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Phia Group Media


The Phia Group's 1st Quarter 2019 Newsletter


Phone: 781-535-5600 | www.phiagroup.com



The Book of Russo:
From the Desk of the CEO

With 2018 in the rear view, it's important that we look back at such a historical year, while also moving forward to fine-tune our focus here at The Phia Group. In 2019, we will hone in on the highest priorities on behalf of our industry, to make certain that the momentum of innovation continues on. All of you must begin to empower your benefit plans. Healthcare has been, and continues to be the number one issue when discussing politics, law, and the economy. It is important to stay aware of change and the most cutting edge options, while also addressing each employer’s unique attributes and specific needs. We must create an understanding of what the best administrators are offering, so that we can in turn identify the best options for your benefit plan and all parties involved. Make it your resolution to understand the various types of plan components that are needed to stay competitive, while maximizing benefits and minimizing costs. I truly believe, we here at The Phia Group, have the tools to empower you to take control of your plan. Happy reading!


Service Focus of the Quarter: Independent Consultation & Evaluation (ICE)
Phia Group Case Study: Subrogation
Phia Fit to Print
From the Blogosphere
Webinars
Podcasts
The Phia Group’s 2019 Charity
The Stacks
Phia’s Speaking Events
Employee of the Quarter
Phia News

 

Service Focus of the Quarter: Independent Consultation & Evaluation (ICE)

Here at The Phia Group, we are not a TPA, but we know TPAs like the back of our hand. That is why we developed our Independent Consultation and Evaluation service, colloquially known as ICE.

We know how difficult processing claims can be, especially when those claims involve complex situations. Asking Plan Administrators for guidance to avoid potential liability is always a good idea, but is sometimes not feasible due to time constraints or simply the fact that most plan administrators are not well-versed in the art and science involved in claims processing. Your clients are school districts, or textile manufacturers, or labor unions; what can they reasonably be expected to know about the law related to when an illegal acts exclusion can be applied, and when it cannot?

Enter The Phia Group’s ICE service. We are experts in the law related to health benefit offerings, and we know plan documents like Tom Brady knows a pigskin. ICE was created to ensure that health plans and the TPAs that work with them have a resource to tap when things get hairy – and since it is billed on a predictable PEPM rate, rather than on an hourly basis, it is affordable and accessible, and there are no surprises.

Contact our Vice President of Sales & Marketing Tim Callender, to learn more. Tim can be reached at 781-535-5631 or tcallender@phiagroup.com.

 

Phia Case Study: Subrogation

A TPA client of The Phia Group had been unable to resolve a $62,000 lien with the patient’s attorney. The patient was in a motor vehicle accident, and subsequently retained an attorney to pursue the other driver for damages. The Plan Administrator attempted to place the attorney on notice of the plan’s right to reimbursement, but received no response whatsoever from the attorney, despite numerous letters and phone calls. The TPA had given up, and mentioned this failed recovery to one of The Phia Group’s attorneys in passing, who promptly volunteered that we would revive this file for them and attempt a recovery.

The Phia Group essentially started over by sending letters and calling the attorney, which again garnered no responses, as expected. The Phia Group’s legal team elected to take a different approach: after researching state law and decisions rendered by the state’s bar association, The Phia Group’s next correspondence focused on the attorney’s own ethical obligations, rather than only the patient’s reimbursement obligations.

The Phia Group not only received a prompt (and somewhat repentant) response from the attorney, but secured an agreement signed by the attorney to hold all settlement proceeds in trust and to honor the health plan’s rights in full. About two years later, the TPA recovered 90% of its lien.

 


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Fiduciary Burden of the Quarter: Whether You Are A Fiduciary!

Simply put, federal law provides that with very limited exceptions, entities acting as fiduciaries may not disclaim such a designation. The law is fairly straightforward when it provides that “…any provision in an agreement or instrument which purports to relieve a fiduciary from responsibility or liability for any responsibility, obligation, or duty under this part shall be void as against public policy.” To elaborate on that, the U.S. Supreme Court has stated that, “not only the persons named as fiduciaries by a benefit plan…but also anyone else who exercises discretionary control or authority over the plan's management, administration, or assets, is an ERISA fiduciary.”

Keep in mind, however, that the fact that an entity such as a TPA may be a fiduciary, under the reasoning spelled out above, does not necessarily mean that the TPA has breached a fiduciary duty when/if a breach occurs.

Fiduciary status is determined on a case-by-case basis; the courts have been clear that fiduciary status is triggered by the exercise of any discretionary authority over the management of a plan’s disposition of its assets. Practically speaking, the main purpose of fiduciary duties is money; the U.S. Court of Appeals for the Sixth Circuit has summed it up very well by noting that “[a]n entity such as a third-party administrator becomes an ERISA fiduciary when it exercises practical control over an ERISA plan’s money.”

If you control money, you owe fiduciary duties to the beneficiaries or potential beneficiaries of that money. So…be careful! Consult a neutral third-party expert when you face difficult claims or benefits decisions.

 

Success Story of the Quarter: Independent Consulting & Evaluation (ICE)

A third-party administrator presented The Phia Group with the facts of a situation wherein one of their incoming groups, previously serviced by another administrator, had a great deal of antiquated and weak language in its Plan Document. Erin Hussey, an attorney at The Phia Group, reviewed the Plan and noticed particular issues within its “eligibility” section.

The first issue Erin spotted was language that incentivized Medicare-eligible employees to not enroll in their group health plan, and to enroll in Medicare instead. Erin noted that this provision was in violation of the Medicare Secondary Payer Act (“MSP”), which explicitly prohibits such incentives.

Second, the Plan Document explained that retiree coverage was not offered to non-executive employees. Erin noticed that this may run afoul of §105(h) non-discrimination rules; these rules prohibit group health plans from treating highly-compensated individuals (“HCIs”) more favorably than non-HCIs. Therefore, by providing retiree coverage to only executives (who are far more likely to be HCIs), this language seemed to violate the 105(h) rules.

Erin communicated these findings to The Phia Group’s client, who was understandably concerned with the language issues. Erin explained the applicable law, the TPA’s responsibilities, and potential issues and penalties that could arise, and she provided a set of best practices for the TPA to follow in such circumstances. Based on the information Erin imparted, The Phia Group’s client was able to work with the employer group to correct the language and avoid likely MSP and 105(h) penalties in the face of a federal government that has been cracking down on violations of federal law such as these.

This is a perfect example of a way that health plans can avoid problems before they arise! The Phia Group’s ICE service helps TPAs, plans, and brokers with issues with claims, appeals, and other concrete issues – but where ICE can help the most is by preventing tough problems before they arise!
 

 


 

Phia Fit to Print:

• Money Inc. – A Conflict of Intent: Why We Can’t Achieve a Meeting of the Minds on Healthcare – December 12, 2018

• Self-Insurers Publishing Corp. – The Modernization of Health Savings Accounts – December 3, 2018

• Free Market Healthcare Solutions – Prescription Drug Prices Bridge a Divided Electorate in Election Season – November 28, 2018

• Money Inc. – Dialysis Providers Withstand Regulatory Haymaker – November 26, 2018

• The Inquirer: Daily Philly News – Main Line Hospital Charges $63 for Olive Oil Used to Turn a Breech Baby – November 20, 2018

• Self-Insurers Publishing Corp. – Don't Let Your Loss Leave You DOA: Part II - States Speak Up! – November 2, 2018

• Self-Insurers Publishing Corp. – Explanations That Benefit – October 4, 2018

• Money Inc. – Why Does Reform Always Seem to Favor the Wrongdoer? – October 1, 2018

 



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From the Blogosphere:

A Texas Judge Strikes Down Obamacare – Our Take. Don’t miss out on this great blog post!

You Down with RBP? (You May Already Be!) Reference-based pricing is one of the most mysterious self-funding structures out there.

OSHA Publishes Guidance on Post-Accident Drug Testing. Here’s an explanation to these requirements and how they apply to particular circumstances.

Healthcare on the Ballot, and a Free Side of Fries! Let’s take a step back and assess the big picture.

Is Your Life Insurance Policy Subject to ERISA? You may think this is a ridiculous question; however, Plan Sponsors and employers may want to reconsider this inquiry in light of a recent Seventh Circuit ruling...

 

To stay up to date on other industry news, please visit our blog.



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Webinars

Click HERE to Register!

• On December 12, 2018, The Phia Group presented, “What to Expect in 2019 – Part 2,” where we discussed current industry happenings and our predictions to help you look forward to the coming year.

• On November 13, 2018, The Phia Group presented, “What to Expect in 2019 - Part 1,” where we discussed current industry happenings and our predictions to help you look forward to the coming year.

• On October 18, 2018, The Phia Group presented, “Specialty Drugs: Trends and Issues Affecting Self-Funded Plans,” where we discussed the rising costs of specialty drugs.

Be sure to check out all of our past webinars!



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Podcasts:Featuring Video Podcasts!

• On November 20, 2018, The Phia Group presented, “Politics With Brady,” where Brady and Ron analyze the recent election results, and determine how they will impact the health benefits and health care industries.

• On November 16, 2018, The Phia Group presented, “Talkin’ with TPAC,” where our hosts, Ron and Brady, enjoy chatting with Michael Meloch, President of TPAC Underwriters and valued member of The Phia Group’s own advisory board

• On November 1, 2018, The Phia Group presented, “Special Edition: Talking Politics, Elections, and Healthcare,” where our hosts discuss healthcare on the ballot.

• On October 22, 2018, The Phia Group presented “AHPs: Will They Live Up to the Hype,” where our hosts discuss the benefits and hurdles the final rules have created for these new AHPs.

• On October 15, 2018, The Phia Group presented “2019 - Fly Ball or Home Run,” where Ron and Adam discuss the many issues, changes and challenges 2018 has lined up for 2019.

• On October 1, 2018, The Phia Group presented “Learn from the Past to Shape the Future,” where our hosts sit down with industry legend and innovative leader, Jerry Castelloe of Castelloe Partners.

Be sure to check out all of our latest podcasts!

 

Face of Phia

• On November 29, 2018, The Phia Group presented, “Flying High with Judy,” where Ron and Adam sit down with a member of The Phia Group’s Customer Service team, Judith McNeil.

• On November 16, 2018, The Phia Group presented, “Not Your “Norma-l” Employee,” where our hosts, Adam Russo and Ron Peck, sit down with a member of The Phia Group’s Accounting team, Norma Phillips.

• On October 24, 2018, The Phia Group presented, “A Chat With Matt,” where Adam Russo and Ron Peck sit down with The Phia Group’s Marketing & Accounts Manager, Matthew Painten.

 



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The Phia Group’s 2019 Charity

At The Phia Group, we value our community and everyone in it. As we grow and shape our company, we hope to do the same for the people around us.

The Phia Group's 2019 charity is the Boys & Girls Club of Brockton.

The mission of The Boys & Girls Club is to nurture strong minds, healthy bodies, and community spirit through youth-driven quality programming in a safe and fun environment.

The Boys & Girls Club of Brockton (BGCB) was founded in 1990 to create a positive place for the youth of Brockton, Massachusetts. It immediately met a need in the community; in the first year alone, 500 youths, ages 8-18, signed up as club members. In the 25 years since, the club has expanded its scope exponentially by offering a mix of Boys & Girls Clubs of America (BGCA) nationally developed programs and activities unique to this club.

Since their founding, more than 20,000 Brockton youths have been welcomed through their doors. Currently, they serve more than 1,000 boys and girls ages 5-18 annually through academic year and summertime programming.

 

Thanksgiving – A Special Delivery

On Wednesday, November 21st, the Phia family went out to our local grocery store and purchased a total of 20 Thanksgiving dinners for the families of The Boys & Girls Club of Brockton. Once we loaded them up in our cars, we personally delivered them to the families. Words cannot express the feeling we got when we saw the looks on those families’ faces.

 

Christmas Tree Angel

Each year employees of The Phia Group pick nametags from the Angel Tree that sits in our main lobby. On those tags are names, ages and the wish lists of children from The Boys & Girls Club of Brockton. This year we had over 100 nametags! The Phia family loves to give back to the community; our greatest joy is providing these children with all of their holiday wishes.

 

Unwrapping Christmas

Santa and his elves made a surprise visit to the Boys & Girls Club of Brockton, one week before Christmas. Santa had sent a special elf to the Boys & Girls Club a couple of weeks prior to their visit to ask each child what they wanted most for Christmas. Santa and his elves gave out over 100 gifts to these amazing and talented children. We love giving gifts, but we really love receiving those smiles in return.  



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The Stacks

The Modernization of Health Savings Accounts

By: Krista J. Maschinot, Esq. – December 2018 – Self-Insurers Publishing Corp.

HSAs are highly regulated, tax-exempt savings accounts that both individuals and employers may contribute to on behalf of individuals covered by certain high-deductible health plans (HDHPs). These accounts are designed to help individuals set aside funds to be used for the qualified medical expenses of the individuals, their spouses, and their tax dependents. Unlike flexible spending accounts (FSAs), HSAs are not subject to mandatory “use it or lose it rules” and while FSAs are not portable, HSAs are portable as they are owned by the individual, not the employer, and can follow the individual as he or she changes jobs similar to a 401(k) or an individual retirement account (IRA). HSAs can be invested similar to a retirement account and have the ability to grow over time making them a valuable retirement vehicle. They are funded on a pretax basis through a cafeteria plan and result in a triple tax savings for the individual as they are funded with pretax dollars, grow tax-free, and are not taxed upon withdrawal so long as they are used to pay for qualified medical expenses.

Click here to read the rest of this article


Don't Let Your Loss Leave You DOA: Part II - States Speak Up!

By: Kelly E.Dempsey, Esq. – November 2018 – Self-Insurers Publishing Corp.

Remember that scenario from Spring of 2017 where an employer was attempting to do right by an employee and offered a continuation of coverage during an employer-approved leave of absence? If not, let’s quickly refresh our memories.

An employer’s long-time trusted employee had a stroke of bad luck and was diagnosed with stage four cancer after being relatively asymptomatic and having never been diagnosed with cancer previously. As the employee’s treatment plan became more aggressive, the employee ultimately needed to take a leave of absence – but leave under The Family and Medical Leave Act (FMLA) was exhausted due to the employee’s recent addition of a new baby. The employer subsequently continued to provide coverage, pursuant to 2016 guidance issued by the United States Equal Employment Opportunity Commission regarding employer-provided leave in accordance with The Americans with Disabilities Act (ADA).

Click here to read the rest of this article

 

Explanations That Benefit

By: Jon Jablon, Esq. – October 2018 – Self-Insurers Publishing Corp.

In the course of working with many different third-party administrators, it has become clear that every TPA operates differently. Claims processes are no exception; although federal law prescribes certain rules and regulations for the basics of what must be done and how, TPAs and health plans are left to their own devices to figure out the nuts and bolts of their particular processes. The only real requirement is that those processes fit in with the regulators’ rules and vision for how the industry should operate.

Click here to read the rest of this article

 

To stay up to date on other industry news, please visit our blog.

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Phia’s Q4 Speaking Events:

Phia’s Speaking Engagements:

• 1/9/2019 – FMMA Conference – Austin, TX

• 2/27/2019 – Sunlife 2019 MVP Academy – Denver, CO

• 3/8/2019 – UnitedAg Conference – Anaheim, CA

• 3/21/2019 – CGI Business Solutions Seminar – Woburn, MA

• 3/26/2019 – HFTA Broker Meeting – Tyler, TX

• 4/3/2019 – BenefitsPRO Broker Expo – Miami, FL

• 4/5/2019 – Pareto Conference – Nashville, TN

• 4/7/2019 – Captive Symposium – Cayman Islands

• 4/11/2019 – FMMA Conference – Dallas, TX

• 4/24/2019 – Sunlife 2019 MVP Academy – Kansas City, MO

• 4/25/2019 – Best Practices Workshop – Orlando, FL

• 5/30/2019 – Contrarian Captive – Austin, TX

• 6/11/2019 – Leavitt Conference – Big Sky, MT

• 7/31/2019 – 2019 MVP Academy – Wellesley, MA

• 8/24/2019 – Well Health Workshop – Chicago, IL

• 10/27/2019 – 2019 Annual NASP Conference – Washington DC

 

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Get to Know Our Employee of the Quarter:
Philip Qualo

Congratulations to Philip Qualo, The Phia Group’s Q4 2018 Employee of the Quarter!

Since he started just over 6 months ago, Philip has proven himself instrumental to our compliance team. He has shown a passion for and commitment to ensuring that our company remains compliant with state and federal laws as we have continued to grow and thus become subject to new and increasingly complex regulations. In particular, he played a lead role in updating and revising our Employee Handbook, even tackling the rather arduous process of researching state law and creating supplements for each of the 11 states in which we now have remote employees. In addition to internal compliance efforts, Philip has produced high-quality consulting work for our clients. Successfully functioning in a dual-role is never easy for a new employee, especially when those roles involve sensitive human resources and compliance matters. Philip has performed admirably, and for that, he has earned our trust, and earned my Passion Award nomination.

 

 

Congratulations Philip and thank you for your many current and future contributions.

 

Get to Know Our Employee of the Year:
Brady Bizarro

Congratulations to Brady Bizarro, The Phia Group’s 2018 Employee of the Year!

Brady has made his mark here at The Phia Group. Between traveling, speaking on our webinars and gracing industry leaders with his knowledge of politics and D.C. happenings at conferences around the United States, we would like to thank him for all that he has done. You truly exemplify what Phia employees should strive to be.

 

Congratulations Brady and thank you for your many current and future contributions. 

 

 


Phia News

 

Announcement of SIIA’s Next Chairman

Adam V. Russo, CEO of The Phia Group, will serve as the chairman of SIIA’s board of directors. Adam has been a long-time active SIIA member and will be concluding five years of service as a director. Congratulations to Adam and thank you for all fo the hard you and dedication.

 

A Phia Halloween

How great are these costumes? This year, the Phia Halloween Costume Contest was truly a nail-biter. Who would win? Rafiki? The clown? The fan favorite “Gambina the Unicorn riding Sprinkles the Unicorn,” bravely worn by Gambit Hunt, ultimately took home the gold. Thank you to all who participated, you truly made it a stellar Halloween!

 

Ugly Sweater Contest

Our Phia Family is so festive! Our “Ugly Sweater Day” was a hit and we thank all those who participated; congratulations to Norma (pictured below sporting a green and red number, with gold shoulders) for winning “Ugliest Sweater”!

 

 


 

Job Opportunities:

• Accounting Manager

• Staff Attorney, Provider Relations

• Case Investigator I

• Claims Analyst

• Health Benefit Plan Drafter

See the latest job opportunities, here: https://www.phiagroup.com/About-Us/Careers

 

Promotions

• Ekta Gupta was promoted from ETL Specialist to Manager, Data Services Group

• Gambit Hunt was promoted from Sales Coordinator to Sales Executive

 

New Hires

• Tammy Tran was hired as an Accounts Payable Coordinator

• Christina Veneto was hired as a Talent Acquisition Specialist

• Brittany Grueter was hired as a Case Investigator I

• Elise Mulready was hired as a Claim and Case Support Analyst

• Nicholas Bonds was hired as a Health Benefit Plan Admin - Attorney I

• Danijela Stanic was hired as a Health Benefit Plan Consultant I

• Michael Vaz was hired as a Sales and Accounts Coordinator



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info@phiagroup.com
781-535-5600

The Stacks - 1st Quarter 2019

The Modernization of Health Savings Accounts

By: Krista Maschinot, Esq.

 

Health Savings Accounts (HSAs) were originally introduced as part of the Medicare Prescription Drug, Improvement, and Modernization Act that was signed into law by President George W. Bush on December 8, 2003.  While the contribution amounts have increased gradually since this time, no other significant changes have occurred.  Congress is addressing this issue and attempting to help individuals and families afford the ever increasing medical expenses plaguing the United States.

HSAs are highly regulated, tax-exempt savings accounts that both individuals and employers may contribute to on behalf of individuals covered by certain high-deductible health plans (HDHPs).   These accounts are designed to help individuals set aside funds to be used for the qualified medical expenses of the individuals, their spouses, and their tax dependents.  Unlike flexible spending accounts (FSAs), HSAs are not subject to mandatory “use it or lose it rules” and while FSAs are not portable, HSAs are portable as they are owned by the individual, not the employer, and can follow the individual as he or she changes jobs similar to a 401(k) or an individual retirement account (IRA).  HSAs can be invested similar to a retirement account and have the ability to grow over time making them a valuable retirement vehicle.  They are funded on a pretax basis through a cafeteria plan and result in a triple tax savings for the individual as they are funded with pretax dollars, grow tax-free, and are not taxed upon withdrawal so long as they are used to pay for qualified medical expenses.

The House of Representatives passed the Restoring Access to Medication and Modernizing Health Savings Account Act of 2018 (HR 6199) and the Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act of 2018 (HR 6311) on July 25, 2018.   As the names imply, the bills focus on updating and modernizing the current laws surrounding the use of Health Savings Accounts (HSAs).  These updates include increasing the contribution limits for both individuals and families, expanding coverage to include qualified medical expenses that were previously omitted, and allowing for direct primary care physician arrangements to be accessed by individuals covered under an HDHP.

Contribution limits increased

For 2018, the contribution limit (for employer and employee combined) for an individual is $3,450, while the limit for a family is $6,900 (increased from the original $2,600 for individuals and $5,150 for families).  One modernization that HR 6311 will make is to increase to the contribution limits for individuals and families to $6,900 and $13,300 respectively.  These amounts are the current annual limits on deductibles and out-of-pocket expenses for HSA-eligible HDHPs.  In addition, individuals with HSA-qualifying family coverage who were previously deemed ineligible due to their spouse being enrolled in a medical FSA will now be permitted to contribute to an HSA.

Coverage expanded

Under the current law, the funds in an HSA may only be used to pay for qualified medical expenses pursuant to IRC Section 213(d), which include amounts paid:

“(A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body,

(B) for transportation primarily for and essential to medical care referred to in subparagraph (A),

(C) for qualified long-term care services (as defined in section 7702B(c)), or

(D) for insurance (including amounts paid as premiums under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in subparagraphs (A) and (B) or for any qualified long-term care insurance contract (as defined in section 7702B(b)).

In the case of a qualified long-term care insurance contract (as defined in section 7702B(b)), only eligible long-term care premiums (as defined in paragraph (10)) shall be taken into account under subparagraph (D).”

HR 6199 further expands the permissible eligible expenditures to also include gym memberships and certain physical exercise programs (up to $500 for individual and $1,000 for family) along with feminine care products and other over-the-counter medical products.

Direct Primary Care permitted

A Direct Primary Care service arrangement (DPC) is an alternative to a tradition health care plan wherein individuals pay a flat fee each month, similar to a membership fee, to a primary care physician that covers all of the individual’s primary care service needs.  For services that are outside the realm of primary care, additional fees will apply.  At the current time, individuals cannot use their HSA funds to pay for the DPC monthly fee as they do not qualify as medical expenses under IRC Section 213(d).

Other issues surrounding DPC arrangements include the fact that when a DPC is offered outside of the employer’s health plan it is considered to be a second health plan and impermissible other coverage as Section 223(c) of the Internal Revenue Code (IRC) states:

“[S]uch individual is not, while covered under a high deductible health plan, covered under any health plan-

  • which is not a high deductible health plan, and
  • which provides coverage for any benefit which is covered under the high deductible health plan.”

As a result of this Code section, individuals are not permitted to be covered under an HDHP and to also be offered other coverage, include a DPC, outside of the employer’s self-funded health plan as (1) a DPC is not an HDHP and (2) a DPC offers benefits that are already covered under the employer’s HDHP.  Further, individuals are not permitted to use their HSA funds for services related to DPCs, as DPCs are considered to be health plans and use of such funds would be deemed impermissible other coverage.

If the DPC is a benefit under the employer’s self-funded health plan, the following consideration applies. An HDHP is not permitted to provide any first dollar coverage for benefits until a minimum deductible has been satisfied with the exception of preventive care services. Since the services provided by DPCs and other primary care physicians are not always considered preventive care, there will be times where the patient's care is still subject to the deductible. As a DPC does not typically include a fee for service, there is no fee to apply to the deductible which is problematic.

If enacted, HR 6311 will help solve the issues surrounding the ability of DPCs to be used along with HSA-eligible HDHPs.  Specifically, it would permit DPC service arrangements to no longer be treated as health plans, thus no longer disqualifying an individual from contributing to an HSA.  Additionally, the monthly DPC fees would qualify as medical expenses, meaning individuals would be permitted to use their HSA funds to pay for such fees (with a cap of $150 per individual and $300 per family per month). 

Other changes

The bills, again, if enacted, would also:

  • Allow up to $250 for individuals and $500 for families to be covered for non-preventive services under HDHPs;
  • Permit the use of employment-related health services and employer sponsored onsite medical clinics for limited use without violating HSA eligibility restrictions;
  • Allow for rollovers of health FSA balances from year to you (up to three times the contribution limit);
  • Allow for transfers of up to $2,650 for individuals and $5,300 for families from FSAs and HRAs to HSAs when enrolling in a qualifying high-deductible health plan with an HSA;
  • Allow spouses to make annual catch-up contributions of up to $1,000 to an HSA; and
  • Permit working seniors currently enrolled in Medicare Part A to contribute to an HAS when covered by a qualifying HDHP.

While these bills passed the House in July of this year, there has been no action on either in the Senate and December is quickly approaching.  As the tax advantages offered in each are beneficial to both employees and employers, employers should monitor the bills as the year comes to a close.

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Don’t Let Your LOAs Leave You DOA (Part II): States Speak Up!

By: Krista Maschinot, Esq.

Remember that scenario from Spring of 2017 where an employer was attempting to do right by an employee and offered a continuation of coverage during an employer-approved leave of absence? If not, let’s quickly refresh our memories.

An employer’s long-time trusted employee had a stroke of bad luck and was diagnosed with stage four cancer after being relatively asymptomatic and having never been diagnosed with cancer previously. As the employee’s treatment plan became more aggressive, the employee ultimately needed to take a leave of absence – but leave under The Family and Medical Leave Act (FMLA) was exhausted due to the employee’s recent addition of a new baby. The employer subsequently continued to provide coverage, pursuant to 2016 guidance issued by the United States Equal Employment Opportunity Commission regarding employer-provided leave in accordance with The Americans with Disabilities Act (ADA)1.

Although the employee ended up making a miraculous recovery, the claims poured in, and the employer soon realized there was a “gap” between the plan document and the employer’s decision to provide ADA leave, such that the plan document did not actually allow this continued coverage. Of course, the employer was free to provide whatever leave it saw fit – but the employer’s stop-loss carrier was not keen on reimbursing these claims, since this continued coverage was not contemplated when the carrier underwrote the policy. The employer was facing stop-loss reimbursement denials and potentially skyrocketing renewal rates for the upcoming plan year.

Part I of the story ended as a cliffhanger: the employer’s bank account looked bleak, and the employer was scrambling to figure out how to continue offering benefits to its employees without going bankrupt. “How did I end up here? All I wanted was to take care of my employees and give them the best benefits possible. Where did I go wrong?” 

As you may recall, we put ourselves in the shoes of employers. It’s intuitive to think that a health-related leave of absence from employment is coupled with a continuation of health plan coverage. Unfortunately, though, plan documents and employee handbooks are as prone to “gaps” as any other two documents, if not more; you’d be amazed at how antiquated some employee handbooks can be, and even when they’re updated, it occurs to alarmingly few employers that the two documents must be harmonized.

Similar to “surprise billing” legislation, the last year or so has seen a boom in state legislation that is designed to protect employees, and much of the legislation focuses on – you guessed it – leaves of absence and continuation of coverage. Some state laws address whether or not leave must be paid, others address whether benefits must be continued while on leave, and others still address both issues. Two interesting recent examples are California and New York.

California’s leave laws have been in place for decades, but have undergone various changes, including revisions in 1999, 2004, 2011, 2012, and most recently, 2017. California Senate Bill No. 63 implemented the New Parent Leave Act (NPLA) as of January 1, 2018. Affording protected leave to employees of employers with 20 or more employees, this marked a significant change from the state’s previous requirement laws that applied only to employers with 50 or more employees. Employers subject to California law must consider the interaction of all state and federal leave laws, including the NPLA, FMLA, California Family Rights Act (bonding leave), and Pregnancy Disability Leave (PDL). 

Unlike California’s law, which expanded an existing law, New York passed a brand new leave law, and it happens to be the most generous paid leave law in the United States to date. Effective January 1, 2018, New York’s Paid Family Leave Benefits Law (PFLBL) is being phased in over four years with full implementation in 2021. The law requires privately-owned employers to provide paid leave to employees in three situations: (1) for a father or mother to bond with a new child (birth, adoption, or foster); (2) to care for a close relative with a serious health condition; or (3) to care for a close relative when another close relative has been called to active military service. The length of leave in 2018 has been limited to eight weeks, but will increase over time to become 12 weeks upon full implementation in 2021. Interestingly, in addition to creating the requirements, the law requires employee handbook modifications, conspicuous posting of specific information (similar to FMLA), the need to coordinate with paid time off and FMLA, and of course the tax treatment of the benefits.

I don’t know about you, but my head is spinning. For employers subject to a myriad of laws such as FMLA, the various state leave laws, and ERISA, it’s no surprise that complying with all of them simultaneously is a serious headache, and sometimes details are overlooked.

Now, wait a minute. If a self-funded ERISA plan is protected by ERISA, aren’t state laws like these inapplicable? The short answer is no. The longer answer is no way. At a high level, ERISA protects a health plan from being subject to state insurance laws – but laws such as paid leave and continuation of coverage laws have been found to not actually be insurance laws, but employment laws, and therefore ERISA can’t shield anyone from compliance with such laws.

As an attorney, I can tell you that following state and federal laws is crucial to the viability of a health plan and the employer’s business. As a health care professional, I can tell you that full compliance is not an easy task. Laws that protect employees tend to have intricate details and nuances; we’ve picked on California and New York, but five other states and the District of Columbia have introduced legislation to offer or expand leave laws. Those states include Washington, New Jersey, Rhode Island, New Hampshire, and Maryland. Although most federal and state laws do not currently require a continuation of coverage, we may soon see an upheaval in the status quo.

In the absence of applicable state laws, employers can choose whether or not to provide the benefit of continued coverage – but of course an employer’s generosity must be spelled out in the plan document, not just the employee handbook, in order to avoid stop-loss denials. Ultimately, the interaction of applicable state laws, FMLA, and any other type of employer-sponsored leave of absence will need to be assessed on case-by-case basis to determine the rights of an individual employee in any particular circumstance. As with everything else in the self-funded world, if the relevant documents aren’t kept up-to-date and compliant, how can an employer expect to be able to solve the compliance Rubik’s Cube?

The alarming reality is that many gaps between plan documents and employee handbooks are only discovered once a disaster has already ensued. All it takes is one catastrophic event to discover that the various documents aren’t airtight, and may not even align with the employer’s intent.  

In sum, employers need to do their homework on a regular basis. As we enter renewal season, now is the perfect time for employers to look at their plan documents and the employee handbooks. Do the two documents reference the same types of leave? Do the documents clearly indicate under what circumstances, and for how long, coverage under the health plan is maintained during a leave? Has the employer assessed the need to comply with a new or revised state law? Are the employer and employee obligations and coverage options laid out clearly? Do the terms of these documents meet the intent of the employer? What does the stop-loss policy say about eligibility determinations? Can the handbook be used to document eligibility in the health plan? Do changes need to be made to minimize or eliminate gaps?

Don’t let your LOAs leave you DOA. Do the leg work now, and figure out what needs to be done to avoid being caught by surprise.

Kelly E. Dempsey is an attorney with The Phia Group. She is the Director of Independent Consultation and Evaluation (ICE) Services. She specializes in plan document drafting and review, as well as a myriad of compliance matters, notably including those related to the Affordable Care Act. Kelly is admitted to the Bar of the State of Ohio and the United States District Court, Northern District of Ohio.

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Explanations that Benefit

By: Jon Jablon, Esq. 

In the course of working with many different third-party administrators, it has become clear that every TPA operates differently. Claims processes are no exception; although federal law prescribes certain rules and regulations for the basics of what must be done and how, TPAs and health plans are left to their own devices to figure out the nuts and bolts of their particular processes. The only real requirement is that those processes fit in with the regulators’ rules and vision for how the industry should operate.

As a form that is given to a claimant along with payment (or, perhaps more relevantly, without payment), the Explanation of Benefits (or EOB) form is often the first,  and sometimes the only, document a claimant sees that explains why the claim was adjudicated as it has been. For that reason, although it would probably not be accurate to suggest that the regulators treat EOBs as “special” compared to any other regulations, in practical matters the EOB can be considered to be perhaps more important to get right than certain other things. That’s because it’s the first line of defense when denying or partially denying a claim, and the primary vehicle for a health plan’s justification of its denial.

29 USC § 1133 and accompanying regulations address a plan’s internal appeals procedures and require that claimants must be notified of the reasons why a claim has been denied and must be given a reasonable opportunity for a full and fair internal review of a claim1. The regulations go on to require that a group health plan provide – among other things – the specific reason for the denial, reference to the specific plan provisions upon which it has been based, a description of the plan’s appeals procedures, and a way to connect an applicable clinical judgment to the plan’s provisions.

Those rules seem fairly straightforward – but due to the numerous situations that courts and regulators have encountered through the years, there are some nuances in this language that are perhaps not quite clear, and which TPAs should be acutely aware of when addressing matters such as EOB compliance. As usual, the black-letter law leaves room for interpretation.

In one particular case, for instance, a health plan required arbitration as a mandatory stage of plan appeal, after the initial written appeal was denied. The EOB, however, was silent on that requirement. The court in that case applied the normal doctrine that courts use to rectify cases of inadequate notice: the health plan was directed to allow the claimant to file a late appeal, despite the timeframes stated within the applicable plan document and the fact that those timeframes had run out. Known as “tolling,” this remedy effectively stops the “countdown” of the appeal time requirement due to inadequate notice from the plan. In this case, then, the timeframes for appeal stated in the plan document were deemed inapplicable, since the plan did not adequately communicate them.

One can argue that the plan document’s inclusion of the relevant information should be sufficient to convey the information to a claimant – but according to courts, plan members can only reasonably be expected to know what is shown to them with respect to a specific case, rather than in the Plan Document in general. As one court put it, “[j]ust as a fiduciary must give written notice to a plan participant or beneficiary of the steps to be taken to obtain internal review when it denies a claim, so also, we believe, should a fiduciary give written notice of steps to be taken to obtain external review through mandatory arbitration when it denies an internal appeal2.” Even though the arbitration itself is not explicitly governed by ERISA, once it was made a part of the plan’s claim procedures, it became a provision that must be brought to the claimant’s attention. This case and others like it demonstrate that simply including a provision in the Plan Document is sometimes not enough to adequately inform a claimant of that provision.

That’s an example of a situation where plan provisions (timelines, specifically) were actually ignored by a court, because the plan and TPA failed to adequately disclose certain plan requirements on the EOB.

Where does it end, though? Surely the regulations can’t list every conceivable item that must be present on the EOB; even if a very long list were created, there would always be some new situation not previously contemplated. Hence, there is case law like this, that is designed to both give guidance in this specific instance, but also help inform future interpretations of these same rules. For instance, if a health plan required mediation rather than arbitration, surely the case law described above would still apply, even though it’s not an identical situation. It’s close enough, though, that the required “good faith, reasonable interpretation” of unclear regulations can be colored by this example.

In a longstanding series3 of somewhat more egregious examples of deficient EOBs, courts have opined that the regulations explaining the EOB requirements are not designed to invite “conclusions,” but instead “reasons” or “explanations.” So, rather than state that a claim is denied because pre-authorization was not given, the EOB should state why pre-authorization was not given, and therefore the conclusion4. Put simply, and again parroting the established regulations, “[a]n ERISA fiduciary must provide the beneficiary with the specific reasons for the denial of benefits5.”

Noncompliance, or an instance of a questionable nature, is somewhat common with reference-based pricing. The prevailing attitude seems to be that since reference-based pricing is such a fundamental change to the plan itself, there’s so much else going on that an EOB note such as “claim denied due to reference-based pricing” is somehow sufficient. Based on courts’ interpretations of the prevailing regulations, a remark this generic would neither be literally compliant with the text of the regulations, nor satisfy the intent of the regulations (which is to provide the claimant with information sufficient to file a meaningful appeal on the merits, or ultimately file suit to enforce benefits pursuant to ERISA)6.

My mention of the intent of the regulations was deliberate. In the legal system, intent is not always necessary to be held liable; at the risk of going on a tangent, there’s something called “strict liability” which imposes legal liability even without intent or even knowledge of wrongdoing. In the process of interpreting ERISA, this country’s courts have in some situations refused to apply a comparable doctrine of strict liability to violations of ERISA. In other words, sometimes a violation occurs, but the offending fiduciary is not held liable, due to other actions of that fiduciary.

To illustrate this, consider a situation where a claimant is given a compliant EOB containing one denial reason, the claimant appeals, and the health plan or its TPA denies the appeal, and also cites additional reasons for the denial that were not provided on the original EOB. For some context, it isn’t compliant with ERISA to provide additional denial reasons after the claimant has already exhausted or “used up” the available appeals, since that wouldn’t afford the claimant the opportunity to actually appeal the newly-given denials reasons7.

In some situations, though – when the claimant is given the opportunity to appeal the other denial reasons, despite already having exhausted appeals for the initial denial reason – compliance with one provision of ERISA has actually saved the fiduciary from noncompliance in another area. In a situation like this, the health plan is not in compliance when it issues a separate denial reason after already denying appeals for the initial denial reason – but the fiduciary was able to “cure” its noncompliance by providing the claimant ample opportunity to appeal the new denial reasons. Sometimes referred to as “substantial compliance8,” courts have noted that certain instances of technical noncompliance can be excused as long as the purpose of the regulations9 is not frustrated. In this case, that purpose is ensuring that claimants receive adequate recourse to appeal claims denials, which has been done.

As a final note, although the majority of this article discusses procedural matters related to EOBs, it’s worth taking a brief look into the substance of denials. Although the relevant regulations provide that the claimant must be given the “specific reasons” for the denial of benefits, an interesting nuance of this rule apparently involves a sort of meta-reasoning: as one court put it, “The administrator must give the ‘specific reasons’ for the denial, but that is not the same thing as the reasoning behind the reasons...10

Admittedly, that sounds very odd. The nuance is that although the Plan Administrator must provide a reason for denial, the Plan Administrator, oddly, isn’t required to provide a good reason. The fiduciary duty extends to providing a reason, and then the law places the burden on the claimant to refute that reason. Of course, the regulations explaining what must be present on an EOB are designed to give the claimant the tools it needs to refute the denial – but the fact remains that the Plan Administrator may provide a nonsensical reason for denial, and the Plan Administrator has then literally satisfied its duty to compliantly notify the claimant of the specific reason for the denial. After all, the law does not assume that Plan Administrators are perfect, or even logical; only that they explain themselves.

According to one particular court, requiring the Plan Administrator to explain its ‘reasoning behind the reasons’ “would turn plan administrators not just into arbitrators, for arbitrators are not usually required to justify their decisions, but into judges, who are.11” Interestingly, despite the doctrine of “substantial compliance” noted above, perhaps courts should adopt a doctrine of “substantial noncompliance,” which can place a fiduciary out of compliance for providing an egregiously poor reason for denial, and thus violating the spirit of the law, despite following the black letter of the law.

Regardless, the regulations are neither clear nor all-inclusive – but there is case law designed to educate Plan Administrators regarding things that must be on an EOB, and what doesn’t need to be. The rules are not as intuitive as the regulations make them out to be…but then again, in this industry, what is?

1Chappel v. Lab. Corp. of Am., 232 F.3d 719, 726 (9th Cir. 2000).

2Id.

3Accord VanderKlok v. Provident Life and Accident Ins. Co., 956 F.2d 610 (6th Cir. 1992); Wolfe v. J.C. Penney Co., 710 F.2d 388 (7th Cir. 1983); Richardson v. Central States, Southeast and Southwest Areas Pension Fund, 645 F.2d 660, 665 (8th Cir. 1981)

4Weaver v. Phx. Home Life Mut. Ins. Co., 990 F.2d 154, 158 (4th Cir. 1993)

5Makar v. Health Care Corp. of Mid-Atlantic (CareFirst), 872 F.2d 80, 83 (4th Cir. 1989) (dicta), emphasis preserved.

6See Halpin v. W.W. Grainger, Inc. 962 F2d 685 (CA7 Ill, 1992)

7Urbania v Cent. States, Southeast & Southwest Areas Pension Fund, 421 F3d 580 (CA7 Ill 2005).

8Lacy v. Fulbright & Jaworski, 405 F.3d 254, 256-257 & n.5 (5th Cir. 2005).

9Robinson v. Aetna Life Ins., 443 F.3d 389, 393 (5th Cir. 2006).

10Gallo v. Amoco Corp., 102 F.3d 918, 923 (7th Cir. 1996), internal citations omitted.

11Id.

 


The Phia Group's 4th Quarter 2018 Newsletter


Phone: 781-535-5600 | www.phiagroup.com

 


The Book of Russo:
From the Desk of the CEO

It’s hard to believe that another three months have gone by. The leaves are turning here in Boston and my beloved Indians are out of the playoffs, but at least the Browns have won two games. Anyways, it’s busy season for all of us here at The Phia Group, and for all of you as well, so I want to keep this short and sweet. The focus for the next three months of our webinars, podcasts and articles will be around what to expect in 2019. We see it as a transition year with big changes in effect for 2020, so stay tuned my friends. Happy reading to all of you!


Service Focus of the Quarter: PACE & Pre-Service Appeals
Phia Group Case Study
Phia Fit to Print
From the Blogosphere
Webinars
Podcasts
The Phia Group’s 2018 Charity
The Stacks
Phia’s Speaking Events
Employee of the Quarter
Phia News

 

Service Focus of the Quarter: PACE and Pre-Service Appeals

Not all appeals are created equal. While there are always regulations to follow when handling claims and appeals, obeying the rules with respect to pre-service appeals can be far more difficult than their post-service.

Pre-service appeals bring with them more intensive time-restrictive requirements than post-service appeals. Plan Administrators and TPAs have a hard enough time making determinations in the time allotted for post-service appeals; when faced with far quicker turnaround times on pre-service appeals, it’s even easier to make a claim administration or adjudication error.

You’ve heard about The Phia Group’s Plan Appointed Claim Evaluator (“PACE”) service, whereby we assume fiduciary duties on final-level, internal appeals; but did you know that PACE can now also include pre-service second-level appeals? Now you do!

Many of you already trust The Phia Group’s consultative team as it relates to claims processing, and rely upon our PACE service to protect you as it relates to your post-service claim appeals; second level pre-service appeal review is a logical extension of that, and helps protect the plan and TPA in situations where the plan and TPA are even more crunched for time than usual.

To learn more about PACE, including pre-service options, contact Tim Callender at 781-535-5631 or tcallender@phiagroup.com.

 

Phia Case Study: Phia to the Rescue!

The Phia Group’s consulting team received an interesting consulting request (via PGCReferral@phiagroup.com) from the broker of a self-funded health plan administered by an Administrative Services Only (“ASO”) carrier. The broker had identified what was believed to be a billing error made by the ASO carrier, and had engaged The Phia Group to help determine what type of recourse, if any, the health plan had against the ASO.

In particular, The Phia Group was tasked with review the plan’s Administrative Services Agreement (ASA) to determine its audit/indemnification rights if it were ultimately determined that the ASO truly had made the suspected errors.

The Phia Group outlined several provisions that the client could invoke in its favor against the ASO, including audit rights and the obligation to correct an erroneous overpayment if the ASO committed negligence, fraud, or misconduct; quality assurance requirements and penalties for non-compliance; and indemnification in certain circumstances, including negligence.

With those provisions in-hand, the health plan and broker were able to put pressure on the plan’s claims administrator to perform the audit necessary to discover its errors.

 


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Fiduciary Burden of the Quarter: Abiding by the Terms of the Plan Document!

Reference-based pricing can be complicated and daunting, but it doesn’t have to be. There are certain techniques for doing it correctly, but even more techniques for doing it incorrectly. One such incorrect technique is to put language into the Plan Document that describes the reference-based pricing methodology, and then subsequently ignoring it.

Some plans utilizing reference-based pricing contain language in the Plan Document that limits payment at a percentage of Medicare, without account for negotiated rates or settlements. We certainly don’t mean to say that the Plan Document should contain two percentages – one “initial” percent and one “settlement” percent – but the language needs to be written such that the Plan Administrator is not violating the terms of the Plan Document if a given claim needs to be settled. Violating the terms of the Plan Document, after all, is a breach of the Plan Administrator’s most basic fiduciary duty.

An example of this is when a Plan Document provides that “This plan will pay all claims at 150% of Medicare.” Well, if a claim needs to be settled at 200% of Medicare, what then? The Plan Administrator has no authority from the Plan Document to make a settlement payment, resulting in (a) the negotiated rate being taxable to the employee, since it’s not a plan benefit, and (b) the Plan Administrator being technically prohibited from making a settlement payment from plan assets.

The Phia Group’s standard reference-based pricing language specifically notes that if there is a negotiated rate (which can be an ongoing contract, case-by-case agreement, or settlement agreement on the back-end of a balance-bill), that negotiated rate is the payable amount. If and only if there is no negotiated rate, then the Medicare-based payment comes into play. That accounts for the possibility of a contract or negotiation of any given claim if necessary, without giving away the farm by promising that there will be negotiations.

At its core, reference-based pricing is nothing more than a method of redefining traditional U&C. All other plan processes remain the same, and fiduciary duties are still intact – which means the Plan Administrator needs to continue to be acutely aware of them, even while navigating reference-based pricing.

The nuances of reference-based pricing are no excuse for violating fiduciary duties; as regulators and lawmakers continue to push back on reference-based pricing, let’s not give them an excuse to condemn it.

 

Success Story of the Quarter: Unwrapping the OON Claim

A health plan utilizing The Phia Group’s Phia Unwrapped service incurred an out-of-network claim billed at $72,000. The health plan paid its Medicare-based benefits, and the patient was subsequently balance-billed for the entire balance, which was right around $60,000. After the initial patient advocacy layer of Phia Unwrapped, the provider continued to bill the patient, and The Phia Group then engaged the provide

r to negotiate the balance. This particular provider felt that it was unconstrained by any notions of fair market value, even stating that – and we quote – “if there is no law that limits the billing, we can bill however we please.”

We ultimately went above the billing department and found contact information for the hospital’s CFO, whom we contacted and implored him to be reasonable. We pointed to benchmarks, fair market value, other area providers’ bills, cost-to-charge ratios, and more.

Ultimately, without a word, and without knowing what exactly tipped the scales, we received a signed copy of our proposed agreement. We are now in the process, with the client’s approval, of securing a direct contract with this facility at a rate that our client can accept as reasonable.


 

A Case to Remember

Edward Brice Brimacombe v. OptumInsight, Inc. d/b/a Optum; Bank of America; et. al., Sup. Ct. AZ County of Maricopa, Case No. CV2018-055781, September 19, 2018

Delays, miscommunication, and a lack of preparation will eliminate subrogation rights every time. The case of Edward Brice Brimacombe v. OptumInsight, Inc. d/b/a Optum; Bank of America; et. al., Sup. Ct. AZ, Case No. CV2018-055781, was filed on September 19, 2018 in Maricopa County, by an attorney representing a plan participant. He has done so in an effort to have the court void the Bank of America Benefit Plan’s subrogation lien. We learn many important lessons from this case, as we seek to protect plan rights and strengthen subrogation efforts.

First, in this case, the attorney representing the plan participant contacted neither the employer (the plan sponsor, Bank of America) nor the benefit plan’s subrogation vendor (OptumInsight). Rather, they contacted the carrier whose administrative services only (ASO) and network were utilized by the plan; United Healthcare. As part of The Phia Group’s subrogation implementation, we issue notification to all employees regarding who we are, and what we do, and we take active steps to identify opportunities to recover – and put all parties on notice – before they even have a chance to contact (the wrong) entities.

Second, it’s been alleged that the representative at the United Healthcare ASO did not understand what was being asked, or what subrogation is. It’s a reminder that we all have a duty to make sure anyone who may take such calls either understands this part of the plan’s administration, or knows to whom they should refer the inquiry. It is an integral part of The Phia Group’s implementation process.

Third, the attorney says that months later (in July of 2017), OptumInsight (the subrogation partner of the plan in question) did reach out to the attorney, seeking details about the case, but showing no knowledge of what the attorney claims had transpired previously. We, as an industry, need to ensure we always communicate – or appear to have communicated – avoiding any suggestion that there is no communication between the ASO/TPA, plan sponsor, and subrogation vendor. That’s why The Phia Group makes it a priority to obtain access to our clients’ claims management systems… so that we can have read-only access to the notes, and be aware of such calls and correspondence prior to talking to the applicable parties.

Fourth, the participant’s attorney claims that he responded and offered an opportunity to reassert the previously waived lien, but (he says) he did not receive a response to that offer for months. This shows us that delays will result in the right to lien recoupment being lost, in light of new case law and common sense. The bottom line is that we’re operating against the clock, and personal injury attorneys know that delays on our part put the recovery at risk. That’s why The Phia Group sticks to firm deadlines.

Fifth, OptumInsight advised the attorney that the carrier lacked authority to waive the plan’s rights, however, the participant’s attorney advised that by “acting” as if they did have the authority, they exercised legally binding implied authority. This teaches us that ASOs and TPAs must not speak for the plan or act as if they have authority in instances where they do not have such authority. This is why The Phia Group’s subrogation clients are also provided with preferred access to such other services as Independent Consultation and Evaluation (“ICE”) and Plan Appointed Claim Evaluator (“PACE”) services; to ensure we identify such issues and nip them in the bud before they cause any harm, as well as protect TPAs and ASOs from unwanted fiduciary liability.

 


 

Phia Fit to Print:

• Money Inc. – How Proposed HSA Legislation Would Afford New Employer and Employee Freedoms – September 1, 2018

• Self-Insurers Publishing Corp. – Current Litigation Highlights Ongoing Need for Review of Plans for Mental Health Parity Compliance – September 1, 2018

• Money Inc. – Patient Assistance Programs: Why Many Drive Up Costs for Health Plans and Now, Patients – August 9, 2018

• Self-Insurers Publishing Corp. – Much Needed Correction in the Second Circuit...Is Relief (Equitable, That Is) Around the Corner? – August 2, 2018

• Free Market Healthcare Solutions – How Imperfect Regulatory Action May Still Create Opportunities for Self-Funding – July 14, 2018

• Self-Insurers Publishing Corp. – When Benefits and Exclusions Create a Crossroads between Plan and Employer Requirements – July 12, 2018

• Free Market Healthcare Solutions – How Imperfect Regulatory Action May Still Create opportunities for Self-Funding – July 11, 2018

• Money Inc. – State Reactions and their Power over Association Health Plans – July 1, 2018



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From the Blogosphere:

Communication Breakdown – More Lessons Learned from My Wife’s Battle Against Lymphoma. An important lesson from the Senior Vice President and General Counsel.

A Contract By Any Other Name. The regulators have been impressively sparse in their opinions of reference-based pricing.

Has the Life Expectancy of Drug Rebates Been Reduced? The U.S. health secretary (Azar) is making some moves and has indicated that eliminating drug rebates may help reduce costs.

Know when to fold ‘em! A blog post you can’t afford to pass up!

Trump Administration Halts Billions in ACA Payments. The Trump Administration has taken quite a beating from the Affordable Care Act..

 

To stay up to date on other industry news, please visit our blog.



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Webinars


• On September 18, 2018, The Phia Group presented, “Back to School: Renewal Time,” where we discussed a laundry list of what employers, TPAs, brokers, and stop-loss carriers should look for this time of the year – and provide some guidance on how the industry’s players can stay ahead of the curve.

• On August 14, 2018, The Phia Group presented, “Breaking the Mold: Creative Solutions for Everyday Problems,” where we discussed complications that self-funded health plans and their partners need to be able to successfully navigate.

• On July 12, 2018, The Phia Group presented, “Hottest Industry Trends and Topics – This is What You Asked For,” where we discussed specialty drugs, association health plans, the “right to try” law and more.

Be sure to check out all of our past webinars!



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Podcasts:Featuring Video Podcasts!

• On September 24, 2018, The Phia Group presented, “Crossing Bridges,” where Adam, Ron and Brady chat with friend and industry ally, Mark Stadler – President and CEO of BridgeHealth.

• On September 5, 2018, The Phia Group presented, “The View from Nova Healthcare,” where our hosts interview Laura Hirsch, President of Nova Healthcare Administrators.

• On August 15, 2018, The Phia Group presented, “The View from SIIA’s Political Perch,” where our hosts, Adam Russo and Brady Bizarro, speak with Ryan C. Work – Vice President of Government Affairs at the Self-Insurance Institute of America (“SIIA”).

• On August 8, 2018, The Phia Group presented, “A Healthcare Homerun,” where our hosts, Adam Russo, Brady Bizarro, and Ron Peck, chat with Mark S. Gaunya – Chief Innovation Officer and Principal of Borislow Insurance.

• On July 26, 2018, The Phia Group presented, “Where is Ron? A Very Personal Podcast from the SVP,” where Phia’s 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.

• On July 23, 2018, The Phia Group presented “Issues with Inaction: Balance Billing and Wellness Programs,” where Jennifer McCormick, Brady Bizarro and Erin Hussey discuss issues with inaction.

• On July 17, 2018, The Phia Group presented “Make Cost Containment Great Again,” where Brady Bizarro and Adam Russo discuss the hot topics impacting the insurance industry.

• On July 11, 2018, The Phia Group presented “Coaching the Self-Funded Industry,” where Adam and Brady interview Rick Koven, President of Koven Consulting & Coaching.

Be sure to check out all of our latest podcasts!

 



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The Phia Group’s 2018 Charity

At The Phia Group, we value our community and everyone in it. As we grow and shape our company, we hope to do the same for the people around us.

The Phia Group's 2018 charity is the Boys & Girls Club of Brockton.

The mission of The Boys & Girls Club is to nurture strong minds, healthy bodies, and community spirit through youth-driven quality programming in a safe and fun environment.

The Boys & Girls Club of Brockton (BGCB) was founded in 1990 to create a positive place for the youth of Brockton, Massachusetts. It immediately met a need in the community; in the first year alone, 500 youths, ages 8-18, signed up as club members. In the 25 years since, the club has expanded its scope exponentially by offering a mix of Boys & Girls Clubs of America (BGCA) nationally developed programs and activities unique to this club.

Since their founding, more than 20,000 Brockton youth have been welcomed through their doors. Currently, they serve more than 1,000 boys and girls ages 5-18 annually through academic year and summertime programming.

 

With the upcoming school year arriving, The Phia Group wanted to make sure that the kids from the Boys & Girls Club of Brockton were fully stocked up on school supplies. Our goal was to fill 210 backpacks with all of the supplies that they would need for a successful year. We are happy to announce we have surpassed our fundraising goal and successfully collected 13,754 items. We are so excited to pass these educational tools on to the children of the Boys & Girls Club of Brockton, in hopes of a successful school year!

 



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The Stacks

Current Litigation Highlights Ongoing Need for Review of Plans for Mental Health Parity Compliance

By: Corrie Cripps – September 2018 – Self-Insurers Publishing Corp.

Plan sponsors of self-insured group health plans have to balance the need for cost-containment strategies while ensuring compliance with federal health benefit mandates. Mental health parity compliance is particularly challenging to navigate as case law is still being developed in this area.

The Mental Health Parity and Addiction Equity Act (MHPAEA), as amended by the Affordable Care Act (ACA), generally requires that group health plans ensure that the financial requirements and treatment limitations on mental health or substance use disorder (MH/SUD) benefits they provide are no more restrictive than those on medical or surgical benefits. Click here to read the rest of this article

Click here to read the rest of this article


Much Needed Correction in the Second Circuit...Is Relief (Equitable, That Is) Around the Corner?

By: Christopher Aguiar, Esq. – August 2018 – Self-Insurers Publishing Corp.

Third party subrogation and reimbursement rights and the State of New York have always had a bit of a contentious relationship. At every turn it seems New York is tinkering with its state laws in a way that weakens the rights of insurance companies and (they think) benefit plans of all kinds. Many arguments are available both for and against the viability of a benefit plan’s rights in New York. As you can expect, Private Self-Funded ERISA Plans enjoy the benefit of preemption and surely do not have to be concerned with these changes in New York State Law … Or do they?

Click here to read the rest of this article

 

When Benefits and Exclusions Create a Crossroads between Plan and Employer Requirements

By: Erin M. Hussey, Esq. – July 2018 – Self-Insurers Publishing Corp.

Plan Administrators of self-funded plans are able to customize their benefit offerings to meet the needs of the employer group, as long as that customization is compliant. Compliance for self-funded plans subject to the Employee Retirement Income Security Act (“ERISA”) includes federal health-related regulations such as the Patient Protection and Affordable Care Act (“PPACA” or “ACA”) and the Mental Health Parity and Addiction Equity Act (“MHPAEA”). The lurking problem exposing employers, who sponsor those self-funded plans, to unexpected liability are the federal employer-related regulations. The Equal Employment Opportunity Commission (“EEOC”) and the Department of Justice (“DOJ”) have taken action to enforce compliance with certain employer-related regulations such as the Americans with Disabilities Act (“ADA”) and Title VII of the Civil Rights Act of 1964 (“Title VII”).

Click here to read the rest of this article



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Phia’s Q4 Speaking Events:

Phia’s Speaking Engagements:

Adam Russo’s 2018 Speaking Engagements:

• 1/23/18 – Q4 Intelligence Conference – Tampa, FL
• 2/2/2018 – Benefit Intelligence School District Conference – Phoenix, AZ
• 3/7/2018 – SIIA Self-Insured Health Plan Executive Forum – Charleston, NC
• 3/9/2018 – CGI Business Solutions Seminar – Manchester, NH
• 3/14/2018 – Pareto Structure Meeting – Park City, UT
• 4/12/2018 – Caprock Health Care Forum – Dallas, TX
• 4/25/2018 – Berkley Captive Symposium – Grand Cayman Islands
• 4/26/2018 – Innovative Risk – Grand Cayman Islands
• 4/30/2018 – World Health Care Congress – Washington, DC
• 5/17/2018 – Prairie States Broker Event – Chicago, IL
• 6/21/2018 – GBSI Conference – Springfield, MO
• 6/26/2018 – Leavitt Annual Event – Big Sky, MT
• 8/24/2018 – WellHealth Workshop – Berkley Captive Program – Itasca, IL
• 8/29/2018 – Gus Bates Insurance – Fort Worth, TX
• 9/24/2018 – SIIA’s Annual National Educational Conference & Expo – Austin, TX

Ron Peck’s 2018 Speaking Engagements: • 1/25/2018 – HealthFirst TPA Client Conference – Tyler, TX
• 3/6/2018 – SIIA National Conference – Charleston, SC
• 3/7/2018 – CGI Business Solutions Seminar – Manchester, NH
• 3/23/18 – Health Rosetta - Module 5: Next-Gen Plan Design – Boston, MA

Tim Callender’s 2018 Speaking Engagements:

• 2/14/2018 – BevCap Captive Group, 10th Anniversary Meeting – Kona, HI
• 4/25/2018 – Cypress University – Las Vegas, NV
• 5/7/2018 – UBA Spring Conference – Chicago, IL
• 5/16/2018 – Sun Life MVP Forum – Kansas City, KS
• 5/24/2018 – Pareto Captive Services, Contrarian Re Captive Meeting – Nashville, TN
• 6/25/2018 – Leavitt Conference – Big Sky, MT • 7/17/2018 – HCAA TPA Summit – Minneapolis, MN
• 9/17/2018 – United Benefit Advisors, Fall Conference – Cincinnati, OH

Jen McCormick’s 2018 Speaking Engagements:

• 4/17/2018 – Texas Association of Benefit Advisors – Dallas, TX
• 5/16/2018 – IOA RE – Indianapolis, IN

 

 

 

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Get to Know Our Employee of the Quarter:
Judith McNeil

Congratulations to Judith McNeil, The Phia Group’s Q3 2018 Employee of the Quarter! In addition to her great customer service skills, Judy is an extremely reliable employee who goes above and beyond to ensure that there is always adequate coverage in the Customer Service Department & that all tasks are completed in a timely manner. She is one of the first to volunteer to come in early or stay late & will do so with a smile on her face. Judy’s passion for her job has been recognized and acknowledged by both coworkers and Plan members. Her work ethic has left an impression on coworkers to the point where when they think of Customer Service, they think of Judy.

 

Congratulations Judith and thank you for your many current and future contributions.

 


Phia News

Phia on the Front Cover!

Check it out! Adam Russo and Ron E. Peck represent The Phia Group on the cover of the Free Market Healthcare Solutions magazine! In their modeling debut, Phia's classic Dynamic Duo explain what we do at Phia and how we are helping you take control of your health plan!

 


Click here to check out the magazine!

The American Red Cross Visits Phia!

The American Red Cross came to visit The Phia Group and 13 of our employees successfully donated a pint of blood. With those 13 donations, we were able to save 39 lives. We take great pride in knowing the impact this can have. To learn more about the American Red Cross and how you can help save a life, make sure you check out The American Red Cross website.

 

 

Phia Welcome Video

We are pleased to announce our new Phia Welcome video! This video was designed to ensure that our vision, mission and purpose was made clear to not only our clients, but to the general population. Here at Phia we would like to urge any and every one to take a look – it concerns us all. Not only do hardworking Americans deserve access to quality and affordable healthcare, we want to secure and maintain that this is a possibility for all. The Phia Group drives success through passion and we hope you can see the root of our fervent efforts through this presentation of our enterprise.

 

 

 

New Client Account Manager – Matthew Painten

As you may know, Matthew Painten has recently been promoted to Client Account Manager at The Phia Group, in addition to his Marketing Management role. Although you may already have a direct point of contact at Phia, please feel free to start communicating with Matthew directly for any and all of your requests. You may email him personally at MPainten@phiagroup.com or send an email to CAM@phiagroup.com.

 

 

Job Opportunities:

• Health Benefit Plan Drafter, Consulting
• Health Benefit Plan Attorney I
• Staff Attorney, Provider Relations
• Accounts Payable Coordinator, Accounting
• Claim Recovery Specialist – WC, Recovery
• Claim and Case Support Analyst, Recovery
• Sales Administrative Assistant, Sales
• Claims Specialist, Provider Relations
• Sales and Marketing Internship
• Information Technology Internship

See the latest job opportunities, here: https://www.phiagroup.com/About-Us/Careers

 

Promotions

• Ekta Gupta was promoted from ETL Specialist to Manager, Data Services Group
• Zack Mclaren was promoted from Case investigator to Senior Claims Recovery Specialist
• Catina Griffiths was promoted from Case Investigator to Case Handler

 

New Hires

• Carlos Alvarez was hired as a Case Investigator
• Neal Wang was hired as an ETL Specialist
• Megan Colter was hired as a Health Benefit Plan Consultant
• Michael Litman was hired as an Intake Specialist
• Diana Newburg was hired as a Health Benefit Plan Consultant – PACE
• Nicole Russo was hired as a Case Investigator
• Catherine DeQuinzio was hired as a Case Investigator
• Derek Gorini was hired as an IT Systems Administrator

 

Phia Fun Day:

The Phia Group's annual Phia Fun Day was nothing short of a success. The Phia Family spent the day at George's Island off Boston Harbor; there they explored Fort Warren, played beach games, and swam! Our employees more than deserve a fun day in the sun and we were happy to provide for them the best! We can't wait for next year!

 

 



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info@phiagroup.com
781-535-5600

The Stacks - 4th Quarter 2018

Current Litigation Highlights Ongoing Need for Review of Plans for Mental Health Parity Compliance

By: Corrie Cripps

Plan sponsors of self-insured group health plans have to balance the need for cost-containment strategies while ensuring compliance with federal health benefit mandates. Mental health parity compliance is particularly challenging to navigate as case law is still being developed in this area.

Background

The Mental Health Parity and Addiction Equity Act (MHPAEA), as amended by the Affordable Care Act (ACA), generally requires that group health plans ensure that the financial requirements and treatment limitations on mental health or substance use disorder (MH/SUD) benefits they provide are no more restrictive than those on medical or surgical benefits.

MHPAEA generally applies to group health plans that provide coverage for mental health or substance use disorder benefits in addition to medical/surgical benefits. Some self-insured plans are exempt from MHPAEA, such as those with 50 or fewer employees.

The Department of Labor (DOL) has primary enforcement authority with regard to MHPAEA over private sector employment-based group health plans.1

DOL Actions

In April 2018, the Departments of Labor, Health and Human Services and the Internal Revenue Service issued a package of guidance on MHPAEA. Among the items was the “FY 2017 MHPAEA Enforcement Fact Sheet”, which states that in fiscal year (FY) 2017, the DOL conducted 187 MHPAEA-related investigations and cited 92 violations of MHPAEA noncompliance.2

The Employee Benefits Security Administration (EBSA) branch of the DOL authored publications and compliance assistance materials to assist plans with MHPAEA compliance. One of these publications, “Warning Signs” is an extremely useful tool to refer to when doing a quick review of a plan document/summary plan description.3 This document was published in May 2016, but the DOL is expected to publish a “Warning Signs 2.0” document in fiscal year 2018 to focus on non-quantitative treatment limitations (NQTLs), since this appears to be a problem compliance area for plans. NQTLs are generally limits on the scope or duration of benefits for treatment that are not expressed numerically, such as medical management techniques, provider network admission criteria, or fail-first policies. In terms of MHPAEA compliance, plans should ensure that any NQTLs with respect to MH/SUD benefits are comparable to the limitations that apply to the medical/surgical benefits in the same classification.

Current Mental Health Parity Cases

MHPAEA does not require that self-insured group health plans cover MH/SUD benefits; it only requires that if a plan does cover MH/SUD benefits that the benefits are in parity with the medical/surgical benefits.

One of the challenges for plans is determining the scope of benefit types that are compared for parity purposes. Since case law is still being developed in this area, these matters continue to be unsettled.

The following are some recent cases that highlight this area of concern.

Vorpahl v. Harvard Pilgrim Health Care Ins. Co. (D. Mass. July 20, 2018)4

This focus of this case is on coverage of a “wilderness treatment program”. The plan at issue is a fully-insured plan that denied coverage for an employee’s dependent children who received treatment at a state-licensed outdoor youth treatment program that was authorized to provide mental health services. The children’s parents claim the plan’s exclusion for “health resorts, recreational programs, camps, wilderness programs, outdoor skills programs, relaxation or lifestyle programs, and services provided in conjunction with (or as part of) those programs” violates the MHPAEA and the ACA. The US District Court for the District of Massachusetts dismissed the ACA claim but denied the insurer’s motion to dismiss the MHPAEA claim, so this portion of the lawsuit will proceed.

What is interesting about this case is how the plan participants determined the medical/surgical equivalent of the wilderness treatment program, which is different than how the plan viewed the benefits and exclusions.

The plan argued that its exclusion is a categorical exclusion that applies to both medical/surgical benefits and MH/SUD benefits provided at this type of facility. The example the plan gave for the medical/surgical equivalent is a “diabetes camp”, which the plan would also exclude.

The plan participants argued that because the plan covers medical/surgical benefits provided at other inpatient treatment settings it should cover this wilderness treatment program setting as well since it is an equivalent type of treatment setting.  In support of their position, they cited the Joseph F. v. Sinclair Servs. Co. case from 2016, in which the court ruled that the plan violated MHPAEA by covering skilled nursing facilities but not covering residential treatment facilities.

So which comparison is correct—the more specific setting comparison, or the broader category comparison? There is currently no direct guidance on this issue.

While this case is still at its early stages procedurally, we will be watching to see how it develops.

Bushell v. Unitedhealth Group Inc., 2018 WL 1578167 (S.D.N.Y. 2018)5

The question in this case is how to determine the MH/SUD equivalent of the plan’s “nutritional counseling” benefit.

In this case, the plan participant who has anorexia nervosa sued the insurer after it denied her claim for nutritional counseling to treat her condition. The insurer asserted that nutritional counseling was not covered under the plan.

The plan participant argued that the plan covered such counseling for non-mental health conditions, such as diabetes, and therefore was in violation of MHPAEA. The insurer asked the court to dismiss the claim, arguing that the counseling services that were requested were not in the same classification as the counseling services that were covered under the plan. The court refused to dismiss the claim, therefore allowing the case to proceed.

The parity rules under MHPAEA are applied on a classification basis. Therefore, if a plan provides mental health or substance use disorder benefits in any “classification”, then mental health and substance use disorder benefits must be provided in every classification in which medical/surgical benefits are provided. Those classification requirements apply to the following:

  • Inpatient, in-network
  • Inpatient, out-of-network
  • Outpatient, in-network
  • Outpatient, out-of-network
  • Emergency care; and
  • Prescription drugs

In this particular case, the medical/surgical benefit of diabetes nutritional counseling was covered within the “outpatient, out-of-network” classification (as noted by the court in this case), but the mental health benefit for anorexia nutritional counseling, which may also fall into that classification, was not. Therefore, if mental health is covered under the plan, and the medical/surgical benefit of nutritional counseling for diabetes is covered in any of the classifications listed above, then the mental health benefit of nutritional counseling must be provided in parity in that same classification(s).

The plan participant makes a good argument for parity here. Plans that cover both (1) mental health benefits and (2) the medical/surgical benefit of diabetes nutritional counseling should take the conservative approach and cover mental health nutritional counseling as an additional benefit. Another option would be for the plan to provide a “Nutritional Counseling” benefit that is more general, and not specific to just diabetes.

The results are pending in this case but we will be tracking the outcome. Plans should be aware that eating disorder treatments are considered mental health benefits. Congress addressed this in section 13007 of the 21st Century Cures Act and this subject was also addressed in the FAQs that the Departments issued on June 16, 2017.6,7 Plans should be cautious when reviewing plan exclusions to ensure they cannot be interpreted as applying a limit on an eating disorder treatment.

Conclusion

The DOL’s published enforcement reports suggest that the DOL is continuing to investigate compliance with MHPAEA. In addition, based on current litigation, it appears there is a fairly low burden to state a claim under MHPAEA that survives a motion to dismiss. Plan sponsors should review cost-containment techniques with counsel to ensure they are designed to mitigate risk in this area while ensuring compliance.

Corrie Cripps is a plan drafter/compliance consultant with The Phia Group.  She specializes in plan document drafting and review, as well as a myriad of compliance matters, notably including those related to the Affordable Care Act. 

 

1 The Mental Health Parity and Addiction Equity Act (MHPAEA), https://www.cms.gov/cciio/programs-and-initiatives/other-insurance-protections/mhpaea_factsheet.html, (last visited August 8, 2018).

3 Warning Signs – Plan or Policy Non-Quantitative Treatment Limitations (NQTLs) that Require Additional Analysis to Determine Mental Health Parity Compliance, May 2016, https://www.dol.gov/sites/default/files/ebsa/laws-and-regulations/laws/mental-health-parity/warning-signs-plan-or-policy-nqtls-that-require-additional-analysis-to-determine-mhpaea-compliance.pdf, (last visited August 8, 2018).

4 Vorpahl v. Harvard Pilgrim Health Care Ins. Co. (D. Mass. July 20, 2018), https://www.bloomberglaw.com/public/desktop/document/Vorpahl_v_Harvard_Pilgrim_Health_Ins_Co_No_17cv10844DJC_2018_BL_2?1533762894, (last visited August 8, 2018).

5 Bushell v. Unitedhealth Group Inc., 2018 WL 1578167 (S.D.N.Y. 2018), https://law.justia.com/cases/federal/district-courts/new-york/nysdce/1:2017cv02021/471192/38/, (last visited August 8, 2018).

6 21st Century Cures Act, Pub. L. No. 114-255 (2016).

7 FAQs About Affordable Care Act Implementation Part 38 and Mental Health And Substance Use Disorder Parity Implementation, https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-38.pdf, (last visited August 8, 2018).

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Much Needed Correction in the Second Circuit … Is Relief (Equitable, That Is) Around the Corner?

By: Christopher Aguiar, Esq.

 

Third party subrogation and reimbursement rights and the State of New York have always had a bit of a contentious relationship.  At every turn it seems New York is tinkering with its state laws in a way that weakens the rights of insurance companies and (they think) benefit plans of all kinds.  Many arguments are available both for and against the viability of a benefit plan’s rights in New York.  As you can expect, Private Self-Funded ERISA Plans enjoy the benefit of preemption and surely do not have to be concerned with these changes in New York State Law … Or do they?

Ask any attorney practicing personal injury law in the State of New York and most will argue(rather aggressively, in fact) that New York does not allow subrogation and reimbursement under any circumstances, and that they have the federal case law to prove it.  Sereboff v. Mid Atlantic Medical Services, Inc. and its progeny be damned, despite providing that a benefit plan with clear and explicit plan terms allowing for recovery without reduction is entitled to full recovery so long as it is proactive and can trace the actual settlement fund to traceable assets.  547 U.S. 356 (2006).  See also US Airways, Inc. v. McCutchen, 133 S.Ct. 1537 (2013). To them a quick read of Wurtz v. Rawlings is the law of the land. 761 F.3d 232 (2014).

Recall Wurtz in 2014 when the Second Circuit Court of Appeals held that United Health, a fully insured benefit plan arrangement, was unable to satisfy the Davila test and obtain complete preemption from state law, and accordingly, the New York anti-subrogation law would apply to eliminate the rights of United Health and eradicate its right of recovery. Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004).  That outcome, alone, is not all that surprising given the health plans fully insured status.  Wurtz, 761 F.3d. at n. 6. 

What did come as a bit of a surprise was the way in which the Second Circuit reached that decision.  Essentially, the court reasoned in a long, somewhat convoluted opinion that a law suit by a plan beneficiary against its employee benefit plan to enforce an anti-subrogation law does not “relate to” employee benefits and therefore cannot be preempted on a defensive pleading.  In pertinent part, the court stated:

This expansive interpretation of complete preemption ignores the fact that plaintiffs' claims are based on a state law that regulates insurance and are not based on the terms of their plans. As a result, state law does not impermissibly expand the exclusive remedies provided by ERISA § 502(a). Under ERISA § 514(a)-(b), state laws that "relate to" ERISA plans are expressly preempted, but not if they "regulate[] insurance." 29 U.S.C. § 1144(a)-(b). Based on this "insurance saving clause," the Supreme Court has held that state statutes regulating insurance that nonetheless affect ERISA benefits are not expressly preempted, with no hint that claims under these statutes might still be completely preempted and thus unable to be adjudicated under those state laws when they do not expand the remedies available for beneficiaries for claims based on the terms of their plans. See Rush Prudential HMO Inc. v. Moran, 536 U.S. 355, 377-79, 122 S.Ct. 2151, 153 L.Ed.2d 375 (2002); UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 366-67, 119 S.Ct. 1380, 143 L.Ed.2d 462 (1999).

This effectively created a race to the courthouse steps.  If the participant first sues the plan for enforcement of an anti-subrogation law, the plan would not be able to claim preemption and would be unable to litigate in federal court, potentially unable to enforce its right of recovery.1  Every plaintiff’s lawyer in New York (along with its sister states Connecticut and Vermont, all notoriously anti subrogation) was provided the leverage they needed to look at all benefit plans, even private self-funded plans whose rights have repeatedly been protected by The Supreme Court of the United States, and force them into settlements.  After all, do the plans really want to end up in state court and argue with a court consisting of New York judges with a bias against subrogation that just went to great lengths to interpret incorrectly ERISA’s preemption framework in order to reach its outcome?  Interestingly, the court itself acknowledged in footnote 6 of the decision that the outcome for a private self-funded plan would likely be different.  The footnote stated:

The issue in FMC was the effect of the so-called "deemer clause" of ERISA § 514(b)(2)(B), which exempts self-funded plans from the savings clause. The Supreme Court held that the deemer clause did not cause preemption of the entire statute in all cases, but only as applied to self-funded plans. 498 U.S. at 61, 111 S.Ct. 403. Under FMC, the applicability of N.Y. Gen. Oblig. Law § 5-335 to self-funded plans would only mean that the law is preempted as applied to those plans (which is not the case here because the plans at issue are insured), not that the law is not "specifically directed" at insurance.  

Wurtz, 761 F.3d. at n. 6.

You see, even there the court conceded that this outcome was based on the fact that this was an insured Plan, but of particular concern is how the Court determined that anti subrogation law did not relate to the benefit Plan.

So really, what is the problem here?  It appears the court clearly misinterpreted ERISA’s preemption framework, while likely still reaching a correct outcome given that particular plans’ fully insured status, and even conceded that the outcome would likely be different for a Private Self-funded Plan?  Well, the problem is simple.  We lawyers find any leverage point we have and use it to our full advantage.  The fact of the matter is that that law is only as good as what can and reasonably in prudently be enforced, and lawsuits are expensive.  That, along with considering the risk of the Second Circuit Court again misinterpreting the “relation to” portion of ERISA, can be a risky proposition and not always a prudent use of Plan assets to win the race to the Court, so to speak.

Enter Cognetta v. Bonavita, a case this author hopes is the beginning of a clarification of the decision in Wurtz that will finally give plan representatives the tool they need to once and for all quiet this race to the court nonsense.  E.D.N.Y. No. 1:17-cv-03065 (2018).  In Cognetta, the Plan paid approximately $110,000.00 to cover the medical expenses of plan participants injured in an automobile accident.  In an abundance of caution, the Plan got way ahead of the game and won the race to the court.  In fact, the Plan did not even wait for the case to settle.  Instead, while the participant’s injury claims were still pending with the third party, the Plan shrewdly filed for a Declaratory Judgement asking the court to determine that it did, in fact, have an equitable lien and a constructive trust over the possible settlement funds and sought a Court Order that upon settlement, those funds were to be held in Trust.

Much to the delight of self-funded benefit plans everywhere, the court ruled in favor of the Plan.  Among the most interesting parts of the decision was how this court laid out the most important part of the entire dispute in Wurtz, and that is, how the Court handled this “relation to” notion.  In Cognetta, the Court provided in pertinent part:

…The purpose of ERISA is to provide a uniform regulatory regime over employee benefit plans." Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004). To that end, ERISA Section 514(a) expressly preempts "any and all" state laws that "relate to any employee benefit plan." 29 U.S.C. § 1144(a). A state law "relate[s] to" an employee benefit plan if that law "has a connection with or reference to such a plan." Franklin H. Williams Ins. Tr. v. Travelers Ins. Co., 50 F.3d 144, 148 (2d Cir. 1995) (quoting Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739 (1985)). The scope of ERISA's express preemption clause is "as broad as its language." FMC Corp. v. Holliday, 498 U.S. 52, 59 (1990) (quoting Shaw v. Delta Air Lines, 463 U.S. 85, 98 (1983))…

Even where a state law "relate[s] to" an employee benefit plan, however, ERISA does not expressly preempt that law if it "regulates insurance." 29 U.S.C. § 1144(b). A law "regulates insurance" if it is "specifically directed towards entities engaged in insurance" and "substantially affect[s] the risk pooling arrangement between the insurer and the insured." Wurtz v. Rawlings Co., 761 F.3d 232, 240 (2d Cir. 1994) (quoting Kentucky Ass'n of Health Plans, Inc. v. Miller, 538 U.S. 329, 342 (2003)). In such a situation, the state law is "saved" from express preemption. Id. Nevertheless, an employee benefit plan governed by ERISA cannot be "deemed . . . an insurance company or other insurer . . . for purposes of any law of any State purporting to regulate insurance." 29 U.S.C. § 1144(b)(2)(B). That is, a state law cannot escape ERISA preemption by erroneously classifying an employee benefit plan as "insurance." See id.

Whether a state law that regulates insurance applies to a plan or is preempted by ERISA depends on whether the plan purchases insurance. See FMC Corp., 498 U.S. at 64; see also Arnone v. Aetna Life Ins. Co., 860 F.3d 97, 107 (2d Cir. 2017). Where a plan buys insurance, it "remains an insurer for purposes of state laws `purporting to regulate insurance.'" FMC Corp., 498 U.S. at 61. By contrast, where a plan is self-funded and does not purchase insurance from an insurance company, ERISA "exempt[s]" the plan "from state laws that `regulat[e] insurance.'" Id. (second alteration in original); see also Wurtz, 761 F.3d at 241 n.6. …

Cognetta, E.D.N.Y. No. 1:17-cv-03065

And in that last paragraph lies the crux of the issue.  It is because the private self-funded plan does not purchase insurance, and under ERISA’s Deemer clause, cannot be considered “insurance” that application of the rule in Wurtz is incorrect as it relates to self-funded benefit plans.  Once one determines that a plan is not insurance pursuant to the Deemer clause, it is then that we determine whether the law a participant is seeking to enforce “relates to” an employee benefit Plan.  An anti-subrogation clause is by definition the attempt of a plan participant to seek benefits to which it is not entitled, i.e. the ability to keep benefits paid which are subject to a subrogation or reimbursement obligation.  

While this is indeed an exciting development, some notes of caution. 

First, this decision was reached at the Federal Trial Court level.  There are three other Federal districts in New York and none of them have binding authority over the other; meaning that if this exact same issue were to be heard in the Southern District of New York, the outcome could be different. If and only if this decision is appealed, heard, and upheld, by the Second Circuit Court of Appeals will it then be the law of the land in all Federal Districts under the purview of the Second Circuit, including Connecticut and Vermont.  Until then, this decision simply gives plans the same leverage New York attorneys had against them, the risk of loss and cost of pursuit rendering such pursuit an imprudent use of funds, be that due to fiduciary concerns with respect to the plan, or practical concerns with the respect to the participant.

Second, and perhaps most importantly, the ability of self-funded benefit plans to win on any issue in Federal Court in the Land still rests on one very basic concept … plan language.  If the Plan language is insufficient in any way, a plan is at serious risk of losing its rights.  In Cognetta, the Plan was well drafted, and assuming the Second Circuit makes good on its Footnote in the Wurtz decision, It would likely uphold the decision in the Cognetta case upon appeal.

We will have to wait and see how this plays out. Either way, it is an exciting development in the Second Circuit and finally provides what looks to be a light at the end of the tunnel on the Wurtz problem in the Second Circuit.  Make no mistake, New York lawyers will find other ways to make our road to recovery more difficult.  Having the right tools and partners in place to identify recovery opportunities and act on them continues to be the best way to protect plan funds.  Then all we can do is roll with the punches, and every so often, we’ll get some relief!

 

1 This can present insurmountable challenges in some states, such as Illinois, where state courts have repeatedly refused to apply clear plan terms that conflict with state laws. Bishop v. Burgard, 764 N.E. 2d 24 (Ill. 2002). As an intermediate court of appeals in the state noted “…McCutchen may foreshadow a different result than our supreme court has pronounced in the past.” Schrempf, Kelly, Napp & Darr, Ltd. v. Carpenters’ Health and Welfare Trust Fund, 35 N.E.3d 988 (2015).

__________________________________________________________________________________________________________

When Benefits and Exclusions Create a Crossroads between Plan and Employer Requirements

By: Erin M. Hussey, Esq.

Plan Administrators of self-funded plans are able to customize their benefit offerings to meet the needs of the employer group, as long as that customization is compliant. Compliance for self-funded plans subject to the Employee Retirement Income Security Act (“ERISA”) includes federal health-related regulations such as the Patient Protection and Affordable Care Act (“PPACA” or “ACA”) and the Mental Health Parity and Addiction Equity Act (“MHPAEA”). The lurking problem exposing employers, who sponsor those self-funded plans, to unexpected liability are the federal employer-related regulations. The Equal Employment Opportunity Commission (“EEOC”) and the Department of Justice (“DOJ”) have taken action to enforce compliance with certain employer-related regulations such as the Americans with Disabilities Act (“ADA”) and Title VII of the Civil Rights Act of 1964 (“Title VII”).

Provided below are examples of when an exclusion in a self-funded plan, such as an excluded medical condition or treatment for that medical condition, can be compliant with the applicable health-related regulations, such as the ACA and MHPAEA, but that same medical condition is still afforded protection under employer-related regulations such as the ADA and Title VII.  

ACA and Title VII Compliance

Discrimination on the Basis of Sex

The ACA’s Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age, or disability with regards to certain covered entities’ health programs. A covered entity is one that receives federal funding as outlined in the ACA. The convoluted issue is whether treatment for gender identity is a protected class under the category of “discrimination based on sex.” While Section 1557 does not specifically state that plans subject to it must cover gender transition surgery, the rules do state that the Health and Human Services, Office for Civil Rights (“HHS, OCR”) will investigate any complaints. With that said, the December 31, 2016, U.S. District Court injunction (applicable nationwide) was placed on certain parts of Section 1557, including the prohibitions against discrimination on the basis of gender identity and termination of pregnancy, and that injunction is still in effect. The DOJ’s recent guidance, while it does not specifically address Section 1557, appears to hint that the current administration is not going to ask a federal judge to lift the current injunction.

The self-funded plans that are not directly subject to Section 1557, because of the lack of federal funds, must still comply with the ACA. There are no actual benefit mandates for transgender services under the ACA for self-funded plans that are not subject to Section 1557. Therefore, there does not appear to be a direct benefit compliance issue for plans that exclude treatment for gender identity. Regardless, there is the potential for a discrimination issue under Title VII which may draw unwanted attention from the EEOC (as HHS does not have the authority in this case).  

Whether a Plan is or is not subject to Section 1557, it would still be a plan’s best practices to cover gender identity services since employers are not shielded from liability under Title VII. Title VII prohibits employment discrimination based on race, color, religion, sex and national origin, and the EEOC’s interpretation of its prohibition on discrimination based on sex, includes discrimination based on gender identity and sexual orientation. The EEOC, as an independent commission, takes the stance that employees who undergo gender reassignment are protected under Title VII.  For example, the EEOC filed an amicus brief on August 22, 2016, arguing that an individual’s gender dysphoria made gender reassignment surgery “medically necessary” and that the failure to cover this surgery was a sex discrimination violation of Title VII. The case for which this amicus brief was filed, involved a self-funded health plan that had a sex transformation surgery exclusion. The above-noted case is a perfect example of when an exclusion that complies with health-related regulations can cause a discrimination lawsuit to be brought by the EEOC against the employer. Therefore, Plan Administrators must proceed with caution when excluding treatment for gender identity or dysphoria, even if they are not subject to Section 1557, because the EEOC may still have a discrimination claim under Title VII.

MHPAEA and ADA Compliance

Mental Health

The MHPAEA requires mental health and substance use disorder benefits to be covered in parity with the plan’s medical and surgical benefits. The Department of Labor (“DOL”) recently issued proposed FAQs on mental health and substance use disorder parity, and they seem to imply that a plan can compliantly exclude a particular medical condition (i.e., autism), because the exclusion of all benefits for a particular condition would not be considered a “treatment limitation” in the MHPAEA regulations. Comments on these proposed FAQs should be submitted to the DOL by June 22, 2018. As for the medical condition of autism, there is currently no consensus in the medical community regarding whether autism should be classified as a mental health disorder (psychiatric disorder) or a neurological/developmental disorder. With that said if a private self-funded ERISA plan chose to explicitly exclude autism there would be no direct violation of the MHPAEA or the ACA.

Excluding the medical condition of autism does not, however, shield the employer from responsibilities they have under the ADA. Pursuant to the ADA, a “qualified individual with a disability” must be provided with reasonable accommodations unless the employer can show that the accommodation would impose an undue hardship to them. An employee with autism, who would qualify as a disabled individual under the ADA, may request such reasonable accommodations.

A violation of the ADA could result in a lawsuit being brought by the EEOC. For example, the EEOC filed a lawsuit against an employer in California who did not provide reasonable accommodations to their employee with autism. The employer was subject to a large fine, agreed to change their policies and procedures, and will also submit annual reports to the EEOC regarding compliance. Therefore, even if the medical condition of autism is compliantly excluded under the plan, the employer still has to comply with the ADA, such as providing reasonable accommodations. In addition, given the EEOC’s protection of individuals with autism, the EEOC may find an exclusion of autism to be discriminatory and employers of self-funded plans must be cautious.

Substance Use Disorder

As discussed above, private self-funded ERISA plans are not required to cover mental health and substance use disorder benefits, but if they do, they must cover them in parity with the medical and surgical benefits. In other words, if a plan chooses not to cover these benefits at all, the plan would still be in compliance with the ACA and the MHPAEA. With that said, this will pose the same situation as above, because even if these benefits are not covered, employees would still have federal rights under the ADA.

For example, a qualified individual in Massachusetts had sought treatment for opioid use disorder and was denied treatment by a skilled nursing facility, creating action to be taken by the DOJ. The complaint was brought under the ADA because it was determined that these individuals were disabled on the basis of opioid use disorder. On May 10, 2018, the United States of America entered into a Settlement Agreement with Charlwell Operating, LLC, the skilled nursing facility, wherein the facility was found to be discriminating against individuals seeking treatment for opioid use disorder in violation of the ADA. The outcome of that settlement involved a penalty to be paid by the facility, and they were to adopt policies and conduct training, including training on the ADA itself.

Although this settlement involved discrimination by a provider and not an employer, it brings to light that the ADA protects and encompasses medical conditions that, at the same time, are not covered under the plan. If a medical condition is not covered, the employer must still ensure that reasonable accommodations and potential discrimination issues are being monitored.  

Meeting at the Crossroads

Plan Administrators of self-funded plans should always keep in mind the protections of certain medical conditions that are enforced by the EEOC and DOJ. These protections are outside the realm of health-related requirements but inside the realm of employer-related requirements. When a plan’s benefit offerings or exclusions are compliant with the applicable health-related regulations, it does not mean the employer who sponsors that plan is safeguarded from (1) exclusions that may be deemed discriminatory under the ADA and Title VII, (2) the ADA requirements, such as reasonable accommodations, for those excluded medical conditions, or (3) general workplace discrimination regarding those excluded medical conditions.

 


The Phia Group's 3rd Quarter 2018 Newsletter


Phone: 781-535-5600 | www.phiagroup.com





The Book of Russo:
From the Desk of the CEO

The heat wave is here in Boston and so is the increased interest in self-funding. It seems that every day there are new employers, brokers, and others interested in getting in on the fun. What they all don’t realize is that there is no easy button. Building the perfect empowered self-funded employee benefit plan takes time and hard work. It requires attention to detail and a realization that you truly can control the overall cost of claims in your own unique way. Whether it’s changing your payment methodology, your access to pharmacy drugs, your contracting with facilities, or just how you cover out of network claims, the options are endless. Here lies the rub. Having all of these options makes all of us vulnerable to potential pitfalls like gaps in coverage with stop loss or language that is ambiguous at best; worst of all is the potential fiduciary breaches around the corner. This is why The Phia Group exists – to assist all of you in making the perfect self-funded plan. The opportunities are everywhere but so are the traps and the landmines. So while you enjoy a nice cold iced tea reading this quarter’s newsletter, feel happy knowing that we got your back… no matter what.
 

 


Service Focus of the Quarter: Phia Unwrapped
Phia Group Case Study
Phia Fit to Print
From the Blogosphere
Webinars
Podcasts
The Phia Group’s 2018 Charity
The Stacks
Phia’s Speaking Events
Employee of the Quarter
Phia News

 

Service Focus of the Quarter: Phia Unwrapped

The Phia Group is proud to announce that its “Phia Unwrapped” program has been generating extraordinary savings.

Wrap, extender, and other leased networks offer small discounts and audit restrictions, affording providers nearly unlimited rights. With Phia Unwrapped, The Phia Group replaces wrap network access and modifies non-network payment methodologies, securing payable amounts that are unbeatably low, based upon fair market parameters.

Phia Unwrapped places no minimum threshold on claims to be repriced or potential balance billing to be negotiated, and The Phia Group attempts to secure sign-off, ensuring providers will accept the plan’s payment as payment in full. Phia Unwrapped implementation entails setting up an EDI feed with the claims administrator, so claims are flagged, transferred, and repriced automatically. Phia Unwrapped is billed based on a percent of actual savings, leading to fair rates and no excessive costs for unprecedented savings – and if there’s pushback or balance-billing, our Provider Relations team is ready to handle it.

Out-of-network claims run through The Phia Group's Unwrapped program have yielded a whopping average savings of 74% off billed charges (three times the average wrap discount). On average, The Phia Group sees less than 2% of claims result in some form of balance-billing; these results are similar throughout many different plan types and geographies, proving that this program and these results can be replicated nationwide.

Based on our data, Phia Unwrapped has proven to yield significantly better savings than wrap networks. Can you and your clients afford to maintain the status quo in the face of results like this?

Contact our Vice President of Sales and Marketing, Attorney Tim Callender, to learn more about Phia Unwrapped. Tim can be reached by phone at 781-535-5631 or by email at TCallender@phiagroup.com.

Phia Case Study: Phia to the Rescue!

A particular plan participant, covered by a health plan whose subrogation services were provided by The Phia Group, slipped and fell while walking in a parking lot. She subsequently retained a personal injury attorney to represent her and pursue a claim against the owner of the parking lot. The Phia Group promptly placed the attorney on notice of the Plan’s lien.

After some time had elapsed, the plan participant notified The Phia Group that she had only received around $20,000.00 in settlement funds, which was almost equal to the amount of the Plan’s lien; accordingly, the participant requested a reduction, which The Phia Group considered in due course.

After doing some due diligence to confirm the settlement, and examining the considerable resources available to us, The Phia Group’s subrogation team was able to discover that this particular case had actually settled for many times the amount that the participant claimed to have received.

Armed with this information gleaned from diligent investigation, The Phia Group was able to recover the full amount of the Plan’s lien, without the need for any reduction.

 


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Fiduciary Burden of the Quarter: Making Sure the SPD is Sufficient!

The issue of what must be present in an SPD is fairly straightforward at this point; ERISA, the ACA, and other laws have been issued and interpreted, and those that haven’t are subject to the “good faith, reasonable interpretation” guidelines that we all know and love.

In the modern self-funded industry, though, the entities drafting Plan Documents and SPDs are very often not the entities that are legally responsible for creating and ratifying them; the Plan Sponsor must ultimately approve the SPD and is ultimately responsible for the content, but it is very uncommon for the Plan Sponsor itself to do the drafting. There’s nothing wrong with this, of course; everyone uses vendors!

When the employer itself doesn’t draft the Plan Document, though, how diligent is the employer in ensuring compliance and that the document meets the needs of the health plan – and who takes the blame if the document isn’t perfect?

We at The Phia Group have seen numerous instances – both in court and out – of employers “rubber-stamping” a plan document without truly reviewing and approving it. That doesn’t change who is responsible, of course, so the Plan Sponsor could be severely handicapping itself and violating its considerable fiduciary duties to ensure that its plan documents are up to snuff.

A best practice is for TPAs and brokers to ensure that the Plan Sponsor is given an opportunity to truly review and consent to the terms of its plan document. Employers love having the hard parts of self-funding done for them – but TPAs and brokers need to protect themselves!

We also recommend making sure that a TPA’s Administrative Services Agreement holds the TPA harmless in the event the plan document is somehow noncompliant or incorrect, regardless of who has drafted it, since it is the Plan Sponsor’s ultimate responsibility to approve it.

 

Success Story of the Quarter: Egregious Billing

A TPA with which The Phia Group works closely has a benefit plan client that incurred an $860,000 NICU claim. Luckily, this particular client happened to be utilizing The Phia Group’s Phia Unwrapped service. Accordingly, when the claim was incurred, it was repriced based on a percentage of Medicare chosen by the Plan, and paid accordingly, at the Plan’s Maximum Allowable Charge.

A few months later, the provider sent a balance-bill to the member, attempting to force the member to pay the entire balance of the claim. The Phia Group became involved, and after a lengthy negotiation process, The Phia Group was able to get the balance settled for 17% of the amount the hospital originally demanded from the patient. The utilization of the Phia Unwrapped service saved this health plan over half a million dollars – and what’s more, the wrap network (which the Plan abandoned in favor of utilizing Phia Unwrapped) would have afforded the Plan a contractual 22% discount.

The result? Phia Unwrapped netted the Plan savings of over $400,000 above and beyond its previous wrap network – and the patient is fully protected from balance-billing via the settlement agreement.


 


 

Phia Fit to Print:

• Money Inc. – State Reactions and their Power over Association Health Plans – June 30, 2018

• Self-Insurers Publishing Corp. – Conflicting Policies and Courts: When Plan Language Creates More Litigation than Coverage – June 1, 2018

• Self-Insurers Publishing Corp. – The Practical Impact of Ariana M. v. Humana Health Plan of Tex., Inc. on ERISA Denials of Benefits – May 8, 2018

• Money Inc. – The Rising Cost of Cost Containment – May 5, 2018

• Money Inc. – Freedom Blue: Why the Trump Administration Picked Obamacare over Idaho – April 2, 2018

• Self-Insurers Publishing Corp. – Drowning in A Sea of Paper – April 1, 2018



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From the Blogosphere:

The Tangled Web of Eligibility. Eligibility issues are typically very fact specific. Do you know the facts?

The Complications Surrounding Intermittent FMLA Leave! Allow us to uncomplicated intermittent FMLA Leave for you.

Bridging the Gaps Between...Everything! It’s very important that you avoid all gaps, and here’s why.

An Addiction to Health Insurance. For too long insurance has been treated as a shield, blinding people from the cost of their care.

 

To stay up to date on other industry news, please visit our blog.



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Webinars

Click HERE to Register!

• On June 21, 2018, The Phia Group presented, “Final Rule on Association Health Plans and YOU: Phia's Take,” where we discussed the final rule and explain the significant impact it is expected to have on the self-funded industry.

• On June 12, 2018, The Phia Group presented, “The Buck Stops…Where? Pointing Fingers in the Self-Funded Industry,” where we discussed why it’s in everyone’s best interests to work together to overcome issues rather than point fingers.

• On May 15, 2018, The Phia Group presented, “The Case for Collusion: How the Power Players May Have Defrauded Us All,” where we discussed the ways in which our industry can fight back and tackle the underlying problem of specialty drug prices.

• On April 19, 2018, The Phia Group presented, “4 Horsemen of the Plan-pocalypse,” where we discussed four issues that may not presently be keeping you up at night, but will certainly be disturbing your slumber very soon.

Be sure to check out all of our past webinars!



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Podcasts:Now Introducing Video Podcasts!

• On June 29, 2018, The Phia Group presented its first video podcast, “You’ve Gotta Fight, For Your Right, to Try,” where the team addresses the recently passed Right To Try Laws, and dissect the impact it may have – if any – on your health benefit plans.

• On June 22, 2018, The Phia Group presented, “Super-Empowerment,” where our hosts chat with none other than Brooks Goodison, President & Principal Partner at Diversified Group.

• On June 12, 2018, The Phia Group presented, “The Phia Group “MVP” Post-Mortem,” where our hosts discuss the recently concluded Phia Group Most-Valuable-Partners or “MVP” forum; an event that took place June 4th to the 6th at Gillette Stadium, home of the New England Patriots..

• On June 1, 2018, The Phia Group presented, “Empowering Plans: P43 - A Debrief of SIIA’s Fly-In on the Hill,” where Adam, Ron, and Brady discuss their trip to Washington, D.C. in which they took part in SIIA’s “Fly-In” event, where SIIA members met with their elected representatives to discuss self-insurance/captive insurance issues.

• On May 29, 2018, The Phia Group presented “Eliminating the Noise,” where Adam, Ron, and Brady interview David Contorno, President of Lake Normal Benefits.

• On May 24, 2018, The Phia Group presented “The Case for Collusion (Continued),” where The Phia Group’s Sr. VP, Ron E. Peck, and healthcare attorney Brady C. Bizarro as they answer the questions that you asked during our webinar on PBMs, specialty drug prices, and lawsuits alleging fraud.

• On May 17, 2018, The Phia Group presented “RBP - Yeah, You Know Me,” where The Phia Group chats once again with one of their Partners in Empowerment, Gregory S. Everett, President and CEO of Payer Compass.

• On May 7, 2018, The Phia Group presented “Everything's Bigger In Texas,” where our hosts interview Third Party Administrator, visionary, and industry expert – Caprock Healthplans’ own Executive Vice President, John Farnsley

• On April 24, 2018, The Phia Group presented “A Labor of Love,” where Adam, Ron, and Brady interview in-house specialist, VP of Consulting Attorney Jennifer McCormick, and discuss the many complicated issues surrounding surrogacy, and the costs for which benefit plans may be responsible.

• On April 18 2018, The Phia Group presented “Arresting the Financial Serial Killers,” where Adam and Ron interview the industry, and nationally, renowned Dr. Keith Smith of the Surgery Center of Oklahoma.

• On April 9, 2018, The Phia Group presented “New Kids on the Block,” where Adam, Ron and Brady interview one member of our industry’s too-small youth movement, Brian Olsen.

• On April 4, 2018, The Phia Group presented “Direct Primary Care – The Pot of Gold You’re Looking For,” where the Phia team interviews Doctor Jeff Gold of Gold Direct Care.

Be sure to check out all of our latest podcasts!

 



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The Phia Group’s 2018 Charity

At The Phia Group, we value our community and everyone in it. As we grow and shape our company, we hope to do the same for the people around us.

The Phia Group's 2018 charity is the Boys & Girls Club of Brockton.

The mission of The Boys & Girls Club is to nurture strong minds, healthy bodies, and community spirit through youth-driven quality programming in a safe and fun environment.

The Boys & Girls Club of Brockton (BGCB) was founded in 1990 to create a positive place for the youth of Brockton, Massachusetts. It immediately met a need in the community; in the first year alone, 500 youths, ages 8-18, signed up as club members. In the 25 years since, the club has expanded its scope exponentially by offering a mix of Boys & Girls Clubs of America (BGCA) nationally developed programs and activities unique to this club.

Since their founding, more than 20,000 Brockton youth have been welcomed through their doors. Currently, they serve more than 1,000 boys and girls ages 5-18 annually through academic year and summertime programming.

 

On Wednesday, April 24, 2018, The Phia Group announced The Boys & Girls Club of Brockton's Youth of the Year! The Youth of the Year was given a check for $2,500, as well as a new Dell laptop! So many congratulations to Adande Bien-Aime, you have embodied what a true role model should be for the youth of America.

 

 

 

At the 2018 MVP Phia Forum we held a silent auction of which all proceeds were donated to The Boys and Girls Club! The auction was a hit and we cannot thank all those who donated enough for their generosity in supporting such a wonderful organization. In addition to bids on great items like a signed Tom Brady jersey, a signed Lionel Messi jersey, and more, we received many kind donations after the event. We love The Boys and Girls Club and everything they stand for, we could not have wished for a better event to support an amazing organization!



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The Stacks

Conflicting Policies and Courts: When Plan Language Creates More Litigation than Coverage

By: Catherine Dowie, Esq. – June 2018- Self-Insurers Publishing Corp.

Mostly, working on any given subrogation file for a private, self-funded benefit plan is all about the hurry up and wait. Hurrying to communicate with the injured party, their attorney, the adjusters, investigators, and making sure everyone knows about the plan’s involvement and rights. Then waiting for the completion of treatment, the compilation of damages and some initial negotiations before racing to remind everyone of those rights, and potentially racing to the courthouse to make sure those rights are preserved. As the Supreme Court reminded us in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, timing is everything. 136 S. Ct. 651 (2016).

Click here to read the rest of this article


The Practical Impact of Ariana M. v. Humana Health Plan of Tex., Inc. on ERISA Denials of Benefits

By: Patrick Ouellette, Esq. – May 2018 – Self-Insurers Publishing Corp.

The abuse of discretion standard has long been a proverbial ace in the hole for self-funded employee benefit plan administrators in making factual determinations that, while perhaps not popular with the participant, they believed were consistent with the terms of the plan document. While the recent Ariana M. v. Humana Health Plan of Tex., Inc. is noteworthy for many reasons, the most immediate effect will be on the Fifth Circuit’s allowance of plan administrator discretion in making factual determinations.

Click here to read the rest of this article.

 

Drowning in A Sea of Paper

By: Tim Callender, Esq. – April 2018 - Self-Insurers Publishing Corp.

The challenges of setting up and administering an employer-sponsored, self-funded health plan are many. One of the largest challenges a self-funded plan sponsor faces is reconciling the vast number of documents that make a self-funded health plan “go.”

When navigated correctly, these challenges yield immense results in terms of rich benefit delivery within a fiscally responsible health plan mechanism. Still, challenges remain and should be discussed openly so that we can continue to grow and strengthen our industry.

Click here to read the rest of this article.

 

To stay up to date on other industry news, please visit our blog.

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Phia’s 2018 Speaking Events:

Phia’s Speaking Engagements:

Adam Russo’s 2018 Speaking Engagements:

  • 1/23/18 – Q4 Intelligence Conference – Tampa, FL
  • 2/2/2018 – Benefit Intelligence School District Conference – Phoenix, AZ
  • 3/7/2018 – SIIA Self-Insured Health Plan Executive Forum – Charleston, NC
  • 3/9/2018 – CGI Business Solutions Seminar – Manchester, NH
  • 3/14/2018 – Pareto StructuRE Meeting – Park City, UT
  • 4/12/2018 – Caprock Health Care Forum – Dallas, TX
  • 4/25/2018 – Berkley Captive Symposium – Grand Cayman Islands
  • 4/26/2018 – Innovative Risk – Grand Cayman Islands
  • 4/30/2018 – World Health Care Congress – Washington, DC
  • 5/17/2018 – Prairie States Broker Event – Chicago, IL
  • 6/21/2018 – GBSI Conference – Springfield, MO
  • 6/26/2018 – Leavitt Annual Event – Big Sky, MT
  • 8/24/2018 – WellHealth Workshop – Berkley Captive Program – Itasca, IL
  • 8/29/2018 – Gus Bates Insurance – Fort Worth, TX
  • 9/24/2018 – SIIA’s Annual National Educational Conference & Expo – Austin, TX

Ron Peck’s 2018 Speaking Engagements:

  • 1/25/2018 – HealthFirst TPA Client Conference – Tyler, TX
  • 3/6/2018 – SIIA National Conference – Charleston, SC
  • 3/7/2018 – CGI Business Solutions Seminar – Manchester, NH
  • 3/23/18 – Health Rosetta - Module 5: Next-Gen Plan Design – Boston, MA

Tim Callender’s 2018 Speaking Engagements:

  • 2/14/2018 – BevCap Captive Group, 10th Anniversary Meeting – Kona, HI
  • 4/25/2018 – Cypress University – Las Vegas, NV
  • 5/7/2018 – UBA Spring Conference – Chicago, IL
  • 5/16/2018 – Sun Life MVP Forum – Kansas City, KS
  • 5/24/2018 – Pareto Captive Services, Contrarian Re Captive Meeting – Nashville, TN
  • 6/25/2018 – Leavitt Conference – Big Sky, MT
  • 7/17/2018 – HCAA TPA Summit – Minneapolis, MN

Jen McCormick’s 2018 Speaking Engagements:

  • 4/17/2018 – Texas Association of Benefit Advisors – Dallas, TX
  • 5/16/2018 – IOA RE – Indianapolis, IN

 

 

 

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Get to Know Our Employee of the Quarter:
Ulyana Bevilacqua

Congratulations to Ulyana Bevilacqua, The Phia Group’s Q2 2018 Employee of the Quarter!


Ulyana maintains great client relationships because clients can trust her to send their requests on time and that the deliverable will always contain quality work. She remains professional in her correspondence and makes sure everything is done accurately. She also puts in extra hours to ensure organization with all client requests. This reflects positively on The Phia Group because it sends a message to our clients of our professionalism and how much we care.

 

 

Congratulations Ulyana and thank you for your many current and future contributions.

 


Phia News

World Congress 2018 Health Value Awards

On April 29, 2018, more than 350 nominees competed in the World Congress 2018 Health Value Awards to be the best and brightest applications to improve health outcomes, reduce costs and implement innovative health industry practices. The Phia Group is excited to announce we have placed Diamond in the Small Group Employer category and our co-founder and CEO, Adam Russo, has placed Silver in the Outstanding Benefits Provider category!

 

Phia Certification has Arrived!

We are pleased to announce our new internal Phia Certification Program. The Phia Group maintains lofty standards for the industry, and expects the same of our staff. Phia has always developed and implemented best-in-class training programs, keeping our employees up to date and comprehensively educated. As a result, our team is second to none in that regard… and today we are excited to announce a new way to show it. Phia has established its new Phia Certification Program for its employees; this internal program consists of 3 levels, each level testing an even higher caliber of industry expertise than the last.

By the end of 2018 all Phia employees, from our interns to our attorneys, will be Level 1 certified. For leaders and those seeking to take it to the next level, Level 2 of the Phia Certification Program is made available. Finally, for those who dare to dream – Level 3 is indicative of being “the best of the best” – capable of addressing any and all issues impacting our industry, as well as being able to predict the issues headed our way. Our Phia Certification Program will ensure that a consistent knowledge base and industry expertise is embedded in the entirety of our staff, providing you with the best service our industry has to offer.

 

 

The Phia Group Recognizes Diversified Group with 2018 Empowered Plan Award

At our annual MVP (Most Valuable Partners) event, we were pleased to recognize this year’s winner of The Phia Group “Trophy of Empowerment.” It is with appreciation that we publically announce the name of our 2018 Empowered Plan Award winner, Diversified Group.


After analyzing all of our MVPs based on a number of parameters including, but not limited to, collaboration with The Phia Group, a willingness to innovate, as well as application of a forward thinking methodology – reflected through efforts taken to secure the future of our industry – Diversified Group of Marlborough, CT – was a clear winner.

 

 

New Client Account Manager – Matthew Painten

As you may know, Matthew Painten has recently been promoted to Client Account Manager at The Phia Group, in addition to his Marketing Management role. Although you may already have a direct point of contact at Phia, please feel free to start communicating with Matthew directly for any and all of your requests. You may email him personally at MPainten@phiagroup.com or send an email to CAM@phiagroup.com.

 

 

Job Opportunities:

  • ETL Specialist
  • IT Systems Administrator
  • Health Benefit Plan Drafting Consultant
  • Claims Specialist, Provider Relations

See the latest job opportunities, here: https://www.phiagroup.com/About-Us/Careers

 

Promotions

  • Matthew Painten was promoted from Marketing Coordinator to Marketing & Accounts Manager
  • Hannah Sedman was promoted from Marketing Intern to Marketing & Accounts Coordinator
  • Garrick Hunt was promoted from Sales Executive to Sales Manager
  • Jacob Falkof was promoted from Customer Service Representative to Case Investigator
  • Nick O’Neill was promoted from Case Analyst to Legal Assistant

New Hires

  • Dakota Bagley was hired as an IT Intern                                           
  • Holly Blackstead was hired as a Marketing Intern
  • Andrew Modelane was hired as a Training Intern
  • Colleen Ahern was hired as a Case Investigator
  • Bethany LaChance was hired as a Recovery Intern
  • Alanah Lopes was hired as a Sales Intern
  • Philip Qualo was hired as an HR Compliance Specialist
  • Gambit Hunt was hired as a Sales & Accounts Coordinator

 

Fun at Phia:

The Phia Family is one good-looking group of wiffle-ballers! Our wiffle ball team entered the 7th annual John Waldron Memorial Wiffle Ball Tournament, where we were one game away from entering the semi-finals. We were up against some fierce competition, including some courageous Brockton Fire Fighters, that most certainly brought the heat. This tournament raised over $20,000! We are proud of the work our team did and can’t wait to play again next year.

 

 



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info@phiagroup.com
781-535-5600

The Stacks - 3rd Quarter 2018

Conflicting Policies and Courts: When Plan Language Creates More Litigation than Coverage

By: Catherine Dowie

Mostly, working on any given subrogation file for a private, self-funded benefit plan is all about the hurry up and wait.  Hurry to communicate with the injured party, their attorney, the adjusters, investigators, and make sure everyone knows to about the plan’s involvement and rights.  Then wait for the completion of treatment, the compilation of damages and some initial negotiations before racing to remind everyone of those rights, and potentially racing to the courthouse to make sure those rights are preserved.  As the Supreme Court reminded us in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, timing is everything.   136 S. Ct. 651 (2016). 

For the most part, the bulk of the plan’s cost-containment opportunity has always come at the resolution of some liability claim, which is usually years after the bulk of the treatment and payments.  Although many states require Medical Payments Coverage, Personal Injury Protection or some other form of no-fault coverage, they are typically in very small amounts.  There are exceptions, of course, Michigan’s unlimited PIP scheme, potential advancement of funds in Montana under Ridley v. Guaranty National Insurance Co., and high-minimum states like New York and New Jersey, but usually very little coverage is available to alleviate the burden on a plan to pay up front or leave a member to address bills with providers directly.  951 P 2d 987 (Mont. 1997).

In some circumstances, however, acting quickly when the case begins does turn up a policy that will meaningfully impact the plan’s liability from the start, where there is a policy for a specific loss or a high no-fault policy.  The problem arises when these policies are designed to be excess, which they usually are.  An excess policy is a policy designed to provide coverage only when no other coverage exists.  They are often inexpensive because they are designed to often only bear liability for a patient’s copayment or deductible obligations, rather than the bulk of the responsibility for medical claims.  Some are also only designed to cover bills associated with a specific event or activity, such as high school sports.

This issue frequently arises not only in the context of automobile no-fault coverage, but with school and recreational policies.  Schools will often secure excess policies for athletes or even students hurt in gym class, and they are common in adult recreational leagues (usually soccer, but I’ve handled a case where an adjuster was shocked to find that his company had issued a policy for a lawnmower racing league…).

So what happens when a health plan has a valid excess provision, but the accident or automobile policy that covers a specific incident does as well?  Although ERISA might allow a plan to preempt state laws, policy or plan provisions may call for a slightly different analysis.

Various Federal Circuit Courts of Appeal have heard this question and have reached a somewhat surprising conclusion, especially following the Montanile decision from the Supreme Court in 2016.  There is a long-standing split between the circuits on this question.  See Auto Owners Ins. Co. v. Thorn Apple Valley, Inc., 31 F.3d 371 (6th Cir. 1994) (terms of an ERSIA plan are enforceable over conflicting policy language of an insurer) c.f. Winstead v. Ind. Ins. Co., 855 F.2d 430 (7th Cir. 1988) (apportioning liability for claims pro rata).  Both of these cases addressed Michigan PIP policies, which provide unlimited coverage for, among other things, medical bills related to automobile accidents.  Both the PIP policy and the health plans involved in the dispute had excess provisions, and in both cases the auto insurer filed suit, asking the court to declare that the that the health plan should pay the bills as primary.

The 6th Circuit concluded that the ERISA plan terms were not entitled to any deference over the terms of the auto policy and ordered the two litigants to pay the claims on a prorated basis.  Straightforward enough.  Neither policy had a cap on coverage, and the outstanding bills could be split on a 50/50 basis.  One significant problem with this decision as applied to slightly different facts, is how does one pro-rate a theoretically infinite policy with a more standard PIP policy which might have limits of $10,000 or less. McGurl v. Trucking Emps. of N.J. Welfare Fund, Inc. , 124 F.3d 471, 485 (3d Cir. 1997) (noting that it is “unclear how the rule [prorating] would operate in practice”).

The 7th Circuit, when faced with the same issue, gave more weight to the primary purpose of ERISA.  These conclusions were perfectly in line with what the Supreme Court would later point out, the whole reason that the plan, “in short, is at the center of ERISA” and “[t]his focus on the written terms of the plan is the linchpin of ‘a system that is [not] so complex that administrative costs, or litigation expenses, unduly discourage employers from offering [ERISA] plans in the first place.’” Helimeshoff v. Hartford, 134 S.Ct. 604, 612 (2013) (quoting Varity Corp. v. Howe, 516 U.S. 489, 497 (1996)).  Without giving force to valid and clear terms, uniform nationwide enforcement would be undercut.

In the last 5 years, this issue has been somewhat frequently litigated in the context of non-automobile excess policies.[1]  In addition to the existing split on what weight to give the terms of an ERISA plan, courts have now drawn a distinction based on if the plan paid claims before initiating suit.  Courts have allowed plans to pursue declaratory relief, obligating the insurer to issue payment in the future, but not recover from insurance policies with excess provisions once the plan has already paid claims.

This pre/post payment distinction is based on the idea that plans can only seek a monetary award with a court if they can identify a specific pool of money that they have a right to, like a settlement fund, which does not exist when benefits are being coordinated between two payors.  Additionally, some insurers have argued that ERISA is irrelevant even to the determination of primary liability for payment, asking courts to leave these “run-of-the-mill contract disputes” to state courts.

As one court noted:

The paradoxical result [of this argument] is that as an ERISA plan, has fewer remedies than it would if it were a non-ERISA plan, and its beneficiary, through no fault of his own, is considerably worse off for having two policies that coincidentally had conflicting language than he would be if he had only one. One might think that the underlying purposes of ERISA and of equitable relief generally would permit a court to fashion an appropriate remedy.

Cent. States, Se. & Sw. Areas Health & Welfare Fund v. Gerber Life Ins. Co., 771 F.3d 150, 159 (2d Cir. 2014).

As long as these issues remain unresolved, health plan liability will remain uncertain, and insurers and plans alike will be encouraged to leave claims denied and turn to courts before issuing payments.  This leaves plan participants to deal with bills everyone agrees will not ultimately be their responsibility, and forces plans into a position where they may risk loss of discounted rates or access to other benefits that are only available if payment is made within a specific timeframe.  Health plans can seek to preserve enforcement of their terms through diligent investigation and coordination with – and education of – all parties and payors as soon as claims are incurred.


[1] Dakotas & W. Minn. Elec. Indus. Health & Welfare Fund v. First Agency, Inc., 865 F.3d 1098 (8th Cir. 2017); Cent. States, Se. & Sw. Areas Health & Welfare Fund v. Am. Int'l Grp., Inc., 840 F.3d 448 (7th Cir. 2016); Cent. States v. Student Servs., 797 F.3d 512, 60 EBC 1857 (8th Cir. 2015); Cent. States, Se. & Sw. Areas Health & Welfare Fund v. Gerber Life Ins. Co., 771 F.3d 150 (2d Cir. 2014); Cent. States, Se. & Sw. Areas Health & Welfare Fund v. First Agency, Inc., 756 F.3d 954 (6th Cir. 2014); Cent. States, Se. & Sw. Areas Health & Welfare Fund v. Health Special Risk, Inc., 756 F.3d 356 (5th Cir. 2014); Cent. States, Se. & Sw. Areas Health & Welfare Fund v. Bollinger, Inc., 573 F. App'x 197 (3d Cir. 2014).

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The Practical Impact of Ariana M. v. Humana Health Plan of Tex., Inc. on ERISA Denials of Benefits

Patrick Ouellette, Esq.

The abuse of discretion standard has long been a proverbial ace in the hole for self-funded employee benefit plan administrators in making factual determinations that, while perhaps not popular with the participant, they believed were consistent with the terms of the plan document. While the recent Ariana M. v. Humana Health Plan of Tex., Inc. is noteworthy for many reasons, the most immediate effect will be on the Fifth Circuit’s allowance of plan administrator discretion in making factual determinations.

The Fifth Circuit finally joined the fraternity of all other circuit courts that has held decisions made by plan administrators under ERISA Section 1132(a)(1)(B), whether legal or factual, are to be reviewed using a default de novo standard. In addition to introducing consistency across the circuit courts regarding standard of review, the en banc holding in Ariana M. v. Humana Health Plan of Tex., Inc. greatly reduced the amount of inherent deference granted to plan administrators for factual determinations. Self-funded employee benefit plans should be aware of the repercussions of no longer having the abuse of discretion standard available in the Fifth Circuit if there is an appeal regarding its factual determinations relating to, for instance, a denial of benefits.

Prior to this decision, every other circuit court except the Fifth Circuit had applied a de novo review when an ERISA plan document does not expressly grant discretion to plan administrators. These courts based their rationale on the fact that the famed Firestone Tire & Rubber Co. v. Bruch case does not make a distinction between a trustee’s legal interpretations versus their factual decisions regarding the requirement for de novo review. Ariana M. v. Humana Health Plan of Tex., Inc. is legally significant because Fifth Circuit had long held that, under ERISA, a plan administrator was entitled to an abuse of discretion standard of review with respect to its factual determinations. In short, the court to this point had given plans the benefit of the doubt for factual determinations unless the plan had made an unreasonable decision. Now these administrators will be held to the de novo standard, without deference to its factual findings. This shift the court considering an issue for the first time without this deference will likely affect how and under what circumstances plan decisions are made. Thus, it is critical to also consider the practical impact that the holding will have on plan administrators that have relied for years upon Fifth Circuit providing them with this high degree of discretion in making factual determinations even when a plan has not expressly granted them that discretion.

Fifth Circuit Standard of Review Background

Employers, and the plan administrators, traditionally have broad discretion to determine how plan terms will be used, as well as to decide which entities will have the authority to make benefits determinations, factual determinations, appeals determinations, and language interpretations. The Supreme Court in Firestone held that only if a plan explicitly delegated authority to a plan administrator, the decision would be reviewed under a heightened “abuse of discretion” standard. The Court famously stated a “denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” If there was no express delegation, however, the Court held that courts would need to review a denial of benefits challenged under ERISA using a de novo standard. The holding did not directly clarify whether it was referring to both legal interpretations and factual determinations for the de novo standard.

In Ariana M. v. Humana Health Plan of Tex., Inc., the Humana Health Plan of Texas argued that it had a discretionary clause granting to Humana “full and exclusive discretionary authority to: [i]nterpret plan provisions; [m]ake decisions regarding eligibility for coverage and benefits; and [r]esolve factual questions relating to coverage and benefits.” Due to a Texas antidelegation statute making discretionary clauses unenforceable, Humana agreed not to use the argument that the plan document gave it direct authority. Notably, the court remained silent on whether ERISA preemption came into play because Humana did not raise the argument. Instead, Humana relied upon the Fifth Circuit’s holding in Pierre v. Conn. Gen. Life Ins. Co. to argue that for factual determinations under ERISA plans, the abuse of discretion standard of review is the appropriate standard and therefore it had not abused its discretion in making its determination. The Fifth Circuit granted en banc review to reconsider Pierre and determine the default standard of review that would apply in these situations.

The Fifth Circuit’s decision in Ariana v. Humana Health Plan of Texas essentially reversed its own interpretation of Firestone in Pierre. According to Pierre, without delegation of authority to a plan administrator, challenges to a legal interpretation of a plan should be considered under a de novo standard of review while factual determinations were to be under an abuse of discretion standard of review. The Pierre court based its reasoning on the concept that an administrator's factual determinations are inherently discretionary and the Restatement (Second) of Trusts supports giving deference to an ERISA plan administrator's resolution of factual disputes even when the plan does not grant discretion.

The Ariana court essentially held that Pierre’s interpretation is no longer good law, despite some strong dissenting opinions, including from Judge E. Grady Jolly, who authored Pierre. The dissent focused its dissatisfaction with the majority’s opinion on the discrepancy between legal analysis and credibility determinations and a lack of express authority in Firestone.

Factual Determinations That May Now Be Subject to De Novo Review

Now that Ariana held that Firestone's default de novo standard applies when the denial is based on a factual determination, it is worthwhile to see how this change would play out in the types of factual determinations that plan administrators make on a regular basis. This is not intended to be an exhaustive list of decisions that will be affected, but instead meant to illustrate the types of complications that Ariana could create for plan administrators if they are a party to case that reaches the Fifth Circuit.

First and foremost, Humana Health Plan of Texas in Ariana used its discretion to decline to allow partial hospitalization for Ariana beyond June 5th, claiming it was no longer medically necessary. Using Pierre’s precedent, the district court concluded only that "Humana did not abuse its discretion in finding that Ariana M.'s continued treatment at Avalon Hills was not medically necessary after June 4, 2013." Plan administrators are often making factual decisions as to whether treatment is “medically necessary” and therefore whether it should provide coverage according to the terms of the plan document. In the Fifth Circuit, these plans were granted broad deference regarding these determinations because of its decision in Pierre. Similar to the rest of the circuit courts, medical necessity determinations are now subject to de novo review. However, Ariana is merely the tip of the iceberg in that these types of factual determinations are not limited only to questions of medical necessity.

Another determination in which plan administrator discretion is paramount is the application of plan document exclusions, such as excluding coverage if the treatment or care was the result of illegal or hazardous activity. Each plan document has its own set of exclusions that it can choose whether or not to apply to a given set of facts, but the Fifth Circuit had traditionally separated itself from the rest of the circuit courts up until this point as to the standard by which these exclusion determinations would be judged. Anyone who works in the self-funded industry knows how controversial and fact-dependent the practice of excluding participant claims can be for a plan administrator. Without an abuse of discretion standard and de novo standard now in place, however, these administrators may potentially be more wary to automatically exclude a plan participant’s claims due to an illegal or hazardous activity exclusion if, for example, the facts are unclear.

Next, plan administrators often make plan eligibility decisions that will be affected by the Ariana decision in the Fifth Circuit. These determinations will include, for instance, whether spouses are eligible for coverage after they dropped their own plan based on the plan’s eligibility language. Previously free from the potential second-guessing involved in with the de novo standard of review, administrators now more than ever will need to be sure to document their coverage decisions based on the plan document language and be able to defend them in court if necessary.

Administrators also make factual determinations regarding administration of high-deductible health plans (HDHPs), health savings accounts (HSAs), flexible spending accounts (FSAs). Some prime examples of these administrative issues would be deciding which items covered under an HSA would be deemed “preventive” or whether the plan had avoided first-dollar coverage under an HDHP. Similar to the above, the Fifth Circuit will now view the process of how these factual decisions were made in a much different light.

Finally, now that these plan administrators are subject to the de novo standard of review instead of abuse of discretion review, they should remember the ERISA requirement that factual determinations must be made consistently in similar scenarios in the future. Though this is not necessarily a novel consideration for plan administrators, it is a worthwhile reminder that decisions made under this “new” standard of review will be used as precedent for its decisions made in the future as well, adding to the weight of these determinations.

Patrick Ouellette, Esq., is an attorney with The Phia Group, LLC.

Biography

Patrick joined the Phia Group in 2017. He earned his B.A. in journalism and writing from the University of Rhode Island and spent time as a sports writer and also as a healthcare technology journalist. He later graduated from the Suffolk University Law School evening program with a health and biomedical concentration with distinction. Patrick has legal experience with healthcare providers and in state government. He was also a published staff member of the Suffolk University Law School Journal of Health and Biomedical Law and later served as Chief Content Editor on the journal’s executive board.

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Drowning in A Sea of Paper

By: Tim Callender, Esq.

The challenges of setting up and administering an employer-sponsored, self-funded health plan are many. One of the largest challenges a self-funded plan sponsor faces is reconciling the vast number of documents that make a self-funded health plan “go.”

When navigated correctly, these challenges yield immense results in terms of rich benefit delivery within a fiscally responsible health plan mechanism. Still, challenges remain and should be discussed openly so that we can continue to grow and strengthen our industry.

 

The task of reconciling governing documents is challenging for anyone, but it can be an especially daunting job for any plan sponsor, broker/consultant, or interested party mostly familiar with the fully insured platform. In that relatively simple world, everything “goes” with minimal paperwork – at least in the front of the house – but, this simplicity comes at a significant cost and with a significant lack of control and customization.

Clearly, for most employers that really look into the options, self-funding is the way to go. But, if you want to play in the self-insured world and reap the significant financial benefits of the self-funded model – get ready to read, re-read, audit, reconcile, and review more paperwork than a forensic accountant scouring financial records written in invisible ink.

In the interest of staging the optics for this brief piece, let me be incredibly clear that I am 10,000% a believer that self-funding is the best model to deliver rich and affordable health benefits, and the success of the self-funded industry is a personal goal and passion of mine. I am a firm believer that all stakeholders in the self-funded space are vital for the success of this model.

The comments made herein are not meant to demonize any one player, nor am I out to state that any particular stakeholder causes more complication than anyone else. Rather, I hope that through an honest, and a little self-critical conversation (laced with humor), we can identify some brutal truths regarding our great industry so that we can continue to work together for the betterment of self-funding, as a whole!

To approach this in an organized fashion, let’s make a list of some of the array of paperwork needed for a self-funded health plan to fully function (at least the top documents most commonly involved). From there, we can explore one or two examples that reflect “problem areas,” and/or bullet points that we should all think about when reflecting on these documents. Not all problems will be (or should be) explored in this article, but, hopefully, this conversation gets the wheels turning and points us toward improvements and solutions.

Governing Plan Document / Summary Plan Description – This is the cornerstone of every self-funded health plan. Without a governing plan document, you have.... Well... a nebulous concept of a health plan devoid of any defining rules or benefit structure, with all the details living in someone’s head and likely spread across a series of emails and meeting notes! Good luck with a government audit on that one!

Items that could be “problem areas” include:

  • Does the plan document contain benefit carve outs that fly in the face of a network contract?
  • Is the plan document written before the current plan year is even over?
  • Was the plan document compared to the relevant stop-loss policy to look for coverage / reimbursement gaps?

Summary of Benefits and Coverage (SBC) – Thank you Affordable Care Act! As we all know, health insurance is confusing and saturated with paperwork. Well, thankfully the ACA saw fit to “simplify” health coverage by requiring, yes, you guessed it, more paperwork! Better hope your SBC lines up with your SPD or you might be SOL with the DOL while listening to OPP in the LBC.

Items that could be “problem areas” include:

  • Do the benefit examples in the SBC actually match up with the intended benefits of the plan document (what if a plan member relies on the SBC for benefits and the plan document has not been fully written/issued yet...?)
  • Was the benefit structure of the Plan fully finalized before issuing pre-enrollment SBCs (in other words, how many people have pushed SBCs out, just to “get them done,” while recognizing that the benefit structure of the plan document is likely to change by the time it is finalized?).

PBM Agreement – And then, let’s add drugs. No, I don’t mean “let’s add drugs” in the context of a 1970s Grateful Dead, San Francisco acid test – rather, and as if it’s not confusing enough, let’s take a completely separate entity, bring them to the party to assist with a plan’s Rx benefits, and then, in the frantic insanity that is a 60 hour work week, hope that we all read over the PBM agreement to see if it lines up with the intent of our health plan and that the language in the plan document echoes that same alignment – oh, and maybe stop-loss to?

Items that could be a “problem area” include:

  • Is there a clear alignment in the contracting (and the plan document!) regarding which entity might handle / administer claims and appeals for particular Rx benefits? – Has the language in the plan document, as required by the PBM, been reconciled with the Plan’s stop-loss policy, network agreement, and/or SBC?

Network Agreement – Where to start...?

Items that could be “problem areas” include:

  • How many parties are expected to be bound by a particular network agreement?
  • Are there inconsistencies in how particular benefits should be paid as laid out between the network agreement and a plan’s governing plan document?
  • Is the Plan administering a reference-based pricing program, and, if so, have network obligations been taken into account?
  • Have all vendor contracts, and their roles, as related to the administration of a plan, been reconciled against the roles and responsibilities of the plan, as laid out in the network contract?
  • Are there inconsistent medical management criteria as laid out between the plan document, the network contract, the PBM contract, and other documents?
  • Are the benefit payment timelines (and appeal timelines), as between the plan document and the Network Agreement, cogent so as to assure the Plan is not losing a network discount or risking a prompt-payment Network Agreement breach term?

Stop-Loss Policy / Agreement – Too often we see material variances in the wording of definitions and exclusions, as between plan documents and stop-loss policies. To state the obvious, this can create significant coverage gaps, manifesting in reimbursement denials that are not necessarily invalid. Common discrepancies include a disconnect in a “medical necessity” definition or an “experimental and investigational” definition.

Additionally, what about notice provisions? While not directly related to a misalignment between plan document and stop-loss terms, this concept can create havoc when a plan-sponsor does not pay especially close attention to the notice requirements present in a stop-loss contract. More specifically, does the contract require the sponsor to provide notice to the carrier any time the Plan modifies benefits? If so, and if the Plan fails to do so, a significant (and likely valid) coverage gap may exist.

Items that could be “problem areas” include:

  • Pretty much everything I’ve written above, plus this one, often forgotten gem: gaps that might exist between a plan document and an employer-sponsor’s employee handbook, related to leave of absence provisions, which may lead to eligibility issues and subsequent reimbursement denials at the stop-loss level.

Administrative Services Agreement (typically with a TPA or a carrier on its ASO platform) – This document can tend to be the “unifier” or the “great divider.” So many solutions and pieces that make up a self-funded plan all fall together in the ASA. This document is key. I’ll say it again, KEY.

Items that could be “problem areas” include:

  • Who is the named fiduciary outside of the Plan Sponsor (are there others – are there shared duties – are there fiduciary inconsistencies between the ASA, the plan document and the various vendor contracts involved?)
  • Are all vendors mentioned and/or properly referenced within the ASA?
  • Does the ASA properly outline a scope of duties and responsibilities in a way that mirrors the intent of the Plan and as reflected in all other governing plan documents?

Employee / Employer Handbooks – This one just splashed onto the scene in a pretty incredible way over the past year or so.

Items that could be “problem areas” include:

  • As discussed above, have the handbook, plan document, and stop-loss policy been “bounced together” to assure there are no issues that might result in valid reimbursement denials?
  • Leave of absence provisions and plan document eligibility provisions...

Plan Amendments – I had a dream once, about a Plan that had not had its plan document restated in 8 years, and, during that time, the Plan Sponsor had amended the plan 16 times. All amendments existed as separate documents, referencing one another from time to time, and, oftentimes, referencing various vendors that no longer worked for the Plan. Then, the Plan Sponsor came to me and hired me in November to restate the plan for a January 1 kick off. I woke up screaming. That kept me up at night.

Notifications (of material modification; open enrollment; HIPAA privacy notifications; etc.) – While many of these may not need to line up with a plan’s specific benefit grid, network alignment, or the definition of “maximum allowable,” you can easily see how a bit more paperwork, directly impacting the member’s understanding of a plan, can be cumbersome and can easily cause confusion if not handled carefully, especially when bundled into an envelope (or email) containing a plan document and an SBC!

Miscellaneous Vendor Contracts – Take everything discussed above and add in a few more. Time to turn up the volume! All the above is enough to strike fear into the heart of the most diligent and thorough paper pushing accountants, advisors, and attorneys. But, it is the price of admission and a piece of our business that we should be aware of and work through carefully. As a best practice, every Plan Sponsor should engage in expert gap reviews of all documents and should do so on a routine basis.

To conclude, and hopefully provide some closure and definition to my thoughts, I will leave you with this: our industry is complicated. There is no denying it. Let’s acknowledge it, be willing to criticize it, and even be willing to poke fun at it.

But, at the end of the day, let’s recognize that our industry – our platform – is the best. So, we owe it to each other, as stakeholders in this space, to work hard to accomplish the goal of aligning the documents that govern the administration of a self-funded health plan.

Should the first and foremost guardian of this alignment be the Plan Sponsor? Absolutely –and with expert guidance! We are all in this together and should strive to achieve harmony in a Plan’s governing documents, wherever possible, together. All boats rise.


The Phia Group's 2nd Quarter 2018 Newsletter


Phone: 781-535-5600 | www.phiagroup.com


 

The Book of Russo:
From the Desk of the CEO

It is busy… I mean really busy. From conferences to claim issues, never has The Phia Group seen the volume and variety that it is seeing now. That is why this month’s webinar on April 19th is a must-see event. We are witnessing new and unique claim issues, ranging from surrogacy to scary IRS notices being sent to employers across the country. This webinar will discuss what we have learned and what you can do to protect yourselves and your clients. It is only spring here in Boston but the heatwave of self-funding is being felt across Phia. By the way, I wanted to congratulate the following 8 employees of The Phia Group for officially being approved to attend the Future Leaders Track at the 2018 National SIIA Conference in late September.

• Toussaint Anderson
• Ulyana Bevilacqua
• Brady Bizarro
• Amanda Grogan
• Garrick Hunt
• Amanda Lima
• Maribel McLaughlin
• Victoria Pace

These fine people will represent our company at SIIA’s first foray into ensuring the future of self-funding. I would encourage all of you to identify the future leaders of your organization and send them to SIIA as well. Happy reading!

 


Service Focus of the Quarter: Plan Appointed Claim Evaluator (PACE)
Phia Case Study: Overpayment Schmoverpayment
Success Story of the Quarter: The Phia Group Saves an Employer Thousands of Dollars
Phia Fit to Print
From the Blogosphere
Webinars
Podcasts
The Phia Group’s 2018 Charity
The Stacks
Phia’s Speaking Events
Employee of the Quarter
Phia News

Register for The Phia Group's Next Webinar

4 Horsemen of the Plan-pocalypse

Nostradamus? Miss Cleo? The Phia Group? In a psychic feat of foresight, The Phia Group’s team has gazed into their crystal ball and identified four issues that may not presently be keeping you up at night, but will certainly be disturbing your slumber very soon. From being forced to pay for surrogate pregnancy and births, to the IRS actively issuing letters notifying employers of 2015 tax year penalties; from a new wave of fraud, errors, and abuse leading to heretofore unseen overpayments, to case law addressing the rights of plans to utilize reference based pricing – you’ve been warned! We predict this complimentary webinar, taking place at 1pm (EST) on April 19, 2018, will open your eyes. Miss this webinar at your own peril… You’ve been warned!

Click HERE to Register!

 

Service Focus of the Quarter: Plan Appointed Claim Evaluator® (PACE)

Making determinations on medical claim appeals is a frightening prospect. The process can involve complex factual, legal, and medical issues, and can distract an employer plan sponsor from its ordinary business functions, posing a significant resource drain. The PACE service allows the plan sponsor to shift fiduciary duty away, onto the PACE, for final, internal claim appeals. With PACE, plan sponsors and TPAs assign the riskiest fiduciary duty (that is, the power to make payment decisions in response to final, internal appeals), to The Phia Group. This authority carries with it the most risk, because it is this final payment directive that may be scrutinized upon external review or in the courtroom.

Self-funding veterans and novices alike will benefit from PACE. Groups that are moving from fully-insured or ASO arrangements can use PACE as a valuable tool to aid in the transition; these groups have never before been faced with such fiduciary liability - with the PACE, that daunting responsibility can be delegated to a neutral and capable third party. In addition to having a third party expert analyze all final, internal appeals, before they reach an external review, the PACE also ensures that legally mandated independent review organizations (IROs) are in place, and the PACE handles facilitation of external appeals with these IROs. Regardless of whether the PACE upholds or reverses a denial, the PACE's service continues to apply. This includes coordinating efforts with stop-loss, plan sponsors, brokers, and TPAs whenever these partners do not align. PACE is a way for the employer to be able to focus less on the complexities of its health plan, fiduciary duties, and stop-loss concerns, and more on what matters - its business. PACE is also a way for the payor to rest easy knowing that it is not unwittingly assuming fiduciary duties on final, internal appeals.

For years, self-funded plan sponsors and TPAs have asked how they can avoid the risks inherent in self-funding, while still enjoying the benefits of that plan structure. According to The Phia Group's CEO, Adam Russo, "With a PACE in place, we're taking a giant step in the right direction. It's a game changer." Contact Tim Callender at tcallender@phiagroup.com or 781-535-5631 to learn more about how PACE can help you.

 

Phia Case Study: Overpayment, Schmoverpayment!

The Phia Group was presented with a situation in which a TPA had processed a claim in error. The issue was one of eligibility; the TPA processed the claim as usual, without realizing that the member had in fact termed the prior week. The TPA had the information, but through a fairly common record update delay, the claim was paid at the appropriate out-of-network rate - but for a termed member.

The group's broker contacted the TPA and was somewhat upset at the erroneous claim processing. The TPA explained the circumstances - and the TPA's Administrative Services Agreement did not hold the TPA responsible - but the broker expressed interest in pursuing the matter, given the sizeable amount of money involved. The broker was also looking into having the group switch TPAs.

When this matter was brought to the attention of The Phia Group's consulting team, our first two actions were to try to diffuse the situation between the broker and TPA, and to try to recoup the overpayment to keep both sides happy.

As it happened, The Phia Group's dedicated overpayment team had a prior relationship with this particular provider, and our overpayment recovery specialists were able to recover $40,000.00 of the $42,000.00 erroneous payment. That recovery satisfied the broker and the group, and the TPA agreed to credit the group the remaining $2,000.00 as a gesture of good faith (and a smart business decision to boot).

The recovery obtained by The Phia Group's overpayment team not only salvaged $40,000.00 for the group, but it avoided a feud between a TPA and broker, and also helped the TPA keep a valuable block of business that it would otherwise have lost.

 


 

Fiduciary Burden of the Quarter: Following the Plan Documents…Unless…

Generally, it is fairly simple to comply with the duty to follow the terms of the plan documents. That important duty, however, applies only "insofar as such documents and instruments are consistent with the provisions of [ERISA]." In other words, you must follow the plan documents, unless the plan documents violate ERISA, in which case you must follow ERISA instead. The powers that be have interpreted this as applying not just to ERISA, but to all federal laws. The result is that federal law "overrides" any conflicting terms of the plan documents - so Plan Administrators are sometimes forced to ignore the terms of the plan documents in favor of following federal law.

So what does this mean? Well, if the plan documents have provisions that violate federal law, the fiduciary duty morphs from one requiring the fiduciary to comply with the terms of the plan documents to one requiring the fiduciary to comply with the law instead of the plan document.

An example we have seen are the new regulations promulgated under ACA Section 1557 regarding transgender surgery. There is a certain amount of legal discord at the moment surrounding the interpretation of these regulations, but the status quo is that self-funded health plans are not permitted to exclude transgender surgery, or they risk violation of the Affordable Care Act. Many employers, however, have taken a stance against this mandate, by excluding transgender surgery within their plan documents. This is a textbook instance where the fiduciary duty would change: if following the terms of the plan document would be noncompliant with other federal laws, then the fiduciary is required to follow those federal laws instead.

This can be a very tricky situation, and it emphasizes the notion that the plan documents should always be as compliant and current as possible to avoid having to analyze situations like this. As always, if you have questions about your plan documents, fiduciary duties, or how to reconcile the two, please contact PGCReferral@phiagroup.com.

 


Success Story of the Quarter: The Phia Group Saves an Employer Thousands of Dollars

The IRS has recently been enforcing the Employer Shared Responsibility Mandate (“employer mandate”) by sending letters to employers implicating that they may have violated the employer mandate rules and may owe a substantial penalty called an Employer Shared Responsibility Payment (“ESRP”). This employer mandate was put in place by the Affordable Care Act (“ACA”). The ACA requires Applicable Large Employers (“ALEs”) who have 50 or more employees to (1) provide minimum essential health coverage to all full-time employees and their dependents (or the employer will face a subsection (a) penalty); or (2) offer eligible employer-sponsored coverage that is “affordable” and meets “minimum value” (or the employer will face a subsection (b) penalty). Employers who receive these letters may have to pay the ESRP, but have a chance to respond to the letter before the penalty is mandated.

A client was presented with one of these letters from an employer. The employer was facing over $50,000.00 dollars in penalties if they did not respond to the letter properly and explain why they were/were not at fault. The IRS has specific guidelines of how to respond to these letters. This can become very daunting and confusing for employers facing these high penalties. The client reached out to The Phia Group for consultation. Attorneys Krista Maschinot and Erin Hussey analyzed the situation and explained what the employer may or may not have done wrong to receive this large employer mandate penalty, and with their consultation, the employer was able to identify their mistake and properly respond to the IRS letter. After the employer explained their mistake and properly responded to the IRS letter, the IRS sent a second letter to the employer which lowered their penalty to less than $2,500.00, saving the employer thousands in penalties.

Disclaimer: As these forms are heavily based in IRS regulations and taxation, we strongly recommended to the broker that the employer should discuss this with their tax advisor and/or the entity that assisted in preparing their tax forms.
 


 

Phia Fit to Print:

• Self-Insurers Publishing Corp. - Buyer Beware - No Good Deed Goes Unpunished - January 3, 2018

• Money Inc. - Too Good to Pass Up: How we Over Come the Loss of the Individual Mandate - January 24, 2018

• Money Inc. - The Best of Times and the Worst of Times… How Imperfect Regulatory Action May Still Create Opportunities for Self-Funding - February 22, 2018

• Self-Insurers Publishing Corp. - Trump Tax Bill Signals the Swan Song for Obamacare's Individual Mandate - March 4, 2018

• Money Inc. - Freedom Blue: Why the Trump Administration Picked Obamacare over Idaho - March 29, 2018



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From the Blogosphere:

Contraceptive Update - Appeals and Intervenors There is a process that must be followed before a party can intervene.

What do All These New Paid Sick Laws Mean for Employers? The regulations vary by state (and city).

Even the Best Plans can Backfire! It's very important in subrogation cases to consider all options.

Your Plan isn't a Cadillac …Yet. The ACA Health Insurance Provider Tax is applicable for fully-insured plans

 

To stay up to date on other industry news, please visit our blog.



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Webinars

4 Horsemen of the Plan-pocalypse

Nostradamus? Miss Cleo? The Phia Group? In a psychic feat of foresight, The Phia Group's team has gazed into their crystal ball and identified four issues that may not presently be keeping you up at night, but will certainly be disturbing your slumber very soon. From being forced to pay for surrogate pregnancy and births, to the IRS actively issuing letters notifying employers of 2015 tax year penalties; from a new wave of fraud, errors, and abuse leading to heretofore unseen overpayments, to case law addressing the rights of plans to utilize reference based pricing - you've been warned! We predict this complimentary webinar, taking place at 1pm (EDT) on April 19, 2018, will open your eyes. Miss this webinar at your own peril… You've been warned!

Click HERE to Register!

On March 20, 2018, The Phia Group presented, "Transparency: Using it to Your Advantage," where we discussed the need for, and effects of, contractual and price transparency on the self-funded industry - and how health plans, TPAs, and brokers can use transparency to their advantage.

On February 27, 2018, The Phia Group presented, "Evolve or Dissolve - Responding to Today's Tax Law to Save the Health Benefit Plan Industry Tomorrow," where we discussed what you need to know about the new law, and how to navigate the treacherous path that lies ahead.

On February 22, 2018, The Phia Group presented, "Keeping it Under Wraps: What the Networks Don't Advertise," where we discussed how the importance of cost-containment is at an all-time high.

On January 30, 2018, The Phia Group presented, "Plan on Saving by Saving Your Plan - Applying Lessons Learned to Create the Perfect Plan Document," where we discussed The Phia Group's Flagship Template.

On January 18, 2018, The Phia Group presented, "A Taxing Time: The Tax Bill's Impact on Self-Insurance," where we discussed the latest tax law.

Be sure to check out all of our past webinars!



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Podcasts:

•On March 23, 2018, The Phia Group presented, “Loopholes, Untouchables, and An Unlikely Ally,” where Adam, Ron, and Brady went around the horn discussing a few hot button topics.

•On March 16, 2018, The Phia Group presented “
Partners in Empowerment – A Prescription for Savings,” where Ron and Brady were thrilled to interview LG Hanzel of Rx Results.

•On March 1, 2018, The Phia Group presented “
Red Cross Blood Drive Special Episode,” where The Phia Group in partnership with the Red Cross hosted an on-site blood drive. Ron Peck interviewed members of The Phia Group staff and Red Cross regarding personal experiences, the Phia event, and the ever present need for donors.

•On February 26, 2018, The Phia Group presented “
3 Scoops of Knowledge,” where Adam, Ron and Brady celebrated the forthcoming change in seasons and warming weather, by each selecting a unique topic that was bugging them, and offered their opinions regarding how we should react.

•On February 16, 2018, The Phia Group presented “
Fireside Chat with The President,” where our first Empowering Plans guest, the Self-Insurance Institute of America’s CEO and President, Michael Ferguson, sat down with Adam, Ron and Brady to discuss everything – from past wins and losses, to plans for 2018.

•On February 7, 2018, The Phia Group presented “
Disruption or Not?,” where our hosts discussed the recent announcement that Amazon, Berkshire Hathaway and JPMorgan are looking to collaborate on “health care.”

•On January 29 2018, The Phia Group presented “
Game-changers” where our hosts discussed Adam’s recent travels and review events.

•On January 22, 2018, The Phia Group presented “
Mandate? We don’t need no stinking mandate,” where Adam, Ron, and regular co-host – Brady Bizarro – addressed the new tax law, elimination of the individual mandate, and how it may impact benefit plans of all types.

•On January 10, 2018, The Phia Group presented “
Lightning Strikes Twice – Top 2017 Issues Impacting 2018,” where the “Phia Group Boys” freestyled as they shared the issues they felt defined 2017 and are likely to influence 2018.

 

Be sure to check out all of our latest podcasts!



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The Phia Group’s 2018 Charity

At The Phia Group, we value our community and everyone in it. As we grow and shape our company, we hope to do the same for the people around us.

The Phia Group's 2018 charity is the Boys & Girls Club of Brockton.

The mission of The Boys & Girls Club is to nurture strong minds, healthy bodies, and community spirit through youth-driven quality programming in a safe and fun environment.

The Boys & Girls Club of Brockton (BGCB) was founded in 1990 to create a positive place for the youth of Brockton, Massachusetts. It immediately met a need in the community; in the first year alone, 500 youths, ages 8-18, signed up as club members. In the 25 years since, the club has expanded its scope exponentially by offering a mix of Boys & Girls Clubs of America (BGCA) nationally developed programs and activities unique to this club.

Since their founding, more than 20,000 Brockton youth have been welcomed through their doors. Currently, they serve more than 1,000 boys and girls ages 5-18 annually through academic year and summertime programming.

 

On Thursday, February 8th, CEO of The Phia Group, Adam Russo, invited 50+ children from The Boys & Girls Club of Brockton to a Seussical play at the Inly School in Adam's hometown of Scituate, MA. It was truly a pleasure to see the look on their faces while watching the play.

 

 

 

The Phia Group invites its staff to donate various items for the benefit of The Boys and Girls Club of Brockton. For more information or to get involved, visit www.bgcbrockton.org.



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The Stacks

Trump Tax Bill Signals the Swan Song for Obamacare's Individual Mandate

By: Sean Donnelly, Esq. - March 2018 - Self-Insurers Publishing Corp.

The "tax" bill that Congress passed in late December was somewhat of a wolf in sheep's clothing from a health care perspective. It certainly overhauled the tax code and instituted tax cuts for corporations and many American taxpayers, but it also doubled as a thinly veiled health care bill through its repealing of Obamacare's individual mandate. Authors of the tax bill postulated that such a repeal could save the federal government more than $330 billion over the next decade, as fewer Americans will end up receiving subsidies or Medicaid, savings that could then be used to finance the bill's tax cuts and lower tax rates. The tax bill was not the complete eradication of Obamacare that the Trump administration had set its sights on during the first year of Trump's presidency, but the dismantling of the individual mandate marks the first removal of a key pillar in the Obamacare foundation.

Click here to read the rest of this article


The Best of Times and the Worst of Times… How Imperfect Regulatory Action May Still Create Opportunities for Self-Funding

By: Jen McCormick, Esq. - February 2018

Regulators have been busy over the course of the past few months. Between the issuance of executive orders, a tax bill, and state regulatory action, employers are scrambling to understand the implications. And while regulatory action has been quick, it has not necessarily been thorough, creating possibilities and opportunities for self-funded health plans. Upon review of the various regulations, it seems new incentives for the creation of self-funded employer plans now exist. Employers may investigate taking advantage of this environment to form, create, or modify their self-funded benefit plans. Let's examine certain recent regulatory developments.

Click here to read the rest of this article.

 

Buyer Beware - No Good Deed Goes Unpunished

By: Ron E. Peck, Esq. - January 2018 - Self-Insurers Publishing Corp.

Employers and their advisors may soon find themselves accused of breaching their fiduciary duty if they continue to allow their benefit plans to pay inflated rates for medical services, without any justification for the excessive prices. Blindly paying fees that are not revealed until after the service is provided, to practitioners who cannot explain why their rates are many times more than comparable providers of equal or greater skill, is not a prudent use of plan assets and does violate one of the core tenets of the Employee Retirement Income Security Act of 1974 ("ERISA") and fiduciary law.

Click here to read the rest of this article.

 

To stay up to date on other industry news, please visit our blog.

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Phia’s 2018 Speaking Events:

Adam Russo’s 2018 Speaking Engagements:

• 1/23/18 - Q4 Intelligence Conference - Tampa, FL
• 2/2/2018 - Benefit Intelligence School District Conference - Phoenix, AZ
• 3/7/2018 - SIIA Self-Insured Health Plan Executive Forum - Charleston, NC
• 3/9/2018 - CGI Business Solutions Seminar - Manchester, NH
• 3/14/2018 - Pareto StructuRE Meeting - Park City, UT
• 4/12/2018 - Caprock Health Care Forum - Dallas, TX
• 4/25/2018 - Berkley Captive Symposium - Grand Cayman Islands
• 4/26/2018 - Innovative Risk - Grand Cayman Islands
• 4/30/2018 - World Health Care Congress - Washington, DC
• 5/17/2018 - Prairie States Broker Event - Chicago, IL
• 6/21/2018 - GBSI Conference - Springfield, MO
• 6/26/2018 - Leavitt Annual Event - Big Sky, MT

Ron Peck’s 2018 Speaking Engagements:

• 1/25/2018 - HealthFirst TPA Client Conference - Tyler, TX
• 3/6/2018 - SIIA National Conference - Charleston, SC
• 3/7/2018 - CGI Business Solutions Seminar - Manchester, NH
• 3/23/18 - Health Rosetta - Module 5: Next-Gen Plan Design - Boston, MA

Tim Callender’s 2018 Speaking Engagements:

• 2/14/2018 - BevCap Captive Group, 10th Anniversary Meeting - Kona, HI
• 4/25/2018 - Cypress University - Las Vegas, NV
• 5/7/2018 - UBA Spring Conference - Chicago, IL
• 5/16/2018 - Sun Life MVP Forum - Kansas City, KS
• 5/24/2018 - Pareto Captive Services, Contrarian Re Captive Meeting - Nashville, TN
• 6/25/2018 - Leavitt Conference - Big Sky, MT
• 7/17/2018 - HCAA TPA Summit - Minneapolis, MN

Jen McCormick’s 2018 Speaking Engagements:

• 4/17/2018 – Texas Association of Benefit Advisors – Dallas, TX
• 5/16/2018 – IOA RE – Indianapolis, IN

 

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Get to Know Our Employee of the Quarter: Catherine Dowie

Congratulations to Catherine Dowie, The Phia Group's Q1 2018 Employee of the Quarter!

When we think of passion, we think of Catherine. Not only is she working full time, but she is also going to law school full time at night. Even with all the work she has from attending law school, she still manages to find time at night, after school and on weekends, to work. Anyone can always go to her with a question on case law, and if she does not have an answer right away, she is always able to find an argument on the Plan's side.

 

 

Congratulations Catherine and thank you for your many current and future contributions.

 


 

Phia News

2017 Community Partner of the Year Award!

The Phia Group and Adam Russo were recently awarded the "2017 Community Partner of the Year Award" in Easton, Massachusetts, on March 1, 2018. The Community Partner of the Year Award is presented annually to a company, foundation, or community organization that has made significant contributions to advance the work of the Boys & Girls Club of Brockton. In 2017, The Phia Group gave more than just financial support to propel the programs forward, and their employees and leadership gave generously of our time and talents to create special, lasting memories for the boys and girls throughout the year.

 

 

The American Red Cross Visits Phia!

The American Red Cross came to visit The Phia Group and 18 of our employees successfully donated a pint of blood. With those 18 donations, we were able to save 54 lives. We take great pride in knowing the impact this can have. To learn more about the American Red Cross and how you can help save a life, make sure you check out The American Red Cross website.

 

Job Opportunities:

• Health Benefit Plan Administration - Attorney
• Consultant I

See the latest job opportunities, here: https://www.phiagroup.com/About-Us/Careers

 

Promotions

• Brady Bizarro was promoted from Staff Attorney to Director, Healthcare Attorney

• Amanda Lima was promoted from Medical Bill Negotiator to Team Lead, Provider Relations

• Ulyana Bevilacqua was promoted from Consultant I to Supervisor, PGC

• Jillian Painten was promoted from Claim Recovery Specialist IV to Team Leader

• Toussaint Anderson was promoted from Project Manager, PGC to Manager, PDM

• Kelly Dempsey was promoted from Staff Attorney to Director, Independent Consultation & Evaluation (ICE)

• Sabrina Centeio was promoted from Case Investigator to Claim Recovery Specialist III

• Amanda Grogan was promoted from Sr. Claim Recovery Specialist to Team Lead

• Kerri Sherman was promoted from Team Lead, CI / BI to Sr. Team Lead, CI / BI

• Cara Carll was promoted from Team Lead, Recovery MPC/WC to Sr. Team Lead, CA/CSR

• Lisa Tangney was promoted from Manager, Accounting to Controller

• Rose Jardim was promoted from Accounting Administrator to Team Lead, Accounting

• Hemant Dua was promoted from Dir. Applications & Business Intelligence to Sr. Director of Technology

• Garrick Hunt was promoted from Sales Executive to Sales Manager
 

New Hires

• Grace Barron was hired as a Customer Care Representative

• Jacob Falkof was hired as a Customer Care Representative

• David Clasby was hired as an IT Technologist

• Cindy Royle was hired as a Legal Assistant
 

Fun at Phia:

The Phia Family is one good-looking group of footballers! Our Superbowl Party was a hit and we thank all those who participated. Although we did have fans from both teams in the office that day, there were no casualties; and that in itself was a huge success!



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info@phiagroup.com
781-535-5600

The Stacks - 2nd Quarter 2018

Trump Tax Bill Signals the Swan Song for Obamacare’s Individual Mandate
By: Sean Donnelly, Esq.

Background

The “tax” bill that Congress passed in late December was somewhat of a wolf in sheep’s clothing from a health care perspective.  It certainly overhauled the tax code and instituted tax cuts for corporations and many American taxpayers, but it also doubled as a thinly-veiled health care bill through its repealing of Obamacare’s individual mandate.  Authors of the tax bill postulated that such a repeal could save the federal government more than $330 billion over the next decade as fewer Americans will end up receiving subsidies or Medicaid, savings that could then be used to finance the bill’s tax cuts and lower tax rates.1  The tax bill was not the complete eradication of Obamacare that the Trump administration had set its sights on during the first year of Trump’s presidency, but the dismantling of the individual mandate marks the first removal of a key pillar in the Obamacare foundation.

The individual mandate, one of the linchpins of the Affordable Care Act, required Americans who did not otherwise qualify for an exception to obtain minimum essential health coverage.  Those Americans who did not have minimum essential health coverage for any month during the year were required to pay a penalty during tax season.  This mandate was essential to pressure younger and healthier Americans to purchase insurance coverage, thereby bringing balance to the risk pools and stabilizing the health insurance marketplace.   

The concept of the individual mandate was actually spawned by conservative policymakers who posited that health coverage should be mandatory in order to produce a sustainable insurance pool with the right balance of healthy and sick individuals to properly spread the risk.  The underlying theory was that by compelling healthier Americans to enter the marketplace and obtain coverage, premiums would begin to decrease across-the-board as the influx of healthier participants would help to absorb the costs of those less healthy and more expensive participants.  In 2006, Mitt Romney, Massachusetts’ Republican governor, was able to convince the largely Democratic state to adopt an individual mandate as part of its health care overhaul.  The relative success of the mandate’s Massachusetts audition eventually paved the way for then-President Obama to include an individual mandate as a vital component of the 2010 Affordable Care Act.  Even as the Trump tax bill begins to take effect this year, the individual mandate will still remain in effect in 2018.  The repeal of the individual mandate won’t actually take effect until 2019.  Accordingly, the mandate’s penalties will continue to be levied in 2018 unless the Trump administration otherwise attempts to have them waived.

A Short and Bumpy Ride

The individual mandate faced intense partisan scrutiny both before and after the passage of the Affordable Care Act.  Republicans viewed the mandate as an unconstitutional scheme to coerce Americans to participate in a commercial activity, an act that they argued amounted to an impermissible overreach of Congress’ powers to regulate commerce.  Following the enactment of the Affordable Care Act, a total of twenty-seven states challenged the law’s constitutionality in federal court.2  In the seminal case of National Federation of Independent Business v. Sebelius,3 the Supreme Court agreed with the Republican position and held that the individual mandate was outside of the scope of Congress’ authority to regulate commerce because the Constitution’s Commerce Clause does not afford Congress the power to force people to engage in commerce.  However, the individual mandate ultimately managed to withstand judicial scrutiny as the Supreme Court held in its 5-4 decision that the mandate penalty amounted to a permissible tax that Congress could lawfully levy under its taxing and spending power.

Even though the mandate survived its main Constitutional challenge, it nonetheless sustained a shellacking in the court of public opinion.  A tracking poll conducted by Kaiser Health4 just a week after the presidential election in November 2016 found that sixty-three percent of Americans viewed the individual mandate as “very unfavorable” or “somewhat unfavorable.”  Comparably, only thirty-five percent of Americans viewed the mandate as “very favorable” or “somewhat favorable.”  A whopping sixty-one percent of Republicans polled perceived the individual mandate as “very unfavorable.”            

The Heritage Foundation, the conservative think tank that many credit as the originator of the concept of the individual mandate, renounced any affiliation with Obamacare’s iteration of the mandate and opposed it as an unconstitutional anachronism no longer considered necessary to achieve universal coverage.5  Notable among those who continued to champion the repeal of Obamacare and its individual mandate in the wake of the Sebelius decision was Mitt Romney, the very same architect behind the individual mandate’s debut in Massachusetts.  The mandate was branded by its challengers as an un-American and officious overreach of government authority, a pariah in the land of free people, free markets, and free choice.     

Broad Implications of the Repeal

Despite President Trump’s pronouncement that the tax bill “essentially repealed Obamacare,” the Affordable Care Act will continue to be the law of the land.  Left untouched in the wake of the tax bill are the federal income-based subsidies intended to assist American consumers with purchasing individual policies, the expansion of Medicaid for low-income adults, the prohibition against denying coverage to consumers with pre-existing health conditions, and the edict that insurers must cover those health benefits deemed “essential” by the Department of Health and Human Services.  Also surviving is the employer mandate, which requires certain employers to provide affordable health care coverage to their employees or else face a penalty.  However, the repeal of the individual mandate will undoubtedly trigger some significant shifts in the health care landscape.              

The majority of Americans won’t be personally impacted, since most people already obtain health insurance either through their employer or through a public program such as Medicare, and thus were never really at risk of being subjected to the individual mandate penalty.  Nevertheless, for those Americans who do not receive health insurance from an employer or public program and who instead purchase coverage from an Obamacare health exchange, such individuals are now free to forego their coverage entirely without fear of having to pay a penalty.  Those who are completely healthy and those who are financially well-off may now decide to ditch their health coverage as being needless or expendable.  Comparably, even those who are sick or less financially stable may ultimately decide not to carry health insurance without the looming threat of the penalty to force them into action.

Consequently, the Congressional Budget Office (CBO) is estimating that the individual mandate repeal will result in thirteen million fewer Americans being insured within the next decade.  The CBO is also forecasting that the premiums for coverage obtained on the health exchanges will rise approximately ten percent per year over the next decade due to healthy participants scattering from the markets without fear of the penalty and leaving the sicker participants behind to overburden the risk pools.  Some health policy experts are expecting that the removal of the individual mandate will simultaneously give rise to increased premiums and decreased coverage rates, ultimately leading to a market collapse.7  In order to head off this potential outcome, lawmakers in states such as California are already looking to push legislation that would adopt versions of the individual mandate as state law, à la Massachusetts.                                     

Overtones for Employer-Sponsored Plans

As a result of the repeal of the individual mandate, the CBO is projecting that fewer employees will be joining their employer’s self-funded plans with the mandate’s penalty no longer in play.  Specifically, the CBO anticipates that the removal of the individual mandate will result in three million fewer Americans having coverage through their employer over the next decade.8  Accordingly, employers may begin to experience a decline in health plan enrollees. 

As noted earlier, however, the Affordable Care Act’s employer mandate will remain after the enactment of the Trump tax bill.  Employers subject to the mandate, those with fifty or more “full-time equivalent employees,” face penalties if they fail to offer minimum essential coverage that provides minimum value and at least one full-time employee receives a premium tax credit for purchasing individual coverage on the health insurance marketplace.  Timothy Jost, a law professor at the Washington and Lee University School of Law, deduced that if fewer Americans end up seeking coverage through the health care exchange, then it follows that some employers may be able to avoid paying the employer mandate penalties that are only levied if at least one full-time employee receives a premium tax credit through the exchange.  In this way, the individual mandate repeal is somewhat of a double-edged sword; fewer employees may end up enrolling in employer-sponsored plans, but fewer may also look to purchase coverage on the exchange, thereby reducing the risk to their employers who would otherwise be exposed to the strict penalties imposed by the employer mandate.  Still, Jost surmises that as over 150 million Americans already have health coverage through their employers, the “effects of the individual mandate repeal on the employer-sponsored market will be marginal.”9

The repercussions of the repeal will certainly be felt hardest in the individual market, but employer-sponsored plans will likely experience some fallout as healthier, lower-risk employees begin to question if it might make more financial sense to withdraw from their plans entirely.  As these healthier, less expensive employees begin to disenroll, the all-important balance each plan seeks to achieve will be disrupted as the scales start to tilt back towards the sicker, higher-risk and more expensive employees.  A resulting risk pool made up of a disproportionate number of the costliest employees is the kiss of death for an employer-sponsored plan.  As employees are no longer “mandated” to enroll in the plans offered by their employers, self-funded plans will need to devise more alluring and increasingly innovative methods to retain their healthiest participants.  With the individual mandate repealed, the driving force of the mandate’s penalty can no longer be relied upon to funnel low-risk lives towards enrollment.  Employer-sponsored plans will need to fill this void by offering more comprehensive benefits, designing more creative incentive programs, and prioritizing enrollee engagement in order to secure these vital, low-cost lives.                       

1See Congressional Budget Office, Repealing the Individual Health Insurance Mandate: An Updated Estimate (November 2017), https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/53300-individualmandate.pdf.

2Park, Katie & Rolfe, Rebecca (2013, September 23). How states approached health-care reform. The Washington Post. Retrieved from http://www.washingtonpost.com/wp-srv/special/politics/state-healthcare-progress/

3See 567 U.S. 519 (2012).

4Kirzinger, Ashley, Sugarman, Elise & Brodie, Mollyann (2016, December 01). Kaiser Health Tracking Poll: November 2016. The Henry J. Kaiser Family Foundation. Retrieved from https://www.kff.org/health-costs/poll-finding/kaiser-health-tracking-poll-november-2016/.

5Butler, Stuart M., Ph.D. (2012, February 06). Don’t Blame Heritage for ObamaCare Mandate. The Heritage Foundation. Retrieved from https://www.heritage.org/health-care-reform/commentary/dont-blame-heritage-obamacare-mandate.

6See Congressional Budget Office, Repealing the Individual Health Insurance Mandate: An Updated Estimate (November 2017), https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/53300-individualmandate.pdf.

7Sanger-Katz, Margot (2017, December 21). Requiem for the Individual Mandate. The New York Times. Retrieved from https://www.nytimes.com/2017/12/21/upshot/individual-health-insurance-mandate-end-impact.html.

8See Congressional Budget Office, Repealing the Individual Health Insurance Mandate: An Updated Estimate (November 2017), https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/53300-individualmandate.pdf.

9Jost, Timothy (2017, December 20). The Tax Bill And The Individual Mandate: What Happened, And What Does It Mean? Health Affairs. Retrieved from https://www.healthaffairs.org/do/10.1377/hblog20171220.323429/full/.

iBennett, Brian (2017, December 20). ‘We have essentially repealed Obamacare,’ Trump says after tax bill passes. Los Angeles Times. Retrieved from http://www.latimes.com/politics/washington/la-na-pol-essential-washington-updates-trump-sees-an-end-to-obamacare-in-the-1513794883-htmlstory.html.

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The Best of Times and the Worst of Times … How Imperfect Regulatory Action May Still Create Opportunities for Self-Funding
By: Jen McCormick, Esq.
 

Regulators have been busy over the course of the past few months. Between the issuance of executive orders, a tax bill, and state regulatory action, employers are scrambling to understand the implications. And while regulatory action has been quick, it has not necessarily been thorough, creating possibilities and opportunities for self-funded health plans.

Upon review of the various regulations, it seems new incentives for the creation of self-funded employer plans now exist.  Employers may investigate taking advantage of this environment to form, create, or modify their self-funded benefit plans.  Let’s examine certain recent regulatory developments.

Executive Order 13813

On October 12, 2017 President Trump issued Executive Order 13813 to save “the American people from the nightmare of Obamacare.” While this executive order did not modify any laws or regulations, it did direct the Department of Labor (DOL), the Department of Health and Human Services (HHS), and the Department of the Treasury to issue proposed regulations concerning expanded coverage under health reimbursement arrangements (HRAs) and association health plans (AHPs).

HRAs are tax advantaged arrangements subject to the Affordable Care Act (ACA) regulations. As a result, an HRA may not impose annual dollar limits on benefits unless it is integrated with a group health plan. An exception exists, however, for small employers. Pursuant to a provision within the 21st Century Cures Act, certain small employers may offer a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).  This provision allows small businesses (i.e. employers with under 50 employees) to reimburse employees for out of pocket costs and premiums on the individual market. The regulations, however, impose tight restrictions on the employers’ ability to offer a QSEHRA.

Based on the current regulations and guidance for QSEHRAs issued by the Internal Revenue Service (IRS) in Notice 2017-67, an employer offering any group health plan is ineligible.  As a result, even employers who only offered group dental coverage, for example, would be disqualified.  The IRS did request comments on this guidance (due January 19, 2018).

The anticipated comments on Notice 2017-67, combined with the executive order directing the agencies to propose regulations expanding opportunities for employers to offer an HRA, may loosen current restrictions and expand the employer eligibility requirements.  Guidance is still pending, but the proposed regulations could present options for self-funding which do not currently exist.

Proposed DOL Regulations

In addition to the expansion of HRAs, the executive order directed regulators to increase access to health care by allowing a broader pool of employers to create AHPs. In early January 2018, responding to the executive order, the DOL issued proposed regulations to extend the circumstances under which an association may function as an employer under the Employee Retirement Income Security Act (ERISA).

Currently, coverage provided via an AHP is regulated pursuant to the same standards applicable to the individual and small employer health insurance market.  Under ERISA, an AHP’s reach is currently limited to circumstances where it is an employer sponsored plan. Specifically, association members must share a common interest, connect for reasons other than providing health insurance, exercise sufficient control over the health plan, and have at least one non-business owner employee.

The proposed rules may be game-changing for working owners (i.e. sole proprietors and self-employed individuals), allowing them to function as both the employer – for purposes of joining the association – and as the employee – for purposes of being covered by the plan.  This unique dual status could allow working owners to participate in association health plans, and the adjustment could allow a new class of individuals (and potentially attract a large and previously ineligible pool of individuals) to self-funding.

Additionally, the proposed regulations contemplate the formation of an association for the purpose of offering health insurance. The rule does not impose prohibitions on forming new associations (or specify size limitations), but it does provide formal organizational requirements for associations. These newly formed associations would need affordable health insurance options, and may want to explore the benefits of self-funding. This could also create a new pool of entities for self-funding.

Tax Cuts and Jobs Act

In December 2017, the Tax Cuts and Jobs Act (Act) was signed into law, reforming both individual and corporate income tax issues in the most sweeping and drastic changes to the Tax Code since 1986.

While the Act maintains 7 tax brackets for individuals, it reduces the rates and increases the thresholds on the brackets for individuals.  Potentially even more significantly, the Act reduces the individual mandate penalty to $0 (as of January 1, 2019). While the elimination of the individual tax penalty will likely have a significant negative impact on employers, and their employer sponsored health plans, the greater fear is that if individuals are no longer required to have coverage, the healthy, low risk individuals will terminate coverage altogether (whether individual or employer based). Without healthy lives the risk pools will suffer.

While the Act affects the individual mandate, it does not alter current employer mandate requirements; employers are still required to offer affordable coverage meeting minimum value requirements, or face an excise tax. This is troubling for employers.  If, with the reduction of the individual mandate penalty to $0 employees are effectively no longer required to maintain coverage, employers anticipate covering a less balanced risk pool, making (still) mandated employer coverage more expensive.

While the individual and employer mandate were intended to work together to increase access to care and balance risk, the elimination of the individual mandate does not fully undermines the continued value of offering employer sponsored coverage as an employee benefit.  Employers still recognize the culture and corporate benefits that attract and retain a talented work force, like employee health plans. Many employees (even healthy ones) value the benefit of comprehensive healthcare and the elimination of the individual mandate will not deter them from continuing coverage under an employer plan, or seeking an employer that provides one.

This does mean, however, that employers will need to be creative and flexible to counterbalance the potential new costs. One way to offset costs would be to create a tailored plan, designed specifically for the individuals that value healthcare as an employee benefit, and the best way to offer flexibility is via a self-funded plan.  This might be an opportunity to attract more employers who are concerned about rising costs and investigating new solutions.  Only with self-funding can an employer implement a targeted health plan that is loaded with unique benefits and creative cost-containment methodologies.

The Act also creates tax savings for businesses by slashing the corporate income tax rate from 35% to 21%, and creating a 20% deduction for qualified business income (QBI). While the specifics of the business tax changes are beyond the scope of this discussion, and the determination of QBI is not a straightforward analysis, the takeaway is that these tax benefits should (in theory) generate opportunities for employers to save on their tax bill.  With the savings, employers invest in more creative employee benefits, like self-funded healthcare plans.

Despite the complexity of the Act and the continued uncertainty of some of its implications, the potential opportunities for self-funding should not be overlooked.  Employers should discuss the impact of the Act on their individual situation with their tax advisors to better understand planning opportunities.

State Action

In response to the Act’s repeal of the individual mandate, certain states are taking action. For example, a Maryland proposal would require individuals to have insurance or pay a penalty of 2.5% of their income or $696 (whichever is greater).   The imposition of insurance mandates at the state level would encourage participation in employer plans, making employer sponsored coverage an attractive option and broadening the risk pool.   If states like Maryland join Massachusetts in mandating coverage it could positively impact self-funding.  More individuals would be looking for cost effective health plan options, something that an employer with a self-funded plan would be able to provide.

Summary

While recent regulatory developments have been swift, leaving anxiety over their interplay and interaction, employers should look for opportunities to embrace change as it relates to benefits they must offer (i.e. employers are still subject to the employer mandate), and those that could be advantageous or strategic to offer.

With new challenges come new opportunities for HRAs, AHPs, and employers under the executive orders, proposed DOL regulations, tax reform, and state level developments.  Self-funding, with unmatched flexibility for employers of all sizes, could be a cornerstone of the solution to reduce costs in the provision of healthcare.

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Buyer Beware – No Good Deed Goes Unpunished
By: Ron E. Peck, Esq.

Employers and their advisors may soon find themselves accused of breaching their fiduciary duty if they continue to allow their benefit plans to pay inflated rates for medical services, without any justification for the excessive prices.  Blindly paying fees that are not revealed until after the service is provided, to practitioners who cannot explain why their rates are many times more than comparable providers of equal or greater skill, is not a prudent use of plan assets and does violate one of the core tenets of the Employee Retirement Income Security Act of 1974 (“ERISA”) and fiduciary law.

Employers who choose to provide quality health insurance for their employees are generally performing an act of generosity.  Certainly studies show that employers who offer health benefits recruit and retain the best employees, but not all benefit plans are equal - and those employers who choose to offer more than the mandated minimum coverage are indeed combining generosity with good business sense.

As mentioned, however, not all benefit plans are the same.  For many, purchasing what we label as “fully funded” or “fully insured” traditional insurance, is enough.  For these consumers, risk aversion is king, and they will pay a premium (more likely than not more costly than their employees’ health expenditures) to an insurance carrier.  In exchange for that premium, said carrier will take on the risk associated with paying the employees’ medical bills.  Is there a chance some catastrophic claim, injury, or illness will cause the total medical expense to exceed the collective value of the premium?  Sure.  Is it likely?  No.  Insurance carriers are in the business of assessing risk, and calculating premium that will earn profit.

For other employers less concerned with risk, the decision to keep the profit that would otherwise be paid to the carrier, and fund only the actual medical expenses, leads them to engage in the act of self-funding or self-insuring.  It is to those employers that I now direct my commentary.

Studies have shown time and again that employers who self-fund their benefit plan are more likely to save money over five years of doing so, when compared to a comparable fully insured policy.  This is due in part to customizing the plan to address only that population’s needs, adjusting benefits as the data requires, quickly implementing cost containment programs, shopping around for the best vendors, stop loss, and other elements of the plan, and otherwise ensuring that a customized approach trims the fat and applies each plan dollar where it will do the most good.  So, you ask, if self-funding is such a panacea, why doesn’t everyone do it?

The answer is multifaceted.  First of all, if you plan to provide benefits to a population with high medical expenses, you may benefit from fully insuring and working with the carrier to spread the risk over their entire risk pool.  A self-funded employer takes on the entire plan’s expense, with few exceptions.  Next, some employers prefer to pay “more” when that amount is something they can afford, to avoid the risk of paying “MORE” when that amount is something they cannot afford (even if the likelihood of such a massive claim is slim).

Another consideration employers seeking to self-fund must consider (but few sadly do) is the matter of fiduciary authority.  Indeed, ERISA dictates, among other things, that an employer who self-funds a benefit plan either acts as or appoints a plan administrator.  That administrator is a fiduciary of the plan and its members, with a very serious legal obligation to perform numerous tasks – all with the plan’s best interest in mind.  Make one wrong move, and you’ll not only have to fix the damage you cause, but potentially be liable for up to treble-damages.

It is true that a self-funded plan administrator can transfer some or all of their fiduciary duties – meaning they share the burden – but most agree that at best the plan administrator is still responsible to monitor that assignee’s actions, and at worst, they maintain the burden as well.

As a result, employers who self-fund are not only at risk for the medical bills they will pay on their employees’ behalves, but are also at risk of being deemed to have “breached” their fiduciary duty if and when they make a mistake resulting in expenditures not in the best interest of the plan, and take action not in accordance with the terms of the plan document.

This may not sound like a big deal to you.  You may be saying, “Ron!  I ain’t afraid of no breach!”  Indeed; it would be great if all we had to do was follow the terms of the plan document like the instructions that come with your kid’s new toy.  Yet, like those instructions, saying is easier than doing; (where did I put that screw driver)?  This is particularly true in today’s self-funded industry.  Why?  Because things are so good!  Because today is a great time to be self-funded.  What???  At this point you should be thoroughly confused.  I did just say that today is the riskiest time to be a plan fiduciary because it is the best time to be a plan fiduciary.  Let me explain.

More so now than ever before, innovators are developing new services, products, and methodologies to maximize benefits while minimizing costs.  They are taking advantage of the self-funded plan structure, using our ability to customize, and targeting the high cost claims while increasing coverage elsewhere.  Everything is being examined and new approaches are being applied to old issues and new.  From medical tourism, to carve outs.  From technologically advanced subrogation tactics to reference based pricing network alternatives.  These are just a few examples of new and amazing ideas helping self-funded plans to evolve.  Unfortunately, just like Kevin McCallister (Macaulay Culkin) who, in that 1990 classic film, is left “Home Alone” when the rest of his family rushes out the door to embark on an exciting adventure… so too are plan administrators and their supporting cast rushing into fun and exciting adventures without making sure their plan document is along for the ride.

Too often, these self-funded benefit plans – which are controlled by the terms of their plan document – implement a new, shiny service, product, or process and forget to update their plan document to match.  The plan document is how the plan administrator communicates to the plan members (current and prospective), providers, department of labor, etc., what the plan does and doesn’t do – and sets forth the terms by which people decide whether to enroll and contribute their hard earned money in exchange for membership.  If the plan in practice doesn’t match the plan in writing, that is bad news.

Many self-funded employers believe that by hiring brokers, third party administrators, and advisors, they can somehow protect themselves from this fiduciary threat.  Yet, case after case has shown that – even though the broker, TPA, and the rest may ALSO be a fiduciary – the employer / plan administrator is still going to come along for the ride.

The case that has “set me off” and gotten me to head down this mental-path is the case of Acosta v. Macy's, Inc., S.D. Ohio, No. 1:17-cv-00541; (August 29, 2017).  In that case, among other things, we see a benefit plan sponsor and their TPA attempting to contain costs by applying a reference based pricing methodology to their claims.  This is great, and I applaud their efforts.  Unfortunately, however, it appears that they may not have adjusted the applicable plan document to adequately reflect this new approach.  While I’m sure this employer is thinking, “I thought the TPA does this for me?” Regardless of the truth of the matter, the employer – as a fiduciary – will be dragged into the complaint.  This will – at best – harm the relationship between the plan and TPA, but – at worst – it will cause the plan to leave the TPA and possibly self-funding altogether.

This is why I feel that TPAs, and all of us in the business of servicing self-funded employers, need to protect employers even when we’re not obligated to do so.  I fear, as in this case, that even if a self-funded employer “gets burnt” by something that is in no way, shape, or form our “fault” or “responsibility,” it’s still a black eye for the industry as a whole.

This takes me, then, to my next concern.  For some time now, (since the last major economic downturn), we’ve been hearing via mass media all about situations where employees are suing employers, and their brokers, over mismanagement of 401(K) and pension plans.  Indeed, these advisors are in many instances fiduciaries of these employee investors, and – in most of these cases – the employees are accusing their “fiduciaries” of wasting the plan’s (aka their) money on less-than-advisable investments.  Consider, for instance, the case of Lorenz v. Safeway, Inc., 241 F. Supp. 3d 1005, 1011 (N.D. Cal. 2017).  In this class action suit, the Plaintiff (Dennis M. Lorenz) asserted claims under ERISA against the “Safeway 401(K) Plan's” fiduciaries. Lorenz alleged, amongst other things, that the Defendants breached their fiduciary duty by selecting and investing the plan’s assets with funds that charged higher fees than comparable, readily-available funds, and which had no meaningful record of performance so as to indicate that higher performance would offset this difference in fees.  Why does this scare me?  I am scared because we could just as easily take this lawsuit (and the many like it) and replace the players with members of our own industry.  Health benefit plans routinely spend plan assets to pay medical bills and compensate providers that may be more costly “than comparable, readily-available [providers], and which had no meaningful record of performance so as to indicate that higher performance would offset this difference in fees.”  Ouch!  If I am a member of a self-funded health plan, and my administrator is taking my money, and using it to pay for a $3,000 colonoscopy, when a facility down the road would do it for $750… and the more expensive facility has an “as good” or “worse” record when it comes to quality and outcomes… wouldn’t I say: “Hey!  It looks like that fiduciary isn’t prudently managing my assets.”  I truly believe that, for anyone that is a fiduciary of these plans, the day participants turn on us may not be a matter of “if,” but rather, “when.”

Consider also the recently filed, McCorvey v. Nordstrom, Inc. filed in the California Central District Court on November 6, 2017.  In this case, a former participant in the Nordstrom Inc. 401(K) Plan sued plan executives alleging breaches of fiduciary duties in the management of the plan, and is seeking class action status for their claim.  The basis of the claim, similar to the Safeway case discussed above, challenges the reasonableness of fees paid with plan assets, and further, that the plan fiduciaries failed to take advantage of cost-cutting alternatives.  The lawsuit literally contends that the defendant failed to adequately and prudently manage the plan, by allowing plan funds to be used in the payment of unreasonable fees and not acting prudently to lower costs.

It doesn’t take a rocket scientist to see the parallels between these lawsuits, and out of control spending by health plans.  Whether you are someone offering better care for less cost, or someone who can revise the plan’s methodologies to maximize benefits while minimizing costs, these trends in fiduciary exposure should galvanize us all to either offer help, or seek it, when it comes to prudent use of plan assets.

“But Ron,” you say, “even if we (or the TPA and broker) are fiduciaries of the plan, the decision to contract with over-priced facilities, agree to their fees, and pay these claims, is ultimately a decision made by the plan sponsor (employer) – right?  So, while your previous comments about self-funded employers leaving the market when they realize they’ve been taken for a ride may be true, we are at least safe from liability for fiduciary breach.  Right?”  Maybe not.  Consider Longo v. Trojan Horse Ltd., 208 F. Supp. 3d 700, 712 (E.D.N.C. 2016).  In this case, the plaintiff employees of Trojan Horse and Glen Burnie Hauling filed a putative class action against defendant Ascensus Trust.  In this case, the Defendant was collecting contributions, submitting them for investment, and keeping a fee for themselves.  There is some dispute regarding what happened to the investments, but ultimately it appears the funds weren’t properly invested.  The Defendant argued that they did their job, and the issues about which the complaint was filed was outside their immediate control.  Yet, the court held that Defendant had a fiduciary duty in regard to the contributions, and that they failed to take affirmative steps to investigate.  In other words, pursuant to 29 U.S.C. § 1132(a)(2), fiduciaries are responsible to ensure the plan’s welfare is priority number one, even when the actions in question may be taken by another entity or fiduciary.  So… following that line of logic… if a TPA, broker, or other advisor is a fiduciary of the plan, and we are aware (or should reasonably be aware) of actions being taken by another fiduciary, that are detrimental to the plan … or options that available to the plan to contain costs, but we knowingly allow another fiduciary to ignore them… we may be on the hook too!

So – in summary – I believe it is proper and necessary for any and all fiduciaries of these self-funded plans to step back, look for wasteful or imprudent behavior – both by the fiduciary itself, and other fiduciaries of the plan – and determine whether there is any action, option, or alternative that would constitute a more prudent use of plan assets.  Likewise, those who seek to help these fiduciaries and the plan reduce their expenditures without harming the plan need to raise their voices and warn their prospective clients of the cost of not working with them.  In other words, fiduciaries need to stop clinging to the status quo, and the onus is on all of us to help them do so.


The Phia Group's 1st Quarter 2018 Newsletter
Phia Group Newsletter 4th Quarter


Phone: 781-535-5600 | www.phiagroup.com


The Book of Russo:
From the Desk of the CEO

About six months ago I decided to start a project at The Phia Group focusing on how we can ensure the future viability of my company. The strategy for doing this was based on focusing on the young professional, also known as the millennial population, and attempting to figure out what makes them tick. How can I attract these folks to join Phia and make them want to stay with us throughout their career? The first thing that we did was survey the many young professionals that we have here at Phia in order to identify their thoughts, and what we found out truly opened my eyes. These workers want to understand why our company exists and not just what it is that we do.

Ron Peck, Matt Painten, and I spent months just getting back to the basics. After many focus groups and back-and-forth, I believe that we figured it out. This is the core essence of Phia and how we will attract, obtain, and retain not only employees, but clientele as well. I would love your feedback on what we came up with, so here it is:

The Problem
Health care costs too much and the price is increasing; employers are forced to offset costs onto employees through higher co-pays and deductibles.

The Phia Group’s Purpose
To make health benefits affordable for employers and employees

Why is this The Phia Group’s Purpose?
Hard working Americans deserve access to high quality, affordable health care.

What does it mean to “Empower Plans?”

To help employers maximize benefits, minimize costs, and take control of their own plans.

How do we “Empower Plans?”
We start by promoting and educating employers about self-funding. Then, we invent and implement cost containment services while delivering custom solutions to meet specific client needs.

I truly hope that 2018 is an amazing year for you and yours.  Happy reading my friends.


Service Focus of the Quarter: Plan Document/Summary Plan Description Risk Assessment
Phia Group Case Study
Phia Fit to Print
From the Blogosphere
Webinars
Podcasts
The Phia Group’s 2017 Charity
The Stacks
Phia’s Speaking Events
Employee of the Quarter
Phia News


Service Focus of the Quarter: Plan Document/Summary Plan Description Risk Assessment

In case you hadn’t heard, a new tax bill has been signed into law. Amongst other things, it appears the individual mandate ushered in by the ACA (aka ObamaCare) is being eliminated. The initial impact will be on the individual market, but we foresee healthy (low risk) individuals performing a cost benefit analysis and eventually choosing to drop out of their employer’s group health insurance. The first people likely to drop from such plans are likely those who are paying an arm and a leg to be enrolled in expensive, traditional, “fully funded” insurance. Yet, we fear that – soon after – the most desirable lives (healthy, low risk lives) will drop from their employers’ self funded plans… leaving only high risk / high cost lives. No plan – fully funded or self funded – can withstand losing those lives. It therefore behooves every self funded plan sponsor to figure out ways to offer more for less, and thus make plan enrollment attractive for all members – low and high risk, healthy and unhealthy alike. To do this, you must innovate and implement new benefits and cost containment tools. To do that, start with the plan document.

One of the benefits of self-funding is that the employer has the freedom and flexibility to design a benefit plan that truly meets the needs of its employees; making it attractive to the low risk healthy lives we need to fund the plan, and to whom we need to make the plan attractive (now that they aren’t “required” to enroll). The employer also has the ability to structure the plan so as to prudently manage the assets of the plan; this can be done, in particular, through innovative plan language meant to proactively tackle potential issues such as risk and cost.

Our Plan Document/Summary Plan Description Risk Assessments will identify areas the employer may want to consider for additional review, as well as provide a brief explanation of why certain items are important.

Once completed, plan sponsors can implement new measures to make their plans very attractive to even the healthiest folks. Things like new payment methodologies of out of network claims, medical tourism, and more can result in benefit plans offering more for less – and thus remaining a “must have” for those important healthy participants – even when enrollment is optional – but it all starts with the plan document.

Contact Tim Callender at tcallender@phiagroup.com or 781-535-5631 to learn more about how a Plan Document/Summary Plan Description Risk Assessment can help you.

Protect Your ASA: Update Your Agreements Today!

The Phia Group is privileged to work with so many different players in the self-funded industry and health insurance field in general. As a result, we often see issues developing and devise solutions before they have a chance to seriously impact our allies.

One such issue that has become a bigger problem of late, negatively impacting third party administrators, plan sponsors, brokers and stop-loss carriers, occurs when a self funded benefit plan or their broker-advisor wishes to utilize a stop-loss carrier that the TPA has neither vetted nor placed. Despite the fact that the TPA played no role in selecting the carrier, that TPA - more often than not - is still targeted by the plan sponsor if and when the carrier subsequently refuses to reimburse the plan or some other conflict arises.

For those TPAs utilizing The Phia Group's best-in-class template administrative services agreement (ASA), language is included that generally addresses this issue, but as the problem has escalated - it now requires special attention. With that in mind, The Phia Group has developed a form, which is signed by the plan sponsor and TPA, and is added to existing ASAs as an exhibit.

This addendum can be revised to fit with any ASA. Please contact Garrick Hunt at ghunt@phiagroup.com or call him at (781) 535-5644 to learn how you can obtain access to this very important form.

 




 

Cutting back on Questionnaires:

It is The Phia Group’s mission to reduce the cost of healthcare through the use of innovative legal techniques and the most sophisticated technology. In keeping with this goal The Phia Group is always taking steps to improve all of our services, including our earliest: subrogation. Recent upgrades to The Phia System™ and advancements in our investigational techniques have led to faster identification of third party liability claims and quicker engagement by The Phia Group’s team, without relying upon or otherwise communicating with the plan participants. These new resources allow us to identify opportunities more often and more effectively, while at the same time reducing the volume of accident questionnaires we send to plan participants. While accident questionnaires are still a useful tool when investigating and collecting accident details – they are no longer the only tool. As such, we are pleased to now provide all of our subrogation clients with the ability to increase, decrease, or cease the use of plan participant accident questionnaires. Clients can also opt to utilize their own letters, or have the employer communicate directly with plan participants. The choice is yours!

The Phia Group is committed to ensuring you and your clients are provided with nothing but the highest quality service, best-in-class performance, and a member first approach. That is why we are continuously improving our services to provide the best performance (and most options) possible.

To discuss these new customization capabilities, or our other services, please contact Trevor Schramn at tschramn@phiagroup.com or call (781) 535-5692.

 



Phia Group Case Study: Retroactive Plan Amendments

A self-funded group’s broker approached The Phia Group’s consulting department (via PGCReferral@phiagroup.com) and asked us to help respond to a provider’s appeal of a large dialysis claim. The provider was out-of-network, so thankfully there were no PPO contract concerns – but at the time the services were rendered, the SPD defined its payment rate as the prevailing charge in the area. One month after receiving the final claims for which the Plan was responsible, the Plan chose to effect an amendment that limited payment for all dialysis claims to 145% of the Medicare rate, and the amendment was back-dated to the beginning of the year (before the member began dialysis treatments).

The Plan desired to use its new carve-out amendment to reprice the existing claims, but had received negative feedback on that proposition from its TPA, since the TPA felt that the language in the SPD at the time the claims were incurred is the language that must be adhered to. The broker asked The Phia Group for advice, and our advice was identical to that of the TPA – that a retroactive carve-out is not a valid way to price the already-incurred claims. Regardless, the Plan chose to pay all past claims based on that new amendment, despite the language not being in the SPD when the services were rendered.

As expected, the provider pushed back against the lower-than-expected reimbursement, and commenced a lawsuit over the balance of $500,000. The Phia Group provided the Plan assistance with settling the claims to avoid litigation, since litigation almost certainly would have resulted in the Plan paying the prevailing charges in the area…plus interest…plus penalties.

The moral of the story is that self-funded plans, their TPAs, and their brokers should be proactive in making sure the SPD contains the proper protections – since once a claim comes in, it is sometimes too late to contain costs. In other words, if you think you may need to carve out high dollar claims (like dialysis) in the future, fix your plan document now! Don’t wait, until it’s too late; (The Phia Group’s Phia Document Management service – including the Flagship Template – can help make sure that SPDs say what you need them to say).




Fiduciary Burden of the Quarter: Strictly Following the Plan Document!

Plan Administrators owe a fiduciary duty to strictly follow the terms of the governing plan documents. The SPD is the “supreme law of the land” for a health plan, and violating even one minor exclusion is technically a violation of the Plan Administrator’s considerable fiduciary duty. Since we’ve been warning the industry about this for years, it didn’t shock us when we heard that the Department of Labor had filed a lawsuit against a benefit plan for paying claims based on Medicare rates, without having included the proper language within the SPD.

We understand that Plan Documents are complex, and amending them is not exactly an enjoyable process. But if the health plan wants to implement procedures to save money, there are some deal-breakers – such as making sure the SPD affords the Plan the right to do what the plan is going to do.

ERISA empowers a plan sponsor to put almost any language of its choosing into its SPD. That’s a great thing, and plans that take advantage have experienced novel savings and have had remarkable self-funding experiences. If a benefit plan wants to pay claims differently from what is currently in the SPD, it can certainly do so – but not until the SPD reflects it, and not until the SPD is altered at the appropriate time.

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Phia Fit to Print:

• Self-Insurers Publishing Corp. – The Future of Self-Funding - An Insider's Take – October 3, 2017

• Money Inc. – Self-funding Amid Obamacare Uncertainty – November 2, 2017

• Self-Insurers Publishing Corp. – Interim Final Rules Update – November 4, 2017

• Self-Insurers Publishing Corp. – Managing Plan Communication During a Time of Legislative Uncertainty – December 1, 2017

• HealthLeaders Magazine – Insurers Facing Impossible Scenario: Cover Everyone, But No Individual Mandate – December 13, 2017



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From the Blogosphere:

An Appealing Option. Facing a final appeal.

Phia Undercover: Two Chargemasters at Addiction Centers. Dealing with a high rate biller.

Welcome to the Fiduciary Jungle! The writing is on the wall; what will you do about it?

Sacrificing the Individual Mandate on the Alter of Tax Reform. The glue holding all of Obamacare together.

 

To stay up to date on other industry news, please visit our blog.



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Webinars

Plan on Saving by Saving Your Plan

On January 30, 2017, The Phia Group will present “Plan on Saving by Saving Your Plan,” where our legal team will explain the Flagship template, differences from the existing template, and why the Flagship may be right for you.

Click HERE to Register!

On January 18, 2018, The Phia Group presented “A Taxing Time: The Tax Bill’s Impact on Self-Insurance,” where we discussed the latest tax law.

On December 19, 2017, The Phia Group presented “With Great (Cost-Containment) Power Comes Great (Fiduciary) Responsibility,” where we describe various ways to cut costs, what must be done to ensure that fiduciary duties are being met, and what happens if they are not.

On November 14, 2017, The Phia Group presented “Living in the Now: Prepare for 2018,” where we discussed where the market is heading and what you need to do to keep up with it.

On October 17, 2017, The Phia Group presented “Best Practices for Today's Plan Documents,” where our legal team discussed best and worst plan document practices, provide some creative ideas for plan formation, and suggest some concepts to help perfect plan document drafting.

Be sure to check out all of our past webinars!



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Podcasts:

• On December 21, 2017, The Phia Group presented “Breaking Down the GOP Tax Bill and How It Affects You,” where The Phia Group's CEO Adam Russo and Attorney Brady Bizarro discuss the new GOP tax bill in depth.

• On December 18, 2017, The Phia Group presented “Protect Your ASA,” where Adam Russo, Ron Peck, and Jen McCormick discuss the rising trend in stop-loss insurance being placed by entities other than the TPA, yet the TPA is held responsible if things go sour.

• On December 6, 2017, The Phia Group presented “Plans and Conspiracy,” where our legal team discussed the recent news regarding CVS purchasing Aetna, as well as a new opportunity to customize plan document reviews to address different levels of need.

• On November 21, 2017, The Phia Group presented “The Biggest Threats to Self-Funding: A Lightning Round,” where Adam Russo, Ron Peck, and Brady Bizarro discuss the biggest threats to the self-funded industry.

• On November 3, 2017, The Phia Group presented “Planning for Stormy Seas Ahead,” where Adam Russo, Ron Peck, and Jennifer McCormick discuss all of the many issues creating waves as it relates to benefit plan documents, and what steps we can all take to safely navigate those waters – including setting sail on The Phia Group Flagship Template!

• On October 19 2017, The Phia Group presented “Trumping Costs and Climbing the Hill,” where Adam Russo, Ron Peck, and Brady Bizarro discussed discuss the wild and crazy happenings in DC.

• On October 13, 2017, The Phia Group presented “The Man with the Plan,” where Adam Russo and Ron Peck discuss the often overlooked but – in their opinion – all important plan document.

• On September 28, 2017, The Phia Group presented “Responsibility - Beyond the Contract,” where Adam Russo and Ron Peck discuss trends impacting health plans, employers, and employees.

 

Be sure to check out all of our latest podcasts!

 



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The Phia Group’s 2017 Charity

At The Phia Group, we value our community and everyone in it. As we grow and shape our company, we hope to do the same for the people around us.

The Phia Group's 2018 charity is the Boys & Girls Club of Brockton.

The mission of The Boys & Girls Club is to nurture strong minds, healthy bodies, and community spirit through youth-driven quality programming in a safe and fun environment.

The Boys & Girls Club of Brockton (BGCB) was founded in 1990 to create a positive place for the youth of Brockton, Massachusetts. It immediately met a need in the community; in the first year alone, 500 youths, ages 8-18, signed up as club members. In the 25 years since, the club has expanded its scope exponentially by offering a mix of Boys & Girls Clubs of America (BGCA) nationally developed programs and activities unique to this club.

Since their founding, more than 20,000 Brockton youth have been welcomed through their doors. Currently, they serve more than 1,000 boys and girls ages 5-18 annually through academic year and summertime programming.

 

On Wednesday, December 21st, CEO of The Phia Group, Adam Russo, made a special visit to The Boys & Girls club of Brockton. During his visit, Adam handed out over 200 gifts that were purchased and wrapped by The Phia Group. It is truly a pleasure to see the look on their faces when Santa brings them exactly what they asked for on their wish list.

 

 

 

The Phia Group invites its staff to donate various items for the benefit of The Boys and Girls Club of Brockton. For more information or to get involved, visit www.bgcbrockton.org.



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The Stacks

Managing Plan Communication During a Time of Legislative Uncertainty

By: Corrie Cripps – December 2017 – Self-Insurers Publishing Corp.


While the congressional efforts to repeal and replace the Affordable Care Act (ACA) in 2017 have failed, the Trump administration is now taking executive and regulatory action to modify various aspects of the ACA. In addition, other guidance that may affect group health plans in 2018 is still pending. The following is a summary of the recent regulatory actions that will affect self-insured plans in 2018.

Click here to read the rest of this article


Interim Final Rules Update

By: Krista Maschinot, Esq. – November 2017 – Self-Insurers Publishing Corp.

On October 6, 2017, the Trump Administration issued two Interim Final Rules (IFR) related to the Affordable Care Act’s (ACA) contraceptive mandate. These rules apply to all employers and create additional considerations for employers sponsoring self-funded plans and their third-party administrators (TPAs).

Click here to read the rest of this article.


The Future of Self-Funding-An Insider's Take

By: Adam V. Russo, Esq. – October 2017 – Self-Insurers Publishing Corp.


According to the 2016 Milliman Medical Index, the typical family of four costs $25,826 annually in premium and out of pocket expenses and 57% of costs are borne by the employer. Self-funding the right way can reduce these figures significantly and we as an industry must focus on this. At our company, a single employee pays $127.62 for health insurance a month. This compares to the $554 average in the state of Massachusetts, based on the 2017 UBA survey.

Click here to read the rest of this article.

 

To stay up to date on other industry news, please visit our blog.

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Phia’s Q4 Speaking Events:

Phia’s Speaking Engagements:

Adam Russo’s 2018 Speaking Engagements:

• 1/23/18 – Q4 Intelligence Conference – Tampa, FL

• 2/2/2018 – Benefit Intelligence School District Conference – Phoenix, AZ

• 2/7/2018 – CGI Business Solutions Seminar – Manchester, NH

• 3/7/2018 – SIIA Self-Insured Health Plan Executive Forum – Charleston, NC

 

Ron Peck’s 2017 Speaking Engagements:

• 1/25/2018 – HealthFirst TPA Client Conference – Tyler, TX

• 3/6/2018 – SIIA National Conference – Charleston, SC

• 3/7/2018 – CGI Business Solutions Seminar – Manchester, NH

 


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Get to Know Our Employee of the Quarter:
Brady Bizarro

Congratulations to Brady Bizarro, The Phia Group’s Q4 2017 Employee of the Quarter!

Brady joined The Phia Group, LLC as an attorney in early 2016. As a member of The Phia Group's in-house legal team, he focuses on contract review, ERISA, ACA, and HIPAA compliance, claim negotiation, and providing general consultative advice on matters involving the health insurance industry and employee benefits law.

Congratulations Brady and thank you for your many current and future contributions.

 

Get to Know Our Employees of the Year: Amanda Grogan & Hemant Dua

 

 

Amanda: An attorney’s office sent the following to Amanda’s manager: “I wanted to take a moment to tell you what a professional, courteous, knowledgeable, and helpful employee Amanda Grogan is. Besides her helping me with a very difficult file she understands how her industry and her desk works, including the language we need in order to do these files and that is something that should be applauded.”

Hemant: “What more can be said about the man that came to our company and within 3 months deployed a brand new claims system that was in development for 2 years, within 6 months rewrote 75% of the logic code to ensure proper processing of our clients’ claims data in TPS, within 9 months stabilized TPS and pioneered ground breaking performance improvements that were unfathomable with EZD and most recently trained Zach, our new Principal Developer, and on-boarded our new offshore development team, Hitachi. He has been an integral part to this year’s success and his drive to resolve every issue for the TPS users is commendable. He has been a great mentor to many Phia employees that have been with the company for years, showing his business acumen to learn our processes quickly and apply them. His ability to provide solutions, teach the user how the solution was achieved and encourage the user to utilize the newly learned skills in their future endeavors makes Hemant a true sensei. Phia is lucky to have such an amazing individual working to make Phia great again!”

Congratulations Amanda & Hemant and thank you for your many current and future contributions.

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Phia News

    • Rock Stars of Health Award o The Phia Group was recently awarded the “Rock Stars of Health GOLD Award” during The Rock Stars of Health Summit held in Missoula, Montana on September 29, 2017. The award recognizes innovation in the implementation of employee health initiatives that unify expertise in wellness, employee health, safety, risk management, and employee benefits.

    • Year Up at Phia! o The Phia Group has been beyond thrilled with our talented, dedicated members who have come to us through Year Up. Sheyla and Josh have become such essential members of our team – we feel truly blessed to call them a part of the Phia Family. We sat down with them to hear their thoughts and experiences. Find out what they had to say!

    Job Opportunities:

    • Consultant I

    • Health Benefit Plan Administration – Attorney

    • IT Technologist

    • Administrative Assistant – Recovery

    • Case Analyst

    See the latest job opportunities, here: https://www.phiagroup.com/About-Us/Careers

     

    Promotions

    • Keith McMahon was promoted from Claim Recovery Specialist IV – WC to Claim Recovery Specialist IV – BI

    • Casey Balchunas was promoted from Claim Recovery Specialist III to Claim Recovery Specialist IV

    • Joseph Bacon was promoted from Legal Assistant to Claim Recovery Specialist

    • Sabrina Centeio was promoted from Case Handler to Claims Recovery Specialist III

    • Jillian Painten was promoted from Claim Recovery Specialist IV to Team Leader

    • Cori DeCristoforo was promoted from Customer Service to Case Evaluation

    • Jiyra Martinez was promoted from a part-time employee to a full-time employee

    New Hires

    • Harry Horton was hired as an Attorney

    • Rea Kostopulos was hired as a Talent Acquisition Specialist

    • Dixie Hayenga was hired as a Consultant

    • Kerry Brennan was hired as a Legal Assistant


     

    Fun at Phia:

    Our Phia Family is so festive! Our “Ugly Sweater Day” was a hit and we thank all those who participated; congratulations to Josh (pictured below sporting a little red number, complete with a reindeer puppy, plus bells and ornaments) for winning “Ugliest Sweater”!

    How great are these costumes? This year the Phia Halloween Costume Contest was truly a nail-biter. Who would win? The Cowardly Lion? The clown? The fan favorite “Orange Blob,” bravely worn by Sheyla ultimately took home the gold. Thank you to all who participated, you truly made it a stellar Halloween!

     



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The Stacks - 1st Quarter 2018
Managing Plan Communication During a Time of Legislative Uncertainty
By: Corrie Cripps

For many employer-sponsored group health plans, this is open enrollment season.  This normally busy time of year, coupled with the general public’s uncertainty about potential health care policy changes, has produced a more stressful environment than usual.  

What’s happening at the federal level

While the congressional efforts to repeal and replace the Affordable Care Act (ACA) in 2017 have failed, the Trump administration is now taking executive and regulatory action to modify various aspects of the ACA. In addition, other guidance that may affect group health plans in 2018 is still pending. The following is a summary of the recent regulatory actions that will affect self-insured plans in 2018.

Accommodation/exemption from the ACA’s contraceptive mandate
On October 6, 2017, the Department of Labor (DOL) issued interim final rules (effective immediately) on religious and moral exemptions and accommodations to the ACA’s contraceptive mandate.1,2

These interim final rules allow a much broader group of employers and insurers to exempt themselves from covering contraceptives such as birth control pills on religious or moral grounds. While the interim final regulations do maintain the existing accommodations process, the process is now optional. In other words, employers could choose not to request an accommodation, or choose to revoke their current accommodation and instead claim exemption status. The key difference in an accommodation versus an exemption essentially impacts the third party administrator (TPA). Under the exemption, the TPA would no longer be responsible for providing the contraceptive coverage. The rules outline the process if an employer now chooses to revoke its current accommodation (which includes notifying the TPA and plan participants).

DOJ memo on gender identity/orientation
In a memorandum issued on October 4, 2017, to agency heads and US attorneys, Attorney General Jeff Sessions issued guidance to agency heads and US attorneys concluding that transgender individuals are not automatically protected from discrimination under Title VII of the Civil Rights Act of 1964.3
 
It is important to note that the Department of Justice’s (DOJ) recent guidance conflicts with the Equal Employment Opportunity Commission’s (EEOC), an independent commission, stance that transgender employees are protected under Title VII.
 
The December 31, 2016, U.S. District Court injunction (applicable nationwide) on certain parts of the ACA Section 1557—the prohibitions against discrimination on the basis of gender identity and termination of pregnancy—is still in effect.4  The DOJ’s recent guidance does not specifically address ACA Section 1557. The U.S. Department of Health and Human Services (HHS) is expected to issue a new proposed rule on ACA Section 1557, which will likely include a religious exemption.
 
Disability claims and appeals rules may be delayed until April 1, 2018
Last December the Employee Benefits Security Administration at the DOL issued a final rule on disability benefit plans claims procedures changes, which are slated to become effective on January 1, 2018.5  There is now a proposed rule to move the compliance date to April 1, 2018 for these regulations.6 

These regulations are applicable to all Employee Retirement Income Security Act (ERISA) plans that offer disability benefits. The regulations generally align procedures for disability claims with those for group health plans under the ACA.

HIPAA administrative simplification rules
On October 4, 2017, HHS withdrew the January 2, 2014 proposed rule that would have required a controlling health plan (CHP) to submit information certifying compliance with certain Health Insurance Portability and Accountability Act (HIPAA) electronic transaction operating rules and standards.7

The withdrawal of this proposed rule does not remove the requirements for covered entities to comply with any of those regulations codified at 45 CFR parts 160 and 162. The other HIPAA Administration Simplification requirement to obtain and use Health Plan Identifiers (HPIDs) has been delayed since October 2014, with no new guidance issued.8

ACA emergency room regulations
The American College of Emergency Physicians (ACEP) filed suit in May 2016 against the Departments of Health and Human Services, Labor and the Treasury (the Departments) regarding the ACA regulation for emergency services, applicable to non-grandfathered plans. Specifically, ACEP is concerned with the part of the rule that sets forth how much insurers/plans are required to pay out-of-network physicians for emergency health care services.

On August 31, 2017, a federal court ruled that the Departments acted arbitrarily and capriciously in adopting final regulations under the patient protections provisions for emergency services.9  The court stated that the Departments did not "seriously respond" to the transparency and manipulation concerns raised in comments by providers and advocacy groups to the interim final rules. The court’s ruling does not invalidate the final regulations; instead the ruling sends the regulations back to the Departments and requires them to respond to ACEP’s concerns and proposals in a substantive manner.

EEOC wellness regulation review
On August 22, 2017, the U.S. District Court for the District of Columbia concluded that the U.S. Equal Employment Opportunity Commission’s (EEOC) interpretation of a “voluntary” wellness program in its regulations is arbitrary and capricious, and has sent the regulations back to the EEOC for reconsideration.10 

In AARP v. EEOC, the AARP filed a lawsuit against the EEOC regarding its wellness program rules, which state that employers can cap incentives to participate in the wellness programs at 30% of an employee’s health insurance costs. The AARP argued that these incentives are so high that they are not truly “voluntary”, which means that older plan participants would have to incur financial penalties if they chose not to participate or divulge sensitive medical information in cases where the incentive requirement is that a health risk assessment be completed.

The court ruled in AARP's favor, determining that the EEOC did not justify its conclusion that the 30% incentive level is a reasonable interpretation of voluntariness. However, instead of vacating the regulations the court remanded them to the EEOC for reconsideration.

The EEOC has stated in its status report to the Court that it will need until August 2018 to reconsider its regulations on employer wellness programs and expects to issue a new final rule by October 2019.11  AARP is expected to respond to the EEOC’s status report and argue that revised regulations should be issued sooner.

Executive order on health care
On October 12, 2017, the President issued an executive order on health care, which directs the Departments of Health and Human Services (HHS), Labor, and Treasury (the Departments) to develop regulations and guidance that could permit new health insurance options for employers and consumers.12

The executive order seeks to allow the Departments to look for ways to make it easier for small businesses to join Association Health Plans, expand on the availability and use of Health Reimbursement Arrangements (HRAs), as well as allow the sale of insurance across state lines.

The executive order does not specify a date in which a proposed rule from the Departments will be released.

IRS will reject individual tax returns that are silent on health coverage question
The Internal Revenue Service (IRS) announced it will not accept electronically filed tax returns, and may suspend paper returns, where the individual does not answer the health coverage question.13   Employers will need to ensure they are furnishing the Form 1095-B or the Form 1095-C, whichever is applicable, to certain employees by January 31, 2018.

What are the public’s concerns
Two recent studies show that Americans rank health care policy changes as one of their biggest concerns.14,15 

The Transamerica Center for Health Studies study found that more than two-thirds (67 percent) of Americans reported having at least one chronic health condition, and 42 percent say losing health care because of a pre-existing condition is among their biggest fears.

The uncertain political environment around health care and the rising costs of health care undoubtedly cause stress, which ultimately affects the individual’s health status. In addition, many individuals are not taking advantage of the incentive programs and/or wellness programs offered by their employers, even though more employers are offering such programs.16,17  

How to communicate plan changes and spread awareness of incentives
In order to neutralize the impact of uncertainty on plan participants, plans will need to engage more authentically with plan participants. For example, if a plan is removing coverage of a benefit, the plan administrator, or representative, should articulate the reason for the change, and be responsive to the plan participants’ feedback. And if new benefits or programs are being added to the plan, those should be communicated as well. As the results from the Transamerica Center study indicate, while employers might believe that their wellness and incentive programs are clear as day to their employees, many employees aren’t even aware that these programs exist in their employer-sponsored health plans.

In addition, there are notice requirements under ERISA and the ACA that plans need to follow when making plan changes. A recent lawsuit from the DOL reiterates the importance of complying with the ERISA documentation requirements. The DOL filed suit against Macy’s and two of its TPAs alleging violations of ERISA’s fiduciary duties.18   The DOL states that at some point the plan changed the formula to calculate reimbursement of out-of-network claims, but Macy’s did not update its plan documents to notify plan participants of this change. The lawsuit states that this caused plan participants to overpay on certain claims.

This lawsuit shows the continued importance of keeping ERISA plan documentation up-to-date and ensuring that plan administration is consistent with the written terms of the plan.

Conclusion

For plans and TPAs, being well-informed on regulatory developments is always of the upmost importance, but is particularly important for this renewal and open enrollment season due to rapid changes in the regulatory landscape. In addition to keeping plan documents updated, employers and plans should also clearly communicate any changes to help ease the transition for plan participants and avoid liability landmines.

Corrie Cripps is a plan drafter/compliance consultant with The Phia Group.  She specializes in plan document drafting and review, as well as a myriad of compliance matters, notably including those related to the Affordable Care Act.  
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1Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 147, October 13, 2017, https://www.gpo.gov/fdsys/pkg/FR-2017-10-13/pdf/2017-21851.pdf, (last visited November 6, 2017).
2Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 147, October 13, 2017,  https://www.gpo.gov/fdsys/pkg/FR-2017-10-13/pdf/2017-21852.pdf, (last visited November 6, 2017).
3Office of the Attorney General, Revised Treatment of Transgender Employment Discrimination Claims Under Title VII of the Civil Rights Act of 1964, October 4, 2017, https://www.documentcloud.org/documents/4067437-Sessions-memo-reversing-gender-identity-civil.html, (last visited November 6, 2017).
4Section 1557 of the Patient Protection and Affordable Care Act, https://www.hhs.gov/civil-rights/for-individuals/section-1557/index.html, (last visited November 6, 2017).
5Claims Procedure for Plans Providing Disability Benefits, 29 CFR Part 2560, https://www.gpo.gov/fdsys/pkg/FR-2016-12-19/pdf/2016-30070.pdf, (last visited November 6, 2017).
6Claims Procedure for Plans Providing Disability Benefits; Extension of Applicability Date, 29 CFR Part 2560, https://www.gpo.gov/fdsys/pkg/FR-2017-10-12/pdf/2017-22082.pdf, (last visited November 6, 2017).
7Administrative Simplification: Certification of Compliance for Health Plans; Withdrawal, 45 CFR Parts 160 and 162, https://www.gpo.gov/fdsys/pkg/FR-2017-10-04/pdf/2017-21424.pdf, (last visited November 6, 2017).
8HPID, https://www.cms.gov/Regulations-and-Guidance/Administrative-Simplification/Unique-Identifier/HPID.html, (last visited November 6, 2017).
9United States District Court for the District of Columbia, American College of Emergency Physicians v. Thomas E. Price, MD., https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2016cv0913-23, (last visited November 6, 2017).
10United States District Court for the District of Columbia, AARP v. United States Equal Employment Opportunity Commission, https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2016cv2113-47, (last visited November 6, 2017).
11AARP v. United States Equal Employment Opportunity Commission, Defendant’s Status Report, https://gallery.mailchimp.com/582bc250bf108dcead582e3b8/files/c23461a4-8a49-4bad-b6b4-36e8f9fbb615/2017_09_21.EEOC_wellness_regs_status_report.pdf, (last visited November 6, 2017).
12Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States. https://www.whitehouse.gov/the-press-office/2017/10/12/presidential-executive-order-promoting-healthcare-choice-and-competition, October 12, 2017, (last visited November 6, 2017).
13ACA Information Center for Tax Professionals, https://www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals, (last visited November 6, 2017).
14Transamerica Center for Health Studies, Healthcare Consumers in a Time of Uncertainty: Fifth Annual Nationwide TCHS Survey, https://www.transamericacenterforhealthstudies.org/docs/default-source/research/healthcare-consumers-in-a-time-of-uncertainty.pdf?sfvrsn=2, November 1, 2017, (last visited November 6, 2017).
15American Psychological Association, Stress in America™: The State of Our Nation, http://www.apa.org/news/press/releases/stress/2017/state-nation.pdf, November 2017, (last visited November 6, 2017).
16Transamerica Center for Health Studies, Healthcare Consumers in a Time of Uncertainty: Fifth Annual Nationwide TCHS Survey, https://www.transamericacenterforhealthstudies.org/docs/default-source/research/healthcare-consumers-in-a-time-of-uncertainty.pdf?sfvrsn=2, (last visited November 6, 2017).
17Fidelity Investments® and the National Business Group on Health®, Embracing a Broader Definition of Well-Being: Eighth Annual Employer-Sponsored Health and Well-being Survey,
https://workplace.fidelity.com/sites/default/files/NBGH%20Fidelity_2017_WellbeingWebinar_Presentation05022017.pdf, March 2017, (last visited November 6, 2017).
18Acosta v. Macy’s Inc., S.D. Ohio, No. 1:17-cv-00541
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Interim Final Rules Update
By: Krista Maschinot, Esq.

With the calendar year coming to a close, plan sponsors and plan administrators had been breathing a sigh of relief that renewal season will go smoothly as Congress failed to pass any major legislation affecting the Affordable Care Act this year.  As with years past, however, a last-minute curveball was thrown at them that proves this year will be no different than previous years.  
 
On October 6, 2017, the Trump Administration issued two Interim Final Rules (IFR) related to the Affordable Care Act’s (ACA) contraceptive mandate.  These rules apply to all employers and create additional considerations for employers sponsoring self-funded plans and their third-party administrators (TPAs).  These new Department of Health and Human Services (HHS) regulations, the “Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act” and the “Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act,” allow for an exemption to the contraceptive mandate for a broader spectrum of companies and organizations.  Specifically, the rule expands the types of entities that can claim an exemption or an accommodation from the contraceptive mandate on the grounds of religious beliefs or for moral reasons.  

Background
This is not a new discussion.  In 2012, the contraceptive mandate in the ACA required all employers to provide contraceptive coverage to participants on a no cost-sharing basis, in-network.  Religious employers, such as churches, were exempt from the mandate and were not required to file any documentation with the government.  There was also an accommodation process put into place for religious organizations that opposed covering contraceptive services for their employees and students. In 2013, a self-certification form, EBSA Form 700, was created and required for self-funded health plans claiming a religious accommodation from the mandate.  Multiple lawsuits were filed during this time resulting in a split among the circuits as to which entities could claim exemption from the mandate.  

In 2014, the Supreme Court weighed in and, in Burwell v. Hobby Lobby, held that requiring closely-held corporations to abide by the HHS regulations requiring no-cost access to contraceptives being made available to female employees violated the Religious Freedom Restoration Act (RFRA) in situations where the owners’ religious beliefs were contrary to the regulations.1   In addition to Hobby Lobby, there was another Supreme Court case, Zubik v. Burwell, regarding the accommodation process.  The Supreme Court decided not to issue a decision in the consolidated cases challenging the accommodation process for the contraceptive mandate for employers with religious objections to contraceptives.

Under the Trump Administration’s new rules, the pool of employers that will be able to opt out of the contraceptive mandate is greatly expanded as the rules allow for employers that have a sincerely-held religious or moral objection to the provision of all or a subset of contraceptives or sterilization items, procedures, or services, or related patient education and counseling, to opt out of the women’s preventive care mandate.  The expanded group of entities with religious objections includes:

•    Churches, integrated auxiliaries, and religious orders;
•    Nonprofit organizations;
•    For-profit entities;
•    Non-governmental employers;
•    Institutions of higher education;
•    Individuals with employer sponsored or individual market coverage; and
•    Issuers that provide coverage to plan sponsors or individuals that are exempt.2


As you can see from the list, this change will permit a much larger pool of companies to carve-out certain women’s preventive care benefits under their health plans.

While these interim final rules allow a much broader group of employers and insurers to exempt themselves from covering contraceptives such as birth control pills on religious or moral grounds, they do not alter the rules regarding the TPA’s/insurer’s role once the employer has opted out of providing the contraceptive coverage.  In other words, the regulations still require TPAs who administer the self-funded medical plan for those entities who opt out of the mandate to otherwise arrange for these women’s preventive benefits. While the interim final regulations do maintain the existing accommodations process, the process is now optional. Employers could choose not to request an accommodation, or choose to revoke their current accommodation, which would mean that the TPA would no longer be responsible for providing contraceptive coverage. The rules outline the process if an employer now chooses to revoke its current accommodation (which includes notifying the TPA and plan participants).

Process
Under Burwell, closely-held corporations that chose to opt out of contraceptive coverage could send a letter to HHS stating that they objected to offering contraceptive coverage in their health plans or they could complete EBSA Form 700, if they preferred.  Under the new rules, the accommodation is now an optional process and employers can choose whether or not to provide any sort of notice or self-certification in order to inform the government of their intent to no longer provide coverage under the mandate.  Employers are still responsible for notifying plan participants of any changes in coverage.

Pending Action
Upon issuance, the rules were questioned.  For example, Maura Healey, the Attorney General for the Commonwealth of Massachusetts, filed a lawsuit in federal court on Friday, October 6th, in an attempt to block the new rules from taking effect.  According to the Complaint, the IFR will result in thousands of women in Massachusetts being substantially harmed should the contraception mandate of the ACA be nullified by allowing employers to block contraceptive care and services based upon the employers’ religious and moral objections to contraception.3   The Complaint further states that implementation of the IFR will “jeopardize the health care of women in Massachusetts and nationwide, promote the religious freedom of corporations over the autonomy of women, and leave the states to bear additional health care costs both with regard to contraceptive and prenatal care as well as other services associated with unintended pregnancies and related negative health outcomes for both women and their children.”4   As of the date of this article, an Answer has not been issued by HHS.  This creates questions and confusion for how to apply to the IFR.

Next Steps
With plan renewal season just around the corner, the applicability of this rule for self-funded plans and their TPAs needs immediate clarification.  Under Burwell, the regulations required TPAs who administered the self-funded medical plan for those entities who could opt out of the mandate (via an exemption or accommodation, etc.) to otherwise arrange for these women’s preventive benefits.  According to the interim final regulations, the accommodations process is still applicable but is now optional.  TPAs will want to be on the look-out to ensure they have processes and procedures in place to address this accommodation process, or a revocation of a current accommodation, internally.

Should a plan decide to no longer offer contraceptives, the plan must still abide by the reporting and disclosure rules of the Employee Retirement Income Security Act (ERISA).   As this would be a reduction of benefits, the Summary of Material Reduction (SMR) rules would apply. A plan has to disclose a material reduction sixty (60) days after the adoption of the change.  However, this post-change notification may not necessarily align with fiduciary duties and it is best to give as much warning about a change as possible. The Summary of Benefits and Coverage (SBC) rules also include distribution requirements and, in short, if a change to the plan creates the need to change or update the SBC and the change is made mid-plan year, the plan must give sixty (60) days’ advance notice.  When changes are made at plan renewal, the SBC distribution requirement for open enrollment is generally thirty (30) days’ notice before the start of the plan year.   These requirements may create a significant amount of administrative work and potentially be costly for the plan. Plans will need to consider the administrative burdens that will arise if coverage is no longer available, the notification requirements, and how changes could possibly affect their stop loss coverage.

As a result of this regulation, there are many questions that we hope to have resolved with future guidance.  Employers considering the exemption and/or accommodation will need to take into consideration the lack of guidance provided and the potential effect these unanswered questions may have on the plan and the plan participants.  Employers and interested parties can submit their comments to HHS regarding the new rules throughout the comment period, which closes on December 5, 2017.
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1Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 22 (2014)
2Departments of Health and Human Services, Fact Sheet: Religious and Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act (2017), https://www.hhs.gov/sites/default/files/fact-sheet-religious-exemptions-and-accommodations-for-coverage.pdf.
3Commonwealth v. U.S Dep’t of Health and Human Services et al., No. 1:2017cv11930 (D. Mass. Filed Oct. 6, 2017). 
4Id.
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The Future of Self-Funding - An Insider's Take
By: Adam V. Russo, Esq.

According to the 2016 Milliman Medical Index, the typical family of four costs $25,826 annually in premium and out of pocket expenses and 57% of costs are borne by the employer. Self-funding the right way can reduce these figures significantly and we as an industry must focus on this. At our company, a single employee pays $127.62 for health insurance a month. This compares to the $554 average in the state of Massachusetts, based on the 2017 UBA survey.

Click here to read the rest of this article.