Who’s Working for You?: National Business Group on Health

In a series of articles, PLANSPONSOR is profiling industry groups that work for retirement and health plan sponsors to protect them from onerous burdens and help them with plan design and administration. In this article, we profile the National Business Group on Health (NBGH).

The National Business Group on Health’s mission is to be the national voice of large employers dedicated to finding innovative and forward-thinking solutions to the nation’s most important health care issues.

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Brian Marcotte, president and CEO of the National Business Group on Health (NBGH) in Washington, D.C., says the group started in 1974 around the time of the passage of the Employee Retirement Income Security Act (ERISA) and as a result of the new legislation. “Employers felt they needed a seat at the table in Washington for health care and health policy issues,” he says. “They formed a group called the Washington Business Group on Health, which officially became the NBGH in 2003.”

Group members comprise large, typically self-insured, multi-state and even global employers, according to Marcotte, and they provide benefits to more than 50 million employees and covered dependents.

Plan Sponsor Interests

“While legislative and regulatory advocacy is part of our mission, we are much more than that,” Marcotte says. “We do limited lobbying because we are not a lobbying group.” According to the NBGH website, key objectives of the group include providing practical business solutions for health care cost management, including identifying and promoting best practices among large employers; where practical solutions do not exist, providing a forum for members and others to come together to create new solutions and learn from each other; promoting a forward-thinking point of view on current and future health care issues on behalf of large employers; and actively educating members and others about health care issues that might not be obvious today but may have important ramifications in the future, among other things.

“From a policy perspective, we provide advice and resources about the implications of proposed policy and regulations, and about what it takes to comply,” Marcotte says. “We also provide forums for members to share best practices, especially around compliance and administration, where members who have already implemented processes and are doing things efficiently can talk to other members.”

How the NBGH Advocates

The NBGH responds to requests for comments from regulators and sends letters to Congress providing data to legislators about what employers are doing as well as the implications of laws and regulations to employers. “ We have provided comment letters on issues concerning ERISA, the Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act (HIPAA), the Americans With Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA), explaining the administrative burdens, unintended consequences and costs for employers to implement proposed rules,” Marcotte notes.

Among the successes the NBGH counts as part of its efforts is its work to delay the ACA’s excise tax on high-cost health plans (also called the Cadillac tax), and it continues its efforts to repeal the Cadillac tax.

Marcotte says the group has also successfully worked to establish the Medicare prescription drug benefit, including subsidies for employers that offer health benefits for retirees. The group played a key role in bringing consumers and providers together to pass Patient Safety Legislation to encourage transparency by making sure hospitals and clinicians that reported errors were protected from discovery in legal suits.

Recently, the group influenced more streamlined requirements in wake of the ACA for reviews, claims denials and reporting for COBRA. In relation to wellness program regulations, the NBGH advocated for incentives, workable rules and clarity for sponsors about proposed ADA regulations. It also advocated for alignment of GINA rules with the HIPAA wellness program standards.

Marcotte says the group’s highest focuses now are repealing or further delaying the Cadillac tax and creating more flexibility for health savings accounts (HSAs).

Resources the NBGH Provides

NBGH provides a number of resources and forums to help companies optimize business performance through health improvement, innovation and health care management. NBGH’s work on Accountable Care Organizations (ACOs) is one example. To help employers control health benefit costs, there has been a shift in strategy by employers to move away from fee-for-service to alternative payment models, such as ACOs, centers of excellence and high performance networks, Marcotte notes.

An ACO is a health care delivery model where health care providers come together to assume responsibility for the care and the cost of a defined population. Employers can either contract directly with ACOs or work through their health insurance company. More mature ACOs will typically share in the savings as well as the costs if the total cost of care beats or exceeds agreed upon targets.

Given the hundreds of ACOs available today to employers and how their structure and capabilities vary within markets and from market-to-market, the NBGH released two new tools designed to help employers understand and evaluate ACOs.

The group also hosts more than fifty webinars throughout the year about everything from health care policy, to company initiatives on well-being, to pharmacy management, and innovative start-ups. “After the ACA was passed, we had a series of ACA boot camp webinars,” Marcotte says. “We took members though all the provisions of the legislation, what they meant for employers, how to comply, best practices to comply, timeframe for compliance and what other employers are doing. This is an example of how we try to always offer timely, relevant and actionable solutions to our members.”

Research is a big part of what the NBGH provides. “We do a lot of survey work, including an annual health care strategy and plan design survey with members,” Marcotte notes. “We field an annual survey in June and produce the survey report in August. It gives members and the health care industry a good sense of what is to come in the next year from the large employer perspective.”

The NBGH also does research with industry partners, such as a survey with Welltok about wellness programs.

According to Marcotte, several years ago, the NBGH introduced a page on its website called Numbers You Need. “It’s a set of pre-packaged data and statistics in easily downloadable informatics based on data from surveys we’ve done and outside research,” he says. Categories include U.S. Health Care Costs, Consumer-Directed Health Plans, Well-Being, Pharmacy, Retiree Health, Public Policy and others.

“If employers can’t find the information they want there, they can call us and we can do a quick survey of members—we do about 40 or so of those a year,” Marcotte says. “For example, we can do a survey about what employers are doing about autism benefits. We ask five or 10 questions and quickly turn back out results.” He adds, that the group is now doing such a survey about what large employers are doing about Hurricane Harvey—what financial support and leave support employers are providing, what corporate giving is being provided. Employers can see what others are doing to get ideas and formulate their own strategies.”

Marcotte also notes the NBGH is a convener of ideas. The group brings thought leaders together to advance health innovation and improve how health care is delivered and paid for in this country. The group convenes members in a number of ways. There are small groups of members (20 to 30) concentrated on certain things—evidence-based plan design, pharmacy management and value purchasing. There are structured institutes on wellbeing in relation to workforce strategy, health care costs, and health and productivity, which convene between 30 and 50 members.

There are also larger ways of convening. The group hosts summits about a particular topic each year which gathers 75 to 100 employers and two annual conferences that attract between 500 and 600 attendees. “We are holding a summit in February about prescription drug management and the pharmaceutical supply chain,” Marcotte says. “It will take a deep dive into understanding how money and drugs flow through the system from pharmaceutical manufacturers all the way down to physician prescribing and some of the challenges around the whole model.” This year, the group did a deep dive about mental and emotional health, including challenges around access to mental health benefits, the stigma of mental health issues and peer identification training to help employees recognize symptoms and direct peers to resources in the company.

“Every January, we bring about 100 employers together here in D.C. to discuss what they did in the prior year, what they implemented in the current year and to strategically think about what to do in the next year and beyond,” Marcotte says. “We look at who’s doing what, what is working and not working and how to accelerate improvements in a fragmented delivery system.”

The NBGH also has a health innovations forum, in which about 30 to 40 employers get together and vet startups that may be able to disrupt health care in a positive way. “They come together to assess and possibly pilot startups, and if they have good results, we share their experiences with the broader membership,” Marcotte explains. “We’ve seen really cool innovations around engagement, diabetes management and transparency. We try to help accelerate these in the industry.”

Finally, Marcotte notes that many of the NBGH’s members are global, so there is a global business group as well. It focuses on how to help employers address global health issues and manage global benefits. There are about 80 members involved in that organization. Members share their experiences and the Business Group builds country profiles to help employers navigate the landscape. “Some may be strong in one country and know the market very well, but no company is strong in all countries, so there is tremendous opportunity to learn from each other. If an employer is establishing a presence in a country in which they are not familiar, they can get insight from another member that has experience in that country. They also work together to drive country-specific initiatives as a group,” Marcotte says.

Barry’s Pickings Online: A Parade of the Ridiculous

Michael Barry, president of the Plan Advisory Services Group, discusses possible implications of the DOL fiduciary rule and how the agency missed fixing what needs to be fixed.

Does the Department of Labor’s (DOL)’s fiduciary rule work as a regulation? Let’s consider some applications of it:

 

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A real estate agent is discussing with clients—a married couple with a baby on the way—how they might be able to finance the purchase of a new home. The wife asks whether they might be able to take a withdrawal from her 401(k) savings plan. The agent—who has some familiarity with the tax rules but none with the Employee Retirement Income Security Act’s (ERISA)’s fiduciary rules—says that, while there are some downsides to taking a withdrawal, it’s a buyer’s market, she thinks a house is a really good investment, and if they don’t have another option for the down payment, this could be a good idea. This “advice” makes the agent an ERISA fiduciary.

 

The real estate agent can explain, e.g., Tax Code hardship withdrawal rules but cannot say anything about the wisdom of a withdrawal without triggering fiduciary status. This treatment applies to any salesperson who will benefit (e.g., by receiving a commission or simply a salary) from recommending an investment in, e.g., a time share, a boat, or an expensive piece of furniture.

 

A call center operator suggests that a terminating participant should leave her money “in the system”—either in an IRA or a qualified plan—rather than take it in cash. By giving this (common sense) advice, the operator has triggered fiduciary status.

 

While the DOL has (after hearing many complaints on the issue) published guidance saying that recommending a plan contribution does not trigger fiduciary status, it has consistently said that any recommendation with respect to a distribution does trigger fiduciary status. It is unclear what ontological distinction DOL sees between contributions and distributions.

 

A sponsor employee whose job it is to explain the plan and plan investment options to participants is asked whether it’s a good idea to diversify by investing partly in each target-date fund tranche (e.g., 2020, 2030, 2040 and 2050). The sponsor employee says it is not. The sponsor employee is an ERISA fiduciary.

 

This obviously is investment advice provided by an individual (the sponsor employee) paid for giving such advice.

 

An individual walks into a brokerage firm and says, “I have $5,000 to save.” The broker suggests that the individual should consider contributing it to an IRA.

 

Until the most recent round of FAQs, most believed that this advice triggered fiduciary status. Currently, the broker can suggest contributing to an IRA, but she cannot make a recommendation about how the IRA should be invested. If the broker does not mention IRAs, however, she may recommend that the individual open a regular brokerage account and invest the $5,000 in, e.g., Facebook stock (provided SEC “know your customer” rules are complied with).

 

A plaintiffs’ lawyer tells a plan participant that the plan in which she participates includes mutual funds which are over-priced and therefor “imprudent.” The lawyer is an ERISA fiduciary with respect to his “investment advice.”

 

This lawyer/participant exchange clearly includes a recommendation with respect to plan investments.

 

An individual is about to receive a mandatory (post-70 1/2) required minimum distribution of $20,000. If, before she receives this distribution (which she must take), she asks her broker how to invest it, any recommendation by the broker will trigger fiduciary status. If she asks immediately after receipt, it will not.

 

Even where an investment is mandated (i.e., there is no choice to not take it), advice about how to invest it triggers fiduciary status. Once the distribution is made, recommendations as to investment may be made without any effect under ERISA – the money has lost its “character” as ERISA assets.

 

Does the DOL Have a Grip on What It Is Doing?

 

The DOL would, no doubt, dismiss most of these examples as silly. Because all that DOL meant to do with the fiduciary rule was drive brokers (or at least broker compensation culture) out of the retirement savings market.

 

It would, however, be a massive stretch—and obvious poaching on SEC’s regulatory turf—for the DOL to start explicitly regulating broker compensation. Moreover, rules that target particular professions are suspect—they look a lot like ex post facto witch hunting.

 

And so, the DOL crafted the more abstract rule we are dealing with. Which, when applied rationally and logically, requires nearly everyone to shut their mouth whenever the words “retirement plan” or “IRA” are mentioned.

 

The three most extraordinary innovations in the new rule are the extension of ERISA fiduciary coverage to any recommendation (including, e.g., one-off recommendations like that made by the real estate agent); the characterization of advice about distributions as fiduciary “investment” advice; and the application of ERISA’s fiduciary rules to IRAs.

 

Far from being un-serious, the examples given above illustrate just these points: the application of ERISA rules in situations in which no one would intuit they had an ERISA issue and the making of distinctions that make no intuitive (or indeed, any other sort of) sense.

 

These innovations are part of the general fiduciary rule—they have nothing to do with any possible tweaks to the related exemptions. That point has to be emphasized because the DOL, in April, characterized the rule as “among the least controversial aspects of the rulemaking project.” One has to wonder (as many at the time did) what they were smoking.

 

The truth is, the DOL does not have much of a grip on what it is doing. They are regulating in an area in which they have no particular expertise. And they have rejected industry advice that they are working off of bad data and ripping up valuable infrastructure.

 

DOL has bought into certain viewpoints about investments that remain, for good reason, deeply contested—commissions vs. assets under management fees, active vs. passive management. And they’ve ignored deeper problems that have inhibited the development of more efficient retirement savings investment solutions—reduced employer commitment to 401(k) plans, especially with respect to terminating employees, and the awkwardness of the plan-to-plan rollover process.

 

They’ve settled for an easy-but-sloppy “good guys vs. bad guys” politics (with brokers as the bad guys) and reasoning-by-talking-points. In this process, the DOL has demonstrated a lack of any deep understanding, wisdom or humility or even the simple ability (and common decency) to take an opponents’ arguments seriously. All of which sounds great, to some people.

 

None of this is to say that we don’t have problems with 401(k) plan investment fees. I would say, emphatically, that reducing investment fees is the easiest way to improve retirement outcomes over the next 20 years. I seriously doubt we’re going to do it by increasing returns.

 

But this regulation is, in the end, and at best, a political exercise in looking virtuous while slaying cartoon dragons. The effort we will have to spend straightening it out will result in a massive waste of time and a missed opportunity to fix what needs to be fixed.

 

 

Michael Barry is president of the Plan Advisory Services Group, a consulting group that helps financial services­ corporations with the regulatory issues facing their plan sponsor clients. He has 40 years’ experience in the benefits field, in law and consulting firms, and blogs regularly http://moneyvstime.com/ about retirement plan and policy issues.

 

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of Asset International or its affiliates.

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