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It’s Time for a Wake-Up Call!
By: Jen McCormick, Esq.

Healthcare has received so much attention over the past 10 years. Everyone has something to say about its current form, how comprehensive it should be, or who should be have a role in providing the coverage.   The most contentious piece of the conversation, however, is cost.  Healthcare can be expensive – particularly if you don’t pay attention.  Guess what – it’s time to pay attention… This mean you employers!

As an employer, do you take steps to encourage employees to make smart choices when it comes to healthcare? Are they encouraged to select generics? Are they told to read and understand the benefits available to them? Are they aware of the incentives the employer may offer for making an informed choice? These incentives don’t have to be limited to the plan document either!  Consider having a staff meeting to review all the great benefits the plan offers, maybe poll the staff and see if the employees want to offer a certain benefit (i.e. acupuncture), or even have a quiz which asks questions about the benefits and rewards the highest scoring employee.  

Whatever the method – it’s time to do something different and get employees engaged at the outset (prior to receiving healthcare benefits)!

Empowering Plans Segment 11 - The Senate Unveils its Repeal & Replace Bill
In this special edition of the Empowering Plans podcast, Sr. Vice President and General Counsel Ron Peck and Attorney Brady Bizarro give their initial thoughts on the Better Care Reconciliation Act. What is in this new bill? What does it mean for the self-funded industry? What is next for healthcare reform?

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A Network by any Other Name
PPOs, EPOs, HMOs… The days of simple network categories is past.  Today, innovative providers are offering up-front transparent pricing, subscription-based direct primary care (DPC), value based pricing, ACOs, medical tourism, international prescription plans, on-site clinics, telemedicine and direct contracting with “centers of excellence.”

Thank you for joining The Phia Group’s legal team on Thursday, June 22, as they discussed what a health plan needs to do to ensure the plan document supports the chosen methodology, which contracts and arrangements an employer needs to analyze to avoid conflict, and more.

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Full Billed Charges: A Question of Geography
By: Jon Jablon, Esq.

It is increasingly common within the self-funded industry for medical providers to demand full billed charges for non-contracted claims. As we know, no one is actually required to pay full billed charges – but when push comes to shove, that tends to be the prevailing demand.

What about when the plan document limits payment at a percentage of Medicare? Say, 150%? The fiduciary has a duty to strictly abide by the terms of the plan document when making payments – and the definition of a non-contracted claim is that there is no contract to provide services at an agreed-upon price. Interestingly, though, and perhaps rendering it a misnomer, a non-contracted claim is still subject to two distinct contracts – an assignment of benefits, and the all-important plan document.

The plan document, of course, defines the Plan’s payment mechanisms and explains beneficiaries’ rights. When the plan document says that the Plan will pay $X, and the Plan does pay $X, the Plan has followed the terms of the plan document to a T. Or to an X, anyway. Let’s boil that down as simply as possible: X = X. What could be simpler than that?

Next, the assignment of benefits is an agreement between the patient and the provider. The patient says “I will transfer you all health plan benefits due to me ($X), and I promise that if $X does not compensate you fully, I will pay whatever balance you think makes sense.” In return, the medical provider promises to provide valuable medical services. We at The Phia Group have discussed the concept of assignments of benefits ad nauseum, and for good reason; this is the mechanism by which medical providers become beneficiaries of Plan benefits, and are due $X from the Plan.

Question: does an assignment of benefits give providers the right to receive full billed charges from the Plan, even though the Plan limits its benefits to an amount less than billed charges? There are a lot of moving parts in the self-funded industry, and this is yet another; the answer you may not have expected is maybe: it depends on the Plan’s geography.

Is the Plan domiciled in Fantasyland, home of laughable arguments, unexplainable oddities, and absurd logic? Then yes – billed charges will be due on every non-contracted claim, regardless of plan document language.

Or, is the Plan domiciled in Realityville, where general legal and market principles do exist, words have actual meaning, and hospitals and attorneys can be expected to be at least reasonably informed? If that’s where the Plan is, then no – of course an assignment of benefits doesn’t guarantee payment of full billed charges.

What are you, nuts?


Empowering Plans Segment 10 - Plan Tales: The Good, Bad, and Really Bad
In this episode, Adam Russo and Ron Peck interview two key members of The Phia Group’s consulting division – Vice President of Consulting, Attorney Jennifer McCormick, and Product Developer, Kristin Spath. These two have tales to tell, regarding their experiences helping clients with unusual questions, and transforming outlandish ideas into real benefit plan innovations.

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Behind Closed Doors
By: Brady C. Bizarro, Esq.

Anyone paying attention to national politics in the past six months knows that Washington has a problem with leaks; leaks from the White House, leaks from the intelligence community, and unsurprisingly, leaks from Capitol Hill. While many of these leaks come from “anonymous” sources and some are later debunked, they can be extremely damaging to both administration officials and lawmakers. Leaks, however, are not typically an issue in the legislative process. This is because, although legislation is not usually made public until it reaches a congressional committee, Congress routinely holds public hearings, meetings, and roundtable discussions after introducing legislation that could have a significant impact on domestic policy. This time around, however, Republican leaders have chosen to write their health care bill behind closed doors, and that decision should worry employers, insurers, and providers alike.

Back in March, the Washington Post reported that the House bill to repeal and replace Obamacare was being kept secret in an undisclosed room in the U.S. Capitol. This led Republican Senator Rand Paul (R-Ky) on a rather public quest to find the bill and to demand that his House colleagues show him the secret draft. Eventually, a draft leaked to the press, causing Republicans significant grief and making the task of passing the legislation that much more difficult. The Senate has also chosen secrecy, opting not to hold any public meetings on their version of a repeal and replace bill. The strategy seems to be to wait until the Senate has enough votes to pass the bill before unveiling it. Unsurprisingly, an outline of that bill emerged last week and is now causing Senate Majority Leader Mitch McConnell (R-Ky) many headaches.

According to the leaked outline, the Senate bill requires insurance companies to offer coverage to people with preexisting conditions and, unlike the House bill, it prohibits them from charging sick people higher premiums. The outline still permits states to seek waivers that would permit insurers to decide not to cover essential health benefits. This effectively means that insurers can reinstate lifetime and annual limits on coverage since the ban on limits applies only to essential health benefits. Finally, the outline reveals that heavy cuts to Medicaid are still planned, but are pushed out a few more years. In short, these changes represent a compromise between hardline conservatives who want a full repeal of Obamacare and moderate Republicans who are concerned about the impact on low-income Americans and those with pre-existing conditions.

Since we do not know for sure what the final bill will look like, it is futile to try to assess its impact on the health care industry as a whole and on the self-insurance industry in particular. Still, one conclusion we can draw is that the legislative strategy at play is creating substantial uncertainty for our industry. When the Affordable Care Act was being passed, Democrats held public hearings involving industry experts, advocacy groups, and other key stakeholders. While the bill was far from perfect, at least interest groups got the chance to give their input and to discuss their concerns in an open forum. By writing their health care reform bill behind closed doors, Republicans are making themselves susceptible to leaks and to charges that they shut key stakeholders out of the process. It remains to be seen if this strategy is more or less likely to produce a bill that works for the health insurance industry and the American people.

“Stay away from Back Surgery”: A Warning from NBA Coach Steve Kerr
Steve Kerr’s comments can be viewed as a warning for self-funded payers and their administrators to educate their members on the shortcomings of some surgeries which are extremely expensive and often unnecessary.  

According to the American Journal of Orthopedics, over a third of Americans reported some musculoskeletal conditions that significantly impaired their normal routines. For many, these issues develop into the perceived need for serious orthopedic procedures and joint replacements, which are among the most profitable surgeries in all of medicine based on the time the surgeries actually take.

It therefore comes as no surprise to discover that, in the last 10 years, the occurrence and associated costs of serious orthopedic procedures have both jumped by 300%. Current projections are that this trend will continue, and (as an example) we may see an additional 400% increase in joint replacements by 2030.

What is the reason for this steady and significant increase in serious orthopedic surgeries and joint replacement procedures?  Regardless of whose opinion you read, you will be told that the reason for more orthopedic procedures is because we are getting older, and we are getting heavier.  This, however, does not fully capture the often-overlooked third factor: consumers are simply being offered greater access to more surgical options.  As an example, adjusted data from the Orthopedic and Arthritis Center for Outcomes Research demonstrates that obesity and the aging population fails to account for the 134% increase in total knee replacements between 1998 and 2007 (overall, a 300% increase).  So how do we account for it?  It is not a stretch to suggest that at least part of the increase in serious orthopedic procedures and joint replacements is attributable to the provider community pushing for these surgical options more often than ever before (as mentioned, these surgeries are huge revenue drivers).

Steve Kerr is a powerful voice that is highlighting the importance of understanding pros/cons of surgery, exploring alternatives, and getting a second medical opinion – preferably from someone without a financial incentive to supporting the surgery in the first place.  


Empowering Plans Segment 09 - In the Land of the Blind
Who will and who won't get (or lose) health insurance coverage under the AHCA? Join The Phia Group's CEO, Adam V. Russo, Sr. VP, Ron E. Peck, and Attorney Brady Bizarro as they discuss the most recent report by the Congressional Budget Office (CBO) on the new Republican health care bill. Despite the debate in Washington, people are still missing the point: affordable health insurance is not affordable health care.

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A Win for the Good Guys!
By: Chris Aguiar, Esq.

Subrogation added another case to the win column last week when the 5th Circuit ruled in favor of a benefit plan’s reimbursement rights even though the Plan only had an SPD, and that SPD referenced another, nonexistent document.  I know what you are thinking … “Wait a minute, Chris, most of my clients only have an SPD, so why should I care about this?”  The answer is because in 2011, the Supreme Court gave us a decision in Cigna v. Amara that muddied the waters on whether an SPD alone can be the governing document for an ERISA health benefit plan.  In short, the late Justice Antonin Scalia indicated that it couldn’t be, but that case was about pension benefits that were being altered and it included a plan that did in fact have two documents.  The truth is ERISA requires “a written instrument”; nowhere in the statute is that requirement defined to mean that multiple documents are required, but that didn’t stop Justice Scalia from writing in his opinion that a summary by definition implies that a more comprehensive document is available.   Many attorneys attempt to use that decision to argue that if a plan doesn’t have a “plan document” and only an SPD, it cannot enforce its rights.  In some areas of the country, where a plan’s subrogation rights are always under attack (e.g. the 9th Circuit), decisions like this cause problems.  Anytime the Supreme Court makes statements that may be subject to interpretation, a plan’s rights can be called into question until a court in that plan’s jurisdiction (or the Supreme Court itself) provides clarification.  The 5th Circuit gave us that clarification with this decision and it gives us another tool to fight the argument we contend with every day.


The Rules of the Game are Still Changing
By: Kelly Dempsey, Esq.

It’s clear the rules of the Health Care Reform game we’ve been playing for the last seven years are going to be changing.  If you’ve been living under a rock and haven’t heard about the ongoing debates on Capitol Hill, you’ll be unaware of the fact that an ACA replacement bill is in the works.  There have been numerous articles recently on the impact the new bill would have on the amount of individuals in the United States that would lose coverage.  With the mainstream media focused on the full ACA replacement, you may have missed that another Executive Order associated with the ACA was issued.  

Before we get to what the Executive Order says, what is an Executive Order?  The power to issue Executive Orders is granted under Article II of the Constitution.  An Executive Order is directive from the President to certain identified federal agencies that the President oversees on how to direct their resources – in other words, the President is telling the agencies how to operate with the parameters of the applicable rules already in place.  These orders are published in the Federal Register, the same as the interim and final rules associated with the ACA.      

So what’s this new Executive Order you may have missed?  On May 4, 2017, the President issued an Executive Order related to the ACA’s contraceptive coverage mandate.  The Executive Order directs the agencies involved in issued ACA regulations (the Department of Labor, Health and Human Services (HHS), and the Internal Revenue Service) to re-examine and consider amending the ACA’s preventive service regulations “to address conscience-based objections” to the contraceptive coverage mandate.  HHS issued a statement in response welcoming the opportunity to re-examine the preventive services mandate to help safeguard deeply held religious beliefs.    

We’ve already seen multiple challenges, specifically to the contraceptive coverage portion of the preventive services mandate, heard in front of the various courts, including the Supreme Court of the United States.  As a result of these cases accommodations were made to “pardon” certain entities from complying with the contraceptive coverage piece of the preventive services mandates.  With this new Executive Order, it appears the rules of this game may change again, but it’s still unclear what will be changing.  As always, stay tuned…