In March 2024, a three-judge panel of the New Orleans-based U.S. Court of Appeals for the Fifth Circuit (covering the District Courts of Texas, Louisiana, and Mississippi) heard oral arguments regarding an appeal of a lower-court ruling striking down the Affordable Care Act’s (“ACA’s”) requirement that private insurance plans cover preventive services at no cost to patients. The lower court’s ruling clashes with one of the major tenets of the ACA which mandates health plans cover preventive services as graded by the U.S. Preventive Services Task Force (“USPSTF”) with no cost share to the plan member (in network only). The lower, District Court found that the ACA cannot force plans to abide by the mandated preventive services coverage. The lower court found that the preventive mandate of ACA health plans is not subject to approval by the U.S. Department of Health and Human Services (“HHS”) because the members of USPSTF were unconstitutionally appointed in violation of Article II of the U.S. Constitution. A decision from the 5th Circuit Court of Appeals is expected soon.
Employer Action Items
- If the Fifth Circuit rules that a key component of the ACA’s preventive care mandate is unconstitutional, employers will want to consult with their issuers or third-party administrators (“TPAs”) to assess the impact and any benefit changes on their health coverage.
- The benefit changes may not be immediate because conflicting federal rules making significant mid-year changes to plan coverage are unusual and typically trigger a 60-day advance notice of modification respecting participants. If the decision affirms the lower court’s ruling, employers should consult their attorney for advice on when to make the change and what benefits should change.
- State laws regarding preventive care coverage requirements would also continue to apply to fully insured health plans. In addition, employers and issuers may decide to continue offering first-dollar coverage for the full range of preventive care services to help control future spending respecting preventable chronic conditions.
Summary
In March 2023, the U.S. District Court for the Northern District of Texas struck down a key component of the ACA’s preventive care mandate. Specifically, the District Court ruled that the preventive care coverage requirements based on an “A” or “B” rating by the USPSTF on or after March 23, 2010, violate the U.S. Constitution.
On appeal from the District Court, the federal government argued that the District Court’s ruling that would vacate the requirements under the Administrative Procedure Act (“APA”), as well as issuing a nationwide injunction, were unnecessarily sweeping, broad, and ultimately, drastic remedies. They also claimed that the plaintiffs’ concerns were limited to the Texas insurance market, which did not justify a nationwide injunction. Still, the Fifth Circuit panel appeared skeptical, inquiring whether a nationwide injunction was any broader than vacatur under the APA, as vacatur would apply nationwide, as well.
The APA governs the process by which federal agencies develop and issue regulations. It includes requirements for publishing notices of proposed and final rulemaking in the Federal Register and provides opportunities for the public to comment on notices of proposed rulemaking.
The Fifth Circuit panel appeared less open to broadening the District Court’s ruling to the panels that it upheld as constitutional. The lower court explicitly found that while the recommendations of the USPSTF were invalid under the APA due to the unconstitutional appointment of its members, the same reasoning did not apply to coverage requirements set by other agencies stemming from the Constitution’s executive powers to appoint.
The Biden administration appealed the District Court’s decision to the Fifth Circuit. The District Court’s ruling was put on hold pending appeal, which means the ACA’s preventive care mandate is currently in full effect. On March 4, 2024, a three-judge panel for the Fifth Circuit, consisting of two judges appointed by former President Donald Trump and one President Joe Biden appointee, heard oral arguments. A ruling by the Fifth Circuit is expected soon, likely followed by an appeal to the U.S. Supreme Court.
It is uncertain whether the Fifth Circuit will reverse or uphold the District Court’s ruling. However, for now, non-grandfathered health plans and issuers must continue to cover, without cost sharing, the full range of preventive care services required by the ACA.
For More Information
Northern District of Texas ruling that struck down a key element of the ACA’s preventive mandate: https://storage.courtlistener.com/recap/gov.uscourts.txnd.330381/gov.uscourts.txnd.330381.113.0_2.pdf
Amicus Brief: AHA Urges 5th Circuit to Maintain Cost-Free Access to ACA Preventive Services: https://www.aha.org/amicus-brief/2023-06-27-amicus-brief-aha-urges-5th-circuit-maintain-cost-free-access-aca-preventive-services
For more information
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