The Sixth Circuit on Tennessee PBM law preemption

A lot of virtual “ink” got spilled last week about the Sixth Circuit’s opinion affirming a lower court decision that some of Tennessee’s PBM laws are preempted.

A number of those posts left the impression the laws were struck down entirely.

Not so.

McKee Foods v. BFP is about who the State can enforce these provisions against.
The ruling preempts enforcement only as to self-funded ERISA plans. The injunction runs to the Commissioner. That’s the scope.

Fully insured plans are a different story. To see why, you have to keep three ERISA preemption provisions straight:

Preemption clause
ERISA supersedes state laws that “relate to” an employee benefit plan. Broad by design.

Saving clause
State laws that “regulate insurance” are saved from preemption. This is the how states regulate insurance.

Deemer clause
Self-funded plans cannot be “deemed” insurers for purposes of state insurance law.

So even if the state law regulates insurance, it still cannot reach a self-funded plan.
Saving clause saves it. Deemer clause takes it back.

Fully insured plans don’t get that deemer-clause protection. They can be regulated under state insurance law.

Bottom line: Tennessee’s any-willing-pharmacy provisions remain enforceable against fully insured plans written in Tennessee.

Practical takeaways:

If you have self-funded clients with Tennessee employees: document network design decisions as fiduciary decisions.

If you have fully insured clients in Tennessee: the law still applies.
(Link to opinion in comments.)