Level paying field

The American Medical Association has challenged a Georgia court’s blocking of a prompt payment law and in the process has raised questions about some of the pillars of federal preemption under the Employee Retirement Income Security Act (ERISA) as it relates to third-party administrators and self-funded insurance plans.
The AMA action comes after America’s Health Insurance Plans successfully sought an injunction to the law.
As self-funding and third-party administrator (TPA) contracting has grown nationally  -  and to 65 percent of the Georgia health benefits market  -  AMA President Jeremy Lazarus, MD, said there is “a regulatory void where the state’s third-party administrators are unaccountable for chronically late payments, and it jeopardizes a sustainable practice environment for Georgia’s physicians.”
Georgia’s prompt payment law required self-funded plans and TPAs to pay errorless digital claims within 15 business days and paper claims within 30 calendar days, with no extensions (the same schedules for traditional health plans), while the federal ERISA regulations allow 30 days for processing claims and a 15-day extension.
In a friend of the court brief in the Eleventh Circuit Court of Appeals in Atlanta, the AMA and the Georgia Medical Association are seeking a lift of the injunction and a declaration that Georgia’s prompt payment law is not preempted by ERISA.
In its lawsuit, AHIP says it’s not necessarily opposed to shorter payment schedules for self-funded plans and TPAs, but that the industry is trying to avoid “the kind of patchwork of state regulation that ERISA preemption is designed to prevent.”
The AMA, meanwhile, is arguing that ERISA wasn’t necessarily designed to prohibit more local regulations in all cases. With counsel from Barnes & Thornburg attorney Thomas Gallo, the AMA is making several counterarguments to the precedent of ERISA preemption applying to physician payments, including that ERISA does not “substantively” regulate TPAs in the same way it does self-funded plans, that ERISA’s “default position is no preemption,” and that the Georgia law is not affected by the ERISA “deemer clause” that does prohibit state regulation from treating self-funded plans as traditional insurers, which states can regulate under ERISA’s “savings clause.”
The AMA brief says there are two main reasons for the appeals court to “wade into the ‘morass’ of ERISA preemption”  -  the question of what entities ERISA “relates to” and the “deemer clause,” which the Supreme U.S. Court last visited in 1990.
On the question of what entities ERISA can regulate, the AMA is arguing that the provisions covering TPAs in the Georgia prompt payment law are not preempted because they “regulate insurance” and, “insofar as they regulate TPAs, do not ‘deem’ employee benefit plans to be ‘insurance companies.’”
The AMA’s brief further argues that the Supreme Court’s view of ERISA’s employee benefit plan preemption has narrowed over time, from broad interpretations in the years after the law was passed in 1974, to a limiting of the preemption scope in the 1980s and 1990s.
In a 1995 case known as Travelers, the Supreme Court ruled that ERISA preemption did not exempt health plans from a New York tax placed on commercially-insured members at hospitals, a decision that “turned the tide on the expansion of the preemption doctrine,” the AMA says.
Travelers “’unequivocally concluded’ that the ‘starting presumption’ in ERISA preemption cases, like other cases, is ‘that Congress [did] not intend to supplant state law,’” the AMA argues. “So, it is not enough for a law to have an ‘indirect economic influence’ on ERISA plans ... or even a “’direct impact.’”
While the Eleventh Circuit Appeals Court considers whether and how deeply to wade into this “morass” of ERISA, the AMA says that the question is also one more broadly of state sovereignty: Can “Georgia regulate at the intersection of healthcare and insurance  -  each of which ‘historically has been a matter of local concern’”?