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U.S. Airways v. McCutchen – Where Are they Now?
By: Chris Aguiar, Esq.

The health benefits industry can feel like a whirlwind, especially for self-funded plans.  We always seem to be running around trying to figure out how to comply with the law, only to have it change and start the cycle all over again.  We are experiencing this as we speak with the Affordable Care Act (a.k.a. Obamacare) and its possible successor, the American Health Care Act.  As a result, we tend to move on from issues more quickly once they seem to be resolved even though perhaps they linger.

Remember McCutchen?  In the subrogation world, U.S. Airways v. McCutchen was a big deal.  It finally answered the question that every benefit plan, TPA, and recovery vendor was fighting over since the beginning of time on their subrogation cases; can a court override the terms of a private, self-funded benefit plan under the purview of ERISA?  U.S. Airways lost the case, but the decision that now clarified and established the law was clear; specific unambiguous plan language rules the day.  Of course, the Montanile decision threw a bit of a curveball into our world, but that’s a blog post for another day. Fast forward almost four years (that’s right, the Supreme Court decision in McCutchen came down in 2013 – can you believe it was already that long ago?); does anyone know what happened to U.S. Airways?  

In addition to what turned out to be the main issue in the McCutchen case, that the plan terms were not good enough for the Third Circuit, there were many more issues to consider when the case was remanded (i.e. sent back) to the lower courts for additional findings.  As it turned out, U.S. Airways utilized BOTH a Summary Plan Description (SPD) and a Plan Document (PD).  That alone was not the kiss of death, but the SPD explicitly provided that the terms in the PD controlled if there was a conflict. Unfortunately for them, there was!  The SPD provided for recovery from McCutchen’s underinsured motorist coverage (UIM), but the PD did not.  Since the PD was the controlling document in that case, U.S. Airways was not entitled to a recovery against the UIM.

So what was the ultimate outcome?  U.S. Airways was entitled to assert its $64,000.00 lien against $10,000.00 in liability coverage rather than against $100,000.00 in UIM coverage.  It is important to know all of the facts and understand all of the factors that might impact your case.  As we saw in U.S. Airways v. McCutchen – language in the SPD and/or PD was deficient and contradictory – and that led to U.S. Airways losing out on recoveries as well as the costs of bringing those actions.  Every case is different, and every entity has its own motivations as to why they engage in litigation, but it is important to make sure you have all your ducks in a row and that you have the tools needed to actually win the fight, or you might get stuck holding the bag.  The McCutchen case helps us in the subrogation world every single day because of what the Supreme Court ultimately held, but the law can change on any given day.  Make sure you are prepared for the whirlwind!


Bidding Against Themselves: $750K Air Ambulance Claim Adventure
By: Jason Davis

I have a weird claim on my desk right now involving an Air Ambulance (AA) carrier that is billing a client $750K for a flight from the east coast to the west coast.

It is not uncommon for an AA carrier to argue that their charges are reasonable and even show us some so-called usual, customary, reasonable (UCR) charge data to justify their charges.  We find ourselves commonly reminding them that their calculation of UCR is not relevant to the Plan’s payment – but rather the reimbursement will be based on the terms of the Plan Document.  We also counter with data of our own (because we want do want to be fair), and we end up settling at a rate that everyone can live with.  

…usually

In the case I mentioned above, the AA carrier is sticking to their UCR plastic guns, and they are presenting a 10% discount proudly, as if the employer should be thankful.  To be clear, the AA carrier has a UCR database that is showing their charges are “normal.” $750K! UC-R you kidding me?  

If it were up to me, we would send them a check and tell them where to stick their 10% discount, but our client, as is common, would like an agreement on the claim to protect the member from harassment.  This is a classic ransom scenario; the balance-billing and credit-ruining boogieman is meant to scare the employer into paying more than a reasonable amount for this flight.  Regardless, our directives are to use our legal and claim data expertise to “persuade” the AA carrier to accept a lower reasonable price.  

In this case, to do this, we secured two quotes from other competitive AA carriers for the same flight (distance, resources, etc.) and the quotes came in at $35K and $50K.  Yes, you read that right – basically $700K less than these billed charges.  For good measure, we also consulted another UCR publisher, which quoted UCR at $47K – right in line with the quotes received.  Now, we understand that pre-service quotes are less than post-service charges, but certainly this is enough data to get them “in range.”  

…uh…no

We presented these market-based quotes and other UCR data to the AA carrier as a benchmark of “fair market value.” They scoffed, refusing to budge, and they are now saying they want to take this to court because of their “ironclad” UCR data.  

Here’s the best part.  We managed to secure a quote from the very same AA carrier that billed $750K (everything is the same).  The SAME carrier. The SAME flight.  They offered in writing, $35K (insert nausea).  

Believe it or not, we are still trying to get this matter resolved. Moral of the story? Don’t let anyone else (despite their best intentions) exclusively define and calculate UCR for you, because they may get it wrong, as this case clearly shows.  Instead, make sure your plan documents have a comprehensive definition that is fair to the provider, the member, and the Plan based on objective, real-world, fair market measures. At best, an unreasonable UCR calculation shocks the conscience; at worst, it can obliterate your wallet.

Bidding Against Themselves: $750K Air Ambulance Claim Adventure
By: Jason Davis

I have a weird claim on my desk right now involving an Air Ambulance (AA) carrier that is billing a client $750K for a flight from the east coast to the west coast.

It is not uncommon for an AA carrier to argue that their charges are reasonable and even show us some so-called usual, customary, reasonable (UCR) charge data to justify their charges. We find ourselves commonly reminding them that their calculation of UCR is not relevant to the Plan’s payment – but rather the reimbursement will be based on the terms of the Plan Document. We also counter with data of our own (because we want do want to be fair), and we end up settling at a rate that everyone can live with.

…usually

In the case I mentioned above, the AA carrier is sticking to their UCR plastic guns, and they are presenting a 10% discount proudly, as if the employer should be thankful. To be clear, the AA carrier has a UCR database that is showing their charges are “normal.” $750K! UC-R you kidding me?

If it were up to me, we would send them a check and tell them where to stick their 10% discount, but our client, as is common, would like an agreement on the claim to protect the member from harassment.  This is a classic ransom scenario; the balance-billing and credit-ruining boogieman is meant to scare the employer into paying more than a reasonable amount for this flight. Regardless, our directives are to use our legal and claim data expertise to “persuade” the AA carrier to accept a lower reasonable price.

In this case, to do this, we secured two quotes from other competitive AA carriers for the same flight (distance, resources, etc.) and the quotes came in at $35K and $50K. Yes, you read that right – basically $700K less than these billed charges. For good measure, we also consulted another UCR publisher, which quoted UCR at $47K – right in line with the quotes received. Now, we understand that pre-service quotes are less than post-service charges, but certainly this is enough data to get them “in range.”

…uh…no

We presented these market-based quotes and other UCR data to the AA carrier as a benchmark of “fair market value.” They scoffed, refusing to budge, and they are now saying they want to take this to court because of their “ironclad” UCR data.

Here’s the best part. We managed to secure a quote from the very same AA carrier that billed $750K (everything is the same). The SAME carrier. The SAME flight.  They offered in writing, $35K (insert nausea).

Believe it or not, we are still trying to get this matter resolved. Moral of the story? Don’t let anyone else (despite their best intentions) exclusively define and calculate UCR for you, because they may get it wrong, as this case clearly shows.  Instead, make sure your plan documents have a comprehensive definition that is fair to the provider, the member, and the Plan based on objective, real-world, fair market measures. At best, an unreasonable UCR calculation shocks the conscience; at worst, it can obliterate your wallet.

The Phia Group, LLC is pleased to announce the addition of “Leave of Absence” reviews.
Braintree, MA – The Phia Group, LLC is pleased to announce the addition of “Leave of Absence” reviews.  

Recognizing that employee handbooks are rarely compliant with applicable law, and promise employees extended health plan coverage contrary to health plan documents whose terms require termination of coverage, The Phia Group is pleased to provide a Leave of Absence review service.  The Phia Group’s team of plan document experts and attorneys will analyze the applicable plan document side-by-side with the employer’s handbook and stop-loss policy, to ensure there are no gaps in coverage and that all are in compliance with applicable law.  

“Too often we see employees – and their employer – caught unawares by limits existent in their own plan document.” remarked The Phia Group’s Vice President of Consulting, Jennifer McCormick, Esq., “Employers enact generous policies regarding leaves of absence, reflected in their handbooks, but totally forget to update their health plans accordingly.”

For more information regarding The Phia Group’s Leave of Absence Review, or to learn about any of The Phia Group’s other services, please contact Tim Callender by email at tcallender@phiagroup.com or by phone at 781-535-5631.

About The Phia Group:

The Phia Group, LLC, headquartered in Braintree, Massachusetts, is an experienced provider of health care cost containment techniques offering comprehensive claims recovery, plan document and consulting services designed to control health care costs and protect plan assets.  By providing industry leading consultation, plan drafting, subrogation and other cost containment solutions, The Phia Group is truly Empowering Plans.



Medical Bill Blues: Pre-Payment Contracting and Negotiation, Pricing Alternatives, and Post-Payment Recovery of Overpayments

It’s common knowledge that not every network contract adds real value, nor can medical providers always be relied upon to bill responsibly. As the fiduciary duty to be prudent with plan assets becomes increasingly relevant, it's important that self-funded health plans, and those who service them, not fall behind.

Thank you for joining The Phia Group's legal team on March 23, 2017 as they analyzed the various ups and downs we associate with "provider relations," including overpayments, claim negotiations, reference-based pricing, balance billing and more - and discussed some best practices for working within each of these domains.

Click Here to Download Full Webinar
Click Here to Download Audio
Click Here to Download Slides

Health Insurance is NOT Health Care
By: Ron E Peck, Esq.

The Congressional Budget Office (CBO) has provided its assessment of the American Health Care Act, and already Congressional would-be supporters of the law are jumping ship. The CBO’s analysis resulted in what is being called a “devastating blow” to the proposed law.  Primary among the negative reviews is the CBO analysis that predicted about 24 million fewer people would be insured by 2026 under the GOP bill, and that premiums would skyrocket for low-income Americans and the elderly. Yet this is exactly what (some) supporters of the proposed law expected. You likely heard about White House budget director, Mick Mulvaney’s remarks, shared with ABC News chief anchor George Stephanopoulos.  He said that critics worry too much about “getting people coverage,” and that the purpose of the law should instead be, “… focused on getting people affordable health care.”

It’s as if the two sides are talking past each other. If you value securing health insurance for everyone in the nation, then the CBO’s report should scare you. If you care more about securing affordable, accessible, health care for everyone – then the whole discussion over “insurance” should be irrelevant to you. Why? Because Health Insurance is NOT Health Care.

President Obama knew this, once. On the evening of September 9, 2009, President Obama advised a joint session of Congress, that the amount spent on health care is the root cause of skyrocketing insurance premiums. He said, “We spend one and a half times more per person on health care than any other country, but we aren’t any healthier for it. This is one of the reasons that insurance premiums have gone up three times faster than wages.”

Yet… when the Patient Protection and Affordable Care Act (“PPACA,” “ACA,” or “ObamaCare”) was revealed, that fundamental problem was essentially ignored, in exchange for a law whose primary mission was merely to get everyone insured.

So… the money comes out of a different pocket, but what are we doing to reduce the amount actually being spent? Nothing. If I go to a baseball game with my wife, and I buy a beer for $10, whether I pay for it with my debit card, a wad of cash my grandmother sent me for my birthday, or my wife’s credit card (thanks honey), it doesn’t make it any cheaper. $10 for a beer is outrageous, but not as outrageous as the cost of health care.

Just as health insurance is not health care, so too health insurance reform is not health care reform.  Yet, because the ACA got so much press, and many previously uninsured individuals did secure insurance (giving us all the warm and fuzzies), the result was a nationwide misconception that affordable insurance equates with affordable health care. For many, ObamaCare is therefore viewed as a success because millions of uninsured Americans are now insured.

Yet, insurance isn’t a magical money-tree. Like a college student wielding his first credit card, a newly insured America forgets that “someone” has to pay, eventually.  What you buy – with your own money, or with insurance – and how much it costs, still matters.  Insurance just passes the buck – to other insureds, and to you, when the time comes to renew. It blows my mind.  People are involved in car accidents, get out of their vehicle, examine the minor damage, and agree NOT TO REPORT IT TO THEIR INSURANCE, because they DON’T WANT THEIR PREMIUM TO INCREASE! People actually choose to pay for car repairs out of pocket, because they fear insurance premium increases and want to save their insurance for “when they really need it.”  Yet, if we treated auto insurance the way we treat health insurance, we’d be outraged that insurance doesn’t pay for the air in my tires, or the dancing hula girl on my dashboard.

Providing insurance (meaning, digging into another pocket to pay for healthcare) didn’t reduce the cost of said care. In fact, in many instances, having new, direct access to deeper pockets incentivized providers to increase their rates – and why not? Instead of balance billing an uninsured patient, I now have direct access to the deep pockets of a carrier? Sign me up!

Steven I. Weissman, a former hospital president, stated that, “Rates must be published in a uniform format such as industry standard CPT codes or a percentage of Medicare rates. Every citizen would be empowered to search any medical procedure online and see pricing for all providers within X miles. It would be as easy and familiar as checking the price of any other goods or services;” (http://www.orlandosentinel.com/opinion/os-ed-health-care-prices-myword-061015-20150609-story.html; https://www.change.org/p/end-predatory-healthcare-pricing).

In addition to addressing the actual cost of care, we need to be honest about what insurance is, and is not; as well as what it is, and is not, meant to cover. Insurance only works when the insurer is allowed to assess risk, and through underwriting, quote premiums and offer limits adjusted to the individual policy holder. Forcing a carrier or health plan to accept $1,000 in premium for coverage that we know, with certainty, will cost the carrier $1,000 is outrageous and – in my mind – amounts to a form of eminent domain or a governmental taking.

When insurance is required to cover people without regard for risk, forcibly collecting money from all to pay for benefits afforded to some more than others; with limits placed upon carriers regarding how much they can charge, what they must provide, and more, insurance ceases to be insurance and becomes an agent of wealth distribution, a.k.a. a tax collector.

A promise to pay for all but certain future costs eliminates the entire reason to engage in the business of insurance. It’s the reason why auto insurance doesn’t pay for oil changes, tire rotations, or gas changes!

The time has come to be honest with each other and ourselves. What do we hope to accomplish with health care reform? What is the easiest, most direct way to achieve that goal? Do that.  Commandeering an entire private industry to camouflage a tax because politicians are too scared to openly admit that is what they are doing – taxing the nation to raise capital for the purpose of paying out of control health care costs – just doesn’t work for me.


Keep Hands, Arms, Legs, and Feet Inside the Ride at All Times and Remain Seated Until the Ride Comes to a Complete Stop
By: Kelly Dempsey, Esq.

The last 7 years have been a wild ride and it’s not quite over yet.  As noted in many other posts and articles, the rules will be changing under the new administration and in recent weeks we’ve seen a clearer picture of how the rules will be changing, but there are still more steps in the process before TPAs and employers can start making changes to their processes and health plans.  Many are focused on the modifications to the requirements to offer and/or have coverage (i.e., the employer mandate and individual mandate) and it’s no doubt these provisions have had a large impact on how employers offer coverage and what they offer, as well as the costs to employers, individuals, and insurers.

To counteract the rising costs of healthcare due to ACA and other factors, like high medical and drug costs, many in the self-funded industry have explored other options and learned how to expand and better utilize the flexibility and dynamics afforded to self-funded plans in the cost containment realm.  From telemedicine, to medical tourism, to other incentive programs, and exploring other provider payment options like direct primary care, employers with self-funded plans have more opportunities to explore cost containment options and implement the options that can help the plan and employer save money, while tailoring their health plans to the needs of their employees.  Some cost containment programs, however, have added additional complications for a variety of reasons.

The birth of new cost containment programs includes reviewing current rules and applying those rules as we know them to the health plans.  If these programs are offered outside of the self-funded health plan, do the programs themselves become stand-alone health plans?  If yes, what rules are applicable?  Can these new programs qualify as excepted benefits and be excluded from certain (or all) provisions of ERISA, HIPAA, ACA, and other federal laws?  Are these programs compatible with IRS rules related to HSA qualified high deductible health plans (HDHPs)?  Do the answers change if the programs are implemented within the self-funded health plan?  Unfortunately, in many cases, the rules are not clear.

We know the new administration has big plans for modifications to current rules and creation of new rules and guidelines.  In addition to the employer and individual mandates, another key change we’ve heard about repeatedly is the modification to HSA rules.  If the new administration is modifying certain HSA rules to encourage employers and individuals to utilize HSAs, will the administration and agencies issue clarifying rules that address these questions?  Sadly this is another unknown and we’re stuck in this holding pattern with more questions than answers.

In some ways it feels like we’re right back where we started back in 2010 – waiting to see what rules and changes actually make their way through the approval process.  For time being, we have to buckle up and hold on until the ride comes to a complete stop.  As such, until we have finalized new rules with effective dates and clear guidance, it’s best to keep things status quo and maintain compliance with the rules as we know them today until the rules are implemented, finalized, and effective.

If I Can Change, So Can The Average American
By: Garrick Hunt

I recently celebrated my two year anniversary at The Phia Group; an organization that two years ago I didn’t know existed. In my time here, I have learned a great deal about an industry, which should matter to every American, but often is filed away the likes of cell phones bills, something that we pay for because we need it. Like many Americans, I did not question increases in my premium, I did not know what a plan document was, nor had I read one, as they often had small font and no pictures.

That changed when I joined The Phia Group. Shortly after, what was just another thing I was required to have, turned into something I scrutinized and questioned regularly. This was the first organization I had ever worked for that was transparent about health insurance, and unlike my former employers, they had all the answers to my questions. Naturally, such transparency is certainly indicative with the level of expertise The Phia Group has. As I began to step into the proverbial light, I began to understand why most Americans fail to comprehend the health insurance industry. They don’t understand healthcare and it is by design.

Healthcare and health insurance is structured upon rising costs, with everyone shifting the blame, and as long as Americans put their faith in policies and politicians to solve these issues, then the issues will persist. So how does one change the minds of the American people? Education and a reason to care about their healthcare; education that is objective and unbiased, and a reason beyond what if I get sick. It is up to us as industry leaders to provide this, but how does one do this? You guessed it! Pay them to care! When I found out that at The Phia Group I could get paid cash if I found an error in my bill, or consulted with HR prior to receiving treatment, I soon found myself scanning every bill and questioning every line item. This incentive was proven effective when I had my first child, and elected to go to a better rated and more cost efficient hospital, and was rewarded with free diapers and wipes for a year. This is enough incentive for any person who only cared about the co-pay and deductible before, to now look at the whole bill. 

Empowering Plans Segment 04 - Attack of the Killer Savings
Join The Phia Group's CEO, Adam V. Russo, and Sr. VP, Ron E. Peck, as they describe how The Phia Group identifies facilities that provide the best outcomes for the least cost, and encourage plan participants to visit those facilities.

Click here to open the Podcast!


ACA to AHCA… A Look Back on the Past 7 Years

By: Jen McCormick, Esq.

Last Monday, the House Republicans finally had their chance to offer their version of a health care bill.  The American Health Care Act, or AHCA, noted as the repeal and replace measure of the current version of the Affordable Care Act, or ACA, actually seems to have more in common with the ACA  than I would have expected.

Many of the compliance related changes we’ve made to self-funded health plans over the years to comply ACA seem to remain intact – as of right now.  For example, AHCA keeps the following:


  • Maximum out of pocket costs;

  • Continued coverage to age 26;

  • Coverage for individuals with pre-existing conditions (updated with a continuous coverage requirements or subject to 30% surcharge in certain instances); and

  • Prohibition of lifetime and annual dollar limits.

AHCA, however, would eliminate one change that’s been challenging for employers and their plans – the penalty associated with the employer mandate.  Without digging into the weeds too much, AHCA is part of the budget reconciliation process, so the bill only addresses budget related provisions.  So, while the penalty is eliminated, the (tedious) reporting requirements will remain.  As written, it is confusing as to whether the penalty is eliminated retroactively to 2016 … and if that’s the case what happens during this tax filing period?

Some would argue that the AHCA would be a chance for employers to offer a plan that is in their minds cost-effective and flexible for their employees. Employers likely appreciate the additional delay of the Cadillac tax until 2025.  I would note that this freedom may come at a cost.

AHCA not only eliminates many of the taxes in place (i.e. net investment income tax, indoor tanning tax, medical device tax, additional Medicare tax), but will phase out the Medicaid expansion in the next 3 years (i.e. costing many people insurance options).   We’ll have to see, but I’m not sure how this will be less costly or achieve the goal of “insurance for everybody.”