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Phia Group Media

The Dangers of Politicizing Health

On November 16, 2020

By: Ron E. Peck

As I – like so many others – anxiously watched election day results on television, a commercial played more than once.  The advertisement displayed a mask (not a fun Halloween mask, but rather, one of the protective masks with which we have all become familiar).  The voice advises that this is a mask.  It protects the wearer and others around them.  It is not a political statement.  It is a mask.

The advertisement struck me, but not for the reasons they likely intended.  It moved me for two reasons.  First, I was saddened that the message even needs to be sent.  Second, I was even more saddened by the fact that the message was wrong.  Love it or hate it, masks – like so many other things – have become a political statement.

This is one example of what I fear; the politicizing of health. 

Many important decisions are made by politicians on a daily basis.  Yet, there are some decisions that transcend politics.  If a school is under siege by a shooter, police respond, rescuers do all that they can to save lives, and we all watch horror stricken.  Yes, in the aftermath people will politicize every aspect of the tragedy; debating mental health, gun control, and the like.  How did it happen?  How can we prevent it?  Yet, in the moment – as the emergency is unfolding – we set aside political rhetoric, unify, and act.

Today we are dealing with the COVID-19 pandemic.  As with a school shooting, there is an emergency that is presently in effect.  Some people question the numbers; how many people actually have the disease, how many fatalities are attributable to the disease, and so forth.  Yet, everyone agrees that there is a disease, it is fatal for some, and there are certain behaviors we can alter temporarily to potentially reduce the risk.  Whether you believe masks are effective or not, as an example, the cost of wearing one is small.  In other words, if you think there is – at best – a 10% chance masks are effective, isn’t it worth it – even then?  The point is that, when performing an objective cost-benefit analysis, the cost of engaging in some simple acts is so low, it’s worth engaging in those acts – even if you think the benefit is minimal.

Yet, once the act (or lack of action) is politicized, a thumb is applied to the scales and the cost is increased. 

Masks and COVID-19 are one example.  Looking at the bigger picture, health care in these United States of America is too expensive.  Insurance premiums or contributions to self-funded health plans are too expensive – in part because they need to pay for the excessive medical bills, but also in part because premiums and contributions have become a privatized tax, whereby we all pool our money to cover costs arising from inefficiencies or losses elsewhere.

I absolutely believe payers can do more to reduce costs without negatively impacting the consumer experience.  I absolutely believe providers can do more to reduce what they charge for care.  I absolutely believe patients can do more to limit damages and through proactive measures reduce the burden they place on both payers and providers.  Yet, as with masks, so too has health care – how it is accessed, administered, and paid – been politicized.  Demanding that everyone assess their behavior, processes, and implement changes that will improve care, improve benefits, and reduce costs should not be a political issue.  Yet, it has become one. 

I have always believed that, before we fight over the pie, we should first identify ways to make the pie larger.  Abraham Lincoln is credited with having said, “Discourage litigation.  Persuade your neighbors to compromise whenever you can.  As a peacemaker the lawyer has superior opportunity of being a good man.”  Certainly providers will need to sacrifice some revenue, if the cost of care is to be reduced.  How much profit can be salvaged, however, by first identifying and eliminating waste?  Likewise, payers will reduce their incoming revenue when they cap premiums or contributions, however, they too can recoup those losses by adjusting their procedures, coordinating benefits with other payers, and delivering their services in a more focused, effective fashion.  Lastly, patients need to be mindful of their own physical health, lest poor health should become financial crisis.  Just as routine $50 oil changes avoid a $4,000 engine replacement, so too can patients take action to reduce the financial burden placed on the system.

Ultimately, the question of “how” we pay for health care should be subservient to the question of what health care should cost… and to answer that question, we need to first consider all that goes into determining what the price ought to be.  The discussion of how we pay for health care may be political, just as deciding who will pay for dinner may be a matter for debate.  Before my father and I argue over who can pick up the tab, however, let’s first ensure we were not charged for a cheesecake we most certainly didn’t order!  That bit of common sense is certainly not political, nor should it be.

Empowering Plans: P96 - Election Aftermath – Where Things Stand

On November 13, 2020

In this episode of the Empowering Plans Podcast, Ron Peck, Brady Bizarro, and Nick Bonds reunite to discuss their developing thoughts on the presidential election results. They speculate as to what moves a Biden administration can make on health care with a potentially Republican-controlled senate, and what effects those moves could have in the self-funded industry. They also discuss California v. Texas and try to anticipate how the Supreme Court might rule on the fate of the ACA. Lastly, they talk through the exciting news of a potentially viable coronavirus vaccine.

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

The Phia Group Announces the Continued Offering of Free Health Benefits to Employees and Their Families in 2021

On November 12, 2020

For Immediate Release

November 13, 2020

Canton, MA – In 2020, The Phia Group, LLC shocked the industry by announcing their intent to cover the entire cost of health benefits for their employees and families.  Now, The Phia Group is pleased to announce that it will – in 2021 – continue to offer these no-cost benefits to employees and their families. 

“This past year has been difficult for everyone.  Between the pandemic, politics, and a complete lack of predictability, the one thing we don’t want our people to worry about is the cost of maintaining their own, and their families’ health,” remarked The Phia Group’s CEO, Adam V. Russo, Esq.  “When we first implemented this program a year ago, our primary goal was to make health care more affordable for our team members – and we accomplished that mission; but that victory is almost outweighed by the residual benefits.  Recruitment of the best talent has been substantially bolstered by this unrivaled benefit, retention of existing talent has never been better, and employee morale is up, despite the 2020 roller coaster.  Not to mention how highly the company is now held in our employees’ spouses’ esteem – which is, of course, the true benchmark of success.”

Employees who have been in enrolled in The Phia Group’s self-funded health benefit plan for a fixed number of years will, upon renewing enrollment in 2021, have their contributions paid for by The Phia Group – including coverage for dependents.  This remarkable achievement continues to be made possible thanks to the application and utilization of cost containment measures developed and provided by The Phia Group, combined with proactive efforts on the part of its own plan membership to be cost-conscious “consumers” of healthcare.

Ron E. Peck, Esq., Executive Vice President and General Counsel of The Phia Group explained, “2020 was going to be an experiment for us.  We asked whether, by combining plan-based cost-containment efforts with member education, could we keep health care expenses at a level our plan could afford without shifting the burden onto our plan members and their families.  The answer is ‘yes’.”

“We are very proud to be able to offer our employees and their families the types of benefits you’d be hard pressed to find anywhere else, and at the same time act as living proof that we can empower plans.” Adam concluded.

For more information regarding The Phia Group, it’s benefit plan, and the services that make these incredible results possible, please contact Garrick Hunt by email at or by phone at 781-535-5644.

About The Phia Group:

The Phia Group, LLC, headquartered in Canton, Massachusetts, and with offices in Hartford, Boise, and Louisville, is an experienced provider of health care cost containment techniques offering comprehensive claims recovery, plan document and consulting services designed to control health care costs and protect plan assets.  By providing industry leading consultation, plan drafting, subrogation and other cost containment solutions, The Phia Group is truly Empowering Plans.

Empowering Plans: P95 - 2020 Election Results (So Far) – Our Takeaways

On November 9, 2020

In this episode of Empowering Plans, Ron and Brady are joined by Attorney Nick Bonds to discuss the 2020 election results. For now, it looks like we will have a new president in 2021. What will that mean for the healthcare industry? If the Senate stays in Republican control, is a public option likely? Will Obamacare be replaced? What will happen to popular issues such as prescription drug reform and surprise billing bans? We are covering all of the angles and breaking down all of the possibilities.

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

Discretion vs. Actual Decisions

On November 2, 2020

By: Jon Jablon, Esq.

The concept of “discretionary authority” within a plan document can be somewhat esoteric. After all, Plan Administrators have to make decisions sometimes; even if the SPD doesn’t explicitly provide the Plan Administrator with the discretionary authority to interpret the provisions of the SPD (which it always should), practically speaking, the Plan Administrator could not possibly administer the plan without exercising some degree of discretion.

Let’s break down what discretionary authority really is, and what it really isn’t. The easiest way is to give a real-life example of something that our consulting department has worked on extensively; here are the facts: a VIP of the plan was driving while intoxicated after an evening work function. The police report would later provide that despite being intoxicated (as tested at the scene), the driver was obeying all traffic rules and did not cause the accident; instead, the accident was caused when a pickup truck slid on some ice, through a stop sign, and t-boned the intoxicated driver’s car. Again – not the intoxicated driver’s fault. But, the SPD language provides that the plan will not pay any expenses for injuries sustained while a plan member is driving while intoxicated. Not caused by the intoxication – but simply while the driver is intoxicated. This is not uncommon, and of course is designed to disincentivize employees from driving while intoxicated.

Eventually, it came time for the Plan Administrator to review the claims and the circumstances under which they arose. The Plan Administrator cited the Plan’s standard discretionary authority language – giving the Plan Administrator the discretion to interpret the terms of the plan and decide questions of fact – and ultimately determined that the member’s intoxicated driving, while not ideal, did not cause the accident, and the Plan subsequently paid the claims. The issue arose when stop-loss denied the claim down the line; the carrier’s denial noted not that the claim was not payable due to a strict interpretation of the SPD (which should have been the reason), but instead the carrier gave the denial reasoning that the Plan Administrator did not have the discretion to make this determination. That incensed the Plan Administrator, since the Plan Administrator felt that the discretionary authority language in the SPD was proof that it did, in fact, have this discretion. (After all, what is that language for, if not to give discretion to the Plan Administrator?!)

Despite the carrier’s odd choice of wording, the carrier is technically correct. A Plan Administrator’s discretion is not absolute; it extends to applying the terms of the SPD or making factual determinations. In this case, the SPD was clear, and the Plan Administrator incorrectly used its discretion to override the terms of the SPD, which is not the purpose of that language. By that logic, the Plan Administrator would have the authority to arbitrarily pay or deny any claims, which is certainly not the intent of ERISA. And what about stop-loss?! Just imagine how a plan could ever be underwritten if that were the case. The fact is, the Plan Administrator’s discretion may be broad, but it does not allow the Plan Administrator to choose to cover something that is explicitly excluded.

Instead, the function of the discretionary authority language is for the Plan Administrator to be able to interpret provisions that may be ambiguous or unclear in any way. It’s effectively an extension of plan language, rather than a vehicle for changing plan language; ideally, the SPD language will be drafted as clearly as possible, but it’s just not realistic to expect the language to perfectly account for every conceivable situation. A good way to conceptualize discretionary authority is like a court making decisions about what it felt the drafters of the Constitution actually meant. The courts can’t change the Constitution, but they can decide what they think it means. Same goes for the Plan Administrator.

If you need help interpreting plan language, or if you need help understanding the extent of a Plan Administrator’s discretion, or anything else, please don’t hesitate to get in touch with The Phia Group’s consulting department, at

National Disability Employment Awareness Month: A Personal Perspective

On October 29, 2020

By: David Ostrowski

This October marks the 75th observance of National Disability Employment Awareness Month, a milestone that is being commemorated with a wide spectrum of events and activities, focused on the theme of “Increasing Access and Opportunity.” The slogan means many different things to many different people. Please allow me the opportunity share how it impacts my family.

As parents of a six-year girl, Colby, who has a significant form of non-verbal autism, my wife and I are not worried about saving for college. We do not have fantasies of our daughter becoming a neurosurgeon or corporate attorney or high school biology teacher. In short, we do not expect her ever to be financially independent.  

But we do have hope that Colby can have access to a fulfilling career opportunity thanks to the phenomenal school that she has been attending for the past three years. It is here that students (aged 3-22) on the autism spectrum disorder learn, grow, and develop. Whether they communicate with limited verbal skills, or, in the case of our daughter, with electronic devices, the students work with dedicated teachers to reduce challenging behaviors and acquire the tools to one day become productive members of the national workforce. As students enter their late tweens and early twenties, the focus shifts towards developing vocational skills necessary for a wide range of jobs that keep America running.

Whether or not students are able to live and work independently, schools that focus on the needs of severely disabled children ensure that graduates have abundant opportunities for parlaying their developed skills towards succeeding in professional careers. Countless former students are currently serving as critical members of society through stocking shelves, bagging groceries, greeting visitors, and managing cash registers. It is through these schools that young adults with significant intellectual disabilities can realize their potential and find professional work that provides fulfillment, appropriate challenges, and, perhaps most importantly, enjoyment.

As the calendar soon flips to November and Halloween gives way to Election Day, the legacy of National Disability Employment Awareness Month endures … largely due to the schools that transform young adults with disabilities into highly functioning and valuable employees. 

ACB – The New Supreme

On October 27, 2020

By: Nick Bonds, Esq.

Amy Coney Barrett, President Trump’s nominee to fill the Supreme Court vacancy left by the late, great, Notorious RBG, is essentially now on a glide path to confirmation. By the time you’re reading this the Senate will have voted on her appointment. Like the committee vote, the full Senate vote is expected to fall along party lines, but with some Republicans announcing their intent to vote with Senate Democrats, and Vice President Pence potentially sidelined by coronavirus among his staff, the vote may come down to the wire.

Even so, the balance of probabilities says that Judge Barrett will soon become Justice Barrett, and her appointment will go down as one of the fastest in recent memory – merely 30 days from announcement to confirmation. Judge Barrett made it through her hearings before the Senate Judiciary Committee, implacable and polite, declining to answer quite a few of the questions lobbed her way by committee members(citing the Ginsburg rule), and letting few details slip as to how she may rule in the future. Even so, her prior history on a number of the issues leave us some clues, a vague outline, of how she may approach the marquee cases soon to come before the highest court in the land.

The case casting the biggest shadow over the confirmation hearings was almost certainly California v. Texas, the most recent challenge to the constitutionality of the Affordable Care Act (ACA). That case comes down to a question of severability, essentially arguing that by zeroing out the penalty associated with the individual mandate the ACA is no longer a viable exercise of Congress’ taxing power and is therefore unconstitutional. The challengers go on to argue that the individual mandate is inseverable from the rest of the ACA, and the entirely of the law must be struck down as a result.

When asked by Senator Lindsey Graham to weigh in on the principle of severability, Judge Barrett indicated that “the presumption is always in favor of severability.” Though keeping her cards held close, Judge Barrett seems to be at least nodding in the direction of excising the individual mandate and preserving the remainder of the ACA.  

The full downfall of the ACA would have sweeping implications for the American economy and healthcare system, and this subtle indicator from the future Justice is cold comfort to the ACA’s defenders. While still a professor at Notre Dame Law School, Judge Barrett was critical of Chief Justice Robert’s rationale in previous ACA cases, writing that the Chief Justice stretched the ACA beyond its plausible meaning to save the statute. Even so, Judge Barrett participated in a recent moot court hearing of the California v. Texas case, where Judge Barret and a panel of seven other judges found the individual mandate unconstitutional but refrained from striking down the ACA in its entirety.

Confirmation testimony aside, another set of tea leaves to divine how Justice Barrett might rule is her history on the 7th Circuit. Judge Barrett’s tenure there lasted three years, and she was arguably the most conservative judge on her circuit. While Judge Barrett did lean towards the middle on cases involving labor, employment discrimination, and criminal law, her views swung hard back toward conservatism on gun, voting, abortion, and civil rights cases. Indeed, Judge Barrett’s positions on a number of those issues skew even more conservative than those of her mentor, the late Justice Antonin Scalia. Though the two also share a pronounced independent streak, it is entirely possible her positions on the Supreme Court will find room to his right.

The Supreme Court is set to hear arguments in California v. Texas on November 10, in time for Justice Barrett to take her seat. Though there appears to be a fair chance that the ACA will live to fight another day, Justice Barrett’s conservative bearing will have profound implications for future decisions over abortion, birth control, sex and gender identity discrimination, and Medicare, among others. We’ll keep our eyes on the Court, and keep you posted on how its decisions will impact employee benefit plans.

Oyez! Oyez! Oyez!

Empowering Plans: P94 - The Final Debate & Election Predictions

On October 26, 2020

In this episode of Empowering Plans, Brady is joined by Attorney Nick Bonds. They break down the final presidential debate of the campaign season, focusing in on the candidates’ healthcare plans. They discuss “Bidencare” as well as what would actually happen if the Affordable Care Act is finally found unconstitutional. To cap things off, they offer election predictions – which states will decide the election? Will Democrats take over the Senate? This is one October surprise you don’t want to miss!

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

The Phia Group's 4th Quarter 2020 Newsletter

On October 21, 2020

Phone: 781-535-5600 |

The Book of Russo:
From the Desk of the CEO

Welcome to the Fall Season! Here in Boston, the leaves are turning color and the air is getting a bit cooler. Meanwhile, at The Phia Group we are busier than ever (even though I haven’t been on a plane since February, and haven’t worn any of my beloved suits in over six months). What I have done, however, is learn that even though I can’t fly anywhere to see clients or prospects, we are still creating new opportunities together. Additionally, though miles may separate us, I am still thrilled to remain in close contact with so many of you virtually; be it by e-mail, phone, or video conference. In fact, in some ways, I actually feel like – since this

pandemic started – I have had more contact with you – my industry friends. Please, reach out any time, as communicating with you has been and will continue to be one reminder of better times. There is no question that my relationship with many individuals here at Phia has also grown tremendously since March. For instance, where we used to do monthly staff meetings, we now do them – virtually – on a weekly basis. Unlike the past, now we also invite our staff to have their children join in on the video calls; (plus pets too). Since all of this started, I have gotten to meet so many family members – both two legged and four – that I otherwise would not have encountered. I’m not even addressing the fact that I actually get to see all of my kids every day, instead of calling them from some random hotel room or airport terminal. If you think I am a “glass half full” type of person, then you are correct. I guess I have always tried to be optimistic in life. I am looking at the silver lining, as it applies to the pandemic, but I also feel the same way about self-funding, and where it is heading. The sky is the limit for our industry and we here at The Phia Group are ready to assist you in ensuring its success. Let the following serve as proof that we can do great things together, and don’t forget to reach out soon. Happy reading!


Enhancements of the Quarter: Phia Unwrapped & Balance Billing Value Reports
Phia Fit to Print
From the Blogosphere
The Phia Group’s 2020 Charity
The Stacks
Employee of the Quarter
Phia News



Enhancement of the Quarter: Phia Unwrapped and Balance Billing Value Reports

Clients of both Phia Unwrapped and our Balance Bill resolution services will be excited to hear that we have this quarter created brand new reports for both services.

Both the Phia Unwrapped and Balance Billing Value Reports not only highlight performance for a particular group, or across a TPA’s entire block of business, but also compare those results to various benchmarks, to provide a feel for how those results hold up in a more objective manner. These new reporte provide the user with an easy-to-read summary of successes The Phia Group has achieved for groups it services, on a quarterly and yearly basis, both in relation to Phia Unwrapped and Balance Bill resolution services. What’s more, it will be automatically provided on a regular basis, but it can also be run on-demand by contacting The Phia Group’s Customer Success Team.

These new reporte highlight the value added by Phia Unwrapped, and conflicts resolved through Balance Bill resolution, both in an information-packed, but comprehensible, PDF. They are designed to not only be informational, but also an important client-retention and marketing tool for TPAs and brokers. Since these reports will be accurate as of the minute they were run, our clients can rest easy knowing that they will always be able to have accurate information at their disposal, whether it’s to provide progress reports to groups, to make tough payment decisions using past data for reference, to include within a renewal proposal, or simply out of curiosity.



The Phia Group is constantly seeking new ways to improve health plans’ self-funding experience; as always, we are Empowering Plans.

To learn more about Phia Unwrapped, Balance-Billing services, or any other services The Phia Group offers, please contact our Sales Manager, Garrick Hunt, at 781-535-5644 or



Service Focus of the Quarter: Patient Defender

Anyone reading this who personally uses RBP, has a client that uses RBP, or has even thought about using RBP is familiar with the concept of balance-billing. RBP is a great tool for plans to use to contain costs, and has proven monumentally successful for some groups – but the threat of balance-billing and collections still exists from some stubborn providers, no matter how effective the patient advocacy may be.

In response to the needs of the self-funded industry’s ever-growing RBP market, The Phia Group has created Patient Defender: a true legal tool to combat the balance-billing problem. Through Patient Defender, for a nominal fee, patients have access to an attorney to represent them if they are sued or sent to collections – and even if they choose to proactively litigate against a medical provider! Gone are the days when a TPA or employer has to tell a patient that the patient can litigate, but must pay his or her own attorney’s fees. Groups that the Patient Defender have pre-paid the attorney’s fee for the patient, removing the most substantial barrier to a patient’s legal defense.

This innovative tool is primarily designed for an RBP plan to supplement its existing patient advocacy program and further protect its members from balance-billing and collections, but it can be an add-on to any plan that pays any claims at any non-contracted rates (since it’s certainly not just RBP plans that may face balance-billing).

For more information about this unique service offering, contact our Sales Manager, Garrick Hunt, at 781-535-5644 or


Success Story of the Quarter: Negotiating COVID-19 Test Claims

As you may know, and as you and your clients may have discovered, there is some recent federal legislation concerning payment rates for COVID-19 testing. In a nutshell, medical providers offering COVID-19 tests must post the price they charge for the test on their website, and health plans must pay those rates, absent a negotiated rate with the provider.

The legislation has been broadly read to imply that to be applicable, a negotiated rate must be in place prior to the test being performed. We see no evidence of that, though; we have been staunch proponents of the idea that the posting of the price does not preclude negotiation of that price following treatment. If the provider refuses to negotiate, we will counsel a client not to ignore the federal regulations – but we also believe this negotiation effort is in compliance with the law.

We have had occasion to approach a few providers in an attempt to settle, but the general response from providers has been to hold firm, under the theory of: “Why the heck would we lower this price that the law says you have to pay?!” A TPA client of ours informed us that they have a group benefit plan client that has incurred claims for a very large number of COVID-19 tests, with substantially all of them coming from the same provider. The TPA asked us if we could negotiate a better rate than the posted rate.

We’ll skip to the interesting part: this plan was willing to steer all of its patients to another provider if this provider didn’t agree to negotiate a better rate. Despite having the knowledge that the plan did have a legal obligation to pay the full bill, these other factors and our approach led to the provider ultimately being willing to negotiate a better rate for both the tests already incurred as well as future tests.

We knew it was possible – but seeing it happen felt good!


Phia Case Study: Unwrapping Without Unwrapped – Our Claim Negotiation & Signoff Service

A client of The Phia Group’s case-by-case negotiation service (Claim Negotiation & Signoff, or CNS) presented us with a very large hospital claim, and requested that we negotiate it. One of our experts approached the hospital to open a dialogue, but was immediately shut down with a stern note indicating the hospital’s unwavering refusal to negotiate.

Of course, our team was not about to give up, but it was cause to strategize. It seemed clear that throwing numbers at this hospital – even supported by data such as Medicare equivalents, cost-to-charge ratios, average commercial reimbursement, and more – was not going to get us anywhere. We tried to negotiate in good faith, but the hospital refused to entertain an offer.

Ultimately, our client wanted this to go away fairly quickly, so the Plan paid its minimum benefits and attempted a method called “accord and satisfaction,” where an additional conditional payment was made, the condition being that the hospital close its file. The theory is that negotiating in theoretical numbers is one thing, but having an actual, physical check for additional payment can yield better results. Alas, the provider rejected that conditional payment, and sent the check back.

After a series of conversations with the group, its broker, the TPA, the stop-loss carrier, and Phia, it was decided that Phia would attempt to enforce the plan’s initial payment (pursuant to the Plan Document), and the plan would essentially walk away for now, and deal with balance-billing if it happened.

So, we waited. And waited. And we’re still waiting. There has been no balance-billing; just angry letters from the hospital demanding that the plan pay more, but no mention of threats to balance-bill the member nor a formal appeal. That isn’t uncommon; a show of strength from a health plan can go a long way to show a provider that the plan means business. Many providers are loathe to balance-bill their patients, and the only way to find out is to test those waters. If the hospital does decide to balance-bill the patient, we’ll sic our experienced balance-billing team on it – but things are looking good for the time being.

Now just imagine this strategy being applied to all out-of-network claims (via Phia Unwrapped), whereby a plan pays its minimum benefits, stands firm, and combats balance-billing on the back-end, as such issues arise.


Fiduciary Burden of the Quarter: Determining Which Services Can Be Covered

This following decision about which we will now discuss, is not traditionally thought of as invoking a fiduciary duty, and that thought is generally accurate in most contexts. In the midst of a pandemic, however, some health plans have been delving more deeply into the question of what services they may cover. In general, ERISA and the IRS rules permit health plans to cover any medical services, and for the vast majority of services, there is no question whether or not they fall into that category. But what about things like art therapy? As some individuals seek to transition from more “traditional” medical care to alternatives, perhaps not in a traditional hospital or physician office setting, questions are arising, most relevantly whether the IRS rules even allow a health plan to cover these types of services.

In general, the IRS has made certain rules regarding which services can be covered by a health plan; and those are, broadly, services that constitute medical care. That term is defined in terms of services designed for “the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.”

The decision of whether or not a particular service complies with that definition (and therefore the tax rules) is left to the Plan Sponsor. The regulators generally require that Plan Sponsors use a good faith, reasonable interpretation of the relevant rules and guidance, in order to best comply when it might not be 100% clear – so unfortunately, plans (usually via the TPA) will need to scrutinize these services and determine, on a case-by-case basis, whether something like art therapy was truly medical in nature.

What little guidance we’ve gotten from the IRS on this topic suggests that it is not necessarily the case that including things such as art therapy as line items within a Plan Document are necessarily dispositive of whether or not the plan is complying with tax rules in any given case; for instance, Mary may have a legitimate need for art therapy as a form of medical care, whereas Michael may be a rambunctious child whose parents send him to a two-week insurance-funded art therapy retreat in lieu of expensive summer camp. For Mary, the art therapy was medical care, and therefore the IRS rules permit the plan to cover it – but for Michael, the IRS rules would not permit it.

The moral of this strange story is that a health plan may only cover medical care, and the plan will need to be careful if it lists any non-traditional treatment in the SPD. There is nothing inherently noncompliant about simply listing that care – but benefits should only be actually paid by the health plan if the care truly meets the definition of “medical care.”



• On September 22, 2020, The Phia Group presented, “Benefits on the Ballot – A Political Update for Health Benefits Professionals,” where we discussed the most important elections (including candidates’ positions on health), ongoing legal cases, and proposed laws.

• On August 17, 2020, The Phia Group presented, “Conflicts Abound – Providers & Facilities Fight Back,” where we discussed new aggressive tactics used by providers and facilities, as well as the conflicts they are causing with networks and stop-loss.

• On July 15, 2020, The Phia Group presented, “The Underlying Regulatory Landscape - Don’t Get Lost in the New Normal,” where we discussed statutes, regulations, and case law that have been and continue to be considered, debated, and finalized; resulting in serious, lasting effects.

Be sure to check out all of our past webinars!



Empowering Plans

• On September 24, 2020, The Phia Group presented, “The Pandemic & The Employer Mandate,” where our hosts, Kelly Dempsey and Brady Bizarro, discuss a particularly damaging impact of the pandemic that does not get much media attention: with many businesses forced to operate at reduced capacity, they still have to comply with the ACA's employer mandate.

• On September 15, 2020, The Phia Group presented, “IRS Notice 2020-29, COVID-19 and Cafeteria Plans: Self-Funded Plans Beware!,” where our hosts, Jennifer McCormick and Philip Qualo, discuss how the COVID-19 pandemic has brought about an unprecedented wave of federal legislation in a short period of time specifically aimed at regulating employer-sponsored group health plan coverage.

• On September 2, 2020, The Phia Group presented, “Healthcare Policy at the DNC/RNC,” where our hosts, Ron Peck and Brady Bizarro, assess what we learned from the candidates on healthcare policy at the virtual Democratic and Republican national conventions..

• On August 3, 2020, The Phia Group presented, “SCOTUS & HHS – ICYMI,” where our hosts, Jennifer McCormick and Nick Bonds, discuss significant developments in nondiscrimination regulations, and the implications for those in the self-funding industry.

• On July 23, 2020, The Phia Group presented, “COVID-19’s Catch-22,” where our hosts, Ron and Brady, discuss a Catch-22 emerging in the midst of the global pandemic - as more government intervention is needed to deal with COVID-19, calls for a public option and Medicare for All grow louder.

• On July 17, 2020, The Phia Group presented, “COVID, Floyd, and the Fight for Social Justice,” where our hosts, Ron Peck and Brady Bizarro, address recent events that have altered the world as we knew it in a matter of months, and in one notable case, in one day.

• On July 10, 2020, The Phia Group presented, “Catching up with the Courts,” where our hosts, Ron Peck and Brady Bizarro, jump into a discussion about recent high-profile court cases that could shape our industry: from requiring hospitals to post their negotiated rates with insurers online to the Trump administration's latest action in the Supreme Court case that could spell the end of the entire Affordable Care Act.

Be sure to check out all of our latest podcasts!


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Phia Fit to Print:

• BenefitsPro – – September 24, 2020

• Self-Insurers Publishing Corp. – RISE AND SHINE: Employment-Based Health Benefits In A Post-COVID Future – September 3, 2020

• BenefitsPro – How COBRA premium subsidies can protect employer-sponsored coverage – September 1, 2020

• Self-Insurers Publishing Corp. – SUBROGATION: The oldest and most effective form of cost containment – August 6, 2020

• BenefitsPro – Considerations for group health plans in 2021 – July 24, 2020

• Self-Insurers Publishing Corp. – COVID-19, Balance Billing, Out-Of-Network Claims, and Confusing Charges - An Ugly Combination – July 7, 2020

• BenefitsPro – Worker’s comp recovery in a COVID-19 world? It depends! – July 2, 2020

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From the Blogoshpere:

Plan Mirroring: What Does It Really Mean? Is your stop-loss carrier mirroring your SPD Language?

Returning to Work Safely and Smartly. Who Bears the Cost? How is it possible to keep everyone in your office safe?

New Rules on Prescription Drug Importation Are Released – Or Are They? At first glance, the order seems to take sweeping steps to facilitate the importation of prescription drugs, but does any of it really represent a departure from existing law?

A Brief Anecdote on Testing for COVID-19. Find out where you can get tested for COVID-19.

Simple Negotiations Made Not-So-Simple. Even something as simple as a plain old claim negotiation can still develop certain unexpected hiccups.

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


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The Stacks:

RISE AND SHINE: Employment-Based Health Benefits In A Post-COVID Future

By: Ron E. Peck, Esq. – September 2020 – Self-Insurers Publishing Corp.

One would reasonably assume that, when discussing a pandemic and health care, the natural direction in which we would head next would be a discussion regarding the health impact – present and future – of COVID-19. The treatment options, the cost of said treatment, as well as short-term and long-term impact of the disease on patients. Yet, here I will not attempt to dissect the clinical issues presented by coronavirus, and the immediate, direct impact it will have on our health benefit plans, and self-funded plan sponsors. Instead, I will be discussing a threat to our industry not called COVID-19, but rather, a growing sociopolitical threat that has emerged in response to a larger economic victim of the virus.

Click here to read the rest of this article

SUBROGATION: The oldest and most effective form of cost containment

By: Maribel Echeverry McLaughlin, Esq. – August 2020 – Self-Insurers Publishing Corp.

For many health plans, the first interaction with any type of cost containment method usually comes about when they begin to utilize subrogation as a way to keep plan costs low, and recover monies owed to them by third parties. It is one of the original, yet consistently effective, cost containment concepts that, as of recently, tends to get overlooked when discussing new and more innovative ways to enhance plan savings.

The history of subrogation can be traced back to as far as the origins of the Court of Chancery in the Elizabethan period. The English Court of Chancery had jurisdiction over all matters in equity, such as trusts, land disputes, the estates of lunatics and guardianship of infants. In this period, subrogation was a common equitable remedy, where one party was permitted to assume a third party’s legal right to collect a debt.

Click here to read the rest of this article

COVID-19, Balance Billing, Out-Of-Network Claims, and Confusing Charges - An Ugly Combination

By: Jon Jablon Esq., and Tim Callender Esq. – July 2020 – Self-Insurers Publishing Corp.

The COVID-19 crisis has sparked a discussion on an old, but repeatedly important and troublesome issue: balance billing and/or overbilling. During the early days of the COVID-19 crisis, news outlets were quick to report examples of health insurance coverage confusion, network issues, and billing issues, all related to a variety of COVID-19 claims.

In April, the federal government chose to tackle this concern by placing prohibitions on how providers could bill COVID-19 patients who received services from providers receiving funds under the Public Health and Social Services Emergency Relief Fund. This attempt to control balance billing and excessive charging practices led to media confusion, with numerous media outlets reporting that the federal government had banned all balance billing and/or all surprise billing, which was not the case.

Click here to read the rest of this article


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The Phia Group's 2020 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 2020 charity is the Boys & Girls Club of Metro South.

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 Metro South (BGCMS) 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 youths have been welcomed through their doors. Currently, they serve more than 1,000 boys and girls ages 5-18 annually through the academic year and summertime programming.

Learning Pods Program

The Boys & Girls Club of Metro South’s Brockton Clubhouse has created a Learning Pods Program designed to support K-8 Students as they adapt to distance learning. This full-day program hosted by The Boys & Girls Club of Metro South was designed to help students and their parents get back into the swing of things, given the change in how students are learning. As you know, The Phia Group is dedicated to ensuring children in the Boys & Girls Club of Metro South are always prepared for their school year. When we heard that they were in need of school supplies for 100 students, we jumped to the opportunity to help. We have compiled a list, loaded up the Amazon cart, and placed our order. The money that we used to purchase these suppliles comes from donations made by the Phia Family and we are proud to announce that we have raised the $2,500 needed to purchase all of the school supplies. We hope all of the children have an amazing school year and can’t wait to hear all about the progress being made with the Learning Pods Program!

The Phia Group’s Diverse Library Exchange

The Phia Group and the Diversity Inclusion Committee are excited to announce the opening of Phia’s Diversity Exchange Library. Inspired by a recent article that featured Adam’s friends and family, the Phia Diversity Exchange Library is a designated space where employees can loan as well as pick up books that are written by authors, or feature characters, from diverse backgrounds.

The Library includes both adult and children books with the goal of facilitating cross-cultural book sharing and dialogue so that employees, and their families, can learn more about other cultures and diverse communities. It is through knowledge and education that we can become more aware of our own place in this world and learn how to respect and embrace others from different backgrounds.

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Get to Know Our Employee of the Quarter:
Aditya Sukumar

To be designated as an Employee of the Quarter is an achievement that is reserved for Phia employees who truly go above and beyond their day to day responsibilities. This person must not only transcend their established job expectations, but also demonstrate with fervency a dedication to The Phia Group and its employees that is so unparalleled that it cannot go without recognition.

The Phia Explore team has made the unanimous decision, without hesitation, that there is no one more deserving than our very own Aditya Sukumar, The Phia Group’s Q3 Employee of the Quarter!

Adi has been a valuable asset to the PDM and PMO teams. He dedication and commitment to client success is commendable. He has demonstrated his expertise in PDM and good communication skills during client demo’s and meetings. His goal oriented approach with focus on client success is very valued, especially his ability to carefully review and resolve client issues with a quick turnaround. He’s a wonderful team player, and doesn’t hesitate to take time out of his schedule to step in and help others when needed. He is truly a great asset to Phia.

Congratulations Aditya, and thank you for your many current and future contributions.


Job Opportunities:

• Customer Care Representative

• Accounting Administrator

• Chief Financial Officer

• Claim Analyst

• Claim and Case Support Analyst

• Case Investigator

• Health Benefit Plan Administration Attorney

• ETL Specialist

• Executive Assistant

See the latest job opportunities, here:


• Sabrina Centeio has been promoted from Claim Recovery Specialist IV to Sr. Claim Recovery Specialist

New Hires

• Dennis Ferzoko was hired as a Claim and Case Support Analyst

• Kaitlyn Furtado was hired as a Case Investigator

• Trina Garcia was hired as a PACE Specialist

• Jenny Armstrong was hired as a Sr. Subro Atty

• Brad Lee was hired as an IT Developer

• Emily King was hired as a Customer Service Rep

• Jillian Stone was hired as a Claim & Case Support Analyst

• Andrea Goodman was hired as a Plan Drafter

• Sneh Gaonshindhe was hired as a Sr. Software Engineer

• Adam Doherty was hired as a Claim & Case Support Analyst

• Anna Lopes was hired as a Claim & Case Support Analyst

• Bradley Bedarian was hired as a Case Investigator

• John Pagnotta was hired as a Case Investigator

• Soumya Gampa was hired as a Sr. Software Engineer


Phia News:

The Phia Group Reaffirms Commitment to Diversity & Inclusion

At The Phia Group, our commitment to fostering, cultivating, and preserving a culture of diversity and inclusion has not wavered from the moment we opened our doors 20 years ago. We realized early on that our human capital is our most valuable asset, and fundamental to our success. The collective sum of individual differences, life experiences, knowledge, inventiveness, innovation, self-expression, unique capabilities, and talent that our employees invest in their work, represents a significant part of not only our culture, but also our company’s reputation and achievements.

We embrace and encourage our employees’ differences, including but not limited to age, color, ethnicity, family or marital status, gender identity or expression, national origin, physical and mental ability or challenges, race, religion, sexual orientation, socio-economic status, veteran status, and other characteristics that make our employees unique.

The Phia Group’s diversity initiatives are applicable to all of our practices and policies, including recruitment and selection, compensation and benefits, professional development and training, promotions, social and recreational programs, and the ongoing development of a work environment built on the premise of diversity equality.

We recognize that the success of our company is a direct reflection of each team member’s drive, creativity, diversity, and willingness to exercise initiative. With this in mind, we always seek to attract and develop candidates who share our passion for the healthcare industry and our commitment to diversity and inclusion.

Welcome to Phia's New Home!

The Phia Group has officially moved! We are proud to announce that after 20 years in business, we have officially moved into an office that we have worked extremely hard for. Our growing staff needed more room and we wanted to make sure they felt right at home when they came to work. Check out our new office!

Welcome to Phia’s New Home in Louisville, KY!

The Phia Group has officially outgrown its Kentucky office after less than one year of opening, and will in Septemeber be moving to a bigger, better location. Since operations began in Kentucky, we have hired over 20 individuals from the Louisville area. We are amazed by the rapid growth of The Phia Group’s sister office and can’t wait to add more Louisville locals to the Phia family!

Welcome to Phia’s New Home in Louisville, KY!

The Phia Group has officially outgrown its Kentucky office after less than one year of opening, and will in Septemeber be moving to a bigger, better location. Since operations began in Kentucky, we have hired over 20 individuals from the Louisville area. We are amazed by the rapid growth of The Phia Group’s sister office and can’t wait to add more Louisville locals to the Phia family!

Customer Success Team

The Phia Group is proud to announce the restructuring of it’s Customer Success Team. As many of you may know from experiences within your own organizations, every sector is experiencing a fundamental shift in customer expectations. It no longer is enough to just be the industry leader in results, one must be the industry leader in customer relations as well. Our Customer Success Team (“CST”) is lead by Rebekah McGuire-Dye. Mrs. McGuire-Dye has over 25 years of experience working in cost containment. Her experience lends her to be an exceptional advocate for The Phia Group’s clients. Mrs. McGuire-Dye will lead her team in providing not just reactive responses to our clients, but in a pro-active approach to ensure every client of The Phia Group is maximizing the value of our many services while always looking for new and innovative products to help our clients grow and lead in their respective areas.

Here are a few items with which the CST can assist you with:

• Identify concerns regarding any and all Phia Group services or results, confirm the absence of an issue or resolve the matter, and ensure customer satisfaction with the explanation or revision;

• Identify any delays or roadblocks to remove them and ensure optimal performance;

• Deliver all reports and resolve any issues associated with them;

• Fully analyze, utilize, and interpret Value Reports and other reporting tools to identify both issues and opportunities;

• Respond to routine file specific client questions (e.g., status on file #12345); and,

• Provide subject matter expert (“SME”) assistance as needed.

Although our CST team continues to grow, it is already one of the best staffed and most professional departments at The Phia Group. We encourage all clients to reach out directly if they have any questions at

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The Stacks - 4th Quarter 2020

On October 21, 2020

Rise and Shine: Employment-Based Health Benefits in a Post-COVID Future

By: Ron E. Peck, Esq.

It is a summer day in August.  The year is 2020.  I dropped my son off at daycare this morning.  I feel guilt, fear and anxiety over having done so.  That is not how I felt upon doing so in August of 2019.  What has changed?  We are busy enduring COVID-19; a pandemic the likes of which the United States has not seen in one hundred years.

COVID-19 has caused a ripple effect, felt by almost every facet of our modern society.  From retail and food services, to ride sharing and travel.  Tourism, education, and of course – health care.

One would reasonably assume that, when discussing a pandemic and health care, the natural direction in which we would head next would be a discussion regarding the health impact – present and future – of COVID-19.  The treatment options, the cost of said treatment, as well as short-term and long-term impact of the disease on patients.  Yet, here I will not attempt to dissect the clinical issues presented by coronavirus, and the immediate, direct impact it will have on our health benefit plans, and self-funded plan sponsors.  Instead, I will be discussing a threat to our industry not called COVID-19, but rather, a growing sociopolitical threat that has emerged in response to a larger economic victim of the virus.

As retail and restaurants have closed shop – for many, permanently; as businesses have had to suddenly adjust to a “work-from-home” environment – for many, without success; as an economy that was thriving has suddenly been thrust into a recession – so suddenly you would be forgiven for thinking you have whiplash … Employers, and thus employees, have been victims of a pandemic economy. 

People have been furloughed or laid off in record numbers.  Visit any nation, anywhere on the planet, and involuntarily losing one’s job is never deemed by the ex-employee to be a happy, welcome circumstance.  Universally, we work to provide for ourselves a sense of purpose, make a positive impact, and enjoy an income.  Thus, regardless of where you live, losing your job is usually not a cause for celebration.  In the United States, however, another reason for which people seek employment is to receive benefits.  Amongst those highly desired benefits, and perhaps primary amongst them, are health benefits.  Whether an employer pays premium to a carrier in exchange for traditional, “fully-funded” insurance… or… the employer sets aside contributions from itself and its employees, to “self-fund” its health plan… employees appreciate health benefits.  So much so, it only makes sense that employers realized they could craft, manage, and fund attractive health benefit plans, using them as an incentive – luring in job seekers and keeping existing employees.  Indeed, in a capitalistic economy like ours, employers are always hunting for the most effective ways to attract and keep the best talent.  In an economy that is functioning well, it only makes sense to allow employers to do so.

What about an economy that is not functioning well?  If and when employers are not using health benefits to attract the best talent, because they cannot afford to pay for health benefits – let alone hire said talent in the first place… naturally, those people who were banking on employment as a source for benefits; people who only a few months prior were singing employment based benefits’ praises… will now question the wisdom of such an arrangement.  One study1 suggests that more than five million Americans have lost their health benefits due to being laid off, as a result of COVID-19.

Add this to a society that – at least in part – is already contemplating a “Medicare-for-All” option, and we have a perfect storm.  
One person wrote, “Corporate America fights single payer universal health care afraid to lose power over workers. Insurance companies fight single-payer universal health care because they make money not providing health care. If small business didn’t have to pay for medical, they could raise wages, modernize, expand their businesses and grow our economy. Workers could leave toxic and unsafe working environments or raise their voices when feeling abused without fear of losing their benefits2” and they aren’t alone.  There exists a perception that employment-based health plans offer no benefit whatsoever over Medicare, and that – therefore – there is no reason to maintain it.

Whenever we, as human beings, make a decision – we perform a cost/benefit analysis.  When I wake up in the morning, and decide to brush my teeth, I perform a cost/benefit analysis.  I weigh the time it takes to brush against the bad breath and tooth decay I’ll suffer if I fail to brush.  If and when we have an interest in another’s cost/benefit analysis, it behooves us to explain to them the benefits and costs involved in that decision.  Consider the following example…

When my previous automobile hit 100,000 miles, I began contemplating my next automotive purchase.  I am constantly being exposed to manufacturer’s marketing – lauding their cars’ qualities.  Thus, when I was shopping around, I was more than armed with the costs and benefits of each option.

Consider the average American voter.  Can you confidently say they are aware of the benefits of employment-based health plans?  I doubt it!  Can you confidently say they are aware of the costs of an alternative?  I doubt it!

The bottom line is this – most people believe that providers of health care services charge one amount to all payers.  They believe that different health care providers in the same area charge about the same amount for the same services.  They believe that health insurance – whether it is fully-insured, self-funded, Medicare, or Medicaid – pays the bill in full, and if there is a discount, those savings are for the benefit of the payer, not the patient.  They believe there is no difference between a private plan and Medicare, aside from the means by which they pay for coverage – premiums or taxes.

Rather than continuously allow our industry to be bashed by the media, to be misunderstood by the public, and thus fall short when forced to endure a cost/benefit analysis against Medicare-for-All … all with a backdrop of a pandemic economy … it behooves us to educate the public regarding the benefits of employment based health plans.

Looking at my own employer, and our self-funded health plan; if Medicare-for-All or some other public option were made available at a lower cost to me than my current plan, I would not make the switch.  Why?  The answer, simply put, is that I understand the benefits of our plan.  I recognize that it is customized to match the needs of a population most like me in needs and wants.  I recognize that the costs I pay up front are used to enhance benefits I may need later.  I recognize that individuals who passionately care about my wellbeing are monitoring my plan and ONLY my plan, to ensure it functions well.

COVID-19 and the unemployment it has triggered armed our adversaries with ammunition.  They point at the state of things and argue that health benefits are a human right – and as such – they cannot be tied to something as fickle as employment.  Yet, they fail to address that, whether through premiums or taxes, someone needs to pay for health care.  Should we all be covered by Medicare, those unemployed individuals will be called upon to pay their share, via taxes, using funds they don’t have.  As such, passing the buck is not a solution either.  The burden is on us to offer a better solution, and to suggest policies meant to contain the cost of the care itself. 

Above all else, our job is to remind people of the benefits of private health plans – benefits that Medicare can’t match.  We need to change the dialogue – shifting the focus away from unemployment as an excuse to abolish health plans, and instead shift the focus onto reducing the cost of care regardless of who is paying.




Subrogation: The Oldest and Most Effective Form of Cost Containment

Maribel Echeverry McLaughlin, Esq.

For many health plans, the first interaction with any type of cost containment method usually comes about when they begin to utilize subrogation as a way to keep plan costs low, and recover monies owed to them by third parties. It is one of the original, yet consistently effective, cost con-tainment concepts that, as of recently, tends to get overlooked when discussing new and more innovative ways to enhance plan savings.

The history of subrogation can be traced back to as far as the origins of the Court of Chancery in the Elizabethan period. The English Court of Chancery had jurisdiction over all matters in equity, such as trusts, land disputes, the estates of lunatics and guardianship of infants.  In this period, subrogation was a common equitable remedy, where one party was permitted to assume a third party’s legal right to collect a debt.  

In the present day, when plans pay for claims that are owed to them by third parties, they naturally expect to be reimbursed for those costs. However, during the Covid-19 crisis, many states were locked down, and people were forced to stay home; which meant less car accidents, less elective treatments due to statewide bans, and thus less money paid out by plans for medical claims.

According to information released by UC Davis, traffic accidents and crash-related injuries and deaths decreased by 50% during the first three weeks of California’s shelter-in-place order. The order began on March 20 and the university estimates that the decrease saved the state about $40 million each day. In other words, the state saved $1 billion in three weeks by having to respond to fewer car accidents.  The department found that the state’s reduction in accidents was paired with up to a 55% reduction in traffic and a 40-50% decrease in serious injuries for drivers, pedestrians, and cyclists.1

While motor vehicle accidents have been less frequent, ironically the drivers that are on the road daily, have become increasingly more reckless. According to the National Safety Council’s President and CEO, Lorraine M. Martin, “disturbingly, we have open lanes of traffic and an apparent open season on reckless driving,” causing more fatal accidents in many states.* Fatalities caused by car accidents increased in Massachusetts and Minnesota2, with the latter seeing deadly accidents more than double typical rates. Other states like Nevada and Rhode Island experienced an increase in pedestrian accidents.3

You would think that during a pandemic, plan spending would increase as the injuries in motor vehicle accidents get worse and the cost of a hospital admission for patients with COVID-19, the dis-ease caused by coronavirus, can top tens of thousands of dollars. Especially as there were over a hundred thousand hospitalizations just in the early months of the pandemic. Eventually, we can expect new additional costs to plans when an effective pharmaceutical treatment is identified, or hopefully a vaccine becomes widely available. However, social distancing measures, concerns over hospital capacity, and fears of contracting the virus are leading to other critical healthcare services being delayed or forgone.  For example, providers have delayed elective surgeries during the pandemic, thus having a downward effect on health costs, at least in the short term.4  Taken together, this data shows that there has been an abrupt and sizable decrease in healthcare utilization, at least in the early months of the pandemic. The exception has been telehealth, which has experienced an increase; however, the increase so far in telehealth was not enough to offset the decrease in in-person office visits. 4 In the first quarter of 2020 (January through March), spending on health services was relatively flat overall. Across all health care services, which excludes prescription drugs and social services, spending was down about -0.4% relative to the first quarter of 2019. Spending was up on nursing homes (5.9%), physician offices (3.9%), outpatient care centers (1.1%), but spending on medical labs (-2.7%) and hospitals (-4.1%) was down in the first quarter of 2020 com-pared to last year.4 Federal spending data from the BEA are reported monthly on an annualized basis. If sustained for a year, the drop in personal consumption expenditures on health care services seen in April would total roughly $1 trillion dollars over a 12-month period.4

Property and casualty insurers are also reporting a 40 to 50% drop in claims volume for personal automobile claims and a 30 to 40% reduction for commercial claims due to the Covid-19 pandemic.5  It is too soon to say whether the drop in frequency will fully offset the rebates that many auto-mobile insurers have been extending to consumers, which the Information Insurance Institute estimates will amount to $10.5 billion.

With all this information, it is easy to conclude that health plans are also saving money in not paying for motor vehicle accident related claims. According to the National Highway Traffic Safety Administration (NHTSA), U.S. motor vehicle crashes in 2010 cost almost $1 trillion in loss of productivity and loss of life.6 The Centers for Disease Control and Prevention (CDC) said in 2010 that the cost of medical care and productivity losses associated with motor vehicle crash injuries was over $99 billion, or nearly $500, for each licensed driver in the U.S.7 In 2015, the CDC report-ed that the average cost for a treatment for motor vehicle accident was $2,314. Which means, if a health plan has 100,000 employees, and roughly one in 150 lives will be involved in one motor vehicle accident per year, then a plan has a potential exposure of 600 lives with accident-related claims that year. If 600 lives have an average of $2,314 in costs, a plan could have had an expense of approximately $1.3 million in costs that year.  It is easy to conclude then, if accidents approximately decreased by 50%, then the plan’s expenses may have also decreased by 50%, thus saving a plan approximately an excess of $690,000, this year, alone. The Phia Group boasts their recoveries for established clients total an average of $30 recovered per employee per year.8 That could trans-late, for a 100,000-employee plan, into a $3,000,000 recovery on a good year.

It is apparent, by way of current events in this country, that this new normal will be here for quite some time.  It is probable that when social distancing rules become more relaxed, people will feel more comfortable going back to provider’s offices and having elective surgeries, thus increasing plan expenses. But until the virus is under control, and an effective treatment is found, we can only assume that we will continue in this pattern of uncertainty.  Plans more likely than not, will see less expenditures this year in claims paid for members. This will allow for next year’s premiums to stay low and provide exceptional benefits to members at a low cost.

A plan could determine that not paying claims is less lucrative than getting claims reimbursed back to them. But the only way a plan would get any claims reimbursed to them, would be if they paid the claims in the first place.  Even though subrogation tends to be the main form of cost containment for plans, it is safe to say that the best form of cost containment is to not have to pay those claims at all.

1  Fell, A., Kushman, R., Oskin, B., Perez, T., & Bankston, E. (2020, June 09). California COVID-19 Traffic Report Finds Silver Lining. Retrieved July 10, 2020, from
2  Wilson, K., Aued, B., Hertz, D., & Cuba, J. (2020, April 10). COVID-19 Cuts Car Crashes - But What About Crash Rates? Retrieved July 10, 2020, from
3  Have Car Accidents Decreased During the COVID-19 Crisis? (n.d.). Retrieved July 10, 2020, from

4  Twitter, C. (2020, May 29). How have healthcare utilization and spending changed so far during the coronavirus pandemic? Retrieved July 10, 2020, from
5  *, N. (2020, April 15). Auto Claims Decline 40 to 50% as Consumers Stay Home, Snapsheet Says. Retrieved July 10, 2020, from
6 (2020, July 06). National Highway Traffic Safety Administration. Retrieved July 10, 2020, from
7  Centers for Disease Control and Prevention. (n.d.). Retrieved July 10, 2020, from
8  Services. (n.d.). Retrieved July 10, 2020, from


COVID-19, Balance Billing, Out-of-Network Claims, and Confusing Charges – An Ugly Combination

By Jon Jablon, Esq., and Tim Callender, Esq.

The COVID-19 crisis has sparked a discussion on an old, but repeatedly important and troublesome issue: balance billing and/or overbilling. During the early days of the COVID-19 crisis, news outlets were quick to report examples of health insurance coverage confusion, network issues, and billing issues, all related to a variety of COVID-19 claims.  

In April, the federal government chose to tackle this concern by placing prohibitions on how providers could bill COVID-19 patients who received services from providers receiving funds under the Public Health and Social Services Emergency Relief Fund. This attempt to control balance billing and excessive charging practices led to media confusion, with numerous media outlets reporting that the federal government had banned all balance billing and/or all surprise billing, which was not the case. The confusion on this basic attempt to stymie out of control billing, during a health crisis, highlights to need to discuss, yet again, the ever-pressing problem of balance billing, cost, network controls, and why excessive balance billing continues to happen.     

Practically speaking, when a member receives a balance-bill, the employer itself, the sponsored health plan, and the payer all go into “panic mode,” which is understandable. It is no secret that hospital chargemasters are essentially arbitrary. Leaving aside the fact that many plans have engaged a patient advocacy solution to assist with balance-billing, many health plans, TPAs, brokers, and patients want to know: Who’s to blame, and why is balance-billing allowed to happen? What is really going on when a provider balance-bills a patient? What can be done to avoid it?

Who’s To Blame?

It’s easy and intuitive to blame medical providers for overbilling. The bill has the hospital’s name on it, and the bill is designed to compensate the hospital for use of its operating room, staff, and other resources. But blaming the provider is like blaming a person for taking advantage of a large loophole. It’s a dog-eat-dog world out there, and most of us take advantage of loopholes. Nothing illegal, hopefully, but if something is within our legal rights and it saves or makes us money, most people can reasonably be expected to operate within the parameters of that advantageous loophole.  

Instead, perhaps we should scrutinize the legal / regulatory authority. For years there have been certain legislative proposals in the works, both on the federal and state levels, that would effectively limit provider billing to a more reasonable amount, or at the very least provide a system of checks and balances. As it stands, though, alarmingly few laws like this exist today, and those that do tend to favor providers far more than any fairness they offer to health plans or patients. The reason? Everyone is stuck in the past. The old system, where insurers have unlimitedly-deep pockets, is not at all the case with self-funding, yet that still seems to be the mentality that legislatures and medical providers are using. Until there is a meaningful legislative change to add some sort of limitation on, or even a reasonable formula that must be followed by, provider billing, there won’t be any change to the paradigm where any price goes.

What Is Really Going On?

Over years of dealing with overbilling and the problems it creates, it has become clear to many in the industry that hospitals do not really expect to get paid their gross charges. Hospitals do not collect, nor do they intend to collect on balance-bills. It seems that the collections threats are scare tactics used to gain higher payments from health plans, as many plans will do whatever it takes to protect the patient. With some plans, that tactic works well; other plans call a hospital’s bluff.

Think of it this way: when I walk into my local bike shop and ask for a tune-up, they quote me $179. Does it actually cost them the full $179 to provide the service? Probably not. Could they charge less? Sure. But the market bears it, and, more importantly, there’s no law prohibiting the shop from charging that fee.

Many suggest comparisons to other markets are inappropriate, since there’s a third-party payor (i.e. insurance) involved – but that does not fundamentally change the dynamic except to remove the relevance of the “the market bears it” factor. The medical services industry is not a “free market” since in most cases, expecting patients to actually shop around is extremely unrealistic; without the market-bearing aspect, we are left with only the reasoning of “there is no law against it.” For payors, that is not a good enough justification for such inflated, arbitrary billing.

What Can Be Done About It?

How about patient advocacy? With respect to plans that systematically allow non-network claims at any amount less than full billed charges, most have adopted some form of patient advocacy or defense, to attempt to minimize the noise and impact of balance-billing, protect patients, and still ultimately save money on claims. That is what reference-based pricing vendors typically aim to accomplish and most do a pretty good job.

But, no matter the vendor, there are still some providers who simply will not go away without a big fight. The prevailing reference-based pricing mentality seems to be that no network is the best network, and for some plans that works very well. It depends on the employee population, employer’s risk tolerance, geographical location, and provider population density (and potentially other factors), and a health plan’s friendly neighborhood RBP vendor or broker are in the best positions to advise on that aspect – but at the end of the day, small, regional networks have tended to be a key to successful reference-based pricing for many health plans.

Direct Contracts & Narrow Networks

“Narrow networks” constitute a middle ground between a direct contract with a provider and a traditional PPO model; although some large national networks now offer certain “narrow network” options, a health plan or TPA can create a de facto narrow network by simply contracting with a small curated group of providers. By picking and choosing providers, the payor is able to limit the size of the network (making the steerage created more valuable to each individual provider) and ensure that providers make certain concessions in exchange for the increased steerage.

“Custom” narrow networks can exponentially increase steerage for the chosen providers, but keep in mind that to many providers, the decision of whether to contract, or what rate to offer, depends on the volume of steerage – and volume is measured in number of lives, not in percent of lives. In other words, a health plan that contracts with two local physicians will in theory give each provider 50% of its total steerage, which is a very attractive percentage – but when the hospital asks how many lives make up that 50%, if the answer is 25 lives, the conversation is going to become much more difficult. If, however, the answer is 2,500 lives, you may have another story. That is one reason that TPAs often negotiate direct contracts across an entire block of business – however, that may leave the hurdle of having all groups potentially opted-in to the contract, possibly without wanting to be.

What Does The Future Hold?

A couple of years ago, we at The Phia Group conducted a survey. One of the questions was “How do you view reference-based pricing?” The results were as follows:

  • 76% of responders said, “Catalyst for change (part of a greater solution that will be a long term answer).”
  • 14% of responders said “Stop-gap (a band aid that won’t resolve excessive healthcare costs long term).”
  • 6% of responders said “Harmful (once enough people get balance billed, we’ll look bad and it will become prohibited by law).”
  • 4% of responders said, “The whole shebang (the way to permanently solve healthcare price gouging).”

State surprise billing legislation definitely seems to be a step in the right direction toward curbing provider billing (although some states have shifted a higher burden onto the health plan rather than truly limiting billing). It is difficult to tell whether the rise of reference-based pricing has been a catalyst for that change, or simply the self-funded industry realizing, fifteen years ago, what legislatures have only just begun to realize in the last few years.