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Hope for Self-funded Plans in Connecticut..
By: Chris Aguiar, Esq.

Subrogation is tough.  Even the best language possible is susceptible to issues like limited funds, or worse, a Plaintiff’s attorney who refuses to acknowledge the realities of the law.  Of course, self-funded benefit plans who find themselves subject to state law, such as government entities, can find themselves in even worse positions when located in certain areas of the Country.  New York, New Jersey, and Pennsylvania, to name a few, are notoriously averse to the rights of benefits plans.  Connecticut was among the worst on that list …until now.  As of October of 2017, the State of Connecticut has enacted an exception to its anti-subrogation law which will give self-funded benefit plans some reprieve.  

Connecticut HB 6221 takes its cue from some of the other anti-subrogation states who have provided an exception to their law for cities, towns, and municipalities; allowing them to take advantage of some more of the cost saving benefits of self-funded plans.  Specifically, it allows self-funded local government entities with a third party interest to seek recovery from judgments or settlements obtained by plan participants.  While this is great news, this change doesn’t come without limitations.  The bill appears to only allow recovery from the part of the judgment or settlement that represents payments for medical, hospital, or prescription expense damages.  This will no doubt entice plan participants and their lawyers to structure settlements in such a way as not to include those damages.  Either way, it gives plans, administrators, and their recovery partners another tool to utilize.


Stopping the Bleeding
This week, The Phia Group’s CEO, Adam Russo and Attorney Brady Bizarro interviewed Garrick Hunt, Phia’s Sales Executive, about some of the most common burdens self-funded employers are facing in our industry. From out-of-network claims to air ambulance to specialty drugs, we explore cost-containment strategies and discuss the potential compliance concerns for employers. Finally, we answer a question from our mail bag regarding best practices for handling overpayments.

Click here to check out the podcast!


The Benchmark Shuffle
By: Kelly Dempsey, Esq.

Sadly this is not some new dance craze (though we can make one up if you want us to).  We know that the state of the health care industry requires us to be flexible and stay on our toes, especially on the regulatory front; so instead of a traditional “dance,” we’re talking about a fun regulatory topic – benchmarks and essential health benefits (EHBs)!  While ACA repeal and replace proposals have been in debate for months now, a consensus hasn’t been reached and it’s unclear what will be coming next on health care legislation.  As mentioned in previous blogs, for now, employers and health plans should continue to comply with all applicable provisions of the ACA, including the EHB rules that were the center of focus in some of the proposed repeal/replace bills.  

The EHB rules (i.e., the prohibition on annual and lifetime dollar limits for in-network EHBs and the requirement for self-funded health plans to select a benchmark) have been around for quite some time now.  The bottom line of picking a benchmark is for the determination of which benefits are EHBs and which benefits are not EHBs, thus helping plans determine which, if any, dollar limits can be maintained.

It’s important to remember that each state is responsible for their benchmark and the original benchmarks and the rules allow changes after designated timeframes.  Revised benchmark summaries were released for 2017 that reflect updates to the benchmarks, thus requiring employers to review their health plans and make necessary changes to ensure compliance.  Just like the benchmarks changed, health plans change too.   

Benefit changes are the nature of the beast in health care – be it to maintain compliance, to better align with the needs of the employer’s employees, or in an attempt to better contain costs – which means employers have to review and revise their benefits from time to time.  It’s easy to forget all the nuances of the ACA, so when an employer makes changes to benefits, they need to take into consideration the implications of those changes, including a potential change to the benchmark selected.  Whether or not a different benchmark will work for a plan, and which benchmark best aligns, is a case by case analysis based on the benefit changes the employer is looking to make.  

If your plan, or a client’s plan, is looking to make benefit changes, remember to review the benchmark and “shuffle” as needed.

A House Divided
By: Ron E. Peck, Esq.

In the world of self-funding, everyone plays a role.  The broker advises, the employer customizes their plan and funds it, the claims administrator (TPA, ASO, etc.) processes claims, and stop-loss provides financial insurance.  When the lines get blurred or we start asking people to do the jobs of others, we either create new opportunities or destroy the foundation.  It all depends upon whom we’re asking, what we’re asking them to do, and whether they are stepping on any other toes when so doing it.

Consider, for instance, when a benefit plan asks its stop-loss carrier whether they should or shouldn’t pay a claim.  Stop-loss is not health insurance.  It is a form of financial reinsurance.  Health insurance receives medical bills, processes the claims, and pays medical service providers for care rendered to insured individual patients.  Stop-loss allows others to handle the “health insuring,” and instead provides protection to such health benefit plans against debts – incurred by those benefit plans – when payable claims exceed a deductible.  They despise it when a plan asks them whether the plan should pay or deny a claim.  They don’t want to be the fiduciary, or deemed responsible for wrong payment decisions.  They aren’t paid to make such decisions, or incur such exposure.  As such, most stop-loss carriers have traditionally told the plan that they (the carrier) cannot make the call, and that the plan will have to comply to the best of their ability with the plan document.  That, when the claim is submitted for reimbursement to the carrier, only then will they judge the payability.

The problem?  Some carriers want to have their cake and eat it too.  They won’t tell the plan what to pay and what to deny, but they will happily criticize the plan’s decisions after the fact.  Again – let me stress that I’m talking about a minority of carriers.  These very few can ruin the reputation of an entire industry, however, and that is why it is so important to address this growing problem.

With increasing frequency – a lack of communication or presence of conflicting interpretation is resulting in stop-loss and benefit plans disagreeing regarding what is payable, how much is payable, and thus – what is covered by stop-loss.  Even more tragically, the growing number of disputes between plans and stop-loss carriers is leading to an increased number of claims paid by benefit plan sponsors that are not reimbursed by stop-loss, resulting in employers enduring negative experiences with self-funding, financial ruin, and legislative scrutiny.

For instance, a plan document may define the maximum payable rate as “usual and customary,” and define that as being a number calculated by reviewing what most payers pay.  The plan takes that to mean “private payers,” while stop-loss includes Medicare as a “payer” when calculating the payable rate.  Or, perhaps the plan applies usual and customary only to out of network claims – choosing to pay per a PPO network contract whenever possible, but stop-loss interprets the term “maximum payable” to apply to all claims – in and out of network; arguing further that the plan document controls the plan, and stop-loss only insures the plan.

The number of claims I’ve seen independently audited by the carrier, resulting in the carrier chopping away at the amount paid by the plan – in an effort to define what they feel is the “payable” amount – and the resultant conflicts will not benefit the industry.  When a self-funded employer who sponsors a self-funded plan, also uses a PPO (to avoid balance billing of their members), and that plan pays $100,000 in “discounted claims” … they expect stop-loss to pay everything paid beyond the $60,000 deductible; a refund of $40,000.  It is, after all, why they pay for stop-loss, and is something they depend upon to self-fund.  Imagine, then, when the carrier “reprices” the $100,000 using Medicare,  and decides no more than $10,000 should have been paid… well short of the $60,000 deductible.  They may even go so far as to “advise” the plan to ask the provider to refund $90,000 to the plan.

This employer will point a finger at their broker, their TPA, and stop-loss.  Taking the carrier’s advice to heart, and challenging the outrageous provider bills and/or PPO terms is the last thing they are going to do.  The sooner we realize this form of “tough love” doesn’t work, and ultimately only provides fuel for politician’s anti-self-funding rhetoric, the better.

To address this issue, it behooves both the plan (and its TPA) and stop-loss to examine the plan in its entirety during the underwriting process.  What do I mean by “entirety?”  The plan document is not enough.  A plan is more than an “SPD.”  It is also the network contracts, employee handbooks, and any other document or obligation that dictates how the plan will actually be administered.  Only by laying all of those cards on the table ahead of time and agreeing collectively how the plan will be administered in all such circumstances can disputes like the ones I described be addressed before real money is at stake.


Empowering Plans Segment 14 - Repeal & Replace Fails: What's Next?
This week, The Phia Group's CEO, Adam Russo, Sr. VP, Ron Peck, and Attorney Brady Bizarro discuss the dramatic events on Capitol Hill and the shocking failure of Senate Republicans to repeal and replace Obamacare. Despite this serious setback, Republicans are not ready to give up. We'll discuss the path forward.

Click here to open the Podcast!

Reverse Medical Tourism
By: Jen McCormick, Esq.

On the way home to Boston from a recent international family vacation, I had the pleasure of sitting next to a young gentleman.  He was very friendly and didn’t seem to mind a wiggly toddler so we started to chat.   He told me that he would be in Boston for a month with his father (who was also on the flight), because his father needed medical treatment.  He explained that the services his father needed were not available on the island, and his father’s health insurance would cover a small part of these services via ‘reverse medical tourism.’  The gentleman implied that the family would be covering the balance.  It shouldn’t have come as a surprise that US hospitals are likely enthusiastic to offer services to affluent international patients (maybe because they might pay the hospital at a higher rate than an insurance company).  

During the flight, the gentleman also wanted to know if he could ask me a few questions about where to go in Boston.  Of course I was ready and excited to tell him all the places to visit and see in Boston, but he instead pulled out a list of medical supplies that needed to be purchased (some for the trip and some to bring home).  The gentleman explained that he had been instructed to purchase these basic supplies to avoid having insurance pay for them and/or due to some of these items being difficult to locate (or too expensive) on the island.  

On a daily basis we work to ensure employers are aware of how they can stretch their budgets while still providing comprehensive benefits to their loyal employees.  One popular way is via international medical tourism.  My chat with this gentleman on my short flight home was a reminder that medical tourism works in a variety of ways - US patients are seeking services abroad to obtain services and care at more affordable rates, while at the same time the international patients are seeking services in the US because they can afford to self pay.


Reference-based Pricing: Decisions, Decisions…
Jon Jablon, Esq.

Self-funding is growing. There’s no question about that. As medical costs continue to skyrocket, there are certain trends in the industry that have increased in popularity to try to combat the ever-growing costs. One of those trends is reference-based pricing, or RBP.

Most people working in our industry have some familiarity with RBP due to the various angles from which they have been bombarded. There are educational materials and sales pitches constantly being thrown at those who represent health plans – and since some of these materials describe RBP differently and different vendors vary in their accounts of how RBP should work, it can be difficult to know what to listen to and which vendor to ultimately place business with.

We generally recommend asking potential vendors certain questions and weighing their answers – and of course different weights should be issued based on the priorities of the particular entity making the decisions. Some questions that we advise to ask include:

•    How is the vendor paid? Are there fees that may become due from the client other than the “base” service fees?

•    Please describe the flexibility that each individual client has in choosing its own payment level, settling claims, or engaging third parties if necessary.

•    Do you assume fiduciary duties on behalf of the client? If so, what benefit does that provide relative to RBP, and which decisions will you be making as fiduciary? If not, why not?

•    If we or a group have provider contracts in place prior to engaging your services, are you entitled to fees or other contractual benefits based on savings generated by those contracts?

•    Is there a minimum claim or balance-bill threshold under which you will not handle the claim or bill?

•    Is there a maximum amount (whether percentage of bill, percentage of Medicare, or other metric) over which you will not negotiate claims with medical providers?

•    In the event a medical provider refuses to negotiate at a rate you deem reasonable, what is your next step?

•    Is there a point at which you will cease handling a given file? If so, are there continued protections against balance-billing?

•    If the TPA, broker, or group is in need of guidance related to a claim for which you are not specifically earning revenue, is there an extra cost for providing that guidance?

You might be surprised at some of the answers you get; if you’re serious about reference-based pricing, a vendor should be chosen after a careful review of everything the vendor has to offer – and of course in comparison to its competition. Happy shopping!


The Rise of Paid Family Leave Laws & Their Impact on Self-Funded Plans
By Brady Bizarro, Esq.
    
Most employers and workers alike are familiar with the federal Family and Medical Leave Act of 1993 (“FMLA”). The law requires employers to provide twelve weeks of unpaid, job-protected leave for an employee’s own serious health condition, for the birth or adoption of a child, or to care for a spouse, parent, or child with an illness. Importantly, the law also requires employers to maintain group health benefits for employees who take FMLA leave. The FMLA, like most other federal laws, applies whether an employer’s health plan is fully insured or self-funded.

As of this writing, five states have passed laws going beyond the FMLA, granting eligible employees paid family leave. They are California, New Jersey, Rhode Island, Washington, and New York. Rhode Island law requires four weeks of paid leave, California and New Jersey each offer six weeks of paid leave, and Washington offers up to twelve weeks per year. Beginning on January 1, 2018, the New York Paid Family Leave Benefits Law (“PFL”) will take effect and New York State will also begin providing employees in the state with paid family leave. The law will be phased in over four years and will eventually provide twelve weeks of paid family leave to employees; which is one the longest leave periods in the country.

What makes the PFL unique is not just that it requires employers to provide twelve weeks of paid family leave; it also requires employers to continue health insurance coverage to employees out on leave. While this state-mandated employer obligation would seem to be preempted by ERISA, the case law on this point is unsettled.

In 2005, the Department of Labor (“DOL”) seemed to put this issue to rest in an advisory opinion on the applicability of leave substitution provisions of the Washington State Family Care Act (“FCA”) to employee benefit plans. The FCA permits employees entitled to sick leave or other paid time off to use that paid time off to care for certain relatives of the employee who had health conditions or medical emergencies. As part of its analysis, the DOL analyzed section 401(b) of the FMLA, which provides that state family leave laws at least as generous as the FMLA are not preempted by “this Act or any amendment made by this Act.” 29 U.S.C. § 2651(b). As a result of the department’s guidance, it appeared as if state family leave laws enjoyed special protections from ERISA preemption.

In 2014, the Sixth Circuit Court of Appeals considered the same issue and reached the opposite conclusion. In Sherfel v. Newson, 768 F.3d 561 (2014), the Court found that the leave substitution provisions of Wisconsin’s FMLA sufficiently “related to” an ERISA plan such that they were preempted by ERISA. Specifically, the Court held that the state law would “mandate the payment of benefits contrary to the [written] terms of an ERISA plan,” thus undermining one of ERISA’s chief purposes; achieving a uniform administrative scheme for employers. Newson, at 564. As part of its analysis of the preemption issue, the Court also dismissed the legislative history relied upon by the DOL in an uncommonly blunt (and borderline satirical) manner. Considering whether legislators intended to preclude the preemption of state family leave laws by ERISA, the Court observed, “[T]he idea that this colloquy ever passed the lips of any Senator is an obvious fiction. Colloquies of this sort get inserted into the Congressional Record all the time, usually at the request of a lobbyist…” Newson, at 570.

In ruling that a state family leave law was preempted by ERISA, the Sixth Circuit Court of Appeals aligned itself with the U.S. Supreme Court’s earlier jurisprudence on preemption. It remains to be seen how other Circuit Courts will address similar challenges to state leave laws; especially those that mandate continuation of coverage. Still, paid family leave is one of the few policies in Washington, D.C. that has bipartisan support, and employers should expect to see more states pass laws akin to New York’s Paid Family Leave Act.


Magical Words in Claim Negotiation: “Please Send Claim Back for Processing”
By: Jason Davis

I negotiate healthcare claims and I have been doing this off and on for nearly 15 years, so I have learned a few things along the way.  Lately, I am picking up on an uptick of a trend with providers and particularly with their third-party billers. Here’s the shtick:  The provider or rep advises of a low discount requirement (this is nothing new), but if you don’t accept that rate, they shut down and politely tell you to “please send claim back for processing.”  What is that all about?

I am a negotiator and I have been hired to present objective third-party data (and we have gobs of it) about the reasonable value of healthcare services to compel another party to willingly settle a claim with a signed agreement.  My raison d’etre is to minimize reimbursement and help health plans contain costs. In contrast, a third party biller’s job is to maximize revenue and cash flow – so they either believe that a settlement will accomplish their goals, or they don’t.  

When a provider representative tells you to send the claim back, they know the insurer has to pay the benefits outlined in the health plan, and so they are basically saying… “nice data, superior parsing of code edits, impressive legal argumentation, very persuasive, but I don’t think the plan has the language to support that level of reimbursement or that they will even apply the limits if they do exist…I think will likely get more money if the payer processes their payment, so please send claim back for processing.”  And you know what?  On average, and sadly, they are absolutely right.   

So what to do?  Two things: 1) make sure your plan language gives you the ability to pay a reasonable referenced-based price (RBP) for out-of-network (OON) services, and 2) if facing an “unreasonable” provider or one that basically says “buzz off” … you need to pay your RBP rate.  In a world where one party can just say flat-out no to settlement, and get paid more money, why would they ever say yes?  Your negotiation is only as good as your end-game.  

Believe you me, if you selectively enforce your RBP end-game (when it makes sense, and allowed by the Plan) you will find that seemingly abusive providers will be more malleable for settlement on your next claim.  As for balance-billing, you will experience it more rarely than you might expect.  Most providers follow the trend of high billing (since “everyone else is doing it…”) to maximize payments from payers but rarely intend to squeeze hapless patients directly.  If they do want to go down this route, there are ways to enforce the consumers’ rights and get the “balance” (that no one ever actually pays) absolved.  

At Phia, we try to have a meaningful meeting of minds to try and come to mutually acceptable agreements with providers, and we work with our clients to help guide them through the often nonsensical world of claim settlement.  Understandably, however, many of our clients have simply given up with even trying to engage in settlement, and they are moving directly to RBP on OON claims, dealing with the levels of balance-billing which can be managed appropriately (with our assistance).  In light of this change, maybe we will see providers start saying “please send back for negotiation.”  


Empowering Plans P13 - Your Friendly Neighborhood Provider
Taking a positive view on the industry, Ron Peck, Jon Jablon and Andrew Silverio today share stories and examples of providers working with payers to preserve the private employer based group health plan industry.  From price transparency, to direct primary care, to medical tourism – providers that are willing to innovate and work with payers get their moment in the sun with this episode.

Click here to open the Podcast!