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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.


SUPPORT for Patients and Communities Act

By: Krista Maschinot, Esq.

It is no secret that this country has an opioid epidemic that has a rising death toll and price tag attached to it. According to the Center for Disease Control, there were approximately 63,632 deaths resulting from drug overdoses in 2016 with 40% of those deaths involving prescription opioids.1  A study conducted by Altarum, a health care research non-profit, found that the opioid epidemic, for years 2001-2017, cost this country $1 trillion.2  The total cost includes not just lost tax revenue and spending on health care, but also of lost wages, lost productivity, and social service costs.3

President Trump, earlier this week, signed into law H.R. 6, the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (the SUPPORT for Patients and Communities Act), legislation that the president states will put an “extremely big dent in this terrible, terrible problem.”  This bi-partisan legislation passed the Senate by a vote of 98-1 and the House by a vote of 396-14.  The hope is that this legislation will reduce the estimated 1,000 people treated in emergency rooms each day for opioid misuse and reduce the number of overdose deaths each year.   Highlights include:

  • Prohibiting the termination of Medicaid eligibility of juvenile inmates;
  • Requiring the establishment of drug management programs for at-risk Medicaid beneficiaries;
  • Requiring Medicaid to monitor concurrent prescribing of opioids and antipsychotic drugs for children along with having safety edits in place for opioid refills;
  • Requiring an opioid-use disorder screening for new Medicare enrollees;
  • Requiring controlled substances covered under Medicare to be transmitted through electronic prescription programs;
  • Requiring Medicare to cover certified opioid-treatment programs;
  • Incentivizing the use of post-surgical injections instead of opioids through increases to reimbursements at Ambulatory Service Centers.

A summary of the SUPPORT for Patients and Communities Act can be found at https://www.congress.gov/bill/115th-congress/house-bill/6.

Critics of the legislation claim it does go far enough to help the rising problem as it does not provide enough funding for addiction treatment.  

Have you considered ways in which your health plan can help combat this problem?  Perhaps by offering non-drug treatments for pain such as acupuncture, physical therapy, yoga therapy, or psychological interventions?   Reach out to our consulting team at pgcreferral@phiagroup.com for assistance. 

1https://www.cdc.gov/drugoverdose/data/statedeaths.html

2https://altarum.org/news/economic-toll-opioid-crisis-us-exceeded-1-trillion-2001

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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.

 


CMS Requires Hospitals to Post Standard Charges Online

By: Patrick Ouellette, Esq.

Price transparency has never really been synonymous with health care. In fact, Kelly Dempsey wrote just more than a year ago about how a lack of clear and timely information on hospital billing practices continues to contribute to skyrocketing care costs, and the industry is currently no closer to a resolution. The Centers for Medicare & Medicaid Services (CMS) recently announced that it is attempting to address the issue by revising the pricing disclosure rules currently in place to ensure data is accessible to patients in a consumable format.

CMS responded to cross-industry stakeholders’ calls for greater price transparency by requiring that hospitals post their standard charges in a readable format online. This is not a complete revelation in the sense that hospitals have been required by law to establish and make public a list of their standard charges and individuals had the option to formally request their data in order to gain access. However, effective January 1, 2019, CMS updated its guidelines to specifically require hospitals to make public a list of their standard charges via the Internet in a machine-readable format, and to update this information at least annually, or more often as appropriate.

CMS issued the mandate through its Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) Final Rule:

While CMS previously required hospitals to make publicly available a list of their standard charges or their policies for allowing the public to view this list upon request, CMS has updated its guidelines to specifically require hospitals to post this information on the Internet in a machine-readable format. The agency is considering future actions based on the public feedback it received on ways hospitals can display price information that would be most useful to stakeholders and how to create patient-friendly interfaces that allow consumers to more easily access relevant healthcare data and compare providers.

It remains to be seen (1) how much pushback there will be from providers; and (2) whether having the information provided will be complete enough to ensure better care decisions on the part of individuals. Moreover, this new rule does not change the fact that hospitals may still bill patients based on their respective internal chargemaster rates. However, this news still represents a positive step forward toward transparent pricing, and thus greater competition, in health care.


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.


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.


A Backdoor Employer Mandate? Massachusetts Targets Employers to Shore Up the State’s Medicaid Program

By: Brady Bizarro, Esq.

To say that Massachusetts is a pioneer in healthcare reform is an understatement. Ever since the Commonwealth enacted a healthcare reform law that aimed to provide health insurance to all of its residents over a decade ago, policymakers planned to use elements of that law to build the foundation for national healthcare reform. One of those elements was an employer mandate, called the Fair Share Contribution, which required certain employers in the Commonwealth to provide group health benefits or face a $295 per employee fee.

In 2014, Massachusetts lawmakers repealed the Fair Share Contribution. This was done because the Affordable Care Act’s (“ACA”) employer mandate was scheduled to take effect (after a delay). Massachusetts legislators still wanted the revenue the Fair Share Contribution generated, however, so it enacted a new law, called the Employer Medical Assistance Contribution (“EMAC”). EMAC is a tax on employers with more than five employees and it applies whether or not the employer offers health coverage to its employees. This act was meant to subsidize the Commonwealth’s Medicaid program, called MassHealth, and the state’s Children’s Health Insurance Program (“CHIP”).

Since 2011, approximately 450,000 people have lost their employer-sponsored insurance in Massachusetts. In the same time period, MassHealth enrollment increased by just over 500,000. The MassHealth program is literally drowning the state in debt, and so last year, Governor Charlie Baked signed H. 3822, which has two major components (beginning in 2018):

•    It increases the EMAC tax from a max of $51 per employee per year to $77 per employee per year; and
•    It imposes a tax penalty or EMAC Supplement on employers with more than five employees of up to $750 per employee per year for each nondisabled employee who receives health insurance coverage through MassHealth or subsidized insurance through the Massachusetts Health Connector (ConnectorCare).

Since the calculation is based on wages and not hours worked, an employer is subject to the penalty for each employee on MassHealth (excluding the premium assistance program) or receiving subsidized care through ConnectorCare regardless of full-time or part-time status. If the employee is enrolled in MassHealth due to a disability, they are not counted.

This legislation should be concerning for Massachusetts employers for a few reasons. First, if an employee chooses to voluntarily forgo an offer of coverage and instead applies and qualifies for MassHealth (excluding the premium assistance program) or subsidized ConnectorCare, the employer is penalized irrespective of the quality or affordability of the coverage that is offered. There is no exemption similar to that provided under the ACA employer mandate under which an applicable large employer (“ALE”) can escape tax exposure by offering coverage that is affordable and provides minimum value. But note that where an employer offers coverage that is both affordable and provides minimum value (as most do per ACA requirements), that employee would not be eligible for subsidized ConnectorCare coverage. Therefore, the EMAC Supplement really only applies to EEs who qualify for and enroll in MassHealth. Second, since employers are advised against asking an employee whether or not they are on Medicaid, the employer will not know its liability until the state’s Department of Unemployment Assistance sends them a letter informing them of their tax liability.

As states across the country feel the pinch of reduced federal funding, they may once again look to Massachusetts as a model to control costs to their Medicaid programs. In this case, however, employers will be squarely in the crosshairs.



Behind Closed Doors
By: Brady C. Bizarro, Esq.

Anyone paying attention to national politics in the past six months knows that Washington has a problem with leaks; leaks from the White House, leaks from the intelligence community, and unsurprisingly, leaks from Capitol Hill. While many of these leaks come from “anonymous” sources and some are later debunked, they can be extremely damaging to both administration officials and lawmakers. Leaks, however, are not typically an issue in the legislative process. This is because, although legislation is not usually made public until it reaches a congressional committee, Congress routinely holds public hearings, meetings, and roundtable discussions after introducing legislation that could have a significant impact on domestic policy. This time around, however, Republican leaders have chosen to write their health care bill behind closed doors, and that decision should worry employers, insurers, and providers alike.

Back in March, the Washington Post reported that the House bill to repeal and replace Obamacare was being kept secret in an undisclosed room in the U.S. Capitol. This led Republican Senator Rand Paul (R-Ky) on a rather public quest to find the bill and to demand that his House colleagues show him the secret draft. Eventually, a draft leaked to the press, causing Republicans significant grief and making the task of passing the legislation that much more difficult. The Senate has also chosen secrecy, opting not to hold any public meetings on their version of a repeal and replace bill. The strategy seems to be to wait until the Senate has enough votes to pass the bill before unveiling it. Unsurprisingly, an outline of that bill emerged last week and is now causing Senate Majority Leader Mitch McConnell (R-Ky) many headaches.

According to the leaked outline, the Senate bill requires insurance companies to offer coverage to people with preexisting conditions and, unlike the House bill, it prohibits them from charging sick people higher premiums. The outline still permits states to seek waivers that would permit insurers to decide not to cover essential health benefits. This effectively means that insurers can reinstate lifetime and annual limits on coverage since the ban on limits applies only to essential health benefits. Finally, the outline reveals that heavy cuts to Medicaid are still planned, but are pushed out a few more years. In short, these changes represent a compromise between hardline conservatives who want a full repeal of Obamacare and moderate Republicans who are concerned about the impact on low-income Americans and those with pre-existing conditions.

Since we do not know for sure what the final bill will look like, it is futile to try to assess its impact on the health care industry as a whole and on the self-insurance industry in particular. Still, one conclusion we can draw is that the legislative strategy at play is creating substantial uncertainty for our industry. When the Affordable Care Act was being passed, Democrats held public hearings involving industry experts, advocacy groups, and other key stakeholders. While the bill was far from perfect, at least interest groups got the chance to give their input and to discuss their concerns in an open forum. By writing their health care reform bill behind closed doors, Republicans are making themselves susceptible to leaks and to charges that they shut key stakeholders out of the process. It remains to be seen if this strategy is more or less likely to produce a bill that works for the health insurance industry and the American people.

I Fought The Law and…Unpredictable Results Ensued
By: Jon Jablon, Esq.

Are you a landlord? If so, you might know that the law is not on your side. Or, are you a criminal? The law isn’t on your side either, but that one might be more obvious. Last question: are you a benefit plan with members being balance-billed?

There are certain legal protections that our country’s various legislative and regulatory bodies have put in place, such Section 501(r) of the Internal Revenue Code, so-called “surprise billing” legislation, and others – but in general, the majority of medical providers are not subject to legal restrictions in terms of whether they can balance-bill patients. In other words, in most circumstances, a medical provider is permitted to balance-bill a patient for the full balance on a non-contracted claim.

There are many health plans, TPAs, and brokers who want nothing more than to show a facility who's boss and refuse to pay another cent. Are there tactics and arguments that can be used to combat balance-billing? Of course there are! But, if a medical provider calls the plan’s bluff and continues to balance-bill, there is the real threat of collections and potentially a lawsuit, which many of us have witnessed first-hand, and it can be a nightmare for the patient.

For health plans that want to stand strong and not negotiate, litigation is an option! Litigation instituted by the health plan or the patient, that is. Even just the threat of litigation can have great effects on balance-billing support; many facilities, when faced with allegations of egregious billing and evidence that their charges are dozens of times Medicare rates, will close out accounts, or look to sign a direct contract for open and future claims.

Look out, though – because if a medical provider says “let’s dance” in response to a threat of litigation, the plan sponsor or patient will need to either back down or follow through. If the latter, it’s truly unpredictable how the court might react. On the one hand, non-contracted claims must, like all other non-contracted transactions in any other market, be billed at some measure of the fair market value. On the other hand, the patient generally signs the provider’s standard assignment of benefits form that says, in small print, “if your insurance doesn’t pay this whole bill, you agree to pay the rest.” In that case, can the claim truly be called non-contracted, after the patient has agreed (read: contracted) to pay the balance?

There are certain factors that work in the plan’s and patient’s favor, but there are perhaps just as many factors that work against them in a given case. It’s a tough call; whether or not to litigate should depend on many factors, including claim size, balance size, and the bill as a percentage of Medicare. For a $3,000 claim billed at 180% of Medicare, I’d recommend against litigation – but for a $150,000 claim billed at 1,300% of Medicare, it might be worth rolling the dice…


House G.O.P. Leaders Outline Plan to Replace Obama Health Care Act
By ROBERT PEAR and THOMAS KAPLAN

WASHINGTON — House Republican leaders on Thursday presented their rank-and-file members with the outlines of their plan to replace the Affordable Care Act, leaning heavily on tax credits to finance individual insurance purchases and sharply reducing federal payments to the 31 states that have expanded Medicaid eligibility.

Read more…