Phia Group Media

rss

Phia Group Media


The Phia Group's 4th Quarter 2017 Newsletter

On October 13, 2017
Phia Group Newsletter 2nd Quarter

Phone: 781-535-5600 | www.phiagroup.com


The Book of Russo:
From the Desk of the CEO

The fall season is here and that means cooler weather, shorter days, changing leaves… and lots of travel for those of us in the self funding space.  The airport terminal is starting to get to me, but as we all know, once October ends, we have a few months at home before the spring events.   But that doesn't mean that it's not busy; in fact, with the amount of new business that so many of you are bringing to the table, it's busier than ever here at The Phia Group. 

We are talking about new plan documents to write, new stop loss policies to assess, more data to scrub for recovery opportunities, and more claims to review.  But all of this growth comes with potential land mines. We cannot take our eyes off the ball and must continue to innovate while being cautious of not overstepping.  There are so many ways we can empower our plans but we need to ensure that we do it right.

Speaking of right, I am excited about the release of our flagship template.  I spoke to our clients and one thing you wanted was our full template plan document, but with the variables pre-selected… a best practices plan document that had our chosen provisions in place already, saving you 75% of your time filling out long checklists.  Consider it done!  That’s just one example of the news we have to share.  So, without further ado, enjoy the season and happy reading.

Reducing Questionnaires:

Thanks to evolving technology and new resources, The Phia Group can identify subrogation opportunities without sending questionnaires to plan participants.  These recent upgrades to The Phia System™ and advancements in our investigational techniques lead to faster identification of third party liability claims and quicker engagement by The Phia Group’s team, without communicating with the plan participants – identifying opportunities more often, while reducing the volume of accident questionnaires we send to plan participants.  While accident questionnaires are still a useful tool – they are no longer the only tool.  That’s why I am pleased to provide you with the ability to decrease or cease the use of accident questionnaires.  To discuss these new customization capabilities, or our other services, please contact Garrick Hunt at ghunt@phiagroup.com or call (781) 535-5644.



Service Focus of the Quarter: The Phia Group Flagship Template
New Services and Offerings
Phia Group Case Study
Phia Fit to Print
From the Blogosphere
Webinars
Podcasts
The Phia Group’s 2017 Charity
The Stacks
Phia’s Speaking Events
Employee of the Quarter
Phia News


Service Focus of the Quarter: The Phia Group Flagship Template

Our plan document can now be yours in a fraction of the time. Taking the guesswork out of best practices and utilizing optimal provisions, The Phia Group Flagship Template offers an unrivaled plan document, with time and cost effectiveness in mind.

Let us make your life easier and your plan document drafting experience more accurate. With minimal time or monetary investment, you can now take advantage of the industry's most thorough yet efficient plan document production tool. Despite having 75% fewer questions than any other customizable plan document template, The Phia Group Flagship Template is both compliant with federal law, as well as innovative in its use of cost-containment tools and participant incentivizing provisions.

It should therefore come as no surprise that following in-depth review and assessment, The Phia Group Flagship Template is supported by many leading stop loss carriers.

Contact Garrick Hunt at ghunt@phiagroup.com or 781-535-5644 to learn more about how The Phia Flagship Template can help you.


New Services and Offerings:

New Phia Tableau Reporting Portal Tool now available:

At The Phia Group, we value transparency and customer satisfaction above all else. In recognition of those priorities, we routinely improve our client facing reports and reporting capabilities. To that end, we are proud to announce that we will be further expanding our reporting service features. Through the use of Tableau (https://www.tableau.com/), reports will now offer a new level of customization, enabling you and The Phia Group to collaborate like never before. These features are not only available to our Subrogation and Third Party Claim Recovery clients, but also customers utilizing any of our Provider Relations services (such as Phia Unwrapped, Balance Bill Support, and Claim Negotiation and Signoff).

For more information regarding the new Phia Tableau Reporting Tool and pricing, please contact Garrick Hunt at ghunt@phiagroup.com or call him at (781) 535-5644


Cutting back on Questionnaires:

It is The Phia Group’s mission to reduce the cost of healthcare through the use of innovative legal techniques and the most sophisticated technology. In keeping with this goal The Phia Group is always taking steps to improve all of our services, including our earliest: subrogation. Recent upgrades to The Phia System™ and advancements in our investigational techniques have led to faster identification of third party liability claims and quicker engagement by The Phia Group’s team, without relying upon or otherwise communicating with the plan participants. These new resources allow us to identify opportunities more often and more effectively, while at the same time reducing the volume of accident questionnaires we send to plan participants. While accident questionnaires are still a useful tool when investigating and collecting accident details – they are no longer the only tool. As such, we are pleased to now provide all of our subrogation clients with the ability to increase, decrease, or cease the use of plan participant accident questionnaires. Clients can also opt to utilize their own letters, or have the employer communicate directly with plan participants.

The Phia Group is committed to ensuring you and your clients are provided with nothing but the highest quality service, best-in-class performance, and a member first approach. That is why we are continuously improving our services to provide the best performance (and most options) possible.

To discuss these new customization capabilities, or our other services, please contact Garrick Hunt at
ghunt@phiagroup.com or call (781) 535-5644.

 


Phia Group Case Study:

The Phia Group was presented with a case where a self-funded health plan paid a claim based on a network rate; the billed charges were $211,500, and the network rate was 51% of billed charges – netting payment of $107,865. When submitted to stop-loss the group’s carrier denied a portion of the claim paid, citing the stop-loss policy exclusion of all amounts in excess of Usual and Customary amounts, as determined by the carrier.

The kicker: that was all the stop-loss policy’s exclusion said - Usual and Customary was not defined anywhere within the policy.

The carrier was of the opinion that 150% of the Medicare rate was Usual and Customary, and upon that basis allowed only $22,000 – denying reimbursement of nearly $87,000 that the Plan paid pursuant to its PPO contract. The group attempted to appeal the denial, but the carrier stood firm; the group was all but ready to give up the fight, when the group changed brokers and the new broker’s first order of business was to consult The Phia Group.

The Phia Group got in touch with the stop-loss carrier on the group’s behalf and attempted to explain the group’s position. The existence of the PPO contract and required payment amount combined with the carrier’s lack of explicit, supporting policy language in the stop-loss policy (along with other arguments – legal and common sense) formed the basis of our position. After many rounds of discussions, the carrier agreed to reimburse the entire claim paid except for $2,073 in “ineligible” charges.

The plan’s liability for the denied stop-loss claim was $87,000, and The Phia Group’s intervention helped save $85,000.


Fiduciary Burden of the Quarter:

Traditionally, we have discussed fiduciary burdens in terms of companies that perform “plan” functions– such as repricing claims or administering appeals – but this quarter has seen certain instances in which those that perform “settlor” functions (most prominently a broker placing stop-loss or network coverage) have encountered some fiduciary issues. For example: a recent dispute between a plan, its broker, a network administrator, and stop-loss carrier in which the broker apparently placed inadequate or insufficient stop-loss coverage to support a network’s standard policies. The issue is that the network contract required payment of claims that the carrier did not cover; caught in the cross-fire is the broker, who placed this business, and who allegedly should have been aware of the potential discrepancy.

The allegation? That the broker simply provided bad guidance regarding the choice of which network/carrier combination the plan should use. It is a very easy mistake to make and one that can potentially be made by anyone placing business. Our advice to brokers, TPAs, and other advisors, is to make sure you are as diligent as possible when making decisions for, or even making suggestions to, your clients. Self-funded plan sponsors and plan administrators rely heavily on their advisors; when they are given questionable advice, the backlash can be huge – and it can be unexpected.

Our popular services: plan document review, stop loss policy review, and Gap-Free Analysis  (which compares the stop-loss policy to a plan document, network contract, or other materials), can help identify issues and potential “gaps” in coverage before they happen. This can mean the difference between spending $120,000 on a new Maserati, and spending $120,000 to indemnify your client from an unexpected stop-loss denial.

Back to top ^


Phia Fit to Print:

• Money Inc. – “Affordable” Health Insurance Is Not “Affordable” Health Care – May 11, 2017

• Boston Voyager – Meet Ron E. Peck of The Phia Group in Braintree – August 7, 2017

• Money Inc. – All Against One and One Not for All: A Case Against a Single Payer System – August 21, 2017

• Bloomberg – Employers Taking Action to Control Health-Care Costs – September 5, 2017

• California Broker Magazine – Even as “Repeal and Replace” Falters Self-funding Remains Strong September 7, 2017

• Self-Insurers Publishing Corp. – State-mandated Continuation of Coverage and ERISA Preemption: What Self-funded Employers Need to Know – August 4, 2017

• Self-Insurers Publishing Corp. – Taking Health Care International - The Growing Trends of Importing Care and Exporting Patients – July 3, 2017



Back to top ^


From the Blogosphere:

Stop Loss and My Infinite Sadness. You get what you pay for.

Uncertainty Prevails in the Health Care Debate. The dog days of summer have come and gone.

Reverse Medical Tourism. US patients are seeking services abroad to obtain services and care at more affordable rates.

Spinning the Web of the Plan Document. No, this isn’t about spiders.

 

To stay up to date on other industry news, please visit our blog.



Back to top ^


Webinars

Best Practices for Today's Plan Documents

On October 17, 2017, The Phia Group will present “Best Practices for Today's Plan Documents,” where our legal team will discuss best and worst plan document practices, provide some creative ideas for plan formation, and suggest some concepts to help perfect plan document drafting.

Click HERE to Register!

On September 21, 2017, The Phia Group presented “It’s Time To Renew – Revisiting Stop Loss Trends,” where we discussed understanding procedures preemptively, reviewing a plan document side-by-side with the stop loss policy, and agreeing upon language interpretations.

On August 22, 2017, The Phia Group presented “A True Impact on the Bottom Line – Identifying Current Issues, Implementing Solutions & Seeing Results,” where we discussed the biggest issues impacting the health benefits industry today.

On July 13, 2017, The Phia Group presented “Consulting Headlines – The Hottest Topics in Benefit Plan Administration,” where our legal team discussed how laws are changing, regulations are shifting, and benefit plans are scrambling to keep up.



Back to top ^


Podcasts:

On September 11, 2017, The Phia Group presented “Cutting Out Conflict,” where our legal team explained what plan administrators can do to cut out conflict and tie up loose ends before they suffer a costly loss.

On August 21, 2017, The Phia Group presented “In Reference to reference Based Pricing,” where Adam Russo and Ron Peck picked apart the method for containing costs, identified the pros and cons of an “RBP” plan, and discussed options to customize such a program.

On August 11, 2017, The Phia Group presented “Stopping the Bleeding,” where The Phia Group’s CEO, Adam Russo and Attorney Brady Bizarro interviewed Garrick Hunt, Phia’s Sales Executive.

On August 7, 2017, The Phia Group presented “Repeal & Replace Fails: What’s Next,” where The Phia Group's CEO, Adam Russo, Sr. VP, Ron Peck, and Attorney Brady Bizarro discussed the dramatic events on Capitol Hill and the shocking failure of Senate Republicans to repeal and replace Obamacare.

On July 17, 2017, The Phia Group presented “Your Friendly Neighborhood Provider,” where Ron Peck, Jon Jablon and Andrew Silverio shared stories and examples of providers working with payers to preserve the private employer based group health plan industry.

On July 10, 2017, The Phia Group presented “The Cost of Care,” where The Phia Group's CEO, Adam Russo and Sr. VP, Ron Peck, interviewed Attorney Jon Jablon - Director of Provider Relations

Be sure to check out all of our latest podcasts!

 



Back to top ^


The Phia Group’s 2017 Charity

At The Phia Group, we value our community and everyone in it. As we grow and shape our company, we hope to do the same for the people around us.

The Phia Group's 2017 charity is the Boys & Girls Club of Brockton.

The mission of The Boys & Girls Club is to nurture strong minds, healthy bodies, and community spirit through youth-driven quality programming in a safe and fun environment.

The Boys & Girls Club of Brockton (BGCB) was founded in 1990 to create a positive place for the youth of Brockton, Massachusetts. It immediately met a need in the community; in the first year alone, 500 youths, ages 8-18, signed up as club members. In the 25 years since, the club has expanded its scope exponentially by offering a mix of Boys & Girls Clubs of America (BGCA) nationally developed programs and activities unique to this club.

Since their founding, more than 20,000 Brockton youth have been welcomed through their doors. Currently, they serve more than 1,000 boys and girls ages 5-18 annually through academic year and summertime programming.

On Friday, August 24th, employees of The Phia Group participated in the annual volunteer day at The Boys & Girls club of Brockton. Employees of The Phia Group hosted a number of activities that all of the children truly enjoyed. This year, The Phia Group collected and donated $4,500 to help keep this program running and enjoyable for years to come!  


The Phia Group invites its staff to donate various items for the benefit of The Boys and Girls Club of Brockton. For more information or to get involved, visit www.bgcbrockton.org.



Back to top ^


The Stacks

Aid-in-dying Laws and the Implications for Self-Funded Plans

By: Maribel E. McLaughlin, Esq. – September 2017 - Self-Insurers Publishing Corp.


Two years ago, a woman close to my mother was diagnosed with an aggressive form of brain cancer. Along with her two daughters, she went through the various treatment options presented to her and determined that she was going to try all of them. She wanted to put her best foot forward for her daughters and her granddaughter, and she found the strength to fight the cancer with every cell in her body.

Click here to read the rest of this article


State-mandated Continuation of Coverage and ERISA Preemption: What Self-funded Employers Need to Know

By: Brady Bizarro, Esq. – August 2017 - Self-Insurers Publishing Corp.

According to one prominent health law attorney, “Although in its text ‘hospital’ appears only once and ‘physician’ not all, ERISA may be the most important law [prior to the Affordable Care Act] affecting health care in the United States.” William Sage, “Health Law 2000”: The Legal System and the Changing Health Care Market, 15(3) Health Aff. 9 (Aug. 1996). Understanding the intricacies of the Employee Retirement Income Security Act of 1973 (“ERISA”) and its preemption clause can be a challenge for even the most assiduous attorney. The statute supersedes any and all state laws insofar as they “relate to” any employee benefit plan. It also contains a “savings clause” which preserves the state’s traditional role of regulating insurance. That clause is then qualified by the “deemer clause,” which acts as a kind of escape hatch through the savings clause. For employers, that escape hatch is key because it allows them to avoid state insurance regulations by self-funding their health plans rather than by purchasing health insurance. Increasingly, however, states are testing the limits of preemption by passing leave laws which mandate that employers continue health insurance coverage for eligible employees out on leave.

Click here to read the rest of this article.


Taking Health Care International – The Growing Trends of Importing Care and Exporting Patients

By: Andrew Silverio, Esq. – July 2017 – Self-Insurers Publishing Corp.


Esteemed physicist Richard Feynman is remembered by many for the phrase “If you think you understand quantum mechanics, you don’t understand quantum mechanics.” This sentiment rings true for the continually evolving landscape of our healthcare system as well, and the problems facing all of us, particularly as insurers, employers, and patients. For those of us within the healthcare or health risk industries, the more we learn about the problems we face and what is causing them, the more we realize just how complex the landscape is and what an impossible task it would be for any single solution to reel in the cost of care.

Click here to read the rest of this article.

To stay up to date on other industry news, please visit our blog.

Back to top ^


Phia’s Q4 Speaking Events:

Phia’s Speaking Engagements:

• 7/12/17 – Montana Captive Conference – Whitefish, MT “High Performing Self-Insured Health Plans – The Key to Successful Stop-loss Captive Programs”

• 8/9/17 – NAHU Region 1 Meeting – Stamford, CT “The Best gets Better: Getting the Most out of Your Self-Funded Plans”

• 9/19/17 – Custom Design Benefits – Cincinnati, OH “The Top 10 Innovations in Self-Funding”

• 9/27/17 – TABA’s 2017 Fall Conference and Membership Meeting - The Woodlands, TX “Gap Traps: Avoiding Variances between the Employee Handbook and the Plan Document”

• 10/3/17 – NHAHU – Bedford, NH “Top 10 Do’s & Don’ts of Self-Funding”

• 10/4/17 – Hewitt Coleman Broker Meeting – Greenville, SC “The Future of Self-Funding & Reference Based Pricing”

• 10/16/17 – Captivated Health Membership Meeting – Woburn, MA “Empower & Engage Through Your Handbook”

Ron Peck’s 2017 Speaking Engagements:

• 9/19/17 – CIC-DC 2017 Annual Conference – Washington, D.C. “Cost Containment Strategies”

Tim Callender’s 2017 Speaking Engagements:
• 7/17/17 – Health Care Administrator’s Association TPA Summit – St. Louis, MO “Conference Emcee”

• 8/17/17 – FMMA 2017 Annual Conference – Oklahoma City, OK “Critical Strategies in Self-Funding to Promote the Free Market”

• 9/21/17 – Metro Detroit Association of Health Underwriters, Annual Conference – Troy, MI “The Real Causes of High Healthcare Costs & True Cost-Containment Strategies to Combat Cost.”

• 10/10/17 – SIIA, National Educational Conference & Expo – Phoenix, AZ “Through the Looking Glass – a Non-Vendor Take on Reference Based Pricing”

Brady Bizarro's 2017 Speaking Engagements:
• 7/18/17 – HCAA TPA Summit 2017 – St. Louis, MO “Ethics”

• 8/9/17 – TPAC 2017 Conference – Philadelphia, PA “Most Common Mistakes Employers Make in Their Plan Documents.”

• 9/26/17 – TABA’s 2017 Fall Conference and Membership Meeting - The Woodlands, TX “Gap Traps: Avoiding Variances between the Employee Handbook and the Plan Document”

 

Back to top ^


Get to Know Our Employee of the Quarter:
Kerri Sherman

Congratulations to Kerri Sherman, The Phia Group’s Q3 2017 Employee of the Quarter!

“Kerri consistently goes above and beyond to help all of us when help is needed. Kerri is always around to provide assistance and help out wherever she can! Whether it be training, or making sure we have all the tools we need to complete our work. She has been in the training room at times working with new people, but always keeps us informed of where she will be and what she is doing, so if any issues arise, we know how to proceed. We think she is a fantastic multi-tasker and is always supportive. She always provides quick feedback if something requires immediate attention and always provides detailed explanations of everything that needs to be done in order to solve the issue. We have appreciated all the hard work she has done to help me keep my case load at bay especially while we were preparing to go on vacation. We think she has been phenomenal and we are happy to have her on our team. She is reasonable and fair, while maintaining professionalism.”



Congratulations Kerri and thank you for your many current and future contributions.


Back to top ^


Phia News

    Catherine Dowie’s Latest Win

    We would like to congratulate Catherine Dowie on her latest win! Phia’s own Catherine Dowie won a $25,000 prize in the Philip Shawe Scholarship Competition, tying for second place in a pool of 240 applicants who submitted briefs to the crowd sourcing contest. We are proud to have you on our team. Get all of the details in recent article published by Suffolk University Law School.


    Job Opportunities:

    • Customer Service Representative

    • Claims Specialist

    • Medical Bill Negotiator

    • Health Benefit Plan Consultant I

    • Health Benefit Plan Administration – Attorney II

    • Product Development Manager

    See the latest job opportunities, here: https://www.phiagroup.com/About-Us/Careers

     

    Babies

    • Jamie Johnson gave birth to Miles and Kaia on 7/10/2017


    Promotions

    • Ulyana Bevilacqua was promoted from Consultant to Supervisor, PGC

    • Elizabeth Pels was promoted from Legal Assistant to Claim Recovery Specialist

    • Joseph Bacon was promoted from Legal Assistant to Claim Recovery Specialist


    • Vourneen O’Donovan was promoted from Legal Assistant to Claim Recovery Specialist

    • Cheyenne Fonseca was promoted from Legal Assistant to Claim Recovery Specialist

    New Hires

    • Joseph Bacon was hired as a Legal Assistant

    • Naveen Omkar was hired as an IT Technologist

    • Trevor Schramn was hired as a Sales and Accounts Coordinator

    • Jeff Booth was hired as a Training and Development Manager

    • Jen Montalto was hired as a Case Investigator/Stop Loss

    • Mike Mears was hired as a Claim Analyst

    • Gordon Glenn was hired as an IT Technologist

    • Olesya Avramenko was hired as a Consultant I


    • Michelle Rowland was hired as a Consultant I

    • Alexandra Simboski was hired as a Consultant I

    • Patrick Ouellette was hired as a Juris Doctor

    • Andrew Fine was hired as an Intake Specialist

    • Erin Hussey was hired as an Attorney I

    • Catina Griffiths was hired as a Case Investigator

    • Samad Khan was hired as a Contract Administrator


    • Zackery McLaren was hired as a Case Investigator

    • Kaley Dennison was hired as a Case Investigator

    • Ekta Gupta was hired as an ETL Specialist

    • Kathy baker was hired as a Claim Recovery Specialist IV-WC

    • Annie Heskin was hired as a Talent Acquisition Specialist

    Fun at Phia:

    Solar Eclipse of 2017




    Rock Star Recognition:

    The Phia Group was recently awarded the “Rock Stars of Health GOLD Award” during The Rock Stars of Health Summit held in Missoula, Montana on September 29, 2017.




    Back to top ^


info@phiagroup.com
781-535-5600

The Stacks - 4th Quarter 2017

On October 10, 2017

Aid-in-dying laws and the Implications for Self-Funded Plans
By: Maribel E. McLaughlin, Esq.

Two years ago, a woman close to my mother was diagnosed with an aggressive form of brain cancer. Along with her two daughters, she went through the various treatment options presented to her and determined that she was going to try all of them.  She wanted to put her best foot forward for her daughters and her granddaughter, and she found the strength to fight the cancer with every cell in her body.  After sixteen months of treatment, losing her hair, the inability to eat properly, and her body being riddled with the toxins that were used to fight the cancer, she decided that she wanted to end her life; her way, on her own terms.  She had a lengthy discussion with her daughters about her choice, and as sad as they were that they would soon be losing their mother, they understood that their mother wanted to live every moment to its fullest, but, when she was ready, she would make the decision to die on her own terms.  One particularly difficult night, she pushed herself to take one last walk through the Newport Cliff Walk with her daughters and granddaughter, enjoyed her last Del’s lemonade, savored the final clam chowder she was going to have, and decided that this was her chance to end her life on a high note.  That night, she took a higher dose of the medicine that she had been taking for the last sixteen months, and never woke up.  She purposely overdosed; or, as many would call it, she committed suicide.

D.C.’s New Death with Dignity Act
The Death with Dignity Act went into effect on February 18, 2017 in Washington D.C., and last month, doctors were able to begin the process of prescribing life-ending drugs to terminally ill patients; adding the District to six states that currently authorize that practice.  

The D.C. Health Department launched a website where physicians can register to participate in the “Death with Dignity” program, where doctors, pharmacists, and patients can learn about the law’s requirements and patients and doctors can download required forms.  Patients must be older than eighteen with a prognosis of less than six months to live in order to be eligible. In addition, they must have made two requests at least fifteen days apart for life-ending medications. They must ingest the drugs themselves, and two witnesses must attest that the patient is making the decision voluntarily.

Affordable Cara Act & Physician-Assisted Suicide
According to Section 1553 of the Affordable Care Act (“ACA”) , a health plan may not discriminate against an individual or institutional healthcare entity because the entity does not provide any healthcare item or service that causes, or assists in causing, the death of any individual, such as by assisted suicide, euthanasia, or mercy killing.  Put another way, if terminally ill patient requests that his doctor help him end his life, and the doctor refuses for moral or other reasons, that doctor is protected against discrimination by federal law.  This protects the doctor that may be targeted by insurance company because of their refusal to help patients end their lives.

California’s Election of Death of Dignity Law
In California, one of the six states, the law does not make it easy for a patient to elect death with dignity; the patient must be terminally ill to request a doctor’s prescription for medications intended to end their lives peacefully.  The End of Life Option Act creates a long list of administrative obstacles that both patients and doctors must overcome. At the time of the law’s enactment, it became the fifth state to implement an aid-in-dying law, and it is currently also the most stringent.  Patients must get a prescription from a participating physician.  This is not as easy as it may seem A coordinator may connect the patient with a physician that participates; but, if the patient is a U.S. military veteran that receives healthcare from the U.S. Department of Veterans Affairs, that patient will not be able to utilize this state law since federal law prohibits the use of federal funds for this purpose.  Additionally, the forty-eight Catholic and Catholic-affiliated hospitals located in California will not provide patients with the option to end their lives.   

Cost of Death vs. Cost of Healthcare
Another obstacle that patients may come across is the cost of the drugs involved with the assisted suicide practice.  The patient’s health plan may not cover them - and the states that have allowed the practice of assisted suicide do not require health insurers to cover the medications.  Under The Employee Retirement Income Security Act of 1974 (ERISA), there are minimum standards for voluntarily established health plans in private industry to provide protection for individuals in these plans; plans must provide participants with information about plan features and funding, and furnish information regularly and free of charge.  Nothing about the Acts requires that a self-funded plan under ERISA, cover the cost of the death-with-dignity practice. Luckily under ERISA, a Plan still has the liberty to create their health benefits. A health plan, when drafting their Plan Document, can choose to either allow this practice, or not. The ACA prohibits the discrimination of a provider that does not provide assisted suicide services.  The Act does not require health plans to allow the practice. The option is left to the Plan.

Healthcare costs in the United States have risen astronomically over the past decade and many people fear that insurance companies may look to assisted suicide as a way for a health plan to save money of expensive medical care.  One report concluded that it would save approximately $627 million dollars in 1995.   Some, who oppose assisted suicide, argue that insurance companies may begin to limit expensive procedures for patients who are suffering from terminal illnesses such as cancer, AIDS, and multiple sclerosis.  Others argue that even though the aggregate savings is small, the impact on an individual company or an individual family would be a powerful enough financial incentive to encourage the practice even where it was not intended.   Many fear that patients would be more likely to consider physician-assisted suicide as a better alternative with the added bonus of saving their family money and the burden of prolonged, expensive care. Insurance companies may try to exclude life-saving or life-extending drugs and pressure people into thinking about the practice of physician assisted suicide.

Collins and the Suicide Exclusion
Health plans are permitted to include a suicide exclusion that would enable the plan administrator to deny claims associated with the suicide. In Collins v. Unum Life Insurance Co., 185 F. Supp.3d 860 (2016),  the Supreme Court held that “Unum reasonably interpreted the suicide exclusion to encompass insane suicide, [and that] Mr. Collins' sanity at death has no bearing on the outcome.”  The issue in this case involved a state law which stated that a suicide exclusion would be only be valid if liability was limited to an insured “who, whether sane or insane, dies by his own act.”  Former Navy SEAL David M. Collins served this country for seventeen years, during which he was deployed to Iraq, Afghanistan, and Kuwait. He served in dangerous and stressful situations, many of which exposed him to enemy gunfire and blasts from mortar fire.   Despite seeking treatment, Mr. Collins was found dead in the driver's seat of his car with a gunshot wound to his head on March 12, 2014. The death was ruled a suicide.  Prior to his death, Mr. Collins had been working for Blackbird Technologies, where he participated in an employee benefit plan that provided basic and supplemental life insurance through group policies funded and administered by Unum Life Insurance Company of America.  When Mr. Collins died, his widow, Jennifer Mullen Collins, applied for benefits under both policies. Unum granted benefits under the basic policy, but denied benefits under the supplemental policy's suicide exclusion.  In addition, the Court held that it found “substantial evidence in the administrative record to support Unum's conclusion that the suicide exclusion applied.”

Option to Elect or Exclude Suicide
Plan administrators can take the position of either excluding assisted-suicide claims or paying them.  They can allow the practice, and give the power to the patient to make the decision for themselves, and ultimately save the Plan money for care that the patient would have ultimately not wanted; or, they can exclude the practice and have the peace of mind that everything that should have been covered was covered.  Whether you’re a broker, a health plan sponsor, third-party administrator, or reinsurer, this is something that should not only spike an interest, but also it should worry you if you have health plans in the states that allow physician assisted suicide practices.  Specialists in plan document drafting can provide assistance in reviewing your plan document and ensuring that the plan document addresses this issue specifically.
_________________________________________
1 HHS Office of the Secretary & Office for Civil Rights (OCR), Section 1553 - Refusal to provide assisted suicide services HHS.gov (2015), https://www.hhs.gov/civil-rights/for-individuals/refusal-provide-assisted-suicide-services/index.html (last visited Aug 9, 2017).
2 42 U.S. Code § 18113 (2010)
3 AB-15 End of life.(2015-2016), Bill Text - ABX2-15 End of life. (2015), https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201520162AB15 (last visited Aug 9, 2017).
4 Id.
5 Emily Bazar, Aid-In-Dying: Not So Easy Kaiser Health News (2017), http://khn.org/news/aid-in-dying-not-so-easy/ (last visited Aug 9, 2017).
6 29 U.S.C. 18 § 1001
7 Physician Assisted Suicide and Health Care Costs, Low Fat Diet Plan, http://lowfatdietplan.com/weight-loss-routine/end-of-life-care/physician-assisted-suicide-and-health-care-costs (last visited Aug 9, 2017).
8 Id
9 Id.
10 Collins v. Unum Life Insurance Co., 185 F. Supp.3d 860 (2016)
11 Id. at 882
12 Id. at 871
13 Id. at 863
14 Id. at 864
15 Id. at 863
16 Id. at 865
17 Id. at 880
________________________________________________________________________________________________________________________
State-mandated Continuation of Coverage and ERISA Preemption: What Self-funded Employers Need to Know
By: Brady Bizarro, Esq.

According to one prominent health law attorney, “Although in its text ‘hospital’ appears only once and ‘physician’ not all, ERISA may be the most important law [prior to the Affordable Care Act] affecting health care in the United States.” William Sage, “Health Law 2000”: The Legal System and the Changing Health Care Market, 15(3) Health Aff. 9 (Aug. 1996). Understanding the intricacies of the Employee Retirement Income Security Act of 1973 (“ERISA”) and its preemption clause can be a challenge for even the most assiduous attorney. The statute supersedes any and all state laws insofar as they “relate to” any employee benefit plan. It also contains a “savings clause” which preserves the state’s traditional role of regulating insurance. That clause is then qualified by the “deemer clause,” which acts as a kind of escape hatch through the savings clause. For employers, that escape hatch is key because it allows them to avoid state insurance regulations by self-funding their health plans rather than by purchasing health insurance. Increasingly, however, states are testing the limits of preemption by passing leave laws which mandate that employers continue health insurance coverage for eligible employees out on leave.

Perhaps the best known leave law is the federal Family and Medical Leave Act of 1993 (“FMLA”). The statute, like most other federal laws, applies regardless of the source of insurance. It requires employers to provide twelve weeks of unpaid, job-protected leave for an employee’s own serious health condition, for the birth or adoption of a child, or to care for a spouse, parent, or child with an illness. Significantly, the law also requires employers to maintain group health benefits for employees who take FMLA leave. Even though this continuation of coverage requirement clearly impacts self-funded ERISA plans, federal laws such as the FMLA are outside the scope of ERISA preemption.

At the state level, five states have now passed laws to address a perceived gap in the FMLA, granting eligible employees paid family leave: California, New Jersey, Rhode Island, Washington, and New York. Rhode Island law requires four weeks of paid leave, California and New Jersey each offer six weeks of paid leave, and Washington offers up to twelve weeks per year. New York’s Paid Family Leave Act (“PFL”), scheduled to take effect on January 1, 2018, offers one of the longest and most comprehensive paid family leave laws in the country. What makes the PFL unique is not just that it requires employers to provide twelve weeks of paid family leave; it also requires employers to continue health insurance coverage to employees out on leave. While this state-mandated employer obligation would seem to fall squarely under the purview of ERISA preemption, it turns out that determining the scope of ERISA preemption is an arduous task.

The key question to answer is whether the state law at issue “relates to” an ERISA plan.  The U.S. Supreme Court has said that a state law “relates to” an employee benefit plan covered by ERISA if it refers to or has a connection with that plan, even if the law is not designed to affect the plan or the effect is only indirect. See, e.g., Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139 (1990). This implies that there is no relevant distinction between obligations imposed on the employer versus on the employee benefit plan for purposes of determining whether ERISA preemption applies. Simply put, state laws which impose obligations on employers, and not specifically plans, may still be preempted. In addition, the Court has held that ERISA does not preempt state laws which have only a tenuous, remote, or peripheral connection with an ERISA plan, as is typically the case with laws of general applicability.

The Court directly addressed ERISA preemption and a state law which mandated the extension of health insurance coverage in District of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125 (1992). In Greater Washington, the Court reviewed a Washington, D.C. law which required employers who provided health insurance for their employees to provide equivalent health insurance coverage for employees eligible for workers’ compensation benefits. The Court explained that when a state law specifically refers to benefit plans regulated by ERISA, that provides a sufficient basis for preemption. It made no difference to the Court that the law also related to ERISA-exempt worker-compensation plans or non-ERISA plans. Once it is determined that a state law relates to ERISA plans, this is sufficient irrespective of whether the law also relates to ERISA-exempt plans.
 
In earlier cases, petitioners argued that ERISA preemption should be construed to require a two-step analysis: if the state law “related to” an ERISA-covered plan, they argued, it may still survive preemption if employers could comply with the law through separately administered plans exempt from ERISA (making the distinction between a plan requirement and an employer requirement). See generally Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985). In Greater Washington, the U.S. Supreme Court dismissed that analysis, stating, “We cannot engraft a two-step analysis onto a one-step statute.” See Greater Washington, at 133. Despite the Court’s rulings, the breadth of the “relate to” clause remained unclear and the question of state-mandated continuation of coverage was not directly addressed.

In 2005, the Department of Labor (“DOL”) seemed to put this issue to rest in an advisory opinion on the applicability of leave substitution provisions of the Washington State Family Care Act (“FCA”) to employee benefit plans. The FCA permits employees entitled to sick leave or other paid time off to use that paid time off to care for certain relatives of the employee who had health conditions or medical emergencies. As part of its analysis, the DOL analyzed section 401(b) of the FMLA, which provides that state family leave laws at least as generous as the FMLA are not preempted by “this Act or any amendment made by this Act.” 29 U.S.C. § 2651(b). Further, the DOL cited to a 1993 Senate report which recounts a colloquy between Senators Chris Dodd (D-CT) and Russ Feingold (D-WI). The discussion involved the leave substitution provisions of the Wisconsin FMLA and ERISA preemption. The record revealed that Senator Dodd, the chief sponsor of the FMLA, remarked, “The authors of this legislation intend to prevent ERISA and any other [f]ederal law from undercutting the family and medical leave laws of States that currently allow the provision of substitution of accrued paid leave for unpaid family leave…” The DOL relied on this exchange as additional support for the notion that state family leave laws at least as generous as the FMLA (including leave laws that provide continuation of health insurance or other benefits) are not preempted by ERISA or any other federal law.

As a result of the department’s guidance, it appeared as if state family leave laws enjoyed special protections from ERISA preemption. In 2014, the Sixth Circuit Court of Appeals considered the same issue and reached the opposite conclusion. In Sherfel v. Newson, 768 F.3d 561 (2014), the Court found that the leave substitution provisions of Wisconsin’s FMLA sufficiently “related to” an ERISA plan such that they were preempted by ERISA. Specifically, the Court held that the state law would “mandate the payment of benefits contrary to the [written] terms of an ERISA plan,” thus undermining one of ERISA’s chief purposes; achieving a uniform administrative scheme for employers. Newson, at 564. As part of its analysis of the preemption issue, the Court also dismissed the legislative history relied upon by the DOL in an uncommonly blunt (and borderline satirical) manner. Considering whether legislators intended to preclude the preemption of state family leave laws by ERISA, the Court observed, “[T]he idea that this colloquy ever passed the lips of any Senator is an obvious fiction. Colloquies of this sort get inserted into the Congressional Record all the time, usually at the request of a lobbyist…” Newson, at 570.

By ruling that a state family leave law was preempted by ERISA, the Sixth Circuit Court of Appeals aligned itself with the U.S. Supreme Court’s earlier jurisprudence on preemption. It remains to be seen how other Circuit Courts will address similar challenges to state leave laws; especially those that mandate continuation of coverage. The conservative approach for employers would be to continue health coverage when required by state law; however, the Sixth Circuit is the highest court to address this issue to date, and self-funded employers would be on solid footing to use ERISA preemption as a shield against state-mandated continuation of coverage.

Paid family leave is one of the few policies in Washington, D.C. that has bipartisan support, and employers should expect to see more states pass laws akin to New York’s Paid Family Leave Act. The President explicitly referred to paid family leave in a speech to a joint session of Congress on February 28, and his 2018 budget proposes six weeks of federal paid parental leave. While it remains unclear if that policy will become law, the trend is likely to continue at the state level, and as those laws impact self-funded health plans, the issue of continuation of coverage and ERISA preemption will increasingly attract the scrutiny of the courts.

Brady Bizarro, Esq. is an attorney with The Phia Group, LLC.
________________________________________________________________________________________________________________________
Taking Health Care International – The Growing Trends of Importing Care and Exporting Patients
By: Andrew Silverio, Esq.

Esteemed physicist Richard Feynman is remembered by many for the phrase “If you think you understand quantum mechanics, you don’t understand quantum mechanics.”  This sentiment rings true for the continually evolving landscape of our healthcare system as well, and the problems facing all of us, particularly as insurers, employers, and patients.  For those of us within the healthcare or health risk industries, the more we learn about the problems we face and what is causing them, the more we realize just how complex the landscape is and what an impossible task it would be for any single solution to reel in the cost of care.

In tow with the cost of care, health premiums as well as per capita healthcare spending in America steadily increase every year.  This should not be news to anyone, and countless strategies have been proposed to slow and eventually reverse this inflation.  But, for many, the immediate objective isn’t to “fix” healthcare or undo the decades of developments which brought us here.  For many, the immediate goal is just to get care for their employees and families in an affordable way.  Although this problem is not uniquely American, we spend more of our GDP on healthcare than any other country (by a wide margin), and care is more expensive here than anywhere else.  As such, several newer strategies for cost containment are reaching beyond our borders into the international market – and doing so with impressive results.

One strategy aims to avoid the exceedingly high prices of some prescription medications in America by simply getting them from elsewhere.  Countries designated as “Tier 1” countries (including Canada, the UK, Australia, and New Zealand) have safety and efficacy standards which equal or exceed American standards, and enjoy significantly lower prices for drugs which are often chemically identical.  So, why hasn’t the American prescription drug market self-corrected due to this international competition?  The simple answer, and the reason many employers are hesitant to take advantage of this option, is that the practice is illegal.  Under federal law, drugs which are manufactured for sale outside the country are not FDA approved, as there is no potential for oversight in the manufacturing process.  Additionally, even if the foreign version of the drug is chemically identical in every respect, FDA guidelines address more than just the chemical makeup of the drug – they relate to labeling, storage, and transportation as well.  So, even a drug manufactured within the United States for sale outside of the country would be considered illegal if it was later re-imported into the country.

So, if importing foreign drugs is illegal, how is it a viable option for cost containment?  It’s possible, under the right circumstances, due to a well documented FDA policy of “enforcement discretion”.  Under this policy, the FDA does not prosecute individuals who import a limited quantity of prescription medications from abroad for personal use.  This discretion is based on several factors, including that the drug is for personal use only and that the amount imported is no more than a 3 month supply. So, if a program is set up correctly, the savings on many costly medications can be huge, with very minimal risk to the employer.  Two important things to consider, though, are safety and plan document design.  Regarding safety, it’s important to remember that just because a drug comes from a “Tier 1” country does not mean it is safe.  Just as you (probably) wouldn’t buy prescription drugs from someone out of a suitcase on the street, it’s important to ensure that you are working with reputable people and pharmacies abroad when dealing with this type of program.  There have been incidents involving drugs which were imported from Tier 1 countries after being manufactured in other countries with more lax standards, as well as incidents were drugs were found to be outright counterfeits.  Regarding plan document design, any given plan document likely has some existing barriers to making a seamless transition into reimbursing for expenses such as these.  Any exclusions or language which would conflict must be removed, and these changes should be approved by the plan’s stop-loss carrier and TPA (and ideally the PBM as well).  But again, when set up and run properly, this type of program can generate significant savings with minimal risk to the employer or patient.

Another trend picking up steam is specialized medical tourism.  Medical tourism is certainly nothing new, both within the country and internationally, but we are seeing a new trend – providers gearing their business model to specifically target medical tourism, and sometimes even specific conditions/illnesses.  When a facility specializing in a certain surgical procedure or implant, or treating a disease with particularly costly treatment, sets up shop just over the boarder or just offshore, it’s surely no coincidence.

A prime example of this is Health City Cayman Islands. Health City is a brand new facility (they took their first patient in 2014) that offers a broad spectrum of healthcare services, but none illustrate the savings potential better than their hepatitis C program.  Of course, a medical tourism offering only helps an employer save money if patients want to utilize it.  Health City seems to understand this – along with the appeal of their tropical location they offer travel planning assistance, transportation, and concierge services including arranging local activities and excursions.  The leading prescription hepatitis C medications can cost nearly $100,000 in the United States for a single 12 week course of treatment.  Many employers may be surprised to hear that in light of this, as compared to simply purchasing the drug at the local pharmacy, it can actually be significantly less expensive to put a patient on a plane (with a companion) and fly them to the Caribbean for treatment, including all ancillary services and testing and prescription medications dispensed onsite, all as part of what is essentially a free vacation.  The same concept is being applied with increasing regularity to other treatment, including surgical procedures.

Just as with drug importation, there are some practical house cleaning tasks a plan must take care of before introducing any sort of medical tourism benefit, particularly if patients will be traveling internationally.  A common barrier could be any existing plan exclusions for international treatment.  This and any other conflicting exclusions must be removed and cleared with interested parties, just as with an importation reimbursement benefit.  Another consideration with a medical tourism benefit is potential conflicts with the employer’s network agreement.  Many such agreements require that the in-network incentive be the “best” available, so if the in-network coinsurance is 20%, and the plan offers a “zero out-of-pocket” option to incentivize patients to use the new program, there could be trouble.  By that same token, the limitation could only apply within the network’s service area, which would mean there is no problem.  It is important to have a professional review these agreements to make sure the employer isn’t creating any liability for itself.

While many great minds continue to grapple with the puzzle of bringing American health costs down, many patients and employers simply cannot afford to wait for a complete solution.  These globally-minded strategies are just a few of the creative ways employer plans, vendors, and providers are attempting to make care more affordable and accessible.  The potential for savings is huge, and the quality of care can be just as high as or higher than comparable treatment domestically. Ultimately, those who reap the benefits will be those who are willing to innovate, and utilize new methods and strategies outside of the traditional employee benefit playbook.

The Phia Group's 3rd Quarter 2017 Newsletter

On July 11, 2017
Phia Group Newsletter 2nd Quarter

Phone: 781-535-5600 | www.phiagroup.com





The Book of Russo: From the Desk of the CEO

The heat is on here in Boston with absolutely beautiful weather over the past few weeks with the same expected in the near future. This can also be said for the self-insured industry as a whole as well as what we have seen here at The Phia Group. The summer has not meant a slow down; in fact business is up across the board and interest from brokers, advisors, and employers is at levels I have never seen. So while it’s great news that so many people want to get in on this innovative market, the risk is that employers and others will jump in too quickly without truly understanding the risks involved with self-funding their employee benefit plans. Sure you can lower your costs by self-funding but you also expose yourself to catastrophic claims issues, high priced drug costs that you cannot control and stop loss issues that you had no idea existed. That’s why we are here for the industry – to ensure you can have your cake and eat it too. I hope you enjoy our summer newsletter as we have lots of great info to share. Happy reading!

Service Focus of the Quarter: Independent Consultation & Evaluation (ICE)
New Services and Offerings
Phia Group Case Study: Flagship Plan Document
Phia Fit to Print
From the Blogosphere
Webinars
Podcasts
The Phia Group’s 2017 Charity
The Stacks
Phia’s Speaking Events
Employee of the Quarter
Phia News


Service Focus of the Quarter: Independent Consultation & Evaluation (ICE)

You need legal consultation to address regulatory compliance concerns, claim processing queries, and to collaborate on difficult administrative tasks. Having an experienced team of attorneys, compliance specialists, and industry experts on call is a must have. With The Phia Group's Independent Consultation and Evaluation ("ICE") service, unlimited access to The Phia Group's acclaimed team of legal consultants is yours for an affordable pre-paid, per employee per month (“PEPM”) subscription fee. Gone are the days of budgeting on the fly and dealing with mysterious "legal bills." With an ICE subscription fee, clients can preemptively budget for and share the cost of this invaluable resource - allowing The Phia Group and their clients to focus on what is really important - results.

For more information regarding ICE and The Phia Group's many other services, please visit our website or contact The Phia Group's Vice President of Sales & Marketing, Tim Callender by email at tcallender@phiagroup.com or by phone at 781-535-5631.

New Services and Offerings:

Leave of Absence Review

Employers aren't paying attention to their health benefit plan documents. They alter their employee handbooks every year, or sometimes multiple times in a single year. They try to be generous, providing employees with the ability to take leaves of absence, and promising them extended health plan coverage when they take such leaves of absence. Little do they know that their plan documents expel participants from coverage after a fixed period of time if the employee isn't actively working. This means that - per the plan - that person exercising their right to a leave of absence has no health plan coverage. If the employer tries to provide coverage anyway, stop-loss isn't required to reimburse claims over the deductible.

We're seeing this conflict come up with startling frequency, and the time has come to end this problem once and for all. The Phia Group has added a Leave of Absence review to its already popular Gap-Free Analysis service. The Phia Group's team of plan document experts and attorneys will analyze the applicable plan document side-by-side with the employer's handbook and stop-loss policy, to ensure there are no gaps in coverage and that all are in compliance with applicable law.

Flagship Plan Document

Every self-funded plan deserves a "Best in Class" plan document, yet - delays in plan drafting cause many plans to administer old plans - or in some cases - no plan. Now there is no excuse for administering a self-funded program with an outdated plan document, or worse, no plan document at all.

The Phia Group has compiled decades of experience servicing various types of plans, and drafting various types of plan documents, to develop its Flagship Template. This plan document "checks all the boxes" when it comes to best practices, regarding everything from cost containment to compliance; offering robust yet effective coverage.

The Phia Group's Flagship Template is a condensed version of its industry acclaimed, fully customizable template. The Phia Group has taken its own plan document (complete with thousands of requisite customization queries), and created a nearly complete plan document - by pre-selecting what it deems to be the best provisions in every regard; applying best practices to create an almost-complete plan. All that remains is for the plan sponsor or its named administrator to fill in their biographical information, insert their selected schedule of benefits, eligibility criteria, and review the language already provided to request edits or revisions.

Our goal is to provide plans with plan documents that we think reflect best practices. The plan sponsor and its administrator no longer need to review countless options or fill in limitless blank spaces. The hard work has already been handled by The Phia Group. We don't want to see any more self-funded employers or plan administrators suffer penalties or face conflicts with their partners, due to an outdated or non-existent plan document. Now, with The Phia Group's Flagship Template, clients can enjoy speedy production of best-in-class plans, with minimal time or monetary investment.

For more information regarding any of The Phia Group’s services, please contact The Phia Group’s Vice President of Sales & Marketing, Tim Callender, by email at tcallender@phiagroup.com or by phone at 781-535-5631.

Phia Group Case Study: Flagship Plan Document

Not long after The Phia Group introduced its Flagship Template offering as part of its Phia Document Management (PDM) service, one of our long-time clients approached us with an issue they were having. They had a new client prospect – the largest prospect the TPA had ever had, and indeed far larger than the average self-funded group. This particular group was coming from the fully-insured market, so it had never structured its own Plan Document before. As part of the RFP process, the TPA had provided the Plan Sponsor with a checklist from the TPA’s standard template, customized for use with the Phia Document Management software.

The TPA contacted our consulting and plan drafting team and relayed that this formerly-fully insured group was a bit uneasy about the number of variables in the checklist. Although the Plan Sponsor had not yet awarded the TPA its business, the Plan Sponsor indicated that it had absolutely no idea how to choose, for instance, which “illegal acts” or “workers compensation” exclusions it wanted, of the myriad of options within the standard checklist.

The Phia Group’s plan drafting team informed the TPA of the newfound existence of our Flagship Template, which is designed specifically to cut down variables by 75%, instead applying our best-practices approach to definitions and exclusions. The remaining variables are designed to be high-level options, rather than the nitty gritty that plan sponsors may not have the experience or interest to answer.

The TPA showed the Plan Sponsor the Flagship Template checklist, and the Plan Sponsor was pleased with the more manageable number of variables, and subsequently awarded the TPA its considerable block of business.


Fiduciary Burden of the Quarter: Prudent Management of Plan Assets

ERISA specifies that all Plan Administrators must be prudent with assets. That means avoiding waste, and securing savings whenever possible. Protecting plan assets, identifying fraud, overpayments, undue costs, as well as taking action to protect the plan, recoup lost funds, and identify savings opportunities, are being treated less like “good ideas” and more like “fiduciary duties.” In the meantime, the Department of Labor has begun to crack down on fiduciary violations more than ever.

As always, we urge TPAs and brokers to do their best to ensure that they, and their clients, are prudent with plan assets in every way possible! Please visit our website or contact The Phia Group's Vice President of Sales & Marketing, Tim Callender by email at tcallender@phiagroup.com or by phone at 781-535-5631 to discuss this growing concern and steps you can take to maximize benefits and minimize costs.

Back to top ^

Phia Fit to Print:

• Employers Costs Outpace Salaries – America's Benefit Specialist, Page 28

Money Inc. – “Affordable” Health Insurance Is Not “Affordable” Health Care

• Self-Insurers Publishing Corp. – Taking Health Care International - The Growing Trends of Importing Care and Exporting Patients

• Self-Insurers Publishing Corp. – Held Captive by Appeals

• Self-Insurers Publishing Corp. – Appealing to Reason

• Self-Insurers Publishing Corp. – Self-Funded Health Plan May Have a New Ally in the Fight against Specialty Drug Prices


Back to top ^

 


From the Blogosphere:

The Rules of the Game are Still Changing. What is an Executive Order?

Dear Stop-Loss: A Ballad. A blog that can be sung to the tune of “Gilligan’s Island.”

You Are Not Going to Sue us, Are You? Claims from providers are “getting high.”

Transparency – It’s Not Just for Ghosts. What about the costs of standard medical procedures?


To stay up to date on other industry news, please visit our blog.


Back to top ^


Webinars

Consulting Headlines – The Hottest Topics in Benefit Plan Administration

On July 13, 2017, The Phia Group will present “Consulting Headlines – The Hottest Topics in Benefit Plan Administration,” where our legal team will discuss how laws are changing, regulations are shifting, and benefit plans are scrambling to keep up.

Click HERE to Register!

On June 22, 2017, The Phia Group presented “A Network by any Other Name,” where we discussed various payment methodologies, and what a health plan needs to do to ensure that the Plan Document supports that methodology.

On May 16, 2017, The Phia Group presented “Decisions, Decisions: Which Plan Types Work Best for Which Groups, and Why,” where we went over some basic types of plans that can be chosen and some benefits and pitfalls of each.

On April 27, 2017, The Phia Group presented “The Double-Edged Sword of Discretion: How Even Great Plan Document Language Can Cause Gaps in Coverage,” where our legal team discussed discretion within Plan Documents and stop-loss policies, and how the two interact.


Back to top ^


Podcasts:

On June 22, 2017, The Phia Group presented “The Senate Unveils its Repeal & Replace Bill,” where Sr. Vice President and General Counsel Ron Peck and Attorney Brady Bizarro give their initial thoughts on the Better Care Reconciliation Act.

On June 19, 2017, The Phia Group presented “Plan Tales: The Good, Bad, and Really Bad,” where Adam Russo and Ron Peck interview two key members of The Phia Group’s consulting division – Vice President of Consulting, Attorney Jennifer McCormick, and Product Developer, Kristin Spath.

On June 5, 2017, The Phia Group presented “In the Land of the Blind,” where we discussed the assessment of the American Health Care Act (Version 2.0).

On May 22, 2017, The Phia Group presented “Healthcares? Alternative Provider Payment Programs,” where Adam Russo and Ron Peck discussed movements within the healthcare provider community.

On May 8, 2017, The Phia Group presented “The American Health Care Act,” where Adam Russo, Ron Peck, and Brady Bizarro discussed the American Health Care Act, which passed the House of Representatives on 05/04/2017.

On April 25, 2017, The Phia Group presented “An Employer Call to Action,” where our legal team discussed what employers can do to improve their health plan and plan performance.

 


Back to top ^


The Phia Group’s 2017 Charity

The Phia Group's 2017 charity is the Boys & Girls Club of Brockton.

The mission of The Boys & Girls Club is to nurture strong minds, healthy bodies, and community spirit through youth-driven quality programming in a safe and fun environment.

The Boys & Girls Club of Brockton (BGCB) was founded in 1990 to create a positive place for the youth of Brockton, Massachusetts. It immediately met a need in the community; in the first year alone, 500 youths, ages 8-18, signed up as club members. In the 25 years since, the club has expanded its scope exponentially by offering a mix of Boys & Girls Clubs of America (BGCA) nationally developed programs and activities unique to this club.

Since their founding, more than 20,000 Brockton youth have been welcomed through their doors. Currently, they serve more than 1,000 boys and girls ages 5-18 annually through academic year and summertime programming.

Phia's Wiffle Ball Game


On Saturday, June 24th, employees of the Phia Group participated in the 6th Annual John A. Waldron Wiffle Ball Tournament. The tournament honors the late John Waldron, a former member of the Brockton’s Planning Board and Democratic City Committee and a longtime booster for Brockton High School’s sports and clubs. Phia and the 36 teams competing helped raise over $16,000 for local charities, including the Boys and Girls Club of Brockton, TOPSoccer, Frederick Douglass Neighborhood Association, Brockton Hospital Cancer Walk, and more. For more information, visit the John Waldron Wiffleball Tournament website. 

 

Monthly Donations From Phia


 

The Phia Group invites its staff to donate various items for the benefit of The Boys and Girls Club of Brockton. For more information or to get involved, visit www.bgcbrockton.org.


Back to top ^


The Stacks

A Year Later . . . Montanile Remembered, Lessons Learned

By: Christopher M. Aguiar, Esq. – April 2017 – Self-Insurers Publishing Corp.


Things were going so well. In the game of subrogation cases being heard by the Supreme Court of the United States, self-funded benefit plans under the purview of ERISA were on a roll. First, it was Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006), then U.S. Airways v. McCutchen, 133 S. Ct. 1537 (2013). Some even considered Great West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) to have been unfairly viewed as a loss for the subrogation industry because despite a decision against Great West Life, it provided the blue print followed by Mid Atlantic Medical Services, Inc. to elicit the favorable decision that led to the recovery in Sereboff. As is the case in most games, momentum can be lost in the blink an eye.

Click here to read the rest of this article


Don’t Let Your LOAs Leave You DOA

By: Kelly E. Dempsey, Esq. – May 2017 Self-Insurers Publishing Corp.

Imagine a scenario where an employer has a long-time reliable employee that suddenly has a stroke of bad luck and is diagnosed with stage four cancer after being relatively asymptomatic and having never been diagnosed with cancer previously. The employee works with a team of medical professionals to come up with a game plan for beating this terrible disease. The employee quickly begins what will hopefully be life-saving treatment as soon as a game plan is mapped out. The claims start rolling in and the treatment starts taking its toll. The employee starts missing an hour here and there for appointments – and then a few hours for appointments and sickness –and then full days of work during treatment. When the employee is at work, the employee struggles to perform normal job functions and the employee is now unable to work because the rigorous chemotherapy regiment.

Click here to read the rest of this article.

 

Air Ambulance: Heads in the Clouds

By: Jon A. Jablon, Esq. – June 2017 – Self-Insurers Publishing Corp.


Health plans, third-party administrators, brokers, consultants, and stop-loss carriers are a bit baffled by air ambulance fees. Many are outraged or appalled or disgusted as well – but it seems that the overwhelmingly common feeling is sheer confusion over how this type of billing is permissible.

Click here to read the rest of this article.


Back to top ^


Phia’s Q2 Speaking Events:

Adam Russo’s 2017 Speaking Engagements:

• 4/24/17 - Berkley Captive Symposium – Grand Cayman Islands
“The Best Gets Better – Getting the Most Out of Your Self-Funded Plan”

• 5/4/17 – Benefest – Westborough, MA
“Multiple Personalities – The Biggest Issues Impacting Plans & Employers, and Instances Where They are Their Own Worst Enemy”

• 5/22/17 – United Benefit Advisors (UBA) Spring Conference – Chicago, IL
“The Best Gets Better – Getting the Most Out of Your Self-Funded Plan”

• 6/27/17 – Leavitt Trustee Conference – Big Sky, MT
“The Best Gets Better – Getting the Most Out of Your Self-Funded Plan”

Ron Peck’s 2017 Speaking Engagements:

• 4/3/17 – Eastern Claims Conference (ECC) – Boston, MA
“The Good, The Bad, and The Ugly: Understanding Reference Based Pricing in the Special Risk Market”

Tim Callender’s 2017 Speaking Engagements:
• 5/4/17 – BevCap Best Practice Workshop – Orlando, FL
“PACE & ICE with a brief political update on repeal and replace”

• 5/22/17 – Group Underwriters Association of America Annual Conference – Denver, CO
“The Future of Health Plans”

Jen McCormick's Speaking Engagements:
• 5/20/17 – United Benefit Advisors (UBA) Spring Conference – Chicago, IL
“Self-funding and Compliance Issues”

Brady Bizarro's 2017 Speaking Engagements:
• 5/4/17 – BevCap Best Practice Workshop 2017 – Orlando, FL
“Phia's PACE and ICE Services”

Phia’s Upcoming Speaking Events

Adam Russo’s Upcoming Speaking Engagements in 2017:

• 7/12/17 – Montana Captive Conference – Whitefish, MT
“High Performing Self-Insured Health Plans – The Key to Successful Stop-loss Captive Programs”

• 8/9/17 – NAHU Region 1 Meeting – Stamford, CT
“The Best gets Better: Getting the Most out of Your Self-Funded Plans”

Ron Peck’s Upcoming Speaking Engagements in 2017:

• 9/19/17 – CIC-DC 2017 Annual Conference – Washington, D.C.
“Cost Containment Strategies”

Tim Callender’s Upcoming Speaking Egnagements in 2017:

• 7/17/17 – Health Care Administrator’s Association TPA Summit – St. Louis, MO
“Conference Emcee”

Brady Bizarro’s Upcoming Speaking Engagements in 2017:

• 7/18/17 – HCAA TPA Summit 2017 – St. Louis, MO
“Ethics”


Back to top ^


Get to Know Our Employee of the Quarter:
Zachariah John

Congratulations to Zachariah John, the Phia Group’s Q2 2017 Employee of the Quarter!

“Zach constantly exhibits great customer service skills and work ethics, with quick responses and delivery on HelpDesk tickets, questions from other employees, and system enhancement builds. He is also incredibly friendly, and always has a great attitude. Even when something cannot be done as specifically desired by a user, Zach finds ways to meet their requirements through other available options and functionalities. He is a true subject matter expert, a great resource of knowledge, and a dedicated employee. There is no question; if Zach were not part of the Phia team, we would be nowhere near where we are now! His assistance and expertise is invaluable.”

Congratulations Zach and thank you for your many current and future contributions.

Back to top ^


Phia News

Babies

- Diaina Williams gave birth to Hannah on 4/19/2017

- Sabrina Centeio gave birth to Gia on 5/5/2017.

- Shannon Olson gave birth to Shelby Marie on 5/8/2017

- Lisamarie DeCristoforo gave birth to Kyrie on 6/20/2017

- Boris Senic’s wife gave birth to Matthew Ryan on 6/27/2017

Promotions

- Casey Balchunas was promoted from Claim Investigator to Claim Recovery Specialist III

- Lyneka Hubbert was promoted from Claim Recovery Specialist III to Case Analyst

New Hires

- Maria Sostre was hired as a Case Investigator

- Dante Tylerbest was hired as a Customer Service Representative

- Cori DeCristoforo was hired as a Customer Service Representative

- Elizabeth Pels was hired as a legal assistant

- Shaiti Alavala was hired as an IT Intern

- Robert Balchunas was hired as a PGC Intern

- Abigail Gatanti was hired as a PGC Intern

- Sandra Przychodzki was hired as a PGC Consultant

- Jess Watsky was hired as a PGC Consultant

- Francesca Russo was hired as a Legal Assistant

- Thadeous Washington was hired as a Plan Document Specialist

- Krishna Malyala was hired as an IT Data Architect

- Hannah Sedman was Hired as a Marketing Intern

- Nubian Gamble was hired as a Case Investigator

- Lennon Johnson III was hired as a Case Investigator

- Colin Patzer was hired as a Legal Assistant

- Jiyra Martinez was hired as a Case Analyst

 

Fun at Phia:

Phia’s Easter Egg Hunt

Phia's Backyard Barbeque



Back to top ^


 

 

 

info@phiagroup.com
781-535-5600

The Stacks - 3rd Quarter 2017

On July 7, 2017
A Year Later . . . Montanile Remembered, Lessons Learned
By:  Christopher M. Aguiar, Esq.

Things were going so well.  In the game of subrogation cases being heard by the Supreme Court of the United States, self-funded benefit plans under the purview of ERISA were on a roll.  First, it was Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006), then U.S. Airways v. McCutchen, 133 S. Ct. 1537 (2013). Some even considered Great West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) to have been unfairly viewed as a loss for the subrogation industry because despite a decision against Great West Life, it provided the blue print followed by Mid Atlantic Medical Services, Inc. to elicit the favorable decision that led to the recovery in Sereboff.  As is the case in most games, momentum can be lost in the blink an eye.

Often times, when the momentum is heavily in one’s favor, the successors eventually let their guard down.  Enter Montanile v. Board of Trustees of Nat. Elevator Industry Health Benefit Plan, 136 S. Ct. 651 (2016). Montanile was the victim of an accident with a third party who was driving under the influence of alcohol.  Montanile’s benefit plan paid approximately $120,000 in medical claims arising from the accident.  Following the accident, he sued the driver of the vehicle and obtained a settlement in the amount of $500,000.  Settlement negotiations between Montanile and the Plan broke down and his attorney warned the Plan that he intended to disburse the funds to Montanile.  The Plan did not respond until almost seven months later when it filed a lawsuit in which the Plan argued that even though Mr. Montanile had spent some or all of the settlement funds, the Plan still had a right to the funds.  The Supreme Court disagreed, stating that the Plan would have had an equitable right if it had “immediately sued to enforce the lien against the settlement fund then in Montanile’s possession” and that suing Montanile to attempt to attach his general assets was a legal remedy not available to the Plan under ERISA 502(a)(3).  Id. at 658.

Immediately following the period when the Court announced that it would be granting certiorari and hearing arguments in Montanile, subrogation experts rationalized what they had hoped would be the outcome; mainly, that the highest court in the land would not put forth a decision that effectively allowed plan participants to take the money and run – but we all knew better, and the Court affirmed our fears; that the Plan’s equitable remedy may be extinguished when funds are disbursed.

In the almost fourteen months since Montanile, there has not been much movement.  The case has been cited in several briefs and other cases, but there is nothing of a significant nature to report. That said, in the interest of keeping the issue fresh in everyone’s mind and not allowing the importance of a benefit plan’s third party recovery rights take a back seat, let us take the opportunity to recall the keys to a successful recovery program and some best practices – many of which have received favorable treatment in the few cases that have addressed the problem created by Montanile.

Plan Language

Perhaps the most important thing to remember is that Montanile did not actually change the law.  Plan language continues to be the most important consideration in determining whether a plan has a right to 100% reimbursement.  Regardless of whether the funds have been disbursed to the participant and/or whether they have been spent on non-traceable assets, if a plan’s language is inadequate, the plan will not be able to enforce its right to a full reimbursement.  Montanile did not change the decision in McCutchen, which clearly stated, “In a §502(a)(3) action based on an equitable lien by agreement—like this one—the ERISA plan’s terms govern. Neither general un-just enrichment principles nor specific doctrines reflecting those principles—such as the double-recovery or common-fund rules invoked by McCutchen—can override the applicable contract.” 133 S. Ct. at 1540.  Ensuring your plan’s language is as strong as possible remains imperative to maximizing recoveries.

Investigation is the Key

The Supreme Court in Montanile disagreed with the Plan’s assertion that its equitable remedy should be enforceable regardless of the whereabouts of the settlement fund and did not appear to have any pity for the burden on the Plan to protect its right.  The Court stated:
… The Board protests that tracking and participating in legal proceedings is hard and costly, and that settlements are often shrouded in secrecy.  The facts of this case undercut that argument.  The Board had sufficient notice of Montanile’s settlement to have taken various steps to preserve those funds.  Most notably, when negotiations broke down and Montanile’s lawyer expressed his intent to disburse the remaining settlement funds …unless the Plan objected …. The Board could have – but did not - object.  Moreover, the Board could have filed suit immediately, rather than waiting half a year.

Montanile at 662.

The Court’s statements here seem to indicate a pretty clear burden on plans to engage in their own investigations and take any and all steps necessary to protect their interests though it does seem to leave the door open for some flexibility in its decision in a situation where perhaps the facts are different.  For example, would the Court have ruled differently if the Plan did not “have sufficient notice” of Montanile’s settlement?  This appears to have been the case in AirTran Airways, Inc. v. Elem, 767 F. 3d 1192 (2014).   In Elem, the attorney ultimately obtained a settlement of over $500,000 against the responsible driver but told Air Tran that the settlement had been for the insurance policy limit of $25,000.  He then inadvertently sent a copy of the $475,000 check of which he had neglected to advise Air Tran. In this case, there appears to have been overt acts to deceive the Plan with regard to the settlement.  Would the Court have ruled the same way if faced with these facts?  

Regardless, to avoid situations like this, the Plan MUST HAVE an effective investigation unit.  All too often investigations are halted based on an insufficient self-report.  Everyone can agree that a participant that falls down the stairs at home does not present a recovery opportunity; but what if that person’s “home” is a rental apartment and the “fall down the stairs” resulted from a broken stair and faulty railing in the main hallway?  If the investigation unit is ill-equipped to ask the right questions or identify when someone is masterfully crafting answers to avoid the question without lying, a plan will miss recovery opportunities.

And the Key to Investigation is Data

A high quality investigation unit is a pivotal part of any recovery process, but access to a plan’s data is where it all begins.  The Court’s decision in Montanile effectively put a ticking clock on a plan’s recovery rights.  The earlier a plan is involved, the better chance it will have to be aware of potential recovery opportunities and on top of the availability and whereabouts of the potential recovery funds.  The most effective way to do that is to both be able to access claims data and also be able to expertly analyze and identify opportunities in the data.  When paired with the most cutting edge technology and resources, data can be utilized to find out about recovery opportunities quickly and put a plan in the best position to succeed.

Funds Disbursed? … All May Not Be Lost …

Certainly, Montanile threw subrogation professionals a bit of a curveball, but most of us knew this curveball was in the arsenal.  Ensuring that you can trace the funds is always the best option; but since Montanile, some courts have reminded us that even if the funds are disbursed, a plan may still have some options.  First, the Supreme Court in Montanile held that a plaintiff can “enforce an equitable lien only against specifically identified funds that remain in the defendant’s possession or against traceable items that the defendant purchased with the funds.... A defendant’s expenditure of the entire identifiable fund on non-traceable items ... destroys an equitable lien.” Montanile, at 658.  For the Plan to lose its right of recovery, the participant must spend the money on items that cannot be traced.  So, if the participant purchases a car, property, or asset of some sort, the plan may still be able to enforce its right.

Further, even if the funds are disbursed, the Plan may have a claim for accounting or disgorgement of profits.  In Homampour v. Blue Shield of California Life and Health Insurance Company, the Northern District of California stated the following:

Montanile does not entirely foreclose plaintiffs' claim. Plaintiffs have not alleged how or from what funds plaintiffs seek to recover disgorgement of profits. It is possible that plaintiffs will present evidence demonstrating that the profits they seek to disgorge are specifically identifiable and within defendants' possession.

Slip Copy, 2016 WL 4539480 at 8

Finally, even in a circumstance where a plan’s equitable remedy is completely lost, the plan may still have a legal remedy under a breach of contract theory.  In Unitedhealth Grp. Inc. v. MacElree Harvey, Ltd.., the U.S. District Court for the Eastern District of Pennsylvania noted that “assuming Ms. Neff had at that point already dissipated the settlement recoveries, then, pursuant to Montanile, the Plan could seek legal redress against Ms. Neff for breach of contract.” Slip Copy, 2016 WL 4440358 at 7,

Conclusion

Subrogation, like many cost containment options, is complicated.  Understanding the legal framework, the differences between the remedies that may be available, the advantages and drawbacks to the different options and utilization of different remedies, and having all the resources to recover effectively can be incredibly burdensome.  It requires experience, technical aptitude with data, and access to legal resources necessary to protect the plan’s rights.   Montanile served as a painful reminder, but all is not lost.  A plan can take steps to protect itself, maximize its recovery dollars, and ensure compliance with its fiduciary duty to enforce the terms of the plan and ensure its viability.

Don’t Let Your LOAs Leave You DOA
By: Kelly E. Dempsey, Esq.

Imagine a scenario where an employer has a long-time reliable employee that suddenly has a stroke of bad luck and is diagnosed with stage four cancer after being relatively asymptomatic and having never been diagnosed with cancer previously. The employee works with a team of medical professionals to come up with a game plan for beating this terrible disease. The employee quickly begins what will hopefully be life-saving treatment as soon as a game plan is mapped out. The claims start rolling in and the treatment starts taking its toll. The employee starts missing an hour here and there for appointments – and then a few hours for appointments and sickness –and then full days of work during treatment. When the employee is at work, the employee struggles to perform normal job functions and the employee is now unable to work because the rigorous chemotherapy regiment.

The employee decides it’s time to take a leave of absence to focus on treatment. To the dismay of the employee, though, the employee doesn’t have any additional leave available under The Family and Medical Leave Act (FMLA), since the full allotment of FMLA leave was recently exhausted while the employee and the employee’s spouse were finally bringing home their new adopted baby that they had waited so long for. Is this pulling at your heart strings yet?

The employer recalls that sometime in 2016, the U.S. Equal Employment Opportunity Commission issued guidance on a leave associated with The Americans with Disabilities Act (ADA)1 . Ah ha! The employer tells the employee they have just the solution – take a leave under ADA and the employment and leave situation can be re-evaluated in a few months. The employer tells the employee not to worry about anything except becoming cancer-free; the health plan coverage will continue as long as the employee needs it, even though the last of the employee’s paid time off is exhausted and no additional FMLA is available. In other words, the employer, via its health plan, is taking care of its employee, as so many employers try so hard to do. The employee is then signed up for the short-term disability policy which will help replace some income during the leave, and the employee is all set – there is continuing health plan coverage and some income replacement to boot. All is well.

Fast forward in time. Three months have passed, and the employee is making miraculous recovery. The employee is not ready to come back to work yet, but things are looking up and the employee is respected to return to work at some point in the near future. With the end of the health plan year approaching, the employer is attempting to get its ducks in a row for renewal season, which includes a stop-loss policy renewal. The cancer treatment claims are continuing to roll in and, as expected, the dollars keep adding up – but unfortunately, as anticipated, stop-loss is going to become a factor before renewal (ugh).

Claims are filed with the stop-loss carrier and all the typical supporting documents are provided. During the stop-loss carrier’s review, the carrier starts scratching its head. This individual has been on a non-FMLA leave of absence for over three months. The health plan document discusses FMLA and COBRA, but no other types of leave. Why was this employee still on the plan? Why was COBRA not offered when plan coverage seems to have terminated? The stop-loss carrier questions the employer and requests additional documentation to support eligibility; the carrier even generously says the employee handbook is acceptable. As everyone knows, the stop-loss policy is underwritten based on the plan document alone; anything contained within the employee handbook is entirely separate from the plan document and the stop-loss underwriting generally won’t take into account anything within the employee handbook. The employer thinks “boy, am I lucky!” *queue the suspenseful music*

The employer pulls out the employee handbook and skips to page 42 – Employer Leave Policies. The employer starts reading, “In addition to FMLA, employees that have exhausted paid time off and FMLA may be eligible for an additional extended leave of absence; referred to as non-FMLA leave. This non-FMLA leave is created to comply with the ADA’s requirement to provide a leave of absence as a reasonable accommodation and will be offered in addition to FMLA. Thus the non-FMLA leave will not run concurrently with FMLA. Additional information regarding how to request this leave and the additional requirements associated with this leave is further detailed herein:”

The employer’s wheels start turning: okay, this ADA leave doesn’t run concurrently with FMLA – great, that helps, but where’s the part about continuing health plan coverage? That must be in this handbook somewhere. The employer starts frantically turning pages looking for those magical words “employees are entitled the health plan benefits during a non-FM LA leave of absence.” But alas, no such wording is contained within the 163-page employee handbook.  The employer’s internal dialogue starts racing. “How can this be? We never meant for our employees to be out sick and not have health coverage. Doesn’t the ADA say we have to provide coverage to employees while they’re out on leave?” So you ask, “What now?” The bottom line is that there is no stop-loss reimbursement for the cancer claims, and quotes for renewal just added a few extra zeros.       

No need to review the gory details in depth – but one can imagine what happened during the plan and stop-loss renewal. The employer’s bank account is looking bleak, as are the proposed stop-loss renewal rates. The employer starts shopping other options despite having been with the same stop-loss carrier for years.  All the while, the employer just thinks “How did I end up here? All I wanted was to take care of my employees and give them the best benefits possible. Where did I go wrong?”  

It’s intuitive to think that a leave of absence from employment is coupled with a continuation of health plan coverage, especially if the leave is illness related; to the dismay of many, however, a continuation of coverage (other than COBRA) isn’t always coupled with a leave of absence. As shown in the scenario above, many employers struggle to align their health plan documents with their employee handbooks (and other internal policies) which subsequently increases the potential for a gap to arise between all the relevant documents. While most federal and state laws do not require a continuation of coverage, employers can choose to provide the benefit of continued coverage – but if the employer wants to ensure stop-loss reimbursement, the terms of continuation of coverage need to be clearly spelled out not only in the employee handbook, but also in the health plan document. The health plan document is key to showing proof of continued coverage, especially in a situation where stop-loss is relevant.

Many employers don’t even realize they have gaps between their policies and the health plan documents until it’s too late. All it takes is one large medical event - a cancer claim, an ESRD diagnosis, premature twins, a transplant – to discover that the documents the employers has aren’t airtight, and may not even align with the employer’s intent.

In summary, most employers need to do some homework. Go back to the office and take a look at the health plan document and the employee handbook. Do the two documents reference the same types of leave? Do the documents clearly indicate when coverage under the health plan is maintained during a leave? Do the terms of these documents meet the intent of the employer? What does the stop-loss policy say about eligibility determinations? Can the handbook be used to document eligibility in the health plan? What (if any) changes need to be made to minimize or eliminate gaps, to the extent possible?

Don’t let large unexpected claims leave you dead on arrival. Do the leg work now, and figure out what needs to be done to avoid being caught by surprise.

Kelly E. Dempsey is an attorney with The Phia Group. She is one of The Phia Group’s consulting attorneys, specializing in plan document drafting and review, as well as a myriad of compliance matters, notably including those related to the Affordable Care Act. Kelly is admitted to the Bar of the State of Ohio and the United States District Court, Northern District of Ohio.

[1] https://www.eeoc.gov/eeoc/publications/ada-leave.cfm

Air Ambulance: Heads in the Clouds
By: Jon A. Jablon, Esq.

Health plans, third-party administrators, brokers, consultants, and stop-loss carriers are a bit baffled by air ambulance fees. Many are outraged or appalled or disgusted as well – but it seems that the overwhelmingly common feeling is sheer confusion over how this type of billing is permissible.

In all other markets – construction, textiles, grocery, you name it – the ordinary legal doctrine is that if there is no agreed-upon price for the goods or services, the seller may only charge the reasonable, fair market value of the delivered service or item. Admittedly, in most markets, prices are agreed upon beforehand – but in the long history of business, there have been enough instances of services rendered without agreed-upon pricing that courts have seen fit to devise controls for just those occasions.

And yet…air ambulance charges are frequently between 600 and 800 percent of Medicare rates for the same flight – and sometimes far, far more. In fact, one recently crossed my desk billed at over 2,600% of Medicare rates. That’s right – a whopping twenty-six times what Medicare would have paid for the same flight.

The disclaimer is that Medicare rates are not directly relevant to these flights, but instead used as a benchmark to inform what might be the fair market value, since unfortunately there isn’t much else to go on. Unlike many other medical providers, though, there seems to be a trend in the air ambulance billing industry where balance-billing is the norm, and many air ambulance providers have the devil-may-care willingness to bill patients which triggers the outrage and disgust that so often has health plans paying upwards of 90% of egregious balances to protect their patients.

Add to the egregious billing the notion that many flights are not medically necessary or otherwise appropriate to begin with, and it becomes clear that we have a problem on our hands.

At Northshore International Insurance Services, Inc.’s 26th Annual Medical Excess Claims Conference regarding Air Ambulance Claim Cost Containment Strategies, Jeff Frazier – a partner at Sentinel Air Medical Alliance, a firm specializing in curbing air ambulance costs – answered quite a few questions, including the following2 :

Question: Why is air ambulance ordered for someone who does not really need the service?

Answer: About 20% of the patients using air ambulance services really need the service. In a lot of cases, patients are not transported to the nearest hospital due to overflight or relationships between the facility and the air ambulance provider.

Question: How do you determine medical necessity?

Answer: Review of transport notes or ambulance run reports primarily to determine medical necessity. Sometimes notes from the hospital are also reviewed.

Question: Why do payors cave?

Answer: Fear of the provider balance due billing the patient.

Balance-billing is a major concern of all benefit plans that pay benefits at an amount not tethered to billed charges, which is an increasing trend. If not for balance-billing, it seems likely that all plans would pay objectively reasonable rates rather than percentages of billed charges.

“Taking Patients for a Ride” Article

A recent (April 6, 2017) Consumer Reports article penned by Donna Rosato – entitled “Air Ambulances: Taking Patients for a Ride3 ” – highlights some real-life scenarios in which air ambulance billing practices have proven to be, in a word, abusive. Aside from citing two separate sources quoting the average air ambulance flight at about $7,000 and about $10,000, the article notes that:

Rick Sherlock, president and CEO of the Association of Air Medical Services, a trade group, says that many air-ambulance patients are on Medicare or Medicaid, and that those programs pay $200 to $6,000 per transport. So, Sherlock says, air-ambulance operators must collect more from people with private insurance to make up the difference.

It should be questioned how equitable or ethical it is to jack up prices for one consumer because the provider has chosen to accept less money for another consumer. An air ambulance provider can always refuse to contract with CMS and choose to not accept Medicare or Medicaid – so to complain about not being paid enough seems a bit petulant.

Airline Deregulation Act

Further challenges are presented by the Airline Deregulation Act of 1978. Through this federal law, states are prohibited from regulating non-hospital affiliated air ambulance providers. That is, this law does not apply to the University of Whatever Health System’s own proprietary air ambulance services, since those are considered to be an “extension” of emergency services as opposed to a separate air ambulance provider – but the law does apply to FlyingAirTaxiMedicalAmbulance Co., Inc., since it is independent of an emergency room and is its own “carrier.”

Through the years there have been proposed changes to the federal Act to account for the disastrous effects it has on air ambulance consumers and health plans, but we’re not quite there yet.

Interestingly, many air ambulance carriers have resorted to quoting the Act when attempting to justify their billing – or at least when attempting to refute reasonable settlement requests. It seems that the most prevalent argument is against any notion of fair market value; the fact that state law is preempted with respect to air ambulance billing practices is cited as the reason that fair market value is not relevant to the carrier’s billing. But, although rooted in state contract law, is it reasonable to suggest that an implied contract for services is “state law,” sufficient to be preempted or overridden by the federal Airline Deregulation Act?

In other words, while the federal Act may supersede state laws aimed at regulating air ambulance providers (and others), the concept of fair market value is implicit in the non-contracted nature of air ambulance services. The issue is not one of some state law attempting to regulate air ambulances; fair market value has to do with the open market and general principles of contract rather than some particular state law.

The Airline Deregulation Act does not set a price or indicate what might be appropriate value. Instead, it dictates that individual states cannot pass laws to regulate the price of these flights. Fair market value is a general principal of contracting rather than some statutory price control, though; air ambulances are free to provide quotes up-front, but in most cases that is either not feasible or just not done. It seems that the general and basic principal of fair market value would still apply when no price is quoted or agreed-upon. The Airline Deregulation Act, after all, was passed to promote a free market economy rather than restrict it. It hardly serves to promote a free market when medical providers can gouge payors without warning.

One could even contend, somewhat ironically, that demanding surprise payment at an amount far in excess of the fair market value frustrates the very purpose of the same Airline Deregulation Act that these providers rely on to defend their charges.

Contract? What Contract?

Here’s where things get even more interesting. Independent air ambulance providers tend to be universally out-of-network. There are a couple of exceptions, but in general, it is near impossible to find an air ambulance provider (unrelated to a hospital) that has contracted with a PPO network to accept discounted fees – primarily due to the belief that the Act guarantees them their full billed charges no matter what, and that there’s no reason to join a network and accept discounted charges.

Regardless of that belief, another question worthy of consideration is whether the out-of-network flights can truly be considered non-contracted. Contracts are a funny thing and they come in many forms; while there is no contract to pay a certain specified rate or percentage of billed charges – indeed, a claim that would generally be considered a “contracted claim” – consider that the patient (if conscious and competent) almost always signs the provider’s “assignment of benefits” form. On that form, the patient says “if my insurance doesn’t pay you, in full, 100% of your bill, then I, the patient, agree to be responsible for the remainder.”

For some bizarre reason, courts in this country have indicated that the patient’s agreement to pay some unspecified amount supersedes any ordinary market properties. If the patient weren’t a patient but a homeowner, and a painter said “you will pay me what I bill you for this job” and the homeowner agreed, courts have always opined that while the consumer is of course responsible to compensate the painter for its service, the painter is responsible for billing only that which is reasonable – measured as the fair market value of the services. In the medical industry, though, there are very few (and largely ineffectual) statutory or common law pricing controls. Even the simplistic concept of fair market value, which is perhaps the most basic of all pricing principles, does not apply in ordinary cases. It goes without saying that this needs to be fixed.

What Can You Do?

Whoever you are – whether a health plan sponsor, third-party administrator, broker, MGU, reinsurer, or anyone else working in the self-funded industry – air ambulance charges are worrisome. If they don’t concern you…they should.

Negotiating claims can be an option, as is the case with other out-of-network medical claims, and there are also other, more novel solutions out there in the marketplace.

Just as programs have developed to assist payors in reducing dialysis billed charges, so are there companies and services that are specifically geared toward controlling air ambulance charges. Specialists in this field can provide assistance from a regulatory and financial standpoint – and ensuring proper utilization is also crucial to ensuring that payors are not gouged.

We urge payors to discuss options with a broker or consultant and ask about some of the solutions out there that have helped save health plans countless dollars of unreasonable and unnecessary air ambulance exposure.

About the Author

Attorney Jon Jablon joined The Phia Group’s legal team in 2013. Since then, he has distinguished himself as an expert in various topics, including stop-loss and PPO networks, focusing on dispute resolution and best practices. In 2016, Jon assumed the role of Director of The Phia Group’s Provider Relations department, which focuses on all things having to do with medical providers – including balance-billing, claims negotiation, PPO and provider disputes, general consulting, and more.


[2] http://www.niis.com/2015Conference/Air%20Ambulance%20Claim%20Cost%20Containment%20Strategies.pdf

[3] http://www.consumerreports.org/medical-transportation/air-ambulances-taking-patients-for-a-ride

The Phia Group's 2nd Quarter 2017 Newsletter

On April 21, 2017
Phia Group Newsletter 2nd Quarter

Phone: 781-535-5600 | www.phiagroup.com


The Book of Russo:
From the Desk of the CEO

Happy spring to all of you. This is my favorite time of the year as baseball begins, the kids can run outside here in Boston, and I get some sanity by enjoying the weather. At The Phia Group, it's no different. This is the time of year when it's truly heating up from a cost containment and consulting level. Brokers, employers, stop loss carriers and administrators are starting to see outrageous claim charges from the first quarter and reaching out to us for assistance. The bottom line is that we are here to empower you and your plans. I urge you to check out the case study from our unwrapped service, as well as the amazing initiative we have put together from a social media aspect. We decided this year to not only offer industry leading webinars, but also to expand our voice though shorter podcasts and intuitive blog posts.

We are here to make this industry better for everyone, by doing what we can to lower the overall cost of care. I love this fight, and we here at The Phia Group are passionate about this goal and our overall mission. Thank you for believing in us and reaching out. Happy reading.



Phia Group Case Study: Handbook, Schmandbook
Service Highlight of the Quarter: Phia Unwrapped
Fiduciary Burden of the Quarter: Strictly Abiding by the Terms of the Plan Document
New Services Announcement: The Phia Group: Catering to More of Your Needs
From the Blogosphere
Webinars
Podcasts
The Phia Group’s 2017 Charity
The Stacks
Phia’s Speaking Events
Employee of the Quarter
Phia News


Phia Group Case Study: Handbook, Schmandbook

A client of The Phia Group faced a situation in which the group’s Plan Document referenced an extension of coverage for up to 24 months for participants unable to actively work due to disability. To contrast, the employer’s Employee Handbook referenced an extension of coverage for up to 36 months, or longer if deemed appropriate by the employer. The group’s stop-loss policy provided coverage only for the length of time dictated by the plan document (24 months).

The health plan’s broker referred the Plan Document and stop-loss policy to The Phia Group’s consulting team to perform a Gap-Free Analysis. As part of this analysis, it was discovered that the Plan Document’s leave provisions did not align with those in the stop-loss policy. The Phia Group’s team also included a note to ensure that if the Plan Document was changed, the Employee Handbook may need to be changed to align as well. Upon receiving the Gap-Free Analysis, the group’s broker asked The Phia Group to review the Employee Handbook and make whatever changes were necessary for the documents to align; upon review, the additional discrepancy was discovered and remedied.

Three months later, after the Plan Document and Employee Handbook were amended to alleviate the gaps in coverage, a member requested 18 months of leave from the employer. The employer was free to grant the leave based on other terms in the Employee Handbook, but the employee was informed that after twelve months, coverage under the Plan would terminate. As luck would have it, during the fifteenth month of the employee’s leave, she incurred significant medical claims that, if paid by the Plan pursuant to its former language, would have been denied by stop-loss. By addressing gaps in coverage, the Plan successfully avoided a large stop-loss denial.


Service Highlight of the Quarter: Phia Unwrapped

In the past, wrap networks provided a great amount of value to health plans. They effectively enlarged the plan’s primary network, somewhat like being able to utilize T-Mobile’s cell phone towers when out of AT&T range. The old theory, however, no longer holds true. Just as primary networks add less and less value as the magnitude of medical bills increase dramatically and arbitrarily, so to have wrap networks become more cumbersome than they are valuable.

Phia Unwrapped is designed as a replacement for non-contracted claims – whether they would normally be subject to a wrap network or treated as out-of-network. Phia Unwrapped is a way of keeping the plan’s primary network as always, but ensuring that all other claims are repriced accurately and responsibly, that patients have an advocate to help them through any potential balance-billing, and that the plan has experienced legal and negotiation support on the back end to secure the best possible outcomes.

In the Plan year 2014-2015, an 1,100 life Employer Group had 32% combined “savings” from their out-of-area wrap PPO program and out-of-network claim “solutions.”  Dissatisfied with these so called solutions and hearing about the strategic merits of reference based pricing (RBP) the employer switched to Phia Unwrapped. This switch allowed the group to pay a reasonable amount on claims while also providing support for members to make sure they were not caught in the crossfire with a provider attempting to collect abusive charges.

The results? In the Plan year 2015-2016, the employer had 74% savings paying 140% of Medicare, totaling an additional $2.8 Million in savings compared to traditional solutions.  Though the employer was initially concerned about “noise” from the members (who to this point only had out of pocket differentials for going out of network), Phia's industry leading balance billing support managed by Attorneys ensured that there was minimal member disruption (2%). 

What does “disruption” look like?

The group had an out-of-network emergency trauma claim, which was billed at $241,000.  Upon receipt of the out-of-network claim, the pre-setup EDI feed sent the claim to Payer Compass for re-pricing, pursuant to the Phia Unwrapped program. The third-party administrator subsequently received pricing back from Payer Compass; the Plan’s language – which specified payment at 140% of Medicare – allowed a little over $81,000. In accordance with the Phia Unwrapped service, the claims administrator paid the claim at the allowed amount.

Three months later the hospital balance billed the patient, at which point the patient spoke to Payer Compass and The Phia Group, clearly concerned about the balance billing. After a few rounds of back-and-forth with the hospital, the bill was escalated to The Phia Group’s Provider Relations department, which had been authorized to negotiate on the Plan's behalf. After a series of lengthy negotiations, which included email and phone correspondence with the hospital CFO, The Phia Group and the hospital reached an agreement to settle the claims for a total payment of 175% of Medicare, yielding significant savings from billed charges. These savings proved to be much higher than the 20% discount that the Plan would have realized if it still used the wrap network.

In the next billing cycle, The Phia Group reimbursed the difference between what it had originally billed as its fee and what it now billed for the final savings:

Plan Exposure:                                             
Final Payment:                                             
Phia Intervention Saved:   
$241,000
$101,000
$140,000


Whatever your out-of-network volume, Phia Unwrapped is the solution you have been waiting for.


Fiduciary Burden of the Quarter: Strictly Abiding by the Terms of the Plan Document

ERISA is very clear that the Plan Administrator is required to administer benefits strictly in accordance with the terms of the applicable plan document. Plan Administrators, though, are often faced with difficult situations – situations where paying a claim that might otherwise be excluded under the plan document would avoid considerable headache, appease a member of the C-suite, or more accurately reflect what the drafter of the plan document intended, even if the language does not provide for that outcome.

We at The Phia Group have been presented with many situations in which the plan document says one thing, but the Plan Administrator wants to do another. Our advice is always the same – be careful and mind your fiduciary duties – but at the end of the day, the Plan Administrator is the decision-maker and should do what it feels is appropriate, being mindful that stop-loss will likely not be quite so sympathetic to the Plan Administrator’s deviation from the terms of the plan document.

One such example came in the form of a particular plan working to administer an exclusion for illegal acts. A twelve-year-old plan participant committed an illegal act, according to the plan document, when the child inadvertently drove an ATV on a public road in a jurisdiction that considers it a crime to ride an ATV on that road. In the next county over, this would not have been a crime – and the child reportedly was not aware that he had entered a jurisdiction where his actions were a crime. There was an ATV crash, and claims were incurred. Upon being presented with claims related to the accident, the plan’s TPA read the language of the plan document, analyzed the facts of the case, and came to the conclusion that the claims should be denied. Since these were not claims that were doubtful or disputed, the TPA rendered the determination without the need for any discretion.

Upon discovering the denial, the group was not happy. According to the group, it never intended for its “illegal acts” exclusion to apply to a twelve-year-old on an ATV; this, according to the Plan Administrator, was a simple mistake on the part of the child, who was not aware what he was doing was illegal. The Plan Administrator was eager to overturn the denial to effect what it considered its real intent – which was to punish acts committed by adults, with knowledge of the illegality of their actions.

Is it appropriate to read such an exception into the terms of the plan document? If the plan document says “illegal acts” but the Plan Administrator wants to apply the exclusion to some illegal acts but not others depending on the circumstances, it creates a potential problem in that the Plan Administrator has failed to strictly abide by the terms of the plan document. This means the plan document has been administered inconsistently.

Practically speaking, do people usually complain about claims being paid? Of course not. But legally speaking, is the Plan Administrator permitted to create exceptions to unambiguous language on a case-by-case basis? Not according to ERISA. Violating fiduciary duties is a problem – especially in light of the Department of Labor getting stricter about audits whenever there is even a hint of impropriety. It is not likely that anyone would report this fiduciary violation – but that does not mean it is a good idea to violate the fiduciary duty to begin with. The Phia Group’s attorneys will attest to the notion that a low likelihood of punishment for a fiduciary violation is neither an excuse nor a good reason to commit the violation.

As mentioned above, the stop-loss carrier would likely not be pleased about the Plan Administrator’s determination either. If the Plan Administrator wants the language changed, the Plan Sponsor should effect an amendment – but as far as stop-loss is concerned, the plan document has been underwritten as-is and a claim, such as this one, should be denied by the Plan. As we have all seen first-hand, when a stop-loss carrier receives a claim for reimbursement that should not have been paid by the
Plan in the first place…well…let’s just say it’s not an ideal situation.



New Services Announcement: The Phia Group: Catering to More of Your Needs

Leave of Absence ReviewWith The Phia Group’s Leave of Absence Review, employee handbooks, health benefit plan documents, and stop-loss policies align, all while remaining compliant with applicable law. Click here to learn more!

Flagship Plan DocumentWith The Phia Group’s Flagship Plan Document, clients can enjoy speedy & efficient production of best-in-class plan documents, with minimal time or monetary investment. Click here to learn more!

If you would like to speak with one of our specialists regarding the new services we offer, please feel free to contact us at info@phiagroup.com so we can schedule a call.

Back to top ^


From the Blogosphere

ACA to AHCA… A Look Back on the Past 7 Years. Seven years in the making.

Health Insurance is NOT Health Care. Sit back, relax and enjoy Ron Peck’s metaphors.

U.S. Airways v. McCutchen – Where Are They Now? It seems like it was just yesterday.

The Guilty Shall Remain Nameless - Yet I Shall Shame Them… Again. Quote: “Yes… Is there someone else here I can talk to?”

Back to top ^


Webinars

The Double-Edged Sword of Discretion: How Even Great Plan Document Language Can Cause Gaps in Coverage

On April 27, 2017, The Phia Group will present “The Double-Edged Sword of Discretion: How Even Great Plan Document Language Can Cause Gaps in Coverage.”

Click HERE to Register!

On March 23, 2017, The Phia Group presented “Medical Bill Blues: Pre-Payment Contracting and Negotiation, Pricing Alternatives, and Post-Payment Recovery of Overpayments,” where we analyzed the various ups and downs we associate with "provider relations.”

On February 15, 2017, The Phia Group presented “Top Miscues Employers Make When It Comes To Their Health Plans ... And What We All Can Do To Become Health Plan Heroes.”

On January 19, 2017, The Phia Group presented “Back to The Self-Funding Future – Which Echoes of 2016 Will Continue to Impact Self-Funding in 2017,” where our legal team talks about how the past decade has ushered in both outrage and opportunity for self-funded plans.

On January 4, 2017, The Phia Group presented a brief webinar to describe some changes recently made to our reporting portal.

Back to top ^


Podcasts

On April 4, 2017, The Phia Group presented “The AHCA Failed: Where To Next,” where our legal team discusses the recent, stunning failure of the GOP’s American Health Care Act.

On March 13, 2017, The Phia Group presented “Attack of the Killer Savings,” where we identify facilities that provide the best outcomes for the least cost.

On February 28, 2017, The Phia Group presented “The Journey Continues,” where Adam Russo & Ron Peck discuss what makes our health benefit plan unique.

On February 13, 2017, The Phia Group presented “The Next Episode,” where we talked about what makes our health plan a source of savings.

On January 30, 2017, The Phia Group presented our very first podcast, “The Maiden Voyage.”

Back to top ^


The Phia Group’s 2017 Charity

The Phia Group's 2017 charity is the Boys & Girls Club of Brockton. 

The mission of The Boys & Girls Club is to nurture strong minds, healthy bodies, and community spirit through youth-driven quality programming in a safe and fun environment.

The Boys & Girls Club of Brockton (BGCB) was founded in 1990 to create a positive place for the youth of Brockton, Massachusetts. It immediately met a need in the community; in the first year alone, 500 youths, ages 8-18, signed up as club members. In the 25 years since, the club has expanded its scope exponentially by offering a mix of Boys & Girls Clubs of America (BGCA) nationally developed programs and activities unique to this club.

Since their founding, more than 20,000 Brockton youth have been welcomed through their doors. Currently, they serve more than 1,000 boys and girls ages 5-18 annually through academic year and summertime programming.

Monthly Donations From Phia

For more information or to get involved, visit www.bgcbrockton.org.

Back to top ^


The Stacks

Self-Funded Health Plans May Have a New Ally in the Fight Against Specialty Drug Prices
By: Brady Bizarro, Esq.


Throughout the bitter and seemingly endless presidential election cycle, Donald Trump and Hillary Clinton vehemently disagreed on almost every issue, especially those involving health policy. Yet, there was at least one health policy issue on which both candidates agreed: prescription drugs are too expensive. For self-funded health plans, this is old news. The industry continues to face increasing costs overall, and prescription drugs make up a significant portion of those costs. Specialty drugs are particularly culpable. Specialty drugs accounted for 32 percent of all drug expenditures in 2014 despite making up less than one percent of all written prescriptions, according to research conducted by Express Scripts.

Click here to read the rest of this article.


Appealing to Reason
By: Jon A. Jablon, Esq.

The language is exceedingly common within benefit plans. We’ve all seen it; in order to appeal a denial, a medical provider must be specifically appointed by the patient as the patient’s “authorized representative.” Only members may appeal their own claims, unless they appoint someone to do so. Some third-party administrators and plan administrators even have a form that a member must fill out. These are long-held maxims by many – but are they truly compliant?

Click here to read the rest of this article.

Held Captive by Appeals
By: Tim Callender, Esq.

Prior to the passage of the Affordable Care Act, self-funding was already healthy and growing. Since the passage of the Affordable Care Act (and predominantly due to the ironic increase in healthcare insurance costs through the fully-insured, carrier model) we have seen self-funding grow even more. Although this growth has been significant, there are some employer groups – primarily small and mid-sized groups – that have struggled to find a sustainable path into self-funding nonetheless.

Click here to read the rest of this article.

As Employer-Sponsored Plans Multiply, Self-Funding Remains an Attractive Option
By: Brady Bizarro

As the new year begins, we can reflect on annual reports and surveys recently released by federal agencies and non-profit organizations which measure public and private healthcare spending and reveal trends in national health policy. One of the most prominent reports is the National Health Expenditure Accounts report, which was released in December by the Centers for Medicare and Medicaid Services. Some of CMS's findings forecast tough times ahead for employer-sponsored health insurance. Now, more than ever, employers will need to develop innovative approaches to continue offering affordable coverage to their employees.

Click here to read the rest of this article.

 

To stay up to date on other industry news, please visit our blog.

Back to top ^


Phia’s Speaking Events

Adam Russo’s 2017 Speaking Engagements:
• 2/22/17 – TABA Spring Conference – Austin, TX
“The Good, The Bad, and the Naughty – Ethics: Simple Mistakes vs. Breach”
• 3/16/17 - IMA National Independent Agency Consortium – Bonita Springs, FL
“Not Your Grandmother’s Self-Funding: Best Practices for a Changing Industry”
• 3/21/17 – Advantage Benefits RBP Seminar – Grand Rapids, MI
“The Best Gets Better - Getting the Most Out of Your Self-Funded Plan”

Adam Russo’s Upcoming Speaking Engagements in 2017:
• 4/24/17 - Berkley Captive Symposium – Grand Cayman Islands
“The Best Gets Better - Getting the Most Out of Your Self-Funded Plan”
• 5/4/17 – Benefest – Westborough, MA
"Multiple Personalities - The Biggest Issues Impacting Plans & Employers, and Instances Where They are Their Own Worst Enemy"

Ron Peck’s 2017 Speaking Engagements:
• 4/3/2017 – Eastern Claims Conference (ECC) – Boston, MA
“The Good, The Bad, and The Ugly: Understanding Reference Based Pricing in the Special Risk Market”

Tim Callender’s 2017 Speaking Engagements:
• 2/2/17 – Alaska Association of Health Underwriters – Anchorage, AK
“Innovation and Cost-Containment In the Self-Funded Space”
• 2/27/17 – LBG Advisors: Benefits Symposium – Anaheim, CA
“Innovation and Cost-Containment In the Self-Funded Space”

Tim Callender’s Upcoming Speaking Engagements in 2017
• 5/22/17 - Group Underwriters Association of America Annual Conference - Denver, CO
“The Future of Health Plans”
• 7/17/17 - Health Care Administrator’s Association TPA Summit - St. Louis, MO
“Conference Emcee”

Jen McCormick’s 2017 Speaking Engagements:
• 3/29/17 – SIIA Executive Forum – Tucson, AZ
“Department of Labor Audits”

Brady Bizarro’s 2017 Speaking Engagements:
• 1/22/17 – Texas Association of Benefit Administrators (TABA) – Austin, TX
“Healthcare Policy under the Trump Administration”


Back to top ^


Get to Know Our Employee of the Quarter:
Erik Graber

Congratulations to Erik Graber, the Phia Group’s Q1 2017 Employee of the Quarter!

“Erik embodies everything Phia is about from our mission statement to our vision to our culture.  Throughout Q1, Erik has been tenacious in his pursuit of teaching and training new team members; giving them the tools essential to succeed in their roles.  The life of an IT Director is not a glamorous one and Erik works assiduously, oftentimes nights and weekends – sacrificing precious family time – to meeting and exceeding his goals and deadlines to ensure our company runs seamlessly.  If there is an issue you can rest assured Erik will promptly handle the matter – possibly with a bit of sass and sarcasm!  Erik is truly an asset to The Phia Group, and we’re fortunate to have him!”


Congratulations Erik and thank you for your many current and future contributions.

Back to top ^


Phia News

Promotions at Phia:
• Keith McMahon was promoted from CI to CRS III
• Lauren Vermette was promoted from legal assistant role to CI
• Cara Carll was promoted to Team Leader of the MedPay & Work Comp. Tier
• Kerri Sherman was promoted to Team Leader of BI Tier & Case Investigation
• James Newell was promoted to Team Leader of Claim & Case Support
• Angela Grande was promoted to CRS III
• Katie Delaney was promoted to Team Leader of the Quality Analysts.
• Jude McNeil was promoted to Team Leader of the Call Center in Customer Service
• Lisamarie DeCristoforo was promoted to Team Leader of Case Evaluation in Customer Service

New Hires This Quarter:
The Phia Group has added 5 new employees to its staff this quarter. They include:
• Matthew Painten was hired into our Marketing department
• Jeff Hanna was hired into our Accounting department
• Randal Moody was hired into our IT department
• Krista Maschinot was hired into our Phia Group Consulting department
• Victoria Pace was hired into our Phia Group Consulting department

Open Positions at Phia
• Case investigator
• Attorney I
• ETL Specialist
• Data Architect
• IT Technologist
• Product Analyst

Click here for more information or to apply today!

Additions to the Phamily:
• Tara Trojano gave birth to a baby girl, Emily Rose, on 02/09/17
• Liz Welcome gave birth to a baby boy, Quinton Jay Robert Pereira, on 02/01/17


Back to top ^


 

info@phiagroup.com
781-535-5600

The Stacks – 2nd Quarter 2017

On April 14, 2017
Self-Funded Health Plans May Have a New Ally in the Fight Against Specialty Drug Prices
By Brady Bizarro, Esq.

Throughout the bitter and seemingly endless presidential election cycle, Donald Trump and Hillary Clinton vehemently disagreed on almost every issue, especially those involving health policy. Yet, there was at least one health policy issue on which both candidates agreed: prescription drugs are too expensive. For self-funded health plans, this is old news. The industry continues to face increasing costs overall, and prescription drugs make up a significant portion of those costs. Specialty drugs are particularly culpable. Specialty drugs accounted for 32 percent of all drug expenditures in 2014 despite making up less than one percent of all written prescriptions, according to research conducted by Express Scripts.

Self-funded health plans employ a variety of cost-containment strategies in an effort to ameliorate the fiscal burden of prescription drugs. These include increased cost-sharing (through copayments, coinsurance, and deductibles) and utilizing manufacturer copay cards and tiered benefit programs. Now, the self-funded industry may be given new tools by the President-elect to fight the pharmaceutical companies.

Chief among President-elect Trump’s health policy priorities is his campaign promise to “repeal and replace” the Affordable Care Act. In addition, he has announced at least two priorities which depart from conventional conservative thinking and have important implications for the future of self-funding: requiring price transparency from all healthcare providers and permitting consumers to import drugs from overseas.

As part of Trump’s plan for “Healthcare Reform to Make America Great Again,” the President-elect proposed that Congress must:

Remove barriers to entry into free markets for drug providers that offer safe, reliable and cheaper products. Congress will need the courage to step away from the special interests and do what is right for America. Though the pharmaceutical industry is in the private sector, drug companies provide a public service. Allowing consumers access to imported, safe and dependable drugs from overseas will bring more options to consumers.

It is hard to overestimate the savings a self-funded health plan can realize if permitted to import drugs from overseas. One of the main reasons why prices for brand-name drugs are typically lower in most developed countries than in the U.S. is because of increased negotiating power. In the U.S., the government has forfeited its negotiating power. Medicare, the largest single purchaser of prescription drugs in the U.S., is prohibited by law from negotiating prices with pharmaceutical companies. By contrast, in the United Kingdom, brand-name drug prices are generally much lower because the government and the industry negotiate agreements which contain set spending caps and require drug companies to reimburse the government any amount which exceeds the cap. While some of these agreements do contain opt-out provisions for the reimbursement requirement, most pharmaceutical companies agree to these contracts as-is in order to gain access to a much larger market.

Also consider the case of Canada, which is often touted as a prime example of a source of low-cost prescription drugs. The Canadian government negotiates with pharmaceutical companies on behalf of the public. As a result, brand-name and even generic drugs are less expensive in Canada than they are in the United States. In 2004, the median prescription drug prices in Canada were nearly 79 percent lower than those in the U.S., according to the Patent Medicine Prices Review Board Annual Report. The 2013 report revealed that Canadian consumers still paid less than half of what U.S. consumers paid for patented-drug products. If the President-elect succeeds in pushing through legislation which ends the ban on foreign drug imports, U.S. consumers could realize similar savings.

This would not be the first time that a politician has attempted to lift the ban on importing foreign drugs. The Safe and Affordable Drugs from Canada Act of 2015 was sponsored by Senator John McCain (R-AZ) and had bi-partisan support, including from Senator Bernie Sanders (D-VT). The bill remains stalled in the Senate Committee on Health, Education, Labor, and Pensions. There was also an attempt to permit importation in 2009 while the Affordable Care Act was being pushed by Democrats, but that effort also failed. Despite past failed attempts, there are many reasons to think that the importation of prescription drugs from overseas may actually become legal (at least in some form) under a Trump Administration.

First, public support for change and increased price transparency is at an all-time high, especially in light of recent, high-profile price-gouging controversies. In August 2015, Turing Pharmaceuticals acquired the exclusive rights to distribute Daraprim, a drug used to treat AIDS-related symptoms. A month later, the company raised the price of Daraprim from $13.50 per pill to $750 per pill overnight, an increase of over 5,500 percent (before 2010, the drug cost $1 per pill). A joint study by the Infectious Disease Society of America and the HIV Medicine Association found that the increase in price would result in an average bill of $634,500 per year for most patients. In response to the public outcry, the CEO of Turing Pharmaceuticals defended his company’s actions, citing the need to modernize the drug and create new alternatives with fewer side effects. A year later, the price of the drug is $375 in the U.S., and between $1 and $2 per pill internationally.

Turing Pharmaceuticals is not the only company to drastically increase the price of its brand-name drugs and face near-universal criticism. Mylan, a global generic and specialty pharmaceuticals company, faced an even bigger political firestorm in the summer of 2016 when it raised the price of a two-pack supply of its popular EpiPen to $608 (the same two-pack EpiPen is available in the United Kingdom for $69). The EpiPen, which sold for $100 as recently as 2009, is an epinephrine auto injector device used to control allergic reactions to food and environmental allergens. What made this case more contentious was a media report revealing that over the past eight years, while the price of EpiPens increased 461 percent, the salary of Mylan’s CEO rose 671 percent, up to $18.9 million a year.

Although many experts agree that these examples are egregious, it is important to note that there are enormous costs associated with pharmaceutical research and development. Furthermore, there is a very real need to encourage drug development as a matter of good public health and public policy. This is why the U.S. government provides regulatory protections to assist pharmaceutical firms in the development of life-saving drugs. Nonetheless, recent polling confirms that Americans are fed up with the price of brand-name drugs. Nearly eight in ten Americans agree that drugs are too expensive, and almost 86 percent agree that pharmaceutical companies should be required to reveal how drug prices are set, according to a survey released by the Kaiser Family Foundation in September 2016.

In addition to the public outcry over specific pricing controversies, the Food and Drug Administration (FDA) has sent mixed signals regarding the agency’s willingness to enforce the ban on foreign drug imports. The FDA’s website explains that the agency has a policy “that it typically does not object to personal imports of drugs that FDA has not approved under certain circumstances . . .” Those circumstances include when less than a three-month supply is imported, and when the consumer importing the drug verifies in writing that it is for her own use and provides contact information for the doctor providing her treatment.

Perhaps most importantly, President-elect Trump will enjoy the benefits of a Republican-controlled House and Senate. While in recent weeks he has shown signs of scaling back some of his campaign promises, this particular health policy initiative enjoys bi-partisan support. As such, there may be no better opportunity to push through legislation lifting the ban on safe, dependable imported drugs.

Appealing to Reason
By Jon A. Jablon, Esq.

The language is exceedingly common within benefit plans. We’ve all seen it; in order to appeal a denial, a medical provider must be specifically appointed by the patient as the patient’s “authorized representative.” Only members may appeal their own claims, unless they appoint someone to do so. Some third-party administrators and plan administrators even have a form that a member must fill out. These are long-held maxims by many – but are they truly compliant?

In what it has deemed a frequently asked question, the Department of Labor, in its Benefit Claims Procedure Regulation FAQs , has asked itself “Does an assignment of benefits by a claimant to a health care provider constitute the designation of an authorized representative?” The Department of Labor simply, and helpfully, led its answer with the word “no.” To elaborate on this “no,” the DOL wrote that “Typically, assignments are not a grant of authority to act on a claimant's behalf in pursuing and appealing a benefit determination under a plan.”

But how much does that truly clarify? Without some context, it is fairly unhelpful – and in context, it is revealed that this guidance from the DOL is somewhat inaccurate.

An authorized representative is one who is authorized to act as the representative of another – a description that could scarcely be any clearer. In our sense, an authorized representative is generally used in the context of the right to appeal. To illustrate the utility of this concept, consider three scenarios; in all three, a plan member has received services from a non-contracted medical provider, and in all three the Plan’s available benefits are not quite enough to cover the provider’s full billed charges. Appeals will occur – but the difference in the scenarios hinges on exactly who is appealing, and on whose behalf.

In scenario number one, the health plan systemically prohibits all assignments of benefits, and pays benefits directly to the member. The member endorses the Plan’s payment to the provider to compensate the provider for its services – but the provider is dissatisfied with the payment amount. In this scenario number one, the provider may not appeal to the health plan unless the provider appeals on the patient’s behalf, since the provider itself was due benefits from the patient, rather than from the health plan, since there was no assignment of benefits – and in such case the provider would need to be appointed by the member as the member’s authorized representative, since the provider has no independent right to benefits from the health plan in this scenario. In other words, the provider would need to appeal on the member’s behalf, and would therefore need to be the member’s authorized representative to do so.

In scenario number two, there is again no assignment of benefits, but the provider decides to balance-bill the member instead of getting involved in the appeals process. The member, rather than the provider, appeals directly to the Plan. Members, of course, are always claimants and are always entitled to appeal to the health plan if the member feels that a greater amount of benefits should be paid. In this scenario two, there is no need for the member to appoint the provider as the member’s authorized representative, since the member needs no representative if she appeals on her own behalf.

Now, consider scenario number three, where there is a valid assignment of benefits from the member to the provider (as is almost universally the case in self-funded health care). Through the assignment of benefits, the provider is invited to submit its claims directly to the health plan, and receives only partial payment of its billed charges in return. In this scenario three, the provider desires to appeal the denial. The provider submits an appeal to the health plan – in accordance with all of the plan’s written and established procedures – and the third-party administrator answers the provider with a letter stating that only members may appeal, unless the member fills out a specific form to authorize the provider to appeal on the member’s behalf. How compliant is that, though? Might the health plan be at risk of noncompliance if it denies providers the right to appeal their own claims?

An authorized representative, as described above, is one who is authorized to be the representative of another. In a case such as this, a medical provider might be authorized to act as the representative of the member, therefore becoming the member’s personal representative. Consider, however, federal regulations that afford all claimants the right to appeal; claimant is a term of art that explicitly includes participants and beneficiaries . A beneficiary is defined as “a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.”

Forget the legalese; the important thing is to note that medical providers, if benefits are assigned to them, are beneficiaries, as that term is defined by the regulations – and beneficiaries become claimants when they submit claims to the health plan. If you remember, all claimants are empowered to submit claims to the health plan, appeal a denial of those claims, and even ultimately sue for redress under ERISA. (As one court put it, “there is now a broad consensus that when a patient assigns payment of insurance benefits to a healthcare provider, that provider gains standing to sue for that payment under ERISA § 502(a). ”)

The same regulation that defines “claimant” also provides that:

Every employee benefit plan shall establish and maintain a procedure by which a claimant shall have a reasonable opportunity to appeal an adverse benefit determination to an appropriate named fiduciary of the plan, and under which there will be a full and fair review of the claim and the adverse benefit determination.

According to these regulations, not only are claimants afforded the right to file claims, but they are also guaranteed the right to appeal, by imposing this responsibility upon the health plan to afford claimants the right to appeal. The relevant regulations unambiguously explain that a claimant may appeal an adverse benefit determination. Moreover, the text of ERISA itself provides that “A civil action may be brought…by a participant or beneficiary…to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan. ” To simplify, again, claimants can sue for benefits. Since medical providers are claimants if they are assigned plan benefits, then providers can appeal and ultimately sue if necessary.

As another court wrote, somewhat more bluntly, “the assignment is only as good as payment if the provider can enforce it. ” This is a matter of public policy, and seems fairly intuitive; if a provider has the right to submit a claim, and the health plan has the right to tender a denial of that claim, practically speaking, why should the provider not also have the right to appeal the denial of its claim? According to courts and the regulations, the provider does in fact have this right.

We now know that medical providers who have been assigned benefits can submit claims, appeal denials of those claims, and sue for redress pursuant to ERIA. It should be noted, however, that although the law on the topic may be established, not everyone is on the same page, as is so often the case in our industry.

The DOL’s answer to its own question (“Does an assignment of benefits by a claimant to a health care provider constitute the designation of an authorized representative?”) continues by specifying that “An assignment of benefits by a claimant is generally limited to assignment of the claimant's right to receive a benefit payment under the terms of the plan.”

But how can that be the case? Claimants have the right to appeal, and claimants include anyone “designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.” The regulations say one thing, but the DOL’s FAQ seems to say the opposite.

The DOL’s answer to its own question yields an absurd conclusion: that a provider that has accepted an assignment of benefits and submitted claims to a health plan is not a claimant. According to applicable law, however, either the provider accepts assignment of benefits and submits claims, and therefore earns the right to appeal and sue – or the provider does none of those things. These rights are not discrete; they are a package deal, inseparable from one another. Each right – the right to submit claims, the right to appeal a denial, and the right to sue under ERISA – has “not for individual sale” marked on its label.

The confusion doesn’t stop there, though. Coming back to the Department of Labor’s answer to its own frequently asked question, the Department has stated that “[t]ypically, assignments are not a grant of authority to act on a claimant's behalf in pursuing and appealing a benefit determination under a plan.” This is a correct statement, although very misleading in context. It is true that an assignment of benefits does not grant a provider authority to act on a claimant’s behalf – because a provider who has received an assignment of benefits is a claimant unto itself, and is not acting on anyone else’s behalf. The provider therefore needs no authority to act on anyone’s behalf.

Where do we go from here? There is conflicting guidance; FAQs are suggestive rather than binding, but most take them as gospel nonetheless, since they are explicitly designed to be written in plain English rather than the legalese of the regulations.

The rules surrounding who has what rights and under what circumstances are undoubtedly confusing at times; guidance provided by our regulators is sometimes confusing, vague, and – at times – even contradictory. This is one of those times, and affording all relevant rights to medical providers is an important topic now more than ever in the face of incoming bouts of regulatory scrutiny of the self-funded industry and the fiduciaries who act within this space.

As health plans struggle to contain costs, health plan administrators, third-party administrators, and brokers should be careful not to handicap themselves by employing the same thinking as prior decades simply because that’s what has always been done. Performing an in-depth review of claims and appeal processes – and the rest of the health plan to boot – is the best way of staying ahead of the curve and ensuring compliance and viability.

Held Captive by Appeals
By: Tim Callender, Esq.

Prior to the passage of the Affordable Care Act, self-funding was already healthy and growing.  Since the passage of the Affordable Care Act (and predominantly due to the ironic increase in healthcare insurance costs through the fully-insured, carrier model) we have seen self-funding grow even more.

Although this growth has been significant, there are some employer groups – primarily small and mid-sized groups – that have struggled to find a sustainable path into self-funding nonetheless.  For purposes of this article I will refer to these employers as “Small-Mids.”  Obviously, opinions differ as to what a “small” or “mid-sized” employer group is, but for today’s discussion, we are looking at employer groups ranging from 50 employees up to approximately 200 employees.  

One of the primary barriers to entry for Small-Mids is the financial risk inherent to the self-funded model.  Even with a stop-loss policy in place (assuming the employer is domiciled in a state that has not regulated stop-loss to the point of making it prohibitive to gain a policy for a small to mid-sized employer), many Small-Mids do not have the cash reserves necessary to make it through a high health spend year before stop-loss reimbursement might kick in. There are programs in the market such as “level-funding” whereby an employer’s risk is effectively capped at a certain figure in exchange for a set monthly expense, but such programs are still in their infancy and not very widely-used.

 In the traditional market, however, figure in a handful of dialysis claims, one or two air ambulance claims, and one plan member on a growth hormone prescription, and the Small-Mid is running for the hills.  Lest we forget that Small-Mids are often terrified of financial ruin on many fronts to begin with, let alone bearing the risk of high claims exposure.  For them, it is unquestionably easier to sign up for that prototypical fully-insured option and trade financial risk for predictable premiums. The problem, though, is that predictable premiums are generally high premiums.

Another barrier to entry for the Small-Mids is the appeals experience.  “What do you mean, ‘appeals experience,’ Tim?” you might ask.  In short, as those of us working in the self-funded health plan space know, a health claim’s denial triggers appeals rights.  These appeals may be pursued by the plan member, a plan beneficiary, or even the medical provider through an assignment of benefits or appeals authorization.  The typical claims and appeals cycle tends to look something like this:

(1)    A claim for health benefits is submitted to the plan-sponsor’s third-party administrator by the Claimant (the Claimant might be the plan member, a plan beneficiary, or a medical provider);
(2)    The claim is adjudicated, by the TPA, pursuant to the terms of the governing plan document, as created and adopted by the plan-sponsor;
(3)    The claim is denied pursuant to the terms of the plan document;
(4)    The Claimant files a first-level appeal.
(5)    The first-level appeal is handled by the TPA.  Sometimes input from the plan-sponsor is solicited, sometimes not.  Every TPA / plan-sponsor relationship is different.
(6)    The denial of benefits is upheld by the TPA / plan-sponsor at the conclusion of the first-level appeal process.
(7)    The Claimant files a second-level appeal.  
(8)    The TPA will handle the second-level appeal in one of two ways: (i) it will review the second-level appeal, provide a recommendation to the plan-sponsor regarding the determination, and ask the plan-sponsor to make a final determination based on the TPA’s recommendation; or (ii) the TPA will submit the second-level appeal to the plan-sponsor, in its entirety, for the plan-sponsor to review and determine, on its own, whether the denial should be upheld or overturned.
It is step (8) where the wheels typically come off for an existing self-funded plan and it is step (8) that is a significant barrier for Small-Mids to get past when they analyze and consider self-funding.  Imagine a Small-Mid that is privately held and made up of hard-working, blue-collar employees and blue-collar leaders who have risen to positions such as Vice President of H.R., or Chief Operations Officer.  Suddenly, it is these leaders who are faced with a second-level appeal based on the medical necessity of cortisone injections for the treatment of migraines; suddenly it is these leaders who are faced with a second-level appeal based on the interpretation of a complex plan exclusion, such as the “hazardous activities exclusion” or the “illegal acts exclusion.”  We have all heard these stories and we are all familiar with the fallout that might occur when a Small-Mid is faced with this daunting task.  

Additionally, how many stories exist of the closely held Small-Mid’s leadership team suddenly faced with a second-level appeal that directly concerns their highest performing sales person?  Or, more generally, consider the heartache involved for any Small-Mid’s leadership team when they must decide an appeal on a health claim for a well-known and well-loved employee, regardless of his or her title! Many Small-Mids have close-knit employee populations, many of whom have been coworkers and friends for years.
 How many times have we heard, “we make motorcycle clutches and just wanted to provide our employees with good health benefits!  We never signed up to make these types of decisions!”  Another group leaves self-funding and then the horror stories trickle downstream, preventing other Small-Mids from moving toward self-funding.  Or, if the Small-Mid stays in the self-funded space, there is a very real chance that they unknowingly breach their fiduciary duty as a plan-sponsor, time and again, when they throw their hands in the air and pay claims that should not be paid pursuant to the governing plan document, simply because of the emotion, heartache, and the difficulty of handling complex appeals.

Solutions to the problems discussed above do exist, and these solutions are exploding across the industry and across the country.  The captive model is one such solution, primarily focused as a remedy to the Small-Mid’s concern over self-funding and financial devastation.  Captive risk-sharing is not a new idea – yet it is not as common in the self-funded health space as we all might think.  Time and again, my colleagues and I are surprised as we travel and speak on self-funding topics, all around the country, to learn that many employers, not to mention their brokers, have either never heard of captive risk sharing or have simply never invested the time to learn much beyond the basics.  

The proof is in the pudding. The numbers show that properly-run captive programs, filled with Small-Mids, are breaking down doors and bringing Small-Mids into self-funding through the assurance of responsible, managed risk-sharing.  Whether heterogeneous (made up of groups spanning multiple industries) or homogeneous (groups within the same industry) in makeup, a captive provides a common goal amongst its members to keep costs down and prop one another up through the safety net of a pool of funds that many might view as a “rainy day fund.”  

Regarding the second barrier to entry for Small-Mids, directly handling health claim appeals, there are solutions covering that problem as well.  Third-party, second-level appeals outsourcing is becoming more prominent in the self-funded industry.  Historically, the only option that might exist for a plan sponsor was to hope it landed with a TPA that might be willing to handle second-level appeals, usually for a fee.  But, most TPAs steer away from this administrative add-on for two reasons.  (1) it drastically blurs the line between who is acting as a fiduciary for the plan and (2) it can create a potential conflict of interest and call objectivity into question when the same entity has adjudicated the initial claim, handled the first appeal, and then went on to handle the second appeal.  

Figure in a solution that can handle the appeals concerns discussed above and we are looking at the pinnacle method to eliminate the two most prominent barriers to self-funding faced by Small-Mids: financial concerns over claims exposure, and managing appeals.  

As Employer-Sponsored Plans Multiply, Self-Funding Remains an Attractive Option
By Brady Bizarro, Esq.

As the new year begins, we can reflect on annual reports and surveys recently released by federal agencies and non-profit organizations which measure public and private healthcare spending and reveal trends in national health policy. One of the most prominent reports is the National Health Expenditure Accounts report, which was released in December by the Centers for Medicare and Medicaid Services. Some of CMS's findings forecast tough times ahead for employer-sponsored health insurance. Now, more than ever, employers will need to develop innovative approaches to continue offering affordable coverage to their employees.

Healthcare expenditures grew more than two percent faster than the overall economy in 2015. Spending was up overall by nearly six percent in 2015, up to $3.2 trillion, or $9,990 a person. Private health insurance spending increased by seven percent, with annual premiums for employer-sponsored family plans already topping $18,000 this year (up three percent from last year). Prescription drug spending, high-cost patients, and an increased use of services were cited as the primary cost drivers.

To the surprise of many health policy experts, many of whom had warned of a mass exodus from employer-sponsored plans to the exchanges, the CMS data also shows that enrollment in employer-sponsored plans rose slightly in 2015. As a result, an increasing number of small and mid-sized employers in particular will face the burden of soaring healthcare costs in 2017.

Self-funding an employee health plan remains one of the most effective cost-containment strategies for employers with a relatively healthy workforce and a willingness to customize a plan. From 2013 to 2015, the number of mid-sized firms that "self-insure" jumped nearly 20 percent, according to the Employee Benefit Research Institute. Among small companies, that share is now up seven percent. As the cost of maintaining fully-funded plans continues to rise, in large part spurred by the Affordable Care Act's coverage mandates, we can expect these numbers to rise.

Self-funding provides employers with flexibility and the opportunity for employee engagement when designing their health plans. Employers can avoid many state-based coverage mandates and administrative costs because of federal preemption of state health insurance regulations. They can work with third-party vendors to analyze claims data and implement unique risk controls such as wellness programs, smoking cessation initiatives, and tiered prescription drug benefits.

A more recent development in the self-funded industry has been the increased use of employer incentive programs. These programs reward employees with cash and other incentives if they create savings for the health plan by voluntarily obtaining care from lower-cost healthcare providers. Many resources exist that enable employees to determine what various providers of different medical services commonly charge for certain services, and what to expect in terms of the quality of their outcomes. For example, third-party organizations routinely provide objective analyses of medical billing by claim type and by facility, while others measure how many mistakes are made by providers. These resources provide quality metrics, a comparison of prices, and even letter grades based on factors such as quality outcomes and lack of provider error. In its Review of State Reports (2008-2015), Freedman Healthcare confirms that "high prices do not directly correlate with high quality of care -- in other words, the highest paid providers do not necessarily provide the highest quality of care." For some procedures, the price discrepancy can be substantial. For example, one employer reported a price difference of $18,000 for a gastric sleeve procedure between two facilities in Louisiana.

While these programs can help alleviate the financial burden, cost will not be the only concern for employer-sponsored care this year. Under a new administration, employers will also face legislative and regulatory uncertainty. President-elect Trump has vowed not only to repeal and replace the Affordable Care Act, but to reduce regulations overall at the federal level. This would be a welcome development for employers, but it remains to be seen which provisions of the Affordable Care Act will be left in place. For example, if the Trump Administration moves to repeal the employer mandate, employers would no longer be required to offer health insurance to their full-time employees. Also, employers would no longer need to report coverage to the IRS or determine the value and affordability of their plans.

Despite the uncertainty, Trump has promised to keep in place two of the most popular ACA provisions; the ban on denying coverage to individuals with pre-existing conditions and the extension of dependent coverage up until age 26. Health policy experts have warned that these two components of the ACA are only viable if accompanied by coverage mandates, which would diversify insurance risk pools. Whether or not the employer mandate is preserved, employers seeking affordable coverage options for their employees will continue to benefit from the flexibility of self-insuring.




The Phia Group's 1st Quarter 2017 Newsletter

On January 17, 2017


Alternatively, you can download the file here.

The Stacks - 4th quarter 2016

On January 3, 2017
Section 1557: Removing the Gender Divide in Employer Medical Plans
By Jennifer M. McCormick, Esq.


The fourth quarter is exciting. Not only do we have the holidays to look forward to, but we have so many opportunities and ideas to contemplate for the upcoming plan year. Generally, over the course of the year we see regulations take effect and guidance clarified, and even learn some new cost containment techniques. Unfortunately, this does not always mean that we know exactly what must be revised in our health plan documents for the upcoming plan year in order to ensure we fully implement these compliance updates and cost savings. To complicate matters, we’re on the edge of our seats to see whether (and how) the recent presidential election could further disrupt the Affordable Care Act (ACA).

This is particularly true for some employer groups who are questioning what (if anything) they must modify in their health plan to comply with the ACA non-discrimination rule. In order to alleviate any heartburn this specific aspect of ACA may cause for the upcoming renewal season, let’s try and break down what Section 1557 really means for plan sponsors.

What Is Section 1557?

Section 1557 prohibits discrimination in certain health programs and activities on the basis of race, color, national origin, sex, age, or disability. It’s not news that discrimination against an individual on the basis of race, color, national origin or disability is prohibited – but – Section 1557’s expansion of these protected classes to now include discrimination on the basis of sex, is. As with other new regulations, the issued guidance leaves us with a lack of clarity and many unanswered questions; however, despite confusion and uncertainty, employers are still required to review and potentially revise internal processes and documents.

This article focuses on the new classification of “sex” and the new corresponding considerations for plan sponsors. For instance, if Section 1557 is applicable to an employer’s health plan, that plan cannot discriminate based on gender identity, meaning it cannot deny coverage based on an individual’s sex or gender identity (i.e. an individual’s internal sense of gender, which may be male, female, neither or a combination).

Prior to making any Section 1557 related updates, however, it is important to understand what is required, and of whom. For example: (1) who must comply with Section 1557; (2) what does Section 1557 exactly require; (3) are there exceptions; and (4) what must change?

Who Must Comply?

When more closely examined, the scope of Section 1557 is not particularly vast as it is only applicable to particular covered entities. For the purpose of this rule, a covered entity is an entity that operates a health program or activity, any part of which receives Federal financial assistance. Specifically, covered entities include all health programs and activities, any part of which receive federal assistance from HHS, health programs and activities administered by HHS (including the Federal Marketplace), and health programs and activities administered by entities under Title I of the ACA (including State Marketplaces).
This generally means that an entity that receives a grant, loan, or subsidy or has another arrangement whether the federal government provides funds, services of federal personnel or property (real or personal) is subject to the Section 1557.

Entities likely subject to Section 1557 include those involved in the administration of health care. For example, health insurance issuers, hospitals, health clinics, physicians’ practices, pharmacies, nursing homes, dialysis facilities, community health centers, providers that accept Medicare, and issuers on the Marketplace are generally subject to Section 1557.

Once applicability of Section 1557 is confirmed, the entity must next make compliance related changes. Ensuring compliance is difficult, particularly since the text of Section 1557 describes what must not be done, instead of what must be done.

What’s Required?

According to the rule, an entity subject to Section 1557 must not: (1) deny, cancel, limit or refuse to issue health coverage based on sex; (2) deny or limit a claim; (3) impose additional cost sharing; or (4) employ discriminatory marketing or benefit design. Specifically, this means a health plan must not deny or limit treatment for any health care that is ordinarily or exclusively available to individuals of one gender based on the fact that the person seeking services identifies as belonging to another or different gender.

While effective as of July 18, 2016, if Section 1557 requires changes to a health plan, the rule does not become effective for the health plan until the first day of the first plan year beginning on or after January 1, 2017.

Changes to a health plan will be necessary if the plan design denies coverage based on gender identity, denies treatment or access to facilities for sex-specific ailments, categorically excludes services related to gender transition or excludes transition related treatment as experimental or cosmetic. As a result, health plan documents must be carefully reviewed and any relevant exclusionary language timely removed.

Additionally, entities subject to Section 1557 must comply with certain notice and tagline requirements. Unlike the health plan changes, these notice requirements took effect 90 days after the July 18, 2016 effective date.

One of the requirements is that notice be placed in significant publications and significant communications targeted to beneficiaries, enrollees, applicants, and members of the public. While the term ‘significant publications and significant communications’ has not been explicitly defined, the agencies suggested they will interpret this term broadly and it will not be limited to those publications or communications intended for a broad audience, but could also include those directed at individuals. As a result, it will be important for employers to review their communications to ensure compliance with the notice requirements.

Section 1557 outlines what must not be done with respect to benefits and requires that notices be included in certain materials, and hints at potential exceptions to these requirements.

Are There Any Exceptions?

This rule does not include an exception, unlike other ACA requirements which allow for certain exemptions and accommodations (i.e. the contraceptive piece of the preventive care requirement).

The rule, however, does state that certain protections already exist and Section 1557 would not displace regulations issued under the ACA related to preventive health services. Further, HHS did note that application of any requirement under Section 1557 which would violate applicable federal statutory protections for religious freedom and conscience is not required. Cases in multiple jurisdictions are currently underway and we expect to see additional guidance on this issue as a result of the litigation.

Additionally, a third party administrator (TPA) subject to Section 1557 does not render a plan for which it administers benefits automatically subject to Section 1557 (and vice versa). A TPA will only be liable for Section 1557 non-compliance if their own actions are discriminatory.

As it relates to the notice requirement, the preamble to Section 1557 did note that entities subject to the rule may exhaust their current supplies of significant publications and communications prior to incorporating the required notice.

What Must Change?

Guidance implies that Section 1557 will be interpreted broadly so entities must first decide if they are subject to the rule.

If subject to the rule, the health plan should be reviewed for compliance. Note that the rule does not explicitly require coverage of any particular service (either surgical or non-surgical) to treat gender dysphoria, gender identity disorder, or any individual that is transitioning genders, exclusions or coverage limitations related to sex, gender dsyphoria or sexual orientation must be removed. However, if a plan has an exclusion for sex change surgery for individuals diagnosed with gender dysphoria, it should be removed or modified.

Further, the rule does not require a plan to cover health care that is based on gender when the care is not deemed to be medically necessary (e.g. prostate exam for a woman that identifies as a transgender male). Additionally, a plan may use reasonable medical management to apply neutral, non-discriminatory standards (as long as it resulted from “a neutral rule or principle” when adopted and the reason for its coverage decision was not a pretext for discrimination).

If not subject to Section 1557, the health plan is not required to make benefit changes. The entity, however, should evaluate their risk tolerance as there is still the potential for the U.S. Equal Employment Opportunity Commission (EEOC) to investigate complaints of discrimination by the employer. Cases regarding plan exclusions of sex reassignment surgery are currently pending in the courts. Further, this should be a significant consideration after a federal court ruled on November 7, 2016 to deny a motion to dismiss a sex discrimination case that the EEOC had filed. Specifically, the EEOC’s motion explained that sexual orientation discrimination was a form of prohibited sex discrimination.

Even if an entity has a high tolerance for risk (or is not concerned about potential employment discrimination), consider other reasons for complying with Section 1557, including the impact on potential claims. According to a June 2016 study from the Williams Institute, there are an estimated 1.4 million adults who identify as transgender in the United States, or 0.6 % of the population. Many entities are opting to cover these benefits and coverage could be seen as a competitive advantage or good public relations.

Summary

Since the final rules were issued, insurers and other industry entities are taking a position on how to address Section 1557. Insurers are directly subject to 1557 and fully insured plans taking a conservative approach are being modified to include surgical and non-surgical treatment for gender dysphoria.

Employers subject to Section 1557, and those not subject but who wish to avoid EEOC scrutiny, should remove any exclusions from health plans which could be viewed as categorical exclusions of transgender services. The decision to cover or exclude transgender benefits, however, ultimately depends on the risk adversity of the employer. As a result, every employer and plan sponsor must review their situation on a case by case basis for Section 1557 applicability and modify relevant materials accordingly.

Of course all of this could become irrelevant if the ACA is repealed or replaced, so I guess we’ll have to wait and see…



How to Avoid Common Pitfalls When Managing a Self-Funded Health Plan
By Brady C. Bizarro, Esq.


Since the passage of the Affordable Care Act in 2010, employers have become increasingly aware of the potential financial benefits that come with adopting a self-funded health plan. A primary benefit of self-funding is that under the Employee Retirement Income Security Act, self-funded plans are shielded from the reach of state insurance regulations. States are unable to regulate these self-funded ERISA plans as they would fully-insured health plans.

As a result, employers are empowered to use innovative plan language to craft an affordable, flexible plan. Additionally, employers benefit from uniform coverage and cost continuity because a single plan can cover many employees in multiple states.

Despite the real advantages of self-funding, many employers still seek out tools they can use to transfer actual or perceived risk away from their plans. That's where incentives and disincentives come into play -- but there are potential pitfalls to be aware of.

Federal law expressly prohibits discrimination against plan participants based on sex, disability, health factors, and other criteria. For example, offering incentives to enroll in Medicare is not permitted according to the Medicare Secondary Payer Act. This is part of the basic structure of the act and, as might be expected, the regulatory bodies charged with enforcement take a very broad view of what actions might constitute such an incentive. While it may be intuitive for a plan to suggest that its participants can, for a monetary incentive, terminate coverage under the plan and instead become covered under Medicare, this runs afoul of the act.

According to the Department of Labor, an employer can't give a cash reimbursement for the purchase of an individual market policy. If it does so, the payment arrangement is part of a “plan, fund, or other arrangement established or maintained for the purpose of providing medical care to employees, without regard to whether the employer treats the money as pre-tax or post-tax to the employee.” Therefore, the arrangement is a group health plan under ERISA. Under the ACA, such arrangements can't be integrated with individual market policies. To be compliant with the ACA, a premium reimbursement plan (or HRA) must be integrated with a compliant group health plan.

Offering a choice between cash and health benefits is generally allowable, but the compensation can't be designated specifically for the payment of individual premiums. Any attempt to condition these payments on proof the employee enrolled in exchange coverage would therefore be noncompliant with the ACA.

An offer of cash in lieu of benefits would also be deemed discriminatory if made only to high risk or ill employees. Such an offer must be extended to all employees. It's also worth noting that if the employer offers affordable coverage which meets the minimum value requirements, employees would not be eligible for subsidies on the exchange -- and exchange coverage would therefore likely be less affordable or attractive to an employee than the employer’s group plan.

Modifying copays and deductibles is another way an employer can incentivize employee behavior. The Department of Labor indicates that a plan may waive or lower a copayment for the cost of certain services in order to encourage participants to seek a certain type of care -- such as well-baby visits or regular physicals. This can benefit the group by ensuring employees and their families are healthy. Similar to copayments, plans may waive or lower deductibles for certain services at the employer's discretion. It should be noted that a HSA-qualified high-deductible health plan is can't retain its HSA qualification if the plan pays first-dollar for services other than preventive care -- so HDHPs can't utilize deductible waivers as an incentive in most cases.

Just as providing incentives to employees may lower the cost of self-funding, so can disincentives.

The simplest type of disincentive is raising deductibles and even lowering the percentage of covered services. By doing this, the plan sends the message to participants that remaining enrolled in the plan may not be the best financial choice. At the very least, a raise in price may cause participants to explore other options.

However, employers should note that raising deductibles could adversely impact the plan in the form of driving even healthy lives to the exchanges. In other words, recklessly including high deductibles in a plan could drive away the very lives the plan needs to thrive, as well as those it wanted to disincentivize in the first place.

An alternative option to consider would be for the plan to have no deductible up to a certain point, at which point the deductible becomes applicable -- and the deductible is the highest permitted by applicable law. By doing so, the plan can ensure that the healthy lives it wants to keep on the plan are satisfied with the care offered because they won't have a deductible for their care.

A “skinny plan” is a type of plan that has been developed in the wake of the ACA. As the ACA imposes many requirements on self-funded plans, the skinny plan attempts to comply perfectly with the requirements of the ACA, and cover the bare minimum allowed by law. A skinny plan is a sort of bare-bones model -- it's generally considered not suitable to employees who have underlying conditions, who may need specialty care. The ACA doesn't require that the plan cover specialty care, so skinny plans don't cover a lot of services that many employees need on a regular basis.

The ACA requires that all large employers offer healthcare to their employees -- but there's no requirement that the employees enroll on the employer’s plan. If the employer offers a skinny plan, and many employees elect to not enroll due to its lack of coverage of services they may need, then the employer has still complied with the ACA.

One potential pitfall of offering a skinny plan may be relevant to employers with smaller employee bases; if not enough employees enroll, maintaining a self-funded plan may prove unfeasible. For this reason, offering a skinny plan is likely only a good option for larger employers.

Pursuing healthcare cost containment strategies is increasingly important for employers who wish to offer affordable health insurance to employees, especially after the passage of the ACA. Self-funded plans can benefit from creative plan design -- and managing risk with incentives and disincentives can provide even greater savings. Provided that employers can stay compliant with anti-discrimination regulations, self-funded health plans will continue to be uniquely flexible and offer real savings to both employers and employees alike.



Confessions of a Self-Insured Employer
By Adam V. Russo, Esq.


As an employer and founder of a business, I will never forget my first experience purchasing health insurance for my employees at The Phia Group. It was 2002 and I was so excited that the company I co-founded in my mother’s basement with my best friend from college was successful enough to actually need health care coverage because we finally had employees. Excitement turned to frustration, and that experience with the health insurance market opened my eyes and sparked within me a new level of passion for revolutionary change; to change how health insurance should look and feel.

How could purchasing health coverage be so different than every other thing that we purchased for the office? I'm not talking about pens, desks, or paper; I’m talking about other employee benefit options such as life insurance, 401k plans, and our firm’s errors and omissions coverage. In every other purchase we made, there was transparency, there was true competition, and there was actual and meaningful discussion. When it came to buying health insurance there was...well, nothing.

The insurance broker walked into my office and after exchanging pleasantries she showed me three options for health insurance. The first option was with a certain insurance company that the broker clearly wanted us to use. There were color brochures for this carrier with great family photos; broad smiles and even bigger fonts. The other proposals didn't come with the fancy colorful brochures (or even brochures at all for that matter). It was clear that the broker wasn't being transparent and had her own agenda to pursue. The broker was getting great commissions from this one particular carrier and that was it. I asked basic questions that in any other industry would be easy and obvious to answer or research. She just smiled.

I was told what the premiums would be and how there were basically two options available to my employees. They could have a $20 or $50 copayment coupled with a few deductible options. So (basically), the “actual” consumers of the health services (a.k.a. the employees), would believe that the cost of the services are either $20 or $50 - in their minds this is the total bill. There was no skin in the game for my employees.

There was nothing that my employees could do to lower the overall cost of the plan. If every single one of my employees was in perfect health and never even saw a doctor, my plan's rates would be guaranteed to increase over 10% a year. So what is the incentive? For me to be creative? For my employees to care? There was nothing we or anyone else could do about the cost. We were helpless and that's how it must feel for every employer or insured group that pays insurance premiums to a fully insured carrier or exchange marketplace policy.

Like you, I figured that maybe this was just my experience and that this one broker was an anomaly, but I have since realized that this is the norm. The broker who actually offers expertise, consults with their clients and focuses on data and plan design is the anomaly. For most of us, we are at the whim of the carriers.

There is no shopping for rates unless you want to strip down or increase the contributions of your employees.

Imagine buying a car and being told every year that you will pay more for the same car (that you hardly used), or you can strip it down in an effort to maintain the payment level and keep the same monthly rates. Next year you will only have a 10% increase if you agree to remove the leather interior! That is exactly what happens with healthcare. The reason “why” is because nobody expects or demands anything different. The options available via the exchanges, for many, are even worse. Many people only have one option - like in the old Soviet Union where the select few who could afford it had the choice of buying a Russian Lada in black or white; the rest get what they’re given.

Think about this for a second. People spend more time choosing the big screen for their living room than they do where and how they get their health care. New parents spend more time researching the day care center for their children than the hospital or pediatrician that treat the same children. CFOs across the country spend so much of their time trying to find ways to increase profit and reduce expenses yet rarely think about health care costs. They look at the revenue stream and the expense lines to see what they can do to cut costs and increase profitability. Most CFOs just assume that their health insurance will go up, and compare it to the cost (penalty) of offering nothing; that the expenditures are essentially a fixed cost that grows each year. There is hardly any discussion relating to how to lower it since these individuals feel powerless to do anything about it.

As someone who risked it all and started my own business, there was no way I was going to adopt this approach with my health care spend. This was the moment I realized that I needed control over my healthcare dollars and looked at self-funding my employee benefit plan for the first time, almost a decade ago, and we have never looked back. The beauty of self-funding is that you can lay your own path. You are in total control of your health plan and you can design the features to meet the needs of your employee population.

The reality is this – a health plan design for a tire manufacturer should not be the same as for a chain of yoga studios. Unfortunately in today’s fully insured market – where a carrier sells you a cookie cutter policy, it is. By having access to the claims data, a self-funded employer can actually see how and where your employees are spending the plan's health care dollars. Using the data analytics readily available only to a self-funded plan, you can then design a plan that meets your needs.

Incentivizing Our Employees through Unique Plan Design

Medical service providers are businesses. They service customers who pick what to buy, but don’t pay the fee directly. A kid at a baseball game with dad’s credit card will buy more hot dogs, regardless of the price, and the vendor knows it. When the price isn’t something the consumer considers, the supplier has no reason to cap it.

If your employees do not care about the cost of health care, then costs will never decrease. Step one then, is to care. With fully funded insurance, savings belong to the insurance carrier. I understand not caring about that! But with self-funding, most employees (wrongfully) feel that if a self-funded plan saves money then the money just goes into the CEO’s pocket. This is not true, as every dollar recouped or not spent goes back into the general assets of the plan, which is a combination of employee and employer contributions. To combat this incorrect perception, we have educated our employees about who pays for the plan (they do), and incentivized our employees to actually care about the cost of the care they get – not just their co-pays, deductibles and out-of-pockets.

It all starts with your health insurance employee plan document. When you open The Phia Group plan document, the first thing you see is a section titled “cost containment incentives.” It truly is an actual page in the document that tells employees how they can make money and put cash in their pocket by looking at the whole bill and not just their co-pay. The first time an employee gets money in exchange for creating plan savings, word spreads like wildfire throughout the organization. People talk about it at the water cooler; and whether it’s $100 in savings or $30,000, every bit counts and adds up.

As mentioned, our plan document features numerous provisions enabling participants to enjoy substantial savings and benefits when they take proactive measures to contain overall plan expenditures. We address the various instances where responsible, cost-containment behavior is incentivized.

For instance, we created a claim audit review program designed to reward employees for identifying erroneous charges on bills recoverable by the plan. Simply put, if the patient identifies something questionable in their “bill” (actually, the explanation of benefits or “EOB” since participants rarely see the provider bill itself), and the plan doesn’t have to pay it or is able to recoup the payment, the patient gets 25% of the savings in their pocket, regardless of the amount. Trust me; we only pay for services that actually occurred and are valid! One employee received a check for over $10,000 for identifying $40,000 in claims we didn’t have to pay. This is promoted across our entire organization.

This next one has likely saved us many thousands in potential claim costs. Participants who preemptively consult with our human resources department regarding non-emergency “to-be-scheduled” medical procedures, to discuss options available to the participant, can receive a financial reward. We had a recent situation where one of our employees needed a medically necessary surgery. The employee’s surgeon could have performed the operation at two different facilities. The employee met with our HR team and after reviewing the claims data available to us we realized that the higher quality facility would have a total cost of $7,000 to perform the operation, while the other facility, using the same surgeon, would cost $40,000. We saved $33,000 and our employee received 25% of this amount in a check payable to them! That’s called having skin in the game.

At any other self-funded plan, employees would just go to the place that may be closer to their home, or maybe they know a friend who works at the hospital, or they pick one over the other for any other reason ... perhaps they choose a location with better parking because at the end of the day, they have the same co-pay and deductible regardless of where they go. They have no idea that one facility will cost the plan tens of thousands of additional dollars for the same exact procedure. However, at our company they do know and they do care ... and that’s a real difference maker.

We have another provision stating that there is no co-pay for the use of urgent care facilities in lieu of a hospital’s emergency room. Think about how much time and money this saves the patient and the large bill that doesn’t exist for the plan. We took it a step further by stating that the co-pay (normally applicable to diagnostic services if performed at a hospital) is waived if the service is sought at any self-standing non-hospital facility. What this provision has done is change the behavior of our employees. When they need testing done, they ask if it can be done at a non-hospital facility. In addition, in order to encourage the use of generic medication whenever possible, we waived any co-pay.

The cultural change affects every aspect of our health plan and the reduction of overall plan spending. Under our current network, you can purchase a nebulizer after the network discount for a total plan cost of $200. If you go to Amazon.com, you can purchase that same nebulizer for $118 with free two day shipping on Amazon Prime. It’s a savings of $82 and the employee receives a check for 25% of that amount. While it’s a small amount compared to the overall plan expense, it’s a huge change in our employees’ behavior. They look for ways to reduce the cost, whether it’s big or small, because that $20.50 is added to their paycheck.

The Future is Now

Instead of telling their employer plan sponsor clients to pay more in premium, deductibles, out of pockets and co-pays, brokers should be telling their clients and employees the real reason behind the high cost of health insurance – the unjustifiable facility charges. Facilities are taking advantage of the fact that most employees only care about their out of pocket, co-pays and deductibles – not the entire bill. This is in essence the best thing about networks and the worst thing about networks. There is no patient noise because they don’t care. If they only have to pay $20, the fact that it costs the employer $20,000 or $200,000 doesn’t matter. So how do we get the employees to care? Easy. Self-fund your health plan, teach the participants how it’s funded, instill an appreciation for the fact that the medical bills are being paid with their money, and give them cash – incentivize savings.

At the day of the day, what really matters to employers? Do they care what the network is, what the logo looks like, what the overall discount is, how many free tickets to the ballgame they receive or how fancy the website looks? I would argue no. As an employer myself, I feel that I have the right to answer this question with some level of authority. I want my employees to be happy. I want my employees to feel secure and that security includes a respectable pay check for a hard week’s work and health insurance coverage that will be there for them and their loved ones when they need it most.

The only way to ensure there is reliable health coverage for my employees in the future is to innovate and get everyone to care. When an insurance carrier collects premium, takes all the risk associated with paying medical bills, and none of us know (or have a reason to know) what things cost, we don’t care. If we don’t care, we don’t innovate. The simplest ways to innovate right now and get the most bang for our buck is to put ourselves and our employees in a position of financial risk and reward, tied to healthcare spending, focus less on discounts off of arbitrary prices and focus more on what is actually being charged.

We can revolutionize health care and insurance in this country. Self-funding is the first step towards offering the innovation, technology, plan design, and customization tied to having skin in the game, and that is what this country needs.



What You Don't Know Can Hurt You: Be Prepared For the Unintended Consequences of Effective Cost Containment
By Christopher M. Aguiar, Esq.


The cost of healthcare in the United States is out of control, and virtually everyone operating in the world of healthcare should know the root of the problem. As stated by Gerard Anderson, a healthcare economist at the Johns Hopkins School of Public Health, ‘the prices are too @#$% high.'[i] A sweeping statement that encapsulates the healthcare conundrum in five simple words. Many in the industry are giving it their all to try to combat those prices, and in no area is that more prevalent than in the world of self-insurance, where a new cost containment idea appears to service daily. But to launch those ideas without a full understanding of all the elements of a self-funded benefit plans and all the issues that may arise can put plans and their advisors in the line of fire. Whether it is through ineffective implementation of a cost containment strategy (make sure your plan language is strong before you start repricing those medical claims), misunderstanding the many relationships a plan enters into (consider your stop loss and network obligations before you try to implement any cost containment initiative), or not evaluating the situational prudence of a particular strategy, administrators must avoid going into any cost containment venture blindly.

Why would any plan or administrator rush into a decision with such broad implications on its benefit plan? Quite simply, the pressure is on. Increasingly, courts are holding plans and advisors responsible for their duties as plan fiduciaries and careful oversight and dissemination of plan assets is under a microscope Unless you have been living under a rock, you know how aggressively health costs are rising, but just in case, consider the following statistics:

1. Healthcare inflation has outpaced inflation of the consumer price index every year dating back to at least 2005. [ii]
2. In 2015, Healthcare inflation outpaced the consumer price index by 900%. [iii]
Those statistics do not even specifically reference some of the shortfalls of the highly touted savior of healthcare, the Affordable Care Act (the ACA).
3. According to the Henry J. Kaiser Family Foundation, between 2014 and 2015, Benchmark Silver Premiums were either flat or increased up to more than 10% in the majority of the country. [iv]
4. The number of exchange participating insurers is down approximately 25% from 2013 to 2016 with major players such as Aetna, United Health Care, and Humana all pulling themselves from the marketplace. [v]

Due to the continued increase in costs, benefit plans and their advisors continue to develop viable ways to provide robust benefits. When faced with challenges, business owners rely on their entrepreneurial spirit and seek innovative answers; many are looking to self-insurance as their alternative.

An excellent example of some innovative approaches for which those who seek alternatives often underestimate the downstream consequences is a reference based pricing approach to claims payment. Perhaps the most innovative and often discussed strategies, reference based pricing is still utilized by a small percentage of plans because its implementation is complicated and can be difficult and volatile. There are different types of reference based pricing plans that can help minimize the disturbance while maximizing their impact on savings. Some plans choose to go with a very aggressive approach, severing all arrangements with networks and instead paying all claims as if they are out of network by setting pricing parameters based on several data references derived from publicly available sources such as Medicare or hospitals' cost data. On the surface, an approach like this can be sold quickly by savvy sales professionals because they can tout hundreds of points in savings, virtually overnight. Unfortunately, there are some very important details that must be considered before proceeding: 1) no pricing model will be successful unless you have airtight plan language; 2) unless you work with a stop loss insurer that understands the complexities of a reference based pricing model and who will support the efforts, any reference base pricing approach will likely fail; and most importantly, 3) any aggressive repricing model will experience backlash as hospitals use the best resource they have against the benefit plans, the patients. The stark reality and the unrest it causes often leads to the demise of such innovative endeavors. As so many self-funded professionals will tell you, and especially with the new batch of organizations looking to self-fund in a post-ACA world, once burnt, a self-funded employer flees to the world of the fully insured, never to take on the risk of self-funding again, regardless of how lucrative the rewards might be.

Amongst all of the innovative approaches discussed in the self-insured marketplace, all of which could have a separate article concerning the potential consequences of an ineffective implementation or execution of the model, many of the consequences and considerations discussed above are relatively contained within the confines of the model itself. But what about these models' impacts on other, oft overlooked, perhaps more downstream cost containment tools? Bear in mind that many of the cost containment mechanisms that are sought after and publicized today are designed to control costs before the claims are actually paid, whereas more traditional cost containment strategies (e.g. subrogation) are focused on recovering funds that are already spent. So every cost containment model designed at reducing the amount spent will necessarily have an impact on the execution of an effective third party recovery program.

Consider this example: ABC, Inc. sponsors a self-insured employee benefit plan. It utilizes a referenced based pricing model with no network obligations; instead, it has established very effective plan language that provides for payment of 200% of some reference price. John Smith is a beneficiary of the benefit plan and suffers injuries in an automobile accident. The benefit plan receives $200,000.00 in medical bills. Mr. Smith brings a third party claim and obtains the full insurance limits available to him, $50,000.00. Of that $50,000.00, he owes his attorney a 33% contingency fee, leaving him with a net settlement of $33,333.37. Assume that 200% of the reference price as established by the terms of the plan totals $100,000.00. Because the plan established its program effectively, the plan's payment is entirely defensible. On the surface, the provider received a fair payment derived from publicly available data which covers the costs incurred in providing the services as well as an additional amount to ensure profitability. So, what is the problem? Recall that the provider's initial bill for its services was for $200,000.00. When Mr. Smith went to the hospital, he signed a document wherein (the hospital will argue) he agreed to pay any balance remaining once his insurance pays for the services. As a result, the provider in this case now puts a lien on Mr. Smith's settlement for $100,000.00, i.e. the difference between the $200,000.00 charge and the $100,000.00 paid by the plan. Of course, Mr. Smith also has an obligation to reimburse the Plan the full amount of his settlement.

Balance billing, the practice by which the provider seeks the remainder of a bill from a patient after the insurance payment, is an unintended consequence of a reference based pricing strategy and can negatively impact the plan’s rights in a third party recovery case. It occurs because the only way to prevent a provider from seeking full payment from a patient is to enter into a contract wherein the provider agrees not to bill the patient upon receipt of payment from the plan, subject to other conditions. Without this agreement, in almost every situation, the provider is free to request payment from Mr. Smith. As this hypothetical example is designed to illustrate, the provider’s ability to bill Mr. Smith for the remainder of the bill causes complications in the plan's ability to recover the third party funds from Mr. Smith’s settlement. Note that even if Mr. Smith wanted to issue reimbursement to the Plan, he now has a rather large elephant in the room – a $100,000.00 provider lien. In this scenario, the best a plan can likely hope for is that the provider agrees to some split between the parties of the remaining $33,333.37 rather than insist on full payment. Otherwise, the only way to successfully recover money for the plan is with a lawsuit challenging the enforceability of the agreement Mr. Smith signed when he arrived at the hospital. In many jurisdictions, the plan participant's lawyer will simply deposit the money with the courts and file an interpleader, i.e. an action which forces all interest holders to appear before the court and prove their claim to the money.

As many who have engaged in any dispute with a hospital over a perceived debt can attest, providers will make their claim with exhaustive persistence often refusing to concede the actual value of their services or the questionable legality of their contract with patients guaranteeing payment. In order to obtain a recovery, the plan or its administrator may need to engage legal counsel and incur additional expenses thereby calling into question the prudence of such a pursuit; once those costs are factored in, and in light of the limited funds available, it may no longer make financial sense to pursue the recovery. Some advisors will stress the plan’s duty to seek every recovery dollar as required by the terms of the plan and its fiduciary duty under ERISA. While this is unquestionably a very important obligation of the plan, many plan advisors will forget the second, perhaps more important duty of a benefit plan administrator, to exercise prudence in its administration of plan assets.

In the end, it is imperative for plans and administrators to understand the complexities and consequences of every decision and benefits strategy they choose to utilize. There is a bevy of innovative tools and cost containment mechanisms that can be used to help benefit plans maximize savings. These include but are not limited to the reference based pricing strategies discussed above as well as some of the more hybrid approaches customized to give benefit plans the best of both worlds (strong plan language controlling out of network charges and some form of network for a feel as seamless as their fully-insured counterparts), self-insured plans can be tailored to fit the needs of the plan. As more benefit plans become more aggressive and experts come up with new strategies, it is important that those who establish benefit plans understand the full range of issues that may arise from their decisions. Utilizing experts that understand the self-insurance industry is an absolute necessity. Whether an administrator, a plan document drafting partner, a repricing agent, or a subrogation expert, understanding the self-insured marketplace improves the experience for the benefit plan, and puts it in the best position to succeed, and ultimately, remain self-insured.
________________________________________
[i] http://www.citizen-times.com/story/opinion/contributors/2014/02/17/lets-face-it-todays-gigantic-hospitals-are-ripping-us-off/5493643/

[ii] http://www.forbes.com/sites/mikepatton/2015/06/29/u-s-health-care-costs-rise-faster-than-inflation/#5a035ef16ad2

[iii] http://www.forbes.com/sites/mikepatton/2015/06/29/u-s-health-care-costs-rise-faster-than-inflation/#5a035ef16ad2

[iv] http://kff.org/health-reform/issue-brief/analysis-of-2015-premium-changes-in-the-affordable-care-acts-health-insurance-marketplaces/

[v] Edmund F. Haislmaier: Senior Research Fellow, Center for Health Policy Studies, http://www.heritage.org/research/reports/2016/03/insurer-aca-exchange-participation-declines-in-2016


Plan Appointed Claim Evaluator (PACE)

On October 16, 2015
Making determinations on medical claim appeals is a frightening prospect. The process can involve complex factual, legal, and medical issues, and can distract a plan administrator from its ordinary business functions, posing a significant resource drain. The PACE service is designed to let the plan administrator shift the fiduciary duty away, onto the PACE, for final-level, internal claim appeals.

Questions & Answers
PACE Flyer
Guide To Implementation
Guide To Appeals
PACE Webinar Slides

In the classic TPA arrangement, the TPA does not assume fiduciary duties, instead relying on the plan administrator for guidance on claims and appeals that require discretion. Many TPAs are still living in the past – an era where Plan Sponsors embraced fiduciary duties – but now,  plans and their brokers exist in a new paradigm, in which a TPA not offering a fiduciary option stands at a substantial disadvantage. As such, business opportunities are lost.

With this in mind, The Phia Group has developed PACE.  With a PACE, plan sponsors and TPAs assign the riskiest fiduciary duty (that is, the power to make payment decisions in response to final appeals), to The Phia Group.  This authority carries with it the most risk, because it is this final payment directive that will be scrutinized upon external review.

Self-funding veterans and novices alike will benefit from PACE. Groups that are moving from fully-insured or ASO arrangements can use PACE as a valuable tool to aid in the transition; these groups have never before had to be the fiduciary of their plans – and with the PACE, that daunting responsibility can be delegated to a neutral and capable third party.

The PACE not only enables the TPA to obtain new business not previously available to it, but also encourages client “stickiness” and also creates a new profit center for the TPA in the form of an administrative fee paid directly by The Phia Group to the TPA, in exchange for the TPA’s facilitation of the PACE service. In other words, PACE adds unprecedented value to the TPA from both a business and a revenue perspective.

In addition to having a third party expert analyze all appealed claims before they reach an external review, the PACE also ensures that legally mandated independent review organizations (IROs) are in place, and the PACE handles facilitation of external appeals with these IROs. Regardless of whether the PACE upholds or reverses a denial, the PACE’s service continues to apply.  From handling external appeals of denied claims to negotiating amounts payable for claims deemed to be covered by the benefit plan, the PACE works to ensure the correct and optimal outcome every time. This includes coordinating efforts with stop-loss, plan sponsors, brokers, and TPAs whenever these partners do not align.

As we know, any entity exercising control over a benefit plan or its assets may be deemed to be a fiduciary; third party administrators, brokers, and any other entity making decisions on behalf of these benefit plans may be dealing with liability for which it simply isn’t prepared. PACE is a way for the employer to be able to focus less on the complexities of its health plan, fiduciary duties, and stop-loss concerns, and more on what matters – its business.

PACE is also a way for the TPA to rest easy knowing that it is not unwittingly assuming fiduciary duties on final appeals.

For years, self-funded plan sponsors and TPAs have asked how they can avoid the risks inherent in self-funding, while still enjoying the benefits of that plan structure.  According to our CEO, Adam Russo, “With a PACE in place, we’re taking a giant step in the right direction. It’s a game changer.”

2nd Quarter Newsletter 2015

On July 16, 2015

 The past few months have brought so much intrigue to our industry.  Everywhere you looked, something or someone was affecting health care and the insurance industry as a whole.  We saw the Supreme Court make a few monumental decisions that will affect how plans are written in the future and the viability of the ACA.  We saw interesting court cases placing more potential fiduciary risks upon brokers and administrators.  We watched and reacted as more states attempted to limit the ability for smaller employers to self fund their benefits through the use of stop loss coverage and last, but certainly not least, we have seen a monumental increase in the DOL audits to our clients and the industry at large.  If there ever was a time that The Phia Group’s services were needed, this is it!

There is no question that health claims costs continue to skyrocket and the use of so called wrap discounts on many of these claims isn’t helping to reduce the burden.  If you are looking for some innovative options to stand out from the pack, please contact me as there are so many great ways to truly make a powerful impact on behalf of your employer plans.  We can save you and your plans significant claim dollars, you just need to strategize and identify your major pain points.

The next quarter will continue to be eventful so while you enjoy your summer weather, please be sure to let us know if you need some assistance – we are here for you.  Happy reading

Click Here to read more!