By: Erin M. Hussey, Esq.
On May 21, 2019, Health and Human Services (“HHS”) published the Final Conscience Rule with an effective date of July 22, 2019, which allows the denial of certain health care services for religious reasons. This rule protects providers, individuals, and other health care entities from having to provide, pay, or refer services such as abortion, sterilization, or assisted suicide. The rule also protects those providers, individuals, and other health care entities from discrimination on the basis of their exercise of conscience in HHS-funded programs. The intent of this rule is to protect religious and moral objections from having to conduct or pay for these services.
This rule also details compliance obligations such as non-retaliation requirements. The Director of HHS’s Office of Civil Rights (“OCR”), Roger Severino, stated the following on that matter:
“This rule ensures that healthcare entities and professionals won’t be bullied out of the health care field because they decline to participate in actions that violate their conscience, including the taking of human life. Protecting conscience and religious freedom not only fosters greater diversity in healthcare, it’s the law.”
Following the publication of the Final Conscience Rule, many lawsuits were filed, including one brought by 23 Democratic states and one brought by the city of San Francisco, and both of those lawsuits essentially argue that the Final Conscience Rule is unconstitutional. As a result of those lawsuits, HHS has now delayed the effective date of the rule until November 22, 2019. With regards to the delayed effective date, the city attorney of San Francisco, Dennis J. Herrera, stated the following:
“We have won this battle – and it was an important one – but the fight is not over. The Trump administration is trying to systematically limit access to critical medical care for women, the LGBTQ community, and other vulnerable patients. We're not going to let that happen. We will continue to stand up for what's right. Hospitals are no place to put personal beliefs above patient care. Refusing treatment to vulnerable patients should not leave anyone with a clear conscience.”
We will be watching to see if the Final Conscience Rule goes into effect on November 22, 2019. This final rule coupled with the proposed rule on Section 1557, which was discussed in our previous blog, will have a major impact on different classes of vulnerable patients.
For more information on the Final Conscience Rule, please see HHS’s fact sheet found here: https://www.hhs.gov/sites/default/files/final-conscience-rule-factsheet.pdf.
By: Jon Jablon, Esq.
Our consulting team recent came across a network agreement that had the interesting nuance of indicating that the provider would bill amounts that were in line with market standards.
Language like that is a killer. There’s no way around it. It’s so ambiguous as to be all but useless when trying to decide which amounts are properly billed. What exactly are the appropriate market standards? Who is empowered to decide that? When the payor and medical provider inevitably have wildly different opinions on that, how can they possibly resolve the matter when the contract language is so infuriatingly unhelpful?
In this example, the provider had unbundled certain charges, and argued that the market did in fact bear that billing methodology, since most private payors such as this one accepted it – and therefore it was proper pursuant to the contract. The plan, however, contended that a large portion of the provider’s business (and a large part of the total local market) was made up of Medicare claims, and CMS guidelines do not bear that type of unbundling – and therefore it was not proper pursuant to the contract.
Due to this tragically-unclear contractual provision, the payor and provider have been forced to either compromise (which neither wants to do), or take it to court (which neither wants to do, either). It’s going to come down to which option the parties hate less.
Another tragic aspect of this story is its moral. The moral of the story should be to make sure you read your contracts and have them reviewed by an expert prior to signing – but as many of us have found out the hard way, it’s not always possible to view a copy of the provider-facing network agreement. If the payor agreement that you sign talks about billing standards, make sure they’re clear and unambiguous; if it doesn’t, try asking to see the provider agreement. The worst anyone can say is no.
Food for thought: if you’re being asked to sign your name to terms that are clearly ambiguous, or terms the other party won’t even show you, maybe that vendor is not the right fit for your business…
By: Chris Aguiar, Esq.
As the saying goes, many of the basic skills we need to be effective in life are taught to us early. “Use your words” – a common instruction given to young children who are struggling to express themselves or communicate effectively, is an instruction I still use daily – albeit with a slight adjustment. Especially with matters relating to plan administration, words alone aren’t enough! it’s important to use the correct words to avoid any confusion and ensure that everyone reading the plan understands exactly what you mean!
A common example we often encounter is the exclusion of benefits incurred while someone is driving under the influence (“DUI”). Some plans use provisions excluding benefits arising from “serious illegal activity” or “felonious activity” and expect those exclusions to operate in a DUI situation. You might be thinking, “yeah, Chris, a DUI is seriously illegal activity”. While virtually everyone will agree that a DUI is seriously illegal, in the law it may not always be considered a “serious illegal activity”. Imagine someone is considered to be a very small amount over the limit (e.g. 0.0804) and they crash into a tree only to have an officer determine that they were in fact engaged in a DUI. They were not drastically over the limit, did not injure anyone but themselves, and this was their first offense. Is it conceivable someone might look at these facts and determine that this particular incident did not rise to the level of “serious illegal activity”? Certainly, the participant seeking to have their benefits paid might believe the activity not to be sufficiently serious, and you can bet their lawyer will fee the same way. Furthermore, based on the facts above, the act would be considered a misdemeanor rather than a felony. It is quite possible neither of the provisions could be upheld!
The point is this – while this issue is not simple enough that a preschooler could handle it, plans can protect themselves by being careful how their provisions are drafted by using words that clearly state their intent. If you intend to exclude benefits when injuries arise while a participant is driving under the influence, ensure the terms of the exclusion clearly state that intent! Understanding the correct words to use is almost always the difference between a valid and invalid denial!
By: Nicholas Bonds, Esq.
Health and Human Services (HHS) Secretary Alex Azar’s recent rule requiring drug manufacturers to include the list prices of their drugs in their television ads is being received by big voices in the industry with about as much enthusiasm as you might expect. Although the rule will not take effect until July 9, big-name manufacturers Merck, Eli Lilly, and Amgen, with the Association of National Advertisers in their corner, are suing HHS and Secretary Azar to block the policy on a combination of likelihood of confusion and First Amendment grounds. Lawsuit aside, the HHS rule drew heavy inspiration from trademark law for its design, and the Federal Government continues to look towards the intellectual property framework for ideas to drag drug prices out of the stratosphere.
Representative Elijah Cummings, Chairman of the Committee on Oversight and Reform, has been among those in Congress leading the charge in this battle over drug prices. Representative Cummings and Senator Debbie Stabenow have joined forces to enlist the Government Accountability Office (GAO) to review HHS’s system for managing patent licenses, with a special focus on Gilead Science’s HIV pill. The drug manufacturer relied, to an extent, on taxpayer-funded research to invent this drug, and are now charging rates that puts it out of reach for many desperate patients. Lawmakers like Cummings and Stabenow believe HHS could better enforce the government’s rights to royalties and licenses, and should take pricing into account when granting such valuable licenses.
Meanwhile, Senators John Cornyn and Richard Blumenthal have introduced the Affordable Prescriptions for Patients (APP) Act, which is designed to empower the Federal Trade Commission to challenge the anti-competitive nature of patent thickets using its antitrust authority. These thickets encircle drugs like Humira and Lantus with dozens of overlapping patents, effectively foreclosing the possibility of generics or biosimilars from giving consumers cheaper alternatives. The bill also takes aim at the practice of pharmaceutical “product hopping,” a practice similarly designed with an eye toward keeping generics out of the market. By tweaking the absorption rate or dosage level of a drug, manufacturers can take advantage of state substitution laws that prohibit pharmacists from offering a generic if the drug is not bioequivalent or therapeutically equivalent. The AAP would deem both patent thicketing and product hopping to be anticompetitive behavior, and could have sweeping implications for patent prosecution and enforcement.
Some lawmakers, however, have jumped in the trenches alongside the pharmaceutical industry and are actively fighting to loosen requirements for securing patents. Senators Thom Tillis and Chris Coons have written a bill, to big pharma’s delight, that would amend Section 101 of the Patent Act to allow patents on products and laws of nature, abstract ides, and other areas of general knowledge – all areas the Supreme Court has previously ruled ineligible for patent protection under the current wording of the Patent Act.
Most on Capitol Hill agree: the drug prices are too damn high. IP law is indelibly embroiled in the battle to bring these prices down, and combatants on both sides are turning to the IP well for any tactical advantage they can find.
By: Andrew Silverio, Esq.
Recently, the Michigan Senate passed sweeping legislation in an effort to get their auto insurance rates, which are the highest in the nation, under control. The main way Michigan aims to accomplish this is by eliminating their requirement that auto insurance policies carry unlimited “Personal Protection Insurance” (commonly referred to elsewhere as “Personal Injury Protection” or “PIP” coverage), which is no-fault first party medical coverage. Under the old system, with exposure to the carrier being quite literally unlimited, premiums predictably climbed to unsustainable levels.
The new law will require that carriers offer PPI options with $500,000 and $250,000 limits, as well as an unlimited option. It also allows for a $50,000 limit for policyholders on Medicaid only, and importantly, allows policyholders to waive PPI coverage completely if they have Medicare coverage or “other health or accident coverage” which provides benefits for accident claims.
So, why are we talking about changes to auto insurance laws? Because policies carrying these new limits will shift liability onto health plans. In light of the previous availability of unlimited PPI coverage, many self-funded Michigan health plans already exclude charges resulting from auto accidents completely. Under the new law, this should exclude an individual from waiving PPI, however it’s probably unreasonable to expect individuals to be educated enough or review applicable requirements in enough detail to understand these requirements, or for carriers offering these policies to do the legwork to determine whether an applicant’s health plan actually covers auto accident claims. So, the end result may be that individuals are left with no coverage at all for auto accident claims. This means that in addition to making sure that plan language is tight, it’s crucial for employers to educate their employees about health coverage and their responsibility to have other coverage available via auto insurance.
This could also impact how plans who don’t exclude auto claims completely – the approach of quickly paying everything up front without question with the understanding that unlimited PPI coverage is available for reimbursement after the fact is no longer such an appealing option. No matter what the existing approach to these claims, now is the right time for Michigan employers to reexamine how they handle auto accident claims and coordinate with PPI coverage.
By: Philip Qualo, J.D.
The commencement of the required contributions for the Massachusetts Paid Family and Medical Leave (“PFML”) program was scheduled for July 1, 2019, but on June 11, 2019, Massachusetts Governor, Charlie Baker, along with members of the Commonwealth’s House and Senate, issued a joint statement agreeing to postpone the start of required contributions for the PFML program by three months. While the legislature will need to pass an emergency bill before the delay is official, this announcement is welcome news for employers scrambling to comply with what was supposed to be a July 1 contribution start date. Adversely, this announcement also brings unwelcome news to employers and their employees because in order to maintain the amount of pre-funding and not reduce total contributions paid to the PFML trust fund, the total contribution rate will be increased from .63% to .75%of wages and will be deducted on October 1, 2019, the new start date for required contributions.
By way of background, the PFML law, enacted in 2018, provides a right to up to 26 weeks of combined family and medical leave in each benefit year, and pay during such leave, to eligible employees, former employees, and self-employed individuals in Massachusetts. The earliest that such leave and pay benefits will be available is January 1, 2021. Leave under the PFML is job protected and will require continuation of health benefits for the duration of such leaves. Pay during this leave is administered by the state and funded through employer and employee contributions that employers must remit to the state on a quarterly basis. Employers with more than 25 covered employees were required to contribute 60% of the medical leave portion on behalf of their employees. Covered employees’ contribution rate was initially established at 0.63% (0.52% for medical leave and .11% for family leave) of the covered individual’s gross wages or other payments to all covered individuals.
The Department of Family and Medical Leave (“DFML”) has yet to provide updated guidance on whether there will be a change in the medical and family leave allocation of the increased .75% contribution rate or any change in the required employer contribution. However, the DFML has confirmed that June 30th deadline for covered employers to comply with workplace poster and employee notification requirements has been extended to September 30, 2019. In the meantime, we recommend employers with employees based in Massachusetts continue to monitor the DFML website for updated guidance. To learn more about self-funded health plans click here.
By: Erin M. Hussey
Section 1557 of the Affordable Care Act (“ACA”) 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 US Department of Health and Human Services (“HHS”) has issued a proposed rule that would revise the regulations implementing and enforcing Section 1557. This proposed rule, among other things, would essentially allow HHS not to include “gender identity” and “termination of pregnancy” within the definition of “sex discrimination.”
By way of background, HHS’s 2016 regulation on Section 1557 redefined sex discrimination to include gender identity and termination of pregnancy. However, on December 31, 2016, a US District Court issued a nationwide injunction on certain parts of Section 1557, including gender identity and termination of pregnancy, and that injunction is still in effect. As such, this proposed rule would follow suit with that injunction. HHS details that this part of the proposed rule would “not create a new definition of discrimination ‘on the basis of sex’ . . . [but] would enforce Section 1557 by returning to the government's longstanding interpretation of ‘sex’ under the ordinary meaning of the word Congress used.”
In addition, plans that are not directly subject to Section 1557, must still ensure that the employer sponsoring that plan remains in compliance with Title VII of the Civil Rights Act. Title VII prohibits employment discrimination based on race, color, religion, sex and national origin. The Equal Employment Opportunity Commission’s (“EEOC’s”) interpretation of its prohibition on sex discrimination includes discrimination based on gender identity and sexual orientation. However, there have been similar discussions of whether sex discrimination should be redefined under Title VII. HHS detailed this issue in their fact sheet on the proposed rule:
“On April 22, 2019, the U.S. Supreme Court granted petitions for writs of certiorari in three cases, which raise the question whether Title VII’s prohibition on discrimination on the basis of sex also bars discrimination on the basis of gender identity or sexual orientation.”
Therefore, while we wait to see if the proposed rules on Section 1557 are finalized, and for the outcome of the above-noted Supreme Court cases on Title VII, applicable health plans should remain cautious with regards to benefits and exclusions that may implicate sex discrimination issues. If you feel as if you are being discriminated against and would like to negotiate a fair rate, visit our claim negotiation page to learn more.
Brady Bizarro, Esq.
Last May, we extensively covered the Trump administration’s American Patients First blueprint. That document outlined four strategies for tackling the problems Americans face with respect to high prescription drug prices: boosting competition, enhancing negotiation, creating incentives for lower list prices, and bringing down out-of-pocket costs. The strategies called for some specific, ambitious proposals, including considering fiduciary status for PBMs. One of those proposals was to require drug companies to disclose list prices in television ads. Nearly a year later, the Centers for Medicare and Medicaid Services (“CMS”) has published the first final rule on prescription drug price transparency.
Currently, drug manufacturers are only required to disclose potential, major side effects of their drugs in commercials, and as anyone who watches commercials knows, the list of potential side effects can be startling and absurdly long. Now, these companies will have to disclose to patients the list price for their drugs, and that is likely to cause even more consternation. An important question to ask, however, is whether or not this will achieve the desired result (bringing down drug prices in general). The reason for skepticism on the part of some industry analysts is because of what the list price actually represents.
List prices are not reflective of what a patient actually pays at the register for a prescription drug. For example, the blood thinner Xarelto, made by Johnson & Johnson, will show a list price of $448 a month. Most patients, however, will pay $0 for this drug because of manufacturers assistance. The pharmaceutical industry and its supporters claim that this confusion may cause patients to avoid seeking necessary care. Closer scrutiny of that position reveals that it is likely overblown and misguided. Drug makers are free to add information to their adds to show what a typical consumer of the drug pays, and we in the self-funded industry know, perhaps more than others, that while the patient may be paying $0 for a prescription drug, the patient’s health plan is most certainly not.
The Secretary of Health and Human Services has noted that drug companies are really pushing back on this rule because they are ashamed of their prices. One healthcare consultant noted, with an air of bemoaning, that this is health policy made through public humiliation. Given that effective legislation and regulation in this area has been scant, public humiliation may be our best bet. The final rule is scheduled to go into effect on July 9th (sixty days after it was published in the Federal Register). In the meantime, some manufacturers are fighting its implementation based on First Amendment concerns. We will be watching to see how those battles play out.
Here’s a case study that crossed my desk recently: A self-funded health plan incurred a claim for a member who went scuba diving, against his doctor’s explicit orders. The activity itself is far from hazardous; for many individuals, scuba diving can be a fun and rewarding activity. In this particular instance, however, the member’s physician told the member – and I quote from the medical records – “I highly recommend against it.”
Well, as expected, the member went scuba diving, and incurred the exact injuries his doctor warned him about. The plan incurred the claim, did some investigation, got ahold of that medical record (the “I highly recommend against it” one), and denied the claim on the basis that the member intentionally disobeyed his doctor’s explicit orders.
Why are we here, then? Why is this a case study and not just a lesson in listening to your doctor?
Well, because the plan document contained an exclusion for any services provided “against the advice of a medical processional.” The Plan Administrator relied on that exclusion to exclude the claim. The member’s attorney argued that the plan’s exclusion applied only to medical services rendered against a doctor’s advice – and these services were both advised and medically necessary (which the Plan Administrator did not dispute).
The activity was against a doctor’s orders – but the Plan Document didn’t mention contain an exclusion for that particular situation.
When considering the member’s attorney’s appeal, the Plan Administrator asked The Phia Group for advice, and after reviewing the facts and the Plan Document, we opined that it does not appear that the Plan Administrator may validly deny this claim upon the basis it had chosen.
Accordingly, the Plan Administrator paid the claim. The kicker, however, is that the appeals process took so long that the stop-loss filing deadline had come and gone, and now the health plan was left with no reimbursement for this spec claim.
What are the morals of this story, then?
Interesting Side Note #1: The Plan Administrator could conceivably have determined that going scuba diving after your doctor specifically tells you not to constitutes a “hazardous activity” pursuant to the Plan Document – but no such argument was made.
Interesting Side Note #2: The member’s attorney raised the argument that HIPAA’s “source of injury” rule prohibited the denial, since the injury was caused by a medical condition the member had. That argument is certainly creative – but when opining, we noted that the member’s medical condition may have been the root cause of the injuries in question, but the member’s choice to go scuba diving against his doctor’s advice broke that “chain of causation” wide open.
By: Nick Bonds, Esq.
Pharmaceutical companies and rapidly rising drug prices have been eating up a lot of the oxygen in the conversation around healthcare costs. From pharmaceutical executives and PBMs testifying before Congress to President Trump’s May 9 remarks from the Roosevelt Room calling for Democrats and Republicans to unite in a legislative effort to end surprise medical bills.
But Congress and the White House are not alone in their endeavors to tamp down prescription drug costs, HHS Secretary Alex Azar and the CMS recently promulgated a new rule requiring pharmaceutical manufacturers to include the list prices of their drugs in their television ads. This push for transparency is the latest tactic in a multi-pronged strategy deployed by the Trump Administration to lower drug prices in the United States, including moves to change the system of rebates paid to PBMs and to restructure Medicare Part B. Outraged drug manufacturers cried foul, arguing that patients almost never pay their list prices and disclosing them in their commercials would lead to customer confusion.
Perhaps one of the most interesting components of this CMS rule is its enforcement mechanism. Instead of the CMS itself going after drug manufacturers who fail to comply, the rule allows other manufacturers to pursue damages and injunctions against them for claims of false or misleading advertising under Section 43(a) of the Lanham Act. Also known as the Trademark Act of 1946, this federal law relies on a “likelihood of confusion” standard for adjudicating trademark disputes. The Lanham Act and its remedies have been refined over the last 70 years to combat the very customer confusion pharmaceutical companies insist this new CMS rule will cause.
Whether you agree with drug manufacturers or the CMS, it’s worth noting that this is not the only situation where the government has turned to intellectual property law as a versatile tool to lower drug costs. A bi-partisan group of Senators, including Republicans Chuck Grassley and John Cornyn along with Democratic Presidential Candidate Amy Klobuchar, are working together on a package of legislation targeting drug pricing issues which they hope to have ready by summer. Cornyn’s bill takes a machete to the “patent thickets” crafted by drug manufacturers to artificially extend the monopolies on high-value “blockbuster” drugs granted them by their patents. These patent thickets make it all but impossible for cheaper generic drugs to reach the market, keeping the price of name brand drugs higher for longer. Legislators are coming to see these patent thickets as an abuse of our patent system, a system intended to spur and reward innovation.
It may be too early to say how effective intellectual property law will be in lawmakers’ fight against high drug prices, but it certainly looks like a trend to keep our eyes on. At the very least, it shows that Democrats and Republicans are willing to get creative, using every weapon in their arsenal in their fights with Big Pharma. And they’re willing to reach across the aisle to do it. If you think your own healthcare may be overcharging you for prescriptions, contact us for a claim negotiation, today!