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RBP: Why Litigate?

By: Jon Jablon, Esq.

For those of you who have a player in the reference-based pricing game, you know that circumstances can arise when things don't go as planned. There are some providers, for instance, that are so dead-set on penalizing RBP plans and their members that they will accept nothing short of the full billed charge. As we all know, though, nobody gets paid full billed charges, and it's wildly unreasonable for anyone to expect that. But what is the end game, then, when a provider makes unreasonable demands and refuses to settle?

One option that's becoming increasingly popular is litigation – in other words, proactively suing a hospital, to help protect the patient. The suit needs to be filed by the patient, since the patient is the one to whom the balance “belongs” and therefore only the patient has standing to sue, but health plans and TPAs often provide assistance to patients with this endeavor, for obvious reasons.

Proactive litigation, or even just the threat, can serve a couple of important functions: it can compel a settlement when none was previously available; it can force the provider to publicize (and try to justify) its charge data; it can incentivize the provider to accept the Plan's payment or settle at a reasonable rate; or it can even lead to the formation of a direct contract that's acceptable to the Plan.

Now, please don't leave this blog post thinking that every claim should be proactively litigated. Litigating a small claim can actually lead to spending more on attorney's fees and costs than the full balance amount. We at The Phia Group have taken drastic steps to help with this dilemma, though; our patient Defender service is intended to give TPAs, employers, and plan members a sense of security with respect to their RBP plans, with the knowledge that the member has an attorney ready and waiting to go to bat when they need it. Most importantly, this attorney is pre-paid at no cost to the member, for a small, budgetable PEPM fee paid by plans or their TPAs.

Reference-based pricing is a tricky business, but there are programs that are designed to make it more manageable. Patient Defender is one of them. Have you found others? Tell us about them! We want to hear your stories.


Lots of Moving Parts

 

By: Jon Jablon, Esq.

As those of us involved in self-funding know, there are multiple considerations involved in most decisions. Even something as simple as negotiating a pre-payment bill can involve questions such as: (1) Will the stop-loss carrier reimburse the negotiation fees? (2) Will the agreement hold up if the provider or plan changes its mind? (3) Does the TPA incur liability if it enters into the agreement on behalf of the health plan? (4) How should the TPA treat patient responsibility pursuant to the agreement? ...etc.

And that's just pre-payment negotiations, which are generally considered to be very straightforward!

Reference-based pricing is far more complicated than simple, "traditional" pre-payment claim negotiations. Post-payment negotiations of any kind add a layer of complication, but add to that the human factor (i.e. the employee!), and situations tend to be delicate and can quickly become volatile.

All that aside, however, the purpose of this blog post is actually to talk about how stop-loss treats RBP. There are certainly different ways that different carriers view RBP in general - some view it as a boon, yet others as a bane. An issue that comes up across many different carriers, however they may view RBP, is reimbursement and calculation of "Usual and Customary" in the stop-loss policy.

Many carriers define U&C in the "traditional" way, which is often calculated simply as an amount the carrier deems reasonable as the result of an audit. That can be very dangerous to a plan using a PPO, since network rates are almost universally higher than stop-loss carriers' audits of claims - but for an RBP plan, even though payments are lower, something that cannot be ignored is the potential to settle large claims after the initial payment.

If the policy will cover this type of top-up settlement payment (and that's a big "if"), you'll still need to investigate how the policy will treat the allowable amount paid. Many medical providers will not settle claims for amounts less than the amount a stop-loss carrier's conservative auditor deems payable, which can result in denied claims!

As always, the best general advice we can give is that if a health plan incurs a large non-contracted claim that is paid subject to Medicare-based pricing, it may be worth it to discuss the potential outcomes with the carrier, since balance-billing can happen, and the plan may need the carrier's cooperation down the line! Without proactive communication, though, the chance of getting the claim covered by stop-loss diminishes significantly.


A Contract By Any Other Name

By: Jon Jablon, Esq.

As you may know, the regulators have been impressively sparse in their opinions of reference-based pricing (or RBP, for short). Courts have scarcely weighed in at all, and the DOL has published a few bits of guidance, some more helpful than others, but it’s still the wild west out there in the RBP space.

One of the central themes – and in fact one of the only themes – of prior DOL guidance has been that balance-billed amounts do not count toward a patient’s out-of-pocket maximum. That’s from way back in the ACA FAQ #18, published in January 2014. Then, in April 2016, the DOL clarified a bit. Question 7 of FAQ #31 (which we have previously webinarred about, and yes, that’s a word, as of right now) indicates that the previous guidance still holds true.

Well, sort of.

Yes, amounts balance-billed by out-of-network providers are still exempt from being counted toward a patient’s cost-sharing maximum, but the wording “out-of-network providers” apparently specifically implies that there are some in-network providers, according to the DOL. Many RBP plans have no in-network providers whatsoever; the result is that balance-billed amounts are counted toward the patient’s out-of-pocket if there are no “in-network” options. What does “in-network” mean, though, in this context?

At first blush, the concept seems to create a problem for RBP, since having “in-network” providers is antithetical to RBP. In most cases, however, RBP is not administered in a vacuum; usually, RBP is administered, at least in part, by a vendor, and that vendor generally has some processes in place for avoiding member balance-billing. The plan must somehow ensure that members are not balance-billed above their out-of-pocket limits, unless they had options and consciously chose not to utilize them.

For instance, if a plan is using RBP for out-of-network claims only – that is, accessing a primary network, but paying based on a reference price for anything falling outside that network – the plan could, in theory, allow any patients to be balance-billed for any amounts, if those patients have chosen to go out-of-network. That’s because the plan has established options for the patient to avoid balance-billing – but if the patient has chosen to not utilize those options, that’s the patient’s prerogative.

The problem arises, however, in the context of a plan that uses no network and has no contracted providers; if a provider balance-bills a patient above the out-of-pocket maximum when the patient had no choice but to be balance-billed, that’s when an employer could be in a state of noncompliance.

Greatly simplified, the regulators have specified that plans using reference-based pricing must provide patients some reasonable way to avoid being balance-billed. If all providers are non-contracted and will balance-bill, the plan is not permitted to sit idly by and allow the balance-billing to occur without doing anything about it. The plan will have no choice but to settle those claims with providers on the back-end. If, however, patients have “reasonable access” (whatever that means) to providers that will not balance-bill the patient – whether through some sort of network, or direct contracts, or even case-by-case agreements – the plan will have met its regulatory obligations, and can continue to not count balance-billed amounts toward patients’ out-of-pocket maximums.

The take-away here is that if you’re doing RBP, make sure you’re doing it right! The legal framework may be the wild west, but your own individual RBP plans shouldn’t be. Contact The Phia Group’s consulting team (PGCReferral@phiagroup.com) to learn more.


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!


Unraveling FAQ Part 31
Reference-based pricing is unquestionably a hot topic in the self-funded industry today. So hot, in fact, that the federal government has taken an active interest in it for the third time now; in its latest FAQ, published just last week (FAQs about Affordable Care Act Implementation, Part 31), the regulators reiterate concerns regarding network adequacy and how it relates to - and regulates - reference-based pricing arrangements.

Thanks for joining us as The Phia Group's legal team and special guest Tim Martin of Payer Compass helped unravel the mystery of the DOL's latest FAQ - and what it means for you and your plans.

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