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Aetna to subsidize Apple Watch for health monitoring
By Morgan Haefner 

Health insurer Aetna will subsidize Apple Watches for select large employers and individual policyholders during November’s open enrollment as a healthy living initiative.

The Hartford, Conn.-based insurer said it is the first major healthcare company to subsidize the Apple Watch. Aetna will also freely offer the watch to 50,000 of its employees who participate in the company’s wellness reimbursement program.

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California Senate Approves Reference Based Pricing
MyHealthGuide Source: Ana B. Ibarra, 8/30/2016, California Healthline and Senate Bill AB-72

Article referred by Bill Rusteberg, RiskManagers.us

A measure to protect California consumers from surprise medical bills — among the longest-debated issues to be considered by state lawmakers — moved closer than it’s ever been to becoming law when the Senate approved it Monday with a 35-1 vote.


The bill would relieve patients from having to pay surprise medical bills out of pocket by requiring insurers to reimburse out-of-network doctors and other health providers a “fair amount” and doctors to accept the payments, said its author, Assemblyman Rob Bonta (D-Oakland).

That rate would be 125 percent of the amount Medicare pays for the same service or the insurer’s average contracted rate for the service, whichever is greater.

The bill still faces additional review before Wednesday, the deadline for passage by the legislature, but its supporters expect it to be sent to the governor for signature.

Surprise medical bills can happen when patients at a hospital or other facility considered in-network by their insurance receive care from a provider who does not contract with the insurer and is considered out-of-network. Since the doctors have no contract with the insurers, they can bill the patients for the full cost of the care. These surprise bills commonly come from radiologists, anesthesiologists or pathologists, specialists likely not chosen by the patient or ones the patient may not even realize has been involved in the care.

Some doctors have chosen to not contract with insurers to allow themselves to command their own higher rates. However, if this legislation passes, providers will be forced to cooperate with insurers and agree upon rates, said Andrea Caballero, program director of the San Francisco nonprofit Catalyst for Payment Reform.

“Because contracted rates are usually higher than Medicare rates, it is hard to say whether the Medicare benchmark will kick in,” Caballero said.

A similar bill last year required that out-of-network providers be reimbursed 100 percent of the amount Medicare pays for a service, but it stalled in the Assembly.

This bill represents a more balanced approach, said Sen. Ed Hernandez (D-West Covina), another of the bill’s sponsors. “This is a more generous payment standard for non-contracting providers.”

But “more generous” depends on whom you ask. Sen. Joel Anderson (R-Alpine), who voted against the bill, said compensation to out-of-network providers could be improved.

“This bill is much closer to a true balance,” Anderson said, “but my problem is, if we don’t compensate [doctors] for all their effort, they won’t do the job. No one is going to work for free.”

Similar measures are being looked at in several other states. Florida recently passed a law exempting patients from having to pay the surprise bills.

Bonta’s bill specifically addresses medical bills only for non-emergency services. Billing patients for emergency care costs that insurers don’t cover is prohibited under state law.

The fight against surprise medical bills has been going on for 16 years, Hernandez said. This bill is the most promising solution thus far, he said.

The bill would also establish an independent dispute process in which doctors can make their case for higher payment.

The bill is significant because it takes the patient out of the middle of the payment dispute between doctors and insurers, consumer advocates say.

“This bill will give consumers some of the strongest protections against surprise out-of-network medical bills in the nation, while ensuring providers are paid fairly,” said Anthony Wright, executive director at Health Access, a Sacramento-based health care advocacy group. “Patients who go to in-network hospitals would only be responsible for in-network cost sharing for all the care they receive.”

To read the text of the legislation:   Assembly Bill No. 72

Federal regulators may try to kill critical illness insurance
Jun 09, 2016 | By Allison Bell
Obama administration officials want to limit use of short-term health insurance in the United States to periods of three months or less.
Officials are also thinking about the possibility of banning the sale of critical illness policies and other policies that cover two or more specific diseases.
The so-called “tri agency” team — the Internal Revenue Service, the Employee Benefits Security Administration and the U.S. Department of Health and Human Services — has included those proposals in a new batch of draft regulations.
The agencies developed the draft regulations to implement the Expatriate Health Coverage Clarification Act of 2014, and to adjust the requirements for health insurance products other than major medical coverage.
With Americans living longer, it might be a good idea to take another look at critical illness insurance.
The three agencies are preparing to publish the regulations in the Federal Register Friday. Members of the public can send in comments up until 60 days after the official publication date.
The Centers for Medicare & Medicaid Services (CMS), part of HHS, announced the release of the draft in a statement about what HHS doing to help the Patient Protection and Affordable Care Act (PPACA) public exchange system.
CMS said it and HHS want to:
• Improve the PPACA risk-adjustment program, which is used to use cash from health plans with low-risk enrollees to compensate competitors that end up with high-risk enrollees. CMS wants to create an adjustment mechanism for part-year enrollees and let plans include enrollees’ prescription information when calculating health risk scores, according to a new batch of risk-adjustment program guidance.
• Forge ahead with previously announced efforts to increase documentation requirements for consumers who seek coverage outside the usual open enrollment period window. Officials say they hope getting tough on special enrollment period applicants will keep healthy people from waiting until they get sick to pay for health insurance.
• Limit use of products that some consumers might see as an alternative to buying major medical coverage. The three agencies described the limits in the draft regulations.

For more details about what the tri agencies said about health insurance products other than major medical insurance in the draft regulations, read on:
Expat coverage
The three agencies want to distinguish travel insurance that happens to cover travel-related health problems from “expatriate health plans,” or coverage aimed at U.S. citizens or U.S. residents who live outside of the United States on a long-term basis, according to the introduction to the draft regulations.
The three agencies want to require an issuer of expat coverage to be a substantial issuer of expat coverage. An issuer would, for example, have to maintain call centers in three or more countries, accept calls from customers in eight or more languages, and process at least $1 million in claims per year in foreign currency equivalents.
An expat plan would be exempt from some requirements that apply to ordinary major medical plans. In the United States, individuals usually need to show they have “minimum essential coverage” to escape from the penalty PPACA imposes on the uninsured, or underinsured. A minimum essential coverage plan cannot impose lifetime or annual limits on the amount of medical benefits a patient can get.
The tri agencies say they would exempt expat plans from some of the PPACA requirements that apply to minimum essential coverage, such as the ban on annual and lifetime benefits limits. But, to qualify as minimum essential coverage, an expat plan would have to cover inpatient services, outpatient facility services, physician services and emergency services.
An employer that sponsored a group health expat plan, and wanted to get credit for offering minimum essential coverage, would have to “reasonably believe” that the expat plan met the usual minimum essential coverage minimum value standards.
Critical illness insurance
PPACA exempts indemnity insurance from the PPACA major medical requirements.
The tri agencies have given their blessing in the past to indemnity products that pay a set, time-based benefit. The agencies have said, for example, that an insurer can pay $100 per day to a policyholder who enters the hospital. Insurers have asked the agencies to allow the sale of traditional supplemental policies that pay benefits to consumers who have certain kinds of conditions or get certain kinds of medical service.
The tri agencies say they are not sure whether a policy that covers multiple specified diseases or illnesses should qualify for excepted benefits status.
The agencies “are concerned that individuals who purchase a specified disease policy covering multiple diseases or illnesses (including policies that cover one overarching medical condition such as ‘mental illness’ as opposed to a specific condition such as depression) may incorrectly believe they are purchasing comprehensive medical coverage when, in fact, these polices may not include many of the important consumer protections,” officials say.
The tri agencies “solicit comments on this issue and on whether, if such policies are permitted to be considered excepted benefits, protections are needed to ensure such policies are not mistaken for comprehensive medical coverage,” officials say.
If the agencies let insurers continue to sell the policies, the agencies might limit the number of conditions that a policy could cover, officials say.
Short-term health insurance
The three agencies have been letting consumers continue to buy traditional short-term health insurance coverage outside the PPACA framework.
A short-term health insurance issuer usually requires applicants to go through a simple medical underwriting process. The issuer may decline to cover pre-existing conditions, and it may leave out benefits for mental health care, maternity care and other types of care that a PPACA-compliant major medical plan would cover. An issuer may also impose annual benefits limits of $100,000 or less.
For qualified applicants, short-term health insurance is often cheaper than major medical coverage, marketers say.
Issuers of short-term health insurance can sell the coverage all year round. Issuers of individual major medical coverage require consumers to show they have a legal excuse to get a special enrollment period before selling them outside the annual open enrollment coverage. The open enrollment period now lasts from Nov. 1 through Jan. 31. The rules mean that, for much of the year, short-term health insurance may be the only health insurance some consumers can buy, marketers say.
In most states, issuers can offer short-term health insurance available for periods of up to one year.
The three agencies want to keep consumers from using short-term health insurance as a convenient major medical alternative by limiting use of a policy to three months. The three-month time limit would include the period of any policy renewals as well as the original policy duration, officials say.
Indemnity insurance
In the past, the three agencies have let insurers continue to sell hospital indemnity insurance plans, which pay benefits to insureds who enter the hospital, or to cancer insurance policies and critical illness insurance policies, which pay benefits when insureds suffer from the covered diseases. The three agencies have said those products would be “excepted benefits.”
Excepted benefits are products free from the federal benefit design rules that usually apply to major medical policies.
In the past, federal agencies have said that excepted benefits policies should be used to fill in the gaps in the major medical policies that comply with PPACA, not as an alternative.
The tri agencies now say they are hearing about group health plan operators telling workers in employer-sponsored group health plans that indemnity policies and other supplemental products count as minimum essential coverage.
The agencies “are concerned that some individuals may incorrectly understand these policies to be comprehensive major medical coverage that would be considered minimum essential coverage,” officials say.
The agencies want issuers of the supplemental products to include prominent notices, in large type, stating that the products are supplemental products, not minimum essential coverage.

ER docs sue HHS over out-of-network payments
By Maria Castellucci

The American College of Emergency Physicians is suing HHS, claiming a provision of the Affordable Care Act allows insurers to underpay for out-of-network emergency medical services.

The federal lawsuit asks that insurers be transparent on the data they’re using to pay for services rendered by an out-of-network hospital.

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Sky-Rage: Bills, Debt, Lawsuits Follow Helicopter Medevac Trips
By Cindy Galli, Stephanie Zimmermann & Brian Ross

The helicopter ambulance that rushed Shauna Laswell to a Las Vegas hospital after a heart attack may have saved her life.

But when she got the air ambulance bill, she says she “almost had another heart attack.”

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FEHBA Preempts Kansas Anti-Subrogation Regulation
By Carmen Castro-Pagan
The Federal Employees Health Benefits Act preempts a Kansas administrative regulation prohibiting subrogation and reimbursement clauses in health insurance contracts of federal government employees, the U.S. Court of Appeals for the Tenth Circuit ruled .
The appeals court, in the Oct. 29 opinion, joining other federal courts in ruling that FEHBA preempts state laws limiting subrogation and reimbursement clauses. The decision confirmed the lower court’s ruling that a federal employee must reimburse her insurer because federal common law also displaced Kansas regulation.
The case is Helfrich v. Blue Cross & Blue Shield Ass’n, 2015 BL 356222, 10th Cir., No. 14-3179, 10/29/15 

Supreme Court of California Case Notification for Children’s Hospital Central California v. Blue Cross of California
In an important legal development in the healthcare cost debate, the California Supreme Court has denied a petition for review of the recent decision in Children’s Hospital of Central California v. Blue Cross of California, 226 Cal. App.4th 1260 (2014). You’ll recall that a few months ago, a California appellate court reversed a decision by the trial court holding Blue Cross responsible for the full billed charges because the jury found that an implied-in-fact contract existed between the Hospital and Blue Cross. In so doing, the jury awarded the hospital $6.6 million in addition to the $4.2 million Blue Cross had already paid, totaling a payment of $10.8 million. This decision set up a potential showdown in the California Supreme Court; but the showdown is not to be. As a result benefit plans get important legal support for the proposition that a hospital cannot be paid an amount simply because they charge for it.

See the full appellate decision here.

Stay tuned as the the California courts try to determine on remand what should be considered when determining the “reasonable and customary” value of services rendered.

Hospitals facing big divide in pro- and anti-ACA states
By Beth Kutscher

Bradford Regional Medical Center and Olean General Hospital sit just 20 miles apart on opposite sides of the Pennsylvania/New York border. They serve a similar patient population in the rural, forested region. They are both owned by the not-for-profit Upper Allegheny Health System.

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Letter from The Phia Group’s editior, Andrew Milesky
The winds of change are coming, and they blow closer than ever. It seems so recent that we were all looking forward to 2014, and feeling confident that we had plenty of time to get things in order and prepare – both financially and in terms of compliance – to address President Obama’s sweeping healthcare[insurance] reform law. Yet here we are, clueless as ever and full implementation looming.

Since the passing of the law, various waves of reform have impacted our industry, sending many of our clients into panic mode as they hustle and bustle to update their plans and implement measures to ensure compliance. At this point, SBCs seem like a thing of the past; as new “bigger and badder” issues arise!

As we sit here, with the air getting a little chillier and January 1st getting a little closer, we once again await our inevitable lives without pre-existing exclusions, no more than 90 day waiting periods, no annual limits on essential health benefits, and for some of us a change in clinical trial coverage.

But let’s not rush to winter; the fall is upon us and that means conference season is too. As we do each year, we road warriors head out to the major industry events to talk and listen; to address your greatest concerns. This interaction is invaluable to us; so when you see us, please let us know how we can help. It is your concerns, your requests, and your pleas that inspire us to research and develop new services and cost containment strategies focused on growing your businesses.

The time to chat is now! There has never been a more appropriate time to tell us how we can help and for us to be your strategic partner. The potential for financial burdens on plans means we must seek new and innovative ways to save our clients money, and ensure the preservation of our industry.

The use of strong, effective plan language can be the first step to maximizing plan benefits and savings. A successful claims recovery process to ensure every recoupable dollar spent is placed back in the mix for future health claims, is another step you must take – and something we are happy to assist with.

If you have yet to work with The Phia Group, now might be a great time to start. We are here for the long run and are dedicated to the growth and stability of the employer based health benefits industry.

Attack of the Killer P’s – Providers Paying Patients’ Premiums
By: Sean Donnelly (The Phia Group, LLC)

A recent and unsettling trend in the healthcare industry involves medical providers paying insurance premiums or contributions on behalf of their patients in order to ensure that the patient’s coverage remains active. Providers engage in this practice because it is largely cheaper and easier to prolong a patient’s coverage and continue charging exorbitant amounts to the patient’s health plan or policy than to try and collect directly from a patient who would otherwise no longer qualify for coverage – a struggle that providers view as being akin to squeezing blood from a stone.

Surprisingly, the Internal Revenue Service (IRS) actually condones this practice as reflected in its Final Rule issued in 64 Fed. Reg. 5160-01 (Feb. 3, 1999). The IRS’ Final Rule, which clarifies the accepted methods for paying for COBRA continuation coverage, makes it clear that employer-sponsored health plans must accept premium payments made by a provider on a qualified beneficiary’s behalf. The Final Rule states:

“Many plans and employers have asked whether they must accept payment on behalf of a qualified beneficiary from third parties, such as a hospital or a new employer. Nothing in the statute requires the qualified beneficiary to pay the amount required by the plan; the statute merely permits the plan to require that payment be made. In order to make clear that any person may make the required payment on behalf of a qualified beneficiary, the final regulations modify the rule in the 1987 proposed regulations to refer to the payment requirement without identifying the person who makes the payment.” (emphasis added).

Accordingly, it does not appear that providers are engaging in any unlawful practice by paying premiums or contributions on behalf of their patients, at least from the perspective of the I.R.S. However, group health plans may be able to discourage this practice by arguing that such payments by medical providers constitute taxable income to the patient.

The starting point for the determination of “taxable income” is the computation of “gross income.” Internal Revenue Code § 61(a) defines gross income as “all income from whatever source derived.” Gross income includes “income realized in any form, whether in money, property, or services. Income may be realized, therefore, in the form of services, meals, accommodations, stock, or other property, as well as cash.” 26 C.F.R. § 1.61-1. There is no provision in the law that excludes insurance premiums from the category of “income realized in any form,” and insurance premiums fit in very well with the examples of income provided in the regulation.

Furthermore, the doctrine of “assignment of income” posits that money paid to and received by a designated agent, but which is really intended for and paid for the benefit of a third person, is considered taxable income for that third person. Thus, when a hospital pays an insurance premium or contribution on behalf of a patient, the patient is considered to have “constructively received” that income, and it ought to be reported on the patient’s income taxes. Consequently, insurers and group health plans should argue that a provider paying an insurance premium or contribution on behalf of a patient amounts to nothing more than a provider giving money indirectly to that patient.

Finally, insurers and group health plans can also argue that when a provider pays a premium on behalf of the patient, the patient is thereby relieved of his or her obligation to continue making payments in order to maintain coverage. As such, a patient who is relieved of his obligation to make premium payments realizes an economic benefit – namely, the provider’s assumption of the patient’s obligation to pay the premium amount.

Next time a provider tries to pay the premium or contribution for one of your policyholders or plan members to further their own commercial interests, make sure they know that the patient may not be off the hook financially – money indirectly received is nothing more than income for tax purposes.