PREVENTING OLD TRICKS IN THE
NEW WORLD: EAST V. BLUE CROSS
BLUE SHIELD OF LOUISIANA
Update on Discriminatory
Marketplace Practices
A Presentation at
“The Intersection between ACA and ADAP Summit”
April 14, 2014
Scott A. Schoettes
Senior Attorney and HIV Project Director
Our Mission
Lambda Legal is a national organization
committed to achieving the full recognition of
civil rights of lesbians, gay men, bisexuals,
transgender people and people living with
HIV through impact litigation, education and
public policy work.
Overview
1. Events/conduct leading to the lawsuit
2. Legal background
3. Litigation strategy of the insurers
4. Current status; remaining vigilant
Events Leading to Lawsuit
Prior to ACA Implementation:
•
John East and 50-60 others receive insurance premium
assistance for individual policies through the Louisiana
(Ryan White) Health Insurance Program (HIP).
•
All at or below 300% of the Federal Poverty Level
•
All had an active health insurance policy more cost-effective
than to provide care/medication directly through Ryan
White
•
BCBS is the largest insurer in Louisiana by far, and the only
insurer in the state that includes Atripla in its formulary
•
And what does BCBS see headed its way?
Events Leading to Lawsuit
Prior to ACA Implementation:
Statistics on People Living with HIV in Louisiana
Approximately 19,087 PLWH in Louisiana
84% are below 400% of federal poverty level and are eligible for
Ryan White HIV/AIDS Program Assistance:
That’s 16,033 people
Of Those Eligible for Ryan White
• 25% are undiagnosed
• 25% are receiving Ryan White assistance
• 50% are diagnosed but not in care
Diagnosed but
Not in Care
Undiagnosed
Receiving
Assistance and In
Care
Events Leading to Lawsuit
Blue Cross Blue Shield Takes Action
Late December/early January:
Those receiving Ryan White premium assistance hear that
BCBS will no longer accept payment from third parties,
including the Ryan White Program.
Early January:
Personnel from the Louisiana Health Insurance Program (HIP)
make inquiries and confirm that BCBS will no longer be
accepting such payments
February 10:
BCBS formally announces its policy, which says it will stop
accepting such payments after February 28.
Events Leading to Lawsuit
Blue Cross Blue Shield Takes Action
BCBS cites the CMS Guidance from November 2013:
“[…] It has been suggested that hospitals, other
healthcare providers, and other commercial entities may be
considering supporting premium payments and cost-sharing
obligations with respect to qualified health plans purchased by
patients in the Marketplaces. HHS has significant concerns with
this practice because it could skew the insurance risk pool and
create an unlevel field in the Marketplaces. HHS discourages this
practice and encourages issuers to reject such third party
payments…”
Events Leading to Lawsuit
Blue Cross Blue Shield Cites CMS Policy
BCBS cites the CMS Guidance from November 2013:
“[…] It has been suggested that hospitals, other
healthcare providers, and other commercial entities may be
considering supporting premium payments and cost-sharing
obligations with respect to qualified health plans purchased by
patients in the Marketplaces. HHS has significant concerns with
this practice because it could skew the insurance risk pool and
create an unlevel field in the Marketplaces. HHS discourages this
practice and encourages issuers to reject such third party
payments…”
Events Leading to Lawsuit
HIV Advocates Respond and BCBS Digs In
Efforts from within the state and by national advocates
From HHS/CMS:
“By statute, RWHAP funds […] may be used to support a Health
Insurance Premium and Cost-Sharing Assistance Program, a core
medical service, for eligible low-income HIV positive clients. […]
RWHAP funds may be used to cover the cost of private health
insurance premiums, deductibles, and co-payments to assist
eligible low-income clients in maintaining health insurance […]”
(published September 13, 2013 by HHS: Health Resources
and Services Administration)
Events Leading to Lawsuit
HIV Advocates Respond and BCBS Digs In
Advocates get CMS to issue new more specific
guidance:
“The November 4, 2013 FAQ does not apply to payments for
premiums and cost sharing made on behalf of QHP enrollees
by […]state and federal government programs […](such as
the Ryan White HIV/AIDS Program).
QHP issuers and Marketplaces are encouraged to accept
such payments. […] Guidance from the Health Resources
Services Administration (HRSA) on the Ryan White HIV/AIDS
Program specifically describes how grantees can use grant
funds to pay premiums and cost sharing for eligible
individuals enrolled in QHPs.” (February 7, 2014)
Events Leading to Lawsuit
HIV Advocates Respond and BCBS Digs In
Conversation with staffer from Senator Landrieu’s office:
“BCBS LA told me their decision was not due to the CMS
guidance or any confusion (as we thought before) but was in
fact due to adverse selection concerns.”
Adverse selection: “The applicant might have information about
the risk that is not known to the insurer, or the insurer might
have access to the information but be unable to incorporate it
fully into the price of coverage, due to factors such as
antidiscrimination laws.”
(National Association of Insurance Commissioners)
Events Leading to Lawsuit
Other Louisiana Insurers Follow Suit
Vantage Health Plan
• Feb. 11: Vantage rep confirms to the TPA that
Vantage no longer accepting RW payments
• Feb. 19: Billy Justice, Director of Marketing
and Sales for Vantage, says in the press that
Vantage has to follow the lead of BCBS, the
state’s largest insurer: “We can’t be the only
carrier left,” Justice said. “We have to do what
the major players in market are doing.”
Events Leading to Lawsuit
Other Louisiana Insurers Follow Suit
Louisiana Health Cooperative (LAHC)
• Feb. 11: Greg Cromer, CEO of LAHC, confirms to
Louisiana Health Insurance Program
representative that LAHC is not accepting Ryan
White funds.
Events Leading to Lawsuit
January 17:
Lambda Legal first hears about the situation in Louisiana; begins
coordinating with national and local HIV advocates.
January 27:
Lambda Legal sends letter to BCBS, asking it to reverse course and
implying the possibility of litigation. We receive no response by deadline.
February 10:
Lambda Legal files a complaint against BCBS with HHS Office of Civil
Rights.
February 13:
Lambda Legal files complaints against LAHC and Vantage with HHS Office
of Civil Rights.
February 20:
Lambda Legal files a class action discrimination lawsuit, along with a
request for emergency injunctive relief, against all three insurers on
behalf of John East and all others similarly situated.
Legal Basis for the Lawsuit
Section 1557: Non-Discrimination Provision of ACA
“[…] [A]n individual shall not, on the ground prohibited
under title VI of the Civil Rights Act of 1964, title IX of the
Education Amendments of 1972, the Age Discrimination
Act of 1975, or section 794 of title 29 [the Rehabilitation
Act], be excluded from participation in, be denied the
benefits of, or be subjected to discrimination under, any
health program or activity, any part of which is
receiving Federal financial assistance, including credits,
subsidies, or contracts of insurance, or under any
program or activity that is administered by an Executive
Agency or any entity established under this title ...”
Legal Basis for the Lawsuit
Section 1557: Non-Discrimination Provision of ACA
Advantages:
Clearly applicable
Private right of action
Case law interpreting the Rehab Act
Disadvantages:
Case law interpreting the Rehab Act
“On the ground prohibited under. . .”
Scope of coverage
Legal Basis for the Lawsuit
Section 1311: Addressing Discriminatory Benefit
Design and/or Marketing Practices
“(c) Responsibilities of the Secretary.
“(1) The Secretary shall, by regulation, establish criteria
for the certification of health plans as qualified health
plans. Such criteria shall require that, to be certified, a
plan shall, at a minimum-“(A) meet marketing requirements, and not employ
marketing practices or benefit designs that have the
effect of discouraging the enrollment in such plan by
individuals with significant health needs…”
Legal Basis for the Lawsuit
Section 1311: Addressing Discriminatory Benefit
Design and/or Marketing Practices
Advantages:
More targeted at/tailored to the
conduct at issue
Disadvantages:
Private right of action?
Remedies
Legal Basis for the Lawsuit
State Law Claims
•
•
•
•
Equitable Estoppel
Breach of Contract
Breach of the Duty of Good Faith and Fair Dealing
Negligent Misrepresentation
Legal Basis for the Lawsuit
State Law Claims
Advantages:
No federal “hook” needed
Disadvantages:
May not apply to new enrollees
Each state is different
Success hinges on unfair practice
regardless
Litigation Strategy of the Insurers
Deny and Delay
February 21: Lambda Legal files for emergency injunctive relief (TRO)
February 22-24: A flurry of motions/briefs from the insurers
February 24: Court grants TRO; sets hearing for the next day at 12:00 p.m.
February 25: The TRO Hearing
• All three Defendants claim they have never rejected Ryan White
payments, which is only technically true.
• BCBS changes its tune; states it will continue accepting such payments
through March 31.
• LAHC and Vantage claim they have no plans to reject such payments,
despite statements to the contrary to members of the press and directly
to HIP personnel.
• Based on these representations and promises to hold the status quo
through the end of March, the Court vacates the TRO and sets the hearing
on the preliminary injunction for two weeks later, on March 10.
Litigation Strategy of the Insurers
From the TRO to the Preliminary Injunction
February 25 – March 10:
Lambda Legal and Ropes & Gray feverishly prepare for the hearing on the
preliminary injunction. Advocacy continues to get the Feds to take action.
About March 3:
We hear that a rule is coming, but no one knows when or what it will say.
March 5:
Both sides file papers in support of/opposing preliminary injunction.
March 6-7:
Opposing counsel gets wind that a rule is coming and, of course, ask the
Court to postpone the hearing until we see what the rule says.
March 7:
We oppose postponing the hearing on the preliminary injunction in letter to
the Court (and continue feverishly preparing).
Litigation Strategy of the Insurers
Hearing on the Preliminary Injunction
• Court refuses to postpone the hearing
• Court hears argument on “lack of standing” with respect to
Vantage and LAHC
• Our first witness: a representative from HAART, the third-party
administrator of the Ryan White funds testifies before lunch.
• After lunch, the insurers agree they will accept payments from
the Ryan White program through the end of the year.
Current Status & Constant Vigilance
Interim Final Rule
March 19: CMS publishes interim final rule in Federal Register
“We have become aware that, despite related policy
clarifications, some QHP issuers continue to reject payments of
premium and cost sharing by the Ryan White HIV/AIDS Program.
In particular, this QHP issuer practice is causing access problems
for persons who rely on the Ryan White HIV/AIDS Program for
assistance. […] We are including within the new requirement
that QHPs and SADPs must accept third party premium and costsharing payments from […] the Ryan White HIV/AIDS
Program[…].”
“This standard applies to all individual market QHPs, regardless of
whether they are offered through an FFE, an SBE, or outside of
the Exchanges.”
Current Status & Constant Vigilance
Interim Final Rule
March 19: CMS publishes interim final rule in Federal Register
“[F]ailure to comply with the requirement to accept third party
payments […] could constitute a violation […] as “substantial noncompliance with [an] Exchange standard.”
“Depending upon the circumstances, [it] could also [be] a
‘practice that would reasonably be expected to have the effect of
denying or discouraging enrollment into a QHP[…]’ [and] may be
subject to a maximum penalty of $100 per day, per each
individual who is adversely affected by the QHP or SADP issuer's
non-compliance. […]”
Current Status & Constant Vigilance
Interim Final Rule
Open Questions:
• Are BCBS and other insurers going to ask CMS
to modify the rule?
• If the rule does not apply to non-Exchange
plans (or plans that are not QHP’s), should it
be made to apply to such plans?
Current Status & Constant Vigilance
East v. BCBS of Louisiana, et al.
• Back before the Court for a status hearing on
May 14
• Insurers have not exactly been angels since
agreeing to accept payments through Nov. 15
• Did Blue Cross Blue Shield lose the battle but
win the war?
Current Status & Constant Vigilance
• Insurers are going to continue to look for ways to
avoid insuring PLWH, particularly lower-income PLWH
• “Smoking gun” of intentional discrimination will be
rare, so claims of disparate impact need to be fortified
• Regulation and Section 1311 Enforcement
(discriminatory benefit designs and marketing
practices)
• Required use of mail order pharmacies
• HIV meds placed in higher tiers, with higher deductibles
and co-pays
• Other?
Upbeat end: insurers lobby for Medicaid expansion?
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