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New Rules on Prescription Drug Importation Are Released – Or Are They?

On August 11, 2020

By: Andrew Silverio, Esq.

On July 24, 2020, the White House issued an “Executive Order on Increasing Drug Importation to Lower Prices for American Patients” as part of a handful of executive orders aimed at drug costs (available at https://www.whitehouse.gov/presidential-actions/executive-order-increasing-drug-importation-lower-prices-american-patients/).  At first glance, the order seems to take sweeping steps to facilitate the importation of prescription drugs, but does any of it really represent a departure from existing law?  The order specifically orders the Secretary of HHS to take action in three ways:

  1. Facilitate waivers to individuals against the prohibition on importation, “provided such importation poses no additional risk to public safety,” pursuant to section 804(j)(2) of the Federal Food, Drug, and Cosmetic Act (FDCA);
  2. Authorize the re-importation of insulin products upon a finding that doing so is required for emergency care; and
  3. Complete the rulemaking process started by the proposed rule (more information below) to allow importation of certain drugs from Canada.

As it relates to the first item, it’s clear that this does not represent any new law or authority.  Under section 804(j)(2) of the FDCA, “The Secretary may grant to individuals, by regulation or on a case-by-case basis, a waiver of the prohibition of importation of a prescription drug or device or class of prescription drugs or devices, under such conditions as the Secretary determines to be appropriate.”  This order is simply an instruction to utilize said authority, and it is not clear how or whether these waivers would differ from the existing FDA policy of enforcement discretion, which is quite broad and under which individuals are rarely prosecuted for importing prescription drugs for personal use.  The important caveat that the importation must pose “no additional risk to public safety” suggests that there may be no real change at all, as this is one of the biggest factors in the FDA’s existing policy of enforcement discretion, and the key element cited by the FDA and pharmacy stakeholders in pushing back against importation.

In regard to the second item, the specific inclusion of insulin is interesting, and perhaps represents the most significant element of this order.  The proposed rules outlined in 2019 by the FDA and HHS did not specifically include insulin (available at https://www.hhs.gov/about/news/2019/07/31/hhs-new-action-plan-foundation-safe-importation-certain-prescription-drugs.html), and the drug’s special storage and safety requirements are a barrier to its inclusion in existing avenues of importation.

While we’re on the topic of the proposed rule, the third item in the executive order is nothing more than an instruction to continue that rulemaking process.  So, is this order a dramatic step toward real federal action allowing drug importation, or just a token announcement that doesn’t really accomplish anything?  Unfortunately, it’s simply too early to tell, and we will have to wait and see what HHS does in response.  It is worth noting that when the proposed rule came out, it was met with harsh criticism from our northern neighbors, many of whom discussed potential action by the Canadian government to counter any such importation efforts in order to protect their own drug supply.  As such, action taken  by the United States in regard to Canadian drug importation won’t be the only factor in whether the practice ultimately becomes both legal and practical.

The Phia Group, LLC Announces the promotion of Nick Fitzsimmons as Senior Director of Provider Relations

On August 7, 2020

For Immediate Release

August 7, 2020


Canton, MA - The Phia Group LLC, the health benefit industry's leading cost-containment service provider, announces the promotion of Nick Fitzsimmons as Senior Director of Provider Relations.  "Nick has been partnered with The Phia Group for 2 years, helping us grow our Provider Relations department where, as part of that team, he distinguished himself as a key strategic contributor,” stated Adam Russo, CEO of The Phia Group. “Nick is a seasoned and experienced cost-containment guru and I look forward to his continued leadership in Provider Relations as we continue to grow and add to our suite of services.”


Nick Fitzsimmons’ cost-containment journey began with Global Excel Management in 1996, managing a team of over 50 employees comprised of negotiators and sales representatives. He also led the network utilization, negotiation strategies, and later rose to the ranks of senior executive leadership.  “The Phia Group is a good fit for me as they are all about innovation, which is what I am looking for.”  stated Nick Fitzsimmons. “I want to be where the action is, and The Phia Group never sits still pursuing their deep commitment to lower the cost of healthcare.”


For more information regarding The Phia Group, please contact Vice President of Sales and Marketing, Tim Callender, by email at tcallender@phiagroup.com or by phone at 781-535-5631.


About The Phia Group:


The Phia Group, LLC, headquartered in Canton, Massachusetts, is an experienced provider of health care cost containment techniques offering comprehensive services, designed to control health care costs and protect plan assets.  By providing industry-leading consultation, plan drafting, subrogation and other cost containment solutions, The Phia Group is truly Empowering Plans.

Empowering Plans: P88 - SCOTUS & HHS – ICYMI

On August 3, 2020

In this episode of the Empowering Plans podcast, Jen and Nick discuss significant developments in nondiscrimination regulations, and the implications for those in the self-funding industry. They talk through the evolution of Section 1557 of the ACA, the new final rule issued by HHS, the Supreme Court’s recent decision on Title VII of the Civil Rights Act, and the looming legal challenges as the health care field attempts to reconcile what we’re hearing from the Supreme Court and HHS. They piece together what all this means for employer-sponsored plans, and offer some advice as to how employers and plans should respond.

Click here to check out the podcast!  (Make sure you subscribe to our YouTube and iTunes Channels!)

The Phia Group, LLC Announces Promotion of Jason Davis to Senior Vice-President of Provider Relations

On August 3, 2020

For Immediate Release

August 3, 2020

Canton, MA - The Phia Group LLC, the health benefit industry's leading cost-containment service provider, announces the promotion of Jason C. Davis to the role of Senior Vice-President of Provider Relations.  "Jason has been partnered with The Phia Group for nearly 7 years, and we have grown tremendously during this time; we now want to highlight and reward his contributions with a seat at the executive table” stated Adam Russo, CEO of The Phia Group. “Jason has proven himself to me and our clients as a person of intelligence and integrity, and I believe he is the right person to lead our Provider Relations department to the next level."
 

Prior to partnering with The Phia Group in 2014, Jason Davis was Vice-President US Markets for Global Excel Management, where for nearly 10 years he contributed at various levels of claim settlement, dispute resolution, R&D, product development, sales, and leadership.  “I believe in The Phia Group’s mission to lower healthcare costs for all, and so I am thrilled to be part of the Phia family and to build on our success,” added Jason Davis.
 

For more information regarding The Phia Group, please contact Vice President of Sales and Marketing, Tim Callender, by email at tcallender@phiagroup.com or by phone at 781-535-5631.


About The Phia Group:

The Phia Group, LLC, headquartered in Canton, Massachusetts, is an experienced provider of health care cost containment techniques offering comprehensive services, designed to control health care costs and protect plan assets.  By providing industry leading consultation, plan drafting, subrogation and other cost containment solutions, The Phia Group is truly Empowering Plans.

Texas Still Working On Mental Health Parity Rule Implementation

On August 3, 2020

By: Kelly Dempsey, Esq.
 

Texas House Bill 10 was passed in 2017. The House Bill 10 “Study of Mental Health Parity to Better Understand Consumer Experiences with Accessing Care” was published in August of 2018. On June 16, 2020, the Texas Department of Insurance (TDI) published an informal draft rule to implement House Bill 10. Before we dive into the requirements, you’re probably wondering why I’m writing about this topic. My motivation is to draw attention to these requirements as they impact self-funded non-ERISA plans.
 

There are four division to the Bill which are summarized here:

  • Division 1: Imposes mental health parity requirements that essentially mirror the federal requirements. The goal is a single unified standard for assessing parity.
  • Division 2: Imposes requirements to submit reporting to the state on utilization review outcomes. The TDI notes that this data will not always be evidence of a violation, but this information will help TDI further assess the need to investigate potential issues and monitor benchmarking and changes over time.
  • Division 3: Imposes requirements to analyze quantitative and non-quantitative treatment limitations for compliance with parity rules, and retain the analysis to make available to the state upon request. The goal is to have a standardized reporting format.
  • Division 4: Replaces the existing Autism mandate with the goal of harmonizing the Autism mandates with mental health parity. This clarifies that Autism Spectrum Disorder treatment is within the scope of mental health parity requirements.

So what does this all mean? A self-funded health plan that is following federal mental health parity rules shouldn’t have any new substantive parity requirements to take into consideration, but there may be new recordkeeping and reporting requirements on the horizon.

TDI held a stakeholder meeting on July 10, 2020. Significant concern from stakeholders was raised regarding the undue burden of the reporting requirements and a request for TDI to work with health plans further to refine the data reporting parameters. It was specifically noted that the reimbursement reporting requirement would create issues related to the confidentiality of reimbursement rates as well. Other concerns included the definitions in the statute straying from federal statutory definitions and the frustration with the limited time to respond to the informal draft rule in light of the COVID-19 pandemic and already strained resources. In light of the feedback, the TDI has much to consider when revising and finalizing House Bill 10.

As one may glean from the issuances of the “informal draft rule,” the TDI is still early in the process of formalizing this rule so we can certainly expect some changes before a final rule is issued and implemented.  


The various pieces of this legislation and the recording of the stakeholder meeting can be found here: https://www.tdi.texas.gov/health/hb10.html.

A Brief Anecdote on Testing for COVID-19

On July 29, 2020

By: Kevin Brady, Esq.
 

This week, a close friend reached out and asked for my help. As an attorney, this is not all that uncommon. I am often asked to read apartment leases, organize estate plans, and opine on the merits of a potential tort claim. This request however, was a bit different. This time, my friend asked for help in getting tested for COVID-19.
 

As a bit of background, my friend lives and works in Chicago, Illinois. She has health insurance through her employer and she has outstanding benefits. She had “known exposure” to the virus last weekend and wanted to take a test to confirm whether she had contracted the virus as well. Now you may be asking, why would she ask you? What do you know about it? And the truth is, I didn’t know much about it, but I certainly do now. I know that there are a number of options for testing, but each of those options has a myriad of issues that go along with it.
 

Testing Options

  1. FDA Approved at-home Test Kit

First, we looked into at-home tests. This option is widely available and can provide results in a short amount of time. Although this option was certainly appealing, my friend was looking for immediate answers and feared that the time it took to get the kit shipped to her, shipped back to the lab, and to process the results would be just too much time, and therefore not worth it.
 

  1. Free Testing through the City of Chicago

The City of Chicago offers free tests at a number of locations throughout the city. While the process was simple, the closest testing location was 6 miles away. For a person without a vehicle, this option wasn’t really feasible.
 

  1. Urgent Care Walk-Up Testing

A local urgent care offers testing on a “first come first served” basis. The clinic advised arriving at least an hour early to ensure a spot in line before the clinic reached its daily capacity. The average wait time at the clinic is between 3 and 5 hours depending on when you arrive and secure your place in line. My friend arrived at 6:30 am, and was tested at approximately 10:00 o’clock.
 

  1. Emergency Room Testing

My friend did not even consider this option for testing. While it may have guaranteed a test, she did not want to risk exposing others and did not want to risk exposing herself if she did not already have it. Further, she had no idea about the potential costs associated with an ER test.
 

Having helped my friend through this difficult experience, I finally have perspective on what it's actually like to be on the ground, seeking a test in our system. I was struck by the number of barriers between my friend and getting a test. Whether it was the 4-hour urgent care wait, the 12-mile round trip for a free test, or even just the fear of the unknown in an ER, the system provided reason after reason to give up on the test, and go about her life.

Thankfully, my friend was persistent and ultimately got the test (she tested negative for COVID). I fear that the same cannot be said for everyone. I wanted to share this anecdote to provide a limited perspective on what it is like to seek a test and how the barriers currently in place may be leading to the spread of the virus. Stay safe, stay healthy, and if you have been exposed or experience symptoms, look past the hurdles and get tested!

Simple Negotiations Made Not-So-Simple

On July 23, 2020

By: Jon Jablon, Esq.

Case-by-case individualized negotiations are simple, and that simplicity is part of what makes vendors who perform these type of negotiations so attractive. This is not to say that it’s easy to secure great deals – but from a payor’s perspective, the process is generally fairly simple: you send a claim to the vendor; the vendor works its magic with the provider; the vendor sends the claim back to you with a negotiated rate attached to it and often a note about when it needs to be paid. No hassle, no fuss.

A small percent of the time, though, it gets more complicated. I don’t mean if a claim can’t be negotiated; I mean a situation in which there is a complex contractual dilemma associated with the negotiation.

For instance, we recently dealt with a situation where a provider was extremely slow to respond to our offers. We didn’t receive a refusal to negotiate; on the contrary, the provider’s billing agent was willing to work with us, but didn’t get back to us in a timely manner due to either internal bureaucracy or possibly just not being great at his job. Ultimately, what happened was that our client hit its 30-day payment mark, and the plan’s broker was adamant that the group not risk a late payment to a provider due to the provider’s own slowness to respond. So, the plan paid the claim at its allowable amount (somewhat higher than the desired negotiated rate) – but then after that payment was made, the provider finally responded to our last offer with a counteroffer of its own. The provider didn’t yet realize that it had already been paid a higher amount than the counteroffer it made to us – likely ascribed to either poor communication within the provider’s systems or office, or, again, possibly just this person not being great at his job.

The first thing we did was not to let the provider know that payment was already made, but to say, unequivocally, in writing, that we accept this offer. That was an important first step, since any time after the offer is made, it can be revoked for any reason (or for no reason) – but once we accept it, it can no longer be revoked. We wanted to make sure the agent didn’t have the chance to revoke the offer the second we told him that the plan had already paid.

After we issued a written acceptance to the written offer, we then informed the billing agent that the payment had already gone out, and we provided the calculations for how much the provider should refund to us from that payment – or, alternatively, the payor could cancel the check and write a new one. We gave them the choice. The billing agent, however, was not happy. He argued that when payment was made by the plan, the negotiation was canceled, and the fact that he made an offer to us after payment means that his offer wasn’t valid. Our legal team forcefully pointed out that there’s no basis in the law for that, and parties are free to negotiate even after payment has been made. The previous tendering of payment has absolutely no bearing on the right to negotiate; it simply creates an overpayment, which is the situation we were facing then. The provider tried to argue that its own offer was invalid. What a joke!

Fast forward two weeks, and we finally got the provider to accept the negotiated rate, which is ironic, because it was the provider’s own offer. We were confident that it would ultimately have this conclusion, but that didn’t make it any easier to stomach the provider’s bad attitude.

The moral of this story is that even something as simple as a plain old claim negotiation can still develop certain unexpected hiccups. Unfortunately, that is sometimes the case with all sorts of daily transactions! If you are facing any issues with negotiations, or other processes that should be simple but have become unexpectedly complex, The Phia Group is here to assist. Feel free to contact attorney Tim Callender at tcallender@phiagroup.com or 781-535-5631, and we’ll do whatever we can to help improve your self-funding experience.

Empowering Plans: P87 - COVID-19’s Catch-22

On July 23, 2020

In this episode of the Empowering Plans podcast, Ron and Brady discuss a Catch-22 emerging in the midst of the global pandemic - as more government intervention is needed to deal with COVID-19, calls for a public option and Medicare for All grow louder. Join them as they discuss this issue and other looming threats to the industry; from uncertainty over the ACA and out of control drug prices to the disruption of employment-based health insurance.

Click here to check out the podcast!  (Make sure you subscribe to our YouTube and iTunes Channels!)

The Phia Group's 3rd Quarter 2020 Newsletter

On July 20, 2020


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




 

The Book of Russo:
From the Desk of the CEO

July in Boston is wonderful – great weather, great beaches, great barbeques – well ... maybe not this year. Seriously, though, in my opinion, there really isn’t a better time of year to be in New England. So one day ... soon ... maybe all of you can come visit.

So much has happened at Phia since the last newsletter. We successfully moved into our new Canton, MA facility; we secured a larger space for our Louisville employees; we established our Customer Success Team (that will proactively reach out to you and your teams); we enhanced many of our client reporting tools, case descriptions and options: and

last but not least, we have ensured that you all have the latest and most valuable information relating to COVID-19, how it impacts your businesses and client plans.

With that in mind, let's continue the trend of entertainment and education, with yet another Phia Group Newsletter! I truly hope you will enjoy the valuable information this edition has in store for you, and as always, thank you for being part of The Phia Family. Enjoy!

 


Service Focus of the Quarter: Plan Appointed Claim Evaluator® (PACE)
Phia Fit to Print
From the Blogosphere
Webinars
Podcasts
The Phia Group’s 2020 Charity
The Stacks
Employee of the Quarter
Phia News


Enhancement of the Quarter: Subrogation Value Reports

To the Phia Group’s valued recovery clients: rejoice! We have supplemented our already-extensive reporting suite to provide you with a brand new report. The “Subrogation Value Report” is a new report that highlights recovery performance for a particular group, or across a TPA’s entire block of business – as well as compares those results to various benchmarks. The Subrogation Value Report provides the user with an easy-to-read summary of how much The Phia Group has recovered, on a quarterly or yearly basis (based on your preference), and it can also be run by The Phia Group’s Customer Success Team, on-demand.

This new report presents as a clean, clear PDF. Through the use of graphics and design, it provides an easy to digest yet comprehensive summary of the most valuable performance benchmarks, as well as compares those results to The Phia Group’s entire book of business, utilizing various useful metrics; an important retention and marketing tool for any user!

The Subrogation Value Report will be automatically provided on a regular basis, as well as being available to all clients upon request, so be sure to contact The Phia Group’s Customer Success Team as needed – and as with all our reports, they will be accurate as of the minute they were run.

 

 


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New Service Offered by Phia: Patient Defender

The Phia Group is proud to introduce its “Patient Defender” program. For a PEPM fee, every plan participant has access to legal representation against collections lawsuits or crippling balances being sent to collections before legal action ensues. 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 aggressive tactics, Patient Defender will be there.

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.

 

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

Years ago, in response to growing industry concern regarding fiduciary duties and appeals, The Phia Group created its Plan Appointed Claim Evaluator (PACE) service. PACE is a service whereby The Phia Group takes on fiduciary duty for, and protects clients against fiduciary liability arising from, final-level internal appeals. It is designed to help health plans ensure adverse benefit determinations are correct and defensible, thereby insulating the plan from liability and allowing the Plan Administrator to focus on its core business rather than difficult determinations, and free itself from worry that an unintentional yet arbitrary mistake could result in excessive damages.

PACE includes:

• Plan Document and stop-loss policy “Gap Reviews” to ensure compliance, eliminate coverage gaps, and ensure PACE readiness

• Advanced-level webinars exclusively for PACE clients

• Assessment of eligible, final internal appeals resulting in a written directive

• Unsurpassed legal analysis, clinical review and access to URAC-accredited IROs (with The Phia Group covering all external review costs)

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.

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

Explains what PACE is, what PACE does, and how it's obtained, implemented, and utilized.

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

Please contact Michael Vaz (mvaz@phiagroup.com) for more information.


Success Story of the Quarter: The Second-Level Appeal

A client of The Phia Group’s Plan Appointed Claim Evaluator (PACE) service recently received a large claim. The medical service from which the claim originated was performed in the emergency room of an out-of-network hospital, but the TPA’s initial medical review deemed it to be of a non-emergency nature; so the claim was processed the same as any normal non-network claim, rather than as a claim for emergency services. The provider was adamant that the services were emergency services, placed numerous calls to the TPA, and wrote an extremely long and detailed appeal.

On appeal, the TPA diligently had the claim reviewed by a qualified medical reviewer, with the same results, so the appeal was denied. The provider continued its tirade against the TPA’s customer service staff, and eventually submitted a second-level appeal, which the TPA referred to The Phia Group for review pursuant to the PACE service agreement.

The Phia Group obtained an independent medical review, which yielded the same results – that the claim was not emergent in nature. Phia rendered its determination, as a fiduciary, which the TPA relied upon in communicating the second-level appeal denial. As expected, the hospital renewed all its objections, but the administrative appeals were exhausted.

This situation is still ongoing. Since the second-level appeal response was issued, the hospital has made numerous threats to sue the Plan, the TPA, and Phia; luckily, the Plan and TPA can rest easy knowing that the second-level appeal determination was made by The Phia Group, rather than by the Plan or TPA, so in the event of a lawsuit, Phia is responsible for any fiduciary damages assessed should the court deem the denial to be inappropriate.

Regardless of the outcome, this is a perfect example of exactly how the PACE service works: the TPA and Plan can get back to their everyday business without worrying about liability from this and similar appeals.


Phia Case Study: The ASC OP

The beauty of this case study is in its simplicity.

A client of The Phia Group’s overpayment recovery service had issued an overpayment to an ASC to the tune of over $12,000 due to incorrect application of the plan’s Usual and Customary limitations. Specifically, the Plan allowed the claim at 140% of Medicare, but the TPA had incorrectly processed the claim at 80% of billed charges. The TPA had sent half a dozen letters to the ASC to no avail; ultimately the TPA referred the case to The Phia Group, to see if we could get any movement.

Upon receiving the file and discussing it with the TPA, we commenced recovery efforts, including sending an initial introductory and demand letter and following up with phone calls every few days. There was no response, so our legal team got involved; an attorney sent a very strongly-worded letter along with a vague warning that the Plan may be forced to take additional action if there was no response.

Within a week of sending that letter, we received a call from the ASC’s owner, apologizing for the delay and letting us know the overpayment request would be reviewed in the coming days. One week later, to the day, the owner called again to let us know that the check was in the mail.

The moral of this story? Sometimes all it takes is having that “Esq.,” on the end of a signature to make things happen – and sometimes having a reputation helps! In this case, The Phia Group’s legal team was able to recover $12,000 for the Plan.


Fiduciary Burden of the Quarter: SPD & PPO Contract Harmony

ERISA contains a broad framework of requirements regarding how health plans must notify claimants of a plan’s claim and appeal process and determinations. In the event of an Adverse Benefit Determination, a health plan must satisfy certain requirements. Three important requirements are (1) notifying the claimant of “[t]he specific reason or reasons for the adverse determination,” (2) including “[r]eference to the specific plan provisions on which the determination is based,” and also, (3) including “[a] description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary.” These are three requirements that are frequently overlooked.

The following example is simplified from the original issue, but it is still noteworthy: The Phia Group recently worked with a TPA who denied a claim on behalf of its client health plan because the provider erroneously submitted the claim directly to the TPA, rather than to the network. The TPA included verbiage on the EOB to the effect of – to paraphrase – “please submit this claim directly to the network for repricing.” There can scarcely be any doubt about what that means. Especially for a medical provider who is contracted with the network, and who understands how the network works.

Now, the interesting part of this anecdote is not really what happened, but instead the fact that even though the PPO contract specified that the claims should be submitted directly to the network – lending credence to the EOB’s remark code, the SPD itself did not contain that same requirement. Instead, the SPD specifically stated that claims must be submitted directly to the TPA. This creates a discrepancy between the PPO contract and the SPD in the most basic aspect of a claim: how to submit it! Recall that while benefit plans are contractually bound to abide by the terms of their network agreement, they – and beneficiaries of the Plan – are bound to obey the terms of the plan document. As a result, the EOB could arguably be deemed not to reflect the terms of the Plan, and the provider can thereby argue that the denial was not sufficient, (since the SPD technically does not support the denial, even though the provider is party to a network contract that says otherwise).

So, while this EOB remark code does seem to have contained “[a] description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary,” it arguably cannot meet the other two requirements since, literally speaking, language in the SPD does not exist to that effect.

This is an example of the common situation where two agreements conflict with one another, and the Plan Administrator has to make a choice of which one to follow. Making that choice is never ideal, so our advice is to say what you mean and mean what you say, in every agreement you have signed. Do not leave anything to chance or to anyone’s imagination!
 


 

Phia Fit to Print:

• Self-Insurers Publishing Corp. – Be Ready For The Drug Pricing Debate To Return With A Bang – June 3, 2020

• BenefitsPro – Voluntary travel, COVID-19 and hazardous activity exclusions – June 03, 2020

• Self-Insurers Publishing Corp. – Continuing Coverage During COVID-19 – May 6, 2020

• BenefitsPro – Employer compliance beyond CARES and FFRCA: Don't forget the basics – April 22, 2020

• Self-Insurers Publishing Corp. – Are Your ICS Really EES? A Look Who's Who on an Employee Benefit Plan – April 7, 2020

• BenefitsPro – The black box: A cautionary anecdote – April 3, 2020


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From the Blogosphere:

No Contract? No Problem! Without a signed service agreement, some things can be left up in the air.

Privacy Pitfalls – Considerations for Reopening the Office. Planning on reopening your office? Here’s what you need to know.

DPC During a Crisis. The many benefits of Direct Primary Care.

Did HHS Just Ban All Surprise Billing During The COVID-19 Pandemic? Apologies for the attention-grabbing headline, but no, as good as that would be for payers, it didn’t.

COVID-19: Social Distancing and Paid Sick Leave. The national shift to social distancing has effectively changed the way almost all of us go to work.

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


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Webinars

• On June 16, 2020, The Phia Group presented, “Old Issues, New Environment – Not The Same Old Song,” where we discussed familiar issues such as balance billing, surprise billing, mental health parity, telemedicine, COB, and others, while framed in the context of these unique times.

• On May 19, 2020, The Phia Group presented, “A Pandemic Economy – Industry Risks and Opportunities,” where we took a deeper dive on ways administrators are extending benefits and taking care of those in need.

• On April 23, 2020, The Phia Group presented, “Reasons for Optimism,” where we discussed the many GOOD and POSITIVE things that have both improved our industry since the end of 2019, and that are on the way.

Be sure to check out all of our past webinars!


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Podcasts:

Empowering Plans
 

• On June 1, 2020, The Phia Group presented, “Workers' Comp. & COVID-19 - Preparing for an Influx,” where our hosts, Jennifer McCormick and Brady Bizarro discuss the impact of COVID-19 on workers' compensation claims.

• On May 6, 2020, The Phia Group presented, “A Million Dollar Start,” where our hosts, Ron and Brady, interview, Attorney Robert Martinez, and explore a case in which he secured a massive balance bill write-off from a hospital using some creative tactics.

• On April 27, 2020, The Phia Group presented, “Video Conferencing & the Risk to PHI,” where our hosts, Ron Peck and Brady Bizarro are joined by consulting attorney Nicholas Bonds to discuss the unique concerns facing covered entities and their business associates as more of us utilize video conferencing platforms while under quarantine.

• On April 13, 2020, The Phia Group presented, “COVID-19: Studies on Treatment Costs & Industry Impact,” where our hosts, Jennifer McCormick and Brady Bizarro, discussed some of the latest studies on the potential cost of COVID-19 treatment for self-funded plans, the projected impact on employer-sponsored insurance, and how they think this pandemic could change the industry.

Be sure to check out all of our latest podcasts!


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The Phia Group’s 2020 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 2020 charity is the Boys & Girls Club of Metro South.

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 Metro South (BGCMS) 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.


Youth of the Year: Abiana Cruz

Each year, the Boys & Girls Clubs of Metro South holds a competition to award the most prestigious honor that a teenager can receive as a member of their local Boys & Girls Club. The Youth of the Year award is the Boys & Girls Club signature effort to foster a new generation of leaders, fully prepared to live and lead in a diverse, global and integrated world economy.

One lucky teen has officially been awarded a $5,000 scholarship and a new laptop, courtesy of The Phia Group. The Boys and Girls Clubs of Metro South has announced, Abiana Cruz, as the Boys & Girls Clubs of Metro South’s 2020 Youth of the Year.

Cruz is a junior at Taunton High School and has been a member of the Taunton Clubhouse for 10 years. In addition to her many contributions to the Taunton Clubhouse as a member, Cruz works at the Club after school as an arts specialist, sharing her passion and creativity with younger Club members, and at Camp Riverside in the summer months as a camp counselor.


Grab-and-Go Dinner Program

The Boys & Girls Club has been hit hard and the Phia family is here to help! The Boys & Girls Club is averaging 100 meals served per night with 85% of those meals being served in Brockton. They are also providing boxes with fresh produce and non-perishable food (pasta, canned goods, etc.) to an average of 25 Brockton families per week on Friday afternoons.

Since the pandemic started in March, The Boys & Girls Club has been suffering financially. In total, the loss of programming revenue, public support, and special events fundraising between March 15th and June 30th is estimated at nearly $1M, or roughly 25% of their FY20 operating budget of $3,890,498.

That figure continues to climb each time Clubhouse re-openings are further delayed. The Phia family came together and donated a total of $3,500.00 while our employees were working from home. We encouraged employees to utilize Venmo to make their donations, and they happily did so. We are so proud of the Phia family and happy to have the ability to assist families in need.

If you would like to make a donation, please visit their website today and help a family in need. Here is their donation link: https://www.bgcmetrosouth.org/donate


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The Stacks

Be Ready For The Drug Pricing Debate To Return With A Bang

By: Nicolas Bonds, Esq. – June 2020 - Self-Insurers Publishing Corp.

As 2020 dawned, one of the fiercest debates around containing healthcare costs pivoted on addressing the runaway prices of prescription drugs. In May of 2018, the Trump administration first floated their “blueprint” to lower drug prices, but hit a number of walls, legal and political.

Meanwhile, Congress labored on a number of pieces of legislation to curtail drug prices, with House Democrats’ approach culminating in the Elijah Cummings Lower Drug Costs Now Act. Named for the late Baltimore Democrat who pressed the Trump administration to do more to rein in drug costs, the bill was designed to empower the federal government to negotiate Medicare drug prices directly. The bill would have also placed a cap on the out-of-pocket prescription drug costs paid by those covered by Medicare Part D, while expanding dental, vision, and hearing coverage for Medicare recipients.

Click here to read the rest of this article


Continuing Coverage During COVID-19

By: Andrew Silverio, Esq. – May 2020 – Self-Insurers Publishing Corp.

For the last month or so, like just about every industry, self-funded plan sponsors and those serving them have been frantically grappling with how to quickly and thoroughly address issues they’ve never had to encounter before. Entire segments of our economy have shut down essentially overnight, travel has screeched to a halt, and employers are dealing with questions of a type and scope they’ve never seen. Against this backdrop, individuals’ healthcare needs have never been more vital, while for many employers the path to ensuring they can continue to be covered has never been more wrought with pitfalls.

Click here to read the rest of this article
 

A Look Who's Who on an Employee Benefit Plan

By: Kelly Dempsey, Esq. – April 2020 – Self-Insurers Publishing Corp.

The glory of self-funding is the flexibility an employer has to create a benefit plan that truly suits the individual employer. Employers with ERISA-governed self-funded plans have the opportunity to craft benefits and exclusions that align with the needs of their employee population, while implementing various cost containment solutions to assist the employer in offering a robust benefit plan, and, perhaps even more importantly, controlling the costs for the employees and the employer. But where does that flexibility stop?

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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Get to Know Our Employee of the Quarter: Regina Cattel

To be designated as an Employee of the Quarter is an achievement that is reserved for Phia employees who truly go above and beyond their day to day responsibilities. This person must not only transcend their established job expectations, but also demonstrate with fervency a dedication to The Phia Group and its employees that is so unparalleled that it cannot go without recognition.

The Phia Explore team will only allow an Explore member to receive this award in the most exemplary of situations; and it is without question that we had one of those types of situations this quarter. As the pandemic advanced, and forced Phia to send most of us home to weather the storm, this employee made herself available to perform any and all duties necessary to maintain Phia’s essential operations that went above and beyond her day to day job duties. Whether it was taking on responsibilities such as managing and sorting the mail, scanning, assisting facilities with the office move, working late handling COVID task force preparations, while still managing to be available 24/7 for employee questions and concerns…you name it – this person has truly done it all. She has made The Phia Group a truly exceptional place to work, and strives to make us even better!

Explore has made the unanimous decision, without hesitation, that there is no one more deserving than our very own Regina Cattel, your Q2 Employee of the Quarter!

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


Job Opportunities:

• Case Investigator

• Health Plan Documentation Specialist/Plan Drafter

• Claim and Case Support Analyst

• Sr. Software Engineer

• Health Benefit Plan Administration Attorney/Consulting Attorney

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


Promotions

• Alyssa Pisco has been promoted from Case Investigator to Claim Recovery Specialist III


New Hires


• Nicole Capazzoli was hired as a Sr. Claim Recovery Specialist

• Krishna Pathuri was hired as a Director, Business Analysis

• Morganne Wagner was hired as a Project Manager

• Irene Yalch was hired as an Office Administrator

• Michael Young was hired as a Legal Intern

• Michael Hutshell was hired as a Sr. Claim Recovery Specialist

• Tara Otoka was hired as a Plan Drafter

• Susan Bivens was hired as a Data Architect

• Cindy Merrell was hired as a Subrogation Attorney

• Katelyn Jalkka was hired as an Accounting Intern

• Caelin McDonald was hired as a Sales Coordinator

• Pruett Cunningham was hired as an Executive Assistant


Phia News

The Phia Group Reaffirms Commitment to Diversity & Inclusion

At The Phia Group, our commitment to fostering, cultivating, and preserving a culture of diversity and inclusion has not wavered from the moment we opened our doors 20 years ago. We realized early on that our human capital is our most valuable asset, and fundamental to our success. The collective sum of individual differences, life experiences, knowledge, inventiveness, innovation, self-expression, unique capabilities, and talent that our employees invest in their work, represents a significant part of not only our culture, but also our company’s reputation and achievements.

We embrace and encourage our employees’ differences, including but not limited to age, color, ethnicity, family or marital status, gender identity or expression, national origin, physical and mental ability or challenges, race, religion, sexual orientation, socio-economic status, veteran status, and other characteristics that make our employees unique.

The Phia Group’s diversity initiatives are applicable to all of our practices and policies, including recruitment and selection, compensation and benefits, professional development and training, promotions, social and recreational programs, and the ongoing development of a work environment built on the premise of diversity equality.

We recognize that the success of our company is a direct reflection of each team member’s drive, creativity, diversity, and willingness to exercise initiative. With this in mind, we always seek to attract and develop candidates who share our passion for the healthcare industry and our commitment to diversity and inclusion.

Welcome to Phia’s New Home!

The Phia Group has officially moved! We are proud to announce that after 20 years in business, we have officially moved into an office that we have worked extremely hard for. Our growing staff needed more room and we wanted to make sure they felt right at home when they came to work. Check out our new office!


Welcome to Phia’s New Home in Louisville, KY!

The Phia Group has officially outgrown its Kentucky office after less than one year of opening, and will in Septemeber be moving to a bigger, better location. Since operations began in Kentucky, we have hired over 20 individuals from the Louisville area. We are amazed by the rapid growth of The Phia Group’s sister office and can’t wait to add more Louisville locals to the Phia family!


Customer Success Team

The Phia Group is proud to announce the restructuring of it’s Customer Success Team. As many of you may know from experiences within your own organizations, every sector is experiencing a fundamental shift in customer expectations. It no longer is enough to just be the industry leader in results, one must be the industry leader in customer relations as well. Our Customer Success Team (“CST”) is lead by Rebekah McGuire-Dye. Mrs. McGuire-Dye has over 25 years of experience working in cost containment. Her experience lends her to be an exceptional advocate for The Phia Group’s clients. Mrs. McGuire-Dye will lead her team in providing not just reactive responses to our clients, but in a pro-active approach to ensure every client of The Phia Group is maximizing the value of our many services while always looking for new and innovative products to help our clients grow and lead in their respective areas.

Here are a few items with which the CST can assist you with:

• Identify concerns regarding any and all Phia Group services or results, confirm the absence of an issue or resolve the matter, and ensure customer satisfaction with the explanation or revision;

• Identify any delays or roadblocks to remove them and ensure optimal performance;

• Deliver all reports and resolve any issues associated with them;

• Fully analyze, utilize, and interpret Value Reports and other reporting tools to identify both issues and opportunities;

• Respond to routine file specific client questions (e.g., status on file #12345); and,

• Provide subject matter expert (“SME”) assistance as needed.

Although our CST team continues to grow, it is already one of the best staffed and most professional departments at The Phia Group. We encourage all clients to reach out directly if they have any questions at CustomerSuccessTeam@phiagroup.com.

 


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info@phiagroup.com
781-535-5600

The Stacks - 3rd Quarter 2020

On July 20, 2020

Be Ready For The Drug Pricing Debate To Return With A Bang

By: Nick Bonds, Esq. 

As 2020 dawned, one of the fiercest debates around containing healthcare costs pivoted on addressing the runaway prices of prescription drugs. In May of 2018, the Trump administration first floated their “blueprint” to lower drug prices, but hit a number of walls, legal and political.

Meanwhile, Congress labored on a number of pieces of legislation to curtail drug prices, with House Democrats’ approach culminating in the Elijah Cummings Lower Drug Costs Now Act. Named for the late Baltimore Democrat who pressed the Trump administration to do more to rein in drug costs, the bill was designed to empower the federal government to negotiate Medicare drug prices directly. The bill would have also placed a cap on the out-of-pocket prescription drug costs paid by those covered by Medicare Part D, while expanding dental, vision, and hearing coverage for Medicare recipients.

Though far from perfect, the legislation was ambitious policy and it received broad support from Democrats. Meanwhile, Republicans in the House and Senate released their own drug pricing plans, both echoing the Democrats’ approach of tuning up Medicare Part D. The House Republicans’ policy package, the Lower Costs, More Cures Act, included a suite of transparency measures and caps on insulin costs. Senate Republicans’ Prescription Drug Pricing Reduction Act imposed penalties for price increases above inflation for Medicare Part B and Part D drugs, and capped expenses for seniors, among other things. While there was no consensus on the precise approach, there was virtually universal acceptance that the American people wanted to see movement on drug pricing reform.

Even so, partisan gridlock kept any of those bills from becoming law. The dust up did, however, lead President Trump to put even greater pressure on HHS Secretary Alex Azar to get the ball rolling on their plan to encourage state importation of a significant number of cheaper Canadian prescription drugs – one of the many steps laid out in the aforementioned blueprint to reduce drug prices. The President then doubled down on his renewed push for drug pricing legislation at the most recent State of the Union, using his address to make the issue one of the central planks in his 2020 election platform.

Drug pricing discussions have taken a back seat to the more pressing pandemic. The federal government has understandably been more focused on dealing with the dual health and economic crises of unprecedented scale. To that end, the Families First Coronavirus Response Act (“FFCRA”) and Coronavirus Aid, Recovery, and Economic Stimulus (“CARES”) Act were passed rapidly and with wide-ranging bi-partisan support. Together, these laws took steps to ensure Americans receive testing and treatment for Covid-19, but the financial toll of contracting the virus will still be a devastating blow to most individuals.

The world may have a year or longer to wait for a vaccine to prevent Covid-19, and nascent treatments for the virus have yet to be perfected. While some therapies are showing promise (even some involving llamas), no treatment has received quite so much of the limelight as remdesivir. An experimental drug developed by Gilead Sciences, remdesivir has received the blessing of White House coronavirus task force member Dr. Anthony Fauci, and been granted an emergency use authorization (“EUA”) by the Food and Drug Administration.  

Effectively, this EUA means that under the FFCRA and CARES Act, health plans will be required to cover this therapy, but an unanswered question lingers: How much does remdesivir cost? Gilead Sciences has yet to set the price for its drug, though the company has donated 1.5 million doses. The drug maker faces a difficult decision, needing to balance the development costs and potential profits of remdesivir against the desperate public need for viable treatments. Estimates of the drug’s prospective price vary wildly. The Institute for Clinical and Economic Review (“ICER”), a Boston-based nonprofit that performs cost analyses on medical treatments, released a recent report estimating that a “cost recovery” pricing model may run as low as $10 for a ten-day course of treatment. Alternatively, under a more traditional “cost-effectiveness” pricing model, ICER estimates place the cost of that same course of treatment closer to $4,500.

To complicate matters, Gilead Sciences may actually have a viable patent on remdesivir, so until other therapies are developed the company may have a government-backed monopoly on the treatment of Covid-19. The development of the drug, however, may well have been at least partially subsidized by federal money. Gilead previously faced a similar situation with their HIV treatment Truvada – which led the government to sue for a license to the drug.

Gilead Sciences will have to balance public opinion, social responsibility, their own finances, and the potential government response as they consider how to price remdesivir. As will any other drug maker who develops a treatment for Covid-19. Whatever price point Gilead settles on, the fallout from their decision will certainly linger. A drug this high profile, coming along amid a global emergency, cannot help but reignite the drug price debate. It may be a slow burn – that debate may need to be tabled until the pandemic is under control, maybe even beyond the 2020 election – but the fuse is most certainly lit.

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Continuing Coverage During COVID-19

By: Andrew Silverio, Esq.

For the last month or so, like just about every industry, self-funded plan sponsors and those serving them have been frantically grappling with how to quickly and thoroughly address issues they’ve never had to encounter before.  Entire segments of our economy have shut down essentially overnight, travel has screeched to a halt, and employers are dealing with questions of a type and scope they’ve never seen.  Against this backdrop, individuals’ healthcare needs have never been more vital, while for many employers the path to ensuring they can continue to be covered has never been more wrought with pitfalls.

As self-funding consultants, we’ve already fielded just about any question one could imagine relating to the COVID-19 pandemic.  It is encouraging though, from a human perspective, that the most common questions we’re seeing don’t relate to how to comply with new federal laws, or even how to contain costs in a time when most employers are being forced to tighten their belts dramatically.  Rather, the most common and urgent inquiries we receive are all variations on the same basic issue – how can we ensure our employees can remain covered?

This seemingly simple question often gets extremely complicated though, as plan sponsors are dealing with business decisions they never envisioned.  What if you have to close down completely for a month?  Two months?  What if you have to cut everyone’s hours to be able to ensure everyone continues receiving a paycheck?  What if employees are placed on leaves of absence or furloughed?  Will stop-loss cover continuations of coverage?  It’s very unlikely that even a well-drafted plan document is already set up to address situations like this.

The first and most important item to check off the list is to ensure that the plan document allows for continuation of coverage in whatever situation you’re dealing with.  Just how to label that situation has become a point of confusion in itself, however.  Employers are getting hung up on terminology – do we call it a layoff or a furlough? Can we call it a leave of absence?  Does this impact actively at work status?  Our general guidance has been to forget about terminology – it doesn’t matter.  If your plan clearly describes the events that would otherwise cause a loss of eligibility and clearly establishes that eligibility is intended to continue regardless, it doesn’t matter if the break in service is called a layoff, a furlough, a leave of absence, a pastrami sandwich, etc.

Another significant source of anxiety for plan sponsors is how stop-loss carriers will treat plan changes in connection with COVID-19.  Many carriers have issued releases that seem very reassuring – saying in broad terms that plans need not worry, and that stop-loss will honor COVID-19 updates and amendments won’t be required of applicable stop-loss policies.  We would caution against taking these representations too broadly, however.  A reasonable interpretation of most of these releases is that carriers will honor any plan changes to the extend necessary for plans to comply with the law (namely the Families First Coronavirus Response Ace and the CARES Act).  However, most plans are contemplating changes beyond what’s required by law.  For example, to date there is no federal requirement to extend coverage which would otherwise be terminated after layoff or due to a reduction in hours – the only required extension of coverage under these laws would fall under a new category of FMLA leave.  There’s also no federal mandate to waive cost sharing for most COVID-19 treatment, as opposed to diagnostic testing (a step many plan sponsors are taking to mirror trends in the fully-insured world).  The prudent approach is to expect collaboration, but not rely on it, and take all the proactive steps that may be necessary to protect the plan and employer.

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Are Your ICs Really EEs? A Look Who’s Who on an Employee Benefit Plan

By: Kelly Dempsey, Esq.

The glory of self-funding is the flexibility an employer has to create a benefit plan that truly suits the individual employer. Employers with ERISA-governed self-funded plans have the opportunity to craft benefits and exclusions that align with the needs of their employee population, while implementing various cost containment solutions to assist the employer in offering a robust benefit plan, and, perhaps even more importantly, controlling the costs for the employees and the employer. But where does that flexibility stop?

Flexibility can begin to taper off when it comes to determining which individuals are eligible for employer-sponsored coverage. In short, the relevant regulations mandate that only employees of the employer sponsoring the health plan should be eligible to participate. So the logical next question is: who qualifies as an employee?

In general, individuals that are issued a 1099 instead of a W-2 are independent contractors (“ICs”) and are accordingly not employees (“EEs”), and thus should not be offered employee benefits; to that end, the Internal Revenue Service (“IRS”) provides various resources to assist employers in appropriately classifying workers. The IRS looks at three areas of the relationship: (1) the behavioral control the employer has on the individual, (2) the level of financial control, and (3) the type or nature of the relationship. 

Interestingly, the IRS specifically lists “benefits” under the “type of relationship” category as a consideration for classifying a worker. While the considerations are a sliding scale rather than a hard-and-fast rule (as in, simply offering benefits does not necessarily make the individual an employee), it is certainly a factor. There is also a 20-factor (yes – 20) test found in Revenue Ruling 87-41 (1987-1 C.B. 296), but the IRS is aware that certain factors may not apply to every situation.  Ultimately, misclassifying individuals may jeopardize the IC’s “IC” status, which leads to various complications for the employer, the IC, and the health plan.

As states continue to develop employment-related laws to address various aspects that either directly relate to or at least tangentially effect employee benefits, one such development is of specific interest. New Jersey in particular has issued several new laws that took effect immediately in late 2019, related to independent contractor status and worker misclassifications. The New Jersey Department of Labor and Workforce Development now has the authority to issue monetary penalties for misclassification. If a labor contractor is involved, the employer and the labor contractor have joint liability for any violations and penalties. In April 2020, New Jersey employers will also be required to post a notice regarding worker misclassification. The poster will include information about the prohibition on misclassification of workers, information on the differences between ICs and EEs, the benefits and protections employees are entitled to under state law, the remedies available to misclassified workers, and contact information for complaints or notification of alleged violations. These laws are the result of Governor Murphy issue Executive Order No. 25 in May of 2018 that established the Task Force on Employee Misclassification, making it a top priority to put guidelines in place to diminish work misclassification, which is believed to be widespread problem.

If the State of New Jersey determines that individuals are being identified as ICs when they really are EEs (and vice versa), the State may issue specific penalties and even stop-work orders, in addition to other remedies or penalties found in other applicable law. There are two penalties that can be imposed. The first is an administrative penalty for misclassifying an employee. For the first violation, the administrative penalty is $250 per misclassified employee. Subsequent violations may increase the penalty up to a maximum of $1,000 per misclassified employee. The second penalty is structured a bit differently and the monetary amount is to be no more than 5% of the worker’s gross earnings over the past 12 months. The limitation applies to the earnings from the employer that actually misclassified the individual – meaning a new employer that has contracted to work with the IC cannot be held accountable for the prior employer’s mistake. The State may dictate that the penalty is paid directly to the misclassified workers, or the employer may be required to pay into a trust account for any applicable workers. Employers are to be provided with notice and given the opportunity to appeal by requesting a hearing with the Commissioner of Labor and Workforce Development.

As with most laws, there is a good faith factor worked into the analysis. Ultimately the State must look to a variety of factors when applying penalties, including any previous violations by the employer, the seriousness of the violation, the employer size, and the good faith of the employer.   

If you’re still reading, you’re probably thinking: why does this matter to me? Over the last few years there has been an uptick in the number of self-funded plans that appear to want to include ICs as eligible, so if you’re a claims administrator, a consultant, or a broker, one of the plans you work with is likely impacted. Aside from specific state law penalties, there are a variety of considerations.

Plan language is a major consideration (as it so often is). This may seem like the easiest piece of the puzzle, but as we dig in a bit, it becomes clear that it’s not so simple. Clear eligibility language is crucial to ensure compliance with ERISA Summary Plan Description requirements, so the first step is to modify the eligibility provisions of the document, including how a covered person or participant is defined. Again, determining when to offer coverage is usually simple, but the length of coverage and termination of coverage get a bit trickier. How long will the IC be eligible? Are ICS only covered when working on a project? Would the IC be terminated immediately when a project is over? Would an IC be interested in such coverage if only offered for a limited period of time?

Benefits are usually offered when there is a permanency of the relationship between the employer and individual; generally, true employment relationships do not have defined end dates, while IC relationships usually have a more definite timeframe. That defined timeframe can make crafting the plan language offering coverage to ICs into a tedious process, and could be difficult for a TPA to administer!

Employers also need to consider whether they are inadvertently creating a MEWA – a multiple employer welfare arrangement. The offer of coverage to non-employees (i.e., the ICs) likely creates a MEWA. Generally speaking, a MEWA is created when one benefit plan is offered to two or more unrelated entities. Because each IC is a separate entity, it could create a de facto MEWA by including even one IC in the plan benefits. As the MEWA and Association Health Plan (“AHP”) space is another area of developing law, the company would need to properly form the MEWA or AHP first before modifying plan eligibility provisions, and an employer that forms a MEWA loses many of the coveted protections afforded by ERISA.

If the employer still wants to continue down this path, the next consideration is tax consequences for both the employer and the IC. By classifying an individual as an IC, an employer avoids paying employment taxes; however, the IC is likely to be taxed on the benefits provided by the employer, since pre-tax protections generally do not apply.

Certain employers may be eligible for the IRS’ Voluntary Classification Settlement Program (“VCSP”), which allows employers to reclassify workers and receive some relief from federal employment taxes that the employer was not paying. Employers can also seek a proactive determination from the IRS regarding the proper classification of workers (although it’s not easy to estimate how long that might take to receive). Last, but not least, there are resources for individuals to calculate unreported taxes and report an apparent misclassification to the IRS.

In addition to the above, stop loss is also a consideration; in order to ensure that these individuals’ claims will be covered under the stop loss policy, it need to be underwritten accordingly and the policy must be written to include coverage for ICs. It generally goes without saying, but the stop loss carrier will need to sign off on the plan language modifications as well (generally before the changes go into place).

With that said, will other states follow New Jersey’s lead? The answer to that question is unclear; however, since the passage of the Affordable Care Act in 2010, the United States Department of Labor is continuing to audit self-funded ERISA-governed plans on a regular basis, looking at a variety of things. Some audits are truly randomized, while others begin due to a complaint from a plan beneficiary. Employers should take a proactive approach to review their benefit offerings and assess whether the health plan’s actual eligibility exactly matches what is stated in the Plan Document, Summary Plan Description, and employee handbook, and update the documents accordingly (or correct any EE or IC statuses accordingly).

In summary, it’s natural for an employer to want to offer benefits, including a robust health plan, to the individuals working for the benefit of the employer; however, if those individuals are not actual employees, things can go sideways quickly. Employers should proceed with caution when deciding to offer employer benefits to independent contractors. In this ever-changing industry, states are continuing to develop new rules for employers that bleed into the employee benefit space and can impact their self-funded health plan offerings. These new state laws, combined with existing federal guidelines, can be difficult to navigate, but with some careful planning, employers are given the tools they need to figure it all out!