Insurance has entered an era of cost-containment. No matter your role in the industry, you are concerned with saving money, whether for yourselves or your clients. Health plans and other entities have begun to adopt various programs that are designed to reduce exposure – but only some of those programs are supported by the Plan Document. This can cause fiduciary headaches for the Plan, such as in the recent Macy’s case. Join The Phia Group’s legal team for an hour as they 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.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.
When working with air ambulance providers to discuss appropriate pricing, it is common for providers to suggest that Medicare rates are inappropriate due to Medicare’s habitual underpayment air ambulance providers. In this manner, when a payor suggests payment at a percentage of Medicare, many providers demand more, suggesting that the Medicare-based payment is unreasonably low, and therefore payment derived from that is low as well.
In apparent agreement with that thought, The 115th Congress has introduced HR3378. Short-titled the “Ensuring Access to Air Ambulance Services Act of 2017,” this bill is designed primarily to alter the Medicare reimbursement to air ambulance providers. The bill apparently contemplates that air ambulance providers are being underpaid by Medicare, because starting in 2018 the Medicare base rate will increase by 12%, prior to any cost data being reported by those providers. For 2019 and 2020, that increase will jump to 20%. Beginning in 2019, air ambulance providers are required to report a comprehensive set of cost data elements, and beginning in 2020, that reporting includes quality data as well. As of 2024, the bill also creates a “value-based purchasing program,” which entails giving each air ambulance provider a performance score and increasing or decreasing payments based on that. Reported cost data will eventually (2021) be used to recalculate the base rate of air ambulance services.
The bill in its current form specifies that the data disclosures will eventually be made public, which can be useful for self-funded plans to be able to benchmark claims. Often health plans have only the provider’s billed charge and a Medicare rate to work with when determining payment, but if cost data is publicized, that creates new benchmarking possibilities.
So, if this bill passes, what will it mean for you? If Medicare rates are irrelevant to you or your health plans, then this likely means very little for you – but if you or a client are one of the thousands of health plans that consider Medicare rates when determining payment for air ambulance services, then it means your Medicare calculations (and therefore payments to air ambulance providers) will increase a bit for 2018, and a bit more for 2019 and 2020. Come 2021, they may increase or decrease again based on cost data, and come 2024, they may increase or decrease yet again based on performance indicators. In other words: expect higher payments in 2018, another increase for the following two years, and then unpredictable increases or decreases from there.
Although it may seem intuitive to assume that the government’s admission that these providers are underpaid by Medicare will lead to an increase in charges across the board, my assumption is that charges billed to self-funded payors will not increase as a result of this bill, even if it becomes law. Many air ambulance providers already justify their billing by citing operating costs, and this new bill does nothing to change those costs. An air ambulance provider would be hard-pressed to use either the assumptions or effects of this bill to justify increasing charges across the board.
The bill is still in its infancy, so it is likely that if it ultimately becomes law, it will have been changed quite a bit in the process; we’ll just have to wait and see what happens with this one.
By: Brady Bizarro, Esq.
Perhaps the single most important piece of the Affordable Care Act (“ACA”) is its “individual mandate.” It is literally the glue holding all of Obamacare together. Since 2014, every American (with minor exceptions) has been required to obtain health insurance coverage that meets the government’s definition of “minimum essential coverage” or pay a penalty. The latest version of the Senate tax plan, which narrowly passed on December 2nd, eliminates the individual mandate. According to the non-partisan Congressional Budget Office (“CBO”), this will result in thirteen (13) million fewer individuals having health insurance coverage by 2027. Yet, that is only one fraction of the impact eliminating the individual mandate would have on the health insurance market overall. The primary impact would be the unraveling of the health insurance market because of what is known as the “death spiral.”
Recall that the ACA addressed the problem of unaffordability for individuals with preexisting conditions through its “guaranteed-issue” and “community-rating” provisions. Together, they prohibit insurance companies from denying coverage to these individuals or charging them higher premiums based on their health status. These provisions do not address the problem of healthy individuals choosing to forgo coverage until they become sick or in some cases entirely. This is a phenomenon known by health policy experts as “adverse selection,” and, if left unsolved, it inevitably leads to a “death spiral” in which only the sickest people remain in the health insurance market. In fact, the “guaranteed-issue” and “community-rating” provisions make this problem worse, since insurers would be forced to cover these individuals and be barred from charging them higher rates.
The individual mandate solves the problem of the death spiral because it forces healthy people into the insurance risk pool and allows insurers to subsidize the costs of covering sick individuals. Without the mandate, insurance companies may find it exceedingly difficult to make a profit and are very likely to leave the marketplace (especially the individual exchanges which tend to insure the sickest people). The CBO has already estimated that premiums on the marketplaces will increase by at least ten percent (10%) in 2019 if the individual mandate is repealed.
The truth is, no one knows for sure how many young, healthy individuals will drop their health insurance coverage if the mandate is repealed. For employer-sponsored plans, especially self-funded plans which tend to be less expensive than their fully-insured counterparts, it may be that healthy workers keep their coverage as part of their overall benefit packages. Arguably, the bigger risk is to those who purchase individual coverage. As for hospitals and providers, they can expect to provide increased uncompensated emergency room care as at least some of those individuals who voluntarily (or involuntarily) drop their health insurance coverage will inevitably end up in the emergency room to receive medical treatment.