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ERISA Violations Due to Restrictive Claim Guidelines

By: Erin M. Hussey, Esq.

Whenever a self-funded health plan covers mental health/substance use disorder (“MH/SUD”) benefits, we review the plan to assess whether these benefits are covered in parity with medical/surgical benefits in order to ensure compliance with the Mental Health Parity and Addiction Equity Act (“MHPAEA”). A recent case, however, has added another layer to compliance when it comes to covering MH/SUD benefits. 

In Wit v. United Behavioral Health, 2019 WL 1033730 (N.D. Cal. 2019), class actions were brought against an insurer by plaintiffs who were “at all relevant times a beneficiary of an ERISA-governed health benefit plan” administered by the insurer. In the capacity of administering MH/SUD benefits, the insurer had developed “Level of Care Guidelines and Coverage Determination Guidelines (collectively, “Guidelines”) that it uses for making coverage determinations” of MH/SUD benefits. Those Guidelines were the main issue in this case as well as how they were utilized to adjudicate claims.

Interestingly enough, the plaintiffs' claims against the insurer did not include a violation of the MHPAEA. Instead, the plaintiffs asserted two ERISA claims: (1) breach of fiduciary duty and (2) arbitrary and capricious denial of benefits. The Plaintiffs argued that the insurer breached its fiduciary duty by:

“1) developing guidelines for making coverage determinations that are far more restrictive than those that are generally accepted even though Plaintiffs’ health insurance plans provide for coverage of treatment that is consistent with generally accepted standards of care, and 2) prioritizing cost savings over members’ interests.”

The plaintiffs also argued that the insurer improperly adjudicated and denied claims because of the overly restrictive Guidelines, and the use of those Guidelines was arbitrary and capricious.

The court ruled that the insurer breached their ERISA fiduciary duty and that the actions were an arbitrary and capricious denial of benefits, and concluded that the insurer’s Guidelines were overly restrictive and not in line with accepted standards of care. The court emphasized that the insurer placed “an excessive emphasis on addressing acute symptoms and stabilizing crises while ignoring the effective treatment of members’ underlying conditions.”

This case is a reminder that the claim guidelines utilized and the process of adjudicating and denying claims must be held to certain standards to ensure ERISA compliance when administering MH/SUD benefits.


FDA Chief Resigns – Why It’s A Loss for Self-Funding

By: Brady Bizarro, Esq.

When President Trump nominated Scott Gottlieb to be commissioner of the Food and Drug Administration (“FDA”) in March of 2017, critics were quick to point out his deep ties to the pharmaceutical industry. They had little hope that he would have the wherewithal to overcome perceived conflicts of interest and challenge the industry on important issues facing consumers and payers. Scott Gottlieb, however, proved to be a rarity, seemingly immune to regulatory capture. He received bipartisan praise as one of the administration’s most effective regulators. His departure in April will be a loss for the self-funded industry and for healthcare cost containment as a whole.

Dr. Gottlieb focused his efforts in three key areas: rising drug prices, the opioid epidemic, and the underage use of e-cigarettes. Under his leadership, the FDA worked to strengthen and speed up the review process for generic drugs. In 2018, first-time generic approval grew by 24%. In all, the FDA approved 971 generic drugs in 2018, an all-time high. With respect to the opioid crisis, which has killed some 85,000 people since 2017 and led to an enormous spike in treatment costs to payers, Dr. Gottlieb took a hard stance on opioid prescribing limits and approved a mobile app to help those with substance use disorder recovering through outpatient treatment. Finally, under Gottlieb, the FDA cracked down on teen vaping by announcing rules to restrict the sale of flavored e-cigarettes, supported banning menthol cigarettes, and reduced nicotine levels in cigarettes.

Soon after he announced his departure, the Trump administration named an interim replacement, Dr. Ned Sharpless, who now heads the Cancer Division of the National Institutes of Health (“NIH”). The search for a permanent replacement is still underway.


RBP: Sticking It To The Man

By: Jon Jablon, Esq.

Employers, TPAs, and brokers primarily choose to utilize reference-based pricing programs to cut costs. Instilling systemic changes in the industry can also be a goal of those utilizing this methodology, but cost-containment is a much more tangible goal.

The reference-based pricing mentality can carry with it the opinion that medical providers are crooks – charging many times the fair market value of services with no meaningful system of checks or balances. While that may sometimes be accurate, it’s still important to remember the law that surrounds reference-based pricing and, more importantly, balance-billing, when deciding whether to “stick it to the man.” 

Some employers refuse to negotiate balances with medical providers, even if the health plan offers very few or no options for contracted providers. Aside from the Department of Labor’s not-so-favorable stance on this matter (see https://www.phiagroup.com/Media/Posts/PostId/376/unraveling-faq-part-31), medical providers retain the right to send patients to collections, or even file lawsuits against them. Although there is an increasing amount of litigation in the industry regarding this exact topic, there is not yet any concrete guidance that removes a medical provider’s right to send patients to collections or sue a patient.

It’s sometimes tempting to walk away from the bargaining table in frustration, but remember the ramifications on the member if that’s the route taken. My advice is certainly not to bend to any given provider’s whim when it comes to payment – but keep an open mind, and consider the potential consequences associated with every option.


Transparency: A Building Block of Self-funding

Whether from unpredictable provider charges, “black box” claims repricing, mysterious PBM rebates, or unobtainable claims data, entities operating in the self-funded space such as employers, TPAs, brokers, and stop-loss carriers have been forced to deal with a systemic lack of transparency.
 
Join The Phia Group’s legal team as they discuss some emerging and ongoing transparency issues, measures being taken to try to resolve them, and methods you can use to get the data you need in order to lower costs.

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Foreign Drugs: Savings Worth Traveling For

By: Andrew Silverio, Esq.

In recent weeks, we have seen an influx of questions regarding the practice of procuring prescription drugs from abroad, particularly Mexico (Canada has historically been the most popular source).  The issue has also been popping up in the news, and a program for public employees in Utah to venture to Tijuana to pick up their prescriptions is now live.  The potential for significant savings compared to domestic pricing for (essentially) the same drugs is what is driving the popularity of this trend.  We won’t get into the legal standing of this practice – feel free to reach out if you’d like information on that topic – but we wanted to highlight a potential risk that we generally don’t see employers consider when looking at programs like this – not a legal or contractual risk, but a health risk stemming from the drugs themselves.

It is true that drugs manufactured for sale abroad can be chemically identical or sometimes even manufactured in the same facilities as their U.S. counterparts.  However, this is not always the case, and quality control can be an issue, as can more nefarious problems with counterfeit drugs. Countries designated as “Tier 1” (such as Canada) have comparable safety standards to those in the United States, but the fact remains that the FDA has no authority or ability to oversee drugs manufacturer for sale abroad (even drugs that come off the same conveyor belt as their U.S. counterparts).

Even at home, quality control issues happen.  Per a recent CNN article, “there’s no end in sight for one of the largest prescription drug recalls in recent memory.”  Numerous different blood pressure medications, from several manufacturers, have been pulled from shelves due to contamination related to “NDMA” (N-nitrosodimethylamine), a chemical which is used to make liquid rocket fuel.  This chemical, and another which has been identified called NDEA (N-Nitrosodiethylamine), interfere with DNA replication which can result in cancer, and the issue goes back years, not months.  These foreign manufacturers may be taking all the same appropriate corrective action for drugs packaged for sale elsewhere, but the FDA simply doesn’t have the ability or authority to make sure of it. 

Finally, in the event a patient visits a foreign country to retrieve their medications and ends up receiving tainted or counterfeit products and having adverse effects (whether due to a lack of FDA oversight or not), that patient will not have the benefit of any domestic laws relating to product safety or medical malpractice.  If any recourse against the manufacturer or pharmacy is available at all, they will likely need to return to the source of the drug and operate within an unfamiliar legal system.  Of course, if the patient’s health plan actively encouraged the patient to get their drugs from a less reputable foreign source rather than the pharmacy up the street, the plan itself could potentially be liable – and a much more appealing target than a foreign pharmacy.


The Opioid Crisis: How Employers & Self-Funded Health Plans Can Combat This Epidemic

By: Philip Qualo, J.D.

Each year more and more Americans overdose on prescription opioid drugs. In fact, the Centers for Disease Control and Prevention (CDC) reported that deaths attributed to opioid abuse and addiction now exceed car crashes as the leading cause of unintentional death in the United States. Opioid addiction has grown exponentially in recent years and is now officially the deadliest drug crisis in American history, more than heroin and cocaine combined.

Opioid drugs are routinely prescribed by healthcare providers for its lawful intended purpose, to treat severe pain. As access to healthcare has increasingly become available to all Americans from diverse backgrounds, this specific drug crisis is unique in that it crosses all social, economic and racial boundaries. This broad demographic substantially increases the likelihood that the opioid epidemic will eventually make its way into every employer’s workforce.

Employers sponsoring group health plans can incur significant financial and legal risks when dealing with plan participant opioid abuse, such as an increased use of emergency room services, hospitalizations, related medical costs, and even an increase in workers’ compensation claims. As a result of opioid abuse, the cost per claim continues to grow, as well as the number of painkillers per claim. For example, a 2012 study conducted by The Hopkins-Accident Research Fund Study, found that workers prescribed even one opioid had average total claim costs that were more than three times greater than claimants with similar claims but who were not prescribed any opioids. 

Employers who sponsor self-funded health coverage have a particular advantage in combatting the opioid epidemic in their own workforce as they have the flexibility to design their health plans in ways that could potentially discourage opioid abuse among plan participants. For example, allowing for low cost access to, or otherwise incentivizing participation in, popular alternatives to pain management. These alternatives provide plan participants with a variety of options to treat pain without the use of prescription drugs. The most common alternatives to pain management are acupuncture, chiropractic care and physical therapy. Such alternatives are likely far less expensive than the financial and legal risks associated with prescription opioid abuse.

Self-funded health plans also have the ability to ensure that healthcare providers in their networks are following CDC guidelines. These guidelines are intended to improve the way opioids are prescribed to ensure patients have access to safer, more effective chronic pain treatment while reducing the number of people who misuse, abuse, or overdose from these drugs. In the alternative, self-funded health plans could consider implementing a three-day limit on opioid prescriptions for initial pain treatment as the CDC has found that the probability of addiction increases on day four.  

Regardless of how employers and/or plan sponsors choose to address the opioid epidemic, it is important that employees and plan participants are educated about opioid abuse and its potential consequences.  Employees that are educated about the drug crisis and their healthcare options are more likely to make informed decisions regarding their pain.


Empowering Plans: P66 - Bigger in Texas

Join The Phia Group’s Ron Peck and Brady Bizarro as they discuss Brady’s recent trip to Austin and presentation at the Texas Association of Benefit Administrators; with a focus on employee engagement, new ideas for cost containment, and an in depth analysis of pending litigation challenging the legality of ObamaCare.  Yeah… You’ll want to tune in for this one.

Click here to check out the podcast!  (Make sure you subscribe to our YouTube and iTunes Channels!)


Too Early to Worry About 2020? Never!

By: Kelly Dempsey, Esq. & Corrie Cripps

ACA changes are few and far between these days – a lot of talk, but not a lot of action…yet. There are two things health plans should pay attention to and one is likely a welcome change. The less exciting of the two is a quick update to the preventive care rules, while the more exciting proposal is relating to the exclusion of certain prescription drug charges from the out-of-pocket maximum. While this proposal doesn’t solve all the drug copay card problems at once, it’s a step to help plans control prescription drug spend.   

New Preventive Care Guideline
The United States Preventive Services Task Force (USPSTF) issued a brand new “B” recommendation on February 12, 2019. The new recommendation requires plans to provide interventions to prevent perinatal depression. The USPSTF found that counseling can help prevent perinatal depression in persons at increased risk, and recommends that clinicians provide or refer pregnant and postpartum persons who are at increased risk to counseling interventions.

As a reminder, this new recommendation impacts non-grandfathered plans. Non-grandfathered plans are required to provide coverage for certain preventive care services in-network at 100% with no cost-sharing. Included in the list of services are USPSTF guidelines with an A or B rating. Employers that offer robust medical plans, as well as limited medical benefit plans, such as preventive only plans, will need to make the necessary modifications. Timing of applicability of new recommendations is a little confusing, as such, Phia’s best practices are to implement new guidelines into plans with the first plan year beginning on or after the recommendation is issued.

Drug Copay Cards and Out-of-Pocket Maximums
Annually the U.S. Department of Health and Human Services (HHS) issues proposed regulations with benefit and payment parameters. Generally this just means employers and plans are put on notice regarding inflation updates to certain figures such as the ACA out-of-pocket maximum limits. This year HHS is throwing a likely welcome curveball - HHS has proposed to allow self-insured group health plans to except certain cost-sharing from the maximum out-of-pocket limit if certain things occur related to prescription drugs. The rule would allow plans to exclude from the out-of-pocket totals the amount the plan must pay when a plan participant selects a brand drug when a medically appropriate generic drug is available and amounts associated with drug manufacturer coupons for specific prescription brand drugs that have a generic equivalent.

 


To RBP, or Not to RBP: That is (one) of the Question(s)

By: Ron E. Peck, Esq.

Why do employers offer health benefits to employees?  Some might point to the Patient Protection and Affordable Care Act (“PPACA” or “ObamaCare”) and say the law forces them to do so.  Yet, prior to the law’s passage in 2010, many (if not most) employers voluntarily offered health benefits to their employees.  There are a number of reasons for this, but suffice it to say, it was meant to attract and retain the best talent.

Indeed, once upon a time, health benefits were just that – “benefits.”  Now, it’s assumed health insurance is included in an employment package, and what was once a benefit is now an entitlement.

Why does this matter?  It matters for many reasons, but as it relates to reference-based pricing, or “RBP,” it matters insofar as RBP ultimately – more often than not – puts the patient (“a/k/a” the employee or their family) in the crosshairs when disputes arise between providers of healthcare services, and the benefit plans that utilize an RBP pricing methodology.

Perhaps – long ago – when health benefits were welcomed as “icing on the cake,” the fact that an individual may be limited in who or whom they could utilize for care, or risk being balance billed the difference between what the plan pays and what the provider charges, would not have been so onerous.   The employee might have thought, “Heck!  It’s better than nothing; and I suppose I could avoid the bill by selecting a provider that works with my plan.”

Today, however, not only do we expect to receive health benefits, but we are outraged when our out of pocket expenses increase.  This attitude, on the part of plan participants, is anathema to RBP.

At the same time, recall that RBP is a response to changing opinions as they relate to networks, and PPOs.  Looking back in time, one of the values inherent in PPOs was a discount off of provider billed charges.  It was assumed – “back in the day” – that the billed charges against which the discount applied were reasonable, and as such, getting discounts on top of reasonable charges had value.  The fact that the provider, by agreeing to accept the network rate as payment in full, had the secondary impact of protecting patients from balance billing, was just icing on the cake.

Today, however, we recognize that billed charges are so exorbitant, that network discounts do next to nothing to counter the abuse, and thereby are worthless.  As a result, the thing that once was a secondary benefit of network enrollment – balance billing protection for the patient – has become, more or less, the only valuable element of a network.  Yes; if asked why they are still using a network, most plans would not state it’s for the discount, but rather, it’s to avoid balance billing and protect patients.

Thus, we must ask ourselves – how much will we pay to avoid balance billing and protect patients?  If a provider charges $60,000, there is a discount of 30% ($18,000), $42,000 is thus expected as payment, and the reasonable fee is $5,000, is it worth $37,000 to protect the patient from balance billing?  If not, what will you pay – instead – to protect patients, if anything?

This is ultimately the question every plan contemplating RBP must ask itself.  How much more, beyond reasonable charges, am I willing to pay to protect my plan participants?

Piling onto this, politicians, lawmakers, regulators and courts seem more than happy to offset the rising cost of healthcare onto the benefit plans as well.  From FAQs released by the DOL, indicating that a failure to offer “adequate access” (“a/k/a” a network) will result in balance billed amounts counting against maximum out of pockets – and thus make the remainder of the billed charges owed and payable by the plan, to court decisions overturning previous rulings that determined hospitals can’t force patients to agree to pay whatever the hospital charges and sought to calculate fair prices when no fee was agreed upon, those in power seem dead set on allowing providers to charge whatever they want, and protect patients from any undue out of pocket expenses – by forcing plans to either contract with providers, or pay the cost.

I have personally advocated for working directly with providers, identifying value, and finding ways to create win-win scenarios without increasing how much the plan pays; instead offering providers things of value – other than cash – that incentivizes them to accept plan maximums as payment in full.  Yet, this effort is put into serious jeopardy whenever anyone “forces” a plan to enter into contracts or networks with providers.  Politicians and providers seem to treat (or want to treat) “networks” like a silver bullet.  The issue is, however, that networks are just a nice label for a “contract.”  If any rule or law “requires” a payer to enter into a contract with a payee, and failure to do so results in penalties for the payer, it puts an unfair advantage in the hands of the payee.  One key to successful negotiation – whether it be a provider network deal, buying real estate, or settling a law suit – if both sides don’t have something to gain, something to lose, and the freedom to leave the table, the “deal” won’t be fair.

As a result, the DOL FAQs, case law, and proposed laws that would “force” a payer (plan, carrier, etc.) to broaden their network, and force them to sign a deal with a provider, will result in one-sided deals, as providers know that the payer cannot “leave the table” without a deal.

These are all things one must consider when asking themselves whether to RBP or not to RBP.


Faces of Phia: Episode 9 - Taking Account with Lisa T!

In this episode of Faces of Phia, Adam and Brady interview the superpowered controller of The Phia Group.  From adventures in the Steel City to conquering “nice problems to have,” the team covers it all in this candid discussion.

Click here to check out the podcast!  (Make sure you subscribe to our YouTube and iTunes Channels!)