By: Kelly Dempsey, Esq.
A few weeks ago I wrote a blog about Mental Health Parity (MHP) violations and a summary of a recent court case out of the Southern District of New York. In this short amount of time, as predicted, another court has weighed in on the same topic – this time out of the United States Court of Appeals for the Ninth Circuit (the Ninth Circuit is the federal court circuit that oversees the majority of the west coast). The Ninth Circuit heard the case on appeal from the Western District of Washington State.
In Danny P. v. Catholic Health Initiatives, 2018 WL 2709733 (9th Cir. 2018), the employer and self-funded medical plan were sued by a participant for excluding coverage for the participant’s daughter’s room and board at a residential treatment facility. The participant argued that the plan’s coverage for mental health was not in parity with the medical surgical benefits. The trial court sided with the employer, finding that the interim final regulations in effect at the time of the treatment did not prohibit the denial or exclusion in general.
As noted in the prior blog, while the interim final rules were not clear, the final regulations 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.
The Ninth Circuit reversed the trial court decision and held that the MHP statute precludes the plan from providing coverage for room and board for a licensed skilled nursing facility (i.e., medical and surgical treatment) but not at a residential treatment facility (i.e., mental health and substance abuse treatment). The court did acknowledge that the interim final regulations did not provide definitive guidance, but those regulations “strong suggested” a lack of coverage for residential treatment facilities when skilled nursing facilities were covered would be impermissible. The case has been sent back to the trial court for further proceedings consistent with the Ninth Circuit Court of Appeals’ decision – in other words, the Ninth Circuit Court told the trial court they were wrong (that the denial was impermissible under MHP) and to reassess the resolution.
By Ron E. Peck
From June 4th to June 6th we hosted The Phia Group’s Most Valuable Partners at our annual MVP Forum. This year, it took place at Gillette Stadium, located at Patriot Place in Foxboro, Massachusetts – home of the New England Patriots. I personally love the Pats, and have been a huge fan since I was a pre-teen growing up in a suburb of New York; (ask me to explain it someday, and I will do so happily). Likewise, company co-owner and CFO, Mike Branco, is a huge fan. The other co-owner and CEO, Adam Russo, however, is not a fan – and by that, I mean he hates the team. Yet, we can all agree the venue, people, and event were exceptional. Above all else, however, I think the guests are what made the event such a success. Speaking of guests, one guest in particular volunteered to act as a presenter; (in fact, he was the only non-Phia Group speaker). That gentleman is Jeffrey S. Gold, MD, of Gold Direct Care; a direct primary care provider located in Marblehead, MA (http://golddirectcare.com/). Amongst the many interesting things Doctor Gold presented, one thing he mentioned that really struck home for me is that we – as a nation – have an addiction to health insurance. Wow.
I took this to heart, and recently asked a newly hired employee of The Phia Group the following series of questions: “Do you own a car? Yes. Do you get oil changes, and fill the gas tank? Yes. Are you going to have a car accident? Uh… I don’t know. I hope not. Maybe? Do you have auto insurance? Yes. Will auto insurance pay for the oil changes? The gas? No. Will they pay for the accident? Yes – that’s what it’s for. Ok. Do you get a flu shot every year? Yes. A physical; a regular check up? Yes. Do you routinely purchase a prescription drug? Yeah… Are you going to be diagnosed with cancer? Oh man. I hope not! Me too! But… answer the question. I don’t know. Ok; are you going to break a leg? Maybe? I don’t know. What does health insurance pay for? Uh… all of it. If auto insurance only pays for unforeseen, but admittedly costly risk, and lets you pay for the routine, foreseeable stuff… why does health insurance pay for everything? I don’t know. Wow. Good question. Uh huh. And if the gas station charged $50 a gallon, would you still fill your tank, or go to the competition? I’d go elsewhere. That’s nuts. Ok… So why do you pay $50 for a tissue box when you go to a hospital? Uh… I don’t. Health insurance does.”
This exchange encapsulates one of the issues driving the cost of healthcare through the roof. Health insurance isn’t insurance. It’s a community funded piggy bank that we use to pay for everyone’s healthcare – foreseeable and not. Because some people’s care is more costly than others, but they can’t afford to pay their pro-rated share, everyone needs to chip in something extra to pay for those people. Frankly, I morally don’t have an issue with that. I understand the value of everyone pitching in to lift up society in general. Furthermore, that person in need could be you, or someone you love, with the snap of a finger. So I see the need. My issue is that the concept – collecting funds from everyone to care for a society’s need – is by definition, a tax. The fact that we’re forcing that square peg through the round hole of private insurance is foolish. Insurance was invented to shift unforeseen (and unlikely) but extremely costly risk onto an entity willing to gamble that the loss won’t occur, but who can afford the hit in the unlikely scenario that it happens. Forcing a private entity to pay for foreseeable, absolutely certain events – without adequately funding them – is just passing the buck in its worst form.
Furthermore, by removing the consumer of healthcare from the exchange, the person picking the care has no incentive whatsoever to consider price when assessing providers of the good or service. It’s unnatural not to balance cost against benefit. When a young male lion wants to mate with a female, but first he needs to defeat the alpha male of the pride, he has to weigh the cost against the benefit. If that lion had insurance akin to our health insurance, he’d be chasing every female he sees – after all, his insurance will fight the alpha male for him, right? Isn’t that what insurance is for?
For too long insurance has been treated as a shield, blinding people from the cost of their care. I don’t begrudge providers of healthcare their profits; as someone with my own medical needs, and whose family has had its share of health issues, I value our nation’s providers above all others. I think, however, that the system – as currently constituted – does no one any favors. Providers who achieve maximum effectiveness and quality of care should are able to charge less for their services, while those who are routinely wasteful or fixing their mistakes, need to charge more for the same services. As with the competing gas stations, so too here, we need to reward the provider that can do more for less, and the first step in doing that is to shake our addiction to insurance. Until people see how the cost of care ultimately trickles down to their own pocket, they won’t care enough to pick the better options.
By: Erin Hussey, Esq.
Section 1557 under 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 complicated issue is whether treatment for gender identity is a protected class under the category of discrimination based on sex. While Section 1557 does not specifically state that plans subject to it must cover gender transition surgery, the rules do state that the Health and Human Services, Office for Civil Rights (“HHS, OCR”) will investigate any complaints. With that said, the December 31, 2016, U.S. District Court injunction (applicable nationwide) was placed on certain parts of Section 1557, including the prohibitions against discrimination on the basis of gender identity and termination of pregnancy, and that injunction is still in effect. Recent guidance from the Department of Justice (“DOJ”), while Section 1557 is not specifically addressed, appears to hint that the current administration is not going to ask a federal judge to lift the current injunction.
The self-funded plans that are not directly subject to Section 1557, because of the lack of federal funds, must still comply with the ACA. There are no actual benefit mandates for transgender services under the ACA for self-funded plans that are not subject to Section 1557. Therefore, there does not appear to be a direct benefit compliance issue for plans that exclude treatment for gender identity. Regardless of whether there is a benefit compliance issue, there is the potential for a discrimination issue under Title VII of the Civil Rights Act of 1964 (“Title VII”) drawing unwanted attention from the Equal Employment Opportunity Commission (“EEOC”).
Thus, whether a self-funded plan is or is not subject to Section 1557, it would still be a plan’s best practices to cover gender identity services since employers are not shielded from liability under Title VII. Title VII prohibits employment discrimination based on race, color, religion, sex and national origin, and the EEOC’s interpretation of its prohibition on discrimination based on sex, includes discrimination based on gender identity and sexual orientation. The EEOC, as an independent commission, takes the stance that employees who undergo gender reassignment are protected under Title VII. For example, the EEOC filed an amicus brief on August 22, 2016, arguing that an individual’s gender dysphoria made gender reassignment surgery “medically necessary” and that the failure to cover this surgery was a sex discrimination violation of Title VII. The case for which this amicus brief was filed, involved a self-funded health plan that had a sex transformation surgery exclusion.
The above-noted case should caution Plan Administrators when excluding treatment for gender identity or dysphoria, even if the plan is not subject to Section 1557, because the EEOC may still have a discrimination claim under Title VII.
In a financial climate where saving money has to be made a top priority, so many entities within the insurance industry have fallen victim to someone trying to shift blame onto them. Regardless of fault, it’s in everyone’s best interests to work together to overcome issues rather than point fingers – but it’s not always that simple.
Join The Phia Group’s legal team as they discuss some situations where fingers have been pointed, how those situations were resolved, and how you can help insulate yourself from similar circumstances.
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In this episode, our hosts discuss the recently concluded Phia Group Most-Valuable-Partners or “MVP” forum; an event that took place June 4th to the 6th at Gillette Stadium, home of the New England Patriots. From the subject matter, to the client feedback… experiences, to comical coincidences… For those who attended, and those who wish they could have been there… This episode of Empowering Plans is not to be missed.
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By: Brady Bizarro, Esq.
Well, here we have it: the second and third states to enact individual health insurance mandates modeled after the federal mandate enshrined in the Affordable Care Act (“ACA”). While many states had been considering this kind of move (i.e. Maryland, California, Connecticut), New Jersey and Vermont grew tired of waiting around. These states have now openly defied the Trump Administration’s effective repeal of the ACA’s individual mandate at the end of 2017. They join Massachusetts, which was the first state to require its residents to purchase health insurance, and which served as the blueprint for the ACA.
Starting in 2019, New Jersey will require all of its nine million residents to obtain health insurance coverage. If they fail to do so, they will be subject to a penalty of $695, or 2.5% of a person’s income, whichever is greater (this is the same penalty as the federal mandate). The penalty amounts collected will help subsidize the cost of care for New Jersey’s seniors and chronically ill. The specifics of Vermont’s individual mandate have not been ironed out just yet, but the governor has commissioned a working group to work out the details in 2019. At this point, residents will have until 2020 to obtain health insurance coverage in Vermont.
These states are acting because they believe they will experience a significant drop in enrollment. That drop will likely drive up the cost of care for everyone due to adverse selection and the so-called “death spiral,” which leaves large numbers of very sick individuals isolated in risk pools. Naturally, opponents of state individual insurance mandates point out that imposing mandates does not lead to lower healthcare costs. Instead, they argue that mandates simply force individuals to buy plans that they cannot afford and often cannot use.
In our industry, we know all too well that mandates alone do not lead to cost containment. That is why The Phia Group utilizes multiple, results-driven approaches to cost-containment. As with any policy initiative, though, having to follow different rules based on the state in which you live is not likely to yield positive results when dealing with an industry as large and as ubiquitous as the health insurance industry. We’ll be watching to see which states follow New Jersey and Vermont in the coming months.
Click here to download the 2018 Phia Forum Slide Deck.
By: Jon Jablon, Esq.
You may have heard about our new Phia Certification program, through which The Phia Group requires all employees to be “certified” to the company’s satisfaction. Certification is obtained by watching, reading, and listening to a series of training materials and then taking a series of tests to confirm the employee’s understanding of our industry and all aspects of The Phia Group’s operations.
One particularly noteworthy question is:
Which of the following is the most accurate?
As you may have surmised, the answer is option B, which is essentially an “all of the above” type of answer. This is especially noteworthy because we find that folks in our industry often think of “gaps” as occurring only between the plan document and stop-loss policy, while in practice there are lots of other gaps that can cause lots of unforeseen problems for health plans.
A perfect example – and one that we deal with quite frequently – is when there is a gap between the plan document and a network contract. This can be one the most problematic of all gaps, since it can come out of nowhere. The issue arises like this:
A plan incurs an in-network claim, billed at $50,000. The SPD provides the plan the responsibility to audit all claims, and an audit reveals that the appropriate payable rate (the plan’s U&C rate) for this claim is $30,000. Meanwhile, the network contract provides a 10% discount off billed charges for this particular claim – resulting in the plan paying $30,000 based on the SPD, but owing $45,000 as the network rate. This is a very common scenario and not one that can be solved quite so easily; even if the plan says “oh right – the network contract! We’ll pay the network rate to avoid a fight with the network,” the dilemma may not be over, since stop-loss presumably has underwritten coverage based on the assumption that the plan’s U&C rate will be paid, resulting in stop-loss possibly denying the $15,000 paid in excess of the plan’s U&C rate. Even though there’s a network contract and the plan may have no choice but to pay it, there’s always the chance that the stop-loss policy will define its payment on other terms.
Moral of the story? Gaps in coverage can arise between the plan document and any other document – including network contracts, ASAs, stop-loss policies, employee handbooks, PBM agreements, vendor agreements, and more. Check your contracts, and make sure your SPD aligns with all of them! (Email PGCReferral@phiagroup.com to learn more.)
In this episode of Empowering Plans, Adam, Ron, and Brady discuss their recent trip to Washington, D.C. in which they took part in SIIA’s “Fly-In” event, where SIIA members met with their elected representatives to discuss self-insurance/captive insurance issues. It was a great success, as they were able to promote the interests of self-funded health plans and their TPAs as well as advocate for a Senate version of the Self-Insurance Protection Act.
In this episode, Adam, Ron, and Brady interview David Contorno, President of Lake Normal Benefits. They discuss emerging trends in the industry; from reference-based pricing to direct primary care. They also address the incentive problem and how HSAs are harming the health insurance industry.