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Phia Group Media


The Phia Group's 4th Quarter 2019 Newsletter


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



The Book of Russo:
From the Desk of the CEO

It’s renewal season here at The Phia Group, and in the self-insured industry, I can tell you that it’s busier than ever. It seems like finally all of the industry experts, advisors, and brokers are seeing the light and realizing that the time for change is now. It’s not just enough to disrupt, its time for a revolution in healthcare, and we are more than happy to lead the fight for higher quality, more transparency, and lower costs. We have seen a greater emphasis on empowering plans through data access, incentive based language in plans documents, and carve-outs through specific centers of excellence. The days of overgrown networks are slowing down with narrow networks, and better disease management opportunities are growing. I hope you have a great 4th quarter and success in your opportunities. We are always here to help. Happy reading.


Service Focus of the Quarter: Plan Appointed Claim Evaluator® (PACE)
Phia Group Case Study
Phia Fit to Print
From the Blogosphere
Webinars
Podcasts
The Phia Group’s 2019 Charity
The Stacks
Phia’s Speaking Events
Employee of the Quarter
Phia News

 

Service Focus of the Quarter: Plan Appointed Claim Evaluator® and PACE Certification

Plan Appointed Claim Evaluator®, or “PACE”

Some years ago, in response to growing industry concerns over the difficulty of exercising fiduciary duties with respect to internal appeals, The Phia Group created its Plan Appointed Claim Evaluator® (PACE) service. PACE is a fiduciary transfer service for applicable final-level internal appeals. It is designed solely to help the health plan ensure that it has made correct determinations, thereby insulating the health plan from liability and allowing the Plan Administrator to focus on its core business rather than difficult fiduciary determinations.

PACE includes:

• Plan Document and stop-loss policy “Gap Reviews” ensure compliance, eliminate coverage gaps, and ensure PACE readiness
• Advanced-level webinars exclusively for PACE clients
• Assessment of eligible final internal appeals via written directive as a fiduciary
• Unsurpassed legal analysis, clinical review and access to URAC-accredited IROs (and PACE covers all external review costs)

Beginning August 2019, we will also begin offering complimentary PACE Certification – whereby your organization can enhance your PACE business, improve your internal appeals processes, ensure regulatory compliance, and improve your business as a whole.

Chapter One of PACE Certification explores the ins and outs of self-funding; Chapter 2 takes a deeper dive into the laws and regulations applicable to self-funded health plans; Chapter 3 explains what PACE is, how it works, and how it can best be utilized.

PACE Certification

PACE Certification provides access to a multimedia educational program! Through videos and interactive knowledge materials, you will emerge educated and entertained! Once PACE certified, you will enhance your PACE business and increase revenues, improve your appeals processes, and assure regulatory compliance!

Chapter One: Explore the ins and outs of self-funding while learning about its risks and rewards. This chapter will transform any individual into a self-funding pro.

Chapter Two: Take a deeper dive into the laws that apply to self-funded plans. We cover it all, from preemption to adverse benefit determinations and appeals.

Chapter Three: Explain what PACE is, what PACE does, and how it’s obtained, implemented, and utilized.

To learn more about either PACE or PACE Certification, please contact Tim Callender at 781-535-5631 or tcallender@phiagroup.com.

 

Phia Case Study: Independent Consultation & Evaluation (ICE) 

A client of The Phia Group’s ICE service approached our consulting team with an inquiry whereby an employee had accrued two weeks of paid time off (PTO) pursuant to the employer’s own internal policies, and that employee was about to take leave to deliver her first child. The inquiry was specifically regarding whether the employee could first take her accrued PTO for two weeks, and then begin FMLA leave, for leave totaling 14 weeks (two weeks PTO plus twelve weeks FMLA).

Our response focused on some guidance provided by the Department of Labor. In March 2019, the DOL was very specific in its mandate that once an employer knows that a leave of absence qualifies under FMLA, the employer must designate the leave as FMLA leave, regardless of any available PTO or other employer-approved leave.

In other words, the DOL requires the FMLA and PTO leaves to run concurrently; since the PTO totaled 2 weeks and the FMLA totaled 12 weeks, those first 2 weeks would have the leaves running concurrently, and then, if taken, there would be only ten additional weeks available of solely FMLA.

It’s important to mention in this context that employers have a wide berth to structure their own policies, grant leave, and other employment-type things – but continuation under the health plan should be pursuant to Plan terms, rather than only employer policies; this is important for many reasons, not the least of which being stop-loss coverage.

If the employer granted two weeks of continuation coverage in addition to the twelve guaranteed by FMLA, claims incurred in weeks 13 and 14 would likely not be covered by stop-loss, (since, again, the DOL requires that the two weeks of PTO be fully exhausted concurrently with the FMLA leave, resulting in twelve total weeks rather than fourteen). If the employer had offered those two additional weeks of continued coverage after the first twelve, it would have been neither FMLA nor PTO (i.e. it would have been a “favor” done by the employer), and therefore the stop-loss insurer could determine that it is not covered leave sufficient to invoke coverage under the stop-loss policy.

We therefore opined that allowing the employee to delay designation of FMLA for the purposes of extending coverage beyond 12 weeks would not only violate the DOL’s rules, but it may also result in issues with stop-loss reimbursement for claims incurred after the exhaustion of FMLA as proscribed by the DOL – both of which can carry serious repercussions.

While this issue deserves more analysis than what is described in this case study, this knowledge may have helped save the employer from violating federal regulations as well as potential stop-loss denials!


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Fiduciary Burden of the Quarter: Following the SPD – Unless Inconsistent with the Law!

You may have heard of the so-called “greatest of three” rule with respect to out-of-network emergency services. This regulation – codified at 45 CFR 147.138(b)(3). This regulation, in a nutshell, requires that for out-of-network emergency services, self-funded health plans allow claims at the greatest of (1) 100% of Medicare, (2) the amount the plan would allow for non-emergent out-of-network claims (in other words, Usual and Customary, Maximum Allowable Charge, etc.), or (3) the median contracted rate for emergency services.

Many health plans and TPAs disregard this “greatest of three” rule, either by not containing the proper plan language or simply not following the regulation. In fact, in the performance of The Phia Group’s PACE service, we often need to ask our clients regarding their median contracted rate for emergency services – and we are sometimes informed that the TPA does not know.

They say “knowledge is power,” but in this case, “knowledge is compliance!” Without knowing each of those three elements, it is impossible to know which one is truly highest. This becomes especially dangerous for plans that pay out-of-network emergency claims based on Medicare rates; for such plans, it is incredibly common for the median contracted rate to be higher than the Plan’s chosen percent of Medicare – so knowing the median contracted rate can be the only way to compliantly adjudicate an out-of-network emergency claim.

There are two action items: first, make sure your SPDs are specific on this “greatest of three” rule, such that for non-contracted emergency claims, they are paid pursuant to this regulation – and second, make sure you are acutely aware of the median contracted rate for emergency services, since we have seen more and more providers raising this point in appeals of non-contracted emergency claims!

 

Success Story of the Quarter: The Balance-Billing “End Game”

A health plan had a member who was visiting some out-of-state relatives, and that member happened to sustain a non-emergent injury while playing frisbee with his family. He didn’t go to the emergency room, but instead (wisely!) visited a local Urgent Care facility, which referred him to a local ASC. The health plan of which this individual was a member utilized a small regional network in its home state, with Phia Unwrapped for non-network claims. Since neither the Urgent Care facility nor the ASC was not part of that regional network, this claim became subject to Phia Unwrapped, and was consequently priced at 165% of Medicare – a rate the health plan had chosen.

The ASC billed $17,000 for the eventual care provided, of which 165% of Medicare totaled around $7,500. The member was subsequently billed for the remainder.

The ASC was adamant that its billing was reasonable, and cited the fact that it had billed at only 375% of Medicare; when Phia’s balance-billing support team pointed out that 375% of Medicare is not a reasonable amount, the provider outright refused to negotiate its bill, and continued to bill the patient. The refusal to negotiate is a rare stance, but this ASC was so confident in its ability to collect that it felt it was appropriate.

Unfortunately for this ASC, the particular benefit plan and TPA had had enough with this type of provider mentality; after much discussion, the TPA and plan – with Phia’s assistance – engaged local counsel to file a lawsuit on behalf of the patient to challenge the provider’s billing as unreasonably high. Prior to that filing, we warned the ASC that if we were unable to settle, litigation would likely ensue, but the ASC balked in disbelief.

Fast-forward about two weeks: the very same day the complaint was served upon the ASC, we received correspondence indicating that the ASC would accept Phia’s prior offer of an additional $1,500 to close the claim.

New Service Offered by Phia: Patient Defender

The Phia Group is proud to introduce its “Patient Defender” program. For a small PEPM fee, every plan participant has access to legal representation against lawsuits targeting patients, or crippling balances being sent to collections, when efforts to amicably resolve these disputes fail, Patient Defender is the ultimate weapon in the battle against abusive balance billing tactics. Best of all, Patient Defender can be coupled with any type of health benefit plan – from reference-based pricing plans to traditional network plans; if and when a patient is threatened by these increasingly aggressive tactics, Patient Defender will be there.

Patient Defender finally plugs the gap that has existed across the industry in relation to reference-based pricing programs and balance billing concerns. With Patient Defender, a small PEPM rate ensures that a trusted law firm is placed on retainer, ready and willing to assist the patient when balance-billing occurs. Health plans, TPAs, and brokers can now contain costs while knowing that patients have a legal advocate standing by.

To learn more about Patient Defender or any of The Phia Group’s services, please contact our Vice President of Sales and Marketing, Tim Callender, Esq., at 781-535-5631 or tcallender@phiagroup.com.

 


 

Phia Fit to Print:

• BenefitsPro – Drug manufacturer coupons and out-of-pocket limits: What employers need to know – September 23, 2019

• Self-Insurers Publishing Corp. – Reference-Based Pricing: Pitfalls For A New ERA – September 3, 2019

• BenefitsPro – Universal health care: Comparing what looks nice on paper to reality – August 26, 2019

• Self-Insurers Publishing Corp. – How Self-Insured Health Plans Are Helping Employers Compete In A Challenging Talent Marketplace – August 5, 2019

• BenefitsPro – Blocking TV drug price disclosures: What's next? – July 31, 2019

• Free Market Healthcare Solutions - Senate Finance Committee Tackles Prescription Drug Prices – July 21, 2019

• Self-Insurers Publishing Corp. – Big Pharma Facing Big Losses Tied To Opioid Epidemic Fallout – July 4, 2019

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From the Blogosphere:

Lots of Moving Parts. Put your Reference-Based Pricing knowledge to the test.

Controversy Surrounds the Most Expensive Drug in the World. A drug designed to help kids that will bankrupt their parents.

There’s a New Notice on the Block. On July 17, 2019 the Internal Revenue Service issued Notice 2019-45.

Health Care “Cadillac Tax” Repeal Bill Passed by the House. This Cadillac Tax could hit your wallet and leave a mark.

Network Contract Drafting: You’re Doin’ It Wrong. Watch you contract language!

 

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

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Webinars

 

• On September 17, 2019, The Phia Group presented, “2020 Renewal Season - Decisions Today, Uncertain Tomorrow,” where we discuss important issues impacting plan renewals, address known roadblocks, and perform an assessment of the candidates’ positions on healthcare – with an eye toward what we should be doing today to prepare for an uncertain tomorrow.

• On August 21, 2019, The Phia Group presented, “Back to School: 2020 Renewals,” where we provide the education needed to help you meet your obligations and keep your business safe – and provide the information you need to earn a “passing grade” during renewal season!

• On July 23, 2019, The Phia Group presented, “Trump’s Executive Order on Transparency: How it Will Effect Each Segment of Our Industry,” where we discuss the executive order point by point; they’ll touch on what they like and don’t like about it, and – more importantly – what this all means for you.

Be sure to check out all of our past webinars!



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Podcasts:

Empowering Plans
 

• On September 18, 2019, The Phia Group presented “Politics! Politics! Politics!,” where our hosts, Ron Peck and Brady Bizarro, discuss Obamacare, the state of health care versus health insurance, and the political environment as we move toward the 2020 election.

 

Face of Phia

 

• On September 4, 2019, The Phia Group presented, “Crunching Numbers with Desmond Campbell,” where our host, Ron Peck, sits down with Desmond Campbell, the man, the myth, the legend.

• On August 16, 2019, The Phia Group presented, “The Fine Fan Club!,” where our hosts, Adam and Ron, learn more about the life and background of Andrew Fine, Phia’s Lead Intake Specialist.

• On August 1, 2019, The Phia Group presented, “The Magical Kingdom!,” where our hosts, Adam and Ron, interview Mattie Sesin, our Director of Recovery Services.

 

Tales From the Plan

 

• ON September 23, 2019, The Phia Group Presented, “A Vision for Savings,” where Adam Russo and Michael Vaz sit down to discuss his experience with The Phia Group’s health plan and how he was able to save money for the plan and get rewarded for doing so.

• On July 17, 2019, The Phia Group presented, “Direct & To The Point!,” where The Phia Group’s VP of Legal Recovery Services, Chris Aguiar, Esq., discusses his experiences before and after becoming a happy participant in Direct Primary Care.

• On July 8, 2019, The Phia Group presented, “Mrs Peck, It’s Cancer…,” where our host, Ron Peck, tells us about his family’s battle against cancer, and lessons we can all learn from their experience.

Be sure to check out all of our latest podcasts!



 

 

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The Phia Group’s 2019 Charity

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

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

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

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

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

 

Back to School

Our friends from the Boys & Girls Club of Brockton are going back to school, and the Phia Family wanted to send them some school supplies to go back to school with. The Phia family donated a total of 3,500 school supplies/backpacks and $1,700 in monetary donations. We hope all of the amazing children are enjoying their new school supplies!

 

Volunteer Day

The Phia Family was out and about a few months back, celebrating our annual volunteer day at the Boys & Girls Club of Brockton. There were a variety of activities for the kids to participate in, between archery, rock climbing, basketball, hiking, and so much more. In addition to partaking in activities with the kids, we all got to see the new pavilion that was donated by The Phia Group. Next year, we are planning on decorating the pavilion for the kids. That being said, we are already looking forward to next year!



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The Stacks

Reference-Based Pricing: Pitfalls For a New Era

By: Jon Jablon, Esq. – September 2019 – Self-Insurers Publishing Corp.

How many times have you read an article or listened to a sales pitch about how great reference-based pricing is? RBP can add a lot of value, and many of us have seen that first-hand. But that is not the purpose of this article. As a consultant in the self-funded industry, The Phia Group has lots of opportunities to review and assess reference-based pricing plans and various claims situations. We have seen plans experience a great deal of RBP success – but we have also seen many RBP failures.

As many of you reading this have found out the hard way, and often unexpectedly, there are certain ways that RBP can go poorly and cause harm to an employer’s health plan, employee base, or even business reputation.

Click here to read the rest of this article


How Self-Insured Health Plans Are Helping Employers Compete In A Challenging Talent Marketplace

By: Philip Qualo, J.D. – August 2019 – Self-Insurers Publishing Corp.

Prior to joining The Phia Group, LLC, an experienced health care cost-containment company specializing in self-insured plans, my knowledge and experience with the self-insured industry could fit on the tip of my pinky. My previous work experience was exclusively in the fully-insured sector, where I quickly learned that uttering the words “self-insurance” was considered almost offensive. On a more personal level, I had been covered under various fully-insured health plans since my very first job after graduating law school. From the start, my experience with fully-insured plans jaded my perception of health benefits. I eventually accepted that medical insurance was a necessary evil that I would have to learn to live with. Although my employers genuinely cared about the well-being of their employees, the ability to offer comprehensive medical benefits became increasingly difficult due to the monumental annual increases in the cost of fully-insured coverage.

Click here to read the rest of this article

 

Big Pharma Facing Big Losses Tied To Opioid Epidemic Fallout

By: Sean Donnelly, Esq. – July 2019 – Self-Insurers Publishing Corp.

In 2017, a total of 70,237 people in the United States died from a drug overdose. A staggering 67.8% of those deaths involved the use of opioids, a startling escalation that has been classified as a national epidemic. Deaths attributed to synthetic opioids have become increasingly prevalent, accounting for 59.8% of all opioid overdose deaths.

Every day, an average of 46 people in the United States die from overdoses specifically involving prescription opioids. The highest prescription opioid-involved death rates in 2017 were in West Virginia, Maryland, Kentucky and Utah. According to the National Institute on Drug Abuse, drug overdose deaths involving opioids that were prescribed rose from 3,442 in 1999 to 17,029 in 2017.

Click here to read the rest of this article

 

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

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Phia’s 2019 Speaking Engagements:



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

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

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

• 3/19/2019 – SIIA Self-Insured Health Plan Executive Forum – Charlotte, NC

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

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

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

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

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

• 4/8/2019 – National Beer Wholesalers Association Legislative Conference – Washington DC

• 4/12/2019 – FMMA 2019 Annual Conference – Dallas, TX

• 4/23/2019 – Johns Hopkins Industry Education Series – Baltimore, MD

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

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

• 4/26/2019 – Society of Professional Benefit Administrators Annual Conference – Washington, D.C.

• 5/2/2019 – MassAHU Benefest 2019 Conference – Westborough, MA

• 5/14/2019 – Cypress Unversity – Las Vegas, NV

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

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

• 7/16/2019 – HCAA TPA Summit – Dallas, TX

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

• 8/20/2019 – Pritchard & Jerden Employee Benefits Forum – Brookhaven, GA

• 9/17/2019 – WebTPA Annual Conference– Dallas, TX

• 9/19/2019 – Employee Benefits Planning Association Conference– Seattle, WA

• 9/30/2019 – SIIA National Educational Conference & Expo – San Francisco, CA

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

 

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Get to Know Our Employee of the Quarter:
Lyneka Hubbert

Lyneka is a truly dedicated case handler for the Provider Relations department. She has a vast knowledge of the most proficient and effective ways to work each file. Perhaps even more importantly, she is a great communicator with our clients. One of the most important aspects of this role is to keep our clients updated and confident in the work we are doing. We need to present a clear understanding of where our files stand while providing our clients with multiple options on how we can proceed. Lyneka does a fabulous job of communicating these types of things to our clients in a timely manner. She is persistent with the providers when trying to get a balance written off or a settlement reached. She explores all possible arguments with the providers so that she can have optimum success with her files.

She is also a great team member and is always willing to go above and beyond what is expected of her. Whether this means staying late, helping a team member catch up on work, or executing tasks not normally assigned to her, she is always there to step up with a positive attitude.

 

Congratulations Lyneka, and thank you for your many current and future contributions.

 

 


Phia News

 

PACE® Certification Has Arrived!

The PACE Certification program educates you using 3 distinct chapters of information:

Chapter One
Explore the ins and outs of self-funding while learning about its risks and rewards. This chapter will transform any individual into a self-funding pro.

Chapter Two
Take a deeper dive into the laws that apply to self-funded plans. We cover it all, from federal preemption to adverse benefit determinations and appeals.

Chapter Three
Explain what PACE is, what PACE does, and how it's obtained, implemented, and utilized.

The PACE Certification program is free of charge and creates immense value for your organization. By going through the Certification program, you, or a select person, or team, within your organization, can become PACE Certified. Once PACE Certified, the Program participant(s) will become highly educated PACE business owners and will serve to assist your organization in growing your PACE business, enhancing your PACE revenue, and assuring your appeals processes are the most compliant and best in the industry. Those who complete the Certification will also receive a PACE Certification Fact Sheet, providing an easy to understand summary of the content and best practices covered, which will allow you to maximize the lessons learned within your business.

Additionally, the PACE Certification program provides education on self-funding in general, claims and appeals regulatory education, and overall best practices surrounding fiduciary duties, claims, and appeals.

Please see the PACE Certification flyer, as well as this video for more information.

Please contact Michael Vaz (mvaz@phiagroup.com) for more information and to sign up today!

 

Team Building

After a fun day of volunteering with the children from the Boys & Girls Club of Brockton, the Phia Family took the remainder of the day to work on some good, old-fashioned team-building exercises. Throughout the day, the Phia Family was split into groups and faced with a variety of different tasks. After all of the exercises were complete, the Phia Family felt closer than ever. Check out the picture below to see how exciting the games were!

 

Our Louisville, KY Office is Now Open

The Phia Group, LLC is pleased to announce the opening of a new office in Louisville, KY. Under the leadership of the newly appointed Vice President of Operations and Total Quality Management, Scott Byerley, Esq., this new location strengthens The Phia Group's presence in the central United States - just as it did in the west with its Boise, ID, office - continuing to allow The Phia Group to identify, recruit, and hire the most talented professionals, nationwide.

With a focus on subrogation and claims recovery, as well as other cost containment activities, the Louisville team shares the same passion as the entirety of the "Phia Family," to deliver robust yet affordable health benefits to as many hard working Americans as possible. " We're very excited to bring The Phia Group to Louisville. This is a continuation of year after year growth for The Phia Group," remarked Mr. Byerley. "The Phia Family made this happen with their dedication and passion for everything cost containment and reducing the costs of healthcare."

 

 

Cornhole Tournament and Phia BBQ

It has become tradition at The Phia Group to celebrate the last day of summer with great games, food and conversations. This year we invited all Phia employees to enter into our cornhole tournament. As you can see, we had a great turnout. The winners of the cornhole tournament were Harry Horton and Jeff Hannah. Congrats on the win, it was a close game!

 


 

Job Opportunities:

• Health Benefit Document Drafter

• Health Benefits - Case Investigator I

• Claim and Case Support Analyst

• Client Intake Specialist

• Overpayments Care Representative

• Customer Care Representative

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

 

Promotions

• Kelly Dempsey, Esq. has been promoted from Director, Independent Consultation and Evaluation Services to Director, Consulting and ICE Services

• Dylan Fry has been promoted from Marketing & Accounts Intern to Claim Recovery Specialist

• Dante Tylerbest has been promoted from Customer Service Representative to Overpayment Recovery Assistant

• Denise Swienc has been promoted from Customer Service Representative to Case Investigator


 

New Hires

• Crystal Cascante was hired as an Intern

• William Lovejoy was hired as an IT Systems Administrator

• Craig Malcolmson was hired as an Intake Specialist

• John Shearer was hired as a Health Benefit Plan Admin - Attorney I

• Shauna Mackey was hired as an Associate General Counsel

• Brian Wentworth was hired as a Claims Specialist II, Provider Relations

• Dillon Fosa was hired as a Marketing & Accounts Coordinator

• Larice Booker was hired as an Overpayments Recovery Specialist

• Brittney Willoughby was hired as a Sr. Claims Recovery Specialist

• Elizabeth McAlister was hired as a Sr. Claims Recovery Specialist

• Melanie Brown was hired as an Intake Specialist

• Ashley Jancaterino was hired as an Intake Specialist

• Cornelius Mance was hired as an Attorney I

• Ervin Morice was hired as a Case Investigator I

• Jason Pence was hired as a Sr. Claims Recovery Specialist

• Heather Breckenridge was hired as a PACE Client Intake Coordinator

• Allison Britton was hired as a Case Investigator I

• Aditya Sukumar was hired as a Business Analyst



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info@phiagroup.com
781-535-5600

The Stacks - 4th Quarter 2019

Reference-Based Pricing: Pitfalls For a New Era

By: Jon Jablon, Esq

How many times have you read an article or listened to a sales pitch about how great reference-based pricing is? RBP can add a lot of value, and many of us have seen that first-hand. But that is not the purpose of this article. As a consultant in the self-funded industry, The Phia Group has lots of opportunities to review and assess reference-based pricing plans and various claims situations. We have seen plans experience a great deal of RBP success – but we have also seen many RBP failures.

As many of you reading this have found out the hard way, and often unexpectedly, there are certain ways that RBP can go poorly and cause harm to an employer’s health plan, employee base, or even business reputation.

RBP is a powerful payment methodology used by thousands of health plans around the country, but like so many cost-containment tools, a full understanding of the entire process and a strong implementation of the key elements are absolutely crucial to its success – and even seemingly inconsequential flaws in the process can prove to be problematic down the road. Let’s go through some of the biggest pitfalls.

Lack of Preparation: Poor Supporting SPD Language

Like so many things in the self-funded industry, a health plan’s rights with respect to RBP pricing are only as good as the plan’s language. A plan document should contain language to both allow the plan to pay claims as it sees fit, and to create arguments against balance-billing. A lack of adequate plan language makes the health plan especially vulnerable to appeals and lawsuits.

To provide a practical example, I was recently presented with a case where a health plan had neglected its Plan Document through the years. It was last restated in the late ‘90s, it had over 30 amendments, and it was just plain old confusing to read. That group utilized an RBP methodology, and yet there was a complete lack of payment limitation language, except for one sentence: “Expenses allowed at an amount the Supervisor deems reasonable.”

There are two main problems there: one is that the Supervisor was the TPA (so the first moral of this story is that TPAs should be wary of that type of unexpected liability), and the other is that this does not reference the 155% of Medicare at which rate the group’s RBP vendor had been pricing claims for six months.

What happened next? A large hospital system decided that it wanted to appeal, rather than jumping straight to balance-billing, and in the course of the appeal, the Plan Document was produced. I can just imagine the hospital’s attorney’s eyes filling with gigantic dollar signs when it saw that non-existent RBP language; the result is that while the vendor was repricing claims and raking in its fee, the Plan Document had not supported the program, and the Plan had not limited its exposure. Rather than face a lawsuit, the Plan had no choice but to pay the hospital’s demand in full… and hopefully amend its Plan Document language as soon as possible.

The seldom-referenced section 402(b)(4) of ERISA requires a health plan to “specify the basis on which payments are made to and from the plan.” There is precious little law to interpret exactly what that means, but it is the backbone of the sentiment that “your rights are only as good as your language,” and it seems safe to say that the particular provision within this health plan does not meet the relatively low standard of specifying how payments are made.

Poor Explanations: Inaccurate EOBs

There are two extremely common mistakes that health plans make when generating Explanations of Benefits with respect to RBP claims: (1) providing inaccurate or nonspecific remark codes, and (2) calling the amount over the Plan’s allowable amount a “discount.”

The former is a compliance problem; ERISA requires that EOBs contain not only an explanation of why the claim was priced as it was (according to the regulations at 29 CFR 2560-503.1, “The specific reason or reasons for the adverse determination”), but also a reference to the specific provision in the Plan Document that allows the denial (“Reference to the specific plan provisions on which the determination is based”).

The latter is a business issue; a “discount” is something that is allowed by the provider (typically in the contractual sense), whereas the excess or disallowed amount is, by definition, not agreed-upon in advance by the provider. Incorrectly using the term “discount” is problematic because not only is it incorrect, but it starts all parties out on the wrong foot – and working with a hospital to write off a bill is much more difficult when the provider goes into the conversation already thinking that the payor has tried to take advantage.

Incorrect Implementation: Applying RBP Payments to Contracted Claims

RBP results can be so good that some employers are tempted to apply RBP to contracted claims as well, the theory being that the contracted rate is still higher than what the plan deems reasonable, so the RBP savings are desirable for all claims, even contracted ones. While the contracted rate may well be just as arbitrary and overbilled as the original billed charges, it’s important to remember that contracts are legally-binding instruments, and contracted providers sometimes have powerful legal backing.

This is perhaps another topic for another article – suffice it to say that unless the applicable fee agreement allows it, the health plan’s chosen pricing cannot be applied to contracted claims without violating that agreement. It is a frighteningly-popular misconception within the self-funded industry that network or other fee agreements generally allow health plans to apply the contractual discount on top of the plan’s chosen edits or reductions (including Medicare rates).

Consider the example of a $50,000 claim subject to a mandatory contractual 10% discount, yielding a contractual payment rate of $45,000. The payor priced the claim at 150% of Medicare based on the Plan Document, which totaled $10,000. While the contractual rate would require that this claim be paid at $45,000, an alarming number of health plans and TPAs will apply that contractual 10% discount on top of the Medicare-based $10,000 (yielding payment of $9,000). Given the large discrepancy between payment of $9,000 and payment of $45,000, it is not difficult to assume that a contracted medical provider will push back, and hard.

Bad Negotiation Tactics: Not Having an End-Game

One of the hallmarks of a successful RBP program is patient protection, which can come in many forms – including direct contracts, case-by-case settlements, balance-bill indemnification, attorney representation, and other options, depending on the particular program used.

Settling claims is perhaps the simplest way of protecting patients; by eliminating balances via settlements, balance-billing is extinguished. Likewise, if a third party offers to indemnify the patient, then the patient is protected in that manner as well – and hiring litigation counsel on behalf of the patient can be an effective tool in combatting balance-billing or spurring settlement negotiations where a provider was otherwise hesitant to negotiate.

As has been proven time and time again, the state of the industry is such that medical providers are generally permitted to charge any amounts they choose. Charge masters are arbitrary yet still enforced by many courts, and providers are free to send patients to collections or file lawsuits when they have not received their full billed charges – and some providers feel even more inclined to do that if the provider has been paid at a percentage of the Medicare rate. Many medical providers treat a Medicare-based payment as a personal assault on the value of their treatment, and seek to abuse health plans even more because of that!

Some consider there to be two “separate” responsibilities to settle RBP claims or otherwise provide patients an avenue of protection from balance-billing – a social responsibility, and a legal responsibility. The social responsibility can be thought of in terms of the employer’s desire to provide its employees with sufficient coverage and a desirable program of health insurance; even though reference-based pricing and balance-billing are permitted by law, most employers utilizing this type of model are typically loathe to allow patients to be balance-billed, and desire to settle claims as part of the normal RBP process. For many employers, seeing a valued employee be sent to collections or become the defendant in a hospital’s lawsuit is the worst-case scenario.

There is, despite popular misconception, a legal responsibility to settle claims as well. A few years ago now, the Department of Labor came out with set 31 of its series on Frequently Asked Questions on the Affordable Care Act. While previous guidance provides that balance-billed amounts do not count toward the patient’s out-of-pocket limit, this FAQ indicates that that rule applies only when there is an “adequate network of providers” who will refrain from balance-billing. When there is no adequate network of providers, however, the guidance suggests that health plans must in fact pay for balance-billed amounts that exceed the patient’s out-of-pocket max.

Although the Department of Labor has neglected to provide additional guidance and make sure people understand what the FAQ guidance really means, the general opinion is that health plans must have a systematic program of settling balance-bills one way or another – and in fact most health plans utilizing RBP do have some system, whether direct contracts, a narrow network, or simply making sure they settle claims on the back-end. This is certainly a relevant factor for reference-based pricing, but not necessarily one that is prohibitive. This is an indication that RBP must evolve in order to remain compliant – and evidence that the threat of walking away the negotiation table may not be an option for many health plans.

Thinking That RBP is “All or Nothing”

When employers are sold on RBP by TPAs, brokers, or vendors, often those entities fall into the common sales trap of promoting only the positive aspects of RBP, without painting a full picture of some of the potential snares as well. As a result, since RBP results do tend to add value, many employers immediately jump to leaving their respective PPO networks and applying the RBP methodology to all claims. After all, more claims subject to RBP theoretically means more added value, right?

In practice, however, it often proves extremely beneficial to utilize some system of agreements as part of the overall RBP process. This ensures that employees have “safe harbors” to visit, promoting employee security, ease of use, and even compliance (see above!).

There are no pre-set requirements for what RBP is or is not; though many enter into it with a set of preconceived notions of how it should work, an RBP program can be tailored to suit a given health plan’s needs (subject to the vendor’s and TPA’s standard practices and capabilities, of course). Many health plans using RBP combine it with narrow networks, direct provider contracts, physician-only networks, or even primary networks (using RBP only for out-of-network claims).

Since RBP is meant only for non-contracted claims (see above, again!), RBP can in theory be used for any claims that the health plan has not previously agreed to pay at a certain rate.

On that note, the last point:

Not Realizing that RBP is Just U&C for the Modern Era!

When providers say “we expect payment at U&C” or similar things, it can be useful to take a step back and think about what RBP really is. At its core, RBP is just a way of pricing claims. It’s not a unique type of health plan, nor is it a way of changing the claims processes. It’s simply a way to determine how much money to pay on a given claim.

“Hang on,” you may be saying, “but isn’t that what Usual and Customary is?” Yes, it is! RBP can be conceptualized in many ways, but one of the most familiar is as a way of determining U&C. Just like RBP, “Usual and Customary” is not necessarily a pre-set term with a well-defined meaning; it is the way that a health plan determines what is payable. Interestingly, hospitals tend to suggest that “U&C” has to be defined as what other area providers charge for the same service, yet there is no support for that requirement. In fact, many health plans define “usual and customary” as an amount that hospitals commonly accept as payment for a given code. That can take into account private payors and even – gasp! – Medicare.

The employer determines the definitions within the Plan Document. If your plan defines its payable amount as U&C, and bases that amount on Medicare rates, then you can honestly say that your plan does pay U&C.

In conclusion: take care to ask your vendor – or potential vendor – lots of questions about their processes and how they manage these and other elements of their respective programs. With so many vendors in the industry, there can be lots of conflicting information, so make sure you’ve got your facts straight prior to signing on the dotted line.

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How Self-Insured Health Plans Are Helping Employers Compete In A Challenging Talent Marketplace

By: Philip Qualo, J.D.

Prior to joining The Phia Group, LLC, an experienced health care cost-containment company specializing in self-insured plans, my knowledge and experience with the self-insured industry could fit on the tip of my pinky. My previous work experience was exclusively in the fully-insured sector, where I quickly learned that uttering the words “self-insurance” was considered almost offensive. On a more personal level, I had been covered under various fully-insured health plans since my very first job after graduating law school. From the start, my experience with fully-insured plans jaded my perception of health benefits.  I eventually accepted that medical insurance was a necessary evil that I would have to learn to live with. Although my employers genuinely cared about the well-being of their employees, the ability to offer comprehensive medical benefits became increasingly difficult due to the monumental annual increases in the cost of fully-insured coverage. 

As employers who sponsor fully-insured health plans are generally limited to an “off the shelf” one size fits all plan options designed by their respective carriers, the limited ability to design benefits to meet the specific needs of their employees is an additional obstacle. As a fairly healthy individual who has never broken a bone or required surgery (knock on wood), I have spent most of my adult life stuck paying a premium for benefits that I rarely used. I viewed medical insurance as an unpleasant necessity, expensive but necessary just in case I was hit by a bus. This was especially the case when I experienced the dreaded fully-insured high deductible health plan. Although high deductible plans have become a popular compromise for employers to keep healthcare premiums at an affordable rate, as a low claims plan participant I struggled with the fact that I was not only paying a high premium, but also paying out of pocket for occasional provider visits and generic medications from my own hard-earned money. Due to my infrequent need to seek medical services, in all my years covered by a high deductible health plan, I never reached my deductible amount – not once. So, in reality, I was paying for coverage that I never really used.  Unfortunately, the astronomical profits that fully-insured carriers were reporting at that time did not help to alleviate what I perceived as an unpleasant necessity.

Then I interviewed with The Phia Group, my current employment, who not only specializes in self-insured health plans, but practices what they preach by sponsoring their own self-insured health plan for their employees. Where most employers usually avoid describing their health benefits in the interview process, my experience interviewing with The Phia Group was complete the opposite, and opened my eyes to not only the beauty of self-insured health plans, but how it can be used as an effective recruiting tool. “Ummm… can you repeat that?”, I exclaimed, as my eyes widened in bewilderment. “Which part?”, the Talent Acquisition Specialist asked, “The part about no co-pay for generic medications, no co-pay if I choose to take part in the Direct Primary Care (“DPC”) program, or the list of  incentives that can actually result in extra cash in your pocket for helping the plan contain costs?” Needless to say, this was the first time ever, in my lengthy professional career that I ever considered healthcare benefits as a factor in making my decision to work for an employer. Since enrolling in our health plan over a year ago, my health plan contributions have been consistent and more affordable than they’ve ever been. Most importantly, my trauma from paying the full cost for health services under a fully-insured high deductible health plan had finally faded, as the total I have spent on healthcare since I joined The Phia Group has totaled $0. This is when I first realized how important offering and sponsoring a self-insured plan can be, as self-insurance can be  an employer’s “secret weapon” for marketability in an ever-increasing competitive market for top talent.

Why is There a Struggle to Find & Retain Top Talent?

In May 2019, the White House announced that the unemployment rate in United States had dropped to 3.6 percent—the lowest unemployment rate since December 1969, according to a Bureau of Labor Statistics’ (“BLS”) household survey. Although this was great news for our economy as a whole, a low unemployment rate can be a challenge for employers seeking to expand their workforce and attract and retain top talent. Although U.S. job growth has been consistently strong, a low unemployment rate indicates there are more jobs than there are job seekers.

Another challenge employers are currently facing is increasingly high turnover rates, or what is generally referred to as high “quit rates” meaning voluntary separations initiated by employees. According to the April 2019 Bureau of Labor Statistics Job Openings and Labor Turnover Survey Highlights, high quit rates are indicative of a robust job market. Therefore, the quit rate can serve as a measure of workers' willingness or ability to leave jobs. According to the survey, there were 3.5 million quits in the U.S. in April 2019. This number far exceeded the number of discharge or layoffs for April, which was estimated at 1.8 million. Employers who sponsor self-insured plans and who choose to use the services of Third Party Administrators (“TPAs”) have been found to save more money on their health plans per enrolled person than they would have with traditional insurance. This is because TPAs work to manage an employer’s self-insured plan based on the employer’s specifications instead of according to an insurance carrier’s policy.

The Recruiting & Retention Advantages for Employers Who Sponsor Self-Insured Health Plans 

Due to the limited pool of job seekers, and increasingly high quit rates, employers are reviewing their compensation packages, and more importantly, their benefit offerings, to determine what leverage they have to compete in this employee-centered job market.  In a 2017 survey conducted by the Society for Human Resource Managers (“SHRM”) on the strategic use of benefits, the results yielded that organizations that take a strategic approach to their benefits programs, by leveraging benefits to recruit and retain employees, are nearly twice as likely to have more satisfied employees and to report better business performance compared with organizations that are not strategic with their benefit programs. This survey  reveals that benefits are a key driver in recruitment and job satisfaction. If an employer’s offerings fail to meet employees’ health and financial demands, they risk losing top talent to organizations with more complete coverage options.

Employers who sponsor a self-insured health plan have a notable advantage over employers who offer fully-insured coverage, especially when it comes to adjusting their benefits to  attract top talent. In order too meet the unique needs of job seekers and candidates as well as current employees, self-insured health plans allow for more flexibility and control over the terms of a plan. Employers have the opportunity to work directly with their service providers to customize their benefits to fit their needs and adjust them over time as needed. More importantly, plan sponsors have the ability to incorporate cost-containment incentives for their employees that allows the employer to not only save money, but also use those savings to enhance their plan offerings and offer them at a low cost. On the other hand, employers who offer fully-insured health plans are generally limited to the costly options available from the carriers within their respective states. In this context, budget conscious employers are usually forced to forego the more comprehensive health plan for the most affordable option, which usually has less than favorable coverage and results in employee dissatisfaction.

Bottom Line

According to a survey conducted by America’s Health Insurance Plan, 56 percent of U.S. adults with employer-sponsored health benefits said that whether or not they like their health coverage is a key factor in deciding to stay at their current job. In addition, the survey found that 46 percent of U.S. adults said health insurance was either the deciding factor or a positive influence in choosing their current job.

For employers who offer self-insured health coverage, the ability to design and modify their plans and enhance savings can be a valuable resource to attract top talent in this expanding job market. In sum, communicating the value of self-insured health benefits to job-seekers, potential job candidates, and existing employees, can be an employer’s secret weapon in competing for talent in this job market as well as employee retention.

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Big Pharma Facing Big Losses Tied To Opioid Epidemic Fallout

By: Sean Donnelly, Esq

Background

In 2017, a total of 70,237 people in the United States died from a drug overdose.  A staggering 67.8% of those deaths involved the use of opioids, a startling escalation that has been classified as a national epidemic.  Deaths attributed to synthetic opioids have become increasingly prevalent, accounting for 59.8% of all opioid overdose deaths.

Every day, an average of 46 people in the United States die from overdoses specifically involving prescription opioids.  The highest prescription opioid-involved death rates in 2017 were in West Virginia, Maryland, Kentucky and Utah1.  According to the National Institute on Drug Abuse, drug overdose deaths involving opioids that were prescribed rose from 3,442 in 1999 to 17,029 in 20172.

In particular, oxycodone (such as OxyContin®), hydrocodone (such as Vicodin®), methadone, and fentanyl have been identified as the most common drugs associated with prescription opioid overdose deaths3.  Fentanyl, a synthetic opioid used to treat severe pain, is one of the chief agents being linked to the recent rash of drug overdose deaths.  In 2011, Fentanyl was identified as being the cause of 1,663 deaths; in 2016, that figure surged to 18,335 deaths4.  Natural and semi-synthetic opioids, a category that includes oxycodone and hydrocodone, accounted for 14,495 deaths in the United States in 20175.  On a molecular level, oxycodone is nearly identical to heroin6.   

States Fight Back

Massachusetts

In the last decade, more than 11,000 people died from opioid-related overdoses in Massachusetts alone7.  Massachusetts patients who were prescribed opioids for more than one year were 51 times more likely to die of an opioid-related overdose8.  The Attorney General for Massachusetts, Maura Healey, alleged in a recent lawsuit9 against Purdue Pharma that the pharmaceutical giant possessed actual knowledge that its prescription opioid OxyContin was leading to overdose deaths.  Since 2009, in Massachusetts alone, 671 people who filled prescriptions for opioids manufactured by Purdue ultimately died from an opioid-related overdose10.  Yet, Healey claims that the company turned a blind eye towards the evidence of OxyContin’s addictive qualities and instead engaged in a large-scale sales blitz in Massachusetts to push sales of the prescription drug while deceiving doctors and patients.  Pleadings filed by Healey assert that Purdue’s OxyContin offensive included threatening to fire sales reps whose physician targets failed to write sufficient opioid prescriptions, advocating that the powerful drug be used to treat elderly patients with arthritis, and obscuring the risk of addiction in its marketing materials. 

Healey’s case focuses on Purdue’s deceptive practices, which allegedly included making misleading claims in order to push more patients onto its opioids at higher doses and for longer amounts of time, while simultaneously diverting patients away from safer alternatives11.  Additional counts charge Purdue with creating a public nuisance of addiction, illness, and death and interfering with the public health by engaging in deceptive marketing practices that fostered a dangerous epidemic of opioid addiction in the state12.  Further, Healey contends that Purdue acted negligently and recklessly with regard to the known risks of its drugs13, including by intentionally targeting high-prescribing doctors and rewarding them with gifts and money in exchange for them prescribing more Purdue opioids14, even when Purdue knew that its opioids were being misused and harming patients.  In one instance, Purdue’s governing board had allegedly been warned by staff that two Massachusetts doctors had prescribed opioids inappropriately, but it failed to notify medical licensing officials.  Purdue made more than $823,000 off those two doctors alone in just two yearsi.

In March, Purdue’s attorneys filed a second motion to dismiss the case that labeled Healey’s allegations as “oversimplified scapegoating,” countering that the company neither created nor caused the opioid epidemic in Massachusetts15.  Instead, Purdue made the case that unlawful opioids like heroin and illicitly-produced fentanyl were the root cause of the great majority of opioid-related overdose deaths in Massachusetts16.  Accordingly, Purdue claimed that its FDA-approved OxyContin could not, as a matter of law, be considered the proximate or but-for “cause” of the state’s opioid crisis17.  The Massachusetts Attorney General’s Office is currently opposing Purdue’s motion.

Oklahoma

Oklahoma ranked as the leading state in the nation in terms of amount of opioids distributed per adult resident in 201618.  In 2018, nearly fifty percent of drug overdose deaths in Oklahoma were caused by pharmaceutical drugs.  In that same year, of the more than 3,000 Oklahoma residents who were admitted to a hospital for a non-fatal overdose, eighty percent of those overdoses were due to prescription opioid medications19.  At the epicenter of this epidemic, Purdue Pharma was again in the crosshairs of a state lawsuit centered on opioid addiction.  The case brought by Oklahoma, originally filed in June 2017 by the Oklahoma Attorney General’s Office, named opioid manufacturers Purdue Pharma, Johnson & Johnson, and Teva Pharmaceuticals as defendants.  Rather than face a televised trial, Purdue in this instance elected to settle with the state to the tune of $270 million.  The settlement funds will be used to establish an almost $200 million endowment at the Oklahoma State University’s Center for Wellness and Recovery for the purpose of addiction treatment and research.  More than $100 million of the settlement proceeds will be used to fund a new addiction treatment and research center at Oklahoma State University.  $20 million of that amount will be earmarked for addiction treatment medicines.  Another $12.5 million in settlement funds will be dedicated to use by cities and counties to help fight the opioid epidemic.  In late May, Teva Pharmaceuticals reached its own $85 million settlement with the state.  The case against the remaining defendant, Johnson & Johnson, is moving forward with a bench trial that began on May 28th

The complaint filed by the Oklahoma Attorney General20, Mike Hunter, revealed that Purdue’s OxyContin sales skyrocketed from $48 million in 1996 to $3 billion in 200921.  Hunter alleged that Purdue misrepresented the risks of opioid addition in its marketing materials and promoted unproven benefits in an effort to boost sales.  According to the complaint, Purdue caused “catastrophic damage” in Oklahoma by engaging in a false and deceptive marketing campaign that deluded both doctors and patients into thinking Purdue’s opioids were actually less harmful than had originally been warned by the medical community22.  Specifically, Hunter claims that Purdue falsely downplayed the risk of addiction associated with OxyContin and erroneously maintained that scientific studies had supported the prescription drug’s low risk of addiction23.  One Purdue sales manager is quoted in the complaint as being trained to say that OxyContain was “non-habit forming,” going so far as to admit he was instructed “to say things like [OxyContin] is ‘virtually’ non-addicting…It’s not right, but that’s what they told us to say.”24  The complaint also alleged that Purdue misrepresented the benefits of its opioids, including by falsely promoting that OxyContin had been studied for use with arthritis and recommending that it was effective in treating chronic non-cancer related pain25.  Abbe Gluck, a professor at Yale Law School, theorized that Purdue’s decision to settle the case was largely driven by its apprehension that these allegations by the state would be “publically aired against it during a televised trial,” thereby risking “exposure to what could have been an astronomical jury verdict.”26       

New York

For the first time since the onset of the opioid crisis, criminal charges have been levied against the individual executives running a drug distribution company.  The United States Attorney’s Office for the Southern District of New York (USAO), in cooperation with the New York Division of the U.S. Drug Enforcement Administration (DEA), announced in late April that criminal charges were filed against two executives of Rochester Drug Co-Operative, Inc.  Rochester, which is one of the largest wholesale pharmaceutical distributors in the United States, was accused of unlawfully distributing both oxycodone and fentanyl and conspiring to defraud the DEA.  Most notably, the company’s former chief executive officer and former chief compliance officer were both individually charged with the illegal distribution of controlled substances, a felony offense.  For its part, Rochester admitted culpability for the unlawful distribution and agreed to pay a $20 million fine and allow for future oversight of it operations by an independent monitor.  If Rochester adheres to the government’s terms over the next five years, the USAO has agreed to dismiss the charges against the company.  The press release from the USAO underscored that the unprecedented charges “should send shock waves throughout the pharmaceutical industry reminding them of their role as gatekeepers of prescription medication.”27 

With respect to the individual executives, the USAO alleged that they conspired to distribute oxycodone and fentanyl outside of the scope of professional practice and not for a legitimate medical purpose28.  The indictment alleges that they willfully failed to report suspicious orders of controlled substances to the DEA and likewise failed to advise the DEA that Rochester’s customers were diverting the controlled substances for illegitimate use29.  In particular, over an approximately five-year period, Rochester received 412 orders of fentanyl and 2,530 orders of oxycodone from its pharmacy customers that the company designated as “suspicious.”30  Of those almost 3,000 orders that Rochester’s internal compliance team red-flagged, the former executives only reported four total orders to the DEA at the direction of Rochester’s former CEO31.  One member of Rochester’s compliance team explicitly warned the CEO and other executives that this practice could place the company in the DEA’s “cross-hairs…because of [its] willful blindness and deliberate ignorance.”32  The former executives were also cited with having lied to the DEA about conducting due diligence on new pharmacy customers when no proper review was ever performed33.  These customers were ultimately supplied with opioids from Rochester despite the company and its executives allegedly knowing that the drugs were in turn being sold and used illicitly34.  Laurence Doud, the former CEO, was charged with one count of conspiracy to distribute controlled substances, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years, and one count of conspiracy to defraud the United States, which carries a maximum term of 5 years.  William Pietruszewski, the former Chief Compliance Officer, pled guilty in April to charges of conspiracy to distribute controlled substances, conspiracy to defraud the United States, and failing to file suspicious order reports with the DEA.                         

Proactive Options for Self-Funded Plans

Plan participants that misuse or intentionally abuse prescription opioids are more likely to incur high-dollar medical charges, whether in the form of emergency room visits, lengthy inpatient hospital stays, or recurrent physician visits.  Statistics provided by the Centers for Disease Control and Prevention indicate that over 1,000 people per day receive emergency medical services as a result of misusing prescription opioids35.  In 2014, there were over 1.27 million emergency room visits and hospital inpatient stays for opioid-related issues, which represented a 99% increase for emergency room treatment and 64% increase for inpatient care from just 200536.  These increased emergency room visits, extended hospitalizations, and even a rise in workers’ compensation claims stemming from opioid addiction are putting a considerable financial strain on employers and the plans they sponsor.  Opioid abuse can cost an employer-sponsored plan an additional $10,000 to $20,000 in annual excess costs per patient37.  Almost one-third of prescription painkillers covered by employer-sponsored plans are abused38.  Fortunately, there are a number of options available to self-funded plans to combat the epidemic and mitigate the rising costs associated with opioid abuse:

  1. Plan Design – Employers can customize their plans to discourage opioid abuse and instead incentivize participants to utilize pain management alternatives, such as acupuncture, chiropractic care, physical and behavioral therapy and heat-focused massage. 
  2. Insist on Compliance with CDC and FDA Guidelines – Employer-sponsored plans should confirm whether the providers in their networks are properly following opioid prescription guidelines established by the Centers for Disease Control and Prevention (CDC).  The CDC guidelines were established as a baseline for providers to follow to better ensure that opioids are prescribed safely and appropriately in order to minimize the chances of abuse or misuse.  Additionally, plans should take steps to make sure their participants are aware of, and diligently follow, the Food and Drug Administration’s (FDA) guidelines that instruct patients on how to properly discard surplus opioids before they can be accessed by other household members who do not have a prescription.     
  3. Establish a Limit – CDC studies have revealed that the likelihood of a patient becoming addicted to opioids spikes on day four of use.  Consequently, Plans may want to consider placing a three-day limit on the use of opioid prescriptions for initial pain treatment39.  Plans should work directly with their utilization management vendor and pharmacy benefit manager to establish strict dosage caps and dispensation/refill limits.     
  4. Plan Participant Education – Employers need to take proactive steps to ensure that their employees are fully-informed of the dangers of opioid addiction and misuse.  Group discussions and annual meetings are useful forums for discussing the dangers of opioid side effects, recognizing the symptoms of painkiller abuse, and identifying helpful resources available to employees such as substance abuse hotlines.
  5. Identify Vulnerable Participants – Plans should analyze their prescription drug data to identify plan participants with a history of excessive prescription drug use who may be more prone to abusing opioids.  Plans should then work with their vendors and administrators to preemptively reach out to providers and pharmacists in order to steer susceptible participants towards pain management alternatives, establish prescription limitations, and make such participants aware of assistance networks and other resources at their disposal to help them through substance abuse issues.   

1Preceding statistics derived from Scholl L, Seth P, Kariisa M, Wilson N, Baldwin G. Drug and Opioid-Involved Overdose Deaths — United States, 2013–2017. MMWR Morb Mortal Wkly Rep 2019;67:1419–1427. DOI: http://dx.doi.org/10.15585/mmwr.mm675152e1.  

2See National Institute on Drug Abuse, Overdose Death Rates (Revised January 2019). Retrieved from: https://www.drugabuse.gov/related-topics/trends-statistics/overdose-death-rates.

3Prescription Opioid Data, Centers for Disease Control and Prevention.  Dec. 19, 2018.  Retrieved from: https://www.cdc.gov/drugoverdose/data/prescribing.html.  

4Spencer, Merianne Rose; Warner, Margaret; Bastian, Brigham A.; Trinidad, James P.; and Hedegaard, Holly. National Vital Statistics Reports (Vol. 68, No. 3). National Center for Health Statistics, Centers for Disease Control and Prevention. Mar. 21, 2019. Retrieved from: https://www.cdc.gov/nchs/data/nvsr/nvsr68/nvsr68_03-508.pdf.

6First Amended Complaint at 8, Commonwealth of Massachusetts v. Purdue Pharma, L.P., et al, Mass. Superior Court, 1884-CV-01808 (BLS2). 

7Complaint at 4, Commonwealth of Massachusetts v. Purdue Pharma.

8First Amended Complaint at 8, Commonwealth of Massachusetts v. Purdue Pharma.

9See Commonwealth of Massachusetts v. Purdue Pharma, L.P., et al, Mass. Superior Court, 1884-CV-01808 (BLS2).

10First Amended Complaint at 9, Commonwealth of Massachusetts v. Purdue Pharma

11First Amended Complaint at 10, Commonwealth of Massachusetts v. Purdue Pharma

12First Amended Complaint at 270-272, Commonwealth of Massachusetts v. Purdue Pharma.    

13First Amended Complaint at 272, Commonwealth of Massachusetts v. Purdue Pharma.

14First Amended Complaint at 12, Commonwealth of Massachusetts v. Purdue Pharma.

15Purdue’s Memorandum of Law in Support of its Motion to Dismiss Amended Complaint at 1, Commonwealth of Massachusetts v. Purdue Pharma

16Purdue’s Memorandum of Law in Support of its Motion to Dismiss Amended Complaint at 5, Commonwealth of Massachusetts v. Purdue Pharma.

17See Purdue’s Memorandum of Law in Support of its Motion to Dismiss Amended Complaint at 3, Commonwealth of Massachusetts v. Purdue Pharma.

18Petition at 2, State of Oklahoma v. Purdue Pharma L.P. et al., District Court of Cleveland County, State of Oklahoma, CJ-2017-816. 

19Gerszewskii, Alex. Attorney General Hunter Announces Historic $270 Million Settlement with Purdue Pharma, $200 Million to Establish Endowment for OSU Center for Wellness. Office of the Oklahoma Attorney General. Mar. 26, 2019.  Retrieved from http://www.oag.ok.gov/attorney-general-hunter-announces-historic-270-million-settlement-with-purdue-pharma-200-million-to-establish-endowment-for-osu-center-for-wellness.

20See State of Oklahoma v. Purdue Pharma L.P. et al., District Court of Cleveland County, State of Oklahoma, CJ-2017-816.

21Petition at 1, State of Oklahoma v. Purdue Pharma.

22Petition at 12, State of Oklahoma v. Purdue Pharma.

23Petition at 12, State of Oklahoma v. Purdue Pharma.

24Petition at 13, State of Oklahoma v. Purdue Pharma.

25Petition at 12-13, State of Oklahoma v. Purdue Pharma.

26Hoffman, Jan. Purdue Pharma and Sacklers Reach $270 Million Settlement in Opioid Lawsuit.  The New York Times.  Mar. 26, 2019.  Retrieved from: https://www.nytimes.com/2019/03/26/health/opioids-purdue-pharma-oklahoma.html.

27Manhattan U.S. Attorney And DEA Announce Charges Against Rochester Drug Co-Operative And Two Executives For Unlawfully Distributing Controlled Substances. The United States Attorney’s Office – Southern District of New York. Apr. 23, 2019. Retrieved from: https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-and-dea-announce-charges-against-rochester-drug-co-operative-and.

28Information at 1, U.S. v. Pietruszewski, U.S.D.C. for the S.D.N.Y., 19-cr-___ (WHP).

29Information at 2-3, U.S. v. Pietruszewski.

30Information at 3, U.S. v. Pietruszewski.

31Information at 3, U.S. v. Pietruszewski.

32Indictment at 5, U.S. v. Doud, U.S.D.C. for the S.D.N.Y., 19-cr-285. 

33Information at 4, U.S. v. Pietruszewski.

34Information at 4, U.S. v. Pietruszewski.

35Petition at 10, State of Oklahoma v. Purdue Pharma.

36Petition at 10-11, State of Oklahoma v. Purdue Pharma.

37Kirson, Noam Y.; Scarpati, Lauren M.; Enloe, Caroline J.; Dincer, Aliya P.; Birnbaum, Howard G.; and Mayne, Tracy J.  The Economic Burden of Opioid Abuse: Updated Findings. Journal of Managed Care & Specialty Pharmacy. Vol. 23, Issue 4.  Retrieved from: https://www.jmcp.org/doi/10.18553/jmcp.2017.16265.  

38Coombs, Bertha. U.S. Companies Losing $10B a Year Due to Workers’ Opioid Abuse. CNBC. Apr. 20, 2016. Retrieved from: https://www.nbcnews.com/business/business-news/u-s-companies-losing-10b-year-due-workers-opioid-abuse-n559036.

39For a full description of the first three options and other useful measures available to plans see: Qualo, Philip. The Opiod Crisis: How Employers & Self-Funded Health Plans Can Combat This Epidemic. The Phia Group. Mar. 5, 2019. Available at: https://www.phiagroup.com/Media/Posts/PostId/830/the-opioid-crisis-how-employers-self-funded-health-plans-can-combat-this-epidemic.

iWillmsen, Christine and Bebinger, Martha. Massachusetts Attorney General Implicates Family Behind Purdue Pharma in Opioid Deaths. WBUR.  Jan. 16, 2019.  Retrieved from: https://www.npr.org/sections/health-shots/2019/01/16/685692474/massachusetts-attorney-general-implicates-family-behind-purdue-pharma-in-opioid-.   


The Phia Group's 3rd Quarter 2019 Newsletter


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

 


The Book of Russo:
From the Desk of the CEO

Greetings from the beautiful city of... Braintree, Massachusetts! We are excited about the weeks and months ahead, where - like the weather - things are heating up at The Phia Group. Unlike some others in the industry who look at the summer as a time to kick back and relax, we here at The Phia Group are putting the finishing touches on not one, but TWO huge offerings and upgrades in the coming weeks. When it comes to our mission of empowering plans, and ensuring employers can offer their employees and families the highest quality benefits and health care, for the lowest cost, we never rest. Indeed, we know that this is the time of year you spend preparing for the upcoming renewal and retention season. The services and expertise we provide today will be the tools you use to ensure your continued growth and success tomorrow. I hope you are enjoying your summer thus far - Happy reading, and don't forget the sunblock.


Service Focus of the Quarter: Plan Appointed Claim Evaluator® (PACE)
Phia Group Case Study
Phia Fit to Print
From the Blogosphere
Webinars
Podcasts
The Phia Group’s 2019 Charity
The Stacks
Phia’s Speaking Events
Employee of the Quarter
Phia News

 

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

Some years ago, in response to growing industry concerns regarding fiduciary duties, The Phia Group created its Plan Appointed Claim Evaluator (PACE) service. PACE is a fiduciary transfer service addressing final-level internal appeals. It is designed to help plans ensure they made correct determinations, thereby insulating the health plan from liability and allowing the Plan Administrator to focus on its core business rather than difficult fiduciary determinations.

PACE includes:

• Plan Document and stop-loss policy “Gap Reviews,” to both ensure compliance as well as eliminate coverage gaps, all while also ensuring PACE readiness;
• Advanced-level webinars exclusively for PACE clients;
• Assessment of eligible final internal appeals via written directives; and,
• Unsurpassed legal analysis, clinical review and access to URAC-accredited IROs (with PACE covering all external review costs).

Beginning August 2019, we will also begin offering complimentary PACE Certification – whereby your organization can enhance your PACE business, improve your internal appeals processes, ensure regulatory compliance, and improve your business as a whole. Chapter One of PACE Certification explores the ins and outs of self-funding; Chapter 2 takes a deeper dive into the laws and regulations applicable to self-funded health plans; Chapter 3 explains what PACE is, how it works, and how it can best be utilized.

Tim can be reached by phone at 781-535-5631 or by email at TCallender@phiagroup.com.

 

Phia Case Study: The Tale of the Reluctant ASC

The Phia Group was presented with a file, as part of its Phia Unwrapped service, where a patient had visited an out-of-network ambulatory surgery center (ASC), and was receiving a balance-bill following the plan’s payment. The health plan adjudicated the claim based on 145% of Medicare rates, whereas the claim was billed at a whopping 1,430% of Medicare. Needless to say, a large balance ensued.

The ASC informed The Phia Group’s team that it would not accept any reduction in its billed charges, under any circumstances, and it cited a dozen bogus arguments about how state and federal law prohibited the health plan from utilizing this particular payment methodology.

The Phia Group’s legal team put together a strong response to each argument raised by the ASC; we then followed up after one week, and were told the letter was still being reviewed. We followed up after another week, and were told the same thing. Fast-forward two months: same answer. Still being reviewed!

Our legal team pressured the ASC for a response, informing them that our client was considering closing its file and walking away with no possibility of additional payment.

Two weeks later, we finally received a positive response, and our efforts yielded an ultimate settlement at only 18% of billed charges.

 


_

 

Fiduciary Burden of the Quarter: Managing Conflicting Agreements

Have you ever seen a health plan incur an in-network claim that is billed at many times the appropriate rate defined in the Plan Document? If so, you’re not alone.

Have you ever reviewed that in-network claim against the terms of the Plan Document, and then denied the portion exceeding the Plan Document’s terms? If so, you’re still not alone.

Have you ever received pushback from that in-network provider, demanding the network rate? If so, you’re still not alone.

It’s certainly true that the Plan Document prescribes certain limitations on claims payments – but it’s also true that network contracts don’t take those limitations into account, and instead require payment based on a percentage off billed charges. Not appropriate billed charges, or allowed billed charges; just billed charges.

For that reason, it’s crucial to be aware of what all the relevant contracts say; the Plan Document and the network contract are conflicting, but neither “overrules” the other. That is, the payor has promised to pay two separate amounts – one in the Plan Document and one in the network contract – and of course medical providers are going to expect the higher of those two amounts. Add to that the fact that the provider has privity to the contract guaranteeing the higher amount, and we’ve got a situation on our hands.

Moral of this story? Make sure your Plan Document language is synced up to your network contracts! Try to avoid placing a hard limit on all claims payments, instead focusing on non-contracted claims, since once a claim has a contract whereby it must be paid at a certain rate, the Plan Document’s global limitations across all claims cannot be applied without violating that contract!

 

Success Story of the Quarter: The Non-Responsive Plaintiff’s Attorney

The Phia Group identified a particularly large potential recovery for a client. The patient in question was involved in a motor vehicle accident, and had engaged legal counsel to pursue damages from a wealthy defendant. It seemed likely that this patient would receive a settlement far larger than the health plan’s lien, and The Phia Group put the patient’s attorney on notice of the lien.

Well, we tried, anyway.

The attorney didn’t respond to our letter. Or our phone call. Or any of our subsequent letters or phone calls. Our legal team explored all available avenues, and even spoke to former law firm partners of the attorney, but to no avail.

Finally, our attorneys drafted a very strongly-worded letter, reminding the attorney of his legal obligations, and – with our client’s blessing – informing the attorney that if he did not live up to his legal and ethical obligations, we would gladly have the state bar issue him a more stern reminder of his responsibilities as an attorney.

Our legal team received a prompt, courteous, and apologetic response from the attorney, along with an assurance that the plan will be reimbursed in full from that settlement (assuming the payout exceeds the plan’s lien).

 


 

Phia Fit to Print:

• BenefitsPro – Medical cannabis: Should your health plan cover it? – June 26, 2019

• BenefitsPro – Impact of HHS’s Proposed ACA Revisions to Employers – June 19, 2019

• Self-Insurers Publishing Corp. – Seasons of Change: How to successfully implement evolving healthcare trends – June 10, 2019

• BenefitsPro - What is subrogation, and how does it affect health benefit plans? – June 3, 2019

• BenefitsPro – Paid leave policies: Picking up steam or is it just hot air? – May 20, 2019

• Self-Insurers Publishing Corp. – Transparency - A Clear and Almost-Present Danger? – May 5, 2019

• BefefitsPro - Getting ahead of ERISA disbursement claims – April 8, 2019

• Self-Insurers Publishing Corp. – The Lien, Mean, Subrogation Machine – April 4, 2019

 



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From the Blogosphere:

List Prices in TV Ads: Will This Help? Price transparency may be making its way to a TV near you.

Big Pharma Executives Testify Before Congress (Again). This could be a tough pill to swallow for big pharma companies.

The Final AHP Rules Take a Hard Hit! There were a lot of bumps and bruises along the way.

New DOL Opinion Letter: Employers May Not Delay FMLA Leave Designations. Do you have questions about the FMLA? Here are your answers.

Be Transparent – Tell Me What You Really Want! The most expensive options aren’t always the best options.

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



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Webinars

 

• On June 20, 2019, The Phia Group presented, “The Impact of State, Federal Laws, and Current Market Trends on Self-Funding,” where we share some interesting perspectives on the current legislative climate.

• On May 23, 2019, The Phia Group presented, “To Pay, or Not to Pay … The Guide to Handling Claims, Denials, and Appeals,” where we discussed the good, bad, and ugly truths about the claims process, and how to safely navigate the various TPA and health plan duties associated with it.

• On April 22, 2019, The Phia Group presented, “Evolving Healthcare Issues and Events You Need to Know,” where we discussed some of the most relevant topics affecting our industry, and explain what they mean to you and your business.

Be sure to check out all of our past webinars!



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Podcasts:

Empowering Plans
 

• On June 26, 2019, The Phia Group presented “Surprise? Balance Bills!,” where our hosts define surprise balance billing and discuss movements to curb them (at the State and Federal levels).

• On April 12, 2019, The Phia Group presented “A Healthcare Free-for-All,” where our hosts, Adam, Ron, and Brady tackle the most pressing issues facing our industry, including surprise emergency room bills, drug pricing, medical necessity, and employee incentive programs. Face of Phia

 

Face of Phia

 

• On June 12, 2019, The Phia Group presented, “Glutton for Punishment,” where our hosts sit down with Amanda Lima, as she celebrates more than six years with Phia and working closely with Adam.

• On May 7, 2019, The Phia Group presented, “Pat 'the Man' Santos Has Got it In the Bag,” where our hosts sit down with Pat 'the Man' Santos – our silent producer.

• On April 17, 2019, The Phia Group presented, “Reminiscing with Andrew,” where our hosts, Adam and Ron, reminisce on Andrew Silverio's Undergraduate adventure.

• On April 5, 2019, The Phia Group presented, “Tales From The Lost Filing Room,” where our hosts, Adam and Ron, dig up tales from the days of old with future industry leader and veteran employee, Amanda Grogan. Tales From the Plan

 

Tales From the Plan

 

• On June 14, 2019, The Phia Group presented, “Putting the Benefit in Benefit Plan with Jennifer McCormick,” where our hosts, Adam and Ron, interview The Phia Group’s Sr. VP of Consulting, Jennifer McCormick, about her own experience as a consumer of healthcare and member of The Phia Group’s health plan.

Be sure to check out all of our latest podcasts!

 

 



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The Phia Group’s 2019 Charity

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

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

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

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

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

 

Silent Auction

The Phia Group hosted a silent auction to help raise money for the Boys & Girls Club of Brockton. Due to some generous bids and donations made by our valued clients, we were able to raise $12,335.00 for the Boys & Girls Club of Brockton. We couldn’t have done it without the help of our amazing clients and team. If you are interested in donating to the Boys & Girls Club of Brockton, please visit their website today. Every dollar goes towards helping a child in need.

 

Phia Wiffle-Ballers

The Phia Family is one good-looking group of wiffle-ballers! Our wiffle ball team entered the 8th annual John Waldron Memorial Wiffle Ball Tournament, where we were dominated the field. We were up against some fierce competition, including some courageous Brockton Fire Fighters, that most certainly brought the heat. This tournament raised over $30,000! We are proud of the work our team did.

 



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The Stacks

Seasons of Change: How to Successfully Implement Evolving Healthcare Trends

By: Jennifer M. McCormick, Esq. – June 2019 – Self-Insurers Publishing Corp.

Have you ever wondered whether you paid more for your flight than the person next to you on the airplane? What about whether you could be doing more (or less) to save money and time? I’m confident we all frequently ponder what we can do differently to save.

Whether big or small savings, we’re constantly looking for ways save money in all areas of our life. Dinner budgets, car insurance, clothes, general spending - you name it and surely, we have contemplated whether we can reduce that expense. But we also try to balance cost against convenience, expecting to save money and time. For example, we can click a couple of buttons on our phone and groceries appear at our doorstep two hours later, saving us both money and time.

Click here to read the rest of this article


Transparency - A Clear and Almost-Present Danger?

By: Ron E. Peck, Esq. – May 2019 – Self-Insurers Publishing Corp.

Transparency in healthcare, and pricing of care, has been a hot topic – especially for those in our industry – for quite some time. That flame has been fed recently by an increase in regulatory and legislative attention. About one year ago, a bipartisan group of Senators unveiled their intention to launch a healthcare price and quality information transparency initiative, and the feedback has been all over the map.

Click here to read the rest of this article

 

The Lien, Mean, Subrogation Machine

By: Maribel Echeverry McLaughlin, Esq – April 2019 – Self-Insurers Publishing Corp.

In 1990, the United State Supreme Court ruled in FMC Corp. v. Holliday, that state law will not prevent a private self-funded plan governed under ERISA from obtaining reimbursement. Additionally, the Court ruled that any state law that is contrary to ERISA would be preempted if the Plan’s language so provides or there is a clear contradiction to the federal law.

For years, this law went unchallenged until 2006, when Mr. and Mrs. Sereboff were involved in a motor vehicle accident, and the Mid Atlantic Medical Services Employee Health Plan paid related claims in the amount of $74,869.37.

Click here to read the rest of this article

 

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

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Phia’s 2019 Speaking Engagements:



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

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

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

• 3/19/2019 – SIIA Self-Insured Health Plan Executive Forum – Charlotte, NC

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

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

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

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

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

• 4/8/2019 – National Beer Wholesalers Association Legislative Conference – Washington DC

• 4/12/2019 – FMMA 2019 Annual Conference – Dallas, TX

• 4/23/2019 – Johns Hopkins Industry Education Series – Baltimore, MD

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

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

• 4/26/2019 – Society of Professional Benefit Administrators Annual Conference – Washington, D.C.

• 5/2/2019 – MassAHU Benefest 2019 Conference – Westborough, MA

• 5/14/2019 – Cypress Unversity – Las Vegas, NV

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

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

• 7/16/2019 – HCAA TPA Summit – Dallas, TX

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

• 8/20/2019 – Pritchard & Jerden Employee Benefits Forum – Brookhaven, GA

• 9/30/2019 – SIIA National Educational Conference & Expo – San Francisco, CA

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

 

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Get to Know Our Employees of the Quarter:
Katie Delaney & Corrie Cripps

Congratulations to Katie Delaney & Corrie Cripps, The Phia Group’s Q3 2019 Employee of the Quarter!

Katie and Corrie have both been dedicated employees at The Phia Group for many years, and we are so fortunate to have them on our team. With Corrie being a Consultant, II and PGC Internal Process Auditor, and Katie being a Senior Training & Development Specialist, it is clear that they are both key players in the success we have at The Phia Group.

 

Congratulations Katie & Corrie, and thank you for your many current and future contributions.

 

 


Phia News

PACE® Certification is Almost Here!

The PACE Certification program will educate you using 3 distinct chapters of information:

Chapter One
Explore the ins and outs of self-funding while learning about its risks and rewards. This chapter will transform any individual into a self-funding pro.

Chapter Two
Take a deeper dive into the laws that apply to self-funded plans. We cover it all, from federal preemption to adverse benefit determinations and appeals.

Chapter Three
Explain what PACE is, what PACE does, and how it's obtained, implemented, and utilized.

The PACE Certification program is free of charge and will create immense value for your organization. By going through the Certification program, you, or a select person, or team, within your organization, can become PACE Certified. Once PACE Certified, the Program participant(s) will become highly educated PACE business owners and will serve to assist your organization in growing your PACE business, enhancing your PACE revenue, and assuring your appeals processes are the most compliant and best in the industry. Those who complete the Certification will also receive a PACE Certification Fact Sheet, providing an easy to understand summary of the content and best practices covered, which will allow you to maximize the lessons learned within your business.

Additionally, the PACE Certification program will provide education on self-funding in general, claims and appeals regulatory education, and overall best practices surrounding fiduciary duties, claims, and appeals.

The PACE Certification program will be released to all those interested starting August 1, 2019.

Please see the PACE Certification flyer, as well as this video for more information.

Please contact Tim Callender (tcallender@phiagroup.com), or Garrick Hunt (ghunt@phiagroup.com), for more information.

 

Śmigus-dyngus at Phia

On April 22nd (Easter Monday), The Phia Family celebrated a traditional Polish holiday called Śmigus-dyngus, with a Polish lunch graciously provided by our CEO, Adam Russo. Normally, the holiday includes a big water fight, but we decided not to go down that route. We did however have some delicious Polish meats and pastries, accompanied by a delicious Polish fruit beverage.

 

 

Opening Day BBQ

It has become tradition at The Phia Group to celebrate Opening Day! We invite all Phia employees to dress up in their favorite sports team gear. As you can see, we have a heavy variety of team spirit here at The Phia Group. Some New York Yankees fans, Cleveland Indians fans, and of course, Boston Red Sox fans. Towards the end of the day, the Phia Family comes together outside of our office to celebrate with hotdogs, cold beverages, and great conversations.

 

 

Betting on the Bruins!

The Phia Family suited up in their finest Bruins gear (with the exception of a few Phians) to show their pride and support as the Bruins entered the Stanley Cup Final, in an attempt to win their 7th Stanley Cup. Although the Bruins fell a bit short, they still made it to the final round, which is a victory in itself.

 


 

Job Opportunities:

• Marketing & Accounts Coordinator

• Health Benefit Plan Drafter

• Health Benefits - Case Investigator I

• Attorney 1

• IT Intern

• PACE Intake Client Coordinator

• Health Benefit Plan Attorney I

• Client Intake Specialist

• Senior Claims Specialist II, Provider Relations

 

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

 

Promotions

• Francesca Russo has been promoted from Claim Recovery Specialist III to Claim Recovery Specialist IV

• Colleen Ahern has been promoted from Claim Recovery Specialist III to Sr. Claim Recovery Specialist

• Nicole Russo has been promoted from Case Investigator to Claim Recovery Specialist III

• Brittany Grueter has been promoted from Case Investigator to Claim Recovery Specialist III
 

New Hires

• Nasim Hassan was hired as an Intake Specialist

• David Ostrowsky was hired as a Plan Drafter

• Denise Swienc was hired as a Customer Care Representative

• Darlene Zarella was hired as a Claim Specialist II

• Kelly Gaunya was hired as an Subrogation Recovery Intern

• Erin Daley was hired as a Customer Care Representative

• Kaitlyn Lucier was hired as a Customer Care Representative

• Caelin McDonald was hired as an HR Intern

• Matthew Williams was hired as a Sr. Subrogation Attorney

• Jackie Andrews was hired as a Provider Relations Concierge

• Dylan Fry was hired as a Marketing & CAM Intern

• Bryan Dunton was hired as a Plan Drafter

• Krista Belanger was hired as a Plan Drafter

• Brenna Jackson was hired as a Legal Assistant

• Donna Harman was hired as a Overpayments Assistant

• Kevin Brady was hired as an Attorney I



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info@phiagroup.com
781-535-5600

The Stacks - 3rd Quarter 2019

The Lien, Mean, Subrogation Machine

By: Maribel Echeverry McLaughlin, Esq

When you think of personal injury attorneys, you may imagine men in trench coats with cheesy tag lines with inflated promises, and commercials with ambulances blaring in the background.  Fortunately, I do not like trench coats, my tag lines are only sometimes cheesy, and ambulances terrify me.  

While attending law school, I worked for an attorney who became a state legislator, which meant I was forced to learn the ins and outs of running a practice in a very short period of time.  That experience ultimately left a bad taste in my mouth for opening my own firm.  Eventually, after graduating law school, I started my career as a junior associate in the personal injury firm down the street and became the partner’s main resource for research… and coffee.  

Working there opened my eyes to new experiences, such as the opportunity to practice law with a team of partners and senior associates.  We met once a week and strategized on how to win the most amount of money for our clients and, obviously, for the firm.  Sometimes those two goals conflicted with each other and we would work to find a resolution that would make sense for all parties involved.  

Interestingly enough, that typically meant negotiating with healthcare providers and health insurance plans.  In my tenure with this firm, I may have come across at least five (5) liens from private self-funded benefit plans.  After much negotiation and push back from the plans, each of them were resolved.  But it was not until I left that world that I realized how little personal injury attorneys actually know about the Employment Retirement Income Security Act (ERISA), self-funded health plans, and how they function in our world.  

Overview of the Law:
In 1990, the United State Supreme Court ruled in FMC Corp. v. Holliday,1 that state law will not prevent a private self-funded plan governed under ERISA from obtaining reimbursement. Additionally, the Court ruled that any state law that is contrary to ERISA would be preempted if the Plan’s language so provides or there is a clear contradiction to the federal law.

For years, this law went unchallenged until 2006, when Mr. and Mrs. Sereboff were involved in a motor vehicle accident, and the Mid Atlantic Medical Services Employee Health Plan paid related claims in the amount of $74,869.37.  

The Sereboff’s eventually settled their personal injury claim for $750,000.00 and did not reimburse the self-funded Plan.  The Plan eventually filed suit in the U.S. District Court for the District of Maryland, claiming a right to collect from the Sereboffs under § 502(a)(3) of ERISA.  

The Court ruled in Sereboff v. Mid Atlantic Medical Services2 that the federal courts have subject matter jurisdiction over actions where an ERISA-covered Plan seeks equitable relief.  The Court further ruled that if an ERISA-covered Plan has paid medical benefits arising from an act or omission of a third-party for which a plan participant obtains a settled or jury award, the Plan has a right to right to enforce the terms of the Plan Document pursuant to ERISA 502(a)(3), for equitable relief.

Shortly after, the Supreme Court held again in US Airways, Inc. v. McCutchen3, that the terms of an ERISA-covered Plan would be enforced as written, despite any contrary state law or equitable principle.  

This was a landmark decision as it clarified that the “common fund” and “made-whole” doctrines could be disclaimed by an ERISA Plan in their Plan Document language.  Whether adopted by state statute or relying on common law, neither of these doctrines can be used to defeat the Plan’s right of full reimbursement as long as there is clear language in the Plan Document disclaiming the application of these principles.

Most recently, the Court decided in Montanile v. Board of Trustees of Nat. Elevator Industry Health Benefit Plan4, when a participant in an ERISA plan dissipates a third-party settlement on non-traceable items, the plan fiduciary may not bring suit to attach the participant's separate assets5.  In other words, the Plan is only entitled to “their” money, but if it cannot be traced in an asset that was paid for with that money, then the Plan cannot sue for the member’s general assets.  

Decisions to Settle and Negotiate Liens by Personal Injury Attorneys:
While working for the trench coats, I realized that large insurance carriers, such as Blue Cross, United, etc., were willing to settle without much work and negotiation.  At that time, it was easier to settle those liens than trying to work out a balance with a provider and proved to be more financially sound for the member.  

After negotiating with many private self-funded Plans, I realized they were, and still are, the most difficult to negotiate.  Attorneys will advocate zealously for their clients, whether they are victims of a horrific car accident case, or for the Plans themselves.

I received a letter not too long ago, from a lien resolution company in California, that was fifteen pages long, filled with arguments for the Plan to reduce their lien. Interestingly enough, after doing a quick internet search, it happens to be a string of arguments that many plaintiff attorneys are making to work through the private self-funded Plans governed by ERISA.  

Some of these arguments are easy to argue away, such as the common fund and made-whole arguments, especially if they are disclaimed in the Plan’s language.  

The attorney from the lien resolution company was representing a member and their attorney, for reimbursement and subrogation claims.  He sent me exactly what the member’s attorney had requested for a reimbursement, and interestingly enough, the Plan had previously refused to reduce their interest.  He made many arguments throughout those 15 pages and frankly only two stuck out to me.

He titled one “Deficiencies in the Plan Documentation”6; in which he alleged that the Plan administrator must properly disclose any reimbursement provision to Plan beneficiaries in the Plan document.

He opined that the Ninth Circuit, 29 C.F.R. 2520.102-2(b) requires that “(1) the description of summary of [a] restrictive provision must be placed in close conjunction with the description or summary of benefits, or (2) the pages on which the restrictive provision is described must be noted adjacent to the benefit description.”7 

The Court ruled that a reasonable Plan participant should not have to read every provision of a Plan’s documentation in order to ensure they have read every restrictive provision.8  The Court invalidated an inconspicuously-placed provision where the limitations for third party liability and out-of-pocket maximums were separated from the Plan’s description of benefits by multiple unrelated plan provisions, without cross-references or indexing.  

Our client’s Plan had the reimbursement provision entirely isolated from other provisions of the Plan’s documentation, and as such, would be invalidated by the Ninth Circuit.

The second argument cited was titled “Out of Pocket Maximum.”9 Here, he alleged that the Plan Document provided that individual beneficiaries would not pay more than a specific amount toward medical expenses.  He explained that the “Out of Pocket Maximum” should be a defined term, but in this document, it was not.  He also pointed out that the Plan Document does not define the terms “reimbursement”, “subrogation”, “lien” or other terms relevant to the third-party provision.10

As a former plaintiff’s attorney, I can understand and appreciate the zealous advocacy that this attorney was providing to his client.  It is difficult to balance all the interests especially when the common understanding is that the insurance companies have an abundance of money and that this lien interest would not break the bank.  

In reality, after explaining the concept of self-funding and paying claims out of the pool of money for all members that pay their premiums, attorneys tend to appreciate the advocacy we provide on behalf of these Plans.  These are not big bad insurance companies, as many people perceive; these are usually smaller companies, with the hope of keeping the risk low, and claims paid.  The opportunity for reimbursement for third party claims keeps the premiums low for the members, a concept that eventually attorneys or members understand completely.  

After reviewing these arguments with other attorneys in our office, we agreed that we should amend our major medical template to include these definitions and add references to certain places in our Flagship Plan document, in order to avoid these sorts of arguments from other attorneys in the future.

Specialists in plan document drafting and subrogation attorneys will be able to review your plan document to ensure we address all of the arguments to meet the needs of self-funded groups and their members.
________________________________________

  1FMC Corp. v. Holliday, 498 U.S. 52 (1990)
  2Sereboff v. Mid Atlantic Medical Services, 547 U.S. 356 (2006)
  3US Airways, Inc. v. McCutchen, et al., 133 S.Ct. 1537 (2013)
  4Montanile v. Board of Trustees of Nat. Elevator Industry Health Benefit Plan, 135 S.Ct. 651 (2016),
  5Id. at 655
  6John J. Rice, Esq, LTR #3 to Phia - Clariza (2018)
  7Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc. (9th Cir. 2014) 770 F.3d 1282, 1295
  8Id. at 1296.
  9John J. Rice, Esq, LTR #3 to Phia - Clariza (2018)
  10Id.

__________________________________________________________________________________________

Transparency – A Clear and Almost-Present Danger?

By: Ron E. Peck, Esq

Transparency in healthcare, and pricing of care, has been a hot topic – especially for those in our industry – for quite some time.  That flame has been fed recently by an increase in regulatory and legislative attention.  About one year ago, a bipartisan group of Senators unveiled their intention to launch a healthcare price and quality information transparency initiative, and the feedback has been all over the map.

I recently published a blog post regarding failed attempts at transparency in retail.  The two examples I shared therein I’ve also described below.  The response I received was passionate – from support, to opposition; it seems as if everyone feels “something” when it comes to “transparency.”  Before you read any further, let me state clearly and unequivocally that I am a staunch supporter of transparency – as a concept, as well as a tool to be used in our never-ending quest to minimize costs while maximizing benefits in health coverage and care.  Like so many other useful tools, however, transparency in overabundance or without other key ingredients will not only fail to move the needle (as it relates to the cost of health care) but may result in an increase in spending.

To get you up to speed, the examples of transparency (gone wrong) that I love to share are as follows –

Exhibit A: JC Penny’s.  Recall in 2011, when JC Penny’s made what most experts have deemed a catastrophic, strategic mistake, regarding its pricing strategy.  What horrific miscalculation did the retail giant make?  It replaced “sales” (a/k/a “discount”) and “coupons” with everyday low prices.  JC Penny’s told consumers: “Hey!  We aren’t going to bamboozle you by inflating prices, and then throwing arbitrary discounts at you.  Instead, we’ll offer you fair prices without any games.”  This was one example where transparency failed miserably.

Exhibit B: Payless.  If you want to buy some sneakers from Payless, you’d better do it soon.  Payless ShoeSource, Inc. is closing for good.  I’ve never shopped at Payless myself, but they hold a special place in my heart by virtue of something they did in November of 2018.  Yes indeed; it was only a few months ago that they supported my theory that transparency without quality awareness is not only useless, but potentially dangerous.  Payless opened a fake luxury store, dubbed “Palessi.”  At this “boutique,” they displayed shoes (for which they normally charge $20 at their Payless stores), with price tags that ranged up to $600+ (a 1,800% markup).  Shoppers saw the higher prices and assumed that – if it costs more, it must be better.

Another example of transparency that not only fails to reduce spending, but increases it, is also tethered to healthcare.  Unlike many other expenses about which we industry members are dealing, (expenses for which the lion’s share of the cost is borne by the benefit plan and as such, the patient has no “skin in the game”), one example of healthcare costs for which plan participants are fully responsible to pay is over the counter pain medication.  Enter any retail pharmacy and you’ll see brand name medication, and identical store brand drugs, sharing shelf space.  The store brand is clearly marked with a lower price than the brand name drug – who’s price is also clearly labeled.  Additionally, both medications list the ingredients on the package; identical ingredients and percentages.  This is the ultimate cross-roads between healthcare, patient skin in the game, and transparency.  So, of course people buy the store brand drug – it’s the same drug, costs less, and the patient is financially responsible to pay the price.  Transparency works, right?  Wrong!  People overwhelmingly purchase the branded drug.

I’ve said it before, and I’ll say it again – people want the most expensive option.  People don’t want to pay for the most expensive option, but they want to have the most expensive option.

Look no further than the credit crisis bankrupting so many Americans.  Credit cards made it so easy for people to buy more than they could afford, because they made it “feel” like it was someone else’s money.

Sound familiar?

People inherently want the most expensive option, because they are convinced price is an indicator of quality.  Additionally, luxury purchases are a status symbol.

So we (human beings) want the best.  We assume the most expensive option must be the best option – ever hear someone say, “you get what you pay for?”  Additionally, we want other people to think we have the best (a/k/a the most expensive) stuff as well.  The only roadblock is that we don’t always have enough money with which to buy the best (most expensive) stuff.  Drat.

But, when someone gives me a magical “card” and that “card” grants me access to deeper pockets than my own, I can now use that “card” to buy the best (a/k/a most expensive) stuff.  The fact that I will tomorrow be asked to pay for that “stuff” later (either in the form of credit card payments … or … [assuming my metaphor didn’t go over your head] insurance premiums) won’t stop me from running up an unaffordable bill today.

Transparency did nothing to stop people from getting themselves into credit card debt.  Transparency will do nothing to curb people’s health care spending, and I actually foresee it making things worse.  Consider the proposals to have drug prices on TV advertisements.  I’m watching the Patriots beat another opponent, when a commercial for Viagra pops up; (pun intended).  The commercial ends by telling me the cost of the drug is $400.  Next, a commercial for Cialis appears, and tells me that drug costs $600.  Well – don’t I and my spouse deserve the best?  Cialis it is!

I’d like to say that I am the first to spot these phenomena, but I’m not.  In 2016, the Journal of the American Medical Association published a study1 that supports my assertion that transparency on its own doesn’t lead to savings.  In this study, two employers offered web-based tools to their employee plan participants, providing them with “transparent” healthcare prices.  It empowered these participants to compare prices and “shop around” for their care.  The result?  The tools were rarely accessed, despite the introduction of high deductibles.  In fact, as a side note, the high deductibles caused more participants to seek more costly care, in an effort to burn through the out of pocket maximum as quickly as possible.  Additionally, for the reasons already discussed earlier, researchers discovered that the participants with access to pricing ended up picking the more expensive options, more often than participants without access to pricing.

This report supports my theory above that patients always apply the type of rational behavior upon which traditional economic theory is based, especially when they are shopping for health care.  Rational behavior and economics would anticipate that a consumer will buy a less costly option unless the more expensive option includes additional features worth the added expense to the consumer.  That attitude, however, fails to take into account people’s need to “be seen” as affluent (and flaunt non-existent wealth), as well as their unfounded belief that if something costs more it must be better, and is worth the added expense.  Consider, for instance, the blind taste tests where a person is given two glasses of wine, and they are told one is a $100 glass of wine, and the other is a $10 glass of wine.  Without fail, the drinker claims the more expensive wine is better tasting – even though (you guessed it) the wine in the glasses is the same wine!

Looking at the impact of transparency on a broader scale, Professor David De Cremer of Cambridge University’s Judge Business School, published a fascinating article about transparency, and when it backfires.2  In it, he lists four negative side effects of transparency.  He discusses how it: creates a culture of blame (people become hyper-focused on what they are seeing and reacting to it, rather than identify bigger picture issues, causes for those issues, and solutions); increases distrust (those whose work is constantly under the microscope feel micro-managed and unable to take risks); increases cheating (those who are constantly being watched begin to look for, and take advantage of, any opportunity to game the system when the albeit rare opportunity arises); and sparks resistance (people refuse to do any work that will be hyper-examined, protesting the lack of faith).

Finally, let’s not lose sight of the fact that not everyone agrees on what transparency in healthcare even is.  Consider the Federation of American Hospitals which wrote to Congress that: “ …the healthcare price transparency initiative should focus on sharing out-of-pocket costs. Patients undergoing the same procedure could end up paying different amounts based on their health plan. Therefore, out-of-pocket cost information is more valuable to consumers … effective price transparency should involve the release of information that is clear, accessible, and actionable so that consumers easily can determine the cost of their premiums, deductibles, copayments, and non-covered services (out-of-pocket costs), prior to purchasing health insurance coverage as well as receiving medical services.”  Yikes.

Dr. Niran S. Al-Agba, MD posted on the MedPage Today Professional “KevinMD Blog”3 – “Comprehensive transparency is only relevant if packaged in a reliable comparative context.  Information regarding cost, value, and effectiveness should be readily accessible to patients enabling them to make meaningful comparisons across providers and specialists. However, choices must be incentivized properly, so they are not only empowered but also motivated to use the information to make informed choices.”  I totally agree.  Unless and until reliable quality measurements are included in the transparency discussion, and that information is delivered in such a way that the consumer will understand and appreciate that price has no relationship with quality, I fear “price transparency” on its own is not only a step too short, but potentially a step backwards, in Palessi boots.
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1https://jamanetwork.com/journals/jama/fullarticle/2518264
2https://hbr.org/2016/07/when-transparency-backfires-and-how-to-prevent-it
3https://www.kevinmd.com/blog/2017/03/problem-price-transparency.html

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Seasons of Change: How to Successfully Implement Evolving Healthcare Trends

By: Jennifer M. McCormick, Esq.

Have you ever wondered whether you paid more for your flight than the person next to you on the airplane? What about whether you could be doing more (or less) to save money and time?  I’m confident we all frequently ponder what we can do differently to save.

Whether big or small savings, we’re constantly looking for ways save money in all areas of our life.  Dinner budgets, car insurance, clothes, general spending - you name it and surely, we have contemplated whether we can reduce that expense.  But we also try to balance cost against convenience, expecting to save money and time.  For example, we can click a couple of buttons on our phone and groceries appear at our doorstep two hours later, saving us both money and time.

Can we say the same for our self-funded plan documents? Regulatory changes and medical technologies are continually advancing.  Why aren’t we applying these new technologies, endeavoring to save money and time, to our self-funded plans? It’s probably because we don’t know how to get started.

Hopefully this discussion will help provide a framework to allow employers and plans to implement new medical technologies and other time and cost savers! We will break down some steps to help simplify implementation of new regulations and technologies.

Step 1: Ask Questions!

When approached about a new idea ask this question - what problem are you trying to solve?  Not only is it key to understand what problem the new idea, new regulation, or new technology would be solving, but it is imperative to first determine whether it is a problem that needs to be solved!

When it comes to savings, time is money too. As a result, the first part of an analysis should be ensuring that the full scope of the problem requiring resolution is realized.  What is ‘costing’ the most … time, money, or both?

After understanding the extent of the problem, review whether the idea would mitigate or eliminate the problem.  For example, assume Fictitious Company A has the proven and medically (and dentally) backed solution to effectively reduce the cost of elective cosmetic dental surgeries by 50% for a low monthly cost to the plan.  An employer might think that would be fantastic, but after reviewing a copy of the plan document and summary plan description realized that elective cosmetic dental surgeries are excluded.  In that example, even though real savings could exist, the solution does not solve a problem for the employer (i.e. with an exclusion the employer pays 0% for elective cosmetic dental surgeries).

Assume instead that the employer was hoping to remove the exclusion for elective cosmetic dental surgeries.  Employer wants to offer this benefit to participants of the self-funded plan it sponsors but wants to control costs.  The services offered by Fictitious Company A might be a perfect fit! Here, the idea solves a problem for the employer.

The next set of questions should aim to proactively troubleshoot barriers to implementation of the idea. How can hurdles be eliminated and what alternatives exist to address the concerns? Is there a way to take the hurdle and create an opportunity?

For example, many states are implementing paid family leave laws.  For employers, the problem that needs to be solved here is investigating what must be done to comply, how must it be done, and how can it be financed.  In addition to understanding what state regulations would apply, employers may wish to review their current plan materials.  Does the employer currently have a policy in place that addresses the regulations? If not, can you make updates to existing benefits? Would this be a good opportunity to investigate whether establishing a self-funded benefit might solve the problem, while offering employer convenience and cost savings?

Assuming the answer is yes, the next step would be to investigate any impediments.

Step 2: Investigate Impediments

It’s important to investigate impediments to an employer’s or plan’s ability to successfully implement a valuable idea.  This requires understanding what agreements should be in place, certain legal hurdles that could prevent taking further steps, and whether the claims systems would need changes to address the new technology or solution.

For example, assume a self-funded plan has many members seeking various chronic pain treatments.  A progressive employer, looking to offer an alternative to high cost treatments, investigates medical cannabis.  Coverage of this benefit would save the plan money. In this case, the employer is located in a state that has legalized medical cannabis. The employer decides to investigate modification of the plan design.  Upon investigation, the employer uncovers that the addition of this benefit would be problematic.  While legal at the state level, it is still considered a schedule I drug under federal law.  As a result, it may not be prescribed for medical use (See Section II ‘General Requirements’ of the Practitioner’s Manual from documentation issued by the United States Department of Justice, Drug Enforcement Agency, Office of Diversion Control for additional information). With this discovery, the employer decides that while coverage may be beneficial, medical cannabis is not a prudent addition to the plan terms.

Alternatively, let’s assume that instead of medical cannabis the benefit that the employer wanted to cover was Chronic Pain Treatment B, a brand-new cutting-edge medical technology.  Upon investigation, the employer identifies that there are no legal hurdles; however, it determines that this new medical technology is considered investigational and experimental.  Not only does the plan have a current exclusion for items considered investigational and experimental, but an applicable stop loss policy would not provide reimbursement for related claims.

Now, assume the same facts as above, except the medical technology in this instance is not considered investigational or experimental. The employer would seek to determine whether any executed agreements would impact implementation.  Would a new agreement need to be executed, would that agreement conflict with any existing agreements (i.e. stop loss policy, network agreement, PBM agreement, etc.)? Assuming no conflicts, the employer could implement the new solution or technology.

Step 3: Implementation

A solution free of impediments has been identified to solve a problem.  Does implementation of the solution require a plan update? If so, does the solution create a new benefit or reduce a current benefit? Will the solution be implemented mid-year via an amendment or at plan renewal? Will other documents need to be updated as well, like the Summary of Benefits and Coverage (SBC)? Are there concerns about the Affordable Care Act (ACA) or the Employee Retirement Income Security Act (ERISA) timelines or rules?

For example, assume an employer wants to implement New Benefit C. This new (FDA-approved) technology will save patients and the plan both time and money. The new technology, however, is so new that claims systems have not been updated to accommodate this type of service.  New Benefit C is offered in collaboration with a common medical treatment, but it is unclear how coding for New Benefit C would be handled. In this example, the administrator would need to be aware of how this would be identified to ensure correct processing.  Simple adoption (or modification or removal) of plan language may not be enough; a review of how (or whether) a claim may be processed is also necessary.

Instead, assume an employer wants to offer more expansive leave of absence provisions for its employees.  The employer modifies the employee handbook and has a staff meeting to address the new provisions.  The employer, however, fails to address this policy change in the relevant plan materials, or with the stop loss carrier.  As a result, implementation of the benefit may inadvertently create a coverage gap among stop loss coverage, the plan document, and the employee handbook.  When implementing a new benefit, it is imperative to analyze the impact on other entities.

Step 4: Engagement

Engagement is going to help make the idea or solution successful.  At this point, a problem was identified, a solution was envisioned, and implementation was completed.  How can the employer or plan ensure the idea or solution is being utilized, since utilization is the key to success (i.e. savings)?

For example, assume an employer opted to add a new plan option to the current plan design at renewal.  This new plan option includes direct primary care but will require participants to affirmatively elect that option.  This plan option should not only be enticing for participants, but it has the opportunity to save the plan money.  Since the employer’s participants are unaware of direct primary care the employer elects to hold an educational meeting.  This session educates participants about direct primary care and what new and exciting benefits are be available under this new plan option.

In addition to educational meetings to inform participants of new benefits, employers can encourage engagement by financially incentivizing programs. For example, employers can reduce copays to encourage utilization of the new idea or solution.

Employers can also seek ways to encourage engagement outside of the plan design.  For example, why not incentivize employees to ask questions about health benefit options available to them?  An employer could create a program offering a reward if an employee voluntarily opted to chat with human resources about a planned treatment.

A combination of education, incentives (or penalties), and employee rewards can help employers ensure engagement in programs that are designed to protect participants and save the plan money.

Don’t let new advances pass by!  Keep the plan in check and on trend with the latest and greatest healthcare innovations without sacrificing compliance. Follow this simple framework to ensure new ideas are successfully implemented so the plan, employer and members stay happy - and realize savings!

 


The Phia Group's 2nd Quarter 2019 Newsletter


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

 


The Book of Russo:
From the Desk of the CEO

We are in full spring mode here at The Phia Group, enjoying warmer weather and record breaking growth. My pool is open, the Indians are playing (more like winning) baseball, and we are already seeing an uptick in renewals on behalf of our clients. While the self-funded space has more energy than ever, we are also seeing some situations where employers and brokers aren’t fully aware of what they are getting themselves into. Yes, you can be innovative and save money, but you must also understand that you are now a fiduciary, you must take on added exposure and risk. There are many moving pieces in the self-funded space, so the plug and play approach won’t always work. In fact, you will get the best results by not plugging and playing anything. This is where we come in, from setting up your plan design to handling your appeal issues, Phia is here to ensure you have a positive self-funding experience. I hope you enjoy the great newsletter we have put together for you. Happy reading!


Service Focus of the Quarter: Unwrapped and CNS
Phia Group Case Study - Frightening ASA Provisions
Phia Fit to Print
From the Blogosphere
Webinars
Podcasts
The Phia Group’s 2019 Charity
The Stacks
Phia’s Speaking Events
Employee of the Quarter
Phia News

 

Service Focus of the Quarter: Unwrapped and CNS

We have all witnessed instances of abusive provider billing. When imposed upon a self-funded health plan, the effects seem most disastrous. To combat this, some groups have migrated to a no-network, full reference-based pricing model. While that is ideal for some groups, it is still a small minority of plan sponsors who are willing or able to bear the risks associated with a full reference-based pricing program.

A more traditional way of combating high claims is one-off claim negotiations. The Phia Group calls this our Claim Negotiation & Signoff service (or CNS). Through this service, The Phia Group puts its legal team and expert negotiators to work, to combine legal expertise with objective cost data to obtain case-by-case negotiations with medical billers. A comprehensive set of data helps determine market-based prices, to put payors on a level playing field with their members’ medical providers, and secure written payment agreements that avoid balance-billing.

The Phia Group proudly boasts a 51% average discount off billed charges on claims within the CNS service. Unlike CNS, however, Phia Unwrapped is anything but traditional. Wrap, extender, and other leased networks offer small discounts and audit restrictions, affording providers nearly unlimited rights. With Phia Unwrapped, The Phia Group replaces wrap network access and modifies non-network payment methodologies, securing payable amounts that are unbeatably low. Phia Unwrapped places no minimum threshold on claims to be repriced or potential balance billing to be negotiated, and The Phia Group attempts to secure sign-off, ensuring providers will accept the plan’s payment as payment in full.

Out-of-network claims run through The Phia Group's Unwrapped program yielded a whopping average savings of 74% off billed charges (three times the average wrap discount in 2018). On average, The Phia Group sees roughly 2% of claims result in some form of balance-billing; these results are similar throughout many different plan types and geographies, proving that this program and these results can be applied nationwide.

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

 

Phia Case Study: Frightening ASA Provisions

The broker of a self-funded benefit plan was presented with an Administrative Services Agreement (or ASA), by which the prospective TPA would administer claims for the health plan. The broker presented our consulting division with the Administrative Services Agreement to review, as a matter of ordinary diligence. This review was focused on a holistic approach, rather than any particular provisions that were previously identified as troublesome.

Upon reading the ASA, The Phia Group’s reviewer noticed a provision relating to the network, which provided that the plan would be required to pay certain types of claims despite issues with medical necessity or experimental status. This ASA essentially rendered those important Plan exclusions unusable, which, needless to say, is a problem.

Among other issues to address within the ASA, The Phia Group placed a great deal of emphasis on that provision when providing the client with the review, and the broker was grateful that this matter was brought to light. This is especially important from a stop-loss perspective; it’s tough to know how exactly a given carrier will treat a particular situation without a discussion, and this language within the ASA couldn’t be discussed until it was identified.

With the information provided by The Phia Group, the broker and group were able to discuss the matter with the TPA and reach a resolution favorable to all parties involved – and the plan no longer had to worry that its ASA required it to pay claims that stop-loss would almost certainly deny!

 


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Fiduciary Burden of the Quarter: Ensuring Proper Application of OOP Limits!

The Department of Labor has explained that amounts that must be applied to an individual’s out-of-pocket maximum do not (but may, at the plan’s option) include “premiums, balance billing amounts for non-network providers, or spending for non-covered services.” A claim subject to reference-based pricing, as opposed to one subject to a contract with a provider, necessarily entails an out-of-network claim. Thus, according to the DOL’s original interpretation, balance-billed amounts resulting from non-network reference-based pricing are not included in the individual’s out-of-pocket cost limitations.

Subsequently, however, the DOL got wind of this whole reference-based pricing phenomenon, and altered its stance a bit. According to the regulators:

“…a plan that utilizes a reference-based pricing design (or similar network design) may treat those providers that accept the reference-based price as the only in-network providers and not count an individual’s out-of-pocket expenses for services rendered by other providers towards the MOOP limit only if the plan is using a reasonable method to ensure adequate access to quality providers at the reference price.”

In other words, it’s still the case that a patient’s OOP does not include balance-billed amounts – but that’s only if the plan “is using a reasonable method to ensure adequate access to quality providers at the reference price.” Our interpretation of that has been that reference-based pricing is still alive and well according to the DOL – but a given RBP plan must count balance-billed amounts toward patient OOP unless the plan provides patients options to avoid balance-billing. The DOL has not elaborated on what those options may be, but a reasonable interpretation is that contracts of any kind would work. Some plans choose to use a full PPO and only use RBP for out-of-network claims; other plans use a narrow network; others choose to sign contracts with certain choice facilities to provide their members with safe options; others still opt to sign no contracts whatsoever, but are sure to settle claims on the back-end to avoid balance-billing.

Whatever option you choose for your RBP plan, make sure you’re following the regulations! One important fiduciary duty of a Plan Administrator is to accurately calculate member OOP – and when it comes to reference-based pricing, that can get tricky.

 

Success Story of the Quarter: Overpayment Recovery

The Phia Group’s overpayment department was presented with a file whereby the TPA identified a claim that was overpaid to a medical provider; the overpayment reason was that Medicare was primary on the claims, but the TPA placed the self-funded health plan as primary in error. The plan had paid $76,000. The TPA knew that the plan would need to pay something as secondary, but certainly not its entire allowable. Further, the TPA had concerns that the group and its broker would hold the TPA responsible if the money couldn’t be recovered.

The Phia Group’s overpayment experts reached out to the provider, and initially were given the cold shoulder. After continuous communication with the provider and making sure to stay on the hospital’s radar, eventually the claim was escalated to the hospital’s CFO. After a series of lengthy discussions, the hospital’s CFO finally agreed to resubmit the claims to Medicare, but only agreed to refund the Plan the portion of the claim that was not in fact payable by Medicare, effectively treating the plan as secondary up to the full, billed charges.

At that point, one of The Phia Group’s attorneys contacted the hospital’s CFO, in an attempt to explain that even though the self-funded health plan pays secondary to Medicare, the health plan’s allowable amount is defined within the Plan Document, and is not the full billed charges. After The Phia Group’s overpayment team went back and forth for many weeks and explained the plan’s language numerous times the CFO seemed to understand.

Ultimately, it was revealed that Medicare paid the claims in question at the rate of $58,000. Because the plan’s allowable was the original $76,000, the plan paid the difference of $18,000 as secondary, but was refunded the $58,000 that Medicare paid as primary.

The moral of this story? If you find that money has been overpaid, The Phia Group can help you recover it! Contact our Vice President of Sales and Marketing, attorney Tim Callender, to learn more about The Phia Group’s overpayment recovery services. Tim can be reached by phone at 781-535-5631 or by email at TCallender@phiagroup.com.
 

 


 

Phia Fit to Print:

• Free Market Healthcare Solutions – You Have the Right to Know the Price – March 10, 2019

• Self-Insurers Publishing Corp. – The Self-Funded Case-Back To Basics – March 8, 2019

• BenefitsPro – How close are we to a federal paid family leave law? – March 6, 2019

• Self-Insurers Publishing Corp. – The Profit Motive-A Necessary Evil? – February 5, 2019

• Self-Insurers Publishing Corp. – A Texas Federal Judge Declares The Affordable Care Act Unconstitutional: What Next? – January 16, 2019

• Money Inc. – Texas v. United States: The Events that Followed and the Impact of the Government Shutdown – January 14, 2019

• Managed Healthcare Executive – Top 4 Challenges Healthcare Faces in 2019 – January 11, 2019



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From the Blogosphere:

Foreign Drugs: Savings Worth Traveling For. A roadtrip that might be worth taking.

To RBP, or Not to RBP: That is (one) of the Question(s). Reference-based pricing is one of the most mysterious self-funding structures out there.

Hey, Watch Your Language! Clear language describes what the plan will pay in a comprehensible manner.

New Action on Drug Pricing: Medicare-Like Rates? From ending pharmacy gag rules to outlawing the use of co-pay coupons.

Blocking the Birth Control Rule. Coverage of contraceptives for women and the availability of a religious or moral exemption (or an accommodation) has been hotly debated recently.

 

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



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Webinars

Click HERE to Register!

• On March 14, 2019, The Phia Group presented, “Transparency: A Building Block of Self-funding,” where we discussed some emerging and ongoing transparency issues, measures being taken to try to resolve them, and methods you can use to get the data you need in order to lower costs.

• On February 14, 2019, The Phia Group presented, “What We Love About Self-Funding in 2019,” where we discussed what makes self-funding such a great option for so many employers and employees, as well as the incredibly cool new innovations rolling out in 2019.

• On January 16, 2019, The Phia Group presented, “The Affordable Care Act in 2019: A Look Ahead,” where we discussed many legal and political battles that threaten the ACA's existence.

Be sure to check out all of our past webinars!



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Podcasts:Featuring Video Podcasts!

• On March 29, 2019, The Phia Group presented, “Breaking News - Federal Judge Blocks Expansion of AHPs,” where Adam and Brady discuss the Department of Labor’s new rules that expanded the sale of association health plans (“AHPs”) violate existing law.

• On March 26, 2019, The Phia Group presented, “Employee Takeover: Self-Funded Health Plans from the Member's POV,” where Phia’s Marketing & Accounts Manager, Matthew Painten, and Compliance & Regulatory Affairs Consultant, Philip Qualo, dissect Phia’s very own Self-funded health plan.

• On February 28, 2019, The Phia Group presented, “Bigger in Texas,” where Ron and Brady discuss Brady’s recent trip to Austin and presentation at the Texas Association of Benefit Administrators.

• On February 15, 2019, The Phia Group presented, “Hail to the Chief!,” where our hosts, Brady and Ron, dissect the President’s State of the Union Address.

• On February 5, 2019, The Phia Group presented, “Hospital Transparency!,” where out hosts, Ron and Brady discuss the new legal compliance and regulatory affairs team (“LCARA”) with team member Philip Qualo, and specifically address recent efforts to promote hospital transparency.

• On January 25, 2019, The Phia Group presented “Touchdown!,” how providers – like plan sponsors – are concerned with the state of things and want to identify what’s wrong, what’s right, and how we can collaborate on a new approach that works for us all, as members of a single industry – healthcare.

• On January 10, 2019, The Phia Group presented “Obamacare is Still the Law, Right?,” where Ron and Brady dissect the Texas decision that challenges the legality of the ACA.

• On January 2, 2019, The Phia Group presented “Leather Patches & Pipes,” where our host, Ron Peck sits down with Andrew Silverio and Jon Jablon to discuss the forthcoming master’s degree program in plan development they will be teaching.

Be sure to check out all of our latest podcasts!

 

Face of Phia

• On February 19, 2019, The Phia Group presented, “Taking Account with Lisa T!,” where our hosts sit down with The Phia Group’s Senior Controller, Lisa Tangney.

• On February 8, 2019, The Phia Group presented, “It’s Tomasz Time!,” where our hosts sit down with The Phia Group’s Senior Claim & Case Support Analyst, Tomasz Olszewski.

• On January 30, 2019, The Phia Group presented, “Ashley Turco… International Agent of Security!,” where our hosts sit down with The Phia Group’s Director of Compliance, Ashley Turco.

• On January 17, 2019, The Phia Group presented, “Tech Talk with Hemant,” where our hosts sit down with The Phia Group’s Vice President of Technology, Hemant Dua.

• On January 14, 2019, The Phia Group presented, “Setting the Pace with Tori: Help me Tori!,” where our hosts sit down with a member of The Phia Group’s Client Implementation Coordinator, Tori Pace.

• On January 7, 2019, The Phia Group presented, “Dishing with Delaney,” where our hosts sit down with The Phia Group’s Senior Training & Development Specialist, Katie Delaney.

 

 



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The Phia Group’s 2019 Charity

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

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

 

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

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

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

 

A Special Delivery from the Phia Family

 

The Phia Family loves to show their Patriots Pride! In anticipation of the Super Bowl, we channeled our excitement to raise over 2,000 hygiene items and $1,400 for the Boys & Girls Club of Brockton! As a thank you to the kind, thoughtful, giving members of the Phia Family, we decided to reward everyone at the office with a late opening the day after the Super Bowl.

 

 

Youth of the Year

 

Our favorite time of the year has arrived and we get the opportunity to choose our Youth of the Year. A member of the Boys & Girls Club of Brockton has been chosen by The Phia Group’s CEO, Adam Russo, to receive the prestigious award of Youth of the Year. This member will receive a $5,000 college scholarship and a brand new laptop that will help them through the four years of college. We are proud to announce that Julieth Nwosu was chosen to receive this prestigious award! Congratulations, Julieth, and best of luck in college!

 


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The Stacks

The Self-Funded Case – Back To Basics

By: Tim Callender, Esq. – March 2019 – Self-Insurers Publishing Corp.

Without a plan document, what is a self-funded plan, truly? It is a nebulous financial instrument, or bizarre oral contract slightly memorialized by HR emails and broker notes that exists without clear guidance or application. Yet this plan is still subject to incredible responsibility and liability. Needless to say, not only is having a plan document a good idea (if not required, depending on how you read the law) but it is an even better idea to have a well-written and understandable plan document. As discussed above, many plan sponsors become enamored with new and innovative solutions, ranging from specialty Rx cost control to a medical tourism program filled with plan member incentives. These are wonderful solutions that may yield outstanding results – but what if the plan document does not properly support and outline the specialty Rx program? What if the plan document fails to provide clear instruction to the plan member on how he/she can take advantage of the beneficial medical tourism program? Not only does the plan sponsor run the risk of implementing benefit structures that may cause legal problems, since they are not outlined in the plan document, but the plan sponsor will most surely lose out on gaining the benefit of these innovative solutions. Not to mention paying claims outside the terms of the plan’s stop-loss policy. Without a well-written and understandable plan document, the it is pointless to pursue more complex solutions and the goals of cost containment and rich benefits will surely never be met.

Click here to read the rest of this article


The Profit Motive – A Necessary Evil?

 

By: Andrew Silverio, Esq. – February 2019 – Self-Insurers Publishing Corp.

Working in the self-funded healthcare industry, it can be easy for us to develop tunnel vision and focus on cost containment and affordability at all costs, losing sight of other valid interests within and relating to the healthcare market. Quality of care is an obvious one – if not done properly, reductions in cost can come at the expense of quality (of course, this isn’t always the case in healthcare, a product which so often has a great deal of inefficiency built in). But there are other, less directly related interests which we should keep in mind when we zoom out and look at the broader system, for example in forming policy decisions. The healthcare market is an ecosystem, and like in any ecosystem, one organism becoming too powerful can ultimately be a bad thing for everyone. A super-predator in an isolated system can quickly hunt its own prey out of existence and starve.

Click here to read the rest of this article

 

A Texas Federal Judge Declares The Affordable Care Act Unconstitutional: What Next?

By: Brady Bizarro, Esq. – January 2019 – Self-Insurers Publishing Corp.

On February 26, 2018, eighteen state attorneys general and two Republican governors filed suit in a Texas district court against the federal government over the constitutionality of the Affordable Care Act (“ACA”). While Texas v. United States is not the first serious legal challenge brought against the Obama administration’s signature healthcare law (see, e.g., King v. Burwell, 135 S. Ct. 2480 (2015); see also National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012)), it is the first in which the executive branch broke with tradition and declared that it would not defend the ACA in court. The case has certainly represented the most serious threat to the ACA since the GOP’s legislative efforts to repeal the healthcare law failed last summer. As it turns out, this threat should have been taken more seriously by industry analysts. On December 14, 2018, Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas found that the ACA was unconstitutional.

Click here to read the rest of this article

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

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Phia’s 2019 Speaking Events:

Phia’s Speaking Engagements:

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

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

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

• 3/19/2019 – SIIA Self-Insured Health Plan Executive Forum – Charlotte, NC

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

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

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

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

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

• 4/8/2019 – National Beer Wholesalers Association Legislative Conference – Washington DC

• 4/12/2019 – FMMA 2019 Annual Conference – Dallas, TX

• 4/23/2019 – Johns Hopkins Industry Education Series – Baltimore, MD

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

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

• 4/26/2019 – Society of Professional Benefit Administrators Annual Conference – Washington, D.C.

• 5/2/2019 – MassAHU Benefest 2019 Conference – Westborough, MA

• 5/14/2019 – Cypress Unversity – Las Vegas, NV

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

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

• 7/15/2019 – HCAA TPA Summit – Dallas, TX

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

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

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

 

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Get to Know Our Employee of the Quarter:
Andrew Fine

Congratulations to Andrew Fine, The Phia Group’s Q2 2019 Employee of the Quarter!

When Andrew first started at The Phia Group in 2017 as an intake specialist, it was clear that he was a perfect fit for not only his role, but for The Phia Group. Andrew is currently the Lead Intake Specialist for Phia’s Consulting department. Andrew has a great work ethic and maintains a positive attitude. The Consulting department can always rely on him to stay on top of client requests, as he is very efficient and organized.

 

Congratulations Andrew, and thank you for your many current and future contributions.

 

 


Phia News

 

Exceptional Business Award

The Phia Group is proud to announce that we have been presented with an Exceptional Business Award at the 11th Annual Mentor Recruitment Rally & Celebration! We take tremendous pride in our community and the youths of the Boys & Girls Club of Brockton - Allowing the young people of our community opportunities and platforms in which they can succeed has been rooted in our everyday business functions, leading to a promising future and a caring environment for all those involved.

 

 

Valentine’s Day at Phia

The Phia family celebrated Valentines Day with a guessing game! Everyone in the office was tasked with guessing how many candy hearts were in the glass jar… But we didn’t stop there… We challenged our followers on LinkedIn to join in on the fun. After an entire day of guesses being collected, we finally counted out the candy hearts. There were a total of 2,329 candy hearts in the glass jar! Congratulations to Jeff Hanna, of The Phia Group, who guessed 2,303. We would also like to congradulate Diana Denzin, who had the closest guess on our LinkedIn page, with a guess of 2,621.

 

 


 

Job Opportunities:

• Intake Specialist

• Attorney I

• Overpayments Recovery Assistant

• Health Benefit Plan Drafter

• Case Investigator I

• Provider Relations Client Concierge

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

 

Promotions

• Ron Peck has been promoted from Sr. VP and General Counsel to Executive Vice President and General Counsel

• Julie Martin has been promoted from VP, Recovery Services to Sr. Vice President, Recovery Services

• Jen McCormick has been promoted from VP, Consulting to Sr. Vice President, Phia Group Consulting

• Chris Aquiar has been promoted from Director, Recovery Services to Vice President, Legal Recovery Services

• Hemant Dua has been promoted from Sr. Director of IT to Vice President of Technology

• Brady Bizarro has been promoted from Director, Healthcare Attorney to Director of Legal Compliance & Regulatory Affairs (LCARA)

• Andrew Silverio has been promoted from Health Benefit Plan Admin - Attorney III to Compliance & Oversight Counsel

• Philip Qualo has been promoted from HR Compliance Specialist to Compliance & Regulatory Affairs Consultant

• Sean Donnelly has been promoted from Corporate Counsel to Associate General Counsel

• Cara Carll has been promoted from Senior Team Lead to Manager of Case Evaluation, Customer Service & Claim Analysis

• Amanda Lima has been promoted from Provider Relations Team Lead to CEO Executive Assistant and Manager of Provider Relations

• Cindy Monfils has been promoted from Account Coordinator/Paralegal to COO Executive Assistant/Paralegal

• Jamie Johnson has been promoted from Team Lead, Sr. Recovery Team to Team Lead, Bodily Injury

• Rose Jardim has been promoted from Team Lead of Accounting to Supervisor of Accounting

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

• Erin Hussey has been promoted from Attorney I to Attorney II

• Andrew Fine has been promoted from Intake Specialist to Lead Intake Specialist.


 

New Hires

• Robyn Sullivan was hired as an Executive Assistant

• Robert Martinez was hired as an Attorney in the Provider Relations Department

• Robyn Cleaves was hired at a Team Lead in Accounting

• Shawndell Dias was hired as a Case Investigator

• Scott Byerely was hired as the Vice President, Operations and Total Quality Management



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info@phiagroup.com
781-535-5600

The Stacks - 2nd Quarter 2019

A Texas Federal Judge Declares The Affordable Care Act Unconstitutional: What Next?

By: Brady Bizarro, Esq.

On February 26, 2018, eighteen state attorneys general and two Republican governors filed suit in a Texas district court against the federal government over the constitutionality of the Affordable Care Act (“ACA”). While Texas v. United States is not the first serious legal challenge brought against the Obama administration’s signature healthcare law (see, e.g., King v. Burwell, 135 S. Ct. 2480 (2015); see also National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012)), it is the first in which the executive branch broke with tradition and declared that it would not defend the ACA in court. The case has certainly represented the most serious threat to the ACA since the GOP’s legislative efforts to repeal the healthcare law failed last summer. As it turns out, this threat should have been taken more seriously by industry analysts. On December 14, 2018, Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas found that the ACA was unconstitutional.

 

His decision has rattled the markets, Democratic political leaders, advocacy groups, and the broader healthcare industry. One prominent Democratic senator remarked, “This is a five alarm fire – Republicans just blew up our healthcare system.” Senate Minority Leader Chuck Schumer (D-NY) called it an “awful ruling . . . [which, if not reversed] will be a disaster for tens of millions of American families, especially for people with pre-existing conditions.” After taking a closer look at this ruling, however, many legal experts have concluded that it is not nearly as earth shattering as the headlines have made it appear.

 

First, Judge O’Connor’s ruling did not block enforcement of the ACA despite the fact that the plaintiffs had asked the court to issue a nationwide injunction on the federal government from implementing, regulating, or enforcing the ACA. Since the judge declined, all of the existing provisions of the ACA with which employers, fully insured plans, and self-funded plans must comply are still in effect. This decision has no effect whatsoever on plan design, on cost containment, on employee incentives, or on regulatory compliance. A quick check of Healthcare.gov post-ruling revealed that federal officials have even added this reassuring message: “Court’s decision does not affect 2019 enrollment coverage.”

 

Second, a spokeswoman for the California attorney general has already confirmed that the sixteen states (and D.C.) that stepped in to defend the ACA will appeal this district court ruling to the United States Court of Appeals for the Fifth Circuit in New Orleans, Louisiana. That means there is a chance that this decision could be overturned before the case reaches the Supreme Court. That possibility brings me to my third point; that legal scholars across the ideological spectrum have found the legal arguments made by the plaintiffs in this case to be remarkably unpersuasive. To understand why, let us break down the court’s opinion (which sided with those arguments).

 

Judge O’Connor’s opinion has two major elements. First, he contends that since Congress reduced the ACA’s individual mandate penalty to $0, the mandate to purchase insurance must be invalidated. Then, he argues that since the individual mandate is essential to and inseverable from the remainder of the ACA, the entire 2,000 page healthcare law must be struck down. This issue of “severability,” or whether one provision of a law can be severed without invalidating the entire law, is key. Prior to addressing severability, however, Judge O’Connor explains his constitutional analysis for finding that the individual mandate is no longer fairly readable as an exercise of Congress’s tax power.

 

Regarding his first contention, that the individual mandate could not be saved from the ACA, Judge O’Connor has made a rather compelling case. When the ACA was passed in 2010, the bill contained a requirement that all Americans purchase health insurance or pay a penalty. In 2012, the Supreme Court ruled that this requirement, known as the individual mandate, was a legitimate exercise of Congress’s constitutional authority to tax. See NFIB v. Sebelius (2012). In late 2017, in the Tax Cuts and Jobs Act (“TCJA”), Congress zeroed out the penalty associated with the tax, meaning the individual mandate can no longer reasonably be considered a tax. As such, the constitutional foundation identified by the majority of the Supreme Court, on which the individual mandate was based, was invalidated (recall that the majority in NFIB v. Sebelius also declined to sustain the individual mandate’s constitutionality under the Commerce Clause).

 

With respect to Judge O’Connor’s second contention, that the entire ACA must fall, many legal experts strongly disagree. Nothing in the original 2010 bill spoke to the severability of the individual mandate. Typically, when lawmakers neglect to include a severability clause in a bill, courts look to discern the intent of Congress when considering whether finding a particular provision of a law unconstitutional would require the elimination of the entire law. In NFIB v. Sebelius, the majority never addressed severability with respect to the individual mandate since the Court upheld the requirement. Four dissenting justices concluded that the individual mandate was unconstitutional and that Congress intended the entire ACA to be invalidated without the individual mandate.

 

Judge O’Connor assumes that the intent of the 2010 Congress controls the severability analysis in the case before his court; an intent only discerned by a minority of the Supreme Court. Indeed, he spends most of his 55-page opinion attempting to discern the intent of the 2010 Congress on his own. In doing so, however, he ignores the intent of a later Congress that did speak to the issue of severability in the form a later legislative act. The 2017 Congress, in passing the TCJA, eliminated the individual mandate and preserved the rest of the ACA. This act presents strong evidence that Congress intended the ACA to function without the individual mandate. Judge O’Connor’s explanation for this fact is that the 2017 Congress was unable to repeal the individual mandate because of budget rules and it therefore had no intent with respect to the individual mandate’s severability.

 

By assuming Congress had no intent because it was shackled by complicated legislative rules, Judge O’Connor has drawn the ire of most of the legal community. If he had been so sure of his position, why would he neglect to issue a nationwide injunction on the ACA, as he could have done? True, throwing a wrench into the middle of the healthcare system, where $600 billion in federal funding and health insurance coverage for millions of Americans is on the line, would have been a drastic action; however, if Judge O’Connor truly believed Congress intended this, he could have blocked enforcement of the ACA across the country.

 

I could go on at length about the consequences if this ruling were to stand; the impact on employer-sponsored plans, the effect on those with pre-existing conditions, the potential loss of health insurance coverage for millions of individuals, and the end of the Medicaid expansion. Yet, based on the response from the legal community of which I am a part, my position is that this decision rests on very shaky ground. This decision also goes much further than even the Trump administration had wanted (it wanted to preserve protections in the law for people with pre-existing medical conditions). I fully expect this case to be reversed by the United States Court of Appeals for the Fifth Circuit and to eventually be declined by the Supreme Court.

 

In short, we should all hold our collective horses and conduct business as usual for the time being.

__________________________________________________________________________________________

The Profit Motive – A Necessary Evil?

By: Andrew Silverio, Esq.

Working in the self-funded healthcare industry, it can be easy for us to develop tunnel vision and focus on cost containment and affordability at all costs, losing sight of other valid interests within and relating to the healthcare market.  Quality of care is an obvious one – if not done properly, reductions in cost can come at the expense of quality (of course, this isn’t always the case in healthcare, a product which so often has a great deal of inefficiency built in).  But there are other, less directly related interests which we should keep in mind when we zoom out and look at the broader system, for example in forming policy decisions.  The healthcare market is an ecosystem, and like in any ecosystem, one organism becoming too powerful can ultimately be a bad thing for everyone.  A super-predator in an isolated system can quickly hunt its own prey out of existence and starve.

CNBC published an article recently about a disease called nonalcoholic steatohepatitis, or “NASH.”  It develops from nonalcoholic fatty liver disease, which has been estimated by the Center for Disease Analysis to impact 89 million Americans, and can lead to cirrhosis, cardiac and lung complications, liver cancer, and death.  As a result of the obesity epidemic, particularly around the western world, the disease is becoming increasingly common, and the National Institute of Health now states that as many as 30 million Americans, or 12 percent of adults, have NASH.   It’s estimated that by 2020 NASH will surpass hepatitis C as the leading cause of liver transplants in the United States, as increasingly younger Americans, now often in their 20s and 30s, are developing the disease.

As alarming as these numbers are, there is still no FDA approved treatment for NASH.  Yet.

With a global market for a cure estimated at $35 billion (with a b) dollars, pharmaceutical companies are quite literally racing to get new drugs approved and onto the market.  There are currently 55 NASH drugs in various stages of clinical trials according to BioMedtracker, so new treatments are clearly on the horizon.

That $35 billion pot of gold is the sole reason so many companies are sinking so much money into just having a shot at being first to market.  The market may be months away from a cure, it may be a few years away – we’re not doctors or medical researchers – but what we can say with confidence is that whatever the timeline is, it would be much longer without that mammoth payoff as motivation.  Manufacturers of new specialty drugs are allowed to charge, and regularly receive payment of, absolutely absurd prices.  But in some cases, as appears to be the case with NASH, it is precisely because of this that we will soon have treatment for a disease which would otherwise continue taking lives unchecked.

This ability of manufacturers  to charge and receive such high rates for new drugs has also given rise to an entire new sub-industry based around medical tourism and drug importation. In attempting to get patients access to new specialty drugs at a reduced cost to employers, numerous programs aimed at securing generic versions not yet available in the United States are enjoying success under several different models.  These programs run the whole spectrum, from acting to facilitate shipment by a foreign pharmacy in Canada or Mexico to the American patient, or sending that patient to a border to cross over and pick up a drug themselves, all the way to a concierge service where a patient flies first class to the Caribbean, is put up in a hotel, and receives their treatment in a tropical paradise.  The fact that this third option can actually still be significantly less expensive than the patient simply picking up the American version of a drug at the pharmacy down the street from his or her home is quite telling.

Other types of cost-containment efforts take aim at getting the amounts a plan has to actually pay for these drugs under control.  Again, these programs vary greatly and can take the form of exclusions for certain specialty drugs, exclusions for all specialty drugs, or unique cost-sharing structures where copayment amounts change based on whether payment might be available from another source or based on the particular drug.  Seemingly recognizing the impossibility of an individual without insurance paying for these drugs out of pocket, manufacturers implement assistance programs to help cover patient copayments, or offer discounts or rebates for those who pay completely out of pocket.  Other programs aim to identify when these programs might be available and steer that monetary benefit back toward the health plan.

The fact that all these different approaches are necessary illustrates an important principle which is often overlooked – the profit incentive to develop new drugs and therapies.  America is a global leader in developing new therapies, and is by far the biggest healthcare spender per capita and arguably guilty of the greatest waste.  Can the former continue to be true without the latter?  If not, to what extent are we willing to sacrifice innovation and the development of new therapies for those few with no remedies available for their illnesses, in order to ensure that the masses can receive vital routine care in an affordable way?

Food for thought.

______________________________________________________________________________________________

The Self-Funded Case – Back To Basics

By: Tim Callender, Esq.

Self-Funding – So Many Toys in the Sandbox

Not to criticize our industry, in the least, but if we are being honest, we should all agree that it takes thousands of “parts” to make this “car” run, so to speak.  This fact has its positives.  An industry chock full of numerous stakeholders does lead to incredible innovation, teamwork, healthy competition, creative solutions, and the general strength that comes with an industry steeped in camaraderie.  Likewise, this reality of many stakeholders can also create confusion and distraction unless we are paying close attention and working to block out the noise.  The typical self-funded case will likely have a list of stakeholders that include (in no particular order & I am sure to leave something / someone out):

  • The broker / consultant
  • The employer, plan sponsor
  • A benefits committee and/or benefits decisionmakers within the plan sponsor
  • A third-party administrator or a carrier ASO platform
  • A plan document solution provider
  • A pharmacy benefits manager
  • A specialty Rx cost containment solution provider
  • A case management / utilization management solution provider
  • A concierge and/or centers of excellence solution
  • A stop-loss carrier / managing general underwriter
  • Internal legal counsel
  • External legal counsel
  • Legal counsel for all the solution providers
  • A dialysis cost-containment solution provider
  • A claim re-pricing solution provider
  • A network
  • A wrap network or wrap network alternative
  • A claim negotiation solution and/or patient advocacy solution provider
  • A data analytics platform
  • A claims auditing solution provider
  • A number of independent review organizations
  • A subrogation and recovery solution provider
  • And many, many, more…. (I felt the bullet points were becoming excessive – time to stop)

In short – there are many, many toys in this sandbox of self-funding.

So…. How About, Back to Basics?

As discussed, there are an incredible number of stakeholders in the self-funding sandbox. To reiterate, this is not necessarily a bad thing, but it can steer us away from the fundamental basics and core needs of our industry, which can lead us astray from the root goal.  What is that goal?  In short, most self-funded plan sponsors are going to tell you that they entered into the self-funded space for two reasons: (1) to bring the costs associated with their health plan down; and (2) to have the creative control needed to deliver top-notch health benefits to their employees and their families. 

Not to take away from the importance of the newest healthcare-related iPhone app, or the newest, innovative methodology behind case management, but sometimes it is important to step back and focus on the basics of this complex, self-funded system.  Whether from the outside looking in, or deeply involved in the self-funded industry, all viewers should agree that this industry – this system – is definitely a complex one, as noted by the copious bullet points listed above.  To wade through the complex and try to identify the key roots of a successful self-funded case is not only a noble pursuit but should be a point of pride for all in this space.  With the roots in place, all of the other, more complex solutions can fall into place and will do so with a much higher likelihood of success.

While like minds might rightly differ on the key elements that lead us toward the goals discussed above, I would list out the five most important roots that push the goals of driving down costs while delivering great benefits as follows:

  1. A well-written and understandable plan document.
  2. A vested “benefits committee” or other decision-making body housed within the employer Plan Sponsor.
  3. An educated and empowered consultant.
  4. A partner-focused third-party administrator.
  5. A well-oiled subrogation and recovery platform.

The All Powerful and Governing Document

Without a plan document, what is a self-funded plan, truly?  It is a nebulous financial instrument, or bizarre oral contract slightly memorialized by HR emails and broker notes that exists without clear guidance or application.  Yet this plan is still subject to incredible responsibility and liability.  Needless to say, not only is having a plan document a good idea (if not required, depending on how you read the law) but it is an even better idea to have a well-written and understandable plan document.  As discussed above, many plan sponsors become enamored with new and innovative solutions, ranging from specialty Rx cost control to a medical tourism program filled with plan member incentives.  These are wonderful solutions that may yield outstanding results – but what if the plan document does not properly support and outline the specialty Rx program?  What if the plan document fails to provide clear instruction to the plan member on how he/she can take advantage of the beneficial medical tourism program?  Not only does the plan sponsor run the risk of implementing benefit structures that may cause legal problems, since they are not outlined in the plan document, but the plan sponsor will most surely lose out on gaining the benefit of these innovative solutions.  Not to mention paying claims outside the terms of the plan’s stop-loss policy.  Without a well-written and understandable plan document, the it is pointless to pursue more complex solutions and the goals of cost containment and rich benefits will surely never be met.   

The Heart & The Brain

Every employer plan sponsor should have a benefits committee in place, whether the committee is made up of 3 people or 15 people.  Too many employers rely solely on the expertise of their consultant and “pass the buck,” so to speak, when it comes to truly understanding the ins and outs of their self-funded plan.  Not to say that relying on a consultant is a bad thing – that’s why they exist!  However, as any expert will tell you, the expert’s job is always easier when he/she is advising an educated consumer.  An educated plan sponsor, backed by a benefits committee full of diverse knowledge and expertise, and advised by an industry expert consultant, is already leaps and bounds ahead of the rest when it comes to the ability to choose and implement solutions that will lead to cost savings and rich benefits.  Not to mention, the committee can share the labor burdens associated with running a self-funded health plan.  Like, working together to finalize that plan document! 

Additionally, a benefits committee increases the chances of a plan successfully implementing a complex solution.  Let’s use an out-of-network, reference-based pricing solution as a singular example.  Such an innovative and disruptive program does not stand a chance if there is not employee / member buy in and understanding.  There will likely be balance billing and “scary” situations which will lead plan members to bring the noise, so to speak, directly to HR.  This noise can quickly cause enough pain that the plan sponsor will choose to abandon an otherwise legitimate and beneficial program.  But.  What if a savvy, vested, and educated benefits committee existed, at the employer, plan sponsor level?  Imagine the education and communication opportunities that could exist – imagine the opportunities to work with the plan members, ask critical questions of the vendor, and course correct when needed. 

A benefits committee, whether small or large, will move a plan closer to its goals of containing costs and delivering rich benefits, every time. 

Likewise, it takes the industry expert consultant to advise this bought in committee and bring them the solutions and ideas that they may not be aware of, that they can then interpret and execute, on their own terms.

To repeat: the vested benefits committee plus the expert consultant = reduced plan costs and the implementation of solutions to drive rich benefit delivery. 

The Partner

A sophisticated plan sponsor, governed by a benefits committee and advised by an expert consultant, should next seek a true partner in its third-party administrator.  Plan sponsors can sometimes fall victim to regionalism or sticker attraction (seeking out the lowest administrative fee), which may not always lead to the best payor partner for that particular plan.  Instead, plan sponsors and their consultants should begin by clearly understanding and defining their own needs and their own goals.  They must do this first before trying to find the right payor partner.

Is the plan focused on a strong network?  An in-house dialysis solution?  Is a domestic call center presence important?  What about reporting capabilities?  What does the account management model look like and how involved will they be with enrollment meetings and finalizing the plan document?  Will the payor listen to the plan’s recommendations and needs regarding stop-loss?  The list goes on. 

Needless to say, combining a thoughtful benefits committee, with an expert consultant, and a true partner-oriented payor, will allow for a plan to truly innovate and successfully put solutions in place that will meet the plan’s goals.

The Money at The End of The Chain

In thinking on the goals of driving costs down while delivering great benefits, there is one area that provides a clear “win.”  Subrogation and recovery efforts. 

Why is this the case?  In efforts to contain costs, many plans go straight to the overly advertised, upfront, disruptive solutions that may drive costs down before costs are incurred.  Many of these solutions have merit and bear fruit! But plan sponsors should not lose sight of the big recovery win that is available through a robust subrogation and recovery platform.  Especially now, where copious opportunities exist to seek the recovery of plan dollars on so many fronts.  Traditionally, most plans would focus their recovery efforts on the routine motor vehicle accident – the benchmark example of third-party liability.  Anymore though, alongside these benchmark MVAs, plans should be considering other sources of third-party liability, such as torts, product recalls, and class actions.  The list, and opportunities, go on.    

Additionally, whether governed by ERISA or state law, or a combination of both, all self-funded plans are bound by some level of fiduciary duty.  Instead of quoting federal or state law, the gist is this: plan fiduciaries must behave prudently with plan assets, which includes how the fiduciaries spend plan assets, don’t spend plan assets, or get plan assets back!

To this end, it is easy for a plan sponsor to focus on asset expenditure and upfront plan savings, while forgetting about recovering dollars from a third party.  This is understandable!  Upfront expenses and upfront plan savings are exactly that, “upfront!”  But, the concept of chasing around a third party, sometimes for years, in an effort to return plan funds back to the plan – well, it is easy to see how this concept can fall by the wayside and become easily forgotten.  Yet, maximizing recovery efforts should be just as important to a plan fiduciary as the more routine, upfront savings and expenses that usually take priority.  Seeking to assure that subrogation and recovery efforts are maximized is an important obligation of every plan fiduciary.  Not to mention, returning plan assets into the plan’s coffers means costs can be kept down and the plan can reinvest those dollars in other areas that might lead to that richer, more robust health plan. 

Goals met.

 


The Phia Group's 1st Quarter 2019 Newsletter


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



The Book of Russo:
From the Desk of the CEO

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


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

 

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

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

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

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

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

 

Phia Case Study: Subrogation

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

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

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

 


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

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

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

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

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

 

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

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

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

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

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

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

 


 

Phia Fit to Print:

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

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

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

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

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

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

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

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

 



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From the Blogosphere:

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

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

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

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

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

 

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



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Webinars

Click HERE to Register!

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

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

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

Be sure to check out all of our past webinars!



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Podcasts:Featuring Video Podcasts!

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

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

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

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

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

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

Be sure to check out all of our latest podcasts!

 

Face of Phia

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

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

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

 



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The Phia Group’s 2019 Charity

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

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

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

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

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

 

Thanksgiving – A Special Delivery

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

 

Christmas Tree Angel

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

 

Unwrapping Christmas

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



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The Stacks

The Modernization of Health Savings Accounts

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

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

Click here to read the rest of this article


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

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

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

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

Click here to read the rest of this article

 

Explanations That Benefit

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

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

Click here to read the rest of this article

 

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

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Phia’s Q4 Speaking Events:

Phia’s Speaking Engagements:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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Get to Know Our Employee of the Quarter:
Philip Qualo

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

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

 

 

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

 

Get to Know Our Employee of the Year:
Brady Bizarro

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

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

 

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

 

 


Phia News

 

Announcement of SIIA’s Next Chairman

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

 

A Phia Halloween

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

 

Ugly Sweater Contest

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

 

 


 

Job Opportunities:

• Accounting Manager

• Staff Attorney, Provider Relations

• Case Investigator I

• Claims Analyst

• Health Benefit Plan Drafter

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

 

Promotions

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

• Gambit Hunt was promoted from Sales Coordinator to Sales Executive

 

New Hires

• Tammy Tran was hired as an Accounts Payable Coordinator

• Christina Veneto was hired as a Talent Acquisition Specialist

• Brittany Grueter was hired as a Case Investigator I

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

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

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

• Michael Vaz was hired as a Sales and Accounts Coordinator



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info@phiagroup.com
781-535-5600

The Stacks - 1st Quarter 2019

The Modernization of Health Savings Accounts

By: Krista Maschinot, Esq.

 

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

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

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

Contribution limits increased

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

Coverage expanded

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

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

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

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

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

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

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

Direct Primary Care permitted

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

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

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

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

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

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

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

Other changes

The bills, again, if enacted, would also:

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

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

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

By: Krista Maschinot, Esq.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Explanations that Benefit

By: Jon Jablon, Esq. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2Id.

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

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

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

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

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

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

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

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

11Id.

 


The Phia Group's 4th Quarter 2018 Newsletter


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

 


The Book of Russo:
From the Desk of the CEO

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


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

 

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

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

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

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

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

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

 

Phia Case Study: Phia to the Rescue!

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

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

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

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

 


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

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

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

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

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

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

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

 

Success Story of the Quarter: Unwrapping the OON Claim

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

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

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

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


 

A Case to Remember

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

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

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

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

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

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

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

 


 

Phia Fit to Print:

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

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

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

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

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

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

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

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



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From the Blogosphere:

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

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

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

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

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

 

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



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Webinars


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

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

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

Be sure to check out all of our past webinars!



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Podcasts:Featuring Video Podcasts!

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

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

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

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

• On July 26, 2018, The Phia Group presented, “Where is Ron? A Very Personal Podcast from the SVP,” where Phia’s Senior Vice President & General Counsel dials in to describe where he's been, what major health issue is impacting his family, and what he hopes we can all learn from their experiences thus far - as members of the industry, potential patients, and human beings.

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

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

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

Be sure to check out all of our latest podcasts!

 



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The Phia Group’s 2018 Charity

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

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

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

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

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

 

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

 



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The Stacks

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

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

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

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

Click here to read the rest of this article


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

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

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

Click here to read the rest of this article

 

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

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

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

Click here to read the rest of this article



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Phia’s Q4 Speaking Events:

Phia’s Speaking Engagements:

Adam Russo’s 2018 Speaking Engagements:

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

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

Tim Callender’s 2018 Speaking Engagements:

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

Jen McCormick’s 2018 Speaking Engagements:

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

 

 

 

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Get to Know Our Employee of the Quarter:
Judith McNeil

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

 

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

 


Phia News

Phia on the Front Cover!

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

 


Click here to check out the magazine!

The American Red Cross Visits Phia!

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

 

 

Phia Welcome Video

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

 

 

 

New Client Account Manager – Matthew Painten

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

 

 

Job Opportunities:

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

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

 

Promotions

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

 

New Hires

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

 

Phia Fun Day:

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

 

 



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info@phiagroup.com
781-535-5600

The Stacks - 4th Quarter 2018

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

By: Corrie Cripps

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

Background

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

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

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

DOL Actions

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

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

Current Mental Health Parity Cases

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Conclusion

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

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

 

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

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

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

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

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

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

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

By: Christopher Aguiar, Esq.

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

By: Erin M. Hussey, Esq.

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

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

ACA and Title VII Compliance

Discrimination on the Basis of Sex

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

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

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

MHPAEA and ADA Compliance

Mental Health

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

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

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

Substance Use Disorder

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

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

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

Meeting at the Crossroads

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