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“Incur”-aging a Review of the Term “Incurred”

On March 12, 2020

By: Kevin Brady, Esq.

The first time I read a Plan Document at The Phia Group, I saw a word that I am ashamed to admit, I did not quite understand. A short word, an odd word, but an important one nonetheless. The term “Incurred” can be found over and over in most Plan Documents and stop-loss policies. Little did I know, this term would come up, over and over again as I continued to review these documents.

With some variation in the language, the typical definition of the term establishes that claims are incurred on the date with which a service, supply, or treatment is rendered to a participant. Although this seems to be the standard, some Plans and policies provide that a claim is not incurred until it is submitted to the Plan or sometimes a claim may not be considered incurred until the Plan has issued payment on the claim.

An important consideration for Plan Administrators is that the Plan’s definition of this term should not conflict with the stop loss policy. When the Plan and the policy have conflicting definitions, it may give rise to a number of reimbursement issues. For example, a conflicting definition could implicate issues with stop loss notice requirements; if the Plan is confused about when the clock starts for timely notice of a claim, the Plan may inadvertently fail to provide notice of an otherwise reimbursable claim. Further, confusion on the date with which a claim was incurred could cause a claim to fall completely outside of the policy period unbeknownst to the Plan Administrator.

Another common issue arises when the definition fails to describe how the Plan will treat ongoing courses of treatment. Will the claim be considered incurred on the date when the participant initially sought treatment? Or will each individual treatment or service be considered separately? The Plan should clearly outline these issues to avoid confusion when administering claims. Even if a Plan does describe the impact of ongoing treatment, it must also consult with the carrier to determine if their application is consistent with the carrier’s and make the necessary modifications to ensure there are no gaps between the two documents.

While it may seem very simple, failing to recognize this language gap could ultimately be the difference between reimbursement and denial on an otherwise reimbursable claim.

Plan Administrators should review the definitions in both the Plan and their policy to ensure that a gap such as this one does not preclude the Plan from reimbursement. Even better, send your Plan Document and stop-loss policy to PgcReferral@phiagroup.com and we will perform a detailed analysis of the gaps between the Plan and the Policy.

Empowering Plans: P79 - COVID-19 Preparedness: What Self-Funded Plans Should Be Doing Right Now

On March 11, 2020

In this special edition of Empowering Plans, Brady Bizarro and Jennifer McCormick discuss the recent outbreak of COVID-19 (coronavirus). Join them for their insight into how you should be preparing, what concerns you should have about your benefits documents, and how to navigate applicable law.

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

The Top 10 of 2020: Cost Containment Measures to Implement Right Now

On March 10, 2020

Self-funding can be great if you know how to use it – but it can also be disastrous if done wrong. Health plans trust their TPAs and brokers to make the right decisions for them, and cost-containment is always the right decision. From choosing a stop-loss carrier all the way to handling appeals, the self-funding market is full of options and customizations, and some are (much) better than others.

Join The Phia Group’s legal team as they discuss the cost-containment measures they encounter most frequently, and tell some success stories, some horror stories, and how you can make the best decisions for your clients’ bank accounts.

Click Here to View Our Full Webinar on YouTube

Click Here to Download Webinar Slides Only

New Insight on Provider Surprise Billing

On February 17, 2020

By: Andrew Silverio, Esq.

Anyone who works in health benefits is familiar with surprise billing – the specific kind of balance billing which occurs when a patient visits an in-network physician or hospital, and receives an unexpected balance bill from an out-of-network provider that they didn’t have an opportunity to select, and in many cases, didn’t even know they had utilized.  Common culprits are anesthesiologists, assistant surgeons, and outside lab work.

We often think of this as primarily a problem for emergency claims.  This makes a great deal of sense, since when someone presents at an ER or is brought there via ambulance, they likely won’t have an opportunity to ask questions about network participation or request specific providers.  However, according to surprising data released in the Journal of the American Medical Association on February 11, 2020 entitled “Out-of-Network Bills for Privately Insured Patients Undergoing Elective Surgery With In-Network Primary Surgeons and Facilities (available at jamanetwork.com/journals/jama/fullarticle/2760735?guestAccessKey=9774a0bf-c1e7-45a4-b2a0-32f41c6fde66&utm_source=For_The_Media&utm_medium=referral&utm_campaign=ftm_links&utm_content=tfl&utm_term=021120), these bills don’t actually seem to be more likely to arise from emergencies or other hospital stays where patients have less of an opportunity to “shop around.” 

The study looked at 347,356 patients undergoing elective surgeries, at in-network facilities with in-network surgeons.  These are patients who had ample opportunity to select their providers, and indeed did select in-network providers for both the surgeon performing their procedure and the facility in which it would occur. Shockingly, over 20% of these encounters resulted in a surprise out of network bill (“Among 347 356 patients who had undergone elective surgery with in-network primary surgeons at in-network facilities . . . an out-of-network bill was present in 20.5% of episodes...”) The instances that involved surprise bills also corresponded to higher total charges - $48,383.00 in surprise billing situations versus $34,300.00 in non-surprise billing situations.

The most common culprits were surgical assistants, with an average surprise bill of $3,633.00, and anesthesiologists, with an average bill of $1,219.00.  In the context of previous research indicating that “20 percent of hospital admissions that originated in the emergency department . . . likely led to a surprise medical bill,” it seems that even when patients are able to do their homework and select in-network facilities and surgeons, they are just as susceptible to surprise billing. (See Garmon C, Chartock B., One In Five Inpatient Emergency Department Cases May Lead To Surprise Bills. Health Affairs, available at healthaffairs.org/doi/10.1377/hlthaff.2016.0970.)

Many states have enacted protections against balance billing and surprise billing, with Washington and Texas both recently enacting comprehensive legislation.  However, these state-based laws have limited applicability, and there are to date no meaningful federal protections for patients in these situations.  Until such protections are enacted, patients are left vulnerable to sometimes predatory billing practices, and plans are left to choose between absorbing that financial blow or leaving patients out in the cold.

More Thoughts on The Cigna Racketeering Case

On January 28, 2020

By: Jon Jablon, Esq.

You may have read the blog post that my colleague Andrew Silverio wrote about this case just a few days ago. (If you haven’t, check it out!)

After doing a deep dive into this case, there are a few specific things I want to bring up – and to do so, I’ll do some quoting from the complaint. The plaintiffs – certain medical providers that feel they have been victimized by Cigna – have made many allegations, some very specific, and some more sweeping in nature. While we have no basis to question the facts presented by the plaintiffs, it does seem that the logic employed in the arguments leaves something to be desired. Here are a few paragraphs from the complaint that I find most noteworthy from a self-funding point of view:

13. Plaintiffs’ incurred charges for the Cigna Claims total approximately $72,757,456.28, reflecting Plaintiffs’ usual and customary rates for the particular medical services provided. But Cigna has paid only a small fraction of this amount,—$16,937,637.50, which represents only 23% of its legal responsibility.

The plaintiffs are alleging that the 23% of the total billed charges paid to them by Cigna was “only 23% of [Cigna]’s legal responsibility.”

I’ll pause to let that ridiculousness set in.

These plaintiffs are actually alleging that Cigna’s legal responsibility is to pay 100% of billed charges, across numerous claims. Not surprisingly, the complaint doesn’t support that assertion with any plan language, law, or logic, and I can’t help but wonder what the drafter of this complaint was thinking.

20. In this example, Cigna has told the provider that the unlucky Cigna Subscriber owes it $60,316.07 as the amount not covered under the Subscriber’s Plan, but has told the Subscriber that he/she owes the provider only $895.25 because Cigna negotiated a 98% discount with the provider. In doing this, Cigna misrepresents to Cigna Subscribers that the amounts improperly adjusted by Cigna are “discounts.” This misrepresentation appears on most Cigna Claim Patient EOBs.

Here, the plaintiffs allege that the EOBs provided to them identify that the amount Cigna claims to be above its allowable amount is a discount. This is a common folly and one we strongly caution against making! RBP plans often fall into this trap, since their payments are always at an allowable amount lower than the provider’s billed charges; characterizing the disallowed or excess amount as a “discount,” when it is not, is misleading to providers (causing confusion and frustration, and ultimately hurting outcomes when combating balance-billing) and a misrepresentation to members.

121& 122. For emergency services, the ACA Greatest of Three regulation and New Jersey law require Cigna to reimburse Plaintiffs at least at the in-network rate at which Cigna would reimburse contracted providers for the same services. … Plaintiffs are therefore entitled to the total incurred charges for the elective and emergency claims at issue, less Patient Responsibility Amounts not waived by Cigna.

This is not quite accurate for two reasons. First, the plaintiffs misquote the “Greatest of Three” rule; the amount that must be paid is at least the median in-network rate that each individual plan would pay for the same services, rather than the blundering mischaracterization of “the in-network rate at which Cigna would reimburse contracted providers.” Those are important differences, and, frankly, the attorney should have known better.

Second, even if this premise were accurate as written, the conclusion drawn is still nonsensical. The plaintiffs have indicated that since the payment must be at least the in-network rate paid to the same provider, then the payment must be “total incurred charges” minus patient responsibility. In other words, these providers are suggesting that the in-network rate, across thousands of claims with multiple providers, is 100%. It’s true that 0% discounts exist, but they’re somewhat rare, and it is certainly not the case here that every single relevant discount, accessed by any of the relevant health plans, is 0%.

155. Exhaustion is therefore deemed futile pursuant to 29 C.F.R. § 2560.503-1(l) because Cigna failed to provide a clear basis for its denials and has refused to produce the requested documents necessary for Plaintiffs to evaluate the Cigna Claims denials. Cigna thus offered no meaningful administrative process for challenging its denials of the Cigna Claims.

This last example is another one where many self-funded plans run into unexpected issues. Called “futility,” this doctrine holds that appeals are not necessary, and a claimant can jump straight to a civil suit, if the plan renders appeals futile in any of various ways.

Here, if Cigna has truly issued insufficient EOBs, refused to provide substantiating documentation, and generally didn’t follow the applicable regulations, the providers have a very good argument that appeals are futile. What’s more, though, is that these actions constitute a breach of the Plan Administrator’s fiduciary duties to abide by applicable law and the terms of the Plan Document, which could subject the Plan Administrator to penalties as well as work against the payor in court.

We’re excited to see how this suit unfolds, and we’ll give you more updates when we can!

WORLD AIDS DAY 2019: Three Decades of Progress in Treatment and Healthcare

On December 11, 2019

By: Philip Qualo, J.D.

December 1st marked the 31st observance of World AIDS Day, an opportunity for the world to unite in efforts to stop HIV, support those affected by HIV, and remember those who have lost their lives to HIV-related diseases. The Centers for Disease Control and Prevention (CDC) first called attention to what is now known as AIDS in 1981.  

In 1985, the first HIV test became commercially available. But the number of people who died from AIDS kept growing. The first licensed drug, AZT, had to be given intravenously. At the doses initially used, the drug was toxic. Eventually, an oral formulation was made but it had to be taken in high doses every four hours and usually, only people in clinical trials could gain access to it. Activists had to pressure regulatory agencies to test combinations of new drugs because if each drug were tested on its own, any remission would be temporary, as HIV could easily overcome a single drug.

Since the mid-1990s, scientists have developed an array of antiretroviral drug regimens that durably suppress the replication of HIV. Antiretroviral drugs are used to treat HIV, to maintain the health of an individual, and to prevent transmission of the virus. Numerous studies have demonstrated that when people living with HIV use antiretroviral therapy to achieve and maintain a durably undetectable level of virus, they do not sexually transmit HIV. Over the years, these regimens have been updated and refined to be even more effective, with significantly fewer side effects.

Today, antiretroviral drugs combined into a single pill taken once a day can enable a person living with HIV to achieve a nearly normal lifespan. HIV-negative populations at risk for HIV can reduce the risk of acquiring HIV by 99% by taking a single pill daily as pre-exposure prophylaxis, or PreP. Emergency post-exposure prophylaxis, or PEP, also can prevent HIV from becoming established in the body if begun within three days of exposure and taken for an additional 28 days. 

The passage of the Affordable Care Act’s (ACA) in 2010 was another major milestone in improving access to care and, ultimately, health outcomes, for people with HIV in the United States. The ACA’s prohibition against denying or canceling coverage based on pre-existing conditions had a significant impact on individuals living with HIV. Prior to the ACA, many people living with HIV or other chronic health conditions experienced obstacles in getting health coverage, were dropped from coverage, or avoided seeking coverage for fear of being denied. Additionally, the ACA requires most group health plans to cover certain recommended preventive services, including HIV testing, without additional cost-sharing, such as copays or deductibles. Since one in eight people living with HIV in the U.S. are unaware of their infection, improving access to HIV testing has helped more Americans learn their status so they can be connected to appropriate care and treatment.

Despite the past 30 years of milestones in treatment, healthcare, and prevention of HIV-related illnesses, there is still no cure for AIDS at this time. However, the remarkable progress that has been made in the past three decades leads one to believe that the goal of discovering a cure may soon be a reality.  

The More You Know, the More You Save: How Transparency in Health Care Can Help Empower Patients and Plans

On December 5, 2019

By: Kevin Brady, Esq.

On November 15, 2019, the Department of Health and Human Services, along with the Department of the Treasury, and the Department of Labor, issued proposed rules related to "Transparency in Coverage." These proposed rules come fresh off the heels of the executive order issued by President Trump in June of this year calling for increased transparency in the cost of health care, and the cost of coverage.

As made clear by the title of the proposed rules, the goal of the executive order, and the resulting proposed rules, is to make the cost of health care transparent for patients. Generally speaking, the proposed rules will require group health plans to make certain disclosures to plan members about the possible cost-sharing liability for the member, accumulated amounts (amounts paid by the member toward deductibles and out of pocket max), negotiated rates (payments by the plan to in-network providers for certain services) among other required disclosures.

The proposed rules impose disclosure requirements on group health plans and hopefully, these disclosures will help to avail the potential costs of coverage to its plan members. In practice, these required disclosures should empower self-funded group health plans. Self-funded plans are organized to pay for the health care expenses of their employees; they’re not organized to profit off of the employee premiums and therefore should benefit from increased transparency when it comes to pricing. While the long-term impact of the proposed rules cannot yet be determined, it is possible that network discounts may become more meaningful and group health plans may have more flexibility in terms of steering their plan members to more cost-effective providers. Regardless of the direct impact on group health plans, plan members will be empowered as a result of the rules.

Transparency in health care pricing is long overdue. Imagine going to a new restaurant and ordering an apple pie (an apple pie a day keeps the doctor away… do I have that right?), you don’t see the price on the menu but hey, how expensive can it be right? So you get the pie, you eat the whole thing and the next thing you know, the bill comes. You’re shocked to see that its $100.00. Would you have ordered the pie if you knew the cost? Or would you have gone to the diner across the street that sells an apple pie – that may taste even better - for a fraction of the cost? Without transparency in health care pricing, patients incur claims (eat pies) without regard to the overall (billed charges) or individual (cost of the service after cost-sharing) costs of that service. This is untenable.

In almost every other area of our lives as consumers, we are provided with the cost of a product or service before we purchase or use it; we then have the ability to utilize widely available, and easily accessible, data (thanks google) to compare those prices with other potential vendors or business and eventually ensure that the cost is reasonable, and in-line with our expectations before we make the purchase. This same access to information should be available to consumers of healthcare as well.

It is our hope that the proposed rules for transparency will not only avail the cost of health care to patients, but that a shift in the mindset of those patients to be more responsible consumers will result as well. This shift should not only benefit the patients themselves, but ultimately should help to curb the costs for their health plans as well.  Eventually, as the cost of health care becomes more widely available (and just as importantly, digestible) for patients, the days of uninformed and frankly uninterested plan participants may be coming to an end. A great example of the power of information, and specifically, looking at health care through the lens of a consumer can be found right here at Phia.

Here, plan participants are encouraged to be informed consumers when it comes to health care. Transparency (between the Plan and its members) about the costs of coverage, and how active participation by members will ultimately benefit each covered individual, has helped the Phia Group avoid some of the major financial setbacks that commonly befall group health plans who do not otherwise encourage informed decision-making when it comes to health care.

Year after year, our personal costs (premiums and cost-sharing) remain incredibly low, while our benefit offerings continue to improve. This would not be possible if we (the members) did not approach health care as consumers. By encouraging participants to be informed- when it comes to the treatment options, proactive- when considering providers and their associated costs, diligent- when reviewing personal medical bills for errors and erroneous charges, and engaged- when it comes to our overall health, Phia has been able to effectively contain health care costs despite the lack of total transparency.

While the long-term impact of the proposed rules is yet to be seen, any change to the current system that increases transparency and encourages individuals to be responsible consumers of health care should help curb the rising costs in our health care system and the way in which we all participate in it.

New Transparency Rules Released, But Will They Last?

On December 2, 2019

By: Brady Bizarro, Esq.

On Friday, November 15th, the Trump administration released two long-expected rules: one final rule on hospital price transparency and one proposed rule on “transparency in coverage.” The final rule on hospital pricing is set to go into effect on January 1, 2021. The proposed rule is currently in the notice and comment period in which the Centers for Medicare and Medicaid Services (“CMS”) is accepting comments from interested parties. Both rules are meant to deliver on a promise made by the administration; that consumers would receive “A+ healthcare transparency.” For a variety of reasons, however, the long-term fate of these rules is in question.

Currently, hospitals must post their “list prices” online, but those prices do not represent what consumers are likely to pay for services. The administration wants to force hospitals to publish negotiated rates; meaning, the rates that payers actually pay providers for services. It had hoped to implement its hospital pricing rule sooner, but hospitals and provider organizations insisted that they would need more time to prepare to implement the rule. The rule requires hospitals to publish their standard charges online in a machine-readable format. Specifically, hospitals must come up with at least 300 “shoppable” services, and they must disclose the rates they negotiate with payers. This last point is the source of much controversy and of a legal battle. Hospitals claims that forcing them to publish their secretive negotiated rates will increase prices and that the federal government has no authority to compel them to make this disclosure.

Under the “transparency in coverage” proposed rule, all health plans (including employer-sponsored plans) would be required to disclose price and cost-sharing information to plan participants ahead of time. CMS will require that most insurers, including self-funded employers, provide instant, online access to plan participants detailing their estimated out-of-pocket costs. In other words, insurers would have to provide an explanation of benefits (“EOB”) upfront. According  to CMS, this will incentivize patients to shop around for the best deal before they receive treatment for non-emergency medical services. Currently, the government is soliciting ideas about how to best deliver this information to consumers (i.e. through an app) and how to include quality metrics in the data.

The inevitable legal challenges to the final rule on hospital price transparency could sink the administration’s reform efforts. Recall that back in July, a federal judge blocked the Trump administration from requiring pharmaceutical companies to disclose drug prices in television ads. The legal arguments in that case are applicable here. Big Pharma successfully argued that the administration lacked the regulatory power to compel these companies to disclose prices and that the rule violated the companies’ First Amendment rights to free speech. Hospital systems are gearing up for a fight involving these same arguments. Armed with a federal court decision on a similar rule, the prospect of victory for the administration is relatively bleak. If this rule is blocked, it will further signal the need for congressional action in reigning in healthcare costs.

Empowering Plans: P72 – The Young & The Restless

On November 21, 2019

Adam Russo and Brady Bizarro sit down with Craig Clemente, Chief Operations Officer at Specialty Care Management and outgoing Chairman of the SIIA Future Leaders Committee, to discuss the future of the committee and the many ways they intend on engaging the younger generation. Make sure you tune in to find out what SIIA has in store for 2020 and beyond.

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

Warren and Buttigieg Cross Swords Over Health Care

On November 15, 2019

By: Nick Bonds, Esq.

The Democratic candidate known for her multitude of plans and granular policy detail, has officially unveiled her Medicare for All plan. After a series of sharp jabs on the last Democratic debate stage from several of Senator Warren’s peers (from Mayor Buttigieg in particular), the Senator’s campaign was quick to announce that their plan was in the works.

To be fair, Senator Warren had been somewhat cagey in her responses. When asked point blank during the debates whether her plan would raise taxes on the middle class, she remained adamant that her plan would ultimately rein in costs – an echo of Senator Sanders’ defense of his own Medicare for All plan. On stage, Senator Warren made the promise, “I will not sign a bill into law that does not lower costs for middle-class families.” Now that Senator Warren has released some details, we can see that through some careful if optimistic finagling, the Warren Plan does indeed appear to deliver on that promise, while simultaneously distinguishing itself from Sanders’ plan.

Senator Warren’s plan is inarguably expensive, costing more than $30 trillion over a decade, with roughly two-thirds of that composed of new government spending. Her plan aims to cover this cost with a combination of employer contributions, taxes on large corporations and financial firms, closing tax loopholes (that old chestnut), and wealth taxes on individuals earning more than $50 million per year.

Mayor Buttigieg’s “Medicare-For-All-Who-Want-It” plan takes a different approach. While the Warren attempt to control health care spending focuses primarily on paying less money to providers, the Buttigieg plan takes aim at the other side of the equation: lowering medical prices. Mayor Buttigieg’s plan would implement market-based price caps for out of network providers. The purported cost of this plan does look more appealing: $1.5 trillion over 10 years, largely funded through rolling back the corporate taxes slashed by the Tax Cuts and Jobs Act of 2017.

The Warren campaign is built on its calls for sweeping systemic change, and the Warren Medicare for All plan reflects that aspirational ethos. While the Warren Plan may be difficult to pay for, it stands as a comprehensive overhaul of the American health care system. The Buttigieg campaign takes a less daring approach, and essentially props up the system as it stands now. Senator Warren’s riposte to the Mayor’s attacks starkly underlined her view that his proposal fails to go far enough, calling the Buttigieg plan “Medicare for All who can afford it."                                                                                    

Universal coverage is a noble goal, but ultimately the voters will decide whose path they think will lead us there. With both these candidates back on stage for the next round of Democratic debates, expect the duel over the future of our health care system to remain front and center.