In the self-funded industry, being diligent with respect to employer groups, vendors, and contracts is always important – but sometimes knowing what to put on a checklist in the first place is more difficult than checking off the items. Renewal time means it’s time to impress prospective clients, keep existing clients happy, and make sure the vendors and contracts being utilized are the best possible fit for your groups.
Join The Phia Group’s legal team for an hour as they outline a laundry list of what employers, TPAs, brokers, and stop-loss carriers should look for this time of the year – and provide some guidance on how the industry’s players can stay ahead of the curve.
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By: Brady Bizarro, Esq.
After more than thirty-two hours of testimony (and a record number of interruptions) before the Senate Judiciary Committee, the Supreme Court confirmation hearings for Judge Kavanaugh finally concluded last Friday. Republicans have already set a date for a vote and plan to have him seated for the Supreme Court’s new term, which begins in early October. Democratic opposition to Judge Kavanaugh is multi-faceted, but for our purposes, specifically related to health law, many fear he would vote to overturn Roe v. Wade and strike down the Affordable Care Act’s (“ACA”) pre-existing condition protections. Given the fact that a case to overturn ACA protections is currently sitting before a federal court in Texas, the Supreme Court may indeed be asked to weigh in sooner rather than later.
Judge Kavanaugh, like many nominees before him, refused to give assurances on specific hypotheticals. After all, he argued, independent judges should not give a thumbs up or thumbs down before litigants have appeared before them in court. Senators knew ahead of time that Kavanaugh would answer hypotheticals about abortion rights and the ACA in this way; yet, many of them still asked such questions in a rhetorical fashion to dramatize their points. A more effective strategy, at least politically, would have been to ask rhetorical questions, but also to ask Judge Kavanaugh about specific wording he used in prior dissents to expose signals that the judge might be prepared to overturn Roe v. Wade and/or the ACA.
Of all the committee members that questioned Judge Kavanaugh (and I watched them all), Senator Richard Blumenthal (D-CT) did this most effectively. The senator asked Judge Kavanaugh about his dissent in a case called Garza v. Hargan, the only abortion case on which the nominee has ruled. In that case, Judge Kavanaugh wrote that his colleagues on the D.C. Circuit Court of Appeals had decided that “unlawful immigrant minors have a right to immediate abortion on demand.” To Senator Blumenthal, this was a coded message to the White House. The phrase “abortion on demand,” according to the senator, is often used by the anti-abortion community to refer to repeal of Roe v. Wade.
In addition, in a 2003 memo, Judge Kavanaugh noted that the Supreme Court “can always overrule” Roe v. Wade. In particular, he wrote, “I am not sure that all legal scholars refer to Roe as the settled law of the land at the Supreme Court level since [the] Court can always overrule its precedent,” adding that some conservative justices then on the Court “would do so.” Finally, Senator Blumenthal noticed Kavanaugh’s description of Roe as “existing precedent.” In his review of hundreds of Judge Kavanaugh’s prior opinions, Senator Blumenthal could not find the use of the adjective “existing” before the word “precedent.” To the senator from Connecticut, this implies that Judge Kavanaugh believes that there will be a time when Roe can be overturned and will no longer be the legal precedent on abortion.
Regardless of the Democratic opposition, the simple fact remains that Republicans, in solidarity, have enough votes to confirm him. Unless something dramatic happens between now and the end of September, we can expect Judge Kavanaugh to soon become Justice Kavanaugh, the newest member of the United States Supreme Court. When cases reach the Court that deal with abortion rights and the ACA, we will learn whether or not Senator Blumenthal’s concern was warranted.
Patrick Ouellette, Esq.
This week has featured opening oral arguments in Texas v. U.S. as part of the latest formal attack upon the Affordable Care Act (ACA). The case features 20 Republican governors and state attorneys general pursuing a preliminary injunction on the ACA. Despite technically serving as the defendant, the Trump Administration is defending the law and instead a group of Democratic attorneys have intervened in the case to defend the ACA. Among the key items at stake is the federal law’s guarantee that those with pre-existing conditions will not be denied coverage.
Congress eliminated the ACA’s individual mandate penalty starting in 2019, but the individual coverage mandate remains part of the law even if there technically are no “teeth” to this part since the tax penalties were essentially “zeroed out” by the Trump Administration. However, in their complaint filed on February 26, 2018, the plaintiffs argue that the “individual mandate to buy health insurance that lacks any constitutional basis”. For the mandate to be considered unconstitutional, according to the group, would have far-reaching ramifications that mean “the remainder of the ACA must also fall.” If successful, the governors and state attorneys general would abolish the ACA entirely along with its protection of those with pre-existing conditions.
Employers with self-funded health plans will be watching the results closely, as the pre-existing condition safeguards afforded to members would be removed completely along with the rest of the ACA. Concurrent with this court battle, North Carolina Sen. Thom Tillis led a group of Republican senators in introducing a bill recently that would apparently ensure coverage for those with pre-existing conditions. “This legislation is a common-sense solution that guarantees Americans with pre-existing conditions will have health care coverage, regardless of how our judicial system rules on the future of Obamacare.” However, the “Ensuring Coverage for Patients with Pre-Existing Conditions Act” only provides that insurers must accept those with pre-existing conditions, not necessarily that they need to treat them. This is an important distinction for insurers, as it would allow them far more liberty to deny coverage based on cost than what the ACA currently permits.
Stakeholders in the self-funded industry should pay attention to the progression of both Texas v. U.S. and the Tillis bill.
In this episode of Empowering Plans, Adam Russo and Jennifer McCormick interview Laura Hirsch, President of Nova Healthcare Administrators. They discuss the latest stop-loss trends, patient assistance programs for prescription drugs, and other issues facing the self-funded industry.
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By: Kelly Dempsey, Esq.
That’s a pretty big question as we learn more about the Trump Administration’s attempt to reduce drug costs.
We all know drug prices are off the charts and several attempts to control pricing have failed to get up and running. As you may recall, President Trump indicated during his campaigning that he would develop a plan to lower prescription medicine costs. The U.S. health secretary (Azar) is making some moves and has indicated that eliminating drug rebates may help reduce costs.
Cost containment is key to self-funding and high drug costs have caused employers and plans to explore options to keep plan costs down, including utilizing vendor programs that obtain drugs from outside the U.S. and/or build certain rebate programs into the customized plan design. While there’s still a lot that must be worked through before changes are implemented, these four key takeaways may give plans, employers, brokers, PBMs, and other vendors some heart burn:
Plans and vendors that utilize these types of programs should be on the look-out for rule changes to ensure continued health plan compliance.
By: Erin M. Hussey, Esq.
Since the final Association Health Plan (AHP) rules were issued in June, many states have opposed them arguing they would create adverse selection. The argument is that healthy individuals would join AHPs as a cheaper option, because they do not have to cover certain benefits such as essential health benefits (EHBs), while unhealthier individuals would join the individual and small group markets for more robust coverage. As a result, the more people that move from the individual and small group markets, in order to join AHPs, will cause an increase in premiums for those markets making it less affordable for unhealthy individuals who stay on them. In addition, Massachusetts Attorney General Maura Healey argues that the new rules are unlawful as they will create deception, fraud and mismanagement.
The final AHP rules have also left states with more questions than answers. As a result, states have recently been taking their own actions with the continued lack of guidance from the U.S. Department of Labor (DOL). For example, Michael Pieciak, Vermont Commissioner of the Department of Financial Regulation, issued an emergency regulation on August 1st stating, among other things, that fully-insured AHPs must offer EHBs. Additionally, on August 2nd Jessica Altman, the Pennsylvania Insurance Commissioner, sent a letter to the secretaries at the DOL and Health and Human Services (HHS) stating that AHPs must comply with ACA individual and small group market rules and ACA benefits and protections. This is in stark contrast to the AHP final rules which detail that an employer member who is considered a small employer would be able to avoid the small group market rules, such as covering EHBs, by joining an AHP that would constitute as a large employer or by joining a self-funded AHP. The final AHP rules attracted small employers since they would have the opportunity to offer large group market health coverage to their employees, but some states could make it difficult to do so.
With the final AHP rules becoming effective on August 20th, it is expected that states will continue to take matters into their own hands without further guidance from the DOL. As states continue to challenge the ability for AHPs to operate under the new rules, it is likely that lawsuits will be brought by business groups and individuals who seek to operate an AHP under the new rules.
In this episode, Adam Russo and Brady Bizarro speak with Ryan C. Work – Vice President of Government Affairs at the Self-Insurance Institute of America (“SIIA”). They talk politics, D.C., and more importantly, about the efforts of the Government Relations Committee to advocate for the self-insured industry. From stop-loss protections and an updated “ERISA Notebook” to new wellness program rules, Ryan reveals the top issues on SIIA’s political agenda and explains how member engagement can really make a difference.
Prescription drugs are some of the most costly benefits for any health plan, especially for those plans that are self-funded. In 2017, total spending on prescription drugs in the U.S. reached $453 billion. Specialty drugs are particularly culpable, accounting for more than one third of all drug expenditures in 2016 despite making up less than one percent of all written prescriptions. In May, the Trump administration released a forty-four-page blueprint for executive action on prescription drug prices, entitled “American Patients First.” The document contained many strategies for combating rising drug costs; but it also focused in on the use of patient assistance programs (“PAPs”) and considered whether they might be driving up list prices by limiting the transparency of the true cost of drugs to patients.
Plan sponsors originally utilized the typical tools available to them to try to offset the cost of specialty drugs: higher copayments, coinsurance, and deductibles. In an effort to mitigate the impact on patients, several pharmaceutical manufacturers developed PAPs to help offset patients’ out-of-pocket drug costs. Some of these programs are very generous. For example, a PAP run by Enbrel offers up to $660 per month toward the cost of a specialty drug for members who would not otherwise qualify for financial assistance.
Assistance programs are marketed as a kind of altruism for patients, which has great public relations benefits. They can also increase the demand for specialty drugs, even when generic alternatives are available. This results in a huge cost to the patient’s health plan. Consider the following scenario: a specialty drug’s list price is $10,000. A generic alternative is available that has a list price of $2,000. The health plan imposes a $500 copay for specialty drugs when generics are available and a $100 copay for generics. In this case, however, the specialty drug manufacturer offers the patient a $450 copay card. For the patient, the out-of-pocket cost for the specialty drug is $50 cheaper than the copay for the generic alternative. The patient chooses the specialty drug, and the health plan pays $9,500. Had the patient selected the generic alternative, the plan would have only paid $1,900.
As the scenario above reveals, PAPs can incentivize patients to choose specialty drugs even when cheaper, generic alternatives are available. For most patients, the only price they are aware of is the amount they pay at the register. The cost to their health plan remains hidden to them, although they eventually feel the effects downstream. In other words, PAPs can save patients money on the front end while driving up the cost to patients on the back end through increased premiums and cost-sharing. With PAPs now in the crosshairs of both plan sponsors and the Trump administration, we should expect new regulations on their use in the coming months.
From drafting the plan document all the way to recovering subrogation claims, health plans (and the TPAs, brokers, stop-loss carriers, and other vendors that service them) need to be creative, diligent, and vigilant. Network contracts, stop-loss claims, and intricate medical claim determinations are just a few of the complications that self-funded health plans and their partners need to be able to successfully navigate.
Join The Phia Group’s legal team for an hour as they discuss some common snafus that health plans and TPAs face, and propose some creative solutions for managing them.
Check out these highlight snippets from our August 14 Webinar:
July 2018 PGC FAQs (11 minutes into Webinar)
Q: What is the difference between ADA Leave & Short-Term Disability/Long-Term Disability Leave?
Jennifer McCormick: Continuation of coverage versus a leave of absence are completely different concepts. ADA leave, specifically, is granted to an individual as a reasonable accommodation. Employers began adding these provisions to their plans due to the UPS case in which there was an individual who was pregnant and unable to continue delivering packages for UPS and there was no other function that she could perform. Thus, the reasonable accommodation for her was a leave of absence under the ADA. This is separate from short-term disability or long-term disability in that the leave under the ADA is an accommodation, as opposed to a designated leave granted through a specific employer policy.
Network Contracts (28 minutes into Webinar)
Q: What can plans do about network contracts?
Jon Jablon: First, plans can terminate network contracts. Obviously, you should not do this before notifying the parties involved. However, in terminating the contracts, there are many reference-based pricing (RBP) vendors out there that can help you achieve your payment goals. Every RBP vendor has their own style and techniques, so we recommend you vet each one prior to making a decision. RBP also includes carve-out options, and some popular ones associated with high-dollar claims are dialysis carve-outs and air ambulance carve-outs. If are seeing claims that you can carve out of your plan, chances are there is some way to address it. It is also possible to carve out all out-of-network claims – so not just dialysis or air ambulance. This would be anything not covered by the preferred provider organization (PPO) contract.
Stop-Loss Issues (46 minutes into Webinar)
Q: What are some important stop-loss issues that plans should be aware of?
Brady Bizarro: We have seen a lot more new disputes lately. Many have to do with soft gaps, which may not catch your eye if you are reviewing a stop-loss policy on its own. For example, there may only be four exclusions and it may say that it otherwise mirrors the plan document, but you may not always be good to go. First, the treatment of Pharmacy Benefit Manager (PBM) rebates, which can be an issue if you have a high volume of drug claims. A plan, in theory, gets rebates from drug manufacturers, but in reality, it is the PBM who is getting those rebates. One plan’s stop-loss carrier somehow found out about these rebates through an audit and was then reducing the reimbursement amounts by the rebate figures, even if it was the PBM and not the plan getting money. The key was interpreting the wording, as some carriers may use “refund” instead of “rebate”. Another issue relates to billing protocols, as some stop-loss policies will reimburse claims in accordance with “standardized billing protocols”. Some carriers even cite Centers for Medicare & Medicaid Services (CMS) billing protocols even though CMS is not the payer and this is a private payer. Medicare reimbursement rates are not the issue here, it is the way Medicare itself pays claims.
By: Patrick Ouellette, Esq.
Price transparency has never really been synonymous with health care. In fact, Kelly Dempsey wrote just more than a year ago about how a lack of clear and timely information on hospital billing practices continues to contribute to skyrocketing care costs, and the industry is currently no closer to a resolution. The Centers for Medicare & Medicaid Services (CMS) recently announced that it is attempting to address the issue by revising the pricing disclosure rules currently in place to ensure data is accessible to patients in a consumable format.
CMS responded to cross-industry stakeholders’ calls for greater price transparency by requiring that hospitals post their standard charges in a readable format online. This is not a complete revelation in the sense that hospitals have been required by law to establish and make public a list of their standard charges and individuals had the option to formally request their data in order to gain access. However, effective January 1, 2019, CMS updated its guidelines to specifically require hospitals to make public a list of their standard charges via the Internet in a machine-readable format, and to update this information at least annually, or more often as appropriate.
CMS issued the mandate through its Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) Final Rule:
While CMS previously required hospitals to make publicly available a list of their standard charges or their policies for allowing the public to view this list upon request, CMS has updated its guidelines to specifically require hospitals to post this information on the Internet in a machine-readable format. The agency is considering future actions based on the public feedback it received on ways hospitals can display price information that would be most useful to stakeholders and how to create patient-friendly interfaces that allow consumers to more easily access relevant healthcare data and compare providers.
It remains to be seen (1) how much pushback there will be from providers; and (2) whether having the information provided will be complete enough to ensure better care decisions on the part of individuals. Moreover, this new rule does not change the fact that hospitals may still bill patients based on their respective internal chargemaster rates. However, this news still represents a positive step forward toward transparent pricing, and thus greater competition, in health care.