Washington Update: Texas Court Invalidates Certain ACA Preventive Care Requirements

On March 30, 2023, the US District Court for the Northern District of Texas (the “court”) issued a final judgment in Braidwood Management Inc. v. Becerra, which invalidates and prohibits enforcement of certain ACA preventive care requirements on a nationwide basis. As explained below, the final judgment follows the court’s September 7, 2022, ruling in a case challenging the legality of the preventive care mandates.

Under the ACA, non-grandfathered group health plans must cover certain preventive services without cost-sharing when they are delivered by an in-network provider. The covered requirements have historically included services given an “A” or “B” rating from the US Preventive Services Task Force (PSTF), vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), and preventive care and screenings for children and women recommended by the Health Resources and Services Administration (HRSA).

In this case, the plaintiffs included two businesses and six individuals who sought health insurance that excluded or limited coverage required by the ACA preventive care mandates. Among other claims, the plaintiffs argued that the ACA preventive care mandates violate the US Constitution because the appointment process for members of the PSTF, ACIP and HRSA did not satisfy the constitutional method for appointing US “officers.” A person is a US “officer” if that person occupies a continuing position established by federal law and exercises significant authority under that law.

On September 7, 2022, the court ruled that the appointment of ACIP and HRSA officers satisfied the constitutional requirements, since they are supervised and directed by the HHS Secretary. In contrast, PSTF members are independent experts that provide evidence-based recommendations related to preventive care services. The court found that the appointments of PSTF experts violated the US Constitution because they exercise officer-level authority but are not supervised or directed by an administrative agency. The plaintiffs had also asserted that the PSTF-recommended requirement to cover pre-exposure prophylaxis (PrEP) drugs to prevent HIV infection violated their religious rights under the Religious Freedom Restoration Act. On this issue, the court ruled in favor of the plaintiffs. Please see our previous article summarizing the court’s prior ruling.

The court reserved ruling on the appropriate remedies in their September 7, 2022, opinion. Accordingly, the March 30, 2023, judgment invalidates and prohibits the DOL, IRS and HHS (the “departments”) from enforcing all PSTF-recommended preventive care mandates issued since the ACA’s March 23, 2010, enactment, on a nationwide basis. Additionally, the final judgment prevents the departments from enforcing the PrEP coverage requirements as to the plaintiffs with religious objections.

Braidwood Management Inc. v. Becerra Second Memorandum Opinion and Order on Remedies »

Group Health Plan Considerations

First, it’s important to recognize that the court ruling only removes the ACA coverage requirements and cost-sharing prohibitions for preventive care based on the PSTF recommendations. Preventive care recommendations by ACIP (e.g., vaccines and immunizations) and HRSA for women's health services (including contraceptive coverage requirements) would not be affected and therefore, could not be subject to cost-sharing requirements. Employers may want to consult with their carriers or TPAs for further details on which preventive care coverage requirements (e.g., specific screenings for various types of cancer) are affected.

Second, the departments announced their intention to appeal the decision to the US Court of Appeals for the Fifth Circuit. The departments may also ask for a stay (i.e., delay) of the court’s remedy pending the outcome of the final litigation. If a stay is not granted, the US Supreme Court may be asked to review the issue of the stay. The merits of the underlying case could eventually be reviewed by the US Supreme Court, depending upon the outcome of any appeal. We will have to wait and see, but if a stay is granted at either appellate level, the PSTF-recommended services would continue to be required without cost-sharing, as they have been under the ACA.

Third, during the appeal proceedings, it is anticipated many group health plans will continue to cover all preventive services without cost-sharing. Typically, health plan contracts are in place for the plan year, and employers generally do not make coverage or cost changes midyear. Employers that sponsor fully insured plans may be limited in their ability to make midyear plan changes and should always consult with their carriers regarding potential plan changes and the relating timing and disclosures. (The related rules would generally require 60-days advance notice if a change to cost-sharing occurs outside of open enrollment.) Additionally, states may pass insurance laws mandating coverage of the PSTF-recommended services if the federal coverage requirement is not reinstated.

Generally, employers that sponsor self-insured plans have greater plan design flexibility than fully insured plans. However, cost or coverage changes based on the court’s ruling may need to be reversed if the ruling is overturned on appeal. Employers may also want to consider whether assessing cost sharing for PSTF-recommended preventive services could deter participants from receiving routine screenings, thus delaying disease detection and hindering long-term cost containment strategies. Employers contemplating plan changes should also be mindful that midyear changes that affect the content of the Summary of Benefits Coverage will generally require at least 60 days’ notice to participants in advance of the change effective date. Accordingly, self-insured plan sponsors should always consult with their TPAs, service providers and counsel regarding the implementation of any plan changes and related plan document and disclosure requirements.

Fourth, it's unclear whether HSA eligibility could be negatively impacted for participants who receive the invalidated PSTF-recommended preventive care. It is possible that the IRS will consider these services to be preventive care for this purpose. Hopefully, the IRS will address this concern soon; employers should watch for IRS guidance.

Fifth, plan participants may be confused by the case developments and seek reassurances from employers as plan sponsors that their preventive care coverage has not been adversely impacted. Employers should consult with their carriers and TPAs regarding any related updates or participant communications.

As this case continues through the legal process, employers should be aware of the recent court judgment, consult with their carriers and TPAs and monitor future developments. For specific advice and guidance, employers should always engage their legal counsel.