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No No-fault – Michigan Revamps its Auto Insurance Rules

By: Andrew Silverio, Esq.

Recently, the Michigan Senate passed sweeping legislation in an effort to get their auto insurance rates, which are the highest in the nation, under control.  The main way Michigan aims to accomplish this is by eliminating their requirement that auto insurance policies carry unlimited “Personal Protection Insurance” (commonly referred to elsewhere as “Personal Injury Protection” or “PIP” coverage), which is no-fault first party medical coverage.  Under the old system, with exposure to the carrier being quite literally unlimited, premiums predictably climbed to unsustainable levels.

The new law will require that carriers offer PPI options with $500,000 and $250,000 limits, as well as an unlimited option.  It also allows for a $50,000 limit for policyholders on Medicaid only, and importantly, allows policyholders to waive PPI coverage completely if they have Medicare coverage or “other health or accident coverage” which provides benefits for accident claims.

So, why are we talking about changes to auto insurance laws?  Because policies carrying these new limits will shift liability onto health plans.  In light of the previous availability of unlimited PPI coverage, many self-funded Michigan health plans already exclude charges resulting from auto accidents completely.  Under the new law, this should exclude an individual from waiving PPI, however it’s probably unreasonable to expect individuals to be educated enough or review applicable requirements in enough detail to understand these requirements, or for carriers offering these policies to do the legwork to determine whether an applicant’s health plan actually covers auto accident claims.  So, the end result may be that individuals are left with no coverage at all for auto accident claims.  This means that in addition to making sure that plan language is tight, it’s crucial for employers to educate their employees about health coverage and their responsibility to have other coverage available via auto insurance.

This could also impact how plans who don’t exclude auto claims completely – the approach of quickly paying everything up front without question with the understanding that unlimited PPI coverage is available for reimbursement after the fact is no longer such an appealing option.  No matter what the existing approach to these claims, now is the right time for Michigan employers to reexamine how they handle auto accident claims and coordinate with PPI coverage.


MA PAID FAMILY & MEDICAL LEAVE UPDATE: Required Contributions Delayed…and Increased

By: Philip Qualo, J.D.

The commencement of the required contributions for the Massachusetts Paid Family and Medical Leave (“PFML”) program was scheduled for July 1, 2019, but on June 11, 2019, Massachusetts Governor, Charlie Baker, along with members of the Commonwealth’s House and Senate, issued a joint statement agreeing to postpone the start of required contributions for the PFML program by three months. While the legislature will need to pass an emergency bill before the delay is official, this announcement is welcome news for employers scrambling to comply with what was supposed to be a July 1 contribution start date. Adversely, this announcement also brings unwelcome news to employers and their employees because in order to maintain the amount of pre-funding and not reduce total contributions paid to the PFML trust fund, the total contribution rate will be increased from .63% to .75%of wages  and will be deducted on October 1, 2019, the new start date for required contributions.

By way of background, the PFML law, enacted in 2018, provides a right to up to 26 weeks of combined family and medical leave in each benefit year, and pay during such leave, to eligible employees, former employees, and self-employed individuals in Massachusetts. The earliest that such leave and pay benefits will be available is January 1, 2021. Leave under the PFML is job protected and will require continuation of health benefits for the duration of such leaves. Pay during this leave is administered by the state and funded through employer and employee contributions that employers must remit to the state on a quarterly basis. Employers with more than 25 covered employees were required to contribute 60% of the medical leave portion on behalf of their employees. Covered employees’ contribution rate was initially established at 0.63% (0.52% for medical leave and .11% for family leave) of the covered individual’s gross wages or other payments to all covered individuals.

The Department of Family and Medical Leave (“DFML”) has yet to provide updated guidance on whether there will be a change in the medical and family leave allocation of the increased .75% contribution rate or any change in the required employer contribution. However, the DFML has confirmed that June 30th deadline for covered employers to comply with workplace poster and employee notification requirements has been extended to September 30, 2019. In the meantime, we recommend employers with employees based in Massachusetts continue to monitor the DFML website for updated guidance. To learn more about self-funded health plans click here


Tales From the Plan: Episode 1 – Putting the Benefit in Benefit Plan with Jennifer McCormick

In our inaugural episode of “Tales from the Plan,” our own Sr. VP of Consulting, Jennifer McCormick, opens up and candidly discusses her own experience as a consumer of healthcare and member of The Phia Group’s health plan.  Jen is brutally honest, and will make you realize that anyone can be taken advantage of, and anyone can take advantage of, our nation’s healthcare system.  This is mandatory listening.

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


Faces of Phia: Episode 13 – Glutton for Punishment

Amanda Lima celebrates more than 6 years with Phia (most of that time working closely with Adam), by chatting about her time here, the company, and the amazing work she’s doing on our clients’ behalves – delving deeply into matters of excessive and abusive provider billing. This is a topic about which everyone is buzzing, and Amanda has got the dirt!

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


Will Sex Discrimination be Re-Defined?

By: Erin M. Hussey

Section 1557 of the Affordable Care Act (“ACA”) prohibits discrimination on the basis of race, color, national origin, sex, age, or disability with regards to certain covered entities’ health programs. A covered entity is one that receives federal funding as outlined in the ACA.

The US Department of Health and Human Services (“HHS”) has issued a proposed rule that would revise the regulations implementing and enforcing Section 1557. This proposed rule, among other things, would essentially allow HHS not to include “gender identity” and “termination of pregnancy” within the definition of “sex discrimination.”

By way of background, HHS’s 2016 regulation on Section 1557 redefined sex discrimination to include gender identity and termination of pregnancy. However, on December 31, 2016, a US District Court issued a nationwide injunction on certain parts of Section 1557, including gender identity and termination of pregnancy, and that injunction is still in effect. As such, this proposed rule would follow suit with that injunction. HHS details that this part of the proposed rule would “not create a new definition of discrimination ‘on the basis of sex’ . . . [but] would enforce Section 1557 by returning to the government's longstanding interpretation of ‘sex’ under the ordinary meaning of the word Congress used.”

In addition, plans that are not directly subject to Section 1557, must still ensure that the employer sponsoring that plan remains in compliance with Title VII of the Civil Rights Act. Title VII prohibits employment discrimination based on race, color, religion, sex and national origin. The Equal Employment Opportunity Commission’s (“EEOC’s”) interpretation of its prohibition on sex discrimination includes discrimination based on gender identity and sexual orientation. However, there have been similar discussions of whether sex discrimination should be redefined under Title VII. HHS detailed this issue in their fact sheet on the proposed rule:

“On April 22, 2019, the U.S. Supreme Court granted petitions for writs of certiorari in three cases, which raise the question whether Title VII’s prohibition on discrimination on the basis of sex also bars discrimination on the basis of gender identity or sexual orientation.”

Therefore, while we wait to see if the proposed rules on Section 1557 are finalized, and for the outcome of the above-noted Supreme Court cases on Title VII, applicable health plans should remain cautious with regards to benefits and exclusions that may implicate sex discrimination issues. If you feel as if you are being discriminated against and would like to negotiate a fair rate, visit our claim negotiation page to learn more. 


List Prices in TV Ads: Will This Help?

Brady Bizarro, Esq.

Last May, we extensively covered the Trump administration’s American Patients First blueprint. That document outlined four strategies for tackling the problems Americans face with respect to high prescription drug prices: boosting competition, enhancing negotiation, creating incentives for lower list prices, and bringing down out-of-pocket costs. The strategies called for some specific, ambitious proposals, including considering fiduciary status for PBMs. One of those proposals was to require drug companies to disclose list prices in television ads. Nearly a year later, the Centers for Medicare and Medicaid Services (“CMS”) has published the first final rule on prescription drug price transparency.

Currently, drug manufacturers are only required to disclose potential, major side effects of their drugs in commercials, and as anyone who watches commercials knows, the list of potential side effects can be startling and absurdly long. Now, these companies will have to disclose to patients the list price for their drugs, and that is likely to cause even more consternation. An important question to ask, however, is whether or not this will achieve the desired result (bringing down drug prices in general). The reason for skepticism on the part of some industry analysts is because of what the list price actually represents.

List prices are not reflective of what a patient actually pays at the register for a prescription drug. For example, the blood thinner Xarelto, made by Johnson & Johnson, will show a list price of $448 a month. Most patients, however, will pay $0 for this drug because of manufacturers assistance. The pharmaceutical industry and its supporters claim that this confusion may cause patients to avoid seeking necessary care. Closer scrutiny of that position reveals that it is likely overblown and misguided. Drug makers are free to add information to their adds to show what a typical consumer of the drug pays, and we in the self-funded industry know, perhaps more than others, that while the patient may be paying $0 for a prescription drug, the patient’s health plan is most certainly not.

The Secretary of Health and Human Services has noted that drug companies are really pushing back on this rule because they are ashamed of their prices. One healthcare consultant noted, with an air of bemoaning, that this is health policy made through public humiliation. Given that effective legislation and regulation in this area has been scant, public humiliation may be our best bet. The final rule is scheduled to go into effect on July 9th (sixty days after it was published in the Federal Register). In the meantime, some manufacturers are fighting its implementation based on First Amendment concerns. We will be watching to see how those battles play out.


Denial & Appeal Case Study: A Deep Dive (Literally)

By: Jon Jablon, Esq.

Here’s a case study that crossed my desk recently: A self-funded health plan incurred a claim for a member who went scuba diving, against his doctor’s explicit orders. The activity itself is far from hazardous; for many individuals, scuba diving can be a fun and rewarding activity. In this particular instance, however, the member’s physician told the member – and I quote from the medical records – “I highly recommend against it.”

Well, as expected, the member went scuba diving, and incurred the exact injuries his doctor warned him about. The plan incurred the claim, did some investigation, got ahold of that medical record (the “I highly recommend against it” one), and denied the claim on the basis that the member intentionally disobeyed his doctor’s explicit orders.

Why are we here, then? Why is this a case study and not just a lesson in listening to your doctor?

Well, because the plan document contained an exclusion for any services provided “against the advice of a medical processional.” The Plan Administrator relied on that exclusion to exclude the claim. The member’s attorney argued that the plan’s exclusion applied only to medical services rendered against a doctor’s advice – and these services were both advised and medically necessary (which the Plan Administrator did not dispute).

The activity was against a doctor’s orders – but the Plan Document didn’t mention contain an exclusion for that particular situation.

When considering the member’s attorney’s appeal, the Plan Administrator asked The Phia Group for advice, and after reviewing the facts and the Plan Document, we opined that it does not appear that the Plan Administrator may validly deny this claim upon the basis it had chosen.

Accordingly, the Plan Administrator paid the claim. The kicker, however, is that the appeals process took so long that the stop-loss filing deadline had come and gone, and now the health plan was left with no reimbursement for this spec claim.

What are the morals of this story, then?

  1. When you analyze the Plan Document, make sure you think twice, three times, or even more about the words you’re relying on. A doctor’s advice about treatment is not the same as a doctor’s advice about engaging in an activity in the first place!
  2. Make sure stop-loss is on board with respect to appeals received for potential spec claims. Once the stop-loss filing deadline passes, the vast majority of carriers will tell you that you’re out of luck, even if you reverse the claim in good faith, or at the orders of a court or IRO.
  3. If your doctor tells you you’re not healthy enough for a certain activity, feel free to get a second, third, or fourth opinion – but maybe avoid ignoring that advice completely.

Interesting Side Note #1: The Plan Administrator could conceivably have determined that going scuba diving after your doctor specifically tells you not to constitutes a “hazardous activity” pursuant to the Plan Document – but no such argument was made.

Interesting Side Note #2: The member’s attorney raised the argument that HIPAA’s “source of injury” rule prohibited the denial, since the injury was caused by a medical condition the member had. That argument is certainly creative – but when opining, we noted that the member’s medical condition may have been the root cause of the injuries in question, but the member’s choice to go scuba diving against his doctor’s advice broke that “chain of causation” wide open.


To Pay, or Not to Pay … The Guide to Handling Claims, Denials, and Appeals

A claim arrives. Is it payable? Such a simple question triggers so many complex scenarios. In this era of steadily increasing appeals, to pay or exclude is only the first step. Even if it’s covered, how much is payable? Are there network entanglements or stop-loss issues? Employer bias or HR concerns? Never mind gaps! Even IF the claims are properly handled, has the written notification of adverse benefit determination been issued properly? Who can file an appeal? How? What timelines apply? What steps do you take, to set yourself up to triumph, if and when it ends up in front of a court of law? As so many administrators have discovered the hard way, it is all too easy to make mistakes that can come back to bite you later. DON’T PANIC! Join The Phia Group’s legal team as they discuss the good, bad, and ugly truths about the claims process, and how to safely navigate the various TPA and health plan duties associated with it.

Click Here to View Our Full Webinar on YouTube

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IP Law vs. Drug Prices

By: Nick Bonds, Esq.

Pharmaceutical companies and rapidly rising drug prices have been eating up a lot of the oxygen in the conversation around healthcare costs. From pharmaceutical executives and PBMs testifying before Congress to President Trump’s May 9 remarks from the Roosevelt Room calling for Democrats and Republicans to unite in a legislative effort to end surprise medical bills.

But Congress and the White House are not alone in their endeavors to tamp down prescription drug costs, HHS Secretary Alex Azar and the CMS recently promulgated a new rule requiring pharmaceutical manufacturers to include the list prices of their drugs in their television ads. This push for transparency is the latest tactic in a multi-pronged strategy deployed by the Trump Administration to lower drug prices in the United States, including moves to change the system of rebates paid to PBMs and to restructure Medicare Part B.  Outraged drug manufacturers cried foul, arguing that patients almost never pay their list prices and disclosing them in their commercials would lead to customer confusion.

Perhaps one of the most interesting components of this CMS rule is its enforcement mechanism. Instead of the CMS itself going after drug manufacturers who fail to comply, the rule allows other manufacturers to pursue damages and injunctions against them for claims of false or misleading advertising under Section 43(a) of the Lanham Act. Also known as the Trademark Act of 1946, this federal law relies on a “likelihood of confusion” standard for adjudicating trademark disputes. The Lanham Act and its remedies have been refined over the last 70 years to combat the very customer confusion pharmaceutical companies insist this new CMS rule will cause.

Whether you agree with drug manufacturers or the CMS, it’s worth noting that this is not the only situation where the government has turned to intellectual property law as a versatile tool to lower drug costs. A bi-partisan group of Senators, including Republicans Chuck Grassley and John Cornyn along with Democratic Presidential Candidate Amy Klobuchar, are working together on a package of legislation targeting drug pricing issues which they hope to have ready by summer. Cornyn’s bill takes a machete to the “patent thickets” crafted by drug manufacturers to artificially extend the monopolies on high-value “blockbuster” drugs granted them by their patents. These patent thickets make it all but impossible for cheaper generic drugs to reach the market, keeping the price of name brand drugs higher for longer. Legislators are coming to see these patent thickets as an abuse of our patent system, a system intended to spur and reward innovation.

It may be too early to say how effective intellectual property law will be in lawmakers’ fight against high drug prices, but it certainly looks like a trend to keep our eyes on. At the very least, it shows that Democrats and Republicans are willing to get creative, using every weapon in their arsenal in their fights with Big Pharma. And they’re willing to reach across the aisle to do it. If you think your own healthcare may be overcharging you for prescriptions, contact us for a claim negotiation, today! 


CMS Finalizes Drug Price Transparency Rule

By: Philip Qualo, J.D.

The Centers for Medicaid and Medicare Services (CMS) has finalized yet another rule demonstrating the agency’s commitment for greater transparency in the healthcare industry. On May 8, 2019, CMS finalized the “Regulation to Require Drug Pricing Transparency”, which will require prescription drug manufacturers to provide the Wholesale Acquisition Cost for their products in direct-to-consumer television advertisements. Under the final rule, drug makers will have to post the list price of a typical course of treatment for acute medications like antibiotics or for a 30-day supply of medications for chronic conditions. These consumer ads will be required to have a readable, text statement at the end to comply with the mandate.

The rule also requires the Health and Human Services (HHS) secretary to maintain a public list of drugs that violate the rule. Drugs with list prices under $35 per month will be exempt from the requirement.

CMS estimates that approximately 25 pharmaceutical companies will be affected by this rule, as they run an estimated 300 distinct pharmaceutical ads on television each quarter. Complying with the rule is expected to cost drug makers $5.2 million in its first year and $2.4 million in subsequent years.

The regulation, which was initially proposed in October 2018, has faced major opposition from drug manufacturers. On December 17, 2018, the Pharmaceutical Research and Manufacturers of America (PhRMA) submitted comments in response to the then-proposed CMS rule arguing that disclosure of drug prices in television advertisements. PhRMA argued that the list price alone does not convey to patients meaningful information about how much they will actually pay for a medicine. Without providing additional context, such as a patient’s average, estimated, or typical out-of-pocket costs, disclosure of the list price in a direct-to-consumer advertisement could give patients the false impression that they are required to pay the full list price, rather than the copay or coinsurance that the patient is actually responsible for. They also argued that the new rule is unconstitutional on First Amendment grounds. Specifically, they believe that a government mandate on drug makers to disclose only the full list prices directly in their television ads would violate the First Amendment as "compelled speech."

One of the primary goals of this new regulation is to boost competition among drug manufacturers and provide them with incentives to lower their list prices. This transparency will also help gain more specific information for claim negotiations. Greater drug price transparency will also provide new cost containment opportunities for employers who sponsor self-funded health plans and their respective Pharmacy Benefit Managers. The final rule will go into effect 60 days after it is published in the Federal Register.