You are here:HomeNews CenterInsurance News2018Association Health Plans Invite Fraud, Critics Say

Association Health Plans Invite Fraud, Critics Say

The Labor Department’s proposed expansion of health plans for employer groups (“association health plans”) would invite scammers back into the insurance market, several groups said in comment letters...
June 19, 2018

The Labor Department’s proposed expansion of health plans for employer groups (“association health plans”) would invite scammers back into the insurance market, several groups said in comment letters.

Employment lawyers, former DOL officials, insurers, and advocacy groups are among those to voice concerns about past fraud and insolvency problems with similar multiple employer health plans (MEWAs). The groups said consumers will be at risk for the same type of abuse if protections like giving states oversight of the plans and requiring employer groups to share a common interest other than the need for insurance, aren’t added to the final rule.

Fraudulent multiemployer plans left 200,000 people without coverage between 2000 and 2002, and racked up $252 million in unpaid bills, according to a 2004 Government Accountability Office report, noted Mila Kofman, former state insurance commissioner of Maine in a comment letter. Twice that number were left without coverage between 1988 and 1991, according to a 1992 GAO report.

The proposed rule, however, would loosen the requirements for multiple employer plans, allowing them to form for the sole purpose of creating a health plan and cross state lines without clear jurisdiction for the states. “Any new ambiguity that is created is going to be used by these criminals to evade the law,” Kofman said.

READ: States Concerned About Phony Association Health Plans – Coalition Against Insurance Fraud

Kofman’s group was one of the organizations that joined Georgetown University Center on Health Insurance Reforms in its comment letter March 1 demanding the DOL release information about past fraud in the industry. The National Employment Law Project also objected to the rule in a comment letter.

America’s Health Insurance Plans (AHIP) said in a statement that it believes “Association Health Plans (AHPs) as envisioned … are the wrong way to achieve [these goals] due to the risks of fraud and insolvency they pose to consumers. We further believe that creating a different set of rules for different market actors will disturb insurance markets in a way that runs counter to DOL’s stated objectives.”

Filed under: