Understanding ERISA’s Impact on Managed Care

Las Vegas—According to Mary Emma Karam, senior counsel at Jackson Waller LLP, only 1 of 300 lawyers at her firm completely understands the Employee Retirement Income Security Act (ERISA), a complicated law that she said befuddles most lawyers. During a presentation at the Fall Managed Care Forum, Ms. Karam emphasized the need for organizations to take ERISA seriously and comprehend its implications. The session was titled Managed Care Contracting: Understanding the Key Legal Provisions & the Impact of ERISA. Established in 1974, ERISA set minimum standards to protect employees in voluntary employer pension and health plans. The law does not apply to government plans or workers’ compensation, but amendments have included the establishment of the Consolidated Omnibus Budget Reconciliation Act health benefit provisions as well as the Health Insurance Portability and Accountability Act. ERISA preempts certain state laws, but it is not intended to override states’ regulation of insurance. However, Ms. Karam said there is confusing language in state law amendments. For instance, some states say ERISA applies only to fully insured plans, does not apply to self-funded plans, does not apply to government plans, and applies only to the claims to which the state law applies. According to Ms. Karam, employees have 30 days to make a claim under the ERISA guidelines, but there is no deadline that employers have to abide by when paying claims. Employers are also not penalized for denying or delaying the claim. Ms. Karam said the payment clause in ERISA indicates that the provider will accept a payment for claim or penalty on full-risk plans if required by law. The provider is not entitled to billed charges or any penalty on non–full-risk plans. Ms. Karam stressed that ERISA applies when the right of payment is in question but does not apply when the rate of payment is in question. Contracts containing ERISA clauses are often changed because organizations want flexibility, according to Ms. Karam. Fee exhibits, administrative guides, policies, procedures, and manuals can be amended. An example of a change is that companies may designate a provider as a participating or nonparticipating provider in any plan, but the company has the right to introduce new plans at any time. In addition, some major managed care plans make changes only on their Web sites. However, people do not frequently visit the Web sites, so the changes go unnoticed. Ms. Karam also warned about contracts that contain arbitration clauses that waive the right to a trial by jury, waive the right to legal damages, waive the right to appeal a decision, waive the right to have discovery on a company, waive the right to file a class action lawsuit, or waive the ability to consolidate claims. There are also waiver of damages clauses that limit the company’s liability to the provider to the amount paid in the prior 12 months or indicate that the company is not liable for several types of damages for any action, inaction, tortious conduct, or delay by the company. Ms. Karam said it is important that people carefully read all provisions and understand that they have the right to strike a clause or omit language in any contract. When people sign contracts, they are obligated by all of its terms and are presumed to have read and understood all of its content, she stressed.