In this episode we welcome back to the mic EVP and General Counsel, Ron Peck, as well as SVP of Consulting, Jen McCormick. These industry legends discuss the No Surprises Act, its likely impact on both the payer and provider industries, and provide listeners with guidance on what they need to do now, to ensure compliance when it goes live. Click here to check out the podcast! (Make sure you subscribe to our YouTube and iTunes Channels!)
By: Andrew Silverio, Esq.
On March 5, 2021, the northern district of California came down with a decision that is causing some justifiable concern among TPAs in California and beyond. The root of the dispute is a self-funded plan’s application of its exclusion for Applied Behavioral Analysis (“ABA”) therapy for treatment of autism, but notably, the lawsuit is brought not against the employer or plan, but against United Behavioral Health and United Healthcare Services, the plan’s claims administrator (collectively “United.”)
The interesting conversation here revolves around the question of whether United, by applying the plain language of the plan in enforcing its ABA exclusion, was performing a fiduciary act. The Court cited the appropriate case law, most notably Aetna Health Inc. v. Davila, 542 U.S. 200, 218-19 (2004), which held that “‘A benefit determination under ERISA . . . is generally a fiduciary act’ and is ‘part and parcel of the ordinary fiduciary responsibilities connected to the administration of a plan.’” In its analysis, however, the court essentially disregards the myriad of case law outlining that a claims administrator is not exercising discretion and therefore not engaging in a fiduciary act when it acts in a purely ministerial nature. Discussion often revolves around whether ambiguous or vague plan terms are being interpreted, drawing the distinction between that distinction and the situation here – when the claims administrator is simply applying the clear written terms of the plan as established by the employer. In essence, the court interpreted a “benefit determination … is generally a fiduciary act” as meaning that a benefit determination is a fiduciary act… period, foreclosing the possibility of all the exceptions that “generally” necessarily invites. It found that by applying this clear ABA exclusion, United exercised discretion and rendered itself a fiduciary. The reason for alarm here is clear – under this standard, essentially any claim determination, no matter how routine or how clearly the plan terms dictate the outcome, could subject a TPA to fiduciary liability.
The silver lining, at least at this point, could be that rather than willingly creating new law, the court seems to have simply applied existing law incorrectly. It would come as a surprise to us if this decision was upheld at the circuit level – but if that happens, TPAs will want to take steps to ensure they are protected from the additional potential liability.
Legal Compliance & Regulatory Affairs Consultant, Phil Qualo, and Vice President of Consulting, Kelly Dempsey Esq., explore the phenomena surrounding COVID-19 long haulers. Although the term “long haulers” trigger thoughts of cross country truck driving, it has actually been used as a common reference to people who have been infected with the COVID-19 virus and have not fully recovered for weeks, months, and even up to a year after first experiencing symptoms. This episode provides personal insight into the challenges that these long haulers are facing that impact both employer and benefit considerations, including access to disability benefits and health care.
Click here to check out the podcast! (Make sure you subscribe to our YouTube and iTunes Channels!)
By: Kelly Dempsey, Esq.
Change that creates challenge is nothing new for the self-funded industry, which is why the amount of changes that have been required to address COVID-19 are not a shock to our industry. But now that we’re over a year into a global pandemic, the long-term consequences are only beginning to come to the surface. To date the focus has been on prevention and vaccines, but do you know what a long hauler is? No, not a truck driver, a COVID long hauler: individuals who are not recovered from COVID-19 weeks and even months after the initial onset of symptoms (which may include a positive diagnosis). This concept of long haulers includes those that have experienced subsequent diagnoses that are potentially linked to COVID-19. I have a friend who is a long hauler and her story has captivated me as I’ve watched and listened to her discuss her struggles, including the fact that she hasn’t been able to smell or taste since October 2020. It took her months of being her own advocate to find a doctor that didn’t dismiss her persisting symptoms of extreme fatigue, migraines, and heart rate that spikes from 65 to 150 just by standing up. Can you imagine living your life with these symptoms for over 6 months?!? How would this impact your ability to work? Do you know if you’d still have access to health benefits or short term disability benefits? Check out an upcoming new podcast titled "The Mystery Surrounding COVID-19 Long Haulers: Employment & Benefit Considerations" where I’m joined by Phil Qualo to discuss COVID long haulers and some emerging considerations for self-funded plans and employers which are likely to be felt more deeply in our industry in the coming months.
The costs and conflicts ushered in by the COVID-19 fallout are becoming more apparent. Industry members are debating numerous issues, such as when a plan should pay and whether workers’ compensation should be a primary payer. Both opportunities and challenges appear, especially for fiduciaries, from post-pandemic legislation, such as the No Surprises Act, to state and federal COVID-19 rules – impacting Reference Based Pricing and claims processing in general. Join The Phia Group as we discuss post-COVID era regulations applicable to benefit plans, as well as industry issues emerging from this new chapter in the pandemic saga.
Click Here to View Our Full Webinar To obtain a copy of our webinar slides, please reach out to mpainten@phiagroup.com.
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Breakout #1: Stop-loss Claims, Fiduciary Obstacles & COVID-19
Breakout #2: Surprise Billing & RBP Opportunities
By: Jon Jablon, Esq.
Our consulting team recently fielded a great question, which is worth mentioning here. The text of the law provides that health plans:
…”must have a database on the public website of such plan or issuer that contains (a) a list of each health care provider and health care facility with which such plan or issuer has a direct or indirect contractual relationship for furnishing items and services under such plan or coverage; and (b) provider directory information with respect to each such provider and facility.”
Our client’s question was whether the plan itself had to host the provider list and directory information on its own website, as the text of the law suggests, or if the plan’s website could simply include a link to the applicable network’s website to provide the directory, as is generally already the case. Congress indicated that the Plan must “have” the information on its website, but it’s not clear what that means. Essentially, the question is whether “having” the information on its website necessarily means that the plan itself must host and maintain this data, or whether the plan will be considered to “have” the information on its website by virtue of including a link on the plan’s website to an external website, such as a network’s website, that contains the information.
The intuitive answer is that of course the plan should be able to link to the network’s website. If websites are the bones of the internet, then links are the joints. Or ligaments, maybe. I don’t know if that analogy makes sense, but you get the idea.
We’re not sure, however, how much intuition and logic we can reasonably apply to solving the mysteries of the No Surprises Act. Without further guidance, it’s impossible to know whether the regulators will interpret Congress’ text to be taken literally, or if the powers that be will decide that it is fine for a plan’s website to contain external links to the appropriate network’s website. We certainly hope it will be the latter approach, but we can’t say for sure.
There are certain arguments for and against allowing the plan to simply link to an external website. Some examples that come to mind include the following dramatizations. Note that these are not opinions actually provided by the regulators, but theoretical responses to the arguments that TPAs and plans might make. It’s also possible that the regulators will field this question and have the same intuitive answer that we are all hoping they have. Here we go:
Argument for: Links are just how the internet works. No site can host everything, so the plan’s website should be able to link to the network’s website, on which the required information would be readily available. All the member has to do is click one extra link to go to the network’s website.
Theoretical regulatory argument against: This law is certainly not requiring plans to host everything – just a contracted provider listing and directory information. Patients need easy access to the provider directory, and third-party websites can be down, inaccurate, or otherwise difficult to navigate. Also, having to go to the plan’s website and then navigate away from it can be confusing or burdensome for some members.
* * * Argument for: Requiring the plan to maintain this information separately from the network’s data would be unduly burdensome, requires significant resources to create and manage, and would likely result in inaccuracies in the plan’s data.
Theoretical regulatory argument against: Sometimes major process changes take significant resources to manage. The grand scheme of protecting patients outweighs the plan’s or TPA’s perceived resource limitations. With respect to the potential for errors, compare the data sets as often as you need to. The No Surprises Act provides for what happens in the event a patient is given incorrect network information, so Congress clearly envisioned that a plan or TPA might provide imperfect data in some circumstances.
* * * Argument for: Networks are in a far better position to manage and stay up-to-date on their provider directories; this is how it has always been done, and we aren’t aware of any problems with this model.
Theoretical regulatory argument against: The law as written requires the plan to include the provider listing and directory information on its website; we will take Congress at face value. The passage of the No Surprises Act is evidence that Congress doesn’t think “how it has always been done” is working well. The plan will simply need to find a way to access the network’s data, because that is what Congress has required.
We’ll all be on the lookout for regulatory guidance regarding this and myriad other provisions of the no Surprises Act. In the regulators’ defense, they have been handed a truly gigantic set of requirements, with no real way to know how to effect or enforce them. With any luck, any important guidance they’ve got for us won’t be issued too late for plans to reasonably comply with it! If you’ve got questions about specific provisions of the No Surprises Act, please don’t hesitate to contact The Phia Group’s consulting division at PGCReferral@phiagroup.com.
In this episode of Empowering Plans, Jen McCormick and Andi Goodman discuss the future of vaccinating vulnerable populations such as pregnant women and children, and the importance of vaccinating children in achieving herd immunity. What are the next steps for expanding vaccine eligibility? What do employers need to know if they are considering requiring their staff to get vaccinated before returning to work?
By: Nick Bonds, Esq.
COBRA continuation coverage has never been what I would call “intuitive.” Even under the most straightforward of circumstances, COBRA involves a byzantine labyrinth of rules and timelines, for employers and beneficiaries alike. In the time of coronavirus, COBRA has only grown in its complexity. Recent rules make those timelines more difficult to follow and the coverage more complex to administer. Though these new rules should make more accessible to employees than ever, the COBRA headaches for employers may never have been more intense.
In the “before times,” COBRA coverage was somewhat more straightforward – complicated, surely, but plan administrators were accustomed to the requisite timelines, the unique premium rates, the maximum periods of coverage. COBRA administration was not easy but had a certain familiarity that offset the intimidation factor of its intricacies.
Last spring, as the grip of the pandemic was first beginning to tighten, the Departments of Labor (DOL) and Treasury implemented a new final rule tolling the deadlines for certain aspects of ERISA plans, including the timeframes for electing and paying premiums for COBRA coverage. At the time, like many in our industry, we foresaw that handling COBRA claims incurred during these expanded timeframes were likely to become a chaotic mess. That insight began looking both more accurate and more dire as the pandemic and the “outbreak period” approached its first anniversary. ERISA and the Code imposed a one-year limit on the ability of DOL and the Treasury to toll those deadlines, and we collectively braced to see how the agencies would reconcile that statutory limit with preserving the expanded access to coverage.
Of the likely options their guidance would take, they opted for what was probably the most complex route possible. With mere days to spare before the relief could potentially expire, the DOL issued guidance in Disaster Relief Notice 2021-01, explaining that the “tolling of certain deadlines” operated on a person-by-person basis. Essentially, every individual plan participant has their own unique tolling period. Plan administrators would be forgiven for panicking slightly at trying to keep every individual’s tolling period organized, but at least the deadlines (and premiums) for every potential COBRA beneficiary would not come due all at once, and many plan participants would still have the potential to continue their coverage.
Then, with Sec. 9501 of the American Rescue Plan Act (ARPA), the COBRA landscape got a few new wrinkles. Though COBRA subsidies had been included in the original version of the bill approved by the House of Representatives, those subsidies only covered 80% of the cost of COBRA coverage. In the Senate, those subsidies were increased to 100% for the sixth month period beginning April 1 and ending September 30, 2021. Meaning certain assistance eligible individuals (AEIs) who elect COBRA during this subsidy period would have 100% of their COBRA premiums paid by their employer during that time, with the employers to be reimbursed though payroll tax credits.
This has a few big implications worth considering. Not least of all that COBRA claims have historically been fairly expensive, as most employees tend to avoid paying the relatively high cost of COBRA coverage if they don’t absolutely need it. With that cost nullified, the higher risk pool of COBRA beneficiaries may be somewhat diluted, as even healthy AEIs enroll in COBRA coverage at no cost to themselves.
Additionally, ARPA’s COBRA provisions include its own extended election period for COBRA coverage. An AEI who is not enrolled in COBRA as of April 1, either because they have yet to elect or elected and then dropped COBRA coverage, will have 60 days from the receipt of their new COBRA election notice to enroll. This will give individuals a second bite at the COBRA apple, so long as they are still within their maximum COBRA coverage period (generally, 18 months). Though as we mentioned, each individual will have their own “tolling period” to factor out as well.
ARPA also gives plan sponsors a “plan enrollment option” of allowing AEIs to change the coverage in which they are enrolled, if that coverage is available to similarly situated individuals and the premiums for that coverage do not exceed the premiums for the AEI’s existing coverage. In other words, plan sponsors can allow employees to step down to a tier of coverage that would be less expensive for them (once the six-month subsidy period has ended), but they aren’t allowed to “upgrade.” Plan sponsors are not required to allow AEIs to make this change, but the option is available.
Employers are also required to issue new COBRA notices alerting AEIs to the availability of the premium subsidies and expanded enrollment opportunities and will be required to notify these individuals again between 45 to 15 days prior to the end of the subsidy period. Current COBRA notices may be amended to include the new requirements imposed by ARPA, or separate notices may be provided. The DOL is mandated to issue model notices for both the availability and expiration of the subsidies withing 30 and 45 days of ARPA’s enactment, respectively.
In the meantime, plan sponsors should reach out to their COBRA administrators (if applicable) and stop loss carriers as soon as possible to ensure that everyone is on the same page for administering claims that are incurred during the six-month window created by ARPA. They should also make preparations to issue updated COBRA notices, to ensure their employees are aware of the subsidy’s availability. As always, the Phia Group is here to answer questions and help clarify the issues these new COBRA rules are sure to create.
On Friday, February 26, the EBSA released its Disaster Relief Notice 2021-01 (available at https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/disaster-relief/ebsa-disaster-relief-notice-2021-01), addressing a conflict that many commentators had already picked up on – the fact that previous relief (see https://www.federalregister.gov/documents/2020/05/04/2020-09399/extension-of-certain-timeframes-for-employee-benefit-plans-participants-and-beneficiaries-affected#footnote-2-p26352) provided for the tolling of various timelines under health plans during the “outbreak period”, which is now over a year old and still ongoing, but the authority on which that relief relies expressly limits any such tolling to one year. Because of this conflict, many commentators had concluded that this must mean that the “outbreak period” ends as of February 28, 2021, making it one full year in length. However, the EBSA has clarified that this is not the case – they have interpreted the one-year limitation as applicable to each individual event tolled as opposed to the tolling relief/outbreak period itself. Essentially, they explain that the duration of any tolling granted under the rule can be no longer than one year. This means that an event with an original due date of March 1, 2020 will now have a due date of March 1, 2021.
However, the examples chosen by the EBSA to illustrate this interpretation have given rise to some significant confusion, because the relief can end either by hitting that one-year mark, or as originally intended through the end of the actual outbreak period (whenever that occurs). In the example given above, we have already tolled one full year, so there is no ambiguity. However, in the second example given, the EBSA states “Similarly, if a qualified beneficiary would have been required to make a COBRA election by March 1, 2021, the Joint Notice delays that election requirement until the earlier of 1 year from that date (i.e., March 1, 2022) or the end of the Outbreak Period.” In choosing an initial due date which is well within the outbreak period and not addressing the fact that all days leading up to that event have already been expended, the EBSA has led many readers to interpret this as meaning that after one year of tolling, or when the outbreak period ends, whichever is first, all tolled events come to maturity immediately. This is an incorrect interpretation – any un-used days at the time tolling begins would still be owed to an individual at the time tolling ends, whether that occurs after one year or because the outbreak period comes to an end. So, for example, if an individual was on day 15 of a 60-day COBRA election window when tolling began on March 1, 2020, that individual would now be considered to be on day 16 of that window on March 1, 2021. In other words, the election would resume tolling rather than becoming immediately due on March 1, 2021.
The case-by-case approach that the EBSA has interpreted to be applicable here will certainly give rise to unique administrative challenges. However, these challenges should pale in comparison to the chaos that would have ensured if all relief had been interpreted to come to an end on March 1, 2021, as some had predicted.
In case you haven’t heard, the Employee Benefits Security Administration (EBSA) released Disaster Relief Notice 2021-01 on Friday, February 26th to address statutory language in section 518 of Employee Retirement Income Security Act of 19745 (ERISA) and section 7508A(b) of the Internal Review Code (the Code). In plain English, the statutes place a one year limit on the authority originally used to create the “Outbreak Period” – meaning by statute, the tolling of timeframes cannot exceed one year. Since Friday, Phia has received a large amount of questions related to this Notice and what it really means for plans. Phia has certainly read and re-read the Notice to determine what this means for self-funded plans and all the players in the self-funded industry. Unfortunately, some of the examples in the Notice fall short of the guidance we would have expected. We have reached out to the DOL seeking clarification on some other potential fact patterns that we know exist.
In the meantime, we have re-reviewed plan language that we crafted to accommodate all of the COVID-19 related rules and guidance and have made some small adjustments. As things develop, of course there is the potential for more changes.
The Notice does indicate that plans and their claims administrators (or other vendors) may need to reissue or amend any notices that were previously issued to plan participants that did not include accurate information regarding the time in which participants and beneficiaries are required to take action. It also indicates plans should affirmatively send notice to plan participants and beneficiaries.
With that said, the EBSA puts a great emphasis on providing relief to plan participants and their beneficiaries and the undertone suggests that plans should keep this mindset of acting in a manner than is favorable to plan participants. The Notice goes on to specifically say that plans and fiduciaries should act “in good faith and with reasonable diligence under the circumstances.”
The application of the rules and statutory language will no doubt have to be carefully applied on a case by case basis and there will be no shortage of fact patterns that will arise. As always, Phia is here to help navigate these rough waters for plans and their administrators in the self-funded space.