By: Kelly Dempsey, Esq.
Lawsuits and Department of Labor audits related to Mental Health Parity (MHP) violations are still arising. MHP is a shortened term that refers to the Mental Health Parity Act of 1996 (MHPA) and the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), collectively, the mental health parity provisions in Part 7 of ERISA.
A recent case out of New York (Munnelly v. Fordham Univ. Faculty and Admin. HMO Ins. Plan, 2018 WL 1628839 (S.D.N.Y. 2018)) provides another court’s opinion on one of the hot topics of MHP – residential treatment facilities. The plan at issue denied participant claims for a residential treatment facility indicating that the plan contained exclusions for both residential treatment services and out-of-network inpatient mental health treatment. The plan contended that the interim final regulations were in effect at the time of the claims and thus the plan was in compliance with the rules (as the guidance that clarified MHP compliance with respect to resident treatment facilities was issued after claims were incurred). Additionally, the plan indicated the participant did not comply with the plan’s pre-certification requirements.
For certain portions of the case, the court decided in favor of the participant. The court found that the plan did violate MHP by placing a treatment limitation (excluding coverage for residential treatment facilities) on mental health/substance abuse benefits that was more restrictive than the medical/surgical benefits – in other words, there was no comparative medical/surgical exclusion. Ultimately the plan did not provide a remedy for the participant as there were still questions surrounding the precertification requirements and the application of the out-of-network treatment exclusion.
While the interim final rules were not clear, the final regulations do provide a clear explanation that plans must treat residential treatment facilities the same as skilled nursing facilities to show parity between MHP and medical/surgical benefits. This isn’t the first case about residential treatment facility exclusions and likely won’t be the last if plans do not review and update their plan documents to ensure compliance.
Like most hot topics, until it happens to your plan or your client, this issue isn’t in the forefront of our minds. There are strategies to control these costs which we know can be outrageous; however, plans must be careful when implementing cost containment as some ideas may not comply with MHP.
At long last, after a lengthy investigation, we are ready to present the allegations of collusion. It is alleged that powerful forces have been working together in a complex scheme to mislead us. To be clear, we are talking about Big Pharma and certain PBMs. A new class action lawsuit has been filed against CVS Health alleging that it knowingly colluded with PBMs to raise generic drug prices. The claim is that health plans and consumers alike have been overpaying for drugs. We have seen this playbook before. This time, however, there is potential for TPAs and their groups to join the lawsuit to recoup funds allegedly overpaid to CVS. Join The Phia Group’s Special Counsels for an hour as they share reports on this alleged fraudulent scheme and discuss the ways in which our industry can fight back and tackle the underlying problem of specialty drug prices.
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By: Ron E. Peck, Esq.
Twelve years ago, I was dragged out of the comfort of my office and taken to East Texas, to present before a Third Party Administrator client of ours. After Adam Russo (our CEO) spoke about the cost savings achieved by our best-in-class subrogation services, and Michael Branco (Principal and CFO) explained how our cutting edge software allows us to identify more opportunities than anyone else, it was my turn to talk. I was assigned the simple responsibility of discussing how our subrogation clients receive our innovative SPD/Plan Document language (at the time, focused solely on subrogation) free-of-charge. I wasn’t then the show-stopping public speaker I am today, and Adam felt the need to jump in with, “It’s not just the language. Ron’s an attorney, and he’ll personally look over your plan documents. He’s working day and night; weekdays and weekends.” In response, a well-meaning woman in the audience remarked: “Oh dear! Ron… What do your friends think of that?” In response I announced, “Plan Docs are my friends…” and the legend was born.
In that time I’ve managed to regret that statement (more times than once), but the foundation remains. Plan documents were, and continue to be, the bedrock. Any and all rights our plans seek to assert must first find footing in the SPD. Moreover, inconsistencies, weaknesses, and shortcomings also find their roots grounded in the plan document. For good and for bad, the SPD is all, and all is in the SPD. For this reason, I and my team constantly scream at the top of our lungs: “Update the SPD! Review and revise now, before it’s too late…” Yet, here (as in so many other things), it is too easy to beg forgiveness, and inconvenient to ask permission.
Are there scenarios where a plan document can be revised, and the new terms applied “retroactively?” Can language adopted in March of 2018 reach back and apply to claims received in January of 2018? Certainly. But only in limited situations, and only when it will not have a negative impact upon beneficiaries; only when the language (or lack thereof) had no impact between then and now. Yet, too often, issues pop up … mistakes, errors, shortcomings… either failures to abide by the law, or oversight that leads to costly obligations. These problems come to our attention BECAUSE someone has already relied upon the plan document they received; the issue is rooted in the plan document, and as such, we can’t ask for a “do-over.”
Look at it this way. If you were an inventor, and you invented a time machine for no reason other than to invent a time machine, you could go back in time and change things. As long as the change you make doesn’t impact the “future” you (so that you will still invent the time machine), the change will be allowed. If, however, you invent a time machine specifically with the intent to change a specific event that happened in the past, even if you do invent the time machine, you won’t be able to change that “one thing” in the past that inspired you to invent the time machine. Why? Because if the thing that happened in the past, which inspired you to invent the time machine, is changed – then you won’t be inspired to invent the time machine, won’t go back in time, and won’t change the event. It’s a paradox, and nature abhors a paradox.
The same thing applies here. If some event causes you to reevaluate your plan document, identify an issue, and fix the problem – then you can’t go back and apply the language retroactively, since the triggering event (that caused you to make the change) also, by its nature, means that the change can’t be made retroactively without impacting someone or something.
For instance: if you wanted to exclude cosmetic surgery, mistakenly issue a plan document in January of 2018 that covers cosmetic surgery, and in March of 2018 realize the plan document actually covers cosmetic surgery, you can fix that mistake in March, and have the “new” language apply both in the future, and retroactively, as long as no one is impacted. If, however, the only reason you discovered the mistake (in March of 2018) is because a plan member received cosmetic surgery in February of 2018 (thinking it was a covered service, in reliance upon the language they received in January), then you are stuck covering those claims.
What really burns me, is that (often) we identified and notified the client about the issue, but (at the time) the “fix” was too much of a burden. Now, with that crack in the foundation leading to a collapse of the home, our clients ask for a solution. Certainly, we can (and do) identify and resolve the issue, so that – moving forward – the problem will not be a problem again. Yet, then the inevitable query pops up: “Can we apply the new language retroactively.” For the reasons shared above, too often the answer is, “No.”
If the “problem” is on my desk, chances are it’s NOT because someone just happened to notice an issue in the plan document, it hasn’t impacted anyone or anything yet, and there is a desire to fix the language (and apply the fix retroactively) before the issue actually causes any confusion. No, no, no… If the “problem” is on my desk, it’s because a patient or provider has already sought to enforce the language as written, and a gap or legal violation was discovered after the fact. Cost containment measures the plan “meant” to apply were not set forth in the SPD. Stop loss won’t cover something. The law voids something else. Regardless, even if we can “fix” the problem now, the damage that was done, is done.
So… I say this: You have one shot at this. You must make sure the SPD is perfect, BEFORE it’s handed to participants. BEFORE they seek care in reliance upon its terms. BEFORE providers provide care in reliance upon those terms. This document is written in ink, not pencil, and once it’s signed and dispersed, assume it’s a one way road. With that in mind, respect my friends – the plan documents – and get it right the first time.
By: Jen McCormick, Esq.We frequently talk about the various types of gaps in coverage – gaps between the plan document and the stop loss policy, the network agreement and even the employer handbook. The mission for gap-less coverage should not stop there however. Recently, we have seen situations where employers have gaps in between their documented practices and their payroll practices. For example, an employer may allow continuation of coverage after a leave of absence for up to 3 months. The problem, however, is that the employer’s payroll system does not allow for manual adjustments and coverage must end after a specified (i.e. two week period). This creates an issue as an employee is paying for coverage but is not eligible for that coverage under any plan materials. As a result, employers should not only double check that their plan materials are in sync but that their plan practices (i.e. payroll and otherwise) are aligned with those materials.
In this episode, our hosts interview Third Party Administrator, visionary, and industry expert – Caprock Healthplans’ own Executive Vice President, John Farnsley – as we review some of his recent talking points, cover where he thinks the industry is headed, and dissect the biggest issues he thinks will impact everyone involved.
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By: Erin Hussey, Esq.
The Complications Surrounding Intermittent FMLA Leave
The Family Medical Leave Act (“FMLA”) is a federal law requiring certain employers (employers who employ 50 or more employees, for at least 20 workweeks in the current or preceding calendar year, in a 75 mile radius), to provide eligible employees an unpaid, job-protected leave of absence that continues the employee’s health benefits. It is offered for family and medical reasons and an eligible employee may take up to 12 workweeks of leave in a 12 month period. This timeline appears straightforward, but complications arise when employees take this leave in separate blocks of time, even an hour at a time (when it is medically necessary and for the same serious health condition). This is called intermittent FMLA leave.
Employers should ensure they are administering intermittent FMLA leave properly given the complications it can present:
1. Recordkeeping: Complications can occur with tracking intermittent FMLA leave because an employee’s schedule could vary from week to week and the employer may have to measure FMLA in hourly increments or less. When these intermittent FMLA leaves occur, an employer must be diligent in tracking the leave to avoid liability of non-compliance with FMLA. For example, in Tillman v. Ohio Bell Tel. Co., 545 F. App'x 340 (6th Cir. 2013), an employee was out on intermittent FMLA leave and the employee did not provide information when asked by the employer for recertification of that leave. The employer subsequently terminated the employee. Since the employer kept thorough records of this, the court upheld the employee’s termination and the employer won the lawsuit.
2. Communication: It is important for an employer to maintain communication with the employee who is out on intermittent FMLA leave. For example, in Walpool v. Frymaster, L.L.C., No. CV 17-0558, 2017 WL 5505396 (W.D. La. Nov. 16, 2017), the employee was terminated and he brought suit claiming interference with his intermittent FMLA leave and that his discharge was in retaliation of his right to take FMLA leave. The employer claimed that the employee did not follow normal policies and procedures for giving notice of an absence. However, the employee won the case. The bottom line here is that if the employer believes the employee has provided inadequate notice, the employer should maintain communication with the employee before taking any immediate adverse action.
3. Paid v. Unpaid: In a recent Opinion Letter dated April 12, 2018, the Department of Labor’s Wage and Hour Division addressed a situation where an employee requested 15 minute breaks every hour under FMLA. This creates complications for employers because FMLA is unpaid and determining which 15 minute breaks are unpaid under FMLA, and which ones are paid, can be difficult for employers to track. This issue is discussed in the Opinion Letter.
The takeaway here is that employers should determine what their best practices will be for administering intermittent FMLA properly. Once the employer determines what their best practices are, the employer should implement them and administer their employees’ intermittent FMLA leaves accordingly.
By: Jon Jablon, Esq.
If you’ve dabbled in reference-based pricing, or RBP, then you know about the legal and business challenges involved. From the inability to compel providers to bill reasonably to the difficulty in settling at a mutually-agreeable rate, RBP is tough. There’s a lot to it, and the law has always been on the side of the providers, making fighting the good fight just that much more difficult.
Recently, however, the Texas Supreme Court (in In Re North Cypress Medical Center Operating Co., Ltd., No. 16-0851, 2018 WL 1974376 [Tex. Apr. 27, 2018]) has ventured a change from its historical position, and has indicated that “…because of the way chargemaster pricing has evolved, the charges themselves are not dispositive of what is reasonable, irrespective of whether the patient being charged has insurance.” Historically, Texas courts have opined that the chargemaster is somehow the reasonable price of services.
This case indicates that evidence of accepted rates (from all payers) is in fact relevant to determining the reasonable value of medical services; although this case doesn’t actually determine the reasonable value or assign any relative weight to the amounts paid, it is a stepping stone that RBP plans can use to try to enforce their payment amounts and perhaps induce more reasonable settlements.
To be sure, the court indicated that “[t]he reimbursement rates sought, taken together, reflect the amounts the hospital is willing to accept from the vast majority of its patients as payment in full for such services. While not dispositive, such amounts are at least relevant to what constitutes a reasonable charge.” In other words, amounts the hospital accepts from all payers are relevant – but “not dispositive,” such that no one accepted amount is conclusively considered reasonable simply by virtue of having been accepted in the past. The Texas Supreme Court’s opinion that those amounts are even relevant, however, is a big step, and presents RBP plans with a valuable tool.
According to the court, “[w]e fail to see how the amounts a hospital accepts as payment from most of its patients are wholly irrelevant to the reasonableness of its charges to other patients for the same services.” We concur! This decision gives health plans some ammunition to counter the popular hospital opinion that Medicare rates are not relevant (since arguably they’re not “negotiated” but are instead forced upon the hospital by the government). We have always argued that no hospital is required to accept Medicare payments, but hospitals choose to because presumably those payments are valuable and worthwhile; we expect this case to help the argument that Medicare rates must be considered relevant when determining reasonable value – and the chargemaster rates themselves are all but meaningless.
By: Brady Bizarro, Esq.
Let’s face it: fax machines are horrible and outdated. From busy signals to unreadable printouts to incorrect destinations, it is no wonder most industries abandoned them last century. In our industry, which deals extensively with providers, it’s the primary way to communicate. Understanding why can give you a glimpse into the broader problems with healthcare policy in this country today; a misalignment of economic incentives.
Almost all providers have digitized their own patient records. This was done largely thanks to the Obama administration. In 2009, as part of the stimulus bill, the government passed the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”), which included nearly $30 billion to encourage providers to switch to electronic records. Statistics reveal that the number of hospital systems using electronic records went from nine percent in 2008 to eighty-three percent in 2015. So far so good. So, what went wrong? Why is the fax machine still the primary way doctor’s offices communicate?
The issue is not digitizing records: the issue is sharing them. When doctors want to retrieve patient records from another doctor’s office, they turn to the fax machine. They print out records, fax them over to the other provider, and that office scans them into their digital system. Needless to say, this is inefficient, and a misreading of economic incentives is to blame.
The government, at the time, assumed that providers would volunteer to share patient data amongst themselves. This data, however, is considered proprietary and an important business asset to most providers. If other hospital systems could easily access and share your medical record, you could more easily switch providers. Switching providers may be a good thing for a patient who is shopping for better value care, but most providers perceive this ability as a threat to steerage. After all, hospital systems compete with one another for steerage.
As in the case of other healthcare policy problems, chief among them out-of-control spending, doctors, nurses, patients, lawmakers, everyone is frustrated; yet, a solution has thus far been out of reach. The proposed solutions divide policymakers among ideological lines as is often the case with healthcare spending: some feel that more government regulation is needed; others feel that fewer regulations are needed. The Trump administration has so far proposed deregulation in this area and giving patients more control over their own medical records. This is one of the four priorities recently accounted by the Department of Health and Human Services (“HHS”). Time will tell if this approach will finally lead to the demise of one of the most despised pieces of technology in medicine.
By: Patrick Ouellete, Esq.
Though stakeholders in the self-funded health plan industry may not be following Mental Health Parity and Addiction Equity Act (MHPAEA) enforcement with the same vigor as perhaps the Affordable Care Act (ACA), these entities should be aware of recent efforts in Congress to strengthen mental health parity among plans.
Six members the Senate Health Committee recently sent a letter to Department of Health and Human Services (HHS) Secretary Alex Azar contending that the current administration has not enforced equal treatment of mental health disorders and substance abuse in insurance plans. Along with the uncertain status of the ACA, this bipartisan effort highlights the uneven regulatory ground in which MHPAEA currently stands.
Under MHPAEA, self-funded health plans are not required to offer coverage for mental health and substance abuse. If they do choose to offer coverage, however, the plan must cover mental health and substance abuse in parity with the major medical benefits, such as same copay or coinsurance. MHPAEA was a provision 21st Century Cures Act, which had required that HHS, the Department of Labor (DOL), and Department of Treasury develop an enhanced enforcement plan and guidance by December 13, 2017. From there, Congress was to use agency recommendations to continue to put more teeth into MHPAEA enforcement.
Since no plan has been issued to date, the Senate Health Committee members’ letter to HHS, DOL, and the Treasury focuses on what the agencies have done to improve parity by, for example, taking action on non-qualitative treatment limits as well as a timeline for ratcheting up enforcement activity. The committee requested a response by May 1, 2018.
The letter’s questions and commentary are significant for the self-funded industry because both Republicans and Democrats in the Senate have not forgotten about MHPAEA even though December 13, 2017 has passed. Plans that are subject to its requirements if they cover mental health and substance abuse should take note of Senate Health Committee. Looming in the background is the Government Accountability Office, which the committee stated will be following the agencies’ respective responses carefully.
In this episode, Adam, Ron, and Brady interview in-house specialist, VP of Consulting Attorney Jennifer McCormick, and discuss the many complicated issues surrounding surrogacy, and the costs for which benefit plans may be responsible. What can be denied? What must be paid? Why is this a threat? What can we do to avoid it, or at least minimize the risks? Listen and find out!
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