Phia Group Media


Phia Group Media

Reverse Medical Tourism
By: Jen McCormick, Esq.

On the way home to Boston from a recent international family vacation, I had the pleasure of sitting next to a young gentleman.  He was very friendly and didn’t seem to mind a wiggly toddler so we started to chat.   He told me that he would be in Boston for a month with his father (who was also on the flight), because his father needed medical treatment.  He explained that the services his father needed were not available on the island, and his father’s health insurance would cover a small part of these services via ‘reverse medical tourism.’  The gentleman implied that the family would be covering the balance.  It shouldn’t have come as a surprise that US hospitals are likely enthusiastic to offer services to affluent international patients (maybe because they might pay the hospital at a higher rate than an insurance company).  

During the flight, the gentleman also wanted to know if he could ask me a few questions about where to go in Boston.  Of course I was ready and excited to tell him all the places to visit and see in Boston, but he instead pulled out a list of medical supplies that needed to be purchased (some for the trip and some to bring home).  The gentleman explained that he had been instructed to purchase these basic supplies to avoid having insurance pay for them and/or due to some of these items being difficult to locate (or too expensive) on the island.  

On a daily basis we work to ensure employers are aware of how they can stretch their budgets while still providing comprehensive benefits to their loyal employees.  One popular way is via international medical tourism.  My chat with this gentleman on my short flight home was a reminder that medical tourism works in a variety of ways - US patients are seeking services abroad to obtain services and care at more affordable rates, while at the same time the international patients are seeking services in the US because they can afford to self pay.

Reference-based Pricing: Decisions, Decisions…
Jon Jablon, Esq.

Self-funding is growing. There’s no question about that. As medical costs continue to skyrocket, there are certain trends in the industry that have increased in popularity to try to combat the ever-growing costs. One of those trends is reference-based pricing, or RBP.

Most people working in our industry have some familiarity with RBP due to the various angles from which they have been bombarded. There are educational materials and sales pitches constantly being thrown at those who represent health plans – and since some of these materials describe RBP differently and different vendors vary in their accounts of how RBP should work, it can be difficult to know what to listen to and which vendor to ultimately place business with.

We generally recommend asking potential vendors certain questions and weighing their answers – and of course different weights should be issued based on the priorities of the particular entity making the decisions. Some questions that we advise to ask include:

•    How is the vendor paid? Are there fees that may become due from the client other than the “base” service fees?

•    Please describe the flexibility that each individual client has in choosing its own payment level, settling claims, or engaging third parties if necessary.

•    Do you assume fiduciary duties on behalf of the client? If so, what benefit does that provide relative to RBP, and which decisions will you be making as fiduciary? If not, why not?

•    If we or a group have provider contracts in place prior to engaging your services, are you entitled to fees or other contractual benefits based on savings generated by those contracts?

•    Is there a minimum claim or balance-bill threshold under which you will not handle the claim or bill?

•    Is there a maximum amount (whether percentage of bill, percentage of Medicare, or other metric) over which you will not negotiate claims with medical providers?

•    In the event a medical provider refuses to negotiate at a rate you deem reasonable, what is your next step?

•    Is there a point at which you will cease handling a given file? If so, are there continued protections against balance-billing?

•    If the TPA, broker, or group is in need of guidance related to a claim for which you are not specifically earning revenue, is there an extra cost for providing that guidance?

You might be surprised at some of the answers you get; if you’re serious about reference-based pricing, a vendor should be chosen after a careful review of everything the vendor has to offer – and of course in comparison to its competition. Happy shopping!

The Rise of Paid Family Leave Laws & Their Impact on Self-Funded Plans
By Brady Bizarro, Esq.
Most employers and workers alike are familiar with the federal Family and Medical Leave Act of 1993 (“FMLA”). The law requires employers to provide twelve weeks of unpaid, job-protected leave for an employee’s own serious health condition, for the birth or adoption of a child, or to care for a spouse, parent, or child with an illness. Importantly, the law also requires employers to maintain group health benefits for employees who take FMLA leave. The FMLA, like most other federal laws, applies whether an employer’s health plan is fully insured or self-funded.

As of this writing, five states have passed laws going beyond the FMLA, granting eligible employees paid family leave. They are California, New Jersey, Rhode Island, Washington, and New York. Rhode Island law requires four weeks of paid leave, California and New Jersey each offer six weeks of paid leave, and Washington offers up to twelve weeks per year. Beginning on January 1, 2018, the New York Paid Family Leave Benefits Law (“PFL”) will take effect and New York State will also begin providing employees in the state with paid family leave. The law will be phased in over four years and will eventually provide twelve weeks of paid family leave to employees; which is one the longest leave periods in the country.

What makes the PFL unique is not just that it requires employers to provide twelve weeks of paid family leave; it also requires employers to continue health insurance coverage to employees out on leave. While this state-mandated employer obligation would seem to be preempted by ERISA, the case law on this point is unsettled.

In 2005, the Department of Labor (“DOL”) seemed to put this issue to rest in an advisory opinion on the applicability of leave substitution provisions of the Washington State Family Care Act (“FCA”) to employee benefit plans. The FCA permits employees entitled to sick leave or other paid time off to use that paid time off to care for certain relatives of the employee who had health conditions or medical emergencies. As part of its analysis, the DOL analyzed section 401(b) of the FMLA, which provides that state family leave laws at least as generous as the FMLA are not preempted by “this Act or any amendment made by this Act.” 29 U.S.C. § 2651(b). As a result of the department’s guidance, it appeared as if state family leave laws enjoyed special protections from ERISA preemption.

In 2014, the Sixth Circuit Court of Appeals considered the same issue and reached the opposite conclusion. In Sherfel v. Newson, 768 F.3d 561 (2014), the Court found that the leave substitution provisions of Wisconsin’s FMLA sufficiently “related to” an ERISA plan such that they were preempted by ERISA. Specifically, the Court held that the state law would “mandate the payment of benefits contrary to the [written] terms of an ERISA plan,” thus undermining one of ERISA’s chief purposes; achieving a uniform administrative scheme for employers. Newson, at 564. As part of its analysis of the preemption issue, the Court also dismissed the legislative history relied upon by the DOL in an uncommonly blunt (and borderline satirical) manner. Considering whether legislators intended to preclude the preemption of state family leave laws by ERISA, the Court observed, “[T]he idea that this colloquy ever passed the lips of any Senator is an obvious fiction. Colloquies of this sort get inserted into the Congressional Record all the time, usually at the request of a lobbyist…” Newson, at 570.

In ruling that a state family leave law was preempted by ERISA, the Sixth Circuit Court of Appeals aligned itself with the U.S. Supreme Court’s earlier jurisprudence on preemption. It remains to be seen how other Circuit Courts will address similar challenges to state leave laws; especially those that mandate continuation of coverage. Still, paid family leave is one of the few policies in Washington, D.C. that has bipartisan support, and employers should expect to see more states pass laws akin to New York’s Paid Family Leave Act.

Magical Words in Claim Negotiation: “Please Send Claim Back for Processing”
I negotiate healthcare claims and I have been doing this off and on for nearly 15 years, so I have learned a few things along the way.  Lately, I am picking up on an uptick of a trend with providers and particularly with their third-party billers. Here’s the shtick:  The provider or rep advises of a low discount requirement (this is nothing new), but if you don’t accept that rate, they shut down and politely tell you to “please send claim back for processing.”  What is that all about?

I am a negotiator and I have been hired to present objective third-party data (and we have gobs of it) about the reasonable value of healthcare services to compel another party to willingly settle a claim with a signed agreement.  My raison d’etre is to minimize reimbursement and help health plans contain costs. In contrast, a third party biller’s job is to maximize revenue and cash flow – so they either believe that a settlement will accomplish their goals, or they don’t.  

When a provider representative tells you to send the claim back, they know the insurer has to pay the benefits outlined in the health plan, and so they are basically saying… “nice data, superior parsing of code edits, impressive legal argumentation, very persuasive, but I don’t think the plan has the language to support that level of reimbursement or that they will even apply the limits if they do exist…I think will likely get more money if the payer processes their payment, so please send claim back for processing.”  And you know what?  On average, and sadly, they are absolutely right.   

So what to do?  Two things: 1) make sure your plan language gives you the ability to pay a reasonable referenced-based price (RBP) for out-of-network (OON) services, and 2) if facing an “unreasonable” provider or one that basically says “buzz off” … you need to pay your RBP rate.  In a world where one party can just say flat-out no to settlement, and get paid more money, why would they ever say yes?  Your negotiation is only as good as your end-game.  

Believe you me, if you selectively enforce your RBP end-game (when it makes sense, and allowed by the Plan) you will find that seemingly abusive providers will be more malleable for settlement on your next claim.  As for balance-billing, you will experience it more rarely than you might expect.  Most providers follow the trend of high billing (since “everyone else is doing it…”) to maximize payments from payers but rarely intend to squeeze hapless patients directly.  If they do want to go down this route, there are ways to enforce the consumers’ rights and get the “balance” (that no one ever actually pays) absolved.  

At Phia, we try to have a meaningful meeting of minds to try and come to mutually acceptable agreements with providers, and we work with our clients to help guide them through the often nonsensical world of claim settlement.  Understandably, however, many of our clients have simply given up with even trying to engage in settlement, and they are moving directly to RBP on OON claims, dealing with the levels of balance-billing which can be managed appropriately (with our assistance).  In light of this change, maybe we will see providers start saying “please send back for negotiation.”  

Empowering Plans P13 - Your Friendly Neighborhood Provider
Taking a positive view on the industry, Ron Peck, Jon Jablon and Andrew Silverio today share stories and examples of providers working with payers to preserve the private employer based group health plan industry.  From price transparency, to direct primary care, to medical tourism – providers that are willing to innovate and work with payers get their moment in the sun with this episode.

Click here to open the Podcast!

Consulting Headlines – The Hottest Topics in Benefit Plan Administration
Extra!  Extra!  Have you heard the news?  Laws are changing, regulations are shifting, and benefit plans are scrambling to keep up. 

Thank you for joining The Phia Group’s legal team on July 13th, as they discuss the biggest issues and most common questions facing our industry, as well as ideas and solutions to not only survive but thrive in this changing environment.  This is your chance to learn from others’ questions, concerns, mistakes and successes.  Check it out!

Click Here to Download our Full Webinar
Click Here to Download Webinar Audio Only
Click Here to Download Webinar Slides Only

Can’t We All Just Get Along?
By: Chris Aguiar, Esq.

It always baffles me when sides whose interests should be very well aligned can’t seem to get on the same page.  The Right and the Left blame each other for the problems in America.  Payers chastise providers for charging too much while providers point the finger back at payers for paying too little. The reality is, if we all took a seat at the table together in the spirit cooperation and compromise, we could probably figure out something that worked for everyone.

In today’s blog installment, I’m looking at the relationship between stop loss carriers and benefit plans.  Now, talk to any of us lawyers at The Phia Group, and we could talk all day about horror stories, as far as subrogation is concerned, its comes up in the same way almost every time.  Now, it doesn’t happen often – but every once in a while I’ll  come across a plan that doesn’t want to comply with its stop loss contracts and/or obligations.  It’s important that everyone realizes that we need each other to survive.  Those plans who perhaps don’t have the cash flow or population to sustain large losses especially must consider the importance of stop loss to the health of their self-funded plan.  And let’s face it, if companies didn’t make money offering a stop loss product, it wouldn’t be available in the marketplace.

The truth is, we’re on the same team.  If we can’t get on the same page, how can we expect state regulators to see the value in what self-funding brings to the benefit plan table?

The Phia Group's 3rd Quarter 2017 Newsletter
Phia Group Newsletter 2nd Quarter

Phone: 781-535-5600 |

The Book of Russo: From the Desk of the CEO

The heat is on here in Boston with absolutely beautiful weather over the past few weeks with the same expected in the near future. This can also be said for the self-insured industry as a whole as well as what we have seen here at The Phia Group. The summer has not meant a slow down; in fact business is up across the board and interest from brokers, advisors, and employers is at levels I have never seen. So while it’s great news that so many people want to get in on this innovative market, the risk is that employers and others will jump in too quickly without truly understanding the risks involved with self-funding their employee benefit plans. Sure you can lower your costs by self-funding but you also expose yourself to catastrophic claims issues, high priced drug costs that you cannot control and stop loss issues that you had no idea existed. That’s why we are here for the industry – to ensure you can have your cake and eat it too. I hope you enjoy our summer newsletter as we have lots of great info to share. Happy reading!

Service Focus of the Quarter: Independent Consultation & Evaluation (ICE)
New Services and Offerings
Phia Group Case Study: Flagship Plan Document
Phia Fit to Print
From the Blogosphere
The Phia Group’s 2017 Charity
The Stacks
Phia’s Speaking Events
Employee of the Quarter
Phia News

Service Focus of the Quarter: Independent Consultation & Evaluation (ICE)

You need legal consultation to address regulatory compliance concerns, claim processing queries, and to collaborate on difficult administrative tasks. Having an experienced team of attorneys, compliance specialists, and industry experts on call is a must have. With The Phia Group's Independent Consultation and Evaluation ("ICE") service, unlimited access to The Phia Group's acclaimed team of legal consultants is yours for an affordable pre-paid, per employee per month (“PEPM”) subscription fee. Gone are the days of budgeting on the fly and dealing with mysterious "legal bills." With an ICE subscription fee, clients can preemptively budget for and share the cost of this invaluable resource - allowing The Phia Group and their clients to focus on what is really important - results.

For more information regarding ICE and The Phia Group's many other services, please visit our website or contact The Phia Group's Vice President of Sales & Marketing, Tim Callender by email at or by phone at 781-535-5631.

New Services and Offerings:

Leave of Absence Review

Employers aren't paying attention to their health benefit plan documents. They alter their employee handbooks every year, or sometimes multiple times in a single year. They try to be generous, providing employees with the ability to take leaves of absence, and promising them extended health plan coverage when they take such leaves of absence. Little do they know that their plan documents expel participants from coverage after a fixed period of time if the employee isn't actively working. This means that - per the plan - that person exercising their right to a leave of absence has no health plan coverage. If the employer tries to provide coverage anyway, stop-loss isn't required to reimburse claims over the deductible.

We're seeing this conflict come up with startling frequency, and the time has come to end this problem once and for all. The Phia Group has added a Leave of Absence review to its already popular Gap-Free Analysis service. The Phia Group's team of plan document experts and attorneys will analyze the applicable plan document side-by-side with the employer's handbook and stop-loss policy, to ensure there are no gaps in coverage and that all are in compliance with applicable law.

Flagship Plan Document

Every self-funded plan deserves a "Best in Class" plan document, yet - delays in plan drafting cause many plans to administer old plans - or in some cases - no plan. Now there is no excuse for administering a self-funded program with an outdated plan document, or worse, no plan document at all.

The Phia Group has compiled decades of experience servicing various types of plans, and drafting various types of plan documents, to develop its Flagship Template. This plan document "checks all the boxes" when it comes to best practices, regarding everything from cost containment to compliance; offering robust yet effective coverage.

The Phia Group's Flagship Template is a condensed version of its industry acclaimed, fully customizable template. The Phia Group has taken its own plan document (complete with thousands of requisite customization queries), and created a nearly complete plan document - by pre-selecting what it deems to be the best provisions in every regard; applying best practices to create an almost-complete plan. All that remains is for the plan sponsor or its named administrator to fill in their biographical information, insert their selected schedule of benefits, eligibility criteria, and review the language already provided to request edits or revisions.

Our goal is to provide plans with plan documents that we think reflect best practices. The plan sponsor and its administrator no longer need to review countless options or fill in limitless blank spaces. The hard work has already been handled by The Phia Group. We don't want to see any more self-funded employers or plan administrators suffer penalties or face conflicts with their partners, due to an outdated or non-existent plan document. Now, with The Phia Group's Flagship Template, clients can enjoy speedy production of best-in-class plans, with minimal time or monetary investment.

For more information regarding any of The Phia Group’s services, please contact The Phia Group’s Vice President of Sales & Marketing, Tim Callender, by email at or by phone at 781-535-5631.

Phia Group Case Study: Flagship Plan Document

Not long after The Phia Group introduced its Flagship Template offering as part of its Phia Document Management (PDM) service, one of our long-time clients approached us with an issue they were having. They had a new client prospect – the largest prospect the TPA had ever had, and indeed far larger than the average self-funded group. This particular group was coming from the fully-insured market, so it had never structured its own Plan Document before. As part of the RFP process, the TPA had provided the Plan Sponsor with a checklist from the TPA’s standard template, customized for use with the Phia Document Management software.

The TPA contacted our consulting and plan drafting team and relayed that this formerly-fully insured group was a bit uneasy about the number of variables in the checklist. Although the Plan Sponsor had not yet awarded the TPA its business, the Plan Sponsor indicated that it had absolutely no idea how to choose, for instance, which “illegal acts” or “workers compensation” exclusions it wanted, of the myriad of options within the standard checklist.

The Phia Group’s plan drafting team informed the TPA of the newfound existence of our Flagship Template, which is designed specifically to cut down variables by 75%, instead applying our best-practices approach to definitions and exclusions. The remaining variables are designed to be high-level options, rather than the nitty gritty that plan sponsors may not have the experience or interest to answer.

The TPA showed the Plan Sponsor the Flagship Template checklist, and the Plan Sponsor was pleased with the more manageable number of variables, and subsequently awarded the TPA its considerable block of business.

Fiduciary Burden of the Quarter: Prudent Management of Plan Assets

ERISA specifies that all Plan Administrators must be prudent with assets. That means avoiding waste, and securing savings whenever possible. Protecting plan assets, identifying fraud, overpayments, undue costs, as well as taking action to protect the plan, recoup lost funds, and identify savings opportunities, are being treated less like “good ideas” and more like “fiduciary duties.” In the meantime, the Department of Labor has begun to crack down on fiduciary violations more than ever.

As always, we urge TPAs and brokers to do their best to ensure that they, and their clients, are prudent with plan assets in every way possible! Please visit our website or contact The Phia Group's Vice President of Sales & Marketing, Tim Callender by email at or by phone at 781-535-5631 to discuss this growing concern and steps you can take to maximize benefits and minimize costs.

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Phia Fit to Print:

• Employers Costs Outpace Salaries – America's Benefit Specialist, Page 28

Money Inc. – “Affordable” Health Insurance Is Not “Affordable” Health Care

• Self-Insurers Publishing Corp. – Taking Health Care International - The Growing Trends of Importing Care and Exporting Patients

• Self-Insurers Publishing Corp. – Held Captive by Appeals

• Self-Insurers Publishing Corp. – Appealing to Reason

• Self-Insurers Publishing Corp. – Self-Funded Health Plan May Have a New Ally in the Fight against Specialty Drug Prices

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From the Blogosphere:

The Rules of the Game are Still Changing. What is an Executive Order?

Dear Stop-Loss: A Ballad. A blog that can be sung to the tune of “Gilligan’s Island.”

You Are Not Going to Sue us, Are You? Claims from providers are “getting high.”

Transparency – It’s Not Just for Ghosts. What about the costs of standard medical procedures?

To stay up to date on other industry news, please visit our blog.

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Consulting Headlines – The Hottest Topics in Benefit Plan Administration

On July 13, 2017, The Phia Group will present “Consulting Headlines – The Hottest Topics in Benefit Plan Administration,” where our legal team will discuss how laws are changing, regulations are shifting, and benefit plans are scrambling to keep up.

Click HERE to Register!

On June 22, 2017, The Phia Group presented “A Network by any Other Name,” where we discussed various payment methodologies, and what a health plan needs to do to ensure that the Plan Document supports that methodology.

On May 16, 2017, The Phia Group presented “Decisions, Decisions: Which Plan Types Work Best for Which Groups, and Why,” where we went over some basic types of plans that can be chosen and some benefits and pitfalls of each.

On April 27, 2017, The Phia Group presented “The Double-Edged Sword of Discretion: How Even Great Plan Document Language Can Cause Gaps in Coverage,” where our legal team discussed discretion within Plan Documents and stop-loss policies, and how the two interact.

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On June 22, 2017, The Phia Group presented “The Senate Unveils its Repeal & Replace Bill,” where Sr. Vice President and General Counsel Ron Peck and Attorney Brady Bizarro give their initial thoughts on the Better Care Reconciliation Act.

On June 19, 2017, The Phia Group presented “Plan Tales: The Good, Bad, and Really Bad,” where 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.

On June 5, 2017, The Phia Group presented “In the Land of the Blind,” where we discussed the assessment of the American Health Care Act (Version 2.0).

On May 22, 2017, The Phia Group presented “Healthcares? Alternative Provider Payment Programs,” where Adam Russo and Ron Peck discussed movements within the healthcare provider community.

On May 8, 2017, The Phia Group presented “The American Health Care Act,” where Adam Russo, Ron Peck, and Brady Bizarro discussed the American Health Care Act, which passed the House of Representatives on 05/04/2017.

On April 25, 2017, The Phia Group presented “An Employer Call to Action,” where our legal team discussed what employers can do to improve their health plan and plan performance.


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The Phia Group’s 2017 Charity

The Phia Group's 2017 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.

Phia's Wiffle Ball Game

On Saturday, June 24th, employees of the Phia Group participated in the 6th Annual John A. Waldron Wiffle Ball Tournament. The tournament honors the late John Waldron, a former member of the Brockton’s Planning Board and Democratic City Committee and a longtime booster for Brockton High School’s sports and clubs. Phia and the 36 teams competing helped raise over $16,000 for local charities, including the Boys and Girls Club of Brockton, TOPSoccer, Frederick Douglass Neighborhood Association, Brockton Hospital Cancer Walk, and more. For more information, visit the John Waldron Wiffleball Tournament website. 


Monthly Donations From Phia


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

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The Stacks

A Year Later . . . Montanile Remembered, Lessons Learned

By: Christopher M. Aguiar, Esq. – April 2017 – Self-Insurers Publishing Corp.

Things were going so well. In the game of subrogation cases being heard by the Supreme Court of the United States, self-funded benefit plans under the purview of ERISA were on a roll. First, it was Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006), then U.S. Airways v. McCutchen, 133 S. Ct. 1537 (2013). Some even considered Great West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) to have been unfairly viewed as a loss for the subrogation industry because despite a decision against Great West Life, it provided the blue print followed by Mid Atlantic Medical Services, Inc. to elicit the favorable decision that led to the recovery in Sereboff. As is the case in most games, momentum can be lost in the blink an eye.

Click here to read the rest of this article

Don’t Let Your LOAs Leave You DOA

By: Kelly E. Dempsey, Esq. – May 2017 Self-Insurers Publishing Corp.

Imagine a scenario where an employer has a long-time reliable employee that suddenly has a stroke of bad luck and is diagnosed with stage four cancer after being relatively asymptomatic and having never been diagnosed with cancer previously. The employee works with a team of medical professionals to come up with a game plan for beating this terrible disease. The employee quickly begins what will hopefully be life-saving treatment as soon as a game plan is mapped out. The claims start rolling in and the treatment starts taking its toll. The employee starts missing an hour here and there for appointments – and then a few hours for appointments and sickness –and then full days of work during treatment. When the employee is at work, the employee struggles to perform normal job functions and the employee is now unable to work because the rigorous chemotherapy regiment.

Click here to read the rest of this article.


Air Ambulance: Heads in the Clouds

By: Jon A. Jablon, Esq. – June 2017 – Self-Insurers Publishing Corp.

Health plans, third-party administrators, brokers, consultants, and stop-loss carriers are a bit baffled by air ambulance fees. Many are outraged or appalled or disgusted as well – but it seems that the overwhelmingly common feeling is sheer confusion over how this type of billing is permissible.

Click here to read the rest of this article.

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Phia’s Q2 Speaking Events:

Adam Russo’s 2017 Speaking Engagements:

• 4/24/17 - Berkley Captive Symposium – Grand Cayman Islands
“The Best Gets Better – Getting the Most Out of Your Self-Funded Plan”

• 5/4/17 – Benefest – Westborough, MA
“Multiple Personalities – The Biggest Issues Impacting Plans & Employers, and Instances Where They are Their Own Worst Enemy”

• 5/22/17 – United Benefit Advisors (UBA) Spring Conference – Chicago, IL
“The Best Gets Better – Getting the Most Out of Your Self-Funded Plan”

• 6/27/17 – Leavitt Trustee Conference – Big Sky, MT
“The Best Gets Better – Getting the Most Out of Your Self-Funded Plan”

Ron Peck’s 2017 Speaking Engagements:

• 4/3/17 – Eastern Claims Conference (ECC) – Boston, MA
“The Good, The Bad, and The Ugly: Understanding Reference Based Pricing in the Special Risk Market”

Tim Callender’s 2017 Speaking Engagements:
• 5/4/17 – BevCap Best Practice Workshop – Orlando, FL
“PACE & ICE with a brief political update on repeal and replace”

• 5/22/17 – Group Underwriters Association of America Annual Conference – Denver, CO
“The Future of Health Plans”

Jen McCormick's Speaking Engagements:
• 5/20/17 – United Benefit Advisors (UBA) Spring Conference – Chicago, IL
“Self-funding and Compliance Issues”

Brady Bizarro's 2017 Speaking Engagements:
• 5/4/17 – BevCap Best Practice Workshop 2017 – Orlando, FL
“Phia's PACE and ICE Services”

Phia’s Upcoming Speaking Events

Adam Russo’s Upcoming Speaking Engagements in 2017:

• 7/12/17 – Montana Captive Conference – Whitefish, MT
“High Performing Self-Insured Health Plans – The Key to Successful Stop-loss Captive Programs”

• 8/9/17 – NAHU Region 1 Meeting – Stamford, CT
“The Best gets Better: Getting the Most out of Your Self-Funded Plans”

Ron Peck’s Upcoming Speaking Engagements in 2017:

• 9/19/17 – CIC-DC 2017 Annual Conference – Washington, D.C.
“Cost Containment Strategies”

Tim Callender’s Upcoming Speaking Egnagements in 2017:

• 7/17/17 – Health Care Administrator’s Association TPA Summit – St. Louis, MO
“Conference Emcee”

Brady Bizarro’s Upcoming Speaking Engagements in 2017:

• 7/18/17 – HCAA TPA Summit 2017 – St. Louis, MO

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Get to Know Our Employee of the Quarter:
Zachariah John

Congratulations to Zachariah John, the Phia Group’s Q2 2017 Employee of the Quarter!

“Zach constantly exhibits great customer service skills and work ethics, with quick responses and delivery on HelpDesk tickets, questions from other employees, and system enhancement builds. He is also incredibly friendly, and always has a great attitude. Even when something cannot be done as specifically desired by a user, Zach finds ways to meet their requirements through other available options and functionalities. He is a true subject matter expert, a great resource of knowledge, and a dedicated employee. There is no question; if Zach were not part of the Phia team, we would be nowhere near where we are now! His assistance and expertise is invaluable.”

Congratulations Zach and thank you for your many current and future contributions.

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Phia News


- Diaina Williams gave birth to Hannah on 4/19/2017

- Sabrina Centeio gave birth to Gia on 5/5/2017.

- Shannon Olson gave birth to Shelby Marie on 5/8/2017

- Lisamarie DeCristoforo gave birth to Kyrie on 6/20/2017

- Boris Senic’s wife gave birth to Matthew Ryan on 6/27/2017


- Casey Balchunas was promoted from Claim Investigator to Claim Recovery Specialist III

- Lyneka Hubbert was promoted from Claim Recovery Specialist III to Case Analyst

New Hires

- Maria Sostre was hired as a Case Investigator

- Dante Tylerbest was hired as a Customer Service Representative

- Cori DeCristoforo was hired as a Customer Service Representative

- Elizabeth Pels was hired as a legal assistant

- Shaiti Alavala was hired as an IT Intern

- Robert Balchunas was hired as a PGC Intern

- Abigail Gatanti was hired as a PGC Intern

- Sandra Przychodzki was hired as a PGC Consultant

- Jess Watsky was hired as a PGC Consultant

- Francesca Russo was hired as a Legal Assistant

- Thadeous Washington was hired as a Plan Document Specialist

- Krishna Malyala was hired as an IT Data Architect

- Hannah Sedman was Hired as a Marketing Intern

- Nubian Gamble was hired as a Case Investigator

- Lennon Johnson III was hired as a Case Investigator

- Colin Patzer was hired as a Legal Assistant

- Jiyra Martinez was hired as a Case Analyst


Fun at Phia:

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Empowering Plans Segment 12 - The Cost of Care
This week, The Phia Group's CEO, Adam Russo and Sr. VP, Ron Peck, interviewed Attorney Jon Jablon - Director of Provider Relations, regarding the seemingly increasing number of excessive charges being billed by providers to health plans, strategies to cut costs, and importantly - ways to work with providers rather than against them, in an effort to implement an arrangement that works for all involved.

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The Stacks - 3rd Quarter 2017
A Year Later . . . Montanile Remembered, Lessons Learned
By:  Christopher M. Aguiar, Esq.

Things were going so well.  In the game of subrogation cases being heard by the Supreme Court of the United States, self-funded benefit plans under the purview of ERISA were on a roll.  First, it was Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006), then U.S. Airways v. McCutchen, 133 S. Ct. 1537 (2013). Some even considered Great West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) to have been unfairly viewed as a loss for the subrogation industry because despite a decision against Great West Life, it provided the blue print followed by Mid Atlantic Medical Services, Inc. to elicit the favorable decision that led to the recovery in Sereboff.  As is the case in most games, momentum can be lost in the blink an eye.

Often times, when the momentum is heavily in one’s favor, the successors eventually let their guard down.  Enter Montanile v. Board of Trustees of Nat. Elevator Industry Health Benefit Plan, 136 S. Ct. 651 (2016). Montanile was the victim of an accident with a third party who was driving under the influence of alcohol.  Montanile’s benefit plan paid approximately $120,000 in medical claims arising from the accident.  Following the accident, he sued the driver of the vehicle and obtained a settlement in the amount of $500,000.  Settlement negotiations between Montanile and the Plan broke down and his attorney warned the Plan that he intended to disburse the funds to Montanile.  The Plan did not respond until almost seven months later when it filed a lawsuit in which the Plan argued that even though Mr. Montanile had spent some or all of the settlement funds, the Plan still had a right to the funds.  The Supreme Court disagreed, stating that the Plan would have had an equitable right if it had “immediately sued to enforce the lien against the settlement fund then in Montanile’s possession” and that suing Montanile to attempt to attach his general assets was a legal remedy not available to the Plan under ERISA 502(a)(3).  Id. at 658.

Immediately following the period when the Court announced that it would be granting certiorari and hearing arguments in Montanile, subrogation experts rationalized what they had hoped would be the outcome; mainly, that the highest court in the land would not put forth a decision that effectively allowed plan participants to take the money and run – but we all knew better, and the Court affirmed our fears; that the Plan’s equitable remedy may be extinguished when funds are disbursed.

In the almost fourteen months since Montanile, there has not been much movement.  The case has been cited in several briefs and other cases, but there is nothing of a significant nature to report. That said, in the interest of keeping the issue fresh in everyone’s mind and not allowing the importance of a benefit plan’s third party recovery rights take a back seat, let us take the opportunity to recall the keys to a successful recovery program and some best practices – many of which have received favorable treatment in the few cases that have addressed the problem created by Montanile.

Plan Language

Perhaps the most important thing to remember is that Montanile did not actually change the law.  Plan language continues to be the most important consideration in determining whether a plan has a right to 100% reimbursement.  Regardless of whether the funds have been disbursed to the participant and/or whether they have been spent on non-traceable assets, if a plan’s language is inadequate, the plan will not be able to enforce its right to a full reimbursement.  Montanile did not change the decision in McCutchen, which clearly stated, “In a §502(a)(3) action based on an equitable lien by agreement—like this one—the ERISA plan’s terms govern. Neither general un-just enrichment principles nor specific doctrines reflecting those principles—such as the double-recovery or common-fund rules invoked by McCutchen—can override the applicable contract.” 133 S. Ct. at 1540.  Ensuring your plan’s language is as strong as possible remains imperative to maximizing recoveries.

Investigation is the Key

The Supreme Court in Montanile disagreed with the Plan’s assertion that its equitable remedy should be enforceable regardless of the whereabouts of the settlement fund and did not appear to have any pity for the burden on the Plan to protect its right.  The Court stated:
… The Board protests that tracking and participating in legal proceedings is hard and costly, and that settlements are often shrouded in secrecy.  The facts of this case undercut that argument.  The Board had sufficient notice of Montanile’s settlement to have taken various steps to preserve those funds.  Most notably, when negotiations broke down and Montanile’s lawyer expressed his intent to disburse the remaining settlement funds …unless the Plan objected …. The Board could have – but did not - object.  Moreover, the Board could have filed suit immediately, rather than waiting half a year.

Montanile at 662.

The Court’s statements here seem to indicate a pretty clear burden on plans to engage in their own investigations and take any and all steps necessary to protect their interests though it does seem to leave the door open for some flexibility in its decision in a situation where perhaps the facts are different.  For example, would the Court have ruled differently if the Plan did not “have sufficient notice” of Montanile’s settlement?  This appears to have been the case in AirTran Airways, Inc. v. Elem, 767 F. 3d 1192 (2014).   In Elem, the attorney ultimately obtained a settlement of over $500,000 against the responsible driver but told Air Tran that the settlement had been for the insurance policy limit of $25,000.  He then inadvertently sent a copy of the $475,000 check of which he had neglected to advise Air Tran. In this case, there appears to have been overt acts to deceive the Plan with regard to the settlement.  Would the Court have ruled the same way if faced with these facts?  

Regardless, to avoid situations like this, the Plan MUST HAVE an effective investigation unit.  All too often investigations are halted based on an insufficient self-report.  Everyone can agree that a participant that falls down the stairs at home does not present a recovery opportunity; but what if that person’s “home” is a rental apartment and the “fall down the stairs” resulted from a broken stair and faulty railing in the main hallway?  If the investigation unit is ill-equipped to ask the right questions or identify when someone is masterfully crafting answers to avoid the question without lying, a plan will miss recovery opportunities.

And the Key to Investigation is Data

A high quality investigation unit is a pivotal part of any recovery process, but access to a plan’s data is where it all begins.  The Court’s decision in Montanile effectively put a ticking clock on a plan’s recovery rights.  The earlier a plan is involved, the better chance it will have to be aware of potential recovery opportunities and on top of the availability and whereabouts of the potential recovery funds.  The most effective way to do that is to both be able to access claims data and also be able to expertly analyze and identify opportunities in the data.  When paired with the most cutting edge technology and resources, data can be utilized to find out about recovery opportunities quickly and put a plan in the best position to succeed.

Funds Disbursed? … All May Not Be Lost …

Certainly, Montanile threw subrogation professionals a bit of a curveball, but most of us knew this curveball was in the arsenal.  Ensuring that you can trace the funds is always the best option; but since Montanile, some courts have reminded us that even if the funds are disbursed, a plan may still have some options.  First, the Supreme Court in Montanile held that a plaintiff can “enforce an equitable lien only against specifically identified funds that remain in the defendant’s possession or against traceable items that the defendant purchased with the funds.... A defendant’s expenditure of the entire identifiable fund on non-traceable items ... destroys an equitable lien.” Montanile, at 658.  For the Plan to lose its right of recovery, the participant must spend the money on items that cannot be traced.  So, if the participant purchases a car, property, or asset of some sort, the plan may still be able to enforce its right.

Further, even if the funds are disbursed, the Plan may have a claim for accounting or disgorgement of profits.  In Homampour v. Blue Shield of California Life and Health Insurance Company, the Northern District of California stated the following:

Montanile does not entirely foreclose plaintiffs' claim. Plaintiffs have not alleged how or from what funds plaintiffs seek to recover disgorgement of profits. It is possible that plaintiffs will present evidence demonstrating that the profits they seek to disgorge are specifically identifiable and within defendants' possession.

Slip Copy, 2016 WL 4539480 at 8

Finally, even in a circumstance where a plan’s equitable remedy is completely lost, the plan may still have a legal remedy under a breach of contract theory.  In Unitedhealth Grp. Inc. v. MacElree Harvey, Ltd.., the U.S. District Court for the Eastern District of Pennsylvania noted that “assuming Ms. Neff had at that point already dissipated the settlement recoveries, then, pursuant to Montanile, the Plan could seek legal redress against Ms. Neff for breach of contract.” Slip Copy, 2016 WL 4440358 at 7,


Subrogation, like many cost containment options, is complicated.  Understanding the legal framework, the differences between the remedies that may be available, the advantages and drawbacks to the different options and utilization of different remedies, and having all the resources to recover effectively can be incredibly burdensome.  It requires experience, technical aptitude with data, and access to legal resources necessary to protect the plan’s rights.   Montanile served as a painful reminder, but all is not lost.  A plan can take steps to protect itself, maximize its recovery dollars, and ensure compliance with its fiduciary duty to enforce the terms of the plan and ensure its viability.

Don’t Let Your LOAs Leave You DOA
By: Kelly E. Dempsey, Esq.

Imagine a scenario where an employer has a long-time reliable employee that suddenly has a stroke of bad luck and is diagnosed with stage four cancer after being relatively asymptomatic and having never been diagnosed with cancer previously. The employee works with a team of medical professionals to come up with a game plan for beating this terrible disease. The employee quickly begins what will hopefully be life-saving treatment as soon as a game plan is mapped out. The claims start rolling in and the treatment starts taking its toll. The employee starts missing an hour here and there for appointments – and then a few hours for appointments and sickness –and then full days of work during treatment. When the employee is at work, the employee struggles to perform normal job functions and the employee is now unable to work because the rigorous chemotherapy regiment.

The employee decides it’s time to take a leave of absence to focus on treatment. To the dismay of the employee, though, the employee doesn’t have any additional leave available under The Family and Medical Leave Act (FMLA), since the full allotment of FMLA leave was recently exhausted while the employee and the employee’s spouse were finally bringing home their new adopted baby that they had waited so long for. Is this pulling at your heart strings yet?

The employer recalls that sometime in 2016, the U.S. Equal Employment Opportunity Commission issued guidance on a leave associated with The Americans with Disabilities Act (ADA)1 . Ah ha! The employer tells the employee they have just the solution – take a leave under ADA and the employment and leave situation can be re-evaluated in a few months. The employer tells the employee not to worry about anything except becoming cancer-free; the health plan coverage will continue as long as the employee needs it, even though the last of the employee’s paid time off is exhausted and no additional FMLA is available. In other words, the employer, via its health plan, is taking care of its employee, as so many employers try so hard to do. The employee is then signed up for the short-term disability policy which will help replace some income during the leave, and the employee is all set – there is continuing health plan coverage and some income replacement to boot. All is well.

Fast forward in time. Three months have passed, and the employee is making miraculous recovery. The employee is not ready to come back to work yet, but things are looking up and the employee is respected to return to work at some point in the near future. With the end of the health plan year approaching, the employer is attempting to get its ducks in a row for renewal season, which includes a stop-loss policy renewal. The cancer treatment claims are continuing to roll in and, as expected, the dollars keep adding up – but unfortunately, as anticipated, stop-loss is going to become a factor before renewal (ugh).

Claims are filed with the stop-loss carrier and all the typical supporting documents are provided. During the stop-loss carrier’s review, the carrier starts scratching its head. This individual has been on a non-FMLA leave of absence for over three months. The health plan document discusses FMLA and COBRA, but no other types of leave. Why was this employee still on the plan? Why was COBRA not offered when plan coverage seems to have terminated? The stop-loss carrier questions the employer and requests additional documentation to support eligibility; the carrier even generously says the employee handbook is acceptable. As everyone knows, the stop-loss policy is underwritten based on the plan document alone; anything contained within the employee handbook is entirely separate from the plan document and the stop-loss underwriting generally won’t take into account anything within the employee handbook. The employer thinks “boy, am I lucky!” *queue the suspenseful music*

The employer pulls out the employee handbook and skips to page 42 – Employer Leave Policies. The employer starts reading, “In addition to FMLA, employees that have exhausted paid time off and FMLA may be eligible for an additional extended leave of absence; referred to as non-FMLA leave. This non-FMLA leave is created to comply with the ADA’s requirement to provide a leave of absence as a reasonable accommodation and will be offered in addition to FMLA. Thus the non-FMLA leave will not run concurrently with FMLA. Additional information regarding how to request this leave and the additional requirements associated with this leave is further detailed herein:”

The employer’s wheels start turning: okay, this ADA leave doesn’t run concurrently with FMLA – great, that helps, but where’s the part about continuing health plan coverage? That must be in this handbook somewhere. The employer starts frantically turning pages looking for those magical words “employees are entitled the health plan benefits during a non-FM LA leave of absence.” But alas, no such wording is contained within the 163-page employee handbook.  The employer’s internal dialogue starts racing. “How can this be? We never meant for our employees to be out sick and not have health coverage. Doesn’t the ADA say we have to provide coverage to employees while they’re out on leave?” So you ask, “What now?” The bottom line is that there is no stop-loss reimbursement for the cancer claims, and quotes for renewal just added a few extra zeros.       

No need to review the gory details in depth – but one can imagine what happened during the plan and stop-loss renewal. The employer’s bank account is looking bleak, as are the proposed stop-loss renewal rates. The employer starts shopping other options despite having been with the same stop-loss carrier for years.  All the while, the employer just thinks “How did I end up here? All I wanted was to take care of my employees and give them the best benefits possible. Where did I go wrong?”  

It’s intuitive to think that a leave of absence from employment is coupled with a continuation of health plan coverage, especially if the leave is illness related; to the dismay of many, however, a continuation of coverage (other than COBRA) isn’t always coupled with a leave of absence. As shown in the scenario above, many employers struggle to align their health plan documents with their employee handbooks (and other internal policies) which subsequently increases the potential for a gap to arise between all the relevant documents. While most federal and state laws do not require a continuation of coverage, employers can choose to provide the benefit of continued coverage – but if the employer wants to ensure stop-loss reimbursement, the terms of continuation of coverage need to be clearly spelled out not only in the employee handbook, but also in the health plan document. The health plan document is key to showing proof of continued coverage, especially in a situation where stop-loss is relevant.

Many employers don’t even realize they have gaps between their policies and the health plan documents until it’s too late. All it takes is one large medical event - a cancer claim, an ESRD diagnosis, premature twins, a transplant – to discover that the documents the employers has aren’t airtight, and may not even align with the employer’s intent.

In summary, most employers need to do some homework. Go back to the office and take a look at the health plan document and the employee handbook. Do the two documents reference the same types of leave? Do the documents clearly indicate when coverage under the health plan is maintained during a leave? Do the terms of these documents meet the intent of the employer? What does the stop-loss policy say about eligibility determinations? Can the handbook be used to document eligibility in the health plan? What (if any) changes need to be made to minimize or eliminate gaps, to the extent possible?

Don’t let large unexpected claims leave you dead on arrival. Do the leg work now, and figure out what needs to be done to avoid being caught by surprise.

Kelly E. Dempsey is an attorney with The Phia Group. She is one of The Phia Group’s consulting attorneys, specializing in plan document drafting and review, as well as a myriad of compliance matters, notably including those related to the Affordable Care Act. Kelly is admitted to the Bar of the State of Ohio and the United States District Court, Northern District of Ohio.


Air Ambulance: Heads in the Clouds
By: Jon A. Jablon, Esq.

Health plans, third-party administrators, brokers, consultants, and stop-loss carriers are a bit baffled by air ambulance fees. Many are outraged or appalled or disgusted as well – but it seems that the overwhelmingly common feeling is sheer confusion over how this type of billing is permissible.

In all other markets – construction, textiles, grocery, you name it – the ordinary legal doctrine is that if there is no agreed-upon price for the goods or services, the seller may only charge the reasonable, fair market value of the delivered service or item. Admittedly, in most markets, prices are agreed upon beforehand – but in the long history of business, there have been enough instances of services rendered without agreed-upon pricing that courts have seen fit to devise controls for just those occasions.

And yet…air ambulance charges are frequently between 600 and 800 percent of Medicare rates for the same flight – and sometimes far, far more. In fact, one recently crossed my desk billed at over 2,600% of Medicare rates. That’s right – a whopping twenty-six times what Medicare would have paid for the same flight.

The disclaimer is that Medicare rates are not directly relevant to these flights, but instead used as a benchmark to inform what might be the fair market value, since unfortunately there isn’t much else to go on. Unlike many other medical providers, though, there seems to be a trend in the air ambulance billing industry where balance-billing is the norm, and many air ambulance providers have the devil-may-care willingness to bill patients which triggers the outrage and disgust that so often has health plans paying upwards of 90% of egregious balances to protect their patients.

Add to the egregious billing the notion that many flights are not medically necessary or otherwise appropriate to begin with, and it becomes clear that we have a problem on our hands.

At Northshore International Insurance Services, Inc.’s 26th Annual Medical Excess Claims Conference regarding Air Ambulance Claim Cost Containment Strategies, Jeff Frazier – a partner at Sentinel Air Medical Alliance, a firm specializing in curbing air ambulance costs – answered quite a few questions, including the following2 :

Question: Why is air ambulance ordered for someone who does not really need the service?

Answer: About 20% of the patients using air ambulance services really need the service. In a lot of cases, patients are not transported to the nearest hospital due to overflight or relationships between the facility and the air ambulance provider.

Question: How do you determine medical necessity?

Answer: Review of transport notes or ambulance run reports primarily to determine medical necessity. Sometimes notes from the hospital are also reviewed.

Question: Why do payors cave?

Answer: Fear of the provider balance due billing the patient.

Balance-billing is a major concern of all benefit plans that pay benefits at an amount not tethered to billed charges, which is an increasing trend. If not for balance-billing, it seems likely that all plans would pay objectively reasonable rates rather than percentages of billed charges.

“Taking Patients for a Ride” Article

A recent (April 6, 2017) Consumer Reports article penned by Donna Rosato – entitled “Air Ambulances: Taking Patients for a Ride3 ” – highlights some real-life scenarios in which air ambulance billing practices have proven to be, in a word, abusive. Aside from citing two separate sources quoting the average air ambulance flight at about $7,000 and about $10,000, the article notes that:

Rick Sherlock, president and CEO of the Association of Air Medical Services, a trade group, says that many air-ambulance patients are on Medicare or Medicaid, and that those programs pay $200 to $6,000 per transport. So, Sherlock says, air-ambulance operators must collect more from people with private insurance to make up the difference.

It should be questioned how equitable or ethical it is to jack up prices for one consumer because the provider has chosen to accept less money for another consumer. An air ambulance provider can always refuse to contract with CMS and choose to not accept Medicare or Medicaid – so to complain about not being paid enough seems a bit petulant.

Airline Deregulation Act

Further challenges are presented by the Airline Deregulation Act of 1978. Through this federal law, states are prohibited from regulating non-hospital affiliated air ambulance providers. That is, this law does not apply to the University of Whatever Health System’s own proprietary air ambulance services, since those are considered to be an “extension” of emergency services as opposed to a separate air ambulance provider – but the law does apply to FlyingAirTaxiMedicalAmbulance Co., Inc., since it is independent of an emergency room and is its own “carrier.”

Through the years there have been proposed changes to the federal Act to account for the disastrous effects it has on air ambulance consumers and health plans, but we’re not quite there yet.

Interestingly, many air ambulance carriers have resorted to quoting the Act when attempting to justify their billing – or at least when attempting to refute reasonable settlement requests. It seems that the most prevalent argument is against any notion of fair market value; the fact that state law is preempted with respect to air ambulance billing practices is cited as the reason that fair market value is not relevant to the carrier’s billing. But, although rooted in state contract law, is it reasonable to suggest that an implied contract for services is “state law,” sufficient to be preempted or overridden by the federal Airline Deregulation Act?

In other words, while the federal Act may supersede state laws aimed at regulating air ambulance providers (and others), the concept of fair market value is implicit in the non-contracted nature of air ambulance services. The issue is not one of some state law attempting to regulate air ambulances; fair market value has to do with the open market and general principles of contract rather than some particular state law.

The Airline Deregulation Act does not set a price or indicate what might be appropriate value. Instead, it dictates that individual states cannot pass laws to regulate the price of these flights. Fair market value is a general principal of contracting rather than some statutory price control, though; air ambulances are free to provide quotes up-front, but in most cases that is either not feasible or just not done. It seems that the general and basic principal of fair market value would still apply when no price is quoted or agreed-upon. The Airline Deregulation Act, after all, was passed to promote a free market economy rather than restrict it. It hardly serves to promote a free market when medical providers can gouge payors without warning.

One could even contend, somewhat ironically, that demanding surprise payment at an amount far in excess of the fair market value frustrates the very purpose of the same Airline Deregulation Act that these providers rely on to defend their charges.

Contract? What Contract?

Here’s where things get even more interesting. Independent air ambulance providers tend to be universally out-of-network. There are a couple of exceptions, but in general, it is near impossible to find an air ambulance provider (unrelated to a hospital) that has contracted with a PPO network to accept discounted fees – primarily due to the belief that the Act guarantees them their full billed charges no matter what, and that there’s no reason to join a network and accept discounted charges.

Regardless of that belief, another question worthy of consideration is whether the out-of-network flights can truly be considered non-contracted. Contracts are a funny thing and they come in many forms; while there is no contract to pay a certain specified rate or percentage of billed charges – indeed, a claim that would generally be considered a “contracted claim” – consider that the patient (if conscious and competent) almost always signs the provider’s “assignment of benefits” form. On that form, the patient says “if my insurance doesn’t pay you, in full, 100% of your bill, then I, the patient, agree to be responsible for the remainder.”

For some bizarre reason, courts in this country have indicated that the patient’s agreement to pay some unspecified amount supersedes any ordinary market properties. If the patient weren’t a patient but a homeowner, and a painter said “you will pay me what I bill you for this job” and the homeowner agreed, courts have always opined that while the consumer is of course responsible to compensate the painter for its service, the painter is responsible for billing only that which is reasonable – measured as the fair market value of the services. In the medical industry, though, there are very few (and largely ineffectual) statutory or common law pricing controls. Even the simplistic concept of fair market value, which is perhaps the most basic of all pricing principles, does not apply in ordinary cases. It goes without saying that this needs to be fixed.

What Can You Do?

Whoever you are – whether a health plan sponsor, third-party administrator, broker, MGU, reinsurer, or anyone else working in the self-funded industry – air ambulance charges are worrisome. If they don’t concern you…they should.

Negotiating claims can be an option, as is the case with other out-of-network medical claims, and there are also other, more novel solutions out there in the marketplace.

Just as programs have developed to assist payors in reducing dialysis billed charges, so are there companies and services that are specifically geared toward controlling air ambulance charges. Specialists in this field can provide assistance from a regulatory and financial standpoint – and ensuring proper utilization is also crucial to ensuring that payors are not gouged.

We urge payors to discuss options with a broker or consultant and ask about some of the solutions out there that have helped save health plans countless dollars of unreasonable and unnecessary air ambulance exposure.

About the Author

Attorney Jon Jablon joined The Phia Group’s legal team in 2013. Since then, he has distinguished himself as an expert in various topics, including stop-loss and PPO networks, focusing on dispute resolution and best practices. In 2016, Jon assumed the role of Director of The Phia Group’s Provider Relations department, which focuses on all things having to do with medical providers – including balance-billing, claims negotiation, PPO and provider disputes, general consulting, and more.