Pension & Benefits News Insurance company’s denial of claims for out-of-network lactation services did not violate ACA’s cost-sharing ban
Friday, July 31, 2020

Insurance company’s denial of claims for out-of-network lactation services did not violate ACA’s cost-sharing ban

By Pension and Benefits Editorial Staff

An insurance company was not required to cover out-of-network lactation services under the Affordable Care Act’s (ACA) preventive services mandate, the Eighth Circuit ruled, affirming the district court’s dismissal of a putative class action asserting breach-of-contract claims under state law and breach of fiduciary duty claims under ERISA. The plain language of the statute did not require the company to provide a separate list of lactation counseling providers. Further, the company did provide the insureds with qualified, available in-network providers.

Preventive services mandate. The ACA requires that group health plans provide coverage and not impose cost-sharing requirements for certain preventive health services, including comprehensive lactation support and counseling services (CLS). The ACA defines cost sharing as "deductibles, coinsurance, copayments" and other expenditures with respect to essential health benefits.

Two women, who were members of group health plans subject to the preventive services mandate, received CLS from an in-network registered nurse who operated the breastfeeding clinic at the University of Iowa Hospitals and Clinics (UIHC). However, when both women experienced breastfeeding problems and then had difficulties scheduling and finding in-network CLS providers, they obtained CLS via out-of-network providers and submitted claims for reimbursement. Wellmark Health Plan of Iowa, Inc. and Wellmark Blue Cross Blue Shield of Iowa (Wellmark) refused to cover those costs.

Lower court proceedings. The insureds filed a putative class action, asserting breach-of-contract claims under Iowa law and breach of fiduciary duties under ERISA based on allegations that Wellmark violated the mandate’s cost-sharing and "information and disclosure" requirements. The district court dismissed the information and disclosure claims for failure to state a claim and granted Wellmark summary judgment on the cost-sharing claims. The court concluded that undisputed facts established the insureds received CLS without cost sharing from Wellmark’s network providers and, therefore, Wellmark could deny coverage for out-of-network CLS without violating the ACA’s cost-sharing prohibition. The insureds filed this appeal.

Failure to provide list was not failure to provide coverage. The court found the district court did not err in dismissing the claims that Wellmark violated information and disclosure requirements in the preventive health services mandate. The court rejected the insureds’ argument that Wellmark’s failure to provide a separate list of lactation counseling providers was a failure to provide coverage. This argument was contrary to the plain language of the statute. Both ERISA and the ACA define "health insurance coverage" as "benefits consisting of medical care (provided directly, through insurance or reimbursement, or otherwise and including items and services paid for as medical care) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract offered by a health insurance issuer." Thus, "coverage" under the ACA refers to the "type or amount of benefits or services covered under a plan." Coverage does not include "the hassle associated with utilizing those services." Accordingly, the court found the term "coverage" in the ACA mandate did not require Wellmark to provide a separate list of its in-network lactation counseling providers.

The court also rejected the argument that the ACA mandate and its implementing regulations impose a categorical fiduciary duty on the administrators of group health plans governed by ERISA to publish a separate list of lactation counseling providers. Under regulations implementing an ERISA fiduciary’s disclosure obligations, "the health plan need only provide a list of network providers and describe when out-of-network services are covered – not specify which of those providers offer certain services such as lactation counseling." Because the insureds failed to state a claim under which relief could be granted, the court affirmed the district court’s dismissal of their information and disclosure claims.

Plans can impose cost sharing on out-of-network services. The court also found the district court did not err in granting summary judgment to Wellmark on the cost-sharing claims. The court rejected the insureds’ argument that the ACA’s CLS coverage mandate required Wellmark to expand its networks to include lactation consultants as eligible provider types. Neither the ACA nor its implementing regulations support this contention. The ACA does not use the term "network of providers." An implementing regulation provides that a plan or issuer may deny coverage or impose cost sharing for items and services "performed by an out-of-network provider" if the plan or issuer "ha[s] in its network a provider who can provide an item or service." The terms "network" and "in-network provider" are not defined and must be given their customary meaning in the group health insurance industry. "To adopt [the insureds’] interpretation would construe this regulation as requiring substantive changes to contracts that state-regulated group health insurers negotiate with medical providers," the court wrote.

Moreover, the summary judgment record established that Wellmark did provide the insureds qualified, available in-network providers of CLS. The insureds acknowledged in the district court that the lactation consultants at UIHC were in Wellmark’s network and had provided CLS to them during their pregnancies and after their discharge from the hospital without charge. The court agreed with the district court that difficulty in scheduling an appointment with a provider does not establish an insurer’s noncompliance with the cost-sharing prohibition. Accordingly, the court affirmed the district court’s judgment.

SOURCE: York v. Wellmark, Inc. dba Wellmark Blue Cross and Blue Shield of Iowa, (CA-8), No. 19-1705, July 13, 2020.

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