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Contraceptive Update – Appeals and Intervenors

By: Kelly Dempsey, Esq.

A few weeks ago we reported the two lawsuits that have challenged the contraceptive coverage rule changes issued by the Trump administration. For the purposes of this blog, we will skip a review of the procedural process that allows parties not subject to a lawsuit to appeal an injunction – just note that there is a process that must be followed before a party can intervene.

With that said, an appeal was filed by the Little Sisters of the Poor, Jeanne Jugan Residence (“Little Sisters”) that challenges the preliminary injunction obtained by California and four other states. As a reminder, the injunction blocks the implementation of the interim final rules from October 2017 that broadens the exemptions from the contraceptive mandate. The Little Sisters have also appealed the Pennsylvania case.  

At the same time as the appeals from the Little Sisters, the March for Life Education and Defense Fund has also been granted permission to intervene in the California case and has subsequently filed an appeal.  

Movement through the courts on these types of cases can be slow, but movement is movement. We will continue to watch these cases as the develop and will further address the implications for self-funded plans when action needs to be taken.
 


Clearly it’s (Not) Transparency

By: Ron Peck, Esq.

I’ve been reading articles about the Amazon / JPMorgan / Berkshire Hathaway foray into healthcare, and how this alliance will likely disrupt the market.  The analysts seem to think these powerful entities will “fix” what’s “broken” by collecting data, analyzing the data, and customizing benefits to match user need.  Forgive me, but isn’t that already something self-funded employers can do today?  Indeed, for decades, the ability to collect usage information, and customize your self-funded plan to meet the specific needs of your population has been a benefit of self-funding.  If you’ve not already leveraged this to your advantage, shame on you.  You already have the same tools at your disposal that the likes of Amazon tout as what makes them special, and you’ve done nothing with it?  Ouch.

Another “advantage” these new players in the market supposedly have is the “power of transparency.”  They will publish the prices of medical care, for all to see.  Setting aside the legal and contractual hurdles one must overcome to “publish prices,” and ignoring the fact that there IS NO FIXED PRICE to publish, as the amount charged varies from payer to payer, day to day, depending upon the weather and logo on the card… forgetting all of that and pretending that there actually is a readily available fixed fee for services to “reveal,” why (or how) will this change anything?  If the consumer of healthcare (the patient) is different than the purchaser of healthcare (the plan or insurance carrier), how will knowing the price change the consumer’s behavior?

If I go to a baseball game, and am paying for beer and hot dogs out of my own pocket – if the prices are “transparent” – I may hesitate to drop $20 on solo cup of watered down “beer?” But… if someone else is paying?  Give me the keg!  Until the consumer actually benefits or suffers based on their purchasing decisions, transparency – means – nothing.

Wait … strike that.  Transparency means something… something BAD.  In psychology, we’ve identified a certain human behavior and titled it, “the irrational consumer.”  In a nutshell, this behavior is seen when a person purchases a more expensive option for no other reason than it’s more expensive.  They believe that the higher price must be associated with higher quality.  Additionally, it’s an opportunity to use the purchase as an indicator of status.  Thus, even when an “as good” or “better” option is offered for less, people will purchase the less-good/more-expensive option, either to impress people with their ability to spend, and/or because it must be better – it’s more expensive.

Introduce transparency into healthcare (intending to get patients to be better about spending) and you run the risk of seeing irrational consumerism in healthcare.  People will ignore indicators of quality, and – (horror) – simply seek care from the most expensive provider.

“Clearly” this isn’t what we intended when we all started singing transparency’s praises.  Let’s figure out how to achieve rational pricing in healthcare, and teach consumers what is truly “good” healthcare, before creating plans that force patients to have skin in the game.  Then and only then would transparency make sense to me.


Empowering Plans: P32 - Red Cross Blood Drive Special Episode

Today The Phia Group in partnership with the Red Cross hosted an on-site blood drive.  Join Ron Peck as he interviews members of The Phia Group staff and Red Cross leadership as we discuss the event, personal experiences, and the ever present need for donors.  This moving and important episode will hopefully drive you to action!

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


What do All These New Paid Sick Laws Mean for Employers?

By: Jen McCormick, Esq.

As many states (and cities) are starting to beginning to enact paid sick and/or leave time regulations, employers will need to understand the impact and implications.  The regulations vary by state (and city), but require eligible employers to grant certain employees paid sick time.  Various regulations are in effect already, and some are yet to become effect. Regardless of the effective date of these regulations, it’s clear that employers will need to make changes and consider how the regulations will impact their employer handbooks, plan documents (i.e. continuation of coverage) and stop loss.  Now is the time to get the ball rolling in reviewing these materials so employers can be prepared.


Evolve or Dissolve – Responding to Today’s Tax Law to Save the Health Benefit Plan Industry Tomorrow


You either keep moving, or get out of the way. As changes in the tax law threaten all benefit plans, removing the individual mandate and making enrollment optional, the threat of economic unviability looms. To remain intact, benefit plans must maintain their risk pools, and to maintain their risk pools they must attract low risk lives. Without an individual mandate, how is this achieved? With passion and determination, solutions exist for benefit plans that choose to empower themselves. Those that are unwilling to sacrifice the security of the "status quo" face financial ruin. Instead, today you can take the challenging steps needed to make benefit plans attractive to all participants, and thereby protect plan assets.

Join The Phia Group's Adam Russo, Ron Peck, and Brady Bizarro as they discuss what you need to know about the new law, and how to navigate the treacherous path that lies ahead.

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Empowering Plans: P31 - 3 Scoops of Knowledge

In this episode, Adam, Ron and Brady celebrate the forthcoming change in seasons and warming weather, by each selecting a unique topic that is bugging them, and offering their opinions regarding how we should react. This is one cool sampling of self-funded flavor you won’t want to miss.In this episode, Adam, Ron and Brady celebrate the forthcoming change in seasons and warming weather, by each selecting a unique topic that is bugging them, and offering their opinions regarding how we should react. This is one cool sampling of self-funded flavor you won’t want to miss.In this episode, Adam, Ron and Brady celebrate the forthcoming change in seasons and warming weather, by each selecting a unique topic that is bugging them, and offering their opinions regarding how we should react. This is one cool sampling of self-funded flavor you won’t want to miss.

In this episode, Adam, Ron and Brady celebrate the forthcoming change in seasons and warming weather, by each selecting a unique topic that is bugging them, and offering their opinions regarding how we should react.  This is one cool sampling of self-funded flavor you won’t want to miss.

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


Keeping it Under Wraps: What the Networks Don’t Advertise

It’s 2018, and the importance of cost-containment is at an all-time high. Everywhere you look in the self-funded industry is a vendor trying to help health plans control costs; as can be expected, some methods are effective and maximize savings, whereas others…well…not so much.

Join The Phia Group’s legal team as they discuss wrap networks – both in theory and in practice – and what alternatives might be available to modern self-funded health plans.

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Freedom Blue: Idaho’s Challenge to the ACA Gets Serious

By: Brady Bizarro, Esq.

You may recall that, in our January webinar, we mentioned some of the efforts to roll back the Affordable Care Act (“ACA”) at the federal and state levels. Some states were considering proposing (and some actually did propose) their own individual health insurance mandate. Others, like Massachusetts, were considering applying for waivers to their Medicaid programs to permit them to reduce the number of benefits covered in an effort to save money. None of these actions have been as bold as what it taking place in the state of Idaho.

In early January, Governor Butch Otter signed an executive order that would let health insurers in his state sell new plans to market that do not comply with ACA rules. The order would permit the creation of a separate health insurance marketplace where pre-ACA rules would govern. Specifically, the Department of Insurance (“DOI”) announced that insurers would be able to:

  • Carve out benefits, such as maternity care;
  • Restore co-pays for preventive care, such as colonoscopies;
  • Limit annual claims to $1 million before moving high-cost patients onto the state’s exchange;
  • Deny coverage for pre-existing conditions (though somewhat limited); and
  • Charge individuals more because of a history or high risk of expensive medical conditions.

Despite many protestations from both sides of the political aisle, including analysis by legal experts that this move is likely unconstitutional, the Trump administration has remained silent on these developments so far. On February 14th, the state’s largest insurer, Blue Cross of Idaho, announced that it will sell five “state-based” plans according to the guidance issued by the DOI. These plans, known as “Freedom Blue,” will be much cheaper than ACA plans, as much as 30 to 50 percent less.

What is important to note here is that Idaho is responding (albeit in its own way) to a recognized, serious problem with the current state of the ACA: many lower to middle class residents who earn too much money to qualify for ACA subsidies are dropping out of the market because they cannot afford their premiums. In Idaho, approximately 110,000 have done just that. Combined with the effective repeal of the individual mandate, this spells potential disaster for state exchanges because those healthy individuals who pay full price are leaving sicker individuals reliant on subsidies in the risk pool. This is not a sustainable situation, and Idaho’s bold reaction is an attempt to lower prices to keep its risk pool healthy. It is unclear how the new Secretary of Health and Human Services, Alex Azar, will respond, but finding ways to stabilize risk pools will be extremely important in 2018, or else we should expect more states to flaunt federal rules and test the administration.


Empowering Plans: P30 - Fireside Chat with The President

This is it!  Our first Empowering Plans guest, and it’s a doozy.  In this episode none other than the Self-Insurance Institute of America’s CEO and President, Michael Ferguson, sits down with Adam, Ron and Brady to discuss everything – from past wins and losses, to plans for 2018.  From conflicts within the industry, to threats from beyond… Mike doesn’t hold back, and you – like we – get to enjoy the results.

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


Employer Mandate Enforcement: IRS Turning Up The Heat

By: Patrick Ouellete, Esq.

The Employer Shared Responsibility Provision of the Affordable Care Act (ACA) continues to serve as a polarizing topic among employers and ACA supporters as the Internal Revenue Service (IRS) moves forward with its compliance efforts. Regardless of disposition, however, applicable large employers (ALEs) should take note of IRS enforcement trends to date in 2018.

Employers that have 50 or more full-time equivalent employees must offer coverage that meets minimum value and affordability standards, as defined by the ACA. Those that do not meet these reporting requirements (also called the Employer Mandate) are to be assessed penalties by the IRS.

Each Employer Shared Responsibility Payment (ESRP), or tax penalty, is assessed based on whether an ALE offered minimum essential coverage to at least 95 percent of its full-time employees (and their dependents) and the number of employees who were offered (or not offered) coverage. An ALE member that owes the payment of $2,000 for each full-time employee (after excluding the first 30 full-time employees) would pay $166.67 monthly (i.e. 1/12 of $2,000) per month per full-time employee. The $2,000 amount is indexed for inflation:

  • For calendar year 2015, the adjusted $2,000 amount is $2,080    
  • For calendar year 2016, the adjusted $2,000 amount is $2,160
  • For calendar year 2017, the adjusted $2,000 amount is $2,260

The Congressional Budget Office and Joint Committee on Taxation estimated back in 2014 that penalty payments by employers would total $139 billion from 2015 to 2024. It will bear watching whether those numbers come to fruition. The IRS noted in a November 2017 FAQ that non-compliant ALEs would retroactively be assessed employer shared responsibility payments that have accrued dating back to 2015. Following through with its promise, the IRS has already begun to send out IRS Letter 226J notices to employers to notify them of ESRP liabilities relating to ACA information filings for the 2015 tax year. The IRS provided a FAQ to ALE recipients in January 2018 as to how to understand and respond to these letters, which may be a good start for those unfamiliar with Employer Mandate and ESRP regulations.

These recent IRS sample letters and FAQs reinforce the reality that employer responsibilities related to the ACA’s Employer Mandate do not appear to be going away any time soon. ALEs would be wise to have their proverbial documentation ducks in a row in the instance they receive an IRS Letter 226J notice. Employer groups in the self-funded health insurance industry should to stay up to date on IRS announcements to best understand the agency’s enforcement plans. It is incumbent upon these groups to review its applicable Forms 1094-C and 1095-C documentation and have a potential response strategy in place.