By: Jon Jablon, Esq.
Maybe I should be, but I’m not ashamed to admit that when I first heard of Occam’s Razor, I assumed it had something to do with shaving. Whatever the context, many know Occam’s Razor as a principle of decision-making holding that “the simplest explanation is the best one”. Although the real idea is similar, William of Ockham’s logic is a bit more formulaic than that. To paraphrase, Occam’s Razor suggests that when choosing between multiple options, the best choice is the one that requires the fewest assumptions to reach. Put another way, the best option is the one that has the highest likelihood of actually being the case, by requiring the fewest assumptions to achieve it.
If you’re reading this, you know that the self-funded industry has been rapidly evolving in recent years, and one of the most significant trends is the use of direct contracting arrangements with hospitals or entire hospital systems. Especially considering the No Surprises Act – which throws a wrench into the administration process for many claims – direct contracting is more popular than ever as a way for employers to reduce healthcare costs, improve the quality of care for their employees, and avoid protracted claims payment conflicts.
One significant advantage of direct contracting with hospital systems is that it can help decrease the number of assumptions and variables inherent in the system set up by the No Surprises Act. In other words, it tends to satisfy Occam’s Razor when choosing between direct contracting and not direct contracting. The NSA sets rules for resolving payment disputes between insurers and providers; by directly contracting with a hospital system, a self-funded health plan can significantly reduce the likelihood of payment disputes and avoid the need for Independent Dispute Resolution (IDR) in many cases.
Many consider avoiding the need for IDR to be the best option for a few reasons:
From a TPA’s perspective, there is also an assumption that the employer or health plan will act reasonably and logically under the circumstances, rather than sticking to its disputed initial payment without being willing to make a higher offer, and of course the assumption that the plan won’t attempt to hold the TPA responsible for making a too-low initial payment on behalf of the plan to begin with! That’s a lot of assumptions, and William of Ockham is not happy.
In contrast, though, by entering into a direct contracting arrangement, TPAs or employers themselves can negotiate payment terms that are specific to their needs and employee population. By eliminating the waste of having hundreds or even thousands of providers across the entire country in a network (and paying dearly for it in access fees as well as meager discounts off inflated charges), and by eliminating the potential for balance billing or IDR disputes, the plan can be more efficient, avoid paying out the nose for a large national network of providers that will largely go unused except in the core operating area of the plan’s members, and avoid all those assumptions inherent to the No Surprises Act’s payment processes (thereby making William of Ockham happy once again).
Another advantage of direct contracting with a hospital or hospital system is that it can lead to better quality of care, since the employer can pick and choose its hospital partners based on quality metrics. In addition, medical providers that are part of a direct contracting arrangement have a strong incentive to provide high-quality care at a lower cost, as they are competing for an intentionally limited number of contracts. The larger the pool of potential lives subject to a contract, the more intense this incentive becomes, too, which is why many direct contracts tend to be with TPAs rather than with individual employers.
At the end of the day, by negotiating payment terms directly with individually-curated healthcare providers rather than through a wasteful national network or having no contracts whatsoever, plans can save money, eliminate waste, decrease member noise, and – perhaps more importantly – satisfy Occam’s Razor by opting for variable-free direct contracts in place of the uncertainty inherent in NSA-related claims processing.
Just like the development of a child, regulations evolve in their ability to walk and talk over time. Join Jen McCormick and Kelly Dempsey as they go through the evolution of the Pregnant Workers Fairness Act – from passage in late 2022 to the final rules that took effect on June 18, 2024. They also discuss current court challenges where two courts have reached opposite conclusions and, of course, what this all means for self-funded health plans. It’s hard to keep up as this one went from crawling to running in fewer than two months! Click here to check out the podcast! (Make sure you subscribe to our YouTube and Apple Podcasts Channels!)
By: Kendall Jackson, Esq.
The non-discrimination protections of Section 1557 of the Affordable Care Act are not new, as the Affordable Care Act was originally enacted in 2010. However, the recent Final Rule published on May 5, 2024, provided clarification and additional requirements as they relate to strengthening civil rights protections for individuals.
First, it is important to remember that Section 1557 is not applicable to all health plans. Section 1557 applies to “covered entities,” which are health programs or activities that receive HHS funding. “Covered entities” also include HHS-administered health programs or activities, and the health insurance Marketplace.
The Final Rule recognized the value and prevalence of telehealth services by extending the prohibition of discrimination on the basis of race, color, national origin, sex, age or disability to health programs and activities offered through telehealth services. Additionally, under the Final Rule, health plans must ensure that such services are accessible to individuals with disabilities, including providing program access for individuals with limited English proficiency (LEP). This requirement is a subset of the larger requirement under the Final Rule to provide free language assistance services and auxiliary aids to individuals with LEP and individuals with disabilities.
Perhaps one of the most notable limitations of the Final Rule provides that plans are prohibited from having or implementing a categorical coverage exclusion or limitation for all health services related to gender transition or other gender-affirming care. This is particularly significant as it clarifies that gender-affirming care is within the scope of the protections against sex discrimination under Section 1557. Plans subject to Section 1557 should be sure to remove any non-compliant exclusions for gender-affirming care or sex reassignment that would run afoul of these new protections.
The Final Rule demonstrates the commitment of the Department of Health and Human Services to strengthen and extend the civil rights protections for individuals beyond what was afforded when the Affordable Care Act was enacted in 2010. These new guidelines reflect the changing landscape over the past several years and we will likely see even more protections added in the future.
By: David Ostrowsky
Earlier this month, 2024 Benefest, hosted by the Massachusetts Chapter of the National Association of Benefits and Insurance Professionals (NABIP), took place at the DoubleTree by Hilton Hotel Boston-Westborough. While the conference largely focused on the Massachusetts healthcare ecosystem – panel discussions of which reached the general consensus that, from an affordability and access perspective, these are incredibly challenging times due to unprecedented staffing shortages reducing providers’ daily bandwidth – there was considerable time spent examining federal healthcare developments, including how November’s election will impact employer-sponsored benefit plans.
Some takeaways from the discussion:
In this episode of Empowering Plans, The Phia Group’s CLO – Ron Peck – sits down with experienced surgeon, Dr. Victoria Lee, to discuss a very dangerous – and costly – threat. Esophageal cancer is generally considered to be a death sentence, and historically screening options are invasive and costly, resulting in a low uptake. With the introduction of EsoGuard, however, plans can identify which participants are at risk, and have them tested quickly, non-invasively, and inexpensively. You can save lives and money… but you cannot afford to miss this episode. For those interested in learning more about EsoGuard, please contact Jim Fricchione, Vice President – Employer Markets with Lucid Diagnostics, at 617-921-7949 or [email protected]. Click here to check out the podcast! (Make sure you subscribe to our YouTube and Apple Podcasts Channels!)
By: Nick Bonds, Esq.
National spending on healthcare was approximately $74 billion in 1970. Fast-forward to 2022, the growth alone on healthcare spending from 2021 was $175 billion, topping out around $4.5 trillion total spending for that year. It’s a well-worn saying in the healthcare industry but it still rings true: “It’s the prices, stupid.” Every ounce of work and creativity that we at The Phia Group, and many of our colleagues in the industry, pour into trying to reduce healthcare costs may ultimately be for naught if the prices continue to rise indefinitely. One of the driving factors behind those ever-increasing costs: consolidation.
Consolidation has been steadily taking hold over the last 30 years but was punched into lightspeed by the pandemic. Large corporations (e.g., Amazon, UnitedHealth) and private equity firms have been buying up physician practices and smaller independent hospital systems. Like in every industry, consolidation of health systems pushes costs skyward. Bigger entities with fewer competitors means the people calling the shots at those health systems have little incentive to keep costs low. A study by Harvard’s National Bureau of Economic Research (NBER) has shown that consolidated health systems offer at best marginally better patient care at substantially higher costs than independent providers and hospitals. The prices paid to these consolidated health systems, those with effective monopolies in their areas, were found to be “12%-26% higher for physician services, 31% for hospital services,” for again only marginally better care.
More than simply increasing what patients and their health plans pay for healthcare, consolidation has been proven to hurt many of the providers and employees of these consolidated systems, too. Research by the Washington Center for Equitable Growth has demonstrated that when hospitals no longer have to compete based on quality metrics, they stop investing in innovation and technology, clinician and employee wages stagnate, facilities and services get pared down, and prices continue to rise without any commensurate increase in the quality of care.
Thankfully, the U.S. Department of Justice’s (DOJ’s) Antitrust Division has finally stepped up to try and fix the broken health system market. This May, the DOJ announced the formation of the Antitrust Division’s Task Force on Health Care Monopolies and Collusion (HCMC). This task force’s primary objective is to enhance DOL scrutiny of healthcare platforms that integrate doctors with insurers, data, and other assets and to recommend steps to address the lack of competition in the healthcare market.
It's far from a silver bullet, but any steps to break up the anticompetitive streak that has taken deep root in our industry can go a long way toward finally tackling the prices side of the equation and keeping healthcare affordable for participants and plans alike.
LOUISVILLE – May 23, 2024 -- The Phia Group LLC is very proud to announce that it was recently named one of the 50 “Best Places to Work in Greater Louisville” by Louisville Business First. The Phia Group was one of the 50 honorees in the 2024 Best Places to Work program based strictly on employee survey results. Earning this distinction reflects a company’s unwavering commitment to fostering an inclusive and overall exceptional workplace environment. This marks the fourth consecutive year in which The Phia Group has received this prestigious honor. The Louisville Business First Best Places to Work program is managed by Quantum Workplace, an Omaha-based company that surveys employees about their companies’ internal policies, adherence to companywide goals, and management styles among other factors. Businesses across a wide swath of industries, including healthcare, technology, and financial services, as well as non-profit organizations, with a minimum of 10 full-time or part-time permanent employees (excluding owners or partners) that have an office in the Greater Louisville area region (Jefferson, Bullitt, Oldham, Shelby counties in Kentucky and Floyd, Clark and Harrison counties in Indiana), were invited to participate. In the August 2, 2024, edition of Louisville Business First, there will be further information about the award winners as well as numerical rankings for each category. For more information about The Phia Group and its commitment to care and plan empowerment, please contact Garrick Hunt at [email protected] or 781-535-5644. About The Phia Group: The Phia Group, LLC, headquartered in Canton, Massachusetts, is a leading provider of health care cost containment solutions. With offices across the United States, The Phia Group offers comprehensive claims recovery, plan document, and consulting services designed to contain health care costs and protect plan assets. By delivering industry-leading consultation and cost containment solutions, The Phia Group empowers plans to achieve their goals. Learn more at phiagroup.com. About Louisville Business First: Louisville Business First serves as the preeminent source of local business news for the Louisville, Kentucky, region. In addition to featuring business news items pertaining to the Louisville community, the publication also provides tools to help local businesses develop, network, and hire.
By: Andrew Silverio, Esq. On April 26, 2024, HHS Office for Civil Rights (OCR) released a HIPAA Privacy Rule to Support Reproductive Health Care Privacy (Final Rule). This modifies the HIPAA Privacy Rule to enhance the privacy safeguards around protected health information (PHI) related to reproductive health care and serves to protect access to this care in the wake of the Supreme Court’s Dobbs v. Jackson Women’s Health Organization (Dobbs) decision. This decision, overturning the constitutional right to abortion, led to renewed efforts by many states to more heavily restrict and criminalize certain types of reproductive health care, particularly abortion services. Specifically, the Final Rule does the following:
The main goal here is to protect access to reproductive healthcare by shielding this information from requesters who would be using it to conduct criminal, civil, or administrative investigations into a person for the act of receiving or providing reproductive health care or to impose penalties for doing so. Covered entities must now secure an attestation that a requester of such information is not seeking it for one of these impermissible purposes. Covered entities will also have to revise their notices of privacy practices (NPP) to explain this new prohibition and attestation requirement and provide an example of each. The Final Rule itself is effective June 25, 2024, which means plans must comply with the majority of its requirements within 180 days of that date. The exception is the updated notice of privacy practices (NPP) requirements, which must be complied with by February 16, 2026. The departments are releasing a model attestation but have not noted whether they will release an updated model Notice of Privacy Practices. However, we would expect they will do so prior to the effective date of the new NPP requirements. Otherwise, the materials provided by HHS and CMS online will be non-compliant, a situation we would not expect the Departments to allow to persist for long. In general, we do expect that self-funded plan sponsors will rely on their TPAs for compliance with all of these requirements, as they currently do with preparing NPPs and compliant Business Associate Agreements.
In this installment of The Phia Group’s Empowering Plans podcast series, attorneys Jon Jablon and Cindy Merrell discuss a health plan that lost its ERISA protections because of a pre-cert snafu. Specifically, the provider was quoted benefits at U&C, but that’s not quite what the SPD said – so the court called it a promise outside the SPD, and the security blanket of federal law flew right out the window! Tune in for the full details, and advice on how to not let this happen to you!
Click here to check out the podcast! (Make sure you subscribe to our YouTube and Apple Podcasts Channels!)
During the COVID 19 pandemic, experts anticipated that we would see a surge in undiagnosed cancers. That prediction proved to be accurate. Driven by this ongoing issue, on March 8 the Biden Administration announced updates to its “Cancer Moonshot.” Combining efforts to address navigation, research, treatment, costs and coverage – for health benefit plans, this new focus on cancer represents both an opportunity and risk. Cancer and oncology claims have always been one of the most expensive items health plans encounter. Only those who are aware of ongoing developments and plan ahead will minimize risks and maximize beneficial outcomes. Join The Phia Group as they delve into this and other new regulatory and legal developments, including the aforementioned “Moonshot,” the effect of the Dobbs decision on cancer care, specialty drugs, high cost threats – both present and forthcoming, and a very important personal message from Ron Peck.
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Hospitals, ambulatory surgery centers, long-term care facilities, primary care physician practices, nursing homes, hospice care. They are the most indispensable institutions of any functioning society, but unlike a Fortune 500 company or professional sports franchise, the identity of their respective owners often remains an afterthought. That is, unless you work for or are served by a financially distressed health care system, such as for example Steward Health Care, the massive private-for-profit healthcare conglomerate that recently filed for Chapter 11 bankruptcy protection.
Steward’s sad demise, one of the most impactful health care stories this spring, serves as a cautionary tale about the potential issues stemming from private equity firms (otherwise known as “PE firms”) establishing a prominent foothold in the healthcare space. While this trend has cooled of late due to the current high interest rate environment and pervasive staffing shortages, the pre-COVID numbers are undeniable: per the Institute for New Economic Thinking, private equity investment in health care skyrocketed twenty-fold from 2000 (less than $5 billion per year) to 2018 ($100 billion per year). During that time span, private equity firms closed approximately 7,300 healthcare-related deals, amounting to $833 billion.
One of the core elements of this high-debt, for-profit financial model of hospital ownership in which PE firms primarily use debt to finance acquisitions is that significant cost-cutting measures ensue whereby some of the longest-tenured, most capable (in other words, most highly compensated) employees see their jobs vanish. Not coincidentally, patients receive lower quality care (not to mention, often higher costs) and underserved populations face even greater barriers to accessing adequate services. Just this past December, researchers at Harvard Medical School revealed results from a study that indicated patients are more prone to fall, get new infections, or experience other forms of harm during their stay in a hospital after it is acquired by a private equity firm.
Unfortunately, the honest to God truth is that this problem isn’t going away. Certainly not anytime soon. Purely from a dollars-and-cents perspective, it is in the best interest of PE firms to cut costs quickly after acquiring a hospital or healthcare system because they make the majority of their profits when they sell and often look to do so several years after the acquisition. With their acute short-term focus, PE firms can rake in substantial profits even when their target healthcare organization goes belly up. For a recent example, one needs look no further than the above-mentioned Steward case: from 2010-2020, as the health care system was drowning in debt, Cerberus Capital Management, the New York-based private equity firm that owned Steward at the time, made nearly $800 million off its investment.
How Steward Health Care System fares in bankruptcy court remains to be seen, but the larger, systemic issue, that being the impact of PE-owned health care facilities on patient welfare, warrants a closer look. Naturally, when staffing levels and adherence to patient safety protocols start to wane, trouble looms. But ultimately, from a macro perspective, there are seemingly two irreconcilable dynamics coming into play with the financialization of healthcare: the PE firms’ incentive to rapidly extract a profit and the health care industry’s vested interest in taking care of patients and keeping them healthy.
Tragically, society’s most vulnerable members are so often caught in the middle.
In this concluding episode of our special two-part series on the Empowering Plans Podcast, Adam Russo and Corey Crigger return to unpack more significant developments in the self-funded space. This episode focuses on Walmart’s surprising withdrawal from the healthcare arena—a sector it heavily invested in just a year ago. Listen as they analyze the impact of this move on rural markets and what it signifies for the industry's future. Click here to check out the podcast! (Make sure you subscribe to our YouTube and Apple Podcasts Channels!)
Join us for a captivating two-part episode of the Empowering Plans Podcast. Adam Russo, CEO and Founder of The Phia Group, is back alongside Corey Crigger to delve into the exhilarating 150th Kentucky Derby and share why Corey’s insights are indispensable. This episode also addresses pressing concerns in the self-funded sector that are crucial for our clients. Packed with valuable information, we had to split the discussion into two parts! Click here to check out the podcast! (Make sure you subscribe to our YouTube and Apple Podcasts Channels!)
The Empowering Plans podcast gets a southern infusion in this very Kentucky-centric podcast! Cindy Merrell and Corey Crigger get together to discuss the 150th running of the Kentucky Derby. Before you hear about all things Derby, Cindy and Corey review two impactful Supreme Court cases that were argued in the last session and discuss the implications of presidential immunity as well as the role EMTALA can play in state regulations. No other podcast in the country will break down SCOTUS cases and Derby winners like the Empowering Plans Podcast! Click here to check out the podcast! (Make sure you subscribe to our YouTube and Apple Podcasts Channels!)
It was a nice feel-good story of corporate America helping the commonfolk.
Five years ago, Walmart, the multi-billion-dollar retail behemoth, opened its first-ever health clinic in Georgia. Soon, dozens more Walmart-sponsored clinics started opening their doors across not just Georgia, but also Arkansas, Florida, Illinois, Missouri, and Texas. Most of these pop-up clinics operated in rural communities where chronic diseases were rampant and (affordable) primary care options were scarce. Irrespective of the pandemic soon unfolding, they served their purpose: customers shopping for microwaveable dinners and bath supplies could stop by for a doctor’s appointment, get stitched up, take a flu test, or even get X-rays done, all for a very reasonable fee. As many of these shoppers/patients either lacked health insurance or had high deductible plans with imposing out-of-pocket costs, these clinics represented their only viable option for obtaining any semblance of proper healthcare. Surely, some had not been to a doctor of any type for years.
Now, the not-so-good news that recently dropped: last month, the Bentonville, Arkansas-based retailer announced that it will soon cease operations in all 51 of its healthcare centers as well as cut off virtual healthcare services. In a company-released statement, Walmart noted that this was a “difficult decision,” but its healthcare push was not profitable for the company because of the “challenging reimbursement environment and escalating operating costs.”
Walmart remains the country’s most profitable retail corporation – its stock price is hovering around an all-time high – yet because this healthcare endeavor was not deemed financially viable, thousands of low-income Americans who have benefited from affordable and convenient primary and urgent care – not to mention dental work as well – are now left in the dark. (It should be noted that Walmart plans to continue operating 4,600 pharmacies and over 3,000 optical centers nationwide.) Walmart has not yet provided specific dates for when its health centers will shutter but said that it will divulge that information when it’s available. However, two people familiar with the situation who were interviewed (anonymously) by CNBC, said that the clinics will close over the next 45 to 90 days. Either way, it seems safe to say that the masses of underserved Americans who have reaped the benefits of Walmart clinics now need to scramble to find another option or go without healthcare.
This development is in equal parts discouraging and surprising. It was just over a year ago, in March 2023, that Walmart revealed its plans to incorporate over two dozen health centers into its superstores located in Dallas, Houston, Phoenix, and Kansas City among other locales. But, on the other hand, perhaps it’s not so shocking, considering the dire state of the healthcare industry, specifically the dearth of primary care providers in America, which, according to the Association of American Medical Colleges, could exceed 55,000 in the next decade. Also, in fairness, it was a tall order for a corporation selling retail products like shampoo and oatmeal to have the expertise and managerial resources to pivot to a vastly different line of work. But, for a while anyways, it all seemed to work.
While Walmart made a commendable effort in leveraging its massive financial scale and brick-and-mortar presence to provide convenient, reasonably priced healthcare services to patients in rural outposts, ultimately the multi-trillion-dollar American healthcare system, one rife with systemic inefficiencies and complications, proved immune to undergoing radical change.