American Benefits Council
Benefits Byte

2014-82

September 4, 2014

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

Click here to read past issues on the Benefits Byte Archive page.

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Fourth Circuit Declines to Re-hear Fiduciary Duty Case

The full U.S. Court of Appeals for the Fourth Circuit has declined to revisit an earlier three-judge panel decision in the case of Tatum v. R.J. Reynolds. The Council (with the U.S. Chamber of Commerce) had filed an amicus (“friend of the court”) brief requesting a rehearing “en banc” of the full appeals court.

In Tatum v. R.J. Reynolds, the plaintiffs asserted a breach of fiduciary duty against the plan sponsor because of the elimination of a company stock investment option from the company’s 401(k) plans shortly after a spinoff. After the fund’s removal, the company’s stock rose significantly higher. This is commonly referred to as a “reverse stock drop” case.

On August 4, a three-judge panel from the Fourth Circuit found for the plaintiffs in a split decision. As described more fully in the Council’s August 7 Benefits Byte story, the panel’s majority opinion accepted the arguments of the plaintiffs (and the U.S. Department of Labor, as outlined in its own amicus brief) that the district court applied an erroneous legal standard to determine whether the breach resulted in losses to the plan. The panel therefore remanded the case back to the district court level “to review the evidence to determine whether RJR has met its burden of proving … that a prudent fiduciary would have made the same decision.”

The Council’s brief, as well as its initial amicus brief with the Fourth Circuit,argued that “the panel’s decision is contrary to 40 years of ERISA law” and “the panel’s decision will discourage individuals from serving as fiduciaries and increase plan costs.” 

The Council will continue to monitor the case as it is reviewed once again at the district court level. For more information on this issue or the Council’s amicus brief program, contact Jan Jacobson, senior counsel, retirement policy, or Lynn Dudley, senior vice president, global retirement and compensation policy, at (202) 289-6700.



Council Joins Consumer-Purchaser Alliance in Comments to CMS on Quality Improvement Proposals

The Council was one of 23 organizations to sign on to two letters submitted September 2 by the Consumer-Purchaser Alliance to the Centers for Medicare and Medicaid Services (CMS) on the subject of health care quality and delivery reform.

One letter addresses the proposed rule for payment policies under the Physician Fee Schedule (PFS) and other revisions to Medicare Part B for calendar year 2015. The second letter addresses the proposed rule on the Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) payment system for calendar year 2015.

The Council participates in the Consumer-Purchaser Alliance, a coalition of leading consumer, employer and labor groups working together to promote the use of performance measurement in health care to inform consumer choice, value-based purchasing and payment.

PFS Payment Policies

The letter regarding PFS payment policies underscores that payment and reporting programs such as the Physician Quality Reporting System (PQRS), the Value-Based Payment Modifier (VM), and the Medicare Shared Savings Program are inextricably tied to ongoing efforts to transform the health care delivery system to meet the National Quality Strategy goals of better outcomes, improved individual experiences of care and reduced costs. The letter commends CMS’s concerted efforts to be responsive to the needs of consumers and purchasers and urges CMS to continue to improve Physician Compare (a CMS website that helps users select health care providers) by populating the site with clinically meaningful and patient-reported measures. The letter also supports publicly reporting patient experience information, especially at the individual physician level. An appendix to the letter provides suggestions on programs in the proposed rule.

OPPS and ASC Payment Systems

The letter regarding the OPPS and ASC payments systems was written in response to the CMS proposed rule to change the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. The rule would also update and refine the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program. The letter again applauded CMS’ efforts to increasingly focus on quality of care, but expressed concern that progress is not being achieved at a desirable pace, and suggests the following to increase the rate of change:

  • Ensuring easily accessible and comparable information on outpatient and ambulatory surgical center quality to support consumer decision-making.
  • Aligning the OQR and ASCQR programs with public- and private-sector value-based programs.

The letter also offered detailed comments on CMS’ measure-specific proposals for the OQR and ASCQR programs.

The Council supports improvements in the quality and affordability of health care by using performance information to inform employer and consumer choice, payment and provider care. Because the Medicare program and related quality improvement initiatives play a key role in the delivery and payment of health care services, these programs are of importance to employer sponsors of employee health benefits. For more information, contact Katy Spangler, senior vice president, health policy, at (202) 289-6700.



The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

Notice: the information contained herein is general in nature. It is not, and should not be construed as, accounting, consulting, legal or tax advice or opinion provided by the American Benefits Council or any of its employees. As required by the IRS, we inform you that any information contained herein was not intended or written to be used or referred to, and cannot be used or referred to (i) for the purpose of avoiding penalties under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party any transaction or matter addressed herein (and any attachment).