Managing Compliance Across State Lines

Benefits compliance for HR leaders and brokers.

Transcription:

Deanna Cuadra (00:06):

Eight lines. I'm Deanna Quadra, Senior Reporter with EBN. For the next 30 minutes, we're going to discuss how HR leaders and brokers can keep up with compliance shifts in a world of ever emerging legislation. And of course, remote work. We are lucky to be joined by two great panelists today, right here we have Sarah Borders, Co-founder and compliance consultant at Benefits Compliance Solutions, which works to eliminate inefficiencies the risk of fines, litigation, and loss business. With over 17 years in the employee benefits industry, Sarah knows what it takes for a business to adapt and remain compliant. We are also joined by Jessy Rosales, Vice President of Total Rewards for North America at SAP a multinational business management software company. She supports approximately 25,000 employees, plus their families impacting over 70,000 lives in keeping up with the future for the sake of her workforce. We have, as I said, a great panel today, so we're going to go ahead and dive in. My first question, can each of you share some compliance challenges that have been haunting you at night?

Jessy Rosales (01:15):

I guess I'll start from an employer standpoint. I think that for us right now, the new regulations that are coming up on a daily basis, you call it patron transparency or different types of leaves or I don't know, there's multiple in the healthcare ecosystem as well. So there's too many things. I think that it's not one in particular one topic, but the constant of just listening and reading about the multiple changes that we're facing. And of course when you add the complexity that each state or each municipality has its own requirements, it just becomes a nightmare. It's not keeping me awake, it's a nightmare.

Sarah Borders (02:06):

So from my perspective, since that is my role in the sort of ecosystem through health plan compliance is to assist employers by way of their broker. Typically the things, the challenges that I see are primarily centered around state leave in local laws for sure. And also the new requirements under the CAA, the transparency and coverage rules that were rolled out in 2021. And there was some similar regulations that came out at the same time. And that has sort of come quietly and it is the most significant piece of legislation on health plans that we've seen since the ACA. And I don't think anybody really realized that until we kind of got, okay, how do we need to comply? So the CAA is definitely the number one challenge. I see.

Deanna Cuadra (03:07):

And I mean just from listening to sources, employers from across every industry, I can say that the CAA has given companies a lot of homework. Sarah, what are some of the biggest hurdles you're seeing your employer clients face with the CAA?

Sarah Borders (03:23):

So what I think is the most challenging, it was talked about this morning with the health policy conversation, and it's just really difficult to even be able to have the data that's necessary to comply with it in the first place. So for example, with the CAA, there's a portion of it that requires employers to extract data from their PBMs and from their health plan TPA, and basically upload it to the CMS website. That sounds easy, but it is not easy. It is very challenging, and getting that information from the service providers has been extremely difficult. Not really because they don't want to give over the data necessarily. It's just a myriad of new requirements and new data points that didn't previously exist. So everybody's sort of trying to figure out how to comply and that leaves the employer basically in the middle and who wants to comply, but really just can't that easily. So that's one of the challenges for sure.

Deanna Cuadra (04:37):

And Jessy, how much time have you spent talking about the CA with your broker? What comes up for you in those conversations?

Jessy Rosales (04:44):

Well, we do spend some time. I think that it's part of the conversation or I would say the majority of the conversation is how gray the area is today, how much change is happening every second, right? It's not, we're going live with this, but it's constantly changing. That's one of the main issues, the lack of clarity and the changes. And also, I mean the brokers are in the same situation as we are and all of us trying to keep up with everything that's happening. They are also trying to get themselves to that level of expertise and knowledge and of course partnering with their advisors to be able to help us. So it's a constant catch up from all parties, I would say.

Deanna Cuadra (05:45):

Now we can't talk about compliance of course, without talking about how remote work has completely blown a hole through what employers know about compliance. Can you talk a little bit about, again, what are those hurdles you're seeing now with remote work and how can employers create some consistency with their compliance across state lines?

Jessy Rosales (06:06):

Yeah, I think that especially in the, I am in the high tech industry, so the topic of flexibility and working remotely, it's not necessarily very new. It didn't come up with the pandemic in other industries or other companies. So we've been trying to keep up with that as much as possible from years ago. And yes, every day there are new things coming up and we try to keep up, but to provide some consistency because people are moving around, they move, they don't even tell us they're moving sometimes. So to try to make sure that we provide some sort of consistency to the system, but also from an employer perspective, we're seeing it from an equity of opportunity. Why is Sarah having this amount of days, but I only have two days and things like that. So we try to go with the most generous requirement and then apply consistently.

(07:10)

Of course, it always comes with a price tag. It always comes with the buy-in of leadership because sometimes leadership is like an extra day, what are you talking about? I need people here. They need to be selling, they need to be producing. And that is a conversation that I am assuming most employers have. But at the same time, we have to lead with our pillar of the culture that we live in the company. We want to make sure that one, we are compliant for sure, but also that we treat our employees with equity as well.

Deanna Cuadra (07:47):

Yeah. I'm curious from your perspective as well.

Sarah Borders (07:50):

From my perspective, remote work typically comes up in the context of where the employee resides and not so much where the employer is domiciled. Because in the insurance world, when we're talking about whether there's a fully insured plan, typically if the fully insured plan insurance laws follow the state where the policy was written. So that makes it pretty a little bit more easy to understand, even if you live, for example, in California like where we are now, but your plan is domiciled in Alabama, it follows Alabama state laws for fully insured plans. Now, if you're self-funded, you don't have to comply with state law at all. But sometimes what can happen with remote workers is there are specific laws in those states that are more tied in through the employment law side of things to where it's not necessarily a health plan insurance requirement, it's an employment law that says you have to, for example, in Illinois, if you have an employee who's in Illinois, but you're nowhere near Illinois, you have to give that Illinois employee a notice that talks about all the essential health benefits that your plan provides compared to the Illinois state essential health benefits that are required.

(09:15)

So that can be a little bit of a surprise if you've got one person in Chicago and you've got to do this requirement that it's not required anywhere else like that. So just knowing those different state laws leave laws are a huge headache for most employers with good reason because they're different. And not every state has one. And sometimes it's the city and sometimes it's the county, and sometimes it's not in effect yet, and there's different litigation happening against it. So you're not even sure where it is in the whole mix of things. So it's a big challenge for sure with remote working.

Jessy Rosales (09:54):

And just to add to the differences, the other thing that it's being very impacted by hybrid or flexibility is on the compensation side, because some of us work on both sides of the total reward spectrum, the transparency in job postings have been something that it's obviously very heard of and it becomes a challenge as well, because we have different regulations in different states. New York is different than California, that is different than Florida. So what do you do? Do you post a position in one single place? Do you post them in all? Do you provide ranges that are so ample that they're laughable sometimes from 10,000 to 3 million because they happen? They do. So that's another big complexity. And if you add on the mix, other countries in the region and things like that, it just becomes more convoluted. For sure.

Deanna Cuadra (10:55):

And to that point, I also want to, we jumped into the ca a and of course pay transparency. I also want to jump into the Mental Health Parody Act. I think that's one that's keeping a lot of carriers, brokers, advisors, everyone up at night. I'll ask Sarah first a little bit about what compliance with the Mental Health Parody Act has looked like from your end.

Sarah Borders (11:20):

So the Mental Health Parody Act from MPA, as we call it, has been around for a long time. Actually it's not new, but because of the CA passage in 2021, it put another huge requirement on particularly self-funded employers. And that was this requirement to have what we call and forgive me for these acronyms, but they make them up in QTL. Comparative analysis stands for non-quantitative treatment limitations. And essentially what this is, is it requires an employer that sponsors a self-funded plan to show all of the different non-numerical limitations that are in their plan and how it stacks up to the, for mental health parity, how it stacks up to the benefits and how the benefits are covered under medical surgical. So the more physical types of diagnoses and treatments. So in other words, you don't have to necessarily cover mental health benefits, but if you do, they must be in parity, they must be as good as or better than essentially the medical and surgical side of things.

(12:37)

That's what the mental health parity rules require. I don't know how they got set up that way, why there's all this parody stuff, but that's what we're dealing with. So with the CAA, that brought in, again, this comparative analysis requirement, and it's like, what is that? It's basically going to be a analysis, a report showing why your health plan and all the limitations are in place and how they compare to the medical surgical side. Not an easy thing to compile. In fact, impossible for anybody in this room to compile by yourself. You would need to have a really competent attorney or consultant to come through your data, ask questions of the TPA, the PBMs, all of the vendors and stakeholders, and compile this analysis, which ends up being like 120 pages. Then you have to be able to show it to the Department of Labor. And if they ask for it and they will, they do. So this is extremely challenging. And so that is one reason mental health parody. That sounds good, right? Well, when you look at what it actually requires, it's extremely onerous on self-funded plans to compile this data together.

Jessy Rosales (14:00):

You said it all, you said it all. It's just extremely complex. We have to lean on a lot of our stakeholders. We have the benefit of being a large company with certain functions that can help us. So we have our legal team, we have an ERISA council, we have different partners that we rely on, our broker, our advisors, everybody needs to bring together the efforts because it's a massive thing. Very complex for sure.

Deanna Cuadra (14:43):

We will take it even bigger picture. Ultimately, it does seem like compliance is about creating some degree of transparency. Why could this as much of a headache as it is, why could this eventually benefit employers despite everything it's throwing their way.

Sarah Borders (15:06):

So I do think it has potential to be a very good thing and probably with larger employers or even ones that are a bit more interested in knowing about their data, and there are many employers that have been doing this for years, extracting data, reviewing it, investing in different companies that can do something with this data, benchmark it, whatever. So I think the whole reason for the CAA was to kind of force the hand of a plan sponsor by way of their fiduciary duty. In other words, you're a fiduciary. You need to know what's going on in your plan, and we need to give you the mechanism to get your data by removing gag clauses. That's one of the supposed ways that you're supposed to be able to get your data that remains to be seen. And I think in the future we will be able to get more meaningful data to where you can actually make better plan decisions. And it's just more common. It's not so hard to get it as it has been now, and it's not just for a select few now it'll be more employers are forced to, and then it will eventually hopefully benefit the plan costs overall.

Jessy Rosales (16:25):

I mean you said it all, but it's basically just getting the right information to make better decisions. That's one. The second one is to, when we are messaging our employees based on our benefit strategy and our culture of transparency, making sure that we're thinking about inclusion and other topics that make foundational pillars of our strategy. This just helps on top of to make sure that we're following track of what we are saying. We're walking the talk.

Deanna Cuadra (17:00):

And I think the big question, the million dollar question would then to both of you is how can employers genuinely judge whether or not they're compliant? How do you keep up?

Jessy Rosales (17:16):

That's the $1 million. No, it's like the a hundred million dollars question. I think that we are all trying to find that answer. I don't have the answer for that question, but I think that surrounding ourselves with the proper stakeholders and advisors, it's definitely a must when possible. Making sure that we're up to date with everything that is happening, even though if it is really complex and making sure that on the other hand leadership has a buy-in on this because at the end of the day, we like it or not, it demand resources to make sure that we're compliant. And that can mean from paying a broker an advisor, data analysis, having resources to produce information or so it will require that. But also from a cultural perspective, I go back to the culture of the company. For me, it's very important. I think it's part of how we get to our employees with the right foundation.

Sarah Borders (18:26):

So I have a lot of thoughts on this. This is what I do. In my experience, most employers are pretty much solely reliant on their broker to know if they're in compliance. They may watch webinars read as much as they can. They get stuff from their broker's competition all the time. I'm certain that happens, and I think all that is fine. Reading websites, reading legal blogs, just trying to understand what does this mean for us? And I think that is really important, but having a resource that is an expert in compliance, whether it's an internal resource at your broker's office or going to an outside consultant or ERISA attorney to kind of go through a gap analysis is really the best and most efficient way to figure out if your company is compliant. Most of the time, what is going to determine what applies to you is your group size, meaning how many employees you have, not necessarily how many employees you have on the plan.

(19:40)

I can't think of anything where that actually matters. It's mostly total employees and your funding strategy. So are you fully insured? Do you buy an insurance product from a carrier or self-insured where you buy the administrative services only where they run the claims, but you fund the claims and then whatever you don't spend, you basically keep or reinvest. So you purchase stop-loss. Also, I'll say that a level funded product, someone mentioned that earlier, a level funded product is a self-insured product. It's just simply a marketing term that is for good reason. They go around a rules, but they are just sort of a simplified packaged way to purchase a self-funded plan that's not as complicated as a fully unbundled approach. So knowing that you can kind of decipher that if I'm self-funded, more things are going to apply to me because I essentially, it's like an analogy of owning a house compared to renting a house.

(20:44)

I own the house, I'm responsible for everything that goes on. I can get contractors, I can outsource things to get fixed, but ultimately I pay the taxes, I pay the mortgage, I own the house. And with renting, you just call and it's like calling a carrier and they do all the work. It's very, very similar. So when you must realize that a lot more things are going to apply to me if we're looking to go self-funded than would have previously with that knowledge and the idea that you are a fiduciary, you are actually a fiduciary, whether you're a named fiduciary or not, you're acting as one. And that means there's this duty, there's all these duties that you have to make sure are happening. So ultimately, yeah, just getting back to how to know if you're compliant. There are, and I'm happy to share with you, I have a checklist that you guys can use. If there's any employers in here that would like to run through it, it can be a little complicated, but at least you'll have some base knowledge to maybe take to your broker and ask them, where do we stand with these things? I have never discussed any of these things with you. So ultimately looking to your broker and what resources they can provide is going to be the best place to start.

Deanna Cuadra (22:05):

Alright, well we have a few minutes for questions from the audience. If anyone, I mean I imagine there's a lot of compliance questions out in the world. So do we have any questions? Yes.

Audience Member 1 (22:27):

You both talked a little bit about the regulatory landscape with employee leave, especially state to state how complex it is. So I'm just curious, Jesse, how your team is staying on top of that internally and then Sarah, how you're advising your client groups to stay on top of it.

Jessy Rosales (22:43):

Of course. So we definitely rely a lot in our brokers and our consultants. So we have a firm that it's helping us keep on track. They have obviously access to some of our employee information, not all of it, obviously for privacy reasons, but they know where we have our employees reciting and where are the offices. So we try to match, but they are keeping us updated. We have a tracking document. My team is constantly looking into what is the most beneficial or most generous offer across states so that we can keep up our policies to that. That's work in progress. It's never ending. And definitely heavily relying on our consultants.

Sarah Borders (23:31):

So likewise, there are very few good resources that have been produced by primarily HR technology companies. There's one called Expert HR, it's spelled with expert HR. They have a very helpful free tool that outlines every state and then it goes into every municipality. Like for example, in Texas, the cities of Austin, San Antonio and Dallas, all past on a city level, the city leave, they were all retracted because of litigation. But you can view that there if there is some sort of city or municipality that requires a type of leave and then there are a handful of states and they're growing and you can kind of guess where they are, they're the more typical progressive states that have these. And I think that is going to be the continuum going forward is I feel like in half the states are going to end up with some sort of paid family leave or at least some sort of protected medical leave of some sort.

(24:44)

But yes, that is a great resource to kind of keep track of it. And also the three largest insurance carriers out there, , the ones that sell disability products have very robust tools that you can click on the state and you can see what that applies, same kind of thing. And also the disability requirements. So just leaning on those large national carriers and vendors that have a whole team that's watching this, use that and then perhaps use their products because they do a lot of leave management, which can be outsourced as well. It's almost like you kind of need it in this day and age, somebody to track all this leave and what applies and what, yeah,

Jessy Rosales (25:31):

It is use the resources that you have as big as a company, as Deanna mentioned, and the amount of employees that we have. My benefits team is quite lean, so we don't have all the hands to keep up with everything. So that's why we rely on others. In our case, the Hartford is somebody that my consultant goes to get us the summarized version of the information. But yes, definitely try to leverage everything that you have on hand.

Deanna Cuadra (26:06):

Alright, I think we have, oh, one more question. Yes, I'll

Audience Member 2 (26:08):

Just speak up. So the gag clause at this station coming up, do you have a comment on why they laid that at the foot of the plan sponsors to be responsible for versus the tpa? A, because it just seems like another thing to put on a plate that's already very busy, very lean, and it seems out of place to me. Do you have a

Sarah Borders (26:29):

Comment on that? I do. So I agree with you that it does seem a little strange that they would require the employer to add test. So what he's talking about, if you all don't know, and hopefully you will know this by the end of today, there is a prohibition on plans being in contracts with networks that contain gag clauses. So a gag clause would be a restriction to your provider specific data, for example, like a contract clause. And the reason that a self-funded plan has to go and attest and not their TPA. Now, the TPA maybe is giving out letters that basically say our contracts with our networks contain no gag clauses, but because everything in that section of the CAA has attached itself as an ERISA fiduciary liability, that is why a TPA cannot attest on behalf of a plan sponsor the plan sponsor.

(27:28)

And if you go on to that website, you'll see that they'll answer some questions about the attestation, what they're attesting to, and then the last question where they sign their name basically says something about my answers are binding to the plan. So never is a TPA going to agree to bind itself to a plan's compliance because there's a reason for this too. Self-funded plans, probably you Jesse have AETNA, but you have a PBM and maybe you have a mental health carve out provider and maybe you have a dialysis provider. The unbundled approach has many vendors involved. And so a single TPA is not really able to attest to the fact that their plan, this entire plan has no gag clauses. They simply don't know. So fortunately, the gag clause at a station is not difficult. It's about five questions and it takes, it's not anything as hard as RXDC that was really challenging, but you have to be careful to what you're attesting to. Does your plan truly contain no gag clauses? And that's probably best looked at by an attorney, but that's why, and let just say fully insured plans do have the requirement, the carrier will attest to the fact that there's no gag clauses that's legally on them. So for what that's worth.

Deanna Cuadra (29:06):

Alright, well, oh, was there another question? Alright, well I think we've, there's no other questions. I think we've hit the end of our panel, but I want to thank everybody for joining us. I want to thank our lovely panelists and have a good rest of your afternoon. Thank you.