By: Erin M. Hussey, Esq.
On the verge of a potential government shutdown, the Equal Employment Opportunity Commission (“EEOC”) was quick to issue final rules December 19th on the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”). Issuing final rules at the end of the year is not a new trend, but the unique situation is that the final rules are vacating current provisions on wellness program incentives. With an effective date of January 1, 2019, we are left with less guidance than we had on December 18th.
By way of background, in 2016 the American Association of Retired Persons (“AARP”) sued the EEOC claiming that the EEOC’s wellness incentive rules, for wellness programs that implicate the ADA and GINA, were coercive and not truly voluntary. A wellness program would implicate the ADA if medical examinations or disability-related inquiries were involved (i.e., biometric screenings), and a wellness program would implicate GINA if there were inquiries about genetic information. Before recent events, the EEOC’s ADA and GINA rules capped the wellness program incentive at 30%.
In a 2017 opinion, the judge determined that the EEOC had never defined the term voluntary thus the court found that the EEOC "failed to adequately explain" the 30% maximum and how a plan can still be considered voluntary with that incentive. The EEOC was directed to re-write their workplace wellness rules related to incentives for an effective date of January 1, 2019 or the old rules would be vacated. Obviously the EEOC did not re-write the ADA and GINA incentive-related rules as they have now been vacated effective January 1, 2019. However, the EEOC had indicated at their Fall 2018 Unified Agenda of Federal Regulatory and Deregulatory Actions, that they intend to issue new regulations in June 2019.
In order to ensure compliance until new rules are issued, the quick solutions are to remove medical testing, questions about genetics, and lower the amount of the incentive (though it is unclear what amount will truly be considered voluntary). While frustrating to say the least, this limbo situation for employers and plans is more of the same uncertainty that we have been dealing with for the past eight years. Employers that choose not to make changes should be aware of the compliance risks they may face due to the lack of rules.
*Please note: the above-mentioned EEOC wellness rules are separate from the Health Insurance Portability and Accountability Act (“HIPAA”) and the Affordable Care Act (“ACA”) wellness rules and the above ruling has no effect on these rules.
By: Jon Jablon, Esq.
Plan sponsors of self-funded health plans have a lot to think about. From deciding which services to cover to making tough claims determinations, there are lots of moving parts to consider and be mindful of. Plans that utilize reference-based pricing are in the same boat, of course, except they have added even more moving parts to their benefits programs.
As many plans that use reference-based pricing are aware, some claims need to be settled with providers to eradicate balance-billing. A claim initially paid at 150% of Medicare may need to be ultimately paid at 200%, for instance, pursuant to a signed negotiation between the health plan and the medical provider. Fast-forward two months later, to when the plan receives notice from its stop-loss carrier that the carrier is only considering 150% of Medicare to be payable on the claim, and the extra 50% of Medicare (which can be a significant amount!) is excluded.
When the plan asks why it isn’t receiving its full reimbursement, the carrier quotes its stop-loss policy and the plan document. The former provides that the carrier will only reimburse what is considered Usual and Customary – and the latter provides that Usual and Customary is defined as 150% of Medicare, by the Plan Document’s own wording. The carrier’s liability, therefore, is limited to 150% of Medicare. The plan’s has chosen to pay more than that. Even though it’s for a very good cause, the stop-loss insurer may deny that excess payment amount. In this example, there is a “gap” between the plan document and stop-loss policy such that the plan has paid a higher rate than what the carrier is obligated to pay.
For this reason, it is so incredibly important for plans that are using reference-based pricing to talk to their stop-loss carriers. Some carriers will say “we don’t care – your SPD says 150%, so we’ll reimburse 150%,” but other carriers will say “we understand that reference-based pricing saves us money, and we understand that it’s not always as simple as paying 150% and walking away – so we’ll work with you in terms of reimbursement.” Other carriers still will agree to place a cap on reimbursements higher than what’s written in the Plan Document; in other words, if the plan provides that it’ll pay 150% of Medicare, the carrier may agree to reimburse settlements up to 200% of Medicare, if applicable and if necessary.
There are lots of options for how a stop-loss carrier might react to reference-based pricing, and the only way to find out is to have a conversation. If you don’t ask, you’ll never know (until it’s too late, that is).
Moral of the story? If you’re going to adopt reference-based pricing – whether full network replacement, carve-outs, out-of-network only, or any other type – put stop-loss high up on the laundry list of considerations.
By: Brady Bizarro, Esq.
We have been covering Texas v. United States since the case was filed in February of this year. The suit, brought by 18 state attorneys general and 2 Republican governors, represented the most serious threat to the Affordable Care Act (“ACA”) since the GOP’s efforts to repeal the healthcare law failed last summer. On Friday, Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas ruled that the entire ACA is unconstitutional since Congress eliminated the individual mandate in a 2017 tax bill. His decision has rattled the markets, Democratic political leaders, advocacy groups, and the broader healthcare industry. After taking a closer look at this ruling, however, we agree with the many legal experts who have concluded that this ruling is not as earth shattering as the headlines make it appear.
First, Judge O’Connor’s ruling did not block enforcement of the ACA. All of the existing provisions of the ACA with which employers, fully insured plans, and self-funded plans must comply are still in effect. This decision has no effect whatsoever on plan design, on cost containment, on employee incentives, or on regulatory compliance. A quick check of Healthcare.gov reveals that federal officials have even added this reassuring message: “Court’s decision does not affect 2019 enrollment coverage.”
Second, a spokeswoman for the California attorney general has already confirmed that the 16 states (and D.C.) that defended the law will appeal this ruling to the Fifth Circuit Court of Appeals in New Orleans. That means there is a chance that this decision could be overturned before the case reaches the Supreme Court. That possibility brings us to our third point; that legal scholars across the ideological spectrum have found the legal arguments made by the plaintiffs in this case to be remarkably unpersuasive. To understand why, let us break down the court’s opinion (which sided with those arguments).
Judge O’Connor’s opinion had two major elements. First, he contended that since Congress reduced the ACA’s individual mandate penalty to $0, the mandate to purchase insurance must be invalidated. Then, he argued that since the individual mandate is essential to and inseverable from the remainder of the ACA, the entire healthcare law must be struck down. This issue of “severability,” or whether one provision of a law can be severed without invalidating the entire law, is key.
When the ACA was passed in 2010, the bill contained a requirement that all Americans purchase health insurance or pay a penalty. The Supreme Court ruled in 2012 that this requirement, known as the individual mandate, was a legitimate exercise of Congress’s constitutional authority to tax. Nothing in the original 2010 bill spoke to the severability of the individual mandate. Importantly, however, Congress did in 2017 when it eliminated the individual mandate in the Tax Cuts and Jobs Act (“TCJA”) of 2017 and preserved the rest of the ACA. Judge O’Connor’s explanation for this fact is that the 2017 Congress was unable to repeal the individual mandate because of budget rules and it therefore had no intent with respect to the individual mandate’s severability. In fact, Judge O’Connor spends most of his 55-page opinion attempting to discern the intent of the 2010 Congress instead of interpreting this later legislative act.
The political response to this ruling has been rather expressive. One prominent Democratic senator remarked, “This is a five alarm fire – Republicans just blew up our healthcare system.” Indeed, we could go on at length about the consequences if this ruling were to stand; the impact on employer-sponsored plans, the effect on those with pre-existing conditions, the potential loss of health insurance coverage for millions of individuals, and the end of the Medicaid expansion. Yet, based on the response from the legal community and our own legal analysis, our position is that this decision rests on shaky ground. This decision also goes much further than even the Trump administration had wanted. In short, we should all hold our collective horses and conduct business as usual for the time being.
December 14, 2018 - For Immediate Release
Braintree, MA -- The Phia Group LLC, one of the health benefit industry’s leading cost-containment service providers, announced that it has completed the formal creation of its internal Legal Compliance and Regulatory Affairs (“LCARA”) team.
The members of this Phia Group Consulting (“PGC”) subdivision will handle the most complex Independent Consultation and Evaluation (“ICE”) queries while performing in-depth research meant to benefit both The Phia Group, and its partners. Led by its Director of Legal Compliance & Regulatory Affairs, Brady Bizarro, Esq., as well as Compliance & Oversight Counsel, Andrew Silverio, Esq. and Compliance & Regulatory Affairs Consultant, Philip Qualo, J.D., the LCARA team will diligently track statutory and regulatory changes, to ensure both the continued compliance of The Phia Group as well as its clientele. By focusing both on the company’s own internal needs as well as the needs of its clients, the LCARA team represents a new stage in “crowd sourcing” information and experience. “There are certainly a few individuals here or there who include this type of work in their list of responsibilities,” The Phia Group’s CEO Adam Russo remarked, “But we are confident that no team has ever been so focused on remaining ahead of legal challenges, and ensuring that both The Phia Group and its allies learn – and benefit – from each other’s growth, wins, and losses.” To learn more about The Phia Group, its regulatory compliance services, or any of its offerings, please contact The Phia Group’s Sales Executive, Garrick Hunt, at 781-535-5644 or Info@PhiaGroup.com.
About The Phia Group The Phia Group, LLC, headquartered in Braintree, Massachusetts, is an experienced provider of health care cost containment techniques offering comprehensive claims recovery, plan document and consulting services designed to control health care costs and protect plan assets. By providing industry leading consultation, plan drafting, subrogation and other cost containment solutions, The Phia Group is truly Empowering Plans. Visit www.PhiaGroup.com.
To build on last month’s webinar (Part 1), join The Phia Group’s legal team for an hour on December 12, 2018, as they present the second part of this two-part series on What to Expect in 2019. Touching on topics such as appeals, stop-loss trends, reference-based pricing, and much more, this webinar will highlight current industry happenings and our predictions to help you look forward to the coming year. Just like last month: miss this one, and you’ll be left behind.
Click Here to View Our Full Webinar on YouTube
Click Here to Download Webinar Slides Only
By: Ron E. Peck, Esq.
A friend and ally in the health benefits industry recently asked me if I had an up to date listing of the most costly health care expenses paid by health plans in 2018. I didn’t; so on a whim I brought up my handy dandy search engine and typed in: “the most costly health care expenses paid by health plans in 2018.” You know what the top results were? “Cost of Employer Health Coverage to Rise in 2019” … “Health Insurance: Premiums and Increases” … “How to Find Affordable Health Insurance in 2018” … and other, similar articles focused on what individuals will pay in premium (and in some instances, even dissecting co-pays, deductibles, and co-insurance). The common thread? They are all about participant out-of-pocket expenses. I didn’t ask how much it costs to obtain insurance. I asked how much it costs to obtain an appendectomy!
This is just a most recent example of an issue that sticks in my craw like no other, and reminds me of something I wrote years ago. Check this article out: https://moneyinc.com/affordable-health-insurance-is-not-affordable-health-care/.
“… too many people are confusing the term ‘health care’ with ‘health insurance.’ … Health care – meaning the actual act of caring for someone’s health – is necessary for survival. Health insurance – meaning a method by which we pay for health care – is just that; merely a means to pay for health care. Yet, a few years ago (2009 to be precise), a report posted by the American Journal of Public Health indicated that nearly 45,000 deaths are annually associated with a ‘lack of health insurance’ and that uninsured, working-age Americans have a forty percent higher risk of death than those with private insurance. The knee-jerk reaction to this news is likely (and likely was) to rush to provide health insurance to as many people as possible. Indeed, according to this report, health insurance saves lives. Furthermore, one could argue, if saving lives is health care, and health insurance saves lives, then health insurance is health care, and your author has proven himself wrong.… As stated before, however, health insurance is a method by which we pay for health care. It stands to reason, therefore, that it is not a lack of health insurance that kills people, but rather, it is a lack of means by which to pay for health care that kills people. This, then, leads us to a logical conclusion; the problem is not that we don’t have insurance … the problem is that we can’t pay for health care without insurance. This, then, leads to the next logical thought: why is health care so expensive?”
Go back and re-read the first paragraph of this blog post. Sadly, I fear my words published two years ago apply as much today as ever. Enjoy this blast from the past for Throwback Thursday, and let me know if you think we’ve advanced at all since then.
By: Krista J. Maschinot, Esq.
If you are an applicable large employer (ALE), the Internal Revenue Service (IRS) could possibly be sending a Letter 226J notice your way. Will you be ready to respond accurately within 30 days of receipt if needed?
We discussed in a recent blog post that IRS enforcement of the Employer Shared Responsibility Provision of the Affordable Care Act (ACA) is very real and ALEs should be prepared as such.
There are two types of ESRP penalties that the IRS will assess based upon the information the ALE provided on Forms 1094-C and 1095-C:
§4980H(A) – Assessed when an employer fails to offer minimum essential coverage to enough of its full time employees §4980H(B) – Assessed when an employee enrolls in the Marketplace and qualifies for the premium tax credit because the employer failed to offer affordable coverage
We recommend comprehensively reading and reviewing the information provided in the Letter 226J as to the reasoning for ESRP penalties and ensuring that this matches up with your internal documentation. This review is particularly significant because it will help you determine whether you have made an administrative/filing oversight or if there are larger compliance issues to deal with.
There are common mistakes to be aware of based on how Forms 1094-C and 1095-C were filled out that could trigger a Letter 226J. An ALE could, for instance, forget to check the “Section 4980H Transition Relief” box (Box C of line 22) on Form 1094-C. It may also fail to correctly code Line 14 of Form 1095-C regarding offer of coverage based on months offered coverage, as opposed to months of actual coverage. These types of errors are easy enough to make, but it is important to identify that they have been made prior to responding to the IRS. The monetary penalties will be assessed much differently based on filing mistake rather than actual ESRP non-compliance.
On November 28th, CVS Health closed on its acquisition of Aetna in a $69 billion merger. CVS Health and Aetna announced this deal in December 2017 and received preliminary approval from the Department of Justice in October. This merger will combine CVS’ pharmacies and Aetna’s insurance business, but it remains to be seen whether this merger will only benefit the companies themselves or if it will truly create positive change for patients as consumers of healthcare.
CVS Health President and Chief Executive Officer Larry J. Merlo, detailed the following regarding the company’s objectives: “our combined company will have a community focus, engaging consumers with the care they need when and where they need it, will simplify a complicated system and will help people achieve better health at a lower cost.” In addition, CVS Health not only stressed the importance of patients as consumers, but the role of pharmacists and primary care physicians given the increased access to data. The combined companies will have the ability to deliver data at the pharmacy level and the pharmacists would know recent medical history of patients. Merlo also detailed the following: “By fully integrating Aetna's medical information and analytics with CVS Health’s pharmacy data, we can develop new ways to engage consumers in their total health and wellness through personal contacts and deeper collaboration with their primary care physicians.” CVS Health further commented that the use of technology will also help to achieve these objectives.
CVS will start to test stores in 2019 with added health services, focusing mainly on the management of chronic diseases. Some examples of services being added include the expansion of services at MinuteClinic, nutritional and behavioral counseling, and digital apps. CVS Health and Aetna will also focus on offering new preventive health screenings in communities that are identified as high-risk for certain health conditions. Additionally, CVS Health is developing medical cost reduction programs to “improve medication adherence and avoid hospital readmissions and unnecessary emergency room visits.”
Establishing localized and accessible healthcare, simplifying the process for consumers, and lowering costs are all positive and meaningful objectives that CVS Health and Aetna are seeking to accomplish. The changes within CVS stores will certainly be on the healthcare industry’s radar in 2019 to determine whether these objectives will be achieved and if this merger will prove positive for patients, pharmacists, and primary care physicians.
Sources:
https://cvshealth.com/newsroom/press-releases/cvs-health-completes-acquisition-of-aetna-marking-the-start-of-transforming-the-consumer-health-experience
https://www.cnbc.com/2018/11/28/cvs-creates-new-health-care-giant-as-69-billion-aetna-merger-closes.html
In this episode, Ron and Adam sit down with Judith McNeil. Judith is the most recent winner of our “Employee of the Quarter” award, as well as our second Face of Phia. Judith’s story goes from inspiring to hilarious, and is one you certainly won’t want to miss. Expect to see things differently by the time you’re done with this episode.
Click here to check out the podcast! (Make sure you subscribe to our YouTube and iTunes Channels!)
Reference-based pricing is one of the most mysterious self-funding structures out there. At its core, it’s a simple enough idea: the plan changes what it pays for non-contracted claims. At its most basic level, it’s a way to redefine the traditional notion of U&C; generally, RBP plans base payment on some percentage of the Medicare rate. Guess what, though? If your plan defines U&C based on a database such as FairHealth (for instance), that’s a form of RBP too!
RBP isn’t a structure with a well-defined set of rules. Different plans, TPAs, and vendors do things very differently. The common denominator is that pricing for claims isn’t based on billed charges or an arbitrary percentage off billed charges, but an objective metric based on the value of services. If the plan considers rates set by a popular database to be indicative of the value of services, then that’s the reference upon which prices are based (there’s the R, the B, and the P!).
While of course there are practical differences between popular databases and Medicare, the easiest example being differences in the actual amounts generated), the major conceptual difference is that providers are generally more likely to accept rates generated by popular databases as payment in full than to accept Medicare rates as payment in full from the same payors. Even though the majority of hospitals do accept Medicare, the prevailing opinion among hospitals is that Medicare rates are essentially thrust onto them in a contract that they sign out of necessity (since many hospitals would lose a large percentage of their business if they didn’t accept Medicare). While payors may consider Medicare rates or a percentage above them to be reasonable, the majority of hospitals tend to disagree – at least at first.
When a health plan accesses the FairHealth database (again, just for example) to obtain pricing, there is often no patient advocacy needed, since many providers access the same database or consider those rates to be generally accepted – but to contrast that to Medicare-based pricing, a plan paying Medicare rates is much more likely to need some sort of advocacy since Medicare rates are not nearly as widely-accepted by providers. Patient advocacy is one of the must-haves in “traditional” RBP, which typically uses Medicare rates.
The morals of this story: (1) you may already be using RBP without realizing it! And (2) make sure your RBP program has patient advocacy, if necessary. If your chosen RBP payment methodology doesn’t need patient advocacy, then your RBP experience will probably be a bit simpler – but if you do need it, don’t skimp on it.