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Twice-Weekly Briefing
Tuesday, September 1, 2026
Issue 260901-59
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The MOC Brief
Health policy, priced and translated for self-funded plan sponsors
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In This Edition
Five developments from the past week, and what each one costs you.
| 1. | What four years of surprise billing arbitration has cost, and who is filing | | 2. | A federal appeals court lets a state order your plan to pay pharmacies more | | 3. | Three agencies stop enforcing retroactive wellness rewards, so you can prorate | | 4. | Mounjaro's new cardiovascular indication reaches your prior authorization file | | 5. | A $50,000 HIPAA settlement, and the clock that runs against your plan |
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| 1 · Arbitration Costs · August 28, 2026 |
| Surprise Billing Arbitration Has Added $22.4 Billion in Costs Since 2022, and $16.6 Billion of That in 2025 |
| Georgetown University's Center on Health Insurance Reforms published an analysis by Jack Hoadley and Kennah Watts on August 28 putting total costs attributable to the federal independent dispute resolution system at $22.4 billion from 2022 through 2025. The 2025 figure alone is $16.6 billion, nearly 3.5 times the 2024 total. Providers initiated 2.6 million new disputes in 2025, up 77 percent from 2024, while total awards rose 264 percent. Providers prevailed in about 85 percent of 2025 disputes, and when they won, the median award was 445 percent of the qualifying payment amount. The 90th percentile award reached 1,771 percent, and when plans prevailed their median award was 105 percent. The authors built the analysis from CMS Federal IDR public use files and supplemental tables covering 2022 through 2025, with award and entity fee data available only from 2023 forward. |
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MOC Perspective
Your plan pays those awards out of plan assets, and at 445 percent the arbitrated price runs more than four times the statutory benchmark these disputes are measured against. That benchmark is not your current network rate, so do not read 445 percent as four and a half times what you pay today. The original federal estimate was roughly 22,000 disputes a year. 2025 ran 2.6 million. Three filers drove more than three quarters of resolved dispute lines in 2025: Radiology Partners at 30 percent, HaloMD at 27 percent, and TeamHealth at 20 percent. The analysis does not break costs out by funding arrangement, so nothing in it tells you your own exposure. Your TPA can, and that number belongs in your 2027 renewal file before you price anything else.
What to do now
| ▪ | Ask your TPA how many IDR disputes hit your plan in 2025 and what the awards ran as a percentage of the qualifying payment amount. | | ▪ | Request your 2025 IDR administrative and entity fees itemized separately from claims, since $2.7 billion of the four year total is fees. | | ▪ | Review your emergency and radiology contracts before your 2027 renewal, because those two specialties drove 41 percent and 29 percent of dispute lines. |
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| Source: Georgetown University Center on Health Insurance Reforms |
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| 2 · PBM Preemption · August 26, 2026 |
| A Federal Appeals Court Says ERISA Does Not Block Arkansas From Making Your Plan Pay More to Pharmacies |
| The Seventh Circuit affirmed the dismissal of Central States, Southeast and Southwest Areas Health and Welfare Fund v. McClain, No. 25-2727, on August 26, in an opinion by Judge Kolar joined by Judges Hamilton and Kirsch. Central States is a self-funded, multiemployer welfare benefit fund providing health care benefits to approximately 500,000 participants nationwide. It argued that ERISA preempts Arkansas Rule 128, which lets the state insurance commissioner require a plan to pay an additional dispensing fee to a pharmacy if he determines the plan's payment program is not fair and reasonable, and which, through a bulletin issued under it, requires plans to report pharmacy reimbursement relative to Medicaid pricing, average dispensing fees paid, and prior year claim counts. Applying Rutledge, the panel treated that as ordinary cost regulation, since ERISA does not preempt state rate rules that merely increase costs or alter incentives without forcing plans into any particular scheme of substantive coverage. On reporting, it said under Gobeille that reporting both necessitated by and incidental to a state law that is not itself preempted does not necessarily bear an impermissible connection to ERISA plans, and it concluded the Fund had not plausibly alleged preemption on this record. The Fund relied on Mulready in the Tenth Circuit, McKee Foods in the Sixth, and Flowers in the Eighth, and the panel found all three readily distinguishable. |
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MOC Perspective
The plaintiff was a self-funded fund covering 500,000 participants, not an insurer, so this reaches plans built like yours. If the commissioner finds your plan's pharmacy payment program is not fair and reasonable, your plan can be ordered to pay an additional dispensing fee, and your plan can be told to report what it pays. The decision binds only Illinois, Indiana and Wisconsin, and it came out of a motion to dismiss rather than a full record, so nothing has been finally decided about what these rules cost. Arkansas is also one state among many that have passed PBM payment laws, and the preemption argument the Fund lost here is the one plans have used against all of them. What is settled enough to act on is where the obligation sits: the data lives with your PBM and the duty lives with your plan.
What to do now
| ▪ | Ask your PBM in writing, within 10 business days, which states require plan level pharmacy compensation reporting and whether it files as your agent. | | ▪ | Confirm within 30 days whether your contract passes state mandated dispensing fees through to the plan or absorbs them. | | ▪ | List every state where 25 or more of your members fill prescriptions, then check each one for a PBM rate law. |
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| Source: U.S. Court of Appeals for the Seventh Circuit, via Justia |
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| 3 · Wellness Rules · August 26, 2026 |
| Three Federal Agencies Will Not Enforce Backdating a Wellness Reward to the Start of the Plan Year |
| The Departments of Labor, Health and Human Services, and the Treasury issued FAQs Part 74 on August 26. Question 1 takes up what happens when someone completes a reasonable alternative standard partway through the plan year. The Departments said that until further guidance or regulations are issued, they will not take enforcement action against a plan or issuer for failing to provide that reward retroactively to the beginning of the plan year, where the plan provides the reward corresponding to the period after the alternative standard is satisfied. The program still has to give people sufficient time to complete the alternative standard and receive a reward. Question 2 says the reasonable alternative standard disclosure belongs in all plan materials describing the terms of a health-contingent wellness program, with an exception for materials that merely mention the program without describing its terms. The document states no effective date and no expiration date. |
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MOC Perspective
If your plan promises a full year of premium credit to anyone who finishes a coaching or tobacco cessation alternative, you have been writing checks back to January for people who finished in September. You can prorate instead, at least as far as federal enforcement goes, and the money is not small: a health-contingent reward can run to 30 percent of the total cost of employee-only coverage, and 50 percent for programs designed to prevent or reduce tobacco use. Read this for what it is. The regulation did not change, so your plan document language, your participant claims exposure and your state law exposure all stand. Your wellness vendor may be the one making the promise, so check its participant materials and not only your plan document. Fix the document before open enrollment, because changing a promised reward mid year is the argument you do not want to have.
What to do now
| ▪ | Read your wellness reward language this week and find out whether it promises credit retroactive to the start of the plan year. | | ▪ | Price the difference between full year and prorated credit at your 30 percent cap, using last year's alternative standard completions. | | ▪ | Add the reasonable alternative standard disclosure to every plan material that describes the program's terms, before 2027 open enrollment. |
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| Source: U.S. Departments of Labor, Health and Human Services, and the Treasury |
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| 4 · Diabetes Drugs · August 28, 2026 |
| The FDA Added a Cardiovascular Risk Indication to Mounjaro's Label for Adults With Type 2 Diabetes |
| Eli Lilly announced on August 28 that the FDA approved Mounjaro, tirzepatide, to lower the risk of major adverse cardiovascular events, including cardiovascular death, non-fatal heart attack, or non-fatal stroke, in adults with type 2 diabetes who are at high risk for these events. The approval rests on SURPASS-CVOT, which enrolled more than 13,000 participants at 640 sites in 30 countries with a median follow-up of 210.1 weeks. The comparator was not placebo. It was Trulicity, dulaglutide, at 1.5 mg, which Lilly describes as a GLP-1 treatment with established cardiovascular benefit. The hazard ratio for time to first MACE was 0.92, with a 95.3 percent confidence interval of 0.83 to 1.01, which Lilly describes as an 8 percent lower rate. Lilly states that superiority to dulaglutide was not established, and the release names no price. |
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MOC Perspective
Plans that tightened obesity criteria while leaving diabetes coverage alone now face a labeled cardiovascular indication, and prescribers will cite it. Read the trial honestly before you rewrite anything, because this is non-inferiority against another GLP-1 that already had a cardiovascular claim, and the confidence interval crosses 1.0. What changed is not the clinical case, it is the appeal. A denial resting on criteria written before August 28 is now arguing against the label, and your appeals volume moves before your claims do.
What to do now
| ▪ | Pull your tirzepatide prior authorization criteria and check the date they were last written against the August 28 label change. | | ▪ | Ask your PBM this month how many type 2 diabetes members are on tirzepatide and how many meet a high cardiovascular risk definition. | | ▪ | Set a review date within 60 days for your GLP-1 utilization management, before your 2027 plan documents lock. |
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| Source: Eli Lilly and Company |
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| 5 · Records Access · August 27, 2026 |
| A $50,000 HIPAA Settlement Is a Reminder That Your Plan Owes Members Their Records in 30 Days |
| The HHS Office for Civil Rights announced a settlement with Azul Vision, Inc. on August 27 over a potential violation of the HIPAA Privacy Rule. The California optometry and ophthalmology provider paid $50,000 and agreed to a corrective action plan OCR will monitor for two years. A patient requested her protected health information in January 2023, complained to OCR in April 2023, and did not receive the records until January 2025. The Privacy Rule's right of access provisions require access within 30 days, with one extension possible, and OCR's investigation determined that Azul Vision did not meet it. OCR calls this the 55th enforcement action in its Right of Access Enforcement Initiative. |
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MOC Perspective
Azul Vision is an eye care provider, and the release never mentions employers, group health plans, or third party administrators. That connection is ours to make, and it is a short one: a self-funded group health plan with 50 or more participants is itself a HIPAA covered entity, so the same clock runs when a member asks for her own claim and appeal records. The duty covers records held for the plan as well as by it, so a file sitting at your TPA is still your plan's to produce. Most sponsors have never tested it.
What to do now
| ▪ | Name the person who answers a member request for plan records, and confirm they can meet the 30 day deadline. | | ▪ | Check your business associate agreement before renewal for who fulfills a right of access request, and in how many days. | | ▪ | Run one test request through your own member portal this month and time it end to end. |
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| Source: U.S. Department of Health and Human Services |
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The Bottom Line
Four of these five land on a contract or plan document somebody drafted for you and you signed: the arbitration line in your TPA report, the state reporting clause in your PBM contract, the reward language in your wellness program, and the response times in your business associate agreement. Each is a paragraph you can open this quarter and cannot reopen once your plan year starts. The $22.4 billion arbitration added over four years did not arrive as a line item either, and the share of it your plan absorbed is sitting in a report you have not asked for.
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Jude Odu
Founder and Principal, Model Optimal Care
Author of Model Optimal Care: End U.S. Healthcare Waste, One Health Plan at a Time
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