Phia Group Media

rss

Phia Group Media


The RBP Stew

By: Jon Jablon, Esq.

Reference-based pricing (or RBP) tends to be one of those things that there’s little ambivalence about; in general, if you are acquainted with reference-based pricing, you either love it or hate it. And, like so many hot topics, some of the intricacies are not quite clear. That’s partially due to the sheer complexity of the industry and reference-based pricing in general, but also partially due to the competing sales efforts floating around. Since the RBP stew has so many ingredients, like any stew recipe, there are tons of different ideas of what makes a good stew – but that also means it’s fairly easy to cook a bland one.

Some have historically advocated sticking to your guns and never settling at more than what the SPD provides. This is a mentality that has largely dissipated from the industry, but some still hold it dear, and many plan sponsors and their brokers adopt reference-based pricing programs with the expectation that all payments can be limited to a set percentage of Medicare with no provider pushback. That can best be described as the desire to have one’s stew and eat it too; in practice, it’s not possible for the Plan to pay significantly less than billed charges while simultaneously ensuring that members have access to quality health care with no balance-billing. The law just doesn’t provide any way to do that.

Plans adopting reference-based pricing programs should be urged to realize that although it can add a great deal of value, reference-based pricing also necessarily entails either a certain amount of member disruption, or increased payments to providers or vendors that indemnify patients or otherwise guarantee a lack of disruption. It is not wise, though, to expect that members will never be balance-billed, and that the Plan will be able to decide its own payment but not have to settle claims. Provider pushback can be managed by the right program, but unless someone is paying to settle claims, there is no way to avoid noise altogether and keep patients from collections and court.

Based on all this, it has been our experience that reference-based pricing works best when there are contracts in place with certain facilities. Steering members to contracted facilities provides the best value and avoids balance-billing; when a provider is willing to accept reasonable rates, giving that provider steerage can be enormously beneficial to the Plan. Creating a narrow network of providers gives the Plan options to incentivize members, and gives members a proactive way to avoid balance-billing.

There are of course other ingredients that need to go into the RBP stew – but having the right attitude is incredibly important, and knowing what to expect is vital. Expectations are the base of the stew; you can add all the carrots (member education?) and potatoes (ID card and EOB language?) you want – but if the base is wrong, then the stew can’t be perfect.


A Backdoor Employer Mandate? Massachusetts Targets Employers to Shore Up the State’s Medicaid Program

By: Brady Bizarro, Esq.

To say that Massachusetts is a pioneer in healthcare reform is an understatement. Ever since the Commonwealth enacted a healthcare reform law that aimed to provide health insurance to all of its residents over a decade ago, policymakers planned to use elements of that law to build the foundation for national healthcare reform. One of those elements was an employer mandate, called the Fair Share Contribution, which required certain employers in the Commonwealth to provide group health benefits or face a $295 per employee fee.

In 2014, Massachusetts lawmakers repealed the Fair Share Contribution. This was done because the Affordable Care Act’s (“ACA”) employer mandate was scheduled to take effect (after a delay). Massachusetts legislators still wanted the revenue the Fair Share Contribution generated, however, so it enacted a new law, called the Employer Medical Assistance Contribution (“EMAC”). EMAC is a tax on employers with more than five employees and it applies whether or not the employer offers health coverage to its employees. This act was meant to subsidize the Commonwealth’s Medicaid program, called MassHealth, and the state’s Children’s Health Insurance Program (“CHIP”).

Since 2011, approximately 450,000 people have lost their employer-sponsored insurance in Massachusetts. In the same time period, MassHealth enrollment increased by just over 500,000. The MassHealth program is literally drowning the state in debt, and so last year, Governor Charlie Baked signed H. 3822, which has two major components (beginning in 2018):

•    It increases the EMAC tax from a max of $51 per employee per year to $77 per employee per year; and
•    It imposes a tax penalty or EMAC Supplement on employers with more than five employees of up to $750 per employee per year for each nondisabled employee who receives health insurance coverage through MassHealth or subsidized insurance through the Massachusetts Health Connector (ConnectorCare).

Since the calculation is based on wages and not hours worked, an employer is subject to the penalty for each employee on MassHealth (excluding the premium assistance program) or receiving subsidized care through ConnectorCare regardless of full-time or part-time status. If the employee is enrolled in MassHealth due to a disability, they are not counted.

This legislation should be concerning for Massachusetts employers for a few reasons. First, if an employee chooses to voluntarily forgo an offer of coverage and instead applies and qualifies for MassHealth (excluding the premium assistance program) or subsidized ConnectorCare, the employer is penalized irrespective of the quality or affordability of the coverage that is offered. There is no exemption similar to that provided under the ACA employer mandate under which an applicable large employer (“ALE”) can escape tax exposure by offering coverage that is affordable and provides minimum value. But note that where an employer offers coverage that is both affordable and provides minimum value (as most do per ACA requirements), that employee would not be eligible for subsidized ConnectorCare coverage. Therefore, the EMAC Supplement really only applies to EEs who qualify for and enroll in MassHealth. Second, since employers are advised against asking an employee whether or not they are on Medicaid, the employer will not know its liability until the state’s Department of Unemployment Assistance sends them a letter informing them of their tax liability.

As states across the country feel the pinch of reduced federal funding, they may once again look to Massachusetts as a model to control costs to their Medicaid programs. In this case, however, employers will be squarely in the crosshairs.



Empowering Plans Segment 26 - Lightning Strikes Twice – Top 2017 Issues Impacting 2018

In this episode, the “Phia Group Boys” freestyle as they share the issues they felt defined 2017 and are likely to impact 2018.  From taxes to law; partnerships to reform… nothing is safe from their analysis and we all benefit from their warnings!  This is an episode you cannot afford to miss.

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


NOT SO FAST! Don’t Change Contraceptive Coverage Just Yet
By: Kelly Dempsey, Esq.

It is time to hit the pause button one more time on a regulation change. As noted in a prior blog post, the contraceptive coverage requirement for non-grandfathered plans is one of the ACA rules the Trump administration has already modified. The prior accommodation rules that allowed some employers to decline an offer of coverage for contraceptives had a narrow definition of religious entity, while the new rule created an exemption that broadened the scope of employers who could decline to offer contraceptive coverage. Thus the new rules essentially allow any company that is not publically traded the ability to refuse to cover contraceptives on moral or religious grounds. The process for the exemption is also much more relaxed than the accommodation process.

Several states have sued the Trump administration over the rules, including Pennsylvania, California, Washington, and Massachusetts. Several states (Delaware, Maryland, New York and Virginia) have joined California in efforts.

Two of these cases, Pennsylvania and California, have now created a pause in enforcement of the Trump administration’s rules that applies nationwide. On Friday, December 15, a federal court judge in Philadelphia issued an injunction that ordered the Trump administration not to enforce the new rules. The lawsuit alleges that the new rules violate the Firth Amendment (the rules apply to only women) and the First Amendment (the rules place employers’ religious beliefs over the constitutional rights of women). On Thursday, December 21, a federal court judge in California took a slightly different approach and issued an injunction on the basis that the administration failed to include a notice and comment process before implementing the new rules.

It appears the Trump administration is evaluating options on how to proceed – which likely means there will be an appeal.

From a self-funded plan perspective, employers that have obtained an accommodation under the prior rules should seek to maintain that accommodation instead of seeking an exemption under the new rule.

As with any court case, the timeline for resolution is unclear, so employers and TPAs should stay tuned for developments.

Nice to see you, 2018. Should we Expect more of the same?
By: Chris Aguiar, Esq.

Wow!  What a year 2017 has been.  As I sit here and prepare to start the New Year off with a bang by heading to Kansas to testify in federal court on behalf of a client, I’m reminded of just how much more complex subrogation (and self-funding in general) has become.  More and more of our clients (and The Phia Group, as well) are being dragged into court to defend their practices and attempts to curb the cost of health care.  This is especially on my mind because just this week two Courts in different areas of the Country ruled in favor of our clients. Hospitals challenging our attempts to be innovative, attorneys in anti-subrogation states trying to punish us for being effective at what we do and finding massive holes in their laws, or attorneys on behalf of their clients pushing the limits of current subrogation law and attempting to simply disburse settlement funds in an effort to avoid the reimbursement rights of self-funded benefit plans, prudent management of plan assets is harder than ever before; I don’t expect that trend to reverse.  Even the Federal Government is throwing some interesting curveballs into the rotation.  What will the impact of the changes to Healthcare Reform be on the mandates that were such pivotal cornerstones to The Affordable Care Act and what impact will that  have on the employer-sponsored health plans?

Though it always seems like everything is up in the air, one thing is for certain – self funding is not for the weak.  With a target constantly on our backs, we have to be diligent and make sure we are crossing all of our T’s and doing everything by the book (err … the plan document).  Any misstep is being dissected by those on the other side of the table as they continue to try to search for ways to invalidate the benefits of self-funding.  Whatever 2018 has in store – The Phia Group is proud to be standing on the front lines with our clients and look forward to what I expect to be another action packed year.

Thank you to all of our clients and partners, congratulations on all of your successes, and a Happy New Year to all.  Let’s show 2018 what we’ve got!


Pin the Tail on the Donkey & Other Blindfolded Games of Placement
By: Ron E. Peck, Esq.

Our industry (that being the self funded health benefits industry) is primarily a web-work of relationships.  Unlike a large, traditional health insurance carrier, where all functions are located under one roof, in our industry key pieces of the greater whole are comprised of various independent entities.

The funding comes from a sponsor – usually an employer.  Sometimes, these employer “groups” gather to form a captive, MEWA, association health plan, or other collective funding mechanism.  Next, they select someone to process claims and perform other administrative tasks.  Usually this is a carrier providing administrative services only (ASO) or a third party administrator (TPA).  Next, these plans – more often than not – require some sort of financial insurance to protect them from catastrophic claims, securing for themselves a specific type of reinsurance customized to fit this role, a.k.a. stop-loss.  Add to this list of entities a broker/advisor, who helps the sponsor “check all the boxes,” as well as ensure a complete and successful implementation (as well as plan management), vendors (who offer any number of cost containment services and other plan necessities), networks with providers (from direct contracts to PPOs), and a pharmacy benefit manager (PBM).  I’m sure I’ve missed a few other players, but – hopefully – you start to see how a so called “plan” is not a single being, but rather, a collection of beings coordinating with each other.  If one player drops the ball, the whole thing unravels.

I recently posted on LinkedIn a hypothetical, wherein a CEO loves the idea of medical tourism, railroads it through and has it added to their self-funded health plan; their broker and TPA pick a medical tourism vendor, and a few weeks later, a plan member is in Costa Rica for a costly procedure.  The total cost of the procedure hits (and exceeds) the benefit plan's stop loss insurance specific deductible.  Despite that, the total cost is still way less than if the procedure had taken place domestically (even after applying the plan's network discount).  Yet, stop loss denies the claim for reimbursement, citing the fact that the plan document excludes coverage for treatment received outside the United States.  Now the plan (through its TPA) has paid the vendor's fees, paid for claims that are technically excluded by the plan document, and is without stop-loss reimbursement.

The responses have been many, various, and generally spot-on (as well as – in some cases – entertaining).  Yet, it exposes a few issues and “gaps” in the web-work I described above.  The employer, TPA, and broker are excited to adopt a program that will save them money.  By extension, the stop loss carrier will save money.  In my example, the stop loss carrier did indeed save money, compared to what it would have cost (and they would have paid) domestically.  Yet, because the plan document wasn’t updated and the carrier wasn’t informed, the stop loss carrier isn’t “required” to reimburse.  Today, few carriers will reimburse when not required to do so.  There are some that, in recognition of the plan’s efforts to contain costs, would cover the loss – but most would not.

This is just one example of the issues we’re seeing today due to the “web-work” nature of our industry.  Like organs in a human body, all the pieces need to communicate and coordinate.  

It has also come to our attention that there is a growing trend whereby brokers and plan sponsors seek to use their own stop-loss rather than a “preferred” carrier selected by the TPA.  TPA’s, in turn, are worried that if the plan utilizes a carrier the TPA has not vetted, and something goes wrong, that TPA may be blamed for a conflict they had no hand in creating.  Rather than push back against this trend, however, and thusly lose business opportunities, we believe – AGAIN – the key to success is communication and preemptive coordination.  Explain the concerns, put them in writing, and have the party placing the insurance agree not to hold the TPA at fault for issues they had no hand in creating.  This will then allow a trend – that frankly can be quite good for the industry (that is, allowing plan sponsors to customize their plan to meet their needs, including who provides the stop-loss) – to thrive without threatening the TPA.

These are only two examples, but hopefully it’s now clearer to you why we must discuss these issues ahead of time, ensure all written documents align, and we coordinate before an issue arises.

Empowering Plans Segment 25 - A Taxing Time
In this special edition of the podcast, The Phia Group's CEO Adam Russo and Attorney Brady Bizarro discuss the new GOP tax bill in depth. Specifically, how does the bill affect employers? What does the repeal of the individual mandate mean for the self insured industry and for the future of Obamacare?

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

With Great (Cost-Containment) Power Comes Great (Fiduciary) Responsibility!
Insurance has entered an era of cost-containment. No matter your role in the industry, you are concerned with saving money, whether for yourselves or your clients. Health plans and other entities have begun to adopt various programs that are designed to reduce exposure – but only some of those programs are supported by the Plan Document. This can cause fiduciary headaches for the Plan, such as in the recent Macy’s case.

 Join The Phia Group’s legal team for an hour as they describe various ways to cut costs, what must be done to ensure that fiduciary duties are being met, and what happens if they are not.

Click Here to View Our Full Webinar on YouTube
Click Here to Download Webinar Audio Only
Click Here to Download Webinar Slides Only

Empowering Plans Segment 24 - Protect Your ASA
In this episode, our hosts (including repeat guest host Vice President of Consulting, Attorney Jennifer McCormick) discuss the rising trend in stop-loss insurance being placed by entities other than the TPA, yet the TPA is held responsible if things go sour.  Listen in to see how everyone can proactively avoid issues from emerging.

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

House Bill Assumes Air Ambulance Providers are Underpaid
By: Jon Jablon, Esq.

When working with air ambulance providers to discuss appropriate pricing, it is common for providers to suggest that Medicare rates are inappropriate due to Medicare’s habitual underpayment air ambulance providers. In this manner, when a payor suggests payment at a percentage of Medicare, many providers demand more, suggesting that the Medicare-based payment is unreasonably low, and therefore payment derived from that is low as well.

In apparent agreement with that thought, The 115th Congress has introduced HR3378. Short-titled the “Ensuring Access to Air Ambulance Services Act of 2017,” this bill is designed primarily to alter the Medicare reimbursement to air ambulance providers. The bill apparently contemplates that air ambulance providers are being underpaid by Medicare, because starting in 2018 the Medicare base rate will increase by 12%, prior to any cost data being reported by those providers. For 2019 and 2020, that increase will jump to 20%.  Beginning in 2019, air ambulance providers are required to report a comprehensive set of cost data elements, and beginning in 2020, that reporting includes quality data as well. As of 2024, the bill also creates a “value-based purchasing program,” which entails giving each air ambulance provider a performance score and increasing or decreasing payments based on that. Reported cost data will eventually (2021) be used to recalculate the base rate of air ambulance services.

The bill in its current form specifies that the data disclosures will eventually be made public, which can be useful for self-funded plans to be able to benchmark claims. Often health plans have only the provider’s billed charge and a Medicare rate to work with when determining payment, but if cost data is publicized, that creates new benchmarking possibilities.

So, if this bill passes, what will it mean for you? If Medicare rates are irrelevant to you or your health plans, then this likely means very little for you – but if you or a client are one of the thousands of health plans that consider Medicare rates when determining payment for air ambulance services, then it means your Medicare calculations (and therefore payments to air ambulance providers) will increase a bit for 2018, and a bit more for 2019 and 2020. Come 2021, they may increase or decrease again based on cost data, and come 2024, they may increase or decrease yet again based on performance indicators. In other words: expect higher payments in 2018, another increase for the following two years, and then unpredictable increases or decreases from there.

Although it may seem intuitive to assume that the government’s admission that these providers are underpaid by Medicare will lead to an increase in charges across the board, my assumption is that charges billed to self-funded payors will not increase as a result of this bill, even if it becomes law. Many air ambulance providers already justify their billing by citing operating costs, and this new bill does nothing to change those costs. An air ambulance provider would be hard-pressed to use either the assumptions or effects of this bill to justify increasing charges across the board.

The bill is still in its infancy, so it is likely that if it ultimately becomes law, it will have been changed quite a bit in the process; we’ll just have to wait and see what happens with this one.