Federal regulators may try to kill critical illness insurance

On June 10, 2016
Jun 09, 2016 | By Allison Bell
Obama administration officials want to limit use of short-term health insurance in the United States to periods of three months or less.
Officials are also thinking about the possibility of banning the sale of critical illness policies and other policies that cover two or more specific diseases.
The so-called “tri agency” team — the Internal Revenue Service, the Employee Benefits Security Administration and the U.S. Department of Health and Human Services — has included those proposals in a new batch of draft regulations.
The agencies developed the draft regulations to implement the Expatriate Health Coverage Clarification Act of 2014, and to adjust the requirements for health insurance products other than major medical coverage.
With Americans living longer, it might be a good idea to take another look at critical illness insurance.
The three agencies are preparing to publish the regulations in the Federal Register Friday. Members of the public can send in comments up until 60 days after the official publication date.
The Centers for Medicare & Medicaid Services (CMS), part of HHS, announced the release of the draft in a statement about what HHS doing to help the Patient Protection and Affordable Care Act (PPACA) public exchange system.
CMS said it and HHS want to:
• Improve the PPACA risk-adjustment program, which is used to use cash from health plans with low-risk enrollees to compensate competitors that end up with high-risk enrollees. CMS wants to create an adjustment mechanism for part-year enrollees and let plans include enrollees’ prescription information when calculating health risk scores, according to a new batch of risk-adjustment program guidance.
• Forge ahead with previously announced efforts to increase documentation requirements for consumers who seek coverage outside the usual open enrollment period window. Officials say they hope getting tough on special enrollment period applicants will keep healthy people from waiting until they get sick to pay for health insurance.
• Limit use of products that some consumers might see as an alternative to buying major medical coverage. The three agencies described the limits in the draft regulations.

For more details about what the tri agencies said about health insurance products other than major medical insurance in the draft regulations, read on:
Expat coverage
The three agencies want to distinguish travel insurance that happens to cover travel-related health problems from “expatriate health plans,” or coverage aimed at U.S. citizens or U.S. residents who live outside of the United States on a long-term basis, according to the introduction to the draft regulations.
The three agencies want to require an issuer of expat coverage to be a substantial issuer of expat coverage. An issuer would, for example, have to maintain call centers in three or more countries, accept calls from customers in eight or more languages, and process at least $1 million in claims per year in foreign currency equivalents.
An expat plan would be exempt from some requirements that apply to ordinary major medical plans. In the United States, individuals usually need to show they have “minimum essential coverage” to escape from the penalty PPACA imposes on the uninsured, or underinsured. A minimum essential coverage plan cannot impose lifetime or annual limits on the amount of medical benefits a patient can get.
The tri agencies say they would exempt expat plans from some of the PPACA requirements that apply to minimum essential coverage, such as the ban on annual and lifetime benefits limits. But, to qualify as minimum essential coverage, an expat plan would have to cover inpatient services, outpatient facility services, physician services and emergency services.
An employer that sponsored a group health expat plan, and wanted to get credit for offering minimum essential coverage, would have to “reasonably believe” that the expat plan met the usual minimum essential coverage minimum value standards.
Critical illness insurance
PPACA exempts indemnity insurance from the PPACA major medical requirements.
The tri agencies have given their blessing in the past to indemnity products that pay a set, time-based benefit. The agencies have said, for example, that an insurer can pay $100 per day to a policyholder who enters the hospital. Insurers have asked the agencies to allow the sale of traditional supplemental policies that pay benefits to consumers who have certain kinds of conditions or get certain kinds of medical service.
The tri agencies say they are not sure whether a policy that covers multiple specified diseases or illnesses should qualify for excepted benefits status.
The agencies “are concerned that individuals who purchase a specified disease policy covering multiple diseases or illnesses (including policies that cover one overarching medical condition such as ‘mental illness’ as opposed to a specific condition such as depression) may incorrectly believe they are purchasing comprehensive medical coverage when, in fact, these polices may not include many of the important consumer protections,” officials say.
The tri agencies “solicit comments on this issue and on whether, if such policies are permitted to be considered excepted benefits, protections are needed to ensure such policies are not mistaken for comprehensive medical coverage,” officials say.
If the agencies let insurers continue to sell the policies, the agencies might limit the number of conditions that a policy could cover, officials say.
Short-term health insurance
The three agencies have been letting consumers continue to buy traditional short-term health insurance coverage outside the PPACA framework.
A short-term health insurance issuer usually requires applicants to go through a simple medical underwriting process. The issuer may decline to cover pre-existing conditions, and it may leave out benefits for mental health care, maternity care and other types of care that a PPACA-compliant major medical plan would cover. An issuer may also impose annual benefits limits of $100,000 or less.
For qualified applicants, short-term health insurance is often cheaper than major medical coverage, marketers say.
Issuers of short-term health insurance can sell the coverage all year round. Issuers of individual major medical coverage require consumers to show they have a legal excuse to get a special enrollment period before selling them outside the annual open enrollment coverage. The open enrollment period now lasts from Nov. 1 through Jan. 31. The rules mean that, for much of the year, short-term health insurance may be the only health insurance some consumers can buy, marketers say.
In most states, issuers can offer short-term health insurance available for periods of up to one year.
The three agencies want to keep consumers from using short-term health insurance as a convenient major medical alternative by limiting use of a policy to three months. The three-month time limit would include the period of any policy renewals as well as the original policy duration, officials say.
Indemnity insurance
In the past, the three agencies have let insurers continue to sell hospital indemnity insurance plans, which pay benefits to insureds who enter the hospital, or to cancer insurance policies and critical illness insurance policies, which pay benefits when insureds suffer from the covered diseases. The three agencies have said those products would be “excepted benefits.”
Excepted benefits are products free from the federal benefit design rules that usually apply to major medical policies.
In the past, federal agencies have said that excepted benefits policies should be used to fill in the gaps in the major medical policies that comply with PPACA, not as an alternative.
The tri agencies now say they are hearing about group health plan operators telling workers in employer-sponsored group health plans that indemnity policies and other supplemental products count as minimum essential coverage.
The agencies “are concerned that some individuals may incorrectly understand these policies to be comprehensive major medical coverage that would be considered minimum essential coverage,” officials say.
The agencies want issuers of the supplemental products to include prominent notices, in large type, stating that the products are supplemental products, not minimum essential coverage.

ER docs sue HHS over out-of-network payments

On May 18, 2016
By Maria Castellucci

The American College of Emergency Physicians is suing HHS, claiming a provision of the Affordable Care Act allows insurers to underpay for out-of-network emergency medical services.

The federal lawsuit asks that insurers be transparent on the data they’re using to pay for services rendered by an out-of-network hospital.

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The Tangled Web of Contracts

On May 12, 2016
The self-funded industry is made up of a complex system of contracts, and navigation across them is anything but simple. Network contracts supersede plan documents; Administrative Services Agreements “add” plan provisions, stop-loss policies embrace carve-outs but networks prohibit them, employee handbooks promise benefits not provided by the SPD…and those are just a few examples of areas of confusion.

Thank you for joining The Phia Group on May 12th, 2016 as its legal team gave a crash course in contracts. Cost-containment can be impacted by the contracts you sign, and there are often exceptions and restrictions buried deep down, or potential issues not considered beforehand. In this webinar, The Phia Group explained some of the contracting pitfalls experienced on a daily basis within the self-funded industry.

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Unraveling FAQ Part 31

On May 4, 2016
Reference-based pricing is unquestionably a hot topic in the self-funded industry today. So hot, in fact, that the federal government has taken an active interest in it for the third time now; in its latest FAQ, published just last week (FAQs about Affordable Care Act Implementation, Part 31), the regulators reiterate concerns regarding network adequacy and how it relates to - and regulates - reference-based pricing arrangements.

Thanks for joining us as The Phia Group's legal team and special guest Tim Martin of Payer Compass helped unravel the mystery of the DOL's latest FAQ - and what it means for you and your plans.

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Reference-Based Pricing Webinar: Unraveling FAQ #31

On April 28, 2016

UNRAVELING FAQ #31

Monday, May 2nd, 2016
3:30 PM (EST) to 4:30 PM

Join Us – Register Now!

Reference-based pricing is unquestionably a hot topic in the self-funded industry today. So hot, in fact, that the federal government has taken an active interest in it for the third time now; in its latest FAQ, published just last week (FAQs about Affordable Care Act Implementation, Part 31), the regulators reiterate concerns regarding network adequacy and how it relates to – and regulates – reference-based pricing arrangements.

Join us on Monday, May 2, at 3:30pm (EST) as The Phia Group’s legal team and special guest Tim Martin of Payer Compass help unravel the mystery of the DOL’s latest FAQ – and what it means for you and your plans.

ATTENTION: If you do not receive a confirmation email shortly after registration with webinar log-in details, check your spam filter.

Why Plan Sponsors should be Upfront with Workers about Self-funding

On April 26, 2016
By Zack Pace, Senior Vice President, CBIZ, Inc., Employee Benefit News (Full text) (EBN)

Self-funded health plans don’t have health insurers, only health plan administrators. The knowledge that their employers are paying the claims of the plans dramatically changes employees entire outlook on health benefits and total compensation.


For example, a friend said:
• “When I tell people at work that [our employer] is paying all our claims with cash, people look at me like some wild conspiracy theorist. But the evidence is all there — they want us to be cost-conscious: the health fund incentives, the biometric screenings, the surveys. It’s just odd that [the plan being self-funded] is not discussed openly. Both sides, it would seem, would benefit from information sharing here.”
A human resources executive shared this comment:
• “This is such a good point! I am always surprised when the “average worker” does not know if their plan is self- funded or the impact that has. When I share with them why it matters, you see the lights come on.”
The Majority of Workers are Covered by Self-funded Health Plans
As benefits professionals, we know that most Americans receiving health benefits through group health plans are covered by a self-funded plan. Per the 2015 Kaiser Family Foundation and Health Research & Educational Trust Employer Health
Benefits Annual Survey:
• 63% of all covered workers are covered by a self-funded plan
• 83% of covered workers employed by a firm with 200 or more workers are covered by a self-funded plan
However, are those of us sponsoring self-funded plans effectively communicating to our employees that the plan is self-funded and explaining why that matters?
One of the strongest headwinds in communicating this point is our society’s habit of calling health plan administrators “health insurers.” Even I’m guilty of this from time to time. Thus, employees covered by self-funded plans are constantly hearing the terms “health insurance company” and “health insurer.”

Why are the terms health insurance company and health insurer so pervasive?
1. Many health insurers in the individual and small-group market (e.g., Aetna, Anthem, CIGNA, UnitedHealthcare) also offer claims administration and network services to self-funded medical plans. We tend to associate these brands and their logos with health insurance companies.
2. Policymakers and the media often don’t distinguish in their communications between an insured health plan and a self-funded plan. For example, have you heard a presidential candidate in this election cycle cite that for most American workers, the employer, not an insurance company, is paying the health claims? I haven’t.
So how can an employer sponsoring a self-funded health plan effectively communicate to its employees that the plan is self-funded and explain why that’s important?
1. First, eliminate the terms health insurance company and health insurer from the employee communication materials and strive to eliminate the terms from the company vocabulary.
2. Next, explain the basics of how the self-funded plan works. For example, communicate that the network secures discounts from physicians and hospitals, the health plan administrator adjudicates claims, and the care-management nurses help coordinate and improve the quality of care. Underscore that the employer is paying all of the claims, except, generally, for those above a certain catastrophic level.
3. Then, explain why employee stewardship of the health plan financially benefits all parties. For example, point out that total compensation consists of cash wages plus benefits compensation. Emphasize that increases to benefits compensation generally reduce increases to cash wages. As a visual tool, use Slide 4 of the 2015 Kaiser Family Foundation and HRET Employer Health Benefits Annual Survey’s Chart Pack. The graph demonstrates that since 1999, health plan costs have increased 203%, and cash earnings have increased 56%. You could also share your own history of health plan increases vs. cash compensation increases. Of course, this argument falls apart quickly if a company treats cash compensation and benefits compensation as uncorrelated budget silos.
Once employees begin to understand why smaller increases in health plan costs will raise cash compensation levels, ask for their help. For example:
1. Ask for their ideas and feedback on how to improve workplace health.
2. Ask them to support the wellness initiatives you are investing in and to provide ideas to improve and expand those programs.
3. Ask them to take the phone call from the health plan’s care-management nurse.
Finally, consider developing an incentive plan that rewards employees if the plan’s performance runs better than expected (ask your ERISA attorney and benefits consultant about the permitted incentives).

A Changing Industry: Navigating the current (Events)

On April 14, 2016
The self-funded industry changes rapidly and without notice. In recent memory, the biggest culprit has been the ACA - and in its aftermath, there have been numerous regulatory guidelines and court cases that have helped interpret the ACA's provisions. Still, though, there are many other changes occurring at any given time. Examples include assignments of benefits, discrimination, preemption, bankruptcy, subrogation, stop-loss, and more.

Thank you for joining The Phia Group's legal team as they described recent goings-on within the legal and regulatory framework in which we all operate. Being aware of changes within the industry can be important to take the necessary action as well as to be able to predict and prepare for what might be on the horizon.

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The Replacements

On April 8, 2016
As the self-funded industry evolves, benefit plans are forced to evolve with it or get left in the dust. Employees need quality coverage – but providing robust yet affordable programs has proven difficult for many self-funders. This conundrum can be addressed by changing inefficient or archaic processes; in response to contractual handcuffs limiting your ability to target cost drivers, too many health plans and TPAs overreact, thinking that the solution is to trash their plan entirely, and to try something new and untested – trading security for savings.

When it comes to benefits, don’t remove, don’t reduce... replace! Avoid the extreme sides of the spectrum, achieve balance, and ensure your own viability with “The Replacements.” Thank you for joining The Phia Group on Tuesday, February 16th, as we identified the trouble spots found in all benefit plans, and helped develop strategies to carve them out and replace faulty portions with new alternatives – without harming the rest of the plan!

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Sky-Rage: Bills, Debt, Lawsuits Follow Helicopter Medevac Trips

On March 18, 2016
By Cindy Galli, Stephanie Zimmermann & Brian Ross

The helicopter ambulance that rushed Shauna Laswell to a Las Vegas hospital after a heart attack may have saved her life.

But when she got the air ambulance bill, she says she “almost had another heart attack.”

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TPA of Self-Insured Health Plan Not Subject to Texas Prompt-Pay Law

On February 24, 2016
From the February 18, 2016 EBIA Weekly

[Health Care Serv. Corp. v. Methodist Hosps. of Dallas, 2016 WL 530680 (5th Cir. 2016)]

Available at http://www.ca5.uscourts.gov/opinions/pub/15/15-10154-CV0.pdf

The Fifth Circuit has ruled that a third-party administrator (TPA) of employer-sponsored self-insured health plans is not an insurer subject to the Texas Prompt Payment Act. A hospital sued the TPA for over $31 million under the state law, which generally requires insurers to pay benefit claims within 30 or 45 days (depending on the claim’s format), or face penalties. The TPA argued to the trial court that the Texas law does not apply because the TPA is not an “insurer” providing coverage through a “health insurance policy,” as required by the law. It also contended that ERISA preempts the application of the state law to claims arising under self-insured health plans. The trial court ruled that the state law by its terms does not apply to the TPA’s administration of self-insured plans; because of this conclusion, it did not address ERISA preemption.


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