By: Jon Jablon, Esq.
You may have heard about our new Phia Certification program, through which The Phia Group requires all employees to be “certified” to the company’s satisfaction. Certification is obtained by watching, reading, and listening to a series of training materials and then taking a series of tests to confirm the employee’s understanding of our industry and all aspects of The Phia Group’s operations.
One particularly noteworthy question is:
Which of the following is the most accurate?
As you may have surmised, the answer is option B, which is essentially an “all of the above” type of answer. This is especially noteworthy because we find that folks in our industry often think of “gaps” as occurring only between the plan document and stop-loss policy, while in practice there are lots of other gaps that can cause lots of unforeseen problems for health plans.
A perfect example – and one that we deal with quite frequently – is when there is a gap between the plan document and a network contract. This can be one the most problematic of all gaps, since it can come out of nowhere. The issue arises like this:
A plan incurs an in-network claim, billed at $50,000. The SPD provides the plan the responsibility to audit all claims, and an audit reveals that the appropriate payable rate (the plan’s U&C rate) for this claim is $30,000. Meanwhile, the network contract provides a 10% discount off billed charges for this particular claim – resulting in the plan paying $30,000 based on the SPD, but owing $45,000 as the network rate. This is a very common scenario and not one that can be solved quite so easily; even if the plan says “oh right – the network contract! We’ll pay the network rate to avoid a fight with the network,” the dilemma may not be over, since stop-loss presumably has underwritten coverage based on the assumption that the plan’s U&C rate will be paid, resulting in stop-loss possibly denying the $15,000 paid in excess of the plan’s U&C rate. Even though there’s a network contract and the plan may have no choice but to pay it, there’s always the chance that the stop-loss policy will define its payment on other terms.
Moral of the story? Gaps in coverage can arise between the plan document and any other document – including network contracts, ASAs, stop-loss policies, employee handbooks, PBM agreements, vendor agreements, and more. Check your contracts, and make sure your SPD aligns with all of them! (Email PGCReferral@phiagroup.com to learn more.)
In this episode of Empowering Plans, Adam, Ron, and Brady discuss their recent trip to Washington, D.C. in which they took part in SIIA’s “Fly-In” event, where SIIA members met with their elected representatives to discuss self-insurance/captive insurance issues. It was a great success, as they were able to promote the interests of self-funded health plans and their TPAs as well as advocate for a Senate version of the Self-Insurance Protection Act.
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In this episode, Adam, Ron, and Brady interview David Contorno, President of Lake Normal Benefits. They discuss emerging trends in the industry; from reference-based pricing to direct primary care. They also address the incentive problem and how HSAs are harming the health insurance industry.
Join The Phia Group’s Sr. VP, Ron E. Peck, and healthcare attorney Brady C. Bizarro as they answer the questions that you asked during our webinar on PBMs, specialty drug prices, and lawsuits alleging fraud.
By: Christopher Aguiar
Despite the Supreme Court’s decision in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, 577 U.S. in 2016, some benefit Plan sponsors still question the need for a robust approach to third party liability. In Montanile, the Court stated in no uncertain terms that it would not give benefit plans a remedy if they sat on their hands and were not proactive in their efforts to recover third party settlement. In pertinent part, the Court stated:
… The Board protests that tracking and participating in legal proceedings is hard and costly, and that settlements are often shrouded in secrecy. The facts of this case undercut that argument. The Board had sufficient notice of Montanile’s settlement to have taken various steps to preserve those funds. Most notably, when negotiations broke down and Montanile’s lawyer expressed his intent to disburse the remaining settlement funds to Montanile unless the plan objected within 14 days, the Board could have—but did not—object. Moreover, the Board could have filed suit immediately, rather than waiting half a year. …
Indeed, the Court seemed to give no deference to the Plan’s concern, i.e. it wasn’t necessarily about this case, rather it was about the burden that would be imposed on health plans if left with no remedy against a participant who takes liberties with his/her obligations and spends money that is to be held in trust on the plan’s behalf. It should be no surprise that in all my years working on behalf of benefit plans, I can recall a handful of times where I, personally, had to step foot into a court, and virtually all of them were in jurisdictions where the law requires that the Plan be a named party to the dispute; yet in the past 6 months, I’ve had to step in front of a judge 3 times and just last week was summoned for a 4th.
It's a sign of the times. The Court imposed a duty on Plans to be proactive in their tracking and participation in recovery and legal proceedings. Identifying cases is the first step to recovery and if plans don’t have a good solution for it, it risks holding the bag either because it didn’t know about the recovery opportunity in the first place, or knew because the participant was forthcoming with information, but the plan didn’t have the resources and understand how to execute.
Let’s not even get started on what the Plan’s fiduciary obligations might be in these instances …
In this episode, The Phia Group chats once again with one of their Partners in Empowerment, Gregory S. Everett, President and CEO of Payer Compass. Greg addresses all of our hosts’ questions regarding reference based pricing, balance billing, the value of physician networks, and the future of RBP.
By: Kelly Dempsey, Esq.
Lawsuits and Department of Labor audits related to Mental Health Parity (MHP) violations are still arising. MHP is a shortened term that refers to the Mental Health Parity Act of 1996 (MHPA) and the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), collectively, the mental health parity provisions in Part 7 of ERISA.
A recent case out of New York (Munnelly v. Fordham Univ. Faculty and Admin. HMO Ins. Plan, 2018 WL 1628839 (S.D.N.Y. 2018)) provides another court’s opinion on one of the hot topics of MHP – residential treatment facilities. The plan at issue denied participant claims for a residential treatment facility indicating that the plan contained exclusions for both residential treatment services and out-of-network inpatient mental health treatment. The plan contended that the interim final regulations were in effect at the time of the claims and thus the plan was in compliance with the rules (as the guidance that clarified MHP compliance with respect to resident treatment facilities was issued after claims were incurred). Additionally, the plan indicated the participant did not comply with the plan’s pre-certification requirements.
For certain portions of the case, the court decided in favor of the participant. The court found that the plan did violate MHP by placing a treatment limitation (excluding coverage for residential treatment facilities) on mental health/substance abuse benefits that was more restrictive than the medical/surgical benefits – in other words, there was no comparative medical/surgical exclusion. Ultimately the plan did not provide a remedy for the participant as there were still questions surrounding the precertification requirements and the application of the out-of-network treatment exclusion.
While the interim final rules were not clear, the final regulations do provide a clear explanation that plans must treat residential treatment facilities the same as skilled nursing facilities to show parity between MHP and medical/surgical benefits. This isn’t the first case about residential treatment facility exclusions and likely won’t be the last if plans do not review and update their plan documents to ensure compliance.
Like most hot topics, until it happens to your plan or your client, this issue isn’t in the forefront of our minds. There are strategies to control these costs which we know can be outrageous; however, plans must be careful when implementing cost containment as some ideas may not comply with MHP.
At long last, after a lengthy investigation, we are ready to present the allegations of collusion. It is alleged that powerful forces have been working together in a complex scheme to mislead us. To be clear, we are talking about Big Pharma and certain PBMs. A new class action lawsuit has been filed against CVS Health alleging that it knowingly colluded with PBMs to raise generic drug prices. The claim is that health plans and consumers alike have been overpaying for drugs. We have seen this playbook before. This time, however, there is potential for TPAs and their groups to join the lawsuit to recoup funds allegedly overpaid to CVS. Join The Phia Group’s Special Counsels for an hour as they share reports on this alleged fraudulent scheme and discuss the ways in which our industry can fight back and tackle the underlying problem of specialty drug prices.
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By: Ron E. Peck, Esq.
Twelve years ago, I was dragged out of the comfort of my office and taken to East Texas, to present before a Third Party Administrator client of ours. After Adam Russo (our CEO) spoke about the cost savings achieved by our best-in-class subrogation services, and Michael Branco (Principal and CFO) explained how our cutting edge software allows us to identify more opportunities than anyone else, it was my turn to talk. I was assigned the simple responsibility of discussing how our subrogation clients receive our innovative SPD/Plan Document language (at the time, focused solely on subrogation) free-of-charge. I wasn’t then the show-stopping public speaker I am today, and Adam felt the need to jump in with, “It’s not just the language. Ron’s an attorney, and he’ll personally look over your plan documents. He’s working day and night; weekdays and weekends.” In response, a well-meaning woman in the audience remarked: “Oh dear! Ron… What do your friends think of that?” In response I announced, “Plan Docs are my friends…” and the legend was born.
In that time I’ve managed to regret that statement (more times than once), but the foundation remains. Plan documents were, and continue to be, the bedrock. Any and all rights our plans seek to assert must first find footing in the SPD. Moreover, inconsistencies, weaknesses, and shortcomings also find their roots grounded in the plan document. For good and for bad, the SPD is all, and all is in the SPD. For this reason, I and my team constantly scream at the top of our lungs: “Update the SPD! Review and revise now, before it’s too late…” Yet, here (as in so many other things), it is too easy to beg forgiveness, and inconvenient to ask permission.
Are there scenarios where a plan document can be revised, and the new terms applied “retroactively?” Can language adopted in March of 2018 reach back and apply to claims received in January of 2018? Certainly. But only in limited situations, and only when it will not have a negative impact upon beneficiaries; only when the language (or lack thereof) had no impact between then and now. Yet, too often, issues pop up … mistakes, errors, shortcomings… either failures to abide by the law, or oversight that leads to costly obligations. These problems come to our attention BECAUSE someone has already relied upon the plan document they received; the issue is rooted in the plan document, and as such, we can’t ask for a “do-over.”
Look at it this way. If you were an inventor, and you invented a time machine for no reason other than to invent a time machine, you could go back in time and change things. As long as the change you make doesn’t impact the “future” you (so that you will still invent the time machine), the change will be allowed. If, however, you invent a time machine specifically with the intent to change a specific event that happened in the past, even if you do invent the time machine, you won’t be able to change that “one thing” in the past that inspired you to invent the time machine. Why? Because if the thing that happened in the past, which inspired you to invent the time machine, is changed – then you won’t be inspired to invent the time machine, won’t go back in time, and won’t change the event. It’s a paradox, and nature abhors a paradox.
The same thing applies here. If some event causes you to reevaluate your plan document, identify an issue, and fix the problem – then you can’t go back and apply the language retroactively, since the triggering event (that caused you to make the change) also, by its nature, means that the change can’t be made retroactively without impacting someone or something.
For instance: if you wanted to exclude cosmetic surgery, mistakenly issue a plan document in January of 2018 that covers cosmetic surgery, and in March of 2018 realize the plan document actually covers cosmetic surgery, you can fix that mistake in March, and have the “new” language apply both in the future, and retroactively, as long as no one is impacted. If, however, the only reason you discovered the mistake (in March of 2018) is because a plan member received cosmetic surgery in February of 2018 (thinking it was a covered service, in reliance upon the language they received in January), then you are stuck covering those claims.
What really burns me, is that (often) we identified and notified the client about the issue, but (at the time) the “fix” was too much of a burden. Now, with that crack in the foundation leading to a collapse of the home, our clients ask for a solution. Certainly, we can (and do) identify and resolve the issue, so that – moving forward – the problem will not be a problem again. Yet, then the inevitable query pops up: “Can we apply the new language retroactively.” For the reasons shared above, too often the answer is, “No.”
If the “problem” is on my desk, chances are it’s NOT because someone just happened to notice an issue in the plan document, it hasn’t impacted anyone or anything yet, and there is a desire to fix the language (and apply the fix retroactively) before the issue actually causes any confusion. No, no, no… If the “problem” is on my desk, it’s because a patient or provider has already sought to enforce the language as written, and a gap or legal violation was discovered after the fact. Cost containment measures the plan “meant” to apply were not set forth in the SPD. Stop loss won’t cover something. The law voids something else. Regardless, even if we can “fix” the problem now, the damage that was done, is done.
So… I say this: You have one shot at this. You must make sure the SPD is perfect, BEFORE it’s handed to participants. BEFORE they seek care in reliance upon its terms. BEFORE providers provide care in reliance upon those terms. This document is written in ink, not pencil, and once it’s signed and dispersed, assume it’s a one way road. With that in mind, respect my friends – the plan documents – and get it right the first time.
By: Jen McCormick, Esq.We frequently talk about the various types of gaps in coverage – gaps between the plan document and the stop loss policy, the network agreement and even the employer handbook. The mission for gap-less coverage should not stop there however. Recently, we have seen situations where employers have gaps in between their documented practices and their payroll practices. For example, an employer may allow continuation of coverage after a leave of absence for up to 3 months. The problem, however, is that the employer’s payroll system does not allow for manual adjustments and coverage must end after a specified (i.e. two week period). This creates an issue as an employee is paying for coverage but is not eligible for that coverage under any plan materials. As a result, employers should not only double check that their plan materials are in sync but that their plan practices (i.e. payroll and otherwise) are aligned with those materials.