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COVID-19: Social Distancing and Paid Sick Leave

On April 14, 2020

By: Kevin Brady, Esq.

The national shift to social distancing has effectively changed the way almost all of us go to work. For some, rather than physically report to an office, we simply wake up (hopefully followed by some coffee), and get the day going. The daily “Good Morning” from a coworker is sent over skype, the “Boomers” are now masterful “Zoomers”, and many talented folks juggle the full-time job of parenting while somehow managing their full-time work responsibilities each day. For some (very brave) others, such as nurses and grocery store employees, the way they report to work may not have necessarily changed, but the workplace they go to has taken on an entirely new light.

While it has been a significant shift, those who are able to work remotely are certainly lucky to have the opportunity to do so. Shelter-in-place orders, albeit an absolutely necessary measure to flatten the curve of COVID-19, have had a significant impact on how people work and has unfortunately resulted in a lack of “work” for many.

In an effort to protect employees during these difficult economic times, The Families First Coronavirus Response Act (FFCRA) was signed into law. The new law provides new paid leave entitlements intended to protect employees who are directly impacted by COVID-19. The Emergency Paid Sick Leave Act for example, requires employers to provide up to 80 hours of paid leave when employees go on leave due to certain qualifying circumstances, such as experiencing symptoms of COVID-19 or being advised by a healthcare provider to self-quarantine, among others. One particular circumstance, which has caused a rash of confusion between employers and employees alike, relates to shelter-in-place orders. Under the EPSLA, employees who are unable to work as a result of a federal, state, or local quarantine order are entitled to emergency paid sick leave.

As Congress expedited the drafting, and passing, of the FFCRA, some of its provisions were quite confusing and required further clarification to comprehend the intent behind the language. Luckily, the U.S. Department of Labor (DOL) has issued guidance to help clarify some of the confusion surrounding the EPSLA in particular. The guidance provides that individuals unable to work as a result of a shelter-in-place order are only entitled to leave if they are 1) actually unable to work or telework (meaning they cannot leave their homes to travel to the workplace and cannot telework because of the nature of the position or the required access to technology) and 2) that the employer actually has work for that individual to do (the business operations have continued and the employer has work to be done by the employee). While this application of the law may seem obvious, it is actually quite nuanced and difficult to determine whether an employee is actually eligible for paid leave, and possible even more difficult to determine what their rate of pay should be during said leave. For more information on these nuanced questions, see the DOL’s FAQ page.

As the COVID-19 situation continues to develop, we anticipate that further guidance on how these entitlements are meant to apply will be issued; the DOL has already updated the FAQ portion of their website several times since the FFCRA’s enactment. Given that the situation is fluid and that it is unclear what, if any, steps will be taken next to protect the economy and the workforce, we are interested to see how leave entitlements under the FFCRA will be applied in practice.

Empowering Plans: P82 – COVID-19: Studies on Treatment Costs & Industry Impact

On April 13, 2020

Join Attorneys Brady Bizarro and Jennifer McCormick as they discuss some of the latest studies on the potential cost of COVID-19 treatment for self-funded plans, the projected impact on employer-sponsored insurance, and how they think this pandemic could change the industry.

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

COVID-19… And What it Means to Work From Home with Small Children

On April 13, 2020

By: Jen McCormick, Esq.

COVID-19 has impacted most aspects of our lives, and the lives of our families.  From a healthcare perspective, we want to do all we can to protect our families from the virus.  In most cases this means that households where both parents work outside the home and children attend school or daycare are now all confined to their homes… every day. We do this in hopes of keeping the children and ourselves safe.  Being confined to our homes, however, can be challenging in many ways.

For families where being home is the exception over the rule this has been an adjustment.  We are forced to redefine our roles as co-workers, parents, and spouses to find the perfect work-home balance, all while at home.  Dealing with this new normal is hard, and certainly pays a toll on our mental health. Mindful of this extra stress for many, plans and employers should consider additional ways to help.

Consider ways the parent can use their health plan, for example, does the employer health plan cover telehealth? Is this available for mental health as well?  The option to contact a doctor over the phone would make receiving care easier for many. A waiver of the copay or deductible would make this even more attractive, and likely provide many benefits for the individual, their family, and work productivity.

Another consideration would be how employers are actively trying to stay engaged by using video chat features, hosting virtual happy hours, or playing virtual games.  By setting up meetups it’s a way to remain connected while still maintaining distance. No effort is unnoticed in this particularly challenging time and even a ‘how are you doing’ could make a big difference for a struggling parent.

COVID-19 Testing & Cost-Containment

On April 1, 2020

By: Jon Jablon, Esq.

The CARES Act is brand new, obviously, but its treatment of the relationship between medical providers and health plans is anything but. As with just about all legislation to date on the topic of payor-provider relations, the legislature has not hesitated to essentially give all the power to the providers. The bill includes the following provisions:


(a) Reimbursement Rates.—A group health plan or a health insurance issuer providing coverage of items and services described in section 6001(a) of division F of the Families First Coronavirus Response Act (Public Law 116–127) with respect to an enrollee shall reimburse the provider of the diagnostic testing as follows:

(1) If the health plan or issuer has a negotiated rate with such provider in effect before the public health emergency declared under section 319 of the Public Health Service Act (42 U.S.C. 247d), such negotiated rate shall apply throughout the period of such declaration.

(2) If the health plan or issuer does not have a negotiated rate with such provider, such plan or issuer shall reimburse the provider in an amount that equals the cash price for such service as listed by the provider on a public internet website, or such plan or issuer may negotiate a rate with such provider for less than such cash price.

If there is a negotiated rate between the payor and provider, then the payor must pay that rate. If, however, there is no previously-negotiated rate, then the payor and provider can either elect to negotiate a rate (on a case-by-case basis, or globally – same as any other payment contract), or, if negotiation is not possible or not successful, the plan is required to simply pay the provider whatever price the provider has identified on its website. In other words, the plan must pay a negotiated rate, if there is one, but if not, the plan must pay whatever the provider demands.

Even in this time of near-universal employer financial hardship, the legislature has been very careful to not give a damn about the costs incurred by health plans – including self-funded employer-sponsored plans, many of which are struggling small businesses. It will never cease to amaze me.

Interestingly, the section of the bill immediately following the one quoted above reads:

(b) Requirement To Publicize Cash Price For Diagnostic Testing For COVID–19.—

(1) IN GENERAL.—During the emergency period declared under section 319 of the Public Health Service Act (42 U.S.C. 247d), each provider of a diagnostic test for COVID–19 shall make public the cash price for such test on a public internet website of such provider.

(2) CIVIL MONETARY PENALTIES.—The Secretary of Health and Human Services may impose a civil monetary penalty on any provider of a diagnostic test for COVID–19 that is not in compliance with paragraph (1) and has not completed a corrective action plan to comply with the requirements of such paragraph, in an amount not to exceed $300 per day that the violation is ongoing.

So, the law requires payment of either a negotiated rate or the provider’s published rate – and the same law requires the provider to publish its rate. But what if it doesn’t, or what if the particular provider doesn’t maintain a website at all, as many smaller offices don’t? Health plans should be wary about what happens in the event the provider fails to “make public the cash price for such test on a public internet website.” It’s tempting to take the “you didn’t comply, so if you don’t negotiate a reasonable rate, we’ll report you” approach – but some consider that at least extortion-adjacent. Instead, a good practice may be to simply inform the provider – if it hasn’t posted a price – that there is no option but to negotiate, and make sure you’re armed with reasoning for what you should reasonably be paying.

One thing is clear, though: RBP plans will need to be careful here, since the legislature’s primary aim seems to be that patients do not get balance-billed for COVID-19 testing. The traditional RBP approach, then – where the Plan determines its pricing and then pays its minimum to the provider – is not going to be a viable option under the current state of the CARES Act. If there’s no pre-negotiated rate with the provider, the Plan must pay the provider’s published rate, or negotiate on the spot – but we strongly caution all health plans against creating a situation in which balance-billing is even a possibility.

Empowering Plans: P81 – COVID-19: Provider & State Impact

On March 31, 2020

In this public health emergency, the federal government is not the only entity taking significant action. Join attorneys Brady Bizarro and Kelly Dempsey as they dive into the unique responses we have seen from individual states and providers while evaluating their impact on the self-funded industry.

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

COVID-19: The CARES Act & Workplace Safety FAQs

On March 31, 2020

In the fight against COVID-19, events are unfolding at a breakneck pace. Congress just passed the largest recovery bill in American history. Employers are facing serious questions about their obligations and liability during this crisis. Join The Phia Group for this special edition webinar as we discuss the impact of this historic federal legislation on our industry and answer your questions about workplace safety.

Click Here to View Our Full Webinar on YouTube

Click Here to Download Webinar Slides Only

Special Edition - The Phia Group and COVID-19 FAQs Answered

On March 23, 2020

From inquiries about how to comply with regulations to revising plan documents, The Phia Group has received many questions from brokers, employers, TPAs, and stop-loss carriers about COVID-19.

As always, The Phia Group is ready to assist. ICE clients are able to continue accessing unlimited aid, while all others should send questions to without delay.

Additionally, to further aid our clients and the industry we serve, The Phia Group will be hosting a special webinar, addressing the COVID-19 pandemic and the industry's most frequently asked questions.

Click Here to View Our Full Webinar on YouTube

Click Here to Download Webinar Slides Only

Waiving Copays and Deductibles for Testing Isn’t Enough – The Impact of COVID-19 on the Patient’s Pocket

On March 20, 2020

By: Kevin Brady, Esq.

In response to the mounting need to flatten the curve and slow the spread of COVID-19, the federal government has taken overt action in the passing of the Families First Coronavirus Response Act. The act effectively removes the financial barriers and facilitates access to testing, by requiring group health plans of all shapes and sizes to waive cost-sharing for expenses related to COVID-19 testing.

The federal mandate to waive all cost-sharing on testing is significant, but may not be enough to address the potential costs that patients may ultimately bear. The testing was free, but those who test positive now need care; and that care may be significantly costlier than one may think.

According to a brief prepared by the Kaiser Family Foundation (KFF), even those patients with health insurance could face significant financial pressure following the treatment of COVID-19. For purposes of the study, KFF did a deep dive on the potential costs of treatment for COVID-19 by researching data on the treatment of pneumonia, and the out-of-pocket costs that individuals with health coverage may expect.

For those patients with serious cases, extended inpatient hospitalization will likely be necessary. According to KFF’s analysis, the average cost of care (split between the health plan and the patient) for cases with major complications or comorbidities was $20,292. A patient with no complications can expect to pay around $1,300 (in cost-sharing alone) for treatment.

Another concern for patients is that we are still early in the year and most plan participants have not even come close to reaching their deductibles or out-of-pocket maximums. This fact alone may drive the average cost to patients even higher. Even those who may not owe a significant amount in cost-sharing may still be burdened by balance bills on out-of-network claims or even surprise bills on in-network claims. Needless to say, the potential cost of care for the treatment will likely be significant on health plans and patients alike. It will be interesting to see if further guidance from the federal government or major carrier will address this issue.

While most of us are impacted in some way- social distancing, work from home, restrictions on travel- it is important that we do not lose sight of those individuals who will require significant care as a result of COVID-19 and ensure that the potential costs associated with that care are addressed in kind.

The Stacks – 2nd Quarter 2020

On March 19, 2020

A Case Study In Savings: How The Phia Group is Offering Employees Free Healthcare

By: Philip Qualo, J.D.


The Founder and Chief Executive Officer (CEO) of The Phia Group, LLC, Adam V. Russo, Esq., made an announcement at our most recent Christmas party that caused a reaction that could be heard all throughout the New England region. An overwhelming explosion of applauses, screams, and in some cases, tears and sobs, shook the entire venue as the CEO described a major milestone that made Phia history. What was this groundbreaking announcement? The Phia Group has joined the ranks of only a handful of employers in the United States that offers free healthcare… yes… FREE… healthcare coverage to their employees! Despite astronomical increases in healthcare and prescription drug costs throughout the nation, and soaring insurance premiums, Phia now offers free healthcare coverage to all employees who have been enrolled in the group health plan for a period time. We did this without raising out-of-pocket costs or employee contributions!

Six months before this announcement, when the CEO first considered offering free healthcare, I was tasked with identifying other employers that offer free healthcare, and more importantly, how they did it. Although identifying employers that offered some variation of free healthcare was an easy task, since there are approximately only ten or eleven employers currently doing this, what we could not find was information on how they did it. Consistent with our stated mission to reduce the cost of healthcare through innovative technologies, legal expertise, and focused, flexible customer service, we have decided to break away with this tradition of mystery and intrigue and share with the world how we accomplished this milestone. This is how we did it…

To Insure … or Self-Insure?

Our journey started many years ago when we decided to self-insure our employer-sponsored group health plan. We realized early on that choosing the right type of health insurance would be an essential part of the growth and long-term success of our company. The Phia Group started with a handful of employees twenty years ago, and now, we have several offices throughout the country. But when Phia was still a seedling, we knew that the key to our success hinged on not only attracting top talent to our workforce, but more importantly, retaining them. As healthcare is one of the top factors employees consider when they assess their employment satisfaction, we knew the key would be to offer a robust health plan that would appeal to a wide demographic of diverse individuals. With healthcare costs skyrocketing, however, we weren’t sure how to accomplish this without annihilating our budget.

Ultimately, we decided to take the risk and self-insure our group health plan. We realized that by self-insuring our own group health plan, we could avoid the off-the-shelf price tag sticker shock of a fully-insured plan, and have the flexibility to customize our benefits to meet the specific needs of our growing employee population. Unlike traditional health insurance plans which require employers to pre-pay for potential claims through monthly premiums, self-insuring our health plan provided us with a wide range of saving opportunities as we were only required to pay claims as services were rendered. By choosing a benchmark that met the needs of our workforce, we were able to cut out the wasteful benefits we do not need to keep our costs low. The savings allowed us to add more desirable benefits to our health plans that kept our employees not only healthy, but more importantly, happy. Healthy and happy employees are more likely to be more productive and stay with their employer even in the most competitive of job markets.

Maximize Savings

So we decided to self-insure … what next? Since our goal was to enhance our savings potential, with the hope of one-day passing along the savings to our workforce, our next step was to develop the most effective and clear plan language that would minimize our risk and liability while keeping our expenditures low. We wanted to accomplish this, however, without stripping our plan of the benefits are employees have grown to enjoy. To meet this goal, we developed our own plan design and incorporated the most innovative cost-containment techniques, working within the boundaries of our network agreement, and integrated them into our group health plan in easy to understand language aimed at educating our participants to ensure they utilize the high quality lower cost healthcare options. For example, our plan rewards employees for making cost-effective decisions by waiving co-pays when utilizing the reasonably priced yet effective facilities, generic prescription drugs and other low cost alternatives. Finally, to avoid the financial pitfalls of excess or erroneous payments, we created and adopted some of the strongest subrogation plan language in the country that further empowered our plan to identify more claim recovery opportunities as well as maximize our those recoveries.

Empower the Plan … Empower the Employees

Another benefit of self-insuring that played a role in our ability keep our costs low was access to our claims data. In the fully-insured world, carriers traditionally raise rates annually with little to no explanation. Since carriers are not required to provide employers with claims data, fully-insured employers are basically left powerless to develop strategies to keeping their premiums low. Information is power. Because we self-insure, we enjoy complete access to our claims data and rely on this vital information to identify wastes, high expenditures, and develop innovative and unique ways to save costs on an annual basis. However, we were still not satisfied.

As an industry expert in the self-insured arena, we knew there was more we could do as a plan sponsor to maximize our savings even more, but we knew we could not do this alone. We realized that without the support of our employees, our efforts to enhance our group health plan savings could only go so far. Without employees, a group health plan is nothing but a Plan Document/Summary Plan Description. So how do we get employees interested in, and more importantly, excited about keeping plan expenses low by opting for high quality low cost options? We wanted to be able to maximize options for our employees without dictating their healthcare needs or placing restrictions on our health plan.

The lightbulb went on – rather than dictate or limit healthcare options – we decided to incentivize our employees towards high quality low cost care options. We developed a broad range of employer cost-containment incentives aimed at educating our employees about their healthcare options with an irresistible incentive – a percentage of the savings! For example, by simply consulting with our Human Resources department before selecting a provider for certain procedures, a participant is eligible to receive a percentage of the savings that may result from the consultation. We also created a plan option with a Direct Primary Care (DPC) feature that is paid for company and completely free to our employees – no copays and no out-of-pocket when utilizing our DPC – ever! As an employer invested in our workforce, we always strived to keep our employee contributions low. However, by incentivizing employees to make cost-effective decisions about their healthcare needs and keeping their contributions low, employees not only became interested in keeping our health plan costs low … they became obsessed! In their mind, they were in it for the incentives – extra cash for picking the best care at the lowest cost? Why not?

Passing It On

What our employees did not realize until our most recent Christmas party, however, is that by utilizing our cost-containment incentives we covertly evolved into a work culture with a shared commitment – keeping our health plan costs low. To our employees, our incentives were just opportunities to get some extra funds or save some money while still accessing the best healthcare. With a strong group health plan, and plan participant’s eager to reap the rewards of our cost-containment incentives, our dream became a reality. Our group health plan savings had maximized to a point that we are now able to offer our employees a benefit that few companies provide … free healthcare coverage.


Utah Goes to Mexico – A First for Drug Importation

By: Brady Bizarro, Esq.


Much ink has been spilled about prescription drug importation as a strategy for combating America’s exorbitant drug prices. Despite this practice being technically illegal, many self-funded plans have engaged in it for years without facing any repercussions. With Congress and the Trump administration still unable to agree on a drug pricing reform bill, these programs will almost certainly become more widespread. As they proliferate, they are likely to attract more scrutiny from the Food and Drug Administration (“FDA”), which, although it has rarely enforced the law in this area, has recently taken action against vendors engaged in drug importation. One large insurer, the state of Utah, has become the first to deliberately adopt a type of drug importation program which is much less likely to attract the attention of the FDA and might serve as a roadmap for other self-funded plans in search of relief.

The Legality

There are two traditional types of drug importation: mail order and pharmacy tourism. By and large, most self-funded plans engage in mail order drug importation: that is, they partner (directly or indirectly) with a vendor that assists plan participants in obtaining a drug from outside of the country by U.S. mail. All forms of drug importation are illegal under federal law. The Food, Drug, and Cosmetic Act (“FDCA”), codified as 21 U.S.C. §§ 301 et seq., broadly prohibits the importation of prescription drugs. The statute specifically prohibits the importation or introduction of any “new drug” into interstate commerce which has not been approved by the FDA, any prescription drug not labeled as required by federal law, or any prescription drug dispensed without a valid prescription written by a licensed American practitioner. See 21 U.S.C. § 355; 21 U.S.C. § 352, 353; 21 U.S.C. § 353(b).

Federal law considers a drug to be misbranded if, at any time prior to dispensing, the label of the drug fails to include the symbol “Rx only.” See 21 U.S.C. § 353(b)(4)(A). Drugs that are dispensed by international pharmacies do not bear this label. For example, Canadian pharmacies label their drugs with the tag “Pr,” as opposed to “Rx only,” and federal law does not consider these labels to be functionally equivalent. Therefore, even drugs that are manufactured abroad with the same chemical composition as their U.S. counterparts are considered illegal to import because of these strict labeling requirements.

Selective Enforcement

Although the practice is technically illegal, it appears that enforcement is selective, particularly when small amounts of prescription drugs imported for personal use are involved, either via U.S. mail or in baggage. According to the FDA’s own website, it does not typically object to the personal importation of unapproved drugs when all of the following conditions are met: the drug is for use for a serious condition for which effective treatment is not available in the United States; there is no commercialization or promotion of the drug to U.S. residents; the drug does not represent an unreasonable risk; the individual importing the drug verifies in writing that it is for his or her own use and provides contact information for the treating physician or shows that the product is for the continuation of treatment begun in a foreign country; and, generally, no more than a three-month supply of the drug is imported. See

While individual consumers may reasonably rely on the FDA’s selective enforcement in this context, a company maintaining a business model or a self-funded plan utilizing a drug importation program might not. When the FDA has acted, it has been against companies engaged in or assisting with the importation of drugs through the U.S. mail. For example, on February 26, 2019, the FDA issued a “Warning Letter” to CanaRx, a vendor which administers a popular drug importation program to self-funded employers and their covered participants. See

Though this mail order program, the vendor essentially acts as an agent connecting patients to foreign pharmacies in “Tier 1” countries - those which meet certain standards in drug regulation - which ship the foreign version of a prescription drug directly to the patient. The patient’s health plan is then invoiced for the cost. The FDA’s warning letter asserts that this mail order program violates numerous provisions of federal law. While CanaRx responded to the warning letter defending the legality of its program, the position taken by the FDA with respect to mail order drug importation is consistent with similar enforcement actions the FDA has taken in the past. 

Utah’s Pharmacy Tourism Program

In contrast with using mail order drug importation programs, the state of Utah has become the first large health insurer to utilize a pharmacy tourism drug importation program. Implemented in 2019, the program has already saved the state nearly $250,000, according to the plan’s managing director. Due to the program’s avoidance of the U.S. mail system, carefully crafted policies and procedures, and narrow criteria for eligibility, it appears far less likely to attract the attention of the FDA than typical mail order programs.

Utah’s Public Employee Health Plan is self-funded and self-administered, covering roughly 160,000 individuals. The state had been considering various options to deal with skyrocketing drug costs. It decided against using a mail order program and instead opted for a pharmacy tourism model. In 2019, it implemented a voluntary Pharmacy Tourism Program which is offered to patients taking one or more of thirteen specialty drugs, dealing mostly with rheumatoid arthritis, multiple sclerosis, and other serious, chronic conditions. The program currently covers approximately 400 people.

As part of the program, the plan pays its plan participants to fly to either San Diego, California or Vancouver, Canada. If they are headed to Mexico, the plan pays to drive them to a specified hospital in Tijuana to pick up a 90-day supply of medicine. A representative from a specialty pharmacy escorts the plan participant across the border and stays with the individual at all times. If necessary, the plan also covers lodging costs. Plan participants still pay their usual copayments and are incentivized to participate in the program through a $500 cash incentive. The plan works with a designated hospital to coordinate travel and arrange for the purchase of the drugs. Throughout this process, the plan tracks the medications from the manufacturer to the pharmacy to the patient, increasing the likelihood that the integrity of the chain of custody is maintained.

In reviewing the FDA’s previous enforcement actions, it is clear that the integrity of the chain of custody is one important factor in determining whether the agency will scrutinize any particular drug importation program. The agency seems more concerned about programs that involve introducing foreign drugs into the U.S. mail system than it is about individuals acquiring foreign drugs at the point of sale and carrying them across the border. With mail order programs, such as the one introduced by the state of Maine a few years back, there could be many entities mailing foreign drugs to individuals in the U.S. It would be very difficult for the FDA to track those entities and to ensure the integrity of the chain of command.

By contrast, with Utah’s program, an individual is completing the transaction in person at a designated facility and is accompanied by a representative from a specialty pharmacy. There is no middleman involved in transporting the foreign drug from the pharmacy to the individual, which significantly lessens the commercialization of the process. Also, scale matters in this context and for pharmacy tourism programs, utilization is lower than it would be for mail order programs (so far only ten plan participants have traveled to Mexico under Utah’s program).

As explained, all drug importation programs are technically illegal in the United States. There are no guaranteed approaches to avoiding FDA enforcement of federal law. Still, the FDA applies enforcement discretion and very seldom seizes incoming drugs or prosecutes individuals when the importation is conducted under the right circumstances. Politicians in Utah estimate that its pharmacy tourism program could save the state’s self-funded plan north of $1 million if more eligible individuals sign up. So long as bipartisan legislative reform remains just out of reach, self-funded plans will continue to pursue alternative approaches as cost-saving measures. If nothing else, these approaches are a constant reminder of a broken system in desperate need of repair.

Empowering Plans: P80 – COVID-19: Latest Updates & Legislation

On March 19, 2020

In this episode of Empowering Plans, Ron Peck and Brady Bizarro discuss the latest developments related to COVID-19, the impact on the self-funded industry, and review the contours of the Families First Coronavirus Response Act, which guarantees free coronavirus testing for all Americans as well as an expansion of paid sick days for a subset of workers.

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