Compliance News | April 3, 2023
The ACA’s preventive services mandate requires non-grandfathered group health plans and insurers to cover certain preventive services with no cost-sharing on an in-network basis. On March 30, 2023, Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas ruled that part of that mandate violates the Constitution and vacated all agency action taken to implement or enforce the preventive care coverage requirements on or after March 23, 2010.
Plan sponsors do not need to take any action in response to this decision and may be best served by monitoring the response by the federal government and higher courts.
Judge O’Connor has issued a series of decisions against the ACA — including a 2018 decision invalidating the ACA in its entirety, which was overruled by the U.S. Supreme Court in 2021. In September 2022, O'Connor ruled that mandated coverage of the HIV prevention treatment known as PrEP violated plaintiffs' religious rights under the Religious Freedom Restoration Act.
The recent case, Braidwood Management Inc. v. Becerra, was brought by plaintiffs who challenged the legality of the ACA’s preventive services mandate on several grounds, including that it violates the Constitution because members of the United States Preventive Services Task Force (USPSTF) have not been appointed in a manner consistent with Article II’s Appointments Clause.
The court ordered that the preventive care requirements issued based on the USPSTF are vacated and the federal government is enjoined from implementing or enforcing them. The court’s order is complex — in part because:
Because both ACIP and HRSA are ultimately subject to the “supervision and direction” of the Secretary of Health and Human Services, the court’s order does not appear to extend to ACA-mandated preventive care recommended by the ACIP or the HRSA, including contraceptive coverage and vaccines.
The administration is expected to appeal the decision and seek a “stay,” which would prevent the ruling from taking effect until higher courts can rule on the case. In addition, congressional Democrats could introduce legislation to address the coverage of preventive services.
As noted above, plan sponsors of non-grandfathered plans do not have to take any action in response to the decision.
It is important to look at how the federal government approaches the decision before making choices to change preventive services coverage. If, after considering the federal response and discussing the issue with legal counsel, a plan sponsor wishes to modify preventive services coverage, it would likely be considered a material reduction in benefits, requiring a 60-day advance notice if the change is made mid-year.
This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.
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