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Know when to fold ‘em

By: Chris Aguiar, Esq.

Last week, I teased this blog post on Linkedin with vague commentary about effective cost containment not being just about recovering as much money as possible, but also about being knowledgeable and understanding when its best to cut losses.  One of the attorneys in our office is currently working on a file where a benefit plan may be ill-advisedly pushing the limits of the law.  You see, in subrogation and reimbursement cases, there is a rule called the “Made Whole Rule”.  This rule is one of equity that operates to eliminate a plan’s recovery rights when a plan participant does not recover the full amount of their damages (i.e. they weren’t “made whole”).  Now, those of us with private self-funded plans that enjoy the benefit of state law preemption can point to our plan terms and the current state of Federal law which holds that clear and unambiguous language that disclaims application of this rule and others like it will control and allow plans to recover regardless of whether the participant was made whole.

This plan, however, is unfortunately governed by state law as it is not a private self-funded benefit plan; preemption does not operate in its favor.  The participant had $800,000.00 in medical damages, alone, and received a $1,000,000.00 settlement.  Those numbers alone may indicate to some that the participant was, indeed, made whole.  However, the damages discussed above are ONLY the medical damages.  We have yet to discuss any other damages, including but not limited to:  1) lost wages (present and future) 2) pain and suffering 3) future care, etc.  The list of damages in serious accidents such as this can be extensive, and all of those categories hold considerable value and are compensable in the eyes of the law.  The particular jurisdiction in which this plan sits happens to have one of the most aggressive made whole rules in the country, and the judges there tend to be very pro participant.  Accordingly, it’s a safe assumption that given the participant will really only receive about $600,000.00 after fees and costs of pursuit – it’s quite easy to see that the participant will not likely be considered to have been “made whole” in the eyes of the court.

Despite that, The Phia Group’s attorney has been able to negotiate for a reimbursement of approximately 20% the Plan’s interest.  Should the Plan decide to try to enforce a right of full reimbursement, and the court apply the made whole rule, the Plan will receive no recovery at all and will have endured the extra time, expense, and possibly even media fallout for ‘dragging its participant through this ordeal’, of protracted litigation.

Plans, and we as their advisors, must be cognizant of the rules of the jurisdictions in which we operate and realize when a good outcome is unlikely.  Sometimes, even if one has a good case and can win and recover its entire interest, the cost of doing so paired with the inability to obtain reimbursement of the costs of pursuit can render the action moot, because the cost can in many instances outweigh the interest.  This is even more true, of course, in situations where the Plan is likely to lose.

Effective cost containment is about looking at the situation and determining the most cost effective approach – winning does not always equate to the best outcome.


Empowering Plans: P50 - Where is Ron? A Very Personal Podcast from the SVP

In this episode, our Senior Vice President & General Counsel dials in to describe where he's been, what major health issue is impacting his family, and what he hopes we can all learn from their experiences thus far - as members of the industry, potential patients, and human beings.

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FDA Approves Marijuana-Derived Drug for Seizures

By: Corrie Cripps

In June, the US Food and Drug Administration (FDA) issued the nation’s first approval for a drug derived from marijuana-based compounds. The drug’s name is Epidiolex, and is used to treat patients with forms of severe epilepsy (Dravet syndrome and Lennox-Gastaut syndrome).

The drug uses CBD, or cannabidiol, which is an oil that comes from resin glands on cannabis buds and flowers.

Prior to the FDA marketing Epidiolex, the Drug Enforcement Administration (DEA) must reclassify CBD, since it is currently listed as a Schedule I drug. Schedule I drugs are considered to have “no currently accepted medical use and a high potential for abuse.” The DEA is expected to make this change for CBD, but will likely leave cannabis itself at Schedule I.

Currently CBD is legal to purchase in only some states.  In the states where medicinal or recreational marijuana is legal, CBD is legal. In 17 other states, there are specific laws about what CBD products can be used by whom and for what.

If the DEA reclassifies CBD so that it is no longer a Schedule I drug, thus making CBD legal at the federal level, plan sponsors will need to determine if/how they want to address this in their plans (i.e., if they want to specifically exclude or cover it). Plan sponsors will need to determine how this change will impact their plans, including stop loss.


Empowering Plans: P49 - Issues with Inaction: Balance Billing and Wellness Programs

In this episode, hosts Jennifer McCormick, Brady Bizarro and Erin Hussey discuss issues with inaction. The first issue is with balance billing, and a recent case involving a patient who was balance billed and refused to pay the bill. The hospital now seeks declaratory judgement stating that the patient-hospital contract is valid. This case is a good example of the interaction of third party agreements and the SPD, and the ongoing issue of the reasonableness of Chargemaster rates. The second issue is with wellness incentive rules and the lack of guidance from the EEOC, following the AARP v. EEOC case. This EEOC was ordered to re-write wellness program rules regarding incentives and issue proposed rules on August 31, 2018, with an effective date of January 1, 2019. If the EEOC does not re-write the rules, the old rules (the 30% incentive maximum) will be vacated and there will be no new rules for employers to follow.

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Trump Administration Halts Billions in ACA Payments

By: Brady Bizarro, Esq.

The Affordable Care Act has endured quite the onslaught in the past year and a half. From seeing its outreach budget cut in half to the elimination of the individual mandate, Obamacare has really taken a beating. Now, the Trump administration has dealt another destabilizing blow to the healthcare law. On Saturday, the Centers for Medicare and Medicaid Services announced that it would be forced to suspend some $10.4 billion in so-called “risk-adjustment payments” to insurance companies. These payments were designed to stabilize insurance markets by offsetting the cost to insurers who took on sicker, costlier patients.

This move came because of a February ruling by U.S. District Judge James Browning which held that the Department of Health and Human Services could not use statewide average premiums to come up with its risk-adjustment formula. In the view of the court, the agency wrongly assumed that the Affordable Care Act required the program to be budget-neutral. The Trump administration promised to appeal this federal court ruling, but in the meanwhile, it announced its decision to suspend billions in payments to insurance companies.

While the suspension of risk-adjustment payments directly impacts the fully-insured market, it will inevitably have a spillover effect into the self-insured market. Insurers have indicated that if these payments are not restored, they will be forced to raise premiums in 2019. You can bet that they will look to make up losses in their self-insured lines of business as well. That said, since healthier, less-costly employees tend to be in self-insured plans, the effect may not be so bad. Plans with more costly groups of employees will suffer far more.

Importantly, the Trump administration could issue a new administrative rule to address the concerns raised by the federal judge in New Mexico. It is unclear if the administration will respond, or will wait to fight the battle at the appellate level.


Empowering Plans: P48 - Make Cost Containment Great Again

In this episode, hosts Brady Bizarro and Adam Russo discuss the recent webinar’s success, hot topics impacting the industry today, and new methods to contain rising costs by taking advantage of changes in law and policy. If you like spending too much on healthcare, stay away. If you want to trump rising costs and achieve cost containment greatness, come on in.

Click here to check out the podcast!  (Make sure you subscribe to our YouTube and iTunes Channels!)


Which path will the EEOC take in August?

By: Erin M. Hussey, Esq.

 

Back in 2016 the American Association of Retired Persons (“AARP”) sued the Equal Employment Opportunity Commission (“EEOC”) claiming that the EEOC’s wellness incentive rules that apply to wellness programs were coercive. Specifically, the AARP was referring to wellness programs that involve disability-related inquiries or medical examinations and those that ask plan participants to provide family medical history or genetic information.

 

As a result the major issue in the AARP v. EEOC case was whether an employer can sponsor that type of wellness program and apply an incentive or penalty of up to 30% of the cost of self-only coverage and still be considered a “voluntary” wellness program under the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”). The court found that the EEOC "failed to adequately explain" the 30% maximum and the EEOC has been directed to re-write their workplace wellness rules for an effective date of January 1, 2019.

 

The EEOC is supposed to issue proposed regulations on August 31, 2018. If the EEOC does not re-write new rules, then the old rules will be vacated instead of being replaced with new rules. Thus, there are two paths the regulators may take:

 

  1. EEOC does not re-write the rules (and current rules are vacated) or

 

  1. EEOC does re-write the rules and the new rules will apply. 

 

We won’t know which path to pursue, however, until August 31, 2018. In the meantime employers should review the following considerations:

 

  • The current EEOC rules will continue to apply for 2018; therefore, plans that are compliant with current rules should not have any compliance issues to date.

 

  • If the EEOC does not re-write the rules, the current rules will be vacated.  Thus, pursuant to the vacated rules, the 30% incentive or penalty of the cost of self-only coverage is vacated starting in January 1, 2019.

 

  • If the EEOC does re-write the rules, new rules will apply. Thus, pursuant to the new rules, employers should review their current wellness program design for potential compliance concerns that could arise in case there are new rules issued. For example, is the program truly voluntary?

 

  • If an employer believes their wellness program could pose compliance concerns with either vacated rules or new rules, then the employer should explore alternative options (and have the processes in place to be ready to make those potential changes because the timeframe to revise plans may be short).

 

  • Employers should stay tuned for updates since the EEOC may propose rules to the public August 31, 2018. Once those proposed rules are issued (or not issued, meaning the old rules are vacated instead of being replaced), employers may begin the process of restructuring their incentives to comply. Again, employers do not need to comply with new or vacated rules until January 1, 2019.

 

*Note: This ruling does not affect wellness programs that provide incentives for programs that do not require the above-noted ADA and GINA protected information to be disclosed (i.e.,  programs for smoking-cessation, nutrition, weight-loss). The above-mentioned EEOC wellness rules are separate from the Health Insurance Portability and Accountability Act (“HIPAA”) and the Affordable Care Act (“ACA”) wellness rules and the above ruling has no effect on these rules.


Hottest Industry Trends and Topics – This is What You Asked For

The industry is ablaze! From specialty drugs, to association health plans, to the “right to try” law, we’re all feeling the heat. The Phia Group’s leadership team attempts to address these scorching issues and perhaps cool some nerves in the process.

Click Here to View Our Full Webinar on YouTube

Click Here to Download Webinar Slides Only


You Probably Can!

By: Jon Jablon, Esq.

 

You asked whether your clients can decide to not utilize their wrap network for a given claim, right? Oh, you didn’t? Well, why didn’t you?

 

We get it. Wrap networks are very simple to use and they guarantee against balance-billing. Those are great things. But despite the ease of use, do wrap networks offer the best bang for your buck?

 

Research shows that the average wrap network discount ranges from 18% to 25%. There may be outliers, though; if you’ve got a 65% discount, it’s often worth it to take it with no questions asked. But if you’ve got a 20% discount on a very large claim, it will probably be beneficial to explore other options. In many cases, individualized negotiations can yield far better results than wrap discounts, since wrap discounts are pre-determined and predicated on arbitrary percentages off arbitrary billed charges. When negotiating a claim on an individual basis, though, there’s an opportunity to use benchmarks (such as Medicare), examine the specifics of the bill, and actually discuss the claim and its merits with a human being. More often than not, individualized negotiations yield better savings than pre-negotiated wrap discounts.

 

In a recent poll of many of The Phia Group’s clients, 75% of those who responded indicated that they weren’t aware that they were able to forego utilization of the wrap network on a case-by-case basis. It’ll depend on the contract, but in just about every case, a health plan does have that right.

 

Plus, if a negotiation outside the wrap isn’t successful, the health plan will still have the wrap discount to fall back on!

 

If you need a contract reviewed, The Phia Group can do just that – and if a benefit plan incurs a large claim that should have a better rate than what the wrap will offer, let us know as soon as possible, because we can help.

 


Empowering Plans: P47 - Coaching the Self-Funded Industry

In this episode of Empowering Plans, Adam and Brady interview Rick Koven, President of Koven Consulting & Coaching. They discuss his work with health plan startups, small regional TPAs, and micro-insurance in developing countries. Rick also explains his role as a coach for executives and corporate leaders in our industry. As a special treat, they are also joined by Lisa from the claims department.

Click here to check out the podcast!  (Make sure you subscribe to our YouTube and iTunes Channels!)