By: Kevin Brady, Esq.
In May of this year, the Federal Drug Administration (FDA) approved the most expensive drug in the world, Zolgensma. The drug was developed by Swiss drug maker, Novartis, and costs $2.1 million for the one-time single dose. The drug maker will spread the burden of the high cost by allocating payments for the drug over a 5- year plan at $425,000 a year.
Zolgensma is a new gene therapy drug used to treat spinal muscular atrophy (SMA). SMA is a rare, genetic neuromuscular disease caused by a defective or missing gene. Infants with the missing or defective gene will lose motor function control and are likely to lose the ability to breath, speak, swallow and walk. Essentially, Zolgensma can be used to treat all types of SMA in newborns and toddlers up to age two (2).
Not only is this the most expensive drug in the world, the drug maker, Novartis, has recently come under scrutiny by the FDA for allegedly manipulating pre-clinical data prior to FDA approval. For now, the FDA is not inclined to take Zolgensma off the market, as they still believe in the safety and efficacy of the drug. However, the FDA is likely to take action against the drug maker, most likely in the form of civil and criminal penalties.
With all the scrutiny around this new drug, plan sponsors should be aware of the high-price tag associated with this drug and the alleged misrepresentations of data by the drug maker in its seeking of FDA approval. Plan sponsors should carefully consider their options when drafting their plans. Gene Therapy is always a hot topic as it is typically associated with a high cost. For Zolgensma, while there may be a high up-front cost, if the drug is effective, most importantly, it will save lives and potentially years of expensive, demanding, and less effective alternative treatments.
By: Jon Jablon, Esq.
If you draft, administer, or otherwise manage self-funded health plans, you are likely very familiar with the appeals submission timeframe requirements within the SPD. The relevant regulations prescribe certain timeframes within which a health plan must allow an appeal, and a health plan is certainly free to allow longer periods of time, but abiding by the legal minimums tends to be the common practice.
That’s all well and good, and relatively simple to administer, but they tend to fall flat when applied to balance-billing. Let me explain:
I received an email the other day from a very angry medical provider with whom I had been attempting to resolve a balance-billing scenario, in which the attorney explained that the TPA said to him (and I quote): “On page 83 the plan document says that all payment appeals must be submitted within twelve months of the date of the adverse benefit determination. You have billed the patient seventeen months following the determination. Therefore you are prohibited from billing the patient for the balance.”
A provider’s appeal is to the Plan itself, saying, essentially, “you have underpaid this claim,” whereas balance-billing is to the member, saying “you are responsible for the balance that your health plan has not paid.” While it is certainly possible for a provider to simultaneously appeal to the Plan and balance-bill the member, they constitute two very different demands, and only one – the appeal to the Plan – falls under the purview and limitations of the Plan Document.
I want to do my part to dispel the popular misconception that balance-billing can be eradicated with the right plan language in place. Balance-billing, by definition, is outside the terms of the Plan, and therefore nothing written in the Plan Document can change a provider’s rights. The Plan Document’s terms can and should be used as arguments against balance-billing, of course, and the Plan needs strong language to defend itself – but even the strongest Plan Document language cannot legally prohibit a provider from balance-billing.
Feel free to contact PGCReferral@phiagroup.com, and we’ll do our best to answer all your appeal and balance-billing questions!
By: Nick Bonds, Esq.
On July 17, 2019 the Internal Revenue Service issued Notice 2019-45, and, if our consulting question inbox is any indication, caused quite a stir in our community. At least among the groups offering HSA-qualified high deductible health plans.
We have been inundated with a deluge of inquiries, ranging from the vaguely curious to the slightly manic: Are they changing the definition of preventive services? Does this change what we have to cover? How do we account for this in our plan document? What is the airspeed velocity of an unladen swallow?
Okay, that last one might be from Monty Python, but seriously everyone – relax.
This new rule essentially stems from an executive order President Trump issued on June 24, his “Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First,” which tasked the Treasury Department with a few homework assignment. Among these was Section 6(a), which called for guidance to expand the ability of patients to select high-deductible health plans (HDHPs) that can be used alongside an (HSA), and that these plans cover low-cost preventive care, before the deductible, to help maintain the health of people with chronic conditions, all within 120 days.
Five weeks later, the Treasury delivered, and the IRS introduced Notice 2019-45 to the world. The notice’s stated purpose is to “expand the list of preventive care benefits permitted to be provided by a high deductible health plan (HDHP) . . . without a deductible, or with a deductible below the applicable minimum deductible (self-only or family) for an HDHP.”
Our interpretation of this notice is fairly straightforward: it does not create any requirements for an HDHP to cover the listed services differently. Rather it gives HDHPs the ability to cover fourteen new services and items at 100% without applying their deductible, and without endangering their HDHP status.
The whole point of this notice is to help individuals utilizing an HDHP to manage their chronic conditions, like asthma, diabetes, and heart disease. A growing majority of employers are offering their employees HDHPs in tandem with a Health Savings Account. This rule offers those employers greater flexibility and eases the strain high deductibles put on the wallets of employees with chronic conditions.
Section 6(b) gave us something else to look forward to: Treasury has 180 days to propose regulations that could potentially expand eligible medical expenses under Section 213(d) to include direct primary care and healthcare sharing ministries. Forthcoming regulations could open some exciting possibilities for employers contemplating on-site clinics. So stay tuned.
By: Andrew Silverio, Esq.
Recently, the Trump administration released a finalized rule establishing the conditions under which employers can utilize HRAs to subsidize their employees’ purchase of individual coverage, including coverage on the Exchange.
Under the rule, employers are able to provide enrollees with a fixed dollar amount, tax exempt, which can be used to buy individual coverage. While the rule doesn’t relieve the employer’s obligations to provide group coverage, if applicable, participation in the individual coverage HRA is conditional upon having individual coverage, which includes Medicare. This requirement is applicable for the employee and any dependents. Additionally, the individual coverage must satisfy certain requirements to qualify under the rule, allowing an individual to utilize the ICHRA, and individuals must attest that they have suitable individual coverage.
Notably, the model notice and attestation (available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/Downloads/HRA-Model-Notice-PDF.pdf and https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/Downloads/HRA-Model-Attestations-PDF.pdf) provided by the administration contain no disclosure or explanation that certain coverage, such as certain limited-benefit plans or health sharing ministries, would not satisfy the rule’s requirements relating to the suitability of other coverage.
Critics of the rule have pointed to a few plausible factors in arguing that it will raise the price of individual coverage in the exchanges, both by incentivizing sicker employees within a workforce and employers with sicker employee populations overall to feed high risk lives into the individual markets. Additionally, it has been noted that older participants may not benefit sufficiently from the ICHRAs, because the limitations on how much the contribution amounts can differ based on age will be insufficient to compensate for the naturally disproportionate premiums those participants will encounter in the individual market.
Finally, the content of the rule aside, the quick turnaround time of a 01/01/2020 effective date is leaving state marketplaces scrambling, with many saying it will be simply impossible to implement sufficient changes in just a few months to be equipped to manage enrollment accurately under the new rule.
This is a significant development, with implications in the ACA, tax code, employment law, and other fields. Court challenges are likely, but as of now the rule stands to go “live” in just a few months. Reach out to The Phia Group at PGCReferral@phiagroup.com with any questions or for more detailed information on any of the rule’s contents.
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 now, most Americans, especially those in the healthcare industry and proponents of the ACA, are aware of the December 14, 2018 decision in Texas v. United States by Judge O’Connor of the Northern District Court of Texas. This decision shook the self-funded healthcare industry as it ruled that the individual mandate was unconstitutional and not severable from the rest of the Affordable Care Act (“ACA”), thus concluding that the ACA itself is unconstitutional.
More recently on January 3, 2019, the House filed a motion to intervene, and detailed that they have a “unique institutional interest in participating in this litigation to defend the ACA.” This motion was to intervene in separate claims that were made by the plaintiff states which were not ruled on in the December 14th decision. However, on January 7, 2019, the House filed a second motion to intervene which, if granted, would allow the House to defend the ACA alongside the intervenor states. The House argues that they have the right to defend the constitutionality of federal laws when the Attorney General or the Department of Justice (“DOJ”) do not.
However, this process will be slowed down as the government shutdown continues. The shutdown, which began on December 22, 2018, is interfering with the DOJ’s ability to meet the deadline to file their opposition to the House's motion. As a result, the DOJ asked the Fifth Circuit to pause all briefings since they will be unable to prepare their motion as Justice attorneys cannot work during the shutdown. On January 11, 2019, the Fifth Circuit issued an order, signed by Judge Leslie Southwick, granting the DOJ’s request to temporarily pause the case. While this shouldn't have a deep impact on the case, it presents just one example of many of how the government shutdown is impacting the country.
By: Erin M. Hussey, Esq.
On the verge of a potential government shutdown, the Equal Employment Opportunity Commission (“EEOC”) was quick to issue final rules December 19th on the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”). Issuing final rules at the end of the year is not a new trend, but the unique situation is that the final rules are vacating current provisions on wellness program incentives. With an effective date of January 1, 2019, we are left with less guidance than we had on December 18th.
By way of background, in 2016 the American Association of Retired Persons (“AARP”) sued the EEOC claiming that the EEOC’s wellness incentive rules, for wellness programs that implicate the ADA and GINA, were coercive and not truly voluntary. A wellness program would implicate the ADA if medical examinations or disability-related inquiries were involved (i.e., biometric screenings), and a wellness program would implicate GINA if there were inquiries about genetic information. Before recent events, the EEOC’s ADA and GINA rules capped the wellness program incentive at 30%.
In a 2017 opinion, the judge determined that the EEOC had never defined the term voluntary thus the court found that the EEOC "failed to adequately explain" the 30% maximum and how a plan can still be considered voluntary with that incentive. The EEOC was directed to re-write their workplace wellness rules related to incentives for an effective date of January 1, 2019 or the old rules would be vacated. Obviously the EEOC did not re-write the ADA and GINA incentive-related rules as they have now been vacated effective January 1, 2019. However, the EEOC had indicated at their Fall 2018 Unified Agenda of Federal Regulatory and Deregulatory Actions, that they intend to issue new regulations in June 2019.
In order to ensure compliance until new rules are issued, the quick solutions are to remove medical testing, questions about genetics, and lower the amount of the incentive (though it is unclear what amount will truly be considered voluntary). While frustrating to say the least, this limbo situation for employers and plans is more of the same uncertainty that we have been dealing with for the past eight years. Employers that choose not to make changes should be aware of the compliance risks they may face due to the lack of rules.
*Please note: the above-mentioned EEOC wellness rules are separate from the Health Insurance Portability and Accountability Act (“HIPAA”) and the Affordable Care Act (“ACA”) wellness rules and the above ruling has no effect on these rules.
By: Ron E. Peck, Esq.
A friend and ally in the health benefits industry recently asked me if I had an up to date listing of the most costly health care expenses paid by health plans in 2018. I didn’t; so on a whim I brought up my handy dandy search engine and typed in: “the most costly health care expenses paid by health plans in 2018.” You know what the top results were? “Cost of Employer Health Coverage to Rise in 2019” … “Health Insurance: Premiums and Increases” … “How to Find Affordable Health Insurance in 2018” … and other, similar articles focused on what individuals will pay in premium (and in some instances, even dissecting co-pays, deductibles, and co-insurance). The common thread? They are all about participant out-of-pocket expenses. I didn’t ask how much it costs to obtain insurance. I asked how much it costs to obtain an appendectomy!
This is just a most recent example of an issue that sticks in my craw like no other, and reminds me of something I wrote years ago. Check this article out: https://moneyinc.com/affordable-health-insurance-is-not-affordable-health-care/.
“… too many people are confusing the term ‘health care’ with ‘health insurance.’ … Health care – meaning the actual act of caring for someone’s health – is necessary for survival. Health insurance – meaning a method by which we pay for health care – is just that; merely a means to pay for health care. Yet, a few years ago (2009 to be precise), a report posted by the American Journal of Public Health indicated that nearly 45,000 deaths are annually associated with a ‘lack of health insurance’ and that uninsured, working-age Americans have a forty percent higher risk of death than those with private insurance. The knee-jerk reaction to this news is likely (and likely was) to rush to provide health insurance to as many people as possible. Indeed, according to this report, health insurance saves lives. Furthermore, one could argue, if saving lives is health care, and health insurance saves lives, then health insurance is health care, and your author has proven himself wrong.… As stated before, however, health insurance is a method by which we pay for health care. It stands to reason, therefore, that it is not a lack of health insurance that kills people, but rather, it is a lack of means by which to pay for health care that kills people. This, then, leads us to a logical conclusion; the problem is not that we don’t have insurance … the problem is that we can’t pay for health care without insurance. This, then, leads to the next logical thought: why is health care so expensive?”
Go back and re-read the first paragraph of this blog post. Sadly, I fear my words published two years ago apply as much today as ever. Enjoy this blast from the past for Throwback Thursday, and let me know if you think we’ve advanced at all since then.
By: Patrick Ouellette, Esq.
In a move geared toward making drug prices more visible to consumers, the Department of Health and Human Services (HHS) recently released a proposed regulation that would force drug companies to include prices in their television advertisements of prescription drugs and biological products. HHS focused the proposal on drugs in which payment is available through or under Medicare or Medicaid to include the Wholesale Acquisition Cost (WAC, or “list price”) of that drug or biological product.
There are some drug price components of WAC to note, as WAC is generally the manufacturer’s price for drugs before the supplier of the product offers any rebates, discounts, allowances or other price concessions. True pricing involves a number of other variables to determine what the final drug costs are to patients beyond the WAC, such as what their insurance covers or whether their deductible has been met. These proposed regulations are also limited only to drugs covered under Medicare or Medicaid. However, it will be instructive in the long-term to see whether the inclusion of pricing in advertisements will actually lower final drug payments for patients. Similar to CMS requiring (starting in 2019) hospitals to make public a list of their standard charges via the Internet in a machine-readable format, there are no assurances that patients armed with new information will reduce final costs.
If these regulations prove to be successful, it will be interesting to see whether HHS would extend them to drugs payable by private insurers. In particular, HHS regulations could affect pharmacy benefit manager (PBM) rebates in the self-funded health plan space:
Because the list price of a drug does not reflect manufacturer rebates paid to a PBM, insurer, health plan, or government program, obscuring these discounts can shift costs to consumers in commercial health plans and Medicare beneficiaries. Many incentives in the current system reward higher list prices, all participants in the chain of distribution, e.g., manufacturers, wholesalers, pharmacy benefit managers, and even private insurers, gain as the list price of any given drug increases. These financial gains come at the expense of increased costs to patients and public payors, such as Medicare and Medicaid, which ultimately fall on the backs of American taxpayers.
Furthermore, consumers who have not met their deductible or are subject to coinsurance, pay based on the pharmacy list price, which is not reduced by the substantial drug manufacturer rebates paid to PBMs and health plans. As a result, the growth in list prices, and the widening gap between list and net prices, markedly increases consumer out-of-pocket spending, particularly for high-cost drugs not subject to negotiation.
Though the proposed regulations only affect companies in which their drugs covered by public payers, Medicare and Medicaid, all payers across healthcare should keep track of this initiative. The Pharmaceutical Research and Manufacturers of America (PhRMA) has already argued that such rules would violate the First Amendment and not affect patient costs.
By: Kelly Dempsey, Esq.
That’s a pretty big question as we learn more about the Trump Administration’s attempt to reduce drug costs.
We all know drug prices are off the charts and several attempts to control pricing have failed to get up and running. As you may recall, President Trump indicated during his campaigning that he would develop a plan to lower prescription medicine costs. The U.S. health secretary (Azar) is making some moves and has indicated that eliminating drug rebates may help reduce costs.
Cost containment is key to self-funding and high drug costs have caused employers and plans to explore options to keep plan costs down, including utilizing vendor programs that obtain drugs from outside the U.S. and/or build certain rebate programs into the customized plan design. While there’s still a lot that must be worked through before changes are implemented, these four key takeaways may give plans, employers, brokers, PBMs, and other vendors some heart burn:
Plans and vendors that utilize these types of programs should be on the look-out for rule changes to ensure continued health plan compliance.