Multiple-Employer Health Plans Face U.S. Rules to Combat Fraud

The Obama administration proposed regulations to combat fraud by health-insurance providers hired by small businesses to arrange coverage for employees.

The rules, part of the 2010 health-care law signed by President Barack Obama, require so-called multiple employer welfare arrangements to meet enhanced reporting requirements aimed at protecting employers, workers and their families who need health-care services, according to an e-mailed department statement today.

The Labor Department’s enforcement authority will be expanded to protect participants in such plans and let the department close providers that engage in fraud. The agency has filed more than 1,100 civil and criminal cases against multiple- employer plans, recovering more than $226 million through September, according to an agency statement.

The rules are aimed a multiple-employer operators that have used loopholes to avoid state regulations, such as a requirement to maintain sufficient funds and adequate reserves to pay claims, according to the statement. In some cases, individuals incur medical bills before being told their claims can’t be paid -- and they are liable for the costs.

Under the proposed rule, the providers must register with the Labor Department before operating in a state, or be subject to penalties. The Labor secretary can take legal action when it appears that fraud is taking place.

To contact the reporter on this story: Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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