How Adapting to Regulations Can Benefit Your Practice (with Jen Berman)

This video provides an in-depth exploration of the evolving landscape of regulatory compliance in employer-sponsored health plans, emphasizing that compliance, often viewed as a burden, can be a significant value differentiator and an opportunity to genuinely help people. Featuring Jen Berman, CEO of MZQ Consulting, the discussion traces her journey from an ERISA lawyer specializing in health benefits to founding a leading compliance solutions firm. The conversation begins with the transformative impact of the Affordable Care Act (ACA) in 2010, which created a new legal frontier and a demand for experts willing to navigate its complexities, such as preventive care rules and the elimination of pre-existing condition exclusions. Berman highlights how the initial industry reaction was one of panic, but she recognized it as a unique career opportunity due to the lack of existing expertise.

The narrative then shifts to the accidental origins of MZQ Consulting, born from solving a specific, complex problem for school districts related to ACA's full-time employee definition, which traditional white-labeled solutions failed to address. Leveraging her legal understanding and her father's Excel expertise, Berman developed a robust, data-driven solution. This initial success, particularly in accurate ACA reporting that avoided billions in penalties (226j letters) that plagued other providers, underscored the critical need for solutions that deeply understood the underlying law, not just the technical reporting. The company's evolution saw it expand beyond ACA reporting to broader ERISA compliance (plan documents, 5500s) and, more recently, to the intricate requirements of the Consolidated Appropriations Act (CAA).

A significant portion of the discussion is dedicated to the complexities introduced by the CAA, specifically focusing on mental health parity, prescription drug data collection (RxDC), and gag clause attestations. Berman meticulously breaks down mental health parity, explaining the distinction between quantitative and non-quantitative treatment limits across six benefit categories and the CAA's new requirement for comparative analysis, which demands operational data and annual review. She reveals a critical insight: many plans, even those believing they are compliant, often have hidden violations, which can be uncovered through rigorous analysis, leading to real benefit enhancements for employees. The RxDC requirement is explained as a CMS data collection effort to understand the flow of money in health plans, highlighting the often-overlooked employer responsibility for providing contribution data that carriers and TPAs typically lack. Finally, the contentious issue of gag clause attestations is explored, where employers are required to attest to the absence of contract provisions restricting access to price, quality, or de-identified health information, a task made challenging by indirect contracts and vendor sub-attestations that may not fully cover the plan sponsor's obligations. Berman emphasizes the ethical dilemma of attesting to something one cannot fully verify and advocates for good-faith efforts and continued dialogue with regulators for relief.

Key Takeaways:

• Compliance as a Value Differentiator: Regulatory compliance should not be viewed solely as a burden but as an opportunity for consultants and employers to differentiate their services and provide significant value, ultimately helping people access better benefits.
• Deep Legal Understanding is Crucial: The success of compliance solutions, particularly in areas like ACA reporting, hinges on a profound understanding of the underlying law, not just technical execution. This prevents costly errors and penalties.
• ACA's Enduring Impact: The Affordable Care Act fundamentally reshaped health plan administration, introducing rules around preventive care, emergency coverage, and eliminating pre-existing condition exclusions, which are now commonplace but were revolutionary at the time.
• Mental Health Parity Complexity: Achieving mental health parity is an aspirational goal, requiring detailed analysis of both quantitative (e.g., deductibles, copays) and non-quantitative (e.g., prior authorization, medical necessity definitions) treatment limits across six distinct benefit categories.
• CAA's Comparative Analysis Requirement: The CAA mandates that employers perform and document a comparative analysis of their mental health and substance use disorder benefits against medical/surgical benefits. This "show your work" requirement is a distinct legal obligation separate from actual parity.
• Annual Review for Parity: Due to changing plan terms, claims data, and vendor relationships, mental health parity analysis should be an ongoing, likely annual, process to ensure continued compliance and accurate assessment.
• RxDC Employer Responsibility: The Prescription Drug Data Collection (RxDC) requirement, part of the CAA, obligates plan sponsors to report not only claims data but also the breakdown of employer and employee contributions, a piece of data often not natively held by TPAs or carriers.
• Gag Clause Attestation Challenges: Employers are required to attest to the absence of gag clauses in contracts that restrict access to price, quality, or de-identified health information. This is complicated by indirect contracts and the limitations of vendor sub-attestations, creating a difficult compliance scenario.
• Good Faith Effort is Key: When faced with complex or unresolvable compliance issues like gag clause attestations, employers should document their good faith efforts, due diligence, and reasons for any inability to fully attest, rather than simply ignoring the requirement.
• Regulatory Intent vs. Execution: While regulations can feel onerous, they often stem from good intentions, such as improving health benefits or preventing fraud (e.g., in the case of MEWAs/captives). The challenge lies in effective execution and clear guidance for compliance.
• Proactive Compliance Strategy: Compliance should be an evergreen process, ideally initiated or reviewed immediately after plan renewal, especially when plan design or vendor relationships change.
• Role of Compliance Consultants: Given the complexity and evolving nature of regulations, employers and advisors benefit significantly from partnering with specialized compliance consultants who act as "electricians" to the "general contractor" (advisor) or "architect" (captive), ensuring the intricate details are handled correctly.

Key Concepts:

• Affordable Care Act (ACA): Landmark U.S. healthcare law passed in 2010, introducing significant reforms to health insurance coverage and administration.
• ERISA (Employee Retirement Income Security Act): Federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.
• 226j Letter: An IRS penalty letter related to non-compliance with the ACA's employer mandate or incorrect ACA reporting.
• Consolidated Appropriations Act (CAA): Comprehensive legislation that includes significant provisions impacting health plans, such as mental health parity, prescription drug data collection, and gag clause attestations.
• Mental Health Parity and Addiction Equity Act (MHPAEA): Requires that financial requirements and treatment limitations for mental health and substance use disorder benefits are no more restrictive than those for medical and surgical benefits.
• Quantitative Treatment Limits (QTLs): Numerical limits on benefits, such as deductibles, copays, coinsurance, and out-of-pocket maximums.
• Non-Quantitative Treatment Limits (NQTLs): Non-numerical limits on benefits, such as prior authorization requirements, medical necessity criteria, formulary design, and network adequacy.
• Prescription Drug Data Collection (RxDC): A CMS data collection initiative under the CAA requiring health plans to submit information on prescription drug and medical spending, including employer/employee contributions.
• Gag Clauses: Contractual provisions between a health plan and a service provider (e.g., TPA, PBM) that restrict the plan's access to price, quality, or de-identified health information.
• Attestation: A formal statement or declaration confirming that something is true or accurate, often made under penalty of perjury.
• MEWA (Multiple Employer Welfare Arrangement): An employee welfare benefit plan or any other arrangement that provides benefits to the employees of two or more employers. Heavily regulated due to past fraud.

Examples/Case Studies:

• ACA Implementation: The speaker's personal experience becoming an expert in ACA as a new law, highlighting the industry's initial panic and the opportunity for specialization.
• MZQ Consulting's Origin: Solving a specific, complex problem for school districts in New York to determine full-time employees under the ACA, which involved variable hour employees and coaches, leading to the development of a software solution.
• ACA Reporting Penalties: The "billions of dollars in ACA penalties" assessed due to incorrect early ACA reporting (226j letters), which MZQ Consulting avoided for its clients by deeply understanding the law.
• Manual Recoding: The speaker's personal account of manually recoding over 800 employers' 1094 forms and 700+ 1094 C's in the first year of ACA reporting when their software had a flaw, demonstrating a commitment to accuracy.
• Mental Health Parity Violations: Instances where MZQ's comparative analysis uncovered hidden mental health parity violations in employer plans, leading to plan changes and real benefit enhancements for hundreds or thousands of people.
• RxDC Contribution Data: The common scenario where TPAs and carriers lack the breakdown of employer and employee contribution data, making it the employer's direct responsibility to provide this for RxDC compliance.
• Gag Clause Attestation Dilemma: The challenge for small employers relying on sub-attestations from large TPAs/PBMs, where the vendor's attestation of their own compliance does not necessarily cover the plan sponsor's distinct legal obligations.