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Twice-Weekly Briefing
Friday, October 16, 2026
Issue 261016-72
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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, and what each one costs you.
| 1. | An appeals court overruled its own 1985 exhaustion rule for ERISA statutory claims | | 2. | Treasury proposed a narrower premium tax credit and set a December hearing | | 3. | Michigan's complaint says plan sponsors pay more when only one Blue plan can bid | | 4. | Ten drugmakers move 340B from an up-front discount to a rebate claimed after the dispense | | 5. | UnitedHealthcare drops pediatric prior authorization on select codes, with a UMR plan exclusion |
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| 1 · FIDUCIARY LITIGATION · October 13, 2026 |
| An Appeals Court Overruled Its 1985 Rule and Will Hear ERISA Fiduciary Claims With No Internal Appeal First |
| The Eleventh Circuit, sitting en banc with twelve judges, held on October 13 that ERISA does not require participants to run a plan's internal claims process before suing on statutory claims. The court overruled Mason and its progeny "to the extent they hold that ERISA itself requires exhaustion of statutory claims, including claims for breach of fiduciary duty," and described its own 1985 holding as "an atextual product of judicial creation based solely on policy reasons." The case is No. 24-10084, on appeal from No. 1:22-cv-04602-LMM in the Northern District of Georgia, and the decision reaches plans in Alabama, Florida and Georgia. The plaintiffs are participants in an employee stock ownership plan, so a health plan is not the subject, but the holding reads on ERISA itself. One limit matters as much as the holding: footnote 1 says the court does "not address our cases requiring exhaustion in cases where a plaintiff is challenging the denial of benefits under the terms of a plan governed by ERISA." |
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MOC Perspective
ERISA no longer supplies an exhaustion requirement for statutory claims in those three states, and whether a plan document can supply one is a question the court deliberately left open. It decided this case on language instead, reading the plan's own claims procedure as "permissive, not mandatory." Our reading, not the court's: a fiduciary breach claim over plan fees, vendor selection or an imprudent arrangement can reach a courtroom with no internal appeal filed first. A claim for a denied benefit is untouched and still runs through your appeals process.
What to do now
| ▪ | Ask your ERISA counsel within 30 days whether your plan document requires exhaustion of statutory claims, not only benefit denials. | | ▪ | Pull your fiduciary liability policy before January 1 and confirm the defense cost limit, since ERISA no longer requires an internal appeal first in three states. | | ▪ | File your committee minutes for 2026 before year end, since a fiduciary breach claim can now open with no internal record behind it. |
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| Source: U.S. Court of Appeals for the Eleventh Circuit, en banc opinion in Bolton v. Inland Fresh Seafood Corporation of America, No. 24-10084, filed October 13, 2026 |
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| 2 · PREMIUM TAX CREDITS · October 15, 2026 |
| Treasury Proposed a Narrower Premium Tax Credit and Conformed Its Rules to a Cap Congress Already Repealed |
| The Treasury Department and the Internal Revenue Service published a notice of proposed rulemaking and notice of public hearing on October 15, document 2026-21056, RIN 1545-BS15, docket REG-101576-26. It would amend the rules on an individual taxpayer's eligibility for the premium tax credit, how that credit is computed, and liability for excess advance payments. One part is bookkeeping on a change Congress already made, because section 71305 of the One Big Beautiful Bill Act "removed the section 36B(f)(2)(B) repayment limitation" for taxable years beginning after December 31, 2025, and the proposal conforms the regulation to it. The genuinely new piece runs the other way on the calendar: for taxable years beginning after December 31, 2027 a month would generally count as a coverage month only if the Exchange has verified the enrollee's eligibility. Comments are due November 30, 2026, and a telephonic public hearing is scheduled for December 8, 2026 at 10 a.m. ET. The document also rules out the obvious misreading in its own words: "Nothing in these proposed regulations affects any information reporting requirements for employers," citing sections 6055 and 6056. |
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MOC Perspective
Read this as arithmetic, not as compliance. Our reading, not the document's: the employer mandate penalty under 4980H(b) bills you only when a full-time employee you did not cover affordably goes on to receive this credit, so a narrower credit and an added verification step shrink the population that can trigger it. It cuts the other way for anyone you point toward the Exchange, because the repayment cap is already gone and an employee who takes a subsidy and guesses wrong on income faces repayment with no ceiling. The verification rule is still a proposal, and the comment window is the only part of this you control.
What to do now
| ▪ | File a comment by November 30, 2026 under docket REG-101576-26 if you employ seasonal or variable hour staff. | | ▪ | Recount your 4980H(b) exposure for 2027 using only employees you did not offer affordable coverage. | | ▪ | Tell any employee you point toward the Exchange that Congress already removed the repayment cap for taxable years beginning after December 31, 2025. |
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| Source: Department of the Treasury and Internal Revenue Service, notice of proposed rulemaking and notice of public hearing, REG-101576-26, RIN 1545-BS15, published October 15, 2026 |
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| 3 · TPA COMPETITION · October 8, 2026 |
| Michigan Sued Blue Cross Over Rules It Says Keep Other Blue Plans From Bidding on Large Employer Contracts |
| The State of Michigan and the People of the State of Michigan sued Blue Cross Blue Shield of Michigan Mutual Insurance Company on October 8 in the Eastern District of Michigan, No. 2:26-cv-13834-MFL-EAS. The complaint alleges territorial and output restrictions that are "per se violations of Sections 1 and 2 of the Sherman Act," plus violations of Michigan Compiled Laws sections 445.772 and 445.773. It pleads that Blue Cross holds 65 percent of all health insurance products and 79 percent of the PPO market in Michigan, both attributed to a 2025 American Medical Association report, plus a 69 percent large group share as of 2024 carrying a Herfindahl-Hirschman Index of 5,191, which the complaint attributes to the Kaiser Family Foundation. The State sues partly as a customer, because paragraph 49 says it "self-insures its State Health Plan" and buys administration under Contract No. 071B4300062. Everything is alleged, Blue Cross has not answered, and the market definitions behind those shares are the State's own. |
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MOC Perspective
Paragraph 43 names your seat at the table: competition for these contracts lets "employers, plan sponsors, plan administrators, trustees, and plans" obtain better prices, provider networks and plan designs. If you cover employees in more than one state, the complaint's theory is that a rule keying bids to where an employer is headquartered explains why only one Blue plan ever quotes you. That is a question for your broker now, before your next administration bid, whatever a court eventually decides about it.
What to do now
| ▪ | Ask your broker within 30 days to name every carrier that quoted your last administration bid. | | ▪ | Check whether your administrative services agreement renews before the end of 2027, and calendar the bid date now. | | ▪ | Request your per employee per month administration fee in writing for the last three plan years. |
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| Source: State of Michigan, complaint in State of Michigan v. Blue Cross Blue Shield of Michigan Mutual Insurance Company, No. 2:26-cv-13834-MFL-EAS, E.D. Mich., filed October 8, 2026 |
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| 4 · 340B PRICING · October 2, 2026 |
| Ten Drugmakers Will Make 340B Covered Entities Claim a Rebate Instead of Buying at a Discount Up Front |
| The Health Resources and Services Administration's 340B Rebate Model Pilot page lists ten approved manufacturers, each carrying a start date of January 1, 2027, and every one of them has posted a plan document. Three of those documents are dated in the first days of October: AbbVie's announcement on October 2, GSK's program policy on October 2 and Teva's plan on October 1. From the start date a covered entity buys a listed drug at list price and claims the 340B discount back through a platform called Beacon, instead of receiving it at purchase. HRSA sets the arithmetic and the clock for the whole pilot, stating that "Rebates equal WAC minus the 340B ceiling price on the date of dispense," that claims are due "within 45 calendar days from the date of dispense," and that "Manufacturers must pay or deny (with documentation) all rebates within 10 calendar days of a completed data submission." Each manufacturer then words its own plan, and Teva's adds that "No other Teva products are included in the rebate model at this time." The Federal Register notice establishing the pilot, 91 FR 48883 of August 3, says that "based on 2025 data, the included products represent less than 5.5% of total 340B sales." |
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MOC Perspective
Nothing here obliges your plan, and none of these documents uses the words employer, group health plan or self-funded. The connection is ours: the listed drugs include IMBRUVICA, LINZESS, VRAYLAR, BREO ELLIPTA, TRELEGY ELLIPTA, AUSTEDO and AUSTEDO XR, which your plan already pays for at contract pharmacies and hospital outpatient departments. A covered entity whose discount now arrives after the dispense rather than at purchase has a different reason to route a member's prescription through one site rather than another, so watch those drug names in your 2027 claims.
What to do now
| ▪ | Require your PBM to confirm by December 1 whether any 2027 specialty contract terms change for the pilot manufacturers. | | ▪ | Pull your 2026 claims for the seven listed drug names above to size your exposure before January 1. | | ▪ | Add a 340B pass-through question to your hospital contract review for the plan year beginning in 2027. |
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| Source: Health Resources and Services Administration, 340B Rebate Model Pilot Program page, with AbbVie's announcement of October 2, 2026, GSK's program policy of October 2, 2026 and Teva's plan of October 1, 2026 |
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| 5 · PRIOR AUTHORIZATION · October 1, 2026 |
| UnitedHealthcare Will Drop Prior Authorization on Select Codes for Members Under 18, With a UMR Exclusion |
| UnitedHealthcare told providers on October 1 that "on Dec. 1, 2026, we'll remove prior authorization requirements for select codes for all patients under the age of 18." The program covers UnitedHealthcare commercial plans, UnitedHealthcare Individual Exchange Plans and select UnitedHealthcare Community Plans. Four plan types are excluded, and the first one listed is "UMR plans not following the UMR prior authorization list." The in-scope codes do not exist in published form yet, because the notice says only that "we'll announce in-scope codes before the program begins" and that they "will vary by state and UnitedHealthcare plan." The page carries no percentage and no dollar figure, and it never uses the words employer, group health plan or self-funded. |
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MOC Perspective
If your plan runs a custom UMR prior authorization list, your members under 18 may get nothing out of this, and UnitedHealthcare put that exclusion first on its list rather than in a footnote. You cannot size the change yet because the code list is unpublished, so the only useful move is written confirmation from your administrator about which side of the exclusion you sit on. A parent who hears the announcement and then meets a prior authorization will call your HR line, not the carrier's.
What to do now
| ▪ | Ask your administrator in writing before December 1 whether your plan follows the standard UMR prior authorization list. | | ▪ | Request the in-scope code list the day it publishes, and compare it against your 2026 pediatric denials. | | ▪ | Brief your HR service desk by November 15 so it can answer a parent whose child still needs prior authorization. |
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| Source: UnitedHealthcare provider resource library, prior authorization reductions for members under 18, posted October 1, 2026 |
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The Bottom Line
Three of these land on paper you have already signed and will sit still until you move it: your plan document, your administrative services agreement and your pharmacy terms. The fourth, your prior authorization list, changes on December 1 whether you read it or not. The one left is still a proposal, and November 30 is the last day your comment counts for anything. Read all four this month and you will know which of your 2027 costs you can move now and which ones you are still waiting on a list to price.
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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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