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The Stacks – 4th Quarter 2021

Who Is On First?  Operational Hurdles and Holes Found in Portions of The NSA
By: Tim Callender, Esq.

The Consolidated Appropriations Act (“CAA”) did many things and has created obligations, questions, and confusion for many stakeholders in the healthcare space.  This article could cover COBRA topics, mental health parity topics, surprise billing, or any other number of pandora’s boxes opened by the CAA. But no one wants to read a 1M word article filled with legal jargon and uncertain statements on how a pending rule or vague regulation should be interpreted.  Instead, this piece aims to spend some brief time focused on some specific obligations that have been handed down in the CAA and throw a few questions against the wall, so to speak, in the interest of starting a dialogue toward understanding how our industry might meet the obligations of the CAA.  We will not be looking at all of the obligations within the CAA but will pick out a few of my favorites as examples of the things we need to be considering as the CAA rolls out.  The CAA requirements discussed below are in no particular order and, again, have randomly been picked by me as some that seemed to have a few issues glaring right at the top.  I tend to be very guilty of finding glee in identifying logistical problems, so, the requirements I decide to write about all have this in common – they will create some headaches – let’s figure out how to get past those headaches. 

Please note – as annoying as it might be, I may not offer big solutions to the logistical questions posed herein.  But, by raising the questions, hopefully this will get us all thinking and working together to make sure our industry is poised to handle these new duties and we can find opportunity therein.

Requirement 1 – The Advanced EOB Requirement of The No Surprises Act

The No Surprises Act is everyone’s favorite portion of the CAA.  That is, unless you are really excited by COBRA, then there are other portions of the CAA that might tickle your fancy a little more.  But most of us in this increasingly complicated healthcare space find balance billing, surprise billing, and pricing transparency to be pretty juicy – hence our interest in the No Surprises Act.  Contained within the NSA is a provision that requires a health plan to provide an advanced EOB any time the plan receives notice from a provider of a scheduled procedure and/or a request from a plan participant seeking an explanation of benefits regarding an upcoming procedure.  The advanced EOB is required to contain quite a swath of information, including, whether the provider is in-network or out-of-network; information on how to seek out an in-network provider, if needed; contracted rates for the relevant in-network provider; good faith cost estimates as furnished by the provider; a good faith estimate of the plan’s obligation (what the plan will pay); a good faith estimate of the plan participant’s cost share; deductible and out-of-pocket information related to the participant; medical management information if relevant; and a statement that the numbers provided are merely estimates.

In terms of timelines, the plan is obligated to provide this advanced EOB in 1 business day when the plan receives notice of a proposed procedure, from a provider, and 3 business days when the plan receives a notice/request from a plan participant.

This is clearly going to be an obligation that falls to the plan sponsor’s contracted, third-party payer.  Of course.  Payers already handle the EOB work for their plan clients, typically, so it is a fair assumption this new obligation will be handled at that level as well.  Knowing this obligation will fall to the third-party payer, some questions arise:

  • Will payers have to increase their administrative fees to account for this new operational lift?
  • What about 3rd party EOB production vendors & their relationship with the payer community – will these stakeholders be able to handle these tight turnarounds?
  • What processes will a payer put in place to account for the intake of these requests whether from a provider or a member?  How will plans and/or payers alert plan members to the availability of this information & that participants have a right to request this information?
  • What if the contracted rates for the in-network provider are not known by the payer (I understand this should be known, but I also understand that network contracts are a bit like narwhals – we know they exist but only a few people have ever seen one).
  • How will the payer go about getting a good faith cost estimate from the provider, especially with such a tight turnaround time to provide the info!

Requirement 2 – Plans Must Provide Balance Billing Information on Their Websites Along With a Web-Based, Price Comparison Tool

This requirement will be live as of January 1, 2022, unless the regulators decide otherwise.  Additionally, it should be noted that this requirement applies to both grandfathered and non-grandfathered plans alike.  No getting out of this one! 

Interestingly, it is not clear who will actually handle the logistics in fulfilling this requirement.  Clearly the regulatory obligation falls onto a “plan,” but does a plan even have the ability to comply with this requirement?  It is hard to imagine that a self-funded, plan sponsor, is going to literally place balance billing support information and/or balance billing education tools on its website.  Trying to picture a random employer who makes widgets, in a factory, coordinating its HR department with its IT department to make sure that their company’s website contains balance billing information and a web-based price comparison tool for health plan participants is laughable at best.  Will the insurance broker / consultant advise the plan sponsor to do this?  Likely not.  Where will this obligation end up then?  Does it fall to the payer (TPA / ASO) to put this information on their website?  How would the payer go about accomplishing this task on behalf of a plan it administers? 

It seems that the contracted payers’ contractual duties will be getting thicker and thicker come 2022.

Requirement 3 – Continuity of Care

This requirement is a truly interesting one in that it states that plans are now obligated to provide in-network coverage to participants who access care from a provider that is no longer a part of the network.  Said another way, when an in-network provider leaves a network, a plan participant who was seeing that provider can continue to see that provider and the plan is obligated to provide the benefit as though the provider were still in-network, for 90 days.  The plan is also obligated to provide notice to the plan member when the plan learns of this provider network change.  Now, there are obviously many more details than I’ve outlined here – for example, the patient must be seeking serious and complex care – the care cannot be a routine physical.  But for this discussion, we will just focus on the concept of in-network versus out-of-network, for whatever reason.

On its face, this requirement makes a great deal of sense.  Patients should not be financially punished because their favorite doctor chooses to leave a network.  However, how can we guarantee that the plan does not become the bearer of that punishment – have we simply shifted the financial burden of paying for an out-of-network provider from the plan member to the plan?  To be more specific, what happens when the provider leaves Network A and does not contract with any network so the provider can bill at a higher rate?  Suppose the provider does exactly that & begins billing at a higher rate on a number of patients seeing the provider within the 90-day continuity of care timeline.  The claims are submitted to the payer, as before, only now the third-party payer, on behalf of the health plan, must adjudicate the claims and apply the old, Network A, payment structure to the claims.  But this will leave a balance, correct?  And this will cause the provider to seek reimbursement on that balance, correct?  From whom?  It is clear from the intent of the CAA that this balance cannot fall onto the plan member, which means the plan itself, and/or the plan’s third-party administrator, will be forced to invent mechanisms that will capture these balances – perhaps direct provider negotiations with plan funds at risk? 

Requirement 4 (my favorite) – Removal of Gag Provisions

The gag provision requirement prohibits plans from entering into service contracts with an entity where the contract restricts the plan from providing provider specific cost information, among other details, through a transparency tool or through other means, to plan members or those eligible to enroll in the plan.  The provision goes on to also state that a plan cannot enter into service contracts where certain detailed claim information is restricted from disclosure to the plan.

This requirement seems incredibly logical – clearly, it is set up to promote transparency and assure that cost information is readily available to plan members and the plan alike.  Of course, this is a great thing!  But once you start thinking of the unintended, collateral impacts, the sense behind the way this requirement was put together becomes questionable. 

You will note that it is the PLAN who is prohibited, by this requirement, from entering into these restricted contracts.  The provision does not require networks, providers, or other third parties to remove these gag provisions from their contracts. Instead, it has shifted the burden of fighting these gag provisions onto actual health plans by outlawing a plan’s ability to agree to a gag provision.  This seems to put a plan in a bit of a weird situation in that the plan is now the government’s policeman and will be forced to try and negotiate gag provisions out of service contracts.  What if a network, or a provider, or other third-party refuses to remove a gag provision?  There is no remedy readily available to the plan other than to say, “well, ummmm… I guess we can’t sign that contract then.  Ok.  See ya later.”  Although the third party might be motivated to remove gag provisions in the interest of gaining business, there is not guarantee this will happen.  Unless there is a critical mass of business being lost, third parties who value their gag provisions will likely stand firm and let some business go by in favor of protecting the information that they do not wish to share.  Or will the various, contracting parties find a way to sneak around this requirement and ruin the intended spirit?  Could a TPA enter into a network contract full of gag provisions and then sell the network access to a plan, via their administrative services agreement, so long as the administrative services agreement does not incorporate the terms of the network contract, thus circumventing the gag provision requirement entirely?  Someone should ask a lawyer.

In closing, it is important to note that the CAA and, more specifically, the NSA, work toward some great goals that I think we all believe in.  There is much more to the CAA than discussed in this brief article and it really does deserve a more detailed treatment whenever possible.  Today’s goal was to raise a few questions about a very few provisions of the CAA in the hope that we will all look through the CAA, in its entirety, with questioning eyes.  Not for the sake of poking holes necessarily, but for the sake of asking questions so that we can find opportunity and solutions, together, and continue to move our industry forward.

The Liability Landmine: The Surprising Decision in Doe v. UBH

By: Jon Jablon, Esq.

The industry is buzzing. Congress and the Department of Labor are shaking things up with the Consolidated Appropriations Act – including, of course, the No Surprises Act and new requirements for compliance with the Mental Health Parity and Addiction Equity Act.

Even though the fiduciary liability standards we have all come to understand have been relatively static for a long time, a recent Mental Health Parity-related federal court decision has sent a shockwave across the self-funded industry, potentially changing the way TPAs and other entities will need to view fiduciary liability.

The decision in question is in response to a motion in Jane Doe v. United Behavioral Health, in the U.S. District Court for the Northern District of California (Case No. 4:19-cv-07316-YGR), decided March 5, 2021. The dispute in this case centered around the health plan’s blanket exclusion of Applied Behavioral Analysis and Intensive Behavioral Therapy – two of the primary treatments for Autism Spectrum Disorders.

The facts of the case demonstrate that the SPD excluded these two services, and the claims administrator – United Behavioral Health, or UBH – administered the exclusion that was written in the SPD, and denied a medical claim pursuant to that SPD language as written. UBH moved to dismiss the suit under the theory that even assuming the truth of all facts alleged, applicable law would not classify UBH as a fiduciary.

The relevant case law generally indicates that if the Plan makes the rules via the Plan Document, and if the TPA is just following the literal written terms without exercising discretion, the TPA has not rendered itself a fiduciary. Based on case law and regulatory guidance, that’s the prevailing sense of the fiduciary rules. The court’s decision started out very much as we tend to expect from cases like this: the court recited the facts of the case, iterated the general rules of fiduciary duties, and cited to lots of cases that have indicated that rule, apparently using those cases to guide its decision.

Then, though, the court’s decision changed course, and things got a little strange.

Who’s a Fiduciary?

Department of Labor (DOL) guidance has made it clear that the intended interpretation of ERISA’s fiduciary duty designation is fairly broad, but still well-established through an explicit set of exceptions to the “general” rule that an entity that makes decisions for a health plan is a fiduciary.

According to the DOL, there is an eleven-item list of actions that explicitly do not render an individual or company a TPA, including applying established rules (as opposed to making the rules), processing claims pursuant to established rules (as opposed to adjudicating claims), and calculating benefits (as opposed to determining benefits). With respect to this list, the DOL has stated that “a person who performs purely ministerial functions such as [these] for an employee benefit plan within a framework of policies, interpretations, rules, practices and procedures made by other persons is not a fiduciary.” (Emphasis added).

The distinctions may seem small, but the regulators and courts have been clear that if an entity performs only those broad functions listed in the exceptions, that entity is not a fiduciary. Of course, a TPA or other entity can become a fiduciary if it performs any of these eleven items in addition to other actions – but limiting its actions to solely these eleven items does not cause the TPA to assume a fiduciary designation.

The court appeared to agree, making the point multiple times: a purely ministerial act does not in itself rise to the level of a fiduciary act. This court did not show any evidence of a desire to change that well-established law; in fact, its language tends to indicate that the court agreed and embraced these principles.

So, Was UBH a Fiduciary?

According to UBH, when acting as the TPA, they did exactly what the SPD said, and they didn’t exercise discretion in doing it. The Plan Document excluded ABA and IBT services, and the TPA read the SPD and applied it as written. To an onlooker, UBH’s conduct seems like a textbook definition of a purely ministerial decision; denial of the ABA or IBT claim is indisputable. All indications are that UBH performed “purely ministerial functions…for an employee benefit plan within a framework of policies, interpretations, rules, practices and procedures made by other persons…” and therefore “is not a fiduciary.”

Interestingly enough, the court apparently didn’t disagree with that premise, but still concluded nonetheless that UBH did act as a fiduciary. The logic employed is unexpected, given all the precedent cited: the court reasoned that even though UBH did exactly what the Plan Document provided, UBH still made a decision, and the simple act of making a coverage decision is enough to render UBH a fiduciary.

Recall, however, that the eleven explicit exceptions to the general fiduciary rule include applying established rules and processing claims pursuant to those established rules; the facts suggest that UBH meets those exceptions and is therefore not a fiduciary. For a reason the court did not quite explain, however, it disagreed.

The Supreme Court’s General Rule

In reaching its conclusion, the court placed a great deal of reliance on the United States Supreme Court’s decision in Aetna Health Inc. v. Davila. According to the Supreme Court, “A benefit determination under ERISA . . . is generally a fiduciary act”. Aetna Health Inc.  v. Davila, 542 U.S. 200, 218-19 (2004) (Emphasis added; internal quotations omitted). Despite all the iterations of the “purely ministerial” standard that the court cited in reviewing UBH’s conduct, the court nonetheless relied on the Supreme Court’s quotation above, and concluded that the TPA was necessarily a fiduciary, since all benefit determinations are fiduciary in nature.

Hang on a minute, though: are all benefit determinations fiduciary in nature? Is that really what the Supreme Court wrote? A plain reading of the quote casts some doubt on this court’s interpretation.

Despite quoting the Supreme Court’s general rule, including the very telling word “generally”, this court interpreted the Supreme Court’s rule as an absolute one. The difference is that a general rule is subject to exceptions (recall that case precedent and regulatory guidance suggests that UBH is subject to an exception) while, to contrast, an absolute rule has no exceptions (and this is what the court ultimately concluded).

The Supreme Court’s rule can be read as: benefit determinations are generally fiduciary acts, unless they are purely ministerial in nature and the decision-maker exercised no discretion in making the determination. Instead, the court in Doe v. UBH read the Supreme Court’s rule as benefit determinations are fiduciary acts, period. That doesn’t seem right, though – especially based on everything else the court in Doe v. UBH wrote.

In other words, the text of this decision shows that the court added 2 and 2 and got 5.

Sometimes a court will reimagine or reinterpret existing law, but this court showed no evidence of doing that. Instead, the court went through all the premises, but then disregarded those premises and reached a different conclusion entirely.

An analogy would be to say that if oranges are generally round, then all oranges must be round.

The Literal Fiduciary Duty

On the topic of general versus absolute rules, the fiduciary duty within ERISA to strictly abide by the terms of the SPD is a general rule, an important exception to which being if the terms of the SPD do not comply with applicable law. It is therefore possible to violate a fiduciary duty by choosing to enforce noncompliant plan language over contradictory law, but in order to violate a fiduciary duty, the entity must first be determined to be a fiduciary.

As it happens, the court did go on to determine that the plan language in this case did violate federal law and was therefore unenforceable – but again, the question isn’t whether UBH violated a fiduciary duty, but whether UBH owed one in the first place. An act performed by a non-fiduciary wouldn’t give rise to fiduciary liability, after all.

Begging the Question

At one point, after it had already analyzed the expected premises and reached the unexpected conclusion, the court iterated the fiduciary duty to apply plan terms as written except to the extent inconsistent with ERISA. The court write that UBH “cannot hide behind plan terms” since applicable law conflicts with those terms, which is unquestionably accurate – but this statement or the single paragraph explaining, which appears to be an afterthought, it still does not explain why UBH should be deemed a fiduciary to begin with.

It’s possible that the court’s intended logic was that UBH exercised discretion by choosing to follow the SPD over the conflicting law, thereby rendering it a fiduciary on that basis. The court did not iterate that connection, but giving the court the benefit of the doubt, perhaps that was the intended meaning. In any event, the court performed this ancillary one-paragraph analysis of whether UBH violated a fiduciary duty only because it had already decided that the TPA is a fiduciary; in other words, this single paragraph discussing how UBH can’t “hide behind plan terms” already assumes that the TPA is a fiduciary, which means that this discussion can’t be relevant to the analysis of whether the TPA is a fiduciary to begin with.

In a logical fallacy known as “begging the question”, the court used its conclusion (that UBH is a fiduciary) to form one of its premises (that UBH’s conduct violated a fiduciary duty) – the only premise that even comes close to explaining why UBH might be a fiduciary (which, again, is the conclusion). Put more simply, the court apparently used its conclusion to justify its conclusion. From a logic perspective, this doesn’t track.

Proof of a Negative

At one point in this decision, the court indicated that UBH was a fiduciary because UBH did not sufficiently prove it was not a fiduciary. Interestingly, the old adage “innocent until proven guilty” does not always apply in the civil court setting.

Without getting too far down the rabbit hole on this particular point, it is worth noting that any allegation that a TPA has acted as a fiduciary could prompt the need for the TPA to defend itself – and as a good portion of the self-funded industry has experienced first-hand, plan participants and their attorneys often opt for a “kitchen sink” approach, suing everyone possible, sometimes resulting in an apparently baseless suit against a TPA, broker, consultant, or other entity.

As this case makes clear, though, court is sometimes like the wild west, where anything can happen.

As discussed, the court’s logic is not quite clear, and hopefully an appeals court will shed some light on this so we can at least get some closure one way or the other – but one thing is for sure: if this case doesn’t get reversed, or even if other courts start to rely on this case prior to appeal, TPAs across the country may be in for a paradigm shift when it comes to their ability to strictly follow the clear, literal terms of an SPD without fear of reprisal.

Strengthening plan language is always a good idea, but health plans (and their TPAs!) need to ensure that strong language isn’t stronger than the law permits, since there could be liability landmines even where we least expect them.

New Administration Casts Doubt on Trump’s Importation Plan

By: Andrew Silverio, Esq.

In July of 2019, then president Trump’s HHS announced a “New Action Plan to Lay Foundation for Safe Importation of Certain Prescription Drugs” (archived and available at  Much of this release was reiterating and repackaging previous policies and rulemaking authority, but a significant development was the announcement of that the HHS and FDA would review and approve pilot programs organized by the states to facilitate the importation of prescription drugs from Canada.

An awful lot has happened in the country and the world during the almost two years since this guidance, and we did not see any development at a federal level before the election and hand-off of the presidency.  Now, the Biden administration has touched on the issue for the first time.

In a court filing calling for the dismissal of a lawsuit against HHS by a pharmaceutical industry organization (available at, the administration claimed that the plaintiff’s claims are moot and their alleged damages far too speculative (the lawsuit against HHS claims that the importation rule impermissibly damages drug manufacturers and oversteps federal authority).  In the filing, HHS outlines that there is “no timeline” for the approval of any state programs, and that states still have numerous hurdles to get past before any such program could be approved begin operation (at this time, six states have passed laws providing for the formation of these programs, and two have actually submitted programs to the FDA for review).  Interestingly, HHS cites hostility to the proposed program(s) from Canada itself, noting that “Canada’s interim order injects uncertainty into whether and to what extent the Rule could be implemented.” This is actually closely in line with what we predicted when the rule was first released:

It is worth noting that when the proposed rule came out, it was met with harsh criticism from our northern neighbors, many of whom discussed potential action by the Canadian government to counter any such importation efforts in order to protect their own drug supply.  As such, action taken by the United States in regard to Canadian drug importation won’t be the only factor in whether the practice ultimately becomes both legal and practical.

Of course, proponents of these programs shouldn’t lose all hope just yet – this is an interesting situation where the posture of HHS is such that they must argue in order to defend the program against challenge that it may very well never actually get off the ground.  That said, any optimism for imminent program approvals is essentially quashed with this filing.