April 7, 2023

Texas Judge Invalidates ACA Preventive Care Mandates: Impact on Employer-Sponsored Plans

Holland & Knight Executive Compensation and Benefits Info Flash
Rachel C. Shim | John D. Martini | Ryan C. Meadows
Executive Compensation and Benefits Info Flash

A Texas district court judge has overruled certain preventive care mandates of the Patient Protection and Affordable Care Act (ACA), holding that they are unconstitutional and, in one case, violate the Religious Freedom Restoration Act (RFRA). Employers can modify their group health plans accordingly but should consider waiting until certain appeals and procedural decisions are finalized.

On March 30, 2023, the U.S. District Court for the Northern District of Texas (Court) issued a final ruling in Braidwood Management v. Becerra, a suit challenging the legality of ACA preventive care mandates. The ACA requires group health plans and insurers to provide coverage with zero cost sharing for certain preventive healthcare services. The preventive care services that must be covered are those given an A or B recommendation by the U.S. Preventive Services Task Force (PSTF), as well as other healthcare services recommended by the Centers for Disease Control and Prevention's (CDC) Advisory Committee on Immunization Practices (ACIP) and the Health Resources and Services Administration (HRSA).

The March 30 ruling followed the initial ruling issued by the Court on Sept. 7, 2022, which held that PSTF members are not properly appointed and, accordingly, that its recommendations with regard to preventive care services are unconstitutional. Also in its March 30 decision, the Court found that the preventive care mandate requiring coverage for Pre-Exposure Prophylaxis for HIV Prevention (PrEP) violates employers' rights under the RFRA. Through the most recent ruling, the Court 1) vacated previous actions taken by federal agencies to implement or enforce the preventive care A and B coverage recommendations issued by the PSTF since March 23, 2010; 2) further enjoined the U.S. Department of Health and Human Services Secretary, U.S. Department of the Treasury Secretary and U.S. Department of Labor Secretary (Defendants) from implementing or enforcing any A or B recommendations made by the PSTF; and 3) held that the Defendants were enjoined from requiring employers with a religious objection to cover PrEP.

Employers now analyzing their next steps should keep in mind that in implementing the ACA, multiple entities were authorized to make recommendations regarding what care and services constitute preventive care. It is only the A and B recommendations issued by the PSTF and mandated coverage of PrEP that have been impacted. Other required ACA preventive care requirements remain in effect, meaning those promulgated by ACIP and HRSA continue to apply, as well as certain recommendations made prior to March 23, 2010.

Under the Court's ruling, employers are free to amend their group health plans to impose cost sharing on the impacted preventive care, and those employers with a religious objection may stop providing coverage for PrEP. However, employers with insured programs should confirm that separate state insurance law requirements for preventive care do not apply before making any changes.

Finally, since the Biden Administration has appealed the ruling, employers considering plan amendments should contemplate waiting to make changes until these challenges are resolved. If the appeal results in a stay of the Court's order, employers may be required to continue providing zero cost sharing coverage for all preventive care services and, if an appeal of the ruling is successful, the preventive care mandates may once again become effective.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.

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