made by a participant in an unrelated plan. Cross-plan offsetting allows claims administrators to quickly recover overpaid benefits without the time and expense associated with one-off recovery actions against providers. Defendant UnitedHealth Group (UnitedHealth) initially applied this practice among its in-network providers, but then expanded cross-plan offsetting to non-network providers beginning in 2007. This practice was challenged by two out-of-network doctors in the case at issue, Peterson v. UnitedHealth Group, Inc.

Access the full article.

https://www.employeebenefitsblog.com/2019/02/eighth-circuit-rejects-cross-plan-offsetting/

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