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Empowering Plans: P69 – A Healthcare Free-for-All

Join Adam, Ron, and Brady for a healthcare free for all where they tackle the most pressing issues facing our industry, including surprise emergency room bills, drug pricing, medical necessity, and employee incentive programs.

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Suicidality On the Rise Amongst Missouri’s Child Medicaid Population

By: Andrew Silverio, Esq.

Last month, the Missouri Hospital Association released a study which highlighted some alarming numbers relating to the rates of suicidal thoughts and actions among children covered by Missouri’s Medicaid program (available at https://www.mhanet.com/mhaimages/policy_briefs/PolicyBrief_SuicidalityChildren_0319.pdf).  Among the studies key findings was a notable increase it suicidality amongst Medicare-covered children, along with a decrease in average length of inpatient admissions after the state made a switch from traditional fee-for-service Medicaid to a managed care structure in May 2017. The study looked at 18 months of data prior to the change, and 19 after.

Specifically, the study notes that after the transition from a fee-for-service model to managed care, the average length of stay at psychiatric hospitals for children and adolescents fell from 12.5 days to 7.3, and the 60 day suicidality rate among that same population nearly doubled (30, 60, and 90 day suicidality rates all saw jumps of between 81.7% and 93.2%).  The disparities in services authorized are troubling as well – the percentage of admissions which were denied jumped 7.9 times from 3.3% to 26.4%.

Of course, there’s disagreement on the extent to which these numbers can be attributed to the switch in payment model – the Missouri Health Plan Association, which represents the three managed care Medicaid plans in Missouri, has slammed the report according to Kaiser Health News.  The disparities make sense to Joan Alker, director of the Georgetown University Center for Children and Families, however, who says “Managed care is an effort to save money and that is done by getting rid of unnecessary care or coordinating care better, but a lot of managed care organizations cut corners.”

Whether the managed care structure is being administered poorly, unsuited for this patient population as a whole, or completely irrelevant to these alarming findings, the impact on an incredibly vulnerable patient population is too significant to ignore, and the state should consider getting to the bottom of it to be a top priority.


New DOL Opinion Letter: Employers May Not Delay FMLA Leave Designations

By: Philip Qualo, J.D.

On March 14, 2019, the U.S. Department of Labor (“DOL”) released an Opinion Letter advising that an employer may not delay designating a leave of absence, paid or unpaid, as a leave under the Family and Medical Leave Act ("FMLA”) (if the leave qualifies as an FMLA leave). In addition, this Opinion Letter details that an employer may not permit employees to extend FMLA leave beyond the 12-weeks (or 26 weeks for military caregiver leave) granted under the FMLA.

Under the FMLA, employees of covered employers are entitled to up to 12 weeks of unpaid leave with job protection benefits in the event of certain family and medical situations. The FMLA also permits eligible employees to take up to 26 weeks of leave to care for a covered service member with a serious illness or injury. It is the employer’s responsibility under the FMLA to designate leave as qualifying leave for FMLA purposes.

Prior to the release of the Opinion, many employers permitted employees to delay FMLA designation in specific situations. For example, in order to allow for a full 12-week FMLA leave for a new mother and her newborn to bond, employers would usually allow expectant mothers who needed to commence leave prior to the delivery date the ability to use accrued Personal Time Off (“PTO”) or sick pay until the delivery date. For example, the FMLA designation would begin onthe date of birth instead of the date the mother went on leave prior to delivery.  Many employers were under the impression FMLA designation was a matter of mutual agreement between an employer and employee as opposed to a matter of law.

The Opinion Letter specifically provides that employers are prohibited from delaying the designation of FMLA-qualifying leave as FMLA leave. The Opinion Letter also notes that neither the employee nor employer can decline FMLA protection for FMLA qualifying leave once the employee has communicated a need to take leave for an FMLA-qualifying reason. Thus, once the employer determines that the leave request is for a FMLA-qualifying leave, the leave is FMLA-protected and is counted towards the employee’s 12-week (or 26-week) FMLA leave entitlement. The Opinion Letter advises that once the employer determines the leave is FMLA-qualifying leave, the employer must provide notice of the determination to the employee within five business days. The employer does not have the option to delay this determination once the employer has the information to make such a determination.

The Opinion letter further noted that an employer is prohibited from designating more than 12 weeks of leave (26 weeks in the case of military caregiver leave) as FMLA leave. The DOL notes that an employer can still honor any family and medical leave program it offers outside of the FMLA requirements, even if the offered leave program provides greater leave benefits than that offered under the FMLA. However, any employer-provided leave is separate from the FMLA leave and cannot expand an employee’s FMLA-designated leave beyond 12 (or 26) weeks. If the employer wishes to be generous and extend leave for an employee after FMLA leave exhausts, it should specify in its plan document and employee handbook that any employer-provided leave will not run concurrently with FMLA and therefore once FMLA exhausts, an employer-provided leave can be offered thereafter. An employer should be careful when it comes to continuation of coverage during an employer-provided leave, and if coverage is offered during such a leave, it should be outlined in the plan document.

Employers subject to the FMLA should review their practices, policies, and employee communications regarding FMLA-leave designation and to ensure they are consistent with the guidance provided by the DOL in the Opinion Letter. Specifically, employers should be providing notice of determination within five days of making a FMLA-leave designation, and should not designate more than 12 (or 26) weeks as FMLA-qualifying leave, even if the employee requests to have more than 12 (or 26) weeks designated as FMLA leave or to have an FMLA-qualifying leave treated as non-FMLA leave. Compliance with FMLA and the Opinion Letter is especially important employers who sponsor self-funded health plans as incorrectly designating or extending FMLA for employees could run afoul of the plan document’s continuation of coverage provisions and create issues with stop-loss reimbursement.


Faces of Phia: Episode 10 - Tales From The Lost Filing Room

In the latest episode of Faces of Phia, Adam and Ron dig up tales from the days of old with future industry leader and veteran employee, Amanda Grogan. Tune in for an episode filled with trips down memory lane, tests of knowledge, and a Rumspringa?
 

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


Be Transparent – Tell Me What You Really Want!

By: Ron E. Peck, Esq.

 

At the risk of beating a dead horse, I want to address transparency – at least one more time.  I’ve noticed of late calls from both our industry, and from Capitol Hill, for transparency.  Of course, I don’t think these people really know for what they’re hollering.  Let’s expand our focus from healthcare, and wag the finger at people who failed those noble spirits who crusaded for transparency already – and suffered the consequences.

 

Exhibit A: JC Penny’s.  Recall in 2011, when JC Penny’s made what most experts have deemed a catastrophic, strategic mistake, regarding its pricing strategy.  What horrific miscalculation did the retail giant make?  It replaced “sales” (a/k/a “discount”) and “coupons” with everyday low prices.  JC Penny’s told consumers: “Hey!  We aren’t going to bamboozle you by inflating prices, and then throwing arbitrary discounts at you.  Instead, we’ll offer you fair prices without any games.”  This was one example where transparency failed miserably.

 

Exhibit B: Payless.  If you want to buy some sneakers from Payless, you’d better do it soon.  Payless ShoeSource, Inc. is closing for good.  I’ve never shopped at Payless myself, but they hold a special place in my heart by virtue of something they did in November of 2018.  Yes indeed; it was only a few months ago that they supported my theory that transparency without quality awareness is not only useless, but potentially dangerous.  Payless opened a fake luxury store, dubbed “Palessi.”  At this “boutique,” they displayed shoes (for which they normally charge $20 at their Payless stores), with price tags that ranged up to $600+ (a 1,800% markup).  Shoppers saw the higher prices and assumed that – if it costs more, it must be better. 

 

I could keep sharing stories of “transparency” gone bad, such as my everyday example (people pay more for brand name OTC medication instead of the identical store brand drug), but these two examples above are particularly heinous because they not only both feature businesses that proved people don’t actually care about transparency – but both businesses are now failing!  Or should I say, we’ve failed them?

 

I’ve said it before, and I’ll say it again – people want the most expensive option.  People don’t want to pay for the most expensive option, but they want to have the most expensive option.  Look no further than the credit crisis bankrupting so many Americans, who bought more than they could afford.  Credit cards made it so easy to dig that hole, from which people can’t emerge, because they made it “feel” like it was someone else’s money.

 

So… let’s review.  People inherently want the most expensive option, because they are convinced price is an indicator of quality.  Additionally, luxury purchases are a status symbol.  So we want the best, assume the most expensive must be the best; and we want other people to think we have the best (a/k/a most expensive) stuff as well.  The only roadblock is that I don’t have money with which to buy the best (most expensive) stuff, but, when someone gives me a “card” and that “card” grants me access to deeper pockets than my own, I can now use that “card” to buy the best (most expensive) stuff.  The fact that I have to pay for that “stuff” later (either in the form of credit card payments … or … [assuming my metaphor didn’t go over your head] insurance premiums) won’t stop me from running up an unaffordable bill.

 

Transparency did nothing to stop people from getting themselves into credit card debt.  Transparency will do nothing to curb people’s health care spending, and I actually foresee it making things worse.  Consider the proposals to have drug prices on TV advertisements.  I’m watching the Patriots beat another opponent, when a commercial for Viagra pops up; (pun intended).  The commercial ends by telling me the cost of the drug is $400.  Next, a commercial for Cialis appears, and tells me that drug costs $600.  Well – don’t I and my spouse deserve the best?  Cialis it is!

 

Unless and until reliable quality measurements are included in the transparency discussion, and that information is delivered in such a way that the consumer will understand and appreciate that price has no relationship with quality, I fear “price transparency” on its own is not only a step too short, but potentially a step backwards, in Palessi boots.

 


The Final AHP Rules Take a Hard Hit

By: Erin M. Hussey, Esq.

 

A federal court has ordered certain provisions of President Trump’s Association Health Plan (“AHP”) Final Rule to be vacated. The court has remanded the AHP Final Rule to the Department of Labor (“DOL”) for consideration on how the severability provision will affect the remaining portions of the Final Rule. The court detailed that “if a provision is found entirely invalid then ‘the provision shall be severable from [the Final Rule] and shall not affect the remainder thereof.’ 29 C.F.R. § 2510.3-5(g).”

 

The court ordered the following provisions, codified as 29 C.F.R. §§ 2510.3-5(b), (c), and (e), to be vacated:

 

(1) allowing coverage to be offered to working owners; and

(2) the bona fide provisions (including the provisions about a substantial business purpose, control, and the expanded commonality of interest requirements).

 

The court concluded that the provisions relating to working owners is not within the scope of ERISA because coverage is not being offered to an actual “employer”, and ERISA defines an employer as having at least two or more employees. In addition, Congress intended that only benefit plans that arise from employment relationships fall within ERISA’s scope, and when it comes to a working owner there is no employer-employee relationship. The court noted, “There is no indication that Congress crafted the statute with the intent of sweeping working owners without employees—who employ no one—within ERISA’s scope through the statutory definition of ‘employer.’” The court provided an example to detail the “absurdity of [the] DOL’s interpretation.” The example was of an association forming an AHP that consists of fifty-one working owners without employees. The court concluded that the “number of employees employed by fifty-one working owners without employees. . . reaches a sum of zero.”

 

Furthermore, allowing working owners to purchase coverage through and AHP would be an “end-run” around the Affordable Care Act (“ACA”). Using the example above, an association consisting of fifty-one working owners would be considered a large employer and the AHP formed could follow large group market rules. Thus, the Final Rule is avoiding ACA consumer protections within the individual market rules (i.e., essential health benefits). The court concluded the following:

 

“The Court cannot believe that Congress crafted the ACA, with its careful statutory scheme distinguishing rules that apply to individuals, small employers, and large employers, with the intent that fifty-one distinct individuals employing no others could exempt themselves from the individual market’s requirements by loosely affiliating through a so-called “bona fide association” without real employment ties.”

 

With regards to the bona fide provisions, the court details that this is not a meaningful limit on associations. The court focuses on the three overall criteria that the DOL previously utilized to determine which associations are “bona fide”: purpose, commonality of interest, and control. The court concludes that the Final Rule “departs significantly from the DOL’s prior sub-regulatory guidance in the way it measures these criteria.”  As for the “substantial business purpose” criterion, the court concludes that it “sets such a low bar that virtually no association could fail to meet it . . . [and] provides no meaningful limit on the associations that would qualify as ‘bona fide’ ERISA ‘employers.’”

 

As for the commonalty of interest criterion, codified at 29 C.F.R. § 2510.3-5(c), the Final Rule provides that an AHP will have commonality of interest if:

 

(i) The employers are in the same trade, industry, line of business or profession; or

(ii) Each employer has a principal place of business in the same region that does not exceed the boundaries of a single State or a metropolitan area (even if the metropolitan area includes more than one State).

 

The plaintiff states “object to the latter, which deems employers to be united in interest solely because of common geographical location.” The court agreed and noted that “[g]eography, similarly, is not a logical proxy for common interest, and substituting shared geography for the statutory requirement of common interest improperly expands ERISA’s scope.” As such, the court concluded that allowing geography to meet the commonality of interest test “creates no meaningful limit on these associations . . . [and] the geography test does no work to focus the Final Rule on the types of associations that Congress intended ERISA to cover.”

 

Lastly, as for the criterion of control, the court concludes that the control test is only meaningful if the “members’ interests are already aligned.” However, the AHPs operating under the Final Rule could consist of employer members with “widely disparate interests” and therefore, the “employers’ interests would not be aligned.”

 

Additionally, the bona fide provisions make it easier for small employers to purchase coverage from an AHP and avoid the small group market rules. Therefore, the court concluded that making it easier to allow small employers, as well as working owners, to purchase coverage through an AHP and avoid individual and small group market rules was an “end-run” around the ACA. The court did note however, that pre-Final Rule, in the “rare instances” an association met the DOL’s prior bona fide association criteria, the association coverage would be considered a single group health plan and the number of total employees of all employer members would be counted to determine whether small or large group market rules applied. 

 

The above-noted provisions, that the court ordered to be vacated, are integral to the Final Rule. Those provisions expand the ability for AHPs to form and allow AHPs to offer coverage to more individuals and groups. The remaining portions of the Final Rule are unlikely to survive, besides what is codified at 29 C.F.R. § 2510.3-5(c)(1)(i), where an association of employers in the same trade, industry, line of business or profession, who form an AHP, can expand across state lines. We will be following the reactions to this ruling and how the DOL responds.


Empowering Plans: P68 – Breaking News - Federal Judge Blocks Expansion of AHPs

Last night, a federal judge in Washington, D.C. ruled that the Department of Labor’s new rules that expanded the sale of association health plans (“AHPs”) violate existing law. Those rules applied to fully-insured AHPs in September 2018, to existing self-funded AHPs in January 2019, and would have permitted new self-funded AHPs on April 1, 2019. If this ruling stands, it will have a significant impact on the self-funded industry. The Phia Group will have extensive analysis of this decision in the coming days. For now, join Adam and Brady as they unpack this 43-page order and discuss what it all means for employers, TPAs, brokers, and the broader industry.

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


Empowering Plans: P67 – Employee Takeover: Self-Funded Health Plans from the Member's POV

Listen in as The Phia Group’s Marketing & Accounts Manager, Matthew Painten, and Compliance & Regulatory Affairs Consultant, Philip Qualo, dissect Phia’s very own Self-funded health plan. These guys aren’t holding back and you don’t want to miss out on this podcast!

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


ERISA Violations Due to Restrictive Claim Guidelines

By: Erin M. Hussey, Esq.

Whenever a self-funded health plan covers mental health/substance use disorder (“MH/SUD”) benefits, we review the plan to assess whether these benefits are covered in parity with medical/surgical benefits in order to ensure compliance with the Mental Health Parity and Addiction Equity Act (“MHPAEA”). A recent case, however, has added another layer to compliance when it comes to covering MH/SUD benefits. 

In Wit v. United Behavioral Health, 2019 WL 1033730 (N.D. Cal. 2019), class actions were brought against an insurer by plaintiffs who were “at all relevant times a beneficiary of an ERISA-governed health benefit plan” administered by the insurer. In the capacity of administering MH/SUD benefits, the insurer had developed “Level of Care Guidelines and Coverage Determination Guidelines (collectively, “Guidelines”) that it uses for making coverage determinations” of MH/SUD benefits. Those Guidelines were the main issue in this case as well as how they were utilized to adjudicate claims.

Interestingly enough, the plaintiffs' claims against the insurer did not include a violation of the MHPAEA. Instead, the plaintiffs asserted two ERISA claims: (1) breach of fiduciary duty and (2) arbitrary and capricious denial of benefits. The Plaintiffs argued that the insurer breached its fiduciary duty by:

“1) developing guidelines for making coverage determinations that are far more restrictive than those that are generally accepted even though Plaintiffs’ health insurance plans provide for coverage of treatment that is consistent with generally accepted standards of care, and 2) prioritizing cost savings over members’ interests.”

The plaintiffs also argued that the insurer improperly adjudicated and denied claims because of the overly restrictive Guidelines, and the use of those Guidelines was arbitrary and capricious.

The court ruled that the insurer breached their ERISA fiduciary duty and that the actions were an arbitrary and capricious denial of benefits, and concluded that the insurer’s Guidelines were overly restrictive and not in line with accepted standards of care. The court emphasized that the insurer placed “an excessive emphasis on addressing acute symptoms and stabilizing crises while ignoring the effective treatment of members’ underlying conditions.”

This case is a reminder that the claim guidelines utilized and the process of adjudicating and denying claims must be held to certain standards to ensure ERISA compliance when administering MH/SUD benefits.


FDA Chief Resigns – Why It’s A Loss for Self-Funding

By: Brady Bizarro, Esq.

When President Trump nominated Scott Gottlieb to be commissioner of the Food and Drug Administration (“FDA”) in March of 2017, critics were quick to point out his deep ties to the pharmaceutical industry. They had little hope that he would have the wherewithal to overcome perceived conflicts of interest and challenge the industry on important issues facing consumers and payers. Scott Gottlieb, however, proved to be a rarity, seemingly immune to regulatory capture. He received bipartisan praise as one of the administration’s most effective regulators. His departure in April will be a loss for the self-funded industry and for healthcare cost containment as a whole.

Dr. Gottlieb focused his efforts in three key areas: rising drug prices, the opioid epidemic, and the underage use of e-cigarettes. Under his leadership, the FDA worked to strengthen and speed up the review process for generic drugs. In 2018, first-time generic approval grew by 24%. In all, the FDA approved 971 generic drugs in 2018, an all-time high. With respect to the opioid crisis, which has killed some 85,000 people since 2017 and led to an enormous spike in treatment costs to payers, Dr. Gottlieb took a hard stance on opioid prescribing limits and approved a mobile app to help those with substance use disorder recovering through outpatient treatment. Finally, under Gottlieb, the FDA cracked down on teen vaping by announcing rules to restrict the sale of flavored e-cigarettes, supported banning menthol cigarettes, and reduced nicotine levels in cigarettes.

Soon after he announced his departure, the Trump administration named an interim replacement, Dr. Ned Sharpless, who now heads the Cancer Division of the National Institutes of Health (“NIH”). The search for a permanent replacement is still underway.