Getting Tough On Fraud In MEWAs

The Patient Protection and Affordable Care Act (ACA) provides for protections for businesses and workers with health benefits that are provided through a multiple employer welfare arrangement (MEWAs) and the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) has just issued two proposed rules towards that goal. The proposed rules were published in the December 6 Federal Register.

According to EBSA, “MEWAs frequently have been used by scam artists and criminals to defraud consumers, thus leaving unsuspecting patients with substantial unpaid medical claims.” For employers or employee organizations that have paid premiums or made contributions to a MEWA, and thought they were doing the right thing for their workers and their families, the impact also can be significant, EBSA noted.

The proposed rules call for MEWAs to adhere to enhanced reporting requirements so that employers, workers, and their families will not unexpectedly be cut off from needed health care services. The rules also will increase the DOL’s enforcement authority to protect participants in such plans and allow the department to shut down MEWAs engaged in fraud or other activities that present an immediate danger to the public safety or welfare.

Through MEWAs, unrelated employers, typically small businesses, seek to provide health care and other benefits to their workers at purportedly lower cost than through other traditional forms of coverage, EBSA explained.

The promoters, marketers and operators of MEWAs often have taken advantage of gaps in the law to avoid state insurance regulations, such as a requirement to maintain sufficient funding and adequate reserves to pay the health care claims of workers and their families. In the worst situations, operators of MEWAs have drained their assets through excessive administrative fees or outright embezzlement, resulting in harm to participants and their families. In some cases, individuals incur significant medical bills before they learn that claims are not being paid—and that they are liable and need to pay their medical bills themselves. The ACA includes provisions designed to remedy these gaps.