Washington, D.C., May 28, 2024 – The ERISA Industry Committee (“ERIC”) today submitted public comments in response to updated regulations contained in “Proposed Consolidated Rulemaking for Insurance Regulations 219, 222, 224, and 226-229” (“Proposed Rules”) issued by the New York Department of Financial Services (“Department”) which seeks to implement the state’s 2021 lawcovering pharmacy benefit managers (“PBMs”). Despite improvements to the latest version of the Proposed Rules, concerns remain that the requirements could be applied to self-insured health benefit plans established under the federal Employee Retirement Income Security Act of 1974 (“ERISA”).
“Although many stakeholders are increasingly frustrated with PBM practices contributing to rising healthcare costs, new state laws and regulations threaten ERISA preemption and the national, uniform benefits that self-insured, large employer health plans offer to their nationwide employees,” said Dillon Clair, Director of State Advocacy, ERIC.
“Even though significant improvements have been made to the Proposed Rules, they still allow room for application to ERISA self-funded health benefit plans and could trigger ERISA preemption concerns. To prevent this conflict and likely litigation on preemption grounds, ERIC urges the Department to amend the Proposed Rules to include an explicit exemption for ERISA self-insured health benefit plans,” added Dillon.
Last fall, ERIC submitted public comments expressing deep concerns that the Proposed Rules and underlying state law overstepped state authority to control ERISA self-insured health benefit plans. In response to these concerns, the Department issued a notice withdrawing the original proposed rules to address conflicts with ERISA.
The revised rules have made several notable changes, including:
- Removal of minimum dispensing fee and maximum allowable cost list requirements,
- Removal of minimum network adequacy requirements that would have been placed on PBMs and the plans they administer, and
- Removal of restrictions on PBMs and plans from directing, incentivizing, or requiring use of specialty pharmacies to obtain specialty drugs.
The full text of ERIC’s comments can be found here.