Last month, we discussed some disturbing trends surrounding prescription drugs, and what they mean for self-funding. The overwhelming feedback we received after last month’s webinar was that you, our viewers, want more information on this particular topic – so we’re back with a sequel!
Join The Phia Group’s legal team as they take a deeper dive on the topic of Rx drugs, tackle the difficult questions asked in last month’s webinar, and help plans protect themselves while staying ahead of the curve.
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By: Kevin Brady, Esq.
Every week, we seem some variation of the question: Will this program impact our HSA-Qualified HDHP status? The programs in question often include direct primary care, telemedicine, managed care, or some combination thereof. The answer, often to the disappointment of groups hoping to provide more value to their participants, is that these types of programs can often run afoul with the Internal Revenue Service’s strict requirements on High Deductible Health Plans (HDHP).
An HDHP must meet certain criteria to allow individuals enrolled to contribute to Health Savings Accounts (HSA). The problem arises when an HDHP no longer meets that criteria and therefore loses is qualified status.
For purposes of utilizing a HDHP with an HSA, the HDHP must comply with IRC § 223(c)(2). This section of the code provides the minimum deductible and the maximum out-of-pocket expenses required for a plan to be considered an HDHP. For example, in 2020, the minimum deductible was set at $1,400 for self-only coverage and $2,800 for family coverage. Further, a Plan considered an HDHP cannot contribute to the costs of non-preventive services until an individual’s deductible is met, and the participants cannot be enrolled in other health coverage as defined by the IRS. (See here for more information: Pub. 969)
So, when a client asks us the inevitable question, “will this program impact our HSA-Qualified HDHP status?” We typically look to determine two things; 1. Does the program inherently require the Plan to contribute to the cost of non-preventive services pre-deductible; and 2. does the program constitute other health coverage?
While it certainly requires a full and complete understanding of the proposed program, it has been our experience that the answer to at least one of these questions is often yes.
When these types of programs are included as benefits within the Plan, it often opens the door for the Plan to pay for non-preventive services before an individual’s deductible has been satisfied. Conversely, when the program is offered outside of the Plan, it often constitutes “impermissible other coverage” which renders individuals who are enrolled in both the program and the HDHP ineligible to contribute to their HSA.
If an individual makes contributions to their HSA during a period in which they are not eligible to do so, it could result in massive tax consequences for that individual and could also cause tax consequences on employers who contribute that individual’s HSA as well.
With the current guidance in place, it is difficult for groups to implement these types of alongside or within their HDHPs. This is unfortunate because the programs can often add enormous value for participants and also result in significant savings for Plans.
Luckily, in June of 2019, an Executive Order directed the Secretary of the Treasury to issue regulations to clarify the issue as to whether these types of programs can be offered within or alongside HDHPs without jeopardizing a participant’s ability to contribute to their HSA.
Given the Executive Order, and similar legislation making its way through Congress, we are hopeful that there will be new guidance to allow the expanded use of these types of programs with HDHPs in the new future. Until then, it is best to err on the side of caution and confirm that a proposed program doesn’t conflict with the IRS rules before implementing it into your benefits offerings.
In this episode, Adam and Ron interview industry legend, Ernie Clevenger, regarding CareHere, LLC, the future of consumer-centric medicine, technology – and most importantly – the MyHealthGuide newsletter!
Click here to check out the podcast! (Make sure you subscribe to our YouTube and iTunes Channels!)
By: Jon Jablon, Esq.
You may have read the blog post that my colleague Andrew Silverio wrote about this case just a few days ago. (If you haven’t, check it out!)
After doing a deep dive into this case, there are a few specific things I want to bring up – and to do so, I’ll do some quoting from the complaint. The plaintiffs – certain medical providers that feel they have been victimized by Cigna – have made many allegations, some very specific, and some more sweeping in nature. While we have no basis to question the facts presented by the plaintiffs, it does seem that the logic employed in the arguments leaves something to be desired. Here are a few paragraphs from the complaint that I find most noteworthy from a self-funding point of view:
13. Plaintiffs’ incurred charges for the Cigna Claims total approximately $72,757,456.28, reflecting Plaintiffs’ usual and customary rates for the particular medical services provided. But Cigna has paid only a small fraction of this amount,—$16,937,637.50, which represents only 23% of its legal responsibility.
The plaintiffs are alleging that the 23% of the total billed charges paid to them by Cigna was “only 23% of [Cigna]’s legal responsibility.”
I’ll pause to let that ridiculousness set in.
These plaintiffs are actually alleging that Cigna’s legal responsibility is to pay 100% of billed charges, across numerous claims. Not surprisingly, the complaint doesn’t support that assertion with any plan language, law, or logic, and I can’t help but wonder what the drafter of this complaint was thinking.
20. In this example, Cigna has told the provider that the unlucky Cigna Subscriber owes it $60,316.07 as the amount not covered under the Subscriber’s Plan, but has told the Subscriber that he/she owes the provider only $895.25 because Cigna negotiated a 98% discount with the provider. In doing this, Cigna misrepresents to Cigna Subscribers that the amounts improperly adjusted by Cigna are “discounts.” This misrepresentation appears on most Cigna Claim Patient EOBs.
Here, the plaintiffs allege that the EOBs provided to them identify that the amount Cigna claims to be above its allowable amount is a discount. This is a common folly and one we strongly caution against making! RBP plans often fall into this trap, since their payments are always at an allowable amount lower than the provider’s billed charges; characterizing the disallowed or excess amount as a “discount,” when it is not, is misleading to providers (causing confusion and frustration, and ultimately hurting outcomes when combating balance-billing) and a misrepresentation to members.
121& 122. For emergency services, the ACA Greatest of Three regulation and New Jersey law require Cigna to reimburse Plaintiffs at least at the in-network rate at which Cigna would reimburse contracted providers for the same services. … Plaintiffs are therefore entitled to the total incurred charges for the elective and emergency claims at issue, less Patient Responsibility Amounts not waived by Cigna.
This is not quite accurate for two reasons. First, the plaintiffs misquote the “Greatest of Three” rule; the amount that must be paid is at least the median in-network rate that each individual plan would pay for the same services, rather than the blundering mischaracterization of “the in-network rate at which Cigna would reimburse contracted providers.” Those are important differences, and, frankly, the attorney should have known better.
Second, even if this premise were accurate as written, the conclusion drawn is still nonsensical. The plaintiffs have indicated that since the payment must be at least the in-network rate paid to the same provider, then the payment must be “total incurred charges” minus patient responsibility. In other words, these providers are suggesting that the in-network rate, across thousands of claims with multiple providers, is 100%. It’s true that 0% discounts exist, but they’re somewhat rare, and it is certainly not the case here that every single relevant discount, accessed by any of the relevant health plans, is 0%.
155. Exhaustion is therefore deemed futile pursuant to 29 C.F.R. § 2560.503-1(l) because Cigna failed to provide a clear basis for its denials and has refused to produce the requested documents necessary for Plaintiffs to evaluate the Cigna Claims denials. Cigna thus offered no meaningful administrative process for challenging its denials of the Cigna Claims.
This last example is another one where many self-funded plans run into unexpected issues. Called “futility,” this doctrine holds that appeals are not necessary, and a claimant can jump straight to a civil suit, if the plan renders appeals futile in any of various ways.
Here, if Cigna has truly issued insufficient EOBs, refused to provide substantiating documentation, and generally didn’t follow the applicable regulations, the providers have a very good argument that appeals are futile. What’s more, though, is that these actions constitute a breach of the Plan Administrator’s fiduciary duties to abide by applicable law and the terms of the Plan Document, which could subject the Plan Administrator to penalties as well as work against the payor in court.
We’re excited to see how this suit unfolds, and we’ll give you more updates when we can!
In this episode, Ron Peck and Brady Bizarro discuss the first Democratic debate of 2020 and the latest ruling from a federal appeals court on Obamacare. Time could be running out, both for the ACA and for the candidates for president. You do not want to miss our take on these issues and more!
By: Nick Bonds, Esq.
With the Legislature moving at a glacial pace, the Trump administration has doubled down on its policy objective to reduce health care costs through executive action and administrative rulemaking. A key part of their strategy involves a push to increase transparency in the health care industry – taking special aim at hospitals and drug manufacturers. The apparent logic being that if hospitals and drug makers have to share their actual prices, patient reaction will be strong enough to drag prices down. Experts disagree as to how effective these strategies would be in theory, but we may never have the opportunity to see their impact in practice.
High-profile initiatives to emerge from this approach have run in to a number of difficulties. The administration’s proposed rule requiring drug manufacturers to disclose their drugs’ list prices in their television ads has not been largely repulsed by the pharmaceutical industry, who have had a fair amount of success thus far blocking this rule in court. The pharmaceutical industry argued that this disclosure rule lacked authority and violated their free speech. Last summer, a federal judge in Washington, D.C. ruled that HHS exceeded its authority by compelling them to disclose their prices. HHS appealed, but this past week the U.S. Court of Appeals for the D.C. Circuit appeared unsympathetic. The appeals court agreed that HHS had not been granted the requisite authority by Congress to implement this drug pricing rule, and remained unconvinced that this pricing disclosure requirement would in fact help achieve the administration’s goal of bringing down drug costs. WE expect the administration to appeal yet again.
Announced last November, another transparency-minded federal rule requires hospital systems to disclose the price discounts they have negotiated with insurers for a wide swath of procedures. This disclosure is intended to inform patients of their prospective costs before they are incurred, empowering patients to shop around for the best prices. Here again, debate swirls as to whether this tactic would be effective. Meanwhile, hospital groups have implored the D.C. District Court to block these rules from taking effect echoing the arguments of the pharmaceutical companies before them: that the administration lacks the authority to implement its rule, and that the proposed rule violates their First Amendment rights. Time will tell if the courts come down on the administration’s side this time around.
Other Trump administration efforts have seen fewer setbacks: they have slashed regulations on short terms plans and association health plans (“AHPs”), more generic drugs have been approved, and they are plowing ahead with a notice of proposed rulemaking to allow importation of prescription drugs from Canada. Nonetheless, the number of Americans without health insurance continues to rise, as do marketplace premiums and the actual costs of care. The goal of reducing healthcare costs is an admirable one, we will see how effective the administration’s attempts will be.
Whether you are a fan of politics, profits, or identifying savings, you are likely keeping a close eye on pharmaceuticals. From life-preserving medications that have been around for decades (and whose price increases continue to outpace the national GDP) to specialty drugs that are inches away from FDA approval (and bankrupting most benefit plans), the cost tied to drugs is a hot topic. While congressional efforts to curb rising costs have stalled, pharmaceutical companies, pharmacy benefit managers (PBMs), and politicians continue to look for someone else to blame. Join The Phia Group as they discuss the Rx trends to watch for, the biggest threats to health plans, cost-containment strategies to implement, political efforts underway, and an injection of information you can’t do without.
By: Andrew Silverio, Esq.
In the final hours of 2019, a coalition of New Jersey medical providers filed a voluminous, 150-page complaint against CIGNA in federal court in New Jersey. The providers, in general, are challenging the validity of CIGNA’s reference-based pricing (“RBP”) program, which guides the payments of numerous self-funded plans in and around New Jersey. As would be expected with such a lengthy and thorough complaint, there are various causes of action being pursued – some allege criminal activities like “embezzlement, theft, and unlawful conversion,” and “a pattern of racketeering activity” under RICO. Others strike more directly at basic and common aspects of any RBP program, while others allege practices that, if the allegations are true, would certainly be reasonably classified as problematic. In the coming weeks and months, we will be monitoring this case closely and providing in-depth analysis and commentary in our upcoming webinars and other releases, but for now, we wanted to highlight some key allegations being made. If the case progresses to any sort of substantive holdings, it could have significant effects on RBP as a whole, depending on which causes of action ended up “sticking.”
A key element of many of the complaint’s allegations is that CIGNA and its vendors, in repricing and processing non-contracted claims, fraudulently represent that the amounts paid are in fact agreed-to, contracted amounts which the providers have agreed to accept as payment in full. The providers state that there is in fact no agreement, which is almost certainly true, but also allege that the amounts actually paid are less than is required under the individual plans. For this second element, the complaint cites to no evidence. This issue would certainly be a matter of plan document language, which is not touched on in the complaint.
In support of these allegations that CIGNA fraudulently represents a nonexistent contractual agreement, the providers allege that the EOBs CIGNA sends to plan participants differ from those it sends to providers. Specifically, the patient EOB allegedly describes the portion of charges disallowed after repricing as a contracted discount, stating that the patient has saved money, while the provider EOB describes this same amount as an “amount not covered,” instructing providers not to balance bill the patient, but to contact CIGNA’s repricing company instead with any disputes. The providers give several examples of such claims paid at 1-3% of billed charges and describe a negotiation and dispute process which they allege is a “war of attrition,” aimed at creating delay, expense, and frustration rather than a good faith procedure truly aimed at resolution.
An allegation key to the RICO/racketeering causes of action stems from CIGNA’s billing practices, which the providers describe as a fraudulent scheme to convert plan assets. The complaint claims that CIGNA and its vendors retain a flat percentage of savings fee based on the initial repricing, and importantly, retain that full fee even when, after a negotiation/dispute process, the plans end up paying additional amounts, sometimes up to a full billed charge, negating any actual savings. For illustration, the complaint describes a situation in which a plan pays 1% of a billed charge, a 30% percentage of “savings” fee to CIGNA, then ends up paying the full billed charge after a provider dispute. The end result is the plan paying 130% of a billed charge, with the extra 30% going to CIGNA.
At the complaint stage, it’s important to remember that all the allegations described here are just that – allegations. Some take aim at practices which, if they are actually being engaged in, are objectively problematic, while others strike at core elements of RBP itself. We will be closely monitoring the case as it develops and providing commentary and analysis on an ongoing basis.
Phone: 781-535-5600 | www.phiagroup.com
The Book of Russo: From the Desk of the CEO
Happy New Year everyone! 2020 marks the 20th anniversary of The Phia Group and it made me realize just how much we have accomplished and how far we have come. I am not going to sit here and tell you that this was the dream - to have a leading cost containment firm in the self-funding industry with over 200 employees. I just wanted to create something, anything that would change the status quo. I had no concept of the size of Phia, the revenues, the expertise, the reputation, the services, or the technology we have created.
I just had a passion to offer more than what was being offered at that time. I was 26, living in my mother’s basement, and basically had nothing to lose. We never got a loan, never had investors, never hired top talent - we couldn’t afford anyone! What we had was a determination to have fun, disrupt and innovate. What we created after 20 years still boggles my mind. I want all of you to know how much I appreciate the friendships, the loyalty and the collaboration we have built together. I will never forget where I came from or how I got here - thank you. Happy reading and I hope you all have an amazing 2020. I know we will.
Service Focus of the Quarter: Plan Appointed Claim Evaluator® (PACE) Phia Group Case Study Phia Fit to Print From the Blogosphere Webinars Podcasts The Phia Group’s 2020 Charity The Stacks Phia’s Speaking Events Employees of the Quarter & Year Phia News
We Are Proud to Announce: Free Health Benefits for Phia Employees & Their Families
The Phia Group, LLC is pleased to announce that with the ringing in of the new year, it will be offering FREE HEALTH BENEFITS to employees and their families. Specifically, plan participants that have been enrolled in the plan for five or more years will be enrolled in January of 2020 and have zero contribution or premium; 100% of the cost of their and their families’ membership is paid for by The Phia Group. Further, no plan participant’s contribution rate will increase in 2020.
This remarkable achievement is made possible thanks to the application and utilization of cost containment measures developed and provided by The Phia Group to the self-funded health benefits community, and proactive efforts on the part of its own plan membership to be educated, and cost-conscious “consumers” of healthcare.
Adam V. Russo, remarked – in response to those that believe cost-shifting the burden of rising healthcare costs onto employees is inevitable – that, with the right tactics in place, health benefits can be affordable and employees do not need to bear the burden of an inefficient health plan. “If our approach to health benefits didn’t work,” Adam continued,“… could we afford to maintain our contribution levels, year after year? Could we continue to offer benefits with no co-pays or deductible? The answer is no.”
Ron E. Peck, explained, “Our mission is to ensure health benefits are robust and affordable for hard-working Americans. Very few people work as hard as our own employees, so providing them with the best, most affordable benefits is us living our mission.”
“We are very proud to be able to offer our employees and their families the types of benefits they’d only see at a very small number of businesses, nationwide;” Adam concluded.
Service Focus of the Quarter: Plan Appointed Claim Evaluator® (PACE)
Some years ago, in response to growing industry concerns over fiduciary duties and appeals, The Phia Group created its Plan Appointed Claim Evaluator (PACE) service. PACE is a risk-sharing service for final-level internal appeals. It is designed to help ensure Plans and their TPAs made correct determinations in response to appeals, thereby insulating the health plan from liability and allowing the Plan Administrator to focus on its core business rather than difficult fiduciary determinations.
PACE includes:
• Plan Document and stop-loss policy “Gap Reviews” ensure compliance, eliminate coverage gaps, and ensure PACE readiness;
• Advanced-level webinars exclusively for PACE clients;
• Assessment of eligible final internal appeals resulting in a written directive; and,
• Unsurpassed legal analysis, clinical review, and access to URAC-accredited IROs (and PACE covers all external review costs).
We also now offer complimentary PACE Certification – with which your organization can enhance your PACE business, improve your internal appeals processes, ensure regulatory compliance, and improve your operation as a whole.
Chapter One of PACE Certification explores the ins and outs of self-funding; Chapter Two takes a deeper dive into the laws and regulations applicable to self-funded health plans; Chapter Three explains what PACE is, how it works, and how it can best be utilized.
To learn more, contact Michael Vaz at mvaz@phiagroup.com or 781-884-4971.
Phia Case Study: Claim Negotiation & Signoff (CNS)
The Phia Group was asked to negotiate a high-dollar claim on behalf of a self-funded health plan sponsored by a non-profit religious order. The charges totaled just over $100,000.00, and repricing yielded a Medicare rate of only $7,500.00 (a mark-up of over 1300% over Medicare). To compound the situation, the plan document had not been updated since the early 1990s, and had very weak language governing payment for out-of-network claims.
One of The Phia Group’s negotiators noted that the hospital bore the same name of the religious order of which the patient was an ordained member. After some investigation, Phia learned that this religious order was the very same that founded the hospital nearly a century ago.
In the initial outreach to the provider, we explained the claim’s metrics and equivalent Medicare rate; it was our hope that even without strong plan language or unloading our newfound argument regarding the member’s relationship to the hospital, the hospital would recognize the importance of settlement. Unfortunately, the provider was largely unresponsive to our efforts. After over a month of constant persistence in the form of calls, e-mails, and faxes, we finally received an offer from the provider to accept 35% off of billed charges. While not the smallest discount, that payment still would have constituted almost 900% of the applicable Medicare rate, and our client was not inclined to accept the offer.
In crafting a response, we got a little creative, and quoted some language directly from the “history” section of the hospital’s website. This patient, we noted, is a member of the religious order that founded this hospital back in 1922, and which transformed it into a hospital for children in 1936. That the hospital was now seeking almost 900% of the applicable Medicare rate from one of its founders seemed unreasonable and disingenuous. We also quoted a study that found that the average charge for an out-of-network claim in the state was 176% of Medicare; through this figure, we were able to base our client’s counteroffer in a concrete metric, even though the plan’s cost-containment language left much to be desired.
Ultimately, the provider agreed to accept our offer of 176% of the Medicare rate, and close its file. By going the extra mile, The Phia Group was able to save its client over $88,000; since the Plan Document didn’t have strong cost-containment language, the Plan would have legally been on the hook for the vast majority of it, had this settlement not been achieved.
Fiduciary Burden of the Quarter: New Denial Reasons on Appeal
It’s not uncommon for health plans to realize, while adjudicating a claimant’s appeal, that the initial denial reason was incorrect or incomplete. That’s one major function of appeals – to let a claimant identify that the denial reason is inapplicable. For instance, if the initial Adverse Benefit Determination denies a claim on the basis that the service is experimental, the claimant may appeal and present evidence that the claim is not in fact experimental. The fiduciary, when reviewing the appeal, may realize “whoops – this claim should have been denied for lack of medical necessity, but we used an experimental code by mistake!”
The result is generally that the fiduciary will still deny the appeal, but write that the claim is denied for medical necessity, rather than being experimental. The appeal is a request for additional benefits, but if additional benefits are not payable for some other reason that was not written in the initial denial, then the appeal should still be denied. Health plans often do not consider this to be a “separate” or “new” denial – but legally, it is.
Considering appeals to have been exhausted despite having provided a new denial reason effectively leaves the claimant with no opportunity to appeal that new denial for medical necessity. Courts have iterated that this is contrary to the intent and requirements of ERISA, which are designed to ensure that claimants are afforded the opportunity to appeal an adverse benefit determination. An appeal denial with a reason not previously given for that particular claim’s denial is therefore considered to be an initial adverse benefit determination all over again, even if given as part of a second-level appeal.
In short, any time a new denial reason is given for an existing claim, the claimant has the right to appeal that denial reason.
This could in theory create an absurd situation where the plan must accept many different appeals for the same claim – but to avoid that, we would suggest that the plan list all its denial reasons in the initial denial, when possible. That way, the plan can ensure that it does not need to respond to multiple unnecessary appeals, and also that a claimant is not strung along with the undue burden to appeal multiple times to try to get a straight answer out of her health plan.
Success Story of the Quarter: Balance-Billing at its Best!
The Phia Group was presented with a balance-billing claim from a client of Payer Compass’ INNOVATE360 service, for which The Phia Group provides back-end balance-billing support. This particular claim was billed at $1.57 million; the health plan allowed 150% of Medicare, which was about $289,000. The balance, billed in full to the patient, was nearly $1.3 million.
The TPA had been told prior to The Phia Group’s involvement that the maximum “discount” the provider would allow was 15%. Understandably, this payor would not accept that, and instead engaged The Phia Group to try to resolve this claim to alleviate the balance-billing. The payor was potentially willing to pay additional money to settle the claim, but certainly not the amount the provider was demanding.
The Phia Group engaged the provider, and right off the bat, attorney Rob Martinez unloaded all the arguments he had in his arsenal. They included arguments based on the ID card, the plan document, the hospital’s financial assistance policy, detrimental reliance, and more – and on a more personal note, the fact that this hospital was sending bills to its supposedly valued patient for $1.3 million.
Amazingly, the hospital conceded that Rob’s arguments were sufficient to extinguish the balance. The account was awarded a zero balance, and poof – just like that – Rob “the Magician” Martinez made a $1.3 million balance-bill disappear.
New Service Offered by Phia: Patient Defender
The Phia Group is proud to introduce its “Patient Defender” program. For a small PEPM fee, every plan participant has access to legal representation against lawsuits targeting patients, or crippling balances being sent to collections, when efforts to amicably resolve these disputes fail, Patient Defender is the ultimate weapon in the battle against abusive balance billing tactics. Best of all, Patient Defender can be coupled with any type of health benefit plan – from reference-based pricing plans to traditional network plans; if and when a patient is threatened by these increasingly aggressive tactics, Patient Defender will be there.
Patient Defender finally plugs the gap that has existed across the industry in relation to reference-based pricing programs and balance billing concerns. With Patient Defender, a small PEPM rate ensures that a trusted law firm is placed on retainer, ready and willing to assist the patient when balance-billing occurs. Health plans, TPAs, and brokers can now contain costs while knowing that patients have a legal advocate standing by.
To learn more about Patient Defender or any of The Phia Group’s services, please contact our Vice President of Sales and Marketing, Tim Callender, Esq., at 781-535-5631 or tcallender@phiagroup.com.
Phia Fit to Print:
• BenefitsPro – COBRA can be complicated: What to watch for – December 4, 2019
• Self-Insurers Publishing Corp. – ACA Enrollment By The Numbers! Administration's Attempts To Stall The ACA At Work? – December 1, 2019
• BenefitsPro – Trending therapy options: Gene and stem cell therapy for self-funded plans – November 22, 2019
• Self-Insurers Publishing Corp. – ACA Round-Up for 2020: Items Affecting Employer-Sponsored Group Health Plans – November 5, 2019
• Self-Insurers Publishing Corp. – The Tower of Babel-Talking Heads Talking Past Each Other – October 4, 2019
Back to top ^
From the Blogosphere:
• Washington’s “Surprise” Billing Law Goes Into Effect – January 2020. One less surprise you’ll have to worry about.
• New Transparency Rules Released, But Will They Last? A proposed rule to bring transparency to hospitals near you.
• Theories v. Practicality: The Simplest Answer is Often the Best! The easiest path to third party recovery.
• Happy (Almost) New Plan Year! Preparing your plan documents for 2020!
• Battle Lines Drawn over Medicare for All in the Latest Democratic Debate. Is there truly a cure for our healthcare system?
To stay up to date on other industry news, please visit our blog.
Webinars
• On December 17, 2019, The Phia Group presented, “A Perfect Vision for 2020,” where we review the issues, topics, and innovations of 2019 that we believe will impact 2020, as well as the strategies you need to implement now to conquer the coming year.
• On November 13, 2019, The Phia Group presented, “Plan Language, Rx, and Lawsuits to Watch (and File): Innovation for a Changing Industry,” where we discuss innovative programs to manage vendor fees, balance-bill litigation, Rx manufacturer assistance, and other ideas being proposed by players in the industry.
• On October 17, 2019, The Phia Group presented, “2020 Forecast - Storm Clouds, Clear Skies, and the Issues that will Dominate Next Year,” where we discuss the issues that impacted 2019, and are poised to dominate 2020, including (but not limited to) Mental Health Parity, Paid Leave, Health Insurance Taxes, Drug Prices, Regulations, and Coupons.
Be sure to check out all of our past webinars!
Podcasts:
Empowering Plans
• On December 19, 2019, The Phia Group presented, “Medicare Podcast for All” where our hosts, Ron Peck and Brady Bizarro, pick apart Elizabeth Warren’s Medicare-for-All proposal, and the concept as a whole; the good, the bad, and the really bad.
• On December 11, 2019, The Phia Group presented, “Preparing Your Plan Document for 2020,” where The Phia Group’s Executive Vice President and General Counsel, Ron E. Peck, and Senior Vice President of Consulting, Jen McCormick, sit down to discuss the top-rated topic chosen by Phia’s webinar listeners. Make sure you tune in to find out what Ron and Jen have to say about plan documents and learn the do’s and don’ts when it comes to reviewing and updating your plan document in 2020!
• On November 21, 2019, The Phia Group presented, “The Young & The Restless,” where our hosts, Adam Russo and Brady Bizarro sit down with Craig Clemente, Chief Operations Officer at Specialty Care Management and outgoing Chairman of the SIIA Future Leaders Committee, to discuss the future of the committee and the many ways they intend on engaging the younger generation.
Face of Phia
• On November 15, 2019, The Phia Group presented, “Shauna Makes a Comeback,” where our hosts, Adam Russo and Ron Peck, sits down with Shauna Mackey, The Phia Group’s Associate General Counsel. Tune in to learn more about Shauna and her experience with both public and private healthcare throughout her pregnancy and delivery.
• On November 4, 2019, The Phia Group presented, “Battling Balance-Billing,” where our hosts, Adam and Ron, interview Lyneka Hubbert, a Medical Claim Negotiator here at The Phia Group.
• On October 16, 2019, The Phia Group presented, “Reminiscing on Memories with Mrs. Marsh,” where our hosts, Adam and Ron, interview Jen Marsh, our Client Satisfaction & Quality Control Manager.
Tales From the Plan
• On October 24, 2019, The Phia Group presented, “Translating Phia’s Benefit Plan,” where our hosts, Adam Russo and Ron Peck, interview The Phia Group’s Human Resources Manager, Linda Pestana. Learn how Linda was able to navigate our health plan and negotiate with a provider to make her son’s hearing aids affordable.
Be sure to check out all of our latest podcasts!
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 Brockton 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.
Angel Tree
Each year employees of The Phia Group pick nametags from the Angel Tree that sits in our main lobby. On those tags are names, ages and the wish lists of children from The Salvation Army. This year we had over 130 nametags! The Phia family loves to give back to the community; our greatest joy is providing these children with all of their holiday wishes.
Christmas Came Early
The Phia Group had the pleasure of bringing Christmas joy to the Boys & Girls Club of Metro South. Adam Russo and his helpers passed out hundreds of gifts to over 130 children. We hope these children enjoy their new toys as much as they enjoyed spending time with Santa!
2019 Kennedy Service Award
Adam and Kelly Russo were honored with the 2019 Kennedy Service Award last week at the 2019 Great Futures Gala hosted by The Boys & Girls Clubs of Metro South. Check out the link below to see highlights from this unforgettable night! To learn more about this award, please visit
Thanksgiving Dinner Delivery
The Phia Family was out and about the week of Thanksgiving, delivering Thanksgiving dinners to the families of The Boys and Girls Club of Metro South! Additionally, our Phia Family in Idaho was out and about spreading the same cheer to five families in the Boise area. Check out the great picture we were able to get from that special night! We hope everyone had a wonderful Thanksgiving!
The Stacks
ACA Enrollment By The Numbers! Administration's Attempts To Stall The ACA At Work?
By: Chris Aguiar, Esq. – December 2019 – Self-Insurers Publishing Corp.
With headlines focused on collusion, corruption, impeachment, and a wall being erected in Colorado, much of the political discourse in 2019 has avoided Healthcare Reform. In contrast, 2017 and 2018 featured many headlines with the current Administration doing everything within Its power to make good on a touchstone of Its 2016 campaign platform; President Trump and the Republican Party pushed for repeal and replacement of Barak Obama’s crowning achievement, the Affordable Care Act. When they were unable to garner the votes, the President utilized powers outside the control of Congress to weaken key parts of the Law designed to ensure the viability of the Insurance Marketplace, as well as keeping the American public in the dark regarding enrollment by virtually defunding marketing efforts. Many feared these tactics would encourage disengagement of the young and healthy, demographics crucial to maintaining a balanced risk pool covered by the Marketplace. Did it work?
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ACA Round-Up for 2020: Items Affecting Employer-Sponsored Group Health Plans
By: Corrie Cripps – November 2019 – Self-Insurers Publishing Corp.
During this open enrollment season, plan sponsors of group health plans should be aware of any Affordable Care Act (ACA) changes that may affect the design and administration of their plans.
The case Texas v. United States is the ongoing litigation challenging the constitutionality of the ACA. A decision on this case is expected at any time from the Fifth Circuit Court of Appeals (“Fifth Circuit”). Any decision appears likely to be appealed to the Supreme Court. Whether or not the Supreme Court will take the case depends on how the Fifth Circuit rules. If the Supreme Court does not take the case, the Fifth Circuit’s decision will remain the law; however, the agencies will most likely need to issue regulatory guidance on how they interpret the decision.
The Tower of Babel-Talking Heads Talking Past Each Other
By: Ron E. Peck, Esq. – October 2019 – Self-Insurers Publishing Corp.
As the 2020 Presidential Election draws closer, the topic of healthcare continues to dominate the airwaves. Be it media or debate, this is one of the (if not the) issue about which everyone is talking; but pay close attention and you’ll notice they aren’t all speaking the same language.
One word everyone can agree upon is “affordability.” The issue, however, is that depending upon whom you ask, what it is that ought to be “affordable” differs. Some people throw the term “access” around, while others seek affordable “care,” whilst still others focus (candidly) on affordable insurance.
To stay up to date on other industry news, please visit our blog. Back to top ^
Phia’s 2019 Speaking Engagements:
• 1/9/2019 – FMMA Conference – Austin, TX
• 2/27/2019 – Sunlife 2019 MVP Academy – Denver, CO
• 3/8/2019 – UnitedAg Conference – Anaheim, CA
• 3/19/2019 – SIIA Self-Insured Health Plan Executive Forum – Charlotte, NC
• 3/21/2019 – CGI Business Solutions Seminar – Woburn, MA
• 3/26/2019 – HFTPA Broker Meeting – Tyler, TX
• 4/3/2019 – BenefitsPRO Broker Expo – Miami, FL
• 4/5/2019 – Pareto Conference – Nashville, TN
• 4/7/2019 – Captive Symposium – Cayman Islands
• 4/8/2019 – National Beer Wholesalers Association Legislative Conference – Washington DC
• 4/12/2019 – FMMA 2019 Annual Conference – Dallas, TX
• 4/23/2019 – Johns Hopkins Industry Education Series – Baltimore, MD
• 4/24/2019 – Sunlife 2019 MVP Academy – Kansas City, MO
• 4/25/2019 – BevCap’s Best Practices Workshop – Orlando, FL
• 4/26/2019 – Society of Professional Benefit Administrators Annual Conference – Washington, D.C.
• 5/2/2019 – MassAHU Benefest 2019 Conference – Westborough, MA
• 5/14/2019 – Cypress Unversity – Las Vegas, NV
• 5/30/2019 – Contrarian Captive – Austin, TX
• 6/11/2019 – Leavitt Conference – Big Sky, MT
• 7/16/2019 – HCAA TPA Summit – Dallas, TX
• 7/31/2019 – 2019 MVP Academy – Wellesley, MA
• 8/20/2019 – Pritchard & Jerden Employee Benefits Forum – Brookhaven, GA
• 9/17/2019 – WebTPA Annual Confernece – Dallas, TX
• 9/19/2019 – Employee Benefits Planning Association Conerence – Seattle, WA
• 9/30/2019 – SIIA National Educational Conference & Expo – San Francisco, CA
• 10/27/2019 – 2019 Annual NASP Conference – Washington DC
Phia’s 2020 Speaking Engagements:
• 1/30/2020 – SunLife MVP Academy – San Diego, CA
• 1/31/2020 – 2020 Kairos Risk Management Summit – Phoenix, AZ
• 2/13/2020 – Artex Risk Solutions Conference – Orlando, FL
• 2/18/2020 – HMIG Producer Advisory Counsil – Amelia Island, FL
• 3/9/2020 – CICA Captive Conference – Palm Springs, CA
• 3/12/2020 – SunLife MVP Academy – Kansas City, MO
• 3/26/2020 – TABA Spring Conference – Woodlands, TX
• 4/26/2020 – Berkley Captive Symposium – Caymen Islands
• 6/10/2020 – Leavitt Conference – Big Sky, MT
• 6/18/2020 – SunLife MVP Academy – Kansas City, MO
• 7/14/2020 – HCAA TPA Summit – St. Louis, MO
Get to Know Our Employees of the Quarter: Igor Senic & Desireé Erskine
Desireé is always going above & beyond to help everyone in the company. From trying to fix the fax machines & printers, sending out all of the mail when we are short-staffed at the front desk, to setting up a computer at a coworker’s home & driving them to and from work. She does all of these extra things while being the main component of the OP department. Desireé is an extremely hard worker who has passion and truly cares about this company.
Igor has worked so diligently over the past year in Accounting and it is well deserved. He has come up with multiple enhancements to improve and benefit the Accounting department.
A few examples:
(1) He has stepped up and has become someone on the team that the others can come to for assistance, ask questions, and resolve issues. (2) He set up training for the new Kentucky claims recovery specialists to make sure they are more comfortable with the Accounting payment process, along with trainings for the other accounting team members. (3) His knowledge of OP has helped make the OP payment processing more efficient & he was part of updating the OP payment process from processing payments individually to being able to process multiple payments at one time.
Congratulations Desireé (pictured above) and Igor, and thank you for your many current and future contributions.
Get to Know Our Employees of the Year: Megan Colter & Joanna Wilmot
Megan joined our team as a Consultant in 2018. Since that time Megan’s duties have expanded to include final reviews of plan document checklists, assessments and SBC services. Megan has also been very helpful in training and mentoring new employees. Megan always makes sure the client’s expectations and deadlines are met. She has been staying late and/or working from home and her effort is appreciated. Megan is a pleasure to work with and we are happy she is part of our team!
Joanna is an exceptional example of a model employee. Her kindness, loyalty, enthusiasm, and dedication are only a few of the reasons why she deserves an employee of the year title. She is never short of energy which she selflessly offers to the team, her work product, and our clients.
She is dedicated and hardworking. Over the course of this year she reviewed, audited and revised each process to maximize efficiency and productivity. Specifically, our clients continue to ask for customized approaches, reports, and notifications. Most recently a TPA client requested a tailored notification process for when a mutual client was being onboarded by a partner vendor. Joanna not only went out of her way to build a notification process for this TPA but she also immediately implemented this process for all clients. This is an example of the personal touch and consistency she exemplifies every day. Building a sense of community is important to Joanna as well. For Thanksgiving she organized a team-building and community give back opportunity for PACE. This shows she not only cares about her team, but about her community and the team’s contribution to the community.
Congratulations Joanna & Megan, and thank you for your many current and future contributions.
Phia News
PACE® Certification Is Making Waves
The PACE Certification program will educate you using 3 distinct chapters of information:
Chapter One
Explore the ins and outs of self-funding while learning about its risks and rewards. This chapter will transform any individual into a self-funding pro.
Chapter Two
Take a deeper dive into the laws that apply to self-funded plans. We cover it all, from federal preemption to adverse benefit determinations and appeals.
Chapter Three
Explains what PACE is, what PACE does, and how it's obtained, implemented, and utilized. The PACE Certification program is free of charge and will create immense value for your organization. By going through the Certification program, you, or a select person, or team, within your organization, can become PACE Certified. Once PACE Certified, the Program participant(s) will become highly educated PACE business owners and will serve to assist your organization in growing your PACE business, enhancing your PACE revenue, and assuring your appeals processes are the most compliant and best in the industry. Those who complete the Certification will also receive a PACE Certification Fact Sheet, providing an easy to understand summary of the content and best practices covered, which will allow you to maximize the lessons learned within your business.
Additionally, the PACE Certification program provides education on self-funding in general, claims and appeals regulatory education, and overall best practices surrounding fiduciary duties, claims, and appeals.
Please see the PACE Certification flyer, as well as this video for more information.
Please contact Michael Vaz (mvaz@phiagroup.com) for more information.
Ugly Sweater Contest
The Phia family held its famous ugly sweater contest the week before Christmas, and we had a great turnout this year! With all of the great sweaters, it was a close race for finding the person with the ugliest sweater, but once we tallied up all of the votes, we found a winner. Congratulations to Rob Jolly, who is pictured below in the brown bear getup!
Halloween at Phia
Phia had its annual Halloween costume competition in late October. There were a lot of great costumes on display, but we could only choose one winner. Congrats to Ben Mooney, the homeless man with a passion for healthcare!
Candy Corn Contest
We set up a little contest at the front desk and asked everyone to guess how many candy corn! The winner was Andrew Fine, and the total count was 408. Andrew guessed that there were 402 pieces of candy corn. It’s hard to believe that all of those pieces of candy fit into that tiny jar!
Job Opportunities:
• PACE Specialist
• Administrative Assistant
• Staff Attorney – PGC
• Health Plan Documentation Specialist
• Claims Specialist, Provider Relations
• Manager, Talent Acquisition
• Case Investigator I
• Data / ETL Analyst
• Provider Relations Client Concierge
• Vice President of Client Solutions and Account Management
• Human Resources Compliance Specialist
See the latest job opportunities, here: https://www.phiagroup.com/About-Us/Careers
Promotions • Bethany LaChance has been promoted from Case Investigator to Claim Recovery Specialist III
• Dylan Fry has been promoted from Case Investigator to Senior Claim Recovery Specialist
• Allison Britton has been promoted from Case Investigator to Legal Assistant
• Brenna Jackson has been promoted from Legal Assistant to Senior Claim Recovery Specialist
• Jiyra Martinez has been promoted from Customer Service Representative to Senior Claim Recovery Specialist
New Hires • Diane Mcauley was hired as an Executive Assistant
• Arianna Hibbard was hired as an Executive Assistant
• Robert Jolly was hired as a Claim And Case Support Analyst
• Jessica Grande was hired as an Intake Specialist
• Alyssa Campbell was hired as a Case Investigator
• Elizabeth Painten was hired as a Human Resources Assistant
• Corey Crigger was hired as a Provider Relations Attorney
• Joshua Farley was hired as a Provider Relations Attorney
• Cole Wagner was hired as an Accounting Assistant
ACA Enrollment By The Numbers! Administration’s attempts to stall the ACA At Work?
By: Christopher Aguiar, Esq.
It all came to a head when, in rather theatrical fashion, the late Senator John McCain stood on the Senate floor and casted his vote with a momentous thumbs down, as though he was a dictator in Ancient Rome deciding the fate of a gladiator on the heels of a losing battle. This iconic moment marked the end of a legislative war of words, highlighted to that point by Twitter attacks from the President, himself, where the Republican Party was unable to garner the 50 votes necessary under the Budget Reconciliation Act to pass the Better Care Reconciliation Act. What followed was a tactical maneuvering by President Trump to undermine of key features of the ACA through his control of federal agencies and national purse strings.
First came a backhanded legislative maneuver wherein the Administration built Reform provisions into a tax bill. In December of 2017, President Trump signed the Tax Cuts and Jobs Act (“TCJA”). Among many other provisions, the Bill effectively directed the Internal Revenue Service to cease enforcing the Individual Mandate. In so doing, the Government would no longer penalize Americans who chose not to purchase health insurance. So, even though the Affordable Care Act was still the Law of the Land, one of the key provisions intended to protect the health of the risk pool by ensuring it was balanced and included not only the old and sick but also the young and healthy, now had no teeth. Many posited this lack of enforcement could hamstring the Law by encouraging the very malady it was designed to avoid, adverse selection. Without the tax to be levied upon non-compliant Americans, another important challenge to the Law was also set in motion, Its constitutionality.
When now Chief Justice Roberts upheld the constitutionality of the Affordable Care Act in an historic 2012 Supreme Court decision, it was upon enforcement of this provision that he relied. Specifically, Roberts held in National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012) that the Law was constitutional because the Federal Government was empowered to generate revenue. This penalty, as it was initially labeled, to be levied against Americans who chose not to purchase health insurance, then, was actually a tax, a permissible exercise of the Government’s power of taxation. So, too, was the Affordable Care Act considered constitutional. With the Administration’s removal of enforcement of this tax, without repealing the Law or provision itself, the constitutionality of the Affordable Care Act is again called into question because where no revenue is generated, the Individual Mandate is now arguably invalid. Such is the question to be answered by The Supreme Court when it issues a ruling Texas v. US, 809 F. 3d 134 (2015). Though oral arguments took place in July of 2019, no ruling has been issued.
The final act taken by the Administration was an exercise of the Executive Branch’s control of money. Specifically, it is within the power of the president to control how certain federal funds are spent, a power which allowed President Trump to slash the Affordable Care Act’s marketing budget by 90%. The fear? With significantly less advertising of open enrollment, would American’s be aware of the Open Enrollment period and how they could go about purchasing coverage on the Exchange?
Though not significant, the efforts may have had some impact on the enrollment which occurred from November 1 through December 15, 2018. According to Kaiser Family Foundation as well as the Centers for Medicare & Medicaid Services (“CMS”), enrollment through Healthcare.gov was down 4% in 2018 as compared to 2017. Overall, enrollment was down 3% in 2018 as compared to 2017. Those numbers seem insignificant when you consider the significant budgetary limitations that were placed on advertising, but perhaps the more telling and concerning data lies in the decline of new enrollees and percentage of those who qualified for subsidies. With respect to enrollees, 39% of enrollees were new in 2016. That number in 2017 had fallen to 31%, and even further in 2018 to 24%.
Perhaps the most concerning data point, however, is the percentage of new enrollees who qualify for premium subsides/tax credits. Those who qualify for these subsidies do so because they are individuals or families with low to moderate income levels. In 2017, 83% of new enrollees qualified for these subsidies. In 2018, that number grew to 87%. This indicates that lower income individuals and families are flocking to the health insurance exchanges at significantly higher rates than their wealthier (and perhaps, healthier) counterparts. Historically, data suggests that lower income individuals also tend to be less healthy. Accordingly, it appears the fear of adverse selection may indeed be manifesting itself as the young and healthy seem to be avoiding entering the Marketplace, either due to obtaining benefits through employee sponsored plans, or their willingness to gamble on their youth to save a buck.
It is difficult to ascertain with certainty whether the policy decisions made by the current Administration truly have a causal link to the drop indicated above, or if the connection is simply correlative. The numbers themselves speak to a very ominous reality. The number of new enrollees is declining each year. Additionally, the Marketplace appears to be obtaining a higher rate of enrollees annually in the low to moderate income demographic. Finally, 1/3 of new enrollees, annually, appear to be over the age of 55 and 64% are over the age of 35. As we head into 2020 and what should be another year of significant reform rhetoric, a Supreme Court decision that could leave the Country without a healthcare system on the books, and Healthcare once again top of mind in a presidential election cycle, the Administration will continue to attempt to repeal the Affordable Care Act, or endeavor to limit its efficacy. If adverse selection is in fact coming to fruition as the data seems to support, the Affordable Care Act may be headed for its demise either organically or though direct legislative attacks. It will certainly not be aided by an administration that will actively undermine the parts of a healthcare system that were intended to ensure its success; a flawed system that often leaves Americans footing a significant bill. Even with these attempts, the Republican Party has failed to clearly put forth a viable replacement. Be it with the ACA in some form, a Republican alternative, or the “Medicare for All” approach being touted by the large contingent Democratic candidates, Healthcare discussion is here to stay.
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By: Corrie Cripps
The case Texas v. United States1 is the ongoing litigation challenging the constitutionality of the ACA. A decision on this case is expected at any time from the Fifth Circuit Court of Appeals (“Fifth Circuit”). Any decision appears likely to be appealed to the Supreme Court. Whether or not the Supreme Court will take the case depends on how the Fifth Circuit rules. If the Supreme Court does not take the case, the Fifth Circuit’s decision will remain the law; however, the agencies will most likely need to issue regulatory guidance on how they interpret the decision.
As of the date of this article, the Trump administration is continuing to enforce the ACA. As such, plans will need to ensure they are maintaining compliance with the ACA provisions. The following is a summary of the recent regulatory actions that will affect self-insured plans in 2020.
ACA Contraceptive Mandate
Update on the Obama-Era Rules
On June 5, 2019, U.S. District Judge Reed O’Conner of the Northern District of Texas issued a nationwide injunction2 against the Affordable Care Act’s (ACA’s) contraceptive mandate and its accommodation process, stating the mandate can no longer be enforced against employers who object to contraceptive coverage as it violates the Religious Freedom Restoration Act (RFRA). The injunction applies to all employers and individuals who object to contraceptive coverage based on sincerely held religious beliefs.
The case, DeOtte v. Azar3, was filed in October 2018 on the grounds that the plaintiffs (two Christian couples and one business whose owner is a Christian [Braidwood Management Inc.]) are forced to choose between purchasing health insurance that includes contraceptive coverage or not having insurance. The basis of the claim is having to choose between covering contraceptives under its group health plan, complying with the accommodation process of the contraceptive mandate, or paying a penalty for noncompliance. The court ruled that requiring employers with religious objections to use the contraceptive mandate’s accommodation violates RFRA, as does requiring individuals to obtain coverage with contraceptives.
This decision will apply to all employers that object to the contraceptive mandate, based on sincerely held religious beliefs, regardless of size or status as a nonprofit or for-profit entity. Since these employers are now exempt from the accommodation process, employees under these employer group health plans will no longer have coverage for some or all contraceptive services.
As for individuals, this decision allows individuals who object to some or all contraceptive services based on sincerely held religious beliefs to “…purchase or obtain health insurance that excludes coverage or payments for some or all contraceptive services from a health insurance issuer, or from a plan sponsor of a group plan, who is willing to offer a separate benefit package option, or a separate policy, certificate, or contract of insurance that excludes coverage or payments for some or all contraceptive services.” Based on this injunction, it is not clear if self-funded plans will need to offer a separate plan that does not include contraceptive coverage for employees who are religious objectors.
There is a safe harbor for officials who enforce the contraceptive mandate. Under the safe harbor, the federal government can ask whether an employer or individual that fails to comply with the contraceptive mandate is a sincere religious objector and file notice in court “…if the defendants reasonably and in good faith doubt the sincerity of that employer or individual’s asserted religious objections”. Federal regulators can also enforce the mandate against those who are found by a court to not be sincere religious objectors.
Update on the Trump Administration Rules
There are at least three lawsuits—brought in California, Massachusetts, and Pennsylvania—challenging the Trump administration’s final rules on religious and moral objections to the contraceptive mandate.4,5 Those rules were set to go into effect in January 2019 until they were enjoined by federal district court judges in Pennsylvania and California.
The rulings in Pennsylvania and California do not permanently block the new rules on the contraceptive coverage exemptions; however, the rulings stop the rules from going into effect while legal challenges are pursued.
Those employers who are potentially eligible for the expanded exemptions of the Trump administration’s final rules and wish to utilize an exemption in the future will need to closely monitor the latest developments.
Out-of-Pocket Limits for Non-Grandfathered Plans
2020 Out-of-Pocket Maximums
For non-HDHPs:
The Health and Human Services Department issued a Final Rule on its Notice of Benefit and Payment Parameters for 2020 (2020 NBPP Final Rule).6 The ACA 2020 maximum annual limitation on cost-sharing is $8,150 for individual coverage and $16,300 cumulative for family coverage. (Note that the ACA’s embedded self-only limitation is $8,150 for family plans).
For HSA-compatible HDHPs:
In Revenue Procedure 2019-25, the Internal Revenue Service (IRS) provided the inflation-adjusted Health Savings Account (HSA) contribution limits effective for calendar year 2020, along with minimum deductible and maximum out-of-pocket expenses for the high-deductible health plans (HDHPs) that HSAs are coupled with.7 For HDHP self-only coverage, the minimum deductible amount cannot be less than $1,400. The 2020 maximum out-of-pocket expense amount for self-only coverage is $6,900. For 2020 family coverage, the minimum deductible amount is $2,800 and the out-of-expense maximum is $13,800. (Note that the ACA’s embedded self-only limitation is $8,150 for family plans).
Drug Manufacturer Coupons
Per the 2020 NBPP Final Rule, health plans are not required to count drug manufacturer coupons toward the annual limit on cost-sharing when a medically appropriate generic equivalent is available.
On August 26, 2019, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, “the Departments”) issued a joint FAQ regarding limitations on cost-sharing under the ACA.8 Specifically, the FAQ addresses whether non-grandfathered group health plans must count drug manufacturers’ coupons toward the annual cost-sharing/out-of-pocket limits under the ACA.
Per this new FAQ, it came to the attention of the Departments that the drug manufacturer coupon provision of the 2020 NBPP Final Rule could create a conflict with the IRS regulations pertaining to HDHPs. Specifically, Q&A 9 of IRS Notice 2004-50 provides that the provision of drug discounts will not disqualify an individual from being eligible (for the HDHP) if the individual is responsible for paying the costs of the drugs (considering the discount) until the deductible is met.9 This Q&A requires the HDHP to disregard the drug assistance when determining whether the minimum deductible for an HDHP had been satisfied by only allowing amounts actually paid by the individual to be taken into account for that purposes.
The 2020 NBPP Final Rule, layered with the existing IRS Q&A, creates conflicting policy. As a result, the Departments, as stated in this August 2019 FAQ, realize this “ambiguity” and intend to undertake future rulemaking for 2021. In addition, until 2021, the Departments will not initiate an enforcement action if a group excludes the value of drug assistance from the annual limitation on cost sharing, including in circumstances in which there is no medically appropriate generic available.
Plans, however, when implementing or utilizing such a provision should be cognizant that this does not conflict with the existing Q&A for HDHPs.
Prior to adopting such a provision, the plan, employer, and all related entities should ensure they understand the impact for the participants and the plan.
New (or Modified) Preventive Care Recommendations for Non-Grandfathered Health Plans
The Affordable Care Act’s (ACA) preventive services mandate for non-grandfathered plans requires certain preventive services be covered in-network without cost-sharing for plan participants. The ACA uses the following when determining the preventive services that must be covered:
The final preventive services regulations, issued in July 2015, contain guidelines for when plans must incorporate any modified recommendations.10
The following are new or modified preventive care recommendations that become effective in 2020:
1. Skin Cancer Prevention (Date Issued: March 2018; Best practice is to incorporate by the first day of the plan year on or after January 1, 2020)
The USPSTF updated its 2012 recommendation on skin cancer prevention. In this updated recommendation, the USPSTF expanded the age range for behavioral counseling interventions to include persons aged 6 months to 24 years with fair skin types (the previous recommendation applied to persons aged 10 to 24 years, based on the evidence available at that time).11
2. Screening for Osteoporosis to Prevent Fractures (Date Issued: June 2018; Best practice is to incorporate by the first day of the plan year on or after January 1, 2020)
The USPSTF recommends osteoporosis screening for postmenopausal women younger than 65 years at increased risk of osteoporosis (created from prior osteoporosis screening mandates, this requirement clarifies the population for screening, introduces reference to menopause, and references clinical risk assessment for determining increased risk).12
3. Spinal muscular atrophy screening for newborns (Date Issued: July 2018; Best practice is to incorporate by the first day of the plan year on or after January 1, 2020)
The Uniform Panel of the Discretionary Advisory Committee on Heritable Disorders in Newborns and Children (an HRSA task force) added newborn screening for certain kinds of spinal muscular atrophy.13
4. Interventions to Prevent Obesity-Related Morbidity and Mortality in Adults (Date Issued: September 2018; Best practice is to incorporate by the first day of the plan year on or after January 1, 2020)
The USPSTF updated its previous 2012 recommendation statement on screening for obesity in adults. While it is still a “B” recommendation, the USPSTF expanded the description of behavioral counseling interventions. As with the 2012 recommendation, the 2018 recommendation is that clinicians offer or refer adults with a body mass index (BMI) of 30 or higher (calculated as weight in kilograms divided by height in meters squared) to intensive, multicomponent behavioral interventions.14 The only update to the recommendation is the expansion of the type of behavioral counseling interventions.
5. Screening for Intimate Partner Violence, Elder Abuse, and Abuse of Vulnerable Adults (Date Issued: October 2018; Best practice is to incorporate by the first day of the plan year on or after January 1, 2020)
This USPSTF recommendation incorporates new evidence since 2013 and provides additional information about the types of ongoing support services that appear to be associated with positive outcomes.15
ACA Reporting
Both the Employer Shared Responsibility Mandate (“Employer Mandate”) and the Individual Shared Responsibility Mandate (“Individual Mandate”) of the ACA continue to apply. As such, Applicable Large Employers (ALEs) will need to ensure they file the applicable forms for Internal Revenue Code (IRC) §§ 6055 and 6056 reporting in early 2020.
Conclusion
For plans and TPAs, being well-informed on regulatory developments is always of the upmost importance. Plan sponsors should review their plan documents as well as their plan administration procedures to ensure they are compliant.
1Texas v. United States, Partial Summary Judgment, https://www.documentcloud.org/documents/5629711-Texas-v-US-Partial-Summary-Judgment.html, (Last visited October 1, 2019).
2DeOtte v. Azar, Summary Judgment Order, https://affordablecareactlitigation.files.wordpress.com/2019/06/deotte-summary-judgment-order.pdf, (Last visited October 1, 2019).
3DeOtte v. Azar, Plaintiffs’ Class-Action Complaint, https://affordablecareactlitigation.files.wordpress.com/2019/05/deotte-complaint.pdf, (Last visited October 1, 2019).
4Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 147, October 13, 2017, https://www.gpo.gov/fdsys/pkg/FR-2017-10-13/pdf/2017-21851.pdf, (last visited October 1, 2019).
5Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 147, October 13, 2017, https://www.gpo.gov/fdsys/pkg/FR-2017-10-13/pdf/2017-21852.pdf, (last visited October 1, 2019).
6Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2020, 45 CFR Parts 146, 147, 148, 153, 155, and 156, April 25, 2019, https://www.govinfo.gov/content/pkg/FR-2019-04-25/pdf/2019-08017.pdf, (last visited October 1, 2019).
7Internal Revenue Bulletin: 2019-22, Rev. Proc. 2019-25, May 28, 2019, https://www.irs.gov/irb/2019-22_IRB#REV-PROC-2019-25, (Last visited October 1, 2019).
8Employee Benefits Security Administration, Frequently Asked Questions (FAQs) about Affordable Care Act (ACA) Implementation Part 40, August 26, 2019, https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-40, (Last visited October 1, 2019).
9Internal Revenue Bulletin No. 2004-33, August 16, 2004, https://www.irs.gov/pub/irs-irbs/irb04-33.pdf, (Last visited October 1, 2019).
10Coverage of Certain Preventive Services Under the Affordable Care Act, 26 CFR Part 54, 29 CFR Parts 2510 and 2590, 45 CFR Part 147, July 14, 2015, https://www.govinfo.gov/content/pkg/FR-2015-07-14/pdf/2015-17076.pdf, (Last visited October 1, 2019).
11U.S. Preventive Services Task Force, Skin Cancer Prevention: Behavioral Counseling, March 2018, https://www.uspreventiveservicestaskforce.org/Page/Document/UpdateSummaryFinal/skin-cancer-counseling2, (Last visited October 1, 2019).
12U.S. Preventive Services Task Force, Osteoporosis to Prevent Fractures: Screening, June 2018, https://www.uspreventiveservicestaskforce.org/Page/Document/UpdateSummaryFinal/osteoporosis-screening1?ds=1&s=osteoporosis, (Last visited October 1, 2019).
13Health Resources & Services Administration, Recommendations to HHS Secretary with Responses: Spinal Muscular Atrophy (SMA), https://www.hrsa.gov/advisory-committees/heritable-disorders/recommendations-reports/index.html, (Last visited October 1, 2019).
14U.S. Preventive Services Task Force, Weight Loss to Prevent Obesity-Related Morbidity and Mortality in Adults: Behavioral Interventions, September 2018, https://www.uspreventiveservicestaskforce.org/Page/Document/UpdateSummaryFinal/obesity-in-adults-interventions1, (Last visited October 1, 2019).
15U.S. Preventive Services Task Force, Intimate Partner Violence, Elder Abuse, and Abuse of Vulnerable Adults: Screening, October 2018, https://www.uspreventiveservicestaskforce.org/Page/Document/UpdateSummaryFinal/intimate-partner-violence-and-abuse-of-elderly-and-vulnerable-adults-screening1?ds=1&s=violence, (Last visited October 1, 2019).
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The Tower of Babel – Talking Heads Talking Past Each Other
By: Ron E. Peck, Esq.
Access vs. Care vs. Insurance
Interestingly, for many, the term they use (access versus healthcare) matters little, as – once their position is better defined – a shrewd listener will note that the goal is ultimately the same; make insurance cheaper. They seem to believe that insurance is healthcare, and cheaper insurance is thereby cheaper healthcare. Further, they believe that the only “cost” of healthcare, incurred by an insured person is their premium, co-pay, coinsurance, and deductible.
This, then, is one misconception that continues to dominate political, regulatory, and economic discourse; that by attacking the cost of insurance for the general populace (i.e. premiums/contributions, co-pays, coinsurance, and deductibles), you somehow fix the problem of limited access and/or the high cost of healthcare.
Health Insurance is Not Healthcare
I’ve written in the past, and continue to argue today, that health insurance is not healthcare. Health insurance is one means by which the risk of payment for healthcare is shifted from the consumer of healthcare to a third-party payer. Changing who pays for healthcare doesn’t (on its own) address how much the healthcare costs. For instance, before you argue that Congress should establish a funding mechanism to support the “cost of caring” for those with significant medical needs, ask first what it means to pay for care. Are you referring to the cost of insurance, or the cost of the “actual” health care for which insurance pays?
Some might argue, however, that when a “new” payer is designated, (be it insurance, a self-funded plan, or the government), if they are large enough and possess enough clout, they can strongarm the provider into accepting lower prices for care – thereby reducing the actual cost of care. Thus, while making insurance more affordable doesn’t in and of itself reduce the cost of care, by providing more lives (and this negotiation power) to the payer, those payers in turn are provided with more “power” to force providers into accepting lower prices. Indeed, a single-payer would hold all the cards, and thus name their own price.
In a vacuum it makes sense, and if we were purchasing potatoes or tires it may work (in a truly free-market environment), however, in healthcare some features apply that are unique to this industry.
A Non-Market Market
In any other market, a vendor of goods or services can set any price for those goods or services. Supply, demand, and competition will then force the vendor to increase or reduce their price or fail. This allows the “free market” to naturally set prices at a level both the seller and buyer can live with. In healthcare, however, providers leverage things like technology, reputation, rankings, and sponsorships to compete for “customers” (a/k/a patients), rather than the price. Providers compete for these other things; if and when price is a matter over which there is competition between vendors (providers), it’s a competition to see who can charge the most. Indeed, one of the big pushbacks against transparent pricing in healthcare is that some providers will see that other providers “get away” with charging higher prices for the same services … and will increase their rates to match. Imagine if that same argument applied to every other industry; that the cost of bananas couldn’t be transparent, because grocers will compete to raise prices faster than the competition. Welcome to a world where the consumer has no skin in the game, and no price-based incentive to pick the lower cost options exists.
In healthcare, where patients don’t know, or (they think) pay the price of healthcare (at the time the care is consumed), and the consumer doesn’t appreciate the impact of higher healthcare prices on insurance costs, providers are able to freely raise prices without the negative repercussions vendors in other industries would immediately suffer. Additionally, even if patients know the price, if they (at least in their mind) don’t think they are the ones paying the price, then higher prices will – at best – not dissuade them from consuming care, and – at worst – will steer them away from reasonably priced care to higher cost providers, thanks to an (inaccurate) assumption that higher price equates to higher quality.
Quantum Meruit
At the same time, contract law states that a customer who agrees to pay a certain price for a service or product has entered into a contract with the vendor. This preemptive agreement between the customer and vendor, regarding what will be paid, and what will be received by the customer, is titled a “meeting of the minds.” If the customer later fails to pay the amount to which they’d previously agreed, this would be deemed a breach of contract. Even if objectively, one could argue the agreed upon price is excessive, assuming the customer had the requisite capacity to enter into such a deal, the contract is binding. If, however, someone receives a good or service but there was no meeting of the minds (agreement about what would be provided, and a specific price for said goods or services), the customer will be forced to pay an objectively reasonable price – determined by an objective third party, using objective pricing parameters – and NOT whatever price the vendor chooses to collect. This concept, called Quantum Meruit, ensures vendors are adequately compensated based upon objectively reasonable parameters, and customers are not unjustly enriched (don’t “get something for nothing”) but also aren’t forced to pay a price they never agreed to (and which is excessive by all reasonable, objective measurements).
In healthcare, however, rarely can we say there is truly a meeting of the minds. It is rare indeed to see a provider (the vendor) and patient (the consumer) agree upon a price prior to the provision of services. Yet, despite this, Quantum Meruit – applicable to other commercial exchanges – has no place in healthcare, and rather, the provider is allowed to balance bill the patient whatever amount it wants – usually the amount that exists between the provider’s “charge master” price, and what it already received from the applicable carrier or benefit plan. Note that the only prohibition on this billing practice is the prior existence of a contract between a payer and the provider, by whose terms the provider agrees to accept the payer’s payment as payment in full. This agreement, many argue, is the greatest value a network offers.
Given that the law protects a provider’s right to charge whatever they wish – with no limits based in reasonableness, meeting of the minds, or Quantum Meruit – and limited only by pre-negotiated contracts, payers generally negotiate from a weak position.
As such, simply ensuring everyone has insurance will not drastically reduce the cost of healthcare itself. Further, people – whether they are insured or not – will pay the cost when healthcare is too expensive. Be it balance bills for the uninsured, or rising premiums and deductibles for the insured – the money needs to come from somewhere.
Compounding the issue further is that fact that Americans generally suffer from a lack of long-term vision. We are, as a society, driven by a need for instant gratification. People use credit cards to buy things now, that they can’t afford later. People purchase homes and take out mortgages now, that they can’t afford later. Likewise, people obtain healthcare now that they can’t afford later. Make no mistake; even those with insurance pay the cost later, in the form of higher premiums, co-pays, deductibles, and co-insurance. Therein lies the rub – people are quick to target out of pocket expenses at the time care is received, and the cost of insurance in general, but they do so without asking why insurance is expensive or addressing that root cause.
Until people understand that – with or without insurance – patients will ultimately be responsible for the actual cost of care, then the issue will not be resolved. In other words, focusing on the rising out of pocket expenses, such as premiums, co-pays, and deductibles – without also focusing on why these expenses are increasing – addresses a symptom without diagnosing the disease.
What Does This Mean for Us?
Many candidates and their supporters are proponents of the so-called “Medicare for All” plan, yet even many who support those candidates are beginning to hesitate, worrying that under Medicare payment rates (forced down providers’ throats by a single payer monopoly), some hospitals struggling to stay open might close. Here, then, we see the opposite issue – ushered in when a monopoly is in place. A single payer with too much power can force opposition into accepting unduly low, unfair rates.
Is there a happy medium? Some have argued that a so-called “public option” may be one such “middle ground,” but this idea cannot live in harmony with private benefits for long … resulting in the demise of private plans, and eventual monopoly that is a single payer, and which (as already discussed) most agree needs to be avoided.
Consider as “Exhibit A” the State of Washington. Washington is set to become the first state to enter the private health insurance market with a so-called “public option,” at rates supporters say will be 10% cheaper than comparable private insurance. Almost as if the lawmakers read my article above (before I even wrote it), they claim these savings will be achieved thanks to a cap on rates paid to providers.
Without going into too much detail regarding the pricing model (spoiler alert – it’s a percentage of Medicare), if this public option is indeed available to all residents, and if they can “force” providers to accept these payments as payment in full (thereby preventing balance billing), why would anyone sign up for a private plan? If, then, all private plan members are steered by sheer common sense to this public option, private plans will cease to exist and – in this way – a single payer emerges from the exchange.
It was this threat that caused a public option to be removed from the proposed PPACA legislation, but now it’s back, at the State level as well as in proposals presented by Democratic candidates for the Presidency.
In the end, unless private plans and providers can achieve a meeting of the minds … and make healthcare affordable long term … this may be the future sooner than we think.