By: Kelly Dempsey, Esq.
On January 22, 2018 the House and the Senate passed a continuing resolution that impacts three taxes imposed by The Affordable Care Act (ACA). The most notable in the self-funded industry is the ACA’s High Cost Employer-Sponsored Health Coverage Excise Tax (“Cadillac Tax”). The Cadillac Tax was originally set to begin in 2018, but has been delayed (again) for an additional two years putting the start date at January 1, 2022. The Cadillac Tax is a 40% excise tax on employer-sponsored health coverage that provides high-cost benefits.
Similar to the prior legislation passed in December 2015, this new legislation also:
1. Suspends the ACA Health Insurance Provider Tax for 2019; and
2. Delays the ACA Medical Device Tax until 2020.
The ACA Health Insurance Provider Tax is applicable for fully-insured plans and is effective for 2018. With this legislation, the tax will pick back up in 2020.
The ACA Medical Device Tax is applicable to medical device manufacturers and importers and imposes a 2.3% levy on the sales of commonly used medical devices (defibrillators, pacemakers, artificial joints, heart stents, etc.).
The three delays together cost an approximate $31 billion.
On a positive note, the continued resolution extends the Children’s Health Insurance Program (CHIP) for an additional six years.
While 2022 seems far away, employers should still be mindful that the Cadillac Tax has not been fully repealed and the possibility still exists that it could one day take effect. This is important because wellness programs and on-site clinics have grown tremendously in popularity over the past several years. Both wellness programs and on-site clinics would be included in the Cadillac Tax calculations – meaning employers would likely be dis-incentivized to continue these programs. For now it is too early to start planning for changes - this is just one more item keep on the back burner (just don’t turn the burner off).
Many of you are familiar with the plan drafting conundrum: multiple options are available for plan document verbiage on a given topic, but your client either can’t decide, can’t tell the difference, or simply doesn’t have a preference. In response to Phia Document Management (PDM) user requests, we have simplified the plan document checklist by creating a new template with fewer variables, called the Flagship.Unlike our traditional major medical template where the user is given ten variables for which workers’ compensation exclusion to choose, the Flagship template incorporates The Phia Group’s “best practices” approach to plan drafting; there must always be variables when drafting a plan document, but far fewer in the Flagship, making the user experience a more streamlined and intuitive one.Join The Phia Group’s legal team as they explain the Flagship template, differences from the existing template, and why the Flagship may be right for you.Click Here to View Our Full Webinar on YouTubeClick Here to Download Webinar Audio OnlyClick Here to Download Webinar Slides Only
Phone: 781-535-5600 | www.phiagroup.com
The Book of Russo:
From the Desk of the CEO
About six months ago I decided to start a project at The Phia Group focusing on how we can ensure the future viability of my company. The strategy for doing this was based on focusing on the young professional, also known as the millennial population, and attempting to figure out what makes them tick. How can I attract these folks to join Phia and make them want to stay with us throughout their career? The first thing that we did was survey the many young professionals that we have here at Phia in order to identify their thoughts, and what we found out truly opened my eyes. These workers want to understand why our company exists and not just what it is that we do.
Ron Peck, Matt Painten, and I spent months just getting back to the basics. After many focus groups and back-and-forth, I believe that we figured it out. This is the core essence of Phia and how we will attract, obtain, and retain not only employees, but clientele as well. I would love your feedback on what we came up with, so here it is:
Health care costs too much and the price is increasing; employers are forced to offset costs onto employees through higher co-pays and deductibles.
The Phia Group’s Purpose
To make health benefits affordable for employers and employees
Why is this The Phia Group’s Purpose?
Hard working Americans deserve access to high quality, affordable health care.
What does it mean to “Empower Plans?”
To help employers maximize benefits, minimize costs, and take control of their own plans.
How do we “Empower Plans?”
We start by promoting and educating employers about self-funding. Then, we invent and implement cost containment services while delivering custom solutions to meet specific client needs.
I truly hope that 2018 is an amazing year for you and yours. Happy reading my friends.
Service Focus of the Quarter: Plan Document/Summary Plan Description Risk Assessment
Phia Group Case Study
Phia Fit to Print
From the Blogosphere
The Phia Group’s 2017 Charity
Phia’s Speaking Events
Employee of the Quarter
Service Focus of the Quarter: Plan Document/Summary Plan Description Risk Assessment
In case you hadn’t heard, a new tax bill has been signed into law. Amongst other things, it appears the individual mandate ushered in by the ACA (aka ObamaCare) is being eliminated. The initial impact will be on the individual market, but we foresee healthy (low risk) individuals performing a cost benefit analysis and eventually choosing to drop out of their employer’s group health insurance. The first people likely to drop from such plans are likely those who are paying an arm and a leg to be enrolled in expensive, traditional, “fully funded” insurance. Yet, we fear that – soon after – the most desirable lives (healthy, low risk lives) will drop from their employers’ self funded plans… leaving only high risk / high cost lives. No plan – fully funded or self funded – can withstand losing those lives. It therefore behooves every self funded plan sponsor to figure out ways to offer more for less, and thus make plan enrollment attractive for all members – low and high risk, healthy and unhealthy alike. To do this, you must innovate and implement new benefits and cost containment tools. To do that, start with the plan document.
One of the benefits of self-funding is that the employer has the freedom and flexibility to design a benefit plan that truly meets the needs of its employees; making it attractive to the low risk healthy lives we need to fund the plan, and to whom we need to make the plan attractive (now that they aren’t “required” to enroll). The employer also has the ability to structure the plan so as to prudently manage the assets of the plan; this can be done, in particular, through innovative plan language meant to proactively tackle potential issues such as risk and cost.
Our Plan Document/Summary Plan Description Risk Assessments will identify areas the employer may want to consider for additional review, as well as provide a brief explanation of why certain items are important.
Once completed, plan sponsors can implement new measures to make their plans very attractive to even the healthiest folks. Things like new payment methodologies of out of network claims, medical tourism, and more can result in benefit plans offering more for less – and thus remaining a “must have” for those important healthy participants – even when enrollment is optional – but it all starts with the plan document.
Contact Tim Callender at firstname.lastname@example.org or 781-535-5631 to learn more about how a Plan Document/Summary Plan Description Risk Assessment can help you.
Protect Your ASA: Update Your Agreements Today!
The Phia Group is privileged to work with so many different players in the self-funded industry and health insurance field in general. As a result, we often see issues developing and devise solutions before they have a chance to seriously impact our allies.
One such issue that has become a bigger problem of late, negatively impacting third party administrators, plan sponsors, brokers and stop-loss carriers, occurs when a self funded benefit plan or their broker-advisor wishes to utilize a stop-loss carrier that the TPA has neither vetted nor placed. Despite the fact that the TPA played no role in selecting the carrier, that TPA - more often than not - is still targeted by the plan sponsor if and when the carrier subsequently refuses to reimburse the plan or some other conflict arises.
For those TPAs utilizing The Phia Group's best-in-class template administrative services agreement (ASA), language is included that generally addresses this issue, but as the problem has escalated - it now requires special attention. With that in mind, The Phia Group has developed a form, which is signed by the plan sponsor and TPA, and is added to existing ASAs as an exhibit.
This addendum can be revised to fit with any ASA. Please contact Garrick Hunt at email@example.com or call him at (781) 535-5644 to learn how you can obtain access to this very important form.
Cutting back on Questionnaires:
It is The Phia Group’s mission to reduce the cost of healthcare through the use of innovative legal techniques and the most sophisticated technology. In keeping with this goal The Phia Group is always taking steps to improve all of our services, including our earliest: subrogation. Recent upgrades to The Phia System™ and advancements in our investigational techniques have led to faster identification of third party liability claims and quicker engagement by The Phia Group’s team, without relying upon or otherwise communicating with the plan participants. These new resources allow us to identify opportunities more often and more effectively, while at the same time reducing the volume of accident questionnaires we send to plan participants. While accident questionnaires are still a useful tool when investigating and collecting accident details – they are no longer the only tool. As such, we are pleased to now provide all of our subrogation clients with the ability to increase, decrease, or cease the use of plan participant accident questionnaires. Clients can also opt to utilize their own letters, or have the employer communicate directly with plan participants. The choice is yours!
The Phia Group is committed to ensuring you and your clients are provided with nothing but the highest quality service, best-in-class performance, and a member first approach. That is why we are continuously improving our services to provide the best performance (and most options) possible.
To discuss these new customization capabilities, or our other services, please contact Trevor Schramn at firstname.lastname@example.org or call (781) 535-5692.
Phia Group Case Study: Retroactive Plan Amendments
A self-funded group’s broker approached The Phia Group’s consulting department (via PGCReferral@phiagroup.com) and asked us to help respond to a provider’s appeal of a large dialysis claim. The provider was out-of-network, so thankfully there were no PPO contract concerns – but at the time the services were rendered, the SPD defined its payment rate as the prevailing charge in the area. One month after receiving the final claims for which the Plan was responsible, the Plan chose to effect an amendment that limited payment for all dialysis claims to 145% of the Medicare rate, and the amendment was back-dated to the beginning of the year (before the member began dialysis treatments).
The Plan desired to use its new carve-out amendment to reprice the existing claims, but had received negative feedback on that proposition from its TPA, since the TPA felt that the language in the SPD at the time the claims were incurred is the language that must be adhered to. The broker asked The Phia Group for advice, and our advice was identical to that of the TPA – that a retroactive carve-out is not a valid way to price the already-incurred claims. Regardless, the Plan chose to pay all past claims based on that new amendment, despite the language not being in the SPD when the services were rendered.
As expected, the provider pushed back against the lower-than-expected reimbursement, and commenced a lawsuit over the balance of $500,000. The Phia Group provided the Plan assistance with settling the claims to avoid litigation, since litigation almost certainly would have resulted in the Plan paying the prevailing charges in the area…plus interest…plus penalties.
The moral of the story is that self-funded plans, their TPAs, and their brokers should be proactive in making sure the SPD contains the proper protections – since once a claim comes in, it is sometimes too late to contain costs. In other words, if you think you may need to carve out high dollar claims (like dialysis) in the future, fix your plan document now! Don’t wait, until it’s too late; (The Phia Group’s Phia Document Management service – including the Flagship Template – can help make sure that SPDs say what you need them to say).
Fiduciary Burden of the Quarter: Strictly Following the Plan Document!
Plan Administrators owe a fiduciary duty to strictly follow the terms of the governing plan documents. The SPD is the “supreme law of the land” for a health plan, and violating even one minor exclusion is technically a violation of the Plan Administrator’s considerable fiduciary duty. Since we’ve been warning the industry about this for years, it didn’t shock us when we heard that the Department of Labor had filed a lawsuit against a benefit plan for paying claims based on Medicare rates, without having included the proper language within the SPD.
We understand that Plan Documents are complex, and amending them is not exactly an enjoyable process. But if the health plan wants to implement procedures to save money, there are some deal-breakers – such as making sure the SPD affords the Plan the right to do what the plan is going to do.
ERISA empowers a plan sponsor to put almost any language of its choosing into its SPD. That’s a great thing, and plans that take advantage have experienced novel savings and have had remarkable self-funding experiences. If a benefit plan wants to pay claims differently from what is currently in the SPD, it can certainly do so – but not until the SPD reflects it, and not until the SPD is altered at the appropriate time.
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Phia Fit to Print:
• Self-Insurers Publishing Corp. – The Future of Self-Funding - An Insider's Take – October 3, 2017
• Money Inc. – Self-funding Amid Obamacare Uncertainty – November 2, 2017
• Self-Insurers Publishing Corp. – Interim Final Rules Update – November 4, 2017
• Self-Insurers Publishing Corp. – Managing Plan Communication During a Time of Legislative Uncertainty – December 1, 2017
• HealthLeaders Magazine – Insurers Facing Impossible Scenario: Cover Everyone, But No Individual Mandate – December 13, 2017
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From the Blogosphere:
• An Appealing Option. Facing a final appeal.
• Phia Undercover: Two Chargemasters at Addiction Centers. Dealing with a high rate biller.
• Welcome to the Fiduciary Jungle! The writing is on the wall; what will you do about it?
• Sacrificing the Individual Mandate on the Alter of Tax Reform. The glue holding all of Obamacare together.
To stay up to date on other industry news, please visit our blog.
Plan on Saving by Saving Your Plan
On January 30, 2017, The Phia Group will present “Plan on Saving by Saving Your Plan,” where our legal team will explain the Flagship template, differences from the existing template, and why the Flagship may be right for you.
Click HERE to Register!
On January 18, 2018, The Phia Group presented “A Taxing Time: The Tax Bill’s Impact on Self-Insurance,” where we discussed the latest tax law.
On December 19, 2017, The Phia Group presented “With Great (Cost-Containment) Power Comes Great (Fiduciary) Responsibility,” where we describe various ways to cut costs, what must be done to ensure that fiduciary duties are being met, and what happens if they are not.
On November 14, 2017, The Phia Group presented “Living in the Now: Prepare for 2018,” where we discussed where the market is heading and what you need to do to keep up with it.
On October 17, 2017, The Phia Group presented “Best Practices for Today's Plan Documents,” where our legal team discussed best and worst plan document practices, provide some creative ideas for plan formation, and suggest some concepts to help perfect plan document drafting.
Be sure to check out all of our past webinars!
• On December 21, 2017, The Phia Group presented “Breaking Down the GOP Tax Bill and How It Affects You,” where The Phia Group's CEO Adam Russo and Attorney Brady Bizarro discuss the new GOP tax bill in depth.
• On December 18, 2017, The Phia Group presented “Protect Your ASA,” where Adam Russo, Ron Peck, and Jen McCormick discuss the rising trend in stop-loss insurance being placed by entities other than the TPA, yet the TPA is held responsible if things go sour.
• On December 6, 2017, The Phia Group presented “Plans and Conspiracy,” where our legal team discussed the recent news regarding CVS purchasing Aetna, as well as a new opportunity to customize plan document reviews to address different levels of need.
• On November 21, 2017, The Phia Group presented “The Biggest Threats to Self-Funding: A Lightning Round,” where Adam Russo, Ron Peck, and Brady Bizarro discuss the biggest threats to the self-funded industry.
• On November 3, 2017, The Phia Group presented “Planning for Stormy Seas Ahead,” where Adam Russo, Ron Peck, and Jennifer McCormick discuss all of the many issues creating waves as it relates to benefit plan documents, and what steps we can all take to safely navigate those waters – including setting sail on The Phia Group Flagship Template!
• On October 19 2017, The Phia Group presented “Trumping Costs and Climbing the Hill,” where Adam Russo, Ron Peck, and Brady Bizarro discussed discuss the wild and crazy happenings in DC.
• On October 13, 2017, The Phia Group presented “The Man with the Plan,” where Adam Russo and Ron Peck discuss the often overlooked but – in their opinion – all important plan document.
• On September 28, 2017, The Phia Group presented “Responsibility - Beyond the Contract,” where Adam Russo and Ron Peck discuss trends impacting health plans, employers, and employees.
Be sure to check out all of our latest podcasts!
The Phia Group’s 2017 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 2018 charity is the Boys & Girls Club of Brockton.
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 Brockton (BGCB) 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 youth have been welcomed through their doors. Currently, they serve more than 1,000 boys and girls ages 5-18 annually through academic year and summertime programming.
On Wednesday, December 21st, CEO of The Phia Group, Adam Russo, made a special visit to The Boys & Girls club of Brockton. During his visit, Adam handed out over 200 gifts that were purchased and wrapped by The Phia Group. It is truly a pleasure to see the look on their faces when Santa brings them exactly what they asked for on their wish list.
The Phia Group invites its staff to donate various items for the benefit of The Boys and Girls Club of Brockton. For more information or to get involved, visit www.bgcbrockton.org.
Managing Plan Communication During a Time of Legislative Uncertainty
By: Corrie Cripps – December 2017 – Self-Insurers Publishing Corp.
While the congressional efforts to repeal and replace the Affordable Care Act (ACA) in 2017 have failed, the Trump administration is now taking executive and regulatory action to modify various aspects of the ACA. In addition, other guidance that may affect group health plans in 2018 is still pending. The following is a summary of the recent regulatory actions that will affect self-insured plans in 2018.
Click here to read the rest of this article
Interim Final Rules Update
By: Krista Maschinot, Esq. – November 2017 – Self-Insurers Publishing Corp.
On October 6, 2017, the Trump Administration issued two Interim Final Rules (IFR) related to the Affordable Care Act’s (ACA) contraceptive mandate. These rules apply to all employers and create additional considerations for employers sponsoring self-funded plans and their third-party administrators (TPAs).
Click here to read the rest of this article.
The Future of Self-Funding-An Insider's Take
By: Adam V. Russo, Esq. – October 2017 – Self-Insurers Publishing Corp.
According to the 2016 Milliman Medical Index, the typical family of four costs $25,826 annually in premium and out of pocket expenses and 57% of costs are borne by the employer. Self-funding the right way can reduce these figures significantly and we as an industry must focus on this. At our company, a single employee pays $127.62 for health insurance a month. This compares to the $554 average in the state of Massachusetts, based on the 2017 UBA survey.
Click here to read the rest of this article.
To stay up to date on other industry news, please visit our blog.
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Phia’s Q4 Speaking Events:
Phia’s Speaking Engagements:
Adam Russo’s 2018 Speaking Engagements:
• 1/23/18 – Q4 Intelligence Conference – Tampa, FL
• 2/2/2018 – Benefit Intelligence School District Conference – Phoenix, AZ
• 2/7/2018 – CGI Business Solutions Seminar – Manchester, NH
• 3/7/2018 – SIIA Self-Insured Health Plan Executive Forum – Charleston, NC
Ron Peck’s 2017 Speaking Engagements:
• 1/25/2018 – HealthFirst TPA Client Conference – Tyler, TX
• 3/6/2018 – SIIA National Conference – Charleston, SC
• 3/7/2018 – CGI Business Solutions Seminar – Manchester, NH
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Get to Know Our Employee of the Quarter:
Congratulations to Brady Bizarro, The Phia Group’s Q4 2017 Employee of the Quarter!
Brady joined The Phia Group, LLC as an attorney in early 2016. As a member of The Phia Group's in-house legal team, he focuses on contract review, ERISA, ACA, and HIPAA compliance, claim negotiation, and providing general consultative advice on matters involving the health insurance industry and employee benefits law.
Congratulations Brady and thank you for your many current and future contributions.
Get to Know Our Employees of the Year: Amanda Grogan & Hemant Dua
Amanda: An attorney’s office sent the following to Amanda’s manager: “I wanted to take a moment to tell you what a professional, courteous, knowledgeable, and helpful employee Amanda Grogan is. Besides her helping me with a very difficult file she understands how her industry and her desk works, including the language we need in order to do these files and that is something that should be applauded.”
Hemant: “What more can be said about the man that came to our company and within 3 months deployed a brand new claims system that was in development for 2 years, within 6 months rewrote 75% of the logic code to ensure proper processing of our clients’ claims data in TPS, within 9 months stabilized TPS and pioneered ground breaking performance improvements that were unfathomable with EZD and most recently trained Zach, our new Principal Developer, and on-boarded our new offshore development team, Hitachi. He has been an integral part to this year’s success and his drive to resolve every issue for the TPS users is commendable. He has been a great mentor to many Phia employees that have been with the company for years, showing his business acumen to learn our processes quickly and apply them. His ability to provide solutions, teach the user how the solution was achieved and encourage the user to utilize the newly learned skills in their future endeavors makes Hemant a true sensei. Phia is lucky to have such an amazing individual working to make Phia great again!”
Congratulations Amanda & Hemant and thank you for your many current and future contributions.
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• Rock Stars of Health Award o The Phia Group was recently awarded the “Rock Stars of Health GOLD Award” during The Rock Stars of Health Summit held in Missoula, Montana on September 29, 2017. The award recognizes innovation in the implementation of employee health initiatives that unify expertise in wellness, employee health, safety, risk management, and employee benefits.
• Year Up at Phia! o The Phia Group has been beyond thrilled with our talented, dedicated members who have come to us through Year Up. Sheyla and Josh have become such essential members of our team – we feel truly blessed to call them a part of the Phia Family. We sat down with them to hear their thoughts and experiences. Find out what they had to say!
• Consultant I
• Health Benefit Plan Administration – Attorney
• IT Technologist
• Administrative Assistant – Recovery
• Case Analyst
See the latest job opportunities, here: https://www.phiagroup.com/About-Us/Careers
• Keith McMahon was promoted from Claim Recovery Specialist IV – WC to Claim Recovery Specialist IV – BI
• Casey Balchunas was promoted from Claim Recovery Specialist III to Claim Recovery Specialist IV
• Joseph Bacon was promoted from Legal Assistant to Claim Recovery Specialist
• Sabrina Centeio was promoted from Case Handler to Claims Recovery Specialist III
• Jillian Painten was promoted from Claim Recovery Specialist IV to Team Leader
• Cori DeCristoforo was promoted from Customer Service to Case Evaluation
• Jiyra Martinez was promoted from a part-time employee to a full-time employee
• Harry Horton was hired as an Attorney
• Rea Kostopulos was hired as a Talent Acquisition Specialist
• Dixie Hayenga was hired as a Consultant
• Kerry Brennan was hired as a Legal Assistant
Fun at Phia:
Our Phia Family is so festive! Our “Ugly Sweater Day” was a hit and we thank all those who participated; congratulations to Josh (pictured below sporting a little red number, complete with a reindeer puppy, plus bells and ornaments) for winning “Ugliest Sweater”!
How great are these costumes? This year the Phia Halloween Costume Contest was truly a nail-biter. Who would win? The Cowardly Lion? The clown? The fan favorite “Orange Blob,” bravely worn by Sheyla ultimately took home the gold. Thank you to all who participated, you truly made it a stellar Halloween!
Following a Maryland Senate and House of Delegates vote on January 12, 2018, Maryland became the latest state to mandate paid sick leave for employers with 15 or more employees.
According to Maryland’s Healthy Working Families Act (“the Act”), which will go into effect on February 11, 2018, applicable employers are required to provide one hour of paid (at the employee’s regular wage rate) sick leave for every 30 hours worked. Notably, employers with 14 or fewer employees are required to offer one hour of unpaid sick and safe leave for every 30 hours worked. Employees may begin accruing leave on January 1, 2018 and earn up to 40 hours of sick leave annually.
Permissible uses for earned sick and safe leave include:
• Caring for or treating an employee’s mental or physical illness, injury, or condition
• Obtaining preventive medical care for the employee or employee’s family member
• Caring for a family member with a mental or physical illness, injury, or condition
• Taking time away from work due to domestic violence, sexual assault, or stalking of employee or employee’s family member
• Taking maternity or paternity leave
Employers that offer self-funded health plans should take note of the Act’s requirements and review their current policies, including continuation of health coverage, to determine if they are in compliance with this new law.
To be eligible for this leave, employees must regularly work more than 12 hours per week, be at least 18 years of age, and not serve as independent contractors or as-needed employees. Notice is also a significant element of the Act, as employees must notify the employer at least seven days prior to being out of work when requesting a foreseeable leave. Additionally, employers must maintain records of paid sick time accrual and usage.
The Act will preempt any Maryland sick and safe leave laws enacted after to January 1, 2017, but any laws enacted prior will remain intact. Arizona, California, Connecticut, Massachusetts, Oregon, Vermont, Washington, and the District of Columbia have also enacted legislation requiring paid employee sick leave.
See the full Act here.
In this episode, Adam, Ron, and regular co-hose – Brady Bizarro – address the new tax law, elimination of the individual mandate, and how it may impact benefit plans of all types. In particular, they examine the psyche of low risk lives and ask the all-important question – how do we keep them enrolled without the mandate?
Click here to check out the podcast! (Make sure you subscribe to our YouTube and iTunes Channels!)
On December 22nd, President Trump signed a $1.5 trillion tax bill. Among other things, it effectively ends the Affordable Care Act’s individual mandate. It will have a major impact on individual and employer-sponsored health insurance. Millions of Americans may be without health insurance coverage in the coming years.For self-funded plans, this bill may lead to higher costs due to ripple effects across the entire health insurance market while also opening doors to increased cost-containment opportunities. There are other legislative proposals and agency action which could impact our industry, and many states are considering proposals of their own.Listen to The Phia Group’s legal team as they discuss this sweeping tax law.Click Here to View Our Full Webinar on YouTubeClick Here to Download Webinar Audio OnlyClick Here to Download Webinar Slides Only
By: Jon Jablon, Esq.
Reference-based pricing (or RBP) tends to be one of those things that there’s little ambivalence about; in general, if you are acquainted with reference-based pricing, you either love it or hate it. And, like so many hot topics, some of the intricacies are not quite clear. That’s partially due to the sheer complexity of the industry and reference-based pricing in general, but also partially due to the competing sales efforts floating around. Since the RBP stew has so many ingredients, like any stew recipe, there are tons of different ideas of what makes a good stew – but that also means it’s fairly easy to cook a bland one.
Some have historically advocated sticking to your guns and never settling at more than what the SPD provides. This is a mentality that has largely dissipated from the industry, but some still hold it dear, and many plan sponsors and their brokers adopt reference-based pricing programs with the expectation that all payments can be limited to a set percentage of Medicare with no provider pushback. That can best be described as the desire to have one’s stew and eat it too; in practice, it’s not possible for the Plan to pay significantly less than billed charges while simultaneously ensuring that members have access to quality health care with no balance-billing. The law just doesn’t provide any way to do that.
Plans adopting reference-based pricing programs should be urged to realize that although it can add a great deal of value, reference-based pricing also necessarily entails either a certain amount of member disruption, or increased payments to providers or vendors that indemnify patients or otherwise guarantee a lack of disruption. It is not wise, though, to expect that members will never be balance-billed, and that the Plan will be able to decide its own payment but not have to settle claims. Provider pushback can be managed by the right program, but unless someone is paying to settle claims, there is no way to avoid noise altogether and keep patients from collections and court.
Based on all this, it has been our experience that reference-based pricing works best when there are contracts in place with certain facilities. Steering members to contracted facilities provides the best value and avoids balance-billing; when a provider is willing to accept reasonable rates, giving that provider steerage can be enormously beneficial to the Plan. Creating a narrow network of providers gives the Plan options to incentivize members, and gives members a proactive way to avoid balance-billing.
There are of course other ingredients that need to go into the RBP stew – but having the right attitude is incredibly important, and knowing what to expect is vital. Expectations are the base of the stew; you can add all the carrots (member education?) and potatoes (ID card and EOB language?) you want – but if the base is wrong, then the stew can’t be perfect.
By: Brady Bizarro, Esq.
To say that Massachusetts is a pioneer in healthcare reform is an understatement. Ever since the Commonwealth enacted a healthcare reform law that aimed to provide health insurance to all of its residents over a decade ago, policymakers planned to use elements of that law to build the foundation for national healthcare reform. One of those elements was an employer mandate, called the Fair Share Contribution, which required certain employers in the Commonwealth to provide group health benefits or face a $295 per employee fee.
In 2014, Massachusetts lawmakers repealed the Fair Share Contribution. This was done because the Affordable Care Act’s (“ACA”) employer mandate was scheduled to take effect (after a delay). Massachusetts legislators still wanted the revenue the Fair Share Contribution generated, however, so it enacted a new law, called the Employer Medical Assistance Contribution (“EMAC”). EMAC is a tax on employers with more than five employees and it applies whether or not the employer offers health coverage to its employees. This act was meant to subsidize the Commonwealth’s Medicaid program, called MassHealth, and the state’s Children’s Health Insurance Program (“CHIP”).
Since 2011, approximately 450,000 people have lost their employer-sponsored insurance in Massachusetts. In the same time period, MassHealth enrollment increased by just over 500,000. The MassHealth program is literally drowning the state in debt, and so last year, Governor Charlie Baked signed H. 3822, which has two major components (beginning in 2018):
• It increases the EMAC tax from a max of $51 per employee per year to $77 per employee per year; and
• It imposes a tax penalty or EMAC Supplement on employers with more than five employees of up to $750 per employee per year for each nondisabled employee who receives health insurance coverage through MassHealth or subsidized insurance through the Massachusetts Health Connector (ConnectorCare).
Since the calculation is based on wages and not hours worked, an employer is subject to the penalty for each employee on MassHealth (excluding the premium assistance program) or receiving subsidized care through ConnectorCare regardless of full-time or part-time status. If the employee is enrolled in MassHealth due to a disability, they are not counted.
This legislation should be concerning for Massachusetts employers for a few reasons. First, if an employee chooses to voluntarily forgo an offer of coverage and instead applies and qualifies for MassHealth (excluding the premium assistance program) or subsidized ConnectorCare, the employer is penalized irrespective of the quality or affordability of the coverage that is offered. There is no exemption similar to that provided under the ACA employer mandate under which an applicable large employer (“ALE”) can escape tax exposure by offering coverage that is affordable and provides minimum value. But note that where an employer offers coverage that is both affordable and provides minimum value (as most do per ACA requirements), that employee would not be eligible for subsidized ConnectorCare coverage. Therefore, the EMAC Supplement really only applies to EEs who qualify for and enroll in MassHealth. Second, since employers are advised against asking an employee whether or not they are on Medicaid, the employer will not know its liability until the state’s Department of Unemployment Assistance sends them a letter informing them of their tax liability.
As states across the country feel the pinch of reduced federal funding, they may once again look to Massachusetts as a model to control costs to their Medicaid programs. In this case, however, employers will be squarely in the crosshairs.