Mercer weighs in as House committee looks to bolster ERISA  

ERISA’s nationally uniform regulatory framework that allows multi-state, self-funded employer health plan sponsors to innovate and control costs is under attack and must be defended, Mercer said in March 15 comments to the House Committee on Education and the Workforce. The Committee is exploring ways to build on and strengthen ERISA to help mark its 50th anniversary this year, and Chair Virginia Foxx, R-NC, is seeking feedback on a wide range of topics with the goal of increasing affordability and quality in employer-provided healthcare coverage. Mercer’s comments addressed several issues on which the committee sought feedback:  

ERISA preemption

While preemption “has provided plan sponsors the flexibility to pioneer and revolutionize healthcare in positive ways, the attack [on preemption] has gained momentum” since the Supreme Court’s 2020 ruling in Rutledge v. Pharmaceutical Care Management Association that an Arkansas law on Pharmacy Benefit Managers was not preempted by ERISA. That decision has opened the door to several states passing laws that regulate the network and designs of PBMs beyond the issues in Ruttledge, Mercer noted.  

Mercer recommended that the Committee oppose any legislation that would weaken preemption and direct the Congressional Research Service – a non-partisan policy research and analysis service – to publish and disseminate to state policymakers an extensive report on the history and importance of ERISA preemption. 

Fiduciary requirements and definition

ERISA’s existing fiduciary framework functions well, so Mercer proposed no changes to either the definition of a fiduciary or the fiduciary duties prescribed in ERISA. Mercer instead recommended building on recent transparency improvements to ensure that plan fiduciaries have access to the information (such as claims data) they need to better fulfill existing fiduciary duties, including selecting and monitoring service providers that administer plan benefits. Mercer cautioned, however, against expanding fiduciary status to service providers since they typically have no or limited discretionary authority and doing so would increase costs.  

Reporting requirements

Mercer expressed support for consolidating and streamlining the reporting and disclosure requirements for health and welfare plans and for agency rulemaking that would expand plans’ ability to use electronic delivery of notices and disclosures. 

Cybersecurity

Mercer supports the continued modernization of the Health Insurance Portability and Accountability Act security rule compliance guidance and increased transparency of business associate cybersecurity risk management practices but urged against expanding the definition of covered entities to include employer sponsors of group health plans. Employer health plan sponsors “take very seriously their role in protecting the privacy of protected health information”, Mercer noted, adding that ERISA group health plans have been subject to HIPAA’s stringent privacy and security rules for more than 20 years. Rather than import HIPAA requirements into ERISA or expand on fiduciary obligations already attached to group health plans, Mercer supports an alignment of the ERISA cybersecurity requirements for retirement plan fiduciaries, who are not subject to HIPAA, with those for HIPAA covered entities to streamline compliance and strengthen cybersecurity practices all around. 

Specialty drugs

Mercer outlined the challenges employers are facing in offering high-cost specialty drugs and some of the innovative strategies they are using in trying to address them. Reinsurance is one such strategy and plays a critical role in allowing employers to cover high-cost specialty drugs, but the market for such coverage is becoming more difficult for employers, Mercer said.