ADA advocates for states’ authority to regulate dental benefits

Association comments on the role of pharmacy benefit managers

The ADA is advocating against pharmacy benefit managers’ wish for the government to broadly interpret a law that would stop states from regulating health care benefits, including dental. 

The ADA commented on the House Judiciary Committee’s hearing, the Role of Pharmacy Benefit Managers, to share its perspective on the impact of preemption under the Employee Retirement Income Security Act and what it could mean for state regulation of dental benefits. 

“We believe that ensuring states retain their authority to regulate health care, including dental benefits, is essential for the fair treatment of patients and policyholders, and it promotes consistency in the state insurance marketplace,” the ADA said in a letter, signed by ADA President Linda J. Edgar, D.D.S., and Executive Director Raymond A. Cohlmia, D.D.S. 

The letter goes on to say that preemption would be a “regulatory vacuum” in which states can no longer restrict the behavior of pharmacy benefit managers due to an overly broad notion of ERISA preemption. 

The Employee Retirement Income Security Act of 1974 is a federal law that was established to  set minimum standards for many private retirement and health plans, including self-funded dental plans. Some carriers claim that because ERISA is a federal law it preempts state rules, allowing carriers to ignore state insurance laws meant to protect patients, including dental insurance issues like noncovered services and assignment of benefits. 

This broad preemption would not only impact pharmacy benefit managers, the ADA said, but it would also limit the traditional authority of states to regulate dental insurance programs. The letter notes that every state has enacted insurance laws and established departments of justice in order to hold insurance companies accountable and ensure they treat their policyholders fairly. 

The letter highlighted that in Rutledge v. Pharmaceutical Care Management Association, the U.S. Supreme Court rejected the pharmacy benefit managers’ argument for ERISA preemption and held that preemption should generally be limited to “central matters of plan administration.” It said that many pharmacy benefit managers and insurers have continued to invoke ERISA preemption in defiance of Rutledge, urging Congress to reaffirm the limits on preemption recognized in the case. 

“If the legislature considers any action regarding ERISA preemption, it should reaffirm both the limits on preemption recognized in Rutledge and Congress’s commitment to preserving the traditional authority of states to regulate health care and dental insurance,” the letter reads. 

For more information on ERISA, visit ADA.org/ERISA.