President Trump recently signed Executive Order 14370, removing barriers to research related to the medical benefits of marijuana, requesting its reclassification from a Schedule I to a Schedule III under the Controlled Substance Act (CSA), and enabling its use by patients and doctors to treat certain medical ailments. The order recognizes an expansive legal landscape whereby local and state governments have sanctioned its use for a variety of medical ailments. Furthermore, the order seeks to expand research related to cannabidiol (CBD) and to establish a regulatory framework for the distribution of CBD products. Depending on how the order is implemented, it may lift limitations imposed by health plans and permit its uniform treatment in health care.
While various localities and states have passed regulations permitting the use of marijuana to treat medical ailments, its classification under the CSA has limited its potential coverage under a health plan. Following the issuance of the President Trump’s executive order, the Attorney General is required to expedite the reclassification of marijuana from a Schedule I to a Schedule III controlled substance. Under its current classification as a Schedule I controlled substance, marijuana does not have medical value and is subject to high potential for abuse. Once reclassified as a Schedule III controlled substance, marijuana will have accepted medical use and a lower potential for abuse. Reclassification alone does not authorize physicians to prescribe marijuana; while states may continue to regulate medical licensure and authorize recommendations under state cannabis programs, any lawful prescription of a cannabis-based drug would require approval from the Food and Drug Administration in accordance with the Food, Drug, and Cosmetic Act. If permitted, a medical marijuana prescription and related visits may now be covered by a health plan as medical care.
Pending additional guidance from the Departments of Treasury, Department of Health and Human Services and Department of Labor, the following outlines potential coverage scenarios following the reclassification of marijuana:
- Medical Care Reimbursement: Presently, medical marijuana is not considered “medical care” under the Internal Revenue Code. As such, an individual is not permitted to deduct costs related to medical marijuana from their tax returns or request reimbursement for related expenses from a health savings account (HSA), a flexible spending account (FSA), or a health reimbursement arrangement (HRA). Similarly, an employer is not permitted to deduct expenses related to medical marijuana coverage from business tax returns. However, following the reclassification of marijuana, medical marijuana may be a permitted medical expense deductible from individual and business tax returns or reimbursable by an HSA, FSA or HRA, as available.
- Coverage of Initial Visits – the prescription: Many local and state laws permit a doctor to issue medical marijuana treatment but may not permit its prescription due to its current classification as a controlled substance. Following its reclassification, an individual may seek a sick visit to obtain a prescription for medical marijuana. The visit would then be covered at the same cost as any other sick visit under the plan. Nonetheless, there may be limitations imposed by the particular health plan.
- Coverage of Subsequent Visits – treatment/complications of treatment: The Health Insurance Portability and Accountability Act of 1996 (HIPAA) prohibits health plans and issuers from discriminating against individuals based on health status. HIPAA requires benefits to be uniformly available and restrictions to be applied uniformly to similarly situated individuals. HIPAA permits certain exclusions, such as coverage of certain drugs or treatments, coverage based on medical necessity or experimental treatment, or cost-sharing limits. Moreover, HIPAA permits health plans and issuers to exclude coverage based on the source of injury, except if the injury results from domestic violence or a medical condition. Thus, health plan provisions that exclude coverage because of its source (i.e., use of medical marijuana) may violate HIPAA if the health plan would otherwise cover the treatment for the underlying medical condition (e.g., breast cancer).
- Discrimination Based on Marijuana Use: A health plan and issuer cannot discriminate against a patient who uses medical marijuana. A patient using marijuana must have initial and continued access to health care. The ACA requires access to health care regardless of the patient’s medical history. If a health plan prohibits entry of the employee into the plan due to the use of marijuana, the health plan is considering the patient’s health status, smoking marijuana, to deny health coverage. In addition, a health plan cannot rescind or prevent renewal of coverage except in certain instances (e.g., non-payment of premium, fraud or misrepresentation).
- Coverage as Experimental or Investigational Treatment: Pending broad adoption of medical marijuana coverage in health plans, many plans may be able to cover medical marijuana as experimental or investigational treatment. Experimental or investigational limitations are not defined by federal law; they are designed by health plans or issuers. Most experimental or investigational limitations will limit all treatment unless the treatment meets specific criteria established by the health plan, such as FDA-approved therapies, scientific reviews or clinical trials. If the guidelines require FDA approval or review, the health plan will exclude an authorization visit. However, if the guidelines rely on any medical research, the authorization visit may be covered. Once medical marijuana research is expanded on the federal level, most plans will be able to rely on federal research to cover medical marijuana use. However, pending federal research, there are several states, including New York, that have engaged in research related to the benefits of medical marijuana.
- In-Network and Out-of-Network Coverage: A health plan cannot discriminate against a medical provider by not paying, or otherwise limiting, participation in the health plan’s network due to the medical provider’s engagement in medical marijuana services. State and local laws affecting medical marijuana generally require treating physicians to be licensed and in good standing to practice medicine in the state, and to be registered with the state to authorize medical use of marijuana. The ACA prohibits refusal to cover medical care by a particular health care provider acting within the scope of the provider’s license or certification under applicable state law.
Harris Beach Murtha’s Corporate and Labor and Employment practice groups, along with our Cannabis Industry Team, are awaiting additional guidance on this issue and will report out any new developments. If you have any questions or concerns, please reach out to attorney Erika M. Medina at (212) 314-5450 and emedina@harrisbeachmurtha.com, or the Harris Beach attorney with whom you most frequently work.
This alert is not a substitute for advice of counsel on specific legal issues.
Harris Beach Murtha’s lawyers and consultants practice from offices throughout Connecticut in Bantam, Hartford, New Haven and Stamford; New York state in Albany, Binghamton, Buffalo, Ithaca, New York City, Niagara Falls, Rochester, Saratoga Springs, Syracuse, Long Island and White Plains, as well as in Boston, Massachusetts, and Newark, New Jersey.
