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The New Medicare and Medicaid Bills

By: Erin Hussey, Esq.

There has been a lot of talk lately about the progressive push for Medicare-for-All. For instance, Rep. Pramila Jayapal (D-Wash.) is seeking to introduce an updated bill called the Medicare for All Act of 2019. If passed, this bill would transform the U.S. health care system as it would essentially create a “single-payer” system run by the government. Medicare-for-All has also created a lot of uncertainty. For example, Medicare does not cover certain long-term care and does not include coverage for hearing, dental, vision or foot care, but supposedly the bill proposes to add some of these benefits.

Given the uncertainty of how a Medicare-for-All model would work in the U.S., there could be more support for a bill that was introduced on February 13th, called the Medicare at 50 Act. Sen. Debbie Stabenow (D-MI) and Rep. Brian Higgins (D-N.Y.) introduced this bill which details a Medicare buy-in option for Americans ages 50 to 64, who have not reached the Medicare eligible age of 65. This would allow individuals in that age range to buy Medicare plans instead of purchasing on the Obamacare marketplaces if they do not have coverage through their employer, or as an alternative option if they do have coverage through their employer. Stabenow believes this will allow for lower premiums than what is offered on the individual market and the bill would allow those who qualify for the marketplace subsidies to utilize those funds to buy into Medicare. She also believes the bill would get bipartisan support and that it’s something that could work right now, whereas Medicare-for-all is a more drastic undertaking for the U.S.

To add another layer to the above, Sen. Brian Schatz (D-Hawaii) and Rep. Ben Ray Luján (D-N.M.) re-introduced a bill on February 14th called the State Public Opinion Act. This bill would allow those who are not already eligible for Medicaid to buy into a state Medicaid plan regardless of their income.

We will be watching to see how these bills play out and to see how much support they receive from both sides of the aisle.

 


Stop-Loss: The Forgotten Player in the Reference Based Pricing Game

By: Jon Jablon, Esq.

Plan sponsors of self-funded health plans have a lot to think about. From deciding which services to cover to making tough claims determinations, there are lots of moving parts to consider and be mindful of. Plans that utilize reference-based pricing are in the same boat, of course, except they have added even more moving parts to their benefits programs.

As many plans that use reference-based pricing are aware, some claims need to be settled with providers to eradicate balance-billing. A claim initially paid at 150% of Medicare may need to be ultimately paid at 200%, for instance, pursuant to a signed negotiation between the health plan and the medical provider. Fast-forward two months later, to when the plan receives notice from its stop-loss carrier that the carrier is only considering 150% of Medicare to be payable on the claim, and the extra 50% of Medicare (which can be a significant amount!) is excluded.

When the plan asks why it isn’t receiving its full reimbursement, the carrier quotes its stop-loss policy and the plan document. The former provides that the carrier will only reimburse what is considered Usual and Customary – and the latter provides that Usual and Customary is defined as 150% of Medicare, by the Plan Document’s own wording. The carrier’s liability, therefore, is limited to 150% of Medicare. The plan’s has chosen to pay more than that. Even though it’s for a very good cause, the stop-loss insurer may deny that excess payment amount. In this example, there is a “gap” between the plan document and stop-loss policy such that the plan has paid a higher rate than what the carrier is obligated to pay.

For this reason, it is so incredibly important for plans that are using reference-based pricing to talk to their stop-loss carriers. Some carriers will say “we don’t care – your SPD says 150%, so we’ll reimburse 150%,” but other carriers will say “we understand that reference-based pricing saves us money, and we understand that it’s not always as simple as paying 150% and walking away – so we’ll work with you in terms of reimbursement.” Other carriers still will agree to place a cap on reimbursements higher than what’s written in the Plan Document; in other words, if the plan provides that it’ll pay 150% of Medicare, the carrier may agree to reimburse settlements up to 200% of Medicare, if applicable and if necessary.

There are lots of options for how a stop-loss carrier might react to reference-based pricing, and the only way to find out is to have a conversation. If you don’t ask, you’ll never know (until it’s too late, that is).

Moral of the story? If you’re going to adopt reference-based pricing – whether full network replacement, carve-outs, out-of-network only, or any other type – put stop-loss high up on the laundry list of considerations.


REMINDER: Medicare Part D Creditable Coverage Notices Due to Certain Employees by October 14th

By: Philip Qualo, J.D.


The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires group health plan sponsors and employers that provide prescription drug coverage to disclose to employees and dependents eligible for Medicare Part D whether the plan's coverage is creditable or non-creditable. Prescription drug coverage is creditable when it is at least actuarially equivalent to Medicare's standard Part D coverage and non-creditable when it does not provide, on average, as much coverage as Medicare's standard Part D plan. The Centers for Medicare & Medicaid Services (CMS) has provided a Creditable Coverage Simplified Determination method that plan sponsors can use to determine if a plan provides creditable coverage.


The notice requirement applies to all employers and health plans who offer prescription drug coverage, regardless of size, whether insured or self-funded, Affordable Care Act (ACA) grandfathered status or whether the plan pays primary or secondary to Medicare. Accordingly, the notice obligation is not limited to retirees but also Medicare-eligible active employees, COBRA participants and their respective dependents.


Notices of creditable or non-creditable coverage must be provided before the Medicare Part D annual enrollment period, which commences on October 15. Disclosure of whether prescription drug coverage is creditable or not allows individuals to make informed decisions about whether to remain in their current prescription drug plan or enroll in Medicare Part D plan during the enrollment period. The required notices may be provided in annual enrollment materials, separate mailings or electronically. Whether plan sponsors use the CMS model notices or other notices that meet prescribed standards, they must provide the required disclosures no later than Oct. 14, 2018. Individuals who do not enroll in Medicare Part D during their initial enrollment period and subsequently go at least 63 consecutive days without creditable coverage will generally pay higher premiums if they enroll in a Medicare drug plan at a later date.


It is important to note that Medicare-eligible individuals must be given notices of creditable or non-creditable prescription drug coverage at other times throughout the year as well. The notice must be provided: (1) before the effective date of coverage for any Medicare-eligible individual who joins an employer plan (2) whenever prescription drug coverage ends or creditable coverage status changes and (3) upon the individual’s request.


In addition to the to the notice distribution requirement, plan sponsors that provide prescription drug coverage to Medicare-eligible individuals must also disclose their Part D creditable or non-creditable prescription drug coverage status directly to CMS annually, no later than 60 days after the beginning of each plan year.

 


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.


Negotiated Rates Are King

By: Jon Jablon, Esq.

There are hundreds of novel ideas that have permeated the self-funded space over the last couple of decades, many of which have the potential to be very beneficial to self-funded plans. I mention that they have the potential to be beneficial not because it’s lawyerspeak (well, not just because of that), but because I mean exactly that: some programs could be beneficial, but are implemented in such a way that renders them either ineffective, noncompliant, or something in-between.

A perfect example, and one we face nearly every day, is the phenomenon of claim repricing – whether based on Medicare rates, “traditional” U&C, the “black box” approach (the “black box” is where claims are put into one side of the box, and then magically come out the other side with a new price attached), or anything else.

Check out the title of this post. If a rate has been negotiated and the payer has agreed to pay a certain amount, then that is a contract, and has to be adhered to! If a plan is subject to a network agreement but decides to reprice claims at a lower amount than the network rate, the plan can always – always – expect pushback. This is a phenomenon that is certainly not exclusive to this industry; imagine writing a letter to Bank of America, saying “I know I agreed to pay $2,500 per month for my mortgage, but I talked to Quicken and they told me that’s too much – so I’ll give you $1,100 a month instead.” Let me know how that turns out…

But seriously: when we suggest language for health plans to use to contain costs, the second sentence of our suggested definition – second only to a simple sentence that introduces the definition – notes that “The Maximum Allowable Charge will be a negotiated rate, if one exists….” That is designed to account for the fact that many claims (most, in fact) are subject to some sort of contract. Whether a network agreement, or a single-case agreement, or “letter of agreement,” or any other contract under any other name, a given negotiated rate must be paid, or the payor will subject itself to losing the discount, or the very real possibility of a lawsuit.

“But doesn’t the Plan Document control all other documents?” Tricky question. Does it trump the network contract? No. But does it trump all other obligations of the Plan? Yes. That’s why not having accurate plan language can be trouble. Take, for example, the alarmingly common scenario in which the plan owes a PPO rate, but the Plan Document provides that the Plan will pay 150% of Medicare for all claims. The Plan Administrator (the party responsible for compliance with the Plan Document) is required by law to follow the terms of the Plan Document, and pay all claims at 150% of Medicare – but the Plan Sponsor (the party to the network contract) is required by contract to pay the network rate. Since only one amount can be paid, the Plan Sponsor and Plan Administrator (often the same entity!) need to figure out which document will be followed, and which will be ignored.

I won’t bore you with the details of the implications of each choice, suffice it to say that it’s always a good idea to make sure the Plan Document says what the Plan will actually do. If your documents don’t line up, you’ll have all sorts of problems. If the Plan follows the network contract and doesn’t pay claims at the 150% of Medicare stated within the Plan Document, then the Plan Document shouldn’t say that! That is a compliance issue as well as a stop-loss issue.

If you want to be bored with the details of what might happen if a health plan violates its PPO contract or violates its Plan Document, feel free to contact PGCReferral@phiagroup.com. For now, though, I’ll leave you with a quote from Mark Twain: “Better a broken promise than none at all.” (That’s actually really terrible advice. Do not apply that quote in this scenario.)


Freedom Blue II: The ACA’s Unlikely Ally

By: Brady Bizarro, Esq.

A few months ago, if I had told you that a republican governor of a deeply conservative state was ignoring Obamacare and was shut down by the Trump Administration, you may have called me crazy. Yet, that is exactly what the Trump Administration did to the state of Idaho on March 8, 2018. To understand why, we need to understand the bigger picture and what was really at stake in this fight.

Recall that Idaho, like many states, is facing a crisis in its state exchanges. The combined effect of the individual mandate’s elimination and rising costs for residents who earn too much money to qualify for Affordable Care Act (“ACA”) subsidies has led many healthy people to drop out of the market, leaving the state exchanges in a crisis. In response, Governor Butch Otter issued an executive order back in January that permitted health insurers in his state to sell health plans on the individual exchange that did not comply with Affordable Care Act (“ACA”) rules. Essentially, the state’s Department of Insurance (“DOI”) would have permitted plans to charge individuals more based on a pre-existing medical condition (or to deny coverage in some cases) and to impose annual and lifetime limits on claims, among other things. Blue Cross of Idaho, the state’s largest insurer, announced that it planned to sell “Freedom Blue” plans based on the new state guidance at as much as fifty percent less than typical ACA plans.

On March 8th, the Centers for Medicare and Medicaid Services (“CMS”) warned Idaho that if it did not enforce Obamacare, the federal government would be forced to step in to do so. This reaction surprised more political experts than it did legal experts. After all, why would the Trump Administration come to the defense of Obamacare; a law which the president and his party have long decried? The answer is because much more was at stake than Obamacare; the rule of law itself was at stake.

A fundamental legal principle is that federal laws are the supreme law of the land. This is known as the Supremacy Clause of the U.S. Constitution. Another well-established legal principle is that the federal government cannot commandeer the states to force regulators to enforce federal law. Essentially, states have no obligation to enforce federal law; but if they fail to do so, the federal government must step in. That is, unless the federal government decides not to intervene. Think of the example of marijuana legalization under the Obama administration. In that case, the federal government decided that it was not worth spending millions of dollars to enforce certain federal drug laws (and it largely still maintains that position under the current administration). By contrast, in the case of “sanctuary cities,” the federal government has decided to step in and enforce immigration laws that some states and municipalities are not enforcing.

Despite the different approaches outlined above, many legal experts will tell you that it is dangerous to permit the executive branch to selectively enforce the law when it wants to. That may be why the Trump administration stepped in to block Idaho’s actions. It likely decided that it was not worth setting a precedent in this case, especially because there are still other alternatives that Idaho can pursue to alleviate the issues it is having with rising premiums. We will be following this situation to see how the state responds to this latest setback.


House Bill Assumes Air Ambulance Providers are Underpaid

By: Jon Jablon, Esq.

When working with air ambulance providers to discuss appropriate pricing, it is common for providers to suggest that Medicare rates are inappropriate due to Medicare’s habitual underpayment air ambulance providers. In this manner, when a payor suggests payment at a percentage of Medicare, many providers demand more, suggesting that the Medicare-based payment is unreasonably low, and therefore payment derived from that is low as well.

In apparent agreement with that thought, The 115th Congress has introduced HR3378. Short-titled the “Ensuring Access to Air Ambulance Services Act of 2017,” this bill is designed primarily to alter the Medicare reimbursement to air ambulance providers. The bill apparently contemplates that air ambulance providers are being underpaid by Medicare, because starting in 2018 the Medicare base rate will increase by 12%, prior to any cost data being reported by those providers. For 2019 and 2020, that increase will jump to 20%.  Beginning in 2019, air ambulance providers are required to report a comprehensive set of cost data elements, and beginning in 2020, that reporting includes quality data as well. As of 2024, the bill also creates a “value-based purchasing program,” which entails giving each air ambulance provider a performance score and increasing or decreasing payments based on that. Reported cost data will eventually (2021) be used to recalculate the base rate of air ambulance services.

The bill in its current form specifies that the data disclosures will eventually be made public, which can be useful for self-funded plans to be able to benchmark claims. Often health plans have only the provider’s billed charge and a Medicare rate to work with when determining payment, but if cost data is publicized, that creates new benchmarking possibilities.

So, if this bill passes, what will it mean for you? If Medicare rates are irrelevant to you or your health plans, then this likely means very little for you – but if you or a client are one of the thousands of health plans that consider Medicare rates when determining payment for air ambulance services, then it means your Medicare calculations (and therefore payments to air ambulance providers) will increase a bit for 2018, and a bit more for 2019 and 2020. Come 2021, they may increase or decrease again based on cost data, and come 2024, they may increase or decrease yet again based on performance indicators. In other words: expect higher payments in 2018, another increase for the following two years, and then unpredictable increases or decreases from there.

Although it may seem intuitive to assume that the government’s admission that these providers are underpaid by Medicare will lead to an increase in charges across the board, my assumption is that charges billed to self-funded payors will not increase as a result of this bill, even if it becomes law. Many air ambulance providers already justify their billing by citing operating costs, and this new bill does nothing to change those costs. An air ambulance provider would be hard-pressed to use either the assumptions or effects of this bill to justify increasing charges across the board.

The bill is still in its infancy, so it is likely that if it ultimately becomes law, it will have been changed quite a bit in the process; we’ll just have to wait and see what happens with this one.