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Planning Your Firm'$ Future

State TPAs: Together you stand. Divided you fall. Your state legislature has your livelihood in their hands. You are NOT protected by ERISA Preemption. For at least 20 years, SPBA has been urging TPAs in every state to get organized in state TPA associations of some form in order to follow and shape state laws that apply to them. TPAs in a few states have done a fantastic job of creating effective state TPA associations. However, in too many states, TPAs have been unwilling to make the effort to work with their fellow TPAs in the states. Do NOT think that ERISA preemption lets you ignore state action. The new SPBA Directory of State TPA Licensing Statutes is enclosed. There are also state laws applying to self-funded multiple-employer (MEWA) plans. The HHS Privacy Regs + the Gramm-Leach-Bliley Act (GLBA) law give states HUGE new powers...and opportunities to regulate (or undermine) TPAs and self-funding. ERISA preemption does NOT preempt this. How active is the threat? We hear that 21 states already have GLBA legislation, and we heard that NY, alone, already has 17 privacy bills. What and how can states get you? Both the Privacy Regs & GLBA allow states to write laws tougher than the federal standard, and employers/plans/TPAs must obey the tougher state standard. SPBA is working with the federal authorities to urge common sense and as much uniformity as possible. However, if a state wants to set standards which are impossibly tough for self-funded plans and TPAs to do their duties....they have the power to do so. SPBA is also preparing an analysis paper and has hired legal counsel to prepare a sample draft "decision tree" to see if GLBA applies to your firm and situation and also a draft notice of the type you might send to clients or plan participants. Keep in mind that these will be only drafts. GLBA is quite complex, involves laws other than what normally apply, and every firm will have a different situation (and thus need to personalize GLBA) because of the ownerships and affiliations of the TPA firm and how they operate. So, these drafts are not fill-in-the-blanks. You will probably need your own legal counsel to specifically advise you on your unique situation. Why must TPAs in each state organize and influence their legislatures and State Insurance Departments? Why can't SPBA just do some easy handy-dandy how-to and lobbying in each state? Lots of reasons: >>>(1). SPBA does NOT get involved in individual state issues because every state has its own politics, personalities, and context of what things mean. So, if SPBA played any role in lobbying for or negotiating a deal for TPAs in one state....that same provision could be poison and totally unacceptable in the context of other states. However, the second state's TPAs would have the undesirable (for them) solution jammed down their throats, with the excuse that SPBA had endorsed or supported it in the first state. >>>(2). Even if #1 were not a problem, it would take about a 500% increase in SPBA dues to have a credible lobbying/analysis staff and structure to understand and influence each state. It is a better investment for TPAs in each state to devote some money to a local association. (Also, because state associations are not chapters or in any way affiliated with SPBA, it lets the local groups define who is eligible to suit the needs that best fits their state. For example, in one state TPA association, a creative interpretation of who could be in the state association made the Governor's brother a "TPA' in the state association. That helped. Getting results is what SPBA wants for you.) >>>(3). Nothing is despised more in state government more than, "I'm from Washington (or a national association), and I'm going to tell you what you should do." On the other hand, having local TPAs who impact tens of thousands of lives in the state and can show they are working for well-known local employers have the maximum credibility. Again, the goal is to have the effort achieve success, so use the most effective (credibility of home-state TPAs) technique, not the least effective (national big-brother) strategy. So...what DOES SPBA do for you, you ask??? First, we alert you as early as possible to national issues where state action may impact you (such as these two privacy matters. SPBA has had articles & meeting sessions on HIPPA privacy for 2 years, and GLBA was discused in the Dec. 21 UPDATE as well as at the Spring Meeting.) This often includes analysis & suggestions. Second, SPBA is a resource for insight on how federal laws might impact or preempt state laws. (This has traditionally been ERISA preemption, but that's not going to be any protection in the current privacy & GLBA issues.) Third, we are an informal clearinghouse resource of what we hear from other states that has worked or has been a challenge. (This depends entirely on good simple synopsis summaries supplied by state to us.) PLEASE...Do NOT just send us a 100 page bill or regulation introduced in your state and say , "What do you think?". We can't be of help, because we don't know the politics, personalities, context and history in your state. If there are a couple of specific provisions which you can highlight and frame a specific question, we can try to help, but you have to do your homework carefully first. Folks, this is the greatest challenge and potential threat from states we have ever faced. If you don't get involved EARLY and consistently in the state legislative and Insurance Department process, you may find yourself in an operational straight-jacket, and not know what happened. Put aside those jealousies and competition with other TPAs in your state. If you don't cooperate now, you'll have plenty of time to talk while you're standing in the unemployment line together. As noted, some states, such as California and Texas have very well organized full associations that provide services and meetings all year. Other states have lower-profile or even on-call associations. In some states, TPAs simply agree to meet in some restaurant or hotel or office that is mutually convenient. Everyone informally puts some money in the pot if they need to hire help. So, there's no excuse, and it is YOUR future (very directly) at stake. If your state has an association, join and help it in this effort, If TPAs in your state do not have any kind of association, then get together QUICKLY. Things are already going on in the legislature and Insurance Department on privacy and GLBA. Finally, remember that you need to be concerned not only with the state in which you are actually located, but also where your clients and even individuals in the plans might be. Most state laws apply to "any resident of the state". So, you might suddenly have a COBRA widow in some distant state, or QDRO, QMCSO, etc. may suddenly add some distant person. Be alert.